EXHIBIT 10.20



Plains Exploration & Production Company

700 Milam,
Suite 3100

Pennzoil North Tower

Houston, Texas
77002



September 4, 2003



John F. Wombwell

335 Westminster Drive

Houston, Texas 77024



| | Re: |  | Terms of Employment with the Company
| | --- |  | ------------------------------------



Dear John:



I am pleased to offer you the position of Executive
Vice President and General Counsel of Plains Exploration & Production Company (the Company). This offer letter shall outline the terms of your employment with the Company.



Subject to earlier termination by either you or the Company, you will be employed by the Company for a term of five years which shall begin on
September 4, 2003 (the Effective Date). The term of your employment will automatically be extended one year and again for successive one-year periods on each anniversary thereof, if you and the Company have agreed to new compensation
terms at least ninety days prior to the end of the initial five-year period and any additional one-year extensions (the initial five-year term and any additional years are hereinafter referred to as the Term). Your annual salary shall be
$275,000, and you shall be eligible for an annual target bonus of 100% of your annual salary, subject to attainment of goals set forth by the Companys Board of Directors (the Board). You will receive a signing bonus of $105,000,
which the Company will remit to you within seven (7) days of the Effective Date. You will also be entitled to the following additional benefits:



| |  |  | You will be entitled to receive a lump sum payment equal to $25,000 plus an amount equal to the taxes employee will owe on such amount (the Tax Gross-Up) such that after payment
of taxes, the employee will retain a net amount of $25,000. The Company shall have full discretion with respect to the selection of an accountant to determine the amount of the Tax Gross-Up.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | You will be entitled to receive 35,000 restricted stock units, which will vest one-third on September 4, 2004, one-third on September 4, 2005 and one-third on September 4, 2006 in accordance
with the provisions of the Companys 2002 Stock Incentive Plan.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | You will be entitled to receive stock appreciation rights with respect to 100,000 shares of the Companys common stock at an exercise price equal to the closing price
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



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September 4, 2003

Page 2 of 4



of a share of the Companys common stock on the New York Stock Exchange (as
reported in The Wall Street Journal) on September 4, 2003, and which will vest one-third on September 4, 2004, one-third on September 4, 2005 and one-third on September 4, 2006 in accordance with the provisions of the Companys 2002 Stock
Incentive Plan.



You agree to use reasonable best efforts to perform faithfully and
sufficiently your responsibilities and duties hereunder. The Company understands and acknowledges that you shall be an employee of Plains Resources Inc., and therefore, you will not be able to devote all of your attention and time during normal
business hours to the Company. Accordingly, the Company agrees that the performance of your duties on behalf of Plains Resources Inc. shall not be a breach of this Agreement.



If the Company terminates your employment during the Term for any reason other than cause, or if a change in control as defined in the
Companys 2002 Stock Incentive Plan occurs, or if your employment terminates due to your death during the Term, you will receive a severance payment equal to two times the sum of your base salary and last earned annual bonus (provided, however,
that if such termination shall take place prior to December 31, 2004, the bonus amount used for the severance calculation shall be the target bonus), and any stock appreciation rights covering shares of Company common stock or grants of restricted
Company common stock or restricted stock units shall immediately vest. In addition, you will be entitled to health benefits for up to two years, subject to mitigation should you become entitled to health benefits under another plan.



During the Term and for any period thereafter, you shall not, without the written consent of the Board
or a person authorized by the Board, disclose to any person, other than an employee of the Company or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance of your duties as an executive of the
Company, any confidential information obtained by you while in the employ of the Company with respect to the Companys business, including but not limited to technology, know-how, processes, maps, geological and geophysical data, other
proprietary information and any information whatsoever of a confidential nature, the disclosure of which you know or should know will be damaging to the Company; provided, however, that confidential information shall not include any information
known generally to the public (other than as a result of unauthorized disclosure by you) or any information which you may be required to disclose by any applicable law, order, or judicial or administrative proceeding.



During the Term, you shall not in North America directly or indirectly engage in or become interested
financially in as a principal, employee, partner, shareholder, agent, manager, owner, advisor, lender or guarantor of any person engaged in any business substantially identical to the Business (defined below); provided, however, that you may invest
in stock, bonds or other securities in any such business (without participating in such business) if: (i)(A) such stock, bonds or other securities are listed on any United States securities exchange or are publicly traded in an over the counter
market and (B) your investment does not exceed, in the case of any capital stock of any one issuer, 5% of the issued and outstanding capital stock, or in the case of bonds or other securities, 5% of the aggregate principal amount thereof issued and
outstanding, or (ii) such investment is completely passive and no control or influence over the management or



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September 4, 2003

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policies of such business is exercised. The term Business shall mean the exploitation,
exploration, development and production of crude petroleum and natural gas.



Further,
during the Term and for a period of one year thereafter, you shall not solicit or hire, directly or indirectly, in any manner whatsoever (except in response to a general solicitation), in the capacity of employee, consultant or in any other capacity
whatsoever, one or more of the employees, directors or officers or other persons (hereinafter collectively referred to as Employees) who at the time of solicitation or hire, or in the 90-day period prior thereto, are working full-time or
part-time for the Company or any of its subsidiaries and you shall not endeavor, directly or indirectly, in any manner whatsoever, to encourage any Employee to leave his or her job with the Company or any of its subsidiaries and you shall not
endeavor, directly or indirectly, and in any manner whatsoever, to incite or induce any client of the Company or any of its subsidiaries to terminate, in whole or in part, its business relations with the Company or any of its subsidiaries.



[The next page is the signature page.]





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September 4, 2003

Page 4 of 4



If you agree with the terms as set forth herein, please sign both copies of this letter and return one
copy to me at the above address.



Sincerely,



|                                                    
|----------------------------------------------------
|                                                    
|                                                    
|/s/ James C. Flores                                 
|                                                    
|James C. Flores Chairman and Chief Executive Officer



Agreed to and accepted this 4th day of
September, 2003.



|                    
|--------------------
|                    
|                    
|/s/ John F. Wombwell
|                    
|John F. Wombwell