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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q/A



Amendment No. 2



x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended March 31, 2004



OR



 ̈ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934



Commission file number: 001-31470



PLAINS EXPLORATION
& PRODUCTION COMPANY

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 33-0430755                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



700 Milam Street, Suite 3100

Houston, Texas 77002

(Address of
principal executive offices)

(Zip Code)



(713) 579-6000

(Registrants telephone number,
including area code)



Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.    Yesx    No   ̈



Indicate by check mark
whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).    Yesx    No   ̈



77.3 million shares of Common Stock, $0.01 par value, issued and outstanding at March 31, 2005.



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Explanatory Note



This Amendment No. 2 to quarterly report on Form 10-Q/A (Form 10-Q/A) is being filed to amend the Companys quarterly report on Form 10-Q for the
quarter ended March 31, 2004, which was filed with the SEC on May 7, 2004 (Original Form 10-Q) and amended on June 14, 2004 (Amendment No. 1 to Form 10-Q). Accordingly, pursuant to rule 12b-15 under the Securities Exchange
Act of 1934, as amended, this Form 10-Q/A contains the complete text of Item 4 of Part I, as amended, as well as currently dated certifications. Unaffected items have not been repeated in this Form 10-Q/A.



In June 2004 we determined that deferred tax assets associated with our current
liability for commodity hedging contracts that had historically been classified in long-term deferred income taxes should instead be classified as a current asset in our consolidated balance sheet. We are filing this Form 10-Q/A for the purpose of
amending the disclosure contained in Item 4 of Part I, Controls and Procedures, regarding this change in classification.



This amendment does not reflect events occurring after the filing of the Original Form 10-Q, and does not modify or update the disclosures therein in any way
other than as required to reflect the amendments as described above and set forth below.



Statement Regarding Forward-Looking Statements



This
Quarterly Report on Form 10-Q includes forward-looking statements based on our current expectations and projections about future events. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that
include words such as will, would, should, plans, likely, expects, anticipates, intends, believes, estimates, thinks,
may, and similar expressions, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results and performance to be materially different from any future
results or performance expressed or implied by these forward-looking statements. These factors include, among other things:



| |  |  | uncertainties inherent in the development and production of oil and gas and in estimating reserves;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | unexpected difficulties in integrating our operations as a result of any significant acquisitions, including the recent acquisition of Nuevo Energy Company;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | unexpected future capital expenditures (including the amount and nature thereof);
| | - |  | ---------------------------------------------------------------------------------



| |  |  | impact of oil and gas price fluctuations;
| | - |  | -----------------------------------------



| |  |  | the effects of our indebtedness, which could adversely restrict our ability to operate, could make us vulnerable to general adverse economic and industry conditions, could place us at a
competitive disadvantage compared to our competitors that have less debt, and could have other adverse consequences;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the effects of competition;
| | - |  | ---------------------------



| |  |  | the success of our risk management activities;
| | - |  | ----------------------------------------------



| |  |  | the availability (or lack thereof) of acquisition or combination opportunities;
| | - |  | -------------------------------------------------------------------------------



| |  |  | the impact of current and future laws and governmental regulations;
| | - |  | -------------------------------------------------------------------



| |  |  | environmental liabilities that are not covered by an effective indemnity or insurance, and
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | general economic, market, industry or business conditions.
| | - |  | ----------------------------------------------------------



All forward-looking statements in this report are made as of the date hereof, and you should not place undue certainty on these statements without also considering
the risks and uncertainties



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associated with these statements and our business that are discussed in this report. Moreover, although we believe the expectations reflected in the forward-looking
statements are based upon reasonable assumptions, we can give no assurance that we will attain these expectations or that any deviations will not be material. Except as required by applicable securities laws, we do not intend to update these
forward-looking statements and information. See Items 1 & 2.Business and PropertiesRisk Factors in our Annual Report on Form 10-K for the year ended December 31, 2004 for additional discussions of risks and
uncertainties.



PLAINS EXPLORATION & PRODUCTION COMPANY



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                          |  |  
|----------------------------------------- |  | -
|PART I. FINANCIAL INFORMATION             |  |  
|                                          | 
|Item 4.  Controls and Procedures          |  | 1
|                                          | 
|PART II. OTHER INFORMATION                |  |  
|                                          | 
|Item 6.  Exhibits and Reports on Form 8-K |  | 3



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Item 4Controls and Procedures



Under
the supervision and with the participation of our management, including our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer), we evaluated the effectiveness of our disclosure
controls and procedures (as defined under Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our
disclosure controls and procedures as of March 31, 2004 are effective at the reasonable assurance level to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is (i) recorded,
processed, summarized and reported within the time periods specified in the SECs rules and forms and (ii) accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely
decisions regarding required disclosure. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



Effective January 1, 2001, we adopted Statement of Financial Accounting Standards No. 133Accounting for Derivatives, or SFAS 133, pursuant to
which we were required to record the fair value of all derivative instruments on our balance sheet. Upon adoption of SFAS 133 effective January 1, 2001, we began classifying deferred income taxes associated with our current assets and liabilities
for commodity hedging contracts in long-term deferred income taxes. In a recent review of our financial statements in comparison to financial statements of other oil and gas producing companies, our Vice President, Controller and Chief Accounting
Officer noted that the balance sheet classification of deferred income tax liabilities and assets was not treated consistently by the companies reviewed. On further review we determined that deferred tax assets associated with our current liability
for commodity hedging contracts that we had classified in long term deferred income taxes since January 1, 2001, should instead be classified as a current asset in our consolidated balance sheet. After consultation with our auditors and review
of recent views expressed by the staff of the SEC concerning assessment of materiality and although the misclassification had no impact on our consolidated statements of income, cash flows or stockholders equity and was merely a
reclassification of amounts between balance sheet accounts, we determined to restate our financial statements. At a meeting on June 12, 2004 our Audit Committee approved the restatement of our financial statements and the amendment of the
appropriate documents filed with the SEC. Accordingly, in Amendment No. 1 to our Form 10-K for the year ended December 31, 2003 and Amendment No. 1 to our Form 10-Q for the quarter ended March 31, 2004, we revised our consolidated balance sheets at
December 31, 2003 and 2002 and March 31, 2004, to reflect the reclassification of deferred tax assets associated with our current liability for commodity hedging contracts.



A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives
of the control system are met. Our internal controls at the time of the misclassification included qualified tax consultants who prepared income tax related calculations and disclosures based on information provided by the Company followed by a
review by our Vice President, Controller and Chief Accounting Officer and Assistant Controller, Financial Reporting. Although we believe the appropriate procedures were in place and were performed by qualified personnel, none of those involved
recognized the misclassification. We believe that the misclassification of the deferred taxes represented a deficiency rather than a material weakness in the internal control system and we believe the deficiency has been appropriately addressed.



In early 2004 we decided to add the position of Director of Tax due to
the growth and increasing complexity of the Companys operations. The decision to add the position of Director of Tax was not a result of the tax misclassification. Our Director of Tax joined the Company in May 2004 and is responsible for
overall management of the Companys tax function. These responsibilities include advising management concerning tax-efficient alternatives, assuring the Companys financial



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statements properly reflect tax expenses, assets and liabilities and related disclosures, and meeting tax compliance obligations accurately and efficiently. Our
Director of Tax has twenty-three years of previous tax experience with large multi-national exploration and production companies. He has a masters degree in accounting, is a certified public accountant licensed in Texas, and is a member of the
Tax Executives Institute. We believe that the supervision of the Companys tax disclosures by an experienced tax accounting professional employed by the Company will enhance its ability to comply with all appropriate tax and related accounting
issues, inclusive of the period end reporting process around classification of deferred tax assets and liabilities.



There were no changes in our internal controls over financial reporting during the quarter ended March 31, 2004 identified as a result of the evaluation
described above that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.



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PART II. OTHER INFORMATION



Item 6Exhibits and Reports on Form 8-K



(a) Exhibits



|      |  |                                                                                                                                                                                                                                                                                          
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1   |  | Agreement and Plan of Merger, dated February 12, 2004, by and among Plains Exploration & Production Company, PXP California Inc. and Nuevo Energy Company (incorporated by reference to Exhibit 2.1
to the Companys Form 8-K filed on February 12, 2004).                               
|      | 
|2.2   |  | Amendment No. 1 to Agreement and Plan of Merger, dated April 9, 2004, by and among Plains Exploration & Production Company, PXP California Inc. and Nuevo Energy Company (incorporated by reference
to Exhibit 2.2 to the Companys Amendment No. 1 to Form S-4 filed on April 12, 2004).
|      | 
|31.1* |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.                                                                                                                                                                                                                       
|      | 
|31.2* |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.                                                                                                                                                                                                                       
|      | 
|32.1* |  | Section 1350 Certification of Chief Executive Officer.                                                                                                                                                                                                                                   
|      | 
|32.2* |  | Section 1350 Certification of Chief Financial Officer.                                                                                                                                                                                                                                   

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|* |  | Filed herewith
|- |  | --------------



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.



|                    |  |                                          |  |                                                     
|------------------- |  | ---------------------------------------- |  | ----------------------------------------------------
|                    |  | PLAINS EXPLORATION & PRODUCTION COMPANY.
|                    |  |                                         
|Date: April 4, 2005 |  | By:                                      |  | /s/    STEPHEN A. THORINGTON                        
|                    |  |                                          |  | Stephen A. Thorington                               
|                    |  |                                          |  | Executive Vice President and Chief Financial Officer
|                    |  |                                          |  | (Principal Financial Officer)                       



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