Inre:: in The United States Banruptcy Court

IN THE UNITED STATES BANRUPTCY COURT
FOR THE DISTRICT OF DELAWAR
Inre:
PACIFIC ENERGY RESOURCES LTD., et al., i
Debtors.
Chapter 11
) )
) ) )
(KJC) (Jointly Administered)

Case No. 09~ I 0785
Deadline for Objections: April 24, 2009 at 4:00 p.m. prevailng Eastern time Hearing Date: May I, 2009 at 1:00 p.m. prevailng Eastern time
APPLICATION OF DEBTORS FOR AN ORDER AUTHORIZING RETENTION OF MILLSTREAM ENERGY, LLC AS CONSULTANT AND ASSUMPTION OF PREPETITION CONSULTING AGREEMENT AS AMNDED POST-PETITION
The above captioned debtors and debtors in possession (the "Debtors") hereby
apply (the "Application") for an Order under 327(a) and 328(a) of title 11 of
the United States
Code (the "Banptcy Code") and Rules 2014, 2016, and 5002 of
the Federal Rules of

Milstream Energy,
Bankrptcy Procedure (the "Banptcy Rules"), authorizing the retention of
LLC2 ("Milstream") to render non-exclusive technical and financial consulting services as set
fort in the Consulting Agreement dated December 19, 2008 (the "Original Consulting
Agreement"), as amended by agreement dated April 8,2009 (as amended, the "Consulting
Agreement") between Pacific Energy Resourced Ltd. ("PERL"), Pacific Energy Alaska
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); Petroca! Acquisition Corp. (6249); Pacific Energy Alaska
Holdings, LLC (tax L.D. # not available); Cameros Acquisition Corp. (5866); Pacific Energy Alaska Operating LLC (7021); San Pedro Bay Pipeline Company (1234); Cameros Energy, (nc. (9487); and Gotland Oil, Inc. (5463). The mailing address for all of the Debtors is i I i W. Ocean Boulevard, Suite 1240, Long Beach, CA 90802. l Milstream Energy, LLC is a Texas limited liability company wholly owned by Mark A. Clemans ("Clemans").
Mark Clemans is the sold engineer with Milstream and wil be perfonning all of
the work pursuant to the
Consulting Agreement.
68773-002\DOCS _LA: 198886.1
Operating LLC C'PEAO") and Milstream (copies of
the Original Consulting Agreement and the
Consulting Agreement are appended as hereto as Exhbits A and B. respectively) effective as of

the Petition Date (as defined below) on the terms and conditions described herein
and more fully
set forth in the Consulting Agreement. and authorizing PERL and PEAO, pursuant to section 365
of the Banptcy Code, to assume the Consulting Agreement. The Debtors, in making this
Application, have relied on the Affdavit of Mark A. Clemans (the "Clemans Mfidavit")
attached hereto as Exhibit C. In further support of this Application, the Debtors respectfully
represent as follows:
Jurisdiction. Venue & Statutory Predicate

1. The Court has jurisdiction over this matter pursuant to 28 U.S.C.
1334(b). Venue is proper
pursuant to 28 V.S.C. 1408 and 1409. This matter is a core
proceeding within the meaning of28 U.S.C. 157(b)(2).

2. The statutory predicates for the relief
requested herein are sections 327(a),
328(a) and 365(a) of
the Bankrptcy Code and Bankptcy Rules 2014,2016 and 5002.
Baclround
3. The Debtors commenced these cases by each filing a voluntar petition on
March 9, 2009 (the "Petition Date"). The Debtors have continued in the possession oftheir
property and have continued to operate and manage their business as debtors in possession
pursuant to sections 1 107(a) and 1108 of
the Bankrptcy Code. No request has been made for
the appointment of a trstee or an examiner in these cases. On or about March 19, 2009, the u.s.
Trustee appointed the Offcial Commttee of
Unsecured Creditors in this case.
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68773-Q02\DOCS_LA: i 98886. i
A. Descriotion of the Debtors

4. The Debtors are a group of independent energy companies engaged in the
acquisition, development and exploitation of oil and gas properties in the western United States.
The Debtors' curent oil and gas assets are located offshore near Californa and principally
offshore In Alaska. The Debtors acquired their current oil and gas assets in transactions
occurring in the fourth quarer of
2006 and during 2007, and their existing secured debt is related
to these acquisitions. The Debtors' revenue is largely dependent on the market price for the
underlying crude oil produced, in addition to the level of
production. Their revenue for 2008
was approximately $226.2 millon.
5. Pacific Energy Resources Ltd. ("PERL"), which is a Debtor, is a publicly
held Delaware corporatIon. Its common stock trades on the Toronto Stock Exchange. It is
headquarered in Long Beach, California, and also has offces in Anchorage, Alaska, and
Bakersfield, California.
6. PERL leases oil and gas producing assets located in the Beta Unit (the
"Beta Assets") from the Minerals Management Service ("MMS") ofthe United States
Deparment of Interior. The Beta Unit is located in federal waters approximately nine miles off
the coast of Huntington Beach, California (in the San Pedro Chael area).
7. PERL also owns 100% of
the equity interests in:
a. Pacific Energy Alaska Holdings, LLC ("PEAH"), a Debtor, which
in turn owns:
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68773-002\DOCS_LA: 198886.1
(1) Pacific Energy Alaska Operating LLC ("PEAO"), a Debtor,
which has working interests in certin oil and gas leased

principally from the State of Alaska (the "Alaska Assets").
(2) One-half of
the equity interests in Cook Inlet Pipeline
Company ("CIPL") (the other half of CIPL is owned by an
affliate of Chevron Corporation ("Chevron")). CIPL is not

a Debtor. CIPL owns a pipeline that transports oil and gas
from PEAO's producing assets in Alaska to the Drift River
terminal for sale to the Tesoro Refinery in Kenai, Alaska.
b. San Pedro Bay Pipeline Company ("SPBPCo"), which owns and
operates the pipeline (the "SPBPCo Pipeline") from the Beta Unit to shore, where it connects to
another pipeline (not operated by SPBPCo) that connects to the Conoco/Philips refinery located
in Los Angeles, California. In addition to transporting oil from the Beta Assets, the SPBPCo
Pipeline transports oil from a third party platform in the Beta Unit.
B. The Debtors' Relationship With Chevron
8. An affliate of Chevron has a majority working interest, and is the

designated operator, in certain properties that are included within the Alaska Assets.
Specifically, PEAO and an affliate of
Chevron each own a 46.8% and a 53.2% working interest,

~ ~
respectively, in two offshore properties commonly referred to as the Trading Bay Field and the
Trading Bay Unit in Cook Inlet, Alaska. Trading Bay Field consists of one offshore platform
and twenty-five producing wells. Trading Bay Unit consists of
four offshore platforms and
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68773.002\DOCS _LA: i 98886.)
sixty-six producing wells. As of
the Petition Date, the estimated accrued and unpaid expenses
(net of
production) assessed by Chevron against PEAO for operating expenses totals
approximately $25.2 milion. Chevron's affiiate asserts a first priority lien in PEAO's working
interests and the proceeds thereofto secure PEAO's obligations. PEAO disputes the amount of
expenses incured and allocated to its assets by Chevron.
C. The Debtors' Relationship with Aurora
9. Aurora Gas, LLC ("Aurora") ownes a majority working interest, and is the
designated operator, in a certain propert that is included within the Alaska Assets. Specifically,
PEAO and Aurora own a 30% and a 70% working interest, respectively, in a single oil and gas
lease that contaIns two producing natural gas wells referred to as the Three Mile Creek # 1 and Three Mile Creek #2.
10. As operator, Aurora allocates a portion of
the revenues and the costs of

the Petition
production to PEAO based upon its working interest in the underlying assets. As of
Date, there were no accrued and unpaid expenses (net of production) assessed by Aurora against
PEAO on account of its working interest.
D. PERL's and PEAu's Liabilties
11. PERL's estimated liabilities as ofthe Petition Date (exclusive of accrued
and unpaid interest), are as follows:
Creditor
Prepetition
Secured Lenders3
3 The "Prepetition Secured Lenders" are an affliate of financing under three credit agreements consisting of
Approx. Amount
$361.1 milion
!I
Secured
Goldman Sachs and Silver Point, which have provided

the: (a) Beta senior secured facilty (the "Beta Facilty"); (b)
Alaska first lien facilty (the "Alaska First Lien Facilty"); and (0) Alaska second lien facility (the "Alaska Second
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68773-002\DOCS_LA: 198886.1
Subordinated
Unsecured Noteholder4
31.7 millon
1.0 millon
Unsecured Unsecured
Unsecured
Unsecured
Lenders
Unsecured
Obligations
4.0 milion
TOTAL
12. PEAO's estimated liabilties as of
$397.8 milion
the Petition Date (exclusive of
accrued
and unpaid interest), are as follows:
Creditor
Prepetition
Secured Lenders6
Chevron 7
Approx. Amount
$412.9 milion
IY
Secured Secured
25.2 milion
Lien Facilty"), which are discussed below The Prepetition Secured Lenders (or their affliates) are also significant Goldman Sachs is the counterpart with PERL for common shares and warants in PERL. An affliate of owners of the PERL's derivatives was approximately net $3.8 milion estimated as of commodity swaps (the total value of Petition Date). Affiiates of Goldman Sachs and Silver Point also hold Overriding Royalty Interests in Beta Assets the Petition Date, PERL's obligations to the Prepetition Secured Lenders were estimated and Alaska Assets. As of to consist of approximately: (a) $39. I milion as borrower under the Beta Facilty, which is secured by a first lien on substantially all ofPERls assets; and (b) $322.0 milion as guarantor ofPEAO's obligatIon under the Alaska
Second Lien Facilty, which Is secured by a second lien on substantially all of
PERL's assets. PERL did not
guaranty the Alaska First Lien Facilty. PERL's estimated plugging and abandonment obligations of$126.7 milion
as of March 31, 20 i 4, which are the subj eel of the Beta Tr.st, are not included in the char. The char also does not
include approximately $2.0 millon of royalties and $6.9 miJIon of eam out amounts related to the Beta Assets the Petition Date). 4 On or about August 24, 2007, PERL issued an unsecured accreting principal note (the "Forest Oil Note") to Forest
(estimated as of Oil Corporation in connection with the acquisition of of
the Alaska Assets, which was an acquisition (through PEAH) membership interests in the predecessor of PEAO. The Forest Oil Note is subordinated to the Prepetition Secured Lenders' loans and contains no financial covenants. S In April 2008, PERL received a $ 1.0 millon unsecured loan from a shareholder, Bateman & Co.
6 As otthe Petition Date, PEAO's obligations to the Prepetition Secured Lenders are estimated to consist of
approximately: (a) $90.9 millon as a co-borrower with PEAH under the Alaska First Lien Facilty, which is secured by a first lien on substantially all of PEAD's and PEAH's assets (subject to Chevron's first priority lien on certin ofPEAO's assets); and (b) $322.0 millon as a co-borrower with PEAH under the Alaska Second Lien Facilty, which is secured by a second lien on substantially all of PEAO's and PEAH's asset. The chart does not royalties related to the Alaska Assets (estimated as of the Petition Date). include approximately $1.6 milion of
Chevron has a first priority lien on each of the Alaska Assets ofPEAO that Chevron operates. Such lien predates the loans to PERL, PEAR and PEAO from the Prepetition Secured Lenders. 7 As stated above, an affliate of
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68773-002\DOCS_LA: 198886. l
Guaranty of
31.7 millon
Unsecured
Subordinated Unsecured
Notehoi
der8
Unsecured
Obligations
Unsecured
9.0 millon
TOTAL
$478.8 milion
E. The Debtors' RelationshiD With Their Secured Creditors
13. In connection with the acquisition of
the Beta Assets, on November 30,
2006, PERL entered into the Beta Facilty, which is a multiple advance senior secured credit
facility, with J. Aron & Company ("J. Aron"), which is an affliate of
Goldman Sachs that is also
the Agent, and SPF CDO I, LLC ("SPF CDO I") and Field Point I, Ltd. ("Field Point I"), which
are two entities affliated with Silver Point. Approximately $39.9 milion is estimated to be
outstanding under the Beta Facilty as of
the Petition Date. The Beta Facilty is secured by
substantially all of
PERL's assets (including the Beta Assets). The Beta Facility is guaranteed by
SPBPCo on a secured basis and PEAO and PEAH on an unsecured basis. The Beta Facilty is
not secured by any of the Alaska Assets.
14. In connection with the acquisition of
the Alaska Assets, in August 2007,
PEAO and PEAH entered into the Alaska First Lien Facilty with 1. Aron and two affliates of
Silver Point - SPCP Group, L.L.C. ("SPCP Group") and SPF CDO I (collectively, the "Alaska
First Lien Lenders") (Silver Point is Agent). Approximately $90.9 millon is estimated to be
outstanding under the Alaska First Lien Facilty as of the Petition Date. The Alaska First Lien
Facility is secured by substantially all of
the assets ofPEAO and PEAH, including (among other
assets) the Alaska Assets (as stated above, the Prepetition Secured Lenders' lien in certin
8 PEAO and PEAH guaranteed the Forest Oil Note on an unsecured basis.
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68773-002\DOCS_LA: 198886.1
Alaska Assets is subordinate to Chevron's affliate's first priority lien in the Alaska Assets that
Chevron operates), PEAH's membership interest in PEAO and PEAR's 50% of
the equity
interests in CIPL. PERL did not provide a guaranty for obligations under the Alaska First Lien
Facilty, and the Alaska First Lien Facilty is not secured by any of
the Beta Assets.
15. The lenders to PEAO and PEAH for the Alaska Second Lien Facilty are
lAron and four Silver Point affiliates - SPF CDO I., SPCP Group, Field Point I and Field Point
III, Ltd. (Silver Point is Agent). Approximately $322.0 milion is estimated to be outstading
under the Alaska Second Lien Facilty as of
the Petition Date. The Alaska Second Lien Facilty
is secured by a second lien on the assets ofPEAO, PEAH, PetrocaI, SPBPCo and PERL,
including a second lien on the Beta Assets.
F. Reasons Leadint! to the Necessity for a ChaDter 11 Filnt!
16. The Debtors went into default under the Beta Facilty, the Alaska First
Lien Facilty and the Alaska Second Lien Facilty beginning in late March 2008. Due to a
variety offactors, including the drastic fall in the price of crude oil in the last calendar
quarer of 2008, the stress on the Debtors' cash flow worsened. The Debtors and the
Prepetition Secured Lenders entered into forbearance agreements beginning on December 19,
2008. The last of
the forbearance periods expired on Februar 17,2009, and on the same
date, the Prepetition Secured Lenders sent a letter stating that the Debtors are in default under
the Beta Facilty, the Alaska First Lien Facilty and the Alaska Second Lien Facilty. The
Debtors determined that they could no longer operate outside of chapter 11 and commenced
these cases on the Petition Date.
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68773"(2\DOCS _LA: i 98886.1
Basis for Relief

17. Under 327 and 328 of
the Bankrptcy Code, a trustee, debtor in

the Banptcy Code may employ one
possession and committee appointed under 1102 of
or more professionals that do not hold or represent an interest adverse to the estates and that
ate disinterested persons to assist such paries in caring out their duties under the
Bankrptcy Code.
18. Specifically, 327(a) of
the Bankrptcy Code provides that a debtor,
subject to Court approval:
may employ one or more attorneys, accountants, appraisers, auctioneers, or other professional persons, that do not hold or represent an interest adverse to the estates, and that are disinterested persons, to represent or
assist the (debtor) in caring out the (debtor's) duties under this title.
1 i V.S.C. 327(a).
i 9. Section 328(a) provides, in relevant part, that a debtor:
with the cour's approval, may employ or authorize the employment of a professional person under section 327 . . . on any reasonable terms and conditions of employment, including on a retainer, on an hourly basis, or on a contingent fee basis.
1 i U.S.C. 328(a).
20. Banptcy Rule 2014 requires that an application for retention

include:
(SJpecific facts showing the necessity for the employment, the name of
the
( firm) to be employed, the reasons for the selection, the professional

to the best of
services to be rendered, any proposed arangement for compensation, and, the applicant's knowledge, all of the (firm's) connections
with the debtor, creditors, any other part in interest, their respective
attorneys and accountants, the United States Trustee, or any person employed in the offce of the United States Trustee.
Fed. R. Ban. Proc. 2014.
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68773-002\DS_LA: 198886.1
2 I. Section 365(a) provides in relevant par that a debtor in possession
"subject to the court's approval, may assume or reject any executory contract or unexpired
lease of
the debtor,"
22. By this Application, the Debtors are requesting that the Court approve
the assiuption by PERL and PEAO of the Consulting Agreement and approve the retention
of Milstream, of which Clemans is the sole owner and engineer, puruant to the terms of
the
Consulting Agreement and as set forth below.

G. Necessity
23. Pursuant to the Original Consulting Agreement, PERL9 engaged
ClemanslO to act as the Debtors' internal reservoir engineer and reserves coordinator in
connection with the sale of
the Debtors' Beta Assets and Alaska Assets (the Alaska Assets
together with the Beta Assets, the "Properties") and any refinancing efforts undertaken by the
Debtors. After the Petition Date, the Debtors, having determined that Clemans continued
retention by the Debtors was necessary to the Debtors reorganization efforts, and Clemans
agreed to amend the Original Consulting Agreement to add PEAO as a par, to substitute
Milstream Energy, LLC for Clemans (as previously stated, Clemans is the sole owner of
Milstream and is its sale engineer and will be performng all of
the work for the Debtors
under the Consulting Agreement) and to revise the compensation provided under the Original
Consulting Agreement.
9 By the amendment to the Original Consulting Agreement dated April
8, 2009, PEAO has been added as a par to
the Consulting Agreement.
the Original Consulting Agreement, Clemans formed Milstream. Clemans is the owner and manager of Milstieam and wil be the individual who wil be performing the work as an employee of Milstream for the Debtors under the Consulting Agreement.
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68773-002\DOCS_LA: J 98886.1
10 After the execution of
24. The process of evaluating the Properties is a very technical one

requiring a great deal of expertise and the Debtors' business is complcated, which requires a
consultant to the Debtors to have significant knowledge of
the oil and gas industr. The
Debtors are seeking to retain MilstreamClemans as the Debtors' internal advisor to render
the services set forth in the Consulting Agreement, and as elaborated below, because of
Clemans' experience with the Properties, his knowledge of
the Debtors and their operations,
and the need to have an internal pary to coordinate and interact with the outside consultants
and to advise the Debtors' management concerning the Properties. Clemans has substantial
expertise in advising companies in the matters for which Milstream is being retained and
Milstream (through Clemans) is well qualified to pedorm these services and represent the
Debtors' interests in these chapter 1 i cases.
H. Oualifications
25. Milstream (though Clemans) is uniquely qualified to act as the
internal advisor for the Debtors in connection with the sale or refinancing ofthe Properties.
Clemans is a petroleum and natual gas engineer with an MBA and twenty years of
diversified experience that includes both domestic and international evaluation of oil and gas
assets. Prior to establishing his own consulting firm, he worked seven years with Exxon-
Mobile Corporation as a senior engineer, seven years with Netherland, Sewell and
Associates, Inc. ("NSAI") as a consulting reservoir engineer, one year with Sproule
Associates Inc., another top tier international consulting firm, as the manager of
the Houston
offce and five years with Goldman Sachs & Co., E&P Capital Group as a vice president and
senior engineer.
..
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68773-002\DS_ LA: i 98886.1
26. Clemans experience with the Properties extends back over ten years.
While employed with NSAI, he performed engineerig work for the previous operators of the
Properties. He was also responsible for the Beta Assets while at Goldman Sachs. Clemans,
therefore, has been involved with the Beta Assets longer than anyone else involved.
27. In providing prepetition consulting services to the Debtors in
connection with these matters, Clemans has worked closely with the Debtors' management and other professionals and has become well-acquainted with the Debtors' business and the
Properties. Accordingly, Milstream (through Clemans) has developed significant relevant

experience and expertIse regarding the Debtors that will assist it in rendering to the Debtors
the necessary consulting services during these chapter 11 cases. Should the Court approve
the Debtors' retention of Milstream and approve the assumption of
the Consulting
Agreement, Milstream (through Clemans) will continue, without interrption, to perform the
services for the Debtors as described herein. The Debtors seek to retain Milstream as their
internal technical advisor regarding the sale of
the Properties because of, among other things,
Clemans' long standing experience with the Properties and their developed trust in Clemans'
abilities and expertise.

28. A short description of the qualifications of
Clemans is attached to the
Clemans Affdavit as Exhibit 1.

I. Services To Be Rendered
29. Pursuant to the Consulting Agreement, Milstream Is to render services
to PERL and PEAO including, but not limited to the following:
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68773-O2\DOCS _LA: 98886.
a. Provide financial evaluation services in connection with the

Debtors' asset divestitue or refinancing effort;
b. Provide tecliical consulting services, including, but not limited to,
reservoir engineering, economic evaluations, budget reviews, paricipation in operational meetings, and project management;
c. Formulate strategic options and plans, identify and contact
potential buyers, develop marketing materials, organize data-rooms, and make presentations on behalf of the Debtors; and
d. Interact, coordinate, and support evaluation and marketing efforts
by third parties.
30. As set fort above, Clemans has been working with the Debtors prior
to and after the Petition Date. He has been responsible for coordinating the updating of
the
year~end reserves by third par independent engineers for the regulatory filings in the United
States with the Securities and Exchange Commission and in Canada.
31. He is serving as the Debtors' technical expert in the sale process of
the
Alaska Assets. As par of
that process, he is working with Lazard Freres & Co. ("Lazrd") in

the offering memorandum. Because Lazard does not have a petroleum
the preparation of
engineers on staff, he will be the spokesperson for the Debtors on the engineering and
geologic aspects of
the Alaska Assets during the sale process. Further, Clemans is
responsible for the technical data that is provided in the sale data room.
32. Clemans has also been involved on behalf of
the Debtors in the

those assets. He is, on
preparation of
the evaluations of
the Beta Assets for the marketing of
behalf of the Debtors, assisting Albrecht & Associates, Inc. and NSAI in the preparation of
their evaluations of
the Beta Assets and will continue to be actively involved in dealing with
potential purchasers throughout the sale process.
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68773-002\DOS_LA: J 98886. J
J. Comnensation
33. Subject to the Cour's approval, and in accordance with 328(a) ofthe
Banptcy Code, Milstream will be paid under the terms of
the Consulting Agreement as
follows:
34. The Debtors shall pay Milstream $300.00 per hour for services
rendered. In addition, if either PERL or PEAO consumate a Sale Tranaction, as defined in
the Consulting Agreement, Milstream is to be paid a fee as follows: (i) in the event of any
Sale Transaction involving the Beta Assets the fee shall be $75,000; (ii) in the event of any
Sale Transaction involving the Alaska Assets, the fee shall be 1 % of
the Aggregate
Consideration, as defined in the Consulting Agreement, subject to a minimum fee of $50,000

and a maximum fee of $425,000; (Hi) in the event of a Sale Transaction involving all or
substantially all of the assets or equity interests of
the Companies (a "Whole Company
Sale"), the total fee, subject to the minimum fee of $125,000, shall be the sum of the fees
based on the fee set forth above for each of
the Beta Assets and the Alaska Assets and (iv) if
a third-party offer, bid or proposal with respect to a Sale Transaction is received and the
Debtors ultimately enter into an Existing Stakeholder Deal, as defined in the Consulting
Agreement, such transaction shall be deemed to be a Sale Transaction and Milstream will be
paid the appropriate fee as set forth above on consummation thereof. If
PERL and/or PEAO
raises and closes new or additional equity investments of at leat $100,000,000, Milstrea
will receive a fee of
$500,000.
35. The fee, as described above and with more paricularity in the
Consulting Agreement, is to be paid as a result of any of the described transactions occurng

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68773-002\DOS_LA: J 98886.1
within nine (9) months of the termination of the Consulting Agreement. The Debtors have
also agreed to reimburse Milstream for its reasonable expenses incured in the scope of its
retention.
36. The overall compensation strcture described above is comparable to
compensation generally charged by individuals of similar stature to Clemans for comparable

engagements, both in and out of court.
37. Milstream understands the provisions of
sections 327,328,330 and
331 of
the Banptcy Code and agrees that payment of its fees and reimbursement of its
expenses incurred are subject to review and approval by the Banptcy Cour and that it
may not receive any fees or expense reimbursement except as authorized by order of
the the
Banptcy Court. Milstream further understands that, pursuant to section 329(a) of
Bankrptcy Code, notwithstanding the terms and conditions set forth in the Consulting
Agreement, the Bankptcy Court may allow compensation different from the compensation
provided under the Consulting Agreement after the conclusion of
Milstream's retention, if
the terms and conditions of
the Consulting Agreement prove to have been improvident in
light of developments not capable of being anticipated at the time of the fixing of such terms
and conditions.
38. Within the year prior to the Petition Date, PERL paid Clemans
$137,850, $30,000.00 of
which was the engagement fee provided for in the Consulting
Agreement. As of
the Petition Date, PERL owed Clemans $20, 550 for prepetition services
the Court approves the assumption of
rendered. If
the Consulting Agreement as herein
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68773-002\DOCS _LA: 198886.1
requested, the Debtors, pursuant to section 365(b)(I)(A) of
the Banptcy Code, will pay
Clemans the prepetition amount due under the Consulting Agreement.
39. By this Application, the Debtors request that the Court approve the
compensation arrangements described in the Consulting Agreement pursuant to sections
327(a) and 328(a) of the Bankrptcy Code and approve the assumption of
the Consulting
Agreement pursuant to section 365(a) of
the Bankrptcy Code. The assumption of
the
Consulting Agreement and the compensation arangements contained therein are reasonable
and beneficial to the Debtors' estates as they provide certinty and proper inducement for
Clemans to act expeditiously and prudently with respect to the matters for which Milstream
wil be retained.
K. Indemnifcation
40. The Consulting Agreement also provides for an indemnity (the

"Indemnity"). As more fully described in the Consulting Agreement, the essence of
the
Indemnity is that PERL and PEAO indemnify and hold harless Milstream/Clemans from
losses or liabilties to the extent such losses or liabilities result from PERL's and/or PEAO's
gross negligence, fraud, bad faith or willful misconduct in the performance of their duties
under the Consulting Agreement or breach of any provision of the Consulting Agreement or
any misconduct arising from or in any way connected with PERL's or PEAO's providing to
Clemans any data or confidential information.
41. Clemans/MiIstream understands that the Indemnity shall be subject to
the following language in the Order approving this Application:
Notwithstanding the Consulting Agreement, the indemnification provision shall

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68773-002\DOCS_LA: 198886. i
be modified as follows:
a. Milstream shall not be entitled to indemnification, contribution or reimbursement pursuant to the Consulting Agreement for services other than those described in the Consulting Agreement, unless such services and indemnification therefore are approved by
the Court;
b. The Debtors shall have no obligation to indemnify Milstream, or
provide contribution or reimbursement to it, for any claim or expense that is either: (i) judicially determined (the determnation having become final) to have arisen from Milstream's gross negligence or willful misconduct; (ii) for a contractual dispute in which the Debtors allege the breach of Milstream's contractual obligations unless the Cour determines that indemnification, contribution or reimbursement would be permissible pursuant to In re United Artists Theatre Co., 315 F.3d 217 (3d Cir. 2003); or (iIi) settled prior to a judicial determination as to the
exclusions set forth in clauses (i) and (ii) above, but determined by the Court, afer notice and a
hearng to be a claim or expense for which Milstream should not receive indemnity, contribution or reimbursement under the terms of the Consulting Agreement as modified by this Order; and
c. If, before the earlier of (i) the entry of an order confirming a
chapter 1 i plan in these cases (that order having become a final order no longer subject to appeal), and (ii) the entry of an order closing these chapter 11 cases, Milstream believes that it is
entitled to the payment of any amounts by the Debtors on account of
the Debtors'
indemnification, contribution and/or reimbursement obligations under the Consulting Agreement (as modified by this Order), including without limitation the advancement of defense costs, Milstrea must file an application therefore in this Cour, and the Debtors may not pay any such amounts to Milstream before the entry of an order by this Cour approving the payment. This subparagraph (c) is intended only to specify the period oftime under which the Cour shall have jurisdiction over any request for fees and expenses by Milstream for indemnification,
contribution or reimbursement, and not a provision limiting the duration of
the Debtors'
obligation to indemnify Milstream. All paries in interest shall retain the right to object to any demand by Milstream for indemnification, contribution or reimbursement.
L. Other Provisions of the Consultig Agreement
42. The original term of
the Consulting Agreement is six (6) months. It
will expire on June 19,2009. The Consulting Agreement can be terminated by either par
upon thirt (30) days notice to the other pary or can be renewed and extended for addition
six month periods upon the agreement of both parties. The Debtors hereby request that the Cour authorize them to extend the terms of the Consulting Agreement as provided in the
17
68773-002\DOCS_LA: 198886. i
Consulting Agreement based upon their reasoned business judgment without further order of
this Court.
43. The Consulting Agreement contains a provision requiring disputes

arising under the Consulting Agreement to be mediated. Milstream and the Debtors both
recognize that any disputes as to the fees or expenses to be paid under the Consulting
Agreement to Clemans are subject to this Cours jurisdiction.
M. Conflcts
44. As set fort above, Clemans was employed by Goldman Sachs & Co.,
E&P Capital Group from 2004 until November, 2008. The E&P Capital Group originated
and closed the mezzanine loans for the acquisition by the Debtors of
the Beta Assets and the
Alaska Assets. Clemans is no longer employed by Goldman Sachs and does not represent
them in any capacity related to this matter.
45. Clemans may have represented certain of
the Debtors' creditors or
other paries in interest in matters wholly unelated to these chapter 11 cases. To Clemans'
knowledge, neither Milstream nor Clemans represent any pary with an interest materially
adverse to the Debtors or their estates.
46. MilstreamClemans is owed $20,550 for prepetition work. Pursuant
to this Application, the Debtors seek to assume the Consulting Agreement and pay that
prepetition amount owed, thus eliminating any prepetition claim held by Milstream or
Clemans against the Debtors.
18
68773-002\DOCS _LA: l 98886.1
47. To the best of
the Debtors' knowledge, information, and belief, and
except as set forth above and in the Clemans Affdavit, Clemans and Milstream are each a
"disinterested person" as that term is defined in 101(14) of
the Bankrptcy Code.
Areument for Assumption of the Consultinl! Al!eement

48. Section 365(a) of
the Bankptcy Code provides that a debtor "subject

the
to the cour's approval, may assume or reject any executory contract or unexpired lease of
debtor," 1 I V.S.C. 365(a). Section 365(b)(1) of
the Banptcy Code, in turn, provides
that:
(i)f there has been a default in an executory contract or unexpired lease of the debtor, the (debtor) may not assume such contract or lease unless, at the time of assumption ... the (debtor) - (A) cures, or provides adequate assurance that (it) will promptly cure. such default ...; (B) compensates, or provides adequate assurance that (it) will promptly compensate. a patt other than the debtor to such contract or lease. for any actual pecuniary loss to such pary resulting from such default; and (C) provides adequate assurance of future performance under such contract or lease.
11 U.S.C. 365(b)(l).
49. It is well established that the decision to assume or reject an executory
contract or unexpired lease is within the "business
judgment" of
the Debtors (now PCT). See
In re Taylor. 913 F.2d 102 (3d Cir. 1990); Sharon Steel Corp. v. Natl Fuel Gas Dist., 872
F.2d 36 (3d Cir. 1989). The business
judgment standard mandates that a Court approve a

bad faith, whim or caprice.
debtor's business decision unless the decision is the product of
See Lubrizol Enters. V. Richmond Metal Finishes, 756 F.2d 1043, 1047 (4th Cir. 1985). cert.
denied, 475 U.S. 1057 (1986).
19
68773-002\DOCS _LA: 198886. i
50. Section 363(b)(I) of
the Banptcy Code authorizes a debtor to "use"

business. Courts have required that decisions to
property other than in the ordinar course of
use property outside of the ordinary course of business be based upon the sound business
judgment of
the debtor. See In re Phoenix Steel Corp., 82 B.R. 334, 335-36 (Ban. D. DeL.
1987) GudiciaI approval of a section 363 motion requires that a good business reason exist
for the requested relief); In re Chateaugay Corp., 973 F .2d 141, 143 (2d Cir. 1992)
(sectio'n 363(b) applications require evidence ofa good business reason); Stephens Indus. v.
McClung, 789 F.2d 386, 390 (6th Cir, 1986) (a bankptcy cour can authorize an action
under section 363(b)(I) "when a sound business purose dictates such action").
51. The Debtors, after considering the $20,550 cure amount that must be
paid in order to assume the Consulting Agreement in light of the importance to the Debtors
of
retaining Milstream so that Clemans can continue his work and maintaining a good
relationship with him, have determined, in their sound business judgment, that the
assumption of the Consulting Agreement, as it has been amended post-petition, is
justified.
For the same reasons, the Debtors believe that the authorization to use its cash to cure the
default so that it can assume the Consulting Agreement is justified and should be authorized.
No Prior Request
52. No prior request for the relief sought in this Application has been
made to this or any other cour.

Notice
53. Notice of
this Application has been given to the following parties or,
in lieu thereof, to their counsel, if known: (i) the Offce ofthe United States Trustee and (ii)
20
68773-002\DOS_LA: 198886.1
the Debtors' pre~petition and post-petition lenders (iii) counsel to the Offcial Committee of
Unsecured Creditors, is one has been appointed, or if no committee has been appointed,
creditors, or their legal counsel (if-known), holding the thirty largest unsecured claims
against the Debtors; and (iv) those persons who have requested notice pursuant to Rule 2002
of the Federal Rules of Banptcy Procedure. The Debtors submit that, in light of
the nature
of
the relief
requested, no other or fuer notice need be given.
WHEREFORE, the Debtors request that this Cour enter an order substantially in
the form attched hereto approving the employment by the Debtors of Milstream, the
assumption ofthe Consulting Agreement, the payment of
the cure amount and for such other and
furter relief as is just.
21
68773-002\DS _LA: i 98886.l
Dated: April K . 2009
Laura Davis Jones (DE ar No. 2436) Ira D. Kharasch (CA Bar No. 109084)
Scoti 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: 302/6524100 Facsimile: 310/6524400

EmaIl: Ijones(?pszjlaw.com
ikharasch(?pszj smcfarland(?pszj law. law.
com com
rsaunderspszjlaw.com joneilpszjlaw.com
kmakowski~pszjlaw.com
(Proposed) Counsel for Debtors and Debtors in Possession,
22
68773-002\DOCS _LA: 198886.1
IN THE UNITED STATES BANUPTCY COURT
In re: )
PRE TO: (a) the Offce of Official Committee of
FOR THE DISTRICT OF pELA W AR
Chapter 11
)
)
PACIFIC ENERGY RESOURCES LTD., et al., 1 )
Debtors. )
Case No. 09-10785(KC) (Jointly Administered)
Deadline for Objections: April 24, 2009 at 4:00 p.m. prevailng Eastern time Hearing Date: May 1, 2009 at 1:00 p.m. prevailng Eastern time
NOTICE OF APPLICATION OF DEBTORS FOR AN ORDER AUTHORIZING RETENTION OF MILLSTREAM ENERGY, LLC AS CONSULTANT AND ASSUMPTION OF PETITION CONSULTING AGREEMENT AS AMENDED POST-PETITION
Delaware; (b) counsel to the Unsecured Creditors (c) the Debtors' pre-petition and post-petition lenders or their counsel and (d) all parties who have requested notice pursuant to
the United States Trustee for the District of
Bankptcy Rule 2002

PLEASE TAKE NOTICE that on April
8, 2009, the debtors and debtors-in-
possession (collectively, the "Debtors") in the above-captioned case have fied the attached
Application of Debtors for an Order Authorizing Retention of Milstream Energy, LLC
("Milstream 'J as Consultant and Assumption of Pre
petition consulting Agreement as Amended
Post-Petition (the "Application") with the Clerk of
the United States Banptcy Court for the
District of
Delaware. The Application seeks to employ and retain Millstream as consultant for
the Debtors in connection with the sale or refinancing of its properties in these chapter 11 cases.
i 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 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 111 W. Ocean Boulevard, Suite 1240, Long Beach, CA 90802.
PLEASE TAKE FURTHER NOTICE that any response or objection the

Application must be filed on or before April
24, 2009 at 4:00 p.m. prevailng Eastern Time.
Objections or other responses to the Application, if any, must also be served so
that they are received not later than April 24, 2009 at 4:00 p.m. prevailng Eastern time, by:
(1) Pachulski Stang Ziehl & Jones LLP, 919 North Market Street, 1 ih Floor, Wilmington, DE
19899-8705, Attn: Laura Davis Jones, Esq.; Fax: 302-652-4400, e-mail: Ijones0lpszjlaw.com
and (2) Pachulski Stang Ziehl & Jones LLP, 10100 Santa Monica Blvd., 11 th Floor, Los
Angeles, CA 90067-4100; Attn: IraD. Kharasch, Esq; Fax: 310-201-0760, e-mail:

ikharash0lpszjlaw.com; (b) counsel to the Lenders: Goldman Sachs (1) Bingham McCutchen,
399 Park Avenue, New York, NY 10022, Attn: Jeffrey Sabin, Esq.; Fax: 212-752-5378, e-mail:
jeffrey.sabin0lbingham.com and (2) Bingham McCutchen, One Federal Street, Boston, MA
01221-1726, Attn: Amy Kyle, Fax: 617-345-5001, e-mail: amy.kyle0lbingham.com and Silver
Point Finance: Skadden, Ars, Slate, Meagher & Flom, LLP, 333 West Wacker Drive, Chicago,
IL 60606-1285, Attn: Seth Jacobson, Esq.; Fax: 312-407-8511, e-mail:

seth.jacobson0lskadden.com and (c) the Office of
the United States Trustee, J. Caleb Boggs
Federal Building, 844 N. King Street, Suite 2207, Lock Box 35, Wilmington, Delaware 19801,
Attn: Joseph McMahon, Esq. and (d) counsel for the Official Committee of
Unsecured Creditors
(the "Committee"), Steptoe & Johnson LLP, 2121 Avenue ofthe Stars, 28th Floor, Los Angeles,
CA 90067; Attn: Katherine C. Piper, Esq., Fax: (310) 734-3173, e-mail: kpiper0lsteptoe.com.
A HEARNG ON THE APPLICATION WILL BE HELD BEFORE THE

~
HONORALE KEVIN J. CARY AT THE UNITED STATES BANKRUPTCY COURT,

824 MAT STREET, FIFTH FLOOR, COURTROOM #5, WILMINGTON,
DELAWAR 19801 ON MAY 1, 2009 AT 1:00 P.M. PREVAILING EASTERN TIME.
IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE
COURT MAY APPROVE THE APPLICATION WIT:aOUT FURTHER NOTICE OR
HEARG.
Dated: April 8, 2009
PACHULSKI STANG ZIEHL & JONES LLP
a Davis Jones (DE Bar No. 2436)

D. Kharasch (CA Bar No. 109084)
cotta 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(qpszilaw.com
ikharasch~pszilaw. com smcfarland~pszi law .com

rsaunders(qpszi law .com
ioneil~pszilaw.com
krakowski~pszilaw .com
(Proposed) Counsel for Debtors and Debtors in Possession.
68773-001 \DOCS_DE: 146912.1
EXHIBIT A
CONSULTIG AGREEMNT
111I8 CONSULTING AGREMENT is entcrcd into as or DccMr 19. 2008 (tlJ HEffec\oc Date'! b)F and mong Mark A. CIIm ("Consiilmni") ~nd PACIfiC ENF:RGV
RFSQURCES LID.. ii DcJUW cnrprntimi ('"ClmpantW), Cu-nmiat and CompDnj' ar

sometimes refent 10 tQo~elbi: as ihe' "'Paries".
RECITAl
VlHESJ Consultan is il registered prof~sson~1 l"ngine in Teiu. workng l: ~ petleum inu.'ry an rc~idmg in Hotmo~ T~; an
WHEi'. Compim)' is D cmpori1on fored lldcr the law~ of the Slate of DelDware whh its pricipal offces in Long lkc-h. Caif\)mi~ an
WHREAS, Compa wishes lO 1i\'niI ftlf or the ~Mees of Conlta as provided in
lh ABn:~i. and. Cmtal wish 10 ~--fomi such servl(lcs to Compim)' uner tiS and
condhions hcmiftor pt\iidi:d:
NOW, THEREFORE. in c:on5idcnili~ of rhc unerting and lh pEl)'merats_ herin St fOrm,
THE PAR.TlES HERETO AGRE AS FQLLOWS:
1. DUlies and RelafumsJ (lrParti~
~. Durg the: term of his Ag;mc:nt, Compan)' -~s to employ
CiOultni. mu Cotm agree to rendr mm-o;clu.'i,,-e services to Company w; dc$C in

Hxhibh A. COllulmm sluill de\'~ :?uch tfme l, mi be neesa or approp~ to penn the
consulting scQe sp(,"too D E~dblt A. Ho~"'cr. C9m;ultant $h n:8k:' himSelf m1irlfiJe to
Cmpny dming relar businss durg th'~ .te fthls Agrent. lDd 'sbl .b ~w,e run
time dorms th momh of Janua 200. This AB~lneut doe DDt crte -an (:ttloywemlo~
f(IBtiO~h.p be~ Coff)' an Consltnt, It is Xpnily ~d ond inlidc th
CoOltultiili. iE iilng os on indePedeiit con~lO iEt peim tb 5tce hered~, and

under no cii'faOO sbl coihim be deme4 M etJoyee of .ompmi. DIJr shl any miployc of .C9mpany be denO AD employee of Cmit COIulti Shall be 1m
in~~ .eoah'r f CoIpu)'. An cC)m~n pi under ths Agrieit sht DC

reed-by the C;oaiy non..mplO) oom~main'on lRS For J09-MlSC. COS\lmm
sh~ bo TCbl~ -to bcth ~idioid im pay any an iU 1axe includg. but DUlliaicd to.
Fedem tm stae inome ta~~ SOl an FICA~ rur hs emplo)'ee or ~pc co~ if
any. &:"pt as othrwise provided herein Cntal ~ D~. 'fr-c to pn~ whateer mea
co~ium ch in performing th sn-iee described
herein. eon:y l'olls tf ths i5 no an exclus""e 8~cmenl and ai Coomt may pcqr seice fur o~ pii=
b. Consulwu bs tlil ransbiUty fur colyig wi aU I.nvs (fede~. stte, an lOO) in cang out his obligations and dt lI tb5" Agren iiludDg,
n,itout lImittions, (be Intenml Rtwenue Cod wage wi hour la\I"S n i.lycnt
inimc:c I~i
c. Consuhant ncknowli:gcs that Compim)' shall lKt be prvidfu helth

ni;, tc.lremcil pIau t:onlrbuons. Workc' Copensution or other bi;mclis to COIlullat
Mdlct Ctmwltmtt~ i:plo)", if aD)', and Comtutruit shall be 5Oh:Jy l"spomrible for obCariing andlor providing such benefiti;
2. Tetns nnd E)ttcn:iloii~. The te of this Ai.'I't"J~1 ~httl beg on tht Effectiv
Date 4D coniinue fur Q peod of s~ (6) mont un..ss teimWioo ealier 1 cce with
Secdon 8 (l,nltial lLm'" This .igrC(mcnt may be. Mnewed and exende for additonal periods
of Sl;i (6) montl L'&h ~n the Lmd uf th~ ittih1J tenn or ~u~t ~tmqon lC if ag"
upon by horl Piirtie~.
3. F~
a. CompartJ.' shall pay to Consutant nn engagement f~ of US$30,OOO. ussi.s.oo shal be paid upon ~e e~ti()n ttbi$ Agtm~l. iw .USSJ5.000.shl tx pad I;
i(t before Jnnumy 15~ 200Q. This '\grenl shaH tcnnlnatC! jf either of
time!~' mrJe Jo Consultant. Th: $30.000 Cligbgmei fee shn b no rfudablc.
th pymcnts 'On: not
nde. by CODIa to Cpuy. AU fees an exp~s ar in adlion to tbe engagem

roo, At lh' closf h ..ltmdnr .month ConMtant 'Shii.u Sm an tvolCCtD th Compay "Wth l deCriptioD of consulti work ~rluned. Compan)' .&ll pay th invoice within 15. ,qiiys of
b. Compiny shull pa Cns,ultut at II ra or tJS$$OQlbur for ~eri'iee
~pl Any hue pIymcn sbatl ii intrir'm the rae 'of 1.5% per ioth. Copany shll
pa to Consulla B suc:oess. tee of lJ8$500.0oo.oo fiulii fr BUy of the following tn5atom: sl1Je an (:Iosing -of any of Compa"s oil aI gw IItl. ~firucing at any of
cpY':S oU~ung d~bt lmhU'ces 1'idnit w' ~lo5I"~ ~f new in' atonul ~quy in\!stonts to Compay, th Gittihtpuhaet mcrg~r. or iakoer of Compay prvid thaI.
in llh ca tlit: ~aIue or che lmsa~tkm i!haU be ut I~t S50.oo.,00.OO, an pi'id. funert
that the ~. fee ~i be. 0 one-time ~ (.e'l th muxhnum imd only fi 'thm ~iil be pad is
$SOO.OO.OO. ewm if multiplt! tnjons i cIQscd that f311 w!thin th ~ore! bri
above.
4. ~~I
. a. CO~tMt:s be Rwbur for. reasonable g~en busins c:~~
such nS telepbOiiJblac:rry a1m, paring facB- and inili:c allowace.
~
!~ ,;. ;!j
:'
bi Conslt sh wso be rcimbur. fu 1r1 CXP$(s. pr...apred in
wrting ~f m~y, stih li airw- lodgini: and pe.d alwanec.

c. In all insbmce refei to in R. an h. ab,~ C01iuJtat shall pren to
Compay a. itcmjie acoum of .s ~11, l~he.. with sl.pprting voucrs/tee. satisfJictory TO C.ompy.
5. Cen Agents. of Consta
i"
B. Consulul.o1 slJ n.ot hold bimself out as an mploye .of Ci:p1Tl)'. hw.re
an righi or authorti'. expresed or rmplied to oreae or a.~um~ an obligation of an)' kind or
Mfn: whntsovCr 011 belur of (lm~~ aecp lqat prcess on belf or Ccilnp)'~ ur mak
any warm)' or reeni1Uon on behiilf of c.ompany; or to bincl r~ reder Compm liable h'l Y mannr wbats,i'er.
hi Consullm shal not, witoout prior wrtte (lCJnsDt of Compay, L1e me

nae Pacf1~ Energir, or any dert.c th.erf, on an written documen. .sonai)'. busiess
~rd ad\rertisewe.n dit!torlts, ofIi doors, or in II)' oth place or maner.

(l. Consultant slml obtan workers' comr;enS!UiOfl nsunCCcov~gc foCJCli of his cmplayce. C~tai shall pro\"d.~ Cmnpay with cerlanes or iw,"l -u
wrhtiin notiCe of lhi: teali'OD or caccJliiiion of th policli.. Conswia hereby acov'ledges
n:~c, whfch ertficaes shll prvide th Camp' wni ~cl1l not less than 30 diyS'. pror
ibu.t dame. lbef or other -cualty to his ptpe shall nor bcc:ovc~ by any :mn~ of th
Compaj'.
6. Confidential i PrctQ" lDfurnicin.
a. Cnsulmnt cliowli:dgcs tlat in pcromg tM scrvces he.r~r .Constant wil have ~ to cofidential and procw hironatin relatg to the
Compats busines ("Ccmfidential and Prrlet' fnl&mnatDni. Suc CVDfideiitWl and
Prpict In'formation inclu.d~ \\~thQ1U limri M,y an aU tr $e~, 1nuisidoo
llgrmen or poticin of Compim)', its btJll pa its wnOTor m CUst

par:. or ts venors.
sttw. inteJectu prp or 1i)' eonfidantiaf informon oCnce the bnilleBs. fbianclaJ
tec!ogs know~howr fn~~ and sysems as or provide ~y CDmpi, it ~\,iass

b. . Consiita. as th du and afer th pc~ dg whi;bse~~
mi prmidcd under 1hs Agmmci, Con$lU1in ",m not us or 'dfvulse to MY poon any
Confdeti W'd Prprefa' Information. wb~r ret:ei\'ed or creed verly or in writig.
Compay, it busine paers, an.- it. "1mdoT us Confidentia an Prori Inforim

wi it is public:I)' kno\\'4 other tlW1 by a ~Ii by Coiiui~t of the ter herf. Consultant
oth thn in the proper roUl of peomco of prviding ses b~rc.. and i pcine in wnting by Cnpi.y~ tmsi:lianL agree$ tu tr~~ mi womian .ttw tJ ~usi_ of
1:" '.
agree tv tni: IUI rcl1n~ie imd n~ gteps l(l 'intno .~e se~' an pI'CJt the
diselosure an imprpe use ofConfdcntial and Propdet lnroron
to Compy1s :deius V4. Co~ti ~.:al QI ~~t?i bj OJul~nt Wbilc ~g~'

ii(:e5 heidcr T'mi 'wil rcnlam Impspropey.Suc .dumeri irJude, ~ith(lut
Uinbaiion. fies miunua. auio and \'sunJ eommuncai,ulS) o~em:e, repm.an
oniaei Ust.(wbr v.rlne cleetrmc.dig)ti or' cic:wi~).
r
!
c. . Consubi w:know~ed.g tbl d~et othrthwi dC\~ ~S
d. Conultat-ag nol to ren aD)' suh docuents after roplctiwi pfCl sc,r~ bc~dcr Bnd to retu an ~ docts (hicluding nil cOies) prmpdy upn th
CC!~rll ofitif.i; Agreement.
. .
Secion 6 \\;11 nusc dage 10 C.opMY in an am or mnouni difcult 1(1 asert imd. any
o. Consu..ta her.by ilt:knuwledges. an agel: int any ,iolatons or this
remeies at law for such diia,ges wi-1 be inadeiuc. Accingl)', in 8dtiOJl to an ottlr relief
to wlch CompBl Am)' be Ctntited at law or ii equity ~ Compay sban be enriilr: to iempl.mu'Y
and/or pent iDjunetve ar 'tbi,. qhable relief fmii any such b~cb or thtent bl'ch
2luch bm PT thred breb.
by C.otttllli 'W:oul prof of ii" dlUnages th Mve be f may bt tim.l."t to Compai' b)'
7. Ut~"Qd.lY. CornpUiioo and (ndemivr
~ Conslti( rerents miil Wiiuimi lhai his ~ecuriim of and peom:.c

iindir ths Agreent wilnot- viofaw thi: prosions of aD,) agreent tu which Cansultanl j3 a
pa' or by wmch. he is boun

b, ConsuJunri ~lmn pcfmn h~ dunes hcrmdein strct col'lian with lU
appUeal~ laws. lI' \,~u as ~,gatorr and !ie1f~reBulatory o~fiadqn reqirwis.

c. ConsuilMt f1gn to Indemn an hold baess"Compyan its paDl
oopiie. an ofliste and reuuF: c:th~ an th oi~CI dirconl. empioye~ succeors
aD assisns. frm and !1nhJ! ,un,) un n1l lo~ claims. i:-es of action, iiurcs dii?t
c.m."l lmdfor ex, including attorney"s fee! Mi d~en~ ~ frm Of lt any way
c:te with "COlullunt's gr~ ncsJgeroc, bud. .bad faith or wiul "mlcii~~ in IJi~
~r(ltmt of his dutioe under this Agriorit or "breac of any prvi~don of.lhis ~entor
any ninduC'lDward my -employe!! ofC.ompjy or any ofits~ orre~ entie-.
.d. C!Jtlpm)' u.8~ 10 in~cmfy -ad hold htlcss Cnswt from lUd
including alomy'I:; fee and disburinis, arimo! fro or in any way Ctcuted wltl Compnytli grss ne,grtcc thud, bad faith or wilful misoondii in tbe pcrforcc of its
dl1ti~ "1.1= this ~niC'nt or 1m.,h or Wly provisiun of ths Am~i or an)' miondL1c: tlr
arsig ~ni or.i any WIy ~lUccti=d with Compuny's fi$h~.B MY g- or cnfiktiai
~n!jt imy m- flU IOli~t cli. caus of a.ctorl Injur~ .dia~ OOlS andfor CXfl
in(Jmion 10 Consllnt.
g, Tmlmitlon by Pm1~s. Eier Cotm or ComPt1 mny le thi.s Agr~t at tty tIl1 upn 30 dii pror wrte liutifieio"ii lo th" ott Prt'. In rhi: ~Vent diis
Agr tt)iitnt sbal also be ~d any suCc e~ unr Pagrpli J'b .,"'e cn ry trsajn describe in lbt plSnb tJ OLl wi nis (9) "mCmU1 of \h lmnQon or
,;~ ,
~
,.
~ ~
Armcn is terinated by iii~ Par 01' S'Dot re for any ~ C~ultnt shoJI be pad for ul fl.~. nd ~~ incur thrugh ila.da of Cmrmiga or ~hadon or ths
exatlon of lh~ Agr~t.

9. Intcm-ationan Modifeation of Airi!, This Agmem c:onsttutci- th~ cihi:
~i
or Dro reprtatons agients anor undertadi bemwn tb Pari:' cOzig the

subjecm8cr bereof Th Aerm't may be moded. c:ndcd or icniid by the Fories
heo only by wrting liigned ~ both Pnies.
ngenJ of ihc P~rtles wlih ~(!t to the $Ubj~t mmie hereof and s~desan pr.r wntten
10. Aii~eUoieous
a. AssiIDel1t iid Rrndin11 Effi;t, Neilher Pmy =iluill ai~gr. srL or
odu..-rse conW) any rigbt$ imiring to th DEb Pun)'; anor .ay dueSt obHgadan inid/or
~porw"bmti~ aw b)' tJ Prty to th other PiI piimiint 10 lh~ A~ai withom the prlor
ber!fit nf thtl hei. SUOCl.ors am assigns of eab Pa hc~.
wnnen ronsem of tht: other Par-, Tils A.men1 5bal1 be bindng upon, an shan inure l ihc
b. Notice. Any Nnti~ ~auirc or ~ttd tu ~ gi ,,'en herder shan be
5\i;cnt in writig u:i. 1' sent b)' register m.il. potage prcpiiid~ to the Peirls t We addres indkmed rIlOW or to $1h other addrs as ih~ Panics hi:rvkJ may spitY In wrting. Compiy: 111 We:1 C-e Bh-d.. Su1ie 1240. Long Bcuh. Oiifomia 90B02. ConstaDt 4918
Meno Park Dr_. SUCIU Lad. Texiis. n419.
e. GDvemin Law an Si:"ierail~. This' Agret sba b r;onscc;f iI

acord whh the mteila\Y5 Dr the- Stare of Cnithi. Wbi:cwr poble.. eDh PMv1son
of tbts, ~m=li .6hall be tnteireie4 in suc:h ~ mli~ M to
pp!lcnbl~ law. ~cb )vilQA shl be meffecth-C! only 10 the extent of soob prohibltion or invaidity. withou nvaldadg the rendr, of such proviiOn' Of thO' ~lUg PTO\1lOns of
County, C,Jifomizi
be eilC\'e .id vaid under
this A~umi Venue fur imy ficton brougt un ih~ Agrent s: ,be- Lo. Aneles
f. AtiomtYS' Fec and Cos. In any gwl, :ation or PJc~ng arsIng .cut of or related 10 th .Ae-u or ibc tnactions oontempJi;ted beby, inclii4lng imy.npps (mi "Acto't'). the non.prvaing Pa)' in tlat Acton $i FlY 10 i11~ pfIali Part~ a n:nsnal~
su for lml. and ~ar ateys.. pimregl~', accouolDu. an 'XJ. fC' Md eo
IDed in ~tOI wi prseuting, or deren,g the Action ~r!or. enorcing'an)' judgmenlt

order.. ruH~ Dr p,W (collectiwly. Jl ij)clir(m~ gmmd tJern m addition io MY daage
and eo \\-hirJi th: plVll p;. otherise wl'nd~ be entitled. An Oeision entered in the
Aeion sbil eMtain ii spfic prsion proviing tr th recover of rtomibli: attorney,",

cor iJr aritf ma)' fiK ih.c amount Of r'~blc auomeys\ palcp\ ~CQunta.~. ~d
pnJCgaJS"1 aceountat'~ .and ~~' fCd aDd coss, lncur in ~forcirig the Oeon. The
~
~
i-. ~,
arper.s~ f'lUd osts en the- reett of ~thr.pw)'. Por i pus f th. Piiph ior. ,all
mrt!ysi, paegas'.. PCotl~' and ex~ fees ~nd cos :sbe mcl~, 'but not be Urnit
to; fee fd ~S~'in~ in the followin \i p"5~'LUm.ent m~tiuii id collection aiDn. (if
L"Otltenpt pree: (iti) ~ishmentl' lev, and debtr an th pa)' cxamtioii; (iv) cUso\'ery and (v) bicy.
chi.f~ disputs Bn other iM1tm"i tontr\'C ("~i arsins ~ctl)' or indirt!y uutoJ" or :rlated ,tD ths Agment in tl11Y 'I'Y. ot the bI'h' therf: whher 'contr or
g. mll~~ Rtl;ludqn. Bxcl.t o~ se fr tn Pnm~b tie. all
nolKontr~ and wbtllet dinng th le (It af he icrnatron Df ths Agrent hii he

reolved exclush.'C ~eQrdiog to Ch ptdurc$ set frt in lh: ~,
(i) Neltb~ Pliy ~hall wmmcnce litipton ~n5t th otb Pary

ULU.U W. Pcs hIi\'e met ibctn..fce to disainany .dispute!! thy ma' I\'e an
iiempted to netat~ in good fiith a ~ru(iof3.

unble to .rcrolw. the: dIi, befo~ ei~er Pai Jnay e.om.en~e Ift~()n gimit 1hc other P.l'. 1tUlt Part' s1udl doliver 10 th othir Part)' 3 written notice (l: "'isputt!
(il) If IheParties negotiate hJ gQD fuhh for teD UQ) days an at still
Notce", to the other Paii)' Slumg fonh th Pwt"lj wsition regarg Ibe tU ofth~
difute. Thi: Parie, ihidl then Dltempi in ~ood (aim to 1"solve the dispute by mt:dtioS1
unde the Amercan Ariuall: A~oc3ton (~Mt') Comii=rc Medion Rules in

c:ffeci on the da of the Dispute NDtice. If the ParC$ C1lnoof agr~ on the selection of B
mediator v.ithin twenty (20) ~'$ afWr dclh'C of 1Jie Oisputi: Norice. we mediator 'wiU
ae selecte by the AAA. If th diste fw not ~m relved J;j' m.PR \vifum '5r
(60) 00)'5 after delivay oftl Dispute Nticet ihen eith Par' may C(lDenc litiaton.
h. C.oumcma TJ Agrment mA-)' bl: r:~i1uroo in SClel coumerci

eab of which SMn be deeed an origina but aU or which countQJarts col1clively 'bll
COsntute one ~lietit. Sigwurs may be cx~ed b)' faeiile 01 telee~PYi wiln original
oih Pan hi:o.
~gn~iiires 10 follow. Eah Pay h~o agNC's that he: or IE \\il be bound b~' li or its own telei'.ied or PDF'cd signature and that l~ fir h accept~ iJc telei.opicd nfPDF"cd sigptn: 'ftoo
tbe 19tday of~ber 2008.

COMPANY:
IN WITNSS WHEREOF, tbe?ies luve eicecuted th Consultbig Asrent il'i of

lnfic Enrg RiemcC$ Lt/
Its Or G5
CONSUTANT:
if 'J~-~ ~
~..
~ A.d~..~ . _".. Mak A. Clemans ~
;~~
EXIT "A~
Consulti Work Scope
Prvide tehncand fimmal e\'a1iiaion services 10 PEe in connCn ll.ith !hr sn dh~estW' lidlgr rer11ciiig efort
Ti:lci l.oriul~ng. sen.i(! inciude~ bur are not liih: to raeroir elgineng. economic C\'Jlluaotl~ budgt review. pacipiion in opona meetigs, und prject
rrulgtmcnt Consulllg service ab include romnltig stategic option~ un pllis, ldanlifyg im

conmcting poential buer. devloping makciiny maiials. ()rilzing dttta-rooms. and
making pretatIons
Inltni: QCrdinRte. n surt ~'Bi.on and mteoS eITort'i by Sid pa djvescitn

firm on ~baf t-EC
.. to CtMootlon wh t: scice1 11 &laJed y,rork scpe with d~fined delh"eTs'~ aDd
~heled misOTl~ tlai be dcvloped be PC fUd ~ C'n...mm

.. CiJIlultat shall rert only 10 th~ Senior MiUa~illt of
Dam KatIe. Gerry T)'woniuk and JaM Rawater
PEe iicluiig Vladimir Kaiic.
EXHIBIT B
g g
r:: ~~
r;
AMNDMENT TO CONSULTIG AGREEMENT

The parties to that certin CONSULTING AGREEME (the "Consulting Agreement'')l
between Mark A. Clemans C'Consultant") and Pacific Energy Resoures, Ltd., a Delaware
company ("PERL"), dated December i 9,2008, hereby agee to amend the Consting
Agreement as follows:
Pacific Energy Alaska Operating LLC ("PEAO" and together with PERL, the "Companest~) is hereby added as a pary to and agees to be bound by the Consultig Agreement. as amended
hereby.
Milstea Energy, LLC~ a Texas company, is hereby substituted as a par to the Consulting Agreement in the place of Mark A. Clemans and shall be referred to herein as the "Consultat".
The language in section 3.b. ofthe Consulting Agreement is hereby deleted and is replaced with the following:
1) The Companes shall pay Consultant at a rate ofUS$300lhour for services rendered by
Consultant to Companies.
2) If either or both of
the Companes consummate a Sale Transaction,2 Consultant shall be
paid a fee (the "Sale Transaction Fee") as follows:
a) In the event of any Sale Transaction involving the "Beta Assets,,3 the fee shall be $75,000.
i Capitalized terms not otherwise dermed herein shall have the meaning given to them in the Consulting Agreement.
2 "Sale Transaction" means any trsaction or series of
trnsactions involving (a) an cquisition, merger,

consolidation, or other business combination pursuant to which the business or assets of either or both of
the Companies are, directly or indirectly, combined with another company; (b) the acquisition, directly or indirectly, by
persons as defined in Section 13(d) of
a buyer or buyers (which te"nn shall include a "group" of
Exchange Act of 1934, as amended), of equity interes~, or options, or any combination thereof constituting a
majority of the then outstanding stock of either or both of bid of
the Securities
PERL or possessing a majority of the then outstnding voting power of the Companies, except for any acquisition of such equity interests or options resulting from a credit
or indirectly, by a buyer or the Companies, except for any such aequisition resulting from a credit bid by the Companies' secured lenders or (d) the fonnation of a joint venture or
buyers of significant assets, securities or other interests of either or both of parership with the either or both of purpose of the Companies or direct investment in either or both of
the Companies' secured lenders; (c) any other purchase or acquisition, diectly
(.
f
~"
effecting a transfer ofan interest in either or both ofthe Companies to a thd part.
the Companies for
the
3 PERL leases oil and gas producing assets located in the Beta Unit (the "Beta Assets") from the Minerals
Management Servce of approximately nine miles off the United States Deparent of the coast of
Interior. The Beta Unit is loated in the federal waters Huntington Beach, California (in the San Pedro Channel area).
DOCUA:iOO24.i
b) In the event of any Sale Transaction involving the "Alaska Assets',4 the fee shall be
1% of the Aggregate Consideration,S subject to a minimum fee of
$50,000 and a
maximum fee of$425,000.
c) In the event of a Sale Tranaction involving all or substtially all of the assets or equity interests of the Companies (a "Whole Company Sale"), the total fee, subject to
the mium fee of above for each of $125,000, shall be the sum of
the fees based on the fee set fort
the Beta Assets and the Alaska Assets. The Aggregate Consideration shall be the value allocated to each in the definitive purchase and sale agreement(s) relating to such transaction, or, ifno such value is allocated, as mutually
the total Aggregate Consideration received as a result of a Whole Company Sale is $240,000,000 and $40,000,000 is allocated to the Alaska Assets and $200,000,000 is allocated to the Beta Assets, the total fees shall be $475,000 - $75,000 attbutable to
agreed in good faith by the Company and Consultat. For example, if
the Beta Assets and $400,000 attbutable to the Alaska Assets ($40,000,000 ties
1.0%).
d) Furermore, if a third-pary offer, bid or proposal with respect to a Sale Transaction

the Companes ultimately enter into an Existing Stakeholder Deal,6 such transaction shall be deemed to be a Sale Transaction and
is received and either or both of
Consultat shall be paid the Sales Trasaction Fee on consumation thereof.

3) If either or both of
the Companies raises and closes new or additional equity investments to Company of at least $100,000,000, Consultant shall receive a fee of $500,000.
....
4 PEAO owns a working interests in certin oil and gas leases pricipally with the State of Alaska (the "Alaska
Assets"). 5 "Aggegate Consideration" means ex) the total amount of cash and the fair market value (on the date of payment)
of al of
~
~.. ," k'( '" , 1~
the propert paid and payable (including amounts paid into escrow) in connection with the Sale Transaction
(or any related trsaction), including amounts paid and payable in respect of convertible secunties, preferred equity
securities, warants, stock appreciation rights, option or similar rights, whether or not vested, plus (y) the principal
amount orall indebtedness for borrowed money or other liabilties of applicable, as set forth on the most recent balance sheet, or, in case of
the Company or relevant Company entity, as the sale of assets, all indebtedness for
borrowed money or other liabilties (including any payables) asumed by the third part. If the Aggregate Consideraon is subject to increase by contingent payments related to future events, the porton of our fee relating thereto shall be calculated by us in good faith and paid to us upon consummation of
the Sale Transaction.
S "Existing Staeholder Deal" means any trnsaction described in the definition of
Sales in which any holders of the Companies exchange or convert any portion of such securities or obligations for equity interests or assets or other interests.
debt securties or obligations of either or both of
DOCS_tA;20024.1
"
~-
IN WITNSS WHREOF, the Pares have executed this Consultig Agreement as of

the f day of ApriL. 2009.
COrvANs:
Pacifc Energy Resources Ltd.
Its PRESI/)ENT
BY~ ~
Its ((eSt bEAlT
Brz,~ Pacific Energy Alaska OPf LLC
CONStnTANT:
Milstream Energy, LLC
By: Mark A. Clemans Its: Sole Member
~A.~
OCS_lA20024.i
EXHIBIT C
.~, ,";~
i ~.
IN THE UNTED STATES BANRUPTCY COURT

FOR THE DISTRICT OF DELA WARE
In re:
) Chapter i 1
PACIFIC ENERGY RESOURCES LTD., et al.,1

Debtors.
)
) Case No. 09-10785 (KJC)
) Jointly Administered
AFFIDAVIT OF MARK A. CLEMANS IN SUPPORT OF THE APPLICATION OF DEBTORS FOR AN ORDER AUTHORIZING RETENTION OF MILLSTREAM ENERGY, LLC AS CONSULTANT AND ASSUMPTION OF PREPETITION CONSULTING AGREEMENT AS AMENDED POST-PETITION
Mark A. Clemans, being duly sworn, and under penalty of
perjury, deposes and says:
i. This Affdavit is submitted in support of
the application ("Application") of
the above-captioned debtors and debtors in possession (the "Debtors") in these chapter I 1
cases for authorization of the retention of
Milstream Energy, LLC, a Texas limited liabilty
company, of
which I am the sole owner and manager and the sole engineer, as a consultant
for Pacific Energy Resources Ltd. and Pacific Energy Alaska Operating LLC at the expense
of
the Debtors' estates. The facts set forth in this Affdavit are personally known to me and,
.:
=:
if called as a witness, I could and would testify thereto. All capitalized terms not otherwse
defined herein shall have the meaning given them in the Application.
2. This Afdavit is also submitted as the statement required pursuant to

328(a), 329 and 504 of title 11 of
the United States Code (1 i U.S.C. 101 et seq. (the

'.
,.
f
The Debtors in these cases, along with the last four digits of each of the Debtor's federal tax identification
number, are: Pacific Energy Resources Ltd. (3442); Petroea! Acquisition Corp. (6249); Pacific Energy Alaska
Holdings, LLC (ta 1.D. # not available); Caneros Acquisition Corp. (5866); Pacific Energy Alaska Operating LLC (7021); San Pedro Bay Pipeline Company (1234); Caneros 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.
68773-001 \DOCS_LA; i 97962. i
"Banptcy Code")) and Rules 2014Ca) and 2016(b) of
Bankrptcy
Procedure (the "Bankrptcy Rules").

3. The process of evaluating the Properties is a very techncal one
requiring a great deal of expertise and the Debtors' business is complicated, which requires a
consultant to the Debtors to have significant knowledge of the oil and gas industry.
4. Milstream (of
which, I am the sole owner and engineer) is uniquely
qualified to act as the internal advisor for the Debtors in connection with the sale or
refinancing of the Properties because of
my experience and expertise. I am a petroleum and
natural gas engineer with an MBA and twenty years of diversified experience that includes
both domestic and international evaluation of oil and gas assets. Prior to establishing my
consulting firm, I worked seven years with Exxon-Mobile Corporation as a senior engineer,
seven years with Netherland, Sewell and Associates, Inc. C"NSAI") as a consulting reservoir
engineer, one year with Sproule Associates Inc., another top tier international consulting
firm, as the manager of
the Houston offce and five years with Goldman Sachs & Co., E&P
'" "' "' ~-;
Capital Group as a vice president and senior engineer.

5.
My experience with the Properties extends back over ten years. While
the
~,t,;
~
~.
employed with NSAI, I performed engineering work for the previous operators of
Properties. I was also responsible for the Beta Assets while working at Goldman Sachs. I
have, therefore, been involved with the Beta Assets as long, if not longer, than anyone else
r
involved.
6.
In providing prepetition consulting services to the Debtors in
'"
connection with these matters, I have worked closely with the Debtors' management and
68773-001\DOCS_LA: 197962. i
other professionals and have become well-acquainted with the Debtors' business and the
Properties. Accordingly, I have developed significant relevant experience and expertise

regarding the Debtors that wil assist Milstream in rendering to the Debtors the necessar
consulting servces during these chapter 1 i cases. Should the Cour approve the Debtors'
retention of Milstream and approve the assumption of the Consulting Agreement, I will
continue, without interrption, to perform the services for the Debtors as described in the
Consulting Agreement and in the Application. A short description of my qualifications is
attached hereto as Exhbit 1.

7. Pursuant to the Consulting Agreement, Milstream is to render services

a. Provide financial evaluation servces in connection with the
Debtors' asset divestiture or refinancing efforts;

b. Provide technical consulting services, including, but not limited to,
potential buyers, develop marketing materials, organze data-rooms, and make presentations on behalf of the Debtors; and
~~ t~'. :A ,.:.
d. Interact, coordinate, and support evaluation and marketing effort
by third parties.
8. I have been working with the Debtors prior to and after the Petition
Date. I have been responsible for coordinating the updating of the year-end reserves by third
par independent engineers for the regulatory filings in the United States with the Securities
b
f'
and Exchange Commission and in Canada.
68773-00
I \DOCS_LA:
197962.1
9. I am servng as the Debtors' techncal expert in the sale process of
the
Alaska Assets. As part of
that process, I am working with Lazd Freres & Co. ("Lazard") in

the offering memorandum. Because Lazad does not have a petroleum
the preparation of
engineers on staff, I will be the spokesperson for the Debtors on the engineering and geologic
aspects of the Alaska Assets during the sale process. Furher, I am responsible for the
technical data that is provided in the sale data room.
10. I have also been involved on behalf of
the Debtors in the preparation

those assets. I am, on behalf of
of
the evaluations of
the
Debtors, assisting Albrecht & Associates, Inc. and NSAI in the preparation of
their
evaluations of the Beta Assets and will continue to be actively involved in dealing with
i 1. Pursuant to the Consulting Agreement, if the Court authorizes the
Debtors to employ Milstream, the Debtors are to pay Millstream $300.00 per hour for
services I render. In addition, if either PERL or PEAO consummate a Safe Transaction, as
defined in the Consulting Agreement, Milstream is to be paid a fee as foHows: (i) in the
+
event of any Sale Transaction involving the Beta Assets the fee shall be $75,000; (ii) in the
event of any Sale Transaction involving the Alaska Assets, the fee shall be 1 % of the
Aggregate Consideration, as defined in the Consulting Agreement, subject to a minimum fee

of $50,000 and a
maximum fee of$425,OOO; (ii) in the event ofa Sale Transaction involving
the assets or equity interests of
.~ ....
l;aJI or substantially all of
f ..

the fees
Sale"), the total fee, subject to the minimum fee of$l25,000, shaH be the sum of
based on the fee..set forth above for each of

-
68773-00I\DOS_LA: 197962.1
a third~par offer, bid or proposal with respect to a Sale Transaction is received and the
paid the appropriate fee as set forth above on consumation thereof. If PERL and/or PEAO
raises and closes new
or additional equity investments of at least $100,000,000, Milstream
will receive a fee of$SOO,OOO.
12. The fee, as described above and with more partcularity in the
Consulting Agreement, is to be paid as a result of any of
the described transactions occuring

the Consulting Agreement. The Debtors have
within nine (9) months of
the termination of
also agreed to reimburse Milstream for its reasonable expenses incurred in the scope of its
retention.
compensation generally charged by individuals and companies of similar stature to
Milstream and me for comparable engagements, both in and out of court.

14.
I understands the provisions of sections 327, 328, 330 and 331 of
the
~
i~ :;; ~-
Bankrptcy Code and agree, on behalf of
MiIstream, that payment of
Milstream's fees and
reimbursement of
its expenses incurred are subject to review and approval by the Banptcy
Cour and I further understand that it may not receive any fees or expense reimbursement
except as authorized by order of
the Banuptl.Y Court. I also understands that, pursuant to
~ l0
t-''
section 329(a) of
the Banptcy Code, notwithstanding the terms and conditions set forth in
the Consulting Agreement, the Banptcy Cour may allow compensation different from the
compensation provided under the Consulting Agreement after the conclusion of Milstream's
68773-001\DOCS_LA: 197962.1
retention, if
the Consulting Agreement prove to have been
improvident in light of developments not capable of being anticipated at the time of the
fixing of such terms and conditions.
15. I understand that the indemnity contained in the Consulting Agreement
shall be subject to the limitations set forth in the Application.

16. I was employed by Goldman Sachs & Co., E&P Capital Group from
2004 until November, 2008. The E&P Capital Group originated and closed the mezzanine
loans for the acquisition by the Debtors ofthe Beta Assets and the Alaska Assets. I no longer
employed by or associated with Goldman Sachs and do not represent them in any capacity
related to this matter.
17. I may have represented certain of
the Debtors' creditors or other
parIes in interest in matters wholly unelated to these chapter 11 cases. To my knowledge,
neither Milstream nor I represent any par with an interest materially adverse to the Debtors
or their estates.
18.
PERL owes me $20,550 for 68.5 hours of services I rendered to it
before the Petition Date. It is my understading that the Debtors are seeking to assume the
Consulting Agreement and to cure the default under that Consulting Agreement by paying
me the prepetition amount owed to me.
t
~
~.
~~
68773-00 i \DOCS_LA: 197962. i
19. To the best of
my knowlede, if
tho Debtors are authorid to assume
the Consultig Agreement and cure the defaut therunder. Millstrea and r wi be
disinterested persons as defid in the Ba.ptcy Code.

I declare under penty ofpeiur that the foregoing is tre and corrct.
Executed on ths ~th day of April
2009.
Mark A. Clema
State of
ff0J~
of
Texas )
County of llAUl \ )
Subscribed and SWom to (or affied) before me on ths ~ day
Apri, 2009, by -- ~\( . GLM.lW proved to me on the basis of

satisfactory evidence to be the person(s) who appeared before me.
LISA R. GREEN
Not PtIll Stat Qf T&Xes
MV Commissio i:pire
March 23. 2011
LISA R. 6~Ee=
~ri ct. ti ner

~~
;;
t~
68773-001\DCS_LA191962.1
EXHIBIT 1
F
t"
68773.00 I \DOCS_LA: 197962.1
Mark A. Clemans, P.E.
Summary
Professional Engineer with an MBA degree and 20 years of diversified experience that includes both domestic and international evaluations of oil and gas assets. Career work includes 7 years of experience with a major 011 company, 8
years with top tier international consulting firms, and 5 years with the principle investing arm of a top Wall Street
investment bank. Demonstrated abilities in evaluations for asset backed financing and acquisition/divestiture projects, business development, project management, and negotiations. Experience includes all major hydrocarbon basins in the United States involving conventional and unconventional reservoirs.
Employment History
Milstream Energy, LlC, Sugar Land, Texas 2009-present

Principal & Professiona' Engineer
Private consulting firm focused on oil and gas asset evaluations and financial services Engagements have included services for mid-size operating companies and several investment banks Focusing on technical evaluations with emphasis in reservoir engineering and financial analyses
Goldman Sachs & Co., E&P Capital Group (EPC), Houston, Texas 2004-2008
Vice President& Senior Engineer
Led and coordinating engineer for technical evaluation process and portoliO credit management behind
$1.2 billon principle Investing effort
Performed technical analyses of upstream oil and gas, midstream, and service assets for transactions that
included senior secured, second lien, mezzanine debt, and partnership structures for deal sizes ranging from
$10 to over $200 millon
Originated and led deal evaluation process for numerous opportunities including the closing of one the
group's largest debt investments Board member for Fairway Resources, EPC's first funded private equity deal, and directly involved with their
acquisition and development programs in the Permian Basin and Barnett Shale
Provided technical advisory support on over $ 1 bilion of the Firms other business transactions including
hedging activities, collateral trades, volumetric production payments, and other principal investing efforts
Determined feasibility and economic returns for conventional and unconventional reservoirs in North
America, including heavy oil, water-floods, along with numerous shale and CBM plays
Performed rigorous technical due dilgence work that included asset valuation, risk analyses, environmental assessments, and project development planning Coordinated and interactive with financial analysts, 3rd part consultants, and attorneys as part of the deal
closing process Hired and trained two associate engineers to lever EPC's screening and evaluation efforts
Sproule Associates Inc., Houston, Texas 2002-2004

Manager, Houston Offce
Provided technical supervision and coordination over all engineering and geological evaluations Built up quality client base and reduced expenses to improve office profitabilty margins Managed staff offive and was responsible for office operations and business development Gained significant exposure to unconventional plays in Alberta and provincial royalty system
Performed year-end reserve and economic updates/audits for properties located in the U.s., Canada,
Argentina, and the North Sea
Netherland, Sewell and Associates, Inc., Houston, Texas 1995-2002

Consulting Reservoir Engineer
Work activities included project coordination, oil and gas reserve estimation, economic evaluations,
. One of
propert valuations for sales and acquisitions, and field studies the Firm's most effective business development engineers
Maior domestic proiects included: Providing evaluation and coordination work activities for several clients'
acquisitions of oil and gas fields located in the onshore and offshore areas of Louisiana and Texas;
Coordinated evaluation of large Permian and East Texas propert divestiture package; Led engineering and
geological evaluation team for over 800 drilwell prospects in a South Louisiana salt-down field; Conducted
annual reserve updates for broad base of oil and gas properties including Altamont/Bluebell Field in Utah, West McArthur River and Trading bay Fields in the Cook Inlet, Alaska, several fields in the Los Angeles Basin, and numerous fields throughout Texas, Louisiana, Oklahoma, Kansas, and New Mexico
Major international proiects included: Participated in client's geological and reservoir engineering
evaluation of several fields in Bohai Bay, Offshore China. Evaluation efforts included deterministic and probabilstic estimates of reserves and development planning; Evaluated reserves for acquisition purposes for selected Alberta Foothills sour gas fields in Western Canada; Performed detailed technical evaluation of
gas and condensate supply for proposed 200 mile gas pipeline in the Western Desert, Arab Republic of Egypt
Additional ResDonsibilities Included: Business Development Committee Member, Public Relations

Committee Member, and China Market Development Leader
Exxon-Mobil Corporation, New Orleans, louisiana 1988-1995

Senior Engineer
Reservoir engineer for development and surveilance of South Pass 89 Field a salt dome structure with
various primary drive mechanisms, an NGl tertiary flood for 5 reservoirs, and abnorma I pressure gas sands Responsible for the field's driling and workover programs and profitabilty model
Design engineer and project manager for major modifications and additions to offshore platforms to
accommodate platform and jack-up drilling rigs
Served as division abandonment coordinator and developed innovative cost estimating technique for over
100 platforms/structures in the Gulf of Mexico
Reservoir engineer for company's joint interest onshore and offshore fields Evaluated workover and drilwell AFE requests from other operators and served as field sales coordinator Design and construction engineer for oil and gas processing facilities, Implemented two new technologies for gas treating facility and served as project coordinator for drilwell location/restoration program
Education
Masters of Business Administration 1993

University of New Orleans, New Orleans, Louisiana
GPA: 3.6/4.0
Bachelor of Science with Honors 1988

Petroleum and Natural Gas Engineering, the Pennsylvania State University, University Park, Pennsylvania
GPA: 3.6/4.0
Professional Affflations and Reaistrations

Registered Professional Engineer, States of
Texas and Louisiana
Series 7 and 63 Registration Memberships include: SPE, Houston Producers Forum, and Houston Energy Finance Group
EXHIBIT C
.~, ,";~
i ~.
IN THE UNTED STATES BANRUPTCY COURT

FOR THE DISTRICT OF DELA WARE
In re:
) Chapter i 1
PACIFIC ENERGY RESOURCES LTD., et al.,1

Debtors.
)
) Case No. 09-10785 (KJC)
) Jointly Administered
AFFIDAVIT OF MARK A. CLEMANS IN SUPPORT OF THE APPLICATION OF DEBTORS FOR AN ORDER AUTHORIZING RETENTION OF MILLSTREAM ENERGY, LLC AS CONSULTANT AND ASSUMPTION OF PREPETITION CONSULTING AGREEMENT AS AMENDED POST-PETITION
Mark A. Clemans, being duly sworn, and under penalty of
perjury, deposes and says:
i. This Affdavit is submitted in support of
the application ("Application") of
the above-captioned debtors and debtors in possession (the "Debtors") in these chapter I 1
cases for authorization of the retention of
Milstream Energy, LLC, a Texas limited liabilty
company, of
which I am the sole owner and manager and the sole engineer, as a consultant
for Pacific Energy Resources Ltd. and Pacific Energy Alaska Operating LLC at the expense
of
the Debtors' estates. The facts set forth in this Affdavit are personally known to me and,
.:
=:
if called as a witness, I could and would testify thereto. All capitalized terms not otherwse
defined herein shall have the meaning given them in the Application.
2. This Afdavit is also submitted as the statement required pursuant to

328(a), 329 and 504 of title 11 of
the United States Code (1 i U.S.C. 101 et seq. (the

'.
,.
f
The Debtors in these cases, along with the last four digits of each of the Debtor's federal tax identification
number, are: Pacific Energy Resources Ltd. (3442); Petroea! Acquisition Corp. (6249); Pacific Energy Alaska
Holdings, LLC (ta 1.D. # not available); Caneros Acquisition Corp. (5866); Pacific Energy Alaska Operating LLC (7021); San Pedro Bay Pipeline Company (1234); Caneros 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.
68773-001 \DOCS_LA; i 97962. i
"Banptcy Code")) and Rules 2014Ca) and 2016(b) of
Bankrptcy
Procedure (the "Bankrptcy Rules").

3. The process of evaluating the Properties is a very techncal one
requiring a great deal of expertise and the Debtors' business is complicated, which requires a
consultant to the Debtors to have significant knowledge of the oil and gas industry.
4. Milstream (of
which, I am the sole owner and engineer) is uniquely
qualified to act as the internal advisor for the Debtors in connection with the sale or
refinancing of the Properties because of
my experience and expertise. I am a petroleum and
natural gas engineer with an MBA and twenty years of diversified experience that includes
both domestic and international evaluation of oil and gas assets. Prior to establishing my
consulting firm, I worked seven years with Exxon-Mobile Corporation as a senior engineer,
seven years with Netherland, Sewell and Associates, Inc. C"NSAI") as a consulting reservoir
engineer, one year with Sproule Associates Inc., another top tier international consulting
firm, as the manager of
the Houston offce and five years with Goldman Sachs & Co., E&P
'" "' "' ~-;
Capital Group as a vice president and senior engineer.

5.
My experience with the Properties extends back over ten years. While
the
~,t,;
~
~.
employed with NSAI, I performed engineering work for the previous operators of
Properties. I was also responsible for the Beta Assets while working at Goldman Sachs. I
have, therefore, been involved with the Beta Assets as long, if not longer, than anyone else
r
involved.
6.
In providing prepetition consulting services to the Debtors in
'"
connection with these matters, I have worked closely with the Debtors' management and
68773-001\DOCS_LA: 197962. i
other professionals and have become well-acquainted with the Debtors' business and the
Properties. Accordingly, I have developed significant relevant experience and expertise

regarding the Debtors that wil assist Milstream in rendering to the Debtors the necessar
consulting servces during these chapter 1 i cases. Should the Cour approve the Debtors'
retention of Milstream and approve the assumption of the Consulting Agreement, I will
continue, without interrption, to perform the services for the Debtors as described in the
Consulting Agreement and in the Application. A short description of my qualifications is
attached hereto as Exhbit 1.

7. Pursuant to the Consulting Agreement, Milstream is to render services

a. Provide financial evaluation servces in connection with the
Debtors' asset divestiture or refinancing efforts;

b. Provide technical consulting services, including, but not limited to,
potential buyers, develop marketing materials, organze data-rooms, and make presentations on behalf of the Debtors; and
~~ t~'. :A ,.:.
d. Interact, coordinate, and support evaluation and marketing effort
by third parties.
8. I have been working with the Debtors prior to and after the Petition
Date. I have been responsible for coordinating the updating of the year-end reserves by third
par independent engineers for the regulatory filings in the United States with the Securities
b
f'
and Exchange Commission and in Canada.
68773-00
I \DOCS_LA:
197962.1
9. I am servng as the Debtors' techncal expert in the sale process of
the
Alaska Assets. As part of
that process, I am working with Lazd Freres & Co. ("Lazard") in

the offering memorandum. Because Lazad does not have a petroleum
the preparation of
engineers on staff, I will be the spokesperson for the Debtors on the engineering and geologic
aspects of the Alaska Assets during the sale process. Furher, I am responsible for the
technical data that is provided in the sale data room.
10. I have also been involved on behalf of
the Debtors in the preparation

those assets. I am, on behalf of
of
the evaluations of
the
Debtors, assisting Albrecht & Associates, Inc. and NSAI in the preparation of
their
evaluations of the Beta Assets and will continue to be actively involved in dealing with
i 1. Pursuant to the Consulting Agreement, if the Court authorizes the
Debtors to employ Milstream, the Debtors are to pay Millstream $300.00 per hour for
services I render. In addition, if either PERL or PEAO consummate a Safe Transaction, as
defined in the Consulting Agreement, Milstream is to be paid a fee as foHows: (i) in the
+
event of any Sale Transaction involving the Beta Assets the fee shall be $75,000; (ii) in the
event of any Sale Transaction involving the Alaska Assets, the fee shall be 1 % of the
Aggregate Consideration, as defined in the Consulting Agreement, subject to a minimum fee

of $50,000 and a
maximum fee of$425,OOO; (ii) in the event ofa Sale Transaction involving
the assets or equity interests of
.~ ....
l;aJI or substantially all of
f ..

the fees
Sale"), the total fee, subject to the minimum fee of$l25,000, shaH be the sum of
based on the fee..set forth above for each of

-
68773-00I\DOS_LA: 197962.1
a third~par offer, bid or proposal with respect to a Sale Transaction is received and the
paid the appropriate fee as set forth above on consumation thereof. If PERL and/or PEAO
raises and closes new
or additional equity investments of at least $100,000,000, Milstream
will receive a fee of$SOO,OOO.
12. The fee, as described above and with more partcularity in the
Consulting Agreement, is to be paid as a result of any of
the described transactions occuring

the Consulting Agreement. The Debtors have
within nine (9) months of
the termination of
also agreed to reimburse Milstream for its reasonable expenses incurred in the scope of its
retention.
compensation generally charged by individuals and companies of similar stature to
Milstream and me for comparable engagements, both in and out of court.

14.
I understands the provisions of sections 327, 328, 330 and 331 of
the
~
i~ :;; ~-
Bankrptcy Code and agree, on behalf of
MiIstream, that payment of
Milstream's fees and
reimbursement of
its expenses incurred are subject to review and approval by the Banptcy
Cour and I further understand that it may not receive any fees or expense reimbursement
except as authorized by order of
the Banuptl.Y Court. I also understands that, pursuant to
~ l0
t-''
section 329(a) of
the Banptcy Code, notwithstanding the terms and conditions set forth in
the Consulting Agreement, the Banptcy Cour may allow compensation different from the
compensation provided under the Consulting Agreement after the conclusion of Milstream's
68773-001\DOCS_LA: 197962.1
retention, if
the Consulting Agreement prove to have been
improvident in light of developments not capable of being anticipated at the time of the
fixing of such terms and conditions.
15. I understand that the indemnity contained in the Consulting Agreement
shall be subject to the limitations set forth in the Application.

16. I was employed by Goldman Sachs & Co., E&P Capital Group from
2004 until November, 2008. The E&P Capital Group originated and closed the mezzanine
loans for the acquisition by the Debtors ofthe Beta Assets and the Alaska Assets. I no longer
employed by or associated with Goldman Sachs and do not represent them in any capacity
related to this matter.
17. I may have represented certain of
the Debtors' creditors or other
parIes in interest in matters wholly unelated to these chapter 11 cases. To my knowledge,
neither Milstream nor I represent any par with an interest materially adverse to the Debtors
or their estates.
18.
PERL owes me $20,550 for 68.5 hours of services I rendered to it
before the Petition Date. It is my understading that the Debtors are seeking to assume the
Consulting Agreement and to cure the default under that Consulting Agreement by paying
me the prepetition amount owed to me.
t
~
~.
~~
68773-00 i \DOCS_LA: 197962. i
19. To the best of
my knowlede, if
tho Debtors are authorid to assume
the Consultig Agreement and cure the defaut therunder. Millstrea and r wi be
disinterested persons as defid in the Ba.ptcy Code.

I declare under penty ofpeiur that the foregoing is tre and corrct.
Executed on ths ~th day of April
2009.
Mark A. Clema
State of
ff0J~
of
Texas )
County of llAUl \ )
Subscribed and SWom to (or affied) before me on ths ~ day
Apri, 2009, by -- ~\( . GLM.lW proved to me on the basis of

satisfactory evidence to be the person(s) who appeared before me.
LISA R. GREEN
Not PtIll Stat Qf T&Xes
MV Commissio i:pire
March 23. 2011
LISA R. 6~Ee=
~ri ct. ti ner

~~
;;
t~
68773-001\DCS_LA191962.1
EXHIBIT 1
F
t"
68773.00 I \DOCS_LA: 197962.1
Mark A. Clemans, P.E.
Summary
Professional Engineer with an MBA degree and 20 years of diversified experience that includes both domestic and international evaluations of oil and gas assets. Career work includes 7 years of experience with a major 011 company, 8
years with top tier international consulting firms, and 5 years with the principle investing arm of a top Wall Street
investment bank. Demonstrated abilities in evaluations for asset backed financing and acquisition/divestiture projects, business development, project management, and negotiations. Experience includes all major hydrocarbon basins in the United States involving conventional and unconventional reservoirs.
Employment History
Milstream Energy, LlC, Sugar Land, Texas 2009-present

Principal & Professiona' Engineer
Private consulting firm focused on oil and gas asset evaluations and financial services Engagements have included services for mid-size operating companies and several investment banks Focusing on technical evaluations with emphasis in reservoir engineering and financial analyses
Goldman Sachs & Co., E&P Capital Group (EPC), Houston, Texas 2004-2008
Vice President& Senior Engineer
Led and coordinating engineer for technical evaluation process and portoliO credit management behind
$1.2 billon principle Investing effort
Performed technical analyses of upstream oil and gas, midstream, and service assets for transactions that
included senior secured, second lien, mezzanine debt, and partnership structures for deal sizes ranging from
$10 to over $200 millon
Originated and led deal evaluation process for numerous opportunities including the closing of one the
group's largest debt investments Board member for Fairway Resources, EPC's first funded private equity deal, and directly involved with their
acquisition and development programs in the Permian Basin and Barnett Shale
Provided technical advisory support on over $ 1 bilion of the Firms other business transactions including
hedging activities, collateral trades, volumetric production payments, and other principal investing efforts
Determined feasibility and economic returns for conventional and unconventional reservoirs in North
America, including heavy oil, water-floods, along with numerous shale and CBM plays
Performed rigorous technical due dilgence work that included asset valuation, risk analyses, environmental assessments, and project development planning Coordinated and interactive with financial analysts, 3rd part consultants, and attorneys as part of the deal
closing process Hired and trained two associate engineers to lever EPC's screening and evaluation efforts
Sproule Associates Inc., Houston, Texas 2002-2004

Manager, Houston Offce
Provided technical supervision and coordination over all engineering and geological evaluations Built up quality client base and reduced expenses to improve office profitabilty margins Managed staff offive and was responsible for office operations and business development Gained significant exposure to unconventional plays in Alberta and provincial royalty system
Performed year-end reserve and economic updates/audits for properties located in the U.s., Canada,
Argentina, and the North Sea
Netherland, Sewell and Associates, Inc., Houston, Texas 1995-2002

Consulting Reservoir Engineer
Work activities included project coordination, oil and gas reserve estimation, economic evaluations,
. One of
propert valuations for sales and acquisitions, and field studies the Firm's most effective business development engineers
Maior domestic proiects included: Providing evaluation and coordination work activities for several clients'
acquisitions of oil and gas fields located in the onshore and offshore areas of Louisiana and Texas;
Coordinated evaluation of large Permian and East Texas propert divestiture package; Led engineering and
geological evaluation team for over 800 drilwell prospects in a South Louisiana salt-down field; Conducted
annual reserve updates for broad base of oil and gas properties including Altamont/Bluebell Field in Utah, West McArthur River and Trading bay Fields in the Cook Inlet, Alaska, several fields in the Los Angeles Basin, and numerous fields throughout Texas, Louisiana, Oklahoma, Kansas, and New Mexico
Major international proiects included: Participated in client's geological and reservoir engineering
evaluation of several fields in Bohai Bay, Offshore China. Evaluation efforts included deterministic and probabilstic estimates of reserves and development planning; Evaluated reserves for acquisition purposes for selected Alberta Foothills sour gas fields in Western Canada; Performed detailed technical evaluation of
gas and condensate supply for proposed 200 mile gas pipeline in the Western Desert, Arab Republic of Egypt
Additional ResDonsibilities Included: Business Development Committee Member, Public Relations

Committee Member, and China Market Development Leader
Exxon-Mobil Corporation, New Orleans, louisiana 1988-1995

Senior Engineer
Reservoir engineer for development and surveilance of South Pass 89 Field a salt dome structure with
various primary drive mechanisms, an NGl tertiary flood for 5 reservoirs, and abnorma I pressure gas sands Responsible for the field's driling and workover programs and profitabilty model
Design engineer and project manager for major modifications and additions to offshore platforms to
accommodate platform and jack-up drilling rigs
Served as division abandonment coordinator and developed innovative cost estimating technique for over
100 platforms/structures in the Gulf of Mexico
Reservoir engineer for company's joint interest onshore and offshore fields Evaluated workover and drilwell AFE requests from other operators and served as field sales coordinator Design and construction engineer for oil and gas processing facilities, Implemented two new technologies for gas treating facility and served as project coordinator for drilwell location/restoration program
Education
Masters of Business Administration 1993

University of New Orleans, New Orleans, Louisiana
GPA: 3.6/4.0
Bachelor of Science with Honors 1988

Petroleum and Natural Gas Engineering, the Pennsylvania State University, University Park, Pennsylvania
GPA: 3.6/4.0
Professional Affflations and Reaistrations

Registered Professional Engineer, States of
Texas and Louisiana
Series 7 and 63 Registration Memberships include: SPE, Houston Producers Forum, and Houston Energy Finance Group
IN THE UNITED STATES BANUPTCY COURT
In re: )
PRE Upon the application (the "Application,,)2 of
FOR THE DISTRICT OF DELAWAR
Chapter 11
) )
PACIFIC ENERGY RESOURCES LTD., et al., 1 )
Debtors. )
Case No. 09- 10785(KC) (Jointly Administered)
ORDER AUTHORIZING RETENTION OF MILLSTREAM ENERGY, LLC AS CONSULTANT AND ASSUMPTION OF PETITION CONSULTING AGREEMENT AS AMENDED POSTPETITION
the above-captioned debtors and
debtors in possession (the "Debtors"), seeking authorization to retain Millstream Energy, LLC
("Milstream") as Consultant and to assume a prepetition consulting agreement, as amended postpetition; and the Cour being satisfied, based on the representations made in the Application
and the Clemans Affdavit, that Milstream holds no interest adverse to the Debtors or the
Debtors' estates with respect to the matters upon which it is to be engaged, and is disinterested as
that term is defined under section 101(14) of
the Bankptcy Code, as modified by section

Millstream and the assumption of
the Debtors and the Debtors'
1107(b) of
the Bankptcy Code, and that the employment of
the Consulting Agreement is necessary and in the best interests of
estates; and it appearng that the Court has jurisdiction to consider the Application; and it
appearing that due notice of the Application has been given and no further notice need be given;
i 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); San Pedro Bay Pipeline Company (1234); 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 term, unless otherwise defined herein, shall have the meanings ascribed to them in the
Application.
68773-001 \DOCS _DE: 146919.1
and upon the proceedings before the Court; and after due deliberation and good and sufficient
cause appearing; it is
ORDERED that the Application is granted; and it is fuher

ORDERED that pursuant to section 327(a) of
the Bankptcy Code, the Debtors
are authorized to employ and retain Millstream as consultant, effective nunc pro tunc to the Petition Date, on the terms set forth in the Application; and it is further
ORDERED that the Debtors are authorized to assume the Consulting Agreement;
and it is further
ORDERED that the Milstream shall file applications and be compensated in
accordance with sections 328, 330 and 331 ofthe Bankptcy Code, the Bankptcy Rules, the
Local Rules, and such other procedures as may be fixed by order of this Court; and it is further
ORDERED that the Debtors are authorized to take any steps necessary to effectuate the terms of this Order including, but not limited to, payment of any cure costs
associated with assumption of
the Consulting Agreement; and it is fuher
68773-001 \DOCS_DE:146919.1
ORDERED that nothing in this Order shall be deemed to affect any and all rights
that the Offcial Committee of
Unsecured Creditors or any pary-in-interest may have to seek
avoidance, pursuant to Chapter 5 of the Banptcy Code, of any prepetition payments made by
the Debtors to Milstream, and all such rights are hereby expressly preserved.
Dated:
,2009
The Honorable Kevin J. Carey
Chief
United States Banptcy Judge
68773-001 \DOCS_DE: 146919.1
IN THE UNITED STATES BANKRUPTCY COURT
In re: )
list in the maner indicated:
FOR THE DISTRICT OF DELAWARE
Chapter 11
) )
PACIFIC ENERGY RESOURCES LTD., et aI., 1 )
Debtors. )
I, James E. O'Neil, Esquire, hereby certify that on the 8th day of April
Case No. 09-10785 (KJC) (Jointly Administered)
CERTIFICATE OF SERVICE
2009, I
caused a copy of the following document to be served on the individuals on the attached service
NOTICE OF APPLICATION OF THE DEBTORS FOR AN ORDER AUTHORIZING RETENTION OF MILLSTREAM ENERGY, LLC AS CONSULTANT AND ASSUMPTION OF PREPETITION CONSULTING AGREEMENT AS AMENDED POST-PETITION;
APPLICATION OF DEBTORS FOR AN ORDER AUTHORIZING THE RETENTION OF MILLSTREAM ENERGY, LLC AS CONSULTANT AND ASSUMPTION OF PREPETITION CONSULTING AGREEMENT AS AMENDED POST -PETITION;
(PROPOSED) ORDER AUTHORIZING THE RETENTION OF MILLSTREAM ENERGY, LLC AS CONSULTANT AND ASSUMPTION OF PREPETITION CONSULTING AGREEMENT AS AMENDED POSTPETITION.
the Debtors' federal tax identification number, are: Pacific Energy Resources Ltd. (3442); Petrocal Acquisition Corp. (6249); Pacific Energy Alaska Holdings, LLC (tax 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 mailng address for all of the Debtors is ILL W. Ocean Boulevard, Suite 1240, Long Beach, CA 90802.
i The Debtors in these cases, along with the last four digits of each of
68773-001 \DOCS_DE: 146924.2
Pacific Energy Resources Ltd. 2002 Service List

Case No. 09-10785
Document No. 145745
11 - Hand Delivery 35 - First Class Mail

02 - FOREIGN First Class Mail
Hand Delivery (United States Attorney) Ellen W. Slights, Esq. United States Attorney's Offce District of Delaware
1007 N. Orange Street, Suite 700
Wilmington, DE 19801
Hand Delivery (Counsel for the Debtors and Debtors in Possession) Ian S. Fredericks, Esquire Skadden Arps, Slate, Meagher & Flom LLP One Rodney Square P.O. Box 636 Wilmington, DE 19899
Hand Delivery (Counsel for J. Aron & Company) Don A. Beskrone, Esquire Amanda M. Winfree, Esquire Ashby & Geddes, P.A.
500 Delaware Avenue, 8th Floor
((Proposed) 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
Interoffice Pouch to Los Angeles ((Proposed) Counsel for Debtors) Robert M. Saunders, Esquire Ira D. Kharasch, Esquire Scotta E. McFarland, Esquire Pachulski Stang Ziehl & Jones LLP
10100 Santa Monica Blvd., 11 th Floor
Hand Delivery (Counsel for Union Oil Company of California, a California Corporation) Norman M. Monhait, Esquire Rosenthal, Monhait & Goddess, P A Citzens Ban Center, Suite 1401 919 Market Street, P.O. Box 1070 Wilmington, DE 19899
Los Angeles, CA 90067

Hand Delivery (United States Trustee) Joseph McMahon, Esquire the United States Trustee Offce of J. Caleb Boggs Federal Building 844 North King Street, Suite 2207
Lockbox 35
Hand Delivery (Copy Service)
Parcels, Inc.
Vito i. DiMaio 230 N. Market Street Wilmington, DE 19801
Hand Delivery (Counsel for Westchester Fire Insurance Company and Noble Energy Inc.) Tobey M. Daluz, Esquire Joshua E. Zugerman, Esquire Ballard Spahr Andrews & Ingersoll, LLP 919 N. Market Street, 1 ih Floor Wilmington, DE 19801
Hand Delivery (Counsel for Oxy Long Beach Inc.) David 1. Finger, Esquire
Finder, Slanina Liebesman, LLC
First Class Mail

Secretary of Treasury P.O~ Box 7040
One Commerce Center

1201 N. Orange St., 7th Floor
Dover, DE 19903
Hand Delivery
First Class Mail

Secretary of Treasury 15th & Pennsylvania Avenue, N.W. Washington, DC 20220
Unsecured Creditors) David B. Stratton, Esquire James C. Carignan, Esquire Pepper Hamilton LLP
(Offcial Committee of
First Class Mail

Attn: Insolvency
Hercules Plaza, Suite 1500
1313 Market Street Wilmington, DE 19899
District Director Internal Revenue Service 31 Hopkins Plaza, Room 1150 Baltimore, MD 21201
Hand Delivery (Counsel for Marathon Oil Company) Kevin J. Mangan, Esquire Womble Carlyle Sandridge & Rice, PLLC 222 Delaware Avenue, Suite 1501 Wilmington, DE 19801 Hand Delivery (Counsel for Cook Inlet Region, Inc.) Eric Lopez Schnabel, Esquire Dorsey & Whitney (Delaware) LLP
1105 North Market Street, Suite 16th Floor
First Class Mail

Internal Revenue Service P.O. Box 21126 Philadelphia, PA 19114-0326
First Class Mail

Attn: Insolvency Internal Revenue Service
1352 Marrows Road, 2nd Floor
Newark,DE 19711-5445
First Class Mail

Mark Schonfeld, Esq. Regional Director Securities & Exchange Commission New York Regional Office 3 World Financial Center, Suite 400 New York, NY 10281-1022
First Class Mail

(United States Attorney General) Eric H. Holder, Jr. the Attorney General Office of U.S. Deparment of Justice 950 Pennsylvania Avenue, N.W. Washington, DC 20530-0001
First Class Mail

Michael A. Berman, Esq. Securities & Exchange Commission Office of General Counsel-Banptcy 100 F Street, N.E. Washington, DC 20549
First Class Mail

Secretary of State Division of Corporations Franchise Tax P.O. Box 7040 Dover, DE 19903
First Class Mail

Matthew Berry, Esquire Office of General Counsel Federal Communcations Commission
445 12th Street, S.W.
First Class Mail

(Counsel to Silver Point Finance) Seth Jacobs, Esquire
Ara Meresidis, Esquire

Skadden, Ars, Slate, Meagher & Flom, LLP 333 West Wacker Drive Chicago, IL 60606-1285
Washington, DC 20554
First Class Mail

POLLARD WIRELINE P.O. Box 1360 Kenai, AK 99611
First Class Mail

(Counsel to Goldman Sachs and J.Aron & Company) Jeffrey Sabin, Esquire Steven Wilamowsky, Esquire Scott K. Seamon, Esquire Bingham McCutchen LLP
399 Park Avenue
First Class Mail

Chevron Oil Company
Attn: Steven Lastraps
3800 Centerpoint Drive, Suite 100 Anchorage, AK 99503
N ew York, NY 10022
First Class Mail

California Franchise Tax Board
Banptcy, BE MSA 345
First Class Mail (Counsel to Goldman Sachs and lAron &

Company) Amy Kyle
Bingham McCutchen
P.O. Box 2952 Sacramento, CA 95812-2952
First Class Mail

Aera Energy LLC 10000 Ming Avenue Bakersfield, CA 93311-1164
(Boston) One Federal Street Boston, MA 01221-1726
First Class Mail
First Class Mail

SWEPI LP
P.O. Box 576 Houston, TX 77001-0576
(Counsel for Union Oil Company of California, a California Corporation) Cabot Christianson, Esquire Christianson & Spraker
911 West 8th Avenue, Suite 201
First Class Mail

Noble Energy, Inc.
Anchorage, AK 99501
100 Glenborough, Suite 100 Houston, TX 77067
First Class Mail

Linda Lautigar
Banptcy Coordinator
MMS / Denver Federal Center POBox 25165 Mail Stop 370B2 Denver, CO 80225
First Class Mail

Kristina Engelbert RDI Royalty Distributors, Inc. PO Box 24116 Tempe, AZ 85285
First Class Mail

(Counsel for Rosecrans Energy, Ltd. And Sherwin D. Yoelin)
Johr J. Haris, Esquire Rachel M. F eiertag, Esquire
First Class Mail

MTGLQ Investors, L.P. 85 Broad Street New York, New York 10004
Meyers, Nave, Riback, Silver & Wilson 333 South Grand Avenue, Suite 1670 Los Angeles, CA 90071
,-
ti ~
First Class Mail

(Counsel for Oxy Long Beach Inc.) Richard M. Kremen, Esquire Jodie E. Buchman, Esquire DLA Piper LLP (US)
6225 Smith Avenue
First Class Mail

Goldman Sachs E&P Capital Attn: John K. Howie 1000 Louisiana, Suite 550 Houston, Texas 77002
Baltimore, MD 21209
First Class Mail

SPCP Group, L.L.C.
Two Greenwich Plaza, 1 st Floor
First Class Mail

(Counsel for Noble Energy Inc.) Rhett G. Campbell, Esquire Mitchell E. Ayer, Esquire Thompson & Knight LLP 333 Clay Street, Suite 3300 Houston, TX 770022
Greenwich, CT 06830
First Class Mail

Seth E. Jacobson, Esquire 1. Byron Vance III, Esquire
Skadden, Ars, Slate, Meagher & Flom LLP
First Class Mail

Unsecured Creditors) Francis J. Lawall, Esquire Pepper Hamilton LLP 3000 Two Logan Square Eighteenth & Arch Streets Philadelphia, PA 19103
(Official Committee of
333 West Wacker Drive, Suite 2100 Chicago, IL 60606
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Interior, including the Minerals
Management Service)
E. Kathleen Shahan, Esquire U.S. Department of Justice 1100 L Street, NW Washington, D.C. 20005
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(Official Committee of
Unsecured
Creditors)
Filberto Agusti, Esquire
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(Counsel for Westchester Fire Insurance Company) Robert McL. Boote, Esquire Ballard Spah Andrews & Ingersoll, LLP
1735 Market Street, 51 st Floor
Steven Reed, Esquire Joshua Taylor, Esquire Steptoe & Johnson LLP 1330 Connecticut Avenue NW Washington, DC 20036
Philadelphia, PA 19103
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Unsecured (Offcial Committee of Creditors) Robbin Itkin, Esquire Katherine Piper, Esquire Kelly Frazier, Esquire Steptoe & Johnson LLP 2121 Avenue of the Stars, 28th Floor Los Angeles, CA 90067
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(Counsel for Cook Inlet Region, Inc.)
Michael R. Mils, Esquire
Dorsey & Whitney LLP

1031 W. 4th Ave., Suite 600
Anchorage, AK 99501
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(Transfer Agents)
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Computershare Investor Services Inc.
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IN THE UNITED STATES BANRUPTCY COURT

FOR THE DISTRICT OF DELAWAR

(KJC) (Jointly Administered)

the United States

the Federal Rules of

Bankrptcy Procedure (the "Banptcy Rules"), authorizing the retention of

the work pursuant to the

68773-002\DOCS _LA: 198886.1

Operating LLC C'PEAO") and Milstream (copies of

the Original Consulting Agreement and the

Consulting Agreement are appended as hereto as Exhbits A and B. respectively) effective as of

and more fully

Jurisdiction. Venue & Statutory Predicate

pursuant to 28 V.S.C. 1408 and 1409. This matter is a core

proceeding within the meaning of28 U.S.C. 157(b)(2).

requested herein are sections 327(a),

328(a) and 365(a) of

the Bankrptcy Code and Bankptcy Rules 2014,2016 and 5002.

the Bankrptcy Code. No request has been made for

Unsecured Creditors in this case.

A. Descriotion of the Debtors

production. Their revenue for 2008

was approximately $226.2 millon.

5. Pacific Energy Resources Ltd. ("PERL"), which is a Debtor, is a publicly

the equity interests in:

a. Pacific Energy Alaska Holdings, LLC ("PEAH"), a Debtor, which

(1) Pacific Energy Alaska Operating LLC ("PEAO"), a Debtor,

which has working interests in certin oil and gas leased

the equity interests in Cook Inlet Pipeline

Company ("CIPL") (the other half of CIPL is owned by an

affliate of Chevron Corporation ("Chevron")). CIPL is not

8. An affliate of Chevron has a majority working interest, and is the

Chevron each own a 46.8% and a 53.2% working interest,

four offshore platforms and

sixty-six producing wells. As of

the Petition Date, the estimated accrued and unpaid expenses

production) assessed by Chevron against PEAO for operating expenses totals

the revenues and the costs of

11. PERL's estimated liabilities as ofthe Petition Date (exclusive of accrued

and unpaid interest), are as follows:

Goldman Sachs and Silver Point, which have provided

and unpaid interest), are as follows:

PERL's assets. PERL did not

E. The Debtors' RelationshiD With Their Secured Creditors

13. In connection with the acquisition of

the Beta Assets, on November 30,

Goldman Sachs that is also

the Petition Date. The Beta Facilty is secured by

the Alaska Assets, in August 2007,

the assets ofPEAO and PEAH, including (among other

the Beta Assets.

the Petition Date. The Alaska Second Lien Facilty

the forbearance periods expired on Februar 17,2009, and on the same

Basis for Relief

the Bankrptcy Code, a trustee, debtor in

possession and committee appointed under 1102 of

18. Specifically, 327(a) of

the Bankrptcy Code provides that a debtor,

subject to Court approval:

20. Banptcy Rule 2014 requires that an application for retention

( firm) to be employed, the reasons for the selection, the professional

2 I. Section 365(a) provides in relevant par that a debtor in possession