IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: ) ) PACIFIC ENERGY RESOURCES, LTD., ) et al.

, ) ) Debtors. ) ) ) )

Chapter 11 Case No. 09-10785 (KJC) Jointly Administered

Related Docket Nos. 745, 746, 776

OBJECTION OF UNION OIL COMPANY OF CALIFORNIA TO MOTION OF MARATHON OIL COMPANY TO QUASH DEPOSITION AND FOR PROTECTIVE ORDER Union Oil Company of California (Union), through its undersigned counsel submits this objection (the Objection) to the Motion of Marathon Oil Company (Marathon) to Quash Deposition and for Protective Order (the Motion) and respectfully states as follows: BACKGROUND 1. On March 9, 2009 (the Petition Date), the above-captioned debtors (the

Debtors) each filed a petition for relief under chapter 11 of title 11 of the Bankruptcy Code. 2. The Debtors continue in possession of their property and are operating and

managing their businesses as debtors-in-possession pursuant to 1107 and 1108 of the Bankruptcy Code. 3. No request has been made for the appointment of a trustee or an examiner in these

cases. The office of the U.S. Trustee appointed an official committee of unsecured creditors on March 19, 2009. 4. On August 18, 2009, the Court entered a conditional Order (I) Approving Sale of

the Debtors Assets at Trading Bay, Alaska Free and Clear of Liens, Claims, Interests and

701706456v2

Encumbrances, (II) Assuming and Assigning Certain Executory Contracts and Unexpired Leases; and (III) Granting Related Relief (Doc. No. 768) (the Sale Order). 5. During the sale hearing on August 12, 2009, the Debtors Alternative Motion to

Compel Abandonment of Interests in Oil and Gas Properties at Trading Bay, Alaska and Rejection of Executory Contracts Relating Thereto (Doc. No. 455) (the Abandonment Motion) was adjourned to September 1, 2009. Union previously objected to the Abandonment Motion (Doc. No. 572). No other party has filed any pleadings in that contested matter.1 6. At the August 12 hearing, the Debtors requested that the Abandonment Motion be

set for the September 1 omnibus hearing in the event that the transaction contemplated by the Sale Order did not close. Union gave notice on the record that the hearing on the Abandonment Motion should be an evidentiary hearing. See Transcript of Hearing held 8/12/2009 (the

August 12 Transcript) at 50, 54-56.2 Union set forth in detail the basis for its objection to the scope of the Debtors proposed abandonment of Trading Bay assets and requested the right to take discovery, which the Court granted. August 12 Transcript at 59-61. Significantly, at no time has Marathon ever filed an objection or other pleading relating to the Trading Bay Group 2 abandonment, nor has it disclosed any issues or position it has with respect to the proposed abandonment. 7. On August 14, 2009, Union filed a Notice of Deposition of Pacific Energy Alaska

Operating, LLC (Doc. No. 745) (the PEAO Deposition) and a Notice of Deposition of Darin Katic (Doc. No. 746) (the Katic Deposition, and with the PEAO Deposition, collectively, the Depositions). By consent of the parties, the PEAO Deposition is now scheduled for August 21, 2009 and the Katic Deposition is scheduled for August 24, 2009.
1 2

The scope of the

See Amended Notice of Agenda of Matters Scheduled for Hearing (Doc. No. 736), attached as Exhibit A. August 12 Transcript pp. 50-61 is attached as Exhibit B. 2

701706456v2

Depositions is narrow, being focused on the relationship between Union and Pacific Energy Operating LLC (PEAO) with respect to each partys interest in the Trading Bay properties. 8. On August 19, 2009, Marathon asked to attend the Depositions. After

consultation, on August 20, 2009, the Debtors and Union agreed to allow Marathon to attend the Depositions on the condition that it was not to ask questions or otherwise attempt to disrupt the proceedings. That evening, Marathon filed the Motion. ARGUMENT 9. Under Bankruptcy Rule 7030, [a] party who wants to depose a person by oral

questions must give reasonable notice to every other party. Under Delaware Local Bankruptcy Rule 7030-1(b), reasonable notice is defined as not less than five days unless otherwise ordered by the court. Union has given such reasonable notice. Marathon, on the other hand, has not. Marathon, therefore, should not be able to depose PEAOs witnesses during the depositions. 10. Further, Marathon has failed to show in the Motion that allowing Union to

conduct the Depositions on its relationship with PEAO and the scope of the Abandonment Motion would result in its annoyance, embarrassment, or oppression or that it would be unduly burdened or taxed with expense. Indeed, Marathon could have joined issue in the abandonment and sought to take its own discovery, but it did none of those things. Instead, it now seeks to hijack Unions deposition to conduct a fishing deposition. 11. Marathon also correctly notes that Delaware Local Bankruptcy Rule 7030-1(c)

permits a motion to quash so long as it is filed at least one day before the scheduled deposition. Here, too, Marathons notice is deficient, as Marathons notice was filed late in the day on the day before the scheduled deposition, forcing Union to go through the time and expense of resolving a last-minute matter in which Marathon, quite simply, has shown no interest. Further,

3
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under Rule 7030-1(c), a proper motion to quash merely allows a party, witness, or attorney not to appear until the motion is resolved. It does not require that the Depositions not be held until the Motion is resolved. Both Union and the Debtors witnesses and their respective attorneys intend to appear at the Depositions. 12. The subject matter of the Depositions involves the scope of the Abandonment

Motion and the documents which form the basis of the relationship between Union and PEAO. Union is the only party to have joined this matter by filing pleadings and spelling out its objections on the record. August 12 Transcript pp. 53-55. Marathon assigned its rights to all of the Trading Bay leases and agreements long ago and currently is not a party to any of the agreements between Union and PEAO with respect to the Trading Bay properties. 13. The only possible topic which might implicate Marathons rights or

responsibilities is the scope of environmental remediation or abandonment liability, which is decidedly going to be a part of the Depositions. Indeed, Union has consistently argued that such liabilities are not properly within the Courts jurisdiction,3 but rather are the province of the courts of Alaska. Indeed, it is inescapable to conclude that Marathon seeks to use the

Depositions as a fishing expedition to further its interest in obtaining discovery for its earlier filed adversary proceeding, Case No. 09-51004. Its attempt to take such discovery in the context of this abandonment proceeding is improper. 14. Marathon cites no authority for the proposition that an oral reservation of rights

makes one a party to a contested matter or that being a former party to an agreement makes one a party in interest, and there appears to be none. Indeed, ones reservation of rights is only as good as the rights reserved here Marathon is not a party to this contested matter, so it has no right to
3

See Opening Brief in Support of Motion of Defendants Union Oil Company of California and Chevron Corporation to Dismiss or Abstain from Exercising Jurisdiction over Marathon Oil Companys Complaint Against Union and Chevron, Adv. Pro. No. 09-51004, Doc. No. 5. 4

701706456v2

participate. Marathons last-minute attempt to commandeer or quash the Depositions is both self-serving and improper. There is limited time to conduct discovery before the September 1 hearing, and Marathons Motion is a needless distraction by an entity which is not at all a party to this contested matter. Contrary to Marathons assertion, allowing it to conduct its own questioning does not serve the interests of judicial economy. Although it may have an interest in questioning these particular witnesses, it does not have an interest in the lines of inquiry Union seeks to pursue. For the foregoing reasons, Union respectfully requests that the Court (i) deny Marathons Motion; (ii) require that if Marathon attends the Depositions that it not be permitted to question the witnesses or disrupt the proceedings; and (iii) grant such other and further relief as is just and proper. Dated: August 21, 2009 Wilmington, Delaware

Respectfully submitted,

By: /s/ Carmella P. Keener Norman M. Monhait (ID No. 1040) Carmella P. Keener (ID No. 2810) Rosenthal, Monhait & Goddess, P.A. 919 North Market Street, Suite 1401 P.O. Box 1070 Wilmington, DE 19899-1070 Telephone: (302) 656-4433 Facsimile: (302) 658-7567 nmonhait@rmgglaw.com and Richard L. Epling David A. Crichlow Pillsbury Winthrop Shaw Pittman LLP 1540 Broadway New York, NY 10036 Telephone: (212) 858-1000 Facsimile: (212) 858-1500 Counsel to Union Oil Company of California
5
701706456v2

EXHIBIT A

IN THE UNITED STATES BANKRUPTCY COURT

In re: )
CONTESTED MATTERS:

FOR THE DISTRICT OF DELA WARE

Chapter 11

)
)

PACIFIC ENERGY RESOURCES LTD., etal., i )

Debtors. )

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

Related Docket No. 726

AMENDED NOTICE OF AGENDA FOR MATTERS SCHEDULED FOR HEARING ON AUGUST 12.2009 AT 1:00 P.M.

Any part participating telephonically must make arrangements through

CourtCall by telephone (866-582-6878) or facsimile (866-533-2946),

no later than 12:00 p.m., one (1) business day before the hearing.

1. Alternative Motion of Pacific Energy Alaska Operating LLC for an Order Authorizing
Abandonment of

Interests in Oil and Gas Properties at Trading Bay, Alaska and

Rejection of Executory Contracts Relating Thereto (Filed June 16, 2009; Docket No.

455)
Related Documents:
( a) Notice of Alternative Motions of the Debtors for Orders Authorizing

Abandonment of Certin Interests in Oil and Gas Properties in Alaska and Rejection of Executory Contracts Relating Thereto (Filed July 2, 2009; Docket
No. 549)

Objection Deadline: July 21,2009 at 4:00 p.m. (Extended to July 24,2009 for
Creditors ' Committee)

i The Debtors in these cases, along with the last four digits of each ofthe Debtors' federal tax
identification number, are: Pacific Energy Resources Ltd. (3442); Petrocal Acquisition Corp. (6249); Pacific Energy Alaska Holdings, LLC (ta J.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

the Debtors is ILL W.

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

Objections/Responses:
(a) Limited Objection of

California to Alternative Motion of Union Oil Company of Pacific Energy Alaska Operating LLC for an Order Authorizing Abandonment of Interests in Oil and Gas Properties at Trading Bay, Alaska and Rejection of Executory Contracts Relating Thereto (Filed July 10, 2009; Docket No. 572)

Status: This matter is going forward only if a sale is not approved.

2. Debtors' Motion for an Order (A) Approving Sale of

Debtors' Alaska Assets Free and

Clear of All Liens, Claims, Encumbrances and Other Interests Pursuant to Sections the Banptcy Code, (II) Assuming and Assigning Certain 363(b), (f) and (m) of Executory Contracts and Unexpired Leases; and (III) Granting Related Relief (Filed July 2, 2009; Docket No. 545)
Related Documents:
(a) (signed) Order (A) Approving Procedures for Sale of

the Debtors' Alaska Assets; (B) Scheduling Auction and Hearing to Consider Approval of Sale; Respective Dates, Times and Places for Auction and (C) Approving Notice of for Hearing on Approval of (I) Sale and (II) Assumption and Assignment of Certain Executory Contracts and Unexpired Leases; (D) Approving Forms of

Notice; and (E) Granting Related Relief (Entered July 1, 2009; Docket No. 532)
(b) Notice of Auction and Sale Hearing (Filed July 2, 2009; Docket No. 546)
(c) Notice of

Sale Procedures, Auction Date and Sale Hearing (Filed July 2, 2009;

Docket No. 547)

(d) Notice to Counterparies to Executory Contracts and Unexpired Leases that

May be Assumed and Assigned(Filed July 2, 2009; Docket No. 548)

(e) Amended Notice to Counterparies to Executory Contracts and Unexpired Leases that May be Assumed and Assigned (Filed July 11, 2009; Docket No. 585)
(f) Amended Notice to Counterparties to Executory Contracts and Unexpired

Leases that May be Assumed and Assigned (Filed July 17,2009; Docket No. 623)
(g) Notice of Auction Results for Alaska Assets and Date and Time of Sale Hearing

(Filed July 22, 2009; Docket No. 652)

(h) Notice of Filng Purchase and Sale Agreement by and between Ocar

Energy LLC and Pacific Energy Alaska Operating LLC and Pacifc Energy Alaska Holdings, LLC Dated as of August 7, 2009 (Filed August 11, 2009; Docket No. 734)
2

Objection Deadline: !uly 2), 2009 at 4:00 p.m. (Extended to July 22 for State of Alaska and to July 24, 2009 for J. Aron and Silver Point)

Objections/Responses:
(a) Preliminary Objection of

a (A) to Debtors' Debtors' Alaska Assets Free and Clear Motion for an Order (I) Approving Sale of of All Liens, Claims, Encumbrances and Other Interests Pursuant to Sections the Banptcy Code, (II) Assuming and Assigning Certain 363(b), (f) and (m) of Executory Contracts and Unexpired Leases; and (III) Granting Related Relief; and (B) to Debtors' Proposed Cure Amounts Under Executory Contracts (Filed July
Union Oil Company of Cali fomi 15,2009; Docket

No. 605)

(b) Limited Objection to Cure Amount of Whale Building LLC to the Amended

Notice to Counterparies to Executory Contracts and Unexpired Leases that May Be Assumed and Assigned (Filed July 20,2009; Docket No. 629)
(c) Limited Objection of

Marathon Oil Company to Debtors' (A) Motion for an Debtors' Alaska Assets Free and Clear of All Liens, Claims, Encumbrances and Other Interests Pursuant to Sections 363(b), (f) and the Banptcy Code, (II) Assuming and Assigning Certain Executory (m) of Contracts and Unexpired Leases; and (III) Granting Related Relief and (B) Amended Notice to Counterparies to Executory Contracts and Unexpired Leases That May be Assumed and Assigned (Filed July 21, 2009; Docket No. 634)
Order (I) Approving Sale of

(d) Preliminar Objection of

Daniel K. Donkel to Debtors' Motion for an Order: (I) Debtors' Alaska Assets Free and Clear of All Liens, Claims, Approving Sale of the Encumbrances and Other Interests Pursuant to Sections 363(b), (f) and (m) of Bankptcy Code, (II) Assuming and Assigning Certain Executory Contracts and Unexpired Leases; and (III) Granting Related Relief (Filed July 21, 2009; Docket
No. 635)

(e) Objection of

Unsecured Creditors to Debtors' Motion Debtors' Alaska Assets Free and Clear of All for an Order: (I) Approving Sale of Liens, Claims, Encumbrances and Other Interests Pursuant to Sections 363(b), (f) the Banptcy Code, (II) Assuming and Assigning Certain Executory and (m) of Contracts and Unexpired Leases; and (III) Granting Related Relief (Filed July 21,
the Official Committee of

2009; Docket No. 636)

(f) Digital Data Joint Ventue's Response to Debtors' Amended Notice to Executory

Contracts and Unexpired Leases that May Be Assumed and Assigned (Filed July
21,2009; Docket No. 637)

(g) Cook Inlet Region, Inc.' s (I) Limited Objection to the Debtors' Motion for an Debtors' Alaska Assets (Non-Trading Bay), and Order Approving Sale of (II) Limited Objection to the Amended Notice to Counterparies Re Executory Contracts and Unexpired Leases (Filed July 21, 2009; Docket No. 638)
(h) Conditional Objection of

Medema Family Trust to Debtors' Motion for an Order Liens and Interests Debtors' Alaska Assets Free and Clear of Approving Sale of (Filed July 21, 2009; Docket No. 639)

(i) Objection of United States, on behalf of Deparment of Interior through the

Minerals Management Service and the Bureau of Land Management to Amended Notice to Counterparties to Executory Contracts and Unexpired Leases That May be Assumed and Assigned (Filed July 21,2009; Docket No. 640)

G) Joinder (to Cook Inlet Region, Inc.'s Limited Objection) and Limited Objection
of SalamatofNative Association, Inc. to the Debtors' Motion for an Order (I)

Debtors' Alaska Assets Free and Clear of All Liens, Claims, the Encumbrances and Other Interests Pursuant to Sections 363(b), (f) and (m) of Banptcy Code, (II) Assuming and Assigning Certain Executory Contracts and Unexpired Leases; and (III) Granting Related Relief, and Limited Objection to the Amended Notice to Counterparies to Executory Contracts and Unexpired Leases That May be Assumed and Assigned (Filed July 21, 2009; Docket No. 643)
Approving Sale of

(k) Objection of State of Alaska to Debtors' Sale Motion (Filed July 22,2009; Docket No. 651)

(1) CIRI's Supplemental Objection to the Debtors' Motion for an Order Approving

Debtors' Alaska Assets (Non-Trading Bay) and Assumption and Sale of Assignment of Executory Contracts and Leases (Filed July 31, 2009; Docket No. 699)

Replies to Objections
(a) Reply To Objections To Debtors' Motion For An Order: (I) Approving Sale Of

Debtors' Alaska Assets Free And Clear Of All Liens, Claims, Encumbrances And
Other Interests Pursuant To Sections 363(B), (F) And (M) Of

The Banptcy

Code; (II) Assuming And Assigning Certin Executory Contracts And Unexpired Leases; And (III) Granting Related Relief (Filed July 24, 2009; Docket No. 664)
(b) Response of 1. Aron & Company to Objections to Debtors' Motion For An Order:

(I) Approving Sale Of Debtors' Alaska Assets Free And Clear Of All Liens, Claims, Encumbrances And Other Interests Pursuant To Sections 363(B), (F) And

(M) Of The Banptcy Code; (II) Assuming And Assigning Certin Executory

Contracts And Unexpired Leases; And (III) Granting Related Relief (Filed July 24, 2009; Docket No. 669)
Status: This matter is going forward only as to the Debtors' Group 2 assets. The
Debtors will request a continuance of

this matter as to the Debtors' Group 1

assets to September 1,2009.

Dated: August 12, 2009

PACHULSKI STANG ZIEHL & JONES LLP

Isl James E. O'Neil Laura Davis Jones (DE Bar No. 2436) Ira D. Kharasch (CA Bar No. 109084) Scotta E. McFarland (DE Bar No. 4184, CA Bar No. 165391) Robert M. Saunders (CA Bar No. 226172)
James E. O'Neil (DE Bar No. 4042)

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: 310/652-4400
Email: liones)pszilaw.com

ikharasch(gpszilaw.com
smcfarland(gpszi law. rsaunders(szi law. com com

i oneil(gpszilaw.com

kmakowski(gpszilaw.com
Counsel for Debtor and Debtor in Possession Pacific Energy Resources Ltd.

68773-002\DOCS_DE: 15 1901.1

EXHIBIT B

50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
hearing. revised order under certification. I ask that the revision be

circulated to all of the objectors who appeared and spoke today before its submission to the Court. MR. LITVAK: Thank you, Your Honor. Your Honor, as I

had mentioned earlier at the start of the hearing, we also have on the agenda today an alternative motion to abandon these same interests that we've ask the Court to authorize us to sell, contingent on obtaining financing. We would like to go forward with that abandonment The abandonment order would only go into effect on The debtors have requested a continuance

September the 1st.

from various parties in interest, but given the parties' needs and requirements associated with that request, it doesn't look like we're going to be able to ask the Court to continue this hearing to September 1st. it, Your Honor. And so we'd like to go forward with

But I understand that you may have another

hearing coming up this afternoon. THE COURT: Well, I do, but it won't be that long. Why should I consider this

But I have the question myself. now, the abandonment now? MR. LITVAK:

Your Honor, from -- well, two reasons.

From the debtors' perspective, we're kind of forced into it for two separate reasons. One is with respect to our debtor-inThe lenders, as you know, we've

possession financing facility.

negotiated and are bound by certain milestones -- sale

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milestones. And those sale milestones have not been met. And

so periodically, we have negotiated amendments to the debtorin-possession credit financing agreement. our last extension today. We're at the end of

And we would be asking the lenders

for a further extension to continue funding. And the lenders have insisted, as part of that further extension that we go forward with the abandonment today, although they realize and agree that it would only be effective in the event that the Ocar sale -- that the financing contingency does not go away. debtors are pressed into this. Second, Your Honor, you may recall that Union filed a motion to compel assumption or rejection of various agreements with them. Those are the agreements that would be assumed as We had objected to that That's one reason why the

part of the sale if it's approved. motion. June.

Union wanted us to make that determination by late The Court gave us -- it was a contested hearing, and the

Court entered an order giving us until August the 4th to have a hearing on abandonment -- either on our motion to assume or a motion to reject. Technically, we've had the hearing. connection with this Ocar sale. probably satisfied as to Union. It's in

So that requirement is I'm not sure, maybe they would

argue that in the event that you're going forward with some level of abandonment, or trailing that motion, then that also

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has to be today. week to today. The August 4th hearing was continued last So it's August 12th. We're supposed to have a

hearing on one or the other.

I would submit that we had the

hearing on the sale and so we've satisfied the requirements of that order, but perhaps Union has a different view. are the two potential limitations, Your Honor. But from the debtors' perspective, aside from those limitations, we would be satisfied with continuing this matter to September the 1st. THE COURT: consideration. Well, I wonder whether it's ripe for I haven't signed the I've indicated that So those

I just approved a sale.

order yet, but I've approved the sale. I'll sign the order.

And if that's the case, it strikes me

just as a matter of jurisprudence, the abandonment motion is not ripe. But if there's someone who wishes to express a

contrary view, I'm willing to hear it. MR. EPLING: you for hearing me. contrarian view. Richard Epling again, Your Honor. I think I'm expressing a somewhat Thank

The lenders have their own views of this, but

I'll give you Union's perspective on it. We do need to understand, because as I mentioned a minute ago, current lifting has now started again at the field, we do need to understand whether there is a co-owner and whether that co-owner is Pacific, Pacific's assignee, or the State of Alaska, and who we're dealing with, who we owe

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that. MR. EPLING: I hear you, Your Honor. The problem is, royalties to. And we need to get this behind us. We need to

know whether these agreements are going to be assumed or rejected, and we made motion to that effect. I think it is fair to say that at least based on some very extensive discussions we've had with the debtors over the past -- I don't know -- probably ten days, probably longer than that, that all would agree that if this sale to Ocar can't be consummated, these assets must be promptly abandoned for a whole lot of different reasons. THE COURT: And I may be in complete agreement with

and here's the rub, there is a dispute over what should be abandoned, in other words, what the scope of the abandonment is. I wanted to point out to you, and I mentioned this when I

was up here one other time, the description of what's being sold to Ocar, is more inclusive than what's being abandoned to the netherworld. And the principal bone of contention, just to

get it out there on the table, is a production facility that has been operated by the operator of the field since, I guess, 1962 in various ways and shapes and forms. This production facility is where the pipe comes out of the water, the oil is processed there, and it will go on a barge, or it may go up to the tank farm -- or it used to go up to the tank farm at Mount Redoubt. I don't think that will

VERITEXT REPORTING COMPANY 212-267-6868 516-608-2400

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212-267-6868
happen at least for the immediate future. It has an airstrip And it has a

on it, it has roads and it has a barge landing. processing facility.

It's my client's belief -- and this is a matter of some factual complexity -- it's my client's belief that that has always been part of the unit, the Trading Bay unit, Trading Bay field, the unitized portion of the production facility. And I have six or seven reasons that are backed up by the facts why we believe that is so. In the context of the Ocar sale, the debtors are prepared to sell the fee interest in their name in that facility as well as all the facility pertinences to Ocar. In

the context of abandonment, they're holding onto the fee, or they're purporting to hold onto the fee. We don't think they

can do that as a matter of law or as a matter of fact. And as a result, what we think makes some sense here -- and I have proposed this to the debtors, but they were reluctant -- would be to set down the scope of the abandonment, what should be abandoned, what can be rejected, for the 1st of September, so that we can put evidence on, bring whatever witnesses we need from Alaska, and be prepared to put on a full showing before Your Honor, take discovery if we feel we need to in the next two and a half weeks, while I believe you're on vacation. THE COURT: Well --

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212-267-6868
it. THE COURT: And I just -- I'm hesitant, even if it happened. MR. EPLING: THE COURT: government program. MR. EPLING: Your Honor. And to put in written submissions so you'll see what's Because if you read the abandonment papers up to And file any memoranda. -- it's not all vacation. Some of it's

I wish it were all vacation, but it's not. Your vacations sound like my vacation,

this point and the objections, they're talking about one group of issues that I think is behind us. And now we've got a

different issue, which is, the debtor wants to abandon. Nobody's really objecting to their abandonment. is, what can they abandon? to go along with everything? The question What has

What must they abandon?

It's like a unitary contract

issue a la Bill Disco, a la Sharon Steel. THE COURT: Well, but see, what you've said just

reinforces my view, which is I don't think I should hear this today. Because you're talking about disputes which may never

have to be decided. Now, I know that at least according to what I've heard today, there's no certainty that the buyer will be able to get financing, but if there's a sale, don't all these issues go away? MR. EPLING: They do, Your Honor. No question about

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Judge. were ripe for a decision, to undertake -- when we have less than three weeks to the September 1st date -- to undertake an exercise in which there are apparently real and perhaps complex disputes, when it may never be necessary. MR. EPLING: I don't think I'm disagreeing with you,

What I'm saying is, I'd like to be sure that on

September 1st we have the abandonment hearing and that the parties get a chance to produce -- put on evidence and do what they need to do in order to explain the issue of the scope of abandonment to you. THE COURT: Well, it seems to me, at least based on

what you're telling me, I would need to have that in order to make an informed decision. schedule that in a minute. And we can talk about how we I don't know what time you have But let me hear from anyone else

then, but we'll look at that. who wishes to be heard. MR. WILAMOWSKY:

Your Honor, again, for the record, I think that Mr.

Steven Wilamowsky on behalf of J. Aron.

Epling's description really underscores some of the concerns that we have, and is why we were hopeful to be able to go forward today. And the reason is, I mean, what we're hearing

is that there's going to be, at least in Mr. Epling's view of the world, a whole lot of litigation potentially, and discovery, to the expense of the estate, that is not necessarily funded, that will all be to the goal of trying to

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figure out exactly what it is that's being abandoned, so that -- what does the estate get out of it, if it can abandon a more limited group of assets -- potentially, to preserve or protect the value of Group 1 assets where an auction has already determined that we're in a lot of trouble when it comes to trying to get any value out of those Group 1 assets. So we are very concerned about a process, and maybe we need to talk to the debtors about this, but we are very concerned about a process where everybody's ginning up litigation where it's not clear that the estate stands to benefit from the litigation. I think that what may be more

appropriate is for -- and this is why we think that, in fact, it would be okay to go forward today -- is there may be -there are arguments as a matter of law here. If the debtors can prevail, as a matter of law, or if we could work something out with Union, well then, that's great. But the notion that we should be having a lengthy or --

not lengthy, but an accelerated, even, discovery process, and be spending a lot of estate money on preserving an asset that it's not clear has any value whatsoever, is very troubling to us. THE COURT: Well, but isn't that what the Court has to I'm not saying I

determine in looking at an abandonment motion?

that it has to be an extensive hearing or that it doesn't. mean, we haven't addressed the issue yet.

But, I mean, isn't

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Okay. that basically the standard of no value or burdensome to the estate? And if there's a contest to the abandonment, I suppose

I have to hear some evidence on that. MR. WILAMOWSKY: Well, that's certainly an option. I

mean, the other option obviously would be -- and again, this is subject to further discussions with the debtors, I believe, is the Court can decide that akin to a summary judgment, either as a matter of law you can abandon or there would still be more evidence required before I could say that as a matter of law you can abandon; in which case the debtor would be able to step back and say well maybe if that's the choice, maybe I want to abandon everything and moot any evidentiary issues. So I mean, it's not clear that we would -- I'm just -and maybe, again, maybe this is something that we have to be in close discussion with the debtors about, but we're very reluctant to sign on to a process that involves expensive litigation, where it's not clear what the benefit is going to be. THE COURT: I understand that concern and give credit

to the fact that it's a real one. MR. WILAMOWSKY: THE COURT: Thank you, Your Honor. Anyone else care to be heard?

All right.

Well, for the reasons I've expressed, I'm going to put And there's an hour

this motion over to the next hearing date.

set aside -- the 2 o'clock hearing should not involve very

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table? THE COURT: MR. EPLING: You may. Thank you. Again, just to try and make much, and that will either fall through or we can push that around a little bit. The 3 o'clock hearing I'm less sanguine But my inclination is to keep it on

about in terms of time.

for September 1st at 1 o'clock, and just try to fit things in the best we can for the abandonment motion, assuming it's necessary at that point. MR. LITVAK: That's fine, Your Honor. I just wanted We only dealt

to clarify one point for purposes of the agenda. with a portion of the sale motion. covered both Group 1 and Group 2. an order just as to Group 2.

As I mentioned before, it And so we'll be submitting

The portion relating to Group 1,

we would like continued on to September 1st as well. THE COURT: That's fine. Is there anything pending

with respect to Group 1 at the moment? MR. LITVAK: THE COURT: MR. LITVAK: Unfortunately no, Your Honor. All right. We do have an abandonment motion on Group

1 that's also set for September 1st. THE COURT: MR. EPLING: All right. Mr. Epling?

Your Honor, may I stay at the counsel

sure we have an orderly process here, I want to just make sure people understand that we will be -- we, Union, will be

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fine. THE COURT: All right. And how much time would the the 21st? MR. EPLING: Okay. All right. You got me. That's Monday? THE COURT: Well, how about by the preceding Friday, Saturday. MR. EPLING: Oh, okay. How about the following intending to put on evidence at that hearing and at any continued hearing. It is very important to us that if we not

get past September 1 without a resolution -- I mean, I'm sympathetic to the lenders' issues on that as well -- I also would suggest maybe to have some orderly process that there be a time for us to supplement our response to the debtors' abandonment motion now that we've seen what he actually proposes to abandon, and have the debtor have an opportunity to make replies so that you can have some written submissions on the actual issues that are now before you. THE COURT: Well, how much time would you like to

supplement your response? MR. EPLING: THE COURT: I think ten days ought to do it. Well, that would be the 22nd, which is a

debtor or anyone else like for replies? MR. LITVAK: Your Honor, I think, if we have a week

until the following Friday the 28th?

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Honor. require. THE COURT: Yes. That doesn't give me enough time,

and I'll tell you why.

Because if we're to go forward on the

1st, I would like -- I'll tell you what, ideally a week before the hearing, but let's say replies would be due by 4 o'clock Eastern Time on the 26th. At the same time, I would like the

parties by then to have exchanged information on who their witnesses are going to be and a two or three or four-sentence description about the subject of their expected testimony; an estimate of time that each witness will take on direct; I would like the parties to exchange exhibits; and to the extent they can, reach agreement on admissibility. And I think under the circumstances, that's all I'll Any questions or comments? MR. EPLING: I assume, Your Honor -- thank you, Your I assume we'll

I think that works just fine for us.

just treat this as a contested matter under 9014 and that the normal rules there will apply? THE COURT: MR. EPLING: MR. LITVAK: THE COURT: MR. LITVAK: THE COURT: this hearing. I think that's what it is. Yes, okay. That's just fine. Thank you.

That's fine, Your Honor. All right.

Anything further for today?

No, Your Honor. Thank you all very much. That concludes

Court will stand in recess.

(Proceedings concluded at 3:02 p.m.)

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CERTIFICATE OF SERVICE I, Carmella P. Keener, hereby certify that on this 21st day of August, 2009, I caused the foregoing of Objection of Union Oil Company of California to Motion of Marathon Oil Company to Quash Deposition and for Protective Order to be served on all parties registered with the CM/ECF System for the United States Bankruptcy Court for the District of Delaware in this case and in the manner indicated to the individuals listed below. Via Hand Delivery James E. ONeill, Esquire Pachulski Stang Ziehl & Jones LLP 919 Market Street, 17th Floor Wilmington, DE 19801 Via E-Mail IKharasch@pszjlaw.com Ira D. Kharasch, Esquire Pachulski Stang Ziehl & Jones LLP Los Angeles, CA 90067-4100 Via E-Mail Kellan.Grant@skadden.com T. Kellan Grant, Esquire Skadden, Arps, Slate, Meagher & Flom LLP Chicago, IL 60606-1285 Via E-Mail MLitvak@pszjlaw.com Maxim B. Litvak, Esquire Pachulski Stang Ziehl & Jones LLP San Francisco, CA 94111 Via E-Mail Jeffrey.Sabin@bingham.com Scott.Seamon@bingham.com Jeffrey Sabin, Esquire Scott K. Seamon, Esquire Bingham McCutchen New York, New York 10022 Via Hand Delivery Francis A. Monaco, Jr., Esquire Kevin J. Mangan, Esquire Ericka F. Johnson, Esquire Womble Carlyle Sandridge & Rice, PLLC 222 Delaware Avenue, Suite 1501 Wilmington, DE 19801 Via E-Mail morton@wcsr.com Richard E. Morton, Esquire Womble Carlyle Sandridge & Rice, PLLC Charlotte, NC 28202

/s/ Carmella P. Keener Carmella P. Keener (Bar No. 2810)