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                                                                    EXHIBIT 10.7


                              EMPLOYMENT AGREEMENT


                  This Employment Agreement ("Agreement"), is executed effective
as of the 1st day of November, 2000 ("Execution Date"), to be effective as
defined herein, by and between Canaan Energy Corporation, an Oklahoma
corporation ("Company"), and Anthony Lasuzzo ("Executive") with reference to the
following circumstances:

                                    RECITALS:

                  A. Company desires to retain the services of Executive and
Executive desires to make Executive's services available to Company upon the
terms and conditions set forth herein.

                  B. This Agreement is executed on the Execution Date as defined
hereinabove, but shall become effective as of November 1, 2000 ("Effective
Date").

                  In consideration of the above recitals, the mutual conditions
and covenants contained herein and the benefits to be derived from the mutual
observance of the provisions of this Agreement, Company and Executive agree as
follows:.

                  1. EMPLOYMENT. Company hereby employs Executive, and Executive
hereby accepts such employment, upon the terms and conditions hereinafter set
forth.

                  2. TERM. The term of employment of Executive shall be for a
period of five (5) years, beginning on the Effective Date, and continuing for
sixty (60) months thereafter.

                  3. COMPENSATION AND BENEFITS.

                           3.1 Base Compensation. As compensation for services
         rendered under this Agreement, Company shall pay Executive a base
         salary of One Hundred Seventy Thousand and No/100 Dollars ($170,000)
         per year, payable on such days as Company normally pays its employees,
         prorated for any partial employment period.

                           3.2 Signing Bonus. Upon the Effective Date of this
         Agreement, Company shall pay Executive a signing bonus in the amount of
         Eighty Thousand and No/100 Dollars ($80,000), from which Company shall
         withhold all required taxes.

                           3.3 Stock Option. On the first day of trading of the
         Company's common stock on or after the Effective Date or on such other
         date as Company and Executive may agree, Company shall grant Executive
         a stock option to purchase one percent (1.0%) of the total shares of
         outstanding common stock of the Company with the exercise price equal
         to the average of the closing bid and closing asked prices of the
         Company's common stock as of the Effective Date of this Agreement. The
         option shall become exercisable pursuant to a stock option agreement in
         the form attached hereto as Exhibit "A" under the terms of the


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         Company Stock Option Plan at the rate of: (i) one-half (1/2) of the
         total stock options granted to Executive becoming exercisable on the
         Effective Date, and (ii) the remaining one-half (1/2) of the total
         stock options granted to Executive becoming exercisable on the third
         (3rd) anniversary of the Effective Date, so long as Executive continues
         to be employed by Company continuously during said period of time. A
         portion of the option will be an incentive stock option as provided
         under Section 422 of the Internal Revenue Code to the maximum extent
         permitted by such Section.

                           3.4 Additional Compensation. Executive shall be paid
         such additional compensation, if any, for services rendered hereunder
         as may be determined in the sole discretion of the Board of Directors
         of Company ("Board").

                           3.5 Insurance Benefits. During the term of this
         Agreement, Company shall provide Executive, his spouse, and his
         children with insurance coverage providing benefits for sickness and
         hospitalization in such amounts and on such terms as generally
         available to all employees or officers of Company as approved from time
         to time by the Board. However, Executive shall be responsible for the
         premium payments on such insurance coverage for his spouse and
         children. Further, Company shall provide Executive with insurance
         coverage benefits for disability in such amount and on such terms as
         are generally available to the officers of Company. During the term of
         this Agreement, Executive shall be entitled to receive any and all life
         insurance benefits hereafter made available to the executive officers
         of the Company on the same terms and in the same amounts as are
         generally made available to them.

                           3.6 Employee Benefits. During the term of this
         Agreement, Executive shall receive such fringe benefits as allowed
         under Company's stated policies as may be determined from time to time
         in the sole discretion of the Board.

                  4. DUTIES. Executive shall be employed by Company as the Chief
Operating Officer of Company, having those duties and responsibilities
ordinarily associated with a chief operating officer of a publicly held oil and
gas company, and such other specific duties, as shall, from time to time, be
determined by the Board and the President of Company.

                  5. EXTENT OF SERVICES. Executive shall devote substantially
all of his time, attention and energy to the business of Company and shall not
engage in any other business activities; provided, however, that Executive may
retain interests in oil and gas properties acquired prior to the Effective Date,
and that, after the Effective Date, Executive may also continue, from time to
time, as Executive sees fit, in his discretion, to acquire new and additional
interests of all types, kinds and nature in additional oil and gas properties,
as well as to rework and further develop the oil and gas interests which he
currently owns. In addition, Executive may acquire passive investments in other
oil and gas, or energy-related businesses, including publicly held companies, so
long as his interest therein does not exceed 10% of the total voting interests
of such business or company and so long as the management of such activities and
investments does not in any material respect detract from

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Executive's ability to devote substantially all of his time to the affairs of
Company or otherwise conflict with the terms of this Agreement.

                  6. CONFIDENTIAL INFORMATION AND TRADE SECRETS.

                           6.1 Confidential Information and Trade Secrets.
         Executive acknowledges that he will have access to and that there will
         be disclosed to him during the course of this employment, information
         of a proprietary nature owned by Company, which is of a confidential
         nature and has great value to Company and which is a substantial basis
         and foundation upon which Company's business is predicated. Executive
         acknowledges that except for his employment and the duties assigned to
         him which he will be fulfilling under this Agreement, that he would not
         otherwise have access to the foregoing information. Executive agrees
         that any and all confidential information which may be obtained by him
         in the course of his employment will be held inviolate by him and that
         he will conceal the same from any and all other persons, including, but
         not limited to, competitors of Company, and that he will not impart any
         such confidential information acquired by him as an employee of Company
         to anyone whomsoever either during this employment or after his
         employment by Company has terminated, except to the extent (i) such
         disclosure is required by law, (ii) such information is otherwise made
         public by Company, or, for any other reason whatsoever, becomes public
         information, or otherwise generally available information from a source
         other than the Company (other than by Executive in violation of this
         Section 6), or (iii) such disclosure is made in the normal course of
         business and is consistent with Company's interests. Executive agrees
         that upon termination of his employment hereunder he will immediately
         surrender and turn over to Company all books, records, forms, data,
         electric logs, geological maps, scout cards, seismic tapes and all
         papers and writings relating to the business of Company and other
         information which reflects or reveals Company's confidential or trade
         secret information protected by this Section 6, and all other property
         belonging to Company, it being understood and agreed that the same is
         the sole property of Company and that Executive will not make any
         copies thereof; provided, however, the parties agree that Executive's
         personnel files and any books, records, forms, documents, contracts,
         agreements, correspondence, data, logs, seismic tapes and maps, which
         were Executive's property prior to the Effective Date, or which are
         acquired by Executive after the Effective Date with regard to his own
         personal investments and not with regard to his employment by Company,
         shall remain Executive's property for all purposes. For purposes of
         this Section 6, the term "Company" shall include Company as herein
         defined and any of its subsidiaries, affiliates or parent
         organizations.

                           6.2 Injunctive Relief. Executive specifically
         acknowledges and agrees that the remedy at law for any breach of the
         provisions of Sections 6.1 will be inadequate and that Company shall be
         entitled to temporary and permanent injunctive relief without the
         necessity of proving actual damage.

                           6.3 Reformation. In the event that the provisions of
         this Section 6 should ever be deemed to exceed the time or geographic
         limitations permitted by applicable law, then


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         such provision shall be deemed reformed to the maximum time or
         geographic limitations permitted by applicable law.

                  7. EXPENSES. Executive shall be reimbursed by Company for all
of the actual costs and expenses incurred by him in the performance of his
duties hereunder, including expenses for entertainment, travel and similar
items, consistent with policies with respect thereto adopted by the Board from
time to time. Company will reimburse Executive for all such costs and expenses
upon the presentation by Executive, from time to time, of an itemized account of
such expenditures.

                  8. VACATIONS. Executive shall be entitled to five (5) weeks
paid vacation per calendar year, with all five (5) weeks earned as of the
Effective Date of this Agreement.

                  9. TERMINATION. This Agreement will continue in effect for the
term set forth in Section 2, unless sooner terminated pursuant to this Section
9.

                           9.1 Termination by Company. Company will have the
         following rights to terminate this Agreement:

                                    9.1.1 Termination Without Cause; or
                  Resignation by Executive For Good Reason. This Agreement may
                  be terminated by Company without cause, at any time by the
                  service of written notice of termination to Executive
                  specifying an effective date of such termination. In the
                  event: (i) Executive is terminated hereunder by Company
                  without cause, or (ii) the Executive resigns from his
                  employment by Company for "Good Reason," as that term is
                  defined below in Section 9.2, thereby terminating this
                  Agreement, at any time prior to the expiration of the term of
                  this Agreement as set forth in Section 2 hereof ("Expiration
                  Date"), then, and in either such event, Company will pay to
                  Executive within thirty (30) days after the effective date of
                  such termination, or resignation for "Good Reason," a cash
                  severance payment in an amount equal to the full amount of the
                  compensation which would have otherwise been paid to Executive
                  pursuant to the terms of Section 3.1 of this Agreement through
                  the Expiration Date had his employment not been so terminated,
                  less the amount of the withholding obligation of Company with
                  respect to such severance payment. Such severance payment
                  shall be payable in equal monthly installments as provided in
                  Section 3.1 for the unexpired remainder of the term of his
                  employment under Section 2, i.e., until the Expiration Date,
                  and shall be paid regardless of whether Executive obtains
                  other employment.

                                    9.1.2 Termination for Cause. Company may, by
                  action of the Board, terminate this Agreement for cause if
                  Executive: (a) willfully misappropriates the property of
                  Company or commits any other act of dishonesty or breach of
                  trust resulting in or intended to result directly or
                  indirectly in gain to Executive at the expense of Company; (b)
                  engages in personal misconduct which materially injures
                  Company; (c) violates any law or regulation relating to the
                  business of Company

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                  which results in material injury to Company; or (d) subject to
                  the Executive's right to resign for Good Reason, as defined in
                  Section 9.2, below, fails to substantially perform his duties
                  hereunder in a manner consistent with prudent management
                  practices. In the event this Agreement is terminated for
                  cause, Company will have no obligation to provide any further
                  payments or benefits to Executive with respect to any period
                  after the effective date of such termination.

                           9.2 Termination of this Agreement by Executive for
         Good Reason or Without Good Reason. Executive may terminate this
         Agreement without Good Reason, as that term is defined below in this
         Section, or without cause at any time by the service of a written
         notice of termination on the Company specifying an effective date of
         such termination. In the event Executive so voluntarily terminates this
         Agreement, or resigns from his position of employment with the Company,
         without Good Reason or without cause, then, and in such event, all of
         the rights, benefits and entitlements of Executive under this
         Agreement, including without limitation, his right to receive salary
         payments, shall cease on the effective date of such voluntary
         resignation without "Good Reason" or without cause, except for any
         rights of Executive which have vested prior to the effective date of
         his said voluntary resignation without Good Reason or without cause.
         If, on the other hand, the Executive resigns for Good Reason, then such
         termination of this Agreement shall be treated the same hereunder as a
         termination of this Agreement without cause by the Company and, in such
         event, the Executive shall be entitled to receive payment of his salary
         through the remaining term of this Agreement, i.e., until the
         Expiration Date, in the same manner as is specifically provided above
         in Section 9.1.1 with regard to a termination of this Agreement by the
         Company without cause. For purposes of this Agreement, the term "Good
         Reason," with respect to a resignation by the Executive, shall have the
         following meaning:

                                    (i) A significant diminution by the Company
                  of his Role, as that term is defined below in this Subsection,
                  if the diminution in his Role is not reasonably related to an
                  adverse change in his performance of his assigned duties for
                  the Company or if the diminution in his Role is not reasonably
                  related to the hiring by the Company of an executive senior to
                  the Executive; provided that Good Reason shall not exist under
                  this clause in the case of termination for Cause, as that term
                  is defined in Section 9.1.2, above, or the diminution of his
                  Role by reason of the voluntary actions of the Executive, or
                  on account of the disability, retirement or death of the
                  Executive, as described and defined herein, or by reason of
                  the voluntary termination by Executive of his employment with
                  the Company other than for a Good Reason, as defined herein.
                  For purposes of this Agreement, the term "Role" shall mean the
                  Executive's authority or responsibilities with the Company on
                  the Effective Date as Chief Operating Officer; or any enhanced
                  Role (other than by way of an interim or otherwise expressly
                  temporary appointment) to which he had ascended during the
                  term of this Agreement after the Effective Date;

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                                    (ii) A reduction in the base salary and/or
                  bonuses paid to Executive to an amount such that the sum of
                  his base salary and bonuses as so reduced is less than the sum
                  of his base salary and bonuses as of the Effective Date,
                  excluding Executive's Signing Bonus set forth in Section 3.2
                  hereof, or a failure by Company, after twenty (20) days'
                  written notice thereof by Executive to the Company, to pay
                  Executive any installment owing to him of such salary or bonus
                  hereunder;

                                    (iii) The failure by Company to include
                  Executive in any employee benefit plans or provide Executive
                  with any material benefits which are commensurate to
                  Executive's role as Chief Operating Officer and which are
                  provided to the executive officers of Company who are senior
                  to Executive, or any action or inaction by Company which could
                  adversely affect Executive's continued participation in any
                  benefit plan, entitlements or other arrangements of the
                  Company, or Executive's ability to enjoy or realize upon any
                  material benefit under any such plan, entitlement or
                  arrangement; and/or

                                    (iv) Company's assigning Executive, without
                  his prior written consent, to perform his duties under the
                  Agreement at a location anywhere other than Oklahoma County,
                  State of Oklahoma, other than travel required for Executive to
                  perform his Role.

                           9.3 Incapacity or Disability of Executive. For
         purposes of this Agreement, Executive shall be deemed to be "disabled,"
         or have a "disability" or be "incapacitated," if Executive shall have
         an illness, injury or other physical or mental condition which results
         in the Executive's inability to perform substantially the duties he
         performed in his employment capacity for the Company under this
         Agreement to the same extent he was performing such duties immediately
         prior to the commencement of such condition and it is anticipated that
         he will thereafter be unable to render such duties in that manner for a
         period of time in excess of 120 days, as certified to in writing by one
         (1) licensed physician who is licensed to practice medicine in the
         State of Oklahoma. If Executive becomes "disabled," Company may
         terminate this Agreement and Executive will receive the amount of any
         earned but unpaid compensation which is to be paid to him pursuant to
         the terms and conditions of Section 3.1 above, for the period prior to
         the effective date of said termination by the Company and shall be
         entitled to receive such other benefits which might be payable to him
         by reason of such disability as are provided for by the applicable
         employee benefit plans, if any, of Company.

                           9.4 Death of Executive. If Executive dies during the
         term of this Agreement, this Agreement shall terminate without
         compensation to Executive's estate, except for the amount of any earned
         but unpaid compensation as provided by Section 3.1 for the period prior
         to the date of his death and for such other benefits which he has
         accrued through the date of his death under the applicable employee
         benefit plans, if any, of Company.

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                           9.5 Set-Off. Company shall be entitled to set off any
         amounts due from Executive to Company against any termination payments
         payable to Executive pursuant to this Agreement to the extent any
         amounts are currently due and payable from Executive at the time of
         payment of such termination payments.

                  10. HEADINGS. Section headings are including solely for
convenience and should not be used in the interpretation of this Agreement.

                  11. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality,
unenforceability shall not effect any other provision of this Agreement.

                  12. NOTICES. Any notices to be given hereunder by either party
to the other may be effected by personal delivery in writing or by mail,
registered or certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at the addresses appearing opposite
their signature, but each party may change its/his address by written notice in
accordance with this paragraph. Notices delivered personally shall be deemed
communicated as of actual receipt; mailed notices shall be deemed communicated
as of five (5) days after mailing.

                  13. WAIVER OF BREACH. The waiver by Executive or Company of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.

                  14. BINDING EFFECT. The respective rights and obligations of
Company and Executive under the Agreement shall inure to the benefit of and
shall be binding upon Company and the Executive and their respective heirs,
personal representatives, successors and assigns. This Agreement shall not be
assignable by Executive. As used herein, the term "successors and assigns" shall
include any corporation or corporations which acquire all or substantially all
of the assets and businesses of Company whether by purchase, merger,
consolidation or otherwise.

                  15. ENTIRE AGREEMENT. This Agreement, the Company Stock Option
Plan attached hereto as Exhibit "A" and the Change in Control Agreement attached
hereto as Exhibit "B" supersede any and all other agreements, either oral or in
writing, between the parties hereto with respect to the employment of Executive
by Company and such agreements contain all of the covenants and agreements
between the parties with respect to such employment in any manner whatsoever.

                  16. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma.

                  17. ATTORNEY'S FEES AND COSTS. If any action at law or in
equity including an action for declaratory relief, is brought to enforce or
interpret the provisions of this Agreement, the prevailing parties shall be
entitled to recover reasonable attorney fees and all costs



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and expenses, including but not limited to, costs to take depositions costs to
arbitrate a dispute, filing fees and any other costs associated with the dispute
from the other party, which fees and costs may be in addition to any other
relief which may be awarded.

                  18. CHANGE IN CONTROL AGREEMENT. On the Effective Date of this
Agreement, Executive and Company agree to execute a Change in Control Agreement
in substantially the same form as the document attached as Exhibit "B" to this
Agreement.

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.


COMPANY:                               CANAAN ENERGY CORPORATION
                                       119 N. Robinson, Suite 600
                                       Oklahoma City, OK  73102


                                       By:
                                          --------------------------------------
                                                          John Penton, President


EXECUTIVE:
                                       -----------------------------------------

                                       ------------------------------
                                       Address:

                                       ------------------------------

                                       ------------------------------



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                                   EXHIBIT "A"

                         FORM OF STOCK OPTION AGREEMENT





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                                   EXHIBIT "B"

                           CHANGE IN CONTROL AGREEMENT