[Via Verde Note]

                                 AMENDED AND RESTATED
                                    PROMISSORY NOTE

       US $4,500,000.00
                                                         As of December 18, 1997


            FOR  VALUE RECEIVED,  Via Verde  Development Company,  a  California
       corporation ("Borrower"), hereby promises  to pay to the order of  London
       Australian  &  General   Property  Company  Limited,  a  United   Kingdom
       corporation ("Lender"),  the principal sum of  FOUR MILLION FIVE  HUNDRED
       THOUSAND  AND 00/100  DOLLARS (US  $4,500,000.00) or  so much  as may  be
       advanced  (including   the  addition  of   interest  to  principal)   and
       outstanding   hereunder   (the  "Loans"),   in   ten   (10)   semi-annual
       installments, commencing January 15, 1999, the amount of each payment  to
       equal the amount then outstanding on  this Note divided by the number  of
       then  remaining installments,  including the  installment to  be made  on
       such date (the  "Maturity Date").  Borrower  promises to pay interest  on
       the unpaid principal balance hereof from (and including) October 1,  1997
       to (but excluding) the date of  payment in full of such amount at a  rate
       per  annum equal  at all  times to  six percent  (6%) per  annum (or  the
       maximum interest  rate permitted by  law, whichever is  less).   Interest
       shall be payable  on each April 1 (for the  period through March 31)  and
       October  1  (for  the  period  through  September  30)  until   maturity;
       provided, however,  that any amount  of principal that  is not paid  when
       due  (whether at  stated maturity,  by acceleration  or otherwise)  shall
       bear interest from (and including) the  date on which such amount is  due
       until (but excluding) the date such amount is paid in full on demand,  at
       a rate  per annum equal at  all times to eleven  percent (11%) per  annum
       (or  the maximum  interest rate  permitted by  law, whichever  is  less).
       Both  interest and  principal  as herein  provided  shall be  payable  in
       lawful money of the United States of America at the offices of Lender,  4
       Grosvenor Place, London SW1X 7DL England, or at such other place as  from
       time to time may be designated in writing by Lender.

            Notwithstanding anything  in the foregoing to  the contrary, if,  in
       the opinion of its Board of Directors, Borrower does not have  sufficient
       cash resources to  pay interest on this Note when  due, then Hondo Oil  &
       Gas Company, a Delaware corporation and  the owner of all of the  capital
       stock of Borrower ("Hondo"), may offer to Lender, on behalf of  Borrower,
       a payment of  the interest in shares of  Hondo's common stock, valued  at
       (i) the  last reported sales price  regular way on  the interest due  day
       or, in case  no such reported sale takes place  on such day, the  average
       of the reported closing bid and asked prices regular way on such day,  in
       either case  on the American Stock  Exchange or other principal  national
       securities exchange on  which Hondo's common stock  is listed or, if  not
       listed on any national securities exchange, on The Nasdaq Stock  Market's
       National Market System or, (ii) if (i) is not applicable, the average  of
       the bid and asked prices at the end of the interest due day in the  over-
       the-counter market  as furnished by  any New York  Stock Exchange  member
       firm selected by Lender in good  faith for that purpose.  In making  this
       determination,  Hondo's  management will  not,  without  the  consent  of
       Lender, allocate  cash resources to new  capital projects not related  to
       the  Opon Association  Contract  dated  July 15,  1987  between  Empressa
       Colombiana de Petroleos and  Opon Development Company.  Lender will  then
       notify Hondo  whether it will  either accept the  payment of interest  in
       Hondo's common stock or add the  amount of interest due to the  principal


                                           1




       of this  Note.   If Lender  accepts the  payment of  interest in  Hondo's
       common stock, Hondo will issue  the requisite number of shares to  Lender
       within ten business days  after Hondo receives notice of acceptance  from
       Lender.  Lender recognizes that  any shares of Hondo's common stock  that
       it may acquire  by the payment of interest  in Hondo's common stock  will
       not have  been registered under  the Securities Act  of 1933, as  amended
       (the  "Act"),  and may  not  be  sold in  the  absence  of  an  effective
       registration  under  the  Act  or  an  exemption  from  the  registration
       requirements of  the Act.   If Lender so  requests at any  time and  from
       time to time after the date shares of Hondo's common stock are issued  to
       Lender pursuant  to this provision,  Hondo will use  its best efforts  to
       effect registration under the Act of the shares so issued.

            No borrowing may be made by Borrower under this Note after the  date
       hereof,  except pursuant  to the  immediately preceding  paragraph.   All
       additions to principal (including the addition of interest to  principal)
       and payments made pursuant to this Note may be recorded by Lender on  its
       books  and records  or  any Grid  attached  hereto, and  such  books  and
       records and any Grid attached hereto (or any statement or certificate  of
       Lender based  thereon) shall be  conclusive as to  existence and  amounts
       thereof absent manifest error.

            This Note is  secured under, and entitled  to the benefits of,  that
       certain Deed of  Trust dated April 30,  1993, recorded as Instrument  No.
       93-840817 in the Real Property Records of Los Angeles County,  California
       and an Assignment of Rents dated April 30, 1993 by Borrower, as  Trustor,
       to Chicago Title  Company as Trustee, as same has  been, and as same  may
       be,  supplemented,  modified,  amended or  restated  from  time  to  time
       (collectively, the "Via Verde Mortgage"), and is supported by a  Guaranty
       dated April 30, 1993 from Hondo  Oil & Gas Company as same has been,  and
       as same may be, supplemented, modified, amended or restated from time  to
       time (the "Hondo Guaranty");

            Borrower  and  Lender,  as assignee  of  Thamesedge  Ltd.,  in  turn
       assignee of Lonrho Plc ("Original Lender"), are parties to those  certain
       letter agreements  dated December 17, 1993,  November 10, 1994,  December
       22, 1995,  December 13, 1996 and  December 18, 1997, and  as same may  be
       from   time  to   time  further   supplemented,  amended   or   restated,
       collectively,  the "Letter  Agreements") pursuant  to which  1994  Letter
       Agreement  Lender  made  loans  to  Borrower  in  the  total  amount   of
       US $3,000,000 and  to which there has  been added to principal,  pursuant
       to  the Letter  Agreements,  accrued but  unpaid  interest in  the  total
       amount of $585,680.86 through October 1, 1997.

            Borrower  hereby  acknowledges,  certifies  and  agrees  that:   (a)
       pursuant to the Letter Agreements, Borrower has issued a Promissory  Note
       dated April 30, 1993 in the original principal amount of $3,000,000  (the
       "Prior Note"); (b) pursuant to the  Prior Note, Lender has made loans  to
       Borrower that  are outstanding  as of the  date hereof  in the  aggregate
       principal amount  of U.S.$3,585,680.86, after  giving effect to  interest
       added to principal  of the Prior Note  as hereinabove provided; (c)  this
       Note has  been issued by  Borrower to renew,  extend, amend, restate  and
       replace the Prior  Note (in order to,  among other things, implement  the
       aforesaid  December   18,  1997  letter   agreement),  to  evidence   all
       indebtedness and other amounts  outstanding under the Prior Note, and  to
       evidence any further advances of interest that may be added to  principal
       pursuant to the terms of this Note;  (d) although issued in  substitution
       for and restatement of the Prior  Note, this Note shall not be deemed  to
       have been  issued in payment, satisfaction,  cancellation or novation  of


                                           2




       the  Prior Note;  and (e)  Borrower's obligations  to repay  those  loans
       (with interest) to Lender and to perform or otherwise satisfy  Borrower's
       other obligations,  as well as the  security interests granted to  Lender
       by Borrower  under the  Via Verde Mortgage,  and any  other related  loan
       documents (i) each  remain and shall continue  in full force and  effect,
       both before and after giving  effect to this renewal and extension,  (ii)
       are not  subject as  of the  date of this  renewal and  extension to  any
       defense, counterclaim, setoff, right of recoupment, abatement,  reduction
       or other claim or determination, and  (iii) are and shall be governed  by
       the terms and provisions of this Note, the Letter Agreements and the  Via
       Verde Mortgage.

            Notwithstanding  the foregoing,  the Lender  may, by  notice to  the
       Borrower  at any  time thereafter,  declare  all or  any portion  of  the
       principal amount of  this Note, all or any part  of the then accrued  but
       unpaid interest thereon, and  any or all other amounts payable  hereunder
       to be forthwith due and payable at any time after:

                 (a)  the  Borrower  shall  fail  to  pay  any  installment   of
                 principal  of, or  interest on,  this Note  when due  and  such
                 failure shall remain unremedied for three (3) days;

                      (b)  the  Borrower, Hondo  Magdalena  Oil &  Gas  Limited,
                 presently  a wholly-owned  subsidiary of  the Borrower  ("Hondo
                 Magdalena"),  and any  of their  respective subsidiaries  shall
                 (i) fail to pay any Debt (but excluding indebtedness  evidenced
                 by  this  Note)  of  the  Borrower,  Hondo  Magdalena  or  such
                 subsidiary (as  the case may  be), or any  interest or  premium
                 thereon, when  due (whether upon  scheduled maturity,  required
                 prepayment, acceleration, demand  or other notice or  formality
                 of  any  kind)  and  such  failure  shall  continue  after  the
                 applicable grace period, if any, specified in the agreement  or
                 instrument relating  to such Debt  or (ii) fail  to perform  or
                 observe  any term,  covenant or  condition on  its part  to  be
                 performed  or  observed  under  any  agreement  or   instrument
                 relating to  any such Debt,  when required to  be performed  or
                 observed, and such failure shall continue after the  applicable
                 grace  period,   if  any,  specified   in  such  agreement   or
                 instrument,  if  the  effect of  such  failure  to  perform  or
                 observe is  to accelerate, or  to permit  the acceleration  of,
                 the maturity of such Debt;  or any such Debt shall be  declared
                 to be due  and payable, or required  to be prepaid (other  than
                 by a  regularly scheduled  required prepayment),  prior to  the
                 stated maturity  thereof.   "Debt" means  all (i)  indebtedness
                 for  borrowed  money,  (ii)  obligations  evidenced  by  bonds,
                 debentures,   notes  or   other  similar   instruments,   (iii)
                 obligations to pay  the deferred purchase price of property  or
                 services, (iv)  obligations as  lessee under  leases that  have
                 been  or  should be,  in  accordance  with  generally  accepted
                 accounting  principles,   recorded  as   capital  leases,   (v)
                 obligations under direct or indirect guaranties in respect  of,
                 and  obligations  (contingent  or  otherwise)  to  purchase  or
                 otherwise acquire,  or otherwise to  assure a creditor  against
                 loss in  respect of, indebtedness or  obligations of others  of
                 the kinds  referred to in  clauses (i) through  (v) above,  and
                 (vi) liabilities in  respect of unfunded vested benefits  under
                 plans covered by Title IV of ERISA;




                                           3




                 (c)  the Borrower  shall have failed to  furnish to Lender,  by
                 October 1,  1998, a proved  gas reserve  report of  Netherland,
                 Sewell &  Associates that shows  that a  minimum of  13,000,000
                 mcf (25%)  of proved gas reserve  exists, which are subject  to
                 the Opon  Association Contract  in which  Hondo Magdalena  then
                 participates, above  the proved gas  reserve of 52,475,554  mcf
                 at September 30, 1997;

                 (d)  the Borrower, Hondo  Magdalena or any of their  respective
                 subsidiaries shall generally  not pay its debts as they  become
                 due, shall admit in writing  its inability to pay its debts  or
                 shall make a  general assignment for the benefit of  creditors;
                 or  any  proceeding  shall be  instituted  by  or  against  the
                 Borrower,   Hondo  Magdalena   or  any   of  their   respective
                 subsidiaries seeking to adjudicate it a bankrupt or  insolvent,
                 or   seeking    liquidation,   winding   up,    reorganization,
                 arrangement, adjustment, protection, relief, or composition  of
                 it  or  its  Debts  under  any  law  relating  to   bankruptcy,
                 insolvency or reorganization  or relief of debtors, or  seeking
                 the  entry of  an order  for  relief or  the appointment  of  a
                 receiver, trustee, or other similar official for it or for  any
                 substantial  part  of its  property;  or  the  Borrower,  Hondo
                 Magdalena or  any of their  respective subsidiaries shall  take
                 any corporate or other  action to authorize any of the  actions
                 set forth above in this paragraph (d); or

                      (e)  a final  judgment or order for  the payment of  money
                 in excess  of $75,000 shall be  rendered against the  Borrower,
                 Hondo Magdalena  or any of  their respective subsidiaries,  and
                 any such  judgment or order shall  continue unsatisfied and  in
                 effect for a period of 60 consecutive days.

                 (f)  any  other default  (whether in  whole or  in part)  shall
                 occur in  the due observance or  performance of any other  term
                 or provision  of this Note,  the Letter Agreements  or the  Via
                 Verde Mortgage;

                      (g)  This  Note,  the Letter  Agreements,  the  Via  Verde
                 Mortgage (in whole or in part) shall cease to be in full  force
                 or effect  or shall be contested,  challenged or repudiated  by
                 the Borrower or any surety.

            If this Note  is placed in the hands  of an attorney for  collection
       after default,  or if all or  any part of  the indebtedness   represented
       hereby  is proved,  established  or collected  in  any court  or  in  any
       bankruptcy,  receivership,   debtor  relief,  probate   or  other   court
       proceedings, Borrower and all endorsers, sureties and guarantors of  this
       Note jointly  and severally agree to  pay reasonable attorneys' fees  and
       collection costs to  the holder hereof in  addition to the principal  and
       interest payable hereunder.

            Borrower and  all endorsers, sureties  and guarantors  of this  Note
       hereby severally waive  demand, presentment for payment, protest,  notice
       of protest, notice of intention to accelerate the maturity of this  Note,
       diligence in collection, the bringing  of any suit against any party  and
       any notice of or defense on account of any extensions, renewals,  partial
       payments or changes  in any manner of  or in this Note  or in any of  its
       terms, provisions and covenants, or any releases or substitutions of  any



                                           4




       security, or  any delay, indulgence or  other act of  any trustee or  any
       holder hereof, whether before or after maturity.

            This Note and the rights and  duties of the parties hereto shall  be
       governed by  the laws of the  State of New York,  (other than those  that
       would defer  to the substantive laws  of another jurisdiction).   Without
       in  any way  limiting the  preceding choice  of law,  the parties  intend
       (among  other things)  to  thereby avail  themselves  of the  benefit  of
       Section 5-1401 of the General Obligations Law of the State of New York.

            All notices  and other communications  provided for hereunder  shall
       be in writing and shall be delivered to the addressees at the  applicable
       addresses set  forth below by  mail, telecopy, Federal  Express or  other
       equivalent  overnight  carrier or  by  telephone  (confirmed  in  writing
       within 24 hours) or telecopy or hand-delivered, if to Borrower, to it  at
       Hondo Oil &  Gas Company, 10375 Richmond  Avenue, Suite 900, Houston,  TX
       77042, telephone  (713) 954-4600, telecopier  (713) 954-4601,  Attention:
       John  J. Hoey;  if  to Lender,  to  it  at London  Australian  &  General
       Property Company, 4 Grosvenor Place, London, SW1X 7DL England,  telephone
       011-44-171-201-6000,  telecopier  011-44-171-201-6100,  Attention  R.  E.
       Whitten with a copy to Rudolph  H. Funke, Esq. at 805 Third Avenue,  18th
       Floor,  New York,  NY 10022,  telephone 212-715-7001,  telecopy  212-838-
       8141; or,  as to each  party, to  it at such  other address  as shall  be
       designated by  such party in a  written notice to the  other party.   All
       such notices and communications shall not be effective until received  by
       Lender.

            Borrower hereby irrevocably  submits to the jurisdiction of any  New
       York State or United States Federal  court sitting in New York City  over
       any  action or  proceeding  arising out  of  or relating  to  the  Letter
       Agreements, this Note or  the Via Verde Mortgage, and hereby  irrevocably
       agrees that  all claims in respect  of such action  or proceeding may  be
       heard and determined in such New  York State or Federal court.   Borrower
       irrevocably consents to  the service of any and  all process in any  such
       action or  proceeding by  sending copies  of such  process to  it at  its
       address  and in  the manner  determined under  the immediately  preceding
       paragraph hereof.   Borrower  agrees that a  final judgment  in any  such
       action or  proceeding shall be  conclusive and may  be enforced in  other
       jurisdictions by suit on the judgment or in any other manner provided  by
       law.  Borrower further waives any  objections to venue in such State  and
       any objection to  an action or proceeding in such  State on the basis  of
       forum  non  conveniens.   Borrower  further  agrees that  any  action  or
       proceeding brought  by it  against Lender shall  be brought  only in  New
       York State  or United States  Federal court sitting  in New York  County,
       New York.    Borrower  and Lender  waive any right  it may  have to  jury
       trial.   Nothing in this paragraph  shall affect the  right of Lender  to
       serve legal process  in any other manner permitted  by law or affect  the
       right of  Lender to bring  any action or  proceeding against Borrower  or
       any of its properties in the  courts of any other jurisdictions.  To  the
       extent  that Borrower  has or  hereafter may  acquire any  immunity  from
       jurisdiction  of  any court  or  from  any legal  process  (whether  from
       service or  notice, attachment prior  to judgment, attachment  in aid  of
       execution,  execution  or  otherwise)  with  respect  to  itself  or  its
       property, Borrower hereby irrevocable waives such immunity in respect  of
       its obligations under the Letter Agreements, this Note and the Via  Verde
       Mortgage.





                                           5




                                     VIA VERDE DEVELOPMENT COMPANY


                                     By:      /s/ John J. Hoey
                                          John J. Hoey, President

                                     [END OF PAGE]

                                   SCHEDULE TO NOTE


            Date      Amount of      Principal      Principal      Notation
                      Advance        Paid           Outstanding    Made By

            12/18/97  Carryover      --             $3,585,680.86
                      from Prior
                      Note












































                                           6