SOUTHWESTERN ENERGY COMPANY

2002 PERFORMANCE UNIT PLAN

1.  Purpose of the Plan

This Southwestern Energy Company 2002 Performance Unit Plan is intended to promote the interests of the Company and its shareholders by providing the employees of the Company who are largely responsible for the management, growth and protection of the business of the Company, with incentives and rewards for their contribution to the increase in the value of the Company and to encourage them to continue in the service of the Company.

2.  Definitions

Whenever used herein, the masculine pronoun shall be deemed to include the feminine, the singular to include the plural, unless the context clearly indicates otherwise, and the following capitalized words and phrases are used herein with the meaning thereafter ascribed:

(a)

“Account” shall mean a bookkeeping account on the Company’s books established pursuant to Section 5(b) of this Plan.  The Account shall initially reflect the number of Performance Units granted to a Participant pursuant to Section 5(a) of this Plan.

(b)

“Board of Directors” shall mean the Board of Directors of Southwestern.

(c)

"Cause", when used in connection with the termination of a Participant's employment with the Company, shall mean the termination of the Participant's employment by the Company on account of:

(i)

the willful and continued failure by the Participant to substantially perform his duties and obligations (other than any such failure resulting from his incapacity due to physical or mental illness), after a written demand for substantial performance has been delivered to the Participant by the Company or by the  Participant's supervisor, which demand identifies in reasonable detail the manner in which the Participant is believed to have not substantially  performed his or her duties;

(ii)

the Participant's willful and serious misconduct which has resulted in or could reasonably be expected to result in material injury to the business, financial condition or reputation of the Company;

(iii)

the Participant's conviction of, or entering of a plea of nolo contendere to, a crime that constitutes a felony or serious misdemeanor; or

(iv)

the breach by the Participant of any written covenant or agreement with the Company not to disclose any information pertaining to the Company or not to compete or interfere with the Company.

(d)

"Change in Control" shall mean the occurrence of any of the following:

(i)

any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange  Act of 1934 (the "Exchange Act"), an "Acquiring Person") becomes the "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of Southwestern representing 20% or more of the combined voting power of Southwestern's then outstanding securities, provided, however, that any acquisition by:

(A)

Southwestern or any of its subsidiaries, or any employee benefit plan (or related trust) sponsored or maintained by Southwestern or any of its subsidiaries; or

(B)

any corporation with respect to which, immediately following such acquisition, more than 60% of, respectively, the then outstanding shares of Common Stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, in the aggregate by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding Southwestern Common Stock and Southwestern voting securities immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the outstanding Southwestern Common Stock and Southwestern voting securities, as the case may be, shall not constitute a Change in Control;  

(ii)

consummation by Southwestern of a reorganization, merger or consolidation (a "Business Combination"), in each case, with respect to which all or substantially all of the individuals and entities who were their respective beneficial owners of the outstanding Southwestern Common Stock and Southwestern voting securities immediately prior to such Business Combination do not in the aggregate, immediately following such Business Combination, beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of Common Stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination in substantially the same proportion as their ownership immediately prior to such Business Combination of the outstanding Southwestern Common Stock and Southwestern voting securities, as the case may be;

(iii)

any individual who is nominated by the Board of Directors for election to the Board of Directors on any date fails to be so elected as a direct or indirect result of any proxy fight or contested election for positions on the Board of Directors;

(iv)

a "change in control" of Southwestern of a nature that would be required  to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act occurs;

(v)

(A)

a complete liquidation or dissolution of Southwestern, or

(B)

a sale or other disposition  of all or substantially all of the assets of both the Exploration and Production and the Utility  business segments of Southwestern other than to a corporation with respect to which,  immediately following such sale or disposition, more than 80% of, respectively, the then outstanding shares of Common Stock and the combined voting power of the then outstanding  voting securities entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, in the aggregate by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding Southwestern Common Stock and Southwestern voting securities immediately prior to such sale or disposition in substantially the same proportion as their ownership of the outstanding Southwestern Common Stock and Southwestern voting securities, as the case may be, immediately prior to such sale or disposition;

(vi)

other than with respect to a person who is employed in the Utility business segment of Southwestern, the sale or other disposition of all or substantially all the assets of  the  Exploration and Production business segment other than to a corporation with respect to which, immediately following such sale or disposition, more than 80% of, respectively, the then outstanding shares of Common Stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, in the aggregate by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding Southwestern Common Stock and Southwestern voting securities immediately prior to such sale or disposition in substantially the same proportion as their ownership of the outstanding Southwestern Common Stock and Southwestern voting securities, as the case may be, immediately prior to such sale or disposition; or

(vii)

a majority of the Board of Directors determines in its sole and absolute discretion that there has been a Change in Control of Southwestern or that there will be a Change in Control of Southwestern upon the occurrence of certain specified events and such events occur.

(e)

“Commencement Date” shall mean, with respect to a particular grant of Performance Units hereunder, the first day of the Plan Year immediately following the date of grant of such Performance Units.

(f)

“Company” shall mean Southwestern and each of its Subsidiaries.

(g)

“Disability” shall mean a condition entitling a Participant to benefits under the long-term disability policy maintained by the Company and applicable to him.

(h)

“Grant Agreement” shall mean a written document issued to a Participant that shall specify the grant of Performance Units to the Participant, the applicable Performance Measures set by the Plan Administrator and conditions to which the grant is subject.

(i)

“Participant” shall mean an employee of the Company who is eligible to participate in the Plan and to whom one or more Performance Units have been granted pursuant to the Plan and, following the death of any such employee, his or her successors, heirs, executors and administrators, as the case may be.

(j)

“Payment Value” shall mean, as of the end of each Performance Period, the value, expressed in dollars, of each Performance Unit issued under the Plan.  The Payment Value will be determined by multiplying the target value by the percentage or percentages assigned to the level of the Company’s actual financial performance, based on the Performance Measures and based on associated percentages assigned to the various levels of performance of the Performance Measures at the beginning of the Performance Period.  If the attainment of a Performance Measure occurs between the stated levels, the Payment Value will be determined by linear extrapolation.

(k)

“Performance Measures” shall mean the possible standards for measuring the Payment Value of the Performance Units, as determined by the Plan Administrator on the date of grant and as more particularly set forth in the Grant Agreement.

Relative performance will be measured against goals or against peers, as determined by the Plan Administrator on the date of grant.

(l)

“Performance Period” shall mean the time period over which the Performance Measures will be analyzed for purposes of determining the Payment Value of the Performance Units granted to a Participant.  Unless otherwise specified by the Plan Administrator, the Performance Period shall be thirty-six months from the Commencement Date.

(m)

“Performance Unit” shall mean a unit of interest under the Plan the value of which depends upon the financial performance of the Company in comparison to the Performance Measures specified for the applicable Performance Period.

(n)

“Plan” shall mean this Southwestern Energy Company 2002 Performance Unit Plan, as it may be amended from time to time.

(o)

“Plan Administrator” shall mean the individual or individuals as the Board of Directors shall appoint from time to time to administer the Plan and to otherwise exercise and perform the authority and functions assigned to the Plan Administrator under the terms of the Plan, as set forth in Section 3 of this Plan.

(p)

“Plan Year” shall mean Southwestern’s fiscal year.

(q)

“Retirement” shall mean the termination of employment of a Participant with the Company for reasons other than Cause on or after the first date on which the Participant has both attained age 65 and completed five (5) years of service with the Company.

(r)

“Southwestern” shall mean Southwestern Energy Company, an Arkansas corporation, and any successor thereto.

(s)

“Subsidiary” shall mean any “subsidiary corporation” within the meaning of Section 425(f) of the Internal Revenue Code of 1986, as amended from time to time.

(t)

“Vesting Date” shall mean the date established by the Plan Administrator on which a Performance Unit may vest and becomes non-forfeitable except as set forth in Section 5 of this Plan.

3.  Administration of the Plan

The Plan shall be administered by a committee of the Board of Directors consisting of two or more persons, at least two of whom qualify as a "non-employee director," within the meaning of Rule 16b-3 promulgated under Section 16 of the Exchange Act, and an "outside director," within the meaning of Treasury Regulation Section 1.162-27(e)(2).  The Plan Administrator shall, consistent with the terms of the Plan, from time to time designate the employees of the Company who shall be granted Performance Units under the Plan.  All of the powers and responsibilities of the Plan Administrator under the Plan may be delegated by the Plan Administrator, in writing, to any subplan administrator thereof. In addition, the Plan Administrator may authorize an executive officer of Southwestern to grant Performance Units to a specified group of employees and within a specified period of time.

The Plan Administrator shall have full, discretionary authority to administer the Plan, including discretionary authority to interpret and construe any and all provisions of the Plan and the terms of any Performance Unit (and any agreement evidencing any Performance Unit) granted thereunder and to adopt and amend from time to time such rules and regulations for the administration of the Plan as the Plan Administrator may deem necessary or appropriate.  Decisions of the Plan Administrator shall be final, binding and conclusive on all parties.

At or after the date of grant of a Performance Unit under the Plan, the Plan Administrator may

(a)

accelerate the date on which any such Performance Unit becomes vested or paid,

            (b)

          extend the term of any such Performance Unit, including, without limitation, extending the period following a termination of a Participant’s employment during which  any Performance Unit may remain outstanding, or

(c)

waive any conditions to vesting of any such Performance Unit.

Whether an authorized leave of absence, or absence in military or government service, shall constitute termination of employment shall be determined by the Plan Administrator.

No member of the Plan Administrator shall be liable for any action, omission or determination relating to the Plan, and Southwestern shall indemnify and hold harmless each member of the Plan Administrator and each other director or employee of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been delegated against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Plan Administrator) arising out of any action, omission or determination relating to the Plan, unless, in either case, such action, omission or determination was taken or made by such member, director or employee in bad faith and without reasonable belief that it was in the best interests of the Company.

4.  Eligibility

The employees who shall be eligible to receive Performance Units pursuant to the Plan shall be those employees of the Company that the Plan Administrator shall select from time to time, including those key employees (including officers of Southwestern, whether or not they are directors of Southwestern) who are largely responsible for the management, growth and protection of the business of the Company.  All Performance Units granted under the Plan shall be evidenced by a separate Grant Agreement entered into by the Company and the recipient of such award.

5.  Performance Units

The Plan Administrator may grant Performance Units pursuant to the Plan.  Each grant of a Performance Unit shall be evidenced by a Grant Agreement in such form as the Plan Administrator shall from time to time approve.  Each grant of a Performance Unit shall comply with and be subject to the following terms and conditions:

(a)        Grants

For each Performance Period, the Plan Administrator shall determine whether to grant any Performance Units and, if Performance Units are granted, the Plan Administrator shall notify those Participants who are to receive grants, which shall be evidenced by a Grant Agreement between Southwestern and the Participant.  The number of Performance Units to be granted to a Participant shall be determined by the Plan Administrator based on the Participant's role and responsibilities and competitive levels of long-term compensation.   No fractional Performance Units shall be granted.

For each Performance Period, the Plan Administrator shall determine the Performance Measures for the Performance Period, determine the weighting of the Performance Measures for the Performance Period and specify such approvals in the Grant Agreement.

(b)

Interests of a Participant

The Company shall create individual Accounts on its books to reflect the number of Performance Units credited to each Participant for a Performance Period.  No Participant or any other person shall under any circumstances acquire any property interest in any specific assets of the Company, and the Plan shall be unfunded.  Nothing contained in this Plan and no action taken pursuant hereto shall create or be construed to create a fiduciary relationship between the Company, the Plan Administrator or the Board of Directors and any Participant or any other person. To the extent that any person acquires a right to receive payment from the Company hereunder, such right shall be no greater than the right of any unsecured general creditor of the Company.

(c)

Vesting

Except as provided in Section 5(f) or as specified in the Grant Agreement, each Participant's right to the Performance Units awarded for any Performance Period shall vest one-third per year starting on the day of the first anniversary of the date of grant, provided that the Participant has not terminated employment.

(d)

Effect of Termination of Employment

(i)

Unless the Plan Administrator provides otherwise on or after the date of grant, in the event that the employment of a Participant with the Company shall terminate for any reason other than Cause, Disability, Retirement or death, all unvested Performance Units granted to such Participant shall expire at the commencement of business on the date of such termination, and no payment shall be made to the Participant with respect thereto.  Except as otherwise provided herein or in the Grant Agreement, Southwestern shall make payment respecting vested Performance Units upon expiration of the original Performance Period under the original terms for such vested Performance Units.

(ii)

In the event of the termination of a Participant’s employment for Cause, all outstanding Performance Units granted to such Participant shall expire at the commencement of business on the date of such termination, and no payment shall be made to the Participant with respect thereto.

(iii)

In the event that the employment of a Participant with the Company shall terminate on account of the death, Disability or Retirement of the Participant, a portion of the unvested Performance Units granted to such Participant, to the extent not forfeited or cancelled on or prior to such termination pursuant to any provision hereof or the applicable Grant Agreement, shall vest on the date of such termination.  The portion referred to in the preceding sentence shall be determined separately under each Grant Agreement and shall be equal to the product of (a) the total number of Performance Units granted to such Participant under the applicable Grant Agreement and (b) a fraction, the numerator of which is the total number of days that have elapsed between the Grant Date of such Grant Agreement and the date such Participant’s employment terminated and the denominator of which is the total number of days between the Grant Date of such Grant Agreement and the final Vesting Date under such Grant Agreement.

(e)

Performance Unit Benefit

The Performance Units will have a Payment Value at the end of the applicable Performance Period contingent upon the attainment of the Performance Measures, as specified in the Participant’s Grant Agreement, as determined by the Plan Administrator.

The Plan Administrator shall use Southwestern’s year end audited financial statements in determining the extent to which the Performance Measures were achieved during the relevant Performance Period.  The Plan Administrator shall certify in writing whether and the extent to which the Performance Measure for each Performance Period has been met within 120 days following the issuance of such financial statements (the “Certification Period”).

The amount of the Payment Value due a Participant shall be made in cash.

Except as otherwise provided herein or in the Grant Agreement, Southwestern shall pay the Participant the total amount of Payment Value due the Participant at the conclusion of a Performance Period on such date following the conclusion of such Performance Period as the Plan Administrator shall designate, but in no event later than the end of the Certification Period.

The Plan Administrator may permit a Participant to defer the receipt of some or all of the payment due under this Section and have any such sum credited to a deferred compensation plan maintained by the Company, provided that such election is made before Payment Value is calculated and due, as specified by the applicable deferred compensation plan.

(f)

Effect of Change in Control

Upon the occurrence of a Change in Control, each Performance Unit granted under the Plan and outstanding at such time shall become fully and immediately vested.  In full satisfaction of amounts due under the Performance Units, Southwestern shall pay the Participant the target value (as specified in the Grant Agreement) or, if greater and the Plan Administrator, in its sole discretion, elects, an amount that the Plan Administrator determined to be the projected amount that would have been payable had the Performance Period run its cycle.  Such amounts shall be paid within five (5) business days after the Change in Control.

6.  No Special Employment Rights; No Right to Performance Unit

Nothing contained in the Plan or any Performance Unit shall confer upon any Participant any right with respect to the continuation of his employment by the Company or interfere in any way with the right of the Company at any time to terminate such employment or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of a Performance Unit.

No person shall have any claim or right to receive a Performance Unit hereunder.  The Plan Administrator's granting of a Performance Unit to a Participant at any time shall neither require the Plan Administrator to grant a Performance Unit to such Participant or any other Participant or other person at any time nor preclude the Plan Administrator from making subsequent grants to such  Participant or any other Participant or other person .

7.  Withholding Taxes

Upon the payment to the Participant of the Payment Value of the Performance Unit or any deferral of such payment, Southwestern shall have the right to withhold from any such payment required to be made pursuant thereto or such deferral an amount sufficient to satisfy the Federal, state and/or local withholding tax requirements, if any, attributable to such payment.

8.  Amendment or Termination of the Plan

The Board of Directors or Plan Administrator may at any time suspend or discontinue the Plan or revise or amend it in any respect whatsoever.

Nothing herein shall restrict the Plan Administrator's ability to exercise its discretionary authority hereunder pursuant to Section 3 hereof, which discretion may be exercised without amendment to the Plan. However, no action hereunder may, without the consent of a Participant, reduce the Participant's rights under any previously granted and outstanding Performance Units.  Nothing herein shall limit the right of the Company to pay compensation of any kind outside the terms of the Plan.

9.  Transferability of Performance Unit

During the lifetime of a Participant, each Performance Unit to the Participant shall be exercisable by such Participant.  No Performance Unit shall be assignable or transferable otherwise than by will or by the laws of descent and distribution.

10.  Failure to Comply

In addition to the remedies of Southwestern elsewhere provided for herein, failure by a Participant to comply with any of the terms and conditions of the Plan or the agreement executed by such Participant evidencing a Performance Unit, unless such failure is remedied by such Participant within ten days after having been notified of such failure by the Plan Administrator, shall be grounds for the cancellation and forfeiture of such Performance Unit, in whole or in part, as the Plan Administrator may determine.

11.  Adjustment.

Upon the occurrence of any event which could reasonably be expected to have an impact on the stock or Performance Measures of the Company or its peer companies, the Plan Administrator shall have the right, but not the obligation, in its sole discretion, to make such adjustments to the calculations of the payments to be made hereunder as it deems appropriate to reflect such events, provided that no such adjustments shall reduce the Participant’s rights under any previously granted and outstanding Performance Units.

12.  No Effect on Benefit Plans.

No amounts payable hereunder shall count in computing any benefits payable under any other benefit plans maintained by the Company except to extent such plans otherwise incorporate such payments by express reference to the Plan.

13.  Governing Law

The interpretation, performance and enforcement of this Plan shall be governed by the laws of the State of Arkansas, to the extent not preempted by Federal law.

14.   Effective Date and Term of Plan

The Plan was adopted by the Board of Directors on December 11, 2002 and effective as of   December 11, 2002.  No grants may be made under the Plan after December 31, 2008.

SOUTHWESTERN ENERGY COMPANY

INCENTIVE STOCK OPTION

(Not Transferable)

THIS CERTIFIES, that SOUTHWESTERN ENERGY COMPANY, an Arkansas corporation (the "Company"), has, as of the ___ day of _____________, 200___, granted to _____________ ("Participant"), an Incentive Stock Option to purchase _____ shares (the "Optioned Shares") of the Company's Common Stock ($.10 par value) ("Company Stock") on the terms and conditions of the SOUTHWESTERN ENERGY COMPANY 2004 STOCK INCENTIVE PLAN, as may be amended from time to time (the "Plan").

This Incentive Stock Option is granted under and pursuant to the Plan and is subject to the conditions and limitations set forth in the Plan as the same may be amended from time to time.  All of the terms and provisions of the Plan, as amended from time to time, are incorporated herein by reference and nothing herein contained shall be deemed to vary or be given effect as modifying the terms of the Plan.

This Incentive Stock Option shall be exercisable only in accordance with the provisions of this Certificate and the Plan. This Incentive Stock Option is not transferable except by will or the laws of descent and distribution.

The exercise price of the Optioned Shares shall be $____ per share.  

This Incentive Stock Option shall be exercisable in whole or in part; provided , that no partial exercise shall be for an aggregate exercise price of less than $1,000.  The partial exercise of this Incentive Stock Option shall not cause the expiration, termination or cancellation of the remaining portion hereof.  

This Incentive Stock Option shall be exercised by delivering notice to the Company's principal office, to the attention of its Secretary, no less than one business day in advance of the effective date of the proposed exercise.  Such notice shall be accompanied by this Certificate, shall specify the number of Optioned Shares with respect to which this Incentive Stock Option is being exercised and the effective date of the proposed exercise and shall be signed by the Participant.  The Participant may withdraw such notice at any time prior to the close of business on the business day immediately preceding the effective date of the proposed exercise.

Payment for Optioned Shares purchased upon the exercise of an Option shall be made on the effective date of such exercise in accordance with the terms of the Plan.

THIS INCENTIVE STOCK OPTION SHALL FIRST BECOME EXERCISABLE WITH RESPECT TO THE FOLLOWING PERCENTAGE OF THE TOTAL SHARES SUBJECT HERETO ON THE FOLLOWING DATES:

PROVIDED, HOWEVER, UPON THE OCCURRENCE OF A CHANGE IN CONTROL, IF AND TO THE EXTENT IT STILL IS OUTSTANDING, THIS INCENTIVE STOCK OPTION SHALL BECOME FULLY AND IMMEDIATELY EXERCISABLE AND SHALL REMAIN EXERCISABLE UNTIL ITS EXPIRATION, TERMINATION OR CANCELLATION PURSUANT TO THE TERMS OF THE PLAN.

NOTWITHSTANDING ANYTHING CONTRARY IN THE PLAN, IF A PARTICIPANT'S EMPLOYMENT OR SERVICE WITH THE COMPANY HAS NOT BEEN TERMINATED FOR CAUSE, IN THE EVENT OF THE DEATH, DISABILITY (AS DEFINED IN THE PLAN) OR RETIREMENT AFTER AGE 65 (DEFINED BELOW) OF THE PARTICIPANT, THEN THE INCENTIVE STOCK OPTION SHALL BECOME FULLY AND IMMEDIATELY EXERCISABLE AS OF THE ACTUAL DATE OF DEATH, DISABILITY OR RETIREMENT AFTER AGE 65 AND SHALL REMAIN EXERCISABLE FOR THE REMAINDER OF ITS ORIGINAL TERM SUBJECT TO THE PROVISIONS OF THE PLAN AND THIS AGREEMENT .  FOR PURPOSES OF THIS AGREEMENT, THE TERM "RETIREMENT AFTER AGE 65" SHALL MEAN THE TERMINATION OF EMPLOYMENT OF A PARTICIPANT WITH THE COMPANY FOR REASONS OTHER THAN CAUSE ON OR AFTER THE FIRST DATE ON WHICH THE PARTICIPANT HAS BOTH ATTAINED AGE 65 AND COMPLETED FIVE (5) YEARS OF SERVICE WITH THE COMPANY.

THIS INCENTIVE STOCK OPTION SHALL EXPIRE AND BE VOID AND SHALL NOT BE EXERCISABLE AFTER THE EXPIRATION OF SEVEN (7) YEARS FROM THE DATE AS OF WHICH IT WAS GRANTED AND MAY BE EXERCISED ONLY IN THE MANNER PROVIDED IN THE PLAN.  THIS INCENTIVE STOCK OPTION SHALL BE SUBJECT TO EARLIER TERMINATION, EXPIRATION OR CANCELLATION AS PROVIDED IN THE PLAN.

By accepting this Certificate, the Participant agrees to all of the terms and conditions of the Plan as the same may be amended from time to time, and acknowledges that the Participant may review a complete copy of the Plan, which is on file in the office of the Secretary of Southwestern Energy Company, 2350 North Sam Houston Parkway East, Suite 300, Houston, Texas  77032.

IN WITNESS WHEREOF, the Company has issued this Incentive Stock Option Certificate by its undersigned duly authorized officer as of the ____ day of ____________, 200__.

        SOUTHWESTERN ENERGY COMPANY

ATTEST:   (Seal)

                           By:_______________________________

                 Chairman and Chief Executive Officer

By:  ______________________________                                                                        

________________________________

            (Participant)

RESTRICTED STOCK AGREEMENT

2004 STOCK INCENTIVE PLAN

THIS AGREEMENT, made as of this _____ day of _______________, ______, by and between Southwestern Energy Company, an Arkansas corporation (the "Company") and _______________ (the "Participant").

WITNESSETH:

WHEREAS, the Participant is now serving as an officer or key employee of the Company and the Company desires to afford the Participant the opportunity to acquire, or enlarge, the Participant's stock ownership in the Company so that the Participant may have a direct proprietary interest in the Company's success;

NOW, THEREFORE, in consideration of the covenants and agreement herein contained, the parties hereto hereby agree as follows:

1.

Grant of Restricted Stock

Pursuant to the provisions of the Southwestern Energy Company 2004 Stock Incentive Plan (the "Plan") the Company hereby grants to the Participant, subject to the terms and conditions of the Plan and subject further to the terms and conditions herein set forth, the right to receive from the Company ________ shares of Restricted Stock ($.10 par value) of the Company.

2.

Definitions

The meaning of all terms defined in the Plan and used herein shall be as defined in the Plan.

3.

Term and Restrictions

(a)  Issue Date and Vesting Date

The Issue Date of the Restricted Stock granted hereunder shall be the effective date of this agreement.  Except as provided in Sections 8(c), 8(f) and 8(g) of the Plan, stock certificates representing the shares of Restricted Stock granted hereunder shall be issued in accordance with Section 8(d) of the Plan. Such shares shall vest ratably over a period of _____ years from the anniversary date of _________ (the "Vesting Dates"). Except as provided in Sections 8(c), 8(f) and 8(g) of the Plan, and provided that all conditions to the vesting of a share of Restricted Stock imposed pursuant to Section 8(b) of the Plan are satisfied, upon the occurrence of the Vesting Date with respect to a share of Restricted Stock, such shares shall vest and the restrictions of Section 8(c) of the Plan shall cease to apply to such share.

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(b)  Conditions to Vesting

Except for continuation of employment with the Company as provided in Section 3(f) hereof, there are no conditions to the vesting of the shares of Restricted Stock granted hereunder.

(c)  Restrictions on Transfer Prior to Vesting

Prior to the vesting of a share of Restricted Stock, no transfer of Participant's rights with respect to such share, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to such share, but immediately upon any attempt to transfer such rights, such share, and all of the rights related thereto, shall be forfeited by the Participant, and the transfer shall be of no force or effect.

(d)  Issuance of Certificates

(1)  Except as provided in Sections 8(c), 8(f) or 8(g) of the Plan, reasonably promptly after the Issue Date with respect to shares of Restricted Stock, the Company shall cause to be issued a stock certificate, registered in the name of the Participant to whom such shares were granted, evidencing such shares; provided, that the Company shall not cause to be issued such a stock certificate unless it has received a stock power duly endorsed in blank with respect to such shares.  Each such stock certificates shall bear the following legend:

The transferability of this certificate and the shares of stock represented hereby are subject to the restrictions, terms and conditions (including forfeiture provisions and restrictions against transfer) contained in the Southwestern Energy Company 2004 Stock Incentive Plan and an Agreement entered into between the registered owner of such shares and Southwestern Energy Company.  A copy of the Plan and Agreement are on file in the principal executive offices of the Company.

Such legend shall not be removed from the certificate evidencing such shares until such shares vest pursuant to the terms hereof.

(2)  Each certificate issued pursuant to Section 8(d)(1) of the Plan, together with the stock powers relating to the shares of Restricted Stock evidenced by such certificate, shall be deposited by the Company with a custodian designated by the Company.  The Company shall cause such custodian to issue to the Participant a receipt evidencing the certificates held by it which are registered in the name of the Participant.

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(e)  Consequences Upon Vesting

Upon the vesting of a share of Restricted Stock pursuant to the terms hereof, the restrictions of Section 8(c) of the Plan shall cease to apply to such share.  Reasonably promptly after a share of Restricted Stock vests pursuant to the terms hereof, the Company shall cause to be issued and delivered to the Participant, a certificate evidencing such share, free of the legend set forth in Section 8(d)(1) of the Plan, together with any other property of the Participant held by the custodian pursuant to Section 8(d)(2) of the Plan.

(f)  Effect of Termination of Employment

In the event that the employment of the Participant with the Company shall terminate for any reason, other than death, Disability, or Retirement at Age 65 (as defined below), prior to the vesting of shares of the Restricted Stock, all shares of Restricted Stock granted to the Participant hereunder which have not vested as of the date of such termination shall immediately be forfeited.

(g)

Effect of Termination resulting from death, Disability, or Retirement

Notwithstanding anything contrary in the Plan, if a Participant’s employment or service with the Company has not been terminated for Cause, in the event of death, Disability (as defined in the Plan) or Retirement at Age 65 (defined below) of the Participant, then the Restricted Stock shall become fully and immediately vested pursuant to the terms of the Plan.  For purposes of this agreement, the term "Retirement at Age 65" shall mean the termination of employment of a Participant with the Company for reasons other than Cause on or after the first date on which the Participant has both attained age 65 and completed five (5) years of service with the Company.

(h)  Effect of Change in Control

Upon the occurrence of a Change in Control, all shares of Restricted Stock granted hereunder which have not theretofore vested, or been cancelled or forfeited pursuant to any provision hereof or of the Plan, shall immediately vest.

4.

Adjustment Upon Changes in Company Stock

(a)  Outstanding Restricted Stock

Unless the Committee in its absolute discretion otherwise determines, any securities or other property (including dividends paid in cash) received by Participant with respect to a share of Restricted Stock, the Issue Date with respect to which occurs prior to such event, but which has not vested as of the date of such event, as a result of any dividend, stock split, reverse stock split, recapitalization, merger, consolidation, combination, exchange of shares or otherwise will not vest until such share of Restricted Stock vests, and shall be promptly deposited with the custodian designated pursuant to Paragraph 8(d)(2) of the Plan.  The Committee has determined that the right to receive cash dividends paid on the shares of Restricted Stock shall vest on the Issue Date.

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The Committee may, in its absolute discretion, adjust the grant of shares of Restricted Stock made hereunder, provided the Issue Date has not occurred as of the date of the occurrence of any of the following events, to reflect any dividend, stock split, reverse stock split, recapitalization, merger, consolidation, combination, exchange of shares or similar corporate change as the Committee may deem appropriate to prevent the enlargement or dilution of rights of Participant under the grant.

(b)

No Other Rights

Except as expressly provided in the Plan, the Participant shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger or consolidation of the Company or any other corporation.  Except as expressly provided in the Plan, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Company Stock subject to the Incentive Award granted hereunder.

5.

Rights as a Shareholder

The Participant shall have no rights as a stockholder with respect to any shares of Company Stock covered by or relating to the Incentive Award granted hereunder until the date of the issuance of a stock certificate with respect to such shares.  Except as otherwise expressly provided in Section 4 hereof, no adjustment to the Incentive Award shall be made for dividends or other rights for which the record date occurs prior to the date such stock certificate is issued.

6.

No Special Employment Rights; No Right To Incentive Award

Nothing contained in the Plan or this Incentive Award shall confer upon Participant any right with respect to continuation of the Participant's employment by the Company or interfere in any way with the right of the Company, subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or to increase or decrease the compensation of Participant from the rate in existence on the date hereof.  The grant of the Incentive Award hereunder shall neither require nor prevent the granting of any subsequent Incentive Award to Participant or any other Participant or person.

7.

Securities Matters

Southwestern shall be under no obligation to effect the registration pursuant to the Securities Act of any interests in the Plan or this Agreement or any shares of Company Stock to be issued hereunder or to effect similar compliance under any state laws.  Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be issued or delivered any certificates evidencing shares of Company Stock pursuant to the Plan or this Agreement unless and until the Company is advised by its counsel that the issuance and delivery of such certificates is in compliance

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with all applicable laws, regulations of governmental authority and the requirements of the New York Stock Exchange and any other securities exchange on which shares of Company Stock are traded.  The Committee may require, as a condition of the issuance and delivery of certificates evidencing shares of Company Stock pursuant to the terms hereof, that the recipient of shares make such agreements and representations, and that such certificates bear such legends as the Committee, in its sole discretion, deems necessary or desirable.

8.

Withholding Taxes

(a)  Cash Remittance

Whenever shares of Company Stock are to be issued upon the occurrence of the Issue Date or the Vesting Date and whenever dividends are paid in respect of non-vested shares of restricted stock, the Company shall have the right to require the Participant to remit to the Company in cash an amount sufficient to satisfy federal, state and local withholding tax requirements, if any, attributable to such occurrence prior to the delivery of any certificate or certificates for such shares.

(b)  Stock Remittance

Subject to Section 14(b) of the Plan, at the election of the Participant, subject to the approval of the Committee, when shares of Company Stock are to be issued upon the occurrence of the Issue Date or the Vesting Date, in lieu of the remittance required by Section 14(b) of the Plan, the Participant may tender to the Company a number of shares of Company Stock determined by such Participant, the Fair Market Value of which at the tender date the Committee determines to be sufficient to satisfy the federal, state and local withholding tax requirements, if any, attributable to such exercise and not greater than the Participant's estimated total federal, state and local tax obligations associated with such exercise.

(c)  Stock Withholding

The Company shall have the right, when shares of Company Stock are to be issued upon the occurrence of the Issue Date or the Vesting Date, in lieu of requiring the remittance required by Section 14(c) of the Plan, to withhold a number of such shares, the Fair Market Value of which at the exercise date the Committee determines to be sufficient to satisfy the federal, state and local withholding tax requirements, if any, attributable to such occurrence and is not greater than the Participant's estimated total federal, state and local tax obligations associated with such exercise.

9.

Participant Bound by the Plan

Participant hereby acknowledges that he may review a complete copy of the Plan, which is on file in the office of the Secretary of Southwestern Energy Company, 2350 Sam Houston Parkway East, Suite 300, Houston, Texas  77032 and agrees to be bound by all the terms and provisions thereof, as amended from time to time, which are incorporated herein by reference.  In the event of any conflict between the terms of the Plan and the terms of this agreement, the terms of the Plan shall control.

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10.

Transfers Upon Death

No transfer by will or the laws of descent and distribution of the Incentive Award granted hereunder, or the right to exercise such Incentive Award, shall be effective to bind the Company unless the Committee shall have been furnished with (a) written notice thereof and with a copy of the will and/or such evidence as the Committee may deem necessary to establish the validity of the transfer and (b) an agreement by the transferee to comply with all the terms and conditions of the Incentive Award that are or would have been applicable to the Participant and to be bound by the acknowledgements made by the Participant in connection with the grant of the Incentive Award.

11.

Failure to Comply

In addition to the remedies of the Company elsewhere provided for herein or in the Plan, failure by the Participant (or beneficiary) to comply with any of the terms and conditions of the Plan or this agreement, unless such failure is remedied by the Participant (or beneficiary) within ten days after having been notified of such failure by the Committee, shall be grounds for the cancellation and forfeiture of the Incentive Award, in whole or in part as the Committee, in its absolute discretion, may determine.

12.

Applicable Law

Except to the extent preempted by any applicable federal law, the Plan and this Agreement will be construed and administered in accordance with the laws of the State of Arkansas, without reference to the principles of conflicts of law.

13.

Notices

Any notice hereunder to the Company shall be addressed to it at its office, 2350 North Sam Houston Parkway East, Suite 300, Houston, Texas  77032:  Attention: Secretary, and any notice hereunder to Participant shall be addressed to the Participant at __________________________ .  Either party may designate at any time hereafter in writing some other address.