Document:

Exhibit 10.3

     Exhibit 10.3 

OCEAN ENERGY, INC.
2001 CHANGE OF CONTROL
SEVERANCE PLAN

          The OCEAN ENERGY, INC. 2001 CHANGE
OF CONTROL SEVERANCE PLAN (the “Plan”) is hereby adopted pursuant to
the authorization of the Board of Directors of OCEAN ENERGY, INC., a Delaware
corporation (the “Company”). The Plan supercedes and replaces in full
any severance plan, practice or policy (written or oral) of the Company or of
any of its subsidiaries existing with respect to Covered Employees prior to the
Effective Date. 

I .
DEFINITIONS AND CONSTRUCTION

	 	1.1  Definitions.
Where the following words and phrases appear in the Plan, they shall have the respective
meanings set forth below, unless their context clearly indicates to the contrary.  

          “Annual Pay”
shall mean the following: (i) with respect to a salaried employee, his annual
rate of base salary, (ii) with respect to an hourly employee who is not an
“offshore” employee, his hourly base wage rate x his regularly
scheduled hours of work per week x 52, and (iii) with respect to an hourly
employee who works offshore, his regularly scheduled bi-weekly wages x 26. 

          “Board” shall
mean the Board of Directors of the Company. 

          “Change in
Duties” shall mean the occurrence, within one year after the date upon
which a Change of Control occurs, of any one or more of the following: 

          (1) with respect to a Covered
Employee of Severance Level A, a significant reduction in the duties of such
Covered Employee from those applicable to him immediately prior to the date on
which a Change of Control occurs; 

     (2) a reduction in a Covered Employee's
Annual Pay from that in effect immediately prior to the date on which a Change of Control
occurs; and 

          (3) a change in the location of a
Covered Employee’s principal place of employment by the Employer by more
than 50 miles from the location where he was principally employed immediately
prior to the date on which a Change of Control occurs, unless such relocation is
agreed to in writing by the Covered Employee; provided, however, that a
relocation scheduled prior to the date of the Change in Control and a
repatriation to the United States in the normal course that is consistent with
the Employer’s past practice shall not constitute a Change in Duties. 

          “Change of
Control” shall mean the occurrence of either of the following events: 

1  

          (1) the Company (A) shall not be
the surviving entity in any merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity other than a previously wholly-owned
subsidiary of the Company) or (B) is to be dissolved and liquidated, and as a
result of or in connection with such transaction, the persons who were directors
of the Company before such transaction cease to constitute a majority of the
Board; or 

          (2) any person or entity,
including a “group” as contemplated by Section 13(d)(3) of the
Securities Exchange Act of 1934, acquires or gains ownership or control
(including, without limitation, power to vote) of 20% or more of the outstanding
shares of the Company’s voting stock (based upon voting power), and as a
result of or in connection with such transaction, the persons who were directors
of the Company before such transaction cease to constitute a majority of the
Board. 

          “Code” shall mean
the Internal Revenue Code of 1986, as amended. 

          “Committee” shall mean
the committee appointed by the Board to administer this Plan. 

     “Company” shall mean Ocean Energy, Inc., a
Delaware corporation, and any successor thereto. 

          “Compensation”
shall mean the greater of (1) a Covered Employee’s Annual Pay plus his
Severance Factor, if any, immediately prior to the date on which a Change of
Control occurs or (2) a Covered Employee’s Annual Pay plus his Severance
Factor, if any, at the time of his Involuntary Termination. “Three
Months’ Compensation” shall mean Compensation divided by 4.
“Semi-Monthly Compensation” shall mean Compensation divided by
24. 

          “Covered
Employee” shall mean any individual who, on the date upon which a
Change of Control occurs, is a regular, full-time salaried employee of the
Employer or an hourly employee of the Employer who is normally scheduled to work
550 or more hours per year, other than (1) any individual whose terms of
employment in the United States are governed by a collective bargaining
agreement between a collective bargaining unit and the Employer unless such
agreement provides for coverage of such individual under the Plan, (2) any
individual who is a party to a written agreement with the Employer providing for
severance payments or benefits upon such individual’s termination of
employment with the Employer, (3) an employee who is classified as a temporary,
casual, leased employee, or an independent contractor under the Employer’s
employment policies, and (4) an employee of a non-U.S. subsidiary unless said
employee is a U.S. expatriate or third country national. 

          “Effective Date”
shall mean September 27, 2001. 

          “Employer” shall mean
the Company and each eligible organization designated as an Employer in
accordance with the provisions of Section 4.4 of the Plan. 

          “ERISA” shall
mean the Employee Retirement Income Security Act of 1974, as amended. 

          “Involuntary
Termination” shall mean any termination of a Covered Employee’s
employment with the Employer which: 

2  

     (1) does not result from a voluntary
resignation by the Covered Employee (other than a resignation pursuant to clause (2) of
this definition); or 

          (2) results from a resignation by
a Covered Employee on or before the date which is sixty days after the date the
Covered Employee receives notice of a Change in Duties; 

provided, however, that the term ‘Involuntary
Termination’ shall not include (i) a Termination for Cause, (ii) a
termination of a Covered Employee’s employment occurring as a result of or
in connection with the sale or other divestiture to an unrelated third party by
the Employer of a division, subsidiary, or other business segment or assets
(including, without limitation, a divestiture by sale of shares of stock or of
assets) if such Covered Employee is offered continued employment by the acquiror
of such business segment or assets immediately upon such sale or divestiture, or
(iii) any termination as a result of a Covered Employee’s death, disability
under circumstances entitling him to benefits under the Employer’s
long-term disability plan or Retirement. 

          “Retirement”
shall mean the Covered Employee’s voluntary resignation on or after the
date he reaches age sixty-five (other than a resignation within sixty days after
the date the Covered Employee receives notice of a Change in Duties or a
resignation at the request of the Employer). 

          “Severance
Factor” shall mean the percentage of Annual Pay for a Covered
Employee’s Severance Level determined in accordance with the following
schedule and expressed as a dollar amount which, when added to the Annual Pay,
results in the Compensation to be used in the severance benefit calculation. 

                        Severance Level                   Severance Factor
                        ---------------                   ----------------

                               A                                 38%

                               B                                 30%

                               C                                 25%

                               D                                 18%

                               E                                 0%

          “Severance Level”
shall mean the following category into which a Covered Employee is designated
based on his Annual Pay immediately prior to the date on which a Change of
Control occurs or, if greater, at the time of his Involuntary Termination for
the purpose of determining his severance benefit amount. 

3  

                          Severance Level                         Annual Pay
                          ---------------                         ----------

                                 A                            $140,000 and above

                                 B                            $115,000 - $139,999

                                 C                           $  99,000 - $114,999

                                 D                           $  68,000 - $  98,999

                                 E                          Less than    $  68,000

          “Termination for
Cause” shall mean any termination of a Covered Employee’s
employment with the Employer by reason of the Covered Employee’s (1) gross
negligence in the performance of the Covered Employee’s duties and
responsibilities, which negligence results in material harm to the business,
interests, or reputation of the Employer, (2) violation of any material Employer
policy, including, without limitation, the theft, embezzlement or
misappropriation or material misuse of any Employer funds or property, (3)
criminal or civil conviction for (or plea of nolo contendere to) a crime
involving moral turpitude, (4) willful and continued failure to perform the
Covered Employee’s duties and responsibilities, or (5) misconduct that, in
the Employer’s good faith determination, is materially harmful to the
business, interests, or reputation of the Employer. 

          “Welfare Benefit
Coverages” shall mean the medical, dental, life insurance, accidental
death and dismemberment, and vision coverages provided by the Employer to its
active employees. 

     1.2  Number and Gender.
Wherever appropriate herein, word used in the singular shall be considered to include the
plural and the plural to include the singular. The masculine gender, where appearing in
this Plan, shall be deemed to include the feminine gender.  

     1.3  Headings.
The headings of Articles and Sections herein are included solely for convenience and if
there is any conflict between such headings and the text of the Plan, the text shall
control.  

II .
SEVERANCE BENEFITS

     2.1  Severance Benefits.
Subject to the provisions of Section 2.2 and 2.4 hereof, if a Covered Employee’s
employment by the Employer or successor thereto shall be subject to an Involuntary
Termination which occurs on or within one year after the date upon which a Change of
Control occurs, then the Covered Employee shall be entitled to the following severance
benefits:  

     (a) A lump sum cash payment in accordance
with the following schedule:  

4  

                        Severance Level                       Benefit Amount
                        ---------------                       --------------

                               A                             2 x Compensation

                               B                            1.5 x Compensation

                               C                            1.25 x Compensation

                               D                             1 x Compensation

                               E                                Lesser of:

                             (1)    the sum of (A) Semi-Monthly  Compensation as of his Involuntary  Termination for each full year and
                                    fraction  thereof of continuous  employment  with the Employer as a Covered  Employee from his most
                                    recent date of hire,  and (B)  Semi-Monthly  Compensation  for each full $10,000  increment of such
                                    Covered Employee's Annual Pay at the time of his Involuntary Termination;  provided,  however, that
                                    in no event shall any Covered Employee receive less than Three Months' Compensation; or

                             (2)    1 x Compensation;

provided, however, notwithstanding the foregoing, in the event
that salary continuation or severance payments are payable by the Employer to a
Covered Employee pursuant to the applicable laws or rules of any foreign
jurisdiction concerning Involuntary Terminations or as a result of the
application of the Worker Adjustment and Retraining Notification Act, 29 U.S.C.
§ 2101 et. seq. (the “WARN Act”), or an election by the Employer
to make payments in lieu of notice as if the WARN Act applied, whether or not it
does so apply, to any Involuntary Termination of a Covered Employee (each an
“Other Severance Payment”), no severance payment shall be payable as
provided in Section 2.1(a) to such Covered Employee except to the extent such
severance payment exceeds the aggregate amount of Other Severance Payments
payable to such Covered Employee. 

     (b) A Covered Employee shall be entitled to
continue the Welfare Benefit Coverages for himself and, where applicable, his eligible
dependents following his Involuntary Termination for a number of months determined in
accordance with the following schedule:  

5  

                        Severance Level                        Number of Months
                        ---------------                        ----------------

                               A                                      24

                               B                                      18

                               C                                      15

                               D                                      12

                               E                              equal to the quotient of (i) the amount of cash  payable  pursuant to (a)
                                                              above,  divided by (ii) the Covered Employee's monthly pay (1/12th of his
                                                              Annual Pay) (rounded to the nearest whole month if necessary);

provided however, the Covered Employee must continue to pay the
premiums paid by active employees of the Employer for such coverages. The
Covered Employee may choose to continue some or all of such Welfare Benefit
Coverages. Such benefit rights shall apply only to those Welfare Benefit
Coverages which the Employer has in effect from time to time for active
employees, and the applicable payments shall adjust as premiums for active
employees of the Employer change. Welfare Benefit Coverage(s) shall immediately
end upon the Covered Employee’s obtainment of new employment and
eligibility for similar Welfare Benefit Coverage(s) (with the Covered Employee
being obligated hereunder to promptly report such eligibility to the Employer).
Nothing herein shall be deemed to adversely affect in any way the additional
rights, after consideration of this extension period, of Covered Employees and
their eligible dependents to health care continuation coverage as required
pursuant to Part 6 of Title I of ERISA. The provision of extended group health
plan coverage pursuant to this Plan is intended to be part of the Covered
Employee’s COBRA period of coverage. 

     (c) A Covered Employee of Severance Level A
shall be entitled to receive out-placement services in connection with obtaining new
employment up to a maximum cost of $6,000.  

     (d) The severance benefits payable under
this Plan shall be paid to a Covered Employee at the time he receives his final
termination pay, or as soon as administratively practicable thereafter, subject to the
conditions set forth in Section 2.2 of the Plan. Any severance benefits paid pursuant to
this Section will be deemed to be a severance payment and not “Compensation”for
purposes of determining benefits under the Employer’s qualified plans and shall be
subject to any required tax withholding.  

     2.2  Release and
Full Settlement. Anything to the contrary herein notwithstanding, as a
condition to the receipt of any severance payment or benefits hereunder, a Covered
Employee whose employment by the Employer has been subject to an Involuntary Termination
shall first execute a release, in the form established by the Committee, releasing the
Committee, the Employer, and the Employer’s parent corporation, subsidiaries,
affiliates, shareholders, partners, officers, directors, employees and agents from any
and all claims and from any and all causes of action of any kind or character, including
but not limited to all claims or causes of action arising out of such Covered Employee’s
employment with the Employer or the termination of such employment. The performance of
the Employer’s obligations hereunder and the receipt of any benefits provided
hereunder by such Covered Employee shall constitute full settlement of all such claims
and causes of action.  

6  

     2.3  No Mitigation.
A Covered Employee shall not be required to mitigate the amount of any payment or benefit
provided for in this Article II by seeking other employment or otherwise, nor shall the
amount of any payment or benefit provided for in this Article II be reduced by any
compensation or benefit earned by the Covered Employee as the result of employment by
another employer or by retirement benefits except as provided in Section 2.1(b) with
respect to Welfare Benefit Coverage. The benefits under the Plan are in addition to any
other benefits to which a Covered Employee is otherwise entitled.  

     2.4  Severance Pay
Plan Limitation. This Plan is intended to be an employee welfare benefit
plan within the meaning of section 3(1) of ERISA and the Labor Department regulations
promulgated thereunder. Therefore, anything to the contrary herein notwithstanding, in no
event shall any Covered Employee receive total payments under the Plan (excluding
payments pursuant to Section 2.5) that exceed the equivalent of twice such Covered
Employee’s “annual compensation”(as such term is defined in 29 CFR §2510.3-2(b)(2))
during the year immediately preceding his Involuntary Termination. If total payments
under the Plan (excluding payments pursuant to Section 2.5) to a Covered Employee would
otherwise exceed the limitation in the preceding sentence, the amount payable to such
Covered Employee pursuant to Section 2.1(a) shall be reduced in order to satisfy such
limitation.  

     2.5  Certain
Additional Payments by the Employer. Notwithstanding anything to the
contrary in the Plan, in the event that any payment or distribution by the Employer or
any other person to or for the benefit of a Covered Employee, whether paid or payable or
distributed or distributable pursuant to the terms of the Plan or otherwise (a “Payment”),
would be subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties with respect to such excise tax (such excise tax, together with any such
interest or penalties, are hereinafter collectively referred to as the “Excise Tax”),
the Employer shall pay to the Covered Employee an additional payment (a “Gross-up
Payment”) in an amount such that after payment by the Covered Employee of all of
taxes (including any interest or penalties imposed with respect to such taxes), including
any Excise Tax imposed on any Gross-up Payment, the Covered Employee retains an amount of
the Gross-up Payment equal to the Excise Tax imposed upon the Payment. The Employer and
the Covered Employee shall make an initial determination as to whether a Gross-up Payment
is required and the amount of any such Gross-up Payment. The Covered Employee shall
notify the Employer in writing of any claim by the Internal Revenue Service which, if
successful, would require the Employer to make a Gross-up Payment (or a Gross-up Payment
in excess of that, if any, initially determined by the Employer and the Covered Employee)
within ten days of the receipt of such claim. The Employer shall notify the Covered
Employee in writing at least ten days prior to the due date of any response required with
respect to such claim if it plans to contest the claim. If the Employer decides to
contest such claim, the Covered Employee shall cooperate fully with the Employer in such
action; provided, however, the Employer shall bear and pay directly or indirectly all
costs and expenses (including additional interest and penalties) incurred in connection
with such action and shall indemnify and hold the Covered Employee harmless, on an
after-tax basis, for any Excise Tax or income tax, including interest and penalties with
respect thereto, imposed as a result of the Employer’s action. If, as a result of
the Employer’s action with respect to a claim, the Covered Employee receives a
refund of any amount paid by the Employer with respect to such claim, the Covered
Employee shall promptly pay such refund to the Employer. If the Employer fails to timely
notify the Covered Employee whether it will contest such claim or the Employer determines
not to contest such claim, then the Employer shall immediately pay to the Covered
Employee the portion of such claim, if any, which it has not previously paid to the
Covered Employee.  

7  

III.
ADMINISTRATION OF PLAN

     3.1  Committee’s Powers and
Duties. The Company shall be the named fiduciary and shall have full power
to administer the Plan in all of its details, subject to applicable requirements of law.
The duties of the Company shall be performed by the Committee. It shall be a principal
duty of the Committee to see that the Plan is carried out, in accordance with its terms,
for the exclusive benefit of persons entitled to participate in the Plan. For this
purpose, the Committee’s powers shall include, but not be limited to, the following
authority, in addition to all other powers provided by this Plan:  

     (a) to make and enforce such rules and
regulations as it deems necessary or proper for the efficient administration of the Plan;  

     (b) to interpret the Plan and all facts
with respect to a claim for payment or benefits, its interpretation thereof to be final
and conclusive on all persons claiming payment or benefits under the Plan;  

     (c) to decide all questions concerning the
Plan and the eligibility of any person to participate in the Plan;  

     (d) to make a determination as to the right
of any person to a payment or benefit under the Plan (including, without limitation, to
determine whether and when there has been a termination of a Covered Employee’s
employment and the cause of such termination and the amount of such payment or benefit);  

     (e) to appoint such agents, counsel,
accountants, consultants, claims administrator and other persons as may be required to
assist in administering the Plan;  

     (f) to allocate and delegate its
responsibilities under the Plan and to designate other persons to carry out any of its
responsibilities under the Plan, any such allocation, delegation or designation to be in
writing;  

     (g) to sue or cause suit to be brought in
the name of the Plan; and  

     (h) to obtain from the Employer and from
Covered Employees such information as is necessary for the proper administration of the
Plan.  

8  

     3.2   Member's Own Participation.No
Covered Employee or agent of the Committee may act, vote, or otherwise influence a
decision of the Committee specifically relating to himself as a participant in the Plan. 

     3.3  Indemnification.
The Employer shall indemnify and hold harmless each member of the Committee against any
and all expenses and liabilities arising out of his administrative functions or fiduciary
responsibilities, including any expenses and liabilities that are caused by or result
from an act or omission constituting the negligence of such member in the performance of
such functions or responsibilities, but excluding expenses and liabilities that are
caused by or result from such member’s own gross negligence or willful misconduct.
Expenses against which such member shall be indemnified hereunder shall include, without
limitation, the amounts of any settlement or judgment, costs, counsel fees, and related
charges reasonably incurred in connection with a claim asserted or a proceeding brought
or settlement thereof.  

     3.4  Compensation, Bond and
Expenses. The members of the Committee shall not receive compensation with
respect to their services for the Committee. To the extent required by applicable law,
but not otherwise, Committee members shall furnish bond or security for the performance
of their duties hereunder. Any expenses properly incurred by the Committee incident to
the administration, termination or protection of the Plan, including the cost of
furnishing bond, shall be paid by the Company.  

     3.5  Claims Procedure.
Any employee that the Committee determines is entitled to a benefit under the Plan is not
required to file a claim for benefits. Any employee who is not paid a benefit and who
believes that he is entitled to a benefit or who has been paid a benefit and who believes
that he is entitled to a greater benefit may file a claim for benefits under the Plan in
writing with the Committee. In any case in which a claim for Plan benefits by a Covered
Employee is denied or modified, the Committee shall furnish written notice to the
claimant within ninety days (or within 180 days if additional information requested by
the Committee necessitates an extension of the ninety-day period), which notice shall:  

     (a) state the specific reason or reasons
for the denial or modification;  

     (b) provide specific reference to pertinent
Plan provisions on which the denial or modification is based;  

     (c) provide a description of any additional
material or information necessary for the Covered Employee or his representative to
perfect the claim, and an explanation of why such material or information is necessary;
and  

     (d) explain the Plan's claim review
procedure as contained herein.  

9  

     In the event a claim for Plan benefits is
denied or modified, if the Covered Employee or his representative desires to have such
denial or modification reviewed, he must, within sixty days following receipt of the
notice of such denial or modification, submit a written request for review by the
Committee of its initial decision. In connection with such request, the Covered Employee
or his representative may review any pertinent documents upon which such denial or
modification was based and may submit issues and comments in writing. Within sixty days
following such request for review the Committee shall, after providing a full and fair
review, render its final decision in writing to the Covered Employee and his
representative, if any, stating specific reasons for such decision and making specific
references to pertinent Plan provisions upon which the decision is based. If special
circumstances require an extension of such sixty-day period, the Committee’s
decision shall be rendered as soon as possible, but not later than 120 days after receipt
of the request for review. If an extension of time for review is required, written notice
of the extension shall be furnished to the Covered Employee and his representative, if
any, prior to the commencement of the extension period.  

     3.6  Mandatory Arbitration.
If a Covered Employee or his representative is not satisfied with the decision of the
Committee pursuant to the Plan’s claims review procedure, such Covered Employee or
his representative may, within sixty days of receipt of the written decision of the
Committee, request by written notice to the Committee, that his claim be submitted to
arbitration pursuant to the employee benefit plan claims arbitration rules of the
American Arbitration Association. Such arbitration shall be the sole and exclusive
procedure available to a Covered Employee or his representative for review of a decision
of the Committee. In reviewing the decision of the Committee, the arbitrator shall use
the standard of review which would be used by a Federal court in reviewing such decision
under the provisions of ERISA; provided, however, that even if ERISA were ever found to
be inapplicable to the Plan, the arbitrator shall not reverse or otherwise invalidate the
Committee’s decision unless it is found to be arbitrary and capricious, an abuse of
the discretion afforded the Committee, or legally improper. The Covered Employee or his
representative and the Employer shall share equally the cost of such arbitration, unless
the arbitrator directs that all or part of the Covered Employee’s share of such cost
be paid by the Employer. In addition, the arbitrator may direct, in its discretion, that
all or part of the Covered Employee’s expenses in pursuing his claim to payment or
benefits under the Plan shall be paid by the Employer. The arbitrator’s decision
shall be final and legally binding on both parties. This Section shall be governed by the
provisions of the Federal Arbitration Act.  

IV .
GENERAL PROVISIONS

     4.1   Funding.  The benefits provided
herein shall be unfunded and shall be provided from the Employer's general assets. 

     4.2  Cost of Plan.  
Except as provided in Section 2.1(b), the entire cost of the Plan shall be borne by the
Employer and no contributions shall be required of the Covered Employees.  

     4.3   Plan Year.  The Plan shall operate
on a calendar year basis with a short plan year commencing on the Effective Date. 

10  

     4.4  Other Participating
Employers. The Committee may designate any entity or organization eligible
by law to participate in this Plan as an Employer by written instrument delivered to the
Secretary of the Company and the designated Employer. Such written instrument shall
specify the effective date of such designated participation, may incorporate specific
provisions relating to the operation of the Plan which apply to the designated Employer
only and shall become, as to such designated Employer and its employees, a part of the
Plan. Each designated Employer shall be conclusively presumed to have consented to its
designation and to have agreed to be bound by the terms of the Plan and any and all
amendments thereto upon its submission of information to the Committee required by the
terms of or with respect to the Plan; provided, however, that the terms of the Plan may
be modified so as to increase the obligations of an Employer only with the consent of
such Employer, which consent shall be conclusively presumed to have been given by such
Employer upon its submission of any information to the Committee required by the terms of
or with respect to the Plan.  

     4.5  Amendment and Termination.
The Plan may be amended from time to time at the discretion of the Board. Notwithstanding
the foregoing, this Plan may not be amended, on or within one year following a Change of
Control, to reduce benefits or rights to benefits. For purposes of this Section, a change
in the designation of participating Employers by the Committee pursuant to Section 4.4
shall be deemed to be an amendment to the Plan. The Plan shall terminate (i) one year
after the date of the Change of Control except with respect to severance benefits payable
and Welfare Benefit Coverages provided as a result of Involuntary Terminations occurring
prior to such date, (ii) on the second anniversary of the Effective Date if a Change of
Control has not occurred by that date, or (iii) on any date prior to a Change of Control
by action of the Board, whichever occurs first.  

     4.6  Not Contract of
Employment. The adoption and maintenance of the Plan shall not be deemed
to be a contract of employment between the Employer and any person or to be consideration
for the employment of any person. Nothing herein contained shall be deemed to give any
person the right to be retained in the employ of the Employer or to restrict the right of
the Employer to discharge any person at any time nor shall the Plan be deemed to give the
Employer the right to require any person to remain in the employ of the Employer or to
restrict any person’s right to terminate his employment at any time.  

     4.7  Severability.
Any provision in the Plan that is prohibited or unenforceable in any jurisdiction by
reason of applicable law shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating or affecting the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction.  

     4.8  Nonalienation.
Covered Employees shall not have any right to pledge, hypothecate, anticipate or assign
benefits or rights under the Plan, except by will or the laws of descent and
distribution.  

     4.9  Effect of Plan.
This Plan is intended to supersede all prior oral or written policies of the Employer and
all prior oral or written communications to Covered Employees with respect to the subject
matter hereof, and all such prior policies or communications are hereby null and void and
of no further force and effect. Further, this Plan shall be binding upon the Employer and
any successor of the Employer, by merger or otherwise, and shall inure to the benefit of
and be enforceable by the Employer’s Covered Employees.  

11  

     4.10   Governing Law.  The Plan shall be
interpreted and construed in accordance with the laws of the State of Texas without
regard to conflict of laws principles, except to the extent preempted by federal law. 

     EXECUTED as of the Effective Date. 

	 	OCEAN ENERGY, INC.

	 	By:  
/s/ Robert K. Reeves
       Robert K. Reeves 

       Executive Vice President, General Counsel

       and Secretary
 

12Exhibit 10.4

                                                          OCEAN ENERGY, INC.

                                                      DIRECTORS COMPENSATION PLAN

                                                         Adopted July 19, 2001

                                                          OCEAN ENERGY, INC.
                                                      DIRECTORS COMPENSATION PLAN

                                                           Table of Contents

                                                                                                                                   Page

SECTION 1.        DEFINITIONS..................................................................................1

SECTION 2.        ADMINISTRATION...............................................................................1

SECTION 3.        PARTICIPANTS.................................................................................2

SECTION 4.        BENEFITS.....................................................................................2

SECTION 5.        GENERAL PROVISIONS...........................................................................3

                                                          OCEAN ENERGY, INC.
                                                      DIRECTORS COMPENSATION PLAN

                                                               PREAMBLE

         WHEREAS,  Ocean Energy, Inc. (the "Company") desires to adopt the Ocean Energy, Inc. Directors  Compensation Plan (the "Plan")
in order to set forth the cash and stock  compensation  payable to Directors (as defined below) by the Company,  including stock awards
provided pursuant to other plans of the Company;

         NOW, THEREFORE, the Company hereby adopts the Plan as set forth herein, effective as of January 1, 2002.

SECTION 1.

                                                              DEFINITIONS

         For purposes of the Plan, the following terms shall have the meaning indicated:

1.1      Board means the Board of Directors of the Company.

1.2      Committee means the Nominating Committee of the Board.

1.3      Company Stock means the common stock, par value $.10 per share, of the Company.

1.4      Director means a member of the Board who is not also an employee of the Company or a subsidiary thereof.

1.5      Restricted  Stock  means a share of  Company  Stock  granted  pursuant  to this Plan  that,  prior to  vesting,  is subject to
forfeiture and is not transferable by the Director.

1.6      Treasury Stock means issued shares of Company Stock that are held by the Company.

1.7      Years of Service  means the number of years that a Director has served on the Board  (including  the board of directors of any
predecessor corporation that has merged with the Company), with any fractional parts of a year measured in whole calendar months.

SECTION 2.

                                                            ADMINISTRATION

2.1      Administration.  Except as otherwise  specifically  provided  herein,  the Plan shall be  administered  by the Committee.  The
Committee  shall have the complete  authority  and power to interpret  the Plan,  prescribe,  amend and rescind  rules  relating to its
administration,  determine a person's  right to a payment and the amount of such payment,  and to take all other  actions  necessary or
desirable  for the  administration  of the Plan.  All actions  and  decisions  of the  Committee  shall be final and  binding  upon all
persons.  In certain  cases  arising  under the Plan,  action or approval  must be taken by either the full Board or by a committee  of
"non-employee directors", as described in Rule 16b-3 promulgated by the Securities Exchange Commission.

SECTION 3.

                                                             PARTICIPANTS

3.1      Participants.  Each Director shall be a participant in the Plan.

SECTION 4.

                                                               BENEFITS

4.1      Annual  Retainer.  Subject to any elections  made by the Director  under the Company's  Outside  Directors  Deferred Fee Plan,
each  calendar  year each Director  shall be paid an annual  retainer in cash in the amount of $37,500  (plus an additional  $5,000 for
each committee of the Board of which the Director is the  chairman),  which shall be payable in equal  quarterly  amounts on or as soon
as reasonably  practical following the end of each calendar quarter in such year; provided,  however,  that a Director who ceases to be
a Director  during a quarter,  without regard to the reason,  shall be paid a prorated  portion of the retainer  otherwise  payable for
such quarter based on the number of days during such quarter that the  individual  served as a Director over the number of days in such
quarter.

4.2      Meeting Fees.  Subject to any elections made by the Director under the Company's  Outside  Directors  Deferred Fee Plan,  each
Director  shall be paid $1,500 for each  meeting of the Board that such  Director  attends and $1,250 for each  committee  meeting that
such Director attends.

4.3      Annual  Restricted  Stock Grant.  Each year on the first day on which the major stock  exchanges  are open,  each  Director on
such date shall be granted  1,000 shares of  Restricted  Stock.  Shares of Restricted  Stock shall become  vested  (nonforfeitable  and
transferable)  as to (i) [34% of the  shares on the  first  anniversary  of the date of grant,  (ii) an  additional  33% on the  second
anniversary of the date of grant,  and (iii) the remaining 33% on the third  anniversary  of the date of grant,]  provided the Director
continues to serve as a Director on such  applicable  anniversary  date.  The shares of  Restricted  Stock  automatically  shall become
fully vested upon a Change in Control (as defined in the Company's  2001 Long-Term  Incentive  Plan or any successor  thereto) and also
upon the  Director's  termination  from the Board due to his death or a disability  (as  determined  by the  Committee).  If a Director
ceases to be a member of the Board for any reason other than death or a disability  approved by the  Committee,  all shares of unvested
Restricted  Stock  then held by the  Director  shall be  automatically  forfeited  on such  termination.  Any  Restricted  Stock may be
evidenced in such manner as the Committee shall deem appropriate,  including,  without limitation,  book-entry registration or issuance
of a stock  certificate  or  certificates.  In the  event a  certificate  representing  Restricted  Stock  is  issued  hereunder,  such
certificate  shall be registered in the name of the Director and shall bear an appropriate  legend  referring to the terms,  conditions
and  restrictions  applicable to such  Restricted  Stock and, during the restricted  period,  shall be left on deposit with the Company
with a stock power endorsed in blank.  Directors shall have the right to receive  dividends paid on their  Restricted Stock and to vote
such shares.  Restricted Stock may not be sold,  pledged,  transferred or encumbered during the restricted period other than by will or
the laws of descent and distribution.

         Notwithstanding  anything in the Plan to the contrary,  grants of shares of Restricted  Stock may only be made  hereunder from
shares of Treasury  Stock.  In the event the number of shares of  Treasury  Stock is  insufficient  on any date to make all such grants
provided for in this Section 4.3 in full,  then all  Directors  who are entitled to receive  grants on such date shall share ratably in
the number of shares of Treasury Stock available.

4.4      Annual Stock Option Grants.  Each Director shall be entitled to receive stock options (and other  stock-based  awards, if any)
granted pursuant to the terms of the Company's 1999 and/or 2001 Long-Term Incentive Plan (or any successor plan), as applicable.

4.5      Severance  Benefit.  Upon a Director's  termination  from the Board due to any of the  following  events:  (i) the Director is
not re-elected by the  stockholders of the Company,  (ii) the Director's death or a disability,  as determined by the Committee,  (iii)
the Director is not recommended for  re-election by the Board and does not stand for  re-election,  (iv) the Director does not continue
as a member of the Board (or the board of  directors  of a  successor  to the  Company)  upon a Change in  Control  (as  defined in the
Company's 2001 Long-Term  Incentive Plan (or any successor  plan)),  or (v) the Company (or its successor) ceases to be an independent,
publicly  traded entity,  the Director shall be paid, in a lump sum within five business days of such  termination,  an amount equal to
the product of his Years of Service,  including  fractional parts thereof,  (not to be less than one or to exceed five) and the highest
annual cash retainer in effect prior to such termination.

SECTION 5.

                                                          GENERAL PROVISIONS

5.1      Termination and Amendment.  The Board may from time to time amend,  suspend or terminate the Plan or a benefit  hereunder,  in
whole or in part;  provided,  however,  no amendment,  suspension or  termination of the Plan or a benefit  hereunder may,  without the
written consent of such Director,  impair the right of a Director to receive any benefit already accrued or awarded  hereunder prior to
the effective date of such amendment, suspension or termination.

5.2      Applicable  Law.  The Plan shall be  construed  and  governed in  accordance  with the laws of the State of  Delaware  without
regard to conflicts of laws principles.

         Executed this ________________, 2001, effective for all purposes as of January 1, 2002.

                                                              OCEAN ENERGY, INC.

                                                              By:
                                                                  Name:
                                                                  Title:

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