FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

Exhibit 10.25

PLAINS EXPLORATION & PRODUCTION COMPANY

FIRST AMENDMENT TO

EMPLOYMENT AGREEMENT

WHEREAS, effective as of June 4, 2004 Plains Exploration & Production Company (the “Company”) entered into an employment agreement (the “Agreement”) with James C. Flores (the “Employee”); and

WHEREAS, the Company and the Employee have agreed to amend the Agreement as set forth below;

NOW, THEREFORE, the Company and the Employee agree as follows:

1. Paragraph 4(b) of the Agreement shall be amended by adding the following sentence thereto:

“Such bonus, if any, shall be paid not later than the fifteenth day of the third calendar month following the later of (i) the last day of the calendar year or (ii) the last day of the Company’s fiscal year.”

2. Paragraph 6(c)(i) of the Agreement shall be amended by striking the words “immediately upon termination of Employee’s employment” from the third sentence thereof, changing “one” to “three” in such sentence and inserting the following sentence at the end thereof:

“Immediately upon termination of Employee’s employment, amounts payable pursuant to (A) above shall be contributed to the trustee of a “rabbi” trust substantially in the form attached hereto (the “Trust”). Such amounts shall be held by the trustee pursuant to the terms of such Trust and paid to Executive on the earlier of: (1) the first day that is six months following his separation from service (within the meaning of section 409A of the Internal Revenue Code of 1986 as amended (the “Code”)); or (2) as soon as administratively feasible following Executive’s date of death.”

3. Paragraph 6(c)(ii) shall be amended by striking the words “payable in full, as the case may be, with” and inserting the following sentence at the end thereof:

“Immediately upon termination of Employee’s employment, amounts payable pursuant to this paragraph shall be contributed to the trustee of the Trust. Such amounts shall be held by the trustee pursuant to the terms of such Trust and paid to Executive on the earlier of: (1) the first day that is six months following his separation from service (within the meaning of section 409A of the Internal Revenue Code of 1986 as amended (the “Code”)); or (2) as soon as administratively feasible following Executive’s date of death.”

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4. Paragraph 6(e) shall be amended to read as follows:

“(e) Resignation for Good Reason. If Employee resigns his employment for Good Reason, Employee shall be entitled to the compensation and benefits provided in Section 6(c) hereof. “Good Reason” shall mean (1) the material breach of any of the Company’s obligations under this Agreement without Employee’s written consent or (2) the occurrence of any of the following circumstances and other than with respect to item (iv) below, without the Employee’s written consent:”

5. Paragraph 6(j) of the Agreement shall be amended to read as follows:

“(j) Full Tax Gross-Up of Excise Tax Payments. In the event that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) made or provided to or for the benefit of Employee in connection with this Agreement, or Employee’s employment with Company or the termination thereof (the “Payments”) is determined to be subject to the excise tax imposed by Section 4999 or 409A of the Code or any interest or penalties with respect to such excise taxes (such excise taxes, together with any such interest and penalties, are collectively referred to as the “Excise Taxes”), then the Employee shall be entitled to receive an additional payment (a “Gross-Up Paym