Document:

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                                                                    EXHIBIT 10.4

                              AMENDED AND RESTATED

                            TAX ALLOCATION AGREEMENT

                                 by and between

                              PLAINS RESOURCES INC.

                                       and

                     PLAINS EXPLORATION & PRODUCTION COMPANY

                                 October 2, 2002

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                               TABLE OF CONTENTS

                                                                        Page
                                                                        ----
1.   Spinco Group ...................................................     2
2.   Tax Returns ....................................................     2
3.   Obligation for Payment of Taxes ................................     4
4.   No Plains Tax Payments .........................................     5
5.   Spinco Tax Payments ............................................     5
6.   Tax Benefits Before Spin-Off; Deferred Intercompany Gains ......     7
7.   Spinco Tax Benefits After Spin-Off; No Payment by Spinco .......     8
8.   Tax Audits .....................................................     8
9.   Proposed Adjustments ...........................................     8
10.  Notice of Settlement or Compromise .............................     9
11.  Spinco's Right to Contest ......................................     9
12.  Subsequent Adjustments or Refunds ..............................    10
13.  Spinco Spin-Off Tax Indemnity ..................................    11
14.  Future Actions .................................................    12
15.  Combined, Consolidated or Unitary Basis Returns ................    13
16.  Earnings and Profits Information ...............................    13
17.  Tax Interpretation .............................................    14
18.  Consistent Tax Treatment .......................................    14
19.  Retention of Records ...........................................    14
20.  Post Spin-Off Period Taxes .....................................    15
21.  Expenses .......................................................    15
22.  Definitions ....................................................    15
     (a)  "After-Tax Basis" .........................................    15
     (b)  "Agreed Rate" .............................................    15
     (c)  "Code" ....................................................    15
     (d)  "Distribution Agreement" ..................................    16
     (e)  "Items of Loss or Tax Benefit" ............................    16
     (f)  "Interim Period" ..........................................    16
     (g)  "Plains" ..................................................    16
     (h)  "Plains Group" ............................................    16

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                                                                        Page
                                                                        ----
     (i)  "Returns" .................................................    16
     (j)  "Ruling" ..................................................    16
     (k)  "Short Period" ............................................    16
     (l)  "Spinco" ..................................................    16
     (m)  "Spinco Group" ............................................    16
     (n)  "Spin-Off" ................................................    16
     (o)  "Spin-Off Date" ...........................................    16
     (p)  "Spin-Off Tax" ............................................    16
     (q)  "Tax Authority" ...........................................    17
     (r)  "Taxes" ...................................................    17
     (s)  "Transfer Tax" ............................................    17
23.  Notices ........................................................    17
24.  Binding Effect; Successors .....................................    18
25.  Severability ...................................................    18
26.  Entire Agreement ...............................................    19
27.  Governing Law ..................................................    19
28.  Arbitration ....................................................    20

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                              AMENDED AND RESTATED
                            TAX ALLOCATION AGREEMENT

     THIS AMENDED AND RESTATED TAX ALLOCATION AGREEMENT, made and entered into
as of the 2nd day of October, 2002, by and between Plains Resources Inc., a
Delaware corporation ("Plains"), and Plains Exploration & Production Company, a
Delaware corporation ("Spinco").

                              W I T N E S S E T H:
                               - - - - - - - - - -

     WHEREAS, Plains is the common parent of an affiliated group of corporations
(hereinafter referred to as the "Plains Group") within the meaning of Section
1504(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and the
members of the Plains Group have heretofore joined in filing consolidated
Federal income Tax Returns;

     WHEREAS, on or about July 3, 2002, certain assets associated with the
upstream business conducted by the Plains Group, including the stock of certain
subsidiaries included in the Plains Group and engaged in the upstream business,
were contributed to the capital of Spinco or otherwise acquired by Spinco or one
or more of its subsidiaries;

     WHEREAS, on September 18, 2002, Spinco (1) converted from a California
limited partnership to a Delaware limited partnership and immediately thereafter
(2) converted from a Delaware limited partnership to a Delaware corporation;

     WHEREAS, Plains, on a date to be determined by Plains (the "Spin-Off
Date"), will distribute to its stockholders all of the outstanding stock of
Spinco that it then holds (the "Spin-Off"), and thereafter Spinco and its
subsidiaries will no longer be members of the Plains Group for Federal income
Tax purposes;

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     WHEREAS, on July 3, 2002, the parties entered into the Tax Allocation
Agreement to provide for the sharing of the Federal, state, local and foreign
income Tax liabilities and benefits accrued prior to the Spin-Off between Plains
and its subsidiaries and Spinco and its subsidiaries;

     WHEREAS, the parties now desire to amend and restate the Tax Allocation
Agreement to determine, under the Tax Allocation Agreement, Spinco's potential
liability to Plains for Spinco's use of the Tax benefits of the Plains Group
prior to the Spin-Off;

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Spinco Group. For purposes of this Agreement, the "Spinco Group" shall
mean (i) Spinco, (ii) Spinco's subsidiaries, and (iii) those corporations and
other entities whose stock or ownership interests will be contributed to Spinco
prior to the Spin-Off Date, all of such subsidiaries of Spinco and such
corporations and other entities being listed on Exhibit A attached hereto.
Unless otherwise specified, whenever Items of Loss or Tax Benefit (as defined
below) of Spinco are referred to in this Agreement the reference shall be to the
collective amounts of such items for the Spinco Group. For purposes of this
Agreement, items of income, gain, loss, deduction, credit, or other Tax
attributes are referred to as "Items of Loss or Tax Benefit".

     2. Tax Returns. Plains shall prepare and file or cause to be prepared and
filed timely all appropriate Returns in respect of Spinco and the other members
of the Spinco Group that (i) are required to be filed on or before the Spin-Off
Date; or (ii) are required to be filed after the Spin-Off Date that (A) are
required to include, on a consolidated, combined or unitary basis, the
operations of Spinco or any other member of the Spinco Group for any Tax period
or portion thereof ending on or before the Spin-Off Date; or (B) are required to
be filed by Spinco or any other member of the Spinco Group on a separate return
basis for any Tax period ending on or before the Spin-Off Date. To the extent
requested by Plains, Spinco shall participate in the filing

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of and shall file any required Returns with respect to any Tax period that ends
on or before the Spin-Off Date. Spinco shall prepare or cause to be prepared the
schedules in respect of Spinco and other members of the Spinco Group containing
the information necessary for Plains to prepare any consolidated, combined or
unitary Returns. If Plains, after consulting with Spinco, files any such
consolidated, combined or unitary Return using information with respect to
Spinco and the other members of the Spinco Group that is different from the
information prepared and furnished by Spinco, and Plains and Spinco thereafter
are unable to resolve such difference, such difference shall constitute a claim
for purposes of Paragraph 28 of this Agreement. Spinco shall also prepare or
cause to be prepared and shall file or cause to be filed all other Returns
required of Spinco or any other members of the Spinco Group, or in respect of
its or any of their activities, for any Tax period ending after the Spin-Off
Date that includes the operations of Spinco or any other member of the Spinco
Group prior to the Spin-Off Date. The parties hereto will, to the extent
permitted by applicable law, elect with the relevant Tax Authority to treat for
all purposes the Spin-Off Date as the last day of a Tax period of Spinco and the
other members of the Spinco Group, and such period shall be treated as a "Short
Period" for purposes of this Agreement. In any case where applicable law does
not permit Spinco to treat the Spin-Off Date as the last day of a Short Period,
then for purposes of this Agreement, the portion of such Taxes that is
attributable to the operations of Spinco and the other members of the Spinco
Group for such Interim Period (as defined below) shall be (i) in the case of
Taxes that are not based in whole or in part on income or gross receipts, the
total amount of such Taxes for the period in question multiplied by a fraction,
the numerator of which is the number of days in the Interim Period, and the
denominator of which is the total number of days in the entire period in
question, and (ii) in the case of Taxes that are based in whole or in part on
income or gross receipts, the

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Taxes that would be due with respect to the Interim Period, if such Interim
Period were a Short Period. "Interim Period" means with respect to any Taxes
imposed on Spinco or any other members of the Spinco Group for which the
Spin-Off Date is not the last day of a Short Period, the period of time
beginning on the first day of the actual Tax period that includes (but does not
end on) the Spin-Off Date and ending on and including the Spin-Off Date. Any
franchise Tax shall be allocated to the Tax period or portion thereof during
which the right to do business obtained by the payment of such franchise Tax
relates, regardless of whether such franchise Tax is measured by income,
operations, assets or capital relating to another Tax period.

     3. Obligation for Payment of Taxes. Plains shall be entitled to receive
from Spinco amounts calculated in accordance with Paragraphs 2, 3, 5, 12 and 13
hereof. Except as otherwise provided in Paragraph 5, the amounts, if any, that
Spinco shall be obligated to pay Plains pursuant to Paragraph 5, with respect to
Tax periods of the Plains Group ending on or prior to the Spin-Off Date, shall
be paid (i) within 30 days after the Spin-Off Date where the Taxes were paid by
Plains on or before the Spin-Off Date and shall include interest thereon
calculated for the period from the Spin-Off Date to the date of payment at a per
annum rate of interest (computed on the basis of the actual number of days
elapsed (including the Spin-Off Date but excluding the payment date) over a year
of 365 or 366 days, as the case may be) equal to the underpayment rate under
Section 6601 of the Code, or (ii) within 30 days after the date of payment where
the Taxes are paid by Plains after the Spin-Off Date. This initial settlement
shall be based on the Returns as they have been filed and shall include any
amendments of or adjustments to such Returns that have been finally settled.
Except as otherwise provided in Paragraph 5, any amounts that Spinco shall be
obligated to pay Plains pursuant to Paragraph 5 with respect to Tax periods of
the Plains Group ending after the Spin-Off Date shall be paid within 30 days
after

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filing of the Returns for such Tax periods. In the event of an adjustment to the
amount of payment for any Tax period as determined under Paragraph 12, Plains
shall be entitled to receive from Spinco such payment within 30 days after
payment of a deficiency to or receipt of a refund from the Tax Authority. In the
event of an adjustment under Paragraph 12 resulting in no additional payment to
or receipt of a refund from the Tax Authority, settlement shall be made within
30 days after filing of the amended Return or final settlement of the
adjustment. In the event that Spinco is delinquent in paying to Plains any
amount due pursuant to this Paragraph 3, including any interest accrued thereon
pursuant to this Paragraph 3, such unpaid amount shall bear interest from the
original due date until paid at a per annum rate equal to the lesser of (a) 18
percent and (b) the maximum lawful non-usurious rate of interest, if any, which
under applicable law Plains is permitted to charge Spinco thereon from time to
time.

     4. No Plains Tax Payments. Notwithstanding any other provision of this
Agreement to the contrary, Plains shall not be obligated to pay Spinco for any
Items of Loss or Tax Benefit of the Spinco Group used by the Plains Group to
reduce its Federal income Tax liability or Federal taxable income for any Tax
period ending on or before the Spin-Off Date. For purposes of these
computations, the allocation of Tax attributes to the Spinco Group and
absorption thereof by the Plains Group for each Tax period shall be determined
in accordance with the Treasury Regulations under (S)1502 of the Code, applied
in a manner consistent with practices and methods followed in reporting the
Federal income Tax liability of the Plains Group for such Tax periods. In any
instance where a Tax attribute must be characterized, the characterization
prescribed by the aforementioned Treasury Regulations will control.

     5. Spinco Tax Payments. For each Tax period included in a consolidated
Federal income Tax return of the Plains Group which includes income of the
Spinco Group, Spinco shall

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be obligated to pay Plains an amount equal to the product of (i) the net taxable
income of the Spinco Group included in the consolidated Federal income Tax
Return of the Plains Group for such period, multiplied by (ii) the highest
marginal statutory Federal corporate income Tax rate applicable to such income
for such period; provided, however, that no payment shall be required pursuant
to this Paragraph 5 to the extent such payments have previously been made by the
Spinco Group to members of the Plains Group other than the Spinco Group under
any Tax sharing agreement or arrangement (whether written or oral) or any other
similar system of payments with respect to Federal income Taxes of the Plains
Group in existence prior to the Spin-Off Date, including, but not limited to,
any estimated Tax payments. For purposes of these computations, the allocation
of Tax attributes to the Plains Group and absorption thereof by the Spinco Group
for each Tax period shall be determined in accordance with the Treasury
Regulations under (S)1502 of the Code, applied in a manner consistent with
practices and methods followed in reporting the Federal income Tax liability of
the Plains Group for such Tax periods. In any instance where a Tax attribute
must be characterized, the characterization prescribed by the aforementioned
Treasury Regulations will control. To the extent, if any, that the amount of
Taxes Plains is required to pay for a Tax period that includes any net taxable
income of the Spinco Group is less than the amount calculated as owed by Spinco
to Plains under this Paragraph 5, the amount owed by Spinco to Plains shall be
(i) reduced to the extent that such difference is attributable to Items of Loss
or Tax Benefit of the Plains Group used which would have otherwise expired
unused but for the fact that the Spinco Group had net taxable income for such
Tax period, or (ii) deferred to the extent such difference is attributable to
Items of Loss or Tax Benefit of the Plains Group used which would have otherwise
carried forward to a subsequent year or years of the Plains Group but for the
fact that the Spinco Group had net

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taxable income for such Tax period. In the event an amount otherwise payable by
Spinco to Plains is deferred pursuant to clause (ii) of the immediately
preceding sentence, such amount shall be paid by Spinco to Plains within 30 days
after the filing of the Tax Return for the Tax period in which such Items of
Loss or Tax Benefit of the Plains Group previously used by the Spinco Group
would have been used by the Plains Group. In no event shall the aggregate
amounts payable by Spinco to Plains pursuant to the immediately preceding
sentence (including the aggregate amounts of any state, local or foreign Taxes
similarly deferred) exceed $3 million. Any interest that would otherwise be
added to any such amount pursuant to Paragraph 3 or otherwise shall be added to
such amounts notwithstanding that such addition causes the aggregate amounts to
exceed $3 million.

     The parties acknowledge that certain state, local or foreign income Tax
Returns may be filed on a combined, consolidated, separate or unitary basis. In
any such event, the parties intend that the required calculations for
determining which party owes Taxes to the other with respect thereto be made in
accordance with the principles referred to Paragraph 15.

     The parties further acknowledge that all Taxes shown on any Tax Return
prepared and filed on a separate return basis (notwithstanding who may be
obligated to prepare and file any such Tax Return) shall be the sole liability
of, and shall be paid by, the entity reflected as the taxpayer thereon.

     6. Tax Benefits Before Spin-Off; Deferred Intercompany Gains. For purposes
of the calculations under Paragraphs 5, 12 and 13 of this Agreement, any loss of
or decrease in any Items of Loss or Tax Benefit of the Plains Group resulting
from or attributable to the transfer of assets to Spinco or any other member of
the Spinco Group in connection with the Spin-Off (under the Treasury Regulations
governing Federal consolidated returns) shall be ignored and all

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calculations shall be made as though all such Items of Loss or Tax Benefit were
available for use by the Plains Group. In the event any deferred intercompany
gain attributable to assets transferred to Spinco or any other members of the
Spinco Group by other members of the Plains Group is recognized by the Plains
Group by reason of the Spin-Off, such deferred intercompany gain, if any, shall
be deemed to be a gain of the Spinco Group for its taxable year ending on the
Spin-Off Date for purposes of all calculations under this Agreement, including
the calculation of Taxes owed by Spinco to Plains pursuant to Paragraphs 2, 3,
5, 12 and 13 hereof. Notwithstanding anything in this Agreement to the contrary,
with respect to any items of income or gain resulting from an acceleration of an
excess loss account prior to or on the Spin-Off Date, Spinco shall not be liable
to Plains for Taxes or the use of Items of Loss or Tax Benefit resulting from
those items of income or gain.

     7. Spinco Tax Benefits After Spin-Off; No Payment by Spinco.
Notwithstanding anything in this Agreement to the contrary, with respect to
Items of Loss or Tax Benefit apportioned to and carried over by the Spinco Group
after the Spin-Off (under the Treasury Regulations governing Federal
consolidated income Tax Returns) and regardless of whether such Items of Loss or
Tax Benefit (x) are used by the Spinco Group to reduce its Federal income Tax
liability after the Spin-Off or (y) expire unused by the Spinco Group, Spinco
shall not have any obligation to pay Plains for any such item of loss or other
Tax benefit.

     8. Tax Audits. In the event of an audit by any Tax Authority of a Return
filed by Plains for any Tax period ending prior to or on the Spin-Off Date (or
any Tax period thereafter in which a carryforward of the Spinco Group's Items of
Loss or Tax Benefit is used), Plains shall give Spinco timely and reasonable
notice of such audit proceedings and Spinco shall have the right to participate
in any such audit; provided, however, that Plains shall have the full power and

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authority to control such audit. In connection with any such audit, Spinco will
provide all necessary information and other assistance reasonably requested by
Plains with respect to issues concerning the activities of the Spinco Group. All
communications with any such Tax Authority and its employees concerning any such
audit will be made by Plains unless otherwise agreed between the parties hereto.
In connection with its participation in any audit, Spinco shall be given
reasonable notice of all material meetings, investigations, field examinations
and similar events and copies of all relevant material correspondence between
the Tax Authority conducting the audit and Plains.

     9. Proposed Adjustments. Plains shall give prompt notice to Spinco of any
adjustment or adjustments proposed by any Tax Authority relating to the
activities of the Spinco Group for any Tax period ending prior to or on the
Spin-Off Date. After consulting with Spinco, Plains shall determine in its sole
discretion the nature of all action to be taken to contest such proposed
adjustment, including whether any such action shall initially be contested by
way of judicial or administrative proceedings, or both, whether any such
proposed adjustment shall be contested by resisting payment thereof or by paying
the same and seeking a refund thereof, and if Plains shall undertake to contest
such proposed adjustment, the court or other judicial body before which such
action will be commenced. Plains shall have full control over any contest or
administrative proceeding pursuant to this Paragraph, but Spinco, at its expense
and subject to approval by Plains, which approval shall not be unreasonably
withheld, may participate in any proceedings contesting any proposed adjustment
relating to the activities of the Spinco Group.

     10. Notice of Settlement or Compromise. Plains shall give prompt notice to
Spinco of any proposal made to it at the time of an audit or otherwise, to
settle or compromise issues relating to the Tax liabilities of the Spinco Group
for any Tax period ending prior to or on the

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Spin-Off Date. Plains will not accept or offer any settlement or compromise of
such issues without the consent of Spinco, and such consent shall not be
unreasonably withheld. If, in Plains' opinion, Spinco unreasonably withholds
such consent, Plains shall have the right to settle or compromise such issues on
the basis contained in the notice to Spinco. If Spinco thereafter desires to
dispute such settlement or compromise, Spinco's claim with respect thereto shall
constitute a claim for purposes of Paragraph 28 of this Agreement.

     11. Spinco's Right to Contest. Should Plains decline or cease to contest
any proposed adjustment relating to the activities of the Spinco Group for any
Tax period ending prior to or on the Spin-Off Date, Plains shall so notify
Spinco. Spinco, at its expense and upon providing reasonable assurances to
Plains of Spinco's ability to pay any Taxes resulting from any such proposed
adjustment, may contest such proposed adjustment; but in no event shall Spinco
be permitted to accept or offer any settlement or compromise that would require
the settlement or compromise of issues relating to the Tax liabilities of
members of the Plains Group other than the Spinco Group.

     12. Subsequent Adjustments or Refunds. With respect to any Tax period of
the Plains Group after December 31, 2001, for which Plains received (or would be
entitled to receive) from Spinco a payment pursuant to Paragraph 5 or this
Paragraph 12, if the filing of an amended income Tax Return, final determination
of any adjustment made by any Tax Authority or the receipt of a refund by Plains
occurs with respect to such period and such event would cause a difference in
the amount of payment required for such period as previously calculated pursuant
to Paragraph 5 or this Paragraph 12, Plains shall give Spinco prompt notice of
such difference and Plains shall be obligated to pay or entitled to receive from
Spinco the amount of such difference. Any amount required to be paid pursuant to
this Paragraph 12 shall include any

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interest imposed by or received from the Tax Authority if the adjustment results
in the payment of Tax to or receipt of Tax from the Tax Authority.

     In addition, Plains and Spinco acknowledge and agree that the tax sharing
agreement in effect for the Plains Group as of December 31, 2001, shall be
negated and canceled as of the Spin-Off Date. Plains and Spinco further agree
that there are no claims or causes of action under such tax sharing agreement as
of December 31, 2001, for periods ending on or before December 31, 2001, by
either of them or any member of their respective group against the other or any
member of the other's group, and they release each other from any and all such
claims. With respect to Taxes for periods ending after December 31, 2001, Plains
and Spinco agree that this Agreement shall control. Spinco agrees that it will
have no right to request that Plains file an amended return or a claim for
refund for any reason, unless Spinco agrees to pay any Tax liability shown
thereon or therein and Plains, in its absolute discretion (which may be withheld
for any reason), agrees. In the event Spinco generates net operating losses or
other Items of Loss or Tax Benefit after the Spin-Off Date that may otherwise be
carried back to the taxable income or Tax liability of the Plains Group prior to
the Spin-Off Date, Spinco agrees to relinquish the entire carry back period with
respect to each such net operating loss or other Items of Loss or Tax Benefit
under Section 172(b)(3) or other appropriate sections and to carry forward any
such losses and other items.

     13. Spinco Spin-Off Tax Indemnity. Notwithstanding any other provision of
this Agreement to the contrary, Spinco shall be liable for, shall pay and shall
indemnify and hold Plains and the other members of the Plains Group harmless, on
an After-Tax Basis, against (A) any Transfer Taxes and other Taxes which may be
imposed or assessed as a result of the contribution by Plains to the capital of
Spinco or the acquisition (by sale or purchase or

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otherwise) by Spinco or one or more of the other members of the Spinco Group of
assets associated with the upstream business conducted by the Plains Group,
including the stock of certain subsidiaries included in the Plains Group and
engaged in the exploration and production business, (B) any Taxes resulting from
the recognition of deferred intercompany gains as contemplated by Paragraph 6
hereof, and (C) any Spin-Off Tax. In determining the amount of, and the time of
payment of, any such Transfer Taxes, other Taxes or Spin-Off Tax owed by Spinco
to Plains, the principles set forth in Paragraph 5 shall apply.

     In addition, Spinco shall be liable, and shall indemnify Plains, for 50
percent of any Tax to which Plains or any member of the Plains Group is subject
as a result of the application of any provision of the Code to the Spin-Off,
including without limitation, Section 311(b), Section 355(c)(2), Section 355(e)
or Section 361(c)(2) of the Code (or any corresponding or similar provision of
state, local or foreign law), other than (i) any Spin-Off Tax, which is provided
for in the immediately preceding paragraph, or (ii) any such Tax which results
(x) solely from the fact that one or more persons acquire after the Spin-Off
Date directly or indirectly stock representing a 50-percent or greater interest
in Plains and such acquisition is subject to Section 355(e) of the Code, (y)
from the failure of Plains or any other member of the Plains Group (other than
Spinco or any other member of the Spinco Group) to comply with the covenants,
agreements and representations in the Ruling, except to the extent that any of
the covenants, agreements or representations require compliance by Spinco or any
other member of the Spinco Group after the Spin-Off, or (z) from any action by,
or failure to take an action on the part of, Plains or any other member of the
Plains Group (other than Spinco or any other member of the Spinco Group).

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     14. Future Actions. Spinco agrees that, during the three-year period
following the Spin-Off, it will not engage in any transaction that could
adversely affect the tax treatment of the Spin-Off without the prior written
consent of Plains, which consent may be withheld only if reasonable, unless (i)
Spinco delivers to Plains a supplemental ruling from the Internal Revenue
Service or a tax opinion acceptable to Plains of nationally recognized tax
counsel to the effect that the proposed transaction would not adversely affect
the tax treatment of the Spin-Off, or (ii) Spinco or another person or entity
acceptable to Plains provides to, or for the benefit of, Plains a cash escrow,
letter of credit or other comparable security acceptable to Plains in an amount
equal to the Taxes and accrued interest thereon (which accrued interest shall be
increased over time until such Taxes are paid or determined not to be payable)
that Plains reasonably calculates would be payable if the Spin-Off were
determined to be a taxable event for Tax purposes, with the terms and conditions
of any such cash escrow, letter of credit or other security being mutually
acceptable to Plains and Spinco or such other person or entity, as the case may
be. Plains agrees to cooperate with and provide reasonable assistance to Spinco
in the event that Spinco requests a supplemental ruling from the Internal
Revenue Service.

     15. Combined, Consolidated or Unitary Basis Returns. The parties
acknowledge that certain state, local or foreign Tax Authorities may require, or
one of the parties may desire, to file amended or original state, local or
foreign income Tax Returns on a combined, consolidated or unitary basis. In this
regard, Spinco agrees that it will have no right to request that Plains file an
amended return or a claim for refund for any reason, unless Spinco agrees to pay
any Tax liability shown thereon or therein and Plains, in its absolute
discretion (which may be withheld for any reason), agrees. Such filing may
result in an aggregate decrease in the state, local or foreign income Tax of
both parties; however, one party may suffer a Tax increase compared to

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its state, local or foreign income Tax liability calculated on a separate
company basis, while the other party enjoys a Tax decrease. In any such event,
the parties intend that the required calculations for determining which party
owes Taxes to the other with respect thereto be made by utilizing the principles
set forth in Paragraphs 2, 3, 5, 12 and 13 hereof.

     16. Earnings and Profits Information. The parties agree to share such
information as is necessary to allocate properly the earnings and profits of the
Spinco Group in accordance with the Code and Treasury Regulations for Tax
periods prior to or ending on the Spin-Off Date. After the Spin-Off, Plains
agrees to provide Spinco and Spinco's independent auditors with such information
as is necessary to verify amounts received or receivable or paid or payable by
Spinco under this Agreement. Spinco agrees to make available to Plains, upon
request, all Federal, state, local and foreign Tax Returns, work papers and
other documents pertaining to the activities of the Spinco Group prior to the
Spin-Off.

     17. Tax Interpretation. For all Tax purposes and notwithstanding any other
provision of this Agreement, to the extent permitted by applicable law, the
parties hereto shall treat any payment made pursuant to this Agreement as a
capital contribution or dividend distribution, as the case may be, immediately
prior to the Spin-Off Date and, accordingly, as not includible in the taxable
income of the recipient. If it is finally determined that the receipt or accrual
of any payment made under this Agreement is taxable to the recipient, the payor
shall pay to the recipient, on an After-Tax Basis, an amount equal to any
increase in the Taxes of the recipient as a result of receiving the payment from
the payor.

     18. Consistent Tax Treatment. To the extent that assets are assigned, sold,
transferred or conveyed by a member of the Plains Group to Spinco or another
member of the Spinco Group in contemplation of the Separation (as defined in the
Distribution Agreement) or the Spin-Off

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and any such transaction is treated as a sale for Tax purposes, the aggregate
purchase price shall be allocated among the assets assigned, sold, transferred
or conveyed as determined by Plains in its sole discretion. Each of Plains and
Spinco agrees to report and, where applicable, to cause the members of their
respective groups to report, the purchase prices of such assets as determined by
Plains.

     19. Retention of Records. Each party hereto agrees, to the extent
potentially relevant to the other party, to (1) retain, in accordance with
Plains' record retention policies in effect on the date of this Agreement, all
records, documents, accounting and other information (including computer data)
necessary for the preparation and filing of all Returns or the audit of such
Returns, and (2) give to the other party reasonable access to such records,
documents, accounting data, Returns and related books and records and other
information (including computer data) and to its personnel (insuring their
cooperation) and premises, for purposes of the review or audit of such Returns
to the extent relevant to an obligation or liability of a party under this
Agreement.

     20. Post Spin-Off Period Taxes. Except as otherwise provided to the
contrary in this Agreement, (i) Plains and the other members of the Plains Group
(which, for this purpose, shall not include Spinco and the other members of the
Spinco Group) shall be solely responsible for all Taxes of the Plains Group
(which, for this purpose, shall not include Spinco and the other members of the
Spinco Group) arising in Tax periods beginning after the Spin-Off Date, and (ii)
Spinco and the other members of the Spinco Group shall be solely responsible for
all Taxes of the Spinco Group arising in Tax periods beginning after the
Spin-Off Date.

     21. Expenses. Each party will bear its own expenses in complying with this
Agreement, including but not limited to the cost of employee work hours. The
sharing of fees

                                       15

<PAGE>

and expenses of nonemployees and independent contractors mutually engaged by the
parties shall be agreed upon before such persons are engaged.

     22. Definitions.

     (a) "After-Tax Basis" means, with respect to any payment, an amount
calculated by taking into account the Tax consequences of the receipt of such
payment, as well as any Tax benefit associated with the liability giving rise to
the payment, in each case calculated on a present value basis using the Agreed
Rate.

     (b) "Agreed Rate" means the annual rate of interest quoted, from time to
time, by JPMorgan Chase Bank in Houston, Texas as its prime rate of interest for
the purpose of determining the interest rates charged by it for United States
dollar commercial loans made in the United States.

     (c) "Code" has the meaning set forth in the first recital hereof.

     (d) "Distribution Agreement" means that certain Master Separation Agreement
dated as of the date hereof, by and between Plains and Spinco, as the same may
be amended or otherwise modified from time to time pursuant to the terms
thereof.

     (e) "Items of Loss or Tax Benefit" has the meaning set forth in Paragraph 1
hereof.

     (f) "Interim Period" has the meaning set forth in Paragraph 2 hereof.

     (g) "Plains" has the meaning set forth in the preamble hereto.

     (h) "Plains Group" has the meaning set forth in the first recital hereto.

     (i) "Returns" means all returns, declarations, reports, statements and
other documents required to be filed in respect of Taxes, and the term "Return"
means any one of the foregoing Returns.

                                       16

<PAGE>

     (j) "Ruling" means that certain private letter ruling issued by the
Internal Revenue Service on May 22, 2002, with respect to the Spin-Off and
relating to the tax consequences associated with the distribution of all
outstanding shares of Spinco common stock, as the same may be amended,
supplemented or otherwise modified or added to by the Internal Revenue Service
on or before the Spin-Off Date.

     (k) "Short Period" has the meaning set forth in Paragraph 2 hereof

     (l) "Spinco" has the meaning set forth in the preamble hereof.

     (m) "Spinco Group" has the meaning set forth in Paragraph 1 hereof.

     (n) "Spin-Off" has the meaning set forth in the fourth recital hereof.

     (o) "Spin-Off Date" has the meaning set forth in the fourth recital hereof.

     (p) "Spin-Off Tax" means any Tax to which Plains or any member of the
Plains Group is subject as a result of the application of any provision of the
Code to the Spin-Off, including without limitation, Section 311(b), Section
355(c)(2), Section 355(e) or Section 361(c)(2) of the Code (or any corresponding
or similar provision of state, local or foreign law), which results (i) solely
from the fact that one or more persons acquire after the Spin-Off Date directly
or indirectly stock representing a 50-percent or greater interest in Spinco and
such acquisition is subject to Section 355(e) of the Code; (ii) from the failure
of Spinco or any other member of the Spinco Group to comply with the covenants,
agreements and representations in the Ruling; (iii) from any action by, or
failure to take an action on the part of, Spinco or any other member of the
Spinco Group, or (iv) from any combination of (i) through (iii) above.

     (q) "Tax Authority" means the United States Internal Revenue Service or any
other comparable state, local or foreign governmental authority.

                                       17

<PAGE>

     (r) "Taxes" means all federal, state, local, foreign and other taxes,
duties, levies, imposts, customs or other assessments, including, without
limitation, all net income, alternative minimum, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, profit share, license,
value added, withholding, payroll, employment, excise, estimated, severance,
stamp, occupation, premium, property, windfall profits, or other taxes, of any
kind whatsoever, together with any interest, penalties, additions to tax, fines
or other additional amounts imposed thereon or related thereto, and the term
"Tax" means any one of the foregoing Taxes.

     (s) "Transfer Tax" means any excise, sales, use, transfer, documentary,
filing, recordation or other similar tax or fee, together with any interest,
additions or penalties with respect thereto and any interest in respect of such
additions or penalties.

     23. Notices. All notices and other communications to be given or made
hereunder shall be in writing and shall be (a) personally delivered with signed
receipt obtained acknowledging delivery; (b) transmitted by postage prepaid
registered mail, return receipt requested (air mail if international); or (c)
transmitted by facsimile; to a party at the address set out below (or at such
other address as it may have provided notification for the purposes hereof to
the other party hereto in accordance with this Section).

     If to Spinco:               Plains Exploration & Production Company
                                 500 Dallas Street, Suite 700
                                 Houston, Texas 77002
                                 Fax number:       713-654-4915
                                 Attention: General Counsel

     If to Plains:               Plains Resources Inc.
                                 500 Dallas Street, Suite 700
                                 Houston, Texas 77002
                                 Fax number:       (713) 654-4915
                                 Attention: Chief Executive Officer

                                       18

<PAGE>

     24. Binding Effect; Successors. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and any
successor, by merger, acquisition of substantially all of a party's assets or
otherwise, to either of the parties hereto (including but not limited to any
successor of Plains or Spinco succeeding to the Tax attributes of Plains or
Spinco under Section 381 of the Code), to the same extent as if such successor
had been an original party to this Agreement. In addition, in the event of an
acquisition of substantially all of the assets of Spinco in which gain or loss
is not recognized, in whole or in part, for Federal income Tax purposes, Spinco
shall ensure that any purchaser of such assets shall assume the obligations set
forth in this Agreement.

     25. Severability. Any provision of this Agreement that is determined by
arbitration as provided herein or a court of competent jurisdiction to be
invalid, illegal or unenforceable shall be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provision of this Agreement invalid, illegal or unenforceable, so long as the
material purposes of this Agreement can be determined and effectuated. Should
any provision of this Agreement be so declared invalid, illegal or
unenforceable, the parties shall agree on a valid provision to substitute for
it.

     26. Entire Agreement. This Agreement, including the exhibit and other
writings referred to herein or delivered pursuant hereto and the Distribution
Agreement, as well as the other agreements entered into by and between Plains
and Spinco in connection with the transactions contemplated by the Distribution
Agreement, constitutes the entire agreement between Plains and Spinco with
respect to the subject matter hereof and supersedes all other

                                       19

<PAGE>

agreements, representations, warranties, statements, promises and undertakings,
whether oral or written, with respect to the subject matter hereof, including,
without limitation, any and all Tax sharing agreements or arrangements (whether
oral or written) between Plains and the other members of the Plains Group (other
than the Spinco Group) on the one hand and Spinco and the other members of the
Spinco Group on the other hand, that require payments or indemnities to be made
with respect to Taxes. This Agreement may not be amended, altered or modified
except by a writing signed by duly authorized officers of Plains and Spinco.

     27. Governing Law. All questions arising out of this Agreement and the
rights and obligations created herein, or its validity, existence,
interpretation, performance or breach, shall be governed by and construed in
accordance with the internal laws of the State of Texas, without regard to or
the application of the rules of conflicts of laws set forth in such laws.

     28. Arbitration. The parties agree that any claim arising out of or related
to this Agreement shall be governed by the dispute resolution, arbitration and
choice of forum provisions set forth in Article VIII of the Distribution
Agreement.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

                                        PLAINS RESOURCES INC.

                                        By: /s/ John T. Raymond
                                           -------------------------------------
                                                John T. Raymond
                                           -------------------------------------
                                                President and Chief Operating
                                                Officer
                                           -------------------------------------

                                        PLAINS EXPLORATION & PRODUCTION COMPANY

                                        By:  /s/ James C. Flores
                                           -------------------------------------
                                                 James C. Flores
                                           -------------------------------------
                                                 Chief Executive Officer
                                           -------------------------------------

                                       20

<PAGE>

                                                                       EXHIBIT A

                           MEMBERS OF THE SPINCO GROUP
<TABLE>
<CAPTION>
                                            Incorporation or Formation          %
              Name                                 Jurisdiction             Controlled
              ----                          ---------------------------     -----------
<S>                                           <C>                              <C>
Arguello Inc.                                 Delaware                         100%
Plains Illinois Inc.                          Delaware                         100%
PMCT Inc.                                     Delaware                         100%
Plains Resources International Inc.           Delaware                         100%
Plains E & P Company                          Delaware                         100%
Gaviota Gas Plant Company                     None                             26.5%*
Point Arguello Natural Gas Line Company       None                             26.5%*
Point Arguello Pipeline Company               None                             26.5%*
Point Arguello Terminal Company               None                             26.5%*
</TABLE>

* Managing General Partnership Interest

                                       21<PAGE>

                                                                   Exhibit 10.13

                              EMPLOYMENT AGREEMENT

     This Employment Agreement ("Agreement") by and between Plains Exploration &
Production Company, a Delaware corporation ("Company"), and James C. Flores
("Employee") is entered into as of September 19, 2002, but, other than Section
4(d) hereof, shall not be effective until the date (the "Effective Date") on
which all the shares of the common stock of Company held by its parent
corporation, Plains Resources Inc. ("PLX") are distributed to PLX's stockholders
(the "Distribution"); provided, however, that if the Distribution does not take
place on or before May 23, 2003, this Agreement shall not become effective.

     WHEREAS, Company desires to employ Employee and Employee desires to be
employed by Company;

     NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties, and agreements contained herein, and for other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:

     1.   Employment. Contingent on the Distribution occurring no later than May
23, 2003, Company agrees to employ Employee, and Employee hereby agrees to be
employed by Company, on the terms and conditions set forth in this Agreement.

     2.   Term of Employment. Subject to the provisions for earlier termination
provided in the Agreement, the term of this Agreement (the "Term") shall
commence on the Effective Date and shall terminate on the fifth anniversary of
the Effective Date; provided, however, that following the fifth anniversary of
the Effective Date, the Term shall automatically be extended one year and again
for successive one-year periods on each anniversary thereof, if Employee and
Company shall 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. Notwithstanding any provision of this Agreement to the contrary,
termination of this Agreement shall not alter or impair any rights or benefits
of Employee (or Employee's estate or beneficiaries) that have arisen under this
Agreement on or prior to such termination.

     3.   Employee's Duties. During the Term, Employee shall serve as the
Chairman and Chief Executive Officer of Company, with such customary duties and
responsibilities as may from time to time be assigned to him by the Board,
provided that such duties are at all times consistent with the duties of such
positions. Employee shall report directly to the Board. All other employees of
Company shall report to Employee. Employee agrees to serve without additional
compensation, if elected or appointed thereto, in one or more offices or a
director of any of Company's Subsidiaries. For purposes of this Agreement, a
"Subsidiary" shall mean any entity in which Company owns a majority of the
voting stock of the class of securities (or other interests in the case of a
limited liability company or partnership) that may vote in the election of the
members of the governing body of such entity.

<PAGE>

     Employee agrees to use reasonable best efforts to perform faithfully and
efficiently his duties and responsibilities hereunder. Company understands and
acknowledges that Employee shall be an employee, executive officer and director
of PLX, and therefore, Employee will not be able to devote all of his attention
and time during normal business hours to Company. Accordingly, Company agrees
that the performance of Employee's duties on behalf of PLX shall not be a breach
of this Agreement. Notwithstanding the foregoing, during the Term, Employee may
engage in the following activities so long as they do not interfere in any
material respect with the performance of Employee's duties and responsibilities
hereunder: (i) serve on corporate, civic or charitable boards or committees,
(ii) deliver lectures, fulfill speaking engagements or teach on a part-time
basis at educational institutions but not more than 20 hours per month, and
(iii) manage his personal investments; provided, however, that in no event shall
the conduct of any such activities by Employee be deemed to materially interfere
with Employee's duties hereunder until Employee has been notified in writing
thereof by the Board and given a reasonable period in which to cure such
interference; and further provided that Employee shall notify and obtain
approval of the Board prior to accepting any of the positions described in
clause (i) above, which approval shall not be unreasonably withheld. In
addition, Employee shall be permitted to manage his personal investments
described in clause (iii) above in accordance with the preceding sentence
provided that (a) such management shall not interfere in any material respect
with the performance of Employee's duties and responsibilities hereunder or
violate Company's conflicts policy as in effect from time to time, (b) Employee
informs the Board of any conflicts of interest (whether actual or apparent) with
Company and any of its Subsidiaries, including any event reasonably likely to
raise the appearance of conflicts, and (c) Employee notifies the Board of, and
discuss with the Board with respect to, any opportunities presented to Employee
or any of the entities in which Employee owns a majority interest in connection
with such continued ownership and management that should be offered to Company
or its Subsidiaries. Notwithstanding the foregoing, Company agrees that
Employee's management of his current personal investments, as disclosed to
Company prior to the Effective Date, shall not be deemed to materially interfere
with his duties hereunder.

     Company agrees to (a) nominate Employee as a director of Company during the
Term and (b) use its best efforts to cause Employee to be elected or appointed,
or re-elected or re-appointed, as a director of Company during the Term, and (c)
use its reasonable best efforts to appoint Employee a member of each committee
of the Board to the extent such membership does not create any conflicts of
interest with respect to Company and is permitted by Company's certificate of
incorporation or by-laws as in effect from time to time or applicable federal,
state or local laws, regulations or rules, including, but not limited to, rules
of any stock exchange.

     4.   Compensation.

          (a)   Base Compensation. For services rendered by Employee under this
     Agreement Company shall pay to Employee a base salary ("Base Compensation")
     of $400,000 per annum payable in accordance with Company's customary
     payroll practice for its senior executive officers. The amount of Base
     Compensation shall be reviewed periodically by the Board and may be
     increased from time to time as the Board may deem

                                        2

<PAGE>

     appropriate. Base Compensation, as in effect at any time, may not be
     decreased without the prior written consent of Employee.

          (b)  Annual Bonus. In addition to his Base Compensation, Employee
     shall be eligible to receive each year during the Term, a cash incentive
     payment in an amount equal to 100% of Employee's Base Compensation (the
     "Target Bonus"). The amount of the Target Bonus earned for any year shall
     be determined by the Compensation Committee of the Board based on
     Employee's individual performance and the performance of Company.

          (c)  SARs. In accordance with the Employment Agreement dated May 8,
     2001 between PLX and Employee (the "Original Agreement"), the Incentive
     Stock Option and Nonqualified Stock Option Agreement dated February 20,
     2002 between PLX and Employee (the "Other Option Agreement"), the Amended
     and Restated Employment Agreement entered into on the date hereof between
     PLX and Employee the ("Restated Agreement"), the Employee Matters Agreement
     dated July 3, 2002, between the Company and PLX, as amended (the "Employee
     Matters Agreement"), the Company 2002 stock incentive plan, and the PLX
     2001 stock incentive plan, the Company shall issue certain stock
     appreciation rights to Employee (the "Performance SARs") to effect an
     adjustment to certain performance options (the "Performance Options")
     granted to Employee by PLX under the Original Agreement, which adjustment
     results from the Distribution, and certain stock appreciation rights to
     Employee ("Other SARs") to effect an adjustment to the remaining stock
     options (the "Other Options") granted to Employee by PLX under the Other
     Option Agreement. The Performance SARs and Other SARs shall have the same
     terms and conditions as the Performance Options and the Other Options, as
     the case may be, with a strike price and a number of Performance SARs and
     Other SARs, as the case may be, calculated in accordance with the Employee
     Matters Agreement. The Company and Employee shall execute an agreement
     reflecting the Performance SARs and Other SARs.

          (d)  New Grant. On the effective date of an initial public offering of
     Company common stock by Company, Company will grant Employee 75,000
     restricted shares of Company common stock with respect to which
     restrictions will lapse pro rata over a three-year period beginning on the
     first anniversary of such effective date and under such other terms and
     conditions as provided in the agreement evidencing such award.

     5.   Other Benefits; Business Expenses.

          (a)  Employee shall be entitled to participate in all incentive
     compensation plans and to receive all fringe benefits and perquisites
     offered by Company to any of its senior executive officers, including,
     without limitation, participation in the various health, retirement, life
     insurance, disability insurance and other employee benefit plans or
     programs provided to the employees of Company in general, subject to the
     regular eligibility requirements with respect to each of such benefit plans
     or programs, and such

                                        3

<PAGE>

     other benefits or perquisites as may be approved by the Board during the
     Term, all on a basis at least as favorable to Employee as may be provided
     to similarly situated senior executive officers of Company. Employee shall
     be entitled to take appropriate and reasonable annual vacation time
     provided that such vacation time does not interfere with his duties
     hereunder.

          (b)  Company shall reimburse Employee for all reasonable business
     expenses incurred by Employee in the performance of his duties; which
     expenses will be subject to the oversight of Company's audit committee in
     the normal course. It is understood that Employee is authorized to incur
     reasonable business expenses for promoting the business of Company,
     including reasonable expenditures for travel, lodging, meals and client or
     business associate entertainment. Request for reimbursement for such
     expenses must be accompanied by appropriate documentation.

          (c)  Company shall reimburse Employee for his monthly country club
     fees.

     6.   Termination. This Agreement may be terminated prior to the end of its
Term as set forth below.

          (a)  Resignation. Employee may resign his position at any time. In the
     event of such resignation, except in the case of resignation for Good
     Reason (as defined below), Employee shall not be entitled to further
     compensation pursuant to this Agreement except as may be provided by the
     terms of any benefit plans of Company in which Employee may be a
     participant, the Participation Agreement, and the terms of any outstanding
     equity grants, and for salary accrued but unpaid through the date of
     resignation and reimbursement of expenses prior to such date.

          (b)  Death. If Employee's employment is terminated due to his death,
     this Agreement shall terminate and Company shall have no obligations to his
     legal representatives with respect to this Agreement other than the payment
     of benefits as described in Section 6(c)(i) below, benefits under the
     Participation Agreement, salary accrued but unpaid through the date of
     termination, reimbursement of expenses prior to such date and benefits
     under the terms of any outstanding equity grants.

          (c)  Discharge.

               (i)  Company may terminate this Agreement and Employee's
          employment for any reason deemed sufficient by Company upon notice as
          provided in Section 10. However, in the event that Employee's
          employment is terminated during the Term by Company for any reason
          other than Cause, in the event of Employee's death or Disability, or
          if Employee's employment is terminated for Good Reason, then: (A)
          Company shall pay Employee immediately upon termination of Employee's
          employment a lump sum equal to three times the sum of the Base
          Compensation and last earned annual bonus (provided, however,

                                        4

<PAGE>

          that if the Date of Termination (as defined below) occurs before a
          bonus amount has been determined for the first calendar year of
          Employee's employment hereunder, the bonus amount shall be the Target
          Bonus); (B) for the 36-month period after the Date of Termination (as
          defined below), Company shall provide or arrange to provide Employee
          (and Employee's dependents) with health insurance benefits no less
          favorable than the health plan benefits provided by Company (or any
          successor) during such 36-month period to any senior executive officer
          of Company; provided, further, to the extent the coverage or benefits
          received are taxable to Employee, Company shall make Employee "whole"
          on a net after tax basis; and provided, however, that such coverage
          shall cease if Employee obtains comparable replacement coverage
          (although Employee shall have no obligation to pursue such coverage);
          and (C) on the Date of Termination all then outstanding Company
          stock-based awards of Employee, whether under this Agreement, a
          Company stock plan or otherwise, shall become immediately exercisable
          and payable in full, as the case may be, with any performance goals
          associated therewith being deemed to have been achieved at the maximum
          levels and all restrictions removed with respect thereto (including
          without limitation with respect to any options that would otherwise
          vest in accordance with performance goals and any grants of restricted
          stock that shall have been granted prior to the Effective Date); and
          (D) Company shall reimburse Employee for expenses incurred prior to
          the Date of Termination.

               (ii)   Notwithstanding the foregoing provisions of this Section
          6, in the event Employee is terminated because of Cause, Company shall
          have no obligations pursuant to this Agreement after the Date of
          Termination other than reimbursement of expenses incurred prior to
          such date. For purposes herein, "Cause" means (A) the failure by
          Employee to perform reasonably assigned duties with Company, (B) the
          engaging by Employee in conduct which is demonstrably and materially
          injurious to Company and its Subsidiaries taken as a whole, (C)
          Employee's having been convicted of, or entered a plea of nolo
          contendere to, burglary, larceny, murder or arson or a crime involving
          deceit, fraud, perjury or embezzlement, or (D) failure to notify
          Company of any actual or apparent conflicts of interest relating to
          Employee's management of personal investments in accordance with
          Section 3 of this Agreement. Notwithstanding the foregoing, prior to
          any termination for Cause under clauses (A), (B) or (D) of the
          preceding sentence, (X) Company must provide Employee with reasonable
          notice detailing the failure or conduct which the Board believes to
          constitute Cause, (Y) Company must provide Employee a reasonable
          opportunity to cure such failure or conduct, and (Z) after such notice
          and an opportunity to cure, a majority of the Board must reasonably
          determine that Employee has not cured such failure or conduct.
          Notwithstanding the foregoing provisions, Employee shall not be deemed
          to have been terminated for Cause unless and until Employee shall have
          been provided an

                                        5

<PAGE>

          opportunity to be heard in person by the Board (with the assistance of
          Employee's counsel if Employee so desires).

          (d)  Disability. If Employee shall have been absent from the full-time
     performance of Employee's duties with Company for six consecutive months as
     a result of Employee's incapacity due to physical or mental illness as
     determined by Employee's physician ("Disability"), Employee's employment
     may be terminated by Company for Disability. If Employee's employment is
     terminated for Disability, Employee shall be entitled to the compensation
     and benefits provided in Section 6(c)(i) hereof. If Employee fails during
     any period during the Term to perform Employee's full-time duties with
     Company as a result of incapacity due to physical or mental illness, as
     determined by Employee's physician, Employee shall continue to receive his
     benefits under this Agreement during such period until this Agreement is
     terminated for Disability by Company.

          (e)  Resignation for Good Reason. Employee shall be entitled to
     terminate his employment for Good Reason as defined herein. If Employee
     terminates his employment for Good Reason, Employee shall be entitled to
     the compensation and benefits provided in Section 6(c)(i) hereof. "Good
     Reason" shall mean (1) the material breach of any of Company's obligations
     under this Agreement without Employee's written consent or (2) the
     occurrence of any of the following circumstances, as the case may be,
     without Employee's written consent:

               (i)    the assignment by the Board to Employee of any duties that
          materially adversely alter the nature or status of Employee's office,
          title, responsibilities, including reporting responsibilities, from
          those in effect immediately prior to such assignment;

               (ii)   the failure by Company to continue in effect any
          compensation plan in which Employee participates that is material to
          Employee's total compensation unless an equitable arrangement
          (embodied in an ongoing substitute or alternative plan) has been made
          with respect to such plan, or the failure by Company to continue
          Employee's participation therein (or in such substitute or alternative
          plan) on a basis not materially less favorable to Employee, unless any
          such failure to continue in effect any compensation plan or
          participation relates to a discontinuance of such plans or
          participation on a management-wide or Company-wide basis;

               (iii)  the taking of any action by Company which would directly
          or indirectly materially reduce or deprive Employee of any material
          pension, welfare or fringe benefit then enjoyed by Employee, unless
          such action relates to a discontinuance of benefits on a
          management-wide or Company-wide basis;

                                        6

<PAGE>

               (iv)   the failure of Company to obtain a satisfactory agreement
          from any successor to assume and agree to perform this Agreement, as
          contemplated in Section 12 hereof;

               (v)    the relocation of Company's principal executive offices
          outside the greater Houston, Texas metropolitan area, or Company's
          requiring Employee to relocate anywhere other than the location of
          Company's principal executive offices, except for required travel on
          Company's business to an extent substantially consistent with
          Employee's obligations under this Agreement;

               (vi)   the failure to nominate Employee as a director of Company
          or to use best efforts to cause Employee to be elected or appointed,
          or re-elected or re-appointed, as a director of Company or to use
          reasonable best efforts to appoint Employee a member of a committee in
          accordance with, and to the extent provided in, Section 3 hereof; or

               (vii)  the Employee's termination of his employment with Company
          or any successor who has assumed this Agreement in accordance with
          Section 12 hereof within the 30-day period following the first
          anniversary of a Change in Control of Company.

     Employee's right to terminate employment pursuant to this subsection shall
not be affected by Employee's incapacity due to physical or mental illness. In
addition, Employee's continued employment following any event, act or omission,
regardless of the length of such continued employment, shall not constitute
Employee's consent to, or a waiver of Employee's rights with respect to, such
event, act or omission constituting a Good Reason circumstance hereunder.

          (f)  Notice of Termination. Any purported termination of Employee's
     employment by Company or by Employee shall be communicated by written
     Notice of Termination to the other party hereto in accordance with Section
     10 hereof. For purposes of this Agreement, a "Notice of Termination" shall
     mean a notice which shall set forth in reasonable detail the reason for
     termination of Employee's employment, or in the case of resignation for
     Good Reason, said notice must specify in reasonable detail the basis for
     such resignation. No purported termination which is not effected pursuant
     to this Section 6(f) shall be effective.

          (g)  Date of Termination, Etc. "Date of Termination" shall mean in the
     case of Employee's death, his date of death, and in all other cases, the
     date specified in the Notice of Termination. If no notice is given by
     Employee, termination shall be effective on the last date Employee reported
     for work with Company, and shall be deemed to be a voluntary termination
     without Good Reason.

                                        7

<PAGE>

          (h)  Mitigation. Employee shall not be required to mitigate the amount
     of any payment or benefit provided for in this Section 6 by seeking other
     employment or otherwise, nor, except as provided in clause (B) of Section
     6(c)(1), shall the amount of any payment or benefit provided for in this
     Agreement be reduced by any compensation or benefit earned by Employee as a
     result of employment by another employer, self-employment earnings, by
     retirement benefits, by offset against any amount claimed to be owing by
     Employee to Company, or otherwise.

          (i)  Full Tax Gross-Up of Parachute Payments. (i) In the event that
     any payment, award, benefit or distribution (or any acceleration of any
     payment, award, benefit or distribution) made or provided to or for the
     benefit of Employee in connection with this Agreement, or Employee's
     employment with Company or the termination thereof (the "Payments") are
     determined to be subject to the excise tax imposed by Section 4999 of the
     Code or any interest or penalties with respect to such excise tax (such
     excise tax, together with any such interest and penalties, are collectively
     referred to as the "Excise Tax"), then the Employee shall be entitled to
     receive an additional payment (a "Gross-Up Payment") from Company in an
     amount equal to the Excise Tax (excluding any income tax or employment tax
     imposed upon the Gross Up Payment). The determination of whether the
     Payments are subject to the Excise Tax and, if so, the amount of the
     Gross-Up Payment, shall be made by a nationally recognized United States
     public accounting firm that has not, during the two years preceding the
     date of its selection, acted in any way on behalf of Company or any of its
     affiliates; provided, however, that if the accounting firm has determined
     that Section 4999 does not apply, and the Internal Revenue Service claims
     that Section 4999 applies to the Payments (or any portion thereof), then
     paragraph (ii) below of this Section 6(i) shall be applicable.

               (ii)   Employee shall notify Company in writing of any claim by
          the Internal Revenue Service that, if successful, would require the
          payment by Company of a Gross-Up Payment. Such notification shall be
          given as soon as practicable but no later than ten (10) business days
          after Employee is informed in writing of such claim and shall apprise
          Company of the nature of such claim and the date on which such claim
          is requested to be paid. Employee shall not pay such claim prior to
          the expiration of the thirty (30) day period following the date on
          which he gives such notice to Company (or such shorter period ending
          on the date that any payment of taxes with respect to such claim is
          due). If Company notifies Employee in writing prior to the expiration
          of such period that it desires to contest such claim, Employee shall:

                      (A)  give Company any information reasonably requested by
               Company relating to such claim,

                      (B)  take such action in connection with contesting such
               claim as Company shall reasonably request in writing from time to
               time,

                                        8

<PAGE>

               including, without limitation, accepting legal representation
               with respect to such claim by an attorney reasonably selected by
               Company,

                      (C)  cooperate with Company in good faith in order
               effectively to contest such claim, and

                      (D)  permit Company to participate in any proceedings
               relating to such claim;

     provided, however, that Company shall bear and pay directly all costs and
expenses (including additional interest, penalties, accountant's and legal fees)
incurred in connection with such contest and shall indemnify and hold Employee
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this subsection, Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option,
either direct Employee to pay the tax claimed and commence a proceeding to
obtain a refund or contest the claim in any permissible manner, and Employee
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as Company shall determine; provided, however, that if Company directs
Employee to pay such claim and seek a refund, Company shall advance the amount
of such payment to Employee, on an interest-free basis, and shall indemnify and
hold Employee harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of Employee with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder, and
Employee shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

               (iii)  If, after the receipt by Employee of an amount advanced by
          Company pursuant to the foregoing, Employee becomes entitled to
          receive any refund with respect to such claim, Employee shall (subject
          to Company's complying with the requirements of the foregoing)
          promptly pay to Company the amount of such refund (together with any
          interest paid or credited thereon after taxes applicable thereto). If,
          after the receipt by Employee of an amount advanced by Company
          pursuant to the previous subsection, a determination is made that
          Employee shall not be entitled to any refund with respect to such
          claim and Company does not notify Employee in writing of its intent to
          contest such denial of refund prior to the expiration of thirty (30)
          days after such determination, such advance shall be forgiven and
          shall not be required to be repaid and the amount of

                                        9

<PAGE>

          such advance shall offset, to the extent thereof, the amount of
          Gross-Up Payment required to be paid.

          (j)  Change in Control. For purposes of this Agreement, a Change in
     Control shall mean an occurrence of the following during the Term:

               (i)  The "acquisition" by any "Person" (as the term person is
          used for purposes of Section 13(d) or 14(d) of the Securities Exchange
          Act of 1934, as amended (the "1934 Act")) of "Beneficial Ownership"
          (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
          any securities of Company which generally entitles the holder thereof
          to vote for the election of directors of Company (the "Voting
          Securities") which, when added to the Voting Securities then
          "Beneficially Owned" by such Person, would result in such Person
          either "Beneficially Owning" fifty percent (50%) or more of the
          combined voting power of Company's then outstanding Voting Securities
          or having the ability to elect fifty percent (50%) or more of
          Company's directors; provided, however, that for purposes of this
          paragraph (i) of Section 6(j), a Person shall not be deemed to have
          made an acquisition of Voting Securities if such Person: (a) becomes
          the Beneficial Owner of more than the permitted percentage of Voting
          Securities solely as a result of open market acquisition of Voting
          Securities by Company which, by reducing the number of Voting
          Securities outstanding, increases the proportional number of shares
          Beneficially Owned by such Person; (b) is Company or any corporation
          or other Person of which a majority of its voting power or its equity
          securities or equity interest is owned directly or indirectly by
          Company (a "Controlled Entity"); (c) acquires Voting Securities in
          connection with a "Non-Control Transaction" (as defined in paragraph
          (iii) of this Section 6(j)); or (d) becomes the Beneficial Owner of
          more than the permitted percentage of Voting Securities as a result of
          a transaction approved by a majority of the Incumbent Board (as
          defined in paragraph (ii) below); or

               (ii) The individuals who, as of the Effective Date, are members
          of the Board (the "Incumbent Board"), cease for any reason to
          constitute at least a majority of the Board; provided, however, that
          if either the election of any new director or the nomination for
          election of any new director by Company's stockholders was approved by
          a vote of at least a majority of the Incumbent Board, such new
          director shall be considered as a member of the Incumbent Board;
          provided further, however, that no individual shall be considered a
          member of the Incumbent Board if such individual initially assumed
          office as a result of either an actual or threatened "Election
          Contest" (as described in Rule 14a-11 promulgated under the 1934 Act)
          or other actual or threatened solicitation of proxies or consents by
          or on behalf of a Person other than the Board (a "Proxy Contest")
          including by reason of any agreement intended to avoid or settle any
          Election Contest or Proxy Contest; or

                                       10

<PAGE>

               (iii)  The consummation of a merger, consolidation or
          reorganization involving Company (a "Business Combination"), unless
          (1) the stockholders of Company, immediately before the Business
          Combination, own, directly or indirectly immediately following the
          Business Combination, at least fifty percent (50%) of the combined
          voting power of the outstanding voting securities of the corporation
          resulting from the Business Combination (the "Surviving Corporation")
          in substantially the same proportion as their ownership of the Voting
          Securities immediately before the Business Combination, and (2) the
          individuals who were members of the Incumbent Board immediately prior
          to the execution of the agreement providing for the Business
          Combination constitute at least a majority of the members of the Board
          of Directors of the Surviving Corporation, and (3) no Person (other
          than (x) Company or any Controlled Entity, (y) a trustee or other
          fiduciary holding securities under one or more employee benefit plans
          or arrangements (or any trust forming a part thereof) maintained by
          Company, the Surviving Corporation or any Controlled Entity, or (z)
          any Person who, immediately prior to the Business Combination, had
          Beneficial Ownership of fifty percent (50%) or more of the then
          outstanding Voting Securities) has Beneficial Ownership of fifty
          percent (50%) or more of the combined voting power of the Surviving
          Corporation's then outstanding voting securities (a Business
          Combination described in clauses (1), (2) and (3) of this paragraph
          shall be referred to as a "Non-Control Transaction");

               (iv)   A complete liquidation or dissolution of Company; or

               (v)    The sale or other disposition of all or substantially all
          of the assets of Company to any Person (other than a transfer to a
          Controlled Entity).

     Notwithstanding the foregoing, if Employee's employment is terminated and
Employee reasonably demonstrates that such termination (x) was at the request of
a third party who has indicated an intention or has taken steps reasonably
calculated to effect a Change in Control and who effectuates a Change in Control
or (y) otherwise occurred in connection with, or in anticipation of, a Change in
Control which actually occurs, then for all purposes hereof, the date of a
Change in Control with respect to Employee shall mean the date immediately prior
to the date of such termination of employment.

     A Change in Control shall not be deemed to occur solely because fifty
percent (50%) or more of the then outstanding Voting Securities is Beneficially
Owned by (x) a trustee or other fiduciary holding securities under one or more
employee benefit plans or arrangements (or any trust forming a part thereof)
maintained by Company or any Controlled Entity or (y) any corporation which,
immediately prior to its acquisition of such interest, is owned directly or
indirectly by the stockholders of Company in substantially the same proportion
as their ownership of stock in Company immediately prior to such acquisition.

     7.   Restrictive Covenants.

                                       11

<PAGE>

          (a)  Employer Covenants. Company agrees that during the Term, Company
     shall disclose to Employee or provide Employee with access to trade secrets
     or confidential information of Company or its Subsidiaries; or place
     Employee in a position to develop business goodwill on behalf of Company or
     its Subsidiaries; or entrust Employee with business opportunities of
     Company or its Subsidiaries.

          (b)  Confidential Information; Unauthorized Disclosure. During the
     period of his employment hereunder and for any period following the
     termination of employment, the Employee shall not, whether during the
     period of his employment hereunder or thereafter, without the written
     consent of the Board or a person authorized thereby, disclose to any
     person, other than an employee of Company or a person to whom disclosure is
     reasonably necessary or appropriate in connection with the performance by
     the Employee of his duties as an executive of Company, any confidential
     information obtained by him while in the employ of Company with respect to
     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 he knows or should know will be damaging to 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 the Employee) or any information which the
     Employee may be required to disclose by any applicable law, order, or
     judicial or administrative proceeding.

          (c)  Non-Competition. As part of the consideration for the
     compensation and benefits to be paid to Employee hereunder; to protect the
     trade secrets and confidential information of Company or its Subsidiaries
     that have been and will in the future be disclosed or entrusted to
     Employee, the business good will of Company or its Subsidiaries that has
     been and will in the future be developed by Employee or the business
     opportunities that have been and will in the future be disclosed or
     entrusted to Employee by Company or its Subsidiaries, and as an additional
     incentive for Company to enter into this Agreement, Company and Employee
     agree to the following competition provisions:

     During the Term and for a period of one year thereafter, Employee 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, guarantor of any person engaged in any
     business substantially identical to the Business (defined below); provided,
     however, that (a) Employee 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) its 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 policies of such
     business is

                                       12

<PAGE>

     exercised, or (b) any such business shall be deemed to exclude (i)
     ownership by Employee or any affiliated entity of interests in PLX, Plains
     All American GP LLC, Plains AAP LP, Plains All American Pipeline, L.P. and
     any of their respective subsidiaries and any board positions with respect
     to such entities, and (ii) the business of Sable Minerals, Inc. as it
     exists on the date hereof. The term "Business" shall mean the exploration,
     development and production of crude petroleum and natural gas.
     Notwithstanding the foregoing provisions of this Section 7(c), in the event
     of a termination of Employee's employment by Company without Cause or in
     the event of Employee's resignation for Good Reason, Employee shall have no
     further obligations under this Section 7(c).

          (d)  Non-Solicitation. Employee undertakes toward Company and is
     obligated, during the Term and for a period of one year thereafter, not to
     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
     Company or any of its Subsidiaries and not to endeavour, directly or
     indirectly, in any manner whatsoever, to encourage any of said Employees to
     leave his or her job with Company or any of its Subsidiaries and not to
     endeavour, directly or indirectly, and in any manner whatsoever, to incite
     or induce any client of Company or any of its Subsidiaries to terminate, in
     whole or in part, its business relations with Company or any of its
     Subsidiaries.

          (e)  Enforcement. It is the desire and intent of the parties that the
     provisions of this Section 7 shall be enforced to the fullest extent
     permissible under the laws and public policies applied in each jurisdiction
     in which enforcement is sought. Accordingly, if any particular provision of
     this Section 7 shall be adjudicated to be invalid or unenforceable, such
     provision shall be deemed amended to delete therefrom the portion thus
     adjudicated to be invalid or unenforceable. Such deletion shall apply only
     with respect to the operation of such provisions of this Section 7 in the
     particular jurisdiction in which such adjudication is made. In addition, if
     the scope of any restriction contained in this Section 7 is too broad to
     permit enforcement thereof to its fullest extent, then such restriction
     shall be enforced to the maximum extent permitted by law, and the Executive
     hereby consents and agrees that such scope may be judicially modified in
     any proceeding brought to enforce such restriction.

          (f)  Remedies. In the event of a breach or threatened breach by the
     Executive of the provisions of this Section 7, Company shall be entitled to
     an injunction and such other equitable relief as may be necessary or
     desirable to enforce the restrictions contained herein. Nothing herein
     contained shall be construed as prohibiting Company from pursuing any other
     remedies available for such breach or threatened breach or any other breach
     of this Agreement.

                                       13

<PAGE>

          (g)  The parties hereto understand and acknowledge that Employee will
     serve in various capacities (including, without limitation, stockholder,
     employee, executive officer and director) of PLX. Company acknowledges that
     no actions by Employee in any or all of his capacities with PLX shall be a
     violation of the provisions of this Section 7.

     8.   Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Employee's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by Company or any of its affiliated
companies and for which Employee may qualify, nor shall anything herein limit or
otherwise adversely affect such rights as Employee may have under any stock
option or other agreements with Company or any of its affiliated companies.

     9.   Assignability. The obligations of Employee hereunder are personal and
may not be assigned or delegated by him or transferred in any manner whatsoever,
nor are such obligations subject to involuntary alienation, assignment or
transfer, except by will or the laws of descent and distribution.

     10.  Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered, sent by overnight
courier or by facsimile with confirmation of receipt or on the third business
day after being mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to Company at its principal office address
and facsimile number, directed to the attention of the Board with a copy to the
Secretary of Company, and to Employee at Employee's residence address and
facsimile number on the records of Company or to such other address as either
party may have furnished to the other in writing in accordance herewith except
that notice of change of address shall be effective only upon receipt.

     11.  Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

     12.  Successors; Binding Agreement.

          (a)  Company will require any successor (whether direct or indirect,
     by purchase, merger, consolidation or otherwise) to all or substantially
     all of the business and assets of Company ("Successor") or any corporation
     which becomes the ultimate parent corporation of Company or any such
     Successor ("Ultimate Parent") to expressly assume and agree in writing
     satisfactory to the Employee to perform this Agreement in the same manner
     and to the same extent that Company would be required to perform it if no
     such succession had taken place; provided, however, that express assumption
     shall not be required where this agreement is assumed by operation of law.
     As used in this Agreement, including, without limitation, in Section 3, the
     term "Company" shall include any Successor and Ultimate Parent which
     executes and delivers the Agreement as

                                       14

<PAGE>

     provided for in this Section 12 or which otherwise becomes bound by all
     terms and provisions of this Agreement by operation of law.

          (b)  After the death or Disability of Employee, this Agreement and all
     rights of Employee hereunder shall inure to the benefit of and be
     enforceable by Employee's personal or legal representatives, executors,
     administrators, successors, heirs, distributees, devisees and legatees.

     13.  Indemnification. During the Term and for a period of six years
thereafter, Company shall cause Employee to be covered by and named as an
insured under any policy or contract of insurance obtained by it to insure its
directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of Company or service in other
capacities at the request of Company. The coverage provided to Employee pursuant
to this Section 13 shall be of a scope and on terms and conditions at least as
favorable as the most favorable coverage provided to any other officer or
director of Company (or any successor). In addition, to the maximum extent
permitted by the by-laws of Company in effect from time to time and applicable
law, during the Term and for a period of six years thereafter, Company shall
indemnify Employee against and hold Employee harmless from any costs,
liabilities, losses and exposures for Employee's services as an employee,
officer and director of Company (or any successor).

     14.  Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Employee and such officer as may be specifically
authorized by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or in compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. This Agreement is an integration of the parties'
agreement; no agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. Employee represents
and warrants that the execution of this Agreement will not result in any breach
of any prior or existing agreement executed by Employee with respect to any
third party. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Texas.

     15.  Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

     16.  Entire Agreement. This Agreement contains the entire understanding of
the parties in respect of the subject matter and supersedes and replaces in full
all prior written or oral agreements and understandings between the parties with
respect to such subject matters.

                           - SIGNATURE PAGE FOLLOWS -

                                       15

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of
September 19, 2002 effective for all purposes as provided above on the
Effective Date.

                                              PLAINS EXPLORATION & PRODUCTION
                                              COMPANY

                                                  /s/ John T. Raymond
                                              By:_______________________________
                                                  John T. Raymond
                                                  President

                                              EMPLOYEE

                                                 /s/ James C. Flores
                                              __________________________________
                                              James C. Flores

                                       16

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