Almost a year after Plains Resources and its subsidiary, PlainsAll American Pipeline L.P., were allegedly involved in”unauthorized trading,” the companies announced yesterday that theyhave reached an agreement in principle for the settlement of twoclass action securities suits. The companies have agreed to payaffected shareholders a total of $29.5 million plus interest forthe unauthorized trading loss disclosed in November 1999.

The settlement likely will hurt the companies’ third-quarterearnings. Behind the two suits are shareholders who purchasedcommon limited partnership units of Plains All American Pipelinefrom Nov. 17, 1998 through Nov. 26, 1999, and others who purchasedcommon stock and call options of Plains Resources from Oct. 29,1998 through Nov. 26, 1999.

Although the companies have agreed to settle the suits, theycontinue to deny the charges.

“After taking into account the estimated insurance proceeds, webelieve that the settlement arrangement is in the best interests ofPlains All American and Plains Resources, as it enables us to avoida protracted and expensive litigation process,” said Greg L.Armstrong, CEO of the companies. “Moreover, upon satisfying theconditions of the settlement, we can devote 100% of our attentionto continuing the profitable operation and growth of our basebusinesses.”

The companies estimate the settlement and related costs willreduce current third quarter net income by up to $0.14 per unit forthe partnership, and $0.06 to $0.17 a share for the company,depending on final allocation.

Armstrong added that upon approval and satisfaction ofconditions relating to the settlement, the arrangement would”dispose of all class action securities claims” pertaining to theannouncement of the unauthorized trading loss in November 1999.

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