A subterranean, viscous oil-containing formation is penetrated by at least one injection well which extends downwardly from the earth's surface to the formation and then extends a predetermined distance through the formation in a generally horizontal direction. The horizontal section of the injection well is in fluid communication with the formation. At least one spaced apart production well penetrates the formation in fluid communication with the upper two-thirds or less of the formation. A slug of steam, about 0.35 to 0.45 pore volume, is injected into the injection well and fluids including oil are recovered from the formation via the production well. The injection well is shut-in for a predetermined period of time while continuing production of oil. Thereafter, a predetermined amount, about 0.03 to 0.10 pore volume, of hot water or low quality steam is injected into the injection well and production is continued until there is an unfavorable amount of water or steam in the fluids recovered.