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                                                                 EXHIBIT 10.1


                        [COHO ENERGY, INC. LETTERHEAD]


                                            September 29, 1997



The Morgan Stanley Leveraged
  Equity Fund II, L.P.
c/o Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, NY 10020

Attention:  Howard I. Hoffen

Dear Sirs:

        1.       Reference is made to the Registration Rights and Shareholder
Agreement (the "Agreement") dated as of December 8, 1994, among Coho Energy,
Inc., a Texas corporation, The Morgan Stanley Leveraged Equity Fund II, L.P., a
Delaware limited partnership, and Quinn Oil Company Ltd., a Texas limited
partnership. Defined terms used herein that are not defined herein shall have
the meanings assigned to them in the Agreement.

        2.       Section 5.1 of the Agreement is hereby amended in its entirety
to read as follows: 

                 "5.1  Board of Directors. The Company agrees to nominate two 
        persons, one designated by MSLEF II (the "First Designee"), and one
        designated by Quinn (the "Second Designee"), for election to the Board
        of Directors of the Company at each annual meeting of the Company's
        shareholders after 1997. In the event the shares of Common Stock owned  
        by MSLEF II and Quinn that were acquired by them pursuant to the
        Acquisition or upon the exchange of (or in satisfaction of accrued
        dividends with respect to) the Series A Preferred (including for this
        purpose shares that have been distributed by MSLEF II or Quinn to their
        respective partners and are owned by such partners) shall constitute
        less than 5% of the outstanding shares of Common Stock, the Company's
        obligations with respect to this Section 5.1 shall cease. To the extent 
        the Company's proxy statement for any annual meeting includes a
        recommendation regarding the election of any other nominees to the
        Company's Board of Directors, the Company agrees

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    to include a recommendation that the shareholders also vote in favor of the
    foregoing nominees."

        3.      This Agreement shall be governed by the laws of the State of 
Texas.

                                      COHO ENERGY, INC.


                                      By:
                                          -------------------------------------
                                          Name:  Jeffrey Clarke
                                          Title: President

Accepted and agreed as of
 the date first above written:


QUINN OIL COMPANY LTD.


By:
   -----------------------------------
   Name:  Carl S. Quinn,
   Title: General Partner


THE MORGAN STANLEY LEVERAGED
  EQUITY FUND II, L.P.

By: MORGAN STANLEY LEVERAGED
    EQUITY FUND II, INC., its
    GENERAL PARTNER

By:
   -----------------------------------
   Name:
   Title: