
                                                                    EXHIBIT 99.2

                                                  As Amended on January 27, 2000

                       ST. MARY LAND & EXPLORATION COMPANY

                           INCENTIVE STOCK OPTION PLAN

                                    ARTICLE I
                            ESTABLISHMENT AND PURPOSE
                            -------------------------

         1.1  Establishment.  St. Mary Land &  Exploration  Company,  a Delaware
              -------------
corporation  (the  "Company"),  hereby  establishes  a stock option plan for key
employees  providing  material  services to the Company or any subsidiary of the
Company  as  described  herein,  which  shall be known as the "ST.  MARY  LAND &
EXPLORATION  COMPANY  INCENTIVE STOCK OPTION PLAN" (the "Plan").  It is intended
that the options issued to employees  pursuant to the Plan constitute  incentive
stock  options  within the meaning of Section 422 of the Internal  Revenue Code.
The Company shall enter into stock option  agreements with recipients of options
pursuant to the Plan.

         1.2 Purpose. The purpose of the Plan is to enhance shareholder value by
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attracting,  retaining  and  motivating  key employees of the Company and of any
subsidiary  of  the  Company  by  providing  them  with a  means  to  acquire  a
proprietary interest in the Company's success.

                                   ARTICLE II
                                   DEFINITIONS
                                   -----------

         2.1 Definitions.  Whenever used herein,  the following terms shall have
             -----------
the respective  meanings set forth below,  unless the context  clearly  requires
otherwise, and when such meaning is intended, the term shall be capitalized.

             (a)      "Board" means the Board of Directors of the Company.
                       -----

             (b)      "Code"  means  the  Internal  Revenue  Code  of  1986,  as
                       ----
         amended.

             (c)      "Committee"  shall  mean the  Committee  provided  for  by
                       ---------
         Article IV hereof, which may be created at the discretion of the Board.

             (d)      "Company"  means  St. Mary Land &  Exploration  Company, a
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         Delaware corporation.

             (e)      "Date of  Exercise"  means the date the  Company  receives
                       -----------------
         notice,  by an  Optionee,  of the  exercise  of an Option  pursuant  to
         Section  8.1 of the Plan.  Such  notice  shall  indicate  the number of
         shares of Stock the Optionee intends to acquire pursuant to exercise of
         the Option.

             (f)      "Employee"  means  any  person,  including  an  officer or
                       --------
         director of the Company or a Subsidiary Corporation, who is employed by
         the Company or a Subsidiary Corporation.

             (g)      "Fair  Market  Value" means the fair market value of Stock
                       -------------------
         upon which an option is granted under the Plan, determined as follows:

                    (i) If the Stock is listed on a national securities exchange
               or admitted to unlisted trading privileges on such exchange,  the
               Fair Market  Value shall be the last  reported  sale price of the
               Stock  on the  composite  tape of such  exchange  on the  date of
               issuance of this option,  or if such day is not a normal  trading
               day,  the last  trading day prior to the date of issuance of this
               option,  and if no

<PAGE>

               such sale is made on such day, the Fair Market Value shall be the
               average  closing  bid  and  asked  prices  for  such  day  on the
               composite tape of such exchange; or

                    (ii) If the Stock is not so listed or  admitted  to unlisted
               trading  privileges,  the Fair Market  Value shall be the mean of
               the last  reported bid and asked prices  reported by the National
               Association of Securities Dealers Quotation System (or, if not so
               quoted on NASDAQ, by the National Quotation Bureau,  Inc.) on the
               last trading day prior to the date of issuance of the option.

             (h)      "Incentive Stock Option" means an Option granted under the
                       ----------------------
         Plan which is intended to qualify as an "incentive stock option" within
         the meaning of Section 422 of the Code.

             (i)      "Option"  means  the  right,  granted  under the Plan,  to
                       ------
         purchase  Stock of the  Company  at the  option  price for a  specified
         period of time.

             (j)      "Optionee" means an  Employee holding an Option  under the
                       --------
          Plan.

             (k)      "Parent  Corporation" shall  have the meaning set forth in
                       -------------------
         Section  424(e)  of the Code  with the  Company  being  treated  as the
         employer corporation for purposes of this definition.

             (l)      "Subsidiary  Corporation" shall have the meaning set forth
                       -----------------------
         in Section  424(f) of the Code with the  Company  being  treated as the
         employer corporation for purposes of this definition.

             (m)      "Significant  Shareholder" means an individual who, within
                       ------------------------
         the meaning of Section  422(b)(6)  of the Code,  owns stock  possessing
         more than ten percent of the total combined voting power of all classes
         of stock of the  Company or of any  Parent  Corporation  or  Subsidiary
         Corporation of the Company.  In determining  whether an individual is a
         Significant Shareholder, an individual shall be treated as owning stock
         owned by certain relatives of the individual and certain stock owned by
         corporations in which the individual is a shareholder,  partnerships in
         which the  individual is a partner,  and estates or trusts of which the
         individual is a  beneficiary,  all as provided in Section 424(d) of the
         Code.

             (n)      "Stock" mean   the $.01  par  value  common  stock of  the
                       -----
         Company.

         2.2 Gender and Number.  Except when otherwise indicated by the context,
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any masculine  terminology when used in the Plan also shall include the feminine
gender, and the definition of any term herein in the singular also shall include
the plural.

                                   ARTICLE III
                          ELIGIBILITY AND PARTICIPATION
                          -----------------------------

         All  Employees  are  eligible  to  participate  in the Plan and receive
Incentive Stock Options under the Plan.  Optionees in the Plan shall be selected
by the Board,  in its sole  discretion,  from among those  Employees who, in the
opinion  of the  Board,  are  in a  position  to  contribute  materially  to the
Company's  continued  growth  and  development  and to its  long-term  financial
success.

                                   ARTICLE IV
                                 ADMINISTRATION
                                 --------------

         The Board shall be responsible for administering the Plan.

                  (a)  The  Board  is  authorized  to  interpret  the  Plan;  to
         prescribe,  amend,  and rescind rules and  regulations  relating to the
         Plan; to provide for  conditions  and  assurances  deemed  necessary or
         advisable  to protect the  interests  of the  Company;  and to make all
         other  determinations  necessary or advisable for the administration of
         the Plan.  Determinations,  interpretations,  or other  actions made or
         taken by the Board with respect to the Plan and Options  granted  under
         the Plan shall be final and binding and conclusive for all purposes and
         upon all persons.

<PAGE>

                  (b)  At  the   discretion   of  the  Board  the  Plan  may  be
         administered  by a  Committee  of two or  more  non-employee  Directors
         appointed by the Board (the "Committee"). The Committee shall have full
         power and  authority,  subject to the  limitations  of the Plan and any
         limitations imposed by the Board, to construe, interpret and administer
         the Plan and to make  determinations  which shall be final,  conclusive
         and  binding  upon  all  persons,  including  any  persons  having  any
         interests in any Options which may be granted  under the Plan,  and, by
         resolution or  resolutions  to provide for the creation and issuance of
         any Option, to fix the terms upon which, the time or times at or within
         which,  and the price or  prices  at which  any  shares of Stock may be
         purchased from the Company upon the exercise of an Option.  Such terms,
         time or times and price or prices shall, in every case, be set forth or
         incorporated  by reference in the instrument or instruments  evidencing
         an Option, and shall be consistent with the provisions of the Plan.

                  (c) Where a Committee  has been created by the Board  pursuant
         to this  Article IV,  references  in the Plan to actions to be taken by
         the Board  shall be deemed to refer to the  Committee  as well,  except
         where limited by the Plan or by the Board.

                  (d) No member of the  Board or the  Committee  shall be liable
         for any action or determination  made in good faith with respect to the
         Plan or any Option granted under it.

                                    ARTICLE V
                            STOCK SUBJECT TO THE PLAN
                            -------------------------

         5.1 Number.  The total number of shares of Stock hereby made  available
             ------
and  reserved  for  issuance  under the Plan upon  exercise of Options  shall be
1,650,000  shares.  Notwithstanding  anything to the  contrary  contained in the
foregoing,  to the extent that options are issued under any other  current Stock
Option Plan  adopted by the Company,  the shares of Stock  reserved for issuance
pursuant  to Options  granted  under the Plan shall be  reduced.  The  aggregate
number  of  shares  of Stock  available  under  the Plan  shall  be  subject  to
adjustment as provided in Section 5.3.

         5.2 Unused Stock. If an Option shall expire or terminate for any reason
             ------------
without having been exercised in full, the  unpurchased  shares of Stock subject
thereto shall (unless the Plan shall have terminated) become available for other
Options under the Plan.

         5.3 Adjustment  in  Capitalization.  In  the event of any change in the
             ------------------------------
outstanding   shares  of  Stock  by  reason  of  a  stock   dividend  or  split,
recapitalization,   reclassification,  or  other  similar  capital  change,  the
aggregate  number  of  shares  of  Stock  set  forth  in  Section  5.1  shall be
appropriately adjusted by the Board, whose determination shall be conclusive. In
any such case,  the  number and kind of shares of Stock that are  subject to any
Option and the Option price per share shall be proportionately and appropriately
adjusted  without any change in the  aggregate  Option price to be paid therefor
upon exercise of the Option.

                                   ARTICLE VI
                              DURATION OF THE PLAN
                              --------------------

         Subject to  approval of  shareholders,  the Plan shall be in effect for
ten years from the date of its adoption by the Board. Any Options outstanding at
the end of such period  shall remain in effect in  accordance  with their terms.
The Plan shall  terminate  before the end of such period if all Stock subject to
it has been  purchased  pursuant to the  exercise of Options  granted  under the
Plan.

                                   ARTICLE VII
                             TERMS OF STOCK OPTIONS
                             ----------------------

         7.1 Grant of Options. Subject to Section 5.1, Options may be granted to
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Employees  at any time and from time to time as  determined  by the  Board.  The
Board shall have complete discretion in determining the terms and conditions and
number of Options granted to each Optionee.  In making such determinations,  the
Board may take into account the nature of services  rendered by such  Employees,
their  present and  potential  contributions  to the Company and its  Subsidiary
Corporations,  and such other factors as the Board in its discretion  shall deem
relevant.  The  Board is  expressly  given the  authority  to issue  amended  or
replacement  Options  with  respect  to  shares  of Stock  subject  to an

<PAGE>

Option previously  granted  hereunder.  An amended Option amends the terms of an
Option  previously  granted  and  thereby  supersedes  the  previous  Option.  A
replacement  Option is similar to a new Option granted  hereunder except that it
provides  that it shall be  forfeited  to the extent that a  previously  granted
Option is  exercised,  or  except  that its  issuance  is  conditioned  upon the
termination of a previously granted Option.

         7.2 No  Tandem  Options.  Where an  Option  granted  under  the Plan is
             -------------------
intended to be an Incentive  Stock  Option,  the Option shall not contain  terms
pursuant to which the exercise of the Option would affect the  Optionee's  right
to exercise another Option,  or vice versa,  such that the Option intended to be
an Incentive  Stock  Option  would be deemed a tandem  stock  option  within the
meaning of the regulations under Section 422 of the Code.

         7.3 Option  Agreement;  Terms and Conditions to Apply Unless  Otherwise
             -------------------------------------------------------------------
Specified. As determined by the Board on the date of grant, each Option shall be
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evidenced by an Option  agreement  (the "Option  Agreement")  that  includes the
non-transferability   provisions  required  by  Section  10.2  hereof  and  that
specifies: the Option price; the duration of the Option; the number of shares of
Stock to which the Option applies;  such vesting or exercisability  restrictions
which the Board may impose and any other terms or conditions which the Board may
impose.  All such terms and  conditions  shall be determined by the Board at the
time of grant of the Option.

               (a) If not otherwise  specified by the Board, the following terms
          and conditions shall apply to Options granted under the Plan:

                    (i) Term.  The duration of the Option shall be for ten years
                        ----
               from the date of grant.

                    (ii)  Exercise of Option.  Unless an Option is terminated as
                          ------------------
               provided  hereunder,  an Optionee may exercise an Option pursuant
               to a vesting and  exercisability  schedule as  determined  by the
               Board,  which vesting and  exercisability  schedule shall provide
               that an Option held by an Optionee who  terminates his employment
               with the  Company for reasons  other than  death,  permanent  and
               total disability, or termination of employment by the Company for
               cause  shall  upon such  termination  become  exercisable  to the
               extent vested immediately prior to such termination.

                    (iii) Termination.  Each Option granted pursuant to the Plan
                          -----------
               shall expire upon the earliest to occur of:

                         (A) The date set  forth in such  Option,  not to exceed
                    ten years from the date of grant  (five years in the case of
                    a Significant Shareholder);


<PAGE>



                         (B)  The   completion   of  the   merger   or  sale  of
                    substantially all of the Stock or assets of the Company with
                    or to another  company in a transaction in which the Company
                    is not the  survivor,  except for the merger of the  Company
                    into  a  wholly-owned  subsidiary  and,  provided  that  the
                    Company  shall have given the Optionee at least thirty days'
                    prior written notice of its intent to enter into such merger
                    or  sale  (and  the  Company  shall  not be  considered  the
                    surviving  corporation for purposes hereof if the Company is
                    the survivor of a reverse triangular merger);

                         (C)  Ninety  days  following  the  termination  of  the
                    employment of an Optionee,  except for termination for cause
                    by the  Company or  termination  because  of the  Optionee's
                    death  or  disability  (in  which  event of  termination  of
                    employment  due to the Optionee's  death or disability,  the
                    Option shall expire one year  following the  termination  of
                    employment of an Optionee); or

                         (D) Immediately  upon the termination of the employment
                    of an Optionee by the Company for cause.

                    (iv)  Acceleration.  An Option shall become fully vested and
                          ------------
               exercisable  irrespective of its other provisions (A) immediately
               prior to the  completion  of the merger or sale of  substantially
               all of the stock or assets of Company in a  transaction  in which
               the  Company  is not the  survivor,  except

<PAGE>

               for the merger of the Company into a wholly-owned subsidiary (and
               the Company shall not be considered the surviving corporation for
               purposes  hereof  if the  Company  is the  survivor  of a reverse
               triangular  merger);  or (B) upon  termination  of the Optionee's
               employment with the Company or a Subsidiary  Corporation  because
               of death,  disability or normal  retirement upon reaching the age
               of sixty-five.

                    (v)  Nontransferability.  All Options granted under the Plan
                         ------------------
               shall be nontransferable  by the Optionee,  other than by will or
               the laws of descent and  distribution,  and shall be  exercisable
               during the Optionee's lifetime only by the Optionee.

               (b) The Board shall be free to specify terms and conditions other
          than and in addition to those set forth above, in its discretion.

               (c) All Option Agreements shall incorporate the provisions of the
          Plan by reference.

         7.4 Option Price. No Option granted  pursuant to the Plan shall have an
             ------------
Option  price that is less than the Fair  Market  Value of Stock on the date the
Option is granted.  Incentive Stock Options granted to Significant  Shareholders
shall  have an Option  price of not less than 110% of the Fair  Market  Value of
Stock on the date of grant.  The  Option  exercise  price  shall be  subject  to
adjustment as provided in Section 5.3 above.

         7.5 $100,000 Per Year Limitation. To the extent that the aggregate fair
             ----------------------------
market value of Stock (determined as of the time the option with respect to such
Stock is granted) with respect to which  incentive stock options are exercisable
for the first time by any Optionee during any calendar year (under this Plan and
all other plans of the Company and any Parent Company or Subsidiary Corporation)
exceeds  $100,000,  such  options  shall be  treated  as  options  which are not
incentive  stock  options.  The foregoing  provision  shall be applied by taking
options into account in the order in which they were granted.

         7.6 Payment.  Payment for all shares of Stock shall be made at the time
             -------
that an Option, or any part thereof, is exercised, and no shares shall be issued
until full payment therefor has been made. Payment shall be made (i) in cash, or
(ii) if  acceptable  to the  Board,  in Stock or in some other  form;  provided,
however,  in the case of an  Incentive  Stock  Option,  that such  other form of
payment  does not  prevent  the  Option  from  qualifying  for  treatment  as an
"incentive stock option" within the meaning of the Code.

                                  ARTICLE VIII
                        WRITTEN NOTICE, ISSUANCE OF STOCK
                        ---------------------------------
                      CERTIFICATES, SHAREHOLDER PRIVILEGES
                      ------------------------------------

         8.1 Written  Notice.  An Optionee  wishing to exercise an Option  shall
             ---------------
give written  notice to the Company,  in the form and manner  prescribed  by the
Board.  Full  payment  for the shares of Stock to be  acquired  pursuant  to the
exercise of the Option must accompany the written notice.

         8.2 Issuance of Stock Certificates.  As  soon  as practicable after the
             ------------------------------
receipt of written notice and payment, the Company shall deliver to the Optionee
a certificate or certificates for the requisite number of shares of Stock.

         8.3  Privileges  of a  Shareholder.  An  Optionee  or any other  person
              -----------------------------
entitled  to  exercise  an Option  under  the  Option  Agreement  shall not have
shareholder privileges with respect to any Stock covered by the Option until the
date of issuance of a stock certificate for such Stock.

<PAGE>

                                   ARTICLE IX
                      TERMINATION OF EMPLOYMENT OR SERVICES
                      -------------------------------------

         9.1 Death or Disability.  Subject to any prior partial  exercise of the
             -------------------
Option, if an Optionee's  employment terminates by reason of Optionee's death or
permanent  and total  disability,  the Option may be exercised up to one hundred
percent of the shares originally  subject to the Option at any time prior to the
expiration  date of the Option or within 12 months  after the date of such death
or  disability,  whichever  period is the  shorter,  by the  person  or  persons
entitled to do so under the  Optionee's  will or, if the Optionee  shall fail to
make a  testamentary  disposition  of an  Option  or shall  die  intestate,  the
Optionee's legal representative or representatives.

         9.2 Termination  other  than for Cause or Due to Death. In the event of
             --------------------------------------------------
an  Optionee's  termination  of  employment  other  than by  reason  of death or
permanent  and total  disability,  the Optionee may exercise such portion of his
Option as was vested and exercisable by him at the date of such termination (the
"Termination  Date") at any time within ninety days of the Termination  Date. In
any event,  the Option cannot be exercised  after the  expiration of the term of
the Option.  Options not exercised within the applicable  period specified above
shall terminate.

                  (a) In the case of an Employee, a change of duties or position
         within the  Company or an  assignment  of  employment  in a  Subsidiary
         Corporation or Parent Corporation of the Company,  if any, or from such
         a Corporation to the Company,  shall not be considered a termination of
         employment for purposes of the Plan.

                  (b) The Option  Agreements may contain such  provisions as the
         Board shall approve with reference to the effect of approved  leaves of
         absence upon termination of employment.

         9.3 Termination for Cause. In the event of an Optionee's termination of
             ---------------------
employment,  which termination is by the Company or a Subsidiary Corporation for
cause,  any  Option or  Options  held by him under the Plan,  to the  extent not
exercised  before such  termination,  shall terminate upon notice of termination
for cause.

                                    ARTICLE X
                               RIGHTS OF OPTIONEES
                               -------------------

         10.1 Service.  Nothing in the Plan shall interfere with or limit in any
              -------
way the right of the  Company  or a  Subsidiary  Corporation  to  terminate  any
Employee's  employment  at any time,  nor confer upon any  Employee any right to
continue in the employ of the Company or a Subsidiary Corporation.

         10.2  Non-transferability.  All Options granted under the Plan shall be
               -------------------
nontransferable  by the Optionee,  other than by will or the laws of descent and
distribution,  and shall be exercisable  during the Optionee's  lifetime only by
the Optionee.

                                   ARTICLE XI
                          OPTIONEE-EMPLOYEE'S TRANSFER
                          ----------------------------
                               OR LEAVE OF ABSENCE
                               -------------------

         For purposes of the Plan:

                  (a) A transfer  of an  Optionee  who is an  Employee from  the
         Company to a Subsidiary Corporation or Parent Corporation, or from  one
         such Corporation to another, or

                  (b) A leave of absence for such an Optionee  (i) which is duly
         authorized in writing by the Company or a Subsidiary  Corporation,  and
         (ii) if the Optionee holds an Incentive  Stock Option,  which qualifies
         under the applicable regulations under the Code which apply in the case
         of incentive stock options,

shall not be deemed a termination of employment. However, under no circumstances
may an  Optionee  exercise  an  Option  during  any  leave  of  absence,  unless
authorized by the Board.

<PAGE>

                                   ARTICLE XII
                          AMENDMENT, MODIFICATION, AND
                          ----------------------------
                             TERMINATION OF THE PLAN
                             -----------------------

                  (a) The Board may at any time  terminate and from time to time
         may amend or modify the Plan, provided, however, that no such action of
         the Board, without approval of the shareholders, may:

                           (i)      increase the total amount of Stock which may
                  be purchased through Options granted under the Plan, except as
                  provided in Article V;

                           (ii)     change  the class  of Employees  eligible to
                  receive Options; or

                           (iii)  otherwise  amend  or  modify  the  Plan  where
                  approval  of  the  shareholders  is  required  by  any  law or
                  regulation governing the Company.

                  (b) No amendment,  modification,  or  termination  of the Plan
         shall in any manner adversely  affect any outstanding  Option under the
         Plan without the consent of the Optionee holding the Option.

                                  ARTICLE XIII
                       ACQUISITION, MERGER OR LIQUIDATION
                       ----------------------------------

         13.1 Acquisition.
              -----------

                  (a) In the event that an  acquisition  occurs with  respect to
         the Company, the Company shall have the option, but not the obligation,
         to  cancel  Options  outstanding  as of  the  effective  date  of  such
         acquisition,  whether  or not such  Options  are then  exercisable,  in
         return for payment to the  Optionees of an amount equal to a reasonable
         estimate of an amount  (hereinafter  the  "Spread"),  determined by the
         Board, equal to the difference between the net amount per share payable
         in the acquisition or as a result of the acquisition, less the exercise
         price of the Option. In estimating the Spread,  appropriate adjustments
         to give effect to the existence of the Options  shall be made,  such as
         deeming the Options to have been exercised,  with the Company receiving
         the  exercise  price  payable  thereunder,   and  treating  the  shares
         receivable  upon  exercise  of the  Options  as  being  outstanding  in
         determining the net amount per share.

                  (b) For purposes of this section,  an "acquisition" shall mean
         any transaction in which  substantially all of the Company's assets are
         acquired or in which a controlling amount of the Company's  outstanding
         shares are  acquired,  in each case by a single  person or entity or an
         affiliated group of persons and entities. For purposes of this section,
         a  controlling  amount  shall  mean  more  than 50% of the  issued  and
         outstanding shares of Stock of the Company.  The Company shall have the
         above option to cancel  Options  regardless of how the  acquisition  is
         effectuated,  whether by direct  purchase,  through a merger or similar
         corporate  transaction,  or otherwise.  In cases where the  acquisition
         consists of the  acquisition  of assets of the Company,  the net amount
         per share shall be calculated on the basis of the net amount receivable
         with  respect to shares  upon a  distribution  and  liquidation  by the
         Company after giving effect to expenses and charges,  including but not
         limited to taxes,  payable by the Company before the liquidation can be
         completed.

                  (c) Where the Company  does not exercise its option under this
         Section 13.1 the remaining provisions of this Article XIII shall apply,
         to the extent applicable.

         13.2 Merger or  Consolidation.  If the Company  shall be the  surviving
              ------------------------
corporation in any merger or  consolidation,  any Option granted hereunder shall
pertain to and apply to the securities to which a holder of the number of shares
of Stock  subject  to the  Option  would have been  entitled  in such  merger or
consolidation,  provided that the Company shall not be considered  the surviving
corporation  for  purposes  hereof if the  Company is the  survivor of a reverse
triangular merger.

         13.3 Other Transactions.  A dissolution or a liquidation of the Company
              ------------------
or a  merger  and  consolidation  in  which  the  Company  is not the  surviving
corporation  (the Company shall not be considered the surviving  corporation


<PAGE>

for  purposes  hereof if the  Company is the  survivor  of a reverse  triangular
merger)  shall cause every Option  outstanding  hereunder to terminate as of the
effective  date of  such  dissolution,  liquidation,  merger  or  consolidation.
However,  the Optionee either (i) shall be offered a firm commitment whereby the
resulting or surviving  corporation in a merger or consolidation  will tender to
the Optionee an option (the "Substitute Option") to purchase its shares on terms
and  conditions  both  as  to  number  of  shares  and  otherwise,   which  will
substantially  preserve to the  Optionee  the rights and  benefits of the Option
outstanding  hereunder  granted  by the  Company,  or (ii)  shall have the right
immediately prior to such dissolution,  liquidation, merger, or consolidation to
exercise any  unexercised  Options  whether or not then  vested,  subject to the
provisions  of  the  Plan.  The  Board  shall  have  absolute  and  uncontrolled
discretion to determine  whether the Optionee has been offered a firm commitment
and whether the tendered  Substitute Option will  substantially  preserve to the
Optionee the rights and  benefits of the Option  outstanding  hereunder.  In any
event, any Substitute Option for an Incentive Stock Option shall comply with the
requirements of Code Section 424(a).

                                   ARTICLE XIV
                             SECURITIES REGISTRATION
                             -----------------------

         14.1 Securities Registration.  In the event that the Company shall deem
              -----------------------
it  necessary  or desirable to register  under the  Securities  Act of 1933,  as
amended, or any other applicable statute,  any Options or any Stock with respect
to which an Option may be or shall have been granted or exercised, or to qualify
any such Options or Stock under the Securities  Act of 1933, as amended,  or any
other statute,  then the Optionee shall cooperate with the Company and take such
action as is necessary to permit  registration or  qualification of such Options
or Stock.

         14.2  Representations.  Unless  the  Company  has  determined  that the
               ---------------
following representation is unnecessary,  each person exercising an Option under
the Plan may be required by the  Company,  as a condition to the issuance of the
shares pursuant to exercise of the Option,  to make a representation  in writing
(i) that he is acquiring  such shares for his own account for investment and not
with a view to, or for sale in connection  with,  the  distribution  of any part
thereof within the meaning of the  Securities Act of 1933,  (ii) that before any
transfer  in  connection  with the  resale of such  shares,  he will  obtain the
written opinion of counsel for the Company,  or other counsel  acceptable to the
Company,  that such shares may be transferred without registration  thereof. The
Company may also require that the certificates  representing such shares contain
legends reflecting the foregoing.  To the extent permitted by law, including the
Securities  Act of 1933,  nothing  herein  shall  restrict the right of a person
exercising an Option to sell the shares received in an open market transaction.

                                   ARTICLE XV
                                 TAX WITHHOLDING
                                 ---------------

         Whenever  shares of Stock are to be issued in  satisfaction  of Options
exercised  under the Plan,  the  Company  shall  have the power to  require  the
recipient of the Stock to remit to the Company an amount  sufficient  to satisfy
federal, state, and local withholding tax requirements, if any.

<PAGE>

                                   ARTICLE XVI
                                 INDEMNIFICATION
                                 ---------------

         To the extent permitted by law, each person who is or shall have been a
member of the Board or the Committee  shall be indemnified  and held harmless by
the Company against and from any loss, cost,  liability,  or expense that may be
imposed upon or reasonably  incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be a party or in which he
may be involved  by reason of any action  taken or failure to act under the Plan
and against and from any and all amounts paid by him in settlement thereof, with
the Company's  approval,  or paid by him in satisfaction of judgment in any such
action,  suit, or proceeding  against him, provided he shall give the Company an
opportunity,  at its own  expense,  to  handle  and  defend  the same  before he
undertakes  to handle and defend it on his own behalf.  The  foregoing  right of
indemnification shall not be exclusive of any other rights of indemnification to
which  such  persons  may  be  entitled  under  the  Company's   certificate  of
incorporation or bylaws, as a matter of law, or otherwise, or any power that the
Company or any  Subsidiary  Corporation  may have to indemnify them or hold them
harmless.

                                  ARTICLE XVII
                               REQUIREMENTS OF LAW
                               -------------------

         17.1  Requirements  of Law. The granting of Options and the issuance of
               --------------------
shares  of  Stock  upon the  exercise  of an  Option  shall  be  subject  to all
applicable  laws,  rules,  and  regulations,   and  to  such  approvals  by  any
governmental agencies or national securities exchanges as may be required.

         17.2  Governing  Law. The Plan,  and  all agreements  hereunder,  shall
               --------------
be  construed  in  accordance with  and  governed  by  the laws  of the State of
Colorado.

                                  ARTICLE XVIII
                             EFFECTIVE DATE OF PLAN
                             ----------------------

         The Plan shall be effective on March 27, 1997.

                                   ARTICLE XIX
                              COMPLIANCE WITH CODE
                              --------------------

         Incentive  Stock Options  granted  hereunder are intended to qualify as
"incentive  stock  options"  under Code ss. 422. If any provision of the Plan is
susceptible to more than one interpretation,  such interpretation shall be given
thereto as is consistent  with  Incentive  Stock Options  granted under the Plan
being treated as incentive stock options under the Code.

                                   ARTICLE XX
                        NO OBLIGATION TO EXERCISE OPTION
                        --------------------------------

         The granting of an Option shall  impose no  obligation  upon the holder
thereof to exercise such Option.

                                   ARTICLE XXI
                              SHAREHOLDER APPROVAL
                              --------------------

         The Plan was approved by a vote of the majority of the shares of common
stock of the Company on May 21, 1997.


<PAGE>

         THIS INCENTIVE  STOCK OPTION PLAN was adopted by the Board of Directors
of St. Mary Land & Exploration  Company on March 27, 1997, to be effective  upon
adoption,  and was amended by the Board of Directors on July 24, 1997,  on March
25, 1999 to increase the number of shares available for issuance under Article V
to 1,650,000, and on January 27, 2000.

                         ST. MARY LAND & EXPLORATION COMPANY

                         By:      /s/ RICHARD C. NORRIS
                                  ---------------------
                                  Richard C. Norris

                         Title:  Vice President-Finance, Secretary and Treasurer
