Document:

<PAGE>

                                                                    EXHIBIT 10.1

                              SEVENTH AMENDMENT TO
                  FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

     THIS SEVENTH AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment") dated as of the 11th day of October, 2000, by and among
PLAINS RESOURCES INC., a Delaware corporation (the "Company"), FIRST UNION
NATIONAL BANK (assignee of ING (U.S.) Capital LLC, successor in interest to ING
(U.S.) Capital Corporation), as Agent ("Agent"), and the Lenders named herein.

                              W I T N E S S E T H:

     WHEREAS,  the Company, Agent and Lenders entered into that certain Fourth
Amended and Restated Credit Agreement dated as of May 22, 1998, as amended by a
First Amendment to Fourth Amended and Restated Credit Agreement dated November
17, 1998, a Second Amendment to Fourth Amended and Restated Credit Agreement
dated March 15, 1999, a Third Amendment to Fourth Amended and Restated Credit
Agreement dated June 21, 1999, a Fourth Amendment to Fourth Amended and Restated
Credit Agreement dated September 15, 1999, a Fifth Amendment to Fourth Amended
and Restated Credit Agreement dated December 1, 1999, a Limited Waiver and
Consent dated as of January 28, 2000 and a Sixth Amendment to Fourth Amended and
Restated Credit Agreement dated as of June 12, 2000 (as amended, the "Original
Agreement") for the purposes and consideration therein expressed, pursuant to
which Lenders became obligated to make and made loans to the Company as therein
provided; and

     WHEREAS, the Company, Agent and Lenders desire to amend the Original
Agreement for the purposes described herein;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement, in consideration
of the loans which may hereafter be made by Lenders to the Company, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

                   ARTICLE I. -- Definitions and References

     (S) 1.1.  Terms Defined in the Original Agreement.  Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.

     (S) 1.2.  Other Defined Terms.  Unless the context otherwise requires, the
following terms when used in this Amendment shall have the meanings assigned to
them in this (S) 1.2.

          "Amendment" means this Seventh Amendment to Fourth Amended and
     Restated Credit Agreement.

          "Amendment Documents" means this Amendment.

                                       1
<PAGE>

          "Credit Agreement" means the Original Agreement as amended hereby.

                           ARTICLE II. -- Amendments

     (S) 2.1.  Definitions - Indebtedness.  Clause (e) of the definition of
"Indebtedness" in Section 1.01 of the Original Agreement is hereby amended in
its entirety to read as follows:

     (e)  indebtedness of others Guaranteed by such Person, excluding
     indebtedness under forward, future, swap or hedging contracts permitted
     under Section 8.33 that does not constitute "Indebtedness" as defined in
     clause (h) below;

     (S) 2.2.  Limitation on Liens.  Section 8.08 of the Original Agreement is
hereby amended by (i) redesignating clause (l) as clause (k), and (ii) adding a
new clause (j) thereto, to read as follows:

          (j) Liens by the Company or a Subsidiary on money, assets, letters of
     credit or other security pledged to secure Indebtedness and other
     indebtedness and obligations under any forward, future, swap or hedging
     contract permitted under Section 8.33(b), provided, that the aggregate
     amount of such security subject to such Liens does not at any time exceed
     the aggregate amount of $25,000,000; and

     (S) 2.3.  Dividend Payments.  The reference to "$50,000,000" set forth in
the first clause of Section 8.11(c) of the Original Agreement is hereby amended
by referring instead to "$50,000,000, and during the period from October 11,
2000 through September 30, 2001, an additional $50,000,000,".

     (S) 2.4.  Dividend Payments - Series F and Series G.  Section 8.11 of the
Original Agreement is hereby amended by (i) deleting the term "and" at the end
of clause (b) thereof, (ii) deleting the period at the end of clause (c) thereof
and substituting therefor ";", and (iii) adding clauses (d) and (e) at the end
thereof, to read as follows:

          (d) declare and make regularly scheduled Dividend Payments for the
     year 2001 in cash in respect of the Company's Series F Cumulative
     Convertible Preferred Stock, stated value $1,000 per share, provided, the
     aggregate amount of all such Dividend Payments during the year 2001 shall
     not exceed $5,000,000; and

          (b) declare and make regularly scheduled Dividend Payments for the
     year 2001 in cash in respect of the Company's Series G Cumulative
     Convertible Preferred Stock, stated value $500 per share, provided, the
     aggregate amount of all such Dividend Payments during the year 2001 shall
     not exceed $8,450,000.

     (S) 2.5.  New Borrowing Base.  Pursuant to Section 2.08 of the Credit
Agreement, Agent hereby notifies the Company that Supermajority Lenders have
redetermined the Borrowing Base as $225,000,000, effective for the period
beginning on and including the date hereof and continuing until but not
including the next date as of which the Borrowing Base is redetermined.

                                       2
<PAGE>

                  ARTICLE III. -- Conditions of Effectiveness

     (S) 3.1.  Effective Date.  This Amendment shall become effective as of the
date first above written when and only when (i) Agent shall have received, at
Agent's office, a counterpart of this Amendment executed and delivered by the
Company and Majority Lenders (and, as to Section 2.5, Supermajority Lenders),
and (ii) Agent shall have additionally received all of the following documents,
each document (unless otherwise indicated) being dated the date of receipt
thereof by Agent, duly authorized, executed and delivered, and in form and
substance satisfactory to Agent:

          (A) Officer's Certificate.  A certificate of a duly authorized officer
     of the Company to the effect that all of the representations and warranties
     set forth in Article IV hereof are true and correct at and as of the date
     thereof.

          (B) Supporting Documents.  Such supporting documents as Agent may
     reasonably request.

                 ARTICLE IV. -- Representations and Warranties

     (S) 4.1.  Representations and Warranties of the Company.  In order to
induce Agent and Lenders to enter into this Amendment, the Company represents
and warrants to Agent and Lenders that:

          (a) The representations and warranties contained in Section 7 of the
     Original Agreement, are true and correct at and as of the time of the
     effectiveness hereof, except to the extent that such representation or
     warranty was made as of a specific date or updated, modified or
     supplemented as of a subsequent date with the consent of Majority Lenders,
     subject to, in regard to the penultimate sentence of Section 7.02, the
     Unauthorized Trading Losses, as referred to in the Company's annual report
     on Form 10-K for the year ended December 31, 1999.  No Default has occurred
     and is continuing.

          (b) The Company and the Subsidiaries are duly authorized to execute
     and deliver this Amendment and the other Amendment Documents to the extent
     a party thereto, and the Company is and will continue to be duly authorized
     to borrow and perform its obligations under the Credit Agreement.  The
     Company and the Subsidiaries have duly taken all corporate action necessary
     to authorize the execution and delivery of this Amendment and the other
     Amendment Documents, to the extent a party thereto, and to authorize the
     performance of their respective obligations thereunder.

          (c) The execution and delivery by the Company and the Subsidiaries of
     this Amendment and the other Amendment Documents, to the extent a party
     thereto, the performance by the Company and the Subsidiaries of their
     respective obligations hereunder and thereunder, and the consummation of
     the transactions contemplated hereby and thereby, do not and will not
     conflict with any provision of law, statute, rule or regulation or of the
     certificate or articles of incorporation and bylaws of the Company or

                                       3
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     any Subsidiary, or of any material agreement, judgment, license, order or
     permit applicable to or binding upon the Company or any Subsidiary, or
     result in the creation of any lien, charge or encumbrance upon any assets
     or properties of the Company or any Subsidiary, except in favor of Agent
     for the benefit of Lenders. Except for those which have been duly obtained,
     no consent, approval, authorization or order of any court or governmental
     authority or third party is required in connection with the execution and
     delivery by the Company or any Subsidiary of this Amendment or any other
     Amendment Document, to the extent a party thereto, or to consummate the
     transactions contemplated hereby and thereby.

          (d) When this Amendment and the other Amendment Documents have been
     duly executed and delivered, each of the Basic Documents, as amended by
     this Amendment and the other Amendment Documents, will be a legal and
     binding instrument and agreement of the Company and the Subsidiaries, to
     the extent a party thereto, enforceable in accordance with its terms,
     (subject, as to enforcement of remedies, to applicable bankruptcy,
     insolvency and similar laws applicable to creditors' rights generally and
     to general principles of equity).

                          ARTICLE V. -- Miscellaneous

     (S) 5.1.  Ratification of Agreements.  The Original Agreement, as hereby
amended, is hereby ratified and confirmed in all respects.  The Basic Documents,
as they may be amended or affected by this Amendment and/or the other Amendment
Documents, are hereby ratified and confirmed in all respects.  Any reference to
the Credit Agreement in any Basic Document shall be deemed to refer to this
Amendment also.  The execution, delivery and effectiveness of this Amendment and
the other Amendment Documents shall not, except as expressly provided herein or
therein, operate as a waiver of any right, power or remedy of Agent or any
Lender under the Credit Agreement or any other Basic Document nor constitute a
waiver of any provision of the Credit Agreement or any other Basic Document.

     (S) 5.2.  Ratification of Security Documents.  The Company, Agent and
Lenders each acknowledge and agree that any and all indebtedness, liabilities or
obligations arising under or in connection with the Notes are Obligations and is
secured indebtedness under, and is secured by, each and every Security Document
to which the Company is a party.  The Company hereby re-pledges, re-grants and
re-assigns a security interest in and lien on every asset of the Company
described as collateral in any Security Document.

     (S) 5.3.  Survival of Agreements.  All representations, warranties,
covenants and agreements of the Company herein and in the other Amendment
Documents shall survive the execution and delivery of this Amendment and the
other Amendment Documents and the performance hereof and thereof, including
without limitation the making or granting of each Loan, and shall further
survive until all of the Obligations are paid in full.  All statements and
agreements contained in any certificate or instrument delivered by the Company
or any Subsidiary hereunder, under the other Amendment Documents or under the
Credit Agreement to Agent or any Lender shall be deemed to constitute
representations and warranties by, or

                                       4
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agreements and covenants of, the Company under this Amendment and under the
Credit Agreement.

     (S) 5.4.  Basic Documents.  This Amendment and each of the other Amendment
Documents is a Basic Document, and all provisions in the Credit Agreement
pertaining to Basic Documents apply hereto and thereto.

     (S) 5.5.  GOVERNING LAW.  THIS AMENDMENT AND THE OTHER AMENDMENT DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA IN ALL
RESPECTS, INCLUDING CONSTRUCTION, VALIDITY AND PERFORMANCE.

     (S) 5.6.  Counterparts.  This Amendment and each of the other Amendment
Documents may be separately executed in counterparts and by the different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to constitute one and the same Amendment or Amendment Document, as the
case may be.

     IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.

                              PLAINS RESOURCES INC.

                              By:   /s/ Phil Kramer
                                 ------------------
                                 Phil Kramer, Executive Vice President

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<PAGE>

                              FIRST UNION NATIONAL BANK,
                              as Agent, LC Issuer and a Lender

                              By:   /s/ Robert R. Wetteroff
                                 --------------------------
                                 Robert R. Wetteroff, Senior Vice President

                              FLEET NATIONAL BANK
                              (f/k/a BankBoston, N.A.), Lender

                              By:   /s/ Terrence Ronan
                                 ---------------------
                                 Terrence Ronan, Director

                              BANK OF AMERICA, N.A., Lender

                              By:
                                 ---------------------
                                 Name:
                                 Title:

                              WELLS FARGO BANK (TEXAS),
                              NATIONAL ASSOCIATION, Lender

                              By:
                                 ---------------------
                                 Name:
                                 Title:

                              THE CHASE MANHATTAN BANK
                              (successor to Chase Bank of Texas, N.A.), Lender

                              By:
                                 ---------------------
                                 Name:
                                 Title:

                              COMERICA BANK-TEXAS, Lender

                              By:   /s/ Martin W. Wilson
                                 -----------------------
                                 Martin W. Wilson, Vice President

                                       6
<PAGE>

                              FORTIS CAPITAL CORP.
                              (f/k/a MeesPierson Capital Corp.), Lender

                              By:
                                 ---------------------
                                 Name:
                                 Title:

                              By:
                                 ---------------------
                                 Name:
                                 Title:

                              BANK OF SCOTLAND, Lender

                              By:
                                 ---------------------
                                 Name:
                                 Title:

                              U.S. BANK NATIONAL ASSOCIATION, Lender

                              By:
                                 ---------------------
                                 Name:
                                 Title:

                              HIBERNIA NATIONAL BANK

                              By:
                                 ---------------------
                                 Name:
                                 Title:

                              GENERAL ELECTRIC CAPITAL CORPORATION

                              By:
                                 ---------------------
                                 Name:
                                 Title:

                                       7
<PAGE>

                             CONSENT AND AGREEMENT

     Each of the undersigned Subsidiary Guarantors hereby consents to the
provisions of this Amendment and the transactions contemplated herein and hereby
(i) acknowledges and agrees that any and all indebtedness, liabilities or
obligations arising under or in connection with the Notes are Obligations and
are secured indebtedness under, and are secured by, each and every Security
Document to which it is a party, (ii) re-pledges, re-grants and re-assigns a
security interest in and lien on all of its assets described as collateral in
any Security Document, (iii) ratifies and confirms its Amended and Restated
Guaranty dated May 22, 1998 made by it for the benefit of Agent and Lenders, and
(iv) expressly acknowledges and agrees that such Subsidiary Guarantor guarantees
all indebtedness, liabilities and obligations arising under or in connection
with the Notes pursuant to the terms of such Amended and Restated Guaranty, and
agrees that its obligations and covenants thereunder are unimpaired hereby and
shall remain in full force and effect.

                         PLAINS RESOURCES INTERNATIONAL INC.
                         STOCKER RESOURCES, INC.
                         PLAINS ILLINOIS INC.

                         By:   /s/ Phil Kramer
                            ------------------
                            Phil Kramer, Executive Vice President

                         STOCKER RESOURCES, L.P.

                         By:  Stocker Resources, Inc.,
                              its General Partner

                              By:   /s/ Phil Kramer
                                 ------------------
                                 Phil Kramer, Executive Vice President

                                       8
<PAGE>

     The undersigned Subsidiary Guarantor hereby consents to the provisions of
this Amendment and the transactions contemplated herein and hereby (i)
acknowledges and agrees that any and all indebtedness, liabilities or
obligations arising under or in connection with the Notes are Obligations and
are secured indebtedness under, and are secured by, each and every Security
Document to which it is a party, (ii) re-pledges, re-grants and re-assigns a
security interest in and lien on all of its assets described as collateral in
any Security Document, (iii) ratifies and confirms its Guaranty dated July 1,
1999 made by it for the benefit of Agent and Lenders, and (iv) expressly
acknowledges and agrees that such Subsidiary Guarantor guarantees all
indebtedness, liabilities and obligations arising under or in connection with
the Notes pursuant to the terms of such Guaranty, and agrees that its
obligations and covenants thereunder are unimpaired hereby and shall remain in
full force and effect.

                         ARGUELLO INC.

                         By:   /s/ Phil Kramer
                            ------------------
                              Name:  Phil Kramer
                              Title: Executive Vice President

                                       9<PAGE>

                                                                     EXHIBIT 4.1

                         SOUTHERN MINERAL CORPORATION

                    Series B Perpetual Warrant Certificate
          Representing Warrants to Purchase Shares of Common Stock,
                           Par Value $0.01 Per Share

     This Warrant Certificate certifies that, [_____________________] (including
its successors, the "HOLDER"), is the holder of [______] Series B Perpetual
Warrants ("WARRANTS"), each of which entitles such Holder to purchase, at any
time, one share (as adjusted) of common stock, par value $0.01 per share
("COMMON STOCK"), of Southern Mineral Corporation, a Nevada corporation (the
"COMPANY"), as such stock is constituted at the date of this warrant, at the
price of $4.21 per share (as adjusted, the "WARRANT PRICE"), but such number of
shares and the Warrant Price may be adjusted from time to time upon the
occurrence of certain events as provided in the Warrant Agreement (hereinafter
defined), by the surrender of this Warrant Certificate, with the subscription
form on the reverse side hereof duly executed, at the office of American Stock
Transfer & Trust Company, a New York corporation (the "WARRANT AGENT"), whose
address is 6201 Fifteenth Avenue, New York, New York, 11219, and the payment of,
in lawful money of the United States, the Warrant Price for the number of whole
shares of Common Stock as to which Warrants represented by this Warrant
Certificate are exercised, subject to the conditions set forth herein.

     Upon exercise of less than the full number of Warrants represented by this
Warrant Certificate, there shall be countersigned and issued to or upon the
order of the Holder a new Warrant Certificate in respect of the Warrants as to
which this Warrant Certificate shall not have been exercised.

     This Warrant Certificate may be exchanged either separately or in
combination with one or more other countersigned Warrant Certificates for one or
more new countersigned Warrant Certificates representing the same aggregate
number of Warrants represented by the Warrant Certificate or Warrant
Certificates exchanged.

     No fractional shares of Common Stock will be issued upon the exercise of
rights to purchase hereunder; rather, a cash payment in respect thereof will be
made by the Company in lieu of the issuance of a fractional share as provided in
the Warrant Agreement.

     No holder of this Warrant Certificate or of any Warrant shall be deemed to
be the holder of Common Stock or any other securities of the Company that may at
any time be issuable on the exercise hereof for any purpose, nor shall anything
contained in the Warrant Agreement or herein be construed to confer upon any
holder of this Warrant Certificate or of any Warrant, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
reorganization, issuance of securities, reclassification or conversion of Common
Stock, consolidation, merger, sale, lease, conveyance or otherwise), receive
notice of meetings or other action affecting stockholders (except for
<PAGE>

notices expressly provided for in the Warrant Agreement) or receive dividends or
subscription rights or otherwise.

     This Warrant Certificate is issued under and in accordance with the Series
B Perpetual Warrant Agreement dated as of [_________], 2000 (the "WARRANT
AGREEMENT"), between the Company and the Warrant Agent and is subject to the
terms and provisions contained in such Warrant Agreement, to all of which terms
and provisions the Holder consents by acceptance hereof.

     This Warrant Certificate and all rights hereunder are transferable by the
registered holder hereof, in whole or in part, on the register of the Company,
upon surrender of this Warrant Certificate for registration of transfer at the
office of the Warrant Agent maintained for such purpose, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Warrant Agent duly executed by, the holder hereof or his
attorney duly authorized in writing, with signature guaranteed as specified in
the attached Form of Assignment. Upon any partial transfer, the Company will
issue and deliver to such holder a new Warrant Certificate or Warrant
Certificates with respect to any portion not so transferred. No service charge
shall be made for any registration of transfer or exchange of this Warrant
Certificate, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection herewith.

     Each taker and holder of this Warrant Certificate, by taking or holding the
same, consents and agrees that this Warrant Certificate, when duly endorsed in
blank, shall be deemed negotiable and that when this Warrant Certificate shall
have been so endorsed, the holder hereof may be treated by the Company, the
Warrant Agent and all other persons and entities dealing with this Warrant
Certificate as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented hereby, or to the transfer hereof on
the register of the Company maintained by the Warrant Agent, notwithstanding any
notice to the contrary, but until such transfer on such register, the Company
and the Warrant Agent may treat the registered holder hereof as the owner hereof
for all purposes.

     This Warrant Certificate and the Warrant Agreement are subject to amendment
as provided in the Warrant Agreement.

           [The remainder of this page is intentionally left blank.]
<PAGE>

     This Warrant Certificate shall not be valid for any purpose until it shall
have been countersigned by the Warrant Agent.

                                    SOUTHERN MINERAL CORPORATION

                                    By:
                                           ------------------------------
                                    Name:
                                           ------------------------------
                                    Title:
                                           ------------------------------

COUNTERSIGNED:

AMERICAN STOCK TRANSFER & TRUST COMPANY
as Warrant Agent

By:
       ------------------------------
Name:
       ------------------------------
Title:
       ------------------------------

Dated __________________
<PAGE>

                    [FORM OF REVERSE OF WARRANT CERTIFICATE]

                           EXERCISE SUBSCRIPTION FORM

           (To be executed only upon exercise of Warrant Certificate)

To:  Southern Mineral Corporation

     The undersigned irrevocably exercises ______________ Warrants represented
by this Warrant Certificate for the acquisition of _____________ shares of
common stock, par value $0.01 per share, of Southern Mineral Corporation on the
terms and conditions specified in the within Warrant Certificate and the Warrant
Agreement therein referred to, surrenders this Warrant Certificate and all
right, title and interest herein to Southern Mineral Corporation, and directs
that the shares of common stock deliverable upon the exercise of this Warrant
Certificate be registered or placed in the name and at the address specified
below and delivered thereto.

Dated: __________________
                              __________________________(1)
                              (Signature of Owner)

                              __________________________
                              (Street Address)

                              __________________________
                              (City)  (State)  (ZIP Code)

                              Signature Guaranteed by:

                              _____________________________________

-------------------------
(1) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, and must be guaranteed by an eligible
guarantor institution pursuant to SEC Rule 17Ad-15.
-------------------------
Shares of Common Stock to be issued to:

Please insert Social Security or identifying number:

Name:
Street Address:
City, State and ZIP Code:

Any Warrants represented by this Warrant Certificate which are exercisable but
unexercised to be issued to:

Please insert Social Security or identifying number:

Name:
Street Address:
City, State and ZIP Code:
<PAGE>

                              [FORM OF ASSIGNMENT]

     FOR VALUE RECEIVED, the undersigned registered holder of the within Warrant
Certificate hereby sells, assigns and transfers unto the assignee(s) named below
(including the undersigned with respect to any shares of common stock for which
the Warrants represented by the within Warrant Certificate are exercisable but
the right to exercise for which is not being assigned hereby) all of the right
of the undersigned under the within Warrant Certificate, with respect to the
number of Warrants as are set forth below:

                                   Social Security
                                     or other
                                    identifying
Name(s) of                          number of        Number of Warrants
Assignees        Address            Assignee(s)        being assigned
---------        -------            -----------      ------------------

and does hereby irrevocably constitute and appoint _______________ the
undersigned's attorney to make such transfer on the books of Southern Mineral
Corporation maintained for that purpose with full power of substitution in the
premises.

Dated:     ______________________

                              __________________________(1)
                              (Signature of Owner)

                              __________________________
                              (Street Address)

                              __________________________
                              (City)  (State)  (ZIP Code)

                              Signature Guaranteed by:

                              _____________________________________

-------------------------
(1) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, and must be guaranteed by an eligible
guarantor institution pursuant to SEC Rule 17Ad-15.

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