Document:

Employment Agreement

 Exhibit 10.1 
  
 EMPLOYMENT AGREEMENT 
  
 This Employment Agreement (this “Agreement”) entered into effective as of March 14, 2005, by and between William R. Picquet (the
“Executive”), and Mission Resources Corporation, a Delaware corporation having its principal place of business at 1331 Lamar, Suite 1455, Houston, Texas 77010-3039 (the “Company”); 
  
 W I T N E S S E T H: 
  
 WHEREAS, The Company wishes to employ the Executive as Senior Vice President,
Operations & Engineering and to perform services incident to such position for the Company, and the Executive wishes to be so employed by the Company, all upon the terms and conditions hereinafter set forth: 
  
 NOW THEREFORE, in consideration of the premises and mutual covenants and
obligations herein set forth and for other good and valuable consideration, the receipt, sufficiency and adequacy of which is hereby acknowledged, accepted and agreed to, the parties hereto, intending to be legally bound, hereby agree as follows:

  
 1. EMPLOYMENT AND TERM. The Company hereby employs the
Executive to serve as Senior Vice President, Operations & Engineering of the Company. The term of this Agreement (the “Term of this Agreement”) shall be effective as of the date first above written and shall terminate thirty-six (36)
months from the date hereof (the “Termination Date”), unless earlier terminated by either party hereto in accordance with the provisions of Section 5 hereof; provided, however, that beginning on the first anniversary date of the date
hereof and on each anniversary date of the date hereof thereafter, the Term of this Agreement shall be automatically extended one additional year unless either party give written notice to the other at least six months prior to such anniversary of
the date hereof that the Term of this Agreement shall cease to be so extended. During the Term of this Agreement, the terms of employment shall be as set forth herein unless modified by the Executive and the Company in accordance with the provisions
of Section 12 hereof. The Executive hereby agrees to accept such employment and to perform the services specified herein, all upon the terms and conditions hereinafter set forth. 
  
 2. POSITION AND RESPONSIBILITIES. The Executive shall serve as Senior Vice President, Operations & Engineering of the
Company and shall report to, and be subject to the general direction of the Chairman, President and Chief Executive Officer of the Company. The Executive shall have other obligations, duties, authority and power to do all acts and things as are
customarily done by a person holding the same or equivalent position or performing duties similar to those to be performed by executives in corporations of similar size to the Company and shall perform such managerial duties and responsibilities for
the Company which are not inconsistent with his position as may reasonably be assigned to him by the Chairman, President and Chief Executive Officer and/or the Board of Directors of the Company (or a committee thereof). Unless otherwise agreed to by
the Executive, the Executive shall be based at the Company’s principal executive offices located in the greater Houston, Texas metropolitan area. 
  
 3. EXTENT OF SERVICE. The Executive shall devote his full business time and attention to the business of the Company. During the Term of this Agreement,
Executive shall devote his best efforts and skills to the business and interests of Company, do his utmost to further enhance and develop Company’s best interests and welfare, and endeavor to improve his 

 ability and knowledge of Company’s business, in an effort to increase the value of his services for the mutual
benefit of the parties hereto. During the Term of this Agreement, it shall not be a violation of this Agreement for Executive to (i) serve on any corporate board or committee thereof with the approval of the Board, (ii) serve on any civic or
charitable boards or committees (except for boards or committees of a competing business unless approved by the Board), (iii) deliver lectures, fulfill teaching or speaking engagements, (iv) testify as a witness in litigation involving a former
employer or (v) manage personal investments; provided, however, any such activities must not materially interfere with performance of Executive’s responsibilities under this Agreement. 
  
 4. COMPENSATION. 
  
 (a) In consideration of the services to be rendered by the Executive to the
Company, the Company will pay the Executive a salary (“Salary”) of $225,000 per year during the Term of this Agreement. Such Salary will be payable in conformity with the Company’s prevailing practice for executives’ compensation
as such practice shall be established or modified from time to time. Salary payments shall be subject to all applicable federal and state withholding, payroll and other taxes. From time to time during the Term of this Agreement, the amount of the
Executive’s Salary may be increased by, and at the sole discretion of, the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”), which shall review the Executive’s Salary no less
regularly than annually. 
  
 (b) The Company has granted the
Executive on March 14, 2005 an option to purchase 250,000 shares of common stock of the Company at an exercise price per share of $7.14 (“Option”). Such Option shall vest and become exercisable as to 50% of the Option Shares covered hereby
on March 14, 2005; as to 75% of the Option Shares one (1) year following the Grant Date and as to 100% of the Option Shares covered hereby two (2) years following the Grant Date. The term of the Option shall be ten years from the date of grant
subject to the provisions of paragraphs 5(f)(i) and 5(g) hereof. Additional grants of options will be considered by the Compensation Committee on an annual basis based on a review of the Executive’s performance. 
  
 (c) The Executive will be considered for an annual cash and/or stock bonus
based on an evaluation of his performance by the Compensation Committee. Any such bonus will be at the sole discretion of the Compensation Committee. 
  
 (d) During the term of this Agreement, the Company shall pay or reimburse the Executive for all reasonable out-of-pocket expenses for travel, meals, hotel
accommodations, entertainment and the like incurred by him in connection with the business of the Company upon submission by him and approval of an appropriate statement documenting such expenses as required by the Company’s policy and the
Internal Revenue Code of 1986, as amended (the “Code”). In addition, the Audit Committee of the Board of Directors shall review all such expense reports on a quarterly basis. 
  
 (e) The Executive shall be entitled to four (4) weeks of paid vacation during each calendar year during the term of this
Agreement. Vacation shall accrue on the first day of each calendar year. The use of such vacation shall be governed by and administered in accordance with the Company’s vacation policy as in effect from time to time. 

 (f) During the term of this Agreement, the Executive shall be entitled to participate in and to receive
all rights and benefits under any life, disability, medical and dental, health and accident and profit sharing or deferred compensation plans and such other plan or plans as may be implemented by the Company during the term of this Agreement. The
Executive shall also be entitled to participate in and to receive all rights and benefits under any plan or program adopted by the Company for any other or group of other executive employees of the Company, including without limitation, the rights
and benefits under the directors’ and officers’ liability insurance in place from time to time under the Company’s insurance program for the directors and officers of the Company. 
  
 (g) During the term of this agreement, the Executive shall be entitled to
receive a car allowance of $500.00 per month, and one parking space shall be provided to the Executive by the Company. 
  
 (h) The Company shall pay one club initiation fee of up to $25,000.00 and the base monthly dues applicable thereto, not to exceed $400.00 per month.

  
 5. TERMINATION. 
  
 (a) Termination by Company; Discharge for Cause. The Company shall be
entitled to terminate this Agreement and the Executive’s employment with the Company at any time and for whatever reason; or at any time for “Cause” (as defined below) by written notice to the Executive. Termination of the
Executive’s employment by the Company shall constitute a termination for “Cause” if such termination is for one or more of the following reasons: (i) the willful failure or refusal of the Executive to render services to the Company in
accordance with his obligations under this Agreement, including, without limitation, the willful failure or refusal of the Executive to comply with the work rules, policies, procedures, and directives as established by the Chairman and Chief
Executive Officer and the Board of Directors and consistent with this Agreement; such failure or refusal to be uncured and continuing for a period of not less than fifteen (15) days after notice outlining the situation is given by the Company to the
Executive; (ii) the commission by the Executive of an act of fraud or embezzlement; (iii) the commission by the Executive of any other action with the intent to injure the Company; (iv) the Executive having been convicted of a felony or a crime
involving moral turpitude; (v) the Executive having misappropriated the property of the Company; (vi) the Executive having engaged in personal misconduct which materially injures the Company; or (vii) the Executive having willfully violated any law
or regulation relating to the business of the Company which results in material injury to the Company. In the event of the Executive’s termination by the Company for Cause hereunder, the Executive shall be entitled to no severance or other
termination benefits except for any unpaid Salary accrued through the date of termination. A termination of this Agreement by the Company without Cause pursuant to this Section 5(a) (which shall include the decision by the Company to not renew the
Term of this Agreement for any additional one year periods as provided in Section 1 above) shall entitle the Executive to the Severance Payment and other benefits specified in Section 5(f) or (g), hereof, as the case may be. 
  
 (b) Death. If the Executive dies during the term of this Agreement and
while in the employ of the Company, this Agreement shall automatically terminate and the Company shall have no further obligation to the Executive or his estate except that the Company shall pay to the Executive’s estate that portion of his
Salary and benefits accrued through the date of death. All such payments to the Executive’s estate shall be made in the same manner and at the same time as the Executive’s Salary. 

 (c) Disability. If during the term of this Agreement, the Executive shall be prevented from
performing his duties hereunder for a period of 90 days by reason of disability, then the Company, on 30 days’ prior notice to the Executive, may terminate this Agreement. For purposes of this Agreement, the Executive shall be deemed to have
become disabled when the Board of Directors of the Company, upon verification by a physician designated by the Company, shall have determined that the Executive has become physically or mentally unable (excluding infrequent and temporary absences
due to ordinary illness) to perform the essential functions of his duties under this Agreement with reasonable accommodation. In the event of a termination pursuant to this paragraph (c), the Company shall be relieved of all its obligations under
this Agreement, except that the Company shall pay to the Executive or his estate in the event of his subsequent death, that portion of the Executive’s Salary and benefits accrued through the date of such termination. All such payments to the
Executive or his estate shall be made in the same manner and at the same time as his Salary would have been paid to him had he not become disabled. 
  
 (d) Termination for Good Reason. The Executive shall be entitled to terminate this Agreement and his employment with the Company at any time upon
thirty (30) days written notice to the Company for “Good Reason” (as defined below). The Executive’s termination of employment shall be for “Good Reason” if such termination is a result of any of the following events:

  
 (i) The Executive is assigned any
responsibilities or duties materially inconsistent with his position, duties, responsibilities and status with the Company as in effect at the date of this Agreement or as may be assigned to the Executive pursuant to Section 2 hereof; or his title
or offices as in effect at the date of this Agreement or as the Executive may be appointed or elected to in accordance with Section 2 are changed; or the Executive is required to report to or be directed by any person other than the Chairman and
Chief Executive Officer or the Executive Vice President and the Board of Directors of the Company; 
  
 (ii) there is a reduction in the Salary (as such Salary shall have been increased from time to time) payable to the Executive pursuant to
Section 4(a) hereof unless such reduction is applicable to all senior executives of the Company; 
  
 (iii) failure by the Company or any successor to the Company or its assets to continue to provide to the Executive any material benefit,
bonus, profit sharing, incentive, remuneration or compensation plan, stock ownership or purchase plan, stock option plan, life insurance, disability plan, pension plan or retirement plan in which the Executive was entitled to participate in as at
the date of this Agreement or subsequent thereto, or the taking by the Company of any action that materially and adversely affects the Executive’s participation in or materially reduces his rights or benefits under or pursuant to any such plan
or the failure by the Company to increase or improve such rights or benefits on a basis consistent with practices in effect prior to the date of this Agreement or with practices implemented and subsequent to the date of this Agreement with respect
to the executive employees of the Company generally, which ever is more favorable to the Executive, but excluding such action that is required by law; 

 (iv) without Executive’s consent, the Company requires the executive to relocate to
any city or community other than one within a fifty (50) mile radius of the greater Houston, Texas metropolitan area, except for required travel on the Company’s business to an extent substantially consistent with the Executive’s business
obligations under this Agreement; or 
  
 (v)
there is any material breach by the Company of any provision of this Agreement. 
  
 (vi) Upon the Executive’s termination of this Agreement for Good Reason, the Executive shall be entitled to the Severance Payment and
other benefits specified in Section 5(f) hereof. 
  
 (e)
Voluntary Termination. Notwithstanding anything to the contrary herein, the Executive shall be entitled to voluntarily terminate this Agreement and his employment with the Company at his pleasure upon sixty (60) days written notice to such
effect. In such event, the Executive shall not be entitled to any further compensation other than any unpaid Salary and benefits accrued through the date of termination. At the Company’s option, the Company may pay to the Executive the salary
and benefits that the Executive would have received during such sixty (60) day period in lieu of requiring the Executive to remain in the employment of the Company for such sixty (60) day period. 
  
 (f) Termination Benefits Upon Involuntary Termination or Termination for
Good Reason. In the event that (i) the Company terminates this Agreement and the Executive’s employment with the Company for any reason other than for Cause (as defined in Section 5(a) hereof) or the death or disability (as defined in
Section 5(c) hereof) of the Executive, or (ii) the Executive terminates this Agreement and his employment with the Company for Good Reason (as set forth in Section 5(d) hereof), then the Company shall pay the Executive, within thirty (30) days after
the date of termination, an amount (the “Severance Payment”) equal to (x) two (2) times the Executive’s highest annual Salary in existence at any time during the last two (2) years of employment immediately preceding the date of
termination, and (y) a prorata portion (based on the portion of the calendar year that the Executive served hereunder prior to such termination) of the annual bonus which would have been paid to the Executive for the full year during which such
termination occurred, minus applicable withholding and authorized salary reductions (the “Severance Payment”). In addition, following other such termination, the Executive shall be entitled to the following benefits (collectively, the
“Additional Benefits”); 
  
 (i)
immediate vesting of any of the Executive’s outstanding options to purchase securities of the Company which were not vested by their own terms on the date of termination and the extension of the Executive’s right to exercise all the
Executive’s options to purchase securities of the Company for a period equal to the lesser of (A) one (1) year following the date of termination or (B) the remaining term of the applicable option; 
  
 (ii) continued coverage, at the Company’s cost, under
the Company’s group health plan for the applicable coverage period under the Consolidated Omnibus Budget 

 
Reconciliation Act of 1985, as amended (“COBRA”) but only if Executive elects such COBRA continuation in accordance with the time limits and in the
applicable COBRA regulations; and 
  
 (iii) an
amount, in cash, equal to the sum of (A) any unreimbursed expenses incurred by the Executive in the performance of his duties hereunder and in compliance with Company policy through the date of termination, plus (B) any accrued and unused vacation
time or other unpaid benefits as of the date of termination; and 
  
 (iv) Company shall cause Executive to be covered by any policy or contract of insurance obtained by it to insure its directors and officers against personal liability for acts or omissions in connection with service
as an officer or director of Company or service in other capacities at the request of the company. The coverage provided to Executive pursuant to this paragraph shall be of a scope and on terms and conditions at least as favorable as the most
favorable coverage provided to any other officer or director of Company (or any successor). In addition, the Company agrees that the Indemnification Agreement entered into by and between the Company and the Executive, as well as all other rights to
which Executive is entitled with regard to indemnification and advancement of expenses, whether by virtue of the Company’s certificate of incorporation, bylaws or otherwise, will remain in full force and effect, in accordance with its terms.

  
 The parties agree that, because there can be no exact measure
of the damages which would occur to the Executive as a result of termination of employment, such payments contemplated in this Section 5(f) shall be deemed to constitute liquidated damages and not a penalty and the Company agrees that the Executive
shall not be required to mitigate his damages. The termination compensation in this Section 5(f) shall be paid only if the Executive executes a termination agreement releasing all legally waivable claims arising from the Executive’s employment.

  
 (g) Termination and Benefits upon a Change in Control.
In the event of a Change in Control, as defined in this Section 5(g), then in lieu of the Severance Payment contained in Section 5(f) hereof, if the Executive is terminated without Cause or the Executive terminates his employment for Good Reason
within the twelve (12) month period immediately following a Change in Control the Company shall pay to the Executive a lump sum amount equal to: (x) two (2) times the Executive’s highest annual salary paid during the last two (2) years
immediately preceding the date of termination, and (y) a prorata portion (based on the portion of the calendar year that the Executive served hereunder prior to such termination) of the annual bonus which would have been paid to the Executive for
the full year during which such termination occurred, which in no event will be less than one-half of the Executive’s then current Salary, minus applicable withholding and authorized salary reductions (the “Payment”). In the event
that the excise tax relating to “parachute payments” under Section 280G of the Code applies to the Payment or any other payment by the Company to the Executive or other transaction entered into by the Executive pursuant to this Agreement
or any other agreement, plan, instrument or obligation, in whatever form (collectively, the “Other Payments”), then the Company shall pay the Executive an additional payment in an amount such that, after payment of federal income taxes
(but not the excise tax) on the Payment or any Other Payment, the Executive receives an additional amount equal to the excise tax originally imposed on the Payment or any Other 

 
Payment. The Executive shall also be entitled to receive the Additional Benefits. “Change of Control” means or shall be deemed to have occurred if
and when: (i) any “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than 50% of the total voting power of the outstanding voting stock of the Company; (ii) the Company is merged with or into or consolidated with another Person and, immediately after giving effect to the merger or consolidation,
(a) less than 50% of the total voting power of the outstanding voting stock of the surviving or resulting Person is then “beneficially owned” (within the meaning of Rule 13d-3 under the Exchange Act) in the aggregate by the stockholders of
the Company immediately prior to such merger or consolidation, and (b) any “person” or “group” (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act) has become the direct or indirect “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of the voting stock of the surviving or resulting Person; (iii) the Company sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of the Company assets (either in one transaction or a series of related transactions); (iv) the liquidation or dissolution of the Company; or (v) during any consecutive two-year period individuals who at the beginning of such
period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination by the Board of Directors for election by the stockholders of the Company was approved by a vote
of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of
Directors of the Company then in office. 
  
 (h) Survival.
Notwithstanding the termination of this Agreement under this Section 5, the provisions of Sections 7 and 8 of this Agreement, and all other provisions hereof which by their terms are to be performed following the termination hereof shall survive
such termination and be continuing obligations. 
  
 6. CONSENT
AND WAIVER BY THIRD PARTIES. The Executive hereby represents and warrants that he has obtained all necessary waivers and/or consents from third parties as to enable him to accept employment with the Company on the terms and conditions set forth
herein and to execute and perform this Agreement without being in conflict with any other agreement, obligations or understanding with any such third party. 
  
 7. CONFIDENTIAL INFORMATION. The Executive acknowledges that in the course of his employment with the Company, he has received and will receive
access to confidential information of a special and unique value concerning the Company and its business, including, without limitation, trade secrets, know-how, lists of customers, employee records, books and records relating to operations, costs
or providing service and equipment, operating and maintenance costs, pricing criteria and other confidential information and knowledge concerning the business of the Company and its affiliates (hereinafter collectively referred to as
“information”) which the Company desires to protect. The Executive acknowledges that such information is confidential and the protection of such confidential information against unauthorized use or disclosure is of critical importance to
the Company. The Executive agrees that he will not reveal such information to any one outside the Company. The Executive further agrees that during the term of this Agreement and thereafter he will not use or disclose such information. Upon
termination of his employment hereunder, the Executive shall surrender to the 

 
Company all papers, documents, writings and other property produced by him or coming into his possession by or through his employment hereunder and relating
to the information referred to in this Section 7, and the Executive agrees that all such materials will at all times remain the property of the Company. The obligation of confidentiality, non-use and non- disclosure of know-how set forth in this
Section 7 shall not extend to know-how (i) which was in the public domain prior to disclosure by the disclosing party, (ii) which comes into the public domain other than through a breach of this Agreement, (iii) which is disclosed to the Executive
after the termination of this Agreement by a third party having legitimate possession thereof and the unrestricted right to make such disclosure, or (iv) which is necessarily disclosed in the course of the Executive’s performance of his duties
to the Company as contemplated in this Agreement. The agreements in this Section 7 shall survive the termination of this Agreement. 
  
 8. NO SOLICITATION. To support the agreements contained in Section 7 hereof, from the date hereof and for a period twelve (12) months after the
Executive’s employment with the Company is terminated for any reason, the Executive shall not, either directly or indirectly, through any person, firm, association or corporation with which the Executive is now or may hereafter become
associated, (i) solicit any then current employee of the Company or its affiliates (except through ads or notices offering employment that are published or otherwise made publicly available), or (ii) use in any competition, solicitation or marketing
effort any information as to which the Executive has a duty of confidential treatment under paragraph 7 above. 
  
 9. NOTICES. All notices, requests, consents and other communications under this Agreement shall be in writing and shall be deemed to have been delivered
on the date personally delivered or on the date mailed, postage prepaid, by certified mail, return receipt requested, or telegraphed and confirmed if addressed to the respective parties as follows: 
  

			
	 If to the Executive:
	  	William R. Picquet
	 	  	c/o Mission Resources Corporation
	 	  	1331 Lamar, Suite 1455
	 	  	Houston, Texas 77010-3039
		
	 If to the Company:
	  	Mission Resources Corporation
	 	  	1331 Lamar, Suite 1455
	 	  	Houston, Texas 77010-3039
	 	  	Attn: Chairman, Compensation Committee

  
 Either party hereto may designate a
different address by providing written notice of such new address to the other party hereto. 
  
 10. SPECIFIC PERFORMANCE. The Executive acknowledges that a remedy at law for any breach or attempted breach of Section 7 or 8 of this Agreement will be inadequate, agrees that the Company shall be entitled to
specific performance and injunctive and other equitable relief in case of any such a breach or attempted breach, and further agrees to waive any requirement of the securing or posting of any bond in connection with the obtaining of any such
injunctive or any other equitable relief. 
  
 11. WAIVERS AND
MODIFICATIONS. This Agreement may be modified, and the rights and remedies of any provision hereof may be waived, only in accordance with this 

 Section 11. No modifications or waiver by the Company shall be effective without the consent of at least a majority of
the Compensation Committee of the Board of Directors then in office at the time of such modification or waiver. No waiver by either party of any breach by the other or any provision hereof shall be deemed to be a waiver of any later or other breach
thereof or as a waiver of any other provision of this Agreement. This Agreement sets forth all the terms of the understandings between the parties with reference to the subject matter set forth herein and may not be waived, changed, discharged or
terminated orally or by any course of dealing between the parties, but only by an instrument in writing signed by the party against whom any waiver, change, discharge or termination is sought. 
  
 12. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of Texas. 
  
 13. SEVERABILITY. In case of one
or more of the provisions contained in this Agreement for any reason shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable provisions had never contained herein. 
  
 14. ARBITRATION. In the event that a dispute or controversy should arise between the Executive and the Company as to the meaning or application of any
provision, term or condition of this Agreement, such dispute or controversy shall be settled by binding arbitration in Houston, Texas and for said purpose each of the parties hereto hereby expressly consents to such arbitration in such place. Such
arbitration shall be conducted in accordance with the existing rules and regulations of the American Arbitration Association governing commercial transactions. The expense of the arbitrator shall be borne by the Company. 
  
 IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as
of the date and year first above written. 
  

			
	COMPANY:
	
	MISSION RESOURCES CORPORATION
		
	By:	 	 /s/ Robert L. Cavnar

	Name:	 	Robert L. Cavnar
	Title:	 	Chairman of the Board, President & CEO
	
	EXECUTIVE:
	
	 /s/ William R. Picquet

	William R. PicquetNon-statutory Stock Option Grant Agreement

 Exhibit 10.2 
  
 NONSTATUTORY STOCK OPTION 
 GRANT AGREEMENT 
  
 THIS
AGREEMENT is entered into this 14th day of March, 2005, between Mission Resources Corporation, a Delaware corporation (the “Company”), and William R. Picquet, an employee of the Company (“Grantee”). 
  
 WHEREAS, effective as of March 14, 2005, Grantee became an employee of the
Company and as an inducement for such employment the Board of Directors of the Company (the “Board”) authorized and approved the grant of this Nonstatutory Stock Option to Grantee subject to the terms and conditions provided in this
Nonstatutory Stock Option Agreement (the “Agreement”) with a view to increasing Grantee’s interest in the Company’s welfare and growth. 
  
 NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties do hereby agree as follows: 
  
 Section 1. Grant of Option. Subject to all of the terms,
conditions and provisions of this Agreement, the Company hereby grants to Grantee a Nonstatutory Stock Option (the “Option”) pursuant to which Grantee shall have the right and option to purchase from the Company all or any part of an
aggregate of 250,000 shares (“Option Shares”) of the common stock of the Company, par value $0.01 per share (“Common Stock”). The Option Shares, when issued to Grantee upon the exercise of the Option, shall be fully paid and
nonassessable. This Option is being granted in the inducement and consideration of the employment of Grantee with the Company. 
  
 Section 2. Option Price. The purchase price payable by Grantee to the Company in exercise of this Option shall be $7.14 per share of Common
Stock (the “Option Price”), being the Fair Market Value on March 14, 2005, (the “Grant Date”). The Option Term shall be from the Grant Date until the tenth (10th) anniversary of the Grant Date. 
  
 Section 3. Exercise Period and Exercise of Option. The Option shall vest and become exercisable as to 50% of the Option Shares covered
hereby on March 14, 2005; as to 75% of the Option Shares one (1) year following the Grant Date and as to 100% of the Option Shares covered hereby two (2) years following the Grant Date. Any Option Shares which remain unexcercised on the tenth
(10th) anniversary of the Grant Date shall expire. Unless otherwise provided herein, the Option may be exercised at
any time with respect to the vested portion as long as Grantee has been continuously employed by the Company, its parent, or a subsidiary from the Grant Date until the Option is exercised. 
  
 Section 4. This Agreement and the grant of the Option are
subject to administration by and the rules and procedures established by the compensation committee of the Board or a committee of independent directors of the Board appointed by the Board to administer this Agreement (collectively, the
“Committee”) and the Committee shall have the exclusive authority to construe and interpret the terms of this Agreement and to provide omitted terms to carry out this Agreement. The Committee shall have the authority to take all actions
that it deems advisable for the administration of this Agreement. 

 Section 5. Vesting and Exercise Upon Termination of Employment. 
  
 (a) Termination of Employment. If the
Grantee’s employment is terminated for any reason other than as described below, any nonvested portion of the Option at the time of such termination shall automatically expire and terminate and no further vesting shall occur after the
termination date. In such event, the Grantee shall be entitled to exercise his rights only with respect to the portion of the Option that was vested as of the termination date for a period that shall end on the earlier of (i) the expiration
date set forth in Section 2 hereof with respect to the vested portion of such Option or (ii) the date that occurs ninety (90) days after his termination date. All determinations regarding whether and when there has been a termination of employment
shall be made by the Committee. 
  
 (b)
Termination of Employment for Cause. In the event of the termination of a Grantee’s employment for Cause (as defined below), all vested and nonvested Options shall immediately expire, and shall not be exercisable to any extent, as
of 12:01 a.m. (CST) on the date of such termination of employment. Cause shall mean (i) the willful failure or refusal of the Grantee to render services to the Company in accordance with his obligations under the employment agreement between Grantee
and the Company dated March 14, 2005 (the “Employment Agreement”), including, without limitation, the willful failure or refusal of the Grantee to comply with the work rules, policies, procedures, and directives as established by the
Chairman and Chief Executive Officer and the Board of Directors of the Company and consistent with Employment Agreement; such failure or refusal to be uncured and continuing for a period of not less than fifteen (15) days after notice outlining the
situation is given by the Company to the Grantee; (ii) the commission by the Grantee of an act of fraud or embezzlement; (iii) the commission by the Grantee of any other action with the intent to injure the Company; (iv) the Grantee having been
convicted of a felony or a crime involving moral turpitude; (v) the Grantee having misappropriated the property of the Company; (vi) the Grantee having engaged in personal misconduct which materially injures the Company; or (vii) the Grantee having
willfully violated any law or regulation relating to the business of the Company which results in material injury to the Company. 
  
 (c) Retirement. Upon the retirement of Grantee: 
  
 (i) any nonvested portion of any outstanding Option shall immediately terminate and no further vesting shall
occur; and 
  
 (ii) any vested Option shall
expire on the earlier of (A) the expiration date set forth in Section 2 hereof; or (B) the expiration of six (6) months after the date of retirement. 
  
 (d) Disability or Death. Upon termination of employment as a result of the Grantee’s Disability or death: 

 
 (i) any nonvested portion of the Option shall immediately
terminate upon termination of employment and no further vesting shall occur; and 

 (ii) any vested Option shall expire on the earlier of either (A) the expiration
date set forth in Section 2 hereof or (B) the one (1) year anniversary date of the Grantee’s termination of employment date. 
  
 For purposes of this Agreement, the Grantee shall be deemed to have become disabled when the Board of Directors of the Company, upon
verification by a physician designated by the Company, shall have determined that the Grantee has become physically or mentally unable (excluding infrequent and temporary absences due to ordinary illness) to perform the essential functions of his
duties under the Employment Agreement with reasonable accommodation. 
  
 (e) Termination Benefits Upon Involuntary Termination or Termination for Good Reason. In the event that the Company terminates the Employment Agreement and the Grantee’s employment with the Company for any
reason other than for Cause or the death or Disability of the Grantee, or the Grantee terminates the Employment Agreement and his employment with the Company for Good Reason (as defined below), the nonvested portion of the Option hereunder shall be
100% vested and the extension of the Grantee’s right to exercise 100% of the Option shall be equal to a period equal to the lesser of (A) one (1) year following the date of termination or (B) the remaining term of the applicable option
as described in Section 2; 
  
 Grantee shall be
entitled to terminate the Employment Agreement and his employment with the Company at any time upon thirty (30) days written notice to the Company for “Good Reason” (as defined below). Grantee’s termination of employment shall be for
“Good Reason” if such termination is a result of any of the following events: 
  
 (i) The Grantee is assigned any responsibilities or duties materially inconsistent with his position, duties, responsibilities and status
with the Company as in effect at the date of the Employment Agreement or as may be assigned to the Grantee pursuant to Section 2 of the Employment Agreement; or his title or offices as in effect at the date of the Employment Agreement or as the
Grantee may be appointed or elected to in accordance with Section 2 of the Employment Agreement are changed; or the Grantee is required to report to or be directed by any person other than the Chairman and Chief Executive Officer and the Board of
Directors of the Company; 
  
 (ii) there is a
reduction in the Salary (as defined in the Employment Agreement) unless such reduction is applicable to all senior executives of the Company; 
  
 (iii) failure by the Company or any successor to the Company or its assets to continue to provide to the Grantee any material benefit,
bonus, profit sharing, incentive, remuneration or compensation plan, stock ownership or purchase plan, stock option plan, life insurance, disability plan, pension plan or retirement plan in which the Grantee was entitled to participate in as at the
date of the Employment Agreement or subsequent thereto, or the taking by the Company of any action that materially and adversely affects the Grantee’s participation in or 

 materially reduces his rights or benefits under or pursuant to any such plan or the failure by the
Company to increase or improve such rights or benefits on a basis consistent with practices in effect prior to the date of the Employment Agreement or with practices implemented and subsequent to the date of the Employment Agreement with respect to
the executive employees of the Company generally, which ever is more favorable to the Grantee, but excluding such action that is required by law; 
  
 (iv) without Grantee’s consent, the Company requires the Grantee to relocate to any city or community other than one within a fifty
(50) mile radius of the greater Houston, Texas metropolitan area, except for required travel on the Company’s business to an extent substantially consistent with the Grantee’s business obligations under this Agreement; or 
  
 (v) there is any material breach by the Company of any
provision of the Employment Agreement. 
  
 (f)
Termination and Benefits upon a Change in Control. In the event of a Change in Control (as defined below) the nonvested portion of the Option shall become 100% vested and Option shall remain exercisable for a period equal to the lesser
of (i) one (1) year following the date of termination or (ii) the remaining period of the term as described in Section 2 hereof. 
  
 “Change of Control” means or shall be deemed to have occurred if and when: (i) any “person” or “group” (as
such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more
than 50% of the total voting power of the outstanding voting stock of the Company; (ii) the Company is merged with or into or consolidated with another Person and, immediately after giving effect to the merger or consolidation, (a) less than 50% of
the total voting power of the outstanding voting stock of the surviving or resulting Person is then “beneficially owned” (within the meaning of Rule 13d-3 under the Exchange Act) in the aggregate by the stockholders of the Company
immediately prior to such merger or consolidation, and (b) any “person” or “group” (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act) has become the direct or indirect “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of the voting stock of the surviving or resulting Person; (iii) the Company sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of
the Company assets (either in one transaction or a series of related transactions); (iv) the liquidation or dissolution of the Company; or (v) during any consecutive two-year period individuals who at the beginning of such period constituted the
Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination by the Board of Directors for election by the stockholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company
then in office. 

 Section 6. No Employment Commitment. Grantee acknowledges that neither the grant of this
Option nor the execution of this Agreement by the Company shall be interpreted or construed as imposing upon the Company an obligation to retain his services on behalf of the Company or its affiliates for any stated period of time, and the period of
his employment shall be subject to the Employment Agreement. 
  
 Section 7. Grantee’s Agreement. Grantee expressly and specifically agrees that: 
  
 (a) The grant of the options is special incentive compensation which shall not be taken into account as “wages” or
“salary” in determining the amount of payment or benefit to the Grantee under any pension, thrift, stock or deferred compensation plan of the Company or any affiliate, as the case may be; and 
  
 (b) On behalf of the Grantee’s beneficiary, such grant
shall not affect the amount of any life insurance coverage available to such beneficiary under any life insurance plan covering employees of the Company or any affiliate. 
  
 Section 8. Committee Determinations. The Grantee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee, the Company or the Board, as appropriate, upon any questions arising under this Agreement. 
  
 Section 9. Non-Transferability. The Option granted hereunder is not transferable or assignable by Grantee except by will or by the laws of
descent and distribution. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities, obligations or torts of Grantee. 
  
 Section 10. No Guarantee of Tax Consequences. The Company and the Committee make no commitment or guarantee
that any federal or state tax treatment will apply or be available to any person eligible for benefits under the Option. The Grantee has been advised and been provided the opportunity to obtain independent legal and tax advice regarding the grant
and exercise of the Option and the disposition of any shares of Common Stock acquired thereby. 
  
 Section 11. No Rights in Shares. Grantee shall have no rights as a stockholder in respect of the Option Shares until the Grantee becomes the record holder of such shares of Common Stock. 
  
 Section 12. Withholding of Taxes. 
  
 (a) Tax Withholding. This Option is subject to and
the Company shall have the power and the right to deduct or withhold, or require an Grantee to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld
with respect to any taxable event arising as a result of the Option or its exercise hereunder. 
  
 (b) Share Withholding. With respect to tax withholding required upon the exercise of the Option, Grantee may elect, subject to the
approval of and terms and conditions established by the Committee in its sole discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares of Common 

 Stock having a fair market value, as determined by the Committee using methods as authorized under the
Mission Resources Corporation 2004 Incentive Plan, on the date the tax is to be determined equal to the statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Grantee, and shall be
subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate. Any fraction of a share of Common Stock required to satisfy such obligation shall be disregarded and the amount due shall instead be paid in cash by
the Grantee. 
  
 The Company shall have the right to take such
other action as may be necessary or appropriate to satisfy any such tax withholding obligations. 
  
 Section 13. Restrictions on Exercise. The Option may not be exercised if the issuance of such Common Stock or the exercise of the Option
itself (including but not limited to the method of payment of the consideration for such shares of Common Stock) would constitute a violation of any applicable federal or state securities or other laws or regulations, any rules or regulations of any
stock exchange on which the Common Stock may be listed or Company policies. 
  
 Section 14. No Fractional Shares. The Option may only be exercised with respect to full shares of Common Stock, and no fractional share of Common Stock shall be issued. 
  
 Section 15. General. 
  
 (a) Notices. All notices under this Agreement shall
be mailed or delivered by hand to the parties at their respective addresses set forth beneath their signatures below or at such other address as may be designated in writing by either of the parties to one another. Notices shall be effective upon
receipt. 
  
 (b) Amendment and
Termination. No amendment, modification or termination of the Option or this Agreement shall be made at any time without the written consent of Grantee and Company. 
  
 (c) Severability. In the event that any provision of this Agreement shall be held illegal, invalid,
or unenforceable for any reason, such provision shall be fully severable, but shall not affect the remaining provisions of the Agreement, and the Agreement shall be construed and enforced as if the illegal, invalid, or unenforceable provision had
not been included herein. 
  
 (d) Supersedes
Prior Agreements. This Agreement shall supersede and replace all prior agreements and understandings, oral or written, between the Company and the Grantee regarding the grant of this Option and the Option Shares covered hereby. 
  
 (e) Governing Law. The Option shall be construed in
accordance with the laws of the State of Texas without regard to its conflict of law provisions, to the extent federal law does not supersede and preempt Texas law. 
  
 (f) Community Property. Each spouse individually is bound by, and such spouse’s interest, if
any, in any Option Shares is subject to, the terms of this Agreement. Nothing in this Agreement shall create a community property interest where none otherwise exists. 

 (g) Successors and Assigns. Subject to the limitations which this Agreement
imposes upon transferability of the Option, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and Grantee, and, upon his death, on his estate and beneficiaries thereof (whether by
will or the laws of descent and distribution). 
  
 [Signature
page follows.] 

 IN WITNESS WHEREOF, this Agreement is executed and entered into effective on the day and year first above
written. 
  

					
	ATTEST:	 	MISSION RESOURCES CORPORATION
		
	 	 	1331 Lamar Street, Suite 1455
	 /s/ Leslee M. Ranly

	 	Houston, Texas 77010-3039
	Leslee M. Ranly	 	 
	Vice President & Secretary	 	By:	 	 /s/ Robert L. Cavnar

	 	 	Name:	 	Robert L. Cavnar
	 	 	Title:	 	Chairman, President & CEO
		
	 	 	 /s/ William R. Picquet

	 	 	William R. Picquet, Grantee

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