<PAGE>


 
                                                                    EXHIBIT 10.M


                                                                 August 23, 1995


Plains Marketing & Transportation Inc.
1600 Smith Street
Houston, TX 77002

  Re:  Uncommitted Secured Demand Transactional Line of Credit Facility
       ----------------------------------------------------------------

Gentlemen:

  The purpose of the following is to outline the parameters of the uncommitted
secured demand transactional line of credit facility (the "MARKETING FACILITY")
                                                           ------------------  
which The First National Bank of Boston ("FNBB"), Internationale Nederlanden
                                          ----                              
(U.S.) Capital Corporation ("ING") and such other banks as may from time to time
                             ---                                                
become parties hereto by signing below or by executing an Instrument of
Accession in the form of Exhibit A attached hereto (collectively, the "LENDERS")
                         ---------                                     -------  
and FNBB, as agent for the Lenders (in such capacity, the "AGENT"), are prepared
                                                           -----                
to provide to Plains Marketing & Transportation Inc. ("BORROWER") for the
                                                       --------          
issuance of standby letters of credit and demand loans (each an "ACCOMMODATION"
                                                                 ------------- 
and collectively, the "ACCOMMODATIONS").  An "uncommitted secured demand
                       --------------                                   
transactional line of credit facility" means that the Lenders shall have no
obligation, under any circumstances, to issue, grant or make any Accommodation.
Each request made by Borrower for an Accommodation shall be reviewed by the
Lenders on a case by case basis and the decision to grant any Accommodation
shall be made by the Lenders in their absolute and sole discretion in light of
considerations which the Lenders in their sole discretion deem pertinent and
irrespective of whether or not the Borrower is in compliance with any of the
guidelines set forth in Schedule 4 hereto.  The Lenders also reserve the right
                        ----------                                            
to summarily refuse any request for an Accommodation without any review as
contemplated by the preceding sentence.  Accordingly, the Lenders have no
commitment to make any Accommodation available.  FURTHERMORE, THE LENDERS MAY
DEMAND REPAYMENT OF ANY AMOUNTS OUTSTANDING HEREUNDER OR WITH RESPECT TO ANY
ACCOMMODATION AND, AS HEREINAFTER PROVIDED, PREPAYMENT OF ANY AND ALL UNDRAWN
AMOUNTS AVAILABLE FOR DRAWING UNDER ANY ISSUED AND OUTSTANDING L/C (AS
HEREINAFTER DEFINED) OR OF ANY OBLIGATIONS SECURED BY SUCH L/C AT ANY TIME IN
THE LENDERS' SOLE DISCRETION.

  1.   THE FACILITY.   The parameters of the uncommitted secured demand
       ------------                                                    
transactional line of credit facility shall be as follows until further notice
by the Agent and the Lenders:

       (a) BORROWER:  Plains Marketing & Transportation Inc., a Delaware
           --------                                                     
corporation.
<PAGE>
 
                                      -2-



       (b) MARKETING FACILITY AMOUNT:  The aggregate amount of the
           -------------------------                              
Accommodations which may be made available by the Lenders and which will be
allowed to be outstanding at any one time under the Marketing Facility shall be
restricted to the excess of (i) an amount which shall be $70,000,000 during
periods when the NYMEX price for West Texas Intermediate crude oil ("WTI") is
                                                                     ---     
equal to or less than $20.00 per barrel and which shall increase by $2,500,000
for each $1.00 per barrel increase in the NYMEX price of WTI above $20.00 per
barrel up to a maximum amount of $80,000,000, such increase in the amount of the
Marketing Facility to be determined at the time of the issuance or advance of
any Accommodation over (ii) the then aggregate amount of the outstanding
Accommodations made by the Lenders to or for the account of PMCT Inc., a
Delaware corporation ("PMCT"), under that certain letter agreement of even date
                       ----                                                    
herewith, as amended and in effect (the "PMCT AGREEMENT"), among the Lenders,
                                         --------------                      
the Agent and PMCT (such difference in amount, as in effect from time to time
under the Marketing Facility, hereinafter referred to as the "MARKETING FACILITY
                                                              ------------------
AMOUNT").  PLEASE NOTE THAT THE LENDERS MAY MODIFY THE MARKETING FACILITY AMOUNT
------                                                                          
AT ANY TIME IN THEIR SOLE DISCRETION.  In the event such modification results in
a decrease in the Marketing Facility Amount below the then aggregate amount of
outstanding Accommodations, the Borrower will, within one (1) Business Day (as
defined below), or as hereinafter provided, repay the amount of outstanding
Accommodations in excess of the modified Marketing Facility Amount or repay the
undrawn amounts available for drawing under L/Cs in excess of the modified
Marketing Facility Amount, unless notified otherwise by the Agent.  As used
herein, "BUSINESS DAY" shall mean any day on which commercial lenders are not
         ------------                                                        
authorized or required to close in Boston, Massachusetts and New York, New York.

       (c) LENDERS' SHARES:  Each Lender shall be offered the opportunity to
           ---------------                                                  
fund or participate in that percentage of every requested Accommodation as set
forth opposite such Lender's name on Schedule 1 hereto (its "SCHEDULE 1
                                                             ----------
PERCENTAGE").  If any Lender shall decline to so fund or participate in such
----------                                                                  
requested Accommodation, any combination of one or more of the other Lenders may
additionally fund or purchase a participation in the requested Accommodation in
the entire or a pro rata portion of such declining Lender's Schedule 1
                --------                                              
Percentage of such Accommodation, provided that in no event shall any Lender's
                                  --------                                    
interest in any Accommodation exceed a sum representing such Lender's Schedule 1
Percentage multiplied by the Marketing Facility Amount.

       (d) TYPES OF ACCOMMODATIONS; SUBLIMITS:  The types of and limits on
           ----------------------------------                             
Accommodations which may be made available under the Marketing Facility shall be
the following:

            (i) Standby Letters of Credit:  Standby letters of credit having an
                -------------------------                                      
       expiration date no later than 70 days after the date of issuance,
       extension or
<PAGE>
 
                                      -3-

       renewal thereof issued for the account of Borrower to support the
       purchase and exchange by Borrower of crude oil from producers and other
       third parties (the "L/CS");
                           ----   

            (ii) Demand Loans:  Demand loans which may be made by the Lenders to
                 ------------                                                   
       Borrower in an aggregate principal amount at any time outstanding not
       to exceed $20,000,000 less the amount of Demand Loans then outstanding
       under the PMCT Agreement (the "DEMAND LOANS"), the proceeds of which
                                      ------------                         
       are to be used for any of the following purposes:  (x) to finance the
       purchase and physical storage of crude oil which is fully hedged on
       the NYMEX and located in the terminalling and storage facilities owned
       by Plains Terminal & Transfer Corporation in Cushing, Oklahoma (the
       "CUSHING TERMINAL") or in transit in specified pipelines approved by
       -----------------                                                   
       the Lenders and listed on Schedule 5 hereto (the "CASH AND CARRY
                                 ----------              --------------
       PIPELINES") or (y) to finance up to ninety (90%) of the value,
       ---------                                                     
       calculated on a marked-to-market basis, of inventory designated by the
       requesting Borrower as so-called "working inventory" at the Cushing
       Terminal or as linefill in Cash and Carry Pipelines.

       (e)  EXPIRATION:  (i) No request for any Accommodation may be made after
            ----------                                                         
the first anniversary of the date hereof unless the Lenders, in their sole
discretion and without any obligation to do so, extend such date in writing.

            (ii) All Accommodations are payable ON DEMAND.  Any Lender may, at
       any time and in its sole discretion, demand payment of all amounts
       owing to the Lenders under the Marketing Facility; provided that any
                                                          --------         
       Lender not then making such demand for payment with respect to
       Accommodations made by it may waive such demand with respect only to
       the Accommodations made by it.  In addition, those Lenders having a
       pro rata share of the Accommodations at least equal to sixty-seven
       --------                                                          
       percent of the Accommodations (the "REQUIRED LENDERS") may at any time
                                           ----------------                  
       in their sole discretion demand that the Borrower prepay in cash all
       or any part or fraction of the undrawn amount available for drawing
       under any issued and outstanding L/C or the obligations secured by
       such L/C by delivery to the Agent.  Each Lender demanding payment of
       any outstanding amounts owing to the Lenders under the Marketing
       Facility or prepayment of any undrawn amounts available for drawing
       under any issued and outstanding L/C or of any obligations secured by
       such L/C shall promptly notify the Borrower of the reason for such
       demand.  "CASH EQUIVALENTS" means repurchase agreements and short term
                 ----------------                                            
       obligations issued or guaranteed as to principal
<PAGE>
 
                                      -4-

       and interest by the United States of America and having a maturity of
       not more than 12 months from the date of acquisition; short-term
       certificates of deposit issued by any bank organized under the laws of
       the United States of America or any state thereof if such bank has a
       short-term debt rating of not less than P-1 or A-1 or their equivalent
       by Moody's Investor Service or Standard & Poor's Corporation,
       respectively; short-term certificates of deposit issued by, and so-
       called Eurodollar "call deposits" at, any Lender or any foreign
       subsidiary or affiliates of such Lender, if any investments issued by
       such Lender or foreign subsidiary or affiliate, as applicable, has a
       rating of not less than A or its equivalent, or P-1 or A-1 or their
       equivalent, as applicable, by Moody's Investor Service or Standard &
       Poor's Corporation, respectively; or commercial paper or finance
       company paper that is rated not less than P-1 or A-1 or their
       equivalents by Moody's Investor Service or Standard & Poor's
       Corporation, respectively.

            (iii)      Upon the occurrence of a Bankruptcy Event, all
       obligations and liabilities of Borrower to the Lenders with respect to
       the Accommodations, including, without limitation, the obligation to
       prepay any and all amounts available for drawing under any issued and
       outstanding L/C and all other obligations and liabilities of Borrower
       to the Lenders arising under this letter agreement (the "MARKETING
                                                                ---------
       LETTER AGREEMENT") or any agreements, instruments or documents
       ----------------                                              
       executed in connection herewith (collectively with the Marketing
       Letter Agreement, the "MARKETING FACILITY DOCUMENTS") shall become
                              ----------------------------               
       immediately due and payable.  "BANKRUPTCY EVENT" means any event
                                      ----------------                 
       pursuant to which Borrower makes an assignment for the benefit of
       creditors, or admits in writing its inability to pay or generally
       fails to pay its debts as they mature or become due, or petitions or
       applies for the appointment of a trustee or other custodian,
       liquidator or receiver of Borrower or of any substantial part of its
       assets or commences any case or other proceeding relating to Borrower
       under any bankruptcy, reorganization, arrangement, insolvency,
       readjustment of debt, dissolution or liquidation or similar law of any
       jurisdiction, now or hereafter in effect, or takes any action to
       authorize, or in furtherance of, any of the foregoing, or if any such
       petition or application shall be filed or any such case or other
       proceeding shall be commenced against Borrower and Borrower shall
       indicate its approval thereof, consent thereto or acquiescence
       therein, or a decree or order is entered appointing any such trustee,
       custodian, liquidator or receiver or adjudicating Borrower bankrupt or
       insolvent, or approving a petition in any such case or other
       proceeding, or a decree or order for relief
<PAGE>
 
                                      -5-

       is entered in respect of Borrower in an involuntary case under federal
       bankruptcy laws as now or hereafter constituted.

       (f) PRICING:  The following will apply until further notice by the Agent:
           -------                                                              

            (i) Demand Loans:  Subject to paragraph 1(f)(v) hereof, the annual
                ------ -----                                                  
       rate of interest on the unpaid principal balance of Demand Loans from
       time to time outstanding shall be equal to either (i) the Base Rate
       plus five-eighths of one percent (5/8%) per annum or (ii) the
       ----                                                         
       Eurodollar Rate for the applicable interest period plus two percent
                                                          ----            
       (2%) per annum, as such rates are selected by Borrower pursuant to
       Section 1(g) hereof, in each case computed on the basis of a 360-day
       year.  Interest calculated by reference to the Base Rate shall be
       payable quarterly in arrears.  Interest calculated by reference to the
       Eurodollar Rate shall be payable at the end of any applicable interest
       period selected by Borrower for such Demand Loan pursuant to Section
       1(g) hereof.  "BASE RATE" means the higher of (a) the annual rate of
                      ---------                                            
       interest announced from time to time by FNBB as its "base rate" at its
       head office in Boston, Massachusetts or (b) 1/2% above the overnight
       federal funds rate from time to time in effect; provided, that such
                                                       --------           
       rate may not be the lowest rate at which funds are made available to
       customers of FNBB at such time.  "EURODOLLAR RATE" means for any
                                         ---------------               
       interest period of one, two or three months (as selected by Borrower
       pursuant to Section 1(g) hereof), the annual rate of interest (rounded
       upwards, if necessary, to the nearest 1/16th of 1%) determined by the
       Agent at or about 10:30 a.m., Boston time, two Business Days on which
       Lenders are able to conduct eurodollar transactions preceding the
       first day of such interest period, as being (a) the average of the per
       annum rates at which deposits of United States dollars are offered to
       the Agent by prime banks in any lawful recognized market selected by
       the Agent, in its sole discretion acting in good faith and in
       accordance with its usual practice, in which United States dollars are
       offered by banking institutions to each other  for delivery on the
       first day of such interest period for the number of days comprised
       therein and in an amount equal (as nearly as may be) to the amount of
       the Demand Loan to be subject to such Eurodollar Rate divided by (b)
                                                             -------       
       one minus the Reserve Rate.  The "RESERVE RATE" for any date is the
                                         ------------                     
       maximum percentage (expressed as a decimal) in effect on such date at
       which the Agent is required to maintain reserves under Regulation D of
       the Board of Governors of the Federal Reserve System against
       "EUROCURRENCY LIABILITIES".  The Reserve Rate shall be adjusted
       -------------------------                                      
       automatically on and as of the effective date of any change therein.
<PAGE>
 
                                      -6-

            (ii)  Letters of Credit.
                  ----------------- 

                  (x) For the issuance of an L/C, Borrower shall pay to any
            Lender issuing such L/C (in such capacity, an "ISSUING LENDER"), for
                                                           --------------       
            the pro rata accounts of the Lenders participating in such L/C, a
                --- ----   
            fee equal to the greater of (A) 1-1/2% per annum of the maximum
            drawing amount of such L/C on the date of issuance calculated for
            the period during which such L/C is outstanding or (B) 1/4% flat of
            the maximum drawing amount of such L/C on the date of issuance, such
            fee to be estimated and payable upon the issuance of such L/C and
            any unpaid balance of such fee to be payable upon any drawing under,
            and upon the expiration or termination of, such L/C.

                  (y) In addition to the fees set forth in clause (x) above,
            Borrower shall pay to the Issuing Lender for its own account an
            additional issuance fee of $100 per L/C, payable on the date of
            issuance thereof, and such other fees and charges customarily
            charged by the Issuing Lender in respect of L/Cs.

            (iii) Overdue Amounts. All overdue amounts payable with respect to
                  ---------------
       the Demand Loans, including without limitation interest, principal and
       fees, and reimbursement obligations in respect to drawn L/Cs shall bear
       interest payable on demand at a rate per annum equal to four percent
       above the Base Rate from the date of such nonpayment until paid in full
       and whether before or after the entry of judgment thereon.

            (iv)  Charges to the Borrower's Accounts.  Borrower authorizes the
                  ----------------------------------                          
       Agent and the Lenders to charge Borrower's account at any of the
       Lenders for any interest and fees stated herein and due and payable by
       Borrower; provided that in the absence of a demand for payment of the
                 --------                                                   
       Accommodations or in the case of undrawn amounts available for drawing
       under any L/C or the obligations secured by such L/C, prepayment of
       such amounts, the Agent or the Lender charging such account shall give
       Borrower prior notice of its intention to do so.

            (v)   Limitation on Interest.  It is the intention of the parties
                  ----------------------                                     
       hereto that the Agent and each Lender shall conform strictly to usury
       laws applicable to it.  Accordingly, if the transactions contemplated
       hereby would be usurious as to the Agent or any Lender under
       applicable laws then, in that event, notwithstanding anything to the
       contrary in this Marketing Letter Agreement or any other Marketing
       Facility Document, it is agreed that the
<PAGE>
 
                                      -7-

       aggregate of all consideration which constitutes interest under any
       law applicable to the Agent or any Lender that is contracted for,
       taken, reserved, charged or received by such Lender under this
       Marketing Letter Agreement or under any other Marketing Facility
       Document shall under no circumstances exceed the maximum amount
       allowed by such applicable law, and any excess shall be credited by
       the Agent or such Lender to the principal amount of the Demand Loans
       or, if the principal amount of the Demand Loans shall have been or
       would thereby be paid in full, refunded by the Agent or such Lender to
       Borrower.

            (vi) No pricing applicable to any particular outstanding
       Accommodation shall be changed after the making or issuance of such
       Accommodation without Borrower's written consent.  Notwithstanding the
       above, nothing herein shall affect the Lenders' right to demand
       payment, as set forth herein, in their sole discretion, of such
       Accommodation and to charge the rate of interest applicable to overdue
       amounts thereon as set forth in Section 1(f)(iii) if such demand is
       not met.

       (g) PROCEDURES FOR REQUESTING ACCOMMODATIONS: The following procedures
           ----------------------------------------               
will assist the Lenders in considering Borrower's requests for Accommodations:

            (i) To Request a Demand Loan:  To request a Demand Loan, the
                -- ------- - ------ ----                                
       Borrower shall, in a notice to the Agent in the form of Exhibit B
                                                               ---------
       hereto (a "DEMAND LOAN NOTICE"), delivered no later than 11:00 a.m.
                  ------------------                                      
       Boston, Massachusetts time (x) on the Business Day on which the Demand
       Loan is requested to be made if it is to bear interest calculated by
       reference to the Base Rate and (y) three Business Days prior to the
       day on which the Demand Loan  is requested to be made if it is to bear
       interest calculated by reference to the Eurodollar Rate, specify the
       amount of such Demand Loan, whether such Demand Loan is to bear
       interest calculated by reference to the Base Rate or to the Eurodollar
       Rate and, if such Demand Loan is to bear interest calculated by
       reference to the Eurodollar Rate, the interest period to be applicable
       thereto which may be one, two or three months and shall also specify
       the Business Day on which the Demand Loan then requested is to be
       made;

            (ii) To Request a Letter of Credit: To request an L/C, Borrower
                 -- ------- - ----------------                             
       shall submit to the Agent a completed letter of credit application in
       substantially the form of Exhibit C hereto or, if the Agent shall
                                 ------- -                              
       designate, upon prior notice to the Borrower, a Lender other than FNBB
       to be the
<PAGE>
 
                                      -8-

       Issuing Lender with respect to such requested L/C, in the form of
       letter of credit application requested by such Lender.  In the event
       that any provision of the letter of credit application shall be
       inconsistent with any provision of this Marketing Letter Agreement,
       then the provisions of this Marketing Letter Agreement shall, to the
       extent of any such inconsistency, govern; and

            (iii) Representations, etc.  Any request for an Accommodation
                  ---------------  ---                                   
       shall automatically constitute a certification that the
       representations and warranties contained in Schedule 2 hereof are true
                                                   -------- -                
       and correct on the date of such request and that all the guidelines
       set forth in Schedule 4 attached to this Marketing Letter Agreement on
                    ----------                                               
       the date of such request have been and are met, unless otherwise set
       forth in a writing submitted by Borrower in connection with the
       request for the corresponding Accommodation. Disclosure that Borrower
       has not met or does not meet such guidelines shall in no way affect
       the Lenders' right to demand payment or prepayment of any
       Accommodation or any obligation secured by any L/C, as set forth
       herein, in their sole discretion or to refuse to make or issue an
       Accommodation in their sole discretion.

       (h) PAYMENTS: All payments due with respect to the Accommodations,
           --------
including, without limitation, prepayments of any undrawn amounts available for
drawing under any L/C or of the obligations secured by such L/C, shall be made
to the Agent or, with respect to an L/C, the Issuing Lender, for the respective
accounts of the Lenders and the Agent, and shall be paid to the Agent or such
Issuing Lender at the address set forth on the signature page of this Marketing
Letter Agreement for notices to the Agent or such Issuing Lender or at such
other address as the Agent or Issuing Lender may from time to time designate, in
each case in immediately available funds.

       (i) ACCOMMODATIONS: All Accommodations or transactions related thereto
           -------------- 
must meet the following criteria in addition to any other requirements that may
be imposed by the Lenders in their sole discretion from time to time:

            (i) Copies of all applicable written purchase and sale contracts for
       the purchase and sale of crude oil in form acceptable to the Agent and
       other relevant third party documentation must be provided to the Agent
       and the Lenders prior to the issuance or advance of any Accommodation
       securing Borrower's obligation in connection with such transaction;

            (ii) The obligations of the third party purchaser in any matched
       purchase and sale transaction for which an L/C is to be issued shall
       be
<PAGE>
 
                                      -9-

       secured in an amount at least equal to 100% of the maximum drawing
       amount of such L/C by any combination of cash, Cash Equivalents,
       accounts receivable approved by the Agent, or accounts receivable
       secured by letters of credit from acceptable financial institutions
       advised through the Agent;

            (iii) Notification of the assignment to the Issuing Lender, as
       agent for the Lenders of the proceeds of a sale contract relating to a
       purchase and sale transaction for which an Accommodation is to be
       issued or made has been or will be, prior to the making or issuance of
       the Accommodation, accomplished by the following means:

            (A)    Borrower has notified or will, promptly, and in any event
                prior to the making or issuance of the related
                Accommodation, notify the account debtor on such sale
                contract in writing, either by separate correspondence
                and/or in Borrower's sales contract, of the assignment to
                the Issuing Lender, as agent for the Lenders, of proceeds of
                such sale contract and has given or will, prior to the
                making or issuance of the related Accommodation, give
                irrevocable instructions to such account debtor to make
                payment on such sale contract, without offset or
                counterclaim unless the Lenders, through the Agent, have
                given their specific prior approval for the Borrower to give
                effect to any net-out or offset agreements, to Borrower's
                account at the Issuing Lender, as agent for the Lenders, by
                wire transfer; and

            (B)    Agent shall notify such account debtor of the assignment of
                such sale contract and the proceeds relating thereto to the
                Agent or the Issuing Lender as agent for the Lenders, and of
                Borrower's instruction to pay such proceeds, without offset
                or counterclaim, unless the Lenders, through the Agent, have
                given their specific prior approval for the Borrower to give
                effect to any net-out or offset agreements, to Borrower's
                account at the Issuing Lender, as agent for the Lenders, by
                wire transfer.

            (iv) Borrower shall endeavor, and Agent shall be satisfied that
       Borrower has endeavored, to include the notification and instructions
       referred to in clause (i)(iii)(A) above in such Borrower's sales
       contracts;
<PAGE>
 
                                      -10-

            (v)    Notification of the assignment to the Issuing Lender, as
       agent for the Lenders, of the proceeds of each letter of credit securing
       a sale contract relating to a purchase and sale transaction for which an
       Accommodation is to be issued or made has been or will, prior to the
       making or issuance of the related Accommodation, be accomplished by the
       following means:

            (A)    Borrower has notified the issuer of such letter of credit in
                writing of the assignment of such proceeds to the Issuing
                Lender, as agent for the Lenders, and has given irrevocable
                instructions to such issuing bank to pay such proceeds,
                without offset or counterclaim unless the Lenders, through
                the Agent, have given their specific prior approval for the
                Borrower to give effect to any net-out or offset agreements,
                to such Borrower's account at the Issuing Lender, as agent
                for the Lenders; and

            (B)    Borrower or such issuer has delivered the original of such
                letter of credit to the Issuing Lender, as agent for the
                Lenders.

            (vi)   Funds from any account debtor with respect to a sale contract
       in a purchase and sale transaction for which an L/C was issued which
       are received in advance of payment under such L/C shall be maintained
       as cash collateral with the Issuing Lender, as agent for the Lenders,
       for such L/C and shall be paid over and delivered  to Borrower upon
       expiration (without drawdown) of such L/C unless the Lenders have
       demanded payment of any Accommodations, or prepayment of any undrawn
       amounts available for drawing under any other L/C or of the
       obligations secured thereby, as permitted herein, and such demand has
       not been met;

            (vii)  Payments made to suppliers under outstanding L/C will be made
       through the Issuing Lender, as agent for the Lenders, by wire transfer
       with reference to the corresponding L/C to facilitate the reduction or
       cancellation of such L/C; and

            (viii) Marine cargo, transportation, and other insurance as
       appropriate, shall name the Agent or Issuing Lender, as agent for the
       Lenders, as loss payee or co-loss payee to the extent of its interest in
       any purchase and sale transaction for which an Accommodation has been
       made or issued.
<PAGE>
 
                                      -11-


       (j) REPORTING AND INSPECTION REQUIREMENTS:  For so long as any
           -------------------------------------                     
Accommodation is outstanding under this Marketing Letter Agreement or Borrower
wishes to request any Accommodations under this Marketing Letter Agreement and
to enable the Lenders to carry out an ongoing financial review of Borrower,
Borrower shall furnish each of the Lenders with the following:

            (i)   within 45 days following the end of each month, a monthly
       unaudited balance sheet and income statement, prepared in accordance
       with generally accepted accounting principles ("GAAP"), subject to
                                                       ----              
       year-end adjustments, together with a certificate regarding the
       financial and other guidelines set forth in Schedule 4 to this
                                                   ----------        
       Marketing Letter Agreement (the "FINANCIAL AND OTHER GUIDELINES") in
                                        ------------------------------     
       the form attached as Exhibit D hereto (and showing calculations for
                            ---------                                    
       the financial performance guidelines set forth in paragraphs (i), (ii)
       and (iii) of Schedule 4 hereto) demonstrating that the Borrower has
                    ----------                                            
       met, or has not met, as applicable, such operating guidelines, signed
       by the Borrower's chief financial officer or principal accounting
       officer;

            (ii)  within 120 days following Borrower's fiscal year end, audited
       balance sheets and statements of income and retained earnings from
       Price Waterhouse L.L.P. or, in lieu of Price Waterhouse L.L.P., an
       independent public accounting firm selected by Borrower and acceptable
       to the Agent, prepared in accordance with GAAP;

            (iii) on a daily basis, MERC position reports of Borrower as of
       the end of the immediately preceding Business Day and, at such other
       intervals as the Agent may request, reports of inventory held by
       Borrower;

            (iv)  as soon as possible and, in any event prior to the date
       requested for the issuance of L/C hereunder on a monthly basis, a
       monthly scheduling forecast report listing purchases, sales and
       exchange volumes, counterparties, pricing indices and other
       information relating to crude oil purchases and exchanges for the next
       month, together with copies of purchase and sales contracts and an
       estimate of the gross profit margin and operating income for such
       month;

            (v)   immediate notice of any material adverse change in the
       business of Borrower, including without limitation, any threatened or
       pending
<PAGE>
 
                                      -12-

       material litigation against Borrower or any event which may give rise
       to any material litigation or claim under any environmental law;

            (vi)   immediate notice of any material default by Plains Resources,
       Inc., a Delaware corporation ("RESOURCES") with respect to any
                                      ---------                      
       indebtedness of Resources in excess of $50,000, including defaults
       under that certain Second Amended and Restated Credit Agreement dated
       as of February 11, 1994, as amended, among Resources, ING, as agent,
       and the Lenders named therein (the "RESOURCES CREDIT AGREEMENT");
                                           --------------------------   

            (vii)  on a monthly basis, a report of the value, calculated on a
       marked-to-market basis, of inventory designated by the Borrower as so-
       called "working inventory" at the Cushing Terminal or as linefill in Cash
       and Carry Pipelines, provided that Borrower will deliver an additional
                            --------
       report within two days of any downward fluctuation in the value of such
       inventory stated in the most recent monthly report by an amount equal to
       or greater than $500,000;

            (viii) if requested by any of the Lenders, Borrower will furnish to
       the requesting Lender in connection with any Accommodation hereunder a
       statement in conformity with the requirements of Federal Reserve Form U-1
       referred to in said Regulation U; and

            (ix)   such other financial or other information about Borrower as
       any Lender may request.

      In addition, at least twice per year, and more frequently if requested
by the Required Lenders, the Lenders or any of their agents or representatives
shall have the right to conduct a commercial finance examination, including the
right to examine and make copies and abstracts from the records and books of
account of, and visit the properties of, Borrower and to discuss the affairs,
finances and accounts of Borrower with any of Borrower's officers, directors
and, upon prior written notice to Borrower,  independent accountants.  All
expenses relating to not more than two such commercial finance examinations per
year shall be for the account of Borrower, provided Borrower will be responsible
                                           --------                             
for more than two such commercial finance examinations per year if agreed to by
the Borrower or if any demand has been made by any Lender for the payment by
Borrower of outstanding Accommodations owing to such Lenders, or by the Required
Lenders for the prepayment of any undrawn amounts available for drawing under
any L/C or of any obligations secured by such L/C, and such demand has not been
met or withdrawn.
<PAGE>
 
                                      -13-

       (k) FINANCIAL AND OTHER GUIDELINES.  In determining whether to issue or
           ------------------------------                                     
extend, as applicable, any Accommodation, and in no way limiting the imposition,
from time to time, of other reasonable requirements by the Lenders or the
discretionary nature of this Marketing Facility, the Lenders will rely on
Borrower's representations and warranties given pursuant to Section 1(g)(iii)
that as of the date of each request by Borrower for an Accommodation, each of
the Financial and Other Guidelines are met and, up to the date of such request,
have been met by Borrower, unless the Lenders have otherwise been notified by
Borrower.  In order to induce the Lenders to issue or make Accommodations,
Borrower hereby agrees to make such representations and warranties pursuant to
Section 1(g) hereof and hereby covenants that it will immediately notify the
Agent and the Lenders if, at any time, such Financial and Other Guidelines are
not then met by the Borrower.  Whether or not the Financial and Other Guidelines
are, at any time, met shall in no way affect the Lenders' ability to demand
repayment of any Demand Loans outstanding hereunder or to demand prepayment of
any undrawn amounts available for drawing under any L/C or of the obligations
secured by such L/C or the Lenders' right to refuse to advance any
Accommodations.  The Agent, Lenders and Borrower acknowledge that the Financial
and Other Guidelines are meant to provide parameters for Borrower's operations
and serve only as a basis for Borrower to keep the Agent and Lenders apprised of
the status of its operations.

  2.   GENERAL DOCUMENTATION.  (a) Prior to Borrower's initial request for an
       ----------------------                                                
Accommodation under the Marketing Facility, Borrower shall execute and/or
deliver, or cause to be executed and/or delivered, to the Agent and the Lenders
(i) a security agreement, in form and substance of Exhibit E hereto and in any
                                                   ------- -                  
event sufficient to grant to the Agent a continuing, perfected, first priority
lien on all of the assets of Borrower to secure Borrower's obligations with
respect to or in connection with the Accommodations, (ii) pledges, in form and
substance of Exhibit F hereto, of all of the Borrower's deposit and margin
             ------- -                                                    
accounts and acknowledgments of and consents to such pledges from the financial
institutions with which such accounts are maintained, (iii) a guaranty, in form
and substance of Exhibit G hereto, by Resources of all of Marketing's payment
                 ------- -                                                   
obligations with respect to or in connection with the Accommodations, together
with a letter of credit in form and substance of Exhibit H hereto issued by a
                                                 ------- -                   
bank acceptable to the Lenders in the face amount of $1,000,000 to secure
Resources' obligations under such guaranty (items (i) through (iii),
collectively, the "SECURITY DOCUMENTS"), (iv) promissory notes evidencing the
                   ------------------                                        
Borrower's obligations to repay the Demand Loans and any drawings under the L/Cs
(the "NOTES") in form and substance of Exhibit I hereto and (v) such other
      -----                            ------- -                          
documents and instruments requested by the Agent and the Lenders, including,
without limitation those documents and instruments listed on that certain
Closing Agenda prepared in connection with the execution of this Marketing
Letter Agreement.
<PAGE>
 
                                      -14-

          (b) Notwithstanding, the foregoing, any Accommodation which the
Lenders, in their sole discretion, may make or issue shall be on such terms and
conditions as the Lenders may require and shall be evidenced by documentation in
form and substance satisfactory to the Lenders and shall be subject thereto. If,
however, the Lenders shall make or issue any Accommodation and the Lenders shall
not specify other terms, conditions or documentation applicable thereto, then
such Accommodation shall be subject to the terms and conditions set forth in
this Marketing Letter Agreement.

  3.   INDEMNIFICATION.  Borrower shall indemnify and hold harmless the Agent
       ---------------                                                       
and each of the Lenders and each of their respective directors, officers,
employees and agents from and against (a) any and all damages, losses,
liabilities, reasonable costs, and expenses, including, without limitation,
reasonable legal, and/or outside accounting, investment banking and other
professional fees paid or incurred by the Agent or any of the Lenders, which
shall arise out of, result from or in any way relate to any investigation,
litigation or proceeding (actual or threatened) relating to the extension of
Accommodations under this Marketing Letter Agreement, the Marketing Facility
Documents, the Marketing Facility, any Accommodation issued or made hereunder,
the violation or alleged violation of any environmental law or involving or
respecting any inventory or product sold to or by any Borrower and (b) all
related reasonable costs and expenses, including, without limitation, legal,
and/or outside accounting, investment banking and other professional fees paid
or incurred by the Agent or any of the Lenders in connection with any effort to
mitigate or defend against such damages, losses and liabilities, actual or
potential, and to otherwise protect the Agent's or any of the Lenders' interests
in connection with any matter which may give rise to such damages, losses and
liabilities (but excluding any such damages, losses, liabilities, costs and
expenses, and related costs and expenses, incurred by reason of the gross
negligence or willful misconduct by the person or entity seeking to be
indemnified hereunder).  Without prejudice to any of the foregoing provisions of
this Agreement, Borrower will on demand by any Lender indemnify such Lender
against any losses, costs and expenses which such Lender may at any time or from
time to time sustain or incur with respect to any Demand Loan which bears
interest calculated by reference to the Eurodollar Rate as a consequence of
Borrower's failure to borrow such Demand Loan on the date designated for
Borrower therefor or to repay such Demand Loan on the last day of the Interest
Period relating thereto or if any principal payment thereof is made, whether
before or after demand, on any day other than the last day of the interest
period relating thereto, including interest or fees payable by such Lender to
lenders of funds obtained by it in order to maintain such Demand Loan for such
interest period.  Such losses, costs and expenses shall be determined by such
Lender in good faith on a commercially reasonable basis.

  4.   EXPENSES.  Whether or not any Accommodations shall be made hereunder,
       --------                                                             
Borrower agrees to pay:
<PAGE>
 
                                      -15-


            (i) the reasonable cost of (x) reproducing this Marketing Letter
       Agreement and the other Marketing Facility Documents and (y) any taxes
       (including any interest and penalties in respect thereto) or filing
       fees payable by the Agent or the Lenders (other than taxes based upon
       the Agent's or any Lender's net income) on or with respect to the
       transactions contemplated by this Agreement (the Borrowers hereby
       agreeing to indemnify the Agent and the Lenders with respect thereto);

            (ii) the reasonable fees, expenses and disbursements of the Agent,
       the Agent's legal counsel and any experts or consultants (which
       experts or consultants may be employees of the Agent or any Lender)
       retained by the Agent incurred in connection with the preparation,
       negotiation or interpretation of this Marketing Letter Agreement and
       the other Marketing Facility Documents, each Accommodation issued or
       made hereunder, and each amendment, modification, approval, consent or
       waiver hereto or hereunder; and

            (iii) all reasonable out-of-pocket expenses (including
       reasonable attorneys' fees and costs (which attorneys may be employees
       of the Agent or such Lender)) incurred by the Agent or the Lenders in
       connection with (x) the enforcement of this Marketing Letter
       Agreement, the Marketing Facility or any of the Marketing Facility
       Documents against the Borrower or the administration thereof, (y) any
       so-called "work-out" of the Borrowers' obligations with respect to the
       Marketing Facility, or (z) any litigation, proceeding or dispute
       whether arising hereunder or otherwise, in any way related to the
       Agent's or the Lenders' relationship with Borrower or any of its
       subsidiaries under the Marketing Facility Documents if with respect to
       any litigation, proceeding or dispute where the Borrowers and the
       Lenders are adverse parties, the Agent and the Lenders are the
       prevailing parties.  The provisions of this section shall survive
       payment or satisfaction of payment of amounts owing under or with
       respect to the Marketing Facility Documents.

  5.   CONSENTS, AMENDMENTS, WAIVERS, ETC.  Except as otherwise expressly
       --------  ----------  -------  ---                                
provided in this Marketing Letter Agreement, any consent or approval required or
permitted by this Marketing Letter Agreement to be given by the Agent and the
Lenders may be given, and any term of this Marketing Letter Agreement or the
Marketing Facility Documents may be amended, and the performance or observance
by the Borrower of any terms of this Marketing Letter Agreement or the other
Marketing Facility Documents may be waived (either generally or in a particular
instance and either retroactively or prospectively) with, but only with, the
written consent of the Borrower, the Agent and the
<PAGE>
 
                                      -16-

Required Lenders.  Neither (a) the provisions of Section 1(e) requiring that the
Required Lenders are necessary to make a demand for prepayment of any undrawn
amounts available for drawing under any L/C or of any obligations secured by
such L/C nor (b) modification to the defined term "Required Lenders" shall be
made without the written consent of the Borrower, the Agent and all of the
Lenders.

  6.   ASSIGNMENT.  Any Lender may, with the prior written consent of the
       ----------                                                        
Borrowers, the Agent and ING, such consent not to be unreasonably withheld, make
an assignment of any portion of its share of the Marketing Facility, provided
that the assignee with respect thereto and Borrower shall execute an Instrument
of Accession in the form of Exhibit A attached hereto.
                            ---------                 

  7.   NOTICES, ETC.  Except as otherwise expressly provided herein or in the
       -------  ---                                                          
other Marketing Facility Documents, all notices and other communications made or
required to be given pursuant to this Marketing Letter Agreement or the other
Marketing Facility Documents to any party hereto shall be in writing and shall
be delivered in hand, mailed by United States registered or certified first
class mail, postage prepaid, sent by overnight courier, or sent by telecopy,
facsimile or telex and confirmed by delivery via courier or postal service at
the address set forth for such party on the signature pages hereto or at such
other address for notice as such party shall have last furnished in writing to
the person giving the notice.  Any such notice or demand shall be deemed to have
been duly given or made and to have become effective upon receipt thereof.

  8.   DEFINITIONS.  Any capitalized term defined herein shall have such meaning
       -----------                                                              
in each place it appears herein, including in any schedules and exhibits hereto.

  9.   MISCELLANEOUS.
       ------------- 

       With respect to the Borrower, this Marketing Letter Agreement is for
Borrower's information only and the Borrower is not to show this Marketing
Letter Agreement to, and it is not to be relied upon by, third parties (except
that the Borrower may file a copy of, or show, or both, as applicable, this
Marketing Letter Agreement to the Securities Exchange Commission ("SEC"), as
                                                                   ---      
required by the SEC) and this Marketing Letter Agreement creates no rights in
any such third party.  The Agent and the Lenders shall not disclose the terms of
this Marketing Letter Agreement except in accordance with standard and customary
banking practices or as required by law or legal practice or to assignees or
potential assignees.  This Marketing Letter Agreement constitutes the entire
understanding among Borrower, the Lenders and the Agent on this subject and
supersedes all prior discussions.
<PAGE>
 
                                      -17-

       No failure on the part of the Agent or the Lenders to exercise and no
delay in exercising, and no course of dealing with respect to any right, power,
or privilege under this Marketing Letter Agreement or any of the other Marketing
Facility Documents shall operate as a waiver thereof. Any waiver of any
provision hereof shall be effective only in the specific instance granted and
shall not operate as a continuing waiver of such provision.

       THIS LETTER AGREEMENT AND THE FACILITY DOCUMENTS AND INSTRUMENTS EXECUTED
IN CONNECTION HEREWITH SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT
REFERENCE TO CHOICE OF LAW PROVISIONS). THE BORROWER AGREES THAT ANY SUIT FOR
THE ENFORCEMENT OF THIS LETTER AGREEMENT OR ANY RELATED DOCUMENT OR INSTRUMENT
MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL
COURT SITTING THEREIN AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH
COURT AND IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. BORROWER
CONSENTS TO SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER BY
CERTIFIED OR REGISTERED MAIL, POSTAGE PREPAID AND RETURN RECEIPT REQUESTED, WITH
COPY THEREOF TO RESOURCES ALSO BY SUCH CERTIFIED OR REGISTERED MAIL, AT THE
ADDRESS, WITH RESPECT TO BORROWER, FOR BORROWER SPECIFIED IN SECTION 7 HEREOF,
AND AT THE ADDRESS, WITH RESPECT TO RESOURCES FOR RESOURCES, SPECIFIED AT
SECTION 13 OF THAT CERTAIN GUARANTY OF EVEN DATE HEREWITH BY RESOURCES
GUARANTYING MARKETING'S OBLIGATIONS WITH RESPECT TO THE ACCOMMODATIONS. SERVICE
OF PROCESS SERVED IN THE MANNER SET FORTH IN THE PRECEDING SENTENCE SHALL BE
EFFECTIVE FIVE BUSINESS DAYS AFTER THE DATE ON WHICH SUCH SERVICE OF PROCESS IS
SENT AS PROVIDED ABOVE; PROVIDED THAT SUCH FIVE BUSINESS DAY PERIOD SHALL NOT
                        --------                                             
APPLY IF THE AGENT OR ANY LENDER TAKES ANY ACTION OR FILES ANY MOTION, AND SHALL
NOT PREVENT THE AGENT OR ANY LENDER FROM TAKING ANY ACTION, OR FILING ANY
MOTION, SEEKING AN INJUNCTION OR OTHER EMERGENCY ORDER OR RELIEF WITHOUT REGARD
TO THE FIVE BUSINESS DAY PERIOD PROVIDED FOR IN THIS SENTENCE AND SUCH ACTION OR
MOTION WILL NOT BE CONSIDERED TO BE EX PARTE EXCEPT AS OTHERWISE PROVIDED BY
                                    --------                                
APPLICABLE LAW.
<PAGE>
 
                                      -18-

      EACH OF THE AGENT, THE LENDERS AND THE BORROWER HEREBY WAIVES ITS RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS LETTER AGREEMENT OR ANY OTHER FACILITY
DOCUMENT OR ANY RIGHT OR OBLIGATION HEREUNDER OR THEREUNDER. Except as
prohibited by law, each of the Agent, the Lenders and the Borrower hereby waives
any right which it may have to claim or recover in any litigation referred to in
the preceding sentence any special, exemplary, punitive consequential damages or
any damages other than, or in addition to, actual damages. Each of the Agent,
the Lenders and the Borrower (i) certifies that no party hereto nor any
representative, agent or attorney for any party hereto has represented,
expressly or otherwise, that such party would not, in the event of litigation,
seek to enforce the foregoing waivers, and (ii) acknowledges that, in entering
into the Marketing Letter Agreement and the other Marketing Facility Documents
such parties are relying upon, among other things, the waivers and
certifications contained in this (S)9.

      Agent and each Lender agrees (on behalf of itself and each of its
affiliates, directors, officers, employees, agents and representatives) to use
reasonable precautions to keep confidential, in accordance with its customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, any non-public information
supplied to it by Borrower or Resources as being confidential at the time the
same is delivered to Agent or such Lender, provided that nothing herein shall
limit the disclosure of any such information (i) to the extent required by
statute, rule, regulation or judicial process, (ii) to counsel for Agent or any
Lender, (iii) to bank examiners, auditors or accountants, (iv) in connection
with any litigation to which Agent or any Lender is a party or (v) to any
assignee or participant (or prospective assignee participant) so long as such
assignee or participant (or prospective assignee or participant) first enters
into a confidentiality agreement with Agent or such Lender; and provided further
that in no event shall Agent or any Lender be required to return any materials
furnished by Borrower or Resources.

      This Marketing Letter Agreement may be executed in several counterparts,
each of which shall be an original, and all of which shall constitute one
agreement. In proving this Marketing Letter Agreement, it shall not be necessary
to produce more than one such counterpart executed by the party to be charged.
The provisions of this Marketing Letter Agreement are severable and if any one
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, such invalidity or unenforceability shall affect only such
provision in such jurisdiction.
<PAGE>
 
                                      -19-

      Please acknowledge your understanding of the above by signing and
returning the enclosed copy of this letter.

                              Sincerely,

                              THE FIRST NATIONAL BANK OF BOSTON,
                              Individually and as Agent


 
                               By:   /s/ Christopher H. Holmgren
                                    ---------------------------------------
                               Name:     Christopher H. Holmgren
                                    ---------------------------------------
                               Title:    Vice President
                                    ---------------------------------------
 
                               Address:     100 Federal Street, 01-08-02
                                            Boston, Massachusetts 02110
                                Attention:  Christopher H. Holmgren,
                                            Vice President
                               Fax:         (617) 434-4067


                               INTERNATIONALE NEDERLANDEN
                               (U.S.) CAPITAL CORPORATION

 
 
                               By: /s/   Robi Artman-Hodge
                                    ---------------------------------------
                               Name:     Robi Artman-Hodge
                                    ---------------------------------------
                               Title:    Managing Director
                                    ---------------------------------------

                               Address:      135 East 57 Street
                                             New York, New York  10022
                                Attention:   Ms. Robi Artman-Hodge
                                             Managing Director
                               Fax:          (212) 593-3362
<PAGE>
 
                                      -20-



Accepted and Agreed to:

PLAINS MARKETING & TRANSPORTATION INC.

 
 
By: /s/ Phil Kramer
   ------------------------------------
Name:   Phil Kramer
   ------------------------------------
Title:  Vice President
   ------------------------------------
Address:      1600 Smith Street
              Houston, Texas  77002
 Attention:   Mr. Phillip D. Kramer
Fax:          (713) 654-1523