BASIN EXPLORATION, INC.
                              EQUITY INCENTIVE PLAN
                           (as amended April 28, 1997)

                                    SECTION 1
                                  INTRODUCTION

          1.1 ESTABLISHMENT. Basin Exploration, Inc., a Delaware corporation
(hereinafter referred to, together with its Affiliated Corporations (as defined
in subsection 2.1(a)) as the "Company" except where the context otherwise
requires), hereby establishes the Basin Exploration, Inc. Equity Incentive Plan
(the "Plan") for certain key employees, non-employee directors and consultants
of the Company.

          1.2 PURPOSES. The purposes of the Plan are to provide participants
with added incentives to continue in the long-term service of the Company and to
create in such persons a more direct interest in the future success of the
operations of the Company by relating incentive compensation to increases in
stockholder value. With respect to key management employees, the Plan is
intended to help ensure that the income of these employees is more closely
aligned with the income of the Company's stockholders. The Plan is also designed
to attract key employees and to retain and motivate participants by providing an
opportunity for investment in the Company.


                                    SECTION 2
                                   DEFINITIONS

          2.1 DEFINITIONS. The following terms shall have the meanings set forth
below:

               (a) "Affiliated Corporation" means any corporation or other
entity (including but not limited to a partnership) which is affiliated with
Basin Exploration, Inc. through stock ownership or otherwise and is treated as a
common employer under the provisions of Sections 414(b) and (c) of the Internal
Revenue Code.

               (b) "Award" means a grant made under this Plan in the form of
Stock, Options, Restricted Stock, Performance Shares, or Performance Units.

               (c) "Board" means the Board of Directors of the Company.

               (d) "Effective Date" means the effective date of the Plan, 
March 9, 1992.

               (e) "Eligible Employees" means full-time key employees
(including, without limitation, officers and directors who are also employees)
of the Company or any Affiliated Corporation or any division thereof, upon whose
judgment, initiative and efforts the Company is, or will be, important to the
successful conduct of its business.



<PAGE>



               (f) "Fair Market Value" means the officially quoted closing price
of the Stock on the NASDAQ National Market System on a particular date. If there
are no Stock transactions on such date, the Fair Market Value shall be
determined as of the immediately preceding date on which there were Stock
transactions. If no such prices are reported on the NASDAQ National Market
System, then Fair Market Value shall mean the average of the high and low sale
prices for the Stock (or if no sales prices are reported, the average of the
high and low bid prices) as reported by the principal regional stock exchange,
or if not so reported, as reported by NASDAQ or a quotation system of general
circulation to brokers and dealers. If the Stock is not publicly traded, the
Fair Market Value of the Stock on any date shall be determined in good faith by
the Incentive Plan Committee after such consultation with outside legal,
accounting and other experts as the Incentive Plan Committee may deem advisable,
and the Committee shall maintain a written record of its method of determining
such value.

               (g) "Incentive Plan Committee" means a committee consisting of at
least two Non-Employee Directors who are empowered hereunder to take actions in
the administration of the Plan. The Incentive Plan Committee shall be so
constituted at all times as to permit the Plan to comply with Rule 16b-3 or any
successor rule promulgated under the Securities Exchange Act of 1934 (the "1934
Act"). Members of the Incentive Plan Committee shall be appointed from time to
time by the Board, shall serve at the pleasure of the Board, and may resign at
any time upon written notice to the Board.

               (h) "Incentive Stock Option" means any Option designated as such
and granted in accordance with the requirements of Section 422 of the Internal
Revenue Code.

               (i) "Internal Revenue Code" means the Internal Revenue Code of
1986, as it may be amended from time to time.

               (j) "Non-Employee Director" means any member of the Board who
meets the definition of Non-Employee Director under Rule 16b-3 of the 1934 Act.

               (k) "Non-Statutory Option" means any Option other than an
Incentive Stock Option.

               (l) "Option" means a right to purchase Stock at a stated price
for a specified period of time.

               (m) "Option Price" means the price at which shares of Stock
subject to an Option may be purchased, determined in accordance with subsection
7.2(b).

               (n) "Participant" means an Eligible Employee, Non-Employee
Director or consultant to the Company designated by the Incentive Plan Committee
from time to time during the term of the Plan to receive one or more Awards
under the Plan.





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<PAGE>

               (o) "Performance Cycle" means the period of time as specified by
the Incentive Plan Committee over which Performance Share or Performance Units
are to be earned.

               (p) "Performance Shares" means an Award made pursuant to Section
9 which entitles a Participant to receive Shares, their cash equivalent or a
combination thereof based on the achievement of performance targets during a
Performance Cycle.

               (q) "Performance Units" means an Award made pursuant to Section 9
which entitles a Participant to receive cash, Stock or a combination thereof
based on the achievement of performance targets during a Performance Cycle.

               (r) "Plan Year" means each 12-month period beginning April 1 and
ending the following March 31, except that for the first year of the Plan it
shall begin on the Effective Date and extend to March 31 of the following year.

               (s) "Restricted Stock" Means Stock granted under Section 8 that
is subject to restrictions imposed pursuant to said Section.

               (t) "Share" means a share of Stock.

               (u) "Stock" means the common stock, $.01 par value, of the
Company.

          2.2 GENDER AND NUMBER. Except when otherwise indicated by the context,
the masculine gender shall also include the feminine gender, and the definition
of any term herein in the singular shall also include the plural.


                                    SECTION 3
                               PLAN ADMINISTRATION

          The Plan shall be administered by the Board which may from time to
time delegate all or part of its authority under this Plan to the Incentive Plan
Committee. References herein to the Plan Administrator refer to the Board or, to
the extent the Board delegates its authority to the Incentive Plan Committee, to
the Incentive Plan Committee. In accordance with the provisions of the Plan, the
Plan Administrator shall, in its sole discretion and except as specifically set
forth at Section 7.1(b), select Participants to whom Awards will be granted, the
form of each Award, the amount of each Award and any other terms and conditions
of each Award as the Plan Administrator may deem necessary or desirable and
consistent with the terms of the Plan. The Plan Administrator shall determine
the form or forms of the agreements with Participants which shall evidence the
particular provisions, terms, conditions, rights and duties of the Company and
the Participants with respect to Awards granted pursuant to the Plan, which
provisions need not be identical except as may be provided herein. The Plan
Administrator may from time to time adopt such rules and regulations for
carrying out the purposes of the Plan as it may deem proper and in the best
interests of the Company. The Plan Administrator may correct 


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<PAGE>

any defect, supply any omission or reconcile any inconsistency in the Plan or in
any agreement entered into hereunder in the manner and to the extent it shall
deem expedient and it shall be the sole and final judge of such expediency. No
member of the Plan Administrator shall be liable for any action or determination
made in good faith, and all members of the Plan Administrator shall, in addition
to their rights as directors, be fully protected by the Company with respect to
any such action, determination or interpretation. The determination,
interpretations and other actions of the Plan Administrator pursuant to the
provisions of the Plan shall be binding and conclusive for all purposes and on
all persons.


                                    SECTION 4
                            STOCK SUBJECT TO THE PLAN

          4.1 NUMBER OF SHARES. Initially, 1,421,488 Shares are authorized for
issuance under the Plan in accordance with the provisions of the Plan and
subject to such restrictions or other provisions as the Plan Administrator may
from time to time deem necessary. This authorization shall be increased
automatically on each succeeding annual anniversary of July 1, 1996 (the
"Amendment Effective Date") by an amount equal to that number of Shares equal to
one-half of one percent of the Company's then issued and outstanding Shares. The
Shares may be divided among the various Plan components as the Plan
Administrator shall determine, except that (i) no more than 1,150,000 Shares
shall be cumulatively available for the grant of Incentive Stock Options under
the Plan, (ii) no more than 25,000 Shares or the equivalent thereof shall be
cumulatively available for discretionary grants to Non-Employee Directors of
Non-Statutory Options under Section 7.1(a), Restricted Stock under Section 8,
and Performance Shares or Performance Units under Section 9, and (iii) no more
than 150,000 Shares shall be cumulatively available for non-discretionary grants
to Non-Employee Directors of Non-Statutory Options under Section 7.1(b). Any
portion of the Shares added on each succeeding anniversary of the Amendment
Effective Date which are unused during the Plan Year beginning on such
anniversary date shall be carried forward and be available for grant and
issuance in subsequent Plan Years, while up to 100% of the Shares to be added in
the next succeeding Plan Year (calculated on the basis of the current Plan
Year's allocation) may be borrowed for use in the current Plan Year. Shares
which may be issued upon the exercise of Options shall be applied to reduce the
maximum number of Shares remaining available for use under the Plan. The Company
shall at all times during the term of the Plan and while any Options are
outstanding retain as authorized and unissued Stock, or as treasury Stock, at
least the number of Shares from time to time required under the provisions of
the Plan, or otherwise assure itself of its ability to perform its obligations
hereunder.

          4.2 UNUSED AND FORFEITED STOCK. Any Shares that are subject to an
Award under this Plan which are not used because the terms and conditions of the
Award are not met, including any Shares that are subject to an Option which
expires or is terminated for any reason, any Shares which are used for full or
partial payment of the purchase price of Shares with respect to which an Option
is exercised and any Shares retained by the Company pursuant to Section 15.2
shall automatically become available for use under the Plan. Notwithstanding the


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<PAGE>

foregoing, any Shares used for full or partial payment of the purchase price of
the Shares with respect to which an Option is exercised and any Shares retained
by the Company pursuant to Section 15.2 that were originally Incentive Stock
Option Shares must still be considered as having been granted for purposes of
determining whether the 1,150,000 Share limitation on Incentive Stock Option
grants provided for in Section 4.1 has been reached.

          4.3 ADJUSTMENTS FOR STOCK SPLIT, STOCK DIVIDEND, ETC. If the Company
shall at any time increase or decrease the number of its outstanding Shares of
Stock or change in any way the rights and privileges of such Shares by means of
the payment of a stock dividend or any other distribution upon such Shares
payable in Stock, or through a stock split, subdivision, consolidation,
combination, reclassification or recapitalization involving the Stock, then in
relation to the Stock that is affected by one or more of the above events, the
numbers, rights and privileges of the following shall be increased, decreased or
changed in like manner as if they had been issued and outstanding, fully paid
and nonassessable at the time of such occurrence: (i) the shares of Stock as to
which Awards may be granted under the Plan; and (ii) the Shares of Stock then
included in each outstanding Option, Performance Share or Performance Unit
granted hereunder.

          4.4 DIVIDEND PAYABLE IN STOCK OF ANOTHER CORPORATION, ETC. If the
Company shall at any time pay or make any dividend or other distribution upon
the Stock payable in securities of another corporation or other property (except
money or Stock), a proportionate part of such securities or other property shall
be set aside and delivered to any Participant then holding an Award for the
particular type of Stock for which the dividend or other distribution was made,
upon exercise thereof in the case of Options, and the vesting thereof in the
case of other Awards. Prior to the time that any such securities or other
property are delivered to a Participant in accordance with the foregoing, the
Company shall be the owner of such securities or other property and shall have
the right to vote the securities, receive any dividends payable on such
securities, and in all other respects shall be treated as the owner. If
securities or other property which have been set aside by the Company in
accordance with this Section are not delivered to a Participant because an Award
is not exercised or otherwise vested, then such securities or other property
shall remain the property of the Company and shall be dealt with by the Company
as it shall determine in its sole discretion.

          4.5 OTHER CHANGES IN STOCK. In the event there shall be any change,
other than as specified in Sections 4.3 and 4.4, in the number or kind of
outstanding shares of Stock or of any stock or other securities into which the
Stock shall be changed or for which it shall have been exchanged, and if the
Plan Administrator shall in its discretion determine that such change equitably
requires an adjustment in the number or kind of Shares subject to outstanding
Awards or which have been reserved for issuance pursuant to the Plan but are not
then subject to an Award, then such adjustments shall be made by the Plan
Administrator and shall be effective for all purposes of the Plan and on each
outstanding Award that involves the particular type of stock for which a change
was effected.



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<PAGE>

          4.6 RIGHTS TO SUBSCRIBE. If the Company shall at any time grant to the
holders of its Stock rights to subscribe pro rata for additional shares thereof
or for any other securities of the Company or of any other corporation, there
shall be reserved with respect to the Shares then subject to an Award held by
any Participant of the particular class of Stock involved, the Stock or other
securities which the Participant would have been entitled to subscribe for if
immediately prior to such grant the Participant had exercised his entire Option,
or otherwise vested in his entire Award. If, upon exercise of any such Option or
the vesting of any other Award, the Participant subscribes for the additional
Stock or other securities, the Participant shall pay to the Company the price
that is payable by the Participant for such Stock or other securities.

          4.7 GENERAL ADJUSTMENT RULES. If any adjustment or substitution
provided for in this Section 4 shall result in the creation of a fractional
Share under any Award, the Company shall, in lieu of selling or otherwise
issuing such fractional Share, pay to the Participant a cash sum in an amount
equal to the product of such fraction multiplied by the Fair Market Value of a
Share on the date the fractional Share would otherwise have been issued. In the
case of any such substitution or adjustment affecting an Option, the total
Option Price for the shares of Stock then subject to an Option shall remain
unchanged but the Option Price per share under each such Option shall be
equitably adjusted by the Plan Administrator to reflect the greater or lesser
number of shares of Stock or other securities into which the Stock subject to
the Option may have been changed.

          4.8 DETERMINATION BY PLAN ADMINISTRATOR, ETC. Adjustments under this
Section 4 shall be made by the Plan Administrator, whose determinations with
regard thereto shall be final and binding upon all parties thereto.


                                    SECTION 5
                          REORGANIZATION OR LIQUIDATION

          In the event that the Company is merged or consolidated with another
corporation (other than a merger or consolidation in which the Company is the
continuing corporation and which does not result in any reclassification or
change of outstanding Shares), or if all or substantially all of the assets or
more than 50% of the outstanding voting stock of the Company is acquired by any
other corporation, business entity or person (other than a sale or conveyance in
which the Company continues as a holding company of an entity or entities that
conduct the business or businesses formerly conducted by the Company), or in
case of a reorganization (other than a reorganization under the United States
Bankruptcy Code) or liquidation of the Company, and if the provisions of Section
10 do not apply, the Plan Administrator, or the board of directors of any
corporation assuming the obligations of the Company, shall have the power and
discretion to prescribe the terms and conditions for the exercise of, or
modification of, any outstanding Awards granted hereunder. By way of
illustration, and not by way of limitation, the Plan Administrator may provide
for the complete or partial acceleration of the dates of exercise of the
Options, or may provide that such Options will be exchanged or converted into
options to acquire securities of the surviving or acquiring corporation, or may
provide for a payment or 


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<PAGE>

distribution in respect of outstanding Options (or the portion thereof that is
currently exercisable) in cancellation thereof. The Plan Administrator may
remove restrictions on Restricted Stock and may modify the performance
requirements for any other Awards. The Plan Administrator may provide that Stock
or other Awards granted hereunder must be exercised in connection with the
closing of such transaction, and that if not so exercised such Awards will
expire. Any such determinations by the Plan Administrator may be made generally
with respect to all Participants, or may be made on a case-by-case basis with
respect to particular Participants. The provisions of this Section 5 shall not
apply to any transaction undertaken for the purpose of reincorporating the
Company under the laws of another jurisdiction, if such transaction does not
materially affect the beneficial ownership of the Company's capital stock.


                                    SECTION 6
                                  PARTICIPATION

          Participants in the Plan shall be those Eligible Employees,
Non-Employee Directors or consultants who, in the judgment of the Plan
Administrator, are performing, or during the term of their incentive arrangement
will perform, important services in the management, operation and development of
the Company, and significantly contribute, or are expected to significantly
contribute, to the achievement of long-term corporate economic objectives, or
who are otherwise granted Awards pursuant to the automatic grant provisions of
Section 7.1(b). Participants may be granted from time to time one or more
Awards; provided, however, that except as to Options granted pursuant to Section
7.1(b), the grant of each such Award shall be separately approved by the Plan
Administrator, receipt of one such Award shall not result in automatic receipt
of any other Award, and written notice shall be given to such person, specifying
the terms, conditions, rights and duties related thereto; and further provided
that Incentive Stock Options shall not be granted to (i) consultants, (ii)
Non-Employee Directors or (iii) Eligible Employees of any partnership which is
included within the definition of an Affiliated Corporation but whose employees
are not permitted to receive Incentive Stock Options under the Internal Revenue
Code. Each Participant shall enter into an agreement with the Company, in such
form as the Plan Administrator shall determine and which is consistent with the
provisions of the Plan, specifying such terms, conditions, rights and duties.
Awards shall be deemed to be granted as of the date specified in the grant
resolution of the Plan Administrator, which date shall be the date of any
related agreement with the Participant. In the event of any inconsistency
between the provisions of the Plan and any such agreement entered into
hereunder, the provisions of the Plan shall govern.


                                    SECTION 7
                                  STOCK OPTIONS

          7.1 (a) DISCRETIONARY GRANT OF OPTIONS. Coincident with the following
designation for participation in the Plan, and notwithstanding the receipt of an
Award or Awards pursuant to Section 7.1(b), a Participant may be granted one or
more Options. Notwithstanding


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<PAGE>

any other provision of the Plan, Non-Employee Directors granted an award under
this Section 7.1(a) may only be awarded Non-Statutory Options. The Board must
approve each such Award and the interested Non-Employee Director must abstain
from voting on the Award. Eligible Employees may be awarded Non-Statutory
Options, Incentive Stock Options, or both in the Plan Administrator's sole
discretion. The Plan Administrator may grant both an Incentive Stock Option and
a Non-Statutory Option to the same Participant at the same time or at different
times. Incentive Stock Options and Non-Statutory Options, whether granted at the
same or different times, shall be deemed to have been awarded in separate
grants, shall be clearly identified, and in no event shall the exercise of one
Option affect the right to exercise any other Option or affect the number of
Shares for which any other Option may be exercised.

               (b) NON-DISCRETIONARY GRANT OF OPTIONS. Upon the initial election
or appointment of a Non-Employee Director to the Company's Board, the
Non-Employee Director shall automatically be granted an Option to purchase
10,000 Shares (subject to adjustment pursuant to Section 10 hereof) effective as
of the date such person is elected or appointed to the Board, which shall vest
in equal installments on the first, second and third anniversaries of election
or appointment to the Board. In addition, each Non-Employee Director shall
automatically be granted an Option to purchase 2,500 Shares (subject to
adjustment pursuant to Section 4.3 hereof) effective as of each anniversary date
of such Non-Employee Directors' election to the Board, which Option shall vest
one year from the date of grant. The purchase price per Share for the Shares
subject to any Option granted under this Section 7.1(b) shall be 100% of the
Fair Market Value of a Share of Stock on the date on which the Option is
granted. Subject to the provisions of Section 7.2(d)(i), each Option granted
under this Section 7.1(b) shall expire ten years after the date on which it was
granted.

          7.2 OPTION AGREEMENTS. Each Option granted under the Plan shall be
evidenced by a written stock option agreement which shall be entered into by the
Company and the Participant to whom the Option is granted (the "Option Holder"),
and which shall contain the following terms and conditions, as well as such
other terms and conditions not inconsistent therewith, as the Plan Administrator
may consider appropriate in each case.

               (a) NUMBER OF SHARES. Each stock option agreement shall state
that it covers a specified number of Shares, as determined by the Plan
Administrator. Notwithstanding any other provision of the Plan, the aggregate
Fair Market Value of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by an Option Holder in any calendar year,
under the Plan or otherwise, shall not exceed $100,000. For this purpose, the
Fair Market Value of the Shares shall be determined as of the time an Option is
granted.

               (b) PRICE. The price at which each Share covered by an Option may
be purchased shall be determined in each case by the Plan Administrator and set
forth in the stock option agreement, but in no event shall the Option Price for
each Share covered by an Incentive Stock Option be less than the Fair Market
Value of the Stock on the date the Option is granted; provided that the Option
Price for each Share covered by a Non-Statutory Option may be granted at any
price less than Fair Market Value, in the sole discretion of the Plan


                                      -8-
<PAGE>

Administrator. In addition, the Option Price for each Share covered by an
Incentive Stock Option granted to an Eligible Employee who then owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any parent or subsidiary corporation of the Company must
be at least 110% of the Fair Market Value of the Stock subject to the Incentive
Stock Option on the date the Option is granted.

               (c) DURATION OF OPTIONS. Each stock option agreement shall state
the period of time, determined by the Plan Administrator, within which the
Option may be exercised by the Option Holder (the "Option Period"). The Option
Period must expire, in all cases, not more than ten years from the date an
Option is granted; provided, however, that the Option Period of an Incentive
Stock Option granted to an Eligible Employee who then owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary corporation of the Company must expire not
more than five years from the date such an Option is granted. Each stock option
agreement shall also state the periods of time, if any, as determined by the
Plan Administrator, when incremental portions of each Option shall vest. Except
as provided in Sections 5 and 10, no portion of any Option shall vest before six
months after the date of grant of the Option. If any Option is not exercised
during its Option Period, it shall be deemed to have been forfeited and of no
further force or effect.

               (d) TERMINATION OF EMPLOYMENT, DEATH, DISABILITY, ETC. Except as
otherwise determined by the Plan Administrator, each stock option agreement
shall provide as follows with respect to the exercise of the Option upon
termination of the directorship, employment, consultancy or the death of the
Option Holder:

                    (i) TERMINATION OF DIRECTORSHIP OF NON-EMPLOYEE DIRECTORS.

                         (A) If a Non-Employee Director's term as a director of
the Company shall terminate for any reason other than death or disability, any
Options held by the Option Holder, to the extent exercisable under the
applicable stock option agreement(s), shall remain exercisable after termination
of his director status for a period of three months, but in no event beyond the
applicable Option Period.

                         (B) If a Non-Employee Director's term as a director of
the Company terminates because the Participant dies or is disabled within the
meaning of Section 22(e)(3) of the Code while, or within three months after,
serving as a director, any Options then held by the Participant, to the extent
then exercisable under the applicable stock option agreement(s), shall remain
exercisable after the termination of his directorship for a period of twelve
months, but in no event beyond the applicable Option Period.

                    (ii) TERMINATION OF EMPLOYMENT OR CONSULTANCY.

                         (A) If the employment or consultancy of the Option
Holder is terminated within the Option Period for cause, as determined by the
Company, the Option shall thereafter be void for all purposes. As used in this
subsection 7.2(d), "cause" shall 


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<PAGE>

mean a gross violation, as determined by the Company, of the Company's
established policies and procedures. The effect of this subsection 7.2(d)(ii)
shall be limited to determining the consequences of a termination, and nothing
in this subsection 7.2(d)(ii) shall restrict or otherwise interfere with the
Company's discretion with respect to the termination of any employee or
consultant.

                         (B) If the Option Holder terminates his employment or
consultancy with the Company in a manner determined by the Board, in its sole
discretion, to constitute retirement (which determination shall be communicated
to the Option Holder within 10 days of such termination), the Option may be
exercised by the Option Holder, or in the case of death by the persons specified
in subsection (C) of this subsection 7.2(d)(ii), within three months following
his or her retirement if the Option is an Incentive Stock Option or within
twelve months following his or her retirement if the Option is a Non-Statutory
Stock Option (provided in each case that such exercise must occur within the
Option Period), but not thereafter. In any such case, the Option may be
exercised only as to the Shares as to which the Option had become exercisable on
or before the date of the Option Holder's termination of employment or
consultancy.

                         (C) If the Option Holder dies, or if the Option Holder
becomes disabled (within the meaning of Section 22(e) of the Internal Revenue
Code), during the Option Period while still employed or consulting, or within
the three-month period referred to in (D) below, or within the three or
twelve-month period referred to in (B) above, the Option may be exercised by
those entitled to do so under the Option Holder's will or by the laws of descent
and distribution within twelve months following the Option Holder's death or
disability (provided in each case that such exercise must occur within the
Option Period), but not thereafter. In any such case, the Option may be
exercised only as to the Shares as to which the Option had become exercisable on
or before the date of the Option Holder's death or disability.

                         (D) If the employment or consultancy of the Option
Holder by the Company is terminated (which for this purpose means that the
Option Holder is no longer employed by the Company or by an Affiliated
Corporation) within the Option Period for any reason other than cause,
retirement as provided in (B) above, disability or the Option Holder's death,
the Option may be exercised by the Option Holder within three months following
the date of such termination (provided that such exercise must occur within the
Option Period), but not thereafter. In any such case, the Option may be
exercised only as to the Shares as to which the Option had become exercisable on
or before the date of termination of employment or consultancy.

               (e) TRANSFERABILITY. Each stock option agreement shall provide
that the Option granted therein is not transferable by the Option Holder except
by will or pursuant to the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code,
Title I of the Employee Retirement Income Security Act ("ERISA"), and that such
Option is exercisable during the Option Holder's lifetime only by him or her, or
in the event of disability or incapacity, by his or her guardian or legal
representative.



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<PAGE>

               (f) EXERCISE, PAYMENTS, ETC.

                    (i) Each stock option agreement shall provide that the
method for exercising the Option granted therein shall be by delivery to the
Corporate Secretary of the Company of written notice specifying the number of
Shares with respect to which such Option is exercised (which must be in an
amount evenly divisible by 100) and payment of the Option Price. Such notice
shall be in a form satisfactory to the Plan Administrator and shall specify the
particular Option (or portion thereof) which is being exercised and the number
of Shares with respect to which the Option is being exercised. The exercise of
the Option shall be deemed effective upon receipt of such notice by the
Corporate Secretary and payment to the Company. The purchase of such Stock shall
take place at the principal offices of the Company upon delivery of such notice,
at which time the purchase price of the Stock shall be paid in full by any of
the methods or any combination of the methods set forth in (ii) below. A
properly executed certificate or certificates representing the Stock shall be
issued by the Company and delivered to the Option Holder. If certificates
representing Stock are used to pay all or part of the Option Price, separate
certificates for the same number of shares of Stock shall be issued by the
Company and delivered to the Option Holder representing each certificate used to
pay the Option Price, and an additional certificate shall be issued by the
Company and delivered to the Option Holder representing the additional shares,
in excess of the Option Price, to which the Option Holder is entitled as a
result of the exercise of the Option.

                    (ii) The exercise price shall be paid by any of the
following methods or any combination of the following methods:

                         (A) in cash;

                         (B) by cashier's check payable to the order of the
Company;

                         (C) by delivery to the Company of certificates
representing the number of Shares then owned by the Option Holder, the Fair
Market Value of which equals the purchase price of the Stock purchased pursuant
to the Option, properly endorsed for transfer to the Company; provided however,
that Shares used for this purpose must have been held by the Option Holder for
such minimum period of time as may be established from time to time by the Plan
Administrator; for purposes of this Plan, the Fair Market Value of any Shares
delivered in payment of the purchase price upon exercise of the Option shall be
the Fair Market Value as of the exercise date; the exercise date shall be the
day the delivery of the certificates for the Stock used as payment of the Option
Price; or

                         (D) by delivery to the Company of a properly executed
notice of exercise together with irrevocable instructions to a broker to deliver
to the Company promptly the amount of the proceeds of the sale of all or a
portion of the Stock or of a loan from the broker to the Option Holder necessary
to pay the exercise price.



                                      -11-
<PAGE>

                    (iii) In the discretion of the Plan Administrator, the
Company may guaranty a third-party loan obtained by a Participant to pay part or
all of the Option Price of the Shares provided that such loan or the Company's
guaranty is secured by the Shares.

               (g) DATE OF GRANT. Except as provided in Section 7.1(b), an
option shall be considered as having been granted on the date specified in the
grant resolution of the Plan Administrator.

               (h) WITHHOLDING.

                         (A) NON-STATUTORY OPTIONS. Each stock option agreement
covering Non-Statutory Options shall provide that, upon exercise of the Option,
the Option Holder shall make appropriate arrangements with the Company to
provide for the amount of additional withholding required by applicable federal
and state income tax laws, including payment of such taxes through delivery of
Stock or by withholding Stock to be issued under the Option, as provided in
Section 15.

                         (B) INCENTIVE OPTIONS. In the event that a Participant
makes a disposition (as defined in Section 424(c) of the Internal Revenue Code)
of any Stock acquired pursuant to the exercise of an Incentive Stock Option
prior to the expiration of two years from the date on which the Incentive Stock
Option was granted or prior to the expiration of one year from the date on which
the Option was exercised, the Participant shall send written notice to the
Company at its principal office in Denver, Colorado (Attention: Corporate
Secretary) of the date of such disposition, the number of shares disposed of,
the amount of proceeds received from such disposition, and any other information
relating to such disposition as the Company may reasonably request. The
Participant shall, in the event of such a disposition, make appropriate
arrangements with the Company to provide for the amount of additional
withholding, if any, required by applicable federal and state income tax laws.

               (i) ADJUSTMENT OF OPTIONS. Subject to the limitations contained
in Sections 7 and 14, the Plan Administrator may make any adjustment in the
Option Price, the number of shares subject to, or the terms of, an outstanding
Option and a subsequent granting of an Option by amendment or by substitution of
an outstanding Option. Such amendment, substitution, or re-grant may result in
terms and conditions (including Option Price, number of shares covered, vesting
schedule or exercise period) that differ from the terms and conditions of the
original Option. The Plan Administrator may not, however, adversely affect the
rights of any Participant to previously granted Options without the consent of
such Participant. If such action is affected by amendment, the effective date of
such amendment shall be the date of the original grant.

          7.3 STOCKHOLDER PRIVILEGES. No Option Holder shall have any rights as
a stockholder with respect to any Shares covered by an Option until the Option
Holder becomes the holder of record of such Stock, and no adjustments shall be
made for dividends or other 


                                      -12-
<PAGE>

distributions or other rights as to which there is a record date preceding the
date such Option Holder becomes the holder of record of such Stock, except as
provided in Section 4.


                                    SECTION 8
                             RESTRICTED STOCK AWARDS

          8.1 AWARDS GRANTED BY PLAN ADMINISTRATOR. Coincident with or following
designation for participation in the Plan, a Participant may be granted one or
more Restricted Stock Awards consisting of Shares. The number of Shares granted
as a Restricted Stock Award shall be determined by the Plan Administrator.

          8.2 RESTRICTIONS. A Participant's right to retain a Restricted Stock
Award granted to him under Section 8.1 shall be subject to such restrictions,
including but not limited to his continuous employment by the Company for a
restriction period specified by the Plan Administrator, or the attainment of
specified performance goals and objectives, as may be established by the Plan
Administrator with respect to such award. The Plan Administrator may in its sole
discretion require different periods of employment or different performance
goals and objectives with respect to different Participants, to different
Restricted Stock Awards or to separate, designated portions of the Shares
constituting a Restricted Stock Award.

          8.3 PRIVILEGES OF A STOCKHOLDER, TRANSFERABILITY. A Participant shall
have all voting, dividend, liquidation and other rights with respect to Stock in
accordance with its terms received by him as a Restricted Stock Award under this
Section 8 upon his becoming the holder of record of such Stock; provided,
however, that the Participant's right to sell, encumber or otherwise transfer
such Stock shall be subject to the limitations of Section 11.2 hereof.

          8.4 ENFORCEMENT OF RESTRICTIONS. The Plan Administrator may in its
sole discretion require one or more of the following methods of enforcing the
restrictions referred to in Section 8.2 and 8.3:

               (a) Placing a legend on the stock certificates referring to the
restrictions;

               (b) Requiring the Participant to keep the stock certificates,
duly endorsed, in the custody of the Company while the restrictions remain in
effect; or

               (c) Requiring that the stock certificates, duly endorsed, be held
in the custody of a third party while the restrictions remain in effect.

          8.5 TERMINATION OF EMPLOYMENT, DEATH, DISABILITY, ETC. In the event of
the death or disability (within the meaning of Section 22(e) of the Internal
Revenue Code) of a Participant, or the retirement of a Participant as provided
in Section 7.2(d)(ii)(B), all employment period and other restrictions
applicable to Restricted Stock Awards then held by 


                                      -13-
<PAGE>

him shall lapse, and such awards shall become fully nonforfeitable. Subject to
Sections 5 and 10, in the event of a Participant's termination of services for
any other reason, any Restricted Stock Awards as to which the employment period
or other restrictions have not been satisfied shall be forfeited.

                                    SECTION 9
                    PERFORMANCE SHARES AND PERFORMANCE UNITS

          9.1 AWARDS GRANTED BY PLAN ADMINISTRATOR. Coincident with or following
designation for participation in the Plan, a Participant may be granted
Performance Shares or Performance Units.

          9.2 AMOUNT OF AWARD. The Plan Administrator shall establish a maximum
amount of a Participant's Award, which amount shall be denominated in Shares in
the case of Performance Shares or in dollars in the case of Performance Units.

          9.3 COMMUNICATION OF AWARD. Written notice of the maximum amount of a
Participant's Award and the Performance Cycle determined by the Plan
Administrator shall be given to a Participant as soon as practicable after
approval of the Award by the Plan Administrator.

          9.4 AMOUNT OF AWARD PAYABLE. The Plan Administrator shall establish
maximum and minimum performance targets to be achieved during the applicable
Performance Cycle. Performance targets established by the Plan Administrator
shall relate to corporate, group, unit or individual performance and may be
established in terms of earnings, growth in earnings, ratios of earnings to
equity or assets, or such other measures or standards determined by the Plan
Administrator. Multiple performance targets may be used and the components of
multiple performance targets may be given the same or different weighting in
determining the amount of an Award earned, and may relate to absolute
performance or relative performance measured against other groups, units,
individuals or entities. Achievement of the maximum performance target shall
entitle the Participant to payment (subject to Section 9.6) at the full or
maximum amount specified with respect to the Award; provided, however, that
notwithstanding any other provisions of this Plan, in the case of an Award of
Performance Shares the Plan Administrator in its discretion may establish an
upper limit on the amount payable (whether in cash or Stock) as a result of the
achievement of the maximum performance target. The Plan Administrator may also
establish that a portion of a full or maximum amount of a Participant's Award
will be paid (subject to Section 9.6) for performance which exceeds the minimum
performance target but falls below the maximum performance target applicable to
such Award.

          9.5 ADJUSTMENTS. At any time prior to payment of a Performance Share
or Performance Unit Award, the Plan Administrator may adjust previously
established performance targets or other terms and conditions to reflect events
such as changes in laws, regulations, or accounting practice, or mergers,
acquisitions or divestitures.



                                      -14-
<PAGE>

          9.6 PAYMENTS OF AWARDS. Following the conclusion of each Performance
Cycle, the Plan Administrator shall determine the extent to which performance
targets have been attained, and the satisfaction of any other terms and
conditions with respect to an Award relating to such Performance Cycle. The Plan
Administrator shall determine what, if any, payment is due with respect to an
Award and whether such payment shall be made in cash, Stock or some combination
thereof. Payment shall be made in a lump sum or installments, as determined by
the Plan Administrator, commencing as promptly as practicable following the end
of the applicable Performance Cycle, subject to such terms and conditions and in
such form as may be prescribed by the Plan Administrator.

          9.7 TERMINATION OF EMPLOYMENT, DIRECTORSHIP OR CONSULTANCY. If a
Participant ceases to be an Eligible Employee, Non-Employee Director, or
consultant before the end of a Performance Cycle by reason of his death,
permanent disability or retirement as provided in Section 7.2(d)(ii)(B), the
Performance Cycle for such Participant for the purpose of determining the amount
of the Award payable shall end at the end of the calendar quarter immediately
preceding the date on which such Participant ceased to be an Eligible Employee,
Non-Employee Director or consultant. The amount of an Award payable to a
Participant to whom the preceding sentence is applicable shall be paid at the
end of the Performance Cycle and shall be that fraction of the Award computed
pursuant to the preceding sentence the numerator of which is the number of
calendar quarters during the Performance Cycle during all of which said
Participant was an Eligible Employee, Non-Employee Director or consultant and
the denominator of which is the number of full calendar quarters in the
Performance Cycle. Upon any other termination of services of a Participant
during a Performance Cycle, participation in the Plan shall cease and all
outstanding Awards of Performance Shares or Performance Units to such
Participant shall be canceled.


                                  SECTION 10
                                CHANGE IN CONTROL

          10.1 OPTIONS, RESTRICTED STOCK. In the event of a change in control of
the Company as defined in Section 10.3, then the Plan Administrator may, in its
sole discretion, without obtaining stockholder approval, to the extent permitted
in Section 14, take any or all of the following actions: (a) accelerate the
exercise dates of any outstanding Options or make all such Options fully vested
and exercisable; (b) grant a cash bonus award to any Option Holder in an amount
necessary to pay the Option Price of all or any portion of the Options then held
by such Option Holder; (c) pay cash to any or all Option Holders in exchange for
the cancellation of their outstanding Options in an amount equal to the
different between the Option Price of such Options and the greater of the tender
offer price for the underlying Stock or the Fair Market Value of the Stock on
the date of the cancellation of the Options; (d) make any other adjustments or
amendments to the outstanding Options and (e) eliminate all restrictions with
respect to Restricted Stock and deliver Shares free of restrictive legends to
any Participant.



                                      -15-
<PAGE>

          10.2 PERFORMANCE SHARES AND PERFORMANCE UNITS. Under the circumstances
described in Section 10.1, the Plan Administrator may, in its sole discretion,
and without obtaining stockholder approval, to the extent permitted in Section
14, provide for payment of outstanding Performance Shares and Performance Units
at the maximum award level or any percentage thereof.

          10.3 DEFINITION. For purposes of the Plan, a "change in control" shall
be deemed to have occurred if (a) any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the 1934 Act), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
Mr. Michael Smith is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, of more than 33-1/3 percent of the
then outstanding voting stock of the Company; or (b) at any time during any
period of three consecutive years (not including any period prior to the
Effective Date), individuals who at the beginning of such period constitute the
Board (and any new director whose election by the Board or whose nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority thereof;
or (c) the stockholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least 80% of
the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the stockholders approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets.


                                   SECTION 11
                        RIGHTS OF EMPLOYEES; PARTICIPANTS

          11.1 EMPLOYMENT; TENURE. Nothing contained in the Plan or in any Award
granted under the Plan shall confer upon any Participant any right with respect
to the continuation of his or her employment or consultancy by the Company or
tenure as a Non-Employee Director of the Company, or interfere in any way with
the right of the Company, subject to the terms of any separate agreement to the
contrary, at any time to terminate such employment or consultancy or to increase
or decrease the compensation of the Participant from the rate in existence at
the time of the grant of an Award. Whether an authorized leave of absence, or
absence in military or government service, shall constitute a termination of
services shall be determined by the Plan Administrator at the time. Nothing in
this Plan shall interfere in any way with the right of the stockholders of the
Company to remove a Participant Non-Employee Director from the Board pursuant
to the Delaware General Corporation Law and the Company's Certificate of
Incorporation and Bylaws.



                                      -16-
<PAGE>

          11.2 NONTRANSFERABILITY. No right or interest of any Participant in an
Award granted pursuant to the Plan shall be assignable or transferable during
the lifetime of the Participant except pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code, Title I of ERISA,
either voluntarily or involuntarily, or be subjected to any lien, directly or
indirectly, by operation of law, or otherwise, including execution, levy,
garnishment, attachment, pledge or bankruptcy. In the event or a Participant's
death, a Participant's rights and interests in Options shall, to the extent
provided in Section 7, be transferable by testamentary will or the laws of
descent and distribution, and payment of any amounts due under the Plan shall be
made to, and exercise of any Options may be made by, the Participant's legal
representatives, heirs or legatees. If in the opinion of the Plan Administrator
a person entitled to payments or to exercise rights with respect to the Plan is
disabled from caring for his affairs because of mental condition, physical
condition or age, payment due such person may be made to, and such rights shall
be exercised by, such person's guardian, conservator or other legal personal
representative upon furnishing the Plan Administrator with evidence satisfactory
to the Plan Administrator of such status.


                                   SECTION 12
                              GENERAL RESTRICTIONS

          12.1 INVESTMENT REPRESENTATIONS. The Company may require any person to
whom an Option or other Award is granted, as a condition of exercising such
Option or receiving Stock under the Award, to give written assurances in
substance and form satisfactory to the Company and its counsel to the effect
that such person is acquiring the Stock subject to the Option or the Award for
his own account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
securities laws. Legends evidencing such restrictions may be placed on the
certificates evidencing the Stock.

          12.2 COMPLIANCE WITH SECURITIES LAWS. Each Award shall be subject to
the requirement that, if at any time counsel to the Company shall determine that
the listing, registration or qualification of the Shares subject to such Award
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, is necessary as a condition
of, or in connection with, the issuance or purchase of Shares thereunder, such
Award may not be accepted or exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained on conditions acceptable to the Plan Administrator. Nothing herein
shall be deemed to require the Company to apply for or to obtain such listing,
registration or qualification.

          12.3 STOCK RESTRICTION AGREEMENT. The Plan Administrator may provide
that shares of Stock issuable upon the exercise of an Option shall, under
certain conditions, be subject to restrictions whereby the Company has a right
of first refusal with respect to such shares or a right or obligation to
repurchase all or a portion of such shares, which restrictions may survive a
Participant's term of service with the Company. The acceleration of time or
times 


                                      -17-
<PAGE>

at which an Option becomes exercisable may be conditioned upon the Participant's
agreement to such restrictions.


                                   SECTION 13
                             OTHER EMPLOYEE BENEFITS

          The amount of any compensation deemed to be received by a Participant
as a result of the exercise of an Option or the grant or vesting of any other
Award shall not constitute "earnings" with respect to which any other employee
benefits of such participant are determined, including without limitation
benefits under any pension, profit sharing, life insurance or salary
continuation plan. SECTION 14 PLAN AMENDMENT, MODIFICATION AND TERMINATION

          The Board may at any time terminate, and from time-to-time may amend
or modify, the Plan provided, however, that no amendment or modification may
become effective without approval of the amendment or modification by the
stockholders if stockholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements, or if the Company, on the
advice of counsel, determines that stockholder approval is otherwise necessary
or desirable.

          No amendment, modification or termination of the Plan shall in any
manner adversely affect any Awards theretofore granted under the Plan, without
the consent of the Participant holding such Awards.


                                   SECTION 15
                                   WITHHOLDING

          15.1 WITHHOLDING REQUIREMENT. The Company's obligations to deliver
Shares upon the exercise of an Option, or upon the vesting of any other Award,
shall be subject to the Participant's satisfaction of all applicable federal,
state and local income and other tax withholding requirements.

          15.2 WITHHOLDING WITH STOCK. At the time the Plan Administrator grants
an Award, it may, in its sole discretion, grant the Participant an election to
pay all such amounts of tax withholding, or any part thereof, by electing to
transfer to the Company, or to have the Company withhold from Shares otherwise
issuable to the Participant, Shares having a value equal to the amount required
to be withheld or such lesser amount as may be elected by the Participant. All
elections shall be subject to the approval or disapproval of the Plan
Administrator. The value of Shares to be withheld shall be based on the Fair
Market Value of 


                                      -18-
<PAGE>

the Stock on the date that the amount of tax to be withheld is
to be determined (the "Tax Date"). Any such elections by Participants to have
Shares withheld for this purpose will be subject to the following restrictions:

               (a) All elections must be made prior to the Tax Date.

               (b) All elections shall be irrevocable.

               (c) If the Participant is an officer or director of the Company
within the meaning of Section 16 of the 1934 Act ("Section 16"), the Participant
must satisfy the requirements of such Section 16 and any applicable rules
thereunder with respect to the use of Stock to satisfy such tax withholding
obligation.


                                   SECTION 16
                             BROKERAGE ARRANGEMENTS

          The Plan Administrator, in its discretion, may enter into arrangements
with one or more banks, brokers or other financial institutions to facilitate
the disposition of shares acquired upon exercise of Stock Options, including,
without limitation, arrangements for the simultaneous exercise of Stock Options
and sale of the Shares acquired upon such exercise.

                                   SECTION 17
                           NONEXCLUSIVITY OF THE PLAN

          Neither the adoption of the Plan by the Board nor the submission of
the Plan to stockholders of the Company for approval shall be construed as
creating any limitations on the power or authority of the Board to adopt such
other or additional incentive or other compensation arrangements of whatever
nature as the Board may deem necessary or desirable or preclude or limit the
continuation of any other plan, practice or arrangement for the payment of
compensation or fringe benefits to employees generally, or to any class or group
of employees, which the Company or any Affiliated Corporation now has lawfully
put into effect, including, without limitation, any retirement, pension, savings
and stock purchase plan, insurance, death and disability benefits and executive
short-term incentive plans.


                                   SECTION 18
                              REQUIREMENTS OF LAW

          18.1 REQUIREMENTS OF LAW. The issuance of stock and the payment of
cash pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.



                                      -19-
<PAGE>

          18.2 FEDERAL SECURITIES LAW REQUIREMENTS. If a Participant is an
officer or director of the Company within the meaning of Section 16 of the 1934
Act, Awards granted hereunder shall be subject to all conditions required under
Rule 16b-3, or any successor rule promulgated under the 1934 Act, to qualify the
Award for any exception from the provisions of Section 16(b) of the 1934 Act
available under that Rule. Such conditions are hereby incorporated herein by
reference and shall be set forth in the agreement with the Participant which
describes the Award.

          18.3 GOVERNING LAW. The Plan and all agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Delaware.


                                   SECTION 19
                              DURATION OF THE PLAN

          The Plan shall terminate at such time as may be determined by the
Board of Directors, and no Award shall be granted after such termination. If not
sooner terminated under the preceding sentence, the Plan shall fully cease and
expire at midnight on March 9, 2002. Awards outstanding at the time of the Plan
termination may continue to be exercised or earned in accordance with their
terms.

Amended:  April 28, 1997

                                     BASIN EXPLORATION, INC.


                                     By /S/ MICHAEL S. SMITH
                                       ----------------------------
                                        Michael S. Smith, President




                                      -20-