EXHIBIT 10.1


                       PREFERRED STOCK TRANSFER AGREEMENT



          THIS PREFERRED STOCK TRANSFER AGREEMENT (this "Agreement") is
entered into as of this 7th day of October, 1998 by and between RGC
INTERNATIONAL INVESTORS, LDC ("RGC") and HORIZONTAL VENTURES, INC. ("HVI") and
consented to by SABA PETROLEUM COMPANY ("SABA").

                             W I T N E S S E T H:

          WHEREAS, RGC owns 8,000 shares of Series A Convertible Preferred
Stock, par value $0.001 per share, of SABA (the "Series A Preferred"); 

          WHEREAS, RGC desires to sell, and HVI desires to buy, up to 7,000
shares of the Series A Preferred (the "Preferred Shares"),  in exchange for
cash in an amount equal to 104% of the stated value thereof, plus an
additional cash amount representing all accrued and unpaid dividends thereon
through the closing of the transactions contemplated hereby (which dividends
aggregated $319,890.41 through the close of business on October 5, 1998 and
will continue to accrue at the rate of $1,150.68 per day for each day
thereafter); and

          WHEREAS, the shares of Series A Preferred not being sold to HVI
hereunder may be converted into Common Stock of SABA in accordance with the
terms of the Certificate of Designations, Preferences and Rights governing the
Series A Preferred (the "Certificate of Designations") subsequent to the later
to occur of (i) the approval by the shareholders of SABA of the issuance of
shares of Common Stock in excess of 20% of SABA's outstanding Common Stock
pursuant to the conversion of shares of Series A Preferred (the "Shareholder
Approval Date") and (ii) the declaration by the Securities and Exchange
Commission of the effectiveness of SABA's Registration Statement on Form S-1
covering the resale of the shares underlying such Series A Preferred (File No.
333-45023) (the "Effective Date"); provided, however, that any portion thereof
not immediately convertible as a result of the 4.9% limitation set forth in
the Certificate of Designations will be converted as soon thereafter as
practicable.

          NOW, THEREFORE, in consideration of the mutual premises and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is mutually
agreed and covenanted by and between the parties to this Agreement as follows:

     1.     Initial Sale and Purchase of the Preferred Shares.

            Subject to the terms and conditions of this Agreement, on the date
hereof, RGC hereby agrees to transfer, sell and assign to HVI, and HVI hereby
agrees to buy from RGC, the First Closing Shares (as defined herein), in
exchange for, and upon receipt of certificates representing the First Closing
Shares (as defined herein) (the "First Closing Preferred Certificates"), an
aggregate purchase price (the "First Closing Purchase Price") of $750,000.00. 
The "First Closing Shares" shall mean the number of shares of Series A
Preferred equal to (i) 721.15 minus (ii) the quotient of (A) all accrued and
unpaid dividends on the First Closing Shares through the date hereof divided
by (B) 1,040; e.g. the Final Shares were 690.8 shares of Series A Preferred as
of October 5, 1998.

     2.     Subsequent Sale and Purchase of the Preferred Shares.

            (a)     On or before the thirtieth (30th) day following the First
Closing (as defined herein), HVI shall have the exclusive option to buy from
RGC all of  RGC's right, title and interest in the Final Shares (as defined
herein) in exchange for, and upon receipt of certificates representing the
Final Shares (the "Final Preferred Certificates"), an aggregate purchase price
equal to $1,040.00 for each Final Share (or fraction thereof) plus all accrued
and unpaid dividends on each such Final Share (or fraction thereof) through
the date of such purchase (the "Final Purchase Price"), provided, however,
that HVI may extend the exclusive option set forth above for an additional
30-day period by paying to RGC, on or before the thirtieth (30th) day
following the First Closing, the amount of $500,000 as a nonrefundable deposit
(the "Deposit") toward the purchase of the Final Shares.  In the event that
HVI elects to pay the Deposit, then, on or before the thirtieth (30th) day
following the date of such payment, HVI shall have the option to buy from RGC
all of RGC's right, title and interest in the Final Shares for an amount equal
to the Final Purchase Price, less the amount of the Deposit.  The "Final
Shares" shall mean the number of shares equal to 7,000 minus the First Closing
Shares.

            (b)     If HVI fails to exercise its option to purchase the Final
Shares prior to the expiration of the first 30-day period or if, after payment
of the Deposit, HVI fails to exercise its option prior to the expiration of
the second 30-day period, (i) RGC shall be entitled to keep the Deposit (to
the extent such amount was paid in exchange for the additional 30-day period)
and shall be free to sell the Final Shares and the Retained Shares (as defined
below) to any third party and (ii) RGC shall have an option for 15 business
days following the expiration of any such 30-day option period to reacquire
the First Closing Shares for the First Closing Purchase Price.

            (c)     HVI further agrees that it will not sell or convert any of
the First Closing Shares until the earlier of (i) its purchase of the Final
Shares from RGC and (ii) in the event HVI fails to exercise its option, the
date on which RGC's option to reacquire the First Closing Shares expires.

     3.     Delivery of Preferred Certificates and Purchase Price.

            At the closing of the transactions contemplated by Section 1 of
this Agreement (the "First Closing") and at the closing of the transactions
contemplated by Section 2(a) of this Agreement, RGC will deliver the
appropriate First Closing Preferred Certificates and the Final Preferred
Certificates, as the case may be, to HVI and HVI will deliver the First
Closing Purchase Price and the Final Purchase Price, as the case may be,  to
RGC, by wire transfer to RGC's account, in accordance with RGC's written
instructions.

     4.     Obligation to Unwind Short Position.  

            RGC currently holds a short position of 653,000 shares of Common
Stock of SABA (the "Short Position").  Following the consummation of the
transactions contemplated by this Agreement, RGC will continue to own 1,000
shares of Series A Preferred (the "Retained Shares").  RGC agrees that,
following the later to occur of (i) the Shareholder Approval Date and (ii) the
Effective Date, it will use its commercially reasonable efforts to unwind the
Short Position.  RGC agrees that it will only convert such number of the
Retained Shares as is necessary to unwind the Short Position.  In the event
that, following the unwinding of the Short Position, RGC continues to own any
shares of Series A Preferred, HVI will have the right, exercisable within 15
business days after its receipt of written notice from RGC that RGC has
unwound the Short Position, to buy such shares of Series A Preferred for the
purchase price of $1,040 per share, plus any accrued and unpaid dividends
thereon. 

     5.     Representations and Warranties of RGC.

            (a)     RGC has the power and authority to execute, deliver and
perform this Agreement. This Agreement constitutes RGC's valid and legally
binding obligation, enforceable against it in accordance with its terms,
except as such enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or similar laws relating to, or affecting generally, the enforcement of
creditors' rights and remedies.

            (b)     RGC represents and warrants to HVI that the Preferred
Shares and the Retained Shares are owned by RGC and, when sold and delivered
to HVI in accordance with the terms hereof, will be transferred free and clear
of all liens and encumbrances created by RGC; provided, however, that the
Preferred Shares and the Retained Shares are subject to (i) the terms of that
certain Securities Purchase Agreement, dated as of December 31, 1997 (the
"Purchase Agreement"), pursuant to which such shares were issued, as well as
all of the documents executed in connection therewith, and (ii) the terms of
that certain letter agreement, dated June 1, 1998, by and among RGC, SABA and
OMIMEX, INC. ("OMIMEX") regarding, among other things, the grant by RGC to
OMIMEX of the right to purchase up to 4,000 shares of Series A Preferred in
accordance with the terms thereof (the "Letter Agreement" and, collectively
with the documents referred to in (i) above, the "Series A Documentation").  

     6.     Representations and Warranties of HVI.

            (a)     HVI has the power and authority to execute, deliver and
perform this Agreement. This Agreement constitutes HVI's valid and legally
binding obligation, enforceable against it in accordance with its terms,
except as such enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or similar laws relating to, or affecting generally, the enforcement of
creditors' rights and remedies.  

            (b)     HVI is purchasing the Preferred Shares (and to the extent
any Retained Shares are purchased pursuant to Section 3 hereof, the Retained
Shares) for its own account for investment only and not with a present view
towards the public sale or distribution thereof, except pursuant to sales
registered or exempted from registration under the Securities Act of 1933, as
amended (the "Act").

            (c)     HVI is an "accredited investor," as that term is defined
in Rule 501(a) of Regulation D under the Act.

            (d)     HVI acknowledges that neither the Preferred Shares, the
Retained Shares  nor the shares of common stock into which the Preferred
Shares and the Retained Shares are convertible have been registered under the
Act and may not be transferred or sold in the absence of an effective
registration statement or an exemption from the registration requirements
under the Act.


            (e)     HVI acknowledges that it has read and understands all of
the Series A Documentation, including but not limited to the Purchase
Agreement and the Registration Rights Agreement, each dated as of December 31,
1997, the Certificate of Designations and the Letter Agreement.

     7.     Other Agreements.

            (a)     HVI hereby acknowledges and agrees that, upon the
consummation of the transactions contemplated hereby, it will own the
Preferred Shares (and to the extent any Retained Shares are purchased pursuant
to Section 3 hereof, the Retained Shares) subject to the terms of the Series A
Documentation, including any rights OMIMEX may have to purchase up to 4,000
shares of Series A Preferred under the Letter Agreement.

            (b)     RGC agrees that, following the closing of the sale of the
Final Shares to HVI and the receipt by RGC of the Final Purchase Price (the
"Final Closing"), RGC will waive any default by SABA occurring prior to the
Final Closing under any of the provisions of the documents comprising the
Series A Documentation, provided that such waiver shall not apply to any
defaults thereunder arising after the date of the Final Closing or which are
in existence as of the Final Closing and continue thereafter.

     8.     Notices.

            Notices under this Agreement shall be in writing and sent by
registered or certified mail, return receipt requested,  postage paid, to HVI
and RGC at their respective principal offices or at such other address as each
such party shall notify the other in writing.

     9.     Severability.

            The various provisions of this Agreement are severable from each
other and from the rest of the Agreement and, in the  event that any part of
this Agreement shall be held to be invalid or unenforceable by a court of
competent jurisdiction, the remainder of this Agreement shall be fully
effective, operative and enforceable.

    10.     Binding Effect.

            This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.

    11.     Governing Law.

            This Agreement shall be construed and interpreted in accordance
with the laws of the Commonwealth of Pennsylvania.

    12.     Entire Agreement.

            This Agreement contains the entire agreement of the parties and
may not be changed orally but only by an agreement in  writing signed by RGC
and HVI.  This Agreement shall supersede all prior agreements between RGC and
HVI relating to the subject matter hereof.

    13.     Counterparts.

            This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which shall be deemed to be
one and the same instrument.

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          IN WITNESS WHEREOF, RGC has duly executed this Agreement on the day
and year first above written; provided, however, that RGC's execution shall be
rescinded and this Agreement shall be null, void and unenforceable against
RGC, unless HVI shall have executed this Agreement and returned a fully
executed copy hereof via facsimile to RGC at (610) 617-0570, on or before 5:00
p.m., Philadelphia time, Tuesday, October 7, 1998.

                                    RGC INTERNATIONAL INVESTORS, LDC
                                    By:  Rose Glen Capital Management, L.P., 
                                         Investment Manager
                                         By:  RGC General Partner Corp., 
                                              as General Partner

                                       /s/ Wayne Block
                                       __________________________________
                                    By: Wayne Block
                                    Title: Managing Director

                                    HORIZONTAL VENTURES, INC.
                                       /s/ Randeep S. Grewal
                                       __________________________________
                                    By: Randeep S. Grewal
                                    Title: President & C.E.O.
                                    Date: October 7, 1998

ACCEPTED AND AGREED for all purposes, evidencing SABA's right to consent
pursuant to Section 8(g) of the Purchase Agreement:

SABA PETROLEUM COMPANY

/s/ Ilyas Chaudhary
__________________________________
By: Ilyas Chaudhary
Title: President
Date: October 7, 1998