Executives of Plains Resources Inc. and Plains All American Pipeline LP, both in Houston, had an unsettling Thanksgiving week, while having to buy 12 million barrels of oil at highs of $27 per barrel and then prepare a press release to tell shareholders. A trader with Plains All American, a midstream operation with an oil and gas marketing function, was short on oil when approaching the late November expiration of the December crude oil contract, expecting oil prices to tank. But, Iraq suddenly began to withhold its production from world markets, while quibbling with the United Nations about the extension of its oil-for-food relief, and spot oil prices spiked all over the world. The losses to Plains All American, of which Plains Resources is the general partner and 54% owner, may be up to $160 million, the company reported. Plains Resources, an E&P operation, will suffer lost dividends from the midstream business, for at least one quarter, and a significant decrease in the value of its midstream asset. Plains All American will have to contribute the $100 million that is expected from the sale of a California-to-Texas pipeline toward covering the loss, as well as the $50 million it recently raised in an equity offering. This will leave the company on the sidelines of acquisition deals, for a while, analysts said. "Although this loss clearly will affect [Plains All American's] financial liquidity, we believe the company will continue to grow, albeit at a slower pace in the near term," said Stuart J. Wagner, analyst with Petrie Parkman & Co., Denver. PricewaterhouseCoopers LLP is investigating the matter on behalf of Plains All American and Arthur Andersen LLP is investigating on behalf of the company's lenders. Class-action lawsuits have been filed, on behalf of shareholders of the two companies. Shares of each declined approximately 50% to about $10 a share, upon the news and remained there a week later. Loans to Plains All American were suddenly in default, due to the e change in the company's financial situation, but new arrangements were struck within days of the announcement. "We are gratified by the speed with which we were able to move to final documentation," said Greg L. Armstrong, chairman and CEO of Plains Resources. "Finalizing the terms of this [credit] facility represents another positive step in putting this problem behind us."