Exhibit 10.4







News Release                                         For Immediate Release

                                                            Oct. 13, 1998

   For more information, please contact: Sultan Mahmud (805) 347-8700 ext. 205

     Saba Agrees on a $7.5 Million Private Placement at $3.00 Per Share and
              Conversion of Its Preferred Shares at $2.50 Per Share

         Santa Maria,  California:  Saba Petroleum Company (AMEX:SAB)  announced
today that its Board of  Directors  has  consented to two  transactions  whereby
Horizontal Ventures,  Inc., (Nasdaq:  "HVNV") will acquire 5.5 million shares or
approximately 33% of Saba's Common Shares.

         HVNV will acquire $7.5 million worth of Saba's Series A Preferred Stock
currently held by RGC  International  Investors,  LDC ("RGC").  When acquired by
HVNV, the Preferred  Stock is convertible at $2.50 per share.  Conversion of all
of the Preferred Stock is subject to obtaining or waiving various approvals. RGC
will retain a limited  number of shares which it has agreed to convert  pursuant
to the  agreement  regarding  the purchase of Series A Preferred  Stock by HVNV.
Certain of HVNV obligations are subject to financing.

         In addition to the above  transaction,  Saba and HVNV have entered into
an  agreement  whereby  HVNV has agreed to purchase an  aggregate of 2.5 million
shares of Saba's  Common  Stock at $3.00 per share in a private  placement.  The
proceeds from the sale of equity will be used to reduce debt and provide working
capital.

         Under the terms of the agreements,  a total of three persons designated
by HVNV will become members of Saba's 5-member Board of Directors.  The first of
the three  directors  was  appointed to the board of Saba  effective  October 9,
1998. It is expected that the closing will occur by mid-December 1998.

         Ilyas  Chaudhary,  President and CEO commented,  "The  transaction with
HVNV will improve  Saba's  financial  situation  and  strengthen  its ability to
proceed with plans to enhance shareholder value through oil and gas development,
refining and exploration activities."

         Saba Petroleum  Company is an  independent  energy company with oil and
gas production and development  activities in North America and Colombia. In the
United States, the Company's primary areas of activity are California, Louisiana
and New  Mexico.  The  Company  also has large land  positions  and  exploration
options on exploratory projects in the U.S.A., Indonesia and the United Kingdom.



                   Safe Harbor for Forward Looking Statements

Except for  historical  information  contained  herein,  the  statements in this
Release are forward-looking statements that are made pursuant to the safe harbor
provision   of  the   Private   Securities   Litigation   Reform  Act  of  1995.
Forward-looking  statements  involve known and unknown  risks and  uncertainties
which  may cause the  Company's  actual  results  in  future  periods  to differ
materially from forecasted results. These risks and uncertainties include, among
other things,  volatility of oil prices,  product  demand,  market  competition,
risks inherent in the Company's international operations, imprecision of reserve
estimates,  the availability of additional oil and gas assets for acquisition on
commercially  reasonable terms, and the Company's ability to replace and exploit
its existing oil and gas  reserves.  These and other risks are  described in the
Company's Annual Report on Form 10-K and in the Company's other filings with the
Securities and Exchange Commission.