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                                                                    Exhibit 10.1


                               STOCK OPTION PLAN
                                      OF
                           CANAAN ENERGY CORPORATION
                        (effective January ____, 2000)

1.   Purpose of the Plan

     This Stock Option Plan (the "Plan") is intended as an incentive to
managerial and other key employees of Canaan Energy Corporation (the "Company"),
and its subsidiaries.  Its purposes are to retain employees with a high degree
of training, experience, and ability, to attract new employees whose services
are considered unusually valuable, to encourage the sense of proprietorship of
such persons, and to stimulate the active interest of such persons in the
development and financial success of the Company.  Options granted under the
Plan may be either "incentive stock options" as provided by Section 422 of the
Internal Revenue Code of 1986, as amended, and as may be further amended from
time to time ( the "Internal Revenue Code" or "Code") or options which do not
qualify as incentive stock options.

2.   Administration of the Plan

     (a) Administration.  The Plan shall be administered by the Board of
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Directors of the Company, or if the Board so authorizes, by a committee (the
"Committee") of the Board of Directors consisting of not less than two (2)
members of the Board of Directors.  Unless the context otherwise requires,
references herein to the Committee shall be references to the Board of Directors
or the Committee.  Members of the Committee shall serve at the pleasure of the
Board, and the Board may from time to time remove members from, or add members
to, the Committee.  A majority of the members of the Committee shall constitute
a quorum for the transaction of business.  Action approved in writing by a
majority of the members of the Committee then serving shall be fully effective
as if the action had been taken by unanimous vote at a meeting duly called and
held.

     (b) Authority.  The Committee is authorized to construe and interpret the
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Plan, to promulgate, amend and rescind rules and regulations relating to the
implementation of the Plan and to make all other determinations necessary or
advisable for the administration of the Plan.  The Committee may designate
persons other than members of the Committee to carry out its responsibilities
under such conditions and limitations as it may prescribe, except that the
Committee may not delegate its authority with regard to selection for
participation of, and the granting of options to, persons subject to Sections
16(a) and 16(b) of the Exchange Act.  Any determination, decision or action of
the Committee in connection with the construction, interpretation,
administration, or application of the Plan shall be final, conclusive and
binding upon all persons participating in the Plan and any person validly
claiming under or through persons participating in the Plan.  The Company shall
effect the granting of options under the Plan in accordance with the
determinations made by the Committee, by execution of instruments in writing in
such form as approved by the Committee.
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3.   Designation of Participants

     Persons eligible for options under the Plan shall consist of managerial and
other key employees of the Company and/or its subsidiaries who hold positions of
significant responsibilities or whose performance or potential contribution, in
the sole judgment of the Committee, will benefit the future success of the
Company.

4.   Shares Subject to the Plan

     Subject to adjustment as provided in Paragraph 8 hereof, there shall be
subject to the Plan five hundred thousand (500,000) shares of common stock of
the Company, par value $0.01 per share. The shares subject to the Plan shall
consist of authorized but unissued shares or treasury shares held by the
Company.  Any of such shares that may remain unsold and that are not subject to
outstanding options at the termination of the Plan shall cease to be subject to
the Plan, but until termination of the Plan, the Company shall at all times make
available a sufficient number of shares to meet the requirements of the Plan.
Should any option expire or be canceled prior to its exercise in full, or a
portion of an option is surrendered in payment for the exercise of an option or
satisfaction of any tax withholding obligations, the shares theretofore subject
to such options may again be subjected to an option under the Plan.  Any shares
not subject to outstanding options at the expiration of the Plan or at any time
during the life of the Plan may be dedicated to other plans that the Company may
adopt and to the extent so dedicated, such shares shall not be subject to this
Plan.

5.   Option Price

     (a) Price.  The purchase price for each share placed under option pursuant
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to the Plan shall be determined by the Committee, but shall in no event be less
than 100% of the Fair Market Value (as defined below) of such share on the date
the option is granted.

     (b) Fair Market Value.  "Fair Market Value" means the average of the high
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and low sales prices of the shares of Common Stock on any national securities
exchange on which the shares are listed on the day on which such value is to be
determined or, if no shares were traded on such day, on the next preceding day
on which shares were traded, as reported by such exchange, by National Quotation
Bureau, Inc. or other national quotation service.  If the Common Stock is not
listed on a national securities exchange, Fair Market Value means the average of
the closing "bid" and "asked" prices of the shares of Common Stock in the over-
the-counter market on the date on which such value is to be determined or, if
such prices are not available, the last sales price on such day or, if no shares
were traded on such day, on the next preceding day on which the shares were
traded, as reported by the National Association of Securities Dealers Automatic
Quotation System (NASDAQ) or other national quotation service.  If at any time
shares of Common Stock are not traded on an exchange or in the over-the-counter
market, Fair Market Value shall be the value determined by the Committee, taking
into consideration those factors affecting or reflecting value that they deem
appropriate.  For purposes of determining the purchase price of an incentive
stock option, Fair Market Value shall in any event be determined in accordance
with Section 422 of the Code.

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6.   Terms and Exercise of Options

     (a) General.  The Committee, in granting options hereunder, shall have
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discretion to determine the times when, and the terms upon which, options shall
be exercisable, including such provisions as deemed advisable to permit
qualification as "incentive stock options" within the meaning of Section 422 of
the Internal Revenue Code, as the same may from time to time be amended for
options intended to qualify as such, and incentive stock options outstanding
under the Plan may be amended, if necessary, to permit such qualification.  The
Committee shall designate at the time of granting of any option whether such
option or any portion thereof shall be an "incentive stock option."  Each option
shall be evidenced by an agreement between the Company and the optionee
containing provisions consistent with this Plan and such other provisions as the
Committee may determine as provided herein.  Unless otherwise determined by the
Committee at the time of grant, all options shall become exercisable at the rate
of 25% of the total shares subject to the option on each of the first four (4)
anniversary dates of the date of grant.  The Committee shall also be entitled to
accelerate the date any outstanding option becomes exercisable at any time.

     (b) Term.  In the event of the death of an optionee while in the employ of
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the Company, any unvested portion of the option as of the date of death shall be
vested as of the date of death and the option shall be exercisable in full by
the heirs or other legal representatives of the optionee within twelve (12)
months following the date of death.  In the event of termination of employment
for any reason other than death or termination for cause (and except as
otherwise provided in subsection (e) below) such option shall be exercisable by
the employee or his legal representative within three (3) months of the date of
termination as to all then vested portions.  In addition, the Committee may in
its sole discretion, approve acceleration of the vesting of any unvested
portions of the option.  If an optionee's employment with the Company is
terminated for cause, the option shall terminate as of the date of such
termination of employment and the optionee shall have no further rights to
exercise any portion of the option.  "Termination for cause" means any discharge
for violation of the policies and procedures of the Company or for other job
performance or conduct that is detrimental to the best interests of the Company,
as determined by the Committee in its sole discretion.  Notwithstanding any of
the foregoing, in no event may an option be exercised more than ten (10) years
after the date of its grant.

     (c) Method of Exercise.  Options may be exercised, whether in whole or in
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part, by written notification to the Company accompanied by cash or a certified
check for the aggregate purchase price of the number of shares being purchased,
or upon exercise of an option, the optionee shall be entitled (unless otherwise
provided in the agreement evidencing the option), without the requirement of
further approval or other action by the Committee, to pay for the shares (i) by
tendering stock of the Company that has been owned by the optionee for at least
six (6) months with such stock to be valued at the Fair Market Value (as
determined under Section 5) on the date immediately preceding the date of
exercise or (ii) with a combination of cash and stock that has been owned by the
optionee for at least six (6) months as provided above.

     In addition, upon exercise of an option, the optionee may, with the prior
approval of the Committee, pay for the shares (a) by tendering stock of the
Company already owned by the optionee

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but that has not been held by the optionee for at least six (6) months with such
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stock to be valued at the Fair Market Value (as determined under Section 5) on
the date immediately preceding the date of exercise, (b) surrendering a portion
of the option with such surrendered option to be valued based on the difference
between the Fair Market Value (as determined under Section 5) of the shares
surrendered on the date immediately preceding the date of exercise and the
aggregate option purchase price of the shares surrendered ("Surrender Value"),
or (c) with a combination of cash, stock of the Company that has not been held
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by the optionee for at least six (6) months or surrender of options.

     The Committee may also permit optionees, either on a selective or aggregate
basis, to simultaneously exercise options and sell the shares of common stock
thereby acquired, pursuant to a brokerage or similar arrangement, approved in
advanced by the Committee, and use the proceeds from such sale as payment of the
purchase price of the shares being acquired upon exercise of any option.

     (d) Limitations Applicable To Incentive Options.  To the extent the
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aggregate Fair Market Value of stock (determined as of the date of grant) with
respect to which incentive stock options are exercisable for the first time by
any individual during any calendar year (under all Company plans) exceeds one
hundred thousand dollars ($100,000), such options shall be treated as options
that are not incentive stock options.  Options intended to be incentive options
shall have such additional terms and provisions as required by the Internal
Revenue Code.

     (e) Continued Service as a Director.  Any provisions of the Plan to the
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contrary notwithstanding, for purposes of Section 6(b) above, in the event an
optionee who is also a director of the Company ceases to be employed by the
Company but continues to serve as a director of the Company, the Committee, in
its sole discretion, may determine that all or a portion of such optionee's
options shall not expire three (3) months following the date of termination of
employment with the Company as is provided in Section 6(b) above, but instead
shall continue in full force and effect until the such optionee ceases to be a
director of the Company, but in no event beyond the stated expiration date of
the options as set forth in the applicable option agreement.  Termination of any
such option in connection with the optionee's termination of service as a
director shall be in accordance with the provisions of Section 6(b) above;
provided, however, that (i) the terms "employ" and "employment" as used therein
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shall be replaced with the terms "service" and "service on the Board of
Directors," respectively, and (ii) the phrase "termination for cause" shall mean
any removal from the Board of Directors for cause in accordance with applicable
law and the Certificate of Incorporation and By-Laws of the Company.

     (f) Individual Limitation.  Subject to adjustment from time to time, as
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provided in Section 8, not more than two hundred thousand (200,000) shares of
common stock of the Company may be made subject to Options under the Plan to any
individual in the aggregate in any one (1) calendar year, such limitations to be
applied in a manner consistent with the requirements of, and only to the extent
required for compliance with, the exclusion from the limitation or deductibility
of compensation under Section 162(m) of the Code.

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7.   Assignability

     During an optionee's lifetime, an option may be exercisable only by the
optionee and options granted under the Plan and the rights and privileges
conferred thereby shall not be subject to execution, attachment or similar
process and may not be transferred, assigned, pledged or hypothecated in any
manner (whether by operation of law or otherwise) other than by will or by the
applicable laws of descent and distribution.  Notwithstanding the foregoing or
any other provisions of the Plan, to the extent permitted by applicable law, the
Committee may, in its sole discretion, permit recipients of options that do not
qualify as incentive stock options under Section 422 of the Internal Revenue
Code to transfer such non-incentive options by gift or other means pursuant to
which no consideration is given for such transfer.  The Committee shall impose
in connection with any non-incentive options transferred pursuant to the
foregoing sentence such limitations and restrictions as it deems appropriate.
Any other attempt to transfer, assign, pledge, hypothecate or otherwise dispose
of any option under the Plan or of any right or privilege conferred thereby,
contrary to the provisions of the Plan, or the sale or levy or any attachment or
similar process upon the rights and privileges conferred thereby, shall be null
and void ab initio.

8.   Changes in Capitalization

     (a) No Effect on Company Rights.  Subject to the other provisions of this
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Plan, the existence of the Plan and the options granted hereunder shall not
affect or restrict in any way the right or power of the Board or the
shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds, debentures, preferred or prior preference stocks ahead of or affecting
the Company's capital stock or the rights thereof, any issue of shares of Common
Stock or shares of any other class of capital stock or warrants or rights to
acquire such shares, the dissolution or liquidation of the Company or any sale
or transfer of all or any part of its assets or business, or any other corporate
act or proceeding.

     (b) Changes in Capitalization.  In the event of any change in
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capitalization affecting the common stock of the Company, such as a stock
dividend, stock split, recapitalization, merger, consolidation, split-up,
combination or exchange of shares or other form of reorganization, liquidation,
sale of assets or any other change affecting the common stock ("Change in
Capitalization"), such proportionate adjustments, shall be made with respect to
the aggregate number of shares of common stock for which options may be granted
under the Plan, the number of shares of common stock (or other securities)
covered by each outstanding option, and the price per share of outstanding
options to the end that the optionee shall be entitled to receive the same
number and kind of stock, securities, cash, property or other consideration as
if such option had been exercised immediately preceding such Change in
Capitalization.

     (c) Other Distributions.  The Committee may also make such adjustments in
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the number of shares covered by, and the price or other value of any outstanding
options in the event of a spin-off or other distribution (other than normal cash
dividends) of Company assets to shareholders.

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9.   Change in Control

     (a) Effect on Options.  In the event of a Change in Control (as defined
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below) of the Company, in addition to any adjustments required by Section 8(b):

         (i)    all options outstanding on the date of such Change in Control
     shall become immediately and fully exercisable, and

         (ii)   an optionee will be permitted to surrender for cancellation
     within sixty (60) days after such Change in Control, any option or portion
     of such option to the extent not yet exercised and the optionee will be
     entitled to receive a cash payment in an amount equal to the excess, if
     any, of (A) the Fair Market Value on the date preceding the date of
     surrender, of the shares subject to the option or portion thereof
     surrendered, over (B) the aggregate exercise price for the shares under the
     option or portion thereof surrendered.

     (b) Change in Control.  A "Change in Control" of the Company shall mean the
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occurrence after the effective date of the Plan of:

         (i)    An acquisition (other than directly from the Company) of any
     voting securities of the Company (the "Voting Securities") by any "Person"
     (as the term person is used for purposes of Section 13(d) or 14(d) of the
     Exchange Act) immediately after which such Person has "Beneficial
     Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange
     Act) of fifty percent (50%) or more of the combined voting power of the
     Company's then outstanding Voting Securities;

         (ii)   The individuals who, as of the date of adoption of the Plan by
     the Board, are members of the Board (the "Incumbent Board"), cease for any
     reason to constitute at least two-thirds of the members of the Board;
     provided, however, that if the election, or nomination for election by the
     Company's common stockholders, of any new director was approved by a vote
     of at least two-thirds of the Incumbent Board, such new director shall, for
     purposes of this Plan, be considered as a member of the Incumbent Board;
     provided further, however, that no individual shall be considered a member
     of the Incumbent Board if such individual initially assumed office as a
     result of either an actual or threatened 'election contest' (as described
     in Rule 14A-11 promulgated under the Exchange Act) or other actual or
     threatened solicitation of proxies or consents by or on behalf of a Person
     other than the Board (a "Proxy Contest") including by reason of any
     agreement intended to avoid or settle any Election Contest or Proxy
     Contest; or

          (iii) The consummation of:

                (A) A merger, consolidation or reorganization involving the
          Company, unless

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                    (1) the stockholders of the Company, immediately before such
               merger, consolidation or reorganization, own, directly or
               indirectly immediately following such merger, consolidation or
               reorganization, at least sixty percent (60%) of the combined
               voting power of the outstanding voting securities of the
               corporation resulting from such merger or consolidation or
               reorganization (the "Surviving Corporation") in substantially the
               same proportion as their ownership of the Voting Securities
               immediately before such merger, consolidation or reorganization,

                    (2) the individuals who were members of the Incumbent Board
               immediately prior to the execution of the agreement providing for
               such merger, consolidation or reorganization constitute at least
               two-thirds of the members of the board of directors of the
               Surviving Corporation, and

                    (3) no Person, other than the Company, any Subsidiary, any
               employee benefit plan (or any trust forming a part thereof)
               maintained by the Company, the Surviving Corporation, or any
               Subsidiary or any Person who, immediately prior to such merger,
               consolidation or reorganization had Beneficial Ownership of fifty
               percent (50%) or more of the then outstanding Voting Securities,
               has Beneficial Ownership of fifty percent (50%) or more of the
               combined voting power of the Surviving Corporation's then
               outstanding voting securities;

               (B)  A complete liquidation or dissolution of the Company; or

               (C)  An agreement for the sale or other disposition of all or
          substantially all of the assets of the Company to any Person (other
          than a transfer to a Subsidiary).

     Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Company that, by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities which increases the percentage of the
then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur or

10.  Registration and Listing

     The Company from time to time shall take such steps as may be necessary to
cause the issuance of shares upon the exercise of options granted under the Plan
to be registered under the Securities Act of 1933, as amended, and such other
federal or state securities laws as may be

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applicable. The Company shall also from time to time take such steps as may be
necessary to list the shares issuable upon exercise of options granted under the
Plan for trading on such stock exchanges on which the Company's then outstanding
shares are admitted to listed trading.

11.  Effective and Expiration Dates of Plan

     This Plan became effective as of January ____, 2000, the date of its
approval by the Board of Directors and the Shareholders of the Company.  No
options shall be granted pursuant to this Plan after January ___, 2010.

12.  Amendments or Termination

     The Committee may at any time amend, alter or discontinue the Plan in such
manner as it may deem advisable.  Any such amendment or alteration may be
effected without the approval of the shareholders of the Company, except to the
extent such approval may be required by applicable laws or by the rules of any
securities exchange upon which the Company's outstanding shares are admitted to
listed trading.

     No amendment, alteration or discontinuation of the Plan shall adversely
affect any stock option grants made prior to the time of such amendment,
alteration or discontinuation, except with the consent of the holder of the
affected options.

13.  Governmental Regulations

     Notwithstanding any provision hereof, or any option granted hereunder, the
obligation of the Company to sell and deliver shares under any such option shall
be subject to all applicable laws, rules and regulations and to such approvals
by any governmental agencies or national securities exchange as may be required,
and the optionee shall agree that he will not exercise any option granted
hereunder, and that the Company will not be obligated to issue any shares under
any such option, if the exercise thereof or if the issuance of such shares shall
constitute a violation by the optionee or the Company of any applicable law or
regulation.  The Company shall be entitled to require as a condition to the
issuance of any shares of Common Stock upon exercise of an option that the
optionee remit an amount sufficient, in the Company's opinion, to satisfy all
FICA, federal, state or other withholding tax requirements related thereto.
Unless otherwise provided in the Agreement evidencing the option, an optionee
shall be entitled, without the requirement of further approval or other action
by the Committee, to satisfy such obligation in whole or in part (i) by
tendering stock of the Company already owned by the optionee with such stock to
be valued at the Fair Market Value (as determined under Section 5) on the date
immediately preceding the date of exercise of the options, (ii) by surrendering
a portion of his or her option with such surrendered option to be valued at the
Surrender Value (as determined under Section 6(c)), or  (iii) by a combination
of cash, stock of the Company and surrender of options.

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14.  Governing Law

     The Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the state of Oklahoma and applicable
federal law.

15.  Severability

     If any provision of this Plan is determined to be invalid or unenforceable
for any reason, the remaining provisions of the Plan shall remain in effect and
be interpreted to reasonably effect the intent of the Plan.

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