AMENDMENT NO. 2
                                     TO THE
                             CAIRN ENERGY USA, INC.
                             1993 STOCK OPTION PLAN


         The  Board  of  Directors  of  Cairn  Energy  USA,   Inc.,  a  Delaware
corporation  (the  "Corporation"),  voted on February 1, 1995 to amend the Cairn
Energy USA, Inc.  1993 Stock Option Plan (the "Plan") in the following  respects
only:

     FIRST: Section  2.1 of the Plan was  amended to  increase  from  400,000 to
650,000 the number of shares  issuable  pursuant to the  exercise of all Options
granted under the Plan, and to read in its entirety as follows:

                           2.1.   DESCRIPTION   OF  STOCK  AND  MAXIMUM   SHARES
                  ALLOCATED.  The Stock which may be issued upon the exercise of
                  an Option  may  either be  unissued  or  reacquired  shares of
                  Stock, as the Board of Directors may, in its sole and absolute
                  discretion, from time to time determine.

                           Subject to the adjustments provided in PARAGRAPH 6.6,
                  the aggregate  number of shares of Stock to be issued pursuant
                  to the  exercise  of all  Options  granted  under the Plan may
                  equal but shall not exceed 650,000 shares of Stock.


     SECOND: The foregoing amendments to the Plan were effective as of
May 24, 1995.


                                                     CAIRN ENERGY USA, INC.


                                                  By:/s/Susan H. Rader
                                                     ------------------------
                                                     Susan H. Rader, Secretary

DII0BCA2 15467.6
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