UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re: PACIFIC ENERGY RESOURCES LTD., et al. Debtors. _______________________________________

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

Related Docket No. 1845

LIMITED OBJECTION OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS TO FIRST AMENDED CHAPTER 11 PLAN OF LIQUIDATION FOR PACIFIC ENERGY RESOURCES LTD., ET AL. [DOCKET NO. 1845] The Official Committee of Unsecured Creditors (the Committee) of the abovecaptioned debtors and debtors-in-possession (the Debtors), hereby files this limited objection1 to the First Amended Chapter 11 Plan of Liquidation for Pacific Energy Resources Ltd., et al. [Docket No. 1845] (the Plan). More specifically, as explained at the hearing on the approval of the Debtors Disclosure Statement, the Committee objects to the Debtors insertion of language in the Plan that would permit the Debtors to control the composition of the PostEffective Date Supervisory Board, which will effectively perform the same role as the Committee does currently. LIMITED OBJECTION The Plan provides for the liquidation of the Debtors and the distribution of their remaining assets to the creditors of the Debtors estates. The Debtors have already sold

substantially all of their real and personal property. The Debtors have almost completed their

The Committee hopes to resolve the issue set forth herein before the confirmation hearing and continues to work with the Debtors to do so, but are filing this limited objection in order to ensure that the Committees rights with respect to this issue are fully preserved.

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review of the Claims2 filed in these bankruptcy cases and filed any appropriate objections thereto. The only remaining assets to be liquidated in these cases are certain Retained Causes of Action. The proceeds of those Retained Causes of Action are to be distributed to the General Unsecured Creditors of each estate. See Plan I.B.29, 1.B.52, 1.B. 69, IV.B.4-6. Upon the Effective Date, although the Liquidating Debtors will continue to exist for legal purposes, the Liquidating Debtors sole purpose from and after the Effective Date will be to make distributions to Creditors consistent with the Plan and to otherwise effectuate the WindDown. Plan at VI.A. Thus, although the Debtors will technically continue to exist, the reality is that they will be mere corporate shells whose sole purpose will be to effectuate the distribution of the estates assets to creditors through the Plan Representative in accordance with the Plan. Pursuant to the Plan, subject to the oversight of the Supervisory Board, each of the Liquidating Debtors shall be managed and administered through the Plan Representative, who shall be appointed as sole officer of each of the Liquidating Debtors, and shall have full authority to execute the provisions of the Plan. Plan at VI.E. The Debtors have chosen the Plan Representative; Gerald A. Tywoniuk, to whom the Committee does not object. Id. As noted in the Plan, the Plan Representative is subject to the oversight of the Supervisory Board and the Supervisory Board shall have supervisory authority over the Plan Representative. Id.

Allowing the Debtors to select not only the Plan Representative but also the Supervisory Board that will oversee the Plan Representative would mean that the Debtors are choosing both the primary actor for the benefit of creditors, as well as those who are supposed to monitor and question that actor.

Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Plan.

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Nevertheless, this is exactly what the Debtors seek.

Pursuant to the Plan, the

Supervisory Board shall consist of no more than three (3) Persons and no less than one (1) Person selected by the Committee with the consent of the Debtors, which consent shall not be unreasonably withheld. Id. (emphasis added). By including a requirement that the Debtors consent to each member, the Debtors are effectively granting themselves a veto power over the membership of the Supervisory Board. This should not be permitted and the bolded language should be struck from the Plan. As discussed above, as a practical matter, the Liquidating Debtors will operate primarily for the benefit of the General Unsecured Creditors and will be wound-down through the Plan. They will not operate for the benefit of the Debtors. Throughout these cases, the Committee has been the representative of unsecured creditors. The Supervisory Board will perform that same role post-confirmation. Thus, it is reasonable for the Committee to choose the initial Supervisory Board. To allow the Debtors control over the membership of the Supervisory Board would be tantamount to allowing a debtor to choose the members of its own creditors committee. This is illogical and inequitable, as it allows the Debtors to proceed unfettered and without any input from the very people to whom they now owe duties. The Debtors have failed to set forth any reasonable basis or explanation for why they should control selection of the Supervisory Board. The only explanation provided by the

Debtors is that they believe certain creditors may have conflicts in serving on the Supervisory Board. The Committee has considered the Debtors position with respect to the composition of the Supervisory Board, but finds it unpersuasive as a reason why the Debtors should be allowed a veto power over its composition. If conflicts arise within the Supervisory Board, the conflicted member can be recused from any relevant decisions, as has occurred throughout these cases, as

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necessary, with respect to Committee decisions. The Debtors have provided no explanation why such a recusal process will not work on a post-effective date basis. It is quite clear that the purpose of the Supervisory Board is to protect the interests of the General Unsecured Creditors. As such, it should be the Committee that has the authority to select the composition of the Supervisory Board. CONCLUSION For the reasons set forth above, the Committee respectfully requests that this Court enter an order striking the language from section VI.E. of the Plan set forth below in bold: Supervisory Board shall consist of no more than three (3) Persons and no less than one (1) Person selected by the Committee with the consent of the Debtors, which consent shall not be unreasonably withheld. The Committee further requests that this Court enter an Order granting such other relief as this Court deems just, equitable and appropriate. Dated: October 1, 2010 Wilmington, DE PEPPER HAMILTON LLP /s/ James C. Carignan David B. Stratton, Esq. (DE No. 960) James C. Carignan, Esq. (DE No. 4230) Hercules Plaza, Suite 5100 1313 N. Market Street P.O. Box 1709 Wilmington, Delaware 19899-1709 Tel: (302) 777-6500 Fax: (302) 421-8390 and Francis J. Lawall, Esq. 3000 Two Logan Square Eighteenth & Arch Streets Philadelphia, PA 19103-2799 Tel: (215) 981-4000 Fax: (215) 981-4750 and

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Filiberto Agusti, Esq. (DC Bar No. 270058) (admitted pro hac vice) Joshua R. Taylor, Esq. (VA Bar No. 45919) (admitted pro hac vice) STEPTOE & JOHNSON LLP 1330 Connecticut Avenue NW Washington, DC 20036 Tel: (202) 429-3000 Fax: (202) 506-3902 and Robbin L. Itkin, Esq. (CA Bar No. 117105) (admitted pro hac vice) Katherine C. Piper, Esq. (CA Bar No. 222828) (admitted pro hac vice) STEPTOE & JOHNSON LLP 2121 Avenue of the Stars, Suite 2800 Los Angeles CA 90067 Tel: (310) 734-3200 Fax: (310) 734-3300 Counsel for the Official Committee of Unsecured Creditors of Pacific Energy Resources Ltd., et al.

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CERTIFICATE OF SERVICE I, James C. Carignan, hereby certify that, on October 1, 2010, I caused to be served the Limited Objection Of The Official Committee Of Unsecured Creditors To First Amended Chapter 11 Plan Of Liquidation For Pacific Energy Resources Ltd., et al., upon the following entities in the manner indicated. VIA HAND DELIVERY James E. ONeill, Esq. Pachulski Stang Ziehl & Jones LLP 919 N. Market Street, 17th Floor Wilmington, DE 19899-8705 Jane Leamy, Esq. Office of the United States Trustee J. Caleb Boggs Federal building 844 N. King Street, Suite 2207 Lockbox 35 Wilmington, DE 19801 VIA FACSIMILE AND FIRST CLASS MAIL Ira D. Kharasch, Esq. Pachulski Stang Ziehl & Jones LLP 10100 Santa Monica Blvd., 11th Floor Los Angeles, CA 90067-4100 Fax: 310-201-0760 Jeffrey Sabin, Esq. Bingham McCutchen 399 Park Ave. New York, NY 10022 Fax: 212-752-5378 Amy Kyle, Esq. Bingham McCutchen One Federal Street Boston, MA 01221-1726 Fax: 617-345-5001

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Seth Jacobson, Esq. Skadden, Arps, Slate, Meagher & Flom, LLP 333 West Wacker Drive Chicago, IL 60606-1285 Fax: 312-407-8511 Dated: October 1, 2010 Wilmington, DE /s/ James C. Carignan James C. Carignan (No. 4230)

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