In Re:: Fee Auditor'S Final Report - Page 1

UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE
In Re: PACIFIC ENERGY RESOURCES LTD., et al.,
Debtors.
) ) ) ) ) ) )
Chapter 11 Case No. 09-10785 (KJC) (Jointly Administered)
FEE AUDITORS FINAL REPORT REGARDING INTERIM FEE APPLICATION OF PACHULSKI STANG ZIEHL & JONES, LLP FOR THE SECOND 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 Interim Fee Application of Pachulski Stang Ziehl & Jones LLP, for the Second Interim Period (the Application). BACKGROUND 1. Pachulski Stang Ziehl & Jones LLP (Pachulski),was retained as counsel to the
debtors. In the Application, Pachulski seeks approval of fees totaling $1,229,261.25 and costs totaling $151,371.78 for its services from June 1, 2009 through August 31, 2009 (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 December 1, 2009, 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,
FEE AUDITORS FINAL REPORT - Page 1 pac FR Pachulski 2nd int 6-8.09.wpd
1996 (the Guidelines), as well as for consistency with precedent established in the United States 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 Pachulski an initial report based on our review, and received a response from Pachulski, portions of which response are quoted herein. DISCUSSION 3. We noted a few instances in which multiple Pachulski professionals participated in
hearings and an auction. See Exhibit A. Paragraph II.D.5. of the Guidelines 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 Pachulski to provide further explanation regarding these fees. Pachulskis response is provided in Response Exhibit 1. We appreciate Pachulskis response and have no objection to these fees. 4. We noted several airfare charges which are insufficient in explanation. See Exhibit
B. We asked Pachulski to provide further explanation regarding these charges. Pachulski explained
that all airfares questioned were first class fares, and that it obtained the cost of comparable coach fares from the travel agents used by Pachulski attorneys. Pachulskis response regarding each such fare is provided
in italics below each referenced entry in Exhibit B. We appreciate Pachulskis response and its proffered reduction of $1,841.80 in expenses, but our review of comparable fully refundable economy class airfares for the itineraries set forth on Exhibit B showed less expensive airfares for the following itineraries:
7/15/09 rt airfare for IDK from LAX to JFK in the amount of $2,789.20: We found a fully refundable economy class ticket for this itinerary on United Airlines for $1,270.00. Thus, we recommend a reduction in $1,519.201 in expenses. 7/24 rt airfare for IDK from LAX to JFK in the amount of $2,609.20: As noted above, since a fully refundable economy class ticket for this itinerary can be bought for $1,270.00, we recommend a reduction of $1,339.202 in expenses. 7/30/09 and 7/31/09 one-way airfares from LAX to Philadelphia for IDK in the amounts of $946.60 and $946.60: We note that on 8/30/09, professional JKTH traveled the same itinerary and the charge was $1,214.20. Therefore, we recommend a reduction to the total amount of JKTHs trip on 8/30/09. Thus, we recommend a reduction of $679.003 in expenses. Thus for this paragraph 4, we recommend a total reduction of $5,379.20 in expenses. 5. 08/03/2009 08/12/2009 08/31/2009 05/29/2009 08/20/2009 We noted the following travel charges which are insufficient in explanation: Hotel Expense [E110] Hotel Dupont MBL Hotel Expense [E110] Hotel Dupont MBL Hotel Expense [E110] Hotel Dupont MBL Travel Expense [E110] AJK Travel Expense, pc Air Fare [E110] Continental Airlines - flight from Philadelphia to Houston to San Francisco MBL $19.90 $9.95 $19.90 $75.00 $90.00
We asked Pachulski to further explain these charges. Pachulskis response is provided below.
$2,789.20 minus $1,270.00. $2,609.20 minus $1,270.00. $946.60 plus $946.60 minus $1,214.20.
The three hotel expenses incurred at the Hotel Dupont were for internet access for Mr. Litvak while he was there preparing for hearings in this case. We are unable to determine the purpose of travel expense in the amount of $75.00 and agree to write it off. 8/20/2009 one-way air fare from Philadelphia to San Francisco for MBL: We are unable to determine the purpose of this $90.00 expense and, therefore, the Firm agrees to write it off. We appreciate Pachulskis response and thus, recommend a reduction of $165.00 in expenses. 6. 07/22/2009 08/01/2009 We noted the following hotel charges which required further explanation: Hotel Expense [E110] W Hotels New York MBL Hotel Expense [E110] NY Palace Hotel IDK $598.82 $1,728.30
We asked Pachulski to provide additional information for each of these charges. Pachulski provided the following information: The $598.82 charge is for two nights at the W Hotel in New York City. Mr. Litvak stayed there in order to assist with the auction process in July, 2009 as discussed above. The $1,728.30 charge is for four nights at the New York Palace Hotel. [Mr. Kharasch stayed there while in New York City for meetings with the lenders and potential purchasers and for the auction. We appreciate Pachulskis response, and thus have no objection to these expenses4. 7. 07/10/2009 08/05/2009 We noted the following charges for secretarial overtime: Secretarial Overtime, G. Downing Secretarial Overtime, M. De Leon $193.56 $58.55
We asked Pachlulski to provide further information regarding these charges. Pachulski responded as follows: One of the occasions was for the overtime of Gini Downing on July 10, 2009. She
The Palace Hotel in NYC is a 4 and 1/2 star hotel, according to www.expedia.com. However, the price for the 4 nights in this stay calculates to $432.00 per night, which is below our recommended ceiling of $450 per night in NYC. The W Hotel in NYC is a 4 star hotel and the nightly rate for the two nights calculates as $299.41.
was required to work overtime to assist certain of our attorneys with an emergency mailing of cure notices to contract holders affected by the potential sale of certain of the Debtors oil and gas assets located in Alaska. The Firm is unable to determine why the other overtime charge of $58.55 was incurred and agrees to write it off. We appreciate Pachulskis response and accept its proffered reduction. Thus we recommend a reduction of $58.55 in expenses. 8. 05/31/2009 We noted the following car service charges: Auto Travel Expense [E109] AMS Transportation, Inv. 145956, AJK Auto Travel Expense [E109] AMS Transportation, Inv. 145957, AJK Auto Travel Expense - AMS Transportation Invoice # 145963 MBL [E109] Auto Travel Expense - AMS Transportation Invoice #145964 MBL [E109] Auto Travel Expense - AMS Transportation Invoice # 146635 MBL [E109] Auto Travel Expense [E109] AMS Pacific Transportation Inv 146636 M. Litvak Auto Travel Expense [E109] AMS Pacific Transportation Inv 146998 M. Litvak Auto Travel Expense [E109] AMS Pacific Transportation, inv 147114 IDK Auto Travel Expense [E109] AMS Pacific Transportation inv 146999 M. Litvak Auto Travel Expense [E109] AMS Pacific Transportation inv 147259 IDK Travel Expense [E110] Arrow Transportation Invoice #25497 Denise Harris $96.00
05/31/2009
$165.72
06/02/2009
$165.72
06/03/2009
$165.72
06/30/2009
$165.72
07/01/2009
$178.57
07/19/2009
$180.12
07/21/2009
$179.22
07/21/2009
$174.12
07/27/2009
$208.07
07/20/2009
$167.78
07/20/2009 07/28/2009 08/02/2009
Travel Expense [E100] Arrow Transportatation Invoice #25497 Auto Travel Expense [E109] Taxi Expenses IDK (pc) Auto Travel Expense [E109] AMS Pacific Transportation Inv. 147369, MBL Auto Travel Expense [E109] AMS Pacific Transportation Inv 147370, MBL Auto Travel Expense [E109] AMS Pacific Transportation Inv. 147593, MBL Auto Travel Expense [E109] AMS Pacific Transportation Inv. 147594, MBL Auto Travel Expense [E109] AMS Pacific Transportation Inv. 147877, IDK Auto Travel Expense [E109] AMS Pacific Transportation Inv. 147882, JKTH Auto Travel Expense [E109] AMS Pacific Transportation Inv. 147850 J Arlington Auto Travel Expense [E109] AMS Pacific Transportation Inv. 147895 MBL
$89.96 $120.00 $165.72
08/04/2009
$158.72
08/11/2009
$165.72
08/12/2009
$178.57
08/27/2009
$96.00
08/30/2009
$165.72
08/30/2009
$165.72
08/30/2009
$165.72
We asked Pachulski to provide additional information regarding these charges. Pachulskis response is provided below: Note that the 7/28/2009 charge questioned was for taxi service, not car service. Car service was used to transport the Firms attorneys to and from the Philadelphia airport and Wilmington, Delaware for the hearings in these cases and to and from the airport and meetings in New York City. Car service is used instead of taxi service because car service is more reliable than taxis. If an attorney has to wait for a taxi, the attorney time spent waiting will often amount to more costs that the additional small cost of using the car service. Also, the cars offer a better work environment than taxis. The charges dated 7/20/2009 are for car service for a staff member of the New York City office who worked very late that night at the auction and took a car home, which is accepted practice in New York City. The Firm agrees that there should not be two charges to the same invoice and agrees to write-off the $89.96 charge. On one occasion, (8/30/2009), the Firm arranged for car service for one of
the Debtors employees from the Philadelphia airport to Wilmington, Delaware to attended a hearing and passed this cost to the estate PSZ&J believes the use of a car service is reasonable and justified under the circumstances and submits that the charges should be allowed. We appreciate Pachulskis response and accept the response with regards to the write-off of $89.96 for the 7/20/2009 charge. We also have no objection to the 7/28/2009 taxi charge. However, the response is vague regarding the remaining charges. Pachulskis response fails to specify which of the remaining charges apply to trips to and from the Philadelphia Airport, and trips in New York City. In its response, Pachulski states Car service was used to transport the Firms attorneys to and from the Philadelphia airport and Wilmington, Delaware for the hearings in these cases and to and from the airport and meetings in New York City. The response fails to identify any of the specific departure and destination points for each of the charges and thus we are unable to assess whether taxi service was available5. Thus, for all of the car service charges except the charge on 7/20/09 in the amount of $89.96 and the 7/28/09 taxi service in the amount of $120.00, we recommend a 50% reduction. Thus we recommend a reduction of $1,554.336 in expenses. 9. 07/02/2009 07/16/2009 We noted the following meal charges which are insufficient in explanation: Business Meal [E111] Johnnies Pizza, working meal, Staff Business Meal [E111] Delmonico Catering (Lex), Breakfast for Pacific Energy Auction Business Meal [E111] Delmonico Catering (Lex), working meal, S. Bonifacio Business Meal [E111] Events and Every Day Catering, $61.41 $267.57
07/17/2009
$44.78
07/20/2009
$440.36
For example, taxi service is readily available at the Philadelphia Airport for travel to Wilmington Delaware.
6
50% of $3,108.65.
Pacific Energy Auction 07/20/2009 Business Meal [E111] Simply Food Catering, working meal S. Bonifacio Business meal [E111] The Clarkes Group New York IDK Business meal [E111] NY Palace Hotel IDK $33.89
07/20/2009 08/01/2009
$137.70 $91.04
We asked Pachulski to provide additional information regarding these charges. Pachulskis response is provided below: The charges incurred on 7/2/2009 were for a meal for PSZ&J employees who were working late to serve the sale motions and various notices on numerous parties. There were approximately four people who ate and the meal was in Los Angeles. The lunch served in our NYC office on 7/16 was for 15 persons and the breakfast in the NYC office that was served on 7/17 was for 5 persons. On July 20, 2009, the auction of the Alaska assets was conducted in the Firms New York Office and food was ordered from New York restaurants to serve more than ten people during the long day. The Firm cannot determine to what the 8/1/2009 mean charge of $91.04 related and agrees to write-off that amount. Based on these facts, PSZ&J submits that the business meal charges are reasonable and necessary expenses that are reimbursable by the estates. We appreciate Pachulskis response and recommend a reduction of $91.04 in expenses. 10. 07/02/2009 07/02/2009 07/10/2009 We noted the following outside vendor expenses which are exceptionally large: Outside Reproduction Expense - Legal Vision Consulting Outside Reproduction Expense - Legal Vision Consulting Outside Reproduction Expense - Legal Vision Consulting $24,256.76 $24,913.67 $926.97
We asked Pachulski to provide additional information for these charges. Pachulskis response is provided below: The two charges incurred on 7/2/2009 relate to the copying and mailing charges for the two sale motions and various related notices. There were approximately 23,000 copies made and 8,500 envelopes mailed, approximately 500 of them oversized. The charges include the copy charges, the label preparation charges, the postage cost, and the labor costs. The 7/10/2009 charge is for approximately 8,500 copies made of
certain notices that needed to be sent out related to the sale transactions. Based on the above explanations, PSZ&J submits that the charges are reasonable and necessary and are reimbursable from the estates. We appreciate Pachulskis response and have no objection to these expenses. CONCLUSION 11. Thus we recommend approval of fees totaling $1,229,261.25 and expenses totaling
$144,123.66 ($151,371.78 minus $7,248.12) for Pachulskis 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 1275 Republic Center Dallas, Texas 75201 214-698-3868 214-722-0081 (fax) whsmith@whsmithlaw.com FEE AUDITOR
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 3rd day of March, 2010.
Warren H. Smith
SERVICE LIST The Applicant 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 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 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 Corporation 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 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
Exhibit A Hearings: A. On June 3, 2009, JEO (535), IDK (750), and MBL (550) (Partners) attended a hearing. The total time spent including any preparation and non-working travel time was 37.80 hours7 for a total fee of $18,562.50. 06/01/09 06/02/09 06/02/09 06/02/09 06/03/09 06/03/09 06/03/09 JEO JEO JEO JEO JEO JEO IDK 0.80 0.80 0.50 0.40 1.50 3.50 0.40 428.00 428.00 267.50 214.00 802.50 1872.50 300.00 Finalize agenda for June 3, 2009 hearing Review and revise amended agenda Preparation for Omnibus hearing Preparation for hearing on June 3, 2009 Continued preparation for hearing Attend omnibus hearing Attend telephonically hearings on Chevron/Union motions to both compel assumption/rejection, and to establish admin claim (.4). .............; Telephone conference with Seamon and then with Seamon, M. Litvak re preparation issues for tomorrows contested DIP hearing (.3);............ Prepare for hearing on DIP financing motion; draft proffer and review Committee objection. Attend telephonically meeting with lenders, Zolfo, M. Litvak re preparation prior to todays hearing on DIP, and how the proposed final DIP order will be changed to reflect part of anticipated deal with Committee, issues re budget and benchmark deadlines re abandonment of non-ops, commencement of litigation vs Chevron (2.8);...............; Attend telephonically hearing on DIP financing (2.5);..............
06/02/09
IDK
5.50
4125.00
06/02/09
MBL 3.80
2090.00
06/03/09
IDK
9.50
7125.00
Time for this entry was located in the following project categories - (i) Bankruptcy Litigation, (ii) Executory Contracts, (iii) Financing and (iv) Travel.
06/03/09
JEO
1.00
535.00
Meet with lenders in preparation for hearing on DIP financing. Prepare for hearing; meetings with lenders, revise DIP order. Handle DIP hearing and Union motions. Travel to DE for hearing (billed at1/2 normal rate) Travel following hearing (billed at1/2 normal rate)
06/03/09
MBL 4.50
2475.00
06/03/09 06/02/09 06/04/09
MBL 3.00 MBL 5.00 MBL 7.00
1650.00 1375.00 1925.00
B. On August 4, 2009, MBL (550), IDK (750), and JEO (535) (Partners) attended a hearing. The total time spent including any preparation and non-working travel time was 34.90 hours8 for a total fee of $14,720.00. 8/3/2009 8/4/2009 MBL Prepare for hearing. IDK 1 550
............; Meet with Winn; M. Litvak re how to present same to lenders today and today's omnibus hearing (.4); Meet with NAE re status of its attempt to get financing for sale hearing today (.4); Revise presentation for hearing today (.5). 2.1 1575 Meet with M. Litvak; J. O'Neill re coordination of hearing today (.3); Meet with lenders and Committee re same (.4); Attend omnibus hearing re sale re abandonment (1.2). 1.9 1425
8/4/2009
IDK
8/4/2009
MBL Meeting and calls with lender and team re sale and abandonment issues. 5.5 3025 MBL Attend hearing on sale issues. 1 550 JEO Prepare for and attend omnibus hearing 2 1070
8/4/2009
8/4/2009
8/2/2009
MBL Travel to Delaware for hearing. (Billed at normal rate) 5 1375 IDK Non-working travel LA to Delaware for 8/4 hearing (billed at rate).
8/3/2009
Time for this entry was located in the following project categories - (i) Asset Disposition, (ii) Bankruptcy Litigation, and (iii) Travel.
5.2 8/4/2009 IDK
1950
Non-working travel from Delaware to Los Angeles from 8/4 omnibus hearing (billed at rate). 5 1875
8/4/2009
MBL Travel from DE following hearing. (Billed at normal rate) 7 1925
C. On August 12, 2009, MBL (550), IDK (750), and JEO (535) (Partners) attended a hearing. The total time spent including any preparation and non-working travel time was 24.40 hours9 for a total fee of $10,874.00. 8/11/2009 MBL Travel to DE for hearing. (Billed at normal rate) 5 1375 MBL Call with team re abandonment presentation. 1 550 MBL Calls and emails re hearing preparation; sale and abandonment issues. 4 2200 IDK .................; Telephone conference with counsel to Alaska re upcoming hearing today and positions of lenders and Union on abandonment order re who gets title; and Alaskas opposition to same (.2);.......... 0.8 600 Attend telephonically hearing today on Group 2 sale and abandonment; including telephone conference with M. Litvak during recess re issues in hearing (1.0);........... 1.2 900
8/11/2009
8/11/2009
8/12/2009
8/12/2009
IDK
8/12/2009
MBL Prepare for hearing; emails and calls with team and opposing parties re sale and abandonment issues. 3.5 1925 MBL Handle hearing on Group 2 sale and related issues. 2.3 1265 MBL Travel from DE following hearing. (Billed at normal rate)
8/12/2009
8/12/2009
Time for this entry was located in the following project categories - (i) Asset Disposition, (ii) Bankruptcy Litigation, and (iii) Travel.
5 8/12/2009 JEO
1375
Attend omnibus hearing regarding sale of Group 2 assets 2.4 1284
Auction: D. On July 20, 2009, IDK (750), MBL (550), and RMS (495) (two Partners and Of Counsel) attended an auction. The total time spent including any preparation and non-working travel time was 54.70 hours10 for a total fee of $27,392.50. 7/19/2009 IDK Prep for 7/20 Auction; including review of latest PSAs of Qualified bidders; list of open drafting issues and differences in PSAs and prep outline for conducting auction (1.8); Meet with client re tomorrow's AK auction (.8); Telephone conferences with M. Litvak re auction and bid status and how to proceed (.3); Review e-mails re Cercla liability assumption issues (.2). 3.1 750 2325
7/19/2009
MBL Review cumulative redlines of bids; prepare for auction. 6.3 550 3465 IDK Attend all day auction on AK assets; including meetings with various bid groups and their counsel; lenders; client; and trying to resolve numerous problems; and with Committee counsel re same and its potential objections to sale. 10 750 7500
7/20/2009
7/20/2009
MBL Attend auction; negotiations with bidders and creditor constituencies; draft revised terms. 11 550 6050 RMS Assistance during Alaska auction; including review of proposed changes to bidder's PSA including email exchanges with I Kharasch; M Litvak; M Cervi; and G Tywoniuk (2.0) 2 495 990 IDK Nonworking travel from LA to NY for 7/20 auction. (Billed at normal rate) 4.3 375 1612.5
7/20/2009
7/19/2009
10
Time for this entry was located in the following project categories - (i) Asset Disposition and (ii) Travel.
7/19/2009
MBL Travel to NY for Alaska sale auction. (Billed at normal rate) 5 275 1375 IDK Non-working travel from NY to LA from AK auction. (Billed at normal rate) 5 375 1875
7/21/2009
7/21/2009
MBL Travel from NY following sale auction. (Billed at normal rate) 8 275 2200
Exhibit B 5/20/2009 Air Fare [E110] United Airlines, Split Airfare: LAX/Philly/JFK/LAX, (less than full fare coach price); departure 5/31/09, AJK $1,443.10
5/20/2009 air fare for AJK (Alan Kornfeld) for round trip travel from LAX to Philidelphia and then to New York: The full coach fare for the trip was $3091.00. The Firm split the fare with another matter. Mr. Kornfeld is a litigator with the Firm made the trip to help prepare for the upcoming hearing on the motion for approval of the Key Employees Incentive Program. 5/22/2009 Air Fare [E110] United Airlines, SF/Philly, MBL $1,260.60
5/22/2009 one-way air fare for MBL (Max Litvak) from San Francisco to Philidelphia: The cost was less than full fare coach, which was $1,398.70. Mr. Litvak made the trip to attend a hearing for these cases in Delaware. 07/15/2009 Air Fare - United Airlines LAX/JFK/LAX discounted business IDK [E110] $2,789.20
7/15/2009 round trip air fare for IDK (Ira Kharasch) from LAX to JFK: The cost was less than full fare coach, which was $2,827.40. [Mr. Kharasch] made the trip to attend meetings regarding the sale of the debtors major oil and gas assets. 07/24/2009 Air Fare - American Airlines LAX/JFK/LAX discounted business IDK [E110] $2,609.20
7/24/2009 round trip air fare for IDK from LAX to JFK: The cost was less than full fare coach, which was $2,827.40. I made the trip to negotiate the terms of a potential sale of oil and gas assets with the Debtors lenders and potential purchasers and to plan the auction of the Debtors California oil and gas assets. 07/17/2009 Air Fare [E110] - United Airlines SF to JFK (RT) MBL $3,305.20
7/17/2009 round trip air fare from San Francisco to New York City for MBL: The fare was more than full fare coach, which was $2,857.40. Therefore, the Firm agrees to write off $447.80 of the cost of the ticket. Mr. Litvak made the trip to attend the auction of the Debtors oil and gas assets located in Alaska and to participate in the negotiations of the transaction.
07/23/2009
Air Fare [E110] United Airlines SF to Philadelphia (RT) MBL
$2,571.20
7/23/2009 round trip air fare from San Francisco to Philadelphia for MBL: The fare was less than full fare coach, which was $2,797.40. Mr. Litvak made the trip to attend an omnibus hearing for these cases in Wilmington, Delaware. 07/30/2009 Air Fare [E110] United Airlines - Return flight Philadelphia to LAX (IDK) Air Fare [E110] US Air - LAX to Philadelphia IDK $946.60
07/31/2009
$946.60
7/30/2009 and 7/31/2009 one-way air fares from LAX to Philadelphia and return for IDK: Each one-way fare was less than the full coach one-way fare, which was $1,279. [Mr. Kharasch] made the trip to Philadelphia to attend the August 4, 2009 hearing in Wilmington, Delaware that is discussed in detail above. 07/31/2009 Air Fare [E110] American Airlines JFK to LAX (IDK) $1,394.00
7/31/2009 one-way air fare from JFK to LAX for IDK in the amount of $1,394.00: This fare was incurred in order for me to respond to a personal emergency and the Firm will write it off. 07/31/2009 08/05/2009 Air Fare [E110] United Airlines SF to Philadelphia MBL $1,285.60 Air Fare [E110] United Airlines - flight from Philadelphia $1,285.60 to San Francisco MBL
7/31/2009 and 08/05/2009 one-way air fares from San Francisco to Philadelphia and return for MBL: Each one-way fare was less than the full coach one-way fare, which was $1,398.70. Mr. Litvak made this trip to attend the August 4, 2009 hearing in Wilmington, Delaware that is discussed above.
08/11/2009
Air Fare [E110] Continental Airlines - flight to Philadelphia to Houston to San Francisco MBL Air Fare [E110] United Airlines - flight from San Francisco to Philadelphia MBL
$1,005.70
08/11/2009
$1,285.60
8/11/2009 one-way air fares from San Francisco to Philadelphia and back to San Francisco for MBL: Each one-way fare was less than the full coach one way fares, which were $1,398.70. Mr. Litvak made this trip in order to attend the August 12, 2009 hearing in Wilmington, Delaware discussed above. On the way to Philadelphia, Mr. Litvak stopped in Houston, but the stop did not increase the cost
of the fare. 08/28/2009 Air Fare [E110] United Airlines - flight from San Francisco to Philadelphia (RT) MBL $2,581.20
8/28/2009 round trip air fare from San Francisco to Philadelphia for MBL: The cost of this fare was less than the full fare coach fare, which was $2797.40. Mr. Litvak made the trip to attend a hearing in this case in Wilmington, Delaware. 08/30/2009 Air Fare [E110] United Airlines, LA/DE (RT), JKTH $1,214.20
8/30/2009 round trip air fare from LAX to Philadelphia for JKTH (James Hunter): The fare was economy class. Mr. Hunter made the trip to attend the September 1, 2009 hearing on the Debtors motion to abandon certain oil and gas assets. Mr. Hunter is a litigator and was present to assist with the evidentiary portion of the hearing.
Response Exhibit 1. As stated in paragraph 3 of the Report and the attached Exhibit A, PSZ&J billed $44,156.50 for 97.1 hours of professional services rendered by multiple attorneys attending the June 3, 2009, August 4, 2009 and August 12, 2009 hearing (collectively, the Hearings). Below is a brief description of the major matters at issue during the Hearings and the facts that necessitated the participation of more than one attorney from PSZ&J on behalf of the Debtors. PSZ&J believes that this description establishes the bases for why multiple attorneys attended the Hearings in order to properly represent the Debtors and protect the Debtors interests for the benefit of their estates and all of their creditor constituencies. The June 3, 2009 Hearing The June 3, 2009, Notice of Agenda covered seventeen (17) matters, most of which were contested and were scheduled to go forward until immediately before the hearing, when several were either resolved or continued. However, several critical and hotly contested matters did proceed at this hearing, including, but not limited to the following: (1) Debtors Motion for an Order Approving a Key Employee Incentive Plan and Authorizing Payments Thereunder; (2) Motion of the Debtors to Approve Interim and Final Orders Pursuant to 11 U.S.C. Sections 105, 361, 362, 363, 364, 365 and 507: (1) Approving Senior Secured Superpriority Postpetition Financing; (2) Authorizing Use of Cash Collateral; (3) Granting Liens and Providing Superpriority Administrative Expense Status; (4) Granting Adequate Protection; (5) Modifying Automatic Stay; and (6) Scheduling a Final Hearing; (3) Motion of Union Oil Company of California to Compel Immediate Assumption or Rejection of Certain Executory Contracts; and (4) Motion of Union Oil Company of California to Compel Immediate Payment of Administrative Expenses. Mr. ONeill handled the agenda for the hearing and responded to the questions of the Court regarding various motions, including the motion addressing the Key Employee Incentive Plan. Mr. ONeill was also the attorney present with a license to practice law in Delaware as required by Rule 9010-1(c) of the Local Rules for the United States Bankruptcy Court for the District of Delaware. Mr. Litvak handled the hearing on the postpetion financing, which was a contested final hearing on the complex matter of approval of the $100,000,000 debtor in possession financing. He also handled the two contested Union motions, which affected some of the Debtors major assets located in Alaska. I am the lead attorney responsible for representing the Debtors in these Cases. I was very actively involved in the discussions regarding the postpetition financing motion, the Union matters and other pending matters that were to be addressed at the June 3, 2009 hearing. As you will note from the time records attached as Exhibit A to the Report, I attended the June 3, 2009 hearing
telephonically in order to save the estates travel time and expenses and only attended the portion of the hearing dealing with the Union motions (a total of only .4 hours) in order to be available in the event that my knowledge of these matters was required. Accordingly, I submit that the attendance of Mr. ONeill, Mr. Litvak and myself at the June 3, 2009 Hearing was appropriate and that the time entries are compensable. The August 4, 2009 Hearing Originally, eleven (11) matters were expected to go forward at this hearing, including the following contested matters and pretrial conferences: (1) Motion of Union Oil Company of California for Relief from Automatic Stay;
(2) Alternative Motion of Pacific Energy Alaska Operating LLC for an Order Authorizing Abandonment of Interests in Oil and Gas Properties at Trading Bay, Alaska and Rejection of Executory Contracts Relating Thereto; (3) Alternative Motion of Pacific Energy Alaska Operating LLC for an Order Authorizing Abandonment of Certain Interests in Oil and Gas Properties in Alaska (Excluding Trading Bay) and Rejection of Executory Contracts Relating Thereto; (4) Debtors Motion for an Order (A) Approving Sale of Debtors Alaska Assets Free and Clear of All Liens, Claims, Encumbrances and Other Interests Pursuant to Sections 363(b), (f) and (m) of the Bankruptcy Code, (II) Assuming and Assigning Certain Executory Contracts and Unexpired Leases; and (III) Granting Related Relief (5) Debtors Motion for an Order (A) Approving Sale of Debtors Beta Assets Free and Clear of All Liens, Claims, Encumbrances and Other Interests Pursuant to Sections 363(b), (f) and (m) of the Bankruptcy Code, (II) Assuming and Assigning Certain Executory Contracts and Unexpired Leases; and (III) Granting Related Relief; (6) Pre-Trial Conference re: Complaint for Declaratory Judgment and for Damages: Marathon Oil Company v. Pacific Energy Resources, Ltd., et al.; (7) Pre-Trial Conference re: Complaint: Noble Energy, Inc. v. Pacific Energy Resources, Ltd.; and (8) Pre-Trial Conference re: Complaint: Union Oil Company of California v. Pacific Energy Alaska Operating, LLC and Silver Point Finance, LLC This hearing was to be a watershed day for the case in terms of the sales of the major assets of the Debtors and the determination of how to proceed to resolve the case. There were many complex issues associated with the sale of the Debtors major assets and various objections had been filed. I had prepared to handle the legal argument and Mr. Litvak was prepared to handle the evidentiary
part of the hearing. However, due to the events that occurred in the days immediately prior to the hearing, including the evening before the hearing, it evolved into status and scheduling conference as it related to the sale or abandonment of these major assets, which I presented to the Court. Mr. Litvak had primary responsibility for presenting the Debtors position at the three pre-trial conferences, which went forward. Mr. ONeill presented the agenda to the Court and was also the attorney present with a license to practice law in Delaware as required by Rule 9010-1(c) of the Local Rules for the United States Bankruptcy Court for the District of Delaware. Accordingly, I submit that my attendance along with the attendance of Mr. Litvak and Mr. ONeill at the August 4, 2009 hearing was appropriate and that the time entries are compensable. The August 12, 2009 Hearing Two matters that were very important to the estates were scheduled for the August 12, 2009 hearing as follows: (1) Alternative Motion of Pacific Energy Alaska Operating LLC for an Order Authorizing Abandonment of Interests in Oil and Gas Properties at Trading Bay, Alaska and Rejection of Executory Contracts Relating Thereto; and (2) Debtors Motion for an Order (A) Approving Sale of Debtors Alaska Assets Free and Clear of All Liens, Claims, Encumbrances and Other Interests Pursuant to Sections 363(b), (f) and (m) of the Bankruptcy Code, (II) Assuming and Assigning Certain Executory Contracts and Unexpired Leases; and (III) Granting Related Relief. Mr. ONeill handled the agenda for the hearing and was also the attorney present with a license to practice law in Delaware as required by Rule 9010-1(c) of the Local Rules for the United States Bankruptcy Court for the District of Delaware. Mr. Litvak was present in the courtroom and handled the hearing on both of the pending matters, which affected some of the Debtors major assets located in Alaska. As previously set forth, I was the lead attorney for the Debtors in the cases and was very actively involved in all matters related to the sale or abandonment of the Alaska assets. As you will note from the time records attached as Exhibit A to the Report, I attended the August 12, 2009 hearing telephonically in order to save the estates travel time and expenses and only billed the estate for a portion of the hearing (a total of only 1.2 hours) in order to be available in the event that my knowledge of the sale of the Alaska oil and gas assets at issue was required. Accordingly, I submit that the attendance of Mr. Litvak and Mr. ONeill and my attendance by telephone at the August 12, 2009 hearing was appropriate and that the time entries are compensable. The Participation of Multiple Attorneys in the July 20, 2009 Auction The auction of the Debtors oil and gas assets located in Alaska took place in New York City on July 20, 2009. Oil and gas sale transactions are very complicated and involve many facets and parties. Ten parties were present, including the lenders representatives, the committee representatives, and
two potential purchasers. Mr. Litvak and I spent the day dealing with these various parties and negotiating the terms of potential sales on behalf of the Debtors. Mr. Saunders did not attend the hearing but assisted Mr. Litvak and me with the review of proposed changes to the purchase and sale agreement that was to be the basis of a sale. Accordingly, I submit that the participation of multiple attorneys from PSZ&J, considering the complex and important nature of the auction, was appropriate and that the time entries are compensable.

In Re:: Fee Auditor'S Final Report - Page 1

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In Re:: Fee Auditor'S Final Report - Page 1

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UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE

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

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

07/20/2009 07/28/2009 08/02/2009

$89.96 $120.00 $165.72

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

06/03/09 06/02/09 06/04/09

MBL 3.00 MBL 5.00 MBL 7.00

1650.00 1375.00 1925.00

5.2 8/4/2009 IDK

MBL Travel from DE following hearing. (Billed at normal rate) 7 1925

Attend omnibus hearing regarding sale of Group 2 assets 2.4 1284

Air Fare [E110] United Airlines SF to Philadelphia (RT) MBL

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