IN THE UNITED STATES BANKRUPTCY COURT

fure )
) )

FOR THE DISTRICT OF DELA WARE

Chapter 11

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

Case No. 09-10785 (KJC)

(Jointly Administered)
Related to Docket No. 884

Debtors. ))

Hearing Date: September 18,2009, at 2:00 p.m. Eastern

OBJECTION OF THE DEBTORS TO MOTION OF DANIEL K. DONKEL FOR RECONSIDERATION OF THE ABANDONMENT ORDER
The debtors and debtors in possession (together, the "Debtors") in the above-captioned

cases hereby object to the Motion for Reconsideration (the "Reconsideration Motion") fied by
Daniel K. Donkel ("Donkel), pro se, on behalf of Donkel Oil & Gas, LLC ("Donkel LLC"),2
with reference to the Court's Order Granting Alternative Motion of

the Debtorsfor An Order

Authorizing Abandonment of

Certain Interests in Oil and Gas Properties in Alaska (Excluding

Trading Bay) and Rejection of Executory Contracts Relating Thereto (Docket No. 876) (the
"Abandonment Order"). In support of

this objection, the Debtors respectfully state as follows:

1. The Reconsideration Motion is procedurally and substantively improper

and the Debtors urge the Court to deny it.

i The Debtors in these cases, along with the last four digits of each Debtor's 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 address for all of
the Debtors is 111 W. Ocean Boulevard, Suite 1240, Long Beach, CA.

2 The Debtors submit that Donkel should not be permitted to appear and argue in this Court on behalf ofDonkel

LLC without an attorney to represent that entity. Donkel LLC's attorneys have fied a motion to withdraw from this
case (Docket No. 885). See Rowland v. California Men's Colony, Unit II Men's Advisory Council, 506 U.S. 194,

201-02 (1993) (corporations may appear in federal court only through licensed counsel).

68773-002\DOCS _ SF:6734 i.5

2. Donkel lacks standing to force a sale upon these estates. He is a bidder for
the Debtors' abandoned assets (the "Abandoned Assets"), who submitted an "offer" to acquire
certain of the Abandoned Assets literally 40 minutes prior to the hearing on September 11, 2009.
Donkel is also a holder of an overriding royalty interest in the Abandoned Assets,3 who

previously appeared through counsel at the hearing on September 1, 2009, with a last minute

objection to abandonment that was overrled by the Court. Now appearing without counsel (his
attorneys have fied a motion to withdraw (Docket No. 885)),4 Donkel appears to be intent on

negotiating a sale not with the Debtors, but with this Court. This is despite the fact that the Debtors' representatives have spent significant time, even after entry ofthe Abandonment Order,

communicating with Donkel and specifically outlining for him what wil be needed for his sale
proposal to make economic sense to the Debtors' estates.5 As addressed further below, Donkel

has not offered anything viable as yet, not even close. Hence, as things stand today, Donkel is
nothing more that a disgruntled bidder who does not have the capacity to cause a sale of estate
assets.
3. The Debtors have already exercised their sound business judgment in

deciding to abandon the Abandoned Assets. In the context of issuing the Abandonment Order,

the Court suggested that reconsideration of the Abandonment Order may be possible and, in fact,

3 Donkel's overriding royalty interest is apparently at risk under applicable non-bankrptcy law as a result of

the Debtors' abandonment of the Abandoned Assets, but that is not issue that was (or needs to be) determined by this
Court. The Court should be aware, however, that this is the likely motive for Donkel's fiing of

the Reconsideration

Motion. 4 In the motion to withdraw (at paragraph 7), Donkel's attorneys state as follows: "Here, Donkel insists on action contrary to (the firm's) recommendation." pursuing courses of
5 Donkel has even made allusions to hiring the Debtors' Chief Cooper from and after an acquisition of

Financial Officer and restrcturing advisors at Zolfo

the Abandoned Assets.

2
68773-002\DOCS_SF:6734 i.5

the Debtors are continuing to consider any legitimate offers for the Abandoned Assets, provided that the purchase price makes it worthwhile for the estates to enter into the transaction and the
State of Alaska and affected landowners consent to the sale. Donkel' s latest "offer" to purchase

certain of the Abandoned Assets, which is essentially the same offer that the Debtors received
just prior to the hearing last week, does not warrant reconsideration of

the Abandonment Order.

4. Donkel's proposal is unworkable and does not benefit the Debtors' estates.

The purchase price is minimal ($250,000) and does not cover anticipated expenses (both

operational and professional) that wil have to be incurred pending the documentation and

closing of a sale (which is to occur by September 25,2009). Donkel's offer also does not take
into account anticipated cure obligations that would have to be paid at closing (including
$500,000 that would have to be segregated for the benefit of the Bureau of

Land Management)

and provides no evidence that Donkel has access to sufficient working capital or adequate
assurance of future performance to fund ongoing operational expenses.
5. Perhaps most glaring, the Debtors cannot decipher precisely what assets

Donkel proposes to acquire. He appears to pick and choose certain portions of the Abandoned
Assets (primarily gas-producing assets), while excluding others (primarily oil-producing assets)

with substantial potential decommissioning, plugging and abandonment obligations. Entry of the
Abandonment Order and withdrawal of

the various objections thereto asserted by the State of

Alaska and other constituents was, among other things, premised upon the Debtors'

abandonment of the Abandoned Assets as an operational whole. In many respects, the

Abandoned Assets function together in a way that does not allow a buyer to care-out specific
3
68773-002\DOCS _ SF:6734 i.5

portions for purchase. If in fact Donkel is focused on acquiring only the gas-producing assets,
the sale would require the State of Alaska and other landowners to take on oil-producing assets

without the gas production needed for operating such assets. This result is inconsistent with the
settlements that were ultimately encompassed in the Abandonment Order.

6. Finally, Donkel would have the estates bear the risk that the sale does not
close because one ofthe many conditions outlined in Donkel's offer is not met. For instance,
Donkel's proposal is contingent upon obtaining all necessary governental approvals. Yet,
Donkel does not appear to have approval of the State of Alaska or the Bureau of

Land

Management to own or operate any of the Abandoned Assets. In fact, Donkel admits in the
Reconsideration Motion that he is stil

looking for an operator. See Reconsideration Motion at p.

2 ("Over this week end, (Donkel LLC) has made significant progress to find an operator for
these assets."). The estates are left with no certainty that a sale to Donkel could ever close.

7. Taken together, Donkel has offered no legitimate basis for this Court to

reconsider the Abandonment Order. Donkel (while he was stil represented by counsel) already
made these same arguments to the Court last week and his objections were overruled. There is

nothing new in the Reconsideration Motion except that Donkel is now wiling to increase the
purchase price from $100,000 to $250,000. That is not nearly enough, in light of applicable risks
and costs, to make the transaction worthwhile from the perspective of

the Debtors' estates.

8. For the reasons set forth above, the Debtors request that the Court deny the

Motion.

4
68773-002\DOCS_SF:6734 i.5

Dated: September 18, 2009

PACHULSKI STANG ZIEHL & JONES LLP

Ira

D. ,Karasch (CA Bar No.1 09084)

1&' Aim/ lJ/l-f..

j oneil (ip

Jarr E. O'Neil (DE Bar No. 4042)

Maxim B. Litvak (CA BarNo. 215852) 919 North Market Street, 17th Floor P.O. Box 8705 Wilmington, DE 19899-8705
Telephone: (302) 652-4100

Facsimile: (302) 652-4400

Email: ikharasch(ipszjlaw.com

szj law .com

mlitvak(ips7J law .com

Counsel for the Debtors and Debtors in Possession

5
68773-002\DOCS _ SF:6734 i.5

IN THE UNITED STATES BANKRUPTCY COURT

In re: )
STATE OF DELAWARE )
) ss:

FOR THE DISTRICT OF DELAWARE

Chapter 11

) )

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

Debtors. )

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

AFFIDAVIT OF SERVICE

COUNTY OF NEW CASTLE )

Kathleen Forte Finlayson, being duly sworn according to law, deposes and says that she
is employed by the law firm of

Pachulski Stang Ziehl & Jones LLP, attorneys for the Debtors in
the

the above-captioned action, and that on the 18th of September, 2009 she caused a copy of

following document(s) to be served upon the parties on the attached service lists in the manner
indicated:

the Debtors to Motion of Daniel K. Donkel for Reconsideration of the Abandonment Order
Objection of

N ic

oeBAL.Y~
NOTARY PUl'
STATE Of DELAWAR
~ co exp J~ 18, 2011

Commission Exp.:

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

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

the Debtors is 111 W.

Ocean Boulevard, Suite 1240, Long Beach, CA 90802.

ALL BELOW SERVED VIA FACSIMILE

ATTORNEY
Joseph McMahon, Esq. (U.S. Trustee) Ira D. Kharasch, Esq.
Robert Saunders, Esq.

FAX NUMBER 302-573-6497

310-201-0760

PHONE NUMBER
302-573-6491

310-277-6910

Scotta McFarland, Esq. (counsel to the Debtors) Jeffrey Sabin, Esq.

(counsel to the Lenders)

212-752-5378
617-345-5001
312-407-8511

212-705-7747
617-951-8288

Amy Kyle, Esq.

(counsel to the Lenders)
Seth Jacobson, Esq.

312-407-0889 302-777-6500

(counsel for the Lenders) David B. Stratton, Esq. James C. Carignan, Esq. (counsel for Creditors' Committee)
Francis J. Lawall, Esq. (counsel for Creditors' Committee)
Filiberto Agusti, Esq.
Steven Reed, Esq.

302-421-8390

215-981-4750 202-429-3902

215-981-4000
202-429-3000

Josehua Taylor, Esq. (counsel for Creditors' Committee)

Robbin Itkin, Esq. Katherine Piper, Esq. Kelly Frazier, Esq. (counsel for Creditors' Committee)

310-734-3300

310-734-3200

Norman M. Monhait, Esquire (counsel for Union Oil Company of CA)

Robert R. Leinwand, Esquire (counsel for Whale Building LLC)
Francis A. Monaco, Jr., Esquire Fevin J. Mangan, Esquire (counsel for Marathon Oil)

302-658-7567 212-956-2164 302-661-7729

302-656-4433

212-603-6300
302-252-4361

Wiliam E. Chipman, Jr., Esquire (counsel for Daniel K. Donkel) (counsel for Medema Family Trust)

302-467-4450

302-467-4400

John C. Siemers, Esquire

907-258-2530
907-279-5358 713-659-2908

907-276-6100
907-276-1711

(counsel for Medema Family Trust) Christopher M. Brecht, Esquire (counsel for Daniel K. Donkel)

Frederick T. Johnson, Esquire (counsel for Digitel Data Joint Venture)

Robert W. Mallard, Esquire (counsel for Cook Inlet Region, Inc.)

713-659-2900
302-425-7171

302-425-7177 202-307-0494
302-573-6431

E. Kathleen Shahan, Esquire (counsel for United States)

202-307-0249
302-573-6277

Ellen W. Slights, Esquire (counsel for United States)

John C. Smith, Esquire (counsel for Salamatot)
Gerald K. Smith, Squire

907-222-7199 602-734-3834
302-425-6464

907-222-7107
602-262-5348 302-425-6412
302-252-4465

(counsel for Salamatot)

Micahel D. DeBaecke, Esquire (counsel for Salamatot)
Tobey M. Daluz, Esquire Joshua E. Zugerman, Esquire (counsel for Westchester Fire Ins. Co. and ACE USA) (counsel for Noble Energy)

302-252-4466

Robert McL. Boote, Esquire (counsel for Westchester Fire Ins. Co. and ACE USA)
Steven E. Rich, Esquire (counsel for Aera Energy LLC)

215-864-8999

215-665-8500

213-625-0248
713-238-4888
713-654-1871

213-229-9500
713-238-3000
713-654-8111

Charles S. Kelley, Esquire (counsel for Aera Energy LLC)

Mitchell E. Ayer, Esquire (counsel for Noble Energy Inc.)

Francis A. Monzco, Jr., Esquire Kevin J. Mangan, Esquire (counsel for Marathon Oil Company)

302-252-4330

302-252-4320

Richard E. Morton, Esquire Matthew E. Ross, Esquire (counsel for Marathon Oil Company)
Joseph H. Huston, Jr., Esquire Maria Aprile Sawczuk, Esquire (counsel for State of Alaska)
David Brown, Esquire
Stefan Engelhardt, Esquire

704-444-9963

704-331-4993

610-371-7972

302-425-3310

212-468-7900

212-468-8000

Lorenzo Marinuzzi, Esquire (counsel for State of Alaska)

Daniel K. Donkel, pro se

303-955-8741

303-955-8476 302-534-4499

Patrick J. Russell, Esquire (counsel for Daniel K. Donkel)

303-893-8332

DOCS_DE: 153226. I