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                                                                    EXHIBIT 10.1




August 30, 1996

Mr. James H. Price
Vice President - Finance
Southern Mineral Corporation
500 Dallas, Suite 2800
Houston, Texas 77002-4708

         RE: Amendment to Credit Agreements between Southern Mineral
         Corporation et al and Compass Bank dated as of December 20, 1995,
         covering the Term Loan of $4,000,000 and the Reducing Revolving Line
         of Credit of up to $25,000,000

Dear Jim,

Effective as of August 30, 1996, Section 2.7 (a) of the Credit Agreement for
the Reducing Revolving Line of Credit shall be amended to read as follows:

         "The Borrowing Base as of August 30, 1996, is acknowledged by the
         Borrower, the Co-Borrowers and the Lender to be $11,700,000.
         Commencing on October 1, 1996, and continuing thereafter on the first
         day of each calendar month until the earlier of the date such amount
         is redetermined or the Commitment Termination Date, the amount of the
         Borrowing Base shall be reduced by $175,000."

Also, effective as of August 30, 1996, Section 6.7 (b) of both above-referenced
Credit Agreements shall be amended to read as follows:

         "an aggregate of up to $1,500,000 in Southern Links Group,"

Please acknowledge your agreement by signing below.

Sincerely,



Dorothy Marchand Wilson
Vice President

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Mr. James H. Price
August 30, 1996

Acknowledged and Agreed:

SOUTHERN MINERAL CORPORATION

By:     ____________________________________________________
        
Name:   ____________________________________________________
        
Title:  ____________________________________________________
        
Date:   ____________________________________________________