Document:

<PAGE>
                                                                     EXHIBIT 4.2

                                 AMENDMENT NO. 1

      This Amendment No. 1 dated effective as of September 29, 2002
("Amendment") is among Pride Offshore, Inc., a Delaware corporation
("Borrower"), the Guarantors, the Term Lenders (each as defined below) and
Credit Lyonnais New York Branch, as Administrative Agent for the Term Lenders
("Administrative Agent").

                                  INTRODUCTION

      A. The Borrower, the Guarantors, the Term Lenders and the Administrative
Agent are parties to the Term Loan Agreement dated as of June 20, 2002 (the
"Credit Agreement").

      B. The Borrower has requested that the Term Lenders amend the financial
covenants set forth in Sections 6.16, 6.17 and 6.18. The Term Lenders are
willing to amend such provisions subject to the terms of this Amendment.

      THEREFORE, the Borrower, the Term Lenders and the Administrative Agent
hereby agree as follows:

      Section 1. Definitions; References. Unless otherwise defined in this
Amendment, each term used in this Amendment which is defined in the Credit
Agreement has the meaning assigned to such term in the Credit Agreement.

      Section 2. Amendments. The Credit Agreement shall, subject to the terms of
this Amendment, be amended as follows:

      (a) Section 1.1. The definition of "Applicable Margin" is amended in its
entirety as follows:

      "Applicable Margin" means, at any time with respect to each Type of Term
Loan, the percentage rate per annum as set forth below for the Level in effect
at such time:

<TABLE>
<CAPTION>
                                  Level       Level
                    Level I        II          III      Level IV     Level V    Level VI
                    -------        --          ---      --------     -------    --------
<S>                   <C>         <C>         <C>         <C>         <C>         <C>
Eurodollar
  Loans               2.50%       2.75%       3.00%       3.25%       3.75%       4.25%
Base Rate
  Loans               1.00%       1.25%       1.50%       1.75%       2.25%       2.75%
</TABLE>

; provided, however, that until the earlier of (a) January 1, 2004 or (b) the
date financial statements are delivered pursuant to Section 5.5(b) or Section
5.5(c), together with a Compliance Certificate for the fiscal quarter or fiscal
year then ended certifying that (i) the Leverage Ratio was equal to or less than
4.00 to 1.00, (ii) the Interest Coverage Ratio was equal to or greater than 3.25
to 1.00 and (iii) the Maximum Debt to Capitalization Ratio was equal to less
than 50%, each as of the end of such fiscal quarter or fiscal year,
<PAGE>
as the case may be (the "Financial Covenant Certification"), then the Applicable
Margin shall be increased by an additional 0.50%.

      (b) Section 6.16. Section 6.16 is amended in its entirety as follows:

      Section 6.16 Leverage Ratio. The Parent Company shall not permit its
Leverage Ratio at the end of any fiscal quarter to be greater than the following
ratios for the following fiscal quarters:

<TABLE>
<CAPTION>
         Fiscal Quarters Ending                   Maximum Ratio
         ----------------------                   -------------
<S>                                               <C>
             June 30, 2002                         4.75 to 1.00
September 30, 2002 and December 31, 2002           4.95 to 1.00
             March 31, 2003                        4.75 to 1.00
  June 30, 2003 and September 30, 2003             4.50 to 1.00
           December 31, 2003                       4.00 to 1.00
     March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004           3.50 to 1.00
     March 31, 2005 and thereafter                 3.00 to 1.00
</TABLE>

; provided, however, after a Responsible Officer delivers the Financial Covenant
Certification, then the Parent Company shall not permit its Leverage Ratio at
the end of any fiscal quarter to be greater than the following ratios for the
following fiscal quarters:

<TABLE>
<CAPTION>
         Fiscal Quarters Ending                   Maximum Ratio
         ----------------------                   -------------
<S>                                               <C>
 Beginning with the fiscal quarter with
 respect to which a Responsible Officer
    delivers the Financial Covenant
 Certification until December 31, 2003             4.00 to 1.00
     March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004           3.50 to 1.00
     March 31, 2005 and thereafter                 3.00 to 1.00
</TABLE>

                                       2
<PAGE>
      (c) Section 6.17. Section 6.17 is amended in its entirety as follows:

      Section 6.17 Interest Coverage Ratio. The Parent Company shall not permit
the Interest Coverage Ratio as of the end of any fiscal quarter to be less than
the following ratios for the following fiscal quarters:

<TABLE>
<CAPTION>
         Fiscal Quarters Ending                   Maximum Ratio
         ----------------------                   -------------
<S>                                               <C>
   June 30, 2002, September 30, 2002,
   December 31, 2002, March 31, 2003
           and June 30, 2003                       3.00 to 1.00
September 30, 2003 and December 31, 2003           3.25 to 1.00
     March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004           4.00 to 1.00
     March 31, 2005 and thereafter                 4.50 to 1.00
</TABLE>

; provided, however, after a Responsible Officer delivers the Financial Covenant
Certification, then the Parent Company shall not permit the Interest Coverage
Ratio as of the end of any fiscal quarter to be less than the following ratios
for the following fiscal quarters:

<TABLE>
<CAPTION>
         Fiscal Quarters Ending                   Maximum Ratio
         ----------------------                   -------------
<S>                                               <C>
 Beginning with the fiscal quarter with
 respect to which a Responsible Officer
    delivers the Financial Covenant
 Certification until December 31, 2003             3.25 to 1.00
     March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004           4.00 to 1.00
     March 31, 2005 and thereafter                 4.50 to 1.00
</TABLE>

      (d) Section 6.18. Section 6.18 is amended in its entirety as follows:

      Section 6.18 Maximum Debt to Capitalization Ratio. The Parent Company
shall not permit the ratio of (a) Consolidated Net Debt to (b) Total
Capitalization ("Maximum Debt to Capitalization Ratio") as of the end of any
fiscal quarter to be greater than the following ratios for the following fiscal
quarters:

                                       3
<PAGE>
<TABLE>
<CAPTION>
         Fiscal Quarters Ending                   Maximum Ratio
         ----------------------                   -------------
<S>                                               <C>
   June 30, 2002, September 30, 2002,
   December 31, 2002, March 31, 2003,
  June 30, 2003 and September 30, 2003                 55%
           December 31, 2003                           50%
     March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004               45%
     March 31, 2005 and thereafter                     35%
</TABLE>

; provided, however, after a Responsible Officer delivers the Financial Covenant
Certification, then the Parent Company shall not permit the Maximum Debt to
Capitalization Ratio as of the end of any fiscal quarter to be greater than the
following ratios for the following fiscal quarters:

<TABLE>
<CAPTION>
         Fiscal Quarters Ending                   Maximum Ratio
         ----------------------                   -------------
<S>                                               <C>
 Beginning with the fiscal quarter with
 respect to which a Responsible Officer
    delivers the Financial Covenant
 Certification until December 31, 2003                 50%
     March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004               45%
     March 31, 2005 and thereafter                     35%
</TABLE>

      Section 3. Representations and Warranties. Each of the Credit Parties
represents and warrants that (a) the execution, delivery and performance of this
Amendment are within the corporate power and authority of such Credit Party and
have been duly authorized by appropriate proceedings, (b) the Liens under the
Security Documents are valid and subsisting and secure the Obligations under the
Credit Agreement as amended hereby, (c) this Amendment constitutes the legal,
valid, and binding obligation of the Credit Parties enforceable in accordance
with its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and general principles of equity, (d) the representations and
warranties of each of the Credit Parties contained in the Credit Documents are
true and correct as of the date hereof, except to the extent such
representations and warranties relate solely to an earlier date and (e) no
Default has occurred and is continuing as of the date hereof.

      Section 4. Effectiveness. The Credit Agreement shall be amended as
provided in this Amendment effective on the date first set forth above when:

                                       4
<PAGE>
      (a) the Administrative Agent shall have received this Amendment duly
executed by the Borrower, the Guarantors, the Required Term Lenders and the
Required Revolving Lenders; and

      (b) the Borrower shall have paid to the Administrative Agent for the
account of each Term Lender approving this Amendment a non-refundable amendment
fee equal to 0.125% of the aggregate unpaid principal amount of such Term
Lender's Term Loans.

      Section 5. Reaffirmation of Guaranty. Each of the Guarantors hereby
reaffirms its obligations under Article VIII of the Credit Agreement and agrees
to remain liable for the repayment of the Obligations, as such Obligations have
been amended hereby.

      Section 6. Choice of Law. This Amendment shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York.

      Section 7. Counterparts. This Amendment may be signed in any number of
separate counterparts (including facsimile transmission), all of which when
taken together shall be deemed to be an original.

      Section 8. Amendment to Revolving Credit Agreement. Each of the Term
Lenders hereby consents to Amendment No. 1 dated effective as of September 29,
2002 among the Borrower, the Guarantors, the Revolving Lenders and
Administrative Agent (as defined in the Revolving Credit Agreement).

                                       5
<PAGE>
      Executed effective as of the 29th day of September, 2002.

                                    BORROWER:

                                    PRIDE OFFSHORE, INC.

                                    By: /s/ EARL W. MCNIEL
                                       ---------------------------------------
                                          Earl W. McNiel
                                          Treasurer

                                    GUARANTORS:

                                    PRIDE INTERNATIONAL, INC.

                                    By: /s/ EARL W. MCNIEL
                                       ---------------------------------------
                                          Earl W. McNiel
                                          Chief Financial Officer

                                    MEXICO DRILLING LIMITED LLC
                                    PRIDE CENTRAL AMERICA, LLC
                                    PRIDE DRILLING, LLC
                                    PRIDE NORTH AMERICA LLC
                                    PRIDE OFFSHORE INTERNATIONAL LLC
                                    PRIDE SOUTH PACIFIC LLC

                                    By: /s/ EARL W. MCNIEL
                                       ---------------------------------------
                                          Earl W. McNiel
                                          Treasurer
<PAGE>
                                    ADMINISTRATIVE AGENT:

                                    CREDIT LYONNAIS NEW YORK BRANCH,
                                    as Administrative Agent

                                    By: /s/ O. Audemard
                                       ---------------------------------------
                                    Name: O. Audemard
                                         -------------------------------------
                                    Title: Senior Vice President
                                          ------------------------------------
<PAGE>
                                    TERM LENDERS:

                                    ADDISON CDO, LIMITED

                                    By:   Pacific Investment Management Company
                                          LLC, as its Investment Advisor

                                    By: /s/ MOHAN V. PHANSALKAR
                                       ---------------------------------------
                                    Name: Mohan V. Phansalkar
                                         -------------------------------------
                                    Title: Executive Vice President
                                          ------------------------------------
<PAGE>
                                    AIG SUNAMERICA LIFE ASSURANCE COMPANY (dba
                                    Anchor National Life Insurance Company)

                                    By: /s/ JULIE BOTHAMLEY
                                       ---------------------------------------
                                    Name: Julie Bothamley
                                         -------------------------------------
                                    Title: Vice President
                                          ------------------------------------
<PAGE>
                                    AMMC CDO I, LIMITED

                                    By:   American Money Management Corp.,
                                          as Collateral Manager

                                    By: /s/ DAVID P. MEYER
                                       ---------------------------------------
                                    Name: David P. Meyer
                                         -------------------------------------
                                    Title: Vice President
                                          ------------------------------------
<PAGE>
                                    AMMC CDO II, LIMITED

                                    By:   American Money Management Corp.,
                                          as Collateral Manager

                                    By: /s/ DAVID P. MEYER
                                       ---------------------------------------
                                    Name: David P. Meyer
                                         -------------------------------------
                                    Title: Vice President
                                          ------------------------------------
<PAGE>
                                    APEX (IDM) CDO I, LTD.

                                    By:   David L. Babson & Company Inc.,
                                          as Collateral Manager

                                    By: /s/ WILLIAM A. HAYES
                                       ---------------------------------------
                                    Name: William A. Hayes
                                         -------------------------------------
                                    Title: Managing Director
                                          ------------------------------------
<PAGE>
                                    AURUM CLO 2002-1 LTD.

                                    By:   Stein Roe & Farnham Incorporated,
                                          as Investment Manager

                                    By: /s/ JAMES R. FELLOWS
                                       ---------------------------------------
                                    Name: James R. Fellows
                                         -------------------------------------
                                    Title: Sr. Vice President &
                                          ------------------------------------
                                           Portfolio Manager
                                          ------------------------------------
<PAGE>
                                    BALLYROCK CDO I LIMITED

                                    By:   BALLYROCK Investment Advisors LLC,
                                          as Collateral Manager

                                    By: /s/ LISA RYMUT
                                       ---------------------------------------
                                    Name: Lisa Rymut
                                         -------------------------------------
                                    Title: Assistant Treasurer
                                          ------------------------------------
<PAGE>
                                    BEDFORD CDO, LIMITED (#1276)

                                    By:   Pacific Investment Management Company
                                          LLC, as its Investment Advisor

                                    By: /s/ MOHAN V. PHANSALKAR
                                       ---------------------------------------
                                    Name: Mohan V. Phansalkar
                                         -------------------------------------
                                    Title: Executive Vice President
                                          ------------------------------------
<PAGE>
                                    BLACK DIAMOND INTERNATIONAL
                                          FUNDING, LTD.

                                    By: /s/ ALAN GORKISH
                                       ---------------------------------------
                                    Name: Alan Gorkish
                                         -------------------------------------
                                    Title: Director
                                          ------------------------------------
<PAGE>
                                    BLUE SQUARE FUNDING LIMITED SERIES 3

                                    By: Deutsche Bank Trust Co. Americas,
                                        FKA Bankers Trust Co.

                                    By: /s/ SUSAN N. ANDERSON
                                       ---------------------------------------
                                    Name: Susan N. Anderson
                                         -------------------------------------
                                    Title: Assistant Vice President
                                          ------------------------------------
<PAGE>
                                    DEBT STRATEGIES FUND, INC.

                                    By: /s/ J. MATTEO
                                       ---------------------------------------
                                    Name: J. Matteo
                                         -------------------------------------
                                    Title:
                                          ------------------------------------
<PAGE>
                                    DELANO COMPANY (#274)

                                    By:   Pacific Investment Management Company
                                          LLC, as its Investment Advisor

                                    By: /s/ MOHAN V. PHANSALKAR
                                       ---------------------------------------
                                    Name: Mohan V. Phansalkar
                                         -------------------------------------
                                    Title: Executive Vice President
                                          ------------------------------------
<PAGE>
                                    ELC (CAYMAN) LTD. 1999-III

                                    By:   David L. Babson & Company Inc.,
                                          as Collateral Manager

                                    By: /s/ WILLIAM A. HAYES
                                       ---------------------------------------
                                    Name: William A. Hayes
                                         -------------------------------------
                                    Title: Managing Director
                                          ------------------------------------
<PAGE>
                                    ELC (CAYMAN) LTD. 2000-I

                                    By:   David L. Babson & Company Inc.,
                                          as Collateral Manager

                                    By: /s/ WILLIAM A. HAYES
                                       ---------------------------------------
                                    Name: William A. Hayes
                                         -------------------------------------
                                    Title: Managing Director
                                          ------------------------------------
<PAGE>
                                    ELC (CAYMAN) LTD. CDO SERIES 1999-I

                                    By:   David L. Babson & Company Inc.,
                                          as Collateral Manager

                                    By: /s/ WILLIAM A. HAYES
                                       ---------------------------------------
                                    Name: William A. Hayes
                                         -------------------------------------
                                    Title: Managing Director
                                          ------------------------------------
<PAGE>
                                    EMERALD ORCHARD LIMITED

                                    By: /s/ SUSAN K. STRONG
                                       ---------------------------------------
                                    Name: Susan K. Strong
                                         -------------------------------------
                                    Title: Attorney-in-fact
                                          ------------------------------------
<PAGE>
                                    FIDELITY ADVISOR SERIES II

                                    By:   Fidelity Advisor Floating Rate High
                                          Income Fund (161)

                                    By: /s/ JOHN H. COSTELLO
                                       ---------------------------------------
                                    Name: John H. Costello
                                         -------------------------------------
                                    Title: Assistant Treasurer
                                          ------------------------------------
<PAGE>
                                    GALAXY CLO 1999-1, LTD.

                                    By:   SAI Investment Advisor, Inc.,
                                          its Collateral Manager

                                    By: /s/ THOMAS G. BRANDT
                                       ---------------------------------------
                                    Name: Thomas G. Brandt
                                         -------------------------------------
                                    Title: Authorized Agent
                                          ------------------------------------
<PAGE>
                                    HAMILTON CDO, LTD.

                                    By:   Stanfield Capital Partners LLC,
                                          as its Collateral Manager

                                    By: /s/ CHRISTOPHER A. BONDY
                                       ---------------------------------------
                                    Name: Christopher A. Bondy
                                         -------------------------------------
                                    Title: Partner
                                          ------------------------------------
<PAGE>
                                    HARCH CLO I, LTD.

                                    By: /s/ MICHAEL E. LEWITT
                                       ---------------------------------------
                                    Name: Michael E. Lewitt
                                         -------------------------------------
                                    Title: Authorized Signatory
                                          ------------------------------------
<PAGE>
                                    HIGHLAND LOAN FUNDING VII LTD.

                                    By:   Highland Capital Management, L.P.,
                                          as Collateral Manager

                                    By: /s/ MARK OKADA
                                       ---------------------------------------
                                    Name: Mark Okada
                                         -------------------------------------
                                    Title: Chief Investment Officer
                                          ------------------------------------
<PAGE>
                                    IKB CAPITAL CORPORATION

                                    By: /s/ DAVID SNYDER
                                       ---------------------------------------
                                    Name: David Snyder
                                         -------------------------------------
                                    Title: President
                                          ------------------------------------
<PAGE>
                                    INDOSUEZ CAPITAL FUNDING VI, LIMITED

                                    By:   Indosuez Capital,
                                          as Collateral Manager

                                    By: /s/ CHARLES KOBAYASHI
                                       ---------------------------------------
                                    Name: Charles Kobayashi
                                         -------------------------------------
                                    Title: Principal and Portfolio Manager
                                          ------------------------------------
<PAGE>
                                    JISSEKIKUN FUNDING, LTD. (#1288)

                                    By:   Pacific Investment Management Company
                                          LLC, as its Investment Advisor

                                    By: /s/ MOHAN V. PHANSALKAR
                                       ---------------------------------------
                                    Name: Mohan V. Phansalkar
                                         -------------------------------------
                                    Title: Executive Vice President
                                          ------------------------------------
<PAGE>
                                    KZH SOLEIL LLC

                                    By: /s/ ROWENA SMITH
                                       ---------------------------------------
                                    Name: Rowena Smith
                                         -------------------------------------
                                    Title: Authorized Agent
                                          ------------------------------------
<PAGE>
                                    KZH SOLEIL-2 LLC

                                    By: /s/ ROWENA SMITH
                                       ---------------------------------------
                                    Name: Rowena Smith
                                         -------------------------------------
                                    Title: Authorized Agent
                                          ------------------------------------
<PAGE>
                                    LCM I LIMITED PARTNERSHIP

                                    By:   Lyon Capital Management LLC,
                                          as Attorney in Fact

                                    By: /s/ MARK A. CAMPELLONE
                                       ---------------------------------------
                                    Name:   Mark A. Campellone
                                         -------------------------------------
                                    Title:  Senior Portfolio Manager
                                          ------------------------------------
<PAGE>
                                    LONGHORN CDO (Cayman) LTD

                                    By:   Merrill Lynch Investment Managers,
                                          L.P., as Investment Advisor

                                    By:  /s/ J. MATTEO
                                       ---------------------------------------
                                    Name:    J. Matteo
                                         -------------------------------------
                                    Title:
                                          ------------------------------------
<PAGE>
                                    LONGHORN CDO II, LTD

                                    By:   Merrill Lynch Investment Managers,
                                          L.P., as Investment Advisor

                                    By:  /s/ J. MATTEO
                                       ---------------------------------------
                                    Name:    J. Matteo
                                         -------------------------------------
                                    Title:
                                          ------------------------------------
<PAGE>
                                    MADISON AVENUE CDO IV LTD

                                    By:
                                       ---------------------------------------
                                    Name:
                                         -------------------------------------
                                    Title:
                                          ------------------------------------
<PAGE>
                                    MASTER SENIOR FLOATING RATE TRUST

                                    By:  /s/ J. MATTEO
                                       ---------------------------------------
                                    Name:    J. Matteo
                                         -------------------------------------
                                    Title:
                                          ------------------------------------
<PAGE>
                                    MERRILL LYNCH GLOBAL INVESTMENT SERIES: BANK
                                    LOAN INCOME PORTFOLIO

                                    By:   Merrill Lynch Investment Managers,
                                          L.P., as Investment Advisor

                                    By:  /s/ J. MATTEO
                                       ---------------------------------------
                                    Name:    J. Matteo
                                         -------------------------------------
                                    Title:
                                          ------------------------------------
<PAGE>
                                    MERRILL LYNCH GLOBAL INVESTMENT SERIES:
                                    INCOME STRATEGIES PORTFOLIO

                                    By:   Merrill Lynch Investment Managers,
                                          L.P., as Investment Advisor

                                    By:  /s/ J. MATTEO
                                       ---------------------------------------
                                    Name:    J. Matteo
                                         -------------------------------------
                                    Title:
                                          ------------------------------------
<PAGE>
                                    MERRILL LYNCH PRIME RATE PORTFOLIO

                                    By:   Merrill Lynch Investment Managers,
                                          L.P., as Investment Advisor

                                    By:  /s/ J. MATTEO
                                       ---------------------------------------
                                    Name:  J. Matteo
                                         -------------------------------------
                                    Title:
                                          ------------------------------------
<PAGE>
                                    MERRILL LYNCH SENIOR FLOATING RATE
                                          FUND, INC.

                                    By:  /s/ J. MATTEO
                                       ---------------------------------------
                                    Name:  J. Matteo
                                         -------------------------------------
                                    Title:
                                          ------------------------------------
<PAGE>
                                    METROPOLITAN LIFE INSURANCE COMPANY

                                    By:
                                       ---------------------------------------
                                    Name:
                                         -------------------------------------
                                    Title:
                                          ------------------------------------
<PAGE>
                                    MOUNTAIN CAPITAL CLO I LTD.

                                    By:  /s/ DARREN P. RILEY
                                       ---------------------------------------
                                    Name:  Darren P. Riley
                                         -------------------------------------
                                    Title:  Director
                                          ------------------------------------
<PAGE>
                                    MOUNTAIN CAPITAL CLO II LTD.

                                    By: /s/ DARREN P. RILEY
                                       ---------------------------------------
                                    Name: Darren P. Riley
                                         -------------------------------------
                                    Title: Director
                                          ------------------------------------
<PAGE>
                                    NATEXIS BANQUES POPULAIRES

                                    By: /s/ TIMOTHY L. POLVADO
                                       ---------------------------------------
                                    Name: Timothy L. Polvado
                                         -------------------------------------
                                    Title: Vice President & Group Manager
                                          ------------------------------------

                                    By: /s/ RENAUD J. D' HERBES
                                       ---------------------------------------
                                    Name: Renaud J. d'Herbes
                                         -------------------------------------
                                    Title: Senior Vice President
                                           and Regional Manager
                                          ------------------------------------
<PAGE>
                                    NORDEA BANK FINALND PLC, NEW YORK

                                    By: /s/ HANS CHR. KJELSRUD
                                       ---------------------------------------
                                    Name: Hans Chr. Kjelsrud
                                         -------------------------------------
                                    Title: Senior Vice President
                                          ------------------------------------

                                    By: /s/ MARTIN LUNDER
                                       ---------------------------------------
                                    Name: Martin Lunder
                                         -------------------------------------
                                    Title: Senior Vice President
                                          ------------------------------------
<PAGE>
                                    OCTAGON INVESTMENT PARTNERS II, LLC

                                    By:   Octagon Credit Investors, LLC, as
                                          sub-investment manager

                                    By: /s/ MICHAEL B. NECHAMKLN
                                       ---------------------------------------
                                    Name: Michael B. Nechamkln
                                         -------------------------------------
                                    Title: Portfolio Manager
                                          ------------------------------------
<PAGE>
                                    OCTAGON INVESTMENT PARTNERS III, LTD.

                                    By:   Octagon Credit Investors, LLC, as
                                          Portfolio Manager

                                    By: /s/ MICHAEL B. NECHAMKLN
                                       ---------------------------------------
                                    Name: Michael B. Nechamkln
                                         -------------------------------------
                                    Title: Portfolio Manager
                                          ------------------------------------
<PAGE>
                                    OCTAGON INVESTMENT PARTNERS IV, LTD.

                                    By:   Octagon Credit Investors, LLC, as
                                          Collateral manager

                                    By: /s/ MICHAEL B. NECHAMKLN
                                       ---------------------------------------
                                    Name: Michael B. Nechamkln
                                         -------------------------------------
                                    Title: Portfolio Manager
                                          ------------------------------------
<PAGE>
                                    PPM SHADOW CREEK FUNDING LLC

                                    By: /s/ DIANA L. MUSHILL
                                       ---------------------------------------
                                    Name: Diana L. Mushill
                                         -------------------------------------
                                    Title: Asst. Vice President
                                          ------------------------------------
<PAGE>
                                    RIVIERA FUNDING LLC

                                    By: /s/ DIANA L. MUSHILL
                                       ---------------------------------------
                                    Name: Diana L. Mushill
                                         -------------------------------------
                                    Title: Asst. Vice President
                                          ------------------------------------
<PAGE>
                                    ROYALTON COMPANY (#280)

                                    By:   Pacific Investment Management Company
                                          LLC, as its Investment Advisor

                                    By: /s/ MOHAN V. PHANSALKAR
                                       ---------------------------------------
                                    Name: Mohan V. Phansalkar
                                         -------------------------------------
                                    Title: Executive Vice President
                                          ------------------------------------
<PAGE>
                                    SAN JOAQUIN CDO I, LIMITED (#1282)

                                    By:   Pacific Investment Management Company
                                          LLC, as its Investment Advisor

                                    By: /s/ MOHAN V. PHANSALKAR
                                       ---------------------------------------
                                    Name: Mohan V. Phansalkar
                                         -------------------------------------
                                    Title: Executive Vice President
                                          ------------------------------------
<PAGE>
                                    SENIOR HIGH INCOME PORTFOLIO, INC.

                                    By: /s/ J. MATTEO
                                       ---------------------------------------
                                    Name: J. Matteo
                                         -------------------------------------
                                    Title:
                                          ------------------------------------
<PAGE>
                                    SEQUILS-MAGNUM, LTD. (#1280)

                                    By:   Pacific Investment Management Company
                                          LLC, as its Investment Advisor

                                    By: /s/ MOHAN V. PHANSALKAR
                                       ---------------------------------------
                                    Name: Mohan V. Phansalkar
                                         -------------------------------------
                                    Title: Executive Vice President
                                          ------------------------------------
<PAGE>
                                    SL LOANS I LIMITED

                                    By:   Highland Capital Management, L.P.,
                                          as Attorney-in-Fact

                                    By: /s/ MARK OKADA
                                       ---------------------------------------
                                    Name: Mark Okada
                                         -------------------------------------
                                    Title: Chief Investment Officer
                                          ------------------------------------
<PAGE>
                                    STANFIELD ARBITRAGE CDO, LTD.

                                    By:   Stanfield Capital Partners LLC,
                                          as its Collateral Manager

                                    By:   /s/ CHRISTOPHER A. BONDY
                                       ---------------------------------------
                                    Name:  Christopher A. Bondy
                                         -------------------------------------
                                    Title:  Partner
                                          ------------------------------------
<PAGE>
                                    STANFIELD CLO, LTD.

                                    By:   Stanfield Capital Partners LLC,
                                          as its Collateral Manager

                                    By:    /s/ CHRISTOPHER A. BONDY
                                       ---------------------------------------
                                    Name:   Christopher A. Bondy
                                         -------------------------------------
                                    Title:  Partner
                                          ------------------------------------
<PAGE>
                                    STANFIELD QUATTRO CLO, LTD.

                                    By:   Stanfield Capital Partners LLC,
                                          as its Collateral Manager

                                    By:    /s/ CHRISTOPHER A. BONDY
                                       ---------------------------------------
                                    Name:   Christopher A. Bondy
                                         -------------------------------------
                                    Title:  Partner
                                          ------------------------------------
<PAGE>
                                  STEIN ROE & FARNHAM CLO I LTD.

                                  By:   Stein Roe & Farnham Incorporated,
                                        as Portfolio Manager

                                  By:   /s/ JAMES R. BELLOWS
                                     -------------------------------------------
                                  Name:   James R. Bellows
                                       -----------------------------------------
                                  Title:  Sr. Vice President & Portfolio Manager
                                        ----------------------------------------
<PAGE>
                                    TORONTO DOMINION (New York), Inc.

                                    By:   /s/ SUSAN STRONG
                                       ---------------------------------------
                                    Name:   Susan Strong
                                         -------------------------------------
                                    Title:  Vice President
                                          ------------------------------------
<PAGE>
                                    TRS1 LLC

                                    By:   /s/ JOHN PINEIRO
                                       ---------------------------------------
                                    Name:   John Pineiro
                                         -------------------------------------
                                    Title:  Attorney-in-fact
                                          ------------------------------------
<PAGE>
                                    TRYON CLO LTD. 2000-I

                                    By:   First Union Institutional Debt
                                          Management, as Collateral Manager

                                    By:
                                       ---------------------------------------
                                    Name:
                                         -------------------------------------
                                    Title:
                                          ------------------------------------
<PAGE>
                                    VENTURE CDO 2002, LIMITED

                                    By:   Barclays Capital Asset Management
                                          Limited, its investment advisor,

                                    By:   Barclays Bank PLC, New York Branch,
                                          its sub-advisor

                                    By:          /s/ Martin F. Davey
                                       ---------------------------------------
                                    Name:           Martin F. Davey
                                         -------------------------------------
                                    Title:             Director
                                          ------------------------------------
<PAGE>
                                    VENTURE II CDO 2002, LIMITED

                                    By:   Barclays Capital Asset Management
                                          Limited, its investment advisor

                                    By:   Barclays Bank PLC, New York Branch,
                                          its sub-advisor

                                    By:           /s/ Martin F. Davey
                                       ---------------------------------------
                                    Name:            Martin F. Davey
                                         -------------------------------------
                                    Title:              Director
                                          ------------------------------------
<PAGE>
                                    WINDSOR LOAN FUNDING, LIMITED

                                    By:   Stanfield Capital Partners LLC,
                                          as its Collateral Manager

                                    By:   /s/ CHRISTOPHER A. BONDY
                                       ---------------------------------------
                                    Name:   Christopher A. Bondy
                                         -------------------------------------
                                    Title:  Partner
                                          ------------------------------------
<PAGE>
                                    WRIGLEY CDO, LTD. (#1285)

                                    By:   Pacific Investment Management Company
                                          LLC, as its Investment Advisor

                                    By:   /s/ MOHAN V. PHANSALKAR
                                       ---------------------------------------
                                    Name:   Mohan V. Phansalkar
                                         -------------------------------------
                                    Title:  Executive Vice President
                                          ------------------------------------<PAGE>

                                                                    EXHIBIT 10.1

                STANDARD CHARTERED BANK, as Administrative Agent,
                  L/C Issuer and Lender under and as defined in
                 the Reimbursement Agreement (as defined below)
                           1285 Avenue of the Americas
                                New York NY 10019

                                                     Dated as of August 27, 2002

EOTT Energy Operating Limited Partnership
2000 W. Sam Houston Parkway, Suite 400
Houston, Texas 77042

         RE:      LIMITED FORBEARANCE AND FIRST AMENDMENT

Ladies and Gentlemen:

         Reference is hereby made to the Second Amended and Restated
Reimbursement, Loan and Security Agreement, dated as of April 23, 2002 (as
heretofore amended, supplemented or otherwise modified and in effect on the date
hereof, the "REIMBURSEMENT AGREEMENT"), among EOTT ENERGY OPERATING LIMITED
PARTNERSHIP, a Delaware limited partnership ("EOTT OLP"), EOTT ENERGY CANADA
LIMITED PARTNERSHIP, a Delaware limited partnership ("EOTT CANADA"), EOTT ENERGY
LIQUIDS, L.P., a Delaware limited partnership ("EOTT LIQUIDS"), EOTT ENERGY
PIPELINE LIMITED PARTNERSHIP, a Delaware limited partnership ("EOTT PIPELINE"
and together with EOTT Canada and EOTT Liquids, collectively, the "ADDITIONAL
OBLIGORS" and the Additional Obligors together with EOTT OLP on a joint and
several basis, "BORROWER"), EOTT ENERGY PARTNERS, L.P., a Delaware limited
partnership ("EOTT MLP"), EOTT ENERGY GENERAL PARTNERS, L.L.C., a Delaware
limited liability company ("EOTT GP" and together with EOTT MLP, collectively,
the "GUARANTORS" and together with EOTT OLP and each of the Additional Obligors,
collectively, the "CREDIT PARTIES"), EOTT ENERGY CORP., a Delaware corporation
("EOTT CORP." and together with the Credit Parties, the "ORIGINAL CREDIT
PARTIES"), each of the banks or other lending institutions from time to time
party thereto (the "LENDERS") and STANDARD CHARTERED BANK, a banking institution
organized and existing under the laws of England and Wales ("STANDARD
CHARTERED"), as administrative agent for the Lenders (the "ADMINISTRATIVE
AGENT"), and as L/C Issuer. Capitalized terms which are used in this Limited
Forbearance and First Amendment (this "AGREEMENT") without definition and which
are defined in the Reimbursement Agreement shall have the same meanings herein
as in the Reimbursement Agreement, as amended hereby.

         The Credit Parties have informed the Administrative Agent and the
Lenders that the Credit Parties have failed to comply with Section 9(o)
("Minimum Consolidated Net Income

<PAGE>

(Loss), Minimum Consolidated EBITDA and Minimum Consolidated Net Worth") of the
Reimbursement Agreement for the Fiscal Quarter ended June 30, 2002, such failure
to comply constituting an Event of Default under Section 10(d) of the
Reimbursement Agreement (such Event of Default being herein referred to as the
"SPECIFIED DEFAULT").

         The Credit Parties and Standard Chartered have heretofore entered into
a Limited Forbearance, dated as of August 13, 2002 (the "ORIGINAL LIMITED
FORBEARANCE"), pursuant to which the Lenders and the Administrative Agent have
agreed to forbear from exercising their rights and remedies as a result of the
occurrence of the Specified Default, for the period commencing on the effective
date thereof and ending 5:00 p.m. (New York time) on September 16, 2002.

         The Credit Parties have requested that the Lenders and the
Administrative Agent agree to (a) continue to forbear from exercising their
rights and remedies as a result of the occurrence of the Specified Default and
(b) amend certain provisions of the Reimbursement Agreement. The Lenders and the
Administrative Agent have advised the Credit Parties that they are prepared to
agree to (a) extend such forbearance for a limited period and (b) amend such
provisions of the Reimbursement Agreement, in each case on the terms and subject
to the conditions, and in reliance on the representations and releases,
contained herein.

         SECTION 1. LIMITED FORBEARANCE. In consideration of and reliance upon
the representations of the Credit Parties contained herein, the Administrative
Agent, the L/C Issuer and the Lenders hereby agree to forbear from exercising
their contractual, legal and equitable rights and remedies arising as a result
of the occurrence of the Specified Default for (but solely for) the period
commencing on the Effective Date (as hereinafter defined) and ending 5:00 p.m.
(New York time) on October 30, 2002 (the "FORBEARANCE PERIOD"). Such agreement
to forbear shall automatically, and without action, notice, demand or any other
occurrence, expire on and as of the end of the Forbearance Period. The
Administrative Agent, the L/C Issuer and the Lenders hereby expressly reserve
their right, at any time after the Forbearance Period, to proceed to enforce any
or all of their respective rights and remedies under or in respect of the Credit
Documents and applicable law which are available as a result of the occurrence
of the Specified Default. The agreement to forbear set forth in this Section 1
shall apply only to the Specified Default. No forbearance with respect to any
other Default or Event of Default, whether presently existing or hereafter
arising, is agreed to hereby.

         SECTION 2. AMENDMENTS TO REIMBURSEMENT AGREEMENT. (a) Section 9 of the
Reimbursement Agreement is hereby amended by adding the following new Section
(q) at the end of Section 9:

         "(q) Limitation on Interest Payments. None of EOTT MLP, EOTT OLP, EOTT
Pipeline, EOTT Liquids or EOTT Canada will, and EOTT MLP will cause EOTT Energy
Finance Corp., a Delaware corporation, not to, make any interest payment due on
October 1, 2002 in respect of any Indebtedness issued pursuant to the EOTT MLP
Senior Notes Indenture until November 1, 2002."

         (b) Section 10 of the Reimbursement Agreement is hereby amended by
deleting subsection (g) in its entirety and substituting the following therefor:

                                       2
<PAGE>

         "(g) Any Credit Party shall default in the payment when due of any
principal of or interest on any of its other Indebtedness in excess of
$1,000,000 in the aggregate (other than Indebtedness the validity of which is
being contested in good faith by appropriate proceedings and for which adequate
reserves with respect thereto are maintained on the books of the Credit Party in
accordance with GAAP), or any event specified in any note, agreement, indenture,
mortgage, deed of trust, security agreement or other document evidencing or
relating to any such Indebtedness shall occur if the effect of such event is to
cause, or (with the giving of any notice or the lapse of time or both) to permit
the holder or holders of such Indebtedness (or a trustee or agent on behalf of
such holder or holders) to cause, such Indebtedness to become due, or to be
prepaid in full (whether by redemption, purchase, offer to purchaser or
otherwise), prior to its stated maturity; provided, however, that default in
payment of any interest payment due on October 1, 2002 in respect of any
Indebtedness issued pursuant to the EOTT MLP Senior Notes Indenture in
compliance with Section 9 (q) hereof shall not constitute an Event of Default
hereunder."

         (b) Section 10 of the Reimbursement Agreement is hereby further amended
by deleting subsection (k) in its entirety and substituting the following
therefor:

         "(k) Any Material Adverse Change occurs; provided, however, that
default in payment of any interest payment due on October 1, 2002 in respect of
any Indebtedness issued pursuant to the EOTT MLP Senior Notes Indenture in
compliance with Section 9 (q) hereof shall not constitute a Material Adverse
Change."

         SECTION 3. COMMITMENT DURING FORBEARANCE PERIOD. Notwithstanding the
occurrence of the Specified Default, during the Forbearance Period, the
Administrative Agent, the L/C Issuer and the Lenders agree that Borrower may
continue to request and receive, and the Lenders and the L/C Issuer shall make
and issue, as applicable, Loans and Letters of Credit, subject to the terms and
conditions of the Reimbursement Agreement.

         SECTION 4. REPRESENTATIONS AND WARRANTIES. Each of the Credit Parties
represents and warrants to the Administrative Agent and the Lenders as follows:

         (a) The representations and warranties of the Credit Parties contained
in the Credit Documents (i) were true when made, and (ii) shall be true on and
as of the date hereof, except to the extent that such representation or warranty
was made as of a specific date.

         (b) The execution and delivery by the Credit Parties of this Agreement
and the performance by the Credit Parties of all of their agreements and
obligations under this Agreement and the Reimbursement Agreement and the other
Credit Documents as amended hereby (i) are within the partnership, corporate or
limited liability authority, as applicable, of each of the Credit Parties, (ii)
have been duly authorized by all necessary partnership, corporate or limited
liability proceedings or actions, as applicable, by the Credit Parties and (iii)
do not and will not (A) conflict with any provision of (x) any law, (y) the
organizational or other charter documents of such Credit Party or (z) any
material agreement, judgment, license, order or permit

                                       3
<PAGE>

applicable to or binding upon such Credit Party (other than the EOTT MLP Senior
Notes Indenture), or (B) result in, or require the creation of any Lien upon any
assets or properties of such Credit Party, except as expressly contemplated in
the Credit Documents.

         (c) This Agreement, the Reimbursement Agreement, as amended hereby, and
the other Credit Documents to which the Credit Parties are a party constitute
legal, valid and binding obligations of such Credit Party, enforceable in
accordance with their respective terms except as such enforcement may be limited
by bankruptcy insolvency or similar Laws of general application relating to the
enforcement of creditors' rights.

         (d) Other than the Specified Default, no Default or Event of Default
exists on the date hereof.

         SECTION 5. CONDITIONS TO EFFECTIVENESS. This Agreement shall become
effective on the date (the "Effective Date") that the Administrative Agent shall
have received duly executed counterparts of this Agreement, which, when taken
together, bear the authorized signatures of each of the parties hereto.

         SECTION 6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REFERENCE TO CONFLICT OF LAWS).

         SECTION 7. EXPENSES. The Credit Parties shall pay all reasonable
out-of-pocket expenses (including, without limitation, reasonable legal fees and
expenses) incurred by the Administrative Agent in connection with the
preparation, negotiation, execution, delivery and enforcement of this Agreement.

         SECTION 8. RELEASE. Each of the Credit Parties and each of their
respective affiliates, subsidiaries, successors, assigns, employees, agents and
attorneys (collectively, the "Releasors"), hereby release and forever discharge
each of the Administrative Agent, L/C Issuer and each Lender, and each of their
respective parents, subsidiaries, affiliates, officers, directors, employees,
agents, attorneys, predecessors, successors and assigns, both present and former
(collectively, together with the Administrative Agent and the Lenders, the
"Lender Affiliates"), of and from any and all manner of action and actions,
causes of action, suits, debts, controversies, damages, judgments, executions,
claims and demands whatsoever, asserted or unasserted, in law or in equity,
against any of the Lender Affiliates which any Releasor ever had or now has on
the date hereof upon or by reason of any manner, cause, causes or thing
whatsoever, whether presently existing, suspected or unsuspected, known or
unknown, fixed or contingent, direct or indirect, contemplated or anticipated,
arising out of or in connection with the Reimbursement Agreement.

         SECTION 9. MISCELLANEOUS. From and after the date hereof, this
Agreement shall be deemed a Credit Document for all purposes of the
Reimbursement Agreement and the other Credit Documents and each reference to
Credit Documents in the Reimbursement Agreement and the other Credit Documents
shall be deemed to include this Agreement. Except as expressly provided herein,
this Agreement shall not, by implication or otherwise, limit, impair, constitute

                                       4
<PAGE>

an agreement to forbear or otherwise affect any rights or remedies of the
Administrative Agent or the Lenders in respect of the Reimbursement Agreement or
the other Credit Documents, nor alter, modify, amend or in any way affect any of
the obligations or covenants contained in the Reimbursement Agreement or any of
the other Credit Documents, all of which are ratified and confirmed in all
respects and shall continue in full force and effect. This Agreement may be
executed in any number of counterparts, but all of such counterparts shall
together constitute but one and the same agreement. Delivery of an executed
counterpart of a signature page by facsimile transmission shall be effective as
delivery of a manually executed counterpart of this Agreement. In making proof
of this Agreement, it shall not be necessary to produce or account for more than
one such counterpart. This Agreement amends and restates the Original Limited
Forbearance in its entirety.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officer, all as of the
date first above written.

                                       EOTT ENERGY OPERATING LIMITED
                                       PARTNERSHIP,
                                       as a Borrower Party and as the Borrower
                                       Representative

                                       By:  EOTT ENERGY GENERAL PARTNER,
                                            L.L.C., its General Partner

                                            By: /s/ Lawrence Clayton         mms
                                               ---------------------------------
                                               Name: Lawrence Clayton
                                               Title: CFO & Sr. V.P.

                                       EOTT ENERGY CANADA LIMITED
                                       PARTNERSHIP,
                                       as a Borrower Party

                                       By:  EOTT ENERGY GENERAL PARTNER,
                                            L.L.C., its General Partner

                                            By: /s/ Lawrence Clayton         mms
                                               ---------------------------------
                                               Name: Lawrence Clayton
                                               Title: CFO & Sr. V.P.

                                       EOTT ENERGY LIQUIDS, L.P.,
                                       as a Borrower Party

                                       By:  EOTT ENERGY GENERAL PARTNER,
                                            L.L.C., its General Partner

                                            By: /s/ Lawrence Clayton         mms
                                               ---------------------------------
                                               Name: Lawrence Clayton
                                               Title: CFO & Sr. V.P.

                                       5
<PAGE>

                                       EOTT ENERGY PIPELINE LIMITED
                                       PARTNERSHIP,
                                       as a Borrower Party

                                       By:  EOTT ENERGY GENERAL PARTNER,
                                            L.L.C., its General Partner

                                            By: /s/ Lawrence Clayton         mms
                                               ---------------------------------
                                               Name: Lawrence Clayton
                                               Title: CFO & Sr. V.P.

                                       EOTT ENERGY PARTNERS, L.P.,
                                       as a Guarantor

                                       By:  EOTT ENERGY CORP., its General
                                            Partner

                                            By: /s/ Lawrence Clayton
                                               ---------------------------------
                                               Name: Lawrence Clayton
                                               Title: CFO & Sr. V.P.

                                       EOTT ENERGY GENERAL PARTNER, L.L.C.,
                                       as a Guarantor

                                            By: /s/ Lawrence Clayton
                                               ---------------------------------
                                               Name: Lawrence Clayton
                                               Title: CFO & Sr. V.P.

                                       STANDARD CHARTERED BANK,
                                       an Administrative Agent, L/C Issuer and
                                       Lender

                                            By: /s/ N. McCauley
                                               ---------------------------------
                                               Name: N. McCauley
                                               Title: Regional Head ASAM

                                            By: /s/ R. C. Munro
                                               ---------------------------------
                                               Name: R. C. Munro
                                               Title: Senior Vice President

                                       6

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