BETA OIL & GAS INC
EX-10.26
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<TYPE>EX-10.26
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<DESCRIPTION>EX-10.26
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<p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Exhibit 10.26</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">September 16, 2002</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">David A. Wilkins</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8217 S. Yale</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Tulsa, Oklahoma 74137</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Dear David:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The purpose of
this letter is to set forth the basic terms of your proposed employment as
President and Chief Executive Officer of Beta Oil &amp; Gas, Inc. (the
&#147;Company&#148;).&#160; These terms would be as
follows:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-style:italic;margin:0in 0in .0001pt;page-break-after:auto;text-indent:.5in;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:normal;font-weight:normal;">A.&#160; Salary &#150; $160,000 annually.</font></i></b></h2>

<h2 style="font-style:italic;margin:0in 0in .0001pt;page-break-after:auto;text-indent:37.2pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:normal;font-weight:normal;">&nbsp;</font></i></b></h2>

<h2 style="font-style:italic;margin:0in 0in .0001pt;page-break-after:auto;text-indent:.5in;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:normal;font-weight:normal;">B.&#160; Incentive Compensation&#150;The following items
of incentive compensation all require that you be employed by the Company at
the respective dates on which the payments or grants are to be made.</font></i></b></h2>

<p style="margin:0in 0in .0001pt 38.4pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt .5in;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Regular
Bonus &#150; you would receive a bonus equal to not less than 40% of your annual
salary at the end of calendar year 2003.</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt .5in;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; In
consideration of your forfeiture of the unvested options you held with your
prior employer, you would receive the following bonus payments:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="80%" style="border-collapse:collapse;margin-left:106.0pt;width:80.42%;">
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  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.5%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font></p>
  </td>
  <td width="6%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:6.26%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="89%" valign="top" style="padding:0in .7pt 0in .7pt;width:89.26%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$50,000 to be paid upon commencement of your employment;</font></p>
  </td>
 </tr>
 <tr>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.5%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font></p>
  </td>
  <td width="6%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:6.26%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="89%" valign="top" style="padding:0in .7pt 0in .7pt;width:89.26%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$250,000 payable January 2, 2003;</font></p>
  </td>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font></p>
  </td>
  <td width="6%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:6.26%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="89%" valign="top" style="padding:0in .7pt 0in .7pt;width:89.26%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$150,000 payable July 1, 2003; and</font></p>
  </td>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)</font></p>
  </td>
  <td width="6%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:6.26%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="89%" valign="top" style="padding:0in .7pt 0in .7pt;width:89.26%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$150,000 payable January 2, 2004.</font></p>
  </td>
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<p style="margin:0in 0in .0001pt 2.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 2.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-style:italic;margin:0in 0in .0001pt;page-break-after:auto;text-indent:.5in;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:normal;font-weight:normal;">C.&#160;
</font></i></b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:normal;font-weight:normal;">Stock Options&#150;The following options will
be granted to you.&#160; They will vest over
a three-year period, with the first third becoming exercisable on the first
anniversary of the grant, the second third on the second anniversary and the
balance on the third anniversary of the grant.</font></h2>

<h2 style="font-style:italic;margin:0in 0in .0001pt .5in;page-break-after:auto;text-indent:34.8pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:normal;font-weight:normal;">&nbsp;</font></i></b></h2>

<h2 style="font-style:italic;margin:0in 0in .0001pt .5in;page-break-after:auto;text-indent:1.0in;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:normal;font-weight:normal;">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Upon the commencement of your
employment, you will receive an option to purchase a total of 500,000 shares of
common stock of the Company at a price equal to the closing price reported on
The Nasdaq Stock Market on the first day of your employment.</font></i></b></h2>

<p style="margin:0in 0in .0001pt;text-indent:1.2pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt .5in;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; On December 31, 2003, you will be
granted an option to purchase an additional 100,000 shares of the Company&#146;s
common stock at a price equal to the closing price of the stock on The Nasdaq
Stock Market on the immediately preceding trading date.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt .5in;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Options are to have a ten year
term.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:1.2pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We are excited
about the commencement of your position with us and look forward to an exciting
and productive tenure.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Yours very truly,</font></p>
  </td>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Beta Oil &amp; Gas, Inc.</font></p>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Joseph L. Burnett</font></p>
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  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Joseph L. Burnett</font></p>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Financial Officer</font></p>
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  <td width="18%" colspan="2" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:18.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Robert E. Davis, Jr.</font></p>
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  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Robert E. Davis, Jr.</font></p>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Director</font></p>
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