Document:

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                                                                   EXHIBIT 10.30

                            BURLINGTON RESOURCES INC.
                             2001 PERFORMANCE SHARE
                                    UNIT PLAN

                            EFFECTIVE JANUARY 1, 2001

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                                TABLE OF CONTENTS
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                                                   ARTICLE 1

                                           ESTABLISHMENT AND PURPOSE

1.1.     Establishment........................................................................................1
1.2.     Purpose..............................................................................................1

                                                   ARTICLE 2

                                                  DEFINITIONS

2.1.     Definitions..........................................................................................1

                                                   ARTICLE 3

                                                 ADMINISTRATION

3.1.     Committees...........................................................................................3

                                                   ARTICLE 4

                                                  PARTICIPANTS

4.1.     Participants.........................................................................................4

                                                   ARTICLE 5

                                 PERFORMANCE SHARE UNITS AVAILABLE FOR THE PLAN

5.1.     Performance Share Units..............................................................................4
5.2.     Recapitalization.....................................................................................4

                                                   ARTICLE 6

                                        GRANT OF PERFORMANCE SHARE UNITS
                                           AND PERFORMANCE OBJECTIVES

6.1.     Grants of  Units.....................................................................................5
6.2.     Performance Objectives...............................................................................5
6.3.     Vesting Schedule.....................................................................................5
6.4.     Adjustment by Plan Administrator.....................................................................6
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6.5.     Notice to Participants...............................................................................6

                                                           ARTICLE 7

                                       PAYMENT OF VESTED PERFORMANCE SHARE UNITS

7.1.     Entitlement to Payment...............................................................................6
7.2.     Deferred Payment.....................................................................................7
7.3.     Memorandum Account...................................................................................7
7.4.     Investment of Accounts...............................................................................7
7.5.     Payment of Deferred Compensation.....................................................................8
7.6.     Acceleration of Payments of Deferred Compensation....................................................8
7.7.     Acceleration of Payment Due to Change in Control.....................................................9

                                                           ARTICLE 8

                                                      GENERAL PROVISIONS

8.1.     Unfunded Obligation..................................................................................9
8.2.     Other Benefits.......................................................................................9
8.3.     Beneficiary.........................................................................................10
8.4.     Withholding of Taxes................................................................................10
8.5.     Nonassignment.......................................................................................10
8.6.     No Right to Continued Employment or Future Grants...................................................10
8.7.     Leaves of Absence...................................................................................10
8.8.     Transfers...........................................................................................10
8.9.     Shareholder Rights..................................................................................10
8.10.    Termination and Amendment...........................................................................11
8.11.    Applicable Law......................................................................................11
8.12.    Compliance with Securities Laws.....................................................................11
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                            BURLINGTON RESOURCES INC.
                        2001 PERFORMANCE SHARE UNIT PLAN

                                    ARTICLE 1

                            ESTABLISHMENT AND PURPOSE

         1.1. Establishment. Burlington Resources Inc. (the "Company") hereby
establishes the Burlington Resources Inc. 2001 Performance Share Unit Plan
effective as of January 1, 2001.

         1.2. Purpose. The purpose of this Plan is to provide additional
incentives for the executives of the Company and its Subsidiaries to increase
the earnings of the Company, to attract and retain executives whose skills are
of critical importance to the Company, and to further the identity of interests
of the Participants and the Company's stockholders through the reinforcement of
long-term corporate strategic goals.

                                    ARTICLE 2

                                   DEFINITIONS

         2.1. Definitions. When used in this Plan, the following terms shall
have the respective meanings set forth below unless the context clearly
indicates otherwise:

                  (a) Beneficiary. The person or persons to whom payments are to
         be paid pursuant to the terms of the Plan in the event of the
         Participant's death.

                  (b) Board. The Board of Directors of the Company.

                  (c) Change in Control. As used in this Plan, the term "Change
         in Control" shall have the same meaning as set forth in the Company's
         Executive Change in Control Severance Plan, as it may be amended from
         time to time.

                  (d) Common Stock. The common stock of the Company, par value
         $.01 per share, or such other classes of share or other securities as
         may be applicable pursuant to the provisions of Section 5.2.

                  (e) Company. Burlington Resources Inc.

                  (f) Compensation Committee. The committee of the Board
         appointed and/or authorized by the Board to administer the Plan.

                  (g) Exchange Act. The Securities Exchange Act of 1934, as
         amended.
<PAGE>   5

                  (h) Fair Market Value. As determined with respect to a
         Performance Share Unit or share of Phantom Stock, Fair Market Value
         shall mean the average of the closing prices of the Common Stock during
         the twenty (20) business days immediately preceding and including the
         Valuation Date, as reported in the NYSE-Composite Transactions by
         Barron's or The Wall Street Journal for such days; provided, however,
         with respect to the payment of a Company Stock Account or for purposes
         of effecting investment transactions with respect to the Company Stock
         Account pursuant to Section 7.4 (other than the initial crediting of
         deferred Units to the Company Stock Account following the end of a
         Performance Cycle), Fair Market Value shall mean the mean between the
         highest and lowest quoted selling prices at which Common Stock was sold
         on such Valuation Date as reported in the NYSE-Composite Transactions
         by Barron's or The Wall Street Journal on the applicable Valuation Date
         or, if no Common Stock was traded on such date, on the next preceding
         day on which Common Stock was so traded. Notwithstanding the foregoing,
         Fair Market Value on the date of a Change in Control shall be equal to
         the greater of (i) the highest price per share of the Company's Common
         Stock as reported in the NYSE-Composite Transactions by The Wall Street
         Journal during the 60-day period ending on the date of the Change in
         Control, or (ii) if the Change in Control is one described in clause
         (a) of Section 2.7 of the Company's Executive Change in Control
         Severance Plan, the highest price per share paid for the Company's
         Common Stock in connection with such Change in Control.

                  (i) Management Committee. The committee designated pursuant to
         the provisions of Article 3.

                  (j) Performance Cycle. That period commencing with January 1
         of each year in which the grant of a Performance Share Unit is made and
         ending on December 31 of the third succeeding year or such other period
         as the Plan Administrator shall designate. The Plan Administrator, in
         its discretion, may initiate one or more overlapping Performance Cycles
         that begin before an existing Performance Cycle has ended.

                  (k) Performance Share Unit or Unit. The unit of award having
         an accounting value equal to the Fair Market Value of one share of
         Common Stock.

                  (l) Permanent Disability. A Participant shall be deemed to
         have become permanently disabled for purposes of this Plan if the
         Management Committee finds, upon the basis of medical evidence
         satisfactory to it, that the Participant is totally disabled, whether
         due to physical or mental condition, so as to be prevented from
         engaging in further employment by the Company or any of its
         Subsidiaries in a position for which the Participant is reasonably
         qualified by reason of his or her education or experience and that such
         disability will be permanent and continuous during the remainder of his
         or her life.

                  (m) Plan Administrator. The Compensation Committee authorized
         pursuant to Section 3 to administer the Plan.
<PAGE>   6

                  (n) Subsidiary. A corporation or other form of business
         association designated by the Compensation Committee and controlled,
         directly or indirectly, by the Company.

                  (o) Valuation Date. The date that is designated by the Plan
         Administrator for the purpose of determining the Fair Market Value of
         vested Units that will be paid to the Participant or Beneficiary and/or
         credited to the Participant's Memorandum Account in accordance with
         Article 7; provided, however, with respect to (1) payment of a
         Participant's Company Stock Account, the Valuation Date shall be the
         date of the Participant's termination of employment, (2) directed
         investment changes in a Company Stock Account, the Valuation Date shall
         be the date such Participant's investment direction is received by the
         Company, (3) phantom dividends credited to the Company Stock Account,
         the Valuation Date shall be the dividend payment date, and (4) a Change
         in Control, the Valuation Date shall be the date of the Change in
         Control.

                                    ARTICLE 3

                                 ADMINISTRATION

         3.1. Committees. The Plan shall be administered by the Plan
Administrator and the Management Committee with each having the responsibilities
and duties specifically assigned to it herein. The Management Committee shall
consist of the Chief Executive Officer of the Company and/or such other senior
officers as he or she shall designate. Subject to such review and approval or
modification as the Plan Administrator deems appropriate, the Management
Committee shall perform all administrative functions not expressly denied to it
or reserved for the Plan Administrator under the terms of the Plan. No member of
the Management Committee shall vote on any matter that pertains solely to
himself or herself.

         With respect to grants made under the Plan to officers and directors of
the Company who are subject to Section 16 of the Exchange Act, the Plan
Administrator shall be constituted at all times solely of non-employee
directors, as defined in the rules promulgated under Section 16(b) of the
Exchange Act, so long as any of the Company's equity securities are registered
pursuant to Section 12(b) or 12(g) of the Exchange Act.

         The Plan Administrator shall have the ultimate responsibility for
granting awards, determining the vesting and value of Units, reviewing the
actions of the Management Committee as it deems appropriate, and performing such
other functions as are specifically assigned to it under the terms of the Plan.
Nothing herein shall prevent the Plan Administrator from obtaining and approving
recommendations of the Management Committee regarding matters reserved to the
Plan Administrator. Notwithstanding anything herein to the contrary, the Plan
Administrator shall have the full authority and power with respect to the Plan's
administration and operation with respect to all matters relating to compliance
with Section 16(b).

<PAGE>   7

                                    ARTICLE 4

                                  PARTICIPANTS

         4.1. Participants. The Plan Administrator shall select the executives
of the Company and its Subsidiaries who are eligible to receive Units under the
Plan (the "Participants"). Participants, in general, will be limited to the
Chairman of the Board, President, Chief Executive Officer, Executive Vice
Presidents, Senior Vice Presidents, Vice Presidents, and other executives of the
Company, and the chief executive officers and other senior executives of the
Subsidiaries who have the principal responsibility for the management, direction
and success of the Company as a whole or of a particular business unit thereof.
Directors of the Company who are full-time executives of the Company or a
Subsidiary shall be eligible to participate in the Plan. Participants may be
selected at the beginning of, or during, a Performance Cycle at the discretion
of the Plan Administrator.

                                    ARTICLE 5

                 PERFORMANCE SHARE UNITS AVAILABLE FOR THE PLAN

         5.1. Performance Share Units. Subject to Section 5.2, the number of
Performance Share Units which may be granted under the Plan is initially set at
1,500,000. If additional Units are needed under the Plan, after such initial
number has been fully utilized, the Board shall authorize such additional Units
as it shall determine to be appropriate for awards under the Plan. Units that
have been granted and are fully vested or that still may become fully vested
under the terms of the Plan shall reduce the number of outstanding Units that
are available for use in making future grants under the Plan. Upon expiration or
termination, in whole or in part, of nonvested Units at the end of a Performance
Cycle or otherwise, such expired or terminated Units shall again be available
for awards under the Plan.

         5.2. Recapitalization. In the event of recapitalization, stock split,
stock dividend, exchanges of shares, merger, reorganization, change in the
corporate structure of the Company or similar event, the Plan Administrator may
make appropriate adjustments in the number of Units authorized for the Plan and,
with respect to outstanding Units, the Plan Administrator may make appropriate
adjustments in the number of Units.
<PAGE>   8

                                    ARTICLE 6

                        GRANT OF PERFORMANCE SHARE UNITS
                           AND PERFORMANCE OBJECTIVES

         6.1. Grants of Units. Units may be granted to the Participants in such
number and at such times during the Performance Cycle as the Plan Administrator
shall determine, taking into account the duties of the respective executives,
their present and potential contributions to the success of the Company or its
Subsidiaries, their compensation provided by other incentive plans, their
salaries, and such other factors as the Plan Administrator shall deem
appropriate. Normally, however, Units will be granted only at the beginning of
each Performance Cycle except in cases where a prorated grant may be made in
mid-cycle to a newly eligible Participant or a Participant whose job
responsibilities have significantly changed during the cycle.

         6.2. Performance Objectives. The Plan Administrator shall have the sole
authority for deciding what measures of corporate performance ("Performance
Targets") are appropriate for (i) judging the success of the Company and its
Subsidiaries in meeting their strategic objectives during the Performance Cycle
and (ii) measuring the contribution of Participants toward such success. At the
request of the Plan Administrator, the Company's Chief Executive Officer shall
submit recommendations to the Plan Administrator regarding applicable
Performance Targets to be adopted for the Units to be awarded for each
Performance Cycle, but such recommendations shall not be binding.

         6.3.  Vesting Schedule.

         (a) Vesting. With respect to each Performance Cycle, the Plan
Administrator shall adopt a vesting schedule which will permit a designated
percentage of the Units granted at the beginning of that Performance Cycle to
vest at the end of each of the years in the Performance Cycle. Vesting for each
year in a Performance Cycle will depend upon vesting guidelines established by
the Plan Administrator which reflect the Company's performance in relation to
the Performance Targets for the appropriate period of the Performance Cycle,
provided that the Plan Administrator may, in its discretion, alter the vesting
guidelines in the event of unusual circumstances. The Plan Administrator may, in
its discretion, carry over to the end of the Performance Cycle any Units that
did not vest during the prior years of the Performance Cycle because of the
Company's performance in relation to the Performance Targets. The vesting
schedule with respect to Participants who begin participation or receive an
additional grant of Units during the Performance Cycle will be determined by the
Plan Administrator at the time of grant.

         (b) Determination of Performance. The annual performance rating
resulting in vesting under Section 6.3(a) shall be determined by the Plan
Administrator based on criteria selected by it such as relationships between
actual and targeted results for Performance Targets, comparisons of relative
performance by the Company and other companies chosen by the Plan Administrator,
and such additional or alternative factors as the Plan Administrator may deem
appropriate.
<PAGE>   9

         (c) Other Vesting Considerations. Becoming vested in a Unit means
acquiring a nonforfeitable right to receive payment for that Unit. The time and
manner of such payment shall be determined under the provisions of the Plan
other than this Section 6.3. A Participant (or his or her Beneficiaries in the
case of his or her death) who has retired, died, become Permanently Disabled, or
who has terminated his or her employment prior to the end of a Performance
Cycle, shall not be entitled to receive payment from the Company or its
Subsidiaries for any Units which were not vested as of the time the Participant
ceased active employment with the Company and its Subsidiaries.

         (d) Change in Control. Notwithstanding the foregoing vesting
provisions, upon a Change in Control, a Participant in the employ of the Company
or a Subsidiary on the date of the Change in Control shall vest in a number of
Units granted to the Participant for each Performance Cycle that had not ended
prior to the date of the Change in Control equal to the difference, if any,
between (i) the product of (A) the total number of Units originally granted to
the Participant for such Performance Cycle multiplied by (B) a fraction the
numerator of which is the number of days in such Performance Cycle from the
first day of such Performance Cycle through the date of such Change in Control
and the denominator of which is the total number of days in such Performance
Cycle as originally established (rounded to the nearest whole number), and (ii)
the number of Units granted to the Participant for such Performance Cycle as to
which the Participant had vested prior to the date of the Change in Control.

         6.4. Adjustment by Plan Administrator. The Plan Administrator may, at
its discretion, change from time to time the Performance Targets and vesting
schedules with respect to nonvested Units to (a) include or exclude
extraordinary or nonrecurring items, (b) reflect changes in prevailing
competitive or general economic conditions, (c) adjust for changes in income tax
laws and regulations or accounting rules, (d) reflect changes in the Company's
financial or corporate structure, as a result of a recapitalization merger,
reorganization, acquisition or divestiture, and (e) reflect other appropriate
major events.

         6.5. Notice to Participants. The Management Committee shall notify each
Participant in writing of the grant of Units to him or her and the Performance
Targets and vesting criteria applicable to such Units.

                                    ARTICLE 7

                    PAYMENT OF VESTED PERFORMANCE SHARE UNITS

         7.1. Entitlement to Payment. Each Unit which has vested shall entitle
the Participant or his or her Beneficiary to receive from the Participant's
employer a lump sum payment in cash as soon as practicable following the
applicable Valuation Date. The amount of such payment shall be determined by
multiplying the number of vested Units by the Fair Market Value of a share of
Common Stock on such Valuation Date. Notwithstanding the foregoing, however, a
Participant
<PAGE>   10

may receive a deferred payment in lieu of all or a portion of a lump sum payment
pursuant to an election described below in this Article 7.

         7.2. Deferred Payment. During the period designated by the Plan
Administrator which shall occur prior to the date on which Units vest, the
Participant may, subject to the consent of the Plan Administrator and in
accordance with procedures that the Management Committee has approved, elect to
have all or a portion of the lump sum payment described in Section 7.1 with
respect to such vested Units deferred until his or her retirement, death,
Permanent Disability, resignation, or other termination of employment with the
Company and its Subsidiaries or until any other specified time that is
acceptable to the Plan Administrator. Such deferred amount shall be paid in
accordance with the remainder of this Article 7 rather than as provided in
Section 7.1, whereas amounts payable with respect to other Units that vest at a
different time in the Performance Cycle and are not subject to a deferred
payment election shall continue to be paid as a lump sum in accordance with
Section 7.1. The deferral election shall be irrevocable and shall be made on a
form approved by the Plan Administrator.

         7.3. Memorandum Account. The Company shall establish a ledger account
(the "Memorandum Account") for each Participant who has elected to defer a
payment pursuant to Section 7.2. Except as provided in Section 7.4, interest
shall accrue on the deferred payment to the date of distribution, and shall be
credited to the Memorandum Account at the end of each calendar quarter or such
other periods as may be determined by the Management Committee (the deferred
payment plus credited interest under the Memorandum Account being the "Interest
Account"). The Management Committee shall determine the rate of interest
periodically.

         7.4. Investment of Accounts. In lieu of investing in the Interest
Account, a Participant may request that the Management Committee (or, with
respect to a Participant who is subject to Section 16(b) of the Exchange Act (an
"Insider"), the Plan Administrator) credit all or a specified percentage of his
or her deferred payment in the Company Stock Account (as defined below), the S&P
Account (as defined below), or in any combination of the Interest Account,
Company Stock Account and/or S&P Account as elected by the Participant; however,
the Management Committee (or, with respect to a Participant who is an Insider,
the Plan Administrator) shall not be obligated to honor any such Participant's
request. If the Management Committee (or the Plan Administrator, as the case may
be) elects to honor any such request, it shall establish a separate
subaccount(s) for such Participant under his or her Memorandum Account, which
shall be credited (i) with respect to the Company Stock Account, with whole and
fractional phantom shares of Common Stock ("Phantom Stock") as of the applicable
date, and with phantom dividends with respect to the credited Phantom Stock,
which shall be credited as being reinvested in additional shares of Phantom
Stock (such credited shares of Phantom Stock being the "Company Stock Account")
and (ii) with respect to the S&P Account, with whole and fractional phantom
units in a Standard & Poor's 500 Composite Stock Price Index fund (or by
reference to a mutual fund selected by the Management Committee that tracks such
index as of the applicable date) and with any phantom distributions on such
credited S&P units, which shall be credited as being reinvested in additional
phantom S&P units (such credited phantom S&P units being the "S&P Account"). All
credits and debits to the Company Stock Account shall be made based on the Fair
<PAGE>   11

Market Value per share of the Common Stock on the applicable Valuation Date,
unless otherwise authorized by the Management Committee (or the Plan
Administrator, as the case may be). If the Management Committee (or the Plan
Administrator, as the case may be) chooses to not honor any Participant's
request to invest his or her Memorandum Account in the Company Stock Account or
the S&P Account, the Participant's deferral automatically shall be held in the
Interest Account.

         Each Participant who has a Memorandum Account under the Plan may
request that all or a specified percentage of his or her Memorandum Account
balance as of any date be reinvested in the Interest Account, Company Stock
Account and/or S&P Account in such proportions as elected by the Participant;
provided, however, the Management Committee (or Plan Administrator, as the case
may be), shall not be obligated to honor any such request. This election shall
be in such form as the Management Committee (or the Plan Administrator, as the
case may be) shall establish and shall comply with all requirements of Section
16(b), to the extent applicable.

         7.5. Payment of Deferred Compensation. Upon retirement, death,
Permanent Disability, resignation or termination of employment of a Participant
who has elected to defer the payment in respect of any Units, the employer shall
pay in cash to the Participant (or his or her Beneficiary in the case of his or
her death) an amount equal to the balance of his or her Memorandum Account, as
follows:

                  (a) a lump sum payment,

                  (b) in 60 consecutive equal monthly installments together with
         an interest adjustment (determined under Section 7.3), or

                  (c) in 120 consecutive equal monthly installments together
         with an interest adjustment (determined under Section 7.3),

whichever form of payment has been elected by the Participant. However, if a
Participant elects to receive the distribution in installments, his or her
Company Stock Account or S&P Account automatically shall be converted into an
Interest Account as of the Participant's date of termination.

         Payment of a Memorandum Account shall commence or be made in the month
following the Participant's retirement, death, Permanent Disability, resignation
or termination of employment or any other specified time that is elected and
acceptable to the Management Committee or the Plan Administrator, as the case
may be.

         7.6. Acceleration of Payments of Deferred Compensation. The Plan
Administrator, in its discretion, may accelerate the payment of all or any
portion of the unpaid balance of a Participant's Memorandum Account upon its
determination that the Participant (or his or her Beneficiary in the case of the
Participant's death) has incurred a severe financial hardship resulting from a
sudden and unexpected illness or accident of such person or of a dependent, a
loss of such person's property due to casualty, or other similar extraordinary
and unforeseeable circumstances
<PAGE>   12

arising as a result of events beyond the control of such person. The Plan
Administrator, in making its determination of severe financial hardship, may
consider such factors and require such information as it deems appropriate, but,
in any case, payment may not be made to the extent that such hardship is or may
be relieved (i) through reimbursement or compensation by insurance or otherwise
or (ii) by liquidation of such person's assets, to the extent liquidation of
such assets will not itself cause severe financial hardship. The Plan
Administrator, in making its determination, may consider such factors and
require such information as it deems appropriate.

         7.7. Acceleration of Payment Due to Change in Control. Upon a Change in
Control, all current Performance Cycles shall immediately end, and all vested
Units (including Units that vest pursuant to Section 6.3(d)) and shares of
Phantom Stock credited under a Company Stock Account shall be valued at their
then Fair Market Value. Each Participant's employer (or the Company in the event
that another employer does not promptly make payment) shall pay the Participant
the Fair Market Value of his or her vested Units and the remaining unpaid
balance of his or her Memorandum Account(s). This payment shall be made in a
lump sum in lieu of any otherwise applicable form and time of payment under the
Plan and shall be made within ten (10) days after the Change in Control;
provided, however, that any Participant may elect during the period designated
by the Management Committee which shall occur prior to the occurrence of a
Change in Control to have the payment in respect to all or a portion of his or
her Units and/or Memorandum Account deferred until his or her retirement, death,
Permanent Disability, resignation or termination of employment. Such a deferral
election shall be irrevocable and shall be made on a form approved by the Plan
Administrator. All deferred payments in respect to Units shall be paid pursuant
to the payment options set forth in Section 7.5.

                                    ARTICLE 8

                               GENERAL PROVISIONS

         8.1. Unfunded Obligation. The deferred amounts to be paid to
Participants pursuant to this Plan are unfunded obligations. Neither the Company
nor any Subsidiary is required to segregate any monies from its general funds,
to create any trusts, or to make any special deposits with respect to this
obligation. Title to and beneficial ownership of any investments including trust
investments which the Company may make to fulfill this obligation shall at all
times remain in the Company. Any investments and the creation or maintenance of
any trust or Memorandum Accounts shall not create or constitute a trust or a
fiduciary relationship between the Compensation Committee, Management Committee,
the Company, or any Subsidiary and a Participant, or otherwise create any vested
or beneficial interest in any Participant or his or her Beneficiary or his or
her creditors in any assets of the Company or its Subsidiaries whatsoever. The
Participants shall have no claim against the Company for any changes in the
value of any assets which may be invested or reinvested by the Company with
respect to this Plan.

         8.2. Other Benefits. Grants, vesting, or payment of Performance Share
Units shall not be considered as part of a Participant's salary or used for the
calculation of any other pay, allow-
<PAGE>   13

ance, pension or other benefit unless otherwise permitted by other benefit plans
provided by the Company or its Subsidiaries, or required by law or by
contractual obligations of the Company or its Subsidiaries.

         8.3. Beneficiary. The term "Beneficiary" shall mean the person or
persons to whom payments are to be paid pursuant to the terms of the Plan in the
event of the Participant's death. The designation shall be on a form provided by
the Management Committee executed by the Participant (with the consent of the
Participant's spouse, if required by the Management Committee for reasons of
community property or otherwise), and delivered to the Management Committee. A
Participant may change his or her Beneficiary designation at any time. If no
Beneficiary is designated, if the designation is ineffective, or in the event
the Beneficiary dies before the balance of the Memorandum Account is paid, the
balance shall be paid to the Participant's spouse or if there is no surviving
spouse, to his or her lineal descendants, pro rata, or if there in no surviving
spouse or lineal descendants, to the Participant's estate. Notwithstanding the
foregoing, however, a Participant's Beneficiary shall be determined under
applicable state law if such state law either preempts or does not recognize
Beneficiary designations under plans of this sort.

         8.4. Withholding of Taxes. Appropriate income and FICA tax withholdings
shall be made from payments pursuant to this Plan and from other wages of
Participants, as required under applicable law.

         8.5. Nonassignment. The right of a Participant or Beneficiary to the
payment of any compensation under the Plan may not be assigned, transferred,
pledged or encumbered nor shall such right or other interests be subject to
attachment, garnishment, execution or other legal process.

         8.6. No Right to Continued Employment or Future Grants. Nothing in the
Plan shall be construed to confer upon any Participant any right to continued
employment with the Company or a Subsidiary, nor interfere in any way with the
right of the Company or a Subsidiary to terminate the employment of such
Participant at any time without assigning any reasons therefor. The grant of a
Unit to a Participant shall not give the Participant any right to subsequent
grants of Units under the Plan.

         8.7. Leaves of Absence. Leaves of absence for such periods and purpose
conforming to the personnel policy of the Company, or of its Subsidiaries as
applicable, shall not be deemed termination of employment.

         8.8. Transfers. In the event a Participant is transferred from the
Company to a Subsidiary, or vice versa, or is promoted or given different
responsibilities, the Units granted to him or her prior to such date shall not
be affected.

         8.9. Shareholder Rights. The grant of a Unit shall not entitle a
Participant or Beneficiary to any dividend, voting or other rights as a
shareholder of the Company.
<PAGE>   14

         8.10. Termination and Amendment. The Board or the Compensation
Committee may from time to time amend, suspend or terminate the Plan in whole or
in part; provided, however, no such action shall be allowed to impair the right
of a Participant to receive payment with respect to Units that have vested as of
such date without the consent or such Participant. The Management Committee may
amend the Plan, without Board or Compensation Committee approval, to ensure that
the Company may obtain any regulatory approval or to accomplish any other
reasonable purpose, provided that the amendments do not materially increase the
cost of the Plan to the Company and its Subsidiaries, and do not substantially
alter the level of benefits under the Plan or expand the classification of
employees eligible to participate in the Plan. If the Plan is suspended or
terminated, the Board may reinstate any or all of its provisions.

         8.11. Applicable Law. The Plan shall be construed and governed in
accordance with the laws of the State of Texas, except that it shall be
construed and governed in accordance with applicable federal law in the event
that such federal law preempts state law.

         8.12. Compliance with Securities Laws. It is the intention of the
Company that, so long as any of the Company's equity securities are registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, the Plan shall be
operated in compliance with Section 16(b) of the Exchange Act and, if any Plan
provision or transaction is found not to comply with Section 16(b), that
provision or transaction, as the case may be, shall be deemed null and void ab
initio. Notwithstanding anything in the Plan to the contrary, the Board or the
Compensation Committee, in its absolute discretion, may bifurcate the Plan so as
to restrict, limit or condition any provision of the Plan to Participants who
are officers and directors subject to Section 16(b) of the Exchange Act without
so restricting, limiting or conditioning the Plan with respect to other
Participants.<PAGE>   1
                                                                     EXHIBIT 4.1

                              TERMINATION AGREEMENT

         This Termination Agreement (this "Agreement") by and between The
Meridian Resource Corporation, a Texas corporation ("Meridian"), and Shell
Louisiana Onshore Properties Inc., a Delaware corporation ("SLOPI"), is entered
into this 29th day of January, 2001.

                               W I T N E S S E T H

         WHEREAS, Meridian and SLOPI entered into that certain Option and
Standstill Agreement dated July 17, 2000 (the "Option Agreement");

         WHEREAS, in connection with Meridian's exercise of the Option (as
defined in the Option Agreement), Meridian and SLOPI propose to enter into
various agreements, including a Registration Rights Agreement dated the date
hereof;

         WHEREAS, Meridian and SLOPI entered into that certain Stock Rights and
Restrictions Agreement dated June 30, 1998 (the "Stock Rights and Restrictions
Agreement"), a copy of which is attached to this Agreement as ANNEX A, and that
certain Registration Rights Agreement dated June 30, 1998 (the "1998
Registration Rights Agreement"), a copy of which is attached to this Agreement
as ANNEX B; and

         WHEREAS, Meridian and SLOPI desire to terminate the Stock Rights and
Restrictions Agreement and the 1998 Registration Rights Agreement upon the
closing of the exercise of the Option (the "Effective Time").

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

         1. Meridian and SLOPI mutually agree that the Stock Rights and
Restrictions Agreement and the 1998 Registration Rights Agreement shall be
terminated and canceled and shall be of no further force and effect as of the
Effective Time. Meridian and SLOPI mutually agree that Section 2.1(c) of the
Stock Rights and Restrictions Agreement will not survive the termination of the
Stock Rights and Restrictions Agreement.

         2. This Agreement constitutes the entire understanding and agreement
between Meridian and SLOPI with respect to the subject matter hereof and
supersedes all prior negotiations, understandings and agreements between them
relating to the same subject matter.

                         [SIGNATURES BEGIN ON NEXT PAGE]
<PAGE>   2

         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
agreement on the date first written above.

                                         THE MERIDIAN RESOURCE CORPORATION

                                                 /s/ Joseph A. Reeves, Jr.
                                         ---------------------------------------
                                                     Joseph A. Reeves, Jr.
                                                     Chairman of the Board
                                                   and Chief Executive Officer

                                         SHELL LOUISIANA ONSHORE PROPERTIES INC.

                                         By:       /s/ R.V. Deere
                                            ------------------------------------
                                         Name:         R.V. Deere
                                              ----------------------------------
                                         Title:        Treasurer
                                               ---------------------------------

                                      -2-

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