UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE

In Re: PACIFIC ENERGY RESOURCES, LTD., et al., Debtors.

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

FEE AUDITORS FINAL REPORT REGARDING INTERIM FEE APPLICATION OF RUTAN & TUCKER, LLP, FOR THE FOURTH INTERIM PERIOD This is the final report of Warren H. Smith & Associates, P.C., acting in its capacity as fee auditor in the above-captioned bankruptcy proceedings, regarding the Fee Application of Rutan & Tucker, LLP, for the Fourth Interim Period (the Application). BACKGROUND 1. Rutan & Tucker, LLP (Rutan), was retained as special corporate and litigation

counsel for the debtors-in-possession. In the Application, Rutan seeks approval of fees totaling $280,990.50, and costs totaling $2,180.33 for its services from December 1, 2009, through February 28, 2010 (the Application Period). 2. In conducting this audit and reaching the conclusions and recommendations

contained herein, we reviewed in detail the Application in its entirety, including each of the time and expense entries included in the exhibits to the Application, for compliance with Local Rule 2016-2 of the Local Rules of the United States Bankruptcy Court for the District of Delaware, Amended Effective February 1, 2010, and the United States Trustee Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. 330, Issued January 30, 1996 (the Guidelines), as well as for consistency with precedent established in the United States
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Bankruptcy Court for the District of Delaware, the United States District Court for the District of Delaware, and the Third Circuit Court of Appeals. We served on Rutan an initial report based on our review, and received a response from Rutan, portions of which response are quoted herein. DISCUSSION 3. In our initial report, we noted one expense entry for Support Staff Overtime: Support Staff Overtime 160.00

Dec. Inv. 573743

We asked Rutan to provide further explanation regarding this charge and it responded as follows: In paragraph 3 of the Report, the Fee Auditor asks that Rutan provide additional detail regarding its request for reimbursement of $160 in Support Staff Overtime on Invoice Number 573743. Rutan withdraws the request. We appreciate this response and thus recommend a reduction of $160.00 in expenses. 4. In our initial report, we noted two Miscellaneous expense entries that bear no

further description: Dec. Inv. 573744 Jan. Inv. 575745 Miscellaneous Miscellaneous 74.77 137.57

We asked Rutan to explain these charges. Rutan provided the following response: In paragraph 4 of the Report, the Fee Auditor asks that Rutan provide addition detail regarding two "Miscellaneous" expense charges included in Invoice Numbers 573744 and 575745. In light of the amounts at issues, Rutan withdraws the requests. We appreciate this response and thus recommend a reduction of $212.34 in expenses. 5. In our initial report, we noted an expense entry for Appearance Fees: Appearance Fees 30.00

Feb. Inv. 578077

We asked Rutan to explain this expense. Rutan provided the following response: In paragraph 5 of the Report, the Fee Auditor asks that Rutan explain the "Appearance Fee" on Invoice Number 578077. Rutan arranged to appear telephonically at March 24, 2010, hearing on its Second Quarterly Fee Application.
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The $30.00 "Appearance Fee" reflects the amount Court Call charged Rutan for the reservation. We appreciate this response and have no objection to this item. 6. In our initial report, we noted one instance in which three attorneys participated in

a conference call, billing a total of 3.60 hours and $1,587.50: 12/06/09 GA 1.50 Conference call with G. Tywoniuk, G. Sleichter and A. Marino re Rise version of PSA. Telephone conference with G. Tywonuik, G. Amber, T. Marion and R. Kumararatne regarding lenders credit bid PSA.

12/06/09

GS

1.60

12/06/09

RK

10.90 ...; participate in conference call regarding sale of Beta assets (0.5).

Guideline II.D.5 provides that [i]f more than one professional from the applicant firm attends a hearing or conference, the applicant should explain the need for multiple attendees. Furthermore, Delaware Local Rule 2016-2(d)(ix) states that [t]he activity descriptions shall individually identify all meetings and hearings, each participant, the subject(s) of the meeting or hearing, and the participants role. We asked Rutan to provide further explanation regarding these fees. Rutan provided the following response: In paragraph 6 of the Report, the Fee Auditor asks that Rutan explain why three of its attorneys-Gregg Amber, Garett Sleichter, and Rushika Kumararatne-participated in the same conference call. Although Rutan believes that it was necessary for Ms. Kumararatne and Messrs. Amber and Sleichter to each participate in the conference call because of the different aspects of the work they were performing, Rutan withdraws its requests for the fees charged by Ms. Kumararatne for the conference call ($162.50). With respect to Messrs. Amber and Sleichter, it was necessary for both to participate in the conference call for various reasons. First, the Debtors requested that both Messrs. Amber and Sleichter participate in the call. Second, it was necessary for both to participate because they were involved in the deal being discussed in different ways. Mr. Sleichter's participation was key because he was going to do the initial draft of the documents being discussed. Mr. Amber's participation was
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necessary because he was overseeing Mr. Sleichter's work and because he had five years of experience working for the Debtors, which allowed him to ensure that items were included in the documents at the initial drafting stage. Moreover, because the transactional documents were being prepared during the holidays, the Debtors wanted more than one attorney familiar with the transaction because of the various vacation plans and family commitments of those involved. We appreciate this response, and, since we have no objection to the fees of Messrs. Amber and Sleichter, we accordingly recommend a reduction of $162.50 in fees. CONCLUSION 7. Thus, we recommend approval of fees in the amount of $280,828.00 ($280,990.50

minus $162.50) and expenses in the amount of $1,807.99 ($2,180.33 minus $372.34) for Rutans services for the Application Period.

Respectfully submitted, WARREN H. SMITH & ASSOCIATES, P.C.

By: Warren H. Smith Texas State Bar No. 18757050 325 N. St. Paul Street, Suite 1250 Republic Center Dallas, Texas 75201 214-698-3868 214-722-0081 (fax) whsmith@whsmithlaw.com FEE AUDITOR

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CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing document has been served via First-Class United States mail to the attached service list on this 10th day of August 2010.

Warren H. Smith

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SERVICE LIST The Applicant Penelope Parmes Matt Grimshaw Rutan & Tucker, LLP 611 Anton Blvd., 14th Floor Costa Mesa, CA 92626 United States Trustee Office of the United States Trustee 844 N. King Street, Room 2207 Lock Box 35 Wilmington, DE 19801 Counsel to the Debtors Laura Davis Jones, Esq. Ira D. Kharasch, Esq. Scotta E. McFarland, Esq. Robert M. Saunders, Esq. James E. ONeill, Esq. Kathleen P. Makowski, Esq. Pachulski Stang Ziehl & LLP 919 North Market Street, 17th Floor P.O. Box 8705 Wilmington DE 19899-8705 Counsel to the Debtors Ian S. Fredericks, Esq. Skadden Arps, Slate, Meagher & Flom LLP One Rodney Square P.O. Box 636 Wilmington, DE 19899 Special Counsel to the Debtors Penelope Parmes, Esq. Rutan & Tucker, LLP 611 Anton Boulevard 14th Floor Costa Mesa, CA 92626 Canadian Counsel to the Debtors Jensen Lunny MacInnes Law Corp. H.C. Ritchie Clark, Q.C. P.O. Box 12077 Suite 2550 555 West Hastings Street Vancouver, BC V6B 4N5 Engineering Consultant to the Debtors Mark A. Clemans Millstream Energy, LLC 4918 Menlo Park Drive Sugarland, TX 77479 Special Oil and Gas Transactional Counsel to the Debtors Anthony C. Marino, Esq. Schully, Roberts, Slattery & Marino PLC Energy Centre 1100 Poydras Street, Suite 1800, New Orleans, LA 70163 Financial Advisor to the Debtors Curtis A. McClam Deloitte Financial Advisory Services LLP 350 South Grand Ave, Ste. 200 Los Angeles, CA 90071 Financial Advisor to the Debtors John Rutherford Lazard Freres & Co. LLC 30 Rockefeller Plaza, 61st Floor New York, NY 10020

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Co-Counsel to the Official Committee of Unsecured Creditors David B. Stratton, Esq. James C. Carignan, Esq. Pepper Hamilton LLP Hercules Plaza, Suite 1500 1313 Market Street Wilmington, DE 19899 Co-Counsel to the Official Committee of Unsecured Creditors Filiberto Agusti, Esq. Steven Reed, Esq. Joshua Taylor, Esq. Steptoe & Johnson LLP 1330 Connecticut Avenue NW Washington, DC 20036

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