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                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is dated as of September
29, 2003 (the "EFFECTIVE DATE"), and is entered into by and between THE HOUSTON
EXPLORATION COMPANY, a Delaware corporation (the "COMPANY"), and Timothy R.
Lindsey (the "EXECUTIVE").

                                   WITNESSETH:

         WHEREAS, the Company desires to employ the Executive upon the terms and
conditions and in the capacities set forth herein; and

         WHEREAS, the Company and the Executive desire to enter into this
Agreement according to the terms and conditions contained herein.

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Executive hereby agree as follows:

         1.       EMPLOYMENT AND TERM OF EMPLOYMENT. Subject to the terms and
conditions of this Agreement, the Company hereby agrees to employ the Executive,
and the Executive hereby agrees to serve the Company as Vice President of
Exploration for a term (the "TERM OF EMPLOYMENT") beginning on the Effective
Date and ending on the Expiration Date (defined below). As used herein,
"EXPIRATION DATE" means the third anniversary of the Effective Date, provided
that on the first anniversary of the Effective Date and on each subsequent
anniversary of the Effective Date (such first anniversary date and each such
subsequent anniversary date being referred to as a "RENEWAL DATE"), the
Expiration Date shall be automatically extended one additional year unless, not
less than ninety (90) days prior to the relevant Renewal Date, (i) either party
shall have given written notice to the other that no such automatic extension
shall occur after the date of such notice or (ii) either party shall have given
a Notice of Termination to the other pursuant to Section 7 hereof.
Notwithstanding the foregoing, if either party gives a valid Notice of
Termination pursuant to Section 7 hereof, the Term of Employment shall not
extend beyond the termination date specified in such Notice of Termination.

         2.       SCOPE OF EMPLOYMENT.

                  (a)      During the Term of Employment, the Executive agrees
         to (i) serve as Vice President of Exploration of the Company and shall
         have and may exercise all the powers, duties and functions as are
         normal and customary to such positions and that are consistent with the
         responsibilities set forth with respect to such positions in the
         Company's by-laws and (ii) perform such other duties not inconsistent
         with his position as are assigned to him, from time to time, by the
         Board of Directors of the Company (the "BOARD"). During the Term of
         Employment, the Executive shall devote substantially all of his
         business time, attention, skill and efforts to the faithful performance
         of his duties hereunder. Subject to Section 6, the foregoing shall not
         be construed to prevent the Executive from making investments in
         businesses or enterprises so long as such investments do not require
         any services on the part of the Executive in the operation of such
         business or enterprises of a nature or magnitude that would interfere
         materially with the performance of his duties hereunder.

                  (b)      During the Term of Employment, the Executive agrees
         to serve, if elected, as an officer or director of any subsidiary or
         affiliate of the Company so long as such service is commensurate with
         the Executive's duties and responsibilities to the Company.

                  (c)      The Executive's place of employment hereunder shall
         be at the Company's principal executive offices in the greater Houston,
         Texas metropolitan area. Moreover, the Company agrees that it

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         will provide immunity and indemnity for the Executive to the fullest
         extent allowed by law, that if necessary it will amend its certificate
         of incorporation and bylaws to so provide, and that it will obtain
         errors and omissions insurance in the amount of no less than Ten
         Million Dollars ($10,000,000) naming the Executive as an additional
         insured.

         3.       COMPENSATION. During the Term of Employment, in consideration
of the Executive's services hereunder, including, without limitation, service as
an officer or director of the Company or of any subsidiary or affiliate thereof,
and in consideration of the Executive's covenants regarding confidentiality in
Section 5 hereof and noncompetition in Section 6 hereof, the Executive shall
receive a salary at the rate of Two Hundred Twenty-Five Thousand Dollars
($225,000) per year (payable at such regular intervals as other employees of the
Company are compensated in accordance with the Company's employment practices),
which amount shall be subject to review annually by the Board and may be
adjusted at its discretion, provided that such salary may not be reduced at any
time. In addition, the Executive shall be entitled to participate in such bonus,
incentive compensation or other programs as are created or approved by the Board
from time to time, including, but not limited to, the benefits described on
EXHIBIT A attached hereto.

         4.       ADDITIONAL COMPENSATION AND BENEFITS.

                  (a)      As additional compensation for the Executive's
         services under this Agreement, the Executive's covenants regarding
         confidentiality in Section 5 hereof and noncompetition in Section 6
         hereof, during the Term of Employment, the Company agrees to provide
         the Executive with the non-cash benefits being provided by the Company
         to its other officers and key employees as they may exist from time to
         time, including, but not limited to, the benefits described on EXHIBIT
         A attached hereto. Such benefits shall include leave or vacation time
         (not less than five (5) weeks per year), medical and dental insurance,
         life insurance and other health care benefits, retirement and
         disability benefits as may hereafter be provided by the Company in
         accordance with its policies as well as any stock option plan or
         similar employee benefit program for which key executives are or shall
         become eligible. The Executive's participation in each employee benefit
         plan or program provided to officers or other senior executives of the
         Company in general shall be at least as favorable to the Executive as
         the most highly benefited employee thereunder.

                  (b)      The Executive is authorized to incur reasonable
         business expenses for promoting the business and reputation of the
         Company, including (without limitation) reasonable expenditures for
         travel, lodging, club memberships, meals and client, patron, customer
         and/or business associate entertainment. The Company shall reimburse
         within thirty (30) days the Executive for reasonable expenses incurred
         by the Executive in furtherance of the Company's business, provided
         that such expenses are incurred in accordance with the Company's
         policies and upon presentation of documentation in accordance with
         expense reimbursement policies of the Company as they may exist from
         time to time, and submission to the Company of adequate documentation
         in accordance with federal income tax regulations and administrative
         pronouncements.

                  (c)      During the Term of Employment, the Company shall pay
         to the Executive an automobile allowance of Seven Hundred Dollars
         ($700) per month. The Board shall review the amount of such monthly
         allowance at least annually and may increase the same at any time as
         the Board deems appropriate.

         5.       CONFIDENTIALITY AND OTHER MATTERS.

                  (a)      Confidentiality. The Executive shall hold in a
         fiduciary capacity for the benefit of the Company all maps, data,
         reports, including results of exploration, drilling, drill cores,
         cuttings, and other samples, and other information relating to the
         business of the Company which comes into the possession of the
         Executive during the Term of Employment (such information being
         collectively referred to herein as the "CONFIDENTIAL INFORMATION").
         During the Term of Employment and after termination of the Executive's
         employment hereunder, the Executive agrees: (i) to take all such
         precautions as may be reasonably necessary to prevent the disclosure to
         any third party of any of the Confidential Information;

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         (ii) not to use for the Executive's own benefit any of the Confidential
         Information; and (iii) not to aid any other person or entity in the use
         of the Confidential Information in competition with the Company,
         provided that nothing in this Agreement shall prohibit the Executive
         from disclosing or using any Confidential Information (A) in the
         performance of his duties hereunder, (B) as required by applicable law,
         (C) in connection with the enforcement of his rights under this
         Agreement or any other agreement with the Company, (D) in connection
         with the defense or settlement of any claim, suit or action brought or
         threatened against the Executive by or in the right of the Company or
         (E) with the prior written consent of the Board. Notwithstanding any
         provision contained herein to the contrary, the term "CONFIDENTIAL
         INFORMATION" shall not be deemed to include any general knowledge,
         skills or experience acquired by the Executive or any knowledge or
         information known or available to the public in general. The Executive
         further agrees that, if requested by the Company in writing at any time
         within ninety (90) days after termination of his employment for any
         reason, he will surrender to the Company all Confidential Information,
         and any copies thereof, in his possession and agrees that all such
         materials, and copies thereof, are at all times the property of the
         Company. Notwithstanding the foregoing, the Executive shall be
         permitted to retain copies of, or have access to, all such Confidential
         Information relating to any disagreement, dispute or litigation
         (pending or threatened) involving the Executive.

                  (b)      Remedies. For purposes of this Section 5, the
         "COMPANY" shall be defined as the Company and its affiliated companies
         including (without limitation) its successors and assigns and its
         subsidiaries and each of their respective successors and assigns. In
         the event of a breach or threatened breach by the Executive of the
         provisions of this Section 5, the Company shall be entitled to an
         injunction restraining the Executive from violating such provisions
         without the necessity of posting a bond therefor. Nothing herein shall
         be construed as prohibiting the Company from pursuing any other
         remedies available to it at law or in equity. Except as specifically
         set forth herein, the parties agree that the provisions of this Section
         5 shall survive the earlier termination of the Executive's employment
         with the Company, as the continuation of this covenant is necessary for
         the protection of the Company.

         6.       NONCOMPETITION.

                  (a)      Noncompetition Activities. The Executive acknowledges
         that the nature of the employment under this Agreement is such as will
         bring the Executive in personal contact with patrons or customers of
         the Company and will enable him to acquire valuable information as to
         the nature and character of the business of the Company, thereby
         enabling him, by engaging in a competing business in his own behalf, or
         for another, to take advantage of such knowledge and thereby gain an
         unfair advantage. Accordingly, the Executive covenants and agrees that
         he will not, without the prior written consent of the Company during
         the Term of Employment, engage directly or indirectly for himself, or
         as an agent, representative, officer, director or employee of others,
         in the exploration for or production of hydrocarbons in waters offshore
         from the States of Texas and Louisiana, provided that the foregoing
         restriction shall not apply at any time if the Executive's employment
         is terminated during the Term of Employment by the Executive for Good
         Reason (defined in Section 7 hereof) or by the Company for any reason
         other than Cause (defined in Section 7 hereof) and, provided further,
         that nothing in this Agreement shall prohibit the Executive from
         acquiring or holding any issue of stock or securities of any entity
         registered under Section 12 of the Securities and Exchange Act of 1934
         (as amended), listed on a national securities exchange or quoted on the
         automated quotation system of the National Association of Securities
         Dealers, Inc. so long as the Executive is not deemed to be an
         "affiliate" of such entity as such term is used in paragraphs (c) and
         (d) of Rule 145 under the Securities Act of 1933 (as amended).

                  (b)      Scope. In the event that the provisions of this
         Section 6 should ever be deemed to exceed the time, geographic or
         activity related limitations permitted by applicable law, then such
         provisions shall be reformed to the maximum time, geographic or
         activity related limitations permitted by applicable law. In the event
         of a breach or threatened breach by the Executive of the provisions of
         this Section 6, the Company shall be entitled to an injunction
         restraining the Executive from violating such provisions without the
         necessity of posting a bond therefor. Nothing herein shall be construed
         as prohibiting the Company from pursuing any other remedies available
         to it at law or in equity. Except as specifically set forth herein, the
         parties agree that this Section 6 shall remain in effect for its full
         term notwithstanding the earlier

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         termination of the Executive's employment with the Company, as the
         continuation of this covenant is necessary for the protection of the
         Company. For purposes of this Section 6, the "COMPANY" shall be defined
         as the Company and its affiliated companies, including (without
         limitation) its successors and assigns and its subsidiaries and each of
         their respective successors and assigns.

         7.       TERMINATION.

                  (a)      General. The Executive's employment hereunder shall
         automatically terminate on the earlier of his death or the Expiration
         Date. The Executive may, at any time prior to the Expiration Date,
         terminate his employment hereunder for any reason by delivering a
         Notice of Termination (defined below) to the Board. The Company may, at
         any time prior to the Expiration Date, terminate the Executive's
         employment hereunder for any reason by delivering a Notice of
         Termination to the Executive, provided that in no event shall the
         Company be entitled to terminate the Executive's employment prior to
         the Expiration Date unless the Board shall duly adopt, by the
         affirmative vote of a least a majority of the entire membership of the
         Board, a resolution authorizing such termination and stating whether
         such termination is for Cause (defined below). The giving of a notice
         pursuant to clause (i) of the proviso contained in the penultimate
         sentence of Section 1 hereof shall not be deemed a termination of the
         Executive's employment by the party giving such notice. As used in this
         Agreement, "NOTICE OF TERMINATION" means a notice in writing purporting
         to terminate the Executive's employment in accordance with this Section
         7, which notice shall (i) specify the effective date of such
         termination (not prior to the date of such notice) and (ii) in the case
         of a termination by the Company for Cause or Disability or a
         termination by the Executive for Good Reason or Disability, set forth
         in reasonable detail the reason for such termination and the facts and
         circumstances claimed to provide a basis for such termination.

                  (b)      Automatic Termination on Expiration Date. In the
         event the Executive's employment hereunder shall automatically
         terminate on the Expiration Date for any reason other than death, the
         Executive shall only be entitled to receive (i) all unpaid compensation
         accrued as of the termination date pursuant to Section 3 hereof, (ii)
         all unused vacation time accrued by the Executive as of the termination
         date, (iii) all amounts owing to the Executive under Sections 4(b) and
         4(c) hereof and (iv) those benefits under Section 4 which are required
         under the Employee Retirement Income Security Act of 1974, as amended
         ("ERISA"), or other laws. The amounts described in clauses (i), (ii)
         and (iii) of the foregoing sentence shall be paid to the Executive in a
         lump sum payment promptly after the Expiration Date.

                  (c)      Termination by Company for Cause. If the Company
         terminates the Executive's employment for Cause, the Executive shall
         only be entitled to receive the compensation and other payments
         described in paragraph (b) above, such compensation and other payments
         to be paid as if the Executive's employment had automatically
         terminated without the giving of any Notice of Termination. As used in
         this Agreement, "CAUSE" shall mean (i) any material failure of the
         Executive to perform his duties specified in Section 2 of this
         Agreement (other than any such failure resulting from the Executive's
         incapacity due to illness or other disability) after written notice of
         such failure has been given to the Executive by the Board and such
         failure shall have continued for thirty (30) days after receipt of such
         notice, (ii) gross or willful negligence or intentional wrongdoing or
         misconduct, (iii) a material breach by the Executive of Sections 5 or 6
         of this Agreement, or (iv) conviction of the Executive of a felony
         offense involving moral turpitude, any of which has or have a material
         adverse effect on the Executive's ability to perform the duties of his
         position or on the financial condition or profitability of the Company.

                  (d)      Death or Disability. To provide for the event the
         Executive's employment is automatically terminated on account of his
         death or is terminated by either the Company or the Executive on
         account of Disability (defined below), the Company shall purchase and
         provide for the Executive life insurance in the amount of one times
         annual salary and shall purchase and provide for the Executive
         supplemental executive long-term disability benefits (to the extent
         necessary to provide the total benefits described herein, net of the
         Company's existing group long-term disability plan) to provide salary
         replacement in the amount of sixty percent (60%) of annual salary at
         the date of disability (to continue until at least age sixty-five (65),
         or for life if reasonably practicable). As used herein, "DISABILITY"
         means any physical or mental condition of the Executive that (i)
         prevents the Executive from being able to perform the

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         services required under this Agreement, (ii) has continued for at least
         one hundred eighty (180) consecutive days during any twelve (12)-month
         period and (iii) is reasonably expected to continue. The Company's
         obligation to provide to the Executive long-term disability benefits
         hereunder shall be defined by the long-term disability benefits
         contract it is able to procure from an unrelated third party. For that
         purpose, the definition of disability shall be as stated in the
         contract. The Company and the Executive recognize that the definition
         of Disability hereunder may differ from the contract definition and the
         benefits payable shall be those as stated in the contract. The Company,
         however, agrees to obtain a contract with a definition of disability as
         similar as possible to the definition stated hereunder. Moreover, the
         Company and the Executive agree that for purposes of the other
         provisions of this Agreement, the definition of Disability as stated
         herein shall control.

                  (e)      Termination by Company Without Cause or by the
         Executive with Good Reason. If either the Company terminates the
         Executive's employment for any reason other than for Cause or on
         account of Disability or the Executive terminates his employment for
         Good Reason (as hereinafter defined), the Company shall:

                           (i)      pay to the Executive, within thirty (30)
                  days after the date of such termination, a lump sum cash
                  payment equal to 2.99 times the Executive's then current
                  annual rate of Total Compensation;

                           (ii)     pay the Executive any accrued but unpaid
                  compensation as of the date of the termination of employment;
                  and

                           (iii)    continue until the first anniversary of the
                  termination of the Executive's employment, or such longer
                  period as any plan, program or policy or ERISA or other laws
                  may provide, benefits to the Executive as set forth in Section
                  7(f) below.

         As used in this Agreement, "GOOD REASON" shall mean: (A) the failure by
         the Company to elect or re-elect or to appoint or re-appoint the
         Executive to the office of Vice President of Exploration of the Company
         without Cause; (B) a material change in the powers, duties,
         responsibilities or functions of the Executive as described in Section
         2 hereof, including (without limitation) any change which would alter
         the Executive's reporting responsibilities or cause the Executive's
         position with the Company to be of less dignity, responsibility,
         importance or scope than the position (and attributes thereof) of Vice
         President of Exploration of the Company, (C) without the Executive's
         prior written consent, the relocation of the Company's principal
         executive offices outside the greater Houston, Texas metropolitan area
         or requiring the Executive to be based other than at such principal
         executive offices, (D) the failure of the Company to obtain any
         assumption agreement required by Section 16 hereof, (E) the failure by
         the Company to pay the Executive within ten (10) days after a written
         demand therefor any installment of any previous award of or deferred
         compensation, if any, under any employee benefit plan or any deferred
         compensation program in effect in which the Executive may have
         participated, (F) any other material breach of this Agreement by the
         Company, or (G) the occurrence of a Change of Control.

         As used in this Agreement, a "CHANGE OF CONTROL" shall mean:

                           (i)      the acquisition after the Effective Date by
                  any individual, entity or group (within the meaning of Section
                  13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
                  as amended) (a "PERSON") of beneficial ownership of twenty
                  percent (20%) or more of either (i) the then outstanding
                  shares of common stock of the Company (the "OUTSTANDING COMMON
                  STOCK") or (ii) the combined voting power of the then
                  outstanding voting securities of the Company entitled to vote
                  generally in the election of directors (the "OUTSTANDING
                  VOTING SECURITIES"), provided that for purposes of this
                  subsection (i), the following acquisitions shall not
                  constitute a Change of Control: (A) any acquisition directly
                  from the Company, (B) any acquisition by the Company, (C) any
                  acquisition by any employee benefit plan (or related trust)
                  sponsored or maintained by the Company or any corporation
                  controlled by the Company, or (D) any acquisition by any

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                  corporation pursuant to a transaction which complies with
                  clauses (A), (B) and (C) of subsection (iii) hereof; or

                           (ii)     individuals, who, as of the Effective Date,
                  constitute the Board (the "INCUMBENT BOARD") cease for any
                  reason to constitute at least a majority of the Board,
                  provided that any individual becoming a director subsequent to
                  the Effective Date whose election, or nomination for election
                  by the Company's shareholders, was approved by a vote of at
                  least a majority of the directors then comprising the
                  Incumbent Board shall be considered as though such individual
                  was a member of the Incumbent Board, but excluding, for this
                  purpose, any such individual whose initial assumption of
                  office occurs as a result of an actual or threatened election
                  contest with respect to the election or removal of directors
                  or other actual or threatened solicitation of proxies or
                  consents by or on behalf of a Person other than the Board; or

                           (iii)    consummation after the Effective Date of a
                  reorganization, merger or consolidation or sale or other
                  disposition of all or substantially all of the assets of the
                  Company (a "CORPORATE TRANSACTION") in each case, unless,
                  following such Corporate Transaction, (A) (1) all or
                  substantially all of the persons who were the beneficial
                  owners of the Outstanding Common Stock immediately prior to
                  such Corporate Transaction beneficially own, directly or
                  indirectly, more than sixty percent (60%) of the then
                  outstanding shares of common stock of the corporation
                  resulting from such Corporate Transaction, and (2) all or
                  substantially all of the persons who were the beneficial
                  owners of the Outstanding Voting Securities immediately prior
                  to such Corporate Transaction beneficially own, directly or
                  indirectly, more than sixty percent (60%) of the combined
                  voting power of the then outstanding voting securities
                  entitled to vote generally in the election of directors of the
                  corporation resulting from such Corporate Transaction
                  (including, without limitation, a corporation which as a
                  result of such transaction owns the Company or all or
                  substantially all of the Company's assets either directly or
                  through one or more subsidiaries) in substantially the same
                  proportions as their ownership of the Outstanding Common Stock
                  and the Outstanding Voting Securities immediately prior to
                  such Corporate Transaction, as the case may be, (B) no Person
                  (excluding (l) any corporation resulting from such Corporate
                  Transaction or any employee benefit plan (or related trust) of
                  the Company or such corporation resulting from such Corporate
                  Transaction and (2) any Person approved by the Incumbent
                  Board) beneficially owns, directly or indirectly, twenty
                  percent (20%) or more of the then outstanding shares of common
                  stock of the corporation resulting from such Corporate
                  Transaction or the combined voting power of the then
                  outstanding voting securities of such corporation except to
                  the extent that such ownership existed prior to such Corporate
                  Transaction and (C) at least a majority of the members of the
                  board of directors of the corporation resulting from such
                  Corporate Transaction were members of the Incumbent Board at
                  the time of the execution of the initial agreement or of the
                  action of the Board providing for such Corporate Transaction.

         As used in this Agreement, the term "TOTAL COMPENSATION" shall mean the
         sum of the following:

                           (i)      the current annual salary of the Executive
                  referenced in Section 3;

                           (ii)     the current car allowance provided by the
                  Company to the Executive referenced in Section 4(c); and

                           (iii)    the Executive's annual bonus, calculated as
                  though the Company's financial targets had been met at one
                  hundred percent (100%), referenced in Section 3 and EXHIBIT A.

                  (f)      Insurance and Other Special Benefits. To the extent
         the Executive is eligible thereunder, for a period of twelve (12)
         months following termination pursuant to Section 7(e) hereof, the
         Executive shall continue to be provided life insurance policies
         provided to the Executive on the date hereof or such successor policies
         in effect at the time of the Executive's termination, and shall also
         continue to be covered for the applicable period by each other
         insurance, health or other benefit program, plan or policy (excluding
         long-term disability) by which he was covered at the time of the
         Executive's termination. In the event the

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         Executive is ineligible to continue to be so covered under the terms of
         any such life insurance, health or other benefit program, plan or
         policy, the Company shall provide to the Executive through other
         sources such benefits (excluding long-term disability), including such
         additional benefits, as may be necessary to make the benefits
         applicable to the Executive substantially equivalent to those in effect
         immediately prior to such termination, provided that if during such
         period the Executive should enter into the employ of another company or
         firm which provides to the Executive substantially similar benefit
         coverage, the Executive's participation in the comparable benefits
         provided by the Company, either directly or through such other sources,
         shall cease. Nothing contained in this paragraph shall be deemed to
         require or permit termination or restriction of any of the Executive's
         coverage under any plan or program of the Company or any of its
         subsidiaries or any successor plan or program thereto to which the
         Executive is entitled under the terms of such plan or program, whether
         at the end of the aforementioned twelve (12)-month period or at any
         other time. Upon termination of the Executive's employment under
         Section 7(d) or 7(e) hereof, any vesting, lapse of time or similar
         requirement under any stock option plan, restricted stock plan or other
         employee benefit or deferred compensation plan or program in which the
         Executive may participate shall be accelerated to the date of such
         termination and any conditions to the Executive's entitlement to any
         benefits under any of such plans or programs shall be deemed to have
         been satisfied.

                  (g)      Certain Additional Payments by the Company. Anything
         in this Agreement to the contrary notwithstanding, in the event it
         shall be determined that any payment or distribution by the Company to
         or for the benefit of the Executive, whether paid or payable or
         distributed or distributable pursuant to the terms of this Agreement or
         otherwise (a "PAYMENT"), would be subject to the excise tax imposed by
         Section 4999 of the Code or any interest or penalties with respect to
         such excise tax (such excise tax, together with any such interest and
         penalties, are hereinafter collectively referred to as the "EXCISE
         TAX"), then the Executive shall be entitled to receive an additional
         payment (a "GROSS-UP PAYMENT") in an amount such that after payment by
         the Executive of all taxes (including any interest or penalties imposed
         with respect to such taxes), including any Excise Tax imposed upon the
         Gross-Up Payment, the Executive retains an amount of the Gross-Up
         Payment equal to the Excise Tax imposed upon the Payments. Subject to
         the provisions of this Section 7(g), all determinations required to be
         made hereunder, including whether a Gross-Up Payment is required and
         the amount of such Gross-Up Payment, shall be made by the accounting
         firm which at the time audits the financial statements of the Company
         (the "ACCOUNTING FIRM") at the sole expense of the Company, which shall
         provide detailed supporting calculations both to the Company and the
         Executive within fifteen (15) business days of the date of termination
         of the Executive's employment under this Agreement, if applicable, or
         such earlier time as is requested by the Company. If the Accounting
         Firm determines that no Excise Tax is payable by the Executive, the
         Accounting Firm shall furnish the Executive with an opinion that he has
         substantial authority not to report any Excise Tax on his federal
         income tax return. Any determination by the Accounting Firm shall be
         binding upon the Company and the Executive. As a result of the
         uncertainty in the application of Section 4999 of the Code at the time
         of the initial determination by the Accounting Firm hereunder, it is
         possible that Gross-Up Payments, which will not have been made by the
         Company should have been made (an "UNDERPAYMENT"), consistent with the
         calculations required to be made hereunder. If the Company exhausts its
         remedies pursuant hereto and the Executive thereafter is required to
         make a payment of any Excise Tax, the Accounting Firm shall determine
         the amount of the Underpayment that has occurred and any such
         Underpayment shall be promptly paid by the Company to or for the
         benefit of the Executive.

                  The Executive shall notify the Company in writing of any claim
         by the Internal Revenue Service that, if successful, would require the
         payment by the Company of the Gross-Up Payment. Such notification shall
         be given as soon as practicable but no later than ten (10) business
         days after the Executive knows of such claim and shall apprise the
         Company of the nature of such claim and the date on which such claim is
         requested to be paid. The Executive shall not pay such claim prior to
         the expiration of the thirty (30)-day period following the date on
         which it gives such notice to the Company (or such shorter period
         ending on the date that any payment of taxes with respect to such claim
         is due). If the Company notifies the Executive in writing prior to the
         expiration of such period that it desires to contest such claim, the
         Executive shall:

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                           (i)      give the Company any information reasonably
                  requested by the Company relating to such claim,

                           (ii)     take such action in connection with
                  contesting such claim as the Company shall reasonably request
                  in writing from time to time, including (without limitation)
                  accepting legal representation with respect to such claim by
                  an attorney reasonably selected by the Company,

                           (iii)    cooperate with the Company in good faith to
                  effectively contest such claim, and

                           (iv)     permit the Company to participate in any
                  proceedings relating to such claim;

         provided that the Company shall bear and pay directly all costs and
         expenses (including additional interest and penalties) incurred in
         connection with such contest and shall indemnify and hold the Executive
         harmless, on an after-tax basis, for any Excise Tax or income tax,
         including interest and penalties with respect thereto, imposed as a
         result of such representation and payment of costs and expenses.
         Without limitation on the foregoing provisions hereof the Company shall
         control all proceedings taken in connection with such contest and, at
         its sole option, may pursue or forego any and all administrative
         appeals, proceedings, hearings and conferences with the taxing
         authority in respect of such claim and may, at its sole option, either
         direct the Executive to pay the tax claimed and sue for a refund or
         contest the claim in any permissible manner, and the Executive agrees
         to prosecute such contest to a determination before any administrative
         tribunal, in a court of initial jurisdiction and in one or more
         appellate courts, as the Company shall determine, provided that if the
         Company directs the Executive to pay such claim and sue for a refund,
         the Company shall advance the amount of such payment to the Executive,
         on an interest-free basis and shall indemnify and hold the Executive
         harmless, on an after-tax basis, from any Excise Tax or income tax,
         including interest or penalties with respect thereto, imposed with
         respect to such advance or with respect to any imputed income with
         respect to such advance, and further provided that any extension of the
         statute of limitations relating to payment of taxes for the taxable
         year of the Executive with respect to which such contested amount is
         claimed to be due is limited solely to such contested amount.
         Furthermore, the Company's control of the contest shall be limited to
         issues with respect to which a Gross-Up Payment would be payable
         hereunder and the Executive shall be entitled to settle or contest, as
         the case may be, any other issue raised by the Internal Revenue Service
         or any other taxing authority.

                  If, after the receipt by the Executive of an amount advanced
         by the Company pursuant hereto, the Executive becomes entitled to
         receive any refund with respect to such claim, the Executive shall
         (subject to the Company's complying with the requirements hereof)
         promptly pay to the Company the amount of such refund (together with
         any interest paid or credited thereon after taxes applicable thereto).
         If, after the receipt by the Executive of an amount advanced by the
         Company pursuant hereto, a determination is made that the Executive
         shall not be entitled to any refund with respect to such claim and the
         Company does not notify the Executive in writing of its intent to
         contest such denial of refund prior to the expiration of thirty (30)
         days after such determination, then such advance shall be forgiven and
         shall not be required to be repaid and the amount of such advance shall
         offset, to the extent thereof, the amount of Gross-Up Payment required
         to be paid.

                  (h)      Either party may, within fifteen (15) days after
         receipt of a Notice of Termination from the other party, provide notice
         to the other party that a dispute exists concerning the termination, in
         which event the dispute shall be resolved in accordance with Section 9
         hereof. Notwithstanding the pendency of any such dispute and
         notwithstanding any provision of this Agreement to the contrary, the
         Company will (i) continue to pay the Executive the annual base salary
         described in Section 3 hereof and (ii) continue the Executive as a
         participant in all compensation and benefit plans in which the
         Executive was participating when the relevant Notice of Termination was
         given, until the dispute is finally resolved or, with respect to a
         Notice of Termination given by the Executive, the date of termination
         specified in such Notice of Termination if earlier, but, in each case,
         not past the Expiration Date. If (i) the Company gives a Notice of
         Termination to the Executive, (ii) the Executive disputes the
         termination as contemplated by this paragraph (h) and (iii) such
         dispute is finally in favor of the Company in accordance with Section 9
         hereof, the Executive shall be required to refund to the Company any
         amounts paid to the Executive under this

                                       -8-

<PAGE>

         paragraph (h) but only if, and then only to the extent, the Executive
         is not otherwise entitled to receive such amounts under this Agreement.

         8.       NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company or
any of its affiliated companies and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such rights as the Executive may
have under any stock option or other agreements with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the Executive
is otherwise entitled to receive under any plan or program of the Company or any
of its affiliated companies at or subsequent to the date of termination of the
Executive's employment under this Agreement shall be payable in accordance with
such plan or program.

         9.       RESOLUTION OF DISPUTES.

                  (a)      Negotiation. The parties shall attempt in good faith
         to resolve any dispute arising out of or relating to this Agreement
         promptly by negotiations between the Executive and an executive officer
         of the Company who has authority to settle the controversy. Any party
         may give the other party written notice of any dispute not resolved in
         the normal course of business. Within ten (10) days after the effective
         date of such notice, the Executive and an executive officer of the
         Company shall meet at a mutually acceptable time and place within the
         Houston, Texas metropolitan area, and thereafter as often as they
         reasonably deem necessary, to exchange relevant information and to
         attempt to resolve the dispute. If the matter has not been resolved
         within thirty (30) days of the disputing party's notice, or if the
         parties fail to meet within ten (10) days, either party may initiate
         arbitration of the controversy or claim as provided hereinafter. If a
         negotiator intends to be accompanied at a meeting by an attorney, the
         other negotiator shall be given at least three (3) business days'
         notice of such intention and may also be accompanied by an attorney.
         All negotiations pursuant to this Section 9(a) shall be treated as
         compromise and settlement negotiations for the purposes of the federal
         and state rules of evidence and procedure.

                  (b)      Arbitration. Any dispute arising out of or relating
         to this Agreement or the breach, termination or validity thereof, which
         has not been resolved by non-binding means as provided in Section 9(a)
         within sixty (60) days of the initiation of such procedure, shall be
         finally settled by arbitration conducted expeditiously in accordance
         with the Center for Public Resources, Inc. ("CPR") Rules for
         Non-Administered Arbitration of Business Disputes by three (3)
         independent and impartial arbitrators, of whom each party shall appoint
         one, provided that if one party has requested the other to participate
         in a non-binding procedure and the other has failed to participate, the
         requesting party may initiate arbitration before the expiration of such
         period. Any such arbitration shall take place in Harris County, Texas.
         Any arbitrator not appointed by a party shall be appointed from the CPR
         Panels of Neutrals. The arbitration shall be governed by the United
         States Arbitration Act and any judgment upon the award decided upon by
         the arbitrators may be entered by any court having jurisdiction
         thereof. Each party hereby acknowledges that compensatory damages
         include (without limitation) any benefit or right of indemnification
         given by another party to the other under this Agreement.

         10.      EXPENSES. The Company shall promptly pay or reimburse the
Executive for all costs and expenses, including, without limitation, court costs
and attorneys' fees, incurred by the Executive as a result of any claim, action
or proceeding (including, without limitation a claim action or proceeding by the
Executive against the Company) arising out of, or challenging the validity or
enforceability of, this Agreement or any provision hereof.

         11.      GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Texas. Venue and
jurisdiction of any act on relating to this agreement shall lie in Harris
County, Texas.

         12.      NOTICE. Any notice, payment, demand or communication required
or permitted to be given by this Agreement shall be deemed to have been
sufficiently given or served for all purposes if delivered personally or if sent
by registered or certified mall, return receipt requested, postage prepaid,
addressed to such party at its address

                                       -9-

<PAGE>

set forth below such party's signature to this Agreement or to such other
address as shall have been furnished in writing by such party for whom the
communication is intended. Any such notice shall be deemed to be given on the
date so delivered.

         13.      SEVERABILITY. In the event any provisions hereof shall he
modified or held ineffective by any court, such adjudication shall not
invalidate or render ineffective the balance of the provisions hereof.

         14.      ENTIRE AGREEMENT. This Agreement constitutes the sole
agreement between the parties with respect to the employment of the Executive by
the Company and supersedes any and all other agreements, oral or written,
between the parties.

         15.      AMENDMENT AND WAIVER. This Agreement may not be modified or
amended except by a writing signed by the parties. Any waiver or breach of any
of the terms of this Agreement shall not operate as a waiver of any other breach
of such terms or conditions, or any other terms or conditions, nor shall any
failure to enforce any provisions hereof operate as a waiver of such provision
or any other provision hereof.

         16.      ASSIGNMENT. This Agreement is a personal employment contract
and the rights and interests of the Executive hereunder may not be sold,
transferred, assigned or pledged. The Company may assign its rights under this
Agreement to (i) any entity into or with which the Company is merged or
consolidated or to which the Company transfers all or substantially all of its
assets or (ii) any entity, which at the time of such assignment, controls, is
under common control with, or is controlled by the Company, provided that the
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and substance reasonably
acceptable to the Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if not such succession had taken place.

         17.      SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of the Executive and his heirs, executors, administrators and legal
representatives. This Agreement shall be binding upon and inure to the benefit
of the Company and its successors and assigns.

         18.      SECTION HEADINGS. The section headings in this Agreement have
been inserted for convenience and shall not be used for interpretive purposes or
to otherwise construe this Agreement.

         19.      NO MITIGATION OR SET-OFF. The provisions of this Agreement are
not intended to, nor shall they be construed to, require that the Executive
mitigate the amount of any payment provided for in this Agreement by seeking or
accepting other employment, nor shall the amount of any payment provided for in
this Agreement be reduced by any compensation earned by the Executive as a
result of his employment by another employer or otherwise. The Company's
obligations to make the payments to the Executive required under this Agreement
and otherwise to perform its obligations hereunder shall not be affected by any
set off, counterclaim, recoupment, defense or other claim, right or action that
the Company may have against the Executive.

                  [Remainder of page intentionally left blank]

                                      -10-

<PAGE>

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
     date first written above and intend that this Agreement have the effect
                            of a sealed instrument.

                                                /s/ Timothy R. Lindsey
                                       -----------------------------------------
                                                  Timothy R. Lindsey

                                       THE HOUSTON EXPLORATION COMPANY

                                       By:      /s/ William G. Hargett
                                           -------------------------------------
                                       Name: William G. Hargett
                                       Title: President and Chief Executive
                                              Officer

                                      -11-

<PAGE>

                                                              TIMOTHY R. LINDSEY

                                    EXHIBIT A

ANNUAL INCENTIVE PLAN

         The Executive will participate in the Company's annual incentive bonus
plan which will be based on a target measure of profitability to be determined
by the Board of Directors from year to year ("TARGET"). If the Company reaches
100% of Target, the Executive would earn 100% of his target bonus. The target
bonus will be determined as a percentage of the Executive's annual salary. The
percentage for the annual bonus for the Executive will be:

<TABLE>
<CAPTION>
                                                    Percentage of Salary
                                                  for Target Annual Bonus
                                                  -----------------------
<S>                                               <C>
Timothy R. Lindsey, Vice President                          55%
  of Exploration
</TABLE>

Moreover, if the Company performs better or worse than the target earnings, the
bonus will be directly affected. A schedule of target earnings and target bonus
will be as follows:

<TABLE>
<CAPTION>
      Percentage of                                     Percentage of Target Annual
Target Earned by Company                                  Incentive Bonus Earned
------------------------                                  ----------------------
<S>                                                     <C>
      Less than 70%                                                  0%
           70%                                                      40%
           80%                                                      60%
           90%                                                      80%
          100%                                                     100%
          110%                                                     120%
          120%                                                     140%
          130%                                                     160%
          140%                                                     180%
    150% and more                                                  200%
</TABLE>

As an example, if (1) the Target is $4,500,000, (2) an executive's annual salary
is $250,000, (3) the target annual bonus percentage is 45%, and (4) actual
results achieved reaches $4,500,000, the executive's target bonus would be
$112,500. Since actual results achieved equaled 100% of Target, he would earn
$112,500. If actual results achieved were $5,220,000 (116%), he would be
entitled to 132% of his target bonus, or $148,500.

LONG TERM INCENTIVE PLAN

         The Executive will participate in the Company's Amended and Restated
2002 Long-Term Incentive Plan. The 1996 Stock Option Plan shall be paid in
Company stock options under a plan providing for qualified incentive stock
options (for federal income tax purposes) to the extent possible and a
non-qualified stock options for the remainder.

                                       A-1

<PAGE>

         All options granted will have a term of ten (10) years and will vest in
one-fifth (1/5) increments over five (5) years beginning on the first
anniversary of the date granted; provided, however, that such options shall be
deemed fully vested (i) on the death of the Executive or other employee, (ii) on
the termination of the Executive's or other employee's employment on the
Disability of the Executive or other employee after the Executive or other
employee had already vested sixty percent (60%) or more of the option grant, or
(iii) on the termination of the Executive's or other employee's employment by
the Company without Cause or by the Executive or other employee for Good Reason,
or after the third anniversary of the date granted for any reason by the Company
other than for Cause.

         During the Term of Employment, each year on the anniversary of the
Initial Public Offering of the Company, the Executive shall be eligible for an
additional option grant for that number of shares equal to a percentage of the
Executive's annual salary divided by a per share option value determined under
the Black-Scholes model. The percentage of the annual Long Term Incentive grant
for the Executive will be:

                                              Target Percentage of Base Salary

Timothy R. Lindsey                                           50

                                       A-2<PAGE>

                                                                    EXHIBIT 10.1

                                    GUARANTY

         THIS GUARANTY (this "GUARANTY") is executed as of October 21, 2003, by
Arch Coal, Inc., a Delaware corporation ("ARCH"), for the benefit of Natural
Resource Partners L.P., a Delaware limited partnership ("NRP").

                                    RECITALS

         A.       subsidiary of Arch is a lessee of NRP under four separate coal
mining leases on the following properties: Lone Mountain, Pardee, Boone/Lincoln
and Campbell's Creek (collectively, the "ARCH PROPERTIES").

         B.       Arch owns 42.25% of the general partner of NRP and owns
2,895,670 common units and 4,796,920 subordinated units in NRP.

         C.       For internal budgeting purposes, NRP has projected that it
will receive aggregate production royalties from the Arch Properties in fiscal
year 2004 of approximately $9.2 million.

         D.       Arch believes that, based on its own internal projections and
pricing forecasts, the production royalties generated from the Arch Properties
in 2004 will be approximately $11.3 million.

         E.       As a result of its ownership interest in NRP, Arch will
benefit, directly and indirectly, from any coal royalties paid to NRP, as well
as from cash distributions that NRP pays to its partners.

         F.       Arch desires to enter into this Guaranty for the purpose of
guaranteeing coal royalty payments with respect to the Arch Properties of no
less than $11.3 million to NRP in 2004 (the "GUARANTEED OBLIGATION").

         G.       In Arch's judgment, the value of the consideration received
and to be received by Arch from NRP is reasonably worth at least as much as its
liability and obligation under this Guaranty, and such liability and obligation
may reasonably be expected to benefit Arch directly or indirectly.

                                    AGREEMENT

         NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Arch guarantees to NRP the prompt payment of the
Guaranteed Obligation as follows:

         1.       Guaranty. Arch hereby guarantees prompt payment of the
Guaranteed Obligation when due, but in no event later than January 20, 2005.
This is an absolute, unconditional irrevocable and continuing guaranty of
payment of the Guaranteed Obligation that will remain in effect until the
Guaranteed Obligation is paid in full. Arch may not rescind or revoke its
obligations to NRP under this Guaranty with respect to the Guaranteed
Obligation. All payments under this Guaranty shall be in U.S. Dollars.

         2.       Amount of Guaranty and Consideration. NRP's books and records
showing the amount of the Guaranteed Obligation shall be admissible in evidence
in any action or proceeding, and shall be rebuttably presumptive evidence for
the purpose of establishing the amount of the

<PAGE>

Guaranteed Obligation absent manifest error. Arch represents and warrants to NRP
that the value of consideration received and to be received by it is reasonably
worth at least as much as its liability under this Guaranty, and such liability
may be reasonably be expected to benefit Arch, directly or indirectly.

         3.       Enforceability of Guaranty; No Release.

                     (a)      This Guaranty shall not be affected by the
         genuineness, validity, regularity or enforceability of the Guaranteed
         Obligation or any instrument or agreement evidencing any part of the
         Guaranteed Obligation, or by any fact or circumstance relating to the
         Guaranteed Obligation which might otherwise constitute a defense to the
         obligations of Arch under this Guaranty.

                     (b)      Arch hereby agrees that its obligations under the
         terms of this Guaranty shall not be released, discharged, diminished,
         impaired, reduced or otherwise adversely affected by any of the
         following: (i) any renewal, extension or rearrangement of the payment
         of any or all of the Guaranteed Obligation, either with or without
         notice to or consent of Arch, or any adjustment, indulgence,
         forbearance, or compromise that may be granted or given by NRP to Arch;
         (ii) any neglect, delay, omission, failure or refusal of NRP to take or
         prosecute any action for the collection of all or any part of the
         Guaranteed Obligation; or (iii) any failure of NRP to give Arch notice
         of any of the foregoing, it being understood that NRP shall not be
         required to give Arch any notice of any kind under any circumstances
         with respect to or in connection with the Guaranteed Obligation, other
         than any notice expressly required to be given to Arch under this
         Guaranty.

         4.       Exercise of Rights and Waiver. No failure by NRP to exercise,
and no delay in exercising, any right or remedy under this Guaranty shall
operate as a waiver thereof. The exercise by NRP of any right under this
Guaranty shall not preclude the concurrent or subsequent exercise of any other
right. The remedies provided in this Guaranty are cumulative and not exclusive
of any rights provided by law or in equity. The unenforceability or invalidity
of any provision of this Guaranty shall not affect the enforceability or
validity of any other provision herein.

         5.       Expenses. Arch shall pay on demand all out-of-pocket expenses
(including reasonable attorneys' fees and expenses and the allocated cost and
disbursements of internal legal counsel) in any way relating to the enforcement
or protection of NRP's rights under this Guaranty. The obligations of the Arch
under the preceding sentence shall survive termination of this Guaranty.

         6.       Amendments. No provision of this Guaranty may be waived,
amended, supplemented or modified, except by a written instrument executed
by NRP and Arch.

         7.       Binding Agreement. This Guaranty is for the benefit of NRP and
its successors and assigns. This Guaranty is binding on Arch and Arch's
permitted assigns, provided that, Arch may not assign its rights or obligations
under this Guaranty without the prior written consent of NRP.

         8.       Notices. All notices required or permitted to be given under
this Guaranty, if any, must be in writing and shall be given as follows:

                                        2
<PAGE>

         If to Arch:

                  Arch Coal, Inc.
                  One CityPlace Drive, Suite 300
                  St. Louis, Missouri 63141
                  Telephone No.: (314) 994-2716
                  Facsimile No.: (314) 994-2734
                  Attn: Robert G. Jones

         If to NRP:

                  Natural Resource Partners L.P.
                  c/o 601 Jefferson, Suite 3600
                  Houston, Texas 77002
                  Telephone: (713) 751-7516
                  Facsimile No.: (713) 650-0606
                  Attn: Wyatt L Hogan

         9.       Governing Law. This guaranty is to be construed, and its
performance enforced, under Delaware law (without regard to conflicts of
law principles).

                                                    GUARANTOR:

                                                    Arch Coal, Inc.

                                                    By:/s/ Steven F. Leer
                                                       -------------------------
                                                       Steven F. Leer
                                                       Chief Executive Officer

ACCEPTED:

Natural Resource Partners L.P.

         By: NRP (GP) LP

         By: GP Natural Resource Partners LLC

         By:/s/ Corbin J. Robertson, Jr.
            --------------------------------------
            Corbin J. Robertson, Jr.
            Chief Executive Officer

                                       3

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