<PAGE>   1
                                                                  EXHIBIT 10(mm)


                               FOURTH AMENDMENT TO
                           LOAN AND SECURITY AGREEMENT


    THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment"),
dated as of September 29, 1999, is entered into between FINOVA CAPITAL
CORPORATION, a Delaware corporation ("FINOVA"), and SOUTH TEXAS DRILLING &
EXPLORATION, INC., a Texas corporation ("Borrower").

                                     RECITAL

    A. Borrower and FINOVA have previously entered into that certain Loan and
Security Agreement dated as of May 8, 1996, as amended by that certain First
Amendment to Loan and Security Agreement dated as of June 18, 1997, that certain
Second Amendment to Loan and Security Agreement dated as of October 21, 1997 and
that certain Third Amendment to Loan and Security Agreement dated as of November
1, 1998, (the "Loan Agreement"), pursuant to which FINOVA has made certain loans
and financial accommodations available to Borrower. Terms used herein without
definition shall have the meanings ascribed to them in the Loan Agreement.

    B. Borrower has requested that FINOVA (a) consent to the acquisition by
Borrower of certain assets from Howell Drilling, Inc., a Texas corporation
("Howell"), (b) provide an additional term loan to fund such acquisition by
Borrower and (c) terminate the facility pursuant to which FINOVA provided
Capital Expenditure Loans to Borrower.

    C. FINOVA is willing to further amend the Loan Agreement under the terms and
conditions set forth in this Amendment. Borrower is entering into this Amendment
with the understanding and agreement that, except as specifically provided
herein, none of FINOVA's rights or remedies as set forth in the Loan Agreement
is being waived or modified by the terms of this Amendment.

    NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

    1. Consent by FINOVA to Asset Acquisition. Subject to the terms and
conditions set forth herein (including, without limitation, paragraph 7 hereof),
FINOVA hereby consents to the acquisition of certain assets from Howell in
accordance with the terms of the Purchase Agreements (as defined in the Loan
Agreement, as amended hereby).

    2. Amendments to the "Loans" Section of the Loan Agreement.


        (a) The second to the last sentence of Section 1.1 of the Loan
    Agreement, entitled "Loan Facilities", is hereby amended in its entirety to
    read as follows:

        "The maximum aggregate amount of Loans available to Borrower from time
        to time hereunder shall be reduced dollar for dollar from


<PAGE>   2






        the Subsequent Total Facility Amount upon amortization of the
        outstanding principal amount of the Term Loan."

        (b) The definition set forth in the Schedule to the Loan Agreement under
    the section entitled "SUBSEQUENT TOTAL FACILITY AMOUNT (Section 1.1)" is
    hereby amended in its entirety as follows:

        "SUBSEQUENT TOTAL FACILITY AMOUNT (SECTION 1.1):

            Four Million Eight Hundred Twenty Five Thousand Dollars
        ($4,825,000)"

        (c) Paragraph B of the Section in the Schedule to the Loan Agreement
    entitled "LOANS (Section 1.2)" is hereby amended in its entirety as follows:

        "B. TERM LOAN:


            (1) TERM LOAN A: A term loan against the value of Borrower's
        machinery and equipment in the original principal amount of Two Million
        Five Hundred Seventy Five Thousand Dollars ($2,575,000) ('Term Loan A')
        which shall be evidenced by and payable in accordance with the terms of
        a Secured Promissory Note by Borrower in favor of FINOVA, substantially
        in the form of Exhibit A attached hereto (the 'Term Note A').

            (2) TERM LOAN B: A term loan against the value of the Howell
        Purchased Assets consisting of machinery and equipment in the original
        principal amount of One Million Seven Hundred Fifty Thousand Dollars
        ($1,750,000) ('Term Loan B') which shall be evidenced by and payable in
        accordance with the terms of a Secured Promissory Note by Borrower in
        favor of FINOVA, substantially in the form of Exhibit B attached hereto
        (the 'Term Note B'). All proceeds of Term Loan B shall be used by
        Borrower to fund the acquisition of the Howell Purchased Assets from
        Howell."

            (3) OPTIONAL PREPAYMENT: No more than once in any twelve (12) month
        period, Borrower may, at its option, make a prepayment on the
        outstanding balance of the Term Loan; provided, however, in no event
        shall the aggregate amount of each such optional prepayment exceed
        twenty-five percent (25%) of the then aggregate outstanding balance of
        the Term Loan and all such optional prepayments shall be made only from
        proceeds of the internally generated cash flow of Borrower, a secondary
        offering of Borrower's common stock or a private placement of Borrower's
        preferred stock or junior debt subordinated to the Obligations on terms
        and conditions satisfactory to FINOVA. All amounts prepaid pursuant to
        this paragraph (3) shall be applied to principal installments of the
        Term Note in inverse order of maturity.

    3. Amendment to Negative Covenant Provisions. The covenant set forth in the
Schedule to the Loan Agreement under the heading "Capital Expenditures" in the
Section entitled "Negative Covenants (Section 14)" is hereby amended in its
entirety to read as follows:





                                       2

<PAGE>   3






    "Capital Expenditures:                 Borrower shall not make or incur any
                                           Capital Expenditure of any kind if,
                                           after giving effect thereto, the
                                           aggregate amount of all such Capital
                                           Expenditures by Borrower in any
                                           fiscal year would exceed One Million
                                           Five Hundred Thousand Dollars
                                           ($1,500,000). However, for purposes
                                           of calculating the amount of such
                                           Capital Expenditures, (a) the San
                                           Patricio Assets, (b) the mud pump
                                           purchased by Borrower for
                                           $284,212.50, (c) the Skytop Brewster
                                           N-46 drilling rig and associated
                                           equipment purchased from Simmons
                                           Drilling Corp. on or about October
                                           21, 1997 and (d) the Howell Purchased
                                           Assets consisting of Capital
                                           Expenditures shall be excluded."

    4. Amendments to the Definitions in the Loan Agreement.


        (a) The definition of "Term Loan" set forth in Section 18 of the Loan
    Agreement is hereby amended in its entirety as follows:

        "'Term Loan' means collectively, Term Loan A and Term Loan B, or
        individually, Term Loan A or Term Loan B, in each case, as the context
        requires."

        (b) The definition of "Term Loan Note" set forth in Section 18 of the
    Loan Agreement is hereby amended in its entirety as follows:

        "'Term Loan Note' means collectively, Term Loan Note A and Term Loan
        Note B, or individually, Term Loan Note A or Term Loan Note B, in each
        case, as the context requires."

        (c) The following definitions are hereby added to Section 18.1 of the
    Loan Agreement:

        "'Howell' means Howell Drilling, Inc., a Texas corporation."

        "'Howell Purchase Agreements'" means, individually and collectively,
        the Asset Purchase Agreement dated September 22, 1999, between Borrower
        and Howell, together with bills of sale, quitclaim deeds, assignment and
        assumption agreements and such other instruments of transfer as are
        referred to therein and all side letters with respect thereto, and all
        agreements, documents and instruments executed and/or delivered in
        connection therewith, as all of the foregoing now exist or may hereafter
        be amended, modified, supplemented, extended, renewed, restated or
        replaced.

        "'Howell Purchased Assets' means all of the assets and properties
        acquired by Borrower from Howell pursuant to the Howell Purchase
        Agreements."

    5. Amended and Restated Term Note A and Addition of Term Note B. Exhibit A
to the Loan Agreement is hereby replaced in its entirety with Exhibit A attached
hereto and Exhibit B attached hereto is hereby added to the Loan Agreement as
Exhibit B thereto.





                                       3

<PAGE>   4


    6. Termination of Capital Expenditure Facility. The facility pursuant to
which FINOVA provided Capital Expenditure Loans is hereby terminated, the
provisions of paragraph 4 of the Second Amendment to Loan and Security Agreement
dated October 21, 1997 between FINOVA and Borrower shall have no further force
or effect and FINOVA shall have no further obligations to extend Capital
Expenditure Loans to Borrower.

    7. Effectiveness of this Amendment. FINOVA must have received the following
items, in form and content acceptable to FINOVA, and the following conditions
must have been fulfilled to the satisfaction of FINOVA before this Amendment is
effective and before FINOVA is required to extend any credit to Borrower as
provided for by this Amendment.

        (a) Amendment. This Amendment fully executed in a sufficient number of
    counterparts for distribution to FINOVA and Borrower.

        (b) Term Notes. The Term Note A and the Term Note B duly executed by
    Borrower in favor of FINOVA.

        (c) Authorizations. Evidence that the execution, delivery and
    performance by Borrower and each guarantor or subordinating creditor of this
    Amendment and any instrument or agreement required under this Amendment have
    been duly authorized.

        (d) Representations and Warranties. The representations and warranties
    set forth in the Loan Agreement must be true and correct.

        (e) Asset Appraisal. At Borrower's sole cost and expense, an asset
    appraisal of the Howell Purchased Assets, which appraisal must be acceptable
    to FINOVA in all respects.

        (f) Howell Purchase Agreements. FINOVA must review and find satisfactory
    the Howell Purchase Agreements, including copies of all exhibits and
    schedules thereto, including, without limitation, specific representations
    and warranties, in form and substance satisfactory to FINOVA, with respect
    to the accuracy of the financial information submitted by Howell, and
    indemnity provisions acceptable to FINOVA which shall address, among other
    items, liability for environmental contamination or clean up, if any and
    FINOVA shall have received evidence that the Howell Purchase Agreements have
    been duly executed and delivered by the appropriate parties thereto and the
    transactions contemplated under the terms of the Howell Purchase Agreements
    shall be consummated upon the funding of Term Loan B by FINOVA.

        (g) First Priority Security Interest. Evidence that FINOVA has a valid
    and perfected first priority security interest in and lien on the Howell
    Purchased Assets.

        (h) Payoff Letter. A payoff letter from International Bank of Commerce
    stating, among other things, that International Bank of Commerce shall
    execute any and all termination statements, reassignments, releases and
    other documents necessary to evidence its release of its security interest
    or lien in the Howell Purchased Assets.






                                       4

<PAGE>   5



        (i) Payment of Purchase Price. Receipt from Borrower of cash proceeds of
    Seven Hundred Fifty Thousand Dollars ($750,000), which proceeds, together
    with the proceeds of Term Loan B, upon satisfaction of the conditions set
    forth in this paragraph 7, shall be paid by FINOVA to Howell, or as
    otherwise directed by Howell and Borrower, as full payment of the purchase
    price of the Howell Purchased Assets.

        (j) Other Required Documentation. All other documents and legal matters
    in connection with the transactions contemplated by this Amendment shall
    have been delivered or executed or recorded and shall be in form and
    substance satisfactory to FINOVA.

        (k) Payment of Modification Fee. FINOVA shall have received from
    Borrower a modification fee of Eight Thousand Seven Hundred Fifty Dollars
    ($8,750) for the processing and approval of this Amendment.

    8. Condition Subsequent. Within sixty (60) days from the date hereof,
Borrower shall deliver to FINOVA, certificates of title with respect to any and
all motor vehicles of Borrower reflecting Borrower as the owner of such motor
vehicles and FINOVA as lienholder. Failure to satisfy the condition set forth in
the immediately preceding sentence within the time frame specified shall
constitute an Event of Default.

    9. Representations and Warranties. The Borrower represents and warrants as
follows:

        (a) Acquisitions of Howell Purchased Assets.

            (i) The Howell Purchase Agreements and the transactions contemplated
        thereunder have been duly executed, delivered and performed in
        accordance with their terms by the respective parties thereto in all
        respects, including the fulfillment of all conditions precedent set
        forth therein and giving effect to the terms of the Howell Purchase
        Agreements and the assignments to be executed and delivered by Howell
        thereunder, Borrower acquired and has good and marketable title to the
        Howell Purchased Assets, free and clear of all claims, liens, pledges,
        encumbrances of any kind.

            (ii) All actions and proceedings required by the Howell Purchase
        Agreements, applicable law or regulation have been taken and the
        transactions required thereunder have been duly and validly taken and
        consummated and no court of competent jurisdiction has issued any
        injunction or order which prohibits the transactions contemplated by the
        Howell Purchase Agreements and no governmental or other action or
        proceeding has been threatened or commenced, seeking any injunction or
        order which seeks to void or otherwise modify the transactions
        contemplated under the Howell Purchase Agreements.

            (iii) Borrower has delivered, or caused to be delivered, to FINOVA,
        true, correct and complete copies of all the Howell Purchase Agreements.








                                        5
<PAGE>   6





            (b) Authority. The Borrower has the requisite corporate power and
        authority to execute and deliver this Amendment, as applicable, and to
        perform its obligations hereunder and under the Loan Documents (as
        amended or modified hereby) to which it is a party. The execution,
        delivery and performance by the Borrower of this Amendment, and the
        performance by each Loan Party of each Loan Document (as amended or
        modified hereby) to which it is a party have been duly approved by all
        necessary corporate action of such Loan Party and no other corporate
        proceedings on the part of such Loan Party are necessary to consummate
        such transactions.

            (c) Enforceability. This Amendment has been duly executed and
        delivered by the Borrower. This Amendment and each Loan Document (as
        amended or modified hereby) is the legal, valid and binding obligation
        of each Loan Party hereto or thereto, enforceable against such Loan
        Party in accordance with its terms, and is in full force and effect.

            (d) Representations and Warranties. The representations and
        warranties contained in each Loan Document (other than any such
        representations or warranties that, by their terms, are specifically
        made as of a date other than the date hereof) are correct on and as of
        the date hereof as though made on and as of the date hereof.

            (e) No Default. No event has occurred and is continuing that
        constitutes an Event of Default.


         10. Choice of Law. The validity of this Amendment, its construction,
interpretation and enforcement, the rights of the parties hereunder, shall be
determined under, governed by, and construed in accordance with the internal
laws of the State of Arizona governing contracts only to be performed in that
State.

         11. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties and separate counterparts, each of which
when so executed and delivered, shall be deemed an original, and all of which,
when taken together, shall constitute one and the same instrument. Delivery of
an executed counterpart of a signature page to this Amendment by telefacsimile
shall be effective as delivery of a manually executed counterpart of this
Amendment.

         12. Due Execution. The execution, delivery and performance of this
Amendment are within the power of Borrower, have been duly authorized by all
necessary corporate action, have received all necessary governmental approval,
if any, and do not contravene any law or any contractual restrictions binding on
Borrower.

         13. Reference to and Effect on the Loan Documents.

            (a) Upon and after the effectiveness of this Amendment, each
        reference in the Loan Agreement to "this Agreement", "hereunder",
        "hereof" or words of like import referring to the Loan Agreement, and
        each reference in the other Loan Documents to "the Loan Agreement",
        "thereof" or words of like import referring to the Loan Agreement, shall
        mean and be a reference to the Loan Agreement as modified and amended
        hereby.




                                       6

<PAGE>   7









            (b) Except as specifically amended above, the Loan Agreement and all
        other Loan Documents, are and shall continue to be in full force and
        effect and are hereby in all respects ratified and confirmed and shall
        constitute the legal, valid, binding and enforceable obligations of
        Borrower to FINOVA.

            (c) The execution, delivery and effectiveness of this Amendment
        shall not, except as expressly provided herein, operate as a waiver of
        any right, power or remedy of FINOVA under any of the Loan Documents,
        nor constitute a waiver of any provision of any of the Loan Documents.

            (d) To the extent that any terms and conditions in any of the Loan
        Documents shall contradict or be in conflict with any terms or
        conditions of the Loan Agreement, after giving effect to this Amendment,
        such terms and conditions are hereby deemed modified or amended
        accordingly to reflect the terms and conditions of the Loan Agreement as
        modified or amended hereby.

    14. Ratification. Borrower hereby restates, ratifies and reaffirms each and
every term and condition set forth in the Loan Agreement, as amended hereby, and
the Loan Documents effective as of the date hereof

    15. Estoppel. To induce FINOVA to enter into this Amendment and to continue
to make advances to Borrower under the Loan Agreement, Borrower hereby
acknowledges and agrees that, after giving effect to this Amendment, as of the
date hereof, there exists no Event of Default and no right of offset, defense,
counterclaim or objection in favor of Borrower as against FINOVA with respect to
the Obligations.

    16. Release. The Borrower hereby absolutely and unconditionally releases and
forever discharges FINOVA, and any and all participants, parent corporations,
subsidiary corporations, affiliated corporations, insurers, indemnitors,
successors and assigns thereof, together with all of the present and former
directors, officers, agents and employees of any of the foregoing, from any and
all claims, demands or causes of action of any kind, nature or description,
whether arising in law or equity or upon contract or tort or under any state or
federal law or otherwise, which the Borrower has had, now has or has made claim
to have against any such person for or by reason of any act, omission, matter,
cause or thing whatsoever arising from the beginning of time to and including
the date of this Amendment, whether such claims, demands and causes of action
are matured or unmatured or known or unknown.



                                       7

<PAGE>   8






         IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the date first above written.

                                   "BORROWER"

                                   SOUTH TEXAS DRILLING &
                                   EXPLORATION, INC.,
                                   a Texas corporation



                                   By: [ILLEGIBLE]
                                      -----------------------------------------

                                   Title: President & COO
                                         --------------------------------------


                                  "FINOVA"

                                  FINOVA CAPITAL CORPORATION,
                                  a Delaware corporation



                                  By:   [ILLEGIBLE]
                                      -----------------------------------------

                                  Title:     VP
                                        ---------------------------------------
















                                        8