Document:

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                                                                     EXHIBIT 4.2

                                                                  Execution Copy

                                  $200,000,000

                  PLAINS EXPLORATION & PRODUCTION COMPANY, L.P.
                               PLAINS E&P COMPANY

                    8.75% Senior Subordinated Notes due 2012

                          Registration Rights Agreement

                                                        July 3, 2002

         This REGISTRATION RIGHTS AGREEMENT dated July 3, 2002, (the
"Agreement") is entered into by and among Plains Exploration & Production
Company, L.P., a California limited partnership (the "Company"), and Plains E&P
Company, a Delaware corporation (collectively with the Company, the "Issuers"),
Arguello Inc., a Delaware corporation, Plains Illinois Inc., a Delaware
corporation, Plains Resources International Inc., a Delaware corporation and
PMCT Inc., a Delaware corporation (together, the "Guarantors"), and J.P. Morgan
Securities Inc., Goldman, Sachs & Co., Banc One Capital Markets, Inc., BNP
Paribas Securities Corp., Fleet Securities, Inc. and Fortis Investment Services
LLC (collectively, the "Initial Purchasers").

         The Issuers, the Guarantors and the Initial Purchasers are parties to
the Purchase Agreement dated June 28, 2002 (the "Purchase Agreement"), which
provides for the sale by the Issuers to the Initial Purchasers of $200,000,000
aggregate principal amount of the Issuers' 8.75% Senior Subordinated Notes due
2012 (the "Securities") which will be guaranteed on an unsecured senior
subordinated basis by each of the Guarantors. As an inducement to the Initial
Purchasers to enter into the Purchase Agreement, the Issuers and the Guarantors
have agreed to provide to the Initial Purchasers and their direct and indirect
transferees the registration rights set forth in this Agreement. The execution
and delivery of this Agreement is a condition to the closing under the Purchase
Agreement.

         In consideration of the foregoing, the parties hereto agree as follows:

         1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:

         "Business Day" shall mean any day that is not a Saturday, Sunday or
    other day on which commercial banks in New York City are authorized or
    required by law to remain closed.

         "Closing Date" shall mean the Closing Date as defined in the Purchase
    Agreement.

         "Issuers" shall have the meaning set forth in the preamble and shall
    also include the Issuers's successors.

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         "Exchange Act" shall mean the Securities Exchange Act of 1934, as
    amended from time to time.

         "Exchange Dates" shall have the meaning set forth in Section 2(a)(ii)
    hereof.

         "Exchange Offer" shall mean the exchange offer by the Issuers and the
    Guarantors of Exchange Securities for Registrable Securities pursuant to
    Section 2(a) hereof.

         "Exchange Offer Registration" shall mean a registration under the
    Securities Act effected pursuant to Section 2(a) hereof.

         "Exchange Offer Registration Statement" shall mean an exchange offer
    registration statement on Form S-4 (or, if applicable, on another
    appropriate form) and all amendments and supplements to such registration
    statement, in each case including the Prospectus contained therein, all
    exhibits thereto and any document incorporated by reference therein.

         "Exchange Securities" shall mean senior subordinated notes issued by
    the Issuers and guaranteed by the Guarantors under the Indenture containing
    terms identical to the Securities (except that the Exchange Securities will
    not be subject to restrictions on transfer or to any increase in annual
    interest rate for failure to comply with this Agreement) and to be offered
    to Holders of Securities in exchange for Securities pursuant to the Exchange
    Offer.

         "Guarantors" shall have the meaning set forth in the preamble and shall
    also include any Guarantor's successors.

         "Holders" shall mean the Initial Purchasers, for so long as they own
    any Registrable Securities, and each of their successors, assigns and direct
    and indirect transferees who become owners of Registrable Securities under
    the Indenture; provided that for purposes of Sections 4 and 5 of this
    Agreement, the term "Holders" shall include Participating Broker-Dealers.

         "Initial Purchasers" shall have the meaning set forth in the preamble.

         "Indenture" shall mean the Indenture relating to the Securities dated
    as of July [ _ ], 2002 among the Issuers, the Guarantors and JPMorgan Chase
    Bank, as trustee, and as the same may be amended from time to time in
    accordance with the terms thereof.

         "Majority Holders" shall mean the Holders of a majority of the
    aggregate principal amount of outstanding Registrable Securities; provided
    that whenever the consent or approval of Holders of a specified percentage
    of Registrable Securities is required hereunder, Registrable Securities
    owned directly or indirectly by the Issuers or any of its affiliates shall
    not be counted in determining whether such consent or approval was given by
    the Holders of such required percentage or amount.

         "Participating Broker-Dealers" shall have the meaning set forth in
    Section 4(a) hereof.

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         "Person" shall mean an individual, partnership, limited liability
    company, corporation, trust or unincorporated organization, or a government
    or agency or political subdivision thereof.

         "Prospectus" shall mean the prospectus included in a Registration
    Statement, including any preliminary prospectus, and any such prospectus as
    amended or supplemented by any prospectus supplement, including a prospectus
    supplement with respect to the terms of the offering of any portion of the
    Registrable Securities covered by a Shelf Registration Statement, and by all
    other amendments and supplements to such prospectus, and in each case
    including any document incorporated by reference therein.

         "Purchase Agreement" shall have the meaning set forth in the preamble.

         "Registrable Securities" shall mean the Securities; provided that the
    Securities shall cease to be Registrable Securities (i) when a Registration
    Statement covering such Securities has been declared effective by the SEC
    and such Securities have been disposed of pursuant to such Registration
    Statement, (ii) when such Securities have been exchanged pursuant to the
    Exchange Offer for Exchange Securities that may be resold without
    restriction under federal and state securities laws, (iii) when such
    Securities have been sold in compliance with Rule 144 or are eligible to be
    sold pursuant to Rule 144(k) (or any similar provision then in force, but
    not Rule 144A) under the Securities Act or (iv) when such Securities cease
    to be outstanding.

         "Registration Expenses" shall mean any and all expenses incident to
    performance of or compliance by the Issuers and the Guarantors with this
    Agreement, including without limitation: (i) all SEC, stock exchange or
    National Association of Securities Dealers, Inc. registration and filing
    fees, (ii) all fees and expenses incurred in connection with compliance with
    state securities or blue sky laws (including reasonable fees and
    disbursements of counsel for any Underwriters or Holders in connection with
    blue sky qualification of any Exchange Securities or Registrable
    Securities), (iii) all expenses of any Persons in preparing or assisting in
    preparing, word processing, printing and distributing any Registration
    Statement, any Prospectus and any amendments or supplements thereto, any
    underwriting agreements, securities sales agreements or other similar
    agreements and any other documents relating to the performance of and
    compliance with this Agreement, (iv) all rating agency fees, (v) all fees
    and disbursements relating to the qualification of the Indenture under
    applicable securities laws, (vi) the fees and disbursements of the Trustee
    and its counsel, (vii) the fees and disbursements of counsel for the Issuers
    and the Guarantors and, in the case of a Shelf Registration Statement, the
    fees and disbursements of one counsel for the Holders (which counsel shall
    be selected by the Majority Holders and which counsel may also be counsel
    for the Initial Purchasers) and (viii) the fees and disbursements of the
    independent public accountants and independent petroleum engineers of the
    Issuers and the Guarantors, including the expenses of any special audits,
    "comfort" letters or letters concerning oil and gas reserve estimates, as
    applicable, required by or incident to the performance of and compliance
    with this Agreement, but excluding fees and expenses of counsel to the
    Underwriters (other than fees and expenses set forth in clause (ii) above)
    or the Holders and underwriting discounts and commissions and transfer
    taxes, if any, relating to the sale or disposition of Registrable Securities
    by a Holder.

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         "Registration Statement" shall mean any registration statement of the
    Issuers and the Guarantors that covers any of the Exchange Securities or
    Registrable Securities pursuant to the provisions of this Agreement and all
    amendments and supplements to any such registration statement, including
    post-effective amendments, in each case including the Prospectus contained
    therein, all exhibits thereto and any document incorporated by reference
    therein.

         "SEC" shall mean the Securities and Exchange Commission.

         "Securities Act" shall mean the Securities Act of 1933, as amended from
    time to time.

         "Shelf Effectiveness Period" shall have the meaning set forth in
    Section 2(b) hereof.

         "Shelf Registration" shall mean a registration effected pursuant to
    Section 2(b) hereof.

         "Shelf Registration Statement" shall mean a "shelf" registration
    statement of the Issuers and the Guarantors that covers all the Registrable
    Securities (but no other securities unless approved by the Holders whose
    Registrable Securities are to be covered by such Shelf Registration
    Statement) on an appropriate form under Rule 415 under the Securities Act,
    or any similar rule that may be adopted by the SEC, and all amendments and
    supplements to such registration statement, including post-effective
    amendments, in each case including the Prospectus contained therein, all
    exhibits thereto and any document incorporated by reference therein.

         "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
    amended from time to time.

         "Trustee" shall mean the trustee with respect to the Securities under
    the Indenture.

         "Underwriter" shall have the meaning set forth in Section 3 hereof.

         "Underwritten Offering" shall mean an offering in which Registrable
    Securities are sold to an Underwriter for reoffering to the public.

         2. Registration Under the Securities Act. (a) To the extent not
prohibited by any applicable law or applicable interpretations of the Staff of
the SEC, the Issuers and the Guarantors shall use their reasonable best efforts
to (i) cause to be filed an Exchange Offer Registration Statement covering an
offer to the Holders to exchange all the Registrable Securities for Exchange
Securities and (ii) have such Registration Statement remain effective until 180
days after the closing of the Exchange Offer. The Issuers and the Guarantors
shall commence the Exchange Offer promptly after the Exchange Offer Registration
Statement is declared effective by the SEC and use their reasonable best efforts
to complete the Exchange Offer not later than 90 days after such effective date.

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         The Issuers and the Guarantors shall commence the Exchange Offer by
mailing the related Prospectus, appropriate letters of transmittal and other
accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law:

         (i)   that the Exchange Offer is being made pursuant to this Agreement
    and that all Registrable Securities validly tendered and not properly
    withdrawn will be accepted for exchange;

         (ii)  the dates of acceptance for exchange (which shall be a period of
    at least 20 Business Days from the date such notice is mailed) (the
    "Exchange Dates");

         (iii) that any Registrable Security not tendered will remain
    outstanding and continue to accrue interest but will not retain any rights
    under this Agreement;

         (iv)  that any Holder electing to have a Registrable Security exchanged
    pursuant to the Exchange Offer will be required to surrender such
    Registrable Security, together with the appropriate letters of transmittal,
    to the institution and at the address (located in the Borough of Manhattan,
    The City of New York) and in the manner specified in the notice, prior to
    the close of business on the last Exchange Date; and

         (v)   that any Holder will be entitled to withdraw its election, not
    later than the close of business on the last Exchange Date, by sending to
    the institution and at the address (located in the Borough of Manhattan, The
    City of New York) specified in the notice, a telegram, telex, facsimile
    transmission or letter setting forth the name of such Holder, the principal
    amount of Registrable Securities delivered for exchange and a statement that
    such Holder is withdrawing its election to have such Securities exchanged.

         As a condition to participating in the Exchange Offer, a Holder will be
required to represent to the Issuers and the Guarantors that (i) any Exchange
Securities to be received by it will be acquired in the ordinary course of its
business, (ii) at the time of the commencement of the Exchange Offer it has no
arrangement or understanding with any Person to participate in the distribution
(within the meaning of the Securities Act) of the Exchange Securities in
violation of the provisions of the Securities Act, (iii) it is not an
"affiliate" (within the meaning of Rule 405 under Securities Act) of the Issuers
or any Guarantor and (iv) if such Holder is a broker-dealer that will receive
Exchange Securities for its own account in exchange for Registrable Securities
that were acquired as a result of market-making or other trading activities,
then such Holder will deliver a Prospectus in connection with any resale of such
Exchange Securities.

         As soon as practicable after the last Exchange Date, the Issuers and
the Guarantors shall:

         (i)   accept for exchange Registrable Securities or portions thereof
    validly tendered and not properly withdrawn pursuant to the Exchange Offer;
    and

         (ii)  deliver, or cause to be delivered, to the Trustee for
    cancellation all Registrable Securities or portions thereof so accepted for
    exchange by the Issuers and issue, and cause the Trustee to promptly
    authenticate and deliver to each Holder, Exchange Securities equal in
    principal amount to the principal amount of the Registrable Securities
    surrendered by such Holder.

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         The Issuers and the Guarantors shall use their reasonable best efforts
to complete the Exchange Offer as provided above and shall comply with the
applicable requirements of the Securities Act, the Exchange Act and other
applicable laws and regulations in connection with the Exchange Offer. The
Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer does not violate any applicable law or applicable interpretations
of the Staff of the SEC.

         (b) In the event that (i) the Issuers and the Guarantors determine that
the Exchange Offer Registration provided for in Section 2(a) above is not
available or may not be completed as soon as practicable after the last Exchange
Date because it would violate any applicable law or applicable interpretations
of the Staff of the SEC, (ii) the Exchange Offer is not for any other reason
completed by December 30, 2002, (iii) any Holder is prohibited by law or the
applicable interpretations of the staff of the SEC from participating in the
Exchange Offer or does not receive Exchange Securities on the date of the
exchange that may be sold without restriction under federal and state securities
laws (other than due solely to the status of such holder as an affiliate of
either Issuer), or (iv) upon completion of the Exchange Offer any Initial
Purchaser shall so request in connection with any offering or sale of
Registrable Securities, the Issuers and the Guarantors shall use their
reasonable best efforts to cause to be filed as soon as practicable after such
determination, date or request, as the case may be, a Shelf Registration
Statement providing for the sale of all the Registrable Securities by the
Holders thereof and to have such Shelf Registration Statement declared effective
by the SEC.

         In the event that the Issuers and the Guarantors are required to file a
Shelf Registration Statement pursuant to clause (iv) of the preceding sentence,
the Issuers and the Guarantors shall use their reasonable best efforts to file
and have declared effective by the SEC both an Exchange Offer Registration
Statement pursuant to Section 2(a) with respect to all Registrable Securities
and a Shelf Registration Statement (which may be a combined Registration
Statement with the Exchange Offer Registration Statement) with respect to offers
and sales of Registrable Securities held by the Initial Purchasers after
completion of the Exchange Offer.

         The Issuers and the Guarantors agree to use their reasonable best
efforts to keep the Shelf Registration Statement continuously effective until
the expiration of the period referred to in Rule 144(k) under the Securities Act
with respect to the Registrable Securities or such shorter period that will
terminate when all the Registrable Securities covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement (the
"Shelf Effectiveness Period"). The Issuers and the Guarantors further agree to
supplement or amend the Shelf Registration Statement and the related Prospectus
if required by the rules, regulations or instructions applicable to the
registration form used by the Issuers for such Shelf Registration Statement or
by the Securities Act or by any other rules and regulations thereunder for shelf
registration or if reasonably requested by a Holder of Registrable Securities
with respect to information relating to such Holder, and to use their reasonable
best efforts to cause any such amendment to become effective and such Shelf
Registration Statement and Prospectus to become usable as soon as thereafter
practicable. The Issuers and the Guarantors agree to furnish to the Holders of
Registrable Securities copies of any such supplement or amendment promptly after
its being used or filed with the SEC.

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         (c) The Issuers and the Guarantors shall pay all Registration Expenses
in connection with the registration pursuant to Section 2(a) and Section 2(b)
hereof. Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement.

         (d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC.

         In the event that either the Exchange Offer is not completed or the
Shelf Registration Statement, if required hereby, is not declared effective on
or prior to December 30, 2002, the interest rate on the Registrable Securities
will be increased by 1.00% per annum until the Exchange Offer is completed or
the Shelf Registration Statement, if required hereby, is declared effective by
the SEC or the Securities become freely tradable under the Securities Act.

         If the Shelf Registration Statement has been declared effective and
thereafter either ceases to be effective or the Prospectus contained therein
ceases to be usable at any time during the Shelf Effectiveness Period, and such
failure to remain effective or usable exists for more than 30 days (whether or
not consecutive) in any 12-month period, then the interest rate on the
Registrable Securities will be increased by 1.00% per annum commencing on the
31st day in such 12-month period and ending on such date that the Shelf
Registration Statement has again been declared effective or the Prospectus again
becomes usable.

         (e) Without limiting the remedies available to the Initial Purchasers
and the Holders, the Issuers and the Guarantors acknowledge that any failure by
the Issuers or the Guarantors to comply with their obligations under Section
2(a) and Section 2(b) hereof may result in material irreparable injury to the
Initial Purchasers or the Holders for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, the Initial Purchasers or any Holder may
obtain such relief as may be required to specifically enforce the Issuers's and
the Guarantors' obligations under Section 2(a) and Section 2(b) hereof.

         3.  Registration Procedures. In connection with their obligations
pursuant to Section 2(a) and Section 2(b) hereof, the Issuers and the Guarantors
shall as expeditiously as possible:

         (a) prepare and file with the SEC a Registration Statement on the
appropriate form under the Securities Act, which form (x) shall be selected by
the Issuers and the Guarantors, (y) shall, in the case of a Shelf Registration,
be available for the sale of the Registrable Securities by the selling Holders
thereof and (z) shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements and oil
and gas reserve information required by the SEC to be filed therewith; and use
their reasonable best efforts to cause such Registration Statement to become
effective and remain effective for the applicable period in accordance with
Section 2 hereof;

         (b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration

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Statement effective for the applicable period in accordance with Section 2
hereof and cause each Prospectus to be supplemented by any required prospectus
supplement and, as so supplemented, to be filed pursuant to Rule 424 under the
Securities Act; and keep each Prospectus current during the period described in
Section 4(3) of and Rule 174 under the Securities Act that is applicable to
transactions by brokers or dealers with respect to the Registrable Securities or
Exchange Securities;

         (c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, to counsel for the Initial Purchasers, to counsel for
such Holders and to each Underwriter of an Underwritten Offering of Registrable
Securities, if any, without charge, as many copies of each Prospectus, including
each preliminary Prospectus, and any amendment or supplement thereto, in order
to facilitate the sale or other disposition of the Registrable Securities
thereunder; and the Issuers and the Guarantors consent to the use of such
Prospectus and any amendment or supplement thereto in accordance with applicable
law by each of the selling Holders of Registrable Securities and any such
Underwriters in connection with the offering and sale of the Registrable
Securities covered by and in the manner described in such Prospectus or any
amendment or supplement thereto in accordance with applicable law;

         (d) use their reasonable best efforts to register or qualify the
Registrable Securities under all applicable state securities or blue sky laws of
such jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement shall reasonably request in writing by the time the
applicable Registration Statement is declared effective by the SEC; cooperate
with the Holders in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; and do any and all other acts
and things that may be reasonably necessary or advisable to enable each Holder
to complete the disposition in each such jurisdiction of the Registrable
Securities owned by such Holder; provided that neither the Issuers nor any
Guarantor shall be required to (i) qualify as a foreign corporation or other
entity or as a dealer in securities in any such jurisdiction where it would not
otherwise be required to so qualify, (ii) file any general consent to service of
process in any such jurisdiction or (iii) subject itself to taxation in any such
jurisdiction if it is not so subject;

         (e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities, counsel for such Holders and counsel for the Initial
Purchasers promptly and, if requested by any such Holder or counsel, confirm
such advice in writing (i) when a Registration Statement has become effective
and when any post-effective amendment thereto has been filed and becomes
effective, (ii) of any request by the SEC or any state securities authority for
amendments and supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become effective,
(iii) of the issuance by the SEC or any state securities authority of any stop
order suspending the effectiveness of a Registration Statement or the initiation
of any proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Issuers or any
Guarantor contained in any underwriting agreement, securities sales agreement or
other similar agreement, if any, relating to an offering of such Registrable
Securities cease to be true and correct in all material respects or if the
Issuers or any Guarantor receives any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose, (v) of the
happening of any event during the period a Shelf Registration Statement is
effective that makes any statement made in such Registration

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Statement or the related Prospectus untrue in any material respect or that
requires the making of any changes in such Registration Statement or Prospectus
in order to make the statements therein not misleading and (vi) of any
determination by the Issuers or any Guarantor that a post-effective amendment to
a Registration Statement would be appropriate;

         (f) use their reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the earliest
possible moment and provide immediate notice to each Holder of the withdrawal of
any such order;

         (g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without any
documents incorporated therein by reference or exhibits thereto, unless
requested);

         (h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends and enable such Registrable Securities to be
issued in such denominations and registered in such names (consistent with the
provisions of the Indenture) as the selling Holders may reasonably request at
least one Business Day prior to the closing of any sale of Registrable
Securities;

         (i) in the case of a Shelf Registration, upon the occurrence of any
event contemplated by Section 3(e)(v) hereof, use their reasonable best efforts
to prepare and file with the SEC a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Issuers and the Guarantors
shall notify the Holders of Registrable Securities to suspend use of the
Prospectus as promptly as practicable after the occurrence of such an event, and
such Holders hereby agree to suspend use of the Prospectus until the Issuers and
the Guarantors have amended or supplemented the Prospectus to correct such
misstatement or omission;

         (j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or of any document that is to be
incorporated by reference into a Registration Statement or a Prospectus after
initial filing of a Registration Statement, provide copies of such document to
the Initial Purchasers and their counsel (and, in the case of a Shelf
Registration Statement, to the Holders of Registrable Securities and their
counsel) and make such of the representatives of the Issuers and the Guarantors
as shall be reasonably requested by the Initial Purchasers or their counsel
(and, in the case of a Shelf Registration Statement, the Holders of Registrable
Securities or their counsel) available for discussion of such document; and the
Issuers and the Guarantors shall not, at any time after initial filing of a
Registration Statement, file any Prospectus, any amendment of or supplement to a
Registration Statement or a Prospectus, or any document that is to be
incorporated by reference into a Registration Statement or a Prospectus, of
which the Initial Purchasers and their counsel (and, in the case of a Shelf
Registration Statement, the Holders of Registrable Securities and their counsel)
shall not have

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previously been advised and furnished a copy or to which the Initial Purchasers
or their counsel (and, in the case of a Shelf Registration Statement, the
Holders or their counsel) shall object;

         (k) obtain a CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement;

         (l) cause the Indenture to be qualified under the Trust Indenture Act
in connection with the registration of the Exchange Securities or Registrable
Securities, as the case may be; cooperate with the Trustee and the Holders to
effect such changes to the Indenture as may be required for the Indenture to be
so qualified in accordance with the terms of the Trust Indenture Act; and
execute, and use their reasonable best efforts to cause the Trustee to execute,
all documents as may be required to effect such changes and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;

         (m) in the case of a Shelf Registration, make available for inspection
by a representative of the Holders of the Registrable Securities (an
"Inspector"), any Underwriter participating in any disposition pursuant to such
Shelf Registration Statement, and attorneys and accountants designated by the
Holders, at reasonable times and in a reasonable manner, all pertinent financial
and other records, documents and properties of the Issuers and the Guarantors,
and cause the respective officers, directors and employees of the Issuers and
the Guarantors to supply all information reasonably requested by any such
Inspector, Underwriter, attorney or accountant in connection with a Shelf
Registration Statement; provided that if any such information is identified by
the Issuers or any Guarantor as being confidential or proprietary, each Person
receiving such information shall take such actions as are reasonably necessary
to protect the confidentiality of such information to the extent such action is
otherwise not inconsistent with, an impairment of or in derogation of the rights
and interests of any Inspector, Holder or Underwriter;

         (n) in the case of a Shelf Registration, use their reasonable best
efforts to cause all Registrable Securities to be listed on any securities
exchange or any automated quotation system on which similar securities issued or
guaranteed by the Issuers or any Guarantor are then listed if requested by the
Majority Holders, to the extent such Registrable Securities satisfy applicable
listing requirements;

         (o) if reasonably requested by any Holder of Registrable Securities
covered by a Registration Statement, promptly incorporate in a Prospectus
supplement or post-effective amendment such information with respect to such
Holder as such Holder reasonably requests to be included therein and make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as the Issuers has received notification of the matters to be
incorporated in such filing; and

         (p) in the case of a Shelf Registration, enter into such customary
agreements and take all such other actions in connection therewith (including
those requested by the Holders of a majority in principal amount of the
Registrable Securities being sold) in order to expedite or facilitate the
disposition of such Registrable Securities including, but not limited to, an
Underwritten Offering and in such connection, (i) to the extent possible, make
such representations and warranties to the Holders and any Underwriters of such
Registrable Securities with respect to the business of the Issuers and its
subsidiaries, the Registration

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Statement, Prospectus and documents incorporated by reference or deemed
incorporated by reference, if any, in each case, in form, substance and scope as
are customarily made by issuers to underwriters in underwritten offerings and
confirm the same if and when requested, (ii) obtain opinions of counsel to the
Issuers and the Guarantors (which counsel and opinions, in form, scope and
substance, shall be reasonably satisfactory to the Holders and such Underwriters
and their respective counsel) addressed to each selling Holder and Underwriter
of Registrable Securities, covering the matters customarily covered in opinions
requested in underwritten offerings, (iii) obtain "comfort" letters from the
independent certified public accountants of the Issuers and the Guarantors (and,
if necessary, any other certified public accountant of any subsidiary of the
Issuers or any Guarantor, or of any business acquired by the Issuers or any
Guarantor for which financial statements and financial data are or are required
to be included in the Registration Statement) addressed to each selling Holder
and Underwriter of Registrable Securities, such letters to be in customary form
and covering matters of the type customarily covered in "comfort" letters in
connection with underwritten offerings, (iv) obtain oil and gas reserve report
letters from independent petroleum engineering firms and (v) deliver such
documents and certificates as may be reasonably requested by the Holders of a
majority in principal amount of the Registrable Securities being sold or the
Underwriters, and which are customarily delivered in underwritten offerings, to
evidence the continued validity of the representations and warranties of the
Issuers and the Guarantors made pursuant to clause (i) above and to evidence
compliance with any customary conditions contained in an underwriting agreement.

         In the case of a Shelf Registration Statement, the Issuers may require
each Holder of Registrable Securities to furnish to the Issuers such information
regarding such Holder and the proposed disposition by such Holder of such
Registrable Securities as the Issuers and the Guarantors may from time to time
reasonably request in writing.

         In the case of a Shelf Registration Statement, each Holder of
Registrable Securities agrees that, upon receipt of any notice from the Issuers
and the Guarantors of the happening of any event of the kind described in
Section 3(e)(iii) or 3(e)(v) hereof, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to a Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(i) hereof and, if so directed by the Issuers and the
Guarantors, such Holder will deliver to the Issuers and the Guarantors all
copies in its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities that is
current at the time of receipt of such notice.

         If the Issuers and the Guarantors shall give any such notice to suspend
the disposition of Registrable Securities pursuant to a Registration Statement,
the Issuers and the Guarantors shall extend the period during which the
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days during the period from and including the date of the
giving of such notice to and including the date when the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions. The Issuers and the Guarantors may give any such notice only
four times during any 365-day period and any such suspensions shall not exceed
45 days for each suspension and 60 days in the aggregate for all suspensions
during any 365-day period and there shall not be more than four suspensions in
effect during any 365-day period.

                                       11

<PAGE>

         The Holders of Registrable Securities covered by a Shelf Registration
Statement who desire to do so may sell such Registrable Securities in an
Underwritten Offering. In any such Underwritten Offering, the investment banker
or investment bankers and manager or managers (the "Underwriters") that will
administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering.

         4.  Participation of Broker-Dealers in Exchange Offer. (a) The Staff of
the SEC has taken the position that any broker-dealer that receives Exchange
Securities for its own account in the Exchange Offer in exchange for Securities
that were acquired by such broker-dealer as a result of market-making or other
trading activities (a "Participating Broker-Dealer") may be deemed to be an
"underwriter" within the meaning of the Securities Act and must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Securities.

         The Issuers and the Guarantors understand that it is the Staff's
position that if the Prospectus contained in the Exchange Offer Registration
Statement includes a plan of distribution containing a statement to the above
effect and the means by which Participating Broker-Dealers may resell the
Exchange Securities, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Securities owned by them, such Prospectus may
be delivered by Participating Broker-Dealers to satisfy their prospectus
delivery obligation under the Securities Act in connection with resales of
Exchange Securities for their own accounts, so long as the Prospectus otherwise
meets the requirements of the Securities Act.

         (b) In light of the above, and notwithstanding the other provisions of
this Agreement, the Issuers and the Guarantors agree to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as would
otherwise be contemplated by Section 3(i), for a period of up to 180 days after
the last Exchange Date (as such period may be extended pursuant to the
penultimate paragraph of Section 3 of this Agreement), if requested by the
Initial Purchasers or by one or more Participating Broker-Dealers, in order to
expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 4(a) above. The Issuers and the Guarantors further agree that
Participating Broker-Dealers shall be authorized to deliver such Prospectus
during such period in connection with the resales contemplated by this Section
4.

         (c) The Initial Purchasers shall have no liability to the Issuers, any
Guarantor or any Holder with respect to any request that they may make pursuant
to Section 4(b) above.

         5.  Indemnification and Contribution. (a) Each of the Issuers and each
Guarantor, jointly and severally, agree to indemnify and hold harmless each
Initial Purchaser and each Holder, their respective affiliates, directors and
officers and each Person, if any, who controls any Initial Purchaser or any
Holder within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, legal fees and other expenses
incurred in connection with any suit, action or proceeding or any claim
asserted, as such fees and expenses are incurred), joint or several, that arise
out of, or are based upon, any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or any Prospectus or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which

                                       12

<PAGE>

they were made, not misleading, except insofar as such losses, claims, damages
or liabilities arise out of, or are based upon, any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with any information relating to any Initial Purchaser or any Holder furnished
to the Issuers in writing through J.P. Morgan Securities Inc., Goldman, Sachs &
Co. or any selling Holder expressly for use therein. In connection with any
Underwritten Offering permitted by Section 3, the Issuers and the Guarantors,
jointly and severally, will also indemnify the Underwriters, if any, selling
brokers, dealers and similar securities industry professionals participating in
the distribution, their respective affiliates and each Person who controls such
Persons (within the meaning of the Securities Act and the Exchange Act) to the
same extent as provided above with respect to the indemnification of the
Holders, if requested in connection with any Registration Statement.

         (b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Issuers, the Guarantors, the Initial Purchasers and the other
selling Holders, their respective affiliates, the directors of the Issuers and
the Guarantors, each officer of the Issuers and the Guarantors who signed the
Registration Statement and each Person, if any, who controls the Issuers, the
Guarantors, any Initial Purchaser and any other selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the indemnity set forth in paragraph (a) above, but only with
respect to any losses, claims, damages or liabilities that arise out of, or are
based upon, any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with any information relating
to such Holder furnished to the Issuers in writing by such Holder expressly for
use in any Registration Statement and any Prospectus.

         (c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnification may be sought pursuant to either
paragraph (a) or (b) above, such Person (the "Indemnified Person") shall
promptly notify the Person against whom such indemnification may be sought (the
"Indemnifying Person") in writing; provided that the failure to notify the
Indemnifying Person shall not relieve it from any liability that it may have
under this Section 5 except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure; and
provided, further, that the failure to notify the Indemnifying Person shall not
relieve it from any liability that it may have to an Indemnified Person
otherwise than under this Section 5. If any such proceeding shall be brought or
asserted against an Indemnified Person and it shall have notified the
Indemnifying Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others entitled to indemnification pursuant to this Section 5
that the Indemnifying Person may designate in such proceeding and shall pay the
fees and expenses of such counsel related to such proceeding, as incurred. In
any such proceeding, any Indemnified Person shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed to the contrary; (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person
shall have reasonably concluded that there may be legal defenses available to it
that are different from or in addition to those available to the Indemnifying
Person; or (iv) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing

                                       13

<PAGE>

interests between them. It is understood and agreed that the Indemnifying Person
shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm (x) for any Initial Purchaser, its affiliates, directors and
officers and any control Persons of such Initial Purchaser shall be designated
in writing by J.P. Morgan Securities Inc. and Goldman, Sachs & Co., (y) for any
Holder, its affiliates, directors and officers and any control Persons of such
Holder shall be designated in writing by the Majority Holders and (z) in all
other cases shall be designated in writing by the Issuers. The Indemnifying
Person shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested that an Indemnifying Person reimburse
the Indemnified Person for fees and expenses of counsel as contemplated by this
paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by the Indemnifying Person of such
request and (ii) the Indemnifying Person shall not have reimbursed the
Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnification could have been sought hereunder by such Indemnified
Person, unless such settlement (A) includes an unconditional release of such
Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to or any admission of
fault, culpability or a failure to act by or on behalf of any Indemnified
Person.

         (d) If the indemnification provided for in paragraphs (a) and (b) above
is unavailable to an Indemnified Person or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Issuers and the Guarantors from the offering of the
Securities and the Exchange Securities, on the one hand, and by the Holders from
receiving Securities or Exchange Securities registered under the Securities Act,
on the other hand, or (ii) if the allocation provided by clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) but also the relative fault
of the Issuers and the Guarantors on the one hand and the Holders on the other
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Issuers and the Guarantors on the one
hand and the Holders on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Issuers and the Guarantors or by the Holders and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.

                                       14

<PAGE>

         (e) The Issuers, the Guarantors and the Holders agree that it would not
be just and equitable if contribution pursuant to this Section 5 were determined
by pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) above. The amount paid or
payable by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such Indemnified Person in connection with any such action or claim.
Notwithstanding the provisions of this Section 5, in no event shall a Holder be
required to contribute any amount in excess of the amount by which the total
price at which the Securities or Exchange Securities sold by such Holder exceeds
the amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.

         (f) The remedies provided for in this Section 5 are not exclusive and
shall not limit any rights or remedies that may otherwise be available to any
Indemnified Person at law or in equity.

         (g) The indemnity and contribution provisions contained in this Section
5 shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Initial Purchasers or any Holder, their respective affiliates or any Person
controlling any Initial Purchaser or any Holder, or by or on behalf of the
Issuers or the Guarantors, their respective affiliates or the officers or
directors of or any Person controlling the Issuers or the Guarantors, (iii)
acceptance of any of the Exchange Securities and (iv) any sale of Registrable
Securities pursuant to a Shelf Registration Statement.

         6.  General.

         (a) No Inconsistent Agreements. The Issuers and the Guarantors
represent, warrant and agree that (i) the rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of any other outstanding securities issued or
guaranteed by the Issuers or any Guarantor under any other agreement and (ii)
neither the Issuers nor any Guarantor has entered into, or on or after the date
of this Agreement will enter into, any agreement that is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof.

         (b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Issuers and the Guarantors have obtained the written consent of
Holders of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or consent; provided that no amendment, modification, supplement, waiver
or consent to any departure from the provisions of Section 5 hereof shall be
effective as against any Holder of Registrable Securities unless consented to in
writing by such Holder. Any amendments, modifications, supplements, waivers or
consents pursuant to this Section 6(b) shall be by a writing executed by each of
the parties hereto.

                                       15

<PAGE>

         (c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Issuers by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Initial
Purchasers, the address set forth in the Purchase Agreement; (ii) if to the
Issuers and the Guarantors, initially at the Issuers's address set forth in the
Purchase Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 6(c); and (iii) to such
other persons at their respective addresses as provided in the Purchase
Agreement and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 6(c). All such notices and
communications shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when answered back, if telexed; when receipt
is acknowledged, if telecopied; and on the next Business Day if timely delivered
to an air courier guaranteeing overnight delivery. Copies of all such notices,
demands or other communications shall be concurrently delivered by the Person
giving the same to the Trustee, at the address specified in the Indenture.

         (d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Registrable Securities in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all the terms of this Agreement, and by taking and holding such
Registrable Securities such Person shall be conclusively deemed to have agreed
to be bound by and to perform all of the terms and provisions of this Agreement
and such Person shall be entitled to receive the benefits hereof. The Initial
Purchasers (in their capacity as Initial Purchasers) shall have no liability or
obligation to the Issuers or the Guarantors with respect to any failure by a
Holder to comply with, or any breach by any Holder of, any of the obligations of
such Holder under this Agreement.

         (e) Purchases and Sales of Securities. The Issuers and the Guarantors
shall not, and shall use their reasonable best efforts to cause their affiliates
(as defined in Rule 405 under the Securities Act) not to, purchase and then
resell or otherwise transfer any Registrable Securities.

         (f) Third Party Beneficiaries. Each Holder shall be a third party
beneficiary to the agreements made hereunder between the Issuers and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of
other Holders hereunder.

         (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

                                       16

<PAGE>

         (h) Headings. The headings in this Agreement are for convenience of
reference only, are not a part of this Agreement and shall not limit or
otherwise affect the meaning hereof.

         (i) Severability. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

         (j) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

         (k) Miscellaneous. This Agreement contains the entire agreement between
the parties relating to the subject matter hereof and supersedes all oral
statements and prior writings with respect thereto. If any term, provision,
covenant or restriction contained in this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable or against public
policy, the remainder of the terms, provisions, covenants and restrictions
contained herein shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. The Issuers, the Guarantors and the Initial
Purchasers shall endeavor in good faith negotiations to replace the invalid,
void or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, void or unenforceable
provisions.

                                       17

<PAGE>

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

                                         Very truly yours,

                                         PLAINS EXPLORATION & PRODUCTION
                                         COMPANY, L.P.

                                         By: Stocker Resources, Inc.,
                                              its general partner

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

                                         PLAINS E&P COMPANY

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

                                         ARGUELLO INC.

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

                                         PLAINS ILLINOIS INC.

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

                                         PLAINS RESOURCES INTERNATIONAL INC.

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

                                         PMCT INC.

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

                                       18

<PAGE>

Accepted: July 3, 2002
For itself and on behalf of the
several Initial Purchasers

J.P. MORGAN SECURITIES INC.

By /s/ J.P. Morgan Securities Inc.
  ---------------------------------------
          Authorized Signatory

By /s/ Goldman, Sachs & Co.
  --------------------------------------
          Goldman, Sachs & Co.

                                       19<PAGE>

                                                                     EXHIBIT 4.3

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE REOFFERED AND SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION
FROM REGISTRATION IS AVAILABLE.

                              PLAINS RESOURCES INC.
                                                                       Warrant 2

               Warrant for the Purchase of Shares of Common Stock

                                                                  150,000 shares

     FOR VALUE RECEIVED, PLAINS RESOURCES INC., a Delaware corporation (the
"Company"), hereby certifies that Highbridge International LLC, or its permitted
assigns (the "Holder"), is entitled to purchase from the Company, at any time or
from time to time commencing on the date hereof and prior to 5:00 P.M., Houston
time then current, on November 12, 2002, 150,000 fully paid and non-assessable
shares of the common stock, $.10 par value per share, of the Company for a
purchase price per share of $25.00 (the "Per Share Warrant Price").
(Hereinafter, (i) said common stock, together with any other equity securities
which may be issued by the Company with respect thereto or in substitution
therefor, is referred to as the "Common Stock," (ii) the shares of the Common
Stock purchasable hereunder are referred to as the "Warrant Shares," (iii) the
aggregate purchase price payable hereunder for the Warrant Shares is referred to
as the "Aggregate Warrant Price," and (iv) this Warrant and all warrants
hereafter issued in exchange or substitution for this Warrant are referred to as
the "Warrant".) The Aggregate Warrant Price is not subject to adjustment. The
number of Warrant Shares and the Per Share Warrant Price is subject to
adjustment as hereinafter provided. This Warrant has been issued as a result of
the transfer on May 20, 2002 by Shell Land & Energy Company to The Convertible
Fund LLC of that certain Company Warrant #1 for the Purchase of Shares of Common
Stock dated November 12, 1997 (the "Original Warrant") and the subsequent
transfer of the Original Warrant by The Convertible Fund LLC on July 17, 2002 to
Highbridge International LLC.

     1. Exercise of Warrant. This Warrant may be exercised, in whole at any time
or in part from time to time, commencing on the date hereof, and prior to 5:00
P.M., Houston time then current, on November 12, 2002, by the Holder by the
surrender of this Warrant (with the subscription form at the end hereof duly
executed) at the Company's offices in Houston, Texas, together with proper
payment of the Aggregate Warrant Price, or the proportionate part thereof if
this Warrant is exercised in part. Payment for Warrant Shares shall be made by
certified or cashier's bank check payable to the order of the Company. If this
Warrant is exercised in part, this Warrant must be exercised for a number of
whole shares of the Common Stock, and the Holder is entitled to receive a new
Warrant covering the Warrant Shares which have not been exercised. Upon such
surrender of this Warrant, the Company will (a) issue a certificate or
certificates in the name of the Holder for the largest number of whole shares of
the Common Stock to which the Holder shall be entitled (no fractional shares
being issuable upon exercise of this Warrant), and deliver the other securities
and properties receivable upon the exercise of this Warrant, or the
proportionate part thereof if this Warrant is exercised in part, pursuant to the
provisions of this Warrant. The Company shall pay all taxes and other expenses
payable in connection with the preparation, execution and delivery of stock
certificates pursuant to

                                       1

<PAGE>

this Section 1. Unless and until the Warrant Shares are registered under the
Securities Act of 1933, as amended (the "Act") as provided for in Exhibit A-3 to
the Exchange Agreement pursuant to which the Original Warrant was issued,
certificates evidencing the Warrant Shares issued upon exercise of this Warrant
shall bear a restrictive legend regarding limitations on transferability of such
shares.

     2. Reservation of Warrant Shares; Listing. The Company agrees that, prior
to the expiration of this Warrant, the Company will at all times (a) have
authorized and in reserve, and will keep available, solely for issuance or
delivery upon the exercise of this Warrant, the shares of the Common Stock and
other securities and properties as from time to time shall be receivable upon
the exercise of this Warrant, and (b) keep the shares of the Common Stock
receivable upon the exercise of this Warrant listed upon notice of issuance on
the American Stock Exchange or such other national securities exchange as the
Common Stock of the Company may be listed from time to time.

     3. Protection Against Dilution.

     (a) In case the Company shall hereafter (i) pay a dividend or make a
distribution on its capital stock in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
or (iv) issue by reclassification of its Common Stock other securities of the
Company, the kind and amount of Common Stock and other securities shall be
adjusted so that the Holder of this Warrant upon the exercise hereof shall be
entitled to receive the number of shares of Common Stock or other securities of
the Company which he would have owned immediately following such action had this
Warrant been exercised immediately prior thereto. An adjustment made pursuant to
this Subsection 3(a) shall become effective immediately after the record date in
the case of a stock dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification. If, as a result of an adjustment made pursuant to this
Subsection 3(a), the Holder of this Warrant thereafter surrendered for exercise
shall become entitled to receive shares of two or more classes of capital stock
or shares of Common Stock and other securities of the Company, the Board of
Directors (whose determination shall be made in its reasonable judgment) shall
determine the allocation of the adjusted Per Share Warrant Price between or
among shares of such classes or capital stock or shares of Common Stock and
other securities.

     (b) In case of any capital reorganization or reclassification, or any
consolidation or merger to which the Company is a party other than a merger or
consolidation in which the Company is a continuing corporation, or in case of
any sale or conveyance to another entity of the property of the Company as an
entirety or substantially as an entirety, or in the case of any statutory
exchange of securities with another corporation (including any exchange effected
in connection with a merger of a third corporation into the Company), the Holder
of this Warrant shall have the right thereafter to convert this Warrant into the
kind and amount of securities, cash or other property which he would have owned
or have been entitled to receive immediately after such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or conveyance
had this Warrant been converted immediately prior to the effective date of such
reorganization, reclassification, consolidation, merger, statutory exchange,
sale or conveyance and in any such case, if necessary, appropriate adjustment
shall be made in the application of the provisions set forth in this Section 3
with respect to the rights and interests thereafter of the Holder of this
Warrant to the end that the provisions set forth in this

                                       2

<PAGE>

Section 3 shall thereafter correspondingly be made applicable, as nearly as may
reasonably be, in relation to any shares of stock or other securities or
property thereafter deliverable on the exercise of this Warrant. The above
provisions of this Subsection 3(b) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, statutory
exchanges, sales or conveyances. In the event of a statutory merger, the issuer
of any shares of stock or other securities or property thereafter deliverable on
the exercise of this Warrant shall be responsible for all of the agreements and
obligations of the Company hereunder. Notice of any such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or conveyance
and of said provisions so proposed to be made, shall be mailed to the Holder of
this Warrant not less than 20 days prior to such event.

     (c) Whenever the number of Warrant Shares purchasable upon the exercise of
this Warrant is adjusted, as herein provided, the Per Share Warrant Price shall
be adjusted by multiplying such Per Share Warrant Price immediately prior to
such adjustment by a fraction, of which the numerator shall be the number of
Warrant Shares purchasable upon exercise of this Warrant immediately prior to
such adjustment, and of which the denominator shall be the number of Warrant
Shares so purchasable immediately thereafter.

     (d) Whenever the number of Warrant Shares purchasable upon the exercise of
this Warrant or the Per Share Warrant Price is adjusted, as herein provided, the
Company shall promptly mail by first class mail, postage prepaid to the Holder
notice of such adjustment setting forth a brief statement of the facts requiring
such adjustment and the computation by which such adjustment was made.

     (e) In the event that the Company issues securities, makes a distribution
to its stockholders or undertakes some other capital change or transaction that
the Company's Board of Directors in its reasonable judgment determines is an
issuance, distribution, change or transaction that warrants an adjustment
similar to those provided in this Section 3 based upon the intent hereof but
with respect to which the provisions hereof are not specifically applicable,
adjustments to the number of shares or other securities purchasable and the
price of shares or other securities comparable to those provided in this Section
3 shall be made as a result of such issuance, distribution, change or
transaction.

     4. Fully Paid Stock. The Company agrees that the shares of the Common Stock
represented by each and every certificate for Warrant Shares delivered on the
exercise of this Warrant shall, at the time of such delivery, be validly issued
and outstanding, fully paid and non-assessable, and not subject to preemptive
rights.

     5. Limited Transferability. This Warrant is transferable or assignable by
the Holder and is so transferable only upon the books of the Company which it
shall cause to be maintained for the purpose. The Company may treat the
registered Holder of this Warrant as he or it appears on the Company's books at
any time as the Holder for all purposes. Any Warrant issued upon the transfer or
assignment of this Warrant will be dated the same date as this Warrant.
Provided, however, this Warrant may not be transferred unless it is registered
under the Act, or an exemption from such registration is available.

                                       3

<PAGE>

     6. Loss, etc., of Warrant. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and of
indemnity reasonably satisfactory to the Company, if lost, stolen or destroyed,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver to the Holder a new Warrant of like date, tenor and
denomination.

     7. Warrant Holder Not Shareholder. Except as otherwise provided herein,
this Warrant does not confer upon the Holder any right to vote or to consent to
or receive notice as a shareholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a shareholder, prior
to the exercise hereof.

     8. Headings. The headings of this Warrant have been inserted as a matter of
convenience and shall not affect the construction hereof.

     9. Applicable Law. This Warrant shall be governed by and construed in
accordance with the law of the State of Delaware without giving effect to the
principles of conflicts of law thereof.

     IN WITNESS WHEREOF, PLAINS RESOURCES INC. has caused this Warrant to be
signed by its President or Vice President on July __, 2002 to be effective as of
the 12th day of November, 1997.

                               PLAINS RESOURCES INC.

                               By:    /s/ Timothy T. Stephens
                                      ------------------------------------------
                               Name:  Timothy T. Stephens
                               Title: Executive Vice President & General Counsel

                                       4

<PAGE>

                                  SUBSCRIPTION

     The undersigned, ___________________, pursuant to the provisions of the
foregoing Warrant, hereby agrees to subscribe for and purchase _______________
shares of the Common Stock of PLAINS RESOURCES INC. covered by said Warrant, and
makes payment therefore in full at the price per share provided by said Warrant.

Dated:
       --------------

                                    Signature:
                                               ---------------------------------

                                    Address:

                                    --------------------------------------------

                                    --------------------------------------------

                                    --------------------------------------------

                                   ASSIGNMENT

     FOR VALUE RECEIVED ____________________ hereby sells, assigns and transfers
unto _____________________ the foregoing Warrant and all rights evidenced
thereby, and does irrevocably constitute and appoint _________________,
attorney, to transfer said Warrant on the books of PLAINS

RESOURCES INC.

Dated:
       --------------

                                    Signature:
                                               ---------------------------------
                                    Address:

                                    --------------------------------------------

                                    --------------------------------------------

                                    --------------------------------------------

                               PARTIAL ASSIGNMENT

     FOR VALUE RECEIVED _________________________ hereby assigns and transfers
unto ________________________ the right to purchase _________ shares of the
Common Stock of PLAINS RESOURCES INC. by the foregoing Warrant, and a
proportionate part of said Warrant and the rights evidenced hereby, and does
irrevocably constitute and appoint ____________________, attorney, to transfer
that part of said Warrant on the books of PLAINS RESOURCES INC.

Dated:
       --------------

                                    Signature:
                                               ---------------------------------
                                    Address:

                                    --------------------------------------------

                                    --------------------------------------------

                                    --------------------------------------------

                                       5

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