OCEAN ENERGY INC /TX/
EXHIBIT 10.38 NATURAL GAS PURCHASE & SALE AGRMNT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>exh10_38.htm
<DESCRIPTION>EXHIBIT 10.38 NATURAL GAS PURCHASE & SALE AGRMNT
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 10.38
</TITLE>
</HEAD>
<BODY>



<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">November 14,
2002</FONT></FONT> </P>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">Mr. Phil
Iracane<BR>Ocean Energy, Inc.<BR>1001 Fannin, Suite 1600<BR>Houston, TX  77002-6794</FONT></FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3"><B><I>RE: Amendment
to Natural Gas Purchase and Sale Agreement</I></B></FONT></FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">The
parties hereby agree to amend the subject Natural Gas Purchase and Sale
Agreement between Duke Energy Trading and Marketing, L.L.C. (&#147;DETM&#148;)
or (&#147;Buyer&#148;) and Ocean Energy, Inc. (&#147;Ocean&#148;) dated October
1, 2001 (the &#147;Agreement&#148;) as follows:</FONT></FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">
1.&nbsp;&nbsp;&nbsp;Article VIII shall be amended by the addition of the following language to the end of Article VIII:</FONT></FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="3%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">&#147;In
addition to the foregoing, if the credit rating of Buyer is reduced below  investment
grade as determined by Standard and Poor&#146;s, within five (5)  business days of a
demand from Ocean, Buyer shall supply to Ocean an  irrevocable, unconditional letter of
credit (in a form satisfactory to Ocean)  (the &#147;Letter of Credit&#148;) issued by a
national financial institution  having an office in the United States and whose credit
rating is at least  &#147;A-&#148; by Standard and Poor&#146;s and at least &#147;A3&#148; by
Moodys, in favor of Ocean in an amount equal to one hundred percent (100%) of  the
estimated payables for 60 days of flow under the Agreement. It is agreed  that the amount
of such Letter of Credit shall be determined by Ocean in its  sole discretion.</FONT></FONT></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="3%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">Should
Buyer be required to provide the Letter of Credit above, such Letter of Credit  shall
remain in force and effect until (i) Ocean is satisfied Buyer is fully  capable of
performing its obligations under the Agreement which determination  shall be made in Ocean&#146;s
sole discretion, or (ii) the termination of the  Agreement and fulfillment of all
obligations thereunder by Buyer.</FONT></FONT></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="3%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">The
Parties acknowledge and agree that were it not for Buyer&#146;s agreement to  supply
Ocean with such Letter of Credit as provided in this Amendment, Ocean  would exercise its
right to terminate the Agreement. In the event Ocean draws on  such Letter of Credit,
Buyer agrees to supply a replacement Letter of Credit  (within five (5) business days)
and will continue to provide additional Letters  of Credit in the manner specified herein
within such time period.</FONT></FONT></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="3%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">The
Parties agree that if Buyer fails to provide a Letter of Credit as provided  herein, the
Agreement will be immediately terminated.</FONT></FONT></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="3%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">In
order to secure its obligations hereunder, Buyer grants a security interest to  Ocean in
Ocean&#146;s Gas being purchased hereunder. In accordance with this  provision, Ocean is
filing a Financing Statement with the Secretary of State of  the State of Delaware.</FONT></FONT></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="3%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">To the
extent this Amendment conflicts in any manner with the Agreement, the Parties
agree that this Amendment shall control.</FONT></FONT></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="3%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">Except
as amended herein, the Agreement remains in full force and effect.&#148;</FONT></FONT></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">All
capitalized terms used herein shall have the same meaning given them in the
Agreement.</FONT></FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">Please
sign in the space provided below and return one original to DETM as soon as
possible.</FONT></FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">We
thank you for your continued business.</FONT></FONT> </P>

<!-- MARKER FORMAT-SHEET="Cutoff Rule" -->
<P>_________________ </P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">Tim  McCabe<BR>Sr. Director,
East Gas Origination</FONT></FONT> </P>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">Agreed  to and
accepted this 22nd day of November, 2002.</FONT></FONT> </P>

<!-- MARKER FORMAT-SHEET="Cutoff Rule" -->
<P>_________________ </P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="3">Ocean Energy,
Inc.</FONT></FONT> </P>

</BODY>
</HTML>





</TEXT>
</DOCUMENT>
