IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re:

) Chapter 11

PACIFIC ENERGY RESOURCES LTD., et al., ) Case No. 09-10785-KJC

)

Debtor.

) Re: Docket Nos. 1845, 1850, 1899, 1902,

)

1910 and 1913

Hearing Date: October 12, 2010 at 1:00 pm ET

JOINT PRETRIAL MEMORANDUM The above-captioned debtors and debtors in possession (the "Debtors") and the following objecting parties to the Debtors First Amended Chapter 11 Plan of Liquidation for

Pacific Energy Resources Ltd., Et Al, dated August 27, 2010 (Docket No. 1845) (the "Plan"): 2
(a) Baker Hughes Incorporated, for itself and certain of its operating divisions or subsidiaries ("Baker Hughes"); (b) Forest Oil Corporation ("Forest"); (c) Union Oil Company of California ("Union"); and (d) the Official Committee of Unsecured Creditors (the "Committee") (collectively, the "Objectors"), hereby submit this Joint Pretrial Memorandum (the "Memorandum") as required by this Courts Order (I) Approving the Disclosure Statement; (II)

Scheduling Confirmation Hearing; (III) Approving Form And Manner of Notice of Confirmation Hearing, (IV) Establishing Procedures for Solicitation and Tabulation of Votes to Accept or Reject The Joint Plan, including (A) Approving Form and Contents of Solicitation Package; (B)

The Debtors in these cases, along with the last four digits of each of 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); Cameros Energy, Inc. (9487); and Gotland Oil, Inc. (5463). The mailing address for all of the Debtors is 111 W. Ocean Boulevard, Suite 1240, Long Beach, CA 90802.
2

Capitalized terms not defined herein shall have the meanings set forth in the Plan.

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Establishing Record Date And Approving Procedures for Distribution of Solicitation Packages; (C) Approving Forms of Ballots; (D) Establishing Voting Deadline for Receipt of Ballots and (E) Approving Procedures for Vote Tabulations; (J) Establishing Deadline and Procedures For Filing Objections to Confirmation of The Plan, and (VI) Granting Related Relief, entered August 27, 2010 (Docket No. 1850) (the "Disclosure Statement Order"), which provides in pertinent part that "[t]he Debtors shall also coordinate with objecting parties to the Plan, and endeavor to submit to the Court a joint pretrial memorandum by October 5, 2010 outlining the respective positions of the Debtors and the various objection parties for the purposes of the Confirmation Hearing." Disclosure Statement Order at 25 (emphasis in original). I. OBJECTIONS TO CONFIRMATION 1. The Debtors have received the following objections (together, the

"Objections") to confirmation of the Plan: a. Baker Hughes Incorporateds Objection to the First Amended

Chapter 11 Plan of Liquidation for Pacific Energy Ltd., Et. Al., filed September 27, 2010 (Docket No. 1899) (the "Baker Hughes Objection"); b. Objection of Forest Oil Corporation to Debtors First Amended

Plan of Liquidation, filed September 29, 2010 (Docket No. 1910) (the "Forest Oil Objection");
C.

Objection of Union Oil Company of California to First Amended

Chapter 11 Plan of Liquidation for Pacific Energy Resources Ltd., Et Al., filed September 28, 2010 (Docket No. 1902) (the "Union Objection"); and

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d.

Limited Objection of the Official Committee of Unsecured

Creditors to First Amended Chapter 11 Plan of Liquidation for Pacific Energy Ltd., Et Al., filed October 1, 2010 (Docket No. 1913) (the "Committee Limited Objection"). II. RESOLUTION OF OBJECTIONS OR DEBTORS RESPONSES 2. The Debtors and each of the Objectors have met and conferred prior to

submitting this Memorandum. Attached hereto as Exhibit A is a chart (the "Confirmation Chart") summarizing the Debtors position as to each of the Objections and any proposed resolution. 3. Additionally, the Debtors intend to submit their Memorandum in Support

of Confirmation of the First Amended Chapter 11 Plan of Liquidation for Pacific Energy Resources Ltd., et al., as Modified, which sets forth the Debtors responses to the Objections in greater detail. The Debtors also intend to file: (a) a declaration of Gerald A. Tywoniuk in support of confirmation of the Plan, (b) a declaration of Katie Nownes of Omni Management Group, LLC, the voting agent, tabulating the ballots received in connection with the Plan; and (c) a blackline version of the Plan reflecting modifications that the Debtors propose to make to address various objections. III. WITNESSES 4. a. For the Debtors: Gerry A. Tywoniuk, Chief Financial Officer and Acting Chief Executive

Officer of the Debtors (direct testimony will be by declaration; this witness will be present in

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Court for the hearing); and b. Katie Nownes, representative of Omni Management Group, LLC,

the voting agent (direct testimony will be by declaration; this witness will be appearing telephonically at the hearing).

5.

For the Objectors: a. b. Baker Hughes: Susan Wooley, by declaration only. Forest: None, but Forest reserves the right to call rebuttal

witnesses, as necessary.
C.

Union: Union has submitted the Rule 30(b)(6) deposition for

Gerald Tywoniuk and certain documentary exhibits in connection with its Objection. Union reserves the right to use those evidentiary submissions for any purpose at the hearing. Union also reserves the right to cross-examine any witness and to call any rebuttal witness at the hearing. In addition, Union may call one or more witnesses on the subject of the priority of its liens and security interests in the "Excluded Interests" over those of the "Senior Lenders". Finally, Union reserves all rights to respond to any other objections, submissions or other pleadings that may be filed by the "Senior Lenders", the State of Alaska or any other party in interest with respect to confirmation of the Plan, the priority of liens, the proposed settlement between the Debtors and the State of Alaska or the Debtors motion to pay net proceeds of the "Excluded Interests" to certain of the Debtors postpetition lenders. d. Committee: None.

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Iv. STATEMENT OF FACTS IN DISPUTE 6. The Debtors anticipate that the key issues in dispute for purposes of the

Confirmation Hearing will be legal in nature. Except as provided in Part III above as it may impact any lien priority disputes to be tried in the course of the confirmation hearing, the Debtors are not aware of any outstanding factual disputes at this time. V. LIST OF EXHIBITS 7. Aside from various pleadings filed of record in the Debtors cases that

may be made a part of the record at the Confirmation Hearing, the Debtors and Forest intend to offer into evidence that certain Senior Subordinated Accreting Note dated August 27, 2007. This document is attached as Exhibit A to Forests objection to the Plan. Union may offer all or portions of the Tywoniuk deposition, and any documentary evidence submitted in support of its Plan Objection at the hearing and also may offer one or more witnesses on the subject of Unions entitlement to the proceeds of the "Excluded Interests" as defined in the Plan or with respect to any other motion brought on to be heard at or as part of the confirmation hearing. V. LENGTH OF HEARING The Debtors estimate that the Confirmation Hearing should take no more than three hours, but there are other matters on the agenda (including certain proposed settlements)which could require additional time.

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Dated: October 5, 2010

PACHULSKI STANG ZIEHL & JONES LLP /s/ Kathleen P. Makowski Ira D. Kharasch (CA Bar No. 109084) James E. ONeill (DE Bar No. 4042) Maxim B. Litvak (CA Bar No. 215852) Scotta E. McFarland (CA Bar No. 165391) 10100 Santa Monica Blvd., 11th Floor Los Angeles, California 90067-4100 Telephone: 310/277-6910 Facsimile: 310/201-0760 E-mail: ikharasch@pszjlaw.com joneill@pszjlaw.com mlitvak@pszjlaw.com smcfarland@pszjlaw.com kmakowski@pszjlaw.com Counsel for Debtors and Debtors in Possession

Dated: October 5, 2010

McCARTER & ENGLISH, LLP /s/ Katharine L. Mayer Katharine L. Mayer (DE Bar LD. 3758) Renaissance Centre 405 N. King Street, 8th Floor Wilmington, DE 1980 I (302) 984-6300 (302) 984-2494 Direct Facsimile -andSNOW FOGEL SPENCE LLP Ross Spence (Texas Bar No. 18918400) 2929 Allen Parkway, Suite 4100 Houston, TX 77019 Telephone: (713) 335-4800 Telecopier: (713) 335-4848 Email: rossspencesnowfogel.com Counsel for Baker Hughes Incorporated

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Dated: October 5, 2010

PEPPER HAMILTON LLP

/s/ David B. Stratton 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 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
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Dated: October

, 2010

MORRIS NICHOLS ARSHT & TIJNNELL /s/ Robert I Dehney Robert J. Dehney (No. 3578) Curtis S. Miller (No. 4583) 1201 North Market Street, 18th Floor Wilmington, Delaware 19899-1347 Tel: 302.658.9200 Fax: 302.658.3989 Email: rdebney@nmat.com cmiller@mnat.com VINSON & ELKINS LLP Steven M. Abramowitz, NYB# 2431724 Lance A. Muihern, NYB# 4722393 666 Fifth A venue, 26th Floor New York, NY 10103-0040 Tel: 212.237.0000 Fax: 212.237.0100 Email: sabramowitz@velaw.com lmulhern@velaw.com Counsel to Forest Oil Corporation

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Dated: October

12010

ROSENTHAL. MONHAIT & GODDESS, P.A. /s/ Norman M Monhait Norman M. Monhait (ID No. 1040) 9 19 North Market Street, Suite 140 I P.O. Box 1070 Wilmington, DE 19899- 1070 Telephone: (302) 656-4433 Facsimile: (302) 658-7567 nmonhaitnngg1aw.com and Richard L. Epling David A. Crichiow PILL SBURY 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, a California Corporation

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EXHIBIT A

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EXHIBIT A TO JOINT PRETRIAL MEMORANDUM [SUMMARY OF DEBTORSPOSITION ONLYJ

Objecting Party Baker Hughes Incorporated Docket Nos. 1899 Basis of Objection The Plan Authorizes Preference Claims Against Previously Secured Vendors, Critical Vendors and/or Parties to Assumed Contracts. The Plan fails to classify Baker Hughes with like creditors. Among other things, Baker Hughes argues that it should be classified in the Plan as a secured creditor in the event the Debtors or their assignees elect to file a preference action against Baker Hughes and provide for an escrow to pay in full such creditors in the event they prevail. The Plan was not filed in good faith and in accordance with applicable law as the necessary result will be that post-confirmation Baker Hughes will be a secured creditor but the Plan will not allow recovery for that lien in violation of the absolute priority rule. Debtors Status Update/Response to Objection 1. Debtors Response: First, Baker Hughes has no standing to object to the Plan as it is not a creditor. Second, the Plan merely preserves the estates avoidance claims. To the extent that Baker Hughes has any defenses to an avoidance claim, all such defenses are preserved and may be raised in the context of an adversary proceeding. These issues are not relevant to the Confirmation Hearing.

2. The Plan Gives Impermissible Non-Debtor Releases. Baker Hughes is unaware of any consideration given by the non-debtor releasees. 2 Official Committee of Unsecured Creditors 1913 Debtor Should Not Have Veto Over Supervisory Board Membership.

2. Debtors Response: Baker Hughes has no standing to object to the Plan. As addressed below, the Debtors intend to amend the Plan to limit exculpatory provisions to preEffective Date acts, consistent with applicable law. Debtors Response: Before the Confirmation Hearing, the Committee should identify the proposed members of the Supervisory Board, and the Debtors will either consent or not. To the extent of any disagreement, the Court can address the issue. Either way, the language of the Plan on this point will be moot by the time of the Confirmation Hearing. Notably, the Debtors will not consent to the inclusion of Forest as a member of the Supervisory Board because potentially substantial claims against Forest need to be evaluated after the Effective Date free of any influence or appearance of influence of Forest.

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Forest 011 Corporation

1910

1. The Plan Improperly Subordinates Forests Claims Under the Forest Subordinated Note by Purporting to Assign the Senior Lenders Subordination Rights to General Unsecured Creditors,

1. Debtors Response: As contemplated in this Courts Final DIP Order and as directed in its Beta Sale Order, both of which are now res judicata, the Senior Lenders assigned their distributions as well as their subordination rights to the estates solely for the benefit of general unsecured creditors (other than Forest). The Plan merely implements the Courts prior orders. Forest does not challenge the right of the Senior Lenders to contribute their distributions on account of the Forest Subordinated Claim to general unsecured creditors (other than Forest). Such assignment is merely a transfer of funds that would otherwise go to the Senior Lenders based upon the enforcement of the provisions of the Forest Subordinated Note, and is permitted under applicable law. Alternatively, the Senior Lenders assignment of subordination rights is valid and enforceable. Nothing in the Forest Subordinated Note or applicable law prohibits assignment of subordination rights by the Senior Lenders, and such rights are freely assignable under applicable law. Moreover, the assignment of the Senior Lenders rights does not prejudice Forest and is consistent with the terms of the Forest Subordinated Note because Forest is only subordinated given that the claims of the Senior Lenders have not been paid in full.

2. Ability to Sell or Transfer Avoidance Actions is Impermissible. Avoidance actions must be exercised for the benefit of all creditors.

2. Debtors Response: The Plan will be amended to add a limitation to Article VI.D of the Plan to provide that the Liquidating Debtors may settle, release, sell, assign, otherwise transfer or compromise Retained Rights of Action and/or objections to Claims without need for notice or order of this Court, "subject to any limitations under applicable bankruptcy and non-bankruptcy law" and provided that any sale, assignment or transfer of Retained Rights of Actions shall be subject to approval of the Bankruptcy Court on notice to parties in interest.

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3. Debtor Should Not Have Veto Power Over Supervisor Board Membership. Members of the Supervisory Board should be creditors who are not an affiliate or insider of the Debtor and the Plan Representative should not be a member.

3. Debtors Response: Under the Plan at Article VI.E, the Committee selects the members of the Supervisory Board, subject to the Debtors consent, which consent shall not be unreasonably withheld. The Debtors do not intend to amend this provision of the Plan, but believe that it will be a moot point as the issue of membership of the Supervisory Board will be determined at or prior to the Confirmation Hearing. The Debtors oppose Forests involvement on the Supervisory Board given potentially substantial claims that will need to be analyzed and, if appropriate, pursued against Forest after the Effective Date of the Plan free of any influence or appearance of influence of Forest. 4. Debtors Response: a. Third Party Release. The Debtors will amend the Plan at Article X.A.2 to clarify that nothing in the Plan is intended to limit Forests (or any other partys) right to bring cross claims or third party claims against non-Debtors.

4. Certain Plan Provisions are Ambiguous a. Third Party Release. Plan Article X.A.2 might be interpreted to provide an impermissible third-party release. Forest may be prevented from bringing cross claims and third party claims in the event of an action against Forest. b. Setoff. Subrogation and Recoupment. Plan Article X.A.2 could also be interpreted to prevent Forest from asserting a right of setoff, subrogation and/or recoupment in the event that a claim is asserted against Forest. c. Exculpation. Plan Article X.B might be interpreted to exculpate the Plan Representative for post-Effective Date acts.

b. Setoff, Subrogation and Recoupment. The Debtors will amend the Plan at Article X.A.2 to clarify that nothing in the Plan is intended to limit Forests (or any other partys) right to assert setoff, subrogation or recoupment rights.
.

Union Oil Company of California

1902

1. The Plan is Not Feasible Because Administrative Claims, Including Unions, Will Not be Paid in Full on the Effective Date.

c. Exculpation. The Debtors will amend the Plan at Article X.B to clarify that exculpation is limited to the time period up to and including the Effective Date. 1. Debtors Response: Union asserts substantial administrative expense claims against PEAO. The Debtors objection to such claims is under submission with the Court. The Plan cannot go effective as to PEAO until the Court decides the issue.

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2. The Plan Does Not Appear to Classify Unions Claims. Union holds a secured claim, which should be in Class 2 (Miscellaneous Secured Claims), but Union did not receive a proper Class 2 Ballot. With the inclusion of Union in Plan Class 2, Union contends that such class is deemed to reject the Plan, and the Debtors will be required to confirm the plan as to this class under Section 1129(b) of the Bankruptcy Code. 3. The Plan Seeks to Transfer Unions Collateral to Other Creditors. The "Excluded Interest" (Lift Proceeds, Tax Proceeds and Insurance Proceeds) are Unions collateral (in which it has a superior lien by statute, recorded agreements and fixture filings),

2. Debtors Response: Aside from any general unsecured claims that may be allowed in favor of Union, the Debtors will amend the Plan at Article IV.B.2 to clarify that Union shall have a claim in Class 2 (Miscellaneous Secured Claims) if Union is determined to have a valid and enforceable Lien against any property of the Estates.

3. Debtors Response: Although this is principally an intercreditor issue between Union and the Senior Lenders, the Debtors will amend the Plan at Article IV.B.3.b to clarify that "nothing in this Plan shall prejudice (a) any rights of Union to assert Liens against the Lift Proceeds, or (b) any objections that the Holders of Senior Lender Claims may have to Unions asserted Liens against the Lift Proceeds." The issue of whether Union has valid Liens against the Lift Proceeds is currently under submission with the Court. The Plan provides that the Senior Lenders have valid, prior Liens against the Excluded Interests other than the Lift Proceeds, which provision of the Plan is the subject of one of Unions pending plan objections as Union believes such provision improperly attempts to decide lien priorities between Union and the holders of Senior Lender Claims. The Debtors will generally defer to the Senior Lenders on this point. 4. Debtors Response: The Debtors will amend the Plan to state that the Holders of Allowed Claims in Classes 2, 3, 4, 5 and 6 shall receive treatment specified in the Plan, as the sole distribution or dividend from each applicable Debtor or its Estate under the Plan, deleting that such treatment is in full satisfaction, settlement, release, and extinguishment of Allowed Claims. Also, the Debtors will amend the Plan at Article X.A.2 to clarify that the permanent injunction under the Plan is limited to property of the Liquidating Debtors or the Estates.

4. The Plan Improperly Seeks to Discharge Liquidating Debtors.

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