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                                                                    EXHIBIT 10.1

                               APACHE CORPORATION
                             INCOME CONTINUANCE PLAN
                 (AS AMENDED AND RESTATED EFFECTIVE MAY 3, 2001)

The Company desires to provide income continuance benefits to the following
groups of its employees in case there is a change of control affecting the
Company, for the reasons indicated:

                  (i) Those 40 years of age and older, a protected class under
         federal and state age discrimination laws, because it has been
         determined that they typically have more difficulty in finding new
         employment than younger persons;

                  (ii) Those who have been continuously employed by the Company
         for 10 years or more, because they have demonstrated their personal
         commitment to the success of the Company;

                  (iii) Those whose special skills, experience or potential
         justify their inclusion in order to acquire or retain their services;
         and

                  (iv) Those who are officers of the Company.

The Company adopted this Plan on January 10, 1986 in order to protect the income
and other employee benefits of the Company's Employees and in order to induce
the Employees to remain in the employ of the Company for the ultimate benefit of
the Company and its shareholders.

The Plan is intended to create a binding legal relationship between the Company
and each Employee, and a copy of the Plan together with applicable conditions
will be given to each Employee.

Section 1. Definitions.

         (a) "Base Compensation" shall mean the total of all compensation,
including wages, salary, and any other incentive compensation, bonuses,
commissions and non-salary and non-wage cash compensation, which was paid as
consideration for the Employee's service during the year immediately preceding
the Termination Date, or which would have been so paid at the Employee's usual
rate of compensation if the Employee had worked a full year.

         (b) "Benefit Period" shall mean a period commencing on the Termination
Date of the Employee and ending 24 months thereafter.

         (c) "Change of Control" shall mean the event occurring when a person,
partnership or corporation together with all persons, partnerships or
corporations acting in concert with each person, partnership or corporation, or
any or all of them, acquires

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more than 20% of the Company's outstanding voting securities; provided that a
Change of Control shall not occur if such persons, partnerships or corporations
acquiring more than 20% of the Company's voting securities is solicited to do so
by the Company's board of directors, upon its own initiative, and such persons,
partnerships or corporations have not previously proposed to acquire more than
20% of the Company's voting securities in an unsolicited offer made either to
the Company's board of directors or directly to the stockholders of the Company.

         (d) "Company" shall mean Apache Corporation, a Delaware corporation,
whose headquarters is in Houston, Texas, and, unless the context indicates
otherwise, its wholly-owned subsidiaries and affiliates. "Affiliate" shall mean
any and all entities in which the Company shall have a 75% ownership interest of
the shares having voting power for the election of directors.

         (e) "Effective Date" shall mean the date on which a Change of Control
takes place.

         (f) "Employee" shall mean each regular exempt or non-exempt employee of
the Company on the Effective Date or the Termination Date who:

                  (i) is 40 years of age or older; or

                  (ii) has been continuously employed by the Company for 10
         years or more; or

                  (iii) has been designated by the Board of Directors as having
         special skills, experience or potential which warrant extension of the
         Plan to them; or

                  (iv) is an officer of the Company.

         (g) "Plan" shall mean the Income Continuance Plan of the Company, as
amended.

         (h) "Termination Date" shall mean:

                  (i) if termination is by the Company or its successor, the
         date on which an authorized written or oral statement is conveyed to
         the Employee indicating that the Employee's employment is terminated;
         or

                  (ii) if termination is by the Employee, the date on which the
         Employee delivers a written notice to the Company or its successor
         advising of termination of employment.

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Section 2. Effective Date of Plan.

The income protection benefits described in this Plan shall come into effect
only if the employment of an Employee is terminated on or after the Effective
Date.

Section 3. Termination of Employment.

The employment of an Employee shall be deemed to have been terminated within the
meaning of this Plan if one of the following events occur:

         (a) the Company or its successor terminates the employment of an
Employee for any reason on or after the Effective Date, unless the termination
results from an act of the Employee that is materially detrimental to the best
interests of the Company or its successor and the act constitutes common law
fraud, a felony or a gross malfeasance of duty; or

         (b) the Employee, on his own volition, terminates the employment
relationship on or after the Effective Date due to changed circumstances
occurring on or after the Effective Date, which are adverse to the best interest
of the Employee, including without limitation:

                  (i) a significant change in the title, duties, authority or
         compensation of the Employee; or

                  (ii) the assignment of the Employee to a regular work place
         which is more than 50 miles distant from the Employee's regular work
         place on the Effective Date.

Section 4. Income Protection Benefits.

During the Benefit Period, the Company or its successor shall pay and provide to
the Employee the following income continuation and fringe benefits:

         (a) A monthly payment on or about the fifteenth day of each month (or,
in the case of the initial payment, as soon thereafter as is reasonably
practicable), which shall equal 1/12 of the Base Compensation of the Employee;
provided, that such payments may be accelerated in accordance with the terms of
any arrangement adopted by the Company to fund the Company's obligations
hereunder; and provided further, that

                  (i) For an Employee other than an officer of the Company whose
         continuous service with the Company on the Termination Date is less
         than 48 months, the Benefit Period shall be reduced to 1/2 the number
         of months of the Employee's continuous service; and

                  (ii) The Benefit Period for an Employee can be extended to the
         full Benefit Period term of 24 months, if the Board of Directors by
         majority vote concludes it is reasonably required in order to induce an
         individual to

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         accept employment with the Company, or in order to retain an existing
         Employee of the Company.

         (b) Continued comparable health and life insurance benefits as of the
Effective Date at no increase in cost to the Employee; and

         (c) All expenses, including attorneys' fees, which may be incurred by
the Employee in enforcing the Employee's rights against the Company or its
successor under this Plan, whether or not the Employee is successful.

The foregoing payments and benefits shall be paid and provided to the Employee
by the Company or its successor whether or not they are deductible by the
Company or its successor for federal or state income tax purposes. In case of
death of an Employee during the Benefit Period, all payments and benefits
hereunder which have not yet been paid shall be paid to the beneficiary
designated by the Employee. If the Employee has failed to designate a
beneficiary, such payments and benefits shall be paid to the Employee's
surviving spouse or, if there is no surviving spouse, to the Employee's estate.

Section 5. Terms of Plan; Termination.

This Plan is terminable at any time by the majority vote of the Board of
Directors of the Company or its successor upon six months' prior written notice
delivered to all Employees, provided that the Company or its successor shall be
prohibited from delivering notice of termination of the Plan during the two year
period immediately subsequent to the Effective Date.

Section 6. Amendment.

This Plan can be amended at any time by the Company on the following conditions:

         (a) No amendment shall be adopted by the Company or its successor
subsequent to the Effective Date.

         (b) Immediately after adopting any amendment, the Company shall provide
to Employees a written statement of this Plan, as amended, and no amendments
shall be effective as to any Employee, until the Employee has received the
statement. An Employee will be deemed to have received the written statement of
the Plan if it is delivered in person or after 48 hours of dispatch by mail or
other suitable means of delivery to the last known address of the Employee.

Section 7. Other Plans and Contracts.

It is the intention of the Company that the benefits provided for in this Plan
are in addition to, and not in lieu of any other rights, privileges or benefits
to which the Employee may now or hereafter be entitled under any contract,
arrangement, plan or other policy applicable to any Employee with the Company or
any other employer.

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Section 8. Applicable Law.

This Plan shall be interpreted to have been made in the State of Texas and the
laws of the State of Texas shall control.

Dated May 3, 2001.

                                        APACHE CORPORATION

ATTEST:

/s/ Cheri L. Peper                  By: /s/ Jeffrey M. Bender
-----------------------------           ----------------------------------------
Cheri L. Peper                          Jeffrey M. Bender
Corporate Secretary                     Vice President

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                                                                    EXHIBIT 10.1

                     FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

         THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this "FIRST AMENDMENT")
dated as of March 8, 2001 (the "AMENDMENT EFFECTIVE DATE") by and between The
Houston Exploration Company, a Delaware corporation (the "COMPANY"), and Thomas
W. Powers (the "EXECUTIVE").

                                   WITNESSETH:

         WHEREAS, the Company and the Executive entered into an Employment
Agreement dated as of July 2, 1996 (the "AGREEMENT") with an Effective Date of
September 19, 1996; and

         WHEREAS, the Company and the Executive hereby desire to amend the
Agreement as set forth 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. The Agreement shall be amended to reflect that the Executive's
position with the Company shall be that of Senior Vice President, Chief
Financial Officer and Treasurer.

         2. The Agreement shall be amended by adding the following provisions to
the end of Section 1:

                  The Executive agrees to continue his employment with the
                  Company notwithstanding the retirement of James G. Floyd as
                  President and Chief Executive Officer of the Company for at
                  least the period of time described in the next sentence (and
                  potentially thereafter). This period of continued employment
                  shall begin on the Amendment Effective Date and expire on
                  April 1, 2002. On April 1, 2002, the Executive shall have
                  thirty (30) days within which to provide the Company with a
                  Notice of Termination pursuant to Section 7 hereof. If the
                  Executive provides the Company with a Notice of Termination
                  within this period, the Executive shall be entitled to all
                  payments, additional compensation and benefits (including, but
                  not limited to, the payment described in Section 7(e) of 2.99
                  times Total Compensation, and vesting of stock options and
                  phantom stock) described in this Agreement as if a Change of
                  Control had occurred (whether or not a Change of Control
                  actually occurred or has occurred at such date) upon the
                  effective date specified in the Notice of Termination, such
                  effective date to be not more than ninety (90) days after the
                  date of the Notice of Termination). If the Executive does not
                  provide a Notice of Termination within the thirty (30) day
                  period, the Executive's employment with the Company shall
                  continue and this Agreement shall remain in full force and
                  effect according to its terms.

         3. Effective as of April 1, 2001, the Agreement shall be amended by
changing the salary per year referenced in Section 3 from "$140,000 per year" to
"$250,000 per year."

         4. The Agreement shall be amended by deleting the language in Section
7(e) after paragraph (iii) thereof in the definition of the term "Good Reason"
continued in subparts (G)(1)_(4), which formerly required that certain events
also occur before a Change of Control would constitute Good Reason and trigger
the lump sum severance payments provided in Section 7(e). As amended, subpart
(G) of the definition of Good Reason now reads in its entirety as follows:

                           (G)      the occurrence of a Change of Control.

         5. The Agreement shall be amended by modifying the second sentence of
Section 6(a) to provide that the termination of the Agreement will also
terminate the non-compete provisions contained therein. As amended, Section 6(a)
now reads in its entirety as follows:

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                  (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 the competing business on 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 after the
                           Executive's Term of Employment 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).

         6. The Agreement shall be amended to clarify the scope of the term
"total compensation" in Section 7(e). Section 7(e)(i) shall be amended to read
in its entirety as follows:

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

The following provision shall be added to the end of Section 7(e):

         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 hereto.

         7. Exhibit A to the Agreement shall be amended by changing the
"Percentage of Salary for Target Annual Bonus" for the Executive from 45% to
55%.

         8. The Agreement shall be amended by modifying the last sentence of
Section 14 to read in its entirety as follows:

                           This Agreement, as amended by the First Amendment,
                           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.

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         9. Except as expressly amended hereby, the Company and the Executive
ratify and confirm all terms and conditions of the Agreement as continuing in
full force and effect.

         IN WITNESS WHEREOF, the parties hereto have duly executed this First
Amendment as of the date first above written.

                                  THE HOUSTON EXPLORATION COMPANY
Addresses:

                                       By: /s/ Robert B. Catell
                                          --------------------------------------
1100 Louisiana, Suite 2000             Name: Robert B. Catell
Houston, Texas 77002                   Title: Chairman, Compensation Committee

                                       By: /s/ Thomas W. Powers
                                          --------------------------------------
1100 Louisiana, Suite 2000                Thomas W. Powers
Houston, Texas 77002

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