<PAGE>
                                                                   EXHIBIT 10.42

                           [COMPASS BANK LETTERHEAD]

October 12, 1999

Mr. Steven H. Mikel
President & CEO
Southern Mineral Corporation
1201 Louisiana Street, Suite 3350
Houston, Texas 77002-5609

     RE:  Amended and Restated Credit Agreement dated June 19, 1998, by and
          between Southern Mineral Corporation, SMC Ecuador, Inc., SMC
          Production Co., BEC Energy, Inc., Amerac Energy Corporation, Compass
          Bank and First Union National Bank (as subsequently amended, restated,
          and/or supplemented, the "Credit Agreement")

Dear Steve:

Section 2.5 (a) of the Credit Agreement shall be amended to change the date of
October 15, 1999 to October 22, 1999.

Except as expressly provided herein, the Credit Agreement and the other Loan
Documents shall remain in full force and effect in accordance with their
respective terms and this letter shall not be construed to:

     (i)   impair the validity, perfection or priority of any lien or security
           interest securing the Obligations;
     (ii)  waive or impair any rights, powers or remedies of the Agent and the
           Lenders under the Credit Agreement and the other Loan Documents; or
    (iii)  grant any forbearance periods or extend the term of the Credit
           Agreement or the time for payment of any of the Obligations, except
           as expressly provided herein.

No Event of Default and no Default is waived or remedied by the execution of
this letter by the Lenders, and any such Default or Event of Default heretofore
arising and currently continuing shall continue after the execution and delivery
hereof.  Nothing contained in this letter, nor any past indulgence by the
Lenders, nor any prior waiver or consents or any waivers or consents which may
hereafter be granted nor any other action or inaction on behalf of the Lenders
(i) shall constitute or be deemed to constitute a waiver of any Defaults or
Events of Default which exist or may exist under the Credit Agreement or any
other Loan Document, or (ii) shall constitute or be deemed to constitute an
election of remedies by the Lenders or a waiver of any of the rights or remedies
of the Lenders provided in the Credit Agreement or the other Loan Documents or
otherwise afforded at law or in equity.
<PAGE>

Mr. Steven H. Mikel
October 12, 1999
Page 2


All capitalized terms not otherwise defined herein shall have the same meaning
as set forth in the Credit Agreement.

As additional consideration for the waiver granted herein by the Lenders, the
Borrower and Co-Borrowers hereby release the Agent and the Lenders from any and
all known or suspected claims, actions, demands, or causes of action of whatever
kind or character arising on or prior to the date hereof. IT IS EXPRESSLY AGREED
THAT THE CLAIMS RELEASED BY THE BORROWER AND THE CO-BORROWERS HEREBY INCLUDE
THOSE ARISING FROM OR IN ANY MANNER ATTRIBUTABLE TO THE NEGLIGENCE (SOLE,
CONCURRENT, ORDINARY, OR OTHER WISE), OF THE AGENT AND THE LENDERS, THEIR
RESPECTIVE REPRESENTATIVES, AGENTS, OFFICERS, DIRECTORS, EMPLOYEES, SUCCESSORS
AND ASSIGNS. Notwithstanding any provision of this modification or any other
Loan Document, this section shall remain in full force and effect and shall
survive the delivery and payment of the Notes, this modification and the other
Loan Documents and the making, extension, renewal, modification, amendment or
restatement of any thereof.

THIS LETTER, THE CREDIT AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS
REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

Sincerely,

COMPASS BANK


By:/s/  Dorothy Marchand Wilson
   -----------------------------
        Dorothy Marchand Wilson
        Senior Vice President

FIRST UNION NATIONAL BANK

     /s/ Robert R. Wetteroff
By:  __________________________
     Robert R. Wetteroff

     Senior Vice President
Its:__________________________

<PAGE>

Mr. Steven H. Mikel
October 12, 1999
Page 3


ACKNOWLEDGED AND AGREED:

SOUTHERN MINERAL CORPORATION

/s/ Steven H. Mikel
----------------------------
Steven H. Mikel
President
<PAGE>

TYPE:  EX-21.1
SEQUENCE:  7

<TABLE>
<CAPTION>


                                                                   EXHIBIT 21.1
                                 OTHER NAME UNDER WHICH          JURISDICTION OF
NAME OF SUBSIDIARY             SUBSIDIARY CONDUCTS BUSINESS       INCORPORATION
<S>                                      <C>                      <C>
Neutrino Resources Inc.                  None                      Alberta, Canada
SMC Production Co.                       None                      Texas
BEC Energy, Inc.                         None                      Texas
SMC Ecuador, Inc.                        None                      Delaware
Amerac Energy Corporation                None                      Delaware
Spruce Hills Production Company, Inc.    None                      Delaware

</TABLE>
<PAGE>

              [GILBERT LAUSTSEN JUNG ASSOCIATES LTD. LETTER HEAD]


                               LETTER OF CONSENT



TO:  Southern Mineral Corporation
     The Securities and Exchange Commission



                                       Re:  Neutrino Resources Inc.
                                            -----------------------

We refer to the following report prepared by Gilbert Laustsen Jung Associates
Ltd.:

 .  the Reserve Determination and Evaluation of the Canadian Oil and Gas
   Properties of Neutrino Resources Inc. effective January 1, 2000, dated
   January 6, 2000.

We hereby consent to the use of our name, reference to and excerpts from the
said reports by Southern Mineral Corporation in its annual report and SEC 10 K
filing.


                                       Yours very truly,


                                       GILBERT LAUSTSEN JUNG
                                       ASSOCIATES LTD.


                                       /s/ Wayne W. Chow
                                       --------------------------
                                       Wayne W. Chow, P. Eng.
                                       Vice-President


Calgary, Alberta
Date: March 28, 2000
<PAGE>

                      [CHAPMAN LETTER HEAD APPEARS HERE]

March 28, 2000


Neutrino Resources Inc.
1400, 300 - 5th Avenue SW
Calgary, Alberta
T2P 3C4

Attention: Mr. Al Smith

Dear Sir:

Re: Neutrino Resources Inc. (the "Company")
    Consent Letter
    ---------------------------------------

We hereby consent to the use of and reference to our name and material from our
report entitled "Neutrino Resources Inc., Reserve and Economic Evaluation
Constant Price/No Cost Escalation Case", dated January 6, 2000 and any other
associated reports in the Company's annual report and in any required filings
with the Securities Exchange Commission (SEC) or any other securities regulatory
bodies.


Yours very truly,

Chapman Petroleum Engineering Ltd.


/s/ C. W. Chapman
------------------------
C. W. Chapman P. Eng.
President

CWC/hmh/2686

                                                 PERMIT TO PRACTICE
                                          CHAPMAN PETROLEUM ENGINEERING LTD
                                          Signature:/s/ C. W. Chapman
                                                    --------------------

                                           Date: 3/28/00
                                                 -----------------------

                                                  PERMIT NUMBER: P 4201

                                      The Association of Professional Engineers,
                                       Geologists and Geophysicists of Alberta