<PAGE>

                                                                    EXHIBIT 10.2

                                 First Amendment

                                       to

                                Credit Agreement

                                      Among

                 Plains Exploration & Production Company, L.P.,
                                  as Borrower,

                              JPMorgan Chase Bank,
                            as Administrative Agent,

                       Bank One, NA (Main Office Chicago)
                                       and
                               Fleet National Bank
                             as Syndication Agents,

                                   BNP Paribas
                                       and
                              Fortis Capital Corp.,
                            as Documentation Agents,

                                       and

                          The Lenders Signatory Hereto

                          Effective as of July 19, 2002

<PAGE>

                       First Amendment To Credit Agreement

     This First Amendment To Credit Agreement (this "First Amendment") executed
effective as of the 19th of July, 2002 (the "Effective Date") is among Plains
Exploration & Production Company, L.P., a limited partnership formed under the
laws of the State of California (the "Borrower"); each of the undersigned
guarantors (the "Guarantors", and together with the Borrower, the "Obligors");
each of the lenders that is a signatory hereto (collectively, the "Lenders");
JPMorgan Chase Bank, as administrative agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Administrative Agent"); Bank
One, Na (Main Office Chicago) and Fleet National Bank, as syndication agents for
the Lenders (each, in such capacity, together with its successors in such
capacity, a "Syndication Agent"); and BNP Paribas and Fortis Capital Corp., as
documentation agents for the Lenders (each, in such capacity, together with its
successors in such capacity, a "Documentation Agent").

                                    Recitals

     A. The Borrower, the Agents and the Lenders are parties to that certain
Credit Agreement dated as of July 3, 2002 (as the same may be amended, modified,
supplemented or restated, the "Credit Agreement"), pursuant to which the Lenders
have made certain credit available to and on behalf of the Borrower.

     B. The Borrower has requested and the Agents and the Lenders have agreed to
amend certain provisions of the Credit Agreement.

     C. NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

     Section 1. Defined Terms. Each capitalized term which is defined in the
Credit Agreement, but which is not defined in this First Amendment, shall have
the meaning ascribed such term in the Credit Agreement. Unless otherwise
indicated, all section references in this First Amendment refer to the Credit
Agreement.

     Section 2. Amendments to Credit Agreement.

     2.1 Amendments to Section 1.02.

     (a) The definition of "Agreement" is hereby amended to read as follows:

          "Agreement" means this Credit Agreement, as amended by the First
     Amendment, and as the same may from time to time be amended, modified,
     supplemented or restated.

     (b) The definition of "EBITDAX" is hereby amended to read as follows:

          "EBITDAX" means, for any period, the sum of Consolidated Net Income
     for such period plus the following expenses or charges to the extent
     deducted from Consolidated Net Income in such period: interest, income
     taxes, the aggregate amount of Letter of Credit fees paid during such
     period, depreciation, depletion, amortization, exploration

                                       1

<PAGE>

     and abandonment expenses and other noncash charges and expenses, minus all
     noncash income added to Consolidated Net Income.

     (c) The definition of "First Amendment" is hereby added where
alphabetically appropriate to read as follows:

          "First Amendment" means that certain First Amendment to Credit
     Agreement dated as of July 19, 2002 among the Borrower, the Guarantors, the
     Agents and the Lenders.

     2.2 Section 2.05(a). Section 2.05(a) is hereby amended by deleting "12:00
noon" in the second and third lines thereof and inserting in lieu thereof "2:00
p.m.".

     Section 3. Conditions Precedent. The effectiveness of this First Amendment
is subject to the receipt by the Administrative Agent of the following documents
and satisfaction of the other conditions provided in this Section 3, each of
which shall be reasonably satisfactory to the Administrative Agent in form and
substance:

     3.1 Loan Documents. The Agent shall have received multiple counterparts as
requested of this First Amendment from the Lenders.

     3.2 No Default. No Default shall have occurred as of the Effective Date.

     Section 4. Representations and Warranties; Etc. Each Obligor hereby
affirms: (a) that as of the date of execution and delivery of this First
Amendment, all of the representations and warranties contained in each Loan
Document to which such Obligor is a party are true and correct in all material
respects as though made on and as of the Effective Date (unless made as of a
specific earlier date, in which case, was true as of such date); and (b) that
after giving effect to this First Amendment and to the transactions contemplated
hereby, no Defaults exist under the Loan Documents or will exist under the Loan
Documents.

     Section 5. Miscellaneous.

     5.1 Confirmation. The provisions of the Credit Agreement (as amended by
this First Amendment) shall remain in full force and effect in accordance with
its terms following the effectiveness of this First Amendment.

     5.2 Ratification and Affirmation of Obligors. Each of the Obligors hereby
expressly (i) acknowledges the terms of this First Amendment, (ii) ratifies and
affirms its obligations under the Guaranty Agreement and the other Security
Instruments to which it is a party, (iii) acknowledges, renews and extends its
continued liability under the Guaranty Agreement and the other Security
Instruments to which it is a party and agrees that its guarantee under the
Guaranty Agreement and the other Security Instruments to which it is a party
remains in full force and effect with respect to the Indebtedness as amended
hereby.

     5.3 Counterparts. This First Amendment may be executed by one or more of
the parties hereto in any number of separate counterparts, and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.

                                       2

<PAGE>

     5.4 No Oral Agreement. This written First Amendment, the Credit Agreement
and the other Loan Documents executed in connection herewith and therewith
represent the final agreement between the parties and may not be contradicted by
evidence of prior, contemporaneous, or unwritten oral agreements of the parties.
There are no subsequent oral agreements between the parties.

     5.5 GOVERNING LAW. This First Amendment (including, but not limited to, the
validity and enforceability hereof) shall be governed by, and construed in
accordance with, the laws of the State of New York.

                          [SIGNATURES BEGIN NEXT PAGE]

                                       3

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed effective as of the date first written above.

BORROWER:                               PLAINS EXPLORATION &
                                        PRODUCTION COMPANY, L.P.


                                        By: Stocker Resources, Inc.,
                                            its general partner


                                        By: /s/ Jere C. Overdyke, Jr
                                            ------------------------------------
                                            Jere C. Overdyke, Jr.
                                            Vice President and Treasurer

                                      S-1

<PAGE>

GUARANTORS:                             PLAINS ILLINOIS, INC.


                                        By: /s/ Jere C. Overdyke, Jr.
                                            ------------------------------------
                                            Jere C. Overdyke, Jr.
                                            Vice President and Treasurer


                                        ARGUELLO INC.


                                        By: /s/ Jere C. Overdyke, Jr.
                                            ------------------------------------
                                            Jere C. Overdyke, Jr.
                                            Vice President and Treasurer


                                        PLAINS E&P COMPANY


                                        By: /s/ Jere C. Overydyke, Jr.
                                            ------------------------------------
                                            Jere C. Overdyke, Jr.
                                            Vice President and Treasurer


                                        PMCT INC.


                                        By: /s/ Jere C. Overdyke, Jr.
                                            ------------------------------------
                                            Jere C. Overdyke, Jr.
                                            Vice President and Treasurer


                                        PLAINS RESOURCES
                                        INTERNATIONAL INC.


                                        By: /s/ Jere C. Overdyke, Jr.
                                            ------------------------------------
                                            Jere C. Overdyke, Jr.
                                            Vice President and Treasurer

                                      S-2

<PAGE>

                                        JPMORGAN CHASE BANK, as a Lender and
                                        as Administrative Agent


                                        By: /s/ Russell A. Johnson
                                           -------------------------------------
                                        Name:  Russell A. Johnson
                                        Title: Vice President

                                      S-3

<PAGE>

                                        BANK ONE, NA (MAIN OFFICE CHICAGO)
                                        as a Lender and as a Syndication Agent


                                        By: /s/ Charles Kingswell-Smith
                                           -------------------------------------
                                        Name:  Charles Kingswell-Smith
                                        Title: First Vice President

                                      S-4

<PAGE>

                                        FLEET NATIONAL BANK, as a Lender and as
                                        a Syndication Agent


                                        By: /s/ Michael Broenetti
                                           -------------------------------------
                                        Name:  Michael Broenetti
                                        Title: Vice President

                                      S-5

<PAGE>

                                        BNP PARIBAS, as a Lender and as a
                                        Documentation Agent


                                        By: /s/ Brian M. Malone
                                           -------------------------------------
                                        Name:  Brian M. Malone
                                        Title: Managing Director


                                        By: /s/ Gabe Ellisor
                                           -------------------------------------
                                        Name:  Gabe Ellisor
                                        Title: Vice President

                                      S-6

<PAGE>

                                        FORTIS CAPITAL CORP., as a Lender and as
                                        a  Documentation Agent


                                        By: /s/ Dierdre Sanborn
                                           -------------------------------------
                                        Name:  Dierdre Sanborn
                                        Title: Vice President


                                        By: /s/ John C. Preneta
                                           -------------------------------------
                                        Name:  John C. Preneta
                                        Title: Executive Vice President

                                      S-7

<PAGE>

                                        BANK OF SCOTLAND, as a Lender


                                        By: /s/ Joseph Fratus
                                           -------------------------------------
                                        Name:  Joseph Fratus
                                        Title: First Vice President

                                      S-8

<PAGE>

                                        COMERICA BANK - TEXAS, as a Lender


                                        By: /s/ Daniel G. Steele
                                           -------------------------------------
                                        Name:  Daniel G. Steele
                                        Title: Senior Vice President

                                      S-9

<PAGE>

                                        WELLS FARGO BANK TEXAS,
                                        NATIONAL ASSOCIATION, as a Lender


                                        By: /s/ John Lane
                                           -------------------------------------
                                        Name:  John Lane
                                        Title: Vice President

                                      S-10

<PAGE>

                                        ARAB BANKING CORPORATION (B.S.C.),
                                        as a Lender


                                        By: /s/ Robert J. Ivosevich
                                           -------------------------------------
                                        Name:  Robert J. Ivosevich
                                        Title: Deputy General Manager

                                      S-11

<PAGE>

                                        WACHOVIA BANK, NATIONAL
                                        ASSOCIATION, as a Lender


                                        By: /s/ David E. Humphreys
                                           -------------------------------------
                                        Name:  David E. Humphreys
                                        Title: Vice President

                                      S-12

<PAGE>

                                        HIBERNIA NATIONAL BANK, as a Lender


                                        By: /s/ David R. Reid
                                           -------------------------------------
                                        Name:  David R. Reid
                                        Title: Senior Vice President

                                      S-13

<PAGE>

                                        SOUTHWEST BANK OF TEXAS, N.A.,
                                        as a Lender


                                        By: /s/ Ken Batson
                                           -------------------------------------
                                        Name:  Ken Batson
                                        Title: Assistant Vice President

                                      S-14

<PAGE>

                                        TORONTO DOMINION (TEXAS), INC.,
                                        as a Lender


                                        By: /s/ Alva J. Jones
                                           -------------------------------------
                                        Name:  Alva J. Jones
                                        Title: Vice President

                                      S-15

<PAGE>

                                        RZB FINANCE LLC, as a Lender


                                        By: /s/ Frank T. Gautz
                                           -------------------------------------
                                        Name:  Frank T. Gautz
                                        Title: First Vice President

                                      S-16