AMENDED EMPLOYMENT AGMT - JAMES F. WESTMORELAND

Exhibit 10.21

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is dated as of February 8, 2005 (the “Effective Date”), and is entered into by and between THE HOUSTON EXPLORATION COMPANY, a Delaware corporation (the “Company”), and JAMES F. WESTMORELAND (the “Executive”).

WITNESSETH:

     WHEREAS, the Company and the Executive entered into an employment agreement dated July 2, 1996 and as amended April 26, 2001 (the “Prior Agreement”), and

     WHEREAS, the Company and the Executive mutually agree to terminate the Prior Agreement, and hereby covenant that the Prior Agreement shall be null and void and have no further effect, and

     WHEREAS, the Company and the Executive wish to enter in this Agreement setting forth the terms and conditions of the Executive’s employment with the Company.

     NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive hereby agree as follows:

     1. Termination of Prior Agreement. The Executive and the Company hereby agree to terminate the Prior Agreement and relinquish all rights, obligations, payments and benefits provided therein in consideration for the employment terms and conditions set forth in this Agreement. This Agreement shall supersede any and all obligations (other than any obligations relating to accrued, but unused vacation or Executive’s right, if any, to his 2004 bonus) and terms set forth in the Prior Agreement.

     2. Employment and Term of Employment. Subject to the terms and conditions of this Agreement, the Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve the Company as Vice President and Chief Accounting Officer for a term (the “Term of Employment”) beginning on the Effective Date and ending on the Expiration Date (defined below). As used herein, “Expiration Date” means the third anniversary of the Effective Date, provided that on the first anniversary of the Effective Date and on each subsequent anniversary of the Effective Date (such first anniversary date and each such subsequent anniversary date being referred to as a “Renewal Date”), the Expiration Date shall be automatically extended one additional year unless, not less than ninety (90) days prior to the relevant Renewal Date, (i) either party shall have given written notice to the other that no such automatic extension shall occur after the date of such notice or (ii) either party shall have given a Notice of Termination to the other pursuant to Section 9 hereof. Notwithstanding the foregoing, if either party gives a valid Notice of Termination pursuant to Section 9 hereof, the Term of

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Employment shall not extend beyond the termination date specified in such Notice of Termination.

     3.    Scope of Employment.

     (a) During the Term of Employment, the Executive agrees to (i) serve as Vice President and Chief Accounting Officer of the Company (or in such other position of equal or greater authority) and shall have and may exercise the powers, duties and functions as are normal and customary to such positions and that are consistent with the responsibilities set forth with respect to such positions in the Company’s bylaws and (ii) perform such other duties not inconsistent with his position as may be assigned to him, from time to time, by the Company, which may include some or all of the following: corporate secretary, risk management, treasury and cash managements; provided, that, the removal of any of such duties by the Company shall not give Executive Good Reason (as defined below) to terminate his employment hereunder. During the Term of Employment, the Executive shall devote substantially all of his business time, attention, skill and efforts to the faithful performance of his duties hereunder. Subject to Section 8, the foregoing shall not be construed to prevent the Executive from making investments in businesses or enterprises so long as such investments do not require any services on the part of the Executive in the operation of such business or enterprises of a nature or magnitude that would interfere materially with the performance of his duties hereunder.

     (b) During the Term of Employment, the Executive agrees to serve, if elected, as an officer or director of any subsidiary or affiliate of the Company so long as such service is commensurate with the Executive’s duties and responsibilities to the Company.

     (c) The Executive’s place of employment hereunder shall be at the Company’s principal executive offices in the greater Houston, Texas metropolitan area. Moreover, the Company agrees that it will provide immunity and indemnity for the Executive to the fullest extent allowed by law, that if necessary it will amend its certificate of incorporation and bylaws to so provide, and that it will obtain errors and omissions insurance in the amount of no less than Ten Million Dollars ($10,000,000) naming the Executive as an additional insured.

     4.    Compensation. During the Term of Employment, in consideration of the Executive’s services hereunder, including, without limitation, service as an officer or director of the Company or of any subsidiary or affiliate thereof, and in consideration of the Executive’s covenants regarding confidentiality in Section 7 hereof and noncompetition in Section 8 hereof, the Executive shall receive the following compensation:

     (a) Base Salary. The Executive shall be paid a base salary at the rate of Two Hundred Forty-Six Thousand Dollars ($246,000) per year (the “Base Salary”) (payable at such regular intervals as other employees of the Company are compensated in accordance with the Company’s employment practices), which amount shall be subject to review annually by the Board of Directors of the Company (the “Board”) or the

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Compensation Committee of the Board (the “Compensation Committee”) and may be adjusted at its discretion, provided that such Base Salary may not be reduced at any time.

     (b) Target Bonus. During the Term of Employment, The Executive shall also be entitled to an annual target bonus equal to fifty-five percent (55%) of the Executive’s Base Salary (the “Target Bonus”) upon the achievement of pre-established performance goals set by the Board or the Compensation Committee of the Board. Any such bonus shall be paid at such times as the Company customarily pays bonuses and shall be paid consistent with Company policies.

     5.    Additional Compensation and Benefits.

     (a) As additional compensation for the Executive’s services under this Agreement, the Executive’s covenants regarding confidentiality in Section 7 hereof and noncompetition in Section 8 hereof, during the Term of Employment, the Company agrees to provide the Executive with such other benefits as it provides to its employees from time to time and subject to the eligibility provisions of any such employee benefit plans and policies. Executive shall be eligible for leave or vacation time (not less than five (5) weeks per year).

     (b) The Executive shall be eligible to participate in the Company’s Supplemental Executive Retirement Plan (“SERP”), to the extent that the Board has adopted a SERP. The Executive’s retirement benefits under the SERP shall be determined and paid in accordance with the terms of the SERP plan document.

     (c) The Board shall have the discretion to make equity grants to Executive under the Company’s Long Term Incentive Plan.

     (d) The Executive is authorized to incur reasonable business expenses for promoting the business and reputation of the Company, including (without limitation) reasonable expenditures for travel, lodging, club memberships, meals and client, patron, customer and/or business associate entertainment. The Company shall reimburse within thirty (30) days the Executive for reasonable expenses incurred by the Executive in furtherance of the Company’s business, provided that such expenses are incurred in accordance with the Company’s policies and upon presentation of documentation in accordance with expense reimbursement policies of the Company as they may exist from time to time, and submission to the Company of adequate documentation in accordance with federal income tax regulations and administrative pronouncements.

     (e) During the Term of Employment, the Company shall pay to Executive an automobile allowance of Seven Hundred Dollars ($700) per month.

     6.    Contract Severance. In consideration for the termination of the Executive’s Prior Agreement, the Company hereby agrees to provide the Executive with a cash payment and restricted stock grant (the “Contract Severance”) according to the terms set forth below:

     (a) Cash Payment. The Company agrees to provide the Executive with a cash payment equal to Two Hundred Ninety-One Thousand Three Hundred Dollars

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($291,300), less applicable withholding, to be paid to the Executive in a lump sum payment as soon as administratively practicable following the Effective Date.

     (b) Restricted Stock Grant. As soon as administratively practicable following the Effective Date, (the “Grant Date”), the Company hereby grants to the Executive 5,394 shares of the Company’s common stock which shall be subject to certain restrictions (the “Restricted Stock”). The Restricted Stock shall be granted subject to the terms of the Company’s Long Term Incentive Plan and shall vest as provided therein.

     7.    Confidentiality and Other Matters.

     (a) Confidentiality. The Executive shall hold in a fiduciary capacity for the benefit of the Company all maps, data, reports, including results of exploration, drilling, drill cores, cuttings, and other samples, and other information relating to the business of the Company which comes into the possession of the Executive during the Term of Employment (such information being collectively referred to herein as the “Confidential Information”). During the Term of Employment and after termination of the Executive’s employment hereunder, the Executive agrees: (i) to take all such precautions as may be reasonably necessary to prevent the disclosure to any third party of any of the Confidential Information; (ii) not to use for the Executive’s own benefit any of the Confidential Information; and (iii) not to aid any other person or entity in the use of the Confidential Information in competition with the Company, provided that nothing in this Agreement shall prohibit the Executive from disclosing or using any Confidential Information (A) in the performance of his duties hereunder, (B) as required by applicable law, (C) in connection with the enforcement of his rights under this Agreement or any other agreement with the Company, (D) in connection with the defense or settlement of any claim, suit or action brought or threatened against the Executive by or in the right of the Company or (E) with the prior written consent of the Board. Notwithstanding any provision contained herein to the contrary, the term “Confidential Information” shall not be deemed to include any general knowledge, skills or experience acquired by the Executive or any knowledge or information known or available to the public in general. The Executive further agrees that, if requested by the Company in writing at any time within ninety (90) days after termination of his employment for any reason, he will surrender to the Company all Confidential Information, and any copies thereof, in his possession and agrees that all such materials, and copies thereof, are at all times the property of the Company. Notwithstanding the foregoing, the Executive shall be permitted to retain copies of, or have access to, all such Confidential Information relating to any disagreement, dispute or litigation (pending or threatened) involving the Executive.

     (b) Remedies. For purposes of this Section 7, the “Company” shall be defined as the Company and its affiliated companies including (without limitation) its successors and assigns and its subsidiaries and each of their respective successors and assigns. In the event of a breach or threatened breach by the Executive of the provisions of this Section 7, the Company shall be entitled to an injunction restraining the Executive from violating such provisions without the necessity of posting a bond therefor. Nothing

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herein shall be construed as prohibiting the Company from pursuing any other remedies available to it at law or in equity. Except as specifically set forth herein, the parties agree that the provisions of this Section 7 shall survive the earlier termination of the Executive’s employment with the Company, as the continuation of this covenant is necessary for the protection of the Company.

     8.    Noncompetition.

     (a) Noncompetition Activities. The Executive acknowledges that the nature of the employment under this Agreement is such as will bring the Executive in personal contact with patrons or customers of the Company and will enable him to acquire valuable information as to the nature and character of the business of the Company, thereby enabling him, by engaging in a competing business in his own behalf, or for another, to take advantage of such knowledge and thereby gain an unfair advantage. Accordingly, the Executive covenants and agrees that he will not, without the prior written consent of the Company during the Term of Employment, and for the period of one year thereafter, engage directly or indirectly for himself, or as an agent, representative, officer, director or employee of others, in the exploration for or production of oil and gas in Louisiana, Texas, Arkansas, Oklahoma, Colorado, North Dakota, South Dakota and the coastal area of the Gulf of Mexico from the Mexican border to the eastern boarder of Louisiana provided, that, the foregoing restriction shall not apply at any time if the Executive’s employment is terminated during the Term of Employment by the Executive for Good Reason (defined in Section 9 hereof) or by the Company for any reason other than Cause (defined in Section 9 hereof) and, provided further, that nothing in this Agreement shall prohibit the Executive from acquiring or holding any issue of stock or securities of any entity registered under Section 12 of the Securities and Exchange Act of 1934 (as amended), listed on a national securities exchange or quoted on the automated quotation system of the National Association of Securities Dealers, Inc. so long as the Executive is not deemed to be an “affiliate” of such entity as such term is used in paragraphs (c) and (d) of Rule 145 under the Securities Act of 1933 (as amended).

     (b) Scope. In the event that the provisions of this Section 8 should ever be deemed to exceed the time, geographic or activity related limitations permitted by applicable law, then such provisions shall be reformed to the maximum time, geographic or activity related limitations permitted by applicable law. In the event of a breach or threatened breach by the Executive of the provisions of this Section 8, the Company shall be entitled to an injunction restraining the Executive from violating such provisions without the necessity of posting a bond therefor. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it at law or in equity. Except as specifically set forth herein, the parties agree that this Section 8 shall remain in effect for its full term notwithstanding the earlier termination of the Executive’s employment with the Company, as the continuation of this covenant is necessary for the protection of the Company. For purposes of this Section 8, the “Company” shall be defined as the Company and its affiliated companies, including (without limitation) its successors and assigns and its subsidiaries and each of their respective successors and assigns.

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     9.    Termination.

     (a) General. The Executive’s employment hereunder shall automatically terminate on the earlier of his death or the Expiration Date. The Executive may, at any time prior to the Expiration Date, terminate his employment hereunder for any reason by delivering a Notice of Termination (defined below) to the Board. The Company may, at any time prior to the Expiration Date, terminate the Executive’s employment hereunder for any reason by delivering a Notice of Termination to the Executive, provided that in no event shall the Company be entitled to terminate the Executive’s employment prior to the Expiration Date unless the Board shall duly adopt, by the affirmative vote of a least a majority of the entire membership of the Board (excluding Executive if he should then be serving on the Board), a resolution authorizing such termination and stating whether such termination is for Cause (defined below). The giving of a notice pursuant to clause (i) of the proviso contained in the penultimate sentence of Section 2 hereof shall not be deemed a termination of the Executive’s employment by the party giving such notice. As used in this Agreement, “Notice of Termination” means a notice in writing purporting to terminate the Executive’s employment in accordance with this Section 9, which notice shall (i) specify the effective date of such termination (not prior to the date of such notice) and (ii) in the case of a termination by the Company for Cause or Disability or a termination by the Executive for Good Reason or Disability, set forth in reasonable detail the reason for such termination and the facts and circumstances claimed to provide a basis for such termination.

     (b) Automatic Termination on Expiration Date. In the event the Executive’s employment hereunder shall automatically terminate on the Expiration Date for any reason, the Executive shall only be entitled to receive (i) all unpaid Base Salary earned as of the termination date (ii) all unused vacation time accrued by the Executive as of the termination date, and (iii) those benefits which are required under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or other laws or any other amounts due and owing to the Executive under any of the Company’s employee benefit plans or policies on or following his termination of employment (the “Accrued Obligation”). The am