EMPLOYMENT AGREEMENT

Exhibit 10.3

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “ Agreement ”) is made by and between CEP Services Company, Inc., a Delaware corporation (the “ Company ”), Lisa J. Mellencamp (“ Executive ”) and, solely for the limited purpose set out in Section 7.13 of this Agreement, Constellation Energy Partners LLC, a Delaware limited liability company (“ CEP ”).

WHEREAS, the Company is a wholly owned subsidiary of CEP;

WHEREAS, pursuant to an offer letter by and between the Company and Executive, dated December 31, 2008 (the “ Offer Letter ”), Executive is employed by the Company as President, Chief Executive Officer and Chief Operating Officer and serves in those same offices for CEP, as directed by the Company; and

WHEREAS, the Company and Executive desire to provide the full terms and conditions of Executive’s employment by the Company;

WHEREAS, the Company has caused CEP to enter into each of the 2009 LTI Grant Agreement (defined below) and Inducement Award Agreement (defined below) contemporaneously with the execution of this Agreement;

WHEREAS, the Company, CEP and Executive intend for the Offer Letter to be fully superseded by the entry into each of this Agreement, the 2009 LTI Grant Agreement and the Inducement Award Agreement;

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and obligations contained herein, the Company and Executive agree as follows:

ARTICLE 1

DEFINITIONS AND INTERPRETATIONS

(a) “ 2009 LTI Grant Agreement ” means that certain Grant Agreement Relating to Notional Units—Executives, dated May 1, 2009, by and between CEP and Executive.

(b) “ Affiliate ” means, with respect to any natural person, firm, partnership, association, corporation, limited liability company, company, trust, entity, public body or government (a “ Person ”), any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person. The term “ control ” (including the terms “ controlled by ” and “ under common control with ”) as used in this definition means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. With respect to any natural person, the term “ Affiliate ” means (i) the spouse or children (including those by adoption) and siblings of such Person; and any trust whose primary beneficiary is such Person, such Person’s spouse, such Person’s siblings and/or one or more of such Person’s lineal descendants,

(ii) the legal representative or guardian of such Person or of any such immediate family member in the event such Person or any such immediate family member becomes mentally incompetent and (iii) any Person controlled by or under common control with any one or more of such Person and the Persons described in clauses (i) or (ii) preceding.

(c) “ Annual Base Salary ” means, as of a specified date, Executive’s annual base salary as of such date determined pursuant to Section 4.1 .

(d) “ Annual Compensation ” means, as of particular date, an amount equal to:

(i) the Target-Level Bonus for the year in which such date falls; plus

(ii) the greater of:

(A) Executive’s Annual Base Salary at the annual rate in effect on the date of his Involuntary Termination;

(B) Executive’s Annual Base Salary at the annual rate in effect 180 days prior to the date of his Involuntary Termination; and

(C) Executive’s Annual Base Salary at the annual rate in effect immediately prior to a Change of Control if Executive’s employment shall be subject to an Involuntary Termination during the Change of Control Period.

(e) “ Board ” means the Board of Managers of CEP.

(f) “ Cause ” means Executive

(i) has engaged in gross negligence, gross incompetence or willful misconduct in the performance of his duties,

(ii) has failed to substantially perform the duties and services reasonably required by the Company; provided , that such failure continues for at least 30 days after Executive’s receipt of written notice of such failure from the Company,

(iii) has willfully engaged in conduct that is materially injurious to CEP or its subsidiaries (monetarily or otherwise),

(iv) has committed an act of fraud, embezzlement or willful breach of a fiduciary duty to the Company or CEP (including the unauthorized disclosure of confidential or proprietary material information of the Company or CEP) or

(v) has been convicted of, pled guilty to, or pleaded no contest to, a crime involving fraud, dishonesty or moral turpitude.

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For purposes of this definition, “moral turpitude” means an act of baseness, vileness or depravity in the private and social duties which one owes to his fellow man.

(g) “ CEG ” means Constellation Energy Group, Inc., a Maryland corporation.

(h) “ CEG Acquisition ” means the consummation of a reorganization, merger, consolidation, statutory equity exchange or similar form of business transaction involving CEG (a “ CEG Business Combination ”), unless immediately following such CEG Business Combination: (i) more than 60% of the total voting power of (x) the organization resulting from such CEG Business Combination (the “ CEG Surviving Organization ”), or (y) if applicable, the ultimate parent organization that directly or indirectly has beneficial ownership of at least 95% of the voting securities eligible to elect managers or directors of the CEG Surviving Organization (the “ CEG Parent Organization ”), is represented by combined voting power of CEG’s then outstanding securities eligible to vote for the election of the CEG Board (the “ CEG Voting Securities ”) that were outstanding immediately prior to such CEG Business Combination (or, if applicable, is represented by equity interests into which such CEG Voting Securities were converted pursuant to such CEG Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such CEG Voting Securities among the holders thereof immediately prior to the CEG Business Combination, (ii) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the CEG Surviving Organization or the CEG Parent Organization), is or becomes the beneficial owner, directly or indirectly, of 25% or more (the “ CEG Percentage ”) of the total voting power of the outstanding voting securities eligible to elect managers or directors of the CEG Parent Organization (or, if there is no CEG Parent Organization, the CEG Surviving Organization) except where such person held the CEG Percentage of CEG Voting Securities immediately prior to the consummation of the CEG Business Combination and (iii) at least a majority of the members of the board of managers or directors of the CEG Parent Organization (or, if there is no CEG Parent Organization, the CEG Surviving Organization) following the consummation of the CEG Business Combination were members of the CEG Board at the time of the CEG Board’s approval of the execution of the initial agreement providing for such CEG Business Combination.

(i) “ CEG Board ” means the Board of Directors of CEG.

(j) “ CEG Ownership Event ” means the consummation of any transaction or other event whereby CEG or any of its Affiliates becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 49% or more of CEP’s then-outstanding Common Units.

(k) “ Change of Control ” shall be deemed to have occurred upon any one or more of the following events:

(i) Board Change .

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(A) During any period of 24 consecutive months, individuals who, at the commencement of such period, constitute all of the Class B Managers (the “ Incumbent Class B Managers ”) cease for any reason to constitute at least a majority of the Class B Managers; provided , however , that any person becoming a Class B Manager subsequent to the commencement of such period, whose election or nomination for election was approved by a vote of at least two Incumbent Class B Managers then on the Board (either by a specific vote or by approval of the proxy statement of CEP in which such person is named as a nominee for Class B Manager, without written objection to such nomination) shall be an Incumbent Class B Manager; provided further , however , that no individual initially elected or nominated as a Class B Manager of CEP as a result of an actual or threatened election contest with respect to Managers or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be deemed to be an Incumbent Class B Manager; or

(B) Excluding the circumstances described in Section 1.1(k)(i)(C) , during any period of 24 consecutive months, individuals who, at the commencement of such period, constitute the Board (each, an “ Incumbent Board Member ”) cease for any reason to constitute at least a majority of the Board; provided , however , that any person becoming a Class B Manager subsequent to the commencement of such period, whose election or nomination for election was approved by a vote of at least two Incumbent Class B Managers then on the Board (either by a specific vote or by approval of the proxy statement of CEP in which such person is named as a nominee for Class B Manager, without written objection to such nomination) shall be an Incumbent Board Member; provided further , however , that no individual initially elected or nominated as a Class B Manager of CEP as a result of an actual or threatened election contest with respect to Managers or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be deemed to be an Incumbent Class B Manager; or

(C) During the period of 24 consecutive months immediately following the occurrence of a Class A Event, individuals who, at the commencement of such period, constitute the Class A Managers and at least one Class B Manager cease for any reason to serve CEP in such capacities, whether by removal, resignation or otherwise;

(ii) Unit Acquisition . Any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of CEP representing 25% or more of the combined voting power of CEP’s then outstanding securities eligible to vote for the election of the Board (the “ CEP Voting Securities ”); provided , however , that none of CEG or its Affiliates shall be

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deemed such a person unless CEG or any of its Affiliates shall after the date of this Agreement become the beneficial owner, directly or indirectly, of CEP Voting Securities representing 33 ¹ / ₃ % or more of the CEP Voting Securities then outstanding; and provided further , however , that, except with respect to CEG or any of its Affiliates, the event described in this paragraph (ii) shall not be deemed to be a change in control by virtue of any of the following acquisitions (A) by CEP or any organization with respect to which CEP owns a majority of the outstanding equity interest or has the power to vote or direct the voting of sufficient securities to elect a majority of the Managers (or equivalent) (a “ Subsidiary Company ”), (B) by any employee benefit plan (or related trust) sponsored or maintained by CEP or any Subsidiary Company, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (iii)), or (E) pursuant to any acquisition by Executive or any group of persons including Executive (or any entity controlled by Executive or any group of persons including Executive);

(iii) Business Combination . Consummation of a reorganization, merger, consolidation, statutory equity exchange or similar form of business transaction involving CEP or any Subsidiary Company (a “ Business Combination ”), unless immediately following such Business Combination: (A) more than 60% of the total voting power of (x) the organization resulting from such Business Combination (the “ Surviving Organization ”), or (y) if applicable, the ultimate parent organization that directly or indirectly has beneficial ownership of at least 95% of the voting securities eligible to elect managers or directors of the Surviving Organization (the “ Parent Organization ”), is represented by CEP Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by equity interests into which such CEP Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such CEP Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Organization or the Parent Organization), is or becomes the beneficial owner, directly or indirectly, of 25% or more (the “ Applicable Percentage ”) of the total voting power of the outstanding voting securities eligible to elect managers or directors of the Parent Organization (or, if there is no Parent Organization, the Surviving Organization) except where such person held the Applicable Percentage of CEP Voting Securities immediately prior to the consummation of the Business Combination and (C) at least a majority of the members of the board of managers or directors of the Parent Organization (or, if there is no Parent Organization, the Surviving Organization) following the consummation of the Business Combination were Managers at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination that satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “ Non-Qualifying Transaction ”);

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(iv) Liquidation . The equity holders of CEP approve a plan of complete liquidation or dissolution of CEP; or

(v) Asset Sale . The consummation of a sale or disposition by CEP of all or substantially all of CEP’s assets, other than a sale or disposition where the holders of CEP Voting Securities outstanding immediately prior thereto hold securities immediately thereafter that represent more than 60% of the combined voting power of the voting securities of the acquiror, or parent of the acquiror, of such assets.

Notwithstanding the foregoing, except with respect to CEG or any of its Affiliates, a change in control of CEP shall not be deemed to occur solely because any person acquires beneficial ownership of more than 25% of CEP Voting Securities as a result of the acquisition of CEP Voting Securities by CEP that reduces the number of CEP Voting Securities outstanding; provided , however , that if after such acquisition by CEP such person becomes the beneficial owner of additional CEP Voting Securities that increases the percentage of outstanding CEP Voting Securities beneficially owned by such person, a change in control of CEP shall then occur.

(l) “ Class A Event ” means the occurrence of any event through which or as a consequence of which (i) CEG shall cease to beneficially own, directly or indirectly, at least 50% of the Class A Units of CEP that are then outstanding (including where CEG or any of its direct or indirect subsidiaries (individually, a “ CEG Entity ”) enters into a total return swap or any other contractual arrangement whereby a CEG Entity transfers any economic interest in at least 50% of the Class A Units of CEP that are then outstanding); (ii) a CEG Acquisition occurs; or (iii) CEG shall cease to have the right, directly or indirectly, to direct the appointment of all Class A Managers pursuant to Section 11.8(d) of the LLC Agreement or otherwise (including where any CEG Entity enters into any contractual arrangement whereby a CEG Entity grants any Person other than a wholly owned CEG Entity the right or option, directly or indirectly, to direct the appointment of any number of the Class A Managers pursuant to Section 11.8(d) of the LLC Agreement or otherwise).

(m) “ Change of Control Period ” means, with respect to a Change of Control, the two-year period beginning on the date upon which such Change of Control occurs.

(n) “ Code ” means the Internal Revenue Code of 1986, as amended.

(o) “ Compensation Committee ” means the Compensation Committee of the Board.

(p) “ Disability ” means that, as a result of Executive’s incapacity due to physical or mental illness, (i) he shall have been absent from the full-time performance of his duties for six consecutive months, (ii) the Board reasonably determines that such incapacity is expected to be suffered for a period of at least 12 consecutive months from the date such absence first occurred and (iii) he shall not have returned to full-time performance of his duties within 30 days after written notice of disability is given to

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Executive or his representative by the Company (a “ Disability Notice ”); provided , however , that such Disability Notice may not be given prior to 30 days before the expiration of such six-month period.

(q) “ Effective Date ” means May 1, 2009.

(r) “ Enhanced Severance Amount ” means an amount equal to two times Executive’s Annual Compensation.

(s) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

(t) “ Event of Good Reason ” means:

(i) The occurrence, prior to a Change of Control or after the expiration of a Change of Control Period, of any one or more of the following:

(A) a material reduction in the nature or scope of Executive’s authority or duties from those previously applicable to him; provided , however , that, if Executive holds more than one office, the removal from any offices other than the most senior shall not constitute an Event of Good Reason;

(B) a reduction in Executive’s Annual Base Salary, except with Executive’s prior written consent;

(C) a diminution in Executive’s eligibility to participate in bonus, stock option, incentive award and other compensation plans that provide opportunities to receive compensation that are substantially similar to the opportunities provided by CEP or the Company to executives with comparable duties (subject, in each case to CEP and Executive performance, as applicable);

(D) a change in the location of Executive’s principal place of employment by the Company by more than 60 miles from the location where he was principally employed; provided , however , that such change in the location of Executive’s principal place of employment shall not constitute an Event of Good Reason if Executive consents to such decision to relocate prior to such change in location.

(ii) The occurrence, within a Change of Control Period, of any one or more of the following (except with Executive’s prior written consent):

(A) a material reduction in the nature or scope of Executive’s authority or duties from those applicable to him immediately prior to the date on which a Change of Control occurs;

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(B) a reduction in Executive’s Annual Base Salary from that provided to him immediately prior to the date on which a Change of Control occurs;

(C) a diminution in Executive’s eligibility to participate in bonus, stock option, incentive award and other compensation plans that provide opportunities to receive compensation that are the greater of (A) the opportunities provided by CEP or the Company and any of its subsidiaries for executives with comparable duties or (B) the opportunities under any such plans under which he was participating immediately prior to the date on which a Change of Control occurs;

(D) a material diminution in employee benefits (including medical, dental, life insurance and long-term disability plans) and perquisites applicable to Executive from the greater of (A) the employee benefits and perquisites provided by CEP or the Company and any of its subsidiaries to executives with comparable duties or (B) the employee benefits and perquisites to which Executive was entitled immediately prior to the date on which a Change of Control occurs; or

(E) a change in the location of Executive’s principal place of employment by the Company by more than 60 miles from the location where he was principally employed immediately prior to the date on which a Change of Control occurs; provided , however , that such change in the location of Executive’s principal place of employment shall not constitute an Event of Good Reason if Executive consents to the decision to relocate prior to such change in location.

(u) “ Inducement Award Agreement ” means that certain Inducement Award Agreement, dated May 1, 2009, by and between CEP and Executive.

(v) “ Involuntary Termination ” means any termination of Executive’s employment with the Company that:

(i) does not result from a resignation by Executive (other than a resignation pursuant to clause (ii) of this Section 1.1(v) );

(ii) results from the Company’s delivery of a notice pursuant to Section 3.1 that no automatic extension shall occur upon the Initial Expiration Date; or

(iii) results from a resignation by Executive on or before the date that is 60 days after the occurrence of an Event of Good Reason;

provided , however , that the term “ Involuntary Termination ” shall not include a termination for Cause or any termination as a result of death or Disability.

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(w) “ LLC Agreement ” means the Second Amended and Restated Operating Agreement of Constellation Energy Partners LLC, dated as of November 20, 2006, as amended, and as may be further amended from time to time.

(x) “ Manager ” means a member of the Board.

(y) “ Omnibus Incentive Plan ” means (i) Constellation Energy Partners LLC Long-Term Incentive Plan, (ii) the Constellation Energy Partners LLC 2009 Omnibus Incentive Plan and (iii) any successor plan adopted by CEP or any of its Affiliates for the benefit of the employees of CEP or any of its Affiliates.

(z) “ Performance Award ” has the meaning given such term in the Omnibus Incentive Plan.

(aa) “ Severance Amount ” means an amount equal to one and one-half times Executive’s Annual Compensation; provided , however , that, at any time after December 31, 2009, such amount shall include a Target-Level Bonus only if a bonus was paid to or earned by Executive for the most recently completed fiscal year of CEP.

(bb) “ Severance Period ” means the period commencing on the date of Involuntary Termination and continuing for 12 months thereafter.

(cc) “ Special Termination Option ” means Executive’s right to terminate his employment hereunder within one year of the first occurrence of a CEG Ownership Event.

(dd) “ Target-Based Grant ” means an award under the Omnibus Incentive Plan for which eligibility or pay-out is determined by reference to the achievement of a Performance Goal, as such term is defined in the Omnibus Incentive Plan.

(ee) “ Target-Level Bonus ” means that bonus required or indicated under a Performance Award or other Target-Based Grant under the Omnibus Incentive Plan or other bonus arrangement of CEP or the Company, in each case as if all target performance goals were achieved.

(a) General . In this Agreement, unless a clear contrary intention appears, (a) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision, (b) reference to any Article or Section means such Article or Section hereof, (c) the words “including” (and with correlative meaning “include”) means including, without limiting the generality of any description preceding such term and (d) where any provision of this Agreement refers to action to be taken by either party, or that such party is prohibited from taking an action, such provision shall be applicable whether such action is taken directly or indirectly by such party.

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(b) Comparable Positions . For purposes of this Agreement, the offices of chief financial officer or general counsel shall be deemed to have comparable duties to those of Executive.

ARTICLE 2

EMPLOYMENT AND DUTIES

2.1 Employment . Effective as of the Effective Date and continuing for the period of time set forth in Section 3.1 of this Agreement (the “ Term ”), Executive’s employment by the Company shall be subject to the terms and conditions of this Agreement.

2.2 Positions . From and after the Effective Date during the Term, the Company shall employ Executive in the position of President, Chief Executive Officer and Chief Operating Officer of CEP and President, Chief Executive Officer and Chief Operating Officer of the Company.

2.3 Duties and Services . Executive agrees to serve in the position(s) referred to in Section 2.2 and to perform diligently the duties and services appertaining to such offices, as well as such additional duties and services appropriate to such offices that CEP or the Company may reasonably designate from time to time. Executive’s employment shall also be subject to the policies maintained and established by CEP or the Company that are of general applicability to CEP’s or the Company’s employees, as such policies may be amended from time to time.

2.4 Other Interests . Executive agrees, during the period of such employment by the Company, to devote substantially all of Executive’s business time, energy and efforts to the business and affairs of CEP and the Company.

2.5 Duty of Loyalty . Executive acknowledges and agrees that Executive owes a fiduciary duty of loyalty to act at all times in the best interests of CEP and the Company. In keeping with such duty, Executive shall make full disclosure to CEP and the Company of all business opportunities pertaining to CEP’s or the Company’s businesses and shall not appropriate for Executive’s own benefit business opportunities concerning CEP’s or the Company’s businesses.

2.6 Disclosure Representation . Executive represents to the Company that no event of the type referred to in Section 1.1(f)(v) has occurred with respect to Executive other than as has been disclosed to the Board.

ARTICLE 3

TERM AND TERMINATION OF EMPLOYMENT

3.1 Term . Unless Executive’s employment hereunder is sooner terminated pursuant to other provisions hereof, the Company agrees to employ Executive for the period beginning on the Effective Date and ending on the third anniversary of the Effective Date (the “ Initial Expiration Date ”); provided , however , that beginning on the Initial Expiration Date, and on each anniversary of the Initial Expiration Date thereafter, if Executive’s employment hereun