IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELA WARE

In re:

Chapter i i
Case No. 09- i 0785(KJC)

PACIFIC ENERGY RESOURCES LTD., et al., i

Debtors.

) )
) )

(Jointly Administered)
Related To Docket No. 158

CERTIFICATION OF COUNSEL WITH RESPECT TO ORDER AUTHORIZING RETENTION OF MILLSTREAM ENERGY, LLC AS CONSULTANT. NUNC PRO TUNC TO THE PETITION DATE
On April 8,2009, Pacific Energy Resources Ltd, et al. (the "Debtors") filed the
Debtors' Applicationf9r an Order Authorizing Retention of

Milstream Energy, LLC

("Milstream") as r:onsultant and Assumption of Prepetition consulting Agreement as Amended

Post-Petition (Docket No. i 58) (the "Application").
In response thereto, the Official Committee of

Unsecured Creditors (the

"Committee") and the U.S. Trustee (the "Trustee") provided informal comments. The Debtors
have resolved the concerns of

the Committee and the U.S. Trustee and have revised the language the revised proposed order is attached hereto as Exhibit A,

in the proposed order. A copy of

which has been agreed to by the paries. A blackline copy of the order showing changes from the

version fied with the Application is attached hereto as Exhibit B.

The Debtors respectfully request that the Court enter the attached form of
proposed revised order attached hereto as Exhibit A at its earliest convenience.
Should the Court have any questions regarding the proposed revised order, the

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 the Debtors is 111 W. Ocean (1234); Cameros Energy, Inc. (9487); and Gotland Oil, Inc. (5463). The mailing address for all of
Boulevard, Suite i 240, Long Beach, CA 90802.

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

68773-002\DOCS _DE: 148 i 6 i.1

Debtors stand ready to respond.

Dated: May t3 2009

P ACHULSKI STANG ZIEHL & JONES LLP

Lau a Davis J es (DE Bar . 436)

Ira . Kharascn (CA Bar N . 10 084)

Scotta E. McFarland (DE B 0.4184, 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, 1 ih Floor P.O. Box 8705 Wilmington, DE 19899-8705
Telephone: 302/652-4100

Facsimile: 310/652-4400
Email: ljonespszjlaw.com

ikharaschpszjlaw.com
smcfarlandpszj law.com

rsaunderspszjlaw.com

joneilpszjlaw.com
kmakowskipszjlaw.com
Counsel for Debtor and Debtor in Possession Pacific Energy Resources Ltd.

68773-002\DOCS_DE: 148161.1

EXHIBIT A

DOCS_DE:148135.1

IN THE UNITED STATES BANKUPTCY COURT

In re: )
Upon the application (the "Application"i of

FOR THE DISTRICT OF DELAWAR

Chapter 1 1

) )

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

Debtors. )

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

Related to Docket No. 158

ORDER AUTHORIZING RETENTION OF MILLSTREAM ENERGY, LLC AS

CONSUL TANT. NUNC PRO TUNC TO THE PETITION DATE

the above-captioned debtors and

debtors in possession (the "Debtors"), seeking authorization to retain Milstream Energy, LLC
("Millstream") 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 Millstream 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

1 107 (b) of the Bankptcy Code, and that the employment of Milstream is in the best interests

of the Debtors and the Debtors' estates; and it appearing that the Court has jurisdiction to consider the Application; and it appearing that due notice of the Application has been given and

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 LD. # not available); Cameros Acquisition Corp. (5866); Pacific Energy Alaska Operating LLC (7021); San Pedro Bay Pipeline Company (1234); Cameros Energy, Inc. (9487); and Gotland Oil, Inc. (5463). The mailing address for all of the Debtors is ILL W. Ocean Boulevard, Suite 1240, Long Beach, CA 90802.
2 Capitalized terms, unless otherwise defined herein, shall have the meanings ascribed to them in the

Application.

68773-002\DOCS _LA:20 1786.2

no further notice need be given; and upon the proceedings before the Court; and after due
deliberation and good and sufficient cause appearing; it is

ORDERED that the Application is denied in part and granted in part, as modified

hereby; and it is further

the prepetition

ORDERED that the request for approval ofthe assumption of

Consulting Agreement is denied; and it is further

ORDERED that any prepetition amounts owed to Milstream pursuant to the

Consulting Agreement are hereby deemed waived, and it is further

ORDERED that pursuant to section 327(a) and 328(a) of

the Bankptcy Code,

the Debtors are authorized to employ and retain Milstream as consultant, effective nunc pro tunc
to the Petition Date, on the terms set forth in the Application and the Consulting Agreement, as
previously amended by the Amendment to Consulting Agreement on April

8, 2009 (the

"Amendment" and together with the Consulting Agreement, the "Amended Consulting
Agreement"), and as further modified hereby; and it is further

ORDERED that Milstream shall fie applications and be compensated with

respect to its hourly fees and expenses in accordance with sections 330 and 331 of

the

Bankrptcy Code, the Bankptcy Rules, the Local Rules, and such other procedures as may be
fixed by order of this Court; and it is further

68773-002\DOCS _ LA:20 1 786.2

ORDERED that subject to the following "ORDERED" paragraph of

this Order,

Milstream's Sales Transaction Fee, Equity Investments Fee and Termination Fee, all as set forth

and defined below, are approved pursuant to Bankptcy Code section 328(a); and it is fuher
ORDERED, that, notwithstanding anything to the contrary in this Order, the U.S.

Trustee shall retain the right and be entitled to object to the Sales Transaction Fee and/or the

Equity Investments Fee set forth below on the reasonableness standard under Bankptcy Code
sections 330 and 331. The Debtors and Milstream further stipulate and agree that this Order and
the record relating to the Court's consideration of

the Application shall not prejudice or

otherwise affect the rights ofthe U.S. Trustee to challenge the reasonableness of

Milstream's

compensation under Bankptcy Code sections 330 and 331. Accordingly, nothing in this Order

or the record shall constitute a finding of fact or conclusion of law binding on the U.S. Trustee,
on appeal or otherwise, with respect to the reasonableness of

Milstream's compensation; and it

is further

ORDERED that the Debtors are authorized to take any steps necessary to
effectuate the terms of this Order; and it is further

ORDERED that the language in section 3.b of

the Amended Consulting

Agreement is deleted and is replaced with the following:

1. The Companies shall pay Consultant at a rate of $300 per hour for services

rendered by Consultant to Companies.

2. If either or both of the Companies consummate a Sale Transaction (as

defined in the Amendment), Consultant shall be paid a fee (the "Sale Transaction Fee")
as follows:

68773-002\DOCS _ LA:20 1 786.2

(a) In the event of any Sale Transaction involving the "Beta Assets"

(as defined in the Amendment) the fee shall be $50,000.

(b) In the event of a Sale Transaction involving the "Alaska Assets"

(as defined in the Amendment) the fee shall be 1% of the Aggregate

Consideration (as defined in the Amendment), subject to a minimum fee of

$50,000 and a maximum fee of $325,000.
(c) 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 $100,000 and a maximum fee of
$375,000, shall be the sum of

the fees based on the fee set forth above for each of

the Beta Assets and the Alaska Assets. The Aggregate Consideration shall be the

value allocated to each in the definitive purchase and sale agreement(s) relating to
such transaction, or, if no such value is allocated, as mutually agreed in good faith

by the Companies and the Consultant. F or example, if 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 Beta Assets and $200,000,000 is allocated to the

Alaska Assets, the total fees shall be $375,000--$50,000 attributable to the Beta

Assets and $325,000 attributable to the Alaska Assets.

(d) Furthermore, if a bona fide third-part offer, bid or proposal with

respect to a Sale Transaction is received and either or both of the Companies

ultimately enter into an Existing Stakeholder Deal (as defined in the Amendment),
such transaction shall be deemed to be a Sale Transaction and Consultant shall be

paid the Sales Transaction Fee on consummation thereof.

3. If either or both of the Companies raises and closes new or additional

equity investments of at least $100,000,000, Consultant shall receive a fee of $325,000

(the "Equity Investments Fee").

68773-002\DOCS _ LA:20 i 786.2

4. For avoidance of doubt, the maximum combined compensation payable to

Consultant pursuant to subparagraphs 3.b(2) and 3.b(3) of the Consulting Agreement

shall not exceed $375,000 in the aggregate.

5. At the termination or expiration of

the Consulting Agreement, as amended

and further modified hereby, Milstream shall receive a fee of $20,550.00 (the

"Termination Fee"); and it is further

ORDERED that notwithstanding anything to the contrary in the Amended

Consulting Agreement, as modified herein, the Committee and the DIP Lenders shall have the

ability, prior to the payment of any Sale Transaction Fee, to object to the determination that a
third-party offer is "bona-fide" and nothing contained in this Order shall be deemed to operate as
a waiver of such right to object; and it is further

ORDERED that the Indemnity is approved, subject to the following

modifications, notwithstanding the Application or the Amended Consulting Agreement, as
modified herein:

(a) Milstream shall not be entitled to indemnification, contribution or

reimbursement pursuant to the Amended Consulting Agreement, as modified hcrcin, for scrviccs othcr than thosc dcscribcd in the Amended Consulting

Agreement, as modified herein, unless such services and indemnification

therefore are approved by the Court;
(b) The Debtors shall have no obligation to indemnify Milstread, or

provide contribution or reimbursement to Milstream, for any claim or expense

that is either: (i) judicially determined (the determination having become final) to

have arisen from Milstream's bad faith, self-dealing, breach of fiduciary duty (if

68773-002\DOCS _LA:20 1 786.2

any), wilful misconduct or gross negligence; (ii) for a contractual dispute in

which the Debtors allege the breach of Milstream'

s contractual obligations unless

the Court 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 Cour, after notice and a

hearing to be a claim or expense for which Milstream should not receive

indemnity, contribution or reimbursement under the terms of

the Amended

Consulting Agreement, as modified by this Order; and

(c) If, before the earlier of (i) the entr of an order confirming a

chapter 11 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,

Millstream 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 Amended Consulting Agreement, as modified by this Order, including without limitation the advancement of defense

costs, Milstream must file an application therefore in this Court, and the Debtors

may not pay any such amounts to Milstream before the entry of an order by this
Court approving the payment. This subparagraph (c) is intended only to specify
the period of time under which the Court 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'

68773-002\DOCS LA:20 1 786.2

obligation to indemnify Milstream. All parties in interest shall retain the right to
object to any demand by Milstream for indemnification, contribution or
reimbursement;

and it is further
ORDERED that nothing in this Order shall be deemed to affect any and all rights
that the Offcial Committee of

Unsecured Creditors or any part-in-interest may have to seek

avoidance, pursuant to Chapter 5 of the Bankptcy Code, of any prepetition payments made by
the Debtors to Milstream, and all such rights are hereby expressly preserved.

Dated:

,2009
'he Honorable Kevin J. Carey
Chief

United States Bankptcy Judge

68773-002\DOCS _ LA:20 1786.2

EXHIBIT B

DOCS_DE:148135.1

IN THE UNITED STATES BANKUPTCY COURT

EL4.CKThm

In re: )

FOR THE DISTRICT OF DELAWAR

Chapter 1 1

)
)

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

Debtors. )

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

Related to Docket No. 158

ORDER AUTHORIZING RETENTION OF MILLSTREAM ENERGY, LLC AS CONSULTANT. NUNC PRO TUNC TO THE PETITION DATE
Upon the application (the "Application,,)2 ofthe above-captioned debtors and

debtors in possession (the "Debtors"), seeking authorization to retain Milstream Energy, LLC
("Millstream") 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 Bankrptcy Code, as modified by section
1 107(b) of the Bankrptcy Code, and that the employment of

Milstream is in the best interests

of the Debtors and the Debtors' estates; and it appearing that the Court has jurisdiction to consider the Application; and it appearing that due notice of the Application has been given and

1 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 LD. # not available); Cameros Acquisition Corp. (5866); Pacific Energy Alaska Operating LLC (7021); San Pedro Bay Pipeline Company (1234); Cameros Energy, Inc. (9487); and Gotland Oil, Inc. (5463). The mailing address for all of the Debtors is ILL W. Ocean Boulevard, Suite 1240, Long Beach, CA 90802.
2 Capitalized terms, unless otherwise defined herein, shall have the meanings ascribed to them in the

Application.

68773-002\DOCS _LA:20 1 786.2

no further notice need be given; and upon the proceedings before the Court; and after due

deliberation and good and suffcient cause appearing; it is

ORDERED that the Application is denied in part and granted in part, as modified

hereby; and it is further

the prepetition

ORDERED that the request for approval of

the assumption of

Consulting Agreement is denied; and it is further

ORDERED that any prepetition amounts owed to Milstream pursuant to the

Consulting Agreement are hereby deemed waived, and it is further

ORDERED that pursuant to section 327(a) and 328(a) ofthe 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 the Consulting Agreement, as
previously amended by the Amendment to Consulting Agreement on April

8, 2009 (the

"Amendment" and together with the Consulting Agreement. the "Amended Consulting
Agreement"), and as further modified hereby; and it is further

ORDERED that Milstream shall fie applications and be compensated with

respect to its hourly fees and expenses in accordance with sections 330 and 331 of

the

Bankrptcy Code, the Bankptcy Rules, the Local Rules, and such other procedures as may be
fixed by order of this Court; and it is further

68773-002\DOCS _LA:20 1 786.2

ORDERED that subject to the following "ORDERED" paragraph of

this Order,

Milstream's Sales Transaction Fee, Equity Investments Fee and Termination Fee, all as set forth

and defined below, are approved pursuant to Bankptcy Code section 328(a); and it is further
ORDERED, that, notwithstanding anything to the contrary in this Order, the u.s.

Trustee shall retain the right and be entitled to object to the Sales Transaction Fee and/or the

Equity Investments Fee set forth below on the reasonableness standard under Bankptcy Code
sections 330 and 331. The Debtors and Milstream further stipulate and agree that this Order and
the record relating to the Court's consideration of

the Application shall not prejudice or

otherwise affect the rights of

the U.S. Trustee to challenge the reasonableness of

Milstream's

compensation under Bankptcy Code sections 330 and 331. Accordingly, nothing in this Order
or the record shall constitute a finding of

fact or conclusion oflaw binding on the u.s. Trustee,

Milstream's compensation; and it

on appeal or otherwise, with respect to the reasonableness of

is further

ORDERED that the Debtors are authorized to take any steps necessary to effectuate the terms of this Order; and it is further

ORDERED that the language in section 3.b ofthe Amended Consulting

Agreement is deleted and is replaced with the following:
1. The Companies shall pay Consultant at a rate of $300 per hour for services

rendered by Consultant to Companies.

2. If either or both of the Companies consummate a Sale Transaction (as

defined in the Amendment), Consultant shall be paid a fee (the "Sale Transaction Fee")
as follows:

68773-002\DOCS _LA:20 1 786.2

(a) In the event of any Sale Transaction involving the "Beta Assets"

(as defined in the Amendment) the fee shall be $50,000.

(b) In the event of a Sale Transaction involving the "Alaska Assets"

(as defined in the Amendment) the fee shall be 1% of the Aggregate

Consideration (as defined in the Amendment), subject to a minimum fee of

$50,000 and a maximum fee of$325,000.
(c) In the event of a Sale Transaction involving all or substantially all
ofthe assets or equity interests of

the Companies (a "Whole Company Sale"), the

total fee, subject to the minimum fee of $100,000 and a maximum fee of
$375,000, shall be the sum ofthe fees based on the fee set forth above for each of
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, if no such value is allocated, as mutually agreed in good faith

by the Companies and the Consultant. F or example, if 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 Beta Assets and $200,000,000 is allocated to the

Alaska Assets, the total fees shall be $375,000--$50,000 attributable to the Beta

Assets and $325,000 attributable to the Alaska Assets.

(d) Furthermore, if a bona fide third-part offer, bid or proposal with

respect to a Sale Transaction is received and either or both of the Companies

ultimately enter into an Existing Stakeholder Deal (as defined in the Amendment),
such transaction shall be deemed to be a Sale Transaction and Consultant shall be

paid the Sales Transaction Fee on consummation thereof.

3. If either or both of the Companies raises and closes new or additional

equity investments of at least $100,000,000, Consultant shall receive a fee of $325,000

(the "Equity Investments Fee").

68773-002\DOCS _ LA:20 1786.2

4. For avoidance of doubt, the maximum combined compensation payable to

Consultant pursuant to subparagraphs 3.b(2) and 3.b(3) of the Consulting Agreement

shall not exceed $375,000 in the aggregate.

5. At the termination or expiration of the Consulting Agreement, as amended

amI further moifie herehy, Milstream shall receive a fee of $20,:):)0.00 (the
"Termination Fee"h

and it is further

ORDERED that notwithstanding anything to the contrary in the Amended

Consulting Agreement, as modified herein, the Committee and the DIP Lenders shall have the

ability, prior to the payment of any Sale Transaction Fee, to object to the determination that a
third-party offer is "bona-fide" and nothing contained in this Order shall be deemed to operate as
a waiver of such right to object;: and it is further

ORDERED that the Indemnitv is aDnroved. subiect to the following

modifications. notwithstanding the ADDlication or the Amended Consulting Agreement. as

modified herein:

W Milstream shall not be entitled to indemnification. contribution or

reimbursement Dursuant to the Amended Consulting Agreement. as modified

herein. for services other than those described in the Amended Consulting Agreement. as modified herein. unless such services and indemnification
therefore are aDnroved bv the Court:
l The Debtors shall have no obligation to indemnifv Milstread. or
Drovide contribution or reimbursement to Millstream. for anv claim or eXDense

that is either: (i iudiciallv determined (the determination having become final) to

have arisen from Millstream's bad faith. self-dealing. breach offiduciarv dutv (if

68773-002\DOCS _ LA:20 1786.2

anv). wilful misconduct or grOSS negligence: (ii) for a contractual disDute in

which the Debtors allege the breach of

Milstream's contractual obligations unless

the Court determines that indemnification. contrbution or reimbursement would

be Dermissible Dursuant to In re United Artists Theatre Co.. 315 F.3d 217 (3d Cir.

2003): or (iii) settled Dfior to a judicial determination as to the exclusions set forth

in clauses (i and (ii) above. but determined bv the Court. after notice and a
hearing to be a claim or eXDense for which Millstream should not receive
indemnity. contribution or reimbursement under the terms of

the Amended

Consulting Agreement. as modified bv this Order: and

~ If. before the earlier of (i) the entr of an order confirming a

chaDter 11 Dlan in these cases (that order having become a final order no longer
subject to aDDeal)' and (ii) the entrv of an order closing these chaDter 11 cases.

Millstream believes that it is entitled to the Davment of anv amounts bv the

Debtors on account of

the Debtors' indemnification. contribution and/or

reimbursement obligations under the Amended Consulting Agreement. as

modified bv this Order. including without limitation the advancement of defense
costs. Millstream must file an aDDlication therefore in this Court. and the Debtors

mav not Dav anv such amounts to Millstream before the entrv of an order bv this
Court aDDfoving the Davment. This subDaragraDh (c) is intended onlv to sDecifv

the Deriod of time under which the Court shall have jurisdiction over anv reauest for fees and eXDenses bv Milstream for indemnification. contribution or
reimbursement. and not a Dfovision limiting the duration of the Debtors'

68773-002\DOCS _ LA:20 1786.2

obligation to indemnify Milstream. All Darties in interest shall retain the rrht to
obiect to anv demand bv Millstream for indemnification. contribution or
reimbursement: and it is further

ORDERED that nothing in this Order shall be deemed to affect any and all rights
that the Offcial Committee of

Unsecured Creditors or any part-in-interest may have to seek

avoidance, pursuant to Chapter 5 of the Bankptcy 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 Bankptcy Judge

68773-002\DOCS _ LA:20 1 786.2

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