-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FHIbLKuvmxOvhlNKTJGI3d1Dl92MjxdcdbhN7rG5VQWAZ9pkEGSwMtO2nw0b7asf 4YH3JiDZWnTXaqkjUeCm3Q== 0000899243-97-002188.txt : 19971113 0000899243-97-002188.hdr.sgml : 19971113 ACCESSION NUMBER: 0000899243-97-002188 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLAINS RESOURCES INC CENTRAL INDEX KEY: 0000350426 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PETROLEUM & PETROLEUM PRODUCTS (NO BULK STATIONS) [5172] IRS NUMBER: 132898764 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-09808 FILM NUMBER: 97715504 BUSINESS ADDRESS: STREET 1: 1600 SMITH ST STE 1500 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7136541414 MAIL ADDRESS: STREET 1: 1600 SMITH STREET STREET 2: SUITE 1500 CITY: HOUSTON STATE: TX ZIP: 77002 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 0-9808 PLAINS RESOURCES INC. (Exact name of registrant as specified in its charter) and each of the Subsidiary Guarantors of $50 Million 10.25% Senior Subordinated Notes due 2006 listed under "General" on Page 2 of this report Delaware 13-2898764 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1600 Smith Street Houston, Texas 77002 (Address of principal executive offices) (Zip Code) (713) 654-1414 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] 16,694,548 shares of common stock $.10 par value, issued and outstanding at October 31, 1997. Page 1 of 22 PLAINS RESOURCES INC. AND SUBSIDIARIES TABLE OF CONTENTS - -------------------------------------------------------------------------------- GENERAL This Quarterly Report on Form 10-Q is filed on behalf of Plains Resources Inc. (the "Company") and the following wholly-owned subsidiaries, which are guarantors ("Subsidiary Guarantors") of $50 million principal amount of 10.25% Senior Subordinated Notes due 2006 (the "Series C & D 10.25% Notes").
State or other jurisdictions of I.R.S. Employer Subsidiary Guarantors incorporation or organization Identification No. --------------------- ------------------------------- ------------------ Calumet Florida, Inc. Delaware 35-1880416 Plains Illinois Inc. Delaware 76-0487569 Plains Marketing & Transportation Inc. Delaware 76-0339476 Plains Resources International Inc. Delaware 76-0040974 PMCT Inc. Delaware 76-0410281 PLX Crude Lines Inc. Delaware 76-0387477 PLX Ingleside Inc. Delaware 76-0493777 Plains Terminal & Transfer Corporation Delaware 76-0376679 Stocker Resources, Inc. California 33-0421175 Stocker Resources, L.P. California 33-0430755
PART I. FINANCIAL INFORMATION PAGE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: Condensed Consolidated Balance Sheets: September 30, 1997 and December 31, 1996 ................................... 3 Condensed Consolidated Statements of Income: For the three and nine months ended September 30, 1997 and 1996............. 4 Condensed Consolidated Statements of Cash Flows: For the nine months ended September 30, 1997 and 1996....................... 5 Notes to Condensed Consolidated Financial Statements.......................... 6 Separate financial statements of Calumet Florida, Inc., Plains Illinois Inc., Plains Marketing & Transportation Inc., Plains Resources International Inc., PMCT Inc., PLX Crude Lines Inc., PLX Ingleside Inc., Plains Terminal & Transfer Corporation, Stocker Resources, Inc., and Stocker Resources, L.P., as Subsidiary Guarantors of the Series C & D 10.25% Notes, have not been included herein because (a) such guarantors are jointly and severally liable for full and unconditional guarantees of the Series C & D 10.25% Notes and (b) the aggregate earnings of such guarantors and the Company are equivalent, and the aggregate net assets and equity of such guarantors and the Company are equivalent, to the net assets, earnings and equity of the Company on a consolidated basis. MANAGEMENT'S DISCUSSION AND ANALYSIS.................................................. 10 PART II. OTHER INFORMATION........................................................... 20
Page 2 of 22 PLAINS RESOURCES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
September 30, December 31, 1997 1996 ------------- ------------ (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 3,085 $ 2,517 Accounts receivable and other 92,627 94,778 Inventory 33,245 4,563 --------- --------- Total current assets 128,957 101,858 --------- --------- PROPERTY AND EQUIPMENT Oil and natural gas properties - full cost method: Subject to amortization 460,862 384,019 Not subject to amortization 49,704 41,698 Midstream assets, primarily crude oil terminal and storage facility 35,419 35,122 Other property and equipment 7,885 8,275 --------- --------- 553,870 469,114 Less allowance for depreciation, depletion and amortization (174,125) (158,074) --------- --------- 379,745 311,040 --------- --------- OTHER ASSETS 16,361 17,351 --------- --------- $ 525,063 $ 430,249 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and other current liabilities $ 97,934 $ 93,242 Interest payable 1,368 5,089 Royalties payable and drilling advances 5,436 7,859 Notes payable and other current obligations 25,511 511 --------- --------- Total current liabilities 130,249 106,701 BANK DEBT 76,700 72,700 SUBORDINATED DEBT 202,717 149,121 OTHER LONG-TERM DEBT 3,067 3,578 OTHER LONG-TERM LIABILITIES 5,119 2,577 --------- --------- 417,852 334,677 --------- --------- STOCKHOLDERS' EQUITY Common stock, $.10 par value, 50,000,000 shares authorized; issued and outstanding 16,665,849 at September 30, 1997 and 16,518,645 shares at December 31, 1996 1,667 1,652 Additional paid-in capital 121,773 120,051 Accumulated deficit (16,229) (26,131) --------- --------- 107,211 95,572 --------- --------- $ 525,063 $ 430,249 ========= =========
See notes to condensed consolidated financial statements. Page 3 of 22 PLAINS RESOURCES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands, except per share data)
Three Months Ended Nine Months Ended September 30, September 30, --------------------- ------------------- 1997 1996 1997 1996 --------- --------- -------- --------- REVENUE Oil and natural gas sales $ 27,265 $ 24,825 $ 79,829 $ 70,597 Marketing, transportation and storage 193,318 144,321 536,332 377,871 Interest and other income 77 99 223 220 -------- -------- -------- -------- 220,660 169,245 616,384 448,688 -------- -------- -------- -------- EXPENSES Production expenses 12,099 9,902 33,064 28,533 Purchases, transportation and storage 189,994 141,727 527,478 370,826 General and administrative 1,990 1,899 6,205 5,941 Depreciation, depletion and amortization 5,993 5,632 17,257 16,053 Interest expense 5,986 4,274 15,877 12,806 Litigation settlement - - - 4,000 -------- -------- -------- -------- 216,062 163,434 599,881 438,159 -------- -------- -------- -------- Income before income taxes and extraordinary item 4,598 5,811 16,503 10,529 Income tax expense (benefit): Current 80 - 290 - Deferred 1,759 2,325 6,311 (6,787) -------- -------- -------- -------- INCOME BEFORE EXTRAORDINARY ITEM 2,759 3,486 9,902 17,316 EXTRAORDINARY ITEM: Gain(Loss) on early extinguishment of debt, net of tax benefit - 1,515 - (5,104) -------- -------- -------- -------- NET INCOME $ 2,759 $ 5,001 $ 9,902 $ 12,212 ======== ======== ======== ======== Net income per common and common equivalent share: Before extraordinary item $ 0.15 $ 0.20 $ .55 $ 0.98 Extraordinary item - 0.08 - (0.29) -------- -------- -------- -------- $ 0.15 $ 0.28 $ 0.55 $ 0.69 ======== ======== ======== ======== Weighted average number of common and common equivalent shares 18,372 17,821 18,158 17,578 ======== ======== ======== ========
See notes to condensed financial statements. Page 4 of 22 PLAINS RESOURCES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands)
Nine Months Ended September 30, ------------------------ 1997 1996 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 9,902 $ 12,212 Items not affecting cash flows from operating activities: Depreciation, depletion and amortization 17,257 16,053 Loss on early extinguishment of debt, net of tax - 5,104 Deferred income taxes 6,311 (6,787) Amortization of debt discount and other 202 79 Change in assets and liabilities resulting from operating activities: Accounts receivable and other (1,253) (28,167) Inventory (28,682) (1,857) Accounts payable and other current liabilities (4,042) 31,567 Interest payable (3,022) (2,323) Royalties payable 469 788 -------- -------- Net cash (used in) provided by operating activities (2,858) 26,669 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from the sale of oil and natural gas properties 185 3,066 Payment for acquisition, exploration and development costs (75,003) (36,506) Payment for additions to other property and assets (3,840) (1,876) -------- -------- Net cash used in investing activities (78,658) (35,316) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term debt 221,604 217,323 Proceeds from short-term debt 25,000 - Principal payments of long-term debt (164,500) (208,357) Costs incurred to redeem long-term debt - (6,468) Proceeds from exercise of stock options 888 1,619 Other (908) (974) -------- -------- Net cash provided by financing activities 82,084 3,143 -------- -------- Net increase (decrease) in cash and cash equivalents 568 (5,504) Cash and cash equivalents, beginning of period 2,517 6,129 -------- -------- Cash and cash equivalents, end of period $ 3,085 $ 625 ======== ========
See notes to condensed consolidated financial statements. Page 5 of 22 PLAINS RESOURCES INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 1997 (unaudited) NOTE 1--ACCOUNTING POLICIES The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to interim financial reporting as prescribed by the Securities and Exchange Commission ("SEC"). For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996 filed with the SEC. All material adjustments consisting only of normal recurring adjustments which, in the opinion of management, were necessary for a fair statement of the results for the interim periods, have been reflected. Certain reclassifications have been made to the prior year statements to conform with the current year presentation. The Company evaluates the capitalized costs of its oil and natural gas properties on an ongoing basis and has utilized the most recently available information to estimate its reserves at September 30, 1997, in order to determine the realizability of such capitalized costs. Future events, including drilling activities, product prices and operating costs, may affect future estimates of such reserves. NOTE 2 -- PROPERTY ACQUISITIONS In March 1997, the Company completed the acquisition of Chevron USA's ("Chevron") interest in the Montebello Field for $25 million, effective February 1, 1997. The assets acquired consist of a 100% working interest and a 99.2% net revenue interest in 55 producing oil wells and related facilities and also include approximately 450 acres of surface fee lands. At the acquisition date, the Montebello Field, which is located approximately 15 miles from the Company's existing California operations, was producing approximately 800 barrels of oil and 800 Mcf of gas per day and added approximately 23 million barrels of oil equivalent to the Company's proved reserves. The acquisition was funded with proceeds from the Company's revolving credit facility ("Revolving Credit Facility"). On November 12, 1997, the Company acquired a 100% working interest and a 94% revenue interest in the Arroyo Grande Field in San Luis Obispo County, California, from subsidiaries of Shell Oil Company ("Shell"). The assets acquired include surface and development rights to approximately 1,000 acres included in the 1,500 acre unit. The field is currently producing approximately 1,600 barrels of 14 degree API gravity oil per day from 70 wells. The aggregate purchase price of $23.0 million consisted of rights to a non- producing property interest conveyed to Shell, the issuance of 46,600 shares of Series D Cumulative Convertible Preferred Stock (the "Series D Preferred Stock") with an aggregate stated value of $23.3 million, recorded at $20.5 million, net of discount, and a 5 year warrant to purchase 150,000 shares of the Company's Common Stock (the "Common Stock") at $25 per share. No proved reserves had been assigned to the rights to the property interest conveyed. Each share of the Series D Preferred Stock has a stated value of $500 and is convertible into Common Stock at a ratio of $25.00 of stated value for each share of Common Stock to be issued. Commencing January 1, 2000, the preferred stock will bear an annual dividend of $30.00 per share. Prior Page 6 of 22 to such date no dividends will accrue. The preferred stock is redeemable at the Company's option at 140% of stated value. If not previously redeemed or converted, the preferred stock will automatically convert into 932,000 shares of Common Stock in 2012. The difference between the stated value of $23.3 million and the recorded amount of $20.5 million for the Series D Preferred Stock will be amortized to retained earnings over the period during which no dividends will accrue on the Series D Preferred Stock, resulting in an annual dividend cost of approximately 6%. NOTE 3 -- LONG-TERM DEBT On July 23, 1997, the Company sold $50 million of Senior Subordinated Notes due 2006, Series C, bearing a stated coupon rate of 10.25% (the "Series C 10.25% Notes"). Such notes were issued pursuant to a Rule 144A private placement at approximately 107.21% of par to yield a minimum yield to worst of 8.79%, or 9.03% yield to maturity. On October 30, 1997, the Company exchanged a total of $49.95 million of the Series C 10.25% Notes for 10.25% Senior Subordinated Notes due 2006, Series D, (the "Series D 10.25% Notes"). The Series D 10.25% Notes are substantially identical (including principal amount, interest rate, maturity and redemption rights) to the Series C 10.25% Notes for which they were exchanged, except for certain transfer restrictions relating to the Series C 10.25% notes. The stated coupon rate of interest and maturity date of the Series C 10.25% Notes and the Series D 10.25% Notes (collectively, the "Series C & D 10.25% Notes") are the same as those of the Company's existing $150 million principal amount of senior subordinated notes currently outstanding. The Series C & D 10.25% Notes are redeemable, at the option of the Company, on or after March 15, 2001 at 105.13%, at decreasing prices thereafter prior to March 15, 2004, and thereafter at 100% plus, in each case, accrued interest to the date of redemption. In addition, prior to March 15, 1999, up to $15 million in principal amount of the Series C & D 10.25% Notes are redeemable at the option of the Company, in whole or in part, from time to time, at 110.25% of the principal amount thereof, with the Net Proceeds (as defined in the Indenture) of any Public Equity Offering (as defined in the Indenture). The indenture under which the Series C & D 10.25% Notes were issued (the "Indenture") contains covenants including, but not limited to, covenants with respect to the following: (i) limitations on incurrence of additional indebtedness; (ii) limitations on certain investments; (iii) limitations on restricted payments; (iv) limitations on disposition of assets; (v) limitations on dividends and other payment restrictions affecting subsidiaries; (vi) limitations on transactions with affiliates; (vii) limitations on liens; and (viii) restrictions on mergers, consolidations and transfers of assets. In the event of a Change of Control and a corresponding Rating Decline, as both are defined in the Indenture, the Company will be required to make an offer to repurchase the Series C & D 10.25% Notes at 101% of the principal amount thereof, plus accrued and unpaid interest to the date of the repurchase. The Series C & D 10.25% Notes are unsecured general obligations of the Company and are subordinated in right of payment to all existing and future senior indebtedness of the Company and are guaranteed by all of the Company's subsidiaries. Proceeds from the sale of the Series C & D 10.25% Notes, net of offering costs, were approximately $53 million and were used to reduce the balance outstanding on the Revolving Credit Facility. In March 1997, the Company's Revolving Credit Facility and borrowing base thereunder was increased to $165 million from $125 million. The Revolving Credit Facility, as amended, converts to a term loan on July 1, 1999, with a final maturity of July 1, 2004, and bears interest at the option of the Company at LIBOR plus 1.375% or Base Rate (as defined therein). The Revolving Credit Facility is guaranteed by all of the Company's principal subsidiaries and is secured by the oil and gas properties of the Company and Page 7 of 22 its subsidiaries and the stock of all subsidiaries. At September 30, 1997, the Company had approximately $76.7 million in borrowings and a $1.0 million standby letter of credit outstanding under the Revolving Credit Facility. NOTE 4 -- UNCOMMITTED SECURED TRANSACTIONAL GUIDANCE FACILITY Plains Marketing and Transportation Inc. ("Plains Marketing ") and PMCT Inc., wholly owned subsidiaries of the Company, have a $90 million Transactional Facility with five banks. The purpose of the Transactional Facility is to provide standby letters of credit to support the purchase of crude oil for resale and borrowings to finance crude oil inventory that has been hedged against future price risk. In August 1997, the sublimit for cash borrowings under the Transactional Facility was increased to $25 million from $20 million. Letters of credit under the Transactional Facility are generally issued for seventy-day periods and bear fees of 1 1/8% per annum. Borrowings incur interest at the option of the borrower at (i) the Base Rate or (ii) LIBOR plus 1 1/2%. At September 30, 1997, approximately $33.7 million in letters of credit and $25 million in borrowings were outstanding under the Transactional Facility. The Transactional Facility is secured by all of the assets of Plains Marketing and is guaranteed by the Company. The Company's guarantee is secured by a $1.0 million standby letter of credit issued on behalf of the Company. All financings under the Transactional Facility, which expires on November 21, 1997, are at the discretion of the lenders. The Company is currently in the process of renewing the Transactional Facility and believes that such facility will be renewed for a one year period. NOTE 5 -- EARNINGS PER SHARE Earnings per share is based on the weighted average number of common and common equivalent shares outstanding. Common equivalent shares include employee stock options and warrants. In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 128 ("SFAS 128"), Earnings Per Share ("EPS"). SFAS 128 replaces the presentation of primary EPS with a presentation of basic EPS and requires a dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures. Basic EPS excludes dilutive securities and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if dilutive securities were converted into common stock and is computed similarly to fully diluted EPS pursuant to previous accounting pronouncements. SFAS 128 is effective for periods ending after December 15, 1997, and requires restatement of all prior period EPS data presented. The Company reported primary EPS of $.15 per share and $.28 per share for the three months ended September 30, 1997 and 1996, respectively, and $.55 per share and $.69 per share for the nine months ended September 30, 1997 and 1996, respectively. Under SFAS 128, basic EPS would have been $.17 per share and $.31 per share for the three months ended September 30,1997 and 1996, respectively, and $.60 per share and $.75 per share for the nine months ended September 30, 1997 and 1996, respectively. Diluted EPS would have been $.15 per share and $.28 per share for the three months ended September 30, 1997 and 1996, respectively, and $.54 per share and $.68 per share for the nine months ended September 30, 1997 and 1996, respectively. Page 8 of 22 NOTE 6 -- NEW ACCOUNTING PRONOUNCEMENT In July 1997, the FASB issued Statement of Financial Accounting Standards No. 131 ("SFAS 131"), Disclosures About Segments of an Enterprise and Related Information, effective for fiscal years beginning after December 15, 1997. SFAS 131 introduces a new model for segment reporting and requires disclosures for each segment that are similar to those required under current standards with the addition of quarterly disclosure requirements and a finer partitioning of geographic disclosures. Reportable segments are based on products and services, geography, legal structure, management structure or any manner in which management disaggregates a company. This statement replaces the notion of industry and geographic segments in current FASB standards. Management is currently evaluating the impact of this statement on the Company's disclosures. Page 9 of 22 MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Three month periods ended September 30, 1997 and 1996 For the quarter ended September 30, 1997, the Company reported net income of $2.8 million, or $.15 per share compared to net income for the third quarter of 1996 of $3.5 million, or $.20 per share before extraordinary items. Including a $1.5 million extraordinary tax benefit in the third quarter of 1996, net income for the prior year period totaled $5.0 million, or $.28 per share. Cash flow from operations (net income plus noncash expenses) was $10.5 million and earnings before interest, taxes, depreciation, depletion and amortization ("EBITDA") was $16.6 million in the current quarter. Such results compare to $11.4 million and $15.7 million, respectively, for the third quarter of 1996. Upstream Results The following table sets forth certain upstream operating information of the Company for the periods presented:
Three Months Ended September 30, -------------------- 1997 1996 --------- --------- (in thousands, except per unit data) (unaudited) Average Daily Production Volumes Barrels of Oil Equivalent ("BOE") California................................ 11.2 9.4 Gulf Coast................................ 5.2 5.1 Illinois Basin............................ 3.6 3.5 ------ ------ Total (93% oil)........................... 20.0 18.0 ====== ====== Unit Economics Average sales price per BOE............... $14.81 $14.97 Production expenses per BOE............... 6.57 5.97 ------ ------ Gross margin per BOE...................... 8.24 9.00 Upstream G&A expenses per BOE............. 0.59 0.72 ------ ------ Gross profit per BOE...................... $ 7.65 $ 8.28 ====== ======
Oil and natural gas production for the third quarter of 1997 increased approximately 11% to an average of 20,000 BOE per day as compared to the third quarter 1996 average of 18,000 BOE per day. Total production for the three month periods ended September 30, 1997 and 1996, was 1.8 million BOE and 1.7 million BOE, respectively. The increase in production volumes is attributable to the Company's acquisition and exploitation activities. Production in the Company's California and Illinois Basin properties increased approximately 19% and 6%, respectively, over last year's third quarter levels. Excluding the production from the Montebello Field which was acquired during the first quarter of 1997 (the "Montebello Acquisition"), California production was 10,200 BOE per day which represents a 9% increase over the comparative prior year period. Production from the Company's Gulf Coast properties, primarily South Florida, was relatively unchanged at approximately 5,200 barrels per day versus 5,100 barrels per day last year. The Company's South Florida properties experienced production downtime during the quarter Page 10 of 22 totaling approximately 34,000 barrels of oil, primarily due to mechanical complications on certain key wells. Such production downtime equates to approximately 370 barrels per day or 7% of the prior year period's reported production of 5,100 barrels per day. Due to the high volume of production that is generated by a few wells in South Florida, abrupt or abnormal declines or downtime due to mechanical, marketing, or other conditions on any of the properties in this area could have a significant impact on production. Oil and natural gas revenues increased 10% to $27.3 million for the third quarter of 1997 due to increased production volumes. On a composite basis, approximately 93% of the current quarter's production was crude oil. During the 1996 third quarter, the benchmark NYMEX West Texas Intermediate crude oil price averaged $22.33 per barrel, $2.56 per barrel or 13% higher than the $19.77 per barrel average for the current year quarter. However, as a result of improvement in the contract prices associated with the Company's crude oil production subject to fixed price contracts or hedging arrangements, average unit prices were significantly less affected. The Company's average product price, which represents a combination of fixed and floating price sales arrangements and incorporates location and quality discounts from the benchmark NYMEX price was $14.81 per BOE, down 1% from the 1996 third quarter average price of $14.97 per BOE. The Company hedged approximately 15,200 barrels per day in the third quarter of 1997 at an average NYMEX benchmark price of approximately $19.19 per barrel before deductions for quality and location differentials. During last year's third quarter, approximately 12,500 barrels per day were hedged at an average NYMEX benchmark price of approximately $17.99 per barrel. Hedging transactions had the effect of decreasing the Company's average price per BOE by $.46 and $2.68 in the third quarter of 1997 and 1996, respectively. The Company's aggregate quality and location differential to the NYMEX crude oil benchmark price averaged $4.05 per barrel during the third quarter of 1997 compared to $3.77 during the third quarter of last year. Unit production expenses increased approximately 10% to $6.57 per BOE during the 1997 third quarter primarily as a result of the current year impact of the Montebello Field, which is expected to have higher unit costs than the average of the Company's other properties through the first part of 1998, and workover expenses attributable to equipment failures in South Florida. During the quarter, the unit production expenses of the Montebello Field were $9.86 per BOE as the Company performed a substantial amount of work designed to improve long-term operations in the field. Total production expenses increased to $12.1 million from $9.9 million for the third quarter of 1996 primarily due to the Montebello Acquisition and South Florida workovers, as well as increased production levels. Upstream, the Company's unit gross margin (well head revenue less production expenses) was $8.24 per BOE, an 8% decrease compared to $9.00 per BOE recorded in last year's third quarter. Unit gross profit, which deducts general and administrative ("G&A") expenses attributable to the upstream segment, was $7.65 per BOE, also down 8% from the 1996 amount of $8.28 per BOE. The decrease is directly related to lower unit sales prices and higher unit production expenses, partially offset by lower unit G&A costs. Unit G&A expense in the upstream segment declined 18% to $.59 per BOE from $.72 per BOE in the third quarter of 1996 primarily due to increased production levels. Unit depreciation, depletion and amortization ("DD&A") declined to $2.85 per BOE for the third quarter of 1997 from $3.00 per BOE in the 1996 comparative quarter. Such reduction is attributable to the increase in proved reserves from the Company's acquisition and exploitation activities. Page 11 of 22 Midstream Results The following table sets forth certain midstream operating information of the Company for the periods presented:
Three Months Ended September 30, ------------------- 1997 1996 --------- --------- (in thousands) Operating Results Gross margin.................................... $3,324 $2,594 G&A expense..................................... 910 710 ------ ------ Gross profit.................................... $2,414 $1,884 ====== ====== Average Daily Volumes Crude oil barrels marketed...................... 75 56 Crude oil terminal throughput barrels........... 56 54 ------ ------ 131 110 ====== ======
Despite significant downward pressure on marketing margins throughout the industry generally, strength in the Company's storage and terminalling activities enabled this segment to generate its strongest quarterly results to date. The Company's midstream segment reported gross margin (marketing, transportation and storage revenues less purchases, transportation and storage expenses) of $3.3 million for the third quarter of 1997, reflecting a 28% increase over the $2.6 million reported for the 1996 quarter. Net of interest expense associated with contango inventory transactions, gross margin was $2.8 million for the current year quarter, an increase of approximately 8% over the prior year amount. Gross revenues were $193.3 million and $144.3 million for the respective periods. Gross profit (gross margin less midstream G&A expenses) also increased 28% to $2.4 million versus $1.9 million in the third quarter of 1996. Midstream G&A expenses increased from $710,000 to $910,000 in the current year quarter primarily as a result of additional personnel added to further expand marketing activities. Average crude oil volumes marketed increased approximately 34% to 75,000 barrels per day from the 56,000 barrels per day averaged during the 1996 quarter. Throughput activity at the Company's Cushing, Oklahoma, storage and terminal facility (the "Cushing Terminal") increased 4% to an average of 56,000 barrels per day. The 1996 third quarter throughput averaged approximately 54,000 barrels per day. A strong backward market for crude oil existed during 1996 and the first quarter of 1997. However, during the second and third quarters of 1997, the market transitioned to a flat to slightly contango market. Typically, margins for crude oil marketing are strongest in a backward market. During a contango market, when marketing margins are generally smaller, the Company's storage operations at the Cushing Terminal typically become more profitable due to (i) the Company's ability to take delivery of crude oil which is simultaneously purchased and resold at a profit for delivery in a subsequent month and (ii) the increased demand by customers for storage capacity. General Total G&A expenses increased approximately 5% to $2.0 million for the third quarter of 1997 as a result of increased G&A expenses in the midstream segment. Interest expense for the quarter ended September 30, 1997, increased by $1.7 million, or approximately 40% over the prior year quarter. Approximately 30% of this increase is attributable to short-term borrowings for the purchase of crude oil Page 12 of 22 inventory associated with contango crude oil transactions. The remainder of the increase is primarily associated with borrowings as a result of the Company's exploitation and acquisition activities, lower capitalized interest and a higher interest rate from refinancing $50 million of bank debt with senior subordinated notes maturing in March 2006. The senior subordinated notes were issued at a yield to maturity of approximately 9%. During the third quarter of 1997, the Company recognized a deferred tax provision of $1.8 million and a current tax provision of $.1 million. During the third quarter of 1996, the Company recognized a deferred tax provision of $2.3 million and an offsetting $1.5 million deferred tax benefit reported as an extraordinary item. Such deferred tax benefit is attributable to the first quarter 1996 extraordinary loss from the early redemption of the Company's $100 million of 12% Senior Subordinated Notes (the "12% Notes"). In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 128 ("SFAS 128"), Earnings Per Share ("EPS"). SFAS 128 replaces the presentation of primary EPS with a presentation of basic EPS and requires a dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures. Basic EPS excludes dilutive securities and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if dilutive securities were converted into common stock and is computed similarly to fully diluted EPS pursuant to previous accounting pronouncements. SFAS 128 is effective for periods ending after December 15, 1997, and requires restatement of all prior period EPS data presented. The Company reported primary EPS of $.15 per share and $.28 per share for the three months ended September 30, 1997 and 1996, respectively. Under SFAS 128, basic EPS would have been $.17 per share and $.31 per share for the three months ended September 30,1997 and 1996, respectively, and diluted EPS would have been $.15 per share and $.28 per share for the same respective periods. Nine month periods ended September 30, 1997 and 1996 For the nine months ended September 30, 1997, the Company reported net income of $9.9 million, or $.55 per share, compared to net income for the same period of 1996 of $12.2 million, or $.69 per share. The 1996 period includes the recognition of nonrecurring tax benefits and an extraordinary charge from the refinancing of subordinated notes. Pretax income for the first nine months of 1997 was $16.5 million as compared to $10.5 million for 1996. For the nine months ended September 30, 1997, cash flow from operations (net income plus noncash expenses) increased to $33.7 million from $26.6 million in 1996, and EBITDA increased to $49.6 million in 1997 from $39.4 million in 1996. The improvement in operating results is primarily attributable to increased production volumes in the upstream segment and continued expansion of marketing and terminalling activities in the midstream segment. Net cash used in operating activities, as reported in the consolidated statements of cash flows was $2.9 million for the nine months ended September 30, 1997, as compared to net cash provided by operating activities of $26.7 million for the 1996 comparative period primarily due to crude oil inventory purchased for resale at the Cushing Terminal. Such inventory has been hedged against price risk. Page 13 of 22 Upstream Results The following table sets forth certain operating information of the Company for the periods presented:
Nine Months Ended September 30, ------------------ 1997 1996 -------- -------- (in thousands, except per unit data) (unaudited) Average Daily Production Volumes Barrels of Oil Equivalent California 10.7 9.1 Gulf Coast 5.4 4.6 Illinois Basin 3.5 3.5 ------ ------ Total (93% oil) 19.6 17.2 ====== ====== Unit Economics Average sales price per BOE $14.91 $15.02 Production expenses per BOE 6.17 6.07 ------ ------ Gross margin per BOE 8.74 8.95 Upstream G&A expenses per BOE 0.67 0.80 ------ ------ Gross profit per BOE $ 8.07 $ 8.15 ====== ======
Oil and natural gas production for the first nine months of 1997 averaged approximately 19,600 BOE per day, a 14% increase over the 17,200 BOE per day averaged during the 1996 period. Total production for the first nine months of 1997 increased to 5.4 million BOE versus the 4.7 million BOE produced in the 1996 comparative period. The Company's unit gross margin was $8.74 per BOE versus $8.95 per BOE in 1996. Unit gross profit, which deducts G&A costs attributable to the upstream segment, was $8.07 per BOE for the first nine months of 1997, down slightly from $8.15 per BOE during the 1996 period. The increase in production volumes is attributable to the Company's acquisition and exploitation activities. Net daily production from the Company's California properties for the first nine months 1997 increased to approximately 10,700 BOE per day, up 1,600 BOE per day, or 18% over last year's comparative period. Excluding the production from the Montebello Field, California production was 9,800 BOE per day which represents an 8% increase over the comparative prior year period. Net daily production in the Illinois Basin averaged approximately 3,500 barrels per day during the first nine months of 1997 which is flat with the 1996 period. Net production from the Company's Gulf Coast properties, primarily South Florida, increased approximately 17% to average 5,400 barrels of oil per day for the nine months ended September 30, 1997 as compared to 4,600 barrels per day in last year's comparative period. Oil and natural gas revenues increased 13% to $79.8 million for the first nine months of 1997 due to increased production volumes. The Company's average product price, which represents a combination of fixed and floating price sales arrangements and incorporates location and quality discounts from the benchmark NYMEX prices, decreased 1% to $14.91 per BOE primarily due to an increase in the crude oil price differential from NYMEX for the Company's production and slightly lower market commodity prices. During the current year, the NYMEX benchmark price averaged $20.85 per barrel, down 1% as compared to an average of $21.15 in the correlative period of 1996. The Company had hedges on approximately 15,000 barrels per day for the first nine months of 1997 at an average NYMEX benchmark Page 14 of 22 price of $19.34 per barrel. Hedging transactions had the effect of decreasing the Company's average price per BOE by $1.49 and $1.94 in the first nine months of 1997 and 1996, respectively. Unit production expenses increased approximately 2% to $6.17 per BOE for the nine months ended September 30, 1997, and total production expenses increased to $33.1 million from $28.5 million for the first nine months of 1996. Such increases are primarily due to the Montebello Acquisition and increased production levels. Midstream Results The following table sets forth certain midstream operating information of the Company for the periods presented:
Nine Months Ended September 30, ------------------ 1997 1996 -------- -------- (in thousands) Operating Results Gross margin..................................... $8,854 $7,045 Gulf Coast....................................... 2,616 2,181 ------ ------ Gross profit..................................... $6,238 $4,864 ====== ====== Average Daily Volumes Crude oil barrels marketed....................... 70 57 Crude oil terminal throughput barrels............ 69 55 ------ ------ 139 55 ====== ======
Despite significant downward pressure on marketing margins throughout the industry generally, strength in the Company's storage and terminalling activities enabled this segment to report a gross margin (marketing, transportation and storage revenues less purchases, transportation and storage expenses) of $8.9 million for the first nine months of 1997, reflecting an approximate 26% increase over the $7.0 million reported for the 1996 period. Net of interest expense associated with contango inventory transactions, gross margin was $8.3 million for the current year period, an increase of 18% over the prior year amount. Gross revenues were $536.3 million and $377.9 million for the respective periods. Midstream G&A expenses increased from $2.2 million to $2.6 million in the current year period primarily as a result of additional personnel added to further expand marketing activities. Total average daily crude oil volumes marketed and terminalled during the first nine months of 1997 were 70,000 barrels and 69,000 barrels, respectively. Such amounts represent respective increases of 23% and 25% as compared with average daily volumes of 57,000 barrels and 55,000 barrels in last year's comparative period. Gross profit (gross margin less midstream G&A expenses) increased 28%, totaling $6.2 million versus $4.9 million in the first nine months of last year. A strong backward market for crude oil existed during 1996 and the first quarter of 1997. However, during the second and third quarters of 1997, the market transitioned to a flat to slightly contango market. Typically, margins for crude oil marketing are strongest in a backward market. During a contango market, when marketing margins are generally smaller, the Company's storage operations at the Cushing Terminal typically become more profitable due to (i) the Company's ability to take delivery of crude oil which is simultaneously purchased and resold at a profit for delivery in a subsequent month and (ii) the increased demand by customers for storage capacity. Page 15 of 22 General For the first nine months of 1997, upstream unit G&A expenses decreased 16% to $.67 per BOE as compared to $.80 per BOE in last year's period due primarily to increased production volumes. Total G&A expenses, including midstream activities, were $6.2 million for the nine months ended September 30, 1997, compared to $5.9 million for the 1996 period. The increase is primarily attributable to increased expenses associated with the Company's midstream activities. DD&A expense increased to $17.3 million from $16.1 million reported in the first nine months of 1996 due primarily to higher production volumes. The Company's unit DD&A rate was $2.82 and $3.00 per BOE for the nine months ended September 30, 1997 and 1996, respectively. Interest expense for the nine months ended September 30, 1997, increased to $15.9 million from $12.8 million reported for the comparative prior year period primarily due to higher outstanding debt levels as a result of capital expenditures related to the Company's acquisition and exploitation activities, short term borrowings for the purchase of crude oil inventory associated with contango crude oil transactions and a decrease in capitalized interest. The effect of higher debt levels was partially offset by a slightly lower overall average interest rate. Capitalized interest was $2.3 million and $2.7 million for the nine months ended September 30, 1997 and 1996, respectively. For the nine months ended September 30, 1997, the Company recognized a deferred tax provision of $6.3 million and a current tax provision of $.3 million. For the 1996 period, the Company recognized a net deferred tax benefit before extraordinary item of $6.8 million. Such amount consists of a $4.2 million deferred tax provision on the Company's income before extraordinary item and an $11 million benefit related to the reversal of a portion of the valuation reserve against the Company's deferred tax asset. The Company reported primary EPS of $.55 per share and $.69 per share for the nine months ended September 30, 1997 and 1996, respectively. Under SFAS 128, basic EPS would have been $.60 per share and $.75 per share for the nine months ended September 30, 1997 and 1996, respectively, and diluted EPS would have been $.54 per share and $.68 per share for the same respective periods. In July 1997, the FASB issued Statement of Financial Accounting Standards No. 131 ("SFAS 131"), Disclosures About Segments of an Enterprise and Related Information, effective for fiscal years beginning after December 15, 1997. SFAS 131 introduces a new model for segment reporting and requires disclosures for each segment that are similar to those required under current standards with the addition of quarterly disclosure requirements and a finer partitioning of geographic disclosures. Reportable segments are based on products and services, geography, legal structure, management structure or any manner in which management disaggregates a company. This statement replaces the notion of industry and geographic segments in current FASB standards. Management is currently evaluating the impact of this statement on the Company's disclosures. Capital Resources, Liquidity and Financial Condition In March 1997, the Company completed the acquisition of Chevron USA's interest in the Montebello Field for $25 million, effective February 1, 1997. The assets acquired consist of a 100% working interest and a 99.2% net revenue interest in 55 producing oil wells and related facilities and also include approximately 450 acres of surface fee lands. At the acquisition date, the Montebello Field, which is located approximately 15 miles from the Company's existing California operations, was producing approximately 800 barrels of oil and 800 Mcf of gas per day and added approximately 23 million barrels of oil equivalent Page 16 of 22 to the Company's proved reserves. The Montebello Acquisition was funded with proceeds from the Company's revolving credit facility ("Revolving Credit Facility"). On November 12, 1997, the Company acquired a 100% working interest and a 94% revenue interest in the Arroyo Grande Field in San Luis Obispo County, California, from subsidiaries of Shell Oil Company ("Shell"). The assets acquired include surface and development rights to approximately 1,000 acres included in the 1,500 acre unit. The field is currently producing approximately 1,600 barrels of 14 degree API gravity oil per day from 70 wells. The aggregate purchase price of $23.0 million consisted of rights to a non- producing property interest conveyed to Shell, the issuance of 46,600 shares of Series D Cumulative Convertible Preferred Stock (the "Series D Preferred Stock") with an aggregate stated value of $23.3 million, recorded at $20.5 million, net of discount, and a 5 year warrant to purchase 150,000 shares of the Company's Common Stock (the "Common Stock") at $25 per share. No proved reserves had been assigned to the rights to the property interest conveyed. Each share of the Series D Preferred Stock has a stated value of $500 and is convertible into Common Stock at a ratio of $25.00 of stated value for each share of Common Stock to be issued. Commencing January 1, 2000, the preferred stock will bear an annual dividend of $30.00 per share. Prior to such date no dividends will accrue. The preferred stock is redeemable at the Company's option at 140% of stated value. If not previously redeemed or converted, the preferred stock will automatically convert into 932,000 shares of Common Stock in 2012. In March 1997, the Company's Revolving Credit Facility and borrowing base thereunder was increased to $165 million from $125 million. The Revolving Credit Facility, as amended, converts to a term loan on July 1, 1999, with a final maturity of July 1, 2004, and bears interest at the option of the Company at LIBOR plus 1.375% or Base Rate (as defined therein). The Revolving Credit Facility is guaranteed by all of the Company's principal subsidiaries and is secured by the oil and gas properties of the Company and its subsidiaries and the stock of all subsidiaries. At September 30, 1997, the Company had approximately $76.7 million in borrowings and a $1.0 million standby letter of credit outstanding under the Revolving Credit Facility. On July 23, 1997, the Company sold $50 million of Senior Subordinated Notes due 2006, Series C, bearing a stated coupon rate of 10.25% (the "Series C 10.25% Notes"). Such notes were issued pursuant to a Rule 144A private placement at approximately 107.21% of par to yield a minimum yield to worst of 8.79%, or 9.03% yield to maturity. On October 30, 1997, the Company exchanged a total of $49.95 million of the Series C 10.25% Notes for 10.25% Senior Subordinated Notes due 2006, Series D, (the "Series D 10.25% Notes"). The Series D 10.25% Notes are substantially identical (including principal amount, interest rate, maturity and redemption rights) to the Series C 10.25% Notes for which they were exchanged, except for certain transfer restrictions relating to the Series C 10.25% Notes. The stated coupon rate of interest and maturity date of the Series C 10.25% Notes and the Series D 10.25% Notes (collectively, the "Series C & D 10.25% Notes") are the same as those of the Company's existing $150 million principal amount of senior subordinated notes currently outstanding (the "Series A & B 10.25% Notes"). The Series C & D 10.25% Notes are redeemable, at the option of the Company, on or after March 15, 2001 at 105.13%, at decreasing prices thereafter prior to March 15, 2004, and thereafter at 100% plus, in each case, accrued interest to the date of redemption. In addition, prior to March 15, 1999, up to $15 million in principal amount of the Series C & D 10.25% Notes are redeemable at the option of the Company, in whole or in part, from time to time, at 110.25% of the principal amount thereof, with the Net Proceeds (as defined in the Indenture) of any Public Equity Offering (as defined in the Indenture). Page 17 of 22 Proceeds from the sale of the Series C & D 10.25% Notes, net of offering costs, were approximately $53 million and were used to reduce the balance outstanding on the Revolving Credit Facility. Plains Marketing and Transportation Inc. ("Plains Marketing ") and PMCT Inc., wholly owned subsidiaries of the Company, have a $90 million Transactional Facility with five banks. The purpose of the Transactional Facility is to provide standby letters of credit to support the purchase of crude oil for resale and borrowings to finance crude oil inventory that has been hedged against future price risk. In August 1997, the sublimit for cash borrowings under the Transactional Facility was increased to $25 million from $20 million. Letters of credit under the Transactional Facility are generally issued for seventy-day periods and bear fees of 1 1/8% per annum. Borrowings incur interest at the option of the borrower at (i) the Base Rate or (ii) LIBOR plus 1 1/2%. At September 30, 1997, approximately $33.7 million in letters of credit and $25 million in borrowings were outstanding under the Transactional Facility. The Transactional Facility is secured by all of the assets of Plains Marketing and is guaranteed by the Company. The Company's guarantee is secured by a $1.0 million standby letter of credit issued on behalf of the Company. All financings under the Transactional Facility, which expires on November 21, 1997, are at the discretion of the lenders. The Company is currently in the process of renewing the Transactional Facility and believes that such facility will be renewed for a one year period. At September 30, 1997, the Company had a working capital deficit of approximately $1.3 million compared to a deficit of $4.8 million at December 31, 1996. The Company has historically operated with a working capital deficit due primarily to ongoing capital expenditures that have been financed through cash flow and the Revolving Credit Facility. Investing and Financing Activities Net cash flows used in investing activities were $78.7 million and $35.3 million for the nine months ended September 30, 1997 and 1996, respectively. Investing activities include payments for acquisition, exploration and development costs of $75.0 million and $36.5 million for these same periods, respectively. Included in the 1997 amount is approximately $25 million related to the Montebello Acquisition. Also included in investing activities are proceeds from the sale of certain nonstrategic properties of $.2 million and $3.1 million for the nine months ended September 30, 1997 and 1996, respectively. Net cash provided by financing activities amounted to $82.1 million and $3.1 million for the nine months ended September 30, 1997 and 1996, respectively. Approximately $25 million borrowed under the Revolving Credit Facility to fund the Montebello Acquisition is included in proceeds from long-term debt in 1997. Also included in financing activities during 1997 are net proceeds of approximately $53 million from the sale of the Series C & D 10.25% Notes and a corresponding payment on the Revolving Credit Facility. Financing activities during 1996 include net proceeds of approximately $144.6 million from the sale of the Series A & B 10.25% Notes, approximately $107 million for the repayment of the 12% Notes, including the 6% call premium and the net defeasance costs, and approximately $42 million for the repayment of the acquisition bridge indebtedness incurred to fund the acquisition of the Illinois Basin properties. Included in both years are net proceeds from borrowings under the Revolving Credit Facility as a result of acquisition, exploration and development activities. Financing activities during 1997 include proceeds of $25 million from short-term borrowings and $6 million from long-term borrowings to finance crude oil inventory transactions at the Cushing Terminal. The short-term borrowings were made under the Plains Marketing Transactional Facility and all inventory acquired has been hedged against price risk. Page 18 of 22 Changing Oil and Natural Gas Prices The Company is heavily dependent on crude oil prices which have historically been volatile. Although the Company has routinely hedged a substantial portion of its crude oil production and intends to continue this practice, future crude oil price declines would have a negative impact on the Company's overall results, and therefore its liquidity. Furthermore, low crude oil prices could affect the Company's ability to raise capital on terms favorable to the Company. For the fourth quarter of 1997, the Company has entered into various fixed price and floating price collar arrangements. Such arrangements generally provide the Company with downside price protection on approximately 14,000 barrels of oil per day at a NYMEX benchmark price of approximately $19.00 per barrel, but permit the Company to receive the benefit of increases in the NYMEX benchmark price up to $24.00 per barrel on 4,000 of such barrels. Thus, based on the Company's average third quarter 1997 oil production rate, these arrangements generally provide the Company with downside price protection for 76% of its production and upside price participation for 46% of its production up to $24.00 per barrel, while 24% of such production and excess volumes, if any, remain unhedged. In addition, the Company also has fixed price arrangements on approximately 12,000 barrels per day for 1998 at a NYMEX benchmark price of approximately $19.80 per barrel. The hedge prices are before deductions for quality and area differentials. Forward-Looking Statements and Associated Risks All statements, other than statements of historical facts, included in the Report which address activities, events or developments that the Company expects or anticipates will or may occur in the future are forward-looking statements. Such forward-looking statements are subject to risks and uncertainties including, among other things, market conditions, drilling and operating hazards, uncertainties inherent in estimating oil and gas reserves and other factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Page 19 of 22 PART II. OTHER INFORMATION Item 1 - Legal Proceedings None Item 2 - Material Modification of Rights of Registrant's Securities None Item 3 - Defaults on Senior Securities None Item 4 - Submission of Matters to a Vote of Security Holders None Item 5 - Other Information None Item 6 - A. Exhibits 3(c) Certificate of Designation, Preferences and Rights of Series D Cumulative Convertible Preferred Stock. 4(d) Warrant dated November 12, 1997, to Shell Land & Energy Company for the purchase of 150,000 shares of Common Stock 10(p) Fourth Amendment to the Third Amended and Restated Credit Agreement dated as of August 29, 1997, among the Company and ING (U.S.) Capital Corporation, f/k/a/ Internationale Nederlanden (U.S.) Capital Corporation, et.al. 10(q) Fifth Amendment to the Third Amended and Restated Credit Agreement dated as of November 3, 1997, among the Company and ING (U.S.) Capital Corporation, f/k/a/ Internationale Nederlanden (U.S.) Capital Corporation, et.al. 10(r) Fifth Amendment to Uncommitted Secured Demand Transactional Line of Credit Facility between Plains Marketing & Transportation Inc. and BankBoston, N.A. (f/k/a The First National Bank of Boston) et. al., dated as of August 7, 1997. Page 20 of 22 10(s) Fifth Amendment to Uncommitted Secured Demand Transactional Line of Credit Facility between PMCT, Inc. and BankBoston, N.A. (f/k/a The First National Bank of Boston) et. al., dated as of August 7, 1997. 10(t) Sixth Amendment to Uncommitted Secured Demand Transactional Line of Credit Facility between Plains Marketing & Transportation Inc. and BankBoston, N.A. (f/k/a The First National Bank of Boston) et. al., dated as of August 29, 1997. 11(a) Computation of per share earnings for the three months ended September 30, 1997 and 1996 11(b) Computation of per share earnings for the nine months ended September 30, 1997 and 1996 27. Financial Data Schedule B. Report on Form 8-K None Page 21 of 22 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned and thereunto duly authorized. PLAINS RESOURCES INC. Date: November 13, 1997 By: /s/ Cynthia A. Feeback ------------------------------- Cynthia A. Feeback, Controller and Principal Accounting Officer (Principal Accounting Officer) Page 22 of 22 EX-3.C 2 CERTIFICATE OF DESIGNATION EXHIBIT 3(c) PLAINS RESOURCES INC. Certificate of Designation, Preferences and Rights of a Series of Preferred Stock by Resolution of the Board of Directors Providing for an Issue of 46,600 Shares of Preferred Stock Designated Series D Cumulative Convertible Preferred Stock Plains Resources Inc., a Delaware corporation (hereinafter called the "Company"), pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware, does hereby state and certify that pursuant to the authority expressly vested in the Board of Directors of the Company by the Certificate of Incorporation, as amended, the Board of Directors, at a meeting thereof duly called and held on October 31, 1997, at which meeting a quorum was present and acting throughout, duly adopted the following resolutions providing for the issue of shares of Preferred Stock hereinafter referred to, and further providing with respect to such issue of shares of Preferred Stock for such powers, designations, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, as are hereinafter set forth, in addition to those set forth in said Certificate of Incorporation; RESOLVED, that pursuant to Article FOURTH of the Certificate of Incorporation (which authorizes 2,000,000 shares of Preferred Stock, $1.00 par value) the Board of Directors hereby provides for the issue of a series of 46,600 shares of Preferred Stock designated "Series D Cumulative Convertible Preferred Stock"; and RESOLVED, that the powers, designations, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, of the shares of the Series D Cumulative Convertible Preferred Stock shall be as follows: SECTION 1. Designation and Rank. The designation of the series of Preferred Stock created by this resolution shall be "Series D Cumulative Convertible Preferred Stock", and the number of shares constituting this Series shall be 46,600. Shares of this Series shall have a stated value of $500.00 per share (the "Stated Value"). The number of authorized shares of this Series may be reduced by further resolution duly adopted by the Board and by the filing of a certificate pursuant to the provisions of the General Corporation Law of the State of Delaware stating that such reduction has been so authorized. The shares of this Series shall rank prior to the Junior Stock (as defined in Section 9) as to distribution of assets and payment of dividends. The shares of this Series shall be of equal rank as to distribution of assets and payment of dividends with all other series of Preferred Stock, except as provided in a certificate of designation with regard to such other series of Preferred Stock filed pursuant to Section 151 of the General Corporation Law of the State of Delaware with the Secretary of State of the State of Delaware. SECTION 2. Dividends. (a) Shares of this Series shall be entitled to receive, when and as declared by the Board of Directors, a cash dividend at the dividend rate of six percent per annum (the "Dividend Rate") on the Stated Value per share of this Series, and no more. No such dividends shall accrue prior to January 1, 2000. Commencing January 1, 2000, such dividends shall be cumulative, shall accrue (whether or not declared and whether or not there shall be funds legally available for the payment of dividends) from such date and shall be payable in arrears, out of assets legally available therefor, when and as declared by the Board of Directors of the Company, on April 1, July 1, October 1, and January 1 of each year, commencing April 1, 2000 (except that if any such date is a Saturday, Sunday or a legal holiday then such dividend shall be payable without interest on the next day that is not a Saturday, Sunday or legal holiday) (each three-month period expiring on a dividend payment date being referred to herein as a "Dividend Period"). Each of such dividends shall be paid to the holders of record of shares of this Series as they appear on the stock register of the Company on such record dates, not exceeding 30 days preceding the payment dates thereof, as shall be fixed by the Board. Dividends on account of arrears for any past Dividend Periods (an "Arrearage") may be declared and paid at any time, without reference to any regular dividend payment date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the Board. (b) At any time while there is an Arrearage on shares of this Series, such Arrearage shall be exchangeable, in full only, at the option of a majority in interest of the record holders thereof for shares of fully paid and nonassessable shares of Common Stock (an "Arrearage Exchange") by presentation to the Company of a written notice executed by such majority in interest (an "Exchange Notice") electing to make an Arrearage Exchange. The number of shares of Common Stock to be issued and delivered to the holders of shares of this Series upon an Arrearage Exchange shall be determined by dividing the total amount of the Arrearage by the Per Share Market Value on the date of the Company's receipt of the Exchange Notice. Upon the issuance and mailing of certificates representing such shares of Common Stock to the record holders of shares of this Series, such Arrearage shall be canceled and no holder of shares of this Series shall be entitled to any payment on account thereof. (c) No full dividends shall be declared or paid or set apart for payment on Parity Stock (as defined in Section 9) or Junior Stock for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on this Series for all Dividend Periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not paid in full, as aforesaid, upon the shares of this Series and of any other series of Parity Stock, all dividends declared upon shares of this Series and of any other series of Parity Stock shall be declared pro rata so that the amount of dividends declared per share on this Series and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of this Series and such other series of Preferred Stock bear to each other. Holders of shares of this Series shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on this Series. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on this Series that may be in arrears. 2 (d) So long as any shares of this Series are outstanding, no dividend (other than a dividend in Junior Stock or other than as provided in Section 2(c) shall be declared or paid or set aside for payment or other distribution declared or made upon the Junior Stock, nor shall any Junior Stock be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of Junior Stock) by the Company (except by conversion into or in exchange for Junior Stock) unless, in each case, the full cumulative dividends on all outstanding shares of this Series then payable shall have been paid. (e) Dividends payable on this Series for any period less than a full Dividend Period shall be computed on the basis of the ratio of the number of days in such partial period to the actual number of days in such full Dividend Period. SECTION 3. Redemption. (a) From and after November 12, 1998, the Company, at its option, may redeem Shares of this Series, as a whole or in part, at any time or from time to time, at a cash redemption price per share of this Series equal to the amount of any Arrearage plus (i) the Conversion Price (as defined in Section 6(b) multiplied by (ii) the number of shares of Common Stock into which a share of this Series is convertible as of the date of such redemption multiplied by (iii) the Agreed Percentage (as defined in Section 9). (b) In the event that fewer than all of the outstanding shares of this Series are to be redeemed, the number of shares to be redeemed shall be determined by the Board and the shares to be redeemed shall be determined by lot or pro rata as may be determined by the Board or by any other method as may be determined by the Board in its sole discretion to be equitable. (c) At such time as the Company shall redeem shares of this Series, notice of such redemption shall be given by first class mail, postage prepaid, mailed not less than 30 days prior to the redemption date, to each holder of record of the shares to be redeemed, at such holder's address as the same appears on the stock register of the Company. Each such notice shall state: (i) the redemption date; (ii) the number of shares of this Series to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date. Prior to the redemption date specified in such notice, holders of shares of this Series may exercise the right to convert shares of this Series into shares of Common Stock pursuant to Section 6 hereof and the right to exchange Arrearage (if any) into shares of Common Stock pursuant to Section 2(b) hereof. (d) Notice having been mailed as aforesaid, from and after the redemption date (unless default shall be made by the Company in providing money for the payment of the redemption price) dividends 3 on the shares of this Series so called for redemption shall cease to accrue, and said shares shall no longer be deemed to be outstanding, and all rights of the holders thereof as stockholders of the Company (except the right to receive from the Company the redemption price) shall cease. Upon surrender in accordance with said notice of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Board shall so require and the notice shall so state), such shares shall be redeemed by the Company at the redemption price aforesaid. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. (e) Any shares of this Series that shall at any time have been redeemed or purchased by the Company shall, after such redemption, have the status of authorized but unissued shares of Preferred Stock, without designation as to series, until such shares are once more designated as part of a particular series by the Board. SECTION 4. Voting. (a) Except as otherwise required by law and as specified in this Section 4, the holders of shares of this Series shall not have any right or power to vote on any question or in any proceeding or to be represented at or to receive notice of any meeting of holders of capital stock of the Company. Holders of shares of this Series shall be entitled to receive all reports filed by the Company with the Securities and Exchange Commission. On any matters on which the holders of shares of this Series shall be entitled to vote, they shall be entitled to one vote for each share held. (b) So long as any shares of this Series remain outstanding, the affirmative vote or consent of the holders of a majority of the shares of this Series outstanding at the time, given in person or by proxy, either in writing or at a meeting, shall be necessary to permit, effect or validate (i) the authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of Senior Stock (as defined in Section 9) and (ii) the amendment, alteration or repeal of any of the provisions of the Certificate of Incorporation, as amended, which would materially and adversely affect any right, preference, privilege or voting power of shares of this Series or of the holders thereof in a manner disproportionate to the effect thereof on the holders of any other shares of the Company's capital stock. However, the creation and issuance of other series of Parity Stock or Junior Stock shall not be deemed to affect materially and adversely such rights, preferences or privileges. (c) So long as at least 2,000 shares of this Series remain outstanding, the holders of shares of this Series outstanding at the time shall be entitled to vote to permit, effect or validate the authorization of a merger or consolidation of the Company or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property. The holders of shares of this Series shall be entitled to that number of votes equal to the aggregate of (i) the number of whole shares of Common Stock into which all shares of this Series held by such holders could be converted pursuant to the provisions of Section 6 hereof, plus (ii) the number of shares for which outstanding Arrearage (if any) may be exchanged pursuant to Section 2(b), at the record date for the determination of the stockholders entitled to vote on such matters or, if no record date is established, at the day prior to the date such vote is taken or any written consent of 4 stockholders is first executed, such votes to be counted together with all other shares of capital stock having general voting powers and not separately as a class. SECTION 5. Liquidation. In the event of any complete liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of shares of this Series shall each be entitled to receive out of the assets of the Company, whether such assets are capital or surplus, for each share of this Series a sum equal to the Stated Value plus the amount of any accrued and unpaid dividends on such share before any distribution shall be made to the holders of Junior Stock of the Company, and if the assets of the Company shall be insufficient to pay in full such amounts, then such assets shall be distributed among such holders and the holders of any Parity Stock ratably in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. In the event of any complete liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of shares of this Series shall not be entitled to receive the liquidation price of such shares held by them until the liquidation price of all Senior Stock shall have been paid in full. SECTION 6. Conversion. (a) Each share of this Series shall be convertible at the option of the record holder thereof at any time by presentation of the certificate representing such share by the record holder in person or by registered mail, return receipt requested with postage prepaid thereon, at the principal office of the Company, and at such other offices, if any, as the Board of Directors may determine, into the number of fully paid and nonassessable shares of Common Stock determined by dividing the Stated Value by the Conversion Price in effect on the Conversion Date. (b) The conversion price initially shall be $25.00 (the "Conversion Price") and shall be subject to adjustment from time to time as follows: (i) If the Company, at any time while any shares of this Series are outstanding, shall (A) pay a stock dividend or stock dividends or otherwise make a distribution or distributions on shares of its capital stock payable in shares of Common Stock (or in securities convertible into shares of Common Stock), (B) except as set forth in clause (A) above, pay a stock dividend or make a distribution on shares of its capital stock payable in shares of its capital stock of any class other than Common Stock or a class convertible into Common Stock, (C) subdivide outstanding shares of Common Stock into a larger number of shares, (D) combine outstanding shares of Common Stock into a smaller number of shares, or (E) issue by reclassification of shares of Common Stock any shares of capital stock of the Company of any class or classes, the Conversion Price in effect immediately prior to such action shall be adjusted so that the holder of any shares of this Series thereafter surrendered for conversion shall be entitled to receive the number and class or classes of shares of the capital stock of the Company which he would have owned or have been entitled to receive immediately after the happening of any of the events described above, had such shares of this Series been converted on or immediately prior to the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification, as the case may be. An adjustment made pursuant to this subsection 6(b)(i) shall become effective immediately after the record 5 date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. (ii) If the Company, at any time while any shares of this Series are outstanding, shall issue rights or warrants to all holders of Common Stock entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase shares of Common Stock at a price per share less than the then Per Share Market Value of Common Stock at the record date mentioned below, the Conversion Price at which each share of this Series shall thereafter be convertible shall be reduced by multiplying the Conversion Price in effect immediately prior to such record date by a fraction, of which the denominator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such Per Share Market Value. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights or warrants. However, upon the expiration of any right or warrant to purchase Common Stock the issuance of which resulted in an adjustment in the Conversion Price of the shares of this Series pursuant to this subsection 6(b)(ii), if any such right or warrant shall expire and shall not have been fully exercised, the Conversion Price per share of Common Stock at which each share of this Series shall thereafter be convertible shall immediately upon such expiration be recomputed and effective immediately upon such expiration be increased to the price which it would have been (but reflecting any other adjustments in the Conversion Price made pursuant to the provisions of this Section 6 after the issuance of such rights or warrants) had the adjustment of the Conversion Price made upon the issuance of such rights or warrants been made on the basis of offering for subscription or purchase only that number of shares of Common Stock actually purchased upon the exercise of such rights or warrants which were actually exercised. (iii) If the Company, at any time while shares of this Series are outstanding, shall distribute to all holders of Common Stock evidences of its indebtedness or assets (excluding cash dividends or cash distributions paid out of earned surplus) or rights or warrants to subscribe for or purchase any security (excluding those referred to in subsection 6(b)(ii) above) then in each such case the Conversion Price per share of Common Stock at which each share of this Series shall thereafter be convertible shall be determined by multiplying the Conversion Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction, of which the denominator shall be the Per Share Market Value of Common Stock determined as of the record date mentioned above, and of which the numerator shall be such Per Share Market Value of the Common Stock, less the then fair market value (as determined by the Board of Directors of the Company (the "Board") in good faith, whose determination shall be conclusive if made in good faith; provided, however that in the event of a distribution or series of related distributions exceeding 10% of the net assets of the Company, then such fair market value shall be determined by a nationally recognized or major regional investment banking firm or 6 firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Company) selected in good faith by the Board, and in either case shall be described in a statement provided to all registered holders of this Series) of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above. (iv) If the Company, at any time while any shares of this Series are outstanding, shall issue or sell shares of Common Stock (excluding stock issuances referred to in other provisions of this Section 6(b)) for a consideration per share which is less than the Per Share Market Value of Common Stock on the date of such issuance or sale, the Conversion Price at which each share of this Series shall thereafter be convertible shall be reduced by multiplying the Conversion Price in effect immediately prior to the date of such issuance or sale by a fraction, of which the denominator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding on the date of such issuance or sale plus the number of additional shares of Common Stock issued or sold, and of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding on the date of such issuance or sale plus the number of shares which the aggregate consideration received or receivable by the Company for the total number of shares so issued or sold would purchase at such Per Share Market Value. Such adjustment shall be made whenever such shares are issued, and shall become effective immediately after such issuance. If the consideration received or receivable by the Company for such issuance or sale of shares of Common Stock is not cash, the fair market value of such consideration shall be determined by the Board, an investment banking firm, or certified public accountants in the manner specified in subsection 6(b)(iii). (v) If the Company, at any time while any shares of this Series are outstanding, shall issue rights, options, or warrants (excluding those referred to in other provisions of this Section 6(b)) which entitle the holders thereof to purchase shares of Common Stock (such rights, options, or warrants collectively referred to as "Purchase Rights") at a price per share less than the then Per Share Market Value of Common Stock on the date of the issuance of such Purchase Rights, the Conversion Price at which each share of this Series shall thereafter be convertible shall be reduced by multiplying the Conversion Price in effect immediately prior to the date of issuance of such Purchase Rights by a fraction, of which the denominator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such Purchase Rights plus the number of additional shares of Common Stock offered for purchase, and of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such Purchase Rights plus the number of shares which the aggregate consideration received or receivable by the Company in connection with the grant as well as the exercise of such Purchase Rights would purchase at such Per Share Market Value. Such adjustment shall be made whenever such Purchase Rights are issued, and shall become effective immediately after the issuance of such Purchase Rights. However, upon the expiration of any such Purchase Right the issuance of which resulted in an adjustment in the Conversion Price of the shares of this Series pursuant to this subsection 6(b)(v), if any such Purchase Right shall expire and 7 shall not have been fully exercised, the Conversion Price per share of Common Stock at which each share of this Series shall thereafter be convertible shall immediately upon such expiration be recomputed and effective immediately upon such expiration be increased to the price which it would have been (but reflecting any other adjustments in the Conversion Price made pursuant to the provisions of this Section 6 after the issuance of such Purchase Rights) had the adjustment of the Conversion Price made upon the issuance of such Purchase Right been made on the basis of offering for purchase only that number of shares of Common Stock actually purchased upon the exercise of such Purchase Rights which were actually exercised. If the consideration for the Purchase Rights received or receivable by the Company for the grant or exercise of such Purchase Rights is not cash, the fair market value of such consideration shall be determined by the Board, an investment banking firm, or certified public accountants in the manner specified in subsection 6(b)(iii). (vi) Notwithstanding any other provision of this Section 6(b) to the contrary, no adjustment to the Conversion Price shall be made with respect to the issuance of shares of Common Stock or the grant of options to purchase shares of Common Stock (or the exercise of such options) which are issued or granted to directors, officers, or employees of the Company, or to the Company's 401(k) Plan while shares of this Series are outstanding, unless and until the aggregate number of such shares issued or issuable upon the exercise of such options exceeds 750,000 shares of Common Stock. (vii) No notification to the holders of any adjustment in the Conversion Price otherwise required by this Section 6 shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustment which by reason of this subsection 6(b)(vii) is not required to be made shall be carried forward and taken into account in any subsequent adjustments, and that upon presentment of shares of this Series for conversion, all adjustment shall be made calculating the conversion rights of such holder. All calculations under this Section 6 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. (viii) Whenever the Conversion Price is adjusted, as herein provided, the Company shall promptly mail to each registered holder of shares of this Series a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Such notice prepared in good faith shall be conclusive evidence of the correctness of such adjustment absent manifest error. (ix) In case: (A) the Company shall declare a dividend (or any other distribution) on the Common Stock payable otherwise than in cash out of its earned surplus; or (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of its Common Stock; or 8 (C) the Company shall authorize the granting to the holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any other rights; or (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock of the Company (other than a subdivision or combination of the outstanding shares of Common Stock), any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) of the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of the shares of this series, and shall cause to be mailed to the holders of record of the shares of this Series at their last addresses as they shall appear upon the stock books of the Company, at least 10 days prior to the applicable record date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, redemption, rights or warrants are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding up (but no failure to mail such notice or any defect therein or in the mailing thereof shall affect the validity of the corporate action required to be specified in such notice). (c) In case of any reclassification of the Common Stock, then the holders of the shares of this Series then outstanding shall have the right thereafter to convert such shares only into the kind and amount of shares of stock and other securities and property receivable upon or deemed to be held following such reclassification by a holder of a number of shares of the Common Stock of the Company into which such shares of this Series could have been converted immediately prior to such reclassification. This provision shall similarly apply to successive reclassifications. (d) In case of any consolidation or merger of the Company with or into another Person in which the Company is not the surviving entity or any compulsory share exchange pursuant to any of which the Common Stock is converted into other securities, cash or property (any such event being hereinafter referred to as a "Reorganization"), then the terms of such Reorganization shall provide that the holder of a share of this Series then outstanding shall have the right to receive in exchange therefor, at the option of the Company, either of the following or such combination of the following as the Company shall elect: 9 (i) the kind and amount of shares of stock and other securities and property receivable upon such Reorganization ("Reorganization Consideration") by a holder of the number of shares of the Common Stock of the Company into which (x) a share of this Series could have been converted as of the effective date of the Reorganization multiplied by the Agreed Percentage in effect at the effective date of the Reorganization, plus (y) the Arrearage (if any) on a share of this Series could have been exchanged as of the effective date of the Reorganization; or (ii) an amount in cash equal to (x) the Agreed Percentage multiplied by the Stated Value, plus (y) the Arrearage (if any) on a share of this Series as of the effective date of the Reorganization. (e) In case at any time conditions shall arise by reason of action taken by the Company, which, in the opinion of the Board of Directors of the Company, are not adequately covered by the other provisions hereof and which might materially and adversely affect the rights of the holders of shares of this Series, or in case at any time any such conditions are expected to arise by reason of any action contemplated by the Company, the Board of Directors of the Company shall appoint a firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Company), who shall give their opinion as to the adjustment, if any (not inconsistent with the standards established in this Section 6, of the Conversion Price (including, if necessary, any adjustment as to the securities into which shares of this Series may thereafter be convertible) which is or would be required to preserve without dilution the rights of the holders of shares of this Series. The Board of Directors of the Company shall make the adjustment recommended forthwith upon the receipt of such opinion or the taking of any such action contemplated, as the case may be; provided, however, that no such adjustment of the Conversion Price shall be made which in the opinion of the investment banking firm or firm of accountants giving the aforesaid opinion would result in an increase of the Conversion Price to more than the Conversion Price then in effect. Section 7. Matters Relating to Issuance of Common Stock. The following provisions shall be applicable to issuances of Common Stock upon conversion of shares of this Series or upon an Arrearage Exchange. (a) The Company covenants that it will at all times reserve and keep available, out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of this Series or upon an Arrearage Exchange as herein provided, free from preemptive rights or any other actual or contingent purchase rights of Persons other than the holders of shares of this Series, such number of shares of Common Stock as shall then be issuable upon the conversion of all outstanding shares of this Series or the exchange of any Arrearage on shares of this Series. The Company covenants that all shares of Common Stock that shall be so issuable shall upon issue be duly and validly issued and fully paid and nonassessable. (b) The Company shall not be required to issue stock certificates representing fractions of shares of Common Stock, but may, if otherwise permitted, make a cash payment in respect of any final fraction of a share based on the Per Share Market Value at such time. 10 If the Company elects not, or is unable, to make such a cash payment, the holder of a share of this Series shall be entitled to receive, in lieu of the final fraction of a share, one whole share of Common Stock. (c) The issuance of certificates for shares of Common Stock on conversion of this Series or on an Arrearage Exchange shall be made without charge to the holders thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided, that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in a name other than that of the holder of the shares of this Series converted or upon which an Arrearage Exchange was made and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. (d) The exercise by a holder of shares of this Series of the conversion or Arrearage Exchange rights granted herein is subject in all respects to and conditioned upon compliance by the parties with the HSR Act, and rules and regulations promulgated pursuant thereto, to the extent that said act, rules and regulations are applicable to such exercise. The Company and such holder agree to make such filings with and provide such information to the Federal Trade Commission and the Department of Justice with respect to such exercise as are required in connection with the HSR Act in a timely manner and to join each others request for early termination. The Company and such holder will use such reasonable efforts to obtain all governmental approval required to permit such exercise and to cause early termination of the waiting period under the HSR Act. SECTION 8. Maturity Date. If any or all shares of this Series have not been redeemed or converted prior to September 1, 2012, (i) such shares shall automatically be converted into the number of shares of Common Stock determined by dividing the Stated Value by the Conversion Price in effect at the time of conversion, and (ii) the Arrearage (if any) on such shares of this Series shall automatically be exchanged for the number of shares of Common Stock determined by dividing the Arrearage by the Per Share Market Value on such date. SECTION 9. Definitions. For the purposes hereof, the following terms shall have the following respective meanings: "Arrearage" has the meaning specified in Section 2(a). "Arrearage Exchange" has the meaning specified in Section 2(b). "Common Stock" means shares now or hereafter authorized of the class of Common Stock, $.10 par value, of the Company presently authorized and stock of any other class into which such shares may hereafter have been reclassified or changed. "Conversion Date" means the date the stock certificate is received by the Company for conversion in accordance with Section 6(a). 11 "Conversion Price" has the meaning specified in Section 6(b). "Dividend Period" has the meaning specified in Section 2(a). "Dividend Rate" has the meaning specified in Section 2(a). "Exchange Notice" has the meaning specified in Section 2(b). "Redemption Threshold" means the date on which the Per Share Market Value first exceeds 140% of the Conversion Price per share of Common Stock for any 20 out of any 30 consecutive Trading Days. "Junior Stock" means the Common Stock of the Company and any other stock of the Company over which shares of this Series has a preference as to distribution of assets and payment of dividends. "Agreed Percentage" means 140%, provided that if the Redemption Threshold has occurred at any time prior to the date of determination, then "Agreed Percentage" means 100%. "Parity Stock" means any stock of the Company ranking as to distribution of assets and payment of dividends on a parity with this Series. "Per Share Market Value" means on any particular date (a) the last sale price per share of the Common Stock on such date on the principal stock exchange on which the Common Stock has been listed or, if there is no such price on such date, then the last price on such exchange on the date nearest preceding such date, or (b) if the Common Stock is not listed on any stock exchange, the final bid price for a share of Common Stock in the over-the- counter market, as reported by the Nasdaq National Market at the close of business on such date, or the last sales price if such price is reported and final bid prices are not available, or (c) if the Common Stock is not quoted on the Nasdaq National Market, the bid price for a share of Common Stock in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting prices), or (d) if the Common Stock is no longer publicly traded, as determined by a nationally recognized or major regional investment banking firm or firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Company) selected in good faith by the Board of Directors of the Company, provided, that none of the transactions related to the foregoing shall include purchases by any "affiliate" (as such term is defined in the General Rules and Regulations under the Securities Act of 1933) of the Company. "Person" means a corporation an association, a partnership, an organization, a business, an individual, a government or political subdivision thereof or a governmental agency. "Preferred Stock" means the Company's Preferred Stock, $1.00 par value. 12 "Reorganization" has the meaning specified in Section 6(d). "Reorganization Consideration" has the meaning specified in Section 6(d). "Senior Stock" means any shares or class of the Company that are by their terms expressly given priority over this Series as to payment of dividends or distribution of assets on any liquidation of the Company. "Stated Value" has the meaning specified in Section 1. "Trading Day" means (a) a day on which the Common Stock is traded on the principal stock exchange on which the Common Stock has been listed, or (b) if the Common Stock is not listed on any stock exchange, a day on which the Common Stock is quoted in the over-the-counter market, as reported by the Nasdaq Stock Market, or (c) if the Common Stock is not quoted on the Nasdaq Stock Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting prices). IN WITNESS WHEREOF, said Plains Resources Inc. has caused this Certificate to be signed by a duly authorized officer, this 11th day of November, 1997. PLAINS RESOURCES INC. By: /s/ --------------------------- Name: Phillip D. Kramer Title: Senior Vice President ATTEST: By: /s/ ------------------------------- Name: Michael R. Patterson Title: Secretary 13 EX-4.D 3 WARRANT DATED NOVEMBER 12, 1997 EXHIBIT 4(d) 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 1 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 SHELL LAND & ENERGY COMPANY, 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. 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 the preparation, execution and delivery of stock certificates pursuant to 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 this Warrant has been issued, certificates evidencing the Warrant Shares issued upon exercise of this Warrant shall bear a restrictive legend regarding limitations on transferability of such shares. 1 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 surren-dered 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 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 2 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. 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. 3 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 this 12th day of November, 1997. PLAINS RESOURCES INC. By: /s/ Name: Phillip D. Kramer Title: Senior Vice President 4 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 therefor 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 EX-10.P 4 FOURTH AMENDMENT TO THE THIRD AMENDMENT EXHIBIT 10(p) FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT THIS FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this "Amendment") dated as of the 29th day of August, 1997, by and among PLAINS RESOURCES INC., a Delaware corporation (the "Company"), ING (U.S.) CAPITAL CORPORATION, f/k/a Internationale Nederlanden (U.S.) Capital Corporation, as Agent ("Agent"), and the Lenders under the Original Agreement (as defined herein). W I T N E S S E T H: WHEREAS, the Company, Agent and Lenders entered into that certain Third Amended and Restated Credit Agreement dated as of April 11, 1996, as amended by that certain First Amendment to Third Amended and Restated Credit Agreement dated December 16, 1996, that certain Second Amendment to Third Amended and Restated Credit Agreement dated March 7, 1997 and that certain Third Amendment to Third Amended and Restated Credit Agreement July 18, 1997 (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 Fourth Amendment to Third Amended and Restated Credit Agreement. "Amendment Documents" means this Amendment. "Credit Agreement" means the Original Agreement as amended hereby. -1- ARTICLE II. -- Amendments (S) 2.1. Investments. Section 8.10(c) of the Original Agreement is hereby amended in its entirety to read as follows: (c) loans, advances and other extensions of credit made after the date hereof by the Company and its Subsidiaries to Subsidiaries of the Company in the ordinary course of business, provided that (i) the aggregate amount of such loans, advances and other extensions of credit by the Company to any one of its Subsidiaries shall not exceed $5,000,000 at any one time outstanding and (ii) the aggregate amount of such loans, advances and other extensions of credit by the Company to its Subsidiaries taken as a whole shall not exceed $5,000,000 at any one time outstanding; in addition to the foregoing (1) the Company may make loans, advances or other extensions of credit or capital contributions of up to $5,000,000 in the aggregate to Plains Marketing and/or its Subsidiaries in connection with acquisitions and other capital investments, (2) the Company may make additional loans, advances or other extensions of credit of up to $15,000,000 in the aggregate to Plains Marketing and/or its Subsidiaries, the proceeds of which are used to finance purchases and physical storage of crude oil that is fully hedged on the NYMEX and located in the Cushing, Oklahoma storage facility or which is in transit in specified pipelines approved by Majority Lenders and listed on Schedule 8.10(c) hereto, (3) the Company (or Plains Marketing) may make capital contributions to PMCT as provided in, and subject to the limitations contained in, Section 8.34, and (4) so long as no Default shall have occurred and be continuing or would exist after giving effect thereto, the Company may make Investments without limitation in Stocker Resources, Inc., Stocker Resources, L.P., Calumet Florida Inc. and Plains Illinois Inc. (S) 2.2. Waiver and Consent - Investments. Prior to the date hereof the Company made loans, advances or other extensions of credit or capital contributions to Plains Marketing and/or its Subsidiaries in excess of $5,000,000, in violation of Section 8.10(c)(1) of the Original Agreement. Lenders hereby waive any Default or Event of Default occurring prior to the date hereof as a result of the above-described violation of Section 8.10(c) of the Original Agreement. 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 each Lender, 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. -2- (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, subject to the amendment of certain of the Schedules to the Credit Agreement as attached hereto. (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 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. -3- (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 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. -4- (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/ PHILLIP D. KRAMER ------------------------------------ Phillip D. Kramer Vice President and Chief Financial Officer ING (U.S.) CAPITAL CORPORATION, f/k/a Internationale Nederlanden (U.S.) Capital Corporation, individually as a Lender and as Agent By: /s/ CHRISTOPHER R. WAGNER ------------------------------------ Christopher R. Wagner, Vice President BANKBOSTON, N.A., Lender By: /s/ TERRENCE RONAN ------------------------------------ Name: Terrence Ronan Title: Vice President -5- DEN NORSKE BANK ASA, Lender By: /s/ MORTEN BJORNSEN ------------------------------------ Name: Morten Bjornsen Title: Senior Vice President By: /s/ CHARLES E. HALL ------------------------------------ Name: Charles E. Hall Title: Senior Vice President WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION (f/k/a First Interstate Bank of Texas, N.A.), Lender By: /s/ ANN M. RHOADS ------------------------------------ Ann M. Rhoads, Vice President TEXAS COMMERCE BANK NATIONAL ASSOCIATION, Lender By: /s/ RUSSELL A. JOHNSON ------------------------------------ Name: Russell A. Johnson Title: Vice President COMERICA BANK-TEXAS, Lender By: /s/ JAMES KIMBLE ------------------------------------ Name: James Kimble Title: Assistant Vice President -6- 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 April 11, 1996 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 MARKETING & TRANSPORTATION INC. PLAINS RESOURCES INTERNATIONAL INC. PLAINS TERMINAL & TRANSFER CORPORATION PLX CRUDE LINES INC. STOCKER RESOURCES, INC. PLX INGLESIDE INC. CALUMET FLORIDA, INC. PLAINS ILLINOIS INC. By: /s/ PHILLIP D. KRAMER ---------------------------------------- Phillip D. Kramer Vice President and Chief Financial Officer STOCKER RESOURCES, L.P. By: Stocker Resources, Inc., its General Partner By: /s/ PHILLIP D. KRAMER ---------------------------------------- Phillip D. Kramer Vice President and Chief Financial Officer -7- EX-10.Q 5 FIFTH AMENDMENT TO THE THIRD AMENDMENT EXHIBIT 10(q) FIFTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT THIS FIFTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this "Amendment") dated as of the 3rd day of November, 1997, by and among PLAINS RESOURCES INC., a Delaware corporation (the "Company"), ING (U.S.) CAPITAL CORPORATION, f/k/a Internationale Nederlanden (U.S.) Capital Corporation, as Agent ("Agent"), and the Lenders under the Original Agreement (as defined herein). W I T N E S S E T H: WHEREAS, the Company, Agent and Lenders entered into that certain Third Amended and Restated Credit Agreement dated as of April 11, 1996, as amended by that certain First Amendment to Third Amended and Restated Credit Agreement dated December 16, 1996, that certain Second Amendment to Third Amended and Restated Credit Agreement dated March 7, 1997, that certain Third Amendment to Third Amended and Restated Credit Agreement dated July 18, 1997 and that certain Fourth Amendment to Third Amended and Restated Credit Agreement dated August 29, 1997 (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 Fifth Amendment to Third Amended and Restated Credit Agreement. "Amendment Documents" means this Amendment. -1- "Credit Agreement" means the Original Agreement as amended hereby. ARTICLE II. -- Amendments (S) 2. 1. Loans. The proviso in the last sentence of Section 2.01(a) of the Original Agreement is hereby amended in its entirety to read as follows: provided, that no more than six separate Interest Periods in respect of Eurodollar Loans may be outstanding at any one time. The proviso in the last sentence of Section 2.01(b) of the Original Agreement is hereby amended in its entirety to read as follows: provided, that no more than six separate Interest Periods in respect of Eurodollar Loans may be outstanding at any one time. (S) 2.2. Dividend Payments. Section 8.11 of the Original Agreement is hereby amended in its entirety to read as follows: Section 8.11 Dividend Payments The Company will not, and will not permit any of its Subsidiaries to, declare or make any Dividend Payment at any time; provided, however, the Company may make regularly scheduled Dividend Payments in cash in respect of the Company's Series D Cumulative Convertible Preferred Stock, par value $500 per share (a) the aggregate amount of all such Dividend Payments not to exceed (i) 6% ($30 per share), or (ii) in the event the purchaser thereof shall desire to sell such stock in a secondary offering, and the investment bankers representing such purchaser shall issue a written opinion to the Company that the gross proceeds of such secondary offering shall not exceed $23,300,000, such percentage as is necessary to enable such Purchaser to receive $23,300,000 of gross proceeds from such secondary offering, but in no event exceeding 7.5% ($37.50 per share)) in any one fiscal year , and (b) the aggregate stated value of such outstanding Convertible Preferred Stock at issuance not to exceed $23,300,000. 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 Agent shall have received, at Agent's office, a counterpart of this Amendment executed and delivered by the Company and Majority Lenders. 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: -2- (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, subject to the amendment of certain of the Schedules to the Credit Agreement as attached hereto. (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 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 -3- 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 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/ PHILLIP D. KRAMER --------------------------------- Phillip D. Kramer Vice President and Chief Financial Officer -4- ING (U.S.) CAPITAL CORPORATION, f/k/a Internationale Nederlanden (U.S.) Capital Corporation, individually as a Lender and as Agent By: /s/ CHRISTOPHER R. WAGNER --------------------------------- Christopher R. Wagner, Vice President BANKBOSTON, N.A., Lender By: /s/ TERRENCE RONAN --------------------------------- Name: Terrence Ronan Title: Vice President DEN NORSKE BANK ASA, Lender By: /s/ J. MORTEN KREUTZ --------------------------------- Name: J. Morten Kreutz Title: Vice President By: /s/ WILLIAM V. MOYER --------------------------------- Name: William V. Moyer Title: First Vice President WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION (f/k/a First Interstate Bank of Texas, N.A.), Lender By: /s/ ANN M. RHOADS --------------------------------- Ann M. Rhoads, Vice President -5- TEXAS COMMERCE BANK NATIONAL ASSOCIATION, Lender By: /s/ RUSSELL A. JOHNSON ---------------------------------- Name: Russell A. Johnson Title: Vice President COMERICA BANK-TEXAS, Lender By: /s/ DANIEL G. STEELE ---------------------------------- Name: Daniel G. Steele Title: Senior Vice President -6- 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 April 11, 1996 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 MARKETING & TRANSPORTATION INC. PLAINS RESOURCES INTERNATIONAL INC. PLAINS TERMINAL & TRANSFER CORPORATION PLX CRUDE LINES INC. STOCKER RESOURCES, INC. PLX INGLESIDE INC. CALUMET FLORIDA, INC. PLAINS ILLINOIS INC. By: /s/ PHILLIP D. KRAMER ------------------------------------ Phillip D. Kramer Vice President and Chief Financial Officer STOCKER RESOURCES, L.P. By: Stocker Resources, Inc., its General Partner By: /s/ PHILLIP D. KRAMER ------------------------------------ Phillip D. Kramer Vice President and Chief Financial Officer -7- EX-10.R 6 FIFTH AMENDMENT TO UNCOMMITTED SECURED EXHIBIT 10(r) Dated as of August 7, 1997 Plains Marketing & Transportation Inc. 1600 Smith Street Houston, TX 77002 Re: Amendment No. 5 to Uncommitted Secured Demand Transactional Line of Credit Facility -------------------------------------------- Gentlemen: Reference is made to that certain letter agreement outlining the parameters of an uncommitted secured demand transactional line of credit facility dated August 23, 1995 (as further amended to date and including all exhibits, schedules and annexes thereto, the "Marketing Letter Agreement") among BankBoston, N.A. (f/k/a The First National Bank of Boston) ("BKB"), Internationale Nederlanden (U.S.) Capital Corporation ("ING"), Den Norske Bank ASA, Comerica Bank-Texas, Wells Fargo Bank (Texas), National Association and such other banks as may from time to time become parties thereto, (collectively, the "Lenders") and BKB, as agent for the Lenders (in such capacity, the "Agent") and Plains Marketing & Transportation Inc. (the "Borrower"). All capitalized terms used herein without definition which are defined in the Marketing Letter Agreement shall have the same meaning herein as therein. The Borrower, the Lenders and the Agent wish to amend certain terms of the Marketing Letter Agreement as follows: 1. DEMAND LOAN SUBLIMIT. Section 1(d)(ii) of the Marketing Letter Agreement is hereby amended by (1) deleting the amount "$20,000,000" from the first sentence thereof and substituting the amount "$25,000,000" therefor and (2) deleting the phrase "ninety (90%)" from clause (y) of the first sentence thereof and substituting the phrase "eighty percent (80%)" therefor. 2. PRICING. (a) Clause (i) of the first sentence of Section 1(f)(i) of the Marketing Letter Agreement is hereby amended by deleting the phrase "plus five-eighths of one percent (5/8%) per annum". -2- (b) Clause (ii) of the first sentence of Section 1(f)(i) of the Marketing Letter Agreement is hereby amended by deleting the phrase "two percent (2%)" therefrom and substituting the phrase "one and one-half of one percent (1-1/2%)" therefor. (c) Section 1(f)(ii)(x) of the Marketing Letter Agreement is hereby amended by deleting the percentage "1-1/2%" from clause (A) thereof and substituting "1-1/8%" therefor and by deleting the percentage "1/4%" from clause (B) thereof and substituting "0.1875%" therefor. 3. FINANCIAL AND OTHER GUIDELINES. Schedule 4 to the Marketing Letter Agreement is hereby amended as follows: (a) paragraph (v)(C) of Schedule 4 is amended by deleting the text thereof in its entirety and substituting the following therefor: "(C) The aggregate of (a) crude oil pipeline inventory and (b) crude oil inventory in the Cushing Terminal shall not exceed, in the aggregate for both PMCT Inc. and Marketing, a maximum of 300,000 barrels. Notwithstanding the above, inventories in crude oil pipelines shall be limited to 225,000 barrels." (b) paragraph (v)(D) of Schedule 4 is amended by deleting the text thereof in its entirety and substituting the following therefor: "(D) Inventory positions (other than fully hedged cash-and-carry positions which qualify under subsection (E) below) and positions which do not otherwise qualify under subsection (E) below shall be limited to fixed price time spreads for periods up to a maximum of twenty-four months for up to a maximum of 500,000 barrels, in the aggregate for both PMCT Inc. and Marketing, of crude oil hedged on the NYMEX." (c) the following new paragraph (E) is inserted immediately following paragraph (v)(D) of Schedule 4: "(E) Cash-and-carry barrels shall be hedged on the NYMEX for delivery within the next 12 months." (d) the first sentence of paragraph (xi) of Schedule 4 is amended by inserting, immediately following the phrase "that certain Indenture dated as of March 15, 1996 among Resources, certain subsidiaries of Resources and Texas Commerce Bank National Association as -3- Trustee, pursuant to which Resources issued 10 1/4% Senior Subordinated Notes due 2006, Series A and Series B, in the aggregate principal amount of $150,000,000" and before the period at the end thereof, the phrase "and that certain Indenture dated as of July 21, 1997 among Resources, certain subsidiaries of Resources and Texas Commerce Bank National Association as Trustee, pursuant to which Resources issued 10 1/4% Senior Subordinated Notes due 2006, Series C and Series D, in the aggregate principal amount of $50,000,000". 4. SECURITY. The Borrower hereby confirms that the reference to "Marketing Letter Agreement" in the term "Marketing Obligations" as used in that certain Security Agreement dated as of August 23, 1995 between Marketing and the Agent includes the Marketing Letter Agreement as amended hereby and that references to the Demand Loans and L/C's issued pursuant to the Marketing Letter Agreement refers to all Demand Loans and L/C's issued pursuant to the Marketing Letter Agreement, as amended hereby. 5. CONDITIONS PRECEDENT. This Amendment shall become effective upon receipt by the Agent of the following: (a) a counterpart of this Amendment duly signed where indicated below by each Lender, the Agent, the Borrower and Plains Resources Inc.; (b) a counterpart of Amendment No. 5 to the PMCT Agreement duly signed where indicated by PMCT, each Lender and the Agent; -4- If you agree to and accept the foregoing amendment, please so indicate by signing a counterpart of this letter and returning it to the Agent. Upon satisfaction of the conditions set forth in Section 5 hereof, this Amendment shall take effect as a binding agreement among us, to be construed and enforceable in accordance with the laws of The Commonwealth of Massachusetts. PLAINS MARKETING & TRANSPORTATION INC. By: /s/ MICHAEL R. PATTERSON Name: Michael R. Patterson Title: Vice President BANKBOSTON, N.A., Individually and as Agent By: /s/ CHRISTOPHER C. HOLMGREEN Name: Christopher C. Holmgreen Title: Director INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION By: /s/ CHRISTOPHER R. WAGNER Name: Christopher R. Wagner Title: Vice President DEN NORSKE BANK ASA DEN NORSKE BANK ASA By: /s/ WILLIAM V. MOYER By: /s/ BYRON L. COOLEY Name: William V. Moyer Name: Byron L. Cooley Title: First Vice President Title: Senior Vice President -5- COMERICA BANK-TEXAS By: /s/ DANIEL G. STEELE Name: Daniel G. Steele Title: Senior Vice President WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION By: /s/ ANN M. RHOADS Name: Ann M. Rhoads Title: Vice President -6- RATIFICATION OF GUARANTY The undersigned Guarantor acknowledges and accepts the foregoing Amendment and ratifies and confirms in all respects such Guarantor's obligations under the Guaranty dated as of August 23, 1995 (the "Guaranty") executed and delivered by the Guarantor to the Agent and the Lenders. The undersigned Guarantor further agrees that references in the Guaranty to the Resources Credit Agreement shall be references to the Third Amended and Restated Credit Agreement dated as of April 11, 1996 among the undersigned Guarantor, ING as agent and the lenders named therein. PLAINS RESOURCES INC. /s/ By: Michael R. Patterson Title: Vice President EX-10.S 7 FIFTH AMENDMENT TO UNCOMMITTED SECURED EXHIBIT 10(s) Dated as of August 7, 1997 PMCT Inc. 1600 Smith Street Houston, TX 77002 Re: Amendment No. 5 to Uncommitted Secured Demand Transactional Line of Credit Facility -------------------------------------------- Gentlemen: Reference is made to that certain letter agreement outlining the parameters of an uncommitted secured demand transactional line of credit facility dated August 23, 1995 (as further amended to date and including all exhibits, schedules and annexes thereto, the "PMCT Letter Agreement") among BankBoston, N.A. (f/k/a The First National Bank of Boston) ("BKB"), Internationale Nederlanden (U.S.) Capital Corporation ("ING"), Den Norske Bank ASA, Comerica Bank-Texas, Wells Fargo Bank (Texas), National Association and such other banks as may from time to time become parties thereto, (collectively, the "Lenders") and BKB, as agent for the Lenders (in such capacity, the "Agent") and PMCT Inc. (the "Borrower"). All capitalized terms used herein without definition which are defined in the PMCT Letter Agreement shall have the same meaning herein as therein. The Borrower, the Lenders and the Agent wish to amend certain terms of the PMCT Letter Agreement as follows: 1. DEMAND LOAN SUBLIMIT. Section 1(d)(ii) of the PMCT Letter Agreement is hereby amended by (1) deleting the amount "$20,000,000" from the first sentence thereof and substituting the amount "$25,000,000" therefor and (2) deleting the phrase "ninety (90%)" from clause (y) of the first sentence and substituting the phrase "eighty percent (80%)" therefor. 2. PMCT SUBLIMIT. Section 1(d)(iii) of the PMCT Letter Agreement is hereby amended by deleting the amount "$20,000,000" from the first sentence thereof and substituting the amount "$25,000,000" therefor. -2- 3. PRICING. (a) Clause (i) of the first sentence of Section 1(f)(i) of the PMCT Letter Agreement is hereby amended by deleting the phrase "plus five-eighths of one percent (5/8%) per annum". (b) Clause (ii) of the first sentence of Section 1(f)(i) of the PMCT Letter Agreement is hereby amended by deleting the phrase "two percent (2%)" therefrom and substituting the phrase "one and one-half of one percent (1-1/2%)" therefor. (c) Section 1(f)(ii)(x) of the PMCT Letter Agreement is hereby amended by deleting the percentage "1-1/2%" from clause (A) thereof and substituting "1- 1/8%" therefor and by deleting the percentage "1/4%" from clause (B) thereof and substituting "0.1875%" therefor. 4. FINANCIAL AND OTHER GUIDELINES. Schedule 4 to the PMCT Letter Agreement is hereby amended as follows: (a) paragraph (v)(C) of Schedule 4 is amended by deleting the text thereof in its entirety and substituting the following therefor: "(C) The aggregate of (a) crude oil pipeline inventory and (b) crude oil inventory in the Cushing Terminal shall not exceed, in the aggregate for both PMCT Inc. and Marketing, a maximum of 300,000 barrels. Notwithstanding the above, inventories in crude oil pipelines shall be limited to 225,000 barrels." (b) paragraph (v)(D) of Schedule 4 is amended by deleting the text thereof in its entirety and substituting the following therefor: "(D) Inventory positions (other than fully hedged cash-and-carry positions which qualify under subsection (E) below) and positions which do not otherwise qualify under subsection (E) below shall be limited to fixed price time spreads for periods up to a maximum of twenty-four months for up to a maximum of 500,000 barrels, in the aggregate for both PMCT Inc. and Marketing, of crude oil hedged on the NYMEX." (c) the following new paragraph (E) is inserted immediately following paragraph (v)(D) of Schedule 4: -3- "(E) Cash-and-carry barrels shall be hedged on the NYMEX for delivery within the next 12 months." (d) the first sentence of paragraph (xi) of Schedule 4 is amended by inserting, immediately following the phrase "that certain Indenture dated as of March 15, 1996 among Resources, certain subsidiaries of Resources and Texas Commerce Bank National Association as Trustee, pursuant to which Resources issued 10 1/4% Senior Subordinated Notes due 2006, Series A and Series B, in the aggregate principal amount of $150,000,000" and before the period at the end thereof, the phrase "and that certain Indenture dated as of July 21, 1997 among Resources, certain subsidiaries of Resources and Texas Commerce Bank National Association as Trustee, pursuant to which Resources issued 10 1/4% Senior Subordinated Notes due 2006, Series C and Series D, in the aggregate principal amount of $50,000,000". 5. SECURITY. The Borrower hereby confirms that the reference to "PMCT Letter Agreement" in the term "PMCT Obligations" as used in that certain Security Agreement dated as of August 23, 1995 between PMCT and the Agent includes the PMCT Letter Agreement as amended hereby and that references to the Demand Loans and L/C's issued pursuant to the PMCT Letter Agreement refers to all Demand Loans and L/C's issued pursuant to the PMCT Letter Agreement, as amended hereby. 6. CONDITIONS PRECEDENT. This Amendment shall become effective upon receipt by the Agent of the following: (a) a counterpart of this Amendment duly signed where indicated below by each Lender, the Agent and the Borrower; (b) a counterpart of Amendment No. 5 to the Marketing Agreement duly signed where indicated by Marketing, each Lender, the Agent and Resources; -4- If you agree to and accept the foregoing amendment, please so indicate by signing a counterpart of this letter and returning it to the Agent. Upon satisfaction of the conditions set forth in Section 6 hereof, this Amendment shall take effect as a binding agreement among us, to be construed and enforceable in accordance with the laws of The Commonwealth of Massachusetts. PMCT INC. By: /s/ MICHAEL R. PATTERSON Name: Michael R. Patterson Title: Vice President BANKBOSTON, N.A., Individually and as Agent By: /s/ CHRISTOPHER C. HOLMGREEN Name: Christopher C. Holmgreen Title: Director INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION By: /s/ CHRISTOPHER R. WAGNER Name: Christopher R. Wagner Title: Vice President DEN NORSKE BANK ASA DEN NORSKE BANK ASA By: /s/ WILLIAM C. MOYER By: /s/ BYRON L. COOLEY Name: Willliam C. Moyer Name: Byron L. Cooley Title: First Vice President Title: Senior Vice President -5- COMERICA BANK-TEXAS By: /s/ DANIEL G. STEELE Name: Daniel G. Steele Title: Senior Vice President WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION By: /s/ ANN M. RHOADS Name: Ann M. Rhoads Title: Vice President EX-10.T 8 SIXTH AMENDMENT TO UNCOMMITTED SECURED EXHIBIT 10(t) Dated as of August 29, 1997 Plains Marketing & Transportation Inc. 1600 Smith Street Houston, TX 77002 Re: Amendment No. 6 to Uncommitted Secured Demand Transactional Line of Credit Facility -------------------------------------------- Gentlemen: Reference is made to that certain letter agreement outlining the parameters of an uncommitted secured demand transactional line of credit facility dated August 23, 1995 (as further amended to date and including all exhibits, schedules and annexes thereto, the "Marketing Letter Agreement") among BankBoston, N.A. (f/k/a The First National Bank of Boston) ("BKB"), Internationale Nederlanden (U.S.) Capital Corporation ("ING"), Den Norske Bank ASA, Comerica Bank-Texas, Wells Fargo Bank (Texas), National Association and such other banks as may from time to time become parties thereto, (collectively, the "Lenders") and BKB, as agent for the Lenders (in such capacity, the "Agent") and Plains Marketing & Transportation Inc. (the "Borrower"). All capitalized terms used herein without definition which are defined in the Marketing Letter Agreement shall have the same meaning herein as therein. The Borrower, the Lenders and the Agent wish to amend certain terms of the Marketing Letter Agreement as follows: 1. FINANCIAL AND OTHER GUIDELINES. Schedule 4 to the Marketing Letter Agreement is hereby amended as follows: (a) paragraph (xi) of Schedule 4 is amended and restated in its entirety to read as follows: "(xi) Borrower shall not create, assume, suffer to exist or incur any Indebtedness other than Indebtedness incurred in connection with the Accommodations and Indebtedness as a guarantor of obligations of Resources arising under the Resource Credit Agreement and that certain Indenture dated as of March 15, 1996 among Resources, certain subsidiaries of Resources and Texas Commerce Bank National Association as Trustee, pursuant to which Resources issued 10 1/4% Senior Subordinated Notes due 2006, Series A and Series B, in the aggregate principle amount of $150,000,000 and that certain Indenture dated as of July 21, 1997 among Resources, certain subsidiaries of Resources and Texas Commerce Bank National Association as Trustee, -2- pursuant to which Resources issued 10 1/4% Senior Subordinated Notes due 2006, Series C and Series D, in the aggregate principal amount of $50,000,000 and an unsecured inter-company line of credit provided by Resources to the Borrower in the amount of $15,000,000, the proceeds of which are to be used to finance the purchase and physical storage of crude oil which is fully hedged on the NYMEX and located in the Cushing Terminal or which is in transit in specified pipelines approved by the Lenders and listed on Schedule 5 hereto. "INDEBTEDNESS" means all obligations contingent or otherwise incurred in connection with the borrowing of money or the extension of credit (other than trade debt incurred on an open account basis customarily extended in the ordinary course of business in connection with normal purchases of goods and services) including without limitation capitalized lease obligations (except such obligations respecting leases of office computers and similar general purpose supplies and equipment leases in an amount not to exceed $50,000 and obligations respecting truck leases) and guaranties or other contingent obligations relating to obligations of others which would be classified as Indebtedness". 2. SECURITY. The Borrower hereby confirms that the reference to "Marketing Letter Agreement" in the term "Marketing Obligations" as used in that certain Security Agreement dated as of August 23, 1995 between the Borrower and the Agent includes the Marketing Letter Agreement as amended hereby and that references to the Demand Loans and L/C's issued pursuant to the Marketing Letter Agreement refers to all Demand Loans and L/C's issued pursuant to the Marketing Letter Agreement, as amended hereby. 3. CONDITIONS PRECEDENT. This Amendment shall become effective upon receipt by the Agent of a counterpart of this Amendment duly signed where indicated below by each Lender, the Agent, the Borrower and the Plains Resources Inc. -3- If you agree to and accept the foregoing amendment, please so indicate by signing a counterpart of this letter and returning it to the Agent. Upon satisfaction of the conditions set forth in Section 3 hereof, this Amendment shall take effect as a binding agreement among us, to be construed and enforceable in accordance with the laws of The Commonwealth of Massachusetts. PLAINS MARKETING & TRANSPORTATION INC. By: /s/MICHAEL R. PATTERSON Name: Michael R. Patterson Title: Vice President BANKBOSTON, N.A., Individually and as Agent By: /s/ TERRANCE RONAN Name: Terrence Ronan Title: Vice President INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION By: /s/ CHRISTOPHER R. WAGNER Name: Christopher R. Wagner Title: Vice President DEN NORSKE BANK ASA DEN NORSKE BANK ASA By: /s/ BYRON L. COOLEY By: /s/ WILLIAM V. MOYER Name: Byron L. Cooley Name: William V. Moyer Title: Senior Vice President Title: First Vice President -4- COMERICA BANK-TEXAS By: /s/ JAMESKIMBLE Name: James Kimble Title: Assistant Vice President WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION By: /s/ ANN RHOADS Name: Ann Rhoads Title: Vice President -5- RATIFICATION OF GUARANTY The undersigned Guarantor acknowledges and accepts the foregoing Amendment and ratifies and confirms in all respects such Guarantor's obligations under the Guaranty dated as of August 23, 1995 (the "Guaranty") executed and delivered by the Guarantor to the Agent and the Lenders. The undersigned Guarantor further agrees that references in the Guaranty to the Resources Credit Agreement shall be references to the Third Amended and Restated Credit Agreement dated as of April 11, 1996 among the undersigned Guarantor, ING as agent and the lenders named therein. PLAINS RESOURCES INC. /s/ MICHAEL R. PATTERSON By: Michael R. Patterson Title: Vice President EX-11.A 9 COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11a.-COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, ------------------------------------------ 1997 1996 -------------------- -------------------- COMMON AND COMMON AND COMMON COMMON EQUIVALENT FULL EQUIVALENT FULL SHARES DILUTION SHARES DILUTION ---------- -------- ---------- -------- Weighted average common shares outstanding 16,627 16,627 16,342 16,342 Incremental shares assumed to be issued 1,745 1,839 1,479 1,521 ------- ------- ------- ------- Total shares outstanding for calculation 18,372 18,466 17,821 17,863 ======= ======= ======= ======= Net income available to common shareholders before extraordinary item $ 2,759 $ 2,759 $ 3,486 $ 3,486 Extraordinary item -- -- 1,515 1,515 ------- ------- ------- ------- Net income for calculation $ 2,759 $ 2,759 $ 5,001 $ 5,001 ======= ======= ======= ======= Net income per share: Before extraordinary item $ 0.15 $ 0.15 $ 0.20 $ 0.20 Extraordinary item -- -- 0.08 0.08 ------- ------- ------- ------- $ 0.15 $ 0.15 $ 0.28 $ 0.28 ======= ======= ======= =======
EX-11.B 10 COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11b.-COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, ------------------------------------------ 1997 1996 -------------------- -------------------- COMMON AND COMMON AND COMMON COMMON EQUIVALENT FULL EQUIVALENT FULL SHARES DILUTION SHARES DILUTION ---------- -------- ---------- -------- Weighted average common shares outstanding 16,572 16,572 16,253 16,253 Incremental shares assumed to be issued 1,586 1,868 1,325 1,610 ------- ------- ------- ------- Total shares outstanding for calculation 18,158 18,440 17,578 17,863 ======= ======= ======= ======= Net income available to common shareholders before extraordinary item $ 9,902 $ 9,902 $17,316 $17,316 Extraordinary item -- -- (5,104) (5,104) ------- ------- ------- ------- Net income for calculation $ 9,902 $ 9,902 $12,212 $12,212 ======= ======= ======= ======= Net income (loss) per share: Before extraordinary item $ 0.55 $ 0.54 $ 0.98 $ 0.97 Extraordinary item -- -- (0.29) (0.29) ------- ------- ------- ------- $ 0.55 $ 0.54 $ 0.69 $ 0.68 ======= ======= ======= =======
EX-27 11 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PLAINS RESOURCES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997, AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 3,085 0 91,412 0 33,245 128,957 553,870 174,125 525,063 130,249 282,484 0 0 1,667 105,544 525,063 616,161 616,384 560,542 577,799 0 0 15,877 16,503 6,601 9,902 0 0 0 9,902 .55 .54
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