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                                  EXHIBIT 10.5







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                                 AMENDMENT NO. 2
                                       TO
                              EMPLOYMENT AGREEMENT


         THIS AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT (this "Amendment") is made
and entered into as of December 3, 1998, by and between MARCUM NATURAL GAS
SERVICES, INC., a Delaware corporation (the "Corporation"), and W. PHILLIP
MARCUM ("Officer").

                                    RECITALS

         WHEREAS, the Corporation and Officer have previously entered into that
certain Employment Agreement, dated as of June 11, 1991, and amended as of July
14, 1997 (as so amended and as the same may hereafter be amended or otherwise
modified from time to time, the "Employment Agreement"); and

         WHEREAS, the Corporation and Officer now desire to amend the Employment
Agreement in order to extend the period of Officer's employment with the
Corporation; and

         WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is desirable and in the best interests of the Corporation and
its stockholders to (1) assure that the Corporation will have the continued
dedication of Officer, notwithstanding the possibility, threat or occurrence of
a change in control of the Corporation, (2) diminish the inevitable distraction
of the Officer by virtue of the personal uncertainties and risks created by a
pending or threatened change in control and to encourage the Corporation's full
attention and dedication to the Corporation currently and in the event of any
threatened or pending change in control, and (3) provide Officer with
compensation and benefits arrangements upon a change in control which ensure
that the compensation and benefits expectations of Officer will be satisfied and
which are competitive with those of other corporations;

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:

         SECTION 1. AMENDMENTS TO EMPLOYMENT AGREEMENT. Effective as of the date
hereof, the Employment Agreement shall be amended as provided in this Section 1.

                  (a) AMENDMENT TO SECTION 2.1. Section 2.1 of the Employment
                  Agreement is hereby amended to read in its entirety as
                  follows:

                     "2.1 Basic Term. The term of Officer's employment under
                  this Agreement shall continue for a period of three years from
                  December 3, 1998, unless terminated earlier pursuant to this
                  Section 2 (the "Employment Period"); 

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                  provided, however, that unless the Corporation or Officer
                  gives to the other written notice at least six months prior to
                  the expiration of such three-year term of any successive
                  one-year extension term as provided hereafter, the Employment
                  Period shall be automatically extended for successive one-year
                  terms, unless and until terminated pursuant to this
                  Agreement."

                  (b) AMENDMENT TO SECTION 2.4. Section 2.4 of the Employment
                  Agreement shall be amended to read in its entirety as follows:

                     "2.4 Termination Without Cause. If the Corporation shall
                  elect to terminate Officer's employment without "cause" prior
                  to the expiration of the Employment Period (including prior to
                  the expiration of any extension period), then:

                           (a) The Corporation shall provide to Officer a Notice
                  of Termination (as defined in Section 3.4.4) setting forth the
                  reason for the termination of his employment, and Officer's
                  employment shall be terminated as of the date Officer receives
                  the Notice of Termination;

                           (b) The Corporation shall pay to Officer in a lump
                  sum in cash within 30 days after the Date of Termination (as
                  defined in Section 3.4.4) the aggregate of the following
                  amounts:

                                    (i) To the extent not theretofore paid,
                           Officer's base salary through the Date of
                           Termination, at the rate in effect on the date the
                           Notice of Termination was given, along with any
                           earned but unpaid bonuses; and

                                    (ii) In the case of compensation previously
                           deferred by Officer, all amounts of such compensation
                           previously deferred and not yet paid by the
                           Corporation; and

                                    (iii) The greater of (A) one times Officer's
                           annual base salary at the rate in effect on the date
                           the Notice of Termination was given, or (B) the
                           aggregate amount of Officer's base salary, at the
                           rate in effect on the date the Notice of Termination
                           was given, that would be due through the end of the
                           Employment Period if the Notice of Termination had
                           not been given; and

                           (c) The Corporation shall, promptly upon submission
                  by Officer of supporting documentation, pay or reimburse to
                  Officer all costs and expenses paid or incurred by Officer
                  prior to the Date of Termination which would have been payable
                  under Section 3.3.2; and

                           (d) Officer's right to participate in the Incentive
                  Compensation Fund, referred to in Section 3.2 hereof, shall
                  immediately vest; and



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                           (e) For a period the longer of (i) one year from the
                  Date of Termination or (ii) the remainder of the Employment
                  Period if Notice of Termination had not been given, Officer
                  and his family shall be permitted to continue to participate
                  in all life, accidental death, disability, medical, dental and
                  other insurance plans of the Corporation. If, despite the
                  provisions of this Section 2.1(a), benefits shall not be
                  available under any of such plans because Officer is no longer
                  an employee of the Corporation, the Corporation itself shall,
                  to the extent necessary, pay or provide for payment of such
                  benefits to Officer and/or Officer's family, in each case at
                  the time such payments would be payable pursuant to the terms
                  of such plans.

                  However, Officer shall not accrue any further benefits other
                  than those required by law and will achieve vested status in
                  any other benefits offered by the Corporation under this
                  Agreement or any other benefit plan."

                  (c) AMENDMENT OF SECTION 2.7. Section 2.7 of the Employment
                  Agreement shall be amended to read in its entirety as follows:

                     "2.7. Termination Upon Expiration of Employment Period. If
                  the Corporation shall elect to terminate Officer's employment
                  hereunder upon the expiration of the Employment Period by
                  giving timely Notice of Termination to Officer, then, as of
                  the date of the expiration of the Employment Period
                  ("Expiration Date"), Officer shall not accrue any further
                  benefits other than those required by law and shall not
                  achieve vested status in any other benefits offered by the
                  Corporation under this Agreement or any other benefit plan,
                  and the Corporation shall have no further obligation under
                  this Agreement, except as follows:

                           (a) The Corporation shall pay to Officer in a lump
                  sum in cash within 30 days after the Expiration Date the
                  aggregate of the following amounts:

                                    (i) to the extent not theretofore paid,
                           Officer's base salary through the Expiration Date at
                           the rate then in effect, along with any earned but
                           unpaid bonuses; and

                                    (ii) one times Officer's annual base salary
                           at the rate then in effect; and

                           (b) The Corporation shall, promptly upon submission
                  by Officer of supporting documentation, pay or reimburse to
                  Officer all costs and expenses paid or incurred by Officer
                  prior to the Expiration Date which are payable under Section
                  3.3.2; and

                           (c) For a period of one year from the Expiration
                  Date, Officer and his family shall be permitted to continue to
                  participate in all life, accidental death, disability,
                  medical, dental and other insurance plans of the Corporation
                  If, despite 



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                  the provisions of this Section 2.7(c), benefits shall not be
                  available under any of such plans because Officer is no longer
                  an employee of the Corporation, the Corporation itself shall,
                  to the extent necessary, pay or provide for payment of such
                  benefits to Officer and/or Officer's family, in each case at
                  the time such payments would be payable pursuant to the terms
                  of such plans.

                  The payments and benefits, if any, required to be made or
                  provided to Officer by the Corporation pursuant to this
                  Section 2.7 shall be in full and complete in satisfaction of
                  all obligations of the Corporation owed to Officer pursuant to
                  this Agreement. After the Expiration Date, the Corporation
                  shall have no further obligations to Officer under this
                  Agreement except as expressly set forth herein."

                  (d) ADDITION OF SECTION 3.4. Following Section 3.3 of the
                  Employment Agreement, a new Section 3.4 shall be added to read
                  in its entirety as follows:


         "3.4 Compensation Upon Termination of Employment Following a Change in
         Control.

         3.4.1 Amount of Compensation. If, during the Employment Period and
         within three years of the date on which a "Change in Control" (as
         defined in Section 3.4.2) occurs, the Corporation shall terminate
         Officer's employment without "cause" (as defined in Section 2.2), or
         the employment of Officer shall be terminated by Officer for "Good
         Reason" (as defined in Section 3.4.3):

                   (a) The Corporation shall pay to Officer in a lump sum in
                   cash within 30 days after the Date of Termination the
                   aggregate of the following amounts:

                           (i) To the extent not theretofore paid, Officer's
                  base salary through the Date of Termination at the rate in
                  effect on the date the Notice of Termination was given along
                  with any earned but unpaid bonuses; and

                           (ii) Two (2) times Officer's annual base salary at
                  the rate in effect on the date the Notice of Termination was
                  given; and

                           (iii) In the case of compensation previously deferred
                  by Officer, all amounts of such compensation previously
                  deferred and not yet paid by the Corporation; and

                   (b) The Corporation shall, promptly upon submission by
                   Officer of supporting documentation, pay or reimburse to
                   Officer all costs and expenses paid or incurred by Officer
                   prior to the Date of Termination which would have been
                   payable under Section 3.3.2 if Officer's employment had not
                   terminated; and

                   (c) For a period of two years from the Date of Termination,
                   Officer shall continue to be treated as a key employee for
                   purposes of the employee benefit plans of the Corporation
                   described in Section 3.3 and the Corporation shall 


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                  continue to provide benefits to or for the benefit of Officer
                  and/or Officer's family at least equal to those which would
                  have been provided or accrued, as the case may be, in
                  accordance with such plans if Officer's employment had not
                  been terminated. If, despite the provisions of this Section
                  3.4.1(c), benefits shall not be available under any of the
                  plans of the Corporation because Officer is no longer an
                  employee of the Corporation, then the Corporation itself
                  shall, to the extent necessary, pay or provide for payment of
                  benefits to Officer and/or Officer's family, or where
                  applicable, pay or provide to Officer and/or Officer's family
                  the difference between the benefits payable pursuant to this
                  Section 3.4.1(b) and the benefits actually payable pursuant to
                  the terms of such plans, in each case at the time such
                  payments would be payable pursuant to the terms of such plans,
                  programs and policies.


         3.4.2 Definition of Change in Control. For the purpose of this
         Agreement, a "Change in Control" shall be deemed to have occurred only
         if:

                  (a) Any person or group (as such terms are used in Sections 13
                  (d) (3) and 14 (d) (2) of the Securities Exchange Act of 1934,
                  as amended (the "Exchange Act") acquires the beneficial
                  ownership (within the meaning of Rule 13d-3 promulgated under
                  the Exchange Act), directly or indirectly, of 50% or more of
                  the aggregate voting power of all classes of the Corporation's
                  then outstanding voting securities entitled to vote generally
                  in the election of directors of the Corporation; provided,
                  however, that the following acquisitions shall not constitute
                  a Change in Control: (i) any acquisition directly from the
                  Corporation (excluding an acquisition by virtue of the
                  exercise of a conversion privilege), (ii) any acquisition by
                  the Corporation or any subsidiary of the Corporation, or (iii)
                  any acquisition by any employee benefit plan (or related
                  trust) for employees or any subsidiary of the Corporation; or

                  (b) Individuals who, as of the date hereof, constitute the
                  Board of Directors of the Corporation (the "Board" generally,
                  and as of the date hereof, the "Incumbent Board") cease for
                  any reason to constitute at least a majority of the Board,
                  provided that any person becoming a director subsequent to the
                  date hereof whose election, or nomination for election by the
                  Corporation's stockholders, was approved by a vote of at least
                  two-thirds of the directors then comprising the Incumbent
                  Board (other than an election or nomination of an individual
                  whose initial assumption of office is in connection with an
                  actual or threatened election contest relating to the election
                  of the directors of the Corporation, as such terms are used in
                  Rule 14a-11 of Regulation 14A promulgated under the Exchange
                  Act) shall be, for purposes of this Agreement, considered as
                  though such individual were a member of the Incumbent Board;
                  or


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                  (c) Approval by the Corporation of a reorganization, merger,
                  combination, or consolidation, in each case, unless, following
                  such reorganization, merger, combination, or consolidation,
                  (i) more than 50% of, respectively, the then outstanding
                  shares of common stock of the corporation or other entity
                  resulting from such reorganization, merger, combination or
                  consolidation and the aggregate voting power of the then
                  outstanding voting securities of the resulting corporation or
                  other entity entitled to vote generally in the election of
                  directors is then beneficially owned, directly or indirectly,
                  by all or substantially all of the individuals and entities
                  who were the beneficial owners, respectively, of the
                  outstanding Common Stock and outstanding voting securities of
                  the Corporation immediately prior to such reorganization,
                  merger, combination, or consolidation, in substantially the
                  same proportion as their ownership immediately prior to such
                  reorganization, merger, combination, or consolidation, and
                  (ii) at least a majority of the members of the board of
                  directors of the corporation or other entity resulting from
                  such reorganization, merger, combination or consolidation were
                  members of the Incumbent Board at the time of the execution of
                  the initial agreement providing for such reorganization,
                  merger, combination or consolidation; or

                  (d) Approval by the Corporation of the sale or other
                  disposition of all or substantially all of the assets of the
                  Corporation, other than to a corporation or other entity with
                  respect to which following such sale or other disposition the
                  conditions described in clauses (i) and (ii) of Section
                  3.4.2(c) are satisfied.

         3.4.3 Definition of Good Reason. For purposes of this Agreement, "Good
         Reason" means:

                  (a) (i) The assignment to Officer of any position, authority,
                  duties or responsibilities inconsistent in any respect with
                  Officer's position (including, without limitation, status,
                  offices, title and reporting requirements), authority, duties
                  or responsibilities, prior to the Change in Control, or (ii)
                  any other action by the Corporation which results in a
                  diminution in such position, authority, duties or
                  responsibilities, other than an insubstantial and inadvertent
                  action which is remedied by the Corporation promptly after
                  receipt of notice thereof given by Officer;

                  (b) Any reduction in Officer's base salary or in the extent of
                  Officer's entitlement to the employee benefits, expenses,
                  fringe benefits or perquisites referred to in Section 3;

                  (c) The Corporation's requiring Officer to be based at an
                  office location or to maintain his personal residence other
                  than in the greater Denver, Colorado area;

                  (d) The failure of the Corporation to obtain a satisfactory
                  agreement from any successor to the Corporation to assume and
                  agree to perform this Agreement;


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                  (e) The imposition on Officer of business travel obligations
                  substantially greater than his business travel obligations
                  during the fiscal year prior to the Change in Control;

                  (f) Any purported termination by the Corporation of Officer's
                  employment other than as expressly permitted by this
                  Agreement; or

                  (g) Any other failure by the Corporation to comply with any
                  provision of this Agreement, other than an insubstantial and
                  inadvertent failure which is remedied by the Corporation
                  promptly after receipt of notice thereof given by Officer.

         3.4.4 Termination of Employment.

                  (a) Notice of Termination. Any termination by the Corporation
                  for any reason or by Officer for Good Reason, shall be
                  communicated by Notice of Termination to the other party
                  hereto. For purposes of this Agreement, a "Notice of
                  Termination" means a written notice which (i) indicates the
                  specific termination provision in this Agreement relied upon,
                  (ii) sets forth in reasonable detail the facts and
                  circumstances claimed to provide a basis for termination of
                  the Officer's employment under the provision so indicated, and
                  (iii) if the Date of Termination is other than the date of
                  receipt of such notice, specifies the Date of Termination.

                  (b) Date of Termination. "Date of Termination", as used in
                  this Agreement, means the date Officer's employment with the
                  Corporation is terminated.

         3.4.5 Supercedes Section 2. In the event of a Change in Control, the
         provisions of this Section 3.4 shall supercede any provisions of
         Section 2 that are inconsistent or in conflict with this Section 3.4."

         SECTION 5. EFFECT OF AMENDMENT. From and after the date hereof, the
term "Employment Period" as used in the Employment Agreement shall be deemed to
refer to the Employment Period as such term is defined in this Amendment. Except
as and to the extent expressly modified by this Amendment, the Employment
Agreement shall remain in full force and effect in all respects in accordance
with its terms, and any reference to the Employment Agreement from and after the
date hereof shall be deemed to be a reference to the Employment Agreement as
modified by this Amendment.

         SECTION 6. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of Colorado.

         SECTION 7. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same instrument.



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         IN WITNESS WHEREOF, this Amendment No. 2 to Employment Agreement has
been duly executed and delivered by or on behalf of the undersigned as of the
date first written above.


                                 CORPORATION:


                                 MARCUM NATURAL GAS SERVICES, INC.


                                 By:   /s/ A. Bradley Gabbard                  
                                    -------------------------------------------
                                    A. Bradley Gabbard, Executive Vice President


                                 OFFICER:


                                 By:   /s/ W. Phillip Marcum                   
                                    -------------------------------------------
                                     W. Phillip Marcum


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