Document:

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                                                                  EXHIBIT 10.24

                        THE HOUSTON EXPLORATION COMPANY
                      1999 NON-QUALIFIED STOCK OPTION PLAN

                                   ARTICLE I

                                      PLAN

                  Section 1.1 Purpose. This Plan is for non-employee directors
of the Company and employees, consultants and advisors of the Company and its
Affiliates, other than officers who are subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended, and is intended to advance the
best interests of the Company, its Affiliates, and its stockholders by
providing those persons who have substantial responsibility for the management
and growth of the Company and its Affiliates with additional incentives and an
opportunity to obtain or increase their proprietary interest in the Company,
thereby encouraging them to continue as directors or in the employ of the
Company or any of its Affiliates.

                  Section 1.2 Effective Date of Plan. This Plan is effective
October 26, 1999 (the "Effective Date"). No Option shall be granted pursuant to
this Plan after October 26, 2009.

                                   ARTICLE II

                                  DEFINITIONS

                  The words and phrases defined in this Article shall have the
meaning set out in these definitions throughout this Plan, unless the context
in which any such word or phrase appears reasonably requires a broader,
narrower, or different meaning.

                  "Affiliate" means any parent corporation and any subsidiary
         corporation. The term "parent corporation" means any corporation
         (other than the Company) in an unbroken chain of corporations ending
         with the Company if, at the time of the action or transaction, each of
         the corporations other than the Company owns stock possessing 50% or
         more of the total combined voting power of all classes of stock in one
         of the other corporations in the chain. The term "subsidiary
         corporation" means any corporation (other than the Company) in an
         unbroken chain of corporations beginning with the Company if, at the
         time of the action or transaction, each of the corporations other than
         the last corporation in the unbroken chain owns stock possessing 50%
         or more of the total combined voting power of all classes of stock in
         one of the other corporations in the chain.

                  "Board" means the board of directors of the Company.

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                  "Change of Control" means:

                           (i) the acquisition 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 20 percent 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 (D) any acquisition
         by any corporation pursuant to a transaction which complies with
         clauses (A), (B) and (C) of subsection (iii) hereof; or

                           (ii) the 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 stockholders,
         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) the 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") unless, in each case, 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 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 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 (1) any corporation resulting form such
         Corporate Transaction or any employee benefit plan (or related trust)
         of the Company or such corporation resulting from

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         such Corporate Transaction and (2) any Person approved by the
         Incumbent Board) beneficially owns, directly or indirectly, 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.

                  "Committee" means the Compensation Committee of the Board or
         such other committee designated by the Board. The Committee shall be
         comprised solely of at least two members who are Outside Directors.

                  "Company" means The Houston Exploration Company, a Delaware
         corporation.

                  "Disability" means a physical or mental infirmity which, in
         the opinion of a physician selected by the Committee, shall prevent
         the Employee from earning a reasonable livelihood with the Company or
         any Affiliate and which can be expected to result in death or which
         has lasted or can be expected to last for a continuous period of not
         less than 12 months and which: (a) was not contracted, suffered or
         incurred while the Employee was engaged in, or did not result from
         having engaged in, a felonious criminal enterprise; (b) did not result
         from alcoholism or addition to narcotics; and (c) did not result from
         an injury incurred while a member of the Armed Forces of the United
         States for which the Employee receives a military pension.

                  "Employee" means an employee of the Company or any Affiliate.

                  "Fair Market Value" of the Stock as of any date means (a) the
         closing sales price of the Stock on that date (or, if there was no
         sale on such date, the next preceding date on which there was such a
         sale) on the principal securities exchange on which the Stock is
         listed; or (b) if the Stock is not listed on a securities exchange,
         the average of the high and low sale prices of the Stock on that date
         (or, if there was no sale on such date, the next preceding date on
         which there was such a sale) as reported on the Nasdaq Stock Market;
         or (c) if the Stock is not listed on the Nasdaq Stock Market, the
         average of the high and low bid quotations for the Stock on that date
         as reported by the National Quotation Bureau Incorporated; or (d) if
         none of the foregoing is applicable, an amount at the election of the
         Committee equal to (x) the average between the closing bid and ask
         prices per share of Stock on the last preceding date on which those
         prices were reported or (y) an amount as determined by the Committee
         in its sole discretion.

                  "Non-Employee Director" means a member of the Board of
         Directors who is not an employee, consultant or advisor of the Company
         or its subsidiaries.

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                  "Option" means a nonqualified option granted under this Plan
         to purchase shares of Stock.

                  "Option Agreement" means the written agreement which sets out
         the terms of an Option.

                  "Optionee" means a person who is granted an Option under this
         Plan.

                  "Outside Director" means a member of the Board of Directors
         serving on the Committee who satisfies the criteria of Section 162(m)
         of the Internal Revenue Code of 1986, as amended.

                  "Plan" means The Houston Exploration Company 1999
         Nonqualified Stock Option Plan, as set out in this document and as it
         may be amended from time to time.

                  "Stock" means the common stock of the Company, $.01 par value
         or, in the event that the outstanding shares of common stock are later
         changed into or exchanged for a different class of stock or securities
         of the Company or another corporation, that other stock or security.

                                  ARTICLE III

                                  ELIGIBILITY

                  The individuals who shall be eligible to receive Options
shall be (i) those employees, consultants and advisors of the Company or any of
its Affiliates as the Committee shall determine from time to time, but
excluding any such individual who is a senior managing officer of the Company,
and (ii) those individuals who are Non-Employee Directors; provided, however,
that Non- Employee Directors shall be eligible only to receive Options pursuant
to Section 5.6.

                                   ARTICLE IV

                     GENERAL PROVISIONS RELATING TO OPTIONS

                  Section 4.1 Authority to Grant Options. The Committee may
grant to those eligible individuals (other than Non-Employee Directors), as it
shall from time to time determine, Options under the terms and conditions of
this Plan. Subject only to any applicable limitations set out in this Plan, the
number of shares of Stock to be covered by any Option to be granted to an
Employee, consultant or advisor of the Company or any of its Affiliates shall
be as determined by the Committee. Non-Employee Directors shall automatically
receive grants of Options as provided in Section 5.6.

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                  Section 4.2 Dedicated Shares. The total number of shares of
Stock with respect to which Options may be granted under the Plan shall be
400,000 shares of Stock; provided, however, in the event that any outstanding
Option shall expire or terminate for any reason other than exercise or any
Option is surrendered unexercised, the shares of Stock allocable to the
unexercised portion of that Option may again be subject to an Option under the
Plan. The shares may be treasury shares or authorized but unissued shares. The
number of shares stated in this Section 4.2 shall be subject to adjustment in
accordance with the provisions of Section 4.5.

                  Section 4.3 Non-Transferability. Options shall not be
transferable by the Optionee otherwise than by will or under the laws of
descent and distribution, and shall be exercisable during the Optionee's
lifetime only by him.

                  Section 4.4 Requirements of Law. The Company shall not be
required to sell or issue any Stock under any Option if issuing that Stock
would constitute or result in a violation by the Optionee or the Company of any
provision of any law, statute, or regulation of any governmental authority.
Specifically, in connection with any applicable statute or regulation relating
to the registration of securities, upon exercise of any Option, the Company
shall not be required to issue any Stock unless the Committee has received
evidence satisfactory to it to the effect that the holder of that Option will
not transfer the Stock except in accordance with applicable law, including
receipt of an opinion of counsel satisfactory to the Company to the effect that
any proposed transfer complies with applicable law. The determination by the
Committee on this matter shall be final, binding and conclusive. The Company
may, but shall in no event be obligated to, register any Stock covered by this
Plan pursuant to applicable securities laws of any country or any political
subdivision. In the event the Stock issuable on exercise of an Option is not
registered, the Company may imprint on the certificate evidencing the Stock any
legend that counsel for the Company considers necessary or advisable to comply
with applicable law. The Company shall not be obligated to take any other
affirmative action in order to cause the exercise of an Option and the issuance
of shares thereunder, to comply with any law or regulation of any governmental
authority.

                  Section 4.5 Changes in the Company's Capital Structure. The
existence of outstanding Options shall not affect in any way the right or power
of the Company or its stockholders to make or authorize any adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock or its rights, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

                  If the Company shall effect a subdivision or consolidation of
shares or other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares of the Stock outstanding, without
receiving compensation for it in money, services or property then (a) the
number, class, and per share price of shares of Stock subject to outstanding
Options under this

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Plan shall be appropriately adjusted in such a manner as to entitle an Optionee
to receive upon exercise of an Option, for the same aggregate cash
consideration, the equivalent total number and class of shares he would have
received had he exercised his Option in full immediately prior to the event
requiring the adjustment; and (b) the number and class of shares of Stock then
reserved to be issued under the Plan shall be adjusted by substituting for the
total number and class of shares of Stock then reserved, that number and class
of shares of Stock that would have been received by the owner of an equal
number of outstanding shares of such class of Stock as result of the event
requiring the adjustment.

                  If the Company is merged or consolidated with another
corporation and the Company is not the surviving corporation, or if the Company
is liquidated or sells or otherwise disposes of all or substantially all its
assets while unexercised Options remain outstanding under this Plan, (a)
subject to the provisions of clause (c) below, after the effective time of the
merger, consolidation, liquidation, sale or other disposition, as the case may
be, each holder of an outstanding Option shall be entitled, upon exercise of
the Option, to receive, in lieu of shares of Stock, the number and class or
classes of shares of stock or other securities or property to which the holder
would have been entitled if, immediately prior to the merger, consolidation,
liquidation, sale or other disposition, the holder had been the holder of
record of a number of shares of Stock equal to the number of shares as to which
the Option shall be so exercised; (b) the Committee shall waive any limitations
set out in or imposed under this Plan so that all Options, from and after a
date prior to the effective date of the merger, consolidation, liquidation,
sale or other disposition, as the case may be, specified by the Committee,
shall be exercisable in full; and (c) all outstanding Options may be canceled
by the Committee as of the effective date of any merger, consolidation,
liquidation, sale or other disposition, if (i) notice of cancellation shall be
given to each holder of an Option and (ii) each holder of an Option shall have
the right to exercise that Option in full (without regard to any limitations
set out in or imposed under this Plan or the Option Agreement granting that
Option) during a period set by the Committee preceding the effective date of
the merger, consolidation, liquidation, sale or other disposition and, if in
the event all outstanding Options may not be exercised in full under applicable
securities laws without registration of the shares of Stock issuable on
exercise of the Options, the Committee may limit the exercise of the Options to
the number of shares of Stock, if any, as may be issued without registration
and the method of choosing which Options may be exercised, and the number of
shares of Stock for such Options may be exercised, shall be solely within the
discretion of the Committee.

                  The issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights
or warrants to subscribe for them, or upon conversion of shares or obligations
of the Company convertible into shares or other securities, shall not affect,
and no adjustment by reason of such issuance shall be made with respect to, the
number, class, or price of shares of Stock then subject to outstanding Options.

                  Section  4.6  Changes of Control. In the event of a Change
of Control, the Committee may, in its discretion, at the time an Option is
granted or any time thereafter: (i) provide

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for the acceleration of any time period relating to the exercise of the Option,
(ii) provide for the purchase of the Option upon the Optionee's request for an
amount of cash or other property that could have been received upon the
exercise of the Option had the Option been then currently exercisable, (iii)
adjust the terms of the Option in a manner determined by the Committee to
reflect the Change of Control, (iv) cause the Option to be assumed, or new
rights substituted therefore, by another entity, or (v) make such other
provisions as the Committee may consider equitable and in the best interest of
the Company. Any transaction described in this Section that is approved by the
Committee will be effective only if a committee of the Board that is composed
solely of two or more Non-Employee Directors approves of the transaction,
unless the transaction would not otherwise subject the Optionee to potential
liability under Section 16(b) of the Securities Exchange of 1934, as amended.

                                   ARTICLE V

                                    OPTIONS

                  Section 5.1 Option Price. The price at which Stock may be
purchased under an Option shall not be less than the greater of: (a) 100% of
the Fair Market Value of the shares of Stock on the date the Option is granted
or (b) the aggregate par value of the shares of Stock on the date the Option is
granted.

                  Section 5.2 Duration of Options. No Option shall be
exercisable after the expiration of 10 years from the date the Option is
granted.

                  Section 5.3 Amount Exercisable. Except as provided in Section
5.5 below, each Option may be exercised from time to time, in whole or in part,
in the manner and subject to the conditions the Committee, in its sole
discretion, may provide in the Option Agreement, as long as the Option is valid
and outstanding.

                  Section 5.4 Exercise of Options. Each Option shall be
exercised by the delivery of written notice to the Committee setting forth the
number of shares of Stock with respect to which the Option is to be exercised,
together with: (a) cash, certified check, bank draft, or postal or express
money order payable to the order of the Company for an amount equal to the
option price of the shares, (b) if approved by a Committee, Stock at its Fair
Market Value on the date of exercise, and/or any other form of payment which is
acceptable to such Committee, or (c) through a "cashless broker" exercise
procedure approved by the Company, and specifying the address to which the
certificates for the shares are to be mailed. Subject to Section 8.3, as
promptly as practicable after receipt of written notification and payment, the
Company shall, deliver to the Optionee certificates for the number of shares
with respect to which the Option has been exercised, issued in the Optionee's
name. If shares of Stock are used in payment of the exercise price, the
aggregate Fair Market Value of the shares of Stock tendered (which may be a
"constructive" tender) must be equal to or less than the aggregate exercise
price of the shares being purchased upon exercise of the Option, and any

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difference must be paid by cash, certified check, bank draft, or postal or
express money order payable to the Company. Delivery of the shares shall be
deemed effected for all purposes when a stock transfer agent of the Company
shall have deposited the certificates in the United States mail, addressed to
the Optionee, at the address specified by the Optionee.

                  Section 5.5 No Rights as Stockholder. No Optionee shall have
any rights as a stockholder with respect to Stock covered by his Option until
the date a stock certificate is issued for the Stock.

                  Section  5.6   Director Options.

                  (a) Each individual who becomes a Non-Employee Director upon
his or her first election to the Board after the Effective Date shall
automatically receive an Option for 5,000 shares of Stock on the date of his or
her election as a Non-Employee Director.

                  (b) On September 20 of each year that this Plan is in effect
(commencing with September 20, 2000), each individual who is a Non-Employee
Director on such date shall automatically receive an Option for 2,000 shares of
Stock on such date; provided, however, that if September 20 of any year in
which such Option share to be granted falls on a day which is not a business
day, such Options shall be granted on the next following business day.

                  (c) Each Option granted to a Non-Employee Director pursuant
to this Section 5.6 will be subject to the following provisions:

                           (i)  Each such Option shall be fully vested and
         exercisable on its date of grant; and

                           (ii) Each such Option shall have a term of 10 years
         from the date the Option is granted; provided, however, that if the
         Non-Employee Director ceases to serve as a director of the Company for
         any reason, including death, each such Option shall terminate on the
         earlier to occur of (A) the first anniversary of the date on which
         such Non-Employee Director ceased to serve as a director of the
         Company and the (B) 10th anniversary of the date of grant of such
         Option.

                  (d) In the event that the number of shares of Stock available
for grant under this Plan is insufficient to make all automatic grants provided
for in this Section 5.6 on the applicable date, then each Non-Employee Director
shall receive an Option for his or her pro rata share of the total number of
shares of Stock then available for grant under this Plan and shall have no
right to receive a grant with respect to the deficiencies in the number of
available shares, and all future grants under this Section 5.6 shall terminate.

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                                   ARTICLE VI

                                 ADMINISTRATION

                  This Plan shall be administered by the Committee. All
questions of interpretation and application of this Plan and Options shall be
subject to the determination of the Committee. A majority of the members of the
Committee shall constitute a quorum. All determinations of the Committee shall
be made by a majority of its members. Any decision or determination reduced to
writing and signed by a majority of the members shall be as effective as if it
had been made by a majority vote at a meeting properly called and held. In
carrying out its authority under this Plan, the Committee shall have full and
final authority and discretion, including but not limited to the following
rights, powers and authorities, to:

                  (a)  determine the persons to whom and the time or times at
which Options will be made,

                  (b)  determine the number of shares and the purchase price of
Stock covered in each Option, subject to the terms of the Plan,

                  (c)  determine the terms, provisions and conditions of each
Option, which need not be identical,

                  (d)  accelerate the time at which any outstanding Option may
be exercised,

                  (e)  define the effect, if any, on an Option of the death,
disability, retirement, or termination of employment of the Optionee,

                  (f)  prescribe, amend and rescind rules and regulations
relating to administration of this Plan, and

                  (g)  make all other determinations and take all other actions
deemed necessary, appropriate, or advisable for the proper administration of
this Plan.

The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of this Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive
and binding on all parties.

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                                  ARTICLE VII

                        AMENDMENT OR TERMINATION OF PLAN

                  The Board may amend, terminate or suspend this Plan at any
time, in its sole and absolute discretion.

                                  ARTICLE VIII

                                 MISCELLANEOUS

                  Section 8.1 No Establishment of a Trust Fund. No property
shall be set aside nor shall a trust fund of any kind be established to secure
the rights of any Optionee under this Plan. All Optionees shall at all times
rely solely upon the general credit of the Company for the payment of any
benefit which becomes payable under this Plan.

                  Section 8.2 No Employment Obligation. The granting of any
Option shall not constitute an employment contract, express or implied, nor
impose upon the Company or any Affiliate any obligation to employ or continue
to employ any Optionee. The right of the Company or any Affiliate to terminate
the employment of any person shall not be diminished or affected by reason of
the fact that an Option has been granted to him.

                  Section 8.3 Tax Withholding. The Company or any Affiliate
shall be entitled to deduct from other compensation payable to each Optionee
any sums required by federal, state, or local tax law to be withheld with
respect to the grant or exercise of an Option. In the alternative, the Company
may require the Optionee (or other person exercising the Option) to pay the sum
directly to the employer corporation. If the Optionee (or other person
exercising the Option) is required to pay the sum directly, payment in cash or
by check of such sums for taxes shall be delivered within ten days after the
date of exercise or lapse of restrictions. The Company shall have no obligation
upon exercise of any Option until payment has been received, unless withholding
(or offset against a cash payment) as of or prior to the date of exercise is
sufficient to cover all sums due with respect to that exercise. The Company and
its Affiliates shall not be obligated to advise an Optionee of the existence of
the tax or the amount which the employer corporation will be required to
withhold.

                  Section 8.4 Written Agreement. Each Option shall be embodied
in a written Option Agreement which shall be subject to the terms and
conditions of this Plan and shall be signed by the Optionee and by a member of
the Committee and an officer of the Company on behalf of the Committee and the
Company. The Option Agreement may contain any other provisions that the
Committee in its discretion shall deem advisable which are not inconsistent
with the terms of this Plan.

                  Section 8.5 Indemnification of the Committee and the Board of
Directors. With respect to administration of this Plan, the Company shall
indemnify each present and future member

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of the Committee and the Board against, and each member of the Committee and
the Board shall be entitled without further action his part to indemnity from
the Company for, all expenses (including attorneys' fees, the amount of
judgments and the amount of approved settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by him in connection with or arising out of any
action, suit, or proceeding in which he may be involved by reason of his being
or having been a member of the Committee and/or the Board, whether or not he
continues to be a member of the Committee and/or the Board at the time of
incurring the expenses--including, without limitation, matters as to which he
shall be finally adjudged in any action, suit or proceeding to have been found
to have been negligent in the performance of his duty as a member of the
Committee or of the Board. However, this indemnity shall not include any
expenses incurred by any member of the Committee and/or the Board in respect of
matters as to which he shall be finally adjudged in any action, suit or
proceeding to have been guilty of gross negligence or willful misconduct in the
performance of his duty as a member of the Committee or the Board. In addition,
no right of indemnification under this Plan shall be available to or
enforceable by any member of the Committee or the Board unless, within 60 days
after institution of any action, suit or proceeding, he shall have offered the
Company, in writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the benefit of the heirs,
executors or administrators of each member of the Committee and the Board and
shall be in addition to all other rights to which a member of the Committee and
the Board may be entitled as a matter of law, contract, or otherwise.

                  Section 8.6 Gender. If the context requires, words of one
gender when used in this Plan shall include the others and words used in the
singular or plural shall include the other.

                  Section 8.7 Headings. Headings of Articles and Sections are
included for convenience of reference only and do not constitute part of this
Plan and shall not be used in construing the terms of this Plan.

                  Section 8.8 Other Compensation Plans. Except as provided
below, the adoption of this Plan shall not affect any other stock option,
incentive or other compensation or benefit plans in effect for the Company or
any Affiliate, nor shall this Plan preclude the Company from establishing any
other forms of incentive or other compensation for employees of the Company or
any Affiliate. Notwithstanding the foregoing, on and after the Effective Date
Non-Employee Directors shall not be eligible to receive option grants under the
Company's 1996 Stock Option Plan and this Section 8.8 shall operate as an
amendment to that plan.

                  Section 8.9 Other Options. The grant of an Option shall not
confer upon an Optionee the right to receive any future or other Options under
this Plan, whether or not Options may be granted to similarly situated
Optionees, or the right to receive future Options upon the same terms or
conditions as previously granted.

                  Section  8.10  Arbitration of Disputes. Any controversy
arising out of or relating to the Plan or an Option Agreement shall be resolved
by arbitration conducted pursuant to the

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arbitration rules of the American Arbitration Association. The arbitration
shall be final and binding on the parties.

                  Section  8.11  Governing Law. The provisions of this Plan
shall be construed, administered, and governed under the laws of the State of
Texas.

                                      -12-<PAGE>   1
                                                                  EXHIBIT 10.25

                        THE HOUSTON EXPLORATION COMPANY
                             CHANGE OF CONTROL PLAN

1.       Purpose. The Houston Exploration Company Change of Control Plan (the
         "Plan") is hereby established effective as of October 26, 1999 (the
         "Effective Date"). The Plan sets forth the severance benefits and
         certain "stay on" bonuses provided by The Houston Exploration Company
         (the "Company", which term shall include any successor) for certain
         employees upon and following a Change of Control of the Company (as
         defined below).

2.       Definitions.

         "Annual Base Salary" means the Eligible Employee's annual base salary
         as in effect immediately prior to the effective date of the Change of
         Control.

         "Benefits" means the Severance Benefits, Stay-on Bonus and/or vesting
         in the Company stock options, as applicable.

         "Bonus Amount" means, with respect to an Eligible Employee, an amount
         equal to 125% of the Eligible Employee's annual target bonus
         percentage as in effect immediately prior to the Change of Control
         multiplied by the Eligible Employee's Annual Base Salary.

         "Cause" means:

                  (i)      the Eligible Employee's gross negligence in the
                           performance of the Eligible Employee's duties and
                           responsibilities;

                  (ii)     a material violation of any material Company policy,
                           including, without limitation, the theft,
                           embezzlement or misappropriation of Company funds
                           or property;

                  (iii)    the conviction of the Eligible Employee for a felony
                           involving moral turpitude; or

                  (iv)     the Eligible Employee's willful and continued
                           failure, after receipt of written notice from the
                           Company, to perform substantially the Eligible
                           Employee's duties and responsibilities (excluding
                           any such failure due to injury or illness).

<PAGE>   2

         "Change of Control" means:

                           (i) the acquisition 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 the beneficial ownership of 20 percent 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 corporation
                  pursuant to a transaction which complies with clauses (A),
                  (B) and (C) of subsection (iii) hereof; or

                           (ii) the individuals who, as of the Effective Date,
                  constitute the Board of Directors of the Company (the
                  "Incumbent Board") cease for any reason to constitute at
                  least a majority of the Board of Directors of the Company
                  (the "Board") provided that any individual becoming a
                  director subsequent to the Effective Date whose election, or
                  nomination for election by the Company's stockholders, 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) the consummation after the Effective Date of a
                  reorganization, merger or consolidation or other disposition
                  of all or substantially all of the assets of the Company (a
                  "Corporate Transaction") unless, in each case, 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 60
                  percent 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 60 percent 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

                                      -2-

<PAGE>   3

                  proportions as their ownership of the Outstanding Common
                  Stock Corporate Transaction, as the case may be, (B) no
                  Person (excluding (1) any corporation resulting from such
                  Corporation 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, 20 percent 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
                  Corporation Transaction.

         "Eligible Employee" means an individual who on the date of the Change
         of Control is an employee of the Company.

         "Good Reason" means, without the Eligible Employee's written consent,
         (i) a significant adverse change in the Eligible Employee's
         authorities, duties, or responsibilities as in effect immediately
         prior to the date of the Change of Control, (ii) a reduction in the
         Eligible Employee's Annual Base Salary when compared with the same as
         in effect immediately prior to the date of the Change of Control, or
         (iii) the assignment of the Eligible Employee to a place of work that
         is more than 30 miles from the Eligible Employee's place of work
         immediately prior to the date of the Change of Control, excluding
         temporary assignments that are reasonably consistent with past
         practices of the Company.

         "Monthly Base Salary" means 1/12th of the Eligible Employee's Annual
         Base Salary.

         "Period of Severance" means the number of whole and fractional months
         equal to the quotient of (i) the sum of the amounts payable to the
         Eligible Employee pursuant to paragraph (a) of Attachment B, divided
         by (ii) the Eligible Employee's Monthly Base Salary.

         "Qualified Termination" means the Eligible Employee's employment with
         the Company is terminated on or within 12 months following the date of
         the Change of Control (a) for any reason other than: (i) death or a
         disability entitling the Eligible Employee to benefits under the
         Company's long term disability plan, (ii) a voluntarily termination by
         the Eligible Employee (excluding for a Good Reason), or (iii) by the
         Company for Cause; or (b) by the Eligible Employee for a Good Reason
         within 30 days after the date on which such Good Reason event occurs.

         "Release and Waiver" means a release and waiver of the Eligible
         Employee's employment related claims against the Company substantially
         in the form of such release adopted by the Company prior to the date
         of the Change of Control.

                                      -3-

<PAGE>   4

         "Severance Benefits" means the benefits provided in Attachment B
         hereto.

         "Stay-on Bonus" means the payment of the cash bonus amount as provided
         in Attachment A hereto.

         "Year of Service" means an Eligible Employee's full and fractional
         years of continuous employment with the Company, its predecessors and
         any affiliates, including any "contract employee" service, as of the
         Eligible Employee's date of termination of employment.

3.       Eligibility for Benefits. Subject to the provisions of Section 4
         below, each Eligible Employee who (i) incurs a Qualified Termination
         shall be eligible to receive Severance Benefits and (ii) is an
         Eligible Employee on the date of the Change of Control (x) shall be
         entitled to receive a Stay-on Bonus and (y) automatically shall be
         100% vested immediately prior to the Change in Control in all Company
         stock options granted to such person. For purposes of the Plan,
         employment with the Company shall also include employment with any
         affiliate of the Company.

4.       Benefit Limitations.

         (a)      Notwithstanding any provision in this Plan to the
                  contrary, it is an express condition precedent to an Eligible
                  Employee's entitlement to receive Severance Benefits that
                  such Eligible Employee execute, and not revoke, a Release and
                  Waiver. Each Eligible Employee shall be afforded not less
                  than 45 days to consider such Release and Waiver. In
                  addition, each Eligible Employee who executes any such
                  Release and Waiver shall have seven days following the
                  execution of the Release and Waiver to revoke the same by
                  delivering written notice of revocation to the Company's
                  designee at the Company's executive offices or such other
                  address as may be designated by the Company in writing. Any
                  such Release and Waiver which has not been revoked in the
                  time and manner prescribed above shall be effective as of the
                  eighth day following its execution.

         (b)      If an Eligible Employee is entitled to receive similar
                  severance benefits under another severance plan, program or
                  policy of the Company or an affiliate, the Severance Benefits
                  under this Plan shall be reduced by the similar severance
                  benefits provided to the Eligible Employee under such other
                  plan, program or policy.

5.       Administration of the Plan.

         (a)      The Plan Administrator shall be the Company. The duties of
                  the Company shall be performed by the individual who,
                  immediately prior to the Change of Control, is the Vice
                  President-Chief Accounting Officer of the Company (the
                  "VP-CAO"), without regards to whether his employment
                  terminates on or following the Change of Control. In the
                  event of the death or incapacity of the VP-CAO, these duties
                  shall

                                      -4-

<PAGE>   5

                  be performed by any officer of the Company. The VP-CAO shall
                  have the authority to control and manage the operation and
                  administration of the Plan. The Company shall fully indemnify
                  the VP-CAO against any and all liabilities arising by reason
                  of any act or failure to act made in good faith pursuant to
                  the provisions of the Plan, including expenses reasonably
                  incurred in the defense of any claim relating thereto.

         (b)      Subject to the terms of the Plan, the VP-CAO may from time to
                  time adopt such procedures, rules and regulations as it deems
                  appropriate for the administration of the Plan. In this
                  regard, the VP-CAO shall have such powers as may be necessary
                  to discharge its duties under the Plan, including the power:

                  (i)      to administer, interpret and construe the Plan and
                           to determine all questions with regard to
                           employment, eligibility, Benefits and other matters
                           for the purpose of administering the Plan, provided
                           that all such actions shall be applied in a
                           nondiscriminatory manner;

                  (ii)     to prescribe procedures to be followed and the forms
                           to be executed by Eligible Employees filing
                           application for Benefits under the Plan;

                  (iii)    to appoint or employ individuals to assist in the
                           administration of the Plan and any other agents it
                           deems advisable, including legal counsel, who may be
                           the legal counsel to the Company on other matters;
                           and

                  (iv)     to delegate to others any administrative or
                           ministerial duties as it may deem necessary or
                           appropriate for the administration of the Plan.

         (c)      Each Eligible Employee who claims Severance Benefits
                  under the Plan shall be required to apply therefor on the
                  form designated and provided by the Company. If any
                  application for a Severance Benefit is denied, the Company
                  shall notify the claimant within a reasonable time of such
                  denial setting forth the specific reasons therefor, and
                  afford such claimant a reasonable opportunity for a full and
                  fair review of the decision denying his claim. Notice of such
                  denial shall set forth, in addition to the specific reasons
                  for the denial, the following: (i) reference to pertinent
                  provisions of the Plan; (ii) such additional information as
                  may be relevant to denial of the claim; (iii) an explanation
                  of the claims review procedure; (iv) advice that such
                  claimant may request the opportunity to review pertinent Plan
                  documents and submit a statement of issues and comments. The
                  claimant will have 60 days to request a review of the denial
                  by the Company, which will provide a full and fair review.
                  The request shall be in writing. The claimant may review
                  pertinent Plan documents and submit comments in writing. The
                  Company shall render a decision within 60 days after
                  claimant's request for review (which may be extended to 120
                  days if circumstances so require) and shall advise claimant
                  in writing of its decision on such review specifying its
                  reasons and identifying appropriate provisions of the Plan.

                                      -5-

<PAGE>   6

         (d)      Notwithstanding anything herein to the contrary, the
                  Eligible Employee may (but shall not be required) to elect
                  that his or her claim for Severance Benefits be settled by
                  arbitration in the city in which the Eligible Employee
                  resides at such time in accordance with the rules of the
                  American Arbitration Association then in effect. Judgment may
                  be entered on the arbitrator's award in any court having
                  jurisdiction. All reasonable legal fees and costs incurred by
                  the Eligible Employee in connection with the resolution of
                  any claim shall be paid by the Company unless the arbitrator
                  finds the Eligible Employee brought the claim in bad faith.

         (e)      When it is determined that an Eligible Employee entitled to
                  Severance Benefits is legally incompetent, Severance Benefits
                  may be paid or provided to the spouse, legal guardian or
                  custodian of such person and such payment shall constitute a
                  complete discharge of all liability of the Company and the
                  Plan with respect to such payment.

7.       Amendment and Termination of the Plan.

         The Company, by action of the Board, reserves the right, at any time
         and from time to time, to amend in whole or in part any or all
         provisions of the Plan; provided, however, no such termination of the
         Plan or any amendment (or any part thereof) shall be effective with
         respect to an Eligible Employee that either (i) on or within six
         months prior to the Change of Control or (ii) 12 months after the
         Change of Control would reduce the Benefits such Eligible Employee
         would have received under the Plan but for such termination or
         amendment of the Plan.

8.       General

         (a)      Except to the extent preempted by applicable federal law,
                  this Plan shall be governed by the laws of the State of
                  Texas.

         (b)      The Plan is intended to conform with, and be administered in
                  conformance with, all applicable requirements of the Employee
                  Retirement Income Security Act of 1974, as amended. Should
                  any provision herein be inconsistent with any such a
                  requirement, the Company shall construe such provision in a
                  manner that is consistent with such requirement, but also is
                  as nearly consistent as is practical with the original
                  intention of such provision.

         (c)      This Plan does not constitute a contract or guarantee of
                  employment to any Eligible Employee.

         (d)      Benefits may not be assigned or alienated by an Eligible
                  Employee other than by will or the laws of descent and
                  distribution.

                                      -6-

<PAGE>   7

         (e)      The Company shall be entitled to withhold from all payments
                  or other compensation due an Eligible Employee all taxes
                  required by applicable law to be withheld by the Company with
                  respect to the Benefits.

                                  THE HOUSTON EXPLORATION COMPANY

                                  By:
                                  Name:  James G. Floyd
                                  Title: President and Chief Executive Officer

                                      -7-

<PAGE>   8

                                  ATTACHMENT A
                                 STAY-ON BONUS

         (a)      On or as soon as reasonably practical following the date of
                  the Change of Control, the Company shall pay to each Eligible
                  Employee a lump sum amount in cash equal to 50% of the
                  Eligible Employee's Bonus Amount, less any taxes required to
                  be withheld therefrom by the Company.

         (b)      On or as soon as reasonably practical following the earlier
                  of (i) 60 days after the date of the Change of Control or
                  (ii) the Eligible Employee's termination of employment (for
                  any reason), the Company shall pay to each Eligible Employee
                  a lump sum amount in cash equal to 50% of the Eligible
                  Employee's Bonus Amount, less any taxes required to be
                  withheld therefrom by the Company.

         (c)      The Stay-On Bonus payable to an Eligible Employee as provided
                  in paragraphs (a) and (b) above shall be in addition to the
                  regular performance bonus payable to the Eligible Employee
                  for 1999, which if earned, will be paid in early 2000 in
                  accordance with past Company practices.

                                      -i-

<PAGE>   9

                                  ATTACHMENT B
                               SEVERANCE BENEFITS

         (a)      On or as soon as reasonable practical following an Eligible
                  Employee's Qualified Termination, but excluding any Eligible
                  Employee who has a written employment agreement with the
                  Company on the date of the Change of Control, the Company
                  shall pay such Eligible Employee a lump sum amount in cash
                  equal to the sum of:

                  (i)      his or her Monthly Base Salary multiplied by 3,

                  (ii)     1/2 of his or her Monthly Base Salary multiplied by
                           the Eligible Employee's Years of Service, and

                  (iii)    1/2 of her or her Monthly Base Salary multiplied by
                           each full and partial $10,000 increment of the
                           Eligible Employee's Annual Base Salary;

                  provided, however, the sum of (i), (ii) and (iii) may not
                  exceed the Eligible Employee's Annual Base Salary.

         (b)      Each Eligible Employee, but excluding any Eligible
                  Employee who has a written employment agreement with the
                  Company on the date of the Change of Control, will continue
                  to be provided, without charge, during his or her Period of
                  Severance continued coverage under the Company's group health
                  (medical, dental and vision), life insurance, and long-term
                  disability plan(s) in which he or she participated on the
                  date his or her employment terminates (or in any successor
                  plan(s) thereto); provided, however, the continuation of
                  coverage under the Company's group health plan(s) without
                  charge (i) shall be conditioned on the Eligible Employee
                  timely electing following his or her termination of
                  employment continuation of coverage benefits under such group
                  health plan(s) pursuant to the Consolidated Omnibus Budget
                  Reconciliation Act of 1985 ("COBRA") and (ii) shall terminate
                  upon the end of the Eligible Employee's COBRA continuation
                  period if that period ends prior to the termination of his or
                  her Period of Severance.

                                      -ii-

<PAGE>   10

                                  ATTACHMENT C
                            VESTING OF STOCK OPTIONS

                  Immediately prior to the Change of Control, all Company stock
options of each Eligible Employee automatically shall become 100% vested
(exercisable). This Attachment C shall constitute an amendment to each Company
stock option plan.

                                     -iii-

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