KCS ENERGY INC
1ST AMEND. TO 2ND AMENDED CREDIT AGREEMENT
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>4
<FILENAME>h13037exv10w7.txt
<DESCRIPTION>1ST AMEND. TO 2ND AMENDED CREDIT AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.7

                                                                  Execution Copy

                               FIRST AMENDMENT TO
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                  THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this "AMENDMENT"), effective as of February 26, 2004 (the "AMENDMENT
EFFECTIVE DATE"), is by and among KCS Energy, Inc., a Delaware corporation (the
"BORROWER"), and each of the Lenders party to that certain Second Amended and
Restated Credit Agreement dated as of November 18, 2003, among Borrower, the
Lenders party thereto, Bank of Montreal, a Canadian chartered bank acting
through certain of its U.S. branches or agencies ("BANK OF MONTREAL"), as Agent
and Collateral Agent, and BNP Paribas, as Documentation Agent (as amended,
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT");

                  WHEREAS, the Borrower has requested that the Lenders amend the
Credit Agreement to delete the requirement pursuant to Section 7.21(b)(ii) of
the Credit Agreement that Borrower enter into one or more Hedging Agreements no
later than February 29, 2004 covering certain of Borrower's calendar year 2005
production; and the Lenders have agreed to such amendment subject to the terms
and conditions set forth herein;

                  WHEREAS, the Borrower and the Lenders have agreed to amend the
Credit Agreement to add the additional title of "Syndication Agent" for Bank
One, N.A.; and

                  WHEREAS, the Borrower has requested that the Lenders
acknowledge satisfaction of certain post-closing title curative requirements
described in Exhibit II to the Credit Agreement (the "TITLE REQUIREMENTS").

                  NOW THEREFORE, in consideration of the premises and the mutual
covenants, representations and warranties contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows. Capitalized terms used but not otherwise defined herein shall have the
meanings assigned such terms in the Credit Agreement.

         Section 1. Amendments. The Credit Agreement is hereby amended as
follows:

                  (a)      Section 7.21(b) is amended by deleting the character
         "(i)" immediately following the words "The Borrower or a Subsidiary
         Guarantor" and by deleting subclause (ii) in its entirety, such that
         Section 7.21(b) reads, in its entirety:

                           "(b)     The Borrower or a Subsidiary Guarantor by
                  not later than December 31, 2003, shall enter into one or more
                  Hedging Agreements covering a notional volume of 20,000
                  MMBtue/d for all of calendar year 2004 at a minimum floor
                  price of $3.50 per MMBtue."

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                  (b)      The title page to the Credit Agreement is amended to
         add the words "AND SYNDICATION AGENT" following the words "BANK ONE,
         N.A., AS CO-LEAD ARRANGER".

                  (c)      The first paragraph of the preamble to the Credit
         Agreement is amended by adding "Bank One, N.A. as Syndication Agent
         ("SYNDICATION AGENT");" immediately following the final semi-colon in
         such paragraph.

                  (d)      Section 10.8, including the heading thereto, is
         amended in its entirety to read: "DOCUMENTATION AGENT AND SYNDICATION
         AGENT. Neither the Documentation Agent nor the Syndication Agent shall
         have any right, power, obligation, liability, responsibility or duty
         under this Agreement or the other Loan Documents other than those
         applicable to Lenders as such."

         Section 2. Title Requirements. The Lenders acknowledge receipt of
evidence that all of the Title Requirements have been satisfactorily resolved,
with the exception of Item 4 of Exhibit II to the Credit Agreement insofar as
the Borrower has not obtained mineral leases covering 23.333 mineral acres as to
the lower Cotton Valley formation beneath Section 17, Township 16 North, Range
11 West, Bossier Parish, Louisiana. Borrower agrees to continue to use its
reasonable commercial efforts to obtain such leases, and to deliver a title
opinion to such effect and a Mortgage thereon in favor of the Collateral Agent;
provided, however, the failure to obtain such leases, in and of itself, shall
not be considered by the Lenders for the purposes of determining whether (i) the
condition precedent set forth in clause (iii) of Section 5.2(e) of the Credit
Agreement has been satisfied; (ii) the Borrower has breached any of its
representations or warranties set forth in Article VI of the Credit Agreement or
any of its representations or warranties in any of the other Loan Documents;
(iii) the Borrower has complied with its obligations set forth in Sections 7.6,
7.19(a) or 7.20 of the Credit Agreement; or (iv) there shall have occurred an
Event of Default under Section 9.1(m) of the Credit Agreement. The lenders agree
that, for purposes of Paragraph B of said Exhibit II, the amount attributable to
the Oil and Gas properties affected by the uncured Title Requirement described
in this Section 2 does not exceed $5,000,000.

         Section 3. Amendment and Ratification. Upon the effectiveness hereof as
provided in Section 4, this Amendment shall be deemed to be an amendment to the
Credit Agreement, and the Credit Agreement, as modified hereby, is hereby
ratified, approved and confirmed to be in full force and effect in each and
every respect. The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of any Lender, the Agent,
the Collateral Agent or the Documentation Agent, nor constitute a waiver of any
provision of any of the Loan Documents. All references to the Credit Agreement
in any other document, instrument, agreement or writing shall hereafter be
deemed to refer to the Credit Agreement as modified hereby.

         Section 4. Conditions to Effectiveness. This Agreement shall become
effective as of the Agreement Effective Date when the Agent has confirmed (and
has so notified the Borrower) that counterparts hereof have been duly executed
by the Borrower and the Applicable Lenders and delivered to the Agent.

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         Section 5. Representation and Warranty. The Borrower hereby represents
and warrants that, as of the Amendment Effective Date, after giving effect
hereto:

                  (i)      the representations and warranties of each Loan Party
         contained in the Loan Documents are correct in all material respects on
         and as of such date (other than those representations and warranties
         that expressly relate solely to a specific earlier date, which shall
         remain correct as of such earlier date), as though made on and as of
         such date; and

                  (ii)     no event has occurred and is continuing which
         constitutes a Default, an Event of Default or both.

         Section 6. Governing Law. This Amendment and the Rights and Obligations
of the parties hereunder shall be construed in accordance with and be governed
by the laws of the state of Illinois.

         Section 7. Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

                            [Signature Pages Follow]

                                       3
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                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective duly authorized
officers as of the Amendment Effective Date.

                                    BORROWER:

                                    KCS ENERGY, INC.

                                    By: /s/ Frederick Dwyer
                                        ----------------------
                                    Name:  FREDERICK DWYER
                                    Title: VICE PRESIDENT

                                       4

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                                    BANKS:

                                    BANK OF MONTREAL, acting through
                                       its U.S. branches and agencies, including
                                       its Chicago, Illinois branch, as Agent

                                    By: /s/ James V. Ducote
                                        --------------------
                                    Name: JAMES V. DUCOTE
                                    Title: DIRECTOR

                                       5

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                                    BNP PARIBAS

                                    BY: /s/ Douglas R. Liftman  /s/ Polly Schott
                                        ----------------------------------------
                                    Name: DOUGLAS R. LIFTMAN     POLLY SCHOTT
                                    Title: MANAGING DIRECTOR    VICE PRESIDENT

                                       6

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                                    BANK ONE, NA

                                    BY: /s/ Charles Kingswell-Smith
                                        ------------------------------
                                    Name:  CHARLES KINGSWELL-SMITH
                                    Title: MANAGING DIRECTOR

                                       7

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                                    STERLING BANK

                                    By: /s/ C. Scott Wilson
                                        ----------------------------
                                    Name: C. SCOTT WILSON
                                    Title: VICE PRESIDENT

                                       8

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