IN THE UNITED STATES BANKRUPTCY COURT FOR THE 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 FINAL FEE APPLICATION OF JENSEN LUNNEY McINNES LAW CORPORATION AND TODD McMAHON, INC., FOR COMPENSATION AND REIMBURSEMENT OF EXPENSES FOR THE PERIOD OF MARCH 9, 2009 THROUGH JUNE 30, 2010 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 Final Fee Application of Jensen Lunney MacInnes Law Corporation and Todd McMahon, Inc., for Compensation and Reimbursement of Expenses for the Period of March 9, 2009 through June 30, 2010 (the Application). BACKGROUND 1. Jensen Lunny MacInnes Law Corporation (JLM) was retained as Canadian counsel

to the debtors-in-possession, and Todd McMahon, Inc. (McMahon), was appointed monitor by the British Columbia Supreme Court. In the Application, JLM seeks final approval of fees totaling $108,021.601 (Canadian) and expenses totaling $19,388.212 (Canadian) for its services from March

We note that the total of the fees requested in JLMs prior interim applications is $111,279.00. In arriving at the figure for which it seeks final approval in the Application, JLM has deducted from this amount $3,257.40 of the $3,257.50 in reductions that were either ordered by the Court for the First and Second Interim Periods or recommended by us for the Fifth Interim Period. These prior periods are discussed in more detail in paragraph 5. We note that the Court has ruled on the First through Sixth Interim Periods. The Court has not yet ruled, however, on JLMs Fifth Interim Period Application. JLM does not seek allowance of fees for any period
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9, 2009 through June 30, 2010 (the Final Application Period), and McMahon seeks final approval of fees totaling $42,0003 (Canadian) and expenses totaling $0.004 for his services during the Final 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, 2011, and the United States Trustee Guidelines for Reviewing Applications

after the Sixth Interim Period. We note that the total of the expenses requested in JLMs prior interim applications is $24,479.18. In arriving at the figure for which it seeks final approval in the Application, JLM has deducted from this amount all but $233.07 of the $5,324.04 in reductions that were either ordered by the Court for the First and Second Interim Periods or recommended by us for the Fifth Interim Period. These prior periods are discussed in more detail in paragraph 5. We note that the Court has ruled on the First through Sixth Interim Periods. The Court has not yet ruled, however, on JLMs Fifth Interim Period Application. JLM does not seek allowance of expenses for any period after the Sixth Interim Period. We note that the total of the fees requested in McMahons prior interim applications is $40,750.00. There were no reductions recommended by us or ordered by the Court for any prior periods. The amount requested in the Application appears to have been increased through the inclusion of the previously-approved expenses in the total. We note that the Court has ruled on the First through Sixth Interim Periods. The Court has not yet ruled, however, on McMahons Fifth Interim Period Application. McMahon does not seek allowance of fees for any period after the Sixth Interim Period. We note that the total of the expenses requested in McMahons prior interim applications is $1,250.00. There were no reductions recommended by us or ordered by the Court for any prior periods. However, in the Application, the previously-approved expenses have apparently been re-categorized and placed in the fee category. We note that the Court has ruled on the First through Sixth Interim Periods. The Court has not yet ruled, however, on McMahons Fifth Interim Period Application. McMahon does not seek allowance of expenses for any period after the Sixth Interim Period.
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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 Delaware, and the Third Circuit Court of Appeals. We served on JLM and McMahon an initial report based on our review, and received a response from JLM and McMahon, portions of which response are quoted herein. DISCUSSION Final Application Period 3. In our initial report, we noted that, in the Application, McMahon requests a final

award of $42,000.00 in compensation and $0.00 in expenses. We further noted, however, that the prior applications for the First and Fifth Interim Periods requested interim allowance of $40,750.00 in fees and $1,250 in expenses. While we had, and have, no objection to those fees and expenses, or a total award of $42,000.00, we asked McMahon to clarify his request and re-categorize these amounts or explain why the full amount requested should be classified as compensation. McMahon provided the following response: With respect to paragraph 3 of the Auditor's Report, the proper categorization of the amounts is $40,000.00 in fees and $2,000.00 in expenses. The expenses consist of 5% PST (tax) which the auditor is obliged, by law to collect and remit to the Provincial Government. The first interim fee application requested fees of $25,000.00, and taxes of $1,250.00, being 5%. The interim application for the fifth interim period sought fees of $15,000.00, and taxes of $750.00, being 5%. We appreciate McMahons response. 4. In footnote 1 above, we note a ten-cent discrepancy in JLMs fee request that appears

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to be the result of a typographical or arithmetic error. Thus we recommend a reduction of $0.10 cents in JLMs fees. Prior Interim Periods 5. We note that we previously filed the following final reports for the prior interim

applications of JLM and McMahon, which final reports we incorporate by reference herein, and we also note the following orders that ruled on these prior interim fee applications: 1st Period: Fee Auditors Final Report Regarding Interim Fee Application of Jensen Lunny MacInnes Law Corporation and Todd McMahon, Inc., for the First Interim Period (docket #1105) filed on or about November 6, 2009, in which we (1) recommended approval of fees totaling $61,954.00 and expenses totaling $12,570.81 for JLM, reflecting our recommended reduction of $1,000.00 in fees and $4,255.40 in expenses, as further explained in paragraphs 4 and 7 of that final report, and (2) recommended approval of fees totaling $25,000.00 and expenses totaling $1,250.00 for McMahon, with no recommended reductions. The recommendations for fees and

expenses were adopted in the Omnibus Order Approving First Interim Fee Application Requests, dated March 29, 2010 (docket #1198). 2nd Period: Fee Auditors Final Report Regarding Interim Fee Application of Jensen Lunny MacInnes Law Corporation, for the Second Interim Period (docket #1455) filed on or about February 26, 2010, in which

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we recommended approval of fees totaling $22,057.50 and expenses totaling $3,180.07, reflecting our recommended reductions of $1,755.00 in fees and $233.10 in expenses, as further explained in paragraphs 4, 5 and 6 of that final report. The recommendations for fees and expenses were adopted in the Omnibus Order Approving Second Interim Fee Application Requests, dated March 29, 2010 (docket #1455). 5th Period: Fee Auditors Final Report Regarding Interim Fee Application of Jensen Lunny MacInnes Law Corporation and Todd McMahon, Inc, for the Fifth Interim Period (docket #2110) filed on or about December 23, 2010, in which we (1) recommended approval of fees totaling $24,010.00 and expenses totaling $3,404.26 for JLM, reflecting our recommended reductions of $502.50 in fees and $835.54 in expenses, as further explained in paragraphs 4, 7, and 8 of that final report, and (2) recommended approval of fees totaling $15,750.00 and expenses totaling $0.00 for McMahon, with no recommended reductions. 6. We have reviewed the final reports and orders allowing fees and expenses for the

prior interim period, and we do not believe there is any reason to change the amounts awarded for those periods. We asked JLM and McMahon about our summary of the prior interim periods, and McMahon stated that: The interim application for the fifth interim period sought fees of $15,000.00, and taxes of $750.00, being 5%, [but] the fee auditor's final report regarding the fifth
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interim period, that became described as fees totaling $15,750.00. That was an error. We appreciate this clarification. CONCLUSION 7. Thus we recommend approval of fees totaling $108,021.50 (Canadian) ($108,021.605

minus $0.10) and expenses totaling $19,155.14 (Canadian) ($19,388.216 minus $233.077) for JLMs services for the Final Application Period; and fees totaling $40,000.00 (Canadian) ($42,000.008

We note that the total of the fees requested in JLMs prior interim applications is $111,279.00. In arriving at the figure for which it seeks final approval in the Application, JLM has deducted from this amount $3,257.40 of the $3,257.50 in reductions that were either ordered by the Court for the First and Second Interim Periods or recommended by us for the Fifth Interim Period. These prior periods are discussed in more detail in paragraph 5. We note that the Court has ruled on the First through Sixth Interim Periods. The Court has not yet ruled, however, on JLMs Fifth Interim Period Application. JLM does not seek allowance of fees for any period after the Sixth Interim Period. We note that the total of the expenses requested in JLMs prior interim applications is $24,479.18. In arriving at the figure for which it seeks final approval in the Application, JLM has deducted from this amount all but $233.07 of the $5,324.04 in reductions that were either ordered by the Court for the First and Second Interim Periods or recommended by us for the Fifth Interim Period. These prior periods are discussed in more detail in paragraph 5. We note that the Court has ruled on the First through Sixth Interim Periods. The Court has not yet ruled, however, on JLMs Fifth Interim Period Application. JLM does not seek allowance of expenses for any period after the Sixth Interim Period.
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See paragraph 5 supra.

We note that the total of the fees requested in McMahons prior interim applications is $40,750.00. There were no reductions recommended by us or ordered by the Court for any prior periods. The amount requested in the Application was increased through the inclusion of the previously-approved expenses (taxes) in the total. In view of the clarifications provided in response to our initial report, we have re-characterized the amounts requested to reflect that $40,000 of the $42,000 total constitute fees. See paragraphs 3 and 6 above. We note that the Court has ruled on the First through Sixth Interim Periods. The Court has not yet ruled, however, on McMahons Fifth Interim Period Application. McMahon does not seek allowance of fees for any period after the Sixth Interim Period.
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minus $2,000.009) and expenses totaling $2,000.0010 for McMahons services for the Final 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

We are not recommending disallowance of this amount but are instead recommending allowance of this amount as expenses consistent with the discussion in paragraphs 3 and 6 above. We note that the total of the expenses requested in McMahons prior interim applications is $1,250.00. There were no reductions recommended by us or ordered by the Court for any prior periods. However, in the Application, the previously-approved expenses have apparently been re-categorized and placed in the fee category. In view of the clarifications provided in response to our initial report, we have re-characterized the amounts requested to reflect that $2,000 of the $42,000.00 requested total are properly characterized as expenses. See paragraphs 3 and 6 above. We note that the Court has ruled on the First through Sixth Interim Periods. The Court has not yet ruled, however, on McMahons Fifth Interim Period Application. McMahon does not seek allowance of expenses for any period after the Sixth Interim Period.
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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 11th day of May, 2011.

Warren H. Smith

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SERVICE LIST Notice Parties The Applicant H.C. Ritchie Clark, Q.C. P.O. Box 12077 Suite 2550, 555 West Hastings Street Vancouver, BC V6B 4N5 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 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

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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

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