Exhibit 10.7

CRUDE OIL MARKETING AGREEMENT

among

PLAINS EXPLORATION & PRODUCTION COMPANY,

ARGUELLO INC.,

PXP GULF COAST INC.,

and

PLAINS MARKETING, L.P.

TABLE OF CONTENTS

EXHIBITS

CRUDE OIL MARKETING AGREEMENT

This CRUDE OIL MARKETING AGREEMENT (this “Agreement” ), dated July 15, 2004 by and among PLAINS EXPLORATION & PRODUCTION COMPANY (“PXP”), ARGUELLO INC. ( “Arguello” ), PXP GULF COAST INC. (“PXP Gulf Coast”), and PLAINS MARKETING, L.P. ( “Buyer” ) amends and restates the Crude Oil Marketing Agreement dated November 23, 1998, by and between PLAINS RESOURCES INC., PLAINS ILLINOIS INC., STOCKER RESOURCES, L.P. (predecessor in interest to PXP), CALUMET FLORIDA, INC. and Buyer, insofar as it affects PXP, Arguello, and PXP Gulf Coast, which are sometimes referred to herein individually as a “Seller” and collectively as the “Sellers.” Sellers and Buyer are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS:

A. Sellers own and produce crude oil from properties located within the lower forty-eight (48) states of the United States.

B. Sellers desire to sell and Buyer desires to purchase all of the crude oil that is produced and owned by Sellers from such properties.

NOW, THEREFORE, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

1.1 Definitions. As used herein, the following terms shall have the following meanings:

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. For clarity, PXP and Plains Resources Inc. shall not be deemed Affiliates of each other for purposes of this Agreement.

“Agreement” means this Agreement and all exhibits, schedules, amendments, modifications, and supplements to this Agreement.

“Anniversary Date” has the meaning assigned in Article 3 .

“Arguello” has the meaning assigned in the preamble.

“Barrel” means forty-two (42) United States gallons of Crude Oil measured in accordance with the General Provisions.

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“Business Day” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the states of New York or Texas shall not be regarded as a Business Day.

“Buyer Specified Event” has the meaning assigned in Section 8.1.

“Conflicts Committee” means a committee of the Board of Directors of the General Partner composed entirely of two or more directors who are neither securityholders, officers nor employees of the General Partner nor officers, directors or employees of any Affiliate of the General Partner.

“Competitive Price” means the price otherwise available to Seller for production from specific Crude Oil producing properties, as demonstrated by Seller to the reasonable satisfaction of Buyer.

“Corporate Governance Documents” means, with respect to any Person, the Certificate or Articles of Incorporation, or Partnership Agreement (or their equivalents), the by-laws (or their equivalents), and the other corporate governance documents of such Person.

“Covered Property” means a Seller’s Crude Oil producing property located within the Marketing Area and either listed on Exhibit A as of the Effective Date or added pursuant to Section 2.3, but specifically excludes the Nuevo Excluded Properties.

“Crude Oil” means crude oil meeting the specifications set forth in the General Provisions.

“Defaulting Party” means (a) in the case of a Buyer Specified Event, Buyer, and (b) in the case of a Seller Specified Event, any Seller affected by such Seller Specified Event.

“Delivery Point” has the meaning assigned in Section 2.6.

“Effective Date” means the 15th day of July, 2004.

“Existing Contract” means any (i) third party crude oil sales contract to which a Seller or its properties are bound or (ii) any joint operating agreement governing a Seller’s property if the operator is not a Seller, to the extent, in the case of both clause (i) and (ii) above, such contract or operating agreement existed as of (a) the Effective Date and is listed on Exhibit B or (b) the date on which such Seller becomes a Seller pursuant to Section 2.2 or the properties become Covered Properties pursuant to Section 2.3.

“Force Majeure” has the meaning assigned in Article 9.

“General Partner” means Plains All American GP LLC, a Delaware limited liability company, in its capacity as the general partner of Plains AAP, L.P. (the general partner of Plains All American Pipeline, L.P)., and its predecessors, successors and permitted assigns as the managing entity of Plains All American Pipeline, L.P.

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“General Provisions” has the meaning assigned in Section 2.9.

“Governmental Requirements” means all judgments, orders, writs, injunctions, decrees, awards, laws, ordinances, statutes, regulations, rules, franchises, permits, certificates, licenses, authorizations, and the like of any government, or any commission, board, court, agency, instrumentality, or political subdivision thereof.

“Marketing and Administrative Fee” has the meaning assigned in Section 2.7.

“Marketing Area” means the lower 48 states of the United States, Alaska and the Outer Continental Shelf.

“Non-defaulting Party” means (i) in the case of a Buyer Specified Event, any Seller that is affected by such Buyer Specified Event, and (ii) in the case of a Seller Specified Event, Buyer.

“Nuevo Excluded Properties” means all properties covered by the Crude Oil Purchase Agreement entered into between Nuevo Energy Company and Tosco Corp. (now ConocoPhillips) dated January 1,2000 , which covers all fields set forth on Exhibit 1 thereto, plus any fields located in the state of California, California state waters, or Federal waters offshore of the state of California, which have been or will be subsequently acquired or developed by Nuevo, or PXP as its successor, pursuant to that certain Agreement and Plan of Merger dated February 12, 2004 between Nuevo and PXP whereby PXP will be the surviving entity.

“ Party ” or “ Parties ” have the meanings assigned in the preamble

“ Person ” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity.

“Platt’s P+ Average” means the arithmetic average of the Platt’s Prices for P-Plus WTI during a Trading Cycle.

“Platt’s Difference” means the arithmetic average for a Trading Cycle of the difference between the Platt’s Prices of the applicable grade of crude to be exchanged (i.e. WTS, LLS, HLS, Eugene Island, Bonito, etc.) and the prompt month WTI.

“Platt’s Prices” means the average of the price range of a particular grade of crude oil as published in the Crude Price Assessments table of Platt’s Oil gram Price Report.

“Purchase Price” has the meaning assigned in Section 2.7.

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“PXP” has the meaning assigned in the preamble.

“PXP Gulf Coast Agreement” means that Crude Oil Purchase Contract, dated December 17, 2003, between Buyer and PXP Gulf Coast, attached hereto as Exhibit C.

“Sales Price” has the meaning assigned in Section 2.7.

“Seller” and “Sellers” have the meaning assigned in the preamble.

“Seller Specified Event” has the meaning assigned in Section 8.2.

“Specified Event” means a Buyer Specified Event or a Seller Specified Event, as the case may be.

“Tosco Letter” means that certain letter agreement between Buyer and Stocker Resources, L.P. (predecessor to PXP) pursuant to which the parties agree that Buyer will continue to purchase and PXP will continue to deliver and sell PXP’s Crude Oil Production from the Arroyo Grande field under the same terms as this Agreement, despite any termination of this Agreement, for the extent to the term of the Buyer’s sales agreement to Tosco Refining Company.

“Trading Cycle” means for a particular month of delivery, a cycle beginning on the 26th day of the second month preceding such month of delivery through the 25th day of the month preceding such month of delivery.

“Trade Location” has the meaning assigned in Section 2.7(b).

ARTICLE 2

PURCHASE AND SALE

2.1 Purchase and Sale. Buyer hereby agrees to purchase and receive and Sellers hereby agree to sell and deliver all of the Crude Oil produced and owned by Sellers from Covered Properties; provided however, that the foregoing Sellers’ agreement shall be subject to any Existing Contract. No Crude Oil shall be sold hereunder in contravention of an Existing Contract by such Seller or from such properties until the Existing Contract has expired or been terminated. Currently, the Covered Properties are set forth on Exhibit A attached hereto and incorporated herein. Exhibit A shall be promptly updated to add or delete Covered Properties.

2.2 Addition of Sellers. Except for the Nuevo Excluded Properties, if a Person who owns Crude Oil producing properties within the Marketing Area becomes an Affiliate of PXP, PXP shall give prompt notice of such acquisition to Buyer, and shall cause such Affiliate to become a Seller hereunder by executing and delivering a ratification of this Agreement to Buyer as soon as practicable after the date such Person became an Affiliate of PXP.

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2.3 Addition of Covered Properties. Except for the Nuevo Excluded Properties, each Seller shall give prompt notice to Buyer of such Seller’s acquisition of any Crude Oi