SEVEN SEAS PETROLEUM INC
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>shareholderltr.txt
<TEXT>

                                                                   Exhibit 10(b)

SEVEN SEAS PETROLEUM INC.
LOGO

                                  July 9, 2001

The Shareholders of Seven Seas Petroleum Inc.

                                         Re:     Financing
Ladies and Gentlemen:

In order to meet our  obligations  and preserve our assets,  we have  previously
advised you in recent filings with the U.S.  Securities and Exchange  Commission
that we needed to obtain financing as promptly as practicable.  Assuming we meet
our current obligations and make certain  expenditures  required to preserve our
assets and fulfill our  obligations as operator to develop the Guaduas Oil Field
and place it on  pipeline  production,  we could have a cash  deficiency  in the
third  quarter  of 2001  unless we raise  additional  capital.  It is  therefore
imperative that the company take measures immediately to ensure that it can meet
these obligations and make semi-annual  interest payments on its $110 million of
senior  subordinated notes beginning in November of this year. These concerns of
our financial  viability  were  expressed by Arthur  Andersen,  our  independent
auditors,  when  it  stated  in its  opinion  of  our  year-end  2000  financial
statements  that the company's  current  financial  position,  in the absence of
additional  financing to meet existing  commitments  and capital  needs,  raises
"substantial  doubt about the company's ability to continue as a going concern."

Because our  financial  viability is in  jeopardy,  we have acted as promptly as
circumstances  would  allow to obtain  the  required  additional  capital.  I am
pleased  to  inform  you that  today  we  secured  financing  to  implement  our
development and exploration  strategy,  fulfilling one of the three goals in our
2001-2002 business plan outlined in my letter to shareholders in our 2000 Annual
Report. Seven Seas Petroleum Inc. (the "Company") entered into an agreement with
Chesapeake  Energy   Corporation   ("Chesapeake")  to  provide   $22,500,000  of
financing.  In a separate  agreement,  several  qualified  investors,  including
myself,  (the "Qualified Investor Group") will agree to provide a like amount of
financing  bringing  the total to  $45,000,000.  Closing  of this  financing  is
subject to CIBC World Markets Corp. ("CIBC"),  the Company's financial advisors,
rendering an opinion that the planned  transactions are fair to the Company from
a financial  point of view.  CIBC is expected to provide its written  opinion on
the fairness of the transactions following a review of the final documents.

After all transactions are completed,  the Company will have issued  $45,000,000
of 12% senior secured notes (interest will accrue for the first two years of the
three and one-half  year notes)  together with  detachable  warrants to purchase
25,224,280  shares of our common  stock at an  exercise  price of  approximately
$1.78.  One-half of these notes will be offered to shareholders through a rights
offering.  The  other  half  will be  sold  to  Chesapeake.  To the  extent  the
shareholders do not elect to exercise their rights, the Qualified Investor Group
has agreed to acquire any remaining  senior secured notes.  To guarantee that we
secure  the full  $45,000,000  financing,  the  Qualified  Investor  Group  will
purchase $22,500,000 of short-term notes that will be redeemed for cash provided
from the rights  offering or converted into senior secured notes  remaining from
unexercised  shareholder rights. Closing for the sale of senior secured notes to
Chesapeake and the short-term  secured notes to the Qualified  Investor Group is
set for July 23, 2001.

If the shareholders  exercise all of the rights,  and all warrants are converted
into  shares of common  stock,  Chesapeake  will own 20% of the  Company and the
existing shareholders will own 80%. Conversely, if shareholders exercise none of
their  rights,  and all the  warrants  are then  issued  to  Chesapeake  and the
Qualified  Investor  Group,  upon exercise of the warrants,  Chesapeake will own
20%, the Qualified  Investor Group will own 20%, and current  shareholders  will
own 60%. In the latter  case,  for my $15 million  commitment,  I will be issued
warrants to purchase  13.33% of the Company,  or 22.22% of the current number of
shares  outstanding.  The number of shares  issuable upon exercise of all of the
warrants  is equal to  approximately  66.67%  of the  current  number  of shares
outstanding.

If after closing of the rights  offering I have  purchased less than $10 million
of notes, I have granted  Chesapeake an option that could require me to purchase
from  Chesapeake  an amount of notes and a  proportionate  share of the warrants
equal to the  difference  between $10 million and the amount of notes I acquired
through  the  rights  offering.  If I  purchase  $10  million  of  notes  in the
aggregate, I would acquire warrants to purchase 5,605,397 shares or 8.89% of the
Company, or 14.81% of the current number of shares outstanding.

The American  Stock  Exchange (the "AMEX") would  normally  require that we seek
shareholder  approval prior to closing this financing for two reasons: 1) we are
selling Chesapeake warrants to purchase, below the market price, common stock of
the Company  that would  represent  more than 20% of our  outstanding  shares if
exercised  on the day of  issuance  (i.e.  before  the rights  offering  and the
issuance of the other half of the warrants),  and 2) the potential exists for me
to acquire warrants to purchase 5% or more of the Company's  outstanding  common
stock.  However,  pursuant to the  Company's  request,  the AMEX has granted the
Company an exception from the shareholder  approval  requirement  based upon the
Company's  representation  that the time required to seek  shareholder  approval
would seriously jeopardize the financial viability of the Company. The Company's
audit committee, composed of three independent directors, has expressly approved
reliance on this exception.

Several  reasons  contributed to our need to rely on the exception from the AMEX
shareholder  approval  requirement.  First, we were precluded from negotiating a
financing  any sooner  than we did  because  of  uncertainties  surrounding  our
Colombian  projects,  including the Colombian national oil company's decision on
its  participation in the Guaduas Oil Field,  receiving  environmental and other
regulatory permits from the Colombian governmental authorities and negotiating a
pipeline and  development  program for the Guaduas Oil Field with our  partners.
Until these  matters  were  resolved,  we were not in a position to quantify our
costs or predict when  regulatory  approval for  development  would be obtained.
Second,  the concentration of our assets in Colombia made it difficult for us to
find a lender or equity participant  willing to be a lead investor.  Third, when
we did  find  a  lead  investor,  Chesapeake  required  that  Seven  Seas  raise
sufficient funds to implement our partner approved  development  program for the
Guaduas Oil Field and conduct certain exploration projects, including commencing
the drilling of the subthrust Dindal  exploration  well as soon as possible.  To
implement this  development  and  exploration  strategy,  we needed to raise $45
million in new capital.  Additionally,  Chesapeake made it clear that timing was
of the essence, and that waiting for shareholder approval may have precluded its
participation. Fourth, as noted above, without additional capital, we could have
a cash deficiency sometime in the third quarter of 2001. Waiting for shareholder
approval would likely delay the financing  until after this time. The likelihood
of consummating a financing with  Chesapeake or an alternative  lead investor is
severely  diminished as the Company's cash position  deteriorates.  Finally,  as
noted above, Arthur Andersen,  our independent auditors,  reiterated the need to
secure  immediate  financing by  providing a modified  "going  concern"  opinion
regarding our year-end 2000 financial statements.

For all of these reasons,  the Company's Board of Directors determined it was in
the best interests of the Company and  shareholders to proceed with financing as
quickly  as  possible.  With our  financing  in place,  we will be able to focus
completely on securing our future by continuing  the  development of the Guaduas
Oil Field and testing our upside by  drilling  an  exploration  well to test the
subthrust Dindal prospect.

This letter does not constitute an offer of any securities for sale. Offers will
be made only pursuant to a registration statement filed with the U.S. Securities
and Exchange Commission ("SEC").  This month, we expect to submit a registration
statement  for  the  rights  offering  to  the  SEC.  As it  becomes  available,
additional  information  regarding the planned  financing  transactions  will be
accessible on our web site,  www.sevenseaspetro.com.  If you have any questions,
please contact Mr. Bryan Sanchez,  our Manager of Investor  Relations,  at (713)
622-8218.

                                Cordially,

                                ROBERT A. HEFNER III
                                Robert A. Hefner
                                Chairman and Chief Executive Officer
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