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                                                                  EXHIBIT 10.12


                               FIRST AMENDMENT TO
                              EMPLOYMENT AGREEMENT


         THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT dated as of August 19,
1996 (this "First Amendment"), is by and among Coho Energy, Inc., a Texas
corporation and R. M. Pearce.

                                  WITNESSETH:

         WHEREAS, the parties hereto have entered into an Employment Agreement
dated as of November 11, 1994 (the "Agreement"); and

         WHEREAS, the parties hereto wish to amend the Agreement as set forth
in this First Amendment;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereby stipulate and agree as follows:

         1.      Capitalized terms used but not otherwise defined herein shall
have the meaning given such terms in the Agreement.

         2.      Section 3 of the Agreement shall be amended by adding the
                 following last sentence:

         "For purposes of Section 7(c)(i) or 7(d)(i) hereof, "annual rate of
         total compensation" shall mean the sum of (i) the annual rate of
         salary set forth above, as the same may be increased from time to time
         as provided above, and (ii) the most recent annual bonus (whether in
         cash or securities) awarded the Executive; provided, however, for
         purposes of Section 7(d)(i), it shall be the greater of (A) the most
         recent annual bonus (whether in cash or securities) awarded the
         Executive and (B) the last annual bonus (whether in cash or
         securities) awarded the Executive prior to the Change of Control."

         3.      Section 7(g) of the Agreement is amended by changing all
references therein to "KPMG Peat Marwick" to "the Company's auditors".

         4.      This First Amendment shall be governed in all respects,
including, without limitation, validity, interpretation and effect, by the laws
of the State of Texas.

         5.      This First Amendment may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same agreement, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other party.

         6.      As amended by this First Amendment, the Agreement remains in
                 full force and effect.





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         IN WITNESS WHEREOF, the parties have duly executed this First
Amendment as of the date first set forth above.

                                  COHO ENERGY, INC.



                                  By:                                          
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                                  Printed Name:                                
                                               --------------------------------
                                  Title:                                       
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-------------------------                 R. M. PEARCE





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