EXHIBIT 10.3

Execution Copy

EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement ("Agreement") is entered into effective as of March 1, 2005 by and between Venoco, Inc., a Delaware
corporation ("Company"), and Gregory Schrage ("Employee").

WHEREAS,
the Company desires to employ Employee as its Vice President, and Employee desires to accept such employment;

NOW,
THEREFORE, in consideration of the mutual covenants, representations, warranties, and agreements contained herein, and for other valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:

1.Employment.The Company hereby employs Employee, and Employee hereby accepts employment by the Company, as
the Vice President and on the terms and conditions set forth in this Agreement.

2.Term of Employment.Subject to the provisions for earlier termination provided in the Agreement, the term of
this Agreement (the "Term") shall commence on the effective date of this Agreement as stated above and shall terminate on December 31, 2006;provided,
however,commencing on January 1, 2006 and on each January 1 thereafter, the term of this Agreement shall automatically be extended one additional year unless,
not later than September 30 of the preceding year, the Board of Directors of the Company (the "Board") shall give written notice to Employee that the Term of the Agreement shall cease to be so
extended;provided, further,that if a Change in Control, as defined in Section 8, shall have occurred during the original or extended Term of
this Agreement, the Term shall continue in effect for a period of not less than 36 months beyond the date of such Change in Control. In no event, however, shall the
Term of this Agreement extend beyond the end of the calendar month in which Employee's 65th birthday occurs. Notwithstanding any provision of this Agreement to the contrary, termination of this
Agreement shall not alter or impair any rights or benefits of Employee (or Employee's estate or beneficiaries) that have arisen under this Agreement on or prior to such termination, including, without
limitation, the provisions of Sections 9(c), 15 and 18.

3.Employee's Duties.During the Term of this Agreement, Employee shall serve as the Vice President of the
Company, based in Carpinteria California, and with such customary duties and responsibilities as may from time to time be assigned to him by the Chief Executive Officer and the Board, provided that
such duties are at all times consistent with the duties of such position.

Employee
agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the duties and
responsibilities assigned to Employee hereunder, to use reasonable best efforts to perform faithfully and efficiently such duties and responsibilities.

4.Base Compensation.For services rendered by Employee under this Agreement, the Company shall pay to Employee
a base salary ("Base Compensation") of $175,000.00 per annum, payable in accordance with the Company's customary payroll practice for its executive officers. The amount of Base Compensation shall be
reviewed periodically and may be increased to reflect inflation or such other adjustments as the Board may deem appropriate but Base Compensation, as increased, may not be decreased thereafter.

5.Annual Bonuses.Employee shall be eligible to participate in the Company's incentive compensation plan; under
which cash bonuses are paid to employees based upon the performance of both the Company and the employee. The target annual bonus for the position of Vice President shall

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be
25% of Base Compensation. The annual bonus award will be determined by the Compensation Committee each year for performance during the prior year and paid on May 31 of the year in which it
is determined. The amount of the bonus shall be based on performance of the Employee and the Company as measured against goals established by the Compensation Committee.

6.Stock Options.Employee shall be granted options to purchase shares of Company stock as set forth herein.
Stock options will at a minimum include provisions similar to those in Attachment I, Stock Option Description. The number of option shares and the strike price of the shares shall be: 30 shares
at $45,000 per share, which the parties hereto agree represents the current fair market value of the Company stock; 2.5 shares at $55,000 per share, and 2.5 shares at $65,000 per share. In all cases,
the strike price will be adjusted for any stock splits, stock dividends, recapitalization, or similar events subsequent to signing of this agreement. Pro rata for the various strike prices, twenty
percent (20%) of such options shall vest immediately upon being granted, and the remainder shall vest in equal lots on
the first, second, third, and fourth anniversaries of the date that Employee commences employment. In the event of a Change in Control as defined in Section 8 hereof or discharge other than for
Misconduct (as defined herein) all options shall become immediately vested. Vested options shall remain exercisable for a period of two (2) years following termination of employment. Unvested
options shall expire upon termination of employment. Should the Company not adopt a Stock Incentive Plan that affords Employee such options, then the Company shall provide Employee with alternate
compensation that is at least as valuable to Employee as the options contemplated herein.

7.Additional Benefits.In addition to the other compensation and benefits provided for in this Agreement,
Employee shall be entitled to receive all fringe benefits and perquisites offered by the Company to its executive officers. Such benefits shall include, without limitation, 4 weeks paid
vacation per year; participation in the Company's 401(k) Plan; participation in other incentive and benefit plans offered generally to key employees; participation in various employee benefit plans or
programs provided to the employees of the Company in general, subject to the regular eligibility requirements with respect to each of such benefit plans or programs; and such other benefits or
prerequisites as may be approved by the Board during the Term of this Agreement. Nothing in this paragraph shall be deemed to prohibit the Company from making any changes in any plans, programs or
benefits described in this Section 7, provided the change similarly affects all executives of the Company similarly situated.

8.Change in Control.

For
purposes of this Agreement, a "Change in Control" shall mean the occurrence of one of the following events:



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9.Termination.This Agreement may be terminated prior to the end of its Term as set forth below.



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10.Non-exclusivity of Rights.Nothing in this Agreement shall prevent or limit Employee's continuing or future
participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its affiliated companies and for which Employee may qualify, nor shall anything herein limit
or otherwise adversely affect such rights as Employee may have under any stock option or other agreements with the Company or any of its affiliated companies.

11.Assignability.The obligations of Employee hereunder are personal and may not be assigned or delegated by
him or transferred in any manner whatsoever, nor are such obligations subject to involuntary alienation, assignment or transfer. The Company shall have the right to assign this Agreement and to
delegate all rights, duties and obligations hereunder, either in whole or in part, to any parent, affiliate, successor or subsidiary organization or company of the Company, so long as the obligations
of the Company under this Agreement remain the obligations of the Company.

12.Notice.For the purpose of this Agreement, notices and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Company
at its principal office address, directed to the attention of the Board with a copy to the Secretary of the Company, and to Employee at Employee's residence address on the records of the Company or to
such other address as either party may have furnished to the other in writing in accordance herewith except that notice of change of address shall be effective only upon receipt.

13.Validity.The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

14.Successors; Binding Agreement.



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15.Indemnification.In consideration of the premises and of the mutual agreements set forth in this Agreement,
the parties hereto further agree as follows:



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16.Miscellaneous.No provision of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by Employee and such officer as may be specifically authorized by the Board. No waiver by either party hereto at any time of any breach by
the other party hereto of, or in compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. This Agreement is an integration of the parties agreement; no agreement or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Delaware.

17.Counterparts.This Agreement may be executed in one or more counterparts, each of which shall be deemed to
be an original but all of which together will constitute one and the same instrument.

18.Arbitration.Employee shall be permitted (but not required) to elect that any dispute or controversy arising
under or in connection with this Agreement be settled by arbitration in Los Angeles, California or in the city in which Employee then resides in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Reasonable legal fees and costs incurred by Employee in connection with the resolution
of any dispute or controversy under or in connection with this Agreement shall be paid by the Company as bills for such services are presented by Employee to the Company.

19.Prior Agreements.This agreement supersedes and replaces in full any previously existing employment
agreement (written or oral) between the parties.

20.Knowledge of Terms and Conditions.Employee has received a copy of this Agreement in advance of his
execution hereof and has consulted with his own attorney with respect to the terms and conditions hereof and the transactions contemplated under this Agreement. Employee has executed this

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Agreement
with full knowledge of the terms and conditions contained herein and acknowledges that he has had the opportunity to obtain information regarding the Company and concerning the terms and
conditions of this Agreement. In making his decision to enter into this Agreement, Employee has relied solely upon independent investigations he made and acknowledges that he is not relying on the
Company, any affiliate of the Company or any officer, director or employee of the Company for advice with respect to any tax or other economic considerations involved in the transactions contemplated
under this Agreement, including those arising under Section 409A of the Internal Revenue Code of 1986, as amended.

IN
WITNESS WHEREOF, the parties have executed this Agreement effective for all purposes as of March 1, 2005.

| |  | VENOCO, INC.
| |  | ------------
| |  | By:         
| |  | EMPLOYEE    
| |  | By:         

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Attachment I
Stock Option Description

|Term                          |  | Options shall have a term equal to 10 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Liquidity Event               |  | "Liquidity Event(s)" means an IPO of the Company such that shares trade on a public exchange, or the sale of all or substantially all assets or common stock of the Company to an unaffiliated third party.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Dividends                     |  | Option Holder shall receive dividends (if declared and paid) as if he held the number of shares issuable upon exercise of the Options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Rights of Holder              |  | Option Holder will receive (as to shares acquired through exercise of options) tag-along rights related to any sale of shares by the Company's Primary Shareholder.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Rights of Primary Shareholder |  | Option Holder shall give drag-along rights to the Primary Shareholder as to shares acquired through exercise of options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Alternate Liquidity Mechanism |  | The intent of the Company and the Option Holder is to allow the Option Holder to gain liquidity for all Option shares.
  
Absent a Liquidity Event, the Company will provide Option Holder with an alternate mechanism for gaining liquidity. In general, such Alternate Liquidity Mechanism ("ALM") will allow holder to liquidate his holdings at Fair Value, over a three to five
year period, and will be available beginning in 2007. In general, the Option Holder may determine the timing of sales under the ALM, but the Company will be able to reasonably alter the timing of payments to manage liquidity and maintain good
business practices.
  
"Fair Value" of the Company's shares shall be determined based on the trading values of a comparable group of public companies as determined by an independent third party selected by the Option Holder and the Company or as agreed by the Option Holder
and the Company. The aggregate value discount for various factors including illiquidity, private company status and minority ownership shall not exceed 15%.
|Cashless Exercise             |  | Options may be exercised on a cashless basis with the holder receiving the appropriate "net value" in either cash or shares. If the holder receives shares, they will be governed by the provisions set out in the Option Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Other                         |  | Standard provisions limiting transfer of shares (but permitting certain transfers to family members), allowing Company to repurchase shares at Fair Value, anti-dilution protection and granting lock-up related to public offering of
securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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