First Amendment To Shareholders Agreement

EXHIBIT 10.29


FIRST AMENDMENT TO SHAREHOLDERS' AGREEMENT


This First Amendment to Shareholders' Agreement (the "Amendment") is made and entered into this 30th day of May, 2000, by and among 3TEC Energy Corporation, a Delaware corporation, successor in interest to Middle Bay Oil Company, Inc. (the "Company") and W/E Energy Company L.L.C., formerly known as 3TEC Energy Company L.L.C. and successor in interest to the 3TEC Energy Corporation referenced in the Agreement (as defined below) ("W/E"), ECIC Corporation ("ECIC"), EnCap Energy Capital Fund III, L.P. ("Fund III"), EnCap Energy Acquisition III-B, Inc. ("Acquisition III-B"), BOCP Energy Partners, L.P. ("BOCP") (W/E, ECIC, Fund III, Acquisition III-B and BOCP are sometimes hereinafter referred to collectively as the "W/E Shareholders") and Kaiser- Francis Oil Company ("Kaiser-Francis"), C.J. Lett, III ("Lett"), Weskids, L.P. ("Weskids") and Alvin V. Shoemaker ("Shoemaker") (Kaiser-Frances, Lett, Weskids and Shoemaker are sometimes hereinafter referred to collectively as the "Major Shareholders").


RECITALS


WHEREAS, on August 27, 1999, the Company, W/E and the Major Shareholders executed that certain Shareholders Agreement (the "Agreement");


WHEREAS, the W/E Shareholders and the Major Shareholders are hereinafter referred to collectively as the "Shareholders";


WHEREAS, the Company and the Shareholders wish to amend the Agreement;


NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


1. Terms Defined in the Agreement. Unless otherwise defined in this
------------------------------- Amendment, each term defined in the Agreement shall have the meaning assigned to it in the Agreement.


2. Additional Parties to the Agreement; Certain Defined Terms.
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(a) EnCap Energy Capital Fund III, L.P., EnCap Energy Acquisition
III-B, Inc., ECIC Corporation and BOCP Energy Partners, L.P.
shall be added as parties to the Agreement.


(b) The Agreement shall be amended: (i) to add a new defined term
"W/E Shareholders" which, for purposes of the Agreement, shall
mean "W/E Energy Company L.L.C., EnCap Energy Capital Fund III,
L.P., EnCap Energy Acquisition III-B, Inc., ECIC Corporation and
BOCP Energy Partners, L.P.," and (ii) to redefine "Shareholders"
to mean "W/E Shareholders and the Major Shareholders."


3. Paragraph 1. Paragraph 1 of the Agreement is hereby deleted in its
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entirety and replaced with the following:


"Nomination and Election of Directors. Each of the Shareholders agrees, so
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long as it owns such shares, to vote (including the taking of any action by
written consent, as necessary or appropriate) and cause its affiliates to
vote all shares of Common Stock (and any and all shares of any other voting
class of capital stock of the Company presently or at any future time owned
by the Shareholders or their affiliates) which it is entitled to vote (or
control the voting directly or indirectly) to ensure that the following
shall occur:


(a) The Company shall at all times be managed by or under the direction of
the Board of Directors of the Company (the "Board"), which shall
consist of seven (7) members, at least two of whom shall qualify as an
"independent director" as defined in Section 4200(14) of the NASDAQ
Marketplace Rules.


The Shareholders shall use their best efforts (including voting the
shares owned by them and their Affiliates, in calling special meetings
of the Shareholders and executing and delivering written consents), to
elect such seven (7) members of the Board, consisting of the
following:


(i) Three (3) members designated by W/E Energy Company L.L.C.
("W/E");


(ii) Two (2) members designated by the Major Shareholders; and


(iii) Two (2) members designated by a majority of the Board, at least
one of which so elected shall be an "indepen ...