IN THE UNITED STATES BANKRUPTCY COURT

In re: )

FOR THE DISTRICT OF DELA WARE

Chapter i i
)

PACIFIC ENERGY RESOURCES LTD., et aI., 1 )

Case No. 09- i 0785 (KJC)

Debtors. )
) )

(Jointly Administered)
Related Docket No. 574

OBJECTION OF PACIFIC ENERGY ALASKA OPERATING LLC TO MOTION OF UNION OIL COMPANY OF CALIFORNIA TO COMPEL DISCLOSURE OF BIDDERS AND BID INFORMATION THROUGHOUT THE SALE PROCESS
Pacific Energy Alaska Operating LLC ("PEAO"), one of

the debtors and debtors

in possession (together with PEAO, the "Debtors") in the above-captioned chapter i i cases,
hereby objects to the Motion to Compel Disclosure of Bidders and Bid Information Throughout

the Sale Process (the "Motion") filed by Union Oil Company of California ("Union"). In support
of

this objection, PEAO respectfully states as follows:

i. As stated in the Motion, Union and PEAO share working interests in

certain oil and gas leases with the State of Alaska in an area commonly referred to as "Trading
Bay." Union is the designated operator for purposes of

these properties. Union asserts various

claims against PEAO relating to Trading Bay. The Debtors are currently in the process of selling
their Alaska assets, including PEAO's interests in Trading Bay. Per prior order of

the Court, the

the Debtors' federal tax identification number, are: Pacific Energy Resources Ltd. (3442) ("PERL"); Petrocal Acquisition Corp. (6249); Pacific Energy

i The Debtors in these cases, along with the last four digits of each of

Alaska Holdings, LLC (tax 1.0. # not available) ("PEAH"); Cameros Acquisition Corp. (5866); Pacific Energy Alaska Operating LLC (7021) ("PEAO"); San Pedro Bay Pipeline Company (1234); Cameros Energy, Inc. (9487);
and Gotland Oil, Inc. (5463). The mailng address for all of the Debtors is 111 W.OceanBoulevard,Suite

1240,

Long Beach, CA.

68773-002\DOCS _SF:66414.!

deadline for submission of qualified bids for the Alaska assets was July 13,2009, the auction is

scheduled for July 20, 2009, and the sale hearing wil take place on July 27, 2009.
2. By the Motion, Union seeks to get ahead of

the curve by approximately

three business days by compelling the Debtors to disclose to Union the identity of bidders on

Trading Bay, the substantive details of any bids on Trading Bay, and other sale-related
information in advance of

the auction. For the reasons set forth below, PEAO urges the Court to

deny the Motion:

3. First, PEAO is under no obligation under the Court-approved Sale

Procedures for Alaska Assets (the "Alaska Procedures") to disclose sale information to Union at
this time. A true and correct copy of the Alaska Procedures are attached hereto as Exhibit A.

The Alaska Procedures prescribe the specific parties who are provided copies of qualifying bids
and are entitled to attend the auction. See pp. 4-5, 7 of

the Alaska Procedures. Union is not on

the list of

notice parties who are supposed to receive copies of

bids. d. at pp. 4-5. Moreover,

"only the authorized representatives of each of

the Qualified Bidders, the Debtors, the Lenders,

the Committee and the Office of

the United States Trustee shall be permitted to attend the

auction." d. at p. 7. The Alaska Procedures could not be more clear that Union is not entitled to
the information now requested in the Motion. Union received notice of

the Alaska Procedures,

appeared at the hearing where the Alaska Procedures were approved, and asserted no objection
to approval of

the Alaska Procedures. Yet, Union is now requesting that the Court essentially

reconsider the Alaska Procedures. This is completely inappropriate, especially given that Union

2
68773-002\DOCS _ SF:664 i 4. i

wil receive all definitive sale-related information on the Alaska assets next week once the
auction is complete and the Debtors have agreed to terms with a paricular bidder or bidders.
4. Second, although PEAO is continuing discussions with prospective

buyers, PEAO has yet to receive any qualifying bids for its interests in Trading Bay. Hence, PEAO has nothing definitive to provide Union at this time. Even if a qualifying bid is received in the coming days, PEAO is under no obligation to accept such bid as written. A qualifying bid may yet require substantial negotiation and revision right up to, and even at, the auction. It is
simply premature for PEAO to disclose such bids to Union before they can be fully evaluated
and negotiated by the Debtors. In this regard, Union's reliance on section 363(e) of

the

Bankptcy Code regarding adequate protection is unavailing because PEAO is not proposing to
withhold sale-related information as of the time of

the sale hearing. There is only a question of

timing. PEAO is not prepared to share all bids with Union at this inopportne moment, but
PEAO wil do so with as much notice as practicable in advance of the hearing.
5. Third, Union's motives are unclear to PEAO. Perhaps Union intends to

contest the sale and to utilize the information that it receives in some way to adversely impact the
sale process. PEAO is not comfortable sharing details of possible bids on Trading Bay with

Union until a firm deal is reached with a prospective buyer, which likely wil not happen until
after the auction when the Debtors file appropriate papers with the Court seeking approval of the

sale to a paricular buyer.

6. Finally, PEAO realizes that a sale of its interests in Trading Bay wil

require some level of coordination with Union. PEAO fully intends to provide Union with notice
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68773-002\DOCS_SF:66414. i

of any potential sale Gust like any other contract counter-pary). PEAO may even request that
prospective buyers contact Union to start those discussions in advance. PEAO, however, should
not be compelled to disclose confidential and sensitive bid-related information with Union before

PEAO is ready to do so. Indeed, as things stand now, there is simply nothing definitive to
disclose, other than the fact that PEAO has no qualifying bids yet on its interests in Trading Bay.
7. In sum, the Motion represents Union's attempt to sidestep the Alaska

Procedures approved by the Court in an effort to gain advance intelligence on the sale process as

it unfolds. The Debtors should be given a few additional days to bind buyers and to effectuate an
auction that maximizes value for the estate before Union is involved in this process.
8. For the reasons set forth above, the Debtors urge the Court to deny the

Motion.

Dated: July 14, 2009

PACHULSKI STANG ZIEHL & JONES LLP

Ira . Khar c (CA ar

Ja s E. O'Neil (DE Ba

Maxim B. Litvak (CA Ba .215852)

Kathleen P. Makowski (DE Bar No. 3648) 919 North Market Street, 17th Floor P.O. Box 8705 Wilmington, DE 19899-8705
Telephone: (302) 652-4100

Facsimile: (302) 652-4400

Email: ikharasch~pszjlaw.com

joneil~pszjlaw.com mlitvak~pszjlaw.com
Counsel for the Debtors and Debtors in Possession

4
68773-002\DOCS_SF:66414.1

EXHIBIT A

42125-001\DOCS_DE:6375.1

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELA WARE
In re:
)

Chapter i 1
Case No. 09-10785 (KJC)

PACIFIC ENERGY RESOURCES LTD, et al..i

Debtors.

) ) ) )

(Jointly Administered)

Deadline for Submitting Bids: July 13, 2009 at 12:00 noon Auction Date: July 20, 2009 at 10:00 a.m. Deadline for Objections to Sale Motion: July 21, 2009 at 4:00 p.m. Hearing Date on Approval of Sale: July 27, 2009 at 1 :30 p.m.

SALE PROCEDURES FOR ALASKA ASSETS

Pacific Energy Resources Ltd. ("PERL"), Pacific Energy Alaska Holdings, LLC ("PEAH"), Pacific Energy Alaska Operating LLC ("PEAO") and the other above-captioned debtors and debtors in possession (collectively the "Debtors") commenced their respective chapter 11 cases by filing voluntary petitions with the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") on March 9, 2009. Such cases are jointly administered for procedural proposes under Case No. 09-10785 (KJC). By motion dated June 16, 2009 (the "Motion"), the Debtors sought, among other things, approval of the process and procedures set forth below (the "Sale Procedures") through which they will identity the highest and best offer for oil and gas production assets located in Alaska (and related assets and contracts) owned by PEAO and stock owned by PEAH in a nondebtor corporation that owns a pipeline and terminalling facilities in Alaska. On July (1),2009, the Bankruptcy Court entered its order (the "Sale Procedures Order"), which, among other things, approved these Sale Procedures.

The identity ofthe Successful Bidder and Back-Up Bidder (defined below), ifany, for the Group 1 Assets (or a subset thereof) and/or Group 2 Assets (as such terms are defined below) shall be determined, if at all, at each of two Auctions (defined below) to be held on July 20,2009 at 10:00 a.m. (Eastern time) at the offices of the Debtors' bankruptcy counsel, Pachulski Stang Ziehl & Jones LLP, 780 Third Ave., 36th Floor, New York, NY 10017-2024.
each of

Court shall conduct a hearing (the "Sale Hearing") to consider approval of

On July 27, 2009, at 1 :30 p.m. (Eastern time), as further described below, the Bankruptcy the sale ofthe Group

i The Debtors in these cases, along with the last four digits of each Debtor's federal tax identification number, are:
Pacific Energy Resources Ltd. (3442); Petrocal Acquisition Corp. (6249); Pacific Energy Alaska Holdings, LLC (tax I.D. # not available); Cameros Acquisition Corp. (5866); Pacific Energy Alaska Operating LLC (7021); San Pedro Bay Pipeline Company (1234); Cameros Energy, Inc. (9487); and Gotland Oil, Inc. (5463). The address for all of the Debtors is III W. Ocean Boulevard, Suite 1240, Long Beach, CA.

68773-002\DOCS_LA:203444. i i

1 Assets (or a subset thereof) and/or Group 2 Assets to each respective Successful Bidder (defined below), if any. At the Sale Hearing, the Debtors shall seek entry of an order (the "Sale Order") authorizing and approving the proposed sale or sales.
Assets for Sale

The Debtors are seeking offers for sale of

two groups of assets (collectively, the "Alaska

Assets"):

(I) "Group 1 Assets": (A) PEAO's interests in leased oil and gas production and
exploration assets located in Alaska (and related assets and contracts) that are operated by PERL or Aurora Gas, LLC (the "Operated Alaska Interests") (B) PEAO's interests in leased gas production assets located in Alaska (and related assets and contracts) that are operated by Aurora Gas, LLC (the "Aurora Operated
Alaska Interests,,);2 and (C) PEAH's 50% of

the issued and outstanding common stock (the "Stock") of Cook Inlet Pipe Line Company ("CIPL,,);3 and

(II) "Group 2 Assets": PEAO's interests in leased oil and gas production assets
located in Alaska (and related assets and contracts) that are operated by Union Oil
(the "Nonoperated Alaska Interests").

The Debtors propose to sell the Group 1 Assets and Group 2 Assets (each a "Group" and, collectively, the "Groups") in two separate concurrent Auctions (defined below) that are scheduled to commence on the same date at approximately the same time. Qualified Bidders are not required to bid for both sets of Alaska Assets but any bidder that bids for both sets must bid the Group 1 Assets, such as separately for each set; nevertheless bidders may bid for subsets of particular leases and wells or bid for the Operated Alaska Interests without bidding for the Aurora Operated Alaska Interests or Stock (or visa versa). Bidders for the Group 2 Assets must the Group 2 Assets. The sales wil be on an "as is," "where is," and "with bid for the entirety of all faults" basis.

Bidding Process
As more fully discussed below, all bids shall be made by a letter or other writing ("Offer
Letter") RECEIVED by the Notice Parties (defined below) on or before July 13,2009 at Noon

(Eastern time) (the "Bid Deadline") by mail, delivery service, fax or email summarizing the the bid. Each Offer Letter must be accompanied by a proposed Purchase and Sale Agreement (the "Agreement") in a form prepared by the Debtors, which is available from the Debtors' investment banker, Lazard Prres & Co. LLC, 600 Travis, Suite 2300, Houston, TX
material terms of

77002, Attn: Robert L. Lynd (email: robert.lynd~lazard.com). Each bidder must submit a

separate Agreement (clean copy and a redlined copy that is marked for any changes proposed by

2 Aurora Gas, LLC is not an affliate of 3 The other 50% of

the Debtors.

the issued and outstanding common stock ofCIPL is owned by Union Oil Company of
Chevron Corporation.

California ("Union Oil"), an affiiate of

2
68773-002\DOCS_LA:203444. i i

the bidder) for each of

Group of Alaska Assets (or a subset of

the Group 1 Assets) for which the

bidder makes a bid.

Participation Requirements
In order to participate in the bidding process and otherwise be considered for any purpose the Alaska Assets
the Group 1 Assets) must first deliver (unless previously delivered) to the Debtors

hereunder, a person (a "Potential Bidder") interested in one or both Groups of (or a subset of

and the other Notice Parties (defined below), not later than the Bid Deadline:
1. Confidentiality Agreement. An executed confidentiality agreement in form and

substance acceptable to the Debtors and their counsel (a "Confidentiality Agreement"), a form of which is available from the Debtors' investment banker Lazard Frres & Co. LLC, 600 Travis, Suite 2300, Houston, TX 77002, Attn: Robert L. Lynd (email: robert. Iynd~lazard .com).
2. Offer Letter, Agreement and Evidence of Authority. A bid ("Bid") in the form of an

Offer Letter accompanied by a proposed Agreement, as set forth above, and evidence of equity holders', board of directors', or other relevant authority for the Potential Bidder to make the Bid, execute the Agreement and close the proposed purchase. The Offer Letter must, in substance:
(a) state that the Potential Bidder's offer is IRRVOCABLE until the closing of purchase of

the the Group 1 Assets) ifsuch Potential Bidder is the Successful Bidder or a Back-Up Bidder (as such terms are defined below);
the relevant Group or Groups of Alaska Assets (or subset of

(b) that the Good Faith Deposit (defined below) is NONREFUNDABLE if

the

Potential Bidder is designated the Successful Bidder;

(c) not request a "break-up fee," "overbid fee" or similar payment or any payment or

its bid is designated the Baseline Bid (defined below), it may request to be reimbursed the actual amount of any nonrefundable commitment fee ("Commitment Fee") paid at or after the time of such designation to an identified financing source, not to exceed 2% of the cash to be actually funded by such financing source on behalf of the Potential Bidder for the purchase of Alaska Assets at closing (the "Expense Reimbursement"); provided, however, that such Commitment Fee shall be limited solely to financing obtained to fund the purchase of the Group of Alaska Assets (or subset of the Group 1 Assets) and not any financing obtained to operate the relevant Alaska Assets after closing (for the avoidance of doubt, the Expense Reimbursement shall be payable solely upon the closing ofthe sale ofthe assets covered by the Baseline Bid to a Successful Bidder that is not the Bidder that submitted the
reimbursement of any fee to its advisor(s) but if

Baseline Bid);

(d) state that the Potential Bidder shall be ready, willng and able (if it pays any

unpaid Commitment Fee) to close the purchase ofthe Group or Groups of Alaska
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68773-002\DOCS_LA:203444.i I

Assets (or subset of

the Group 1 Assets) specified in the Agreement within eleven calendar days (or the next business day if the eleventh day is not a business day) after the entry of the Sale Order; and

(e) if of

the bid is for the Group 1 Assets, a percentage and/or dollar amount allocation the total consideration offered among the Operated Alaska Interests, the Aurora

Operated Alaska Interests and the Stock.

The Offer Letter shall not contain any due diligence or other contingencies, other than a
financing contingency that is conditioned solely on payment of a Commitment Fee. The

the Agreement accompanying the Offer Letter shall be executed by the Potential Bidder and evidence of due authority ofthe signatory shall also be provided with the Offer Letter.
clean copy of

3. Good Faith Deposit. Each Bid must be accompanied by a cash deposit (the "Good Faith

Deposit") received by the Debtors at or prior to the Bid Deadline by a wire transfer or bank check payable to the order of "Pacific Energy Alaska Operating LLC" in an amount
equal to at least ten percent ofthe proposed purchase price for the Alaska Assets contained in such Bid, but in no event less than $250,000. The Good Faith Deposit is
NONREFUNDABLE if

the Potential Bidder is designated the Successful Bidder (whether initially or after being previously designated a Back-Up Bidder) unless the Debtor defaults under any executed and delivered Agreement. Bid, each Potential Bidder shall provide written evidence that the Debtors reasonably conclude demonstrates it has the necessary financial ability to close the contemplated transaction and provide adequate assurance of future performance under all contracts to be assumed in such contemplated transaction. Such information should include, among other things, the following:
(a) the Potential Bidder's current financial statements (audited if

4 Proof of Operational and Financial Ability to Perform. By the time of presentation of a

they exist);
financing sources;

(b) contact names and numbers for verification of

(c) evidence of

the Potential Bidder's operating ability (which may be through an identified proposed third-part operator or temporarily by PERL for the Operated Alaska Assets until such Potential Bidder or its designated third-part operator has obtained all necessary governmental approvals); and

(d) proof of internal financial resources and any debt or equity funding commitments

(conditioned solely upon the payment of a Commitment Fee) that are needed to timely close the contemplated transactions.
its Bid by the Bid Deadline to the Debtors c/o Pacific Energy Alaska Operating LLC, 111 W. Ocean Boulevard, Suite 1240, Long
Each Potential Bidder shall deliver written copies of Beach, CA, Attn: Gerald A. Tywoniuk, Chief

Financial Offcer (email:

gtywoniuk(ipacenergy.com), with a copy to: (a) the Debtors' financial advisor, Zolfo Cooper
4
68773-002\DOCS_LA:203444. i i

LLC, 1166 Avenue ofthe Americas, 24th Floor, New York, NY, Attn: Scott W. Winn, Senior
Managing Director (email: swinn(izolfocooper.com) and Mark A. Cervi (email:

mcervi(izolfocooper.com); (b) the Debtors' investment banker, Lazard Frres & Co. LLC, 600 Travis, Suite 2300, Houston, TX 77002, Attn: Robert L. Lynd (email: robert.lynd(ilazard.com); and (c) the Debtors' counsel (i) (A) Pachulski Stang Ziehl & Jones LLP, 10100 Santa Monica Blvd., 11th Floor, Los Angeles, California 90067-4100, Attn: Ira D.
Kharasch (email: ikharasch(ipszjlaw.com) and Robert M. Saunders (email:

rsaunders(ipszjlaw.com) and (B) Pachulski Stang Ziehl & Jones LLP, 919 N. Market St., 17th

Floor, Wilmington, Delaware 19801, Attn: James A. O'Neil (email: joneil(ipszjlaw.com); (ii) Rutan & Tucker, LLP, 611 Anton Blvd., 14th Floor, Costa Mesa, CA 92626, Attn: Gregg Amber (email: gamber(irutan.com) and Garett Sleichter (email: gsleichter(irutan.com); and (iii) Schully, Roberts, Slattery & Marino, PLC, 1100 Poydras Street, Suite 1800, New Orleans, LA 70163, Attn: Anthony C. Marino (email: amarino(ischullyroberts.com); (d) counsel to the Unsecured Creditors (the "Committee"): Steptoe & Johnson, 1330 Official Committee of Connecticut Ave., N.W., Washington, DC 20036, Attn: Fil Agusti (email: fagusti(isteptoe.com); and (e) counsel to the Debtors' secured lenders (the "Lenders"): (i) Bingham McCutchen LLP, 399 Park Avenue, New York, NY 10022, Attn: Jeffrey S. Sabin (email: jeffrey.sabin(ibingham.com); and (ii) Skadden, Arps, Slate, Meagher & Flom LLP, 333 West Wacker Drive, Chicago, Ilinois 60606, Attn: Seth E. Jacobson (email: the seth.jacobson(iskadden.com), (collectively, the "Notice Parties"). Bids received by any of the other Notice Parties without prior notice to the Notice Parties may be shared with any of
Potential Bidder.

Notwithstanding the aforestated requirements, the Lenders, either together or

the United States Code and any such bid shall constitute a Qualified Bid and an allowed claim for bidding purposes only.
individually, may credit bid their outstanding indebtedness under section 363(k) of title 11 of

Access to Due Diligence Materials

Only Potential Bidders that execute and deliver a Confidentiality Agreement to the Debtors are eligible to receive due diligence access or additional non-public information. Ifthe Debtors determine that a Potential Bidder that has satisfied the Participation Requirements does not constitute a Qualified Bidder, then such Potential Bidder's right to receive due diligence access or additional non-public information shall terminate and such Potential Bidder shall promptly return all confidential and non-public information to the Debtors without retaining any
copies. The Debtors shall not be obligated to furnish any due diligence information after the Bid

Deadline. The Debtors are not responsible for, and shall bear no liability with respect to, any information obtained by Qualified Bidders in connection with the sale of any of the Alaska Assets (whether such information is provided by the Debtors or their professionals or omitted by them). The Debtors shall exercise their sole discretion in providing or withholding confidential information to Potential Bidders that have executed and delivered to the Debtors a Confidentiality Agreement but have not yet qualified as Qualified Bidders.

5
68773-002\DOCS_LA:203444.1 i

Due Dilgence From Bidders

Each Potential Bidder and Qualified Bidder (each, a "Bidder") shall comply with all reasonable requests for additional information and due diligence access by the Debtors or their
advisors regarding such Bidder and its contemplated transaction and operational and financial

ability to timely close a sale. Failure by a Potential Bidder to comply with requests for additional information and due dilgence access wil be a basis for the Debtors to determine that the Potential Bidder is not or no longer is a Qualified Bidder. Failure by a Qualified Bidder to comply with such requests for additional information and due diligence access wil be a basis for the Debtors to determine that a bid made by a Qualified Bidder is not a Qualified Bid.

Designation as Qualifed Bidder

Potential Bidders whose A "Qualified Bidder" is a Potential Bidder (or combination of bids for each Group of Alaska Assets (or a subset ofthe Group 1 Assets) do not overlap and who shall also be referred to herein as a single Qualified Bidder) that timely delivers the documents and Good Faith Deposit described above, and that the Debtors in their discretion and with assistance from their advisors determine has made a bona fide offer that the Potential Bidder would (or would if a Commitment Fee were paid) be able to timely consummate the purchase of
the relevant Group or Groups of Alaska Assets (or a subset of the Group 1 Assets), if

selected as

a Successful Bidder or a Back-Up Bidder.

A Bid received after the Bid Deadline shall not constitute a Qualified Bid unless the Debtors designate such Bid as a Qualified Bid after consultation with the Lenders and the Committee.
The Debtors shaH have the right to reject any and aH Bids that they believe, in their reasonable discretion after consultation with the Lenders and the Committee, do not comply with the Sale Procedures or for any reason or no reason. In the event that any Potential Bidder is determined by the Debtors not to be a Qualified Bidder, the Potential Bidder shall be refunded its Good Faith Deposit without interest thereon, within three business days after that determination. The Debtors shall not be obligated to deposit the funds constituting a Bidder's Good Faith
Deposit in an interest-bearing account or investment.

The Debtors, as soon as is practicable after receipt of each Bid but not later than 24 hours before the beginning ofthe relevant Auction, shaH notity each Potential Bidder whether it is a Qualified Bidder.

Auctions
Ifno timely, conforming Qualitying Bids are submitted by the Bid Deadline, the Debtors shall not hold the relevant Auction and may withdraw any Sale Motion for the relevant Group of the Group 1 Assets) without prejudice. If only one timely QualifYing Alaska Assets (or subset of the Group 1 Assets), the Debtors Bid is submitted for a Group of Alaska Assets (or subset of shall not hold the Auction, but may designate the sole Qualitying Bidder to be the Successful
Bidder with respect to the Group of Alaska Assets (or with respect to the subset of

Group 1

6
68773-002\DOCS_LA:203444. i i

Assets) and proceed with the Sale Hearing or reject the Bid or withdraw the proposed sale after consultation with the Lenders and the Committee. the Debtors have received more than one Qualitying Bid for a Group of Alaska Assets the Group 1 Assets), they may conduct an auction (the "Auction") for each such Group (or a subset of the Group 1 Assets) to determine the highest and best bid with respect to the respective Alaska Assets (or subset of the Group 1 Assets).
If (or a subset of

At least 24 hours prior to each Auction, after consultation with the Lenders and the Committee, the Debtors shall determine in their reasonable discretion which Qualified Bid, if any, constitutes the "Baseline Bid," if any, for each Group of Alaska Assets (or a subset of the Group 1 Assets). In making such determination, the Debtors may take into account, among other things, (a) the number, type and nature of any changes to the Agreement requested by each the Qualified Bidder; (b) the extent to which such modifications are likely to delay closing of sale of the relevant Group of Alaska Assets and the cost to the Debtors or any of them of such modifications or delay; (c) the consideration (in type and amount) to be received by the Debtors or any of them; (d) the likely ability of the Qualified Bidder to close a transaction and the timing thereof; (e) the net benefit to the estate or estates, taking into account any Expense Reimbursement (the "Bid Assessment Criteria").
The Debtors shall provide all Qualified Bidders (a) notice of the identity of any Qualified Bidder that has been selected by the Debtors to make the Baseline Bid for each Group of Alaska Assets (or subset ofthe Group 1 Assets) and (b) copies of all Qualified Bids at least 24 hours prior to the Auction, which may exclude any confidential financial information, as determined by the Debtors in their sole reasonable discretion or which has been so designated by a Qualified Bidder in writing. The Qualified Bidder whose Qualified Bid is designated a Baseline Bid shall notity the Notice Parties in writing prior to the Auction if it has paid a Commitment Fee after the date of its Offer Letter and would therefore be seeking an Expense Reimbursement if it is overbid.

The Auction shall commence at 10:00 a.m. (Eastern time) on July 20, 2009, at the the Debtors' bankruptcy counsel, Pachulski, Stang, Ziehl & Jones LLP, 780 Third Ave., 36th Floor, New York, NY 10017-2024.
offces of

Any Auction shall be conducted according to the following procedures:

1. Participation and Attendance at the Auction

Only a Qualified Bidder that has submitted a Qualified Bid is eligible to participate at an Auction. Each Qualified Bidder must have a representative at the relevant Auction in order to make an Overbid (defined below). Each Qualitying Bidder shall be required to confirm that it has not engaged in any collusion with respect to the bidding or the sale.
Unless the Debtors in their reasonable discretion after consultation with the Lenders and
the Committee agree with another part in interest that it may attend the Auction, only the
authorized representatives of each of Committee and the Offce of

the Qualified Bidders, the Debtors, the Lenders, the United States Trustee shall be permitted to attend the Auction.
7

68773-002\DOCS_LA:203444.11

2. The Debtors Shall Conduct the Auction

The Debtors and/or their professionals shall direct and preside over each Auction. The Debtors may conduct each Auction in the manner they determine in their reasonable discretion after consultation with the Lenders and Committee could result in the highest and best offer for the relevant Group of Alaska Assets. At the start of each Auction, the Debtors shall describe the material business terms ofthe Baseline Bid. All Bids made thereafter shall be Overbids (as defined below) and shall be made and received on an open basis, and all material non-confidential terms of each Overbid shall be fully disclosed to all other Qualified Bidders. The Debtors shall maintain a list or other compilation of the Baseline Bid and Overbids, or may have a transcript made of each Auction instead of or in addition to making such a list or compilation.
3. Terms of Initial Bid and Overbids

announcement of

An "Overbid" is any bid made before or at an Auction subsequent to the Debtors' the Baseline Bid. To submit an Overbid for purposes of an Auction, a Qualified Bidder must comply with the following conditions:
(a) Minimum Overbid Increments

At each Auction, the bidding shall begin with a minimum Overbid, if any, that is, at a minimum, equal to the Baseline Bid plus an initial overbid incremental amount, in cash, equal to the sum of (i) any Expense Reimbursement and (ii) $100,000, and continue in subsequent minimum overbid incremental amounts of at least $100,000 in cash. A Qualified Bidder may credit bid any Expense Reimbursement.

(b) Remainin2 Terms are the Same as for Qualified Bids

Except as modified herein, an Overbid must comply with the relevant conditions for a Qualified Bid set forth above. Any Overbid made by a Qualified Bidder must remain open and binding on the Qualified Bidder until and unless (i) the Debtors accept a higher Qualified Bid as an Overbid and (ii) such Overbid is not selected as a Back-Up Bid (as defined below). To the extent not previously provided (which shall be determined by the Debtors in their reasonable discretion after consultation with the Lenders and Committee), a Qualified Bidder
submitting an Overbid must submit at the Debtors' request, as part of

its Overbid, written

evidence (in the form of financial disclosure or credit-quality support information or operational ability information, or qualification for governmental approval or any enhancement reasonably acceptable to the Debtors) demonstrating such Qualified Bidder's ability to timely close the
transaction proposed by such Overbid.

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68773-002\DOCS_LA:203444. i i

(c) Announcin2 Overbids

The Debtors shall announce at the Auction the material terms of each Overbid, which may include the basis for calculating the total consideration offered in each such Overbid and the resulting benefit to the Debtors' estates based on, inter alia, the Bid Assessment Criteria.
4. Additional Procedures

The Debtors, as appropriate and in their reasonable discretion after consultation with the Lenders and Committee may adopt rules for the Auction at or prior to the Auction that should better promote the goals of the Auction and that are not materially inconsistent with any of the provisions of the Sale Procedures Order. Such rules shall provide that at the Auction all Bids shall be made and received in one room, on an open basis, and all other Qualified Bidders shall be entitled to be present for all bidding with the understanding that the true identity of each Qualified Bidder (i.e., the principals submitting the Bid) shall be fully disclosed to all other Qualified Bidders and that all material terms of each Qualified Bid shall be fully disclosed (subject to any confidentiality restrictions) to all other Qualified Bidders throughout the entire Auction. The Debtors, as appropriate and in their reasonable discretion after consultation with the Lenders and the Committee, shall have the abilty to increase or decrease the Minimum Overbid Increments during an Auction.

The Debtors in their reasonable discretion after consultation with the Lenders and the final DIP financing order entered in the Debtors' chapter 11 cases, extend the Bid Deadline or the Auction Date beyond the dates provided herein. In the event of such an extension, the Debtors shall provide notice to the Notice Parties and any such extension, any related time and location details with respect to same, Qualified Bidders of
Committee may, subject to the terms of and any consequent continuance of

the Sale Hearing.

5. Consent to Jurisdiction as Condition to Biddin2

All Qualified Bidders at the Auction shall be deemed to have consented to the exclusive the Bankruptcy Court and waived any right to ajury trial or alternative dispute resolution in connection with any disputes relating to the Auction or any Bid, and the construction and enforcement of each Qualified Bidder's Agreement and related documents.
core jurisdiction of

6. Closin2 the Auction

Upon conclusion of the bidding (as determined by the Debtors in their reasonable discretion after consultation with the Lenders and Committee), the Auction shall be closed, and the Debtors, after consultation with the Lenders and Committee with respect thereto, shall immediately identity the highest and best offer for portions or all ofthe Alaska Assets (which may be an aggregate of bids for less than all ofa Group of Alaska Assets or subset of

the Group

1 Assets) (the "Successful Bid") and the entity submitting such Successful Bid (the "Successful Bidder"), which highest and best offer would in the Debtors' business judgment provide the greatest amount of net value to the Debtors' estates (or anyone or more of them), and the next highest and best offer after the Successful Bid (the "Back-up Bid") and the entity submitting the Back-Up Bid (the "Back-Up Bidder"), and advise the Qualified Bidders of such determination.
9
68773-002\DOCS_LA:203444. i i

Acceptance of Successful Bid

The Debtors, after consultation with the Lenders and Committee, may (a) at any time until closing of the sale ofthe relevant Group of Alaska Assets (or subset of the Group 1 Assets), determine which Qualified Bid, ifany, is the highest and best offer and (b) reject at any time
before entry of an order ofthe Bankruptcy Court approving a Qualified Bid, any Bid for no

reason or any reason including because it is (i) inadequate or insuffcient; (ii) not in conformity with the requirements of the Bankruptcy Code, these Sale Procedures, or any other terms and conditions of sale; or (iii) contrary to the best interests ofthe Debtors, their estates (or any of
them) and their creditors.

The Debtors shall be deemed to have accepted a Qualified Bid only when: (a) the Debtors have received the prior written consent ofthe Required Lenders (as such term is used in the Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, as amended, approved by order ofthe Bankruptcy Court), which may be granted or withheld in their sole discretion, and (b) the Qualified Bid has been approved by the Bankruptcy Court by an order that has become final and, at the Debtors' discretion after consulting with the Lenders and Committee, no longer subject to rehearing, appeal or certiorari.
The rights of all parties in interest to object to the Debtors' selection of

the Successful

Bidder, including the assignment of any of such objector's assumed executory contracts or unexpired leases (the "Assumed Contract") thereto, are preserved, and the Debtors reserve the right to contest any such objection including (without limitation) because the objector lacks standing, provided, however, that any objection to such assignment on the basis of undisputed amounts necessary, pursuant to Section 365 ofthe Bankruptcy Code, to cure all defaults under such objector's Assumed Contracts must be made and/or reserved in accordance with any procedures set forth in the order approving these Sale Procedures.

"As Is, Where Is, and With All Faults"

The sale of the Assets shall be on an "as is," "where is," and "with all faults" basis and without representations or warranties of any kind, nature, or description by the Debtors, their agents or their estates except to the extent set forth in the executed and delivered Agreement with the Successful Bidder. Each Qualified Bidder shall be deemed to acknowledge and represent

that it has had an opportunity to conduct any and all due dilgence regarding the relevant Group

of Alaska Assets prior to making its offer, that it has relied solely upon its own independent review, investigation and/or inspection of any documents and/or the Alaska Assets in making its bid, and that it did not rely upon any written or oral statements, representations, promises, warranties or guaranties whatsoever, whether express, implied, by operation of law or otherwise, regarding the Assets, or the completeness of any information provided in connection therewith, its Bid or any Overbids or the Auction, except as expressly stated in these Sale Procedures or the executed and delivered Agreement with the Successful Bidder.

Free Of Any And All Interests

Except as otherwise provided in the executed and delivered Agreement with the Debtors' right, title
10
68773-002\DOCS_LA:203444.1 i

Successful Bidder and subject to the approval ofthe Bankruptcy Court, all of

and interest in and to the relevant Group of Alaska Assets subject thereto shall be sold free and clear of all pledges, liens, security interests, encumbrances, claims, charges, options and interests thereon and there against (collectively, the "Interests") other than claims, liabilities and obligations of one or more ofthe Debtors expressly assumed by the Successful Bidder in its Agreement and third party property interests to which the Alaska Assets are subject (such as royalty, overriding royalty and similar oil and gas interests), in accordance with Bankruptcy the sale of the Alaska Assets. Code 363(f), with such Interests to attach to the net proceeds of

Sale Hearing
The Sale Hearing shall be conducted by the Bankruptcy Court on July 27, 2009 at 1 :30

p.m. (Eastern time), or on such other date and time as may be established or continued by the Bankruptcy Court. Any continuation ofthe Sale Hearing that is announced in open court need not be separately noticed to the Notice Parties or Qualified Bidders.

Closing
the Alaska Assets to the Successful the Bankruptcy Court after the Sale Hearing approving such sale unless the Bankruptcy Court or the United States District Court for the Delaware enters a stay of such sale. The Debtors' presentation of a particular District of Qualified Bid to the Bankruptcy Court for approval does not constitute the Debtors' acceptance of such Qualified Bid.
The Debtors shall endeavor to close the sale of Bidder(s) promptly after the entry of an order of

If a Successful Bidder fails to consummate an approved sale in accordance with the applicable Agreement or such Agreement is terminated, the Debtors shall be authorized, but not required, to deem the Back-up Bid, as disclosed at the Sale Hearing, the Successful Bid, and the Debtors shall be authorized, but not required, to consummate the sale with the Qualified Bidder
submitting such Bid without further order of

the Bankruptcy Court. Any Back-Up Bidder that is

notified by the Debtors that it has become the Successful Bidder shall be the "Successful Bidder" as that defined term is used herein.

Return of Good Faith Deposits

the Successful Bidder shall be applied to the purchase price Any Good Faith Deposit of of the relevant transaction at closing. Good Faith Deposits of all Qualified B idders (other than the Successful Bidder and any Back-Up Bidder) shall be returned to the respective Qualified Bidders with any accumulated interest thereon, if any, within three business days after the the relevant Auction. The Good Faith Deposit of any Back-Up Bidder shall be conclusion of returned to the Back-Up Bidder with any accumulated interest thereon, if any, within three the relevant sale with the Successful Bidder. If a Successful business days after the closing of Bidder (including any Back-Up Bidder that has become the Successful Bidder) fails to consummate an approved sale because of a breach or failure to perform on the part of such Successful Bidder, the Debtors shall be entitled to retain such Successful Bidder's Good Faith the damages resulting from such Successful Bidder's breach or failure to Deposit as part of perform.

11
68773-002\DOCS_LA:203444. i i

IN THE UNITED STATES BANKRUPTCY COURT

In re: )
STATE OF DELAWARE )
) ss:

FOR THE DISTRICT OF DELA WARE

Chapter 1 1

PACIFIC ENERGY RESOURCES LTD., et at., i )

) )

Debtors. )

Case No. 09-10785 (KJC) (Jointly Administered)

AFFIDAVIT OF SERVICE

COUNTY OF NEW CASTLE )

Kathleen Forte Finlayson, being duly sworn according to law, deposes and says
that she is employed by the law firm of

Pachulski Stang Ziehl & Jones LLP, attorneys for the

Debtors in the above-captioned action, and that on the 14th day of July, 2009 she caused a copy
of

the following document(s) to be served upon the parties on the attached service lists in the

manner indicated:

Objection of Pacific Energy Alaska Operating LLC to Motion of Union Oil Company of California to Compel Disclosure of Bidders and Bid Information Throughout the Sale Process

DEBR L. YOUNG NOTARY PUBIC

otary Public Commission Exp.:

8 ? (J!j

STATE OF DELAWA _ Ci1l ~Q Jlv '1. ic11

the Debtors' federal tax identification number, are: Pacific Energy Resources Ltd. (3442); Petrocal Acquisition Corp. (6249); Pacific Energy Alaska Holdings, LLC (tax I.D. # not available); Cameros Acquisition Corp. (5866); Pacific Energy Alaska Operating LLC (7021); San Pedro Bay Pipeline Company (1234); Cameros
Energy, Inc. (9487); and Gotland Oil, Inc. (5463). The mailing address for all of

i The Debtors in these ses, a ong with the last four digits of each of

the Debtors is 111 W.

Ocean Boulevard, Suite 1240, Long Beach, CA 90802.

SPECIAL SERVICE LIST JULY 14, 2009

Hand Delivery (Counsel for Union Oil Company of California) Norman M. Monhait, Esquire Rosenthal, Monhait & Goddess, P A
Citizens Bank Center, Suite 1401

919 Market Street, P.O. Box 1070 Wilmington, DE 19899

Overnight Delivery (Counsel for Union Oil Company of California) Richard L. Epling, Esquire David A. Crichlow, Esquire Roger Elder, Esquire Pilsbury Winthrop Shaw Pittman LLP 1540 Broadway New York, NY 10036

DOCS_DE: i 50670.1

Pacific Energy Resources Ltd. Core Service List

Case No. 09-10785
Document No. 146442

04 - Hand Delivery
05 - First Class Mail

Hand Delivery (United States Attorney) Ellen W. Slights, Esq. United States Attorney's Office District of Delaware
1007 N. Orange Street, Suite 700

Wilmington, DE 19801
Counsel for Debtors) Laura Davis Jones, Esquire James E. O'Neil, Esquire Kathleen P. Makowski, Esquire Pachulski Stang Ziehl & Jones LLP 919 North Market Street, 17th Floor P.O. Box 8705 Wilmington, DE 19899-8705
Hand Delivery (Counsel to Official Committee of Unsecured Creditors) David B. Stratton, Esquire James C. Carignan, Esquire Pepper Hamilton LLP
Hercules Plaza, Suite 1500

1313 Market Street Wilmington, DE 19899

Interoffice Pouch to Los Angeles Counsel for Debtors) Robert M. Saunders, Esquire Ira D. Kharasch, Esquire Scotta E. McFarland, Esquire Pachulski Stang Ziehl & Jones LLP
10100 Santa Monica Blvd., 11th Floor

Hand Delivery (Counsel to DIP Administrative Agent) Don A. Beskrone, Esquire Ashby & Geddes, P.A. 500 Delaware Avenue Wilmington, DE 19801

Los Angeles, CA 90067

Hand Delivery (United States Trustee) Joseph McMahon, Esquire the United States Trustee Office of 1. Caleb Boggs Federal Building 844 North King Street, Suite 2207
Lockbox 35

First Class Mail

(Counsel to Goldman Sachs, J.Aron & Company; DIP Administrative Agent) Jeffrey Sabin, Esquire Steven Wilamowsky, Esquire Scott K. Seamon, Esquire Bingham McCutchen LLP 399 Park Avenue New York, NY 10022

Wilmington, DE 19801
Hand Delivery (Copy Service)
Parcels, Inc.

Vito 1. DiMaio 230 N. Market Street

Wilmington, DE 19801

First Class Mail

(Counsel to PEA Collateral Agent, et aL.) Seth E. Jacobson, Esquire

Chris L. Dickerson, Esquire

Skadden, Ars, Slate, Meagher & Flom LLP

333 West Wacker Drive, Suite 2100 Chicago, IL 60606

First Class Mail

(Counsel to Official Committee of
Unsecured Creditors)

Francis J. Lawall, Esquire Pepper Hamilton LLP 3000 Two Logan Square Eighteenth & Arch Streets
Philadelphia, PAl 9 1 03

First Class Mail

(counsel to Official Committee of
Unsecured Creditors)

Filiberto Agusti, Esquire

Steven Reed, Esquire

Joshua Taylor, Esquire Steptoe & Johnson LLP 1330 Connecticut Avenue NW Washington, DC 20036

First Class Mail

(counsel to Official Committee of
Unsecured Creditors)

Robbin Itkin, Esquire Katherine Piper, Esquire Kelly Frazier, Esquire Steptoe & Johnson LLP
2121 Avenue of

the Stars, 28th Floor

Los Angeles, CA 90067