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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 APPLICATION OF MILLSTREAM ENERGY, LLC, FOR ALLOWANCE OF TERMINATION FEE 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 Application of Millstream Energy, LLC, for Allowance of Termination Fee (the Application). BACKGROUND 1. Millstream Energy, LLC (Millstream), was retained as an engineering consultant

to the debtors-in-possession. In the Application, Millstream seeks approval of a termination fee in the amount of $20,550.00. 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 Bankruptcy Court for the District of Delaware, the United States District Court for the District of
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Delaware, and the Third Circuit Court of Appeals. We served on Millstream an initial report based on our review, and received a response from Millstream, portions of which response are quoted herein. DISCUSSION 3. In the Application, Millstream seeks interim allowance of a termination fee in the

amount of $20,550.00. The Millstream retention order (docket #314) approved all of Millstreams fees pursuant to section 328(a) and specifically provided for a termination fee in the requested amount, payable upon the termination of expiration of the Consulting Agreement. Section 2 of the Consulting Agreement provides for a six-month term from the Effective Date of December 19, 2008, with renewal and extension permitted upon the agreement of the parties. Obviously, the initial six-month term has expired. The Application, however, does not state whether there were any extensions or when or how the Consulting Agreement expired or was terminated. We asked Millstream to provide this information. Millstream provided the following response: Millstream's last Application Fee was 10-1-09 for consulting services in August 2009. Additional consulting work past that time period was not performed by Millstream for Pacific. With the sale of both the Offshore CA and Alaskan properties, additional engineering consulting services were not required by Millstream for Pacific. It was agreed to by Millstream's Managing Director, Mark Clemans, and Pacific's CFO, Gerry Tywoniuk, to terminate the agreement. The termination fee was payable upon that event. Additionally, we received the following statement from Pac Energys acting CEO Gerry Tywoniuk: The termination fee was payable pursuant to the court approved retention agreement with Millstream. We appreciate these responses. While they do not make it clear exactly when the termination occurred, they do make it clear that the termination has occurred and that the termination fee is now payable. We have no objection to the requested termination fee.

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CONCLUSION 4. Thus, we recommend approval of fees in the amount of $20,550.00 in connection

with Millstreams request for allowance of a termination fee.

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

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 6th day of December, 2010.

Warren H. Smith

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SERVICE LIST Notice Parties The Applicant Mark A. Clemans Millstream Energy, LLC 4918 Menlo Park Drive Sugar Land, TX 77479 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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