**Exhibit 10.7****EMPLOYEE STOCK OPTION AGREEMENT**     **THIS EMPLOYEE STOCK OPTION AGREEMENT**(the “**Agreement**”) is made and entered into effective the___day of                     , 200___, by and between **PETROHAWK ENERGY CORPORATION,**a Delaware corporation(the “**Company**”), and                                          (“**Employee**”).     **WHEREAS,**to carry out the purposes of the Company’s Second Amended and Restated 2004 EmployeeIncentive Plan, as amended (the “**Plan**”), the Company desires to afford the opportunity to purchaseshares of the common stock of the Company (“**Stock**”).     **NOW THEREFORE,**in consideration of the mutual agreements and other matters set forth hereinand in the Plan, the Company and Employee hereby agree as follows:     1. **Grant of Option**. The Company hereby grants to Employee the right and option(“**Option**”) to purchase all or any part of an aggregate of                      shares of Stock, on the termsand conditions set forth herein and in the Plan, which Plan is incorporated herein by reference.This Option is intended to constitute an Incentive Stock Option, within the meaning of 422(b) ofthe Internal Revenue Code of 1986, as amended (the “**Code**”); except that to the extent that theaggregate Fair Market Value of Stock (determined at the Option is granted) with respect to whichIncentive Stock Options are exercisable for the first time by Employee during any calendar yearunder all incentive stock option plans of the Company and its parent and subsidiary corporationsexceeds One Hundred Thousand Dollars ($100,000), such excess Incentive Stock Options shall betreated as Non-Statutory Stock Options.     2. **Purchase Price**. The purchase price of Stock purchased pursuant to the exercise ofthis Option shall be                      Dollars and                      Cents ($___) per share, which has beendetermined to be the Fair Market Value of the Stock. For all purposes of this Agreement, FairMarket Value of Stock shall be determined in accordance with the provisions of the Plan.     3. **Vesting of Option**. The Option granted hereunder shall vest as follows: (a) the option to purchase                     shares of Stock is vested and exercisable as of                                         ___, 200___;  (b) the option to purchase                     shares of Stock is vested and exercisable asof                                          ___, 200___;  (c) the option to purchase                     shares of Stock is vested and exercisable asof                                          ___, 200___.     Subject to the earlier expiration of this Option as herein provided, this Option may beexercised by written notice to the Company at is principal executive office addressed to theattention of its chief executive officer. This Option must be exercised on or before
 

 
                                         ___, 201___or it will expire worthless.     The shares of Stock that are the subject of the Option are shares of Stock as presentlyconstituted, but if, and whenever, prior to the expiration of an Option theretofore granted, theCompany shall effect a subdivision or consolidation of shares of Stock or the payment of a stockdividend on Stock without receipt of consideration by the Company, the number of shares of Stockwith respect to which such Option may thereafter be exercised (a) in the event of an increase inthe number of outstanding shares of Stock shall be proportionately increased, and the purchaseprice per share shall be proportionately reduced, and (b) in the event of a reduction in the numberof outstanding shares of Stock shall be proportionately reduced, and the purchase price per shareshall be proportionately increased.     If the Company recapitalizes and/or reclassifies its capital stock (a “recapitalization”), thenumber and class of shares of Stock covered by an Option theretofore granted shall be adjusted asprovided in the Plan.     4. **Transferability**: This Option is not transferable or assignable other than by willor the laws of descent and distribution or pursuant to a qualified domestic relations order (asdefined by Section 414(p) of the Code). If an Incentive Stock Option is transferred pursuant to aqualified domestic relations order, the Option shall cease to qualify as an Incentive Stock optionas of the date of such transfer. The Committee (defined hereafter) may authorize the transfer ofall or a portion of the Non-Statutory Stock Options subject to the terms of the Plan. TheNon-Statutory Stock Option shall be exercisable by the transferee only to the extent, and for theperiods, specified in paragraphs 3 and 5 of this Agreement.     No transfer by will, trust, or by the laws of descent and distribution shall be effective tobind the Company unless the Compensation Committee of the board of directors of the Company orother such committee as the Board shall appoint to administer the Plan as permitted by the Plan(collectively herein the “**Committee**”) has been furnished with a copy of the deceased Employee’senforceable will, trust or such other evidence as the Committee deems necessary to establish thevalidity of the transfer. Any attempted transfer in violation of this provision shall be void andineffective.     5. **Exercise of Option**. This Option may be exercised only by Employee during hislifetime while Employee remains an employee of the Company and will terminate and cease to beexercisable upon Employee’s termination of employment with the Company for any reason, except that: (a) If Employee’s employment with the Company terminates by reason of disabilitywithin the meaning of section 22(e)(3) of the Code, this Option may be exercised infull (whether or not the option is fully vested) by Employee (or Employee’s estate orthe person who acquires this Option by will or the laws of descent and distribution orotherwise by reason of death of Employee) but only within such period of time ending onthe earlier of (i) the date that is one (1) year following
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   such termination or (ii) the expiration of the term of the Option as set forth inthe Agreement.  (b) If Employee dies while in employ of the Company, Employee’s estate, or theperson who acquires this Option by will or the laws of descent and distribution orotherwise by reason of the death of Employee, may exercise Employee’s Option in full(whether or not the Option is fully vested) but only within such period of time endingon the earlier of (i) the date that is one (1) year following Employee’s death or (ii)the expiration of the term of the Option as set forth in the Agreement.  (c) If Employee’s employment terminates for any reason other than as described in(a) or (b) above at a time when Employee holds an Option, unless Employee voluntarilyterminates without the written consent of the Company or is terminated for Cause,Employee may exercise his or her Option but only within such period of time ending onthe earlier of (i) the date that is three months following the termination of suchperson’s employment or (ii) the expiration of the term of the Option as set forth inthe Agreement. For purposes of this Agreement, “cause” shall mean Employee’s grossnegligence or willful misconduct in performance of the duties of his employment, orEmployee’s final conviction of a felony or of a misdemeanor involving moral turpitude.     The purchase price upon exercise of any Option shall be payable to the Company in full either:(a) in cash or its equivalent, or (b) subject to prior approval by the Committee in its discretion,by tendering previously acquired shares of Stock having an aggregate Fair Market Value at the timeof exercise equal to the total purchase price (provided that the shares of Stock tendered have beenheld by Employee for at least six (6) months prior to their tender to satisfy the option price), or(c) subject to prior approval by the Committee in its discretion, by withholding shares of Stockwhich otherwise would be acquired on exercise having an aggregate Fair Market Value at the time ofexercise equal to the total purchase price, or (d) subject to prior approval by the Committee inits discretion, by a combination of (a), (b), and (c) above. Any payment in shares of Stock shallbe effected as provided for in the Plan. The Committee, in its discretion, also may allow thepurchase price to be paid with such other consideration as shall constitute lawful considerationfor the issuance of shares of Stock (including, without limitation, effecting a “cashlessexercise,” as defined in the Plan, with a broker of the Option), subject to applicable securitieslaw restrictions and tax withholdings, or by any other means which the Committee determines to beconsistent with the Plan’s purpose and applicable law.     As soon as practicable after receipt of a written notification of exercise and full payment,the Company shall deliver, or cause to be delivered, to or on behalf of Employee, in the name ofEmployee or other appropriate recipient, share certificates for the number of shares of Stockpurchased under the Option. Unless and until such certificates have been issued by the Company toEmployee, Employee (or other person permitted to exercise this Option in the event of Employee’sdeath) shall not be or have any rights or privileges of a stockholder of the Company with respectto the shares acquirable upon an exercise of this option.
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     6. **Withholding of Tax**. To the extent that the exercise of this Option or thedisposition of shares of Stock acquired by exercise of this Option results in compensation incometo Employee for federal or state income tax purposes, Employee shall deliver to the Company at thetime of such exercise or disposition such amount of money or shares of Stock as the Company mayrequire to meet its obligation under applicable tax laws or regulations, and, if Employee fails todo so, the Company is authorized to withhold from any cash or Stock remuneration then or thereafterpayable to Employee any tax required to be withheld by reason of such resulting compensationincome. Upon an exercise of this Option, the Company is further authorized in its discretion tosatisfy any such withholding requirement out of any cash or shares of Stock distributable toEmployee upon such exercise.     Except as may otherwise be permitted by the Code, in the event of a permitted transfer of aNon-Statutory Stock Option hereunder, Employee shall remain subject to withholding taxes uponexercise. In addition, the Company shall have no obligation to provide any notices to thetransferee including, for example, notice of the termination of a stock option following Employee’stermination of employment.     7. **Securities Laws**. Employee agrees that the shares of Stock which Employee mayacquire by exercising this Option will not be sold or otherwise disposed of in any manner whichwould constitute a violation of any applicable securities laws, whether federal or state. Employeealso agrees (i) that the certificates representing the shares of Stock purchased under this Optionmay bear such legend or legends as the Committee deems appropriate in order to assure compliancewith applicable securities laws, and (ii) that the Company may refuse to register the transfer ofsuch shares of Stock purchased under this Option on the stock transfer records of the Company ifsuch proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute aviolation of any applicable securities laws and (iii) that the Company may give relatedinstructions to its transfer agent, if any, to stop registration of the transfer of the shares ofStock purchased under this Option.     8. **Employment Relationship**. For the purposes of this Agreement, Employee shall beconsidered to be in employment of the Company as long as Employee remains an employee of either theCompany or a parent or subsidiary corporation (as defined in Section 424 of the Code) of theCompany, or a corporation or a parent or subsidiary of such corporation assuming or substituting anew option for this Option. Nothing contained in this Agreement shall confer upon Employee theright to continue in the employ of the Company or its parent or subsidiary or any other corporationaffiliated with the Company, or interfere in any way with the rights of the Company or its parentor subsidiaries or any other corporation affiliated with the Company to terminate Employee’semployment. Any question as to whether and when there has been a termination of such employment,and the cause for such termination, shall be determined by the Committee and its determinationshall be final.     9. **Representations and Warranties of Employee****.**The Employee represents and warrantsto the Company as follows:
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 (a) The Employee has received a copy of the Plan and has read and understands theterms of the Plan and this Agreement, and agrees to be bound by their terms andconditions. The Employee acknowledges that there may be adverse tax consequencesrelated to the Options and their vesting and exercise, and that Employee should consulta tax advisor prior to such time.  (b) The Employee agrees to sign such additional documentation as may reasonablyrequired from time to time by the Company in connection with this Agreement.     10. **Binding Effect**. This Agreement shall be binding upon and inure to the benefit ofany successors to the Company and all persons lawfully claiming under Employee.     11. **Governing Laws**. This Agreement shall be governed by, and construed in accordancewith, the laws of the State of Delaware.     12. **Modification**. This Agreement may not be modified except in writing signed by theparties hereto or their respective successors and permitted assigns.     13. **Headings**. The headings of paragraphs in this Agreement are for convenience ofreference only, do not constitute a part of this Agreement, and shall not be deemed to limit oralter any of the provisions of this Agreement.     14. **Defined Terms**. Except as otherwise provided in this Agreement, or unless thecontext clearly indicates otherwise, capitalized terms used but not defined in this Agreement havethe definitions as provided in the Plan. In the event of a conflict or inconsistency between thediscretionary terms and provisions of the Plan and the provisions of this Agreement, this Agreementshall govern and control.     **IN WITNESS WHEREOF,**the Company has caused this Agreement to be duly executed, by its officerthereunto duly authorized, and Employee has executed this Agreement, all as of the day and yearfirst above written.       **PETROHAWK ENERGY CORPORATION**       By:         Name: Floyd C.Wilson  Title: Chief Executive Officer       **EMPLOYEE**          PrintedName:      
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