Exhibit 10.7

PLAINS EXPLORATION & PRODUCTION COMPANY

LONG-TERM RETENTION AGREEMENT

THIS AGREEMENT (“Agreement”) is made by and between Plains Exploration &
Production Company (the “Company”) and                                         
                     (“Executive”) effective this 3rd day of August, 2005
pursuant to the terms of the Plains Exploration & Production Company Executives’
Long-Term Retention and Deferred Compensation Plan (the “Plan”), and the Plains
Exploration & Production Company 2004 Stock Incentive Plan as amended from time
to time, or any successor plan (the “2004 Stock Plan”), which are incorporated
herein by reference. Terms used but not defined herein have the meanings
assigned to them in the Plan.

WHEREAS, effective as of June 9, 2004, Executive received an award of two
hundred and fifty thousand (250,000) Restricted Stock Units (the “2004 Award”);

NOW THEREFORE, the parties agree as follows:

1. As of the last day of the calendar quarter in which Executive becomes fully
Vested in the 2004 Award, Executive shall have credited to his Account under the
Plan thirty-three thousand (33,000) Restricted Stock Units subject to the terms
of the Plan (the “Initial Award Date”). Additional awards of thirty-three
thousand (33,000) Restricted Stock Units shall be credited to Executive’s
Account on each of the first and second anniversaries of the Initial Award Date;
provided, however, that the number of Restricted Stock Units Executive shall be
entitled to have credited to his Account on each such date shall increase to
fifty thousand (50,000) effective as of the first credit date (each, an “Annual
Credit Date”) immediately following the date that the closing price per share of
the Company’s common stock equals or exceeds $75.84 on any ten out of twenty
consecutive trading days on the New York Stock Exchange or such other exchange
or market on which the shares primarily trade. If Executive is still employed by
the Company on the third anniversary of the Initial Award Date (the “Second
Award Date”), an additional 33,000 Restricted Stock Units (or 50,000 Restricted
Stock Units if the annual amount of Restricted Stock Units shall have increased
to 50,000 as provided above) shall be credited to Executive’s Account on such
Second Award Date and on each of the first and second anniversaries of such
Second Award Date. If Executive is still employed by the Company on the third
anniversary of the Second Award Date (the “Third Award Date”), an additional
33,000 Restricted Stock Units (or 50,000 Restricted Stock Units if the annual
amount of Restricted Stock Units shall have increased pursuant to the terms of
Paragraph 1 above) shall be credited to Executive’s Account on such Third Award
Date and on each of the first and second anniversaries of such Third Award Date.
If Executive is still employed by the Company on the third anniversary of the
Third Award Date (the “Fourth Award Date”), an additional 33,000 Restricted
Stock Units (or 50,000 Restricted Stock Units if the annual amount of Restricted
Stock Units shall have increased to 50,000 as provided above) shall be credited
to Executive’s Account on such Fourth Award Date. The Initial Award Date, the
Second Award Date, the Third Award Date and the Fourth Award Date shall each be
referred to herein as an “Award Date.” Awards hereunder shall be made under the
Company’s 2004 Stock Plan or, if sufficient shares of Common Stock are not
available under such plan, such other plan or plans that the Company hereby
agrees to adopt and to make all required filings, obtain all approvals and take
all other required regulatory actions, as soon as administratively feasible, in
order to make the foregoing awards or the economic equivalent thereto. Each date
on which Restricted Stock Units are credited to Executive’s Account, including
any Award Date shall be referred to as an “Annual Credit Date.”

2. The Restricted Stock Units credited to Executive’s Account on each of the
first six Annual Credit Dates shall become Vested in full at 11:59 p.m. on the
fifth (5th) anniversary of each such Annual Credit Date. The Restricted Stock
Units credited to Executive’s Account on the seventh (7th), eighth (8th), ninth
(9th) and tenth (10th) Annual Credit Dates shall become Vested in full on the
fourth (4th), third (3rd), second (2nd) and first (1st) anniversaries of each
such Annual Credit Date, respectively (each such Vesting date, a

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“Retention Award Vesting Date”). Except as set forth in this Agreement, the Plan
or the 2004 Stock Plan, Executive must be an employee of the Company (or any
parent or subsidiary) on a Retention Award Vesting Date for the applicable
Restricted Stock Units to become Vested.

3. Except as otherwise provided in paragraph 4 below, if Executive ceases to be
employed by the Company (or any parent or subsidiary) for any reason at any time
prior to any Annual Credit Date or Retention Award Vesting Date, no further
credits will be made to Executive’s Account and any unvested Restricted Stock
Units shall be automatically forfeited upon such cessation of employment.

4. In the event of a Change of Control, Executive’s Account shall be immediately
credited with all the Restricted Stock Units that could be credited to
Executive’s Account on each of the ten Annual Credit Dates under this Agreement
and shall be fully Vested. In the event of Executive’s death or Disability or
termination of Executive’s employment without Cause or for Good Reason, both as
defined under Executive’s employment agreement with the Company dated as of
June 9, 2004, Executive’s Account shall be immediately credited with the
Restricted Stock Units that would be credited to Executive’s Account on each
Annual Credit Date prior to the next Award Date and shall be fully Vested.

5. Absent a Deferral Election or Payment Date change by Executive to a later
date or dates, the Payment Date with respect to the portion of Executive’s
Account applicable to the Vested Restricted Stock Units granted pursuant to this
Agreement shall be the earlier of:

(i) the tenth anniversary of the Initial Credit Date;

(ii) death of the Executive;

(iii) Disability of the Executive;

(iv) six months (or such shorter period as may be permitted pursuant to
regulations or interpretations of Section 409A of the Code) following the date
of Executive’s separation from service with the Company following a termination
without Cause, for Good Reason or at any time following a Change of Control that
James C. Flores is not Chief Executive Officer of the Company and Executive does
not report directly to James C. Flores; or

(v) occurrence of an unforeseeable emergency (within the meaning of Section 409A
of the Code).

6. Executive may make a Deferral Election according to the terms of the Plan
with respect to all or any portion of the Restricted Stock Units to be credited
to Executive’s Account on any Annual Credit Date provided that such election is
made in the calendar year prior to the applicable Annual Credit Date. Executive
may elect to change the applicable Payment Date in accordance with the terms of
section 3.7(b) of the Plan.

7. Subject to the provisions of section 3.10 of the Plan, Restricted Stock Units
shall be credited to Executive’s Account pursuant to the terms of the Plains
Exploration & Production Company 2004 Stock Incentive Plan as amended from time
to time or any successor plan of the Company. If, for any reason, Restricted
Stock Units may not be credited to Executive’s Account pursuant to the 2004
Stock Incentive Plan or any successor plan of the Company as of any Annual
Credit Date, an amount of cash equal to the Fair Market Value of the Restricted
Stock Units shall be credited to Executive’s Account as of such date pursuant to
the provisions of section 3.10 of the Plan.

8. In the event of any subdivision or consolidation of outstanding shares of
Common Stock, declaration of a dividend payable in shares of Common Stock or
other stock split, then (i) the number of Restricted Stock Units credited and to
be credited to Executive’s Account pursuant to this Agreement shall each be
proportionately adjusted to reflect such transaction. In the event of any other
recapitalization or capital reorganization of the Company, any consolidation or
merger of the Company with another corporation or entity, the adoption by the
Company of any plan of exchange affecting the Common Stock or any

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distribution to holders of Common Stock of securities or property (other than
normal cash dividends or dividends payable in Common Stock), the Company shall
make appropriate adjustments to the number of Restricted Stock Units credited
and to be credited to Executive’s Account to give effect to such transaction;
provided that such adjustments shall only be such as are necessary to preserve,
without increasing, the value of such units. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Company shall be authorized to issue or assume units by means
of substitution of new units, as appropriate, for previously issued units or an
assumption of previously issued units as part of such adjustment.

9. Tax withholding shall be made in accordance with the terms of the Plan.

IN WITNESS WHEREOF, the parties hereto have signed this to be effective as of
the last date of signature.

 

PLAINS EXPLORATION & PRODUCTION COMPANY     By:         

Date:

    

Name:         Title:        

EXECUTIVE     By:         

Date: