IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: PACIFIC ENERGY RESOURCES LTD., et al.

, Debtors. ) ) ) ) ) ) ) )

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

Related Docket Nos. 1932, 1933

UNION OIL COMPANY OF CALIFORNIAS REPLY TO SILVER POINT FINANCE LLCS REPLY TO UNION OIL COMPANY OF CALIFORNIAS PENDING OBJECTIONS Union Oil Company of California (Union) hereby replies (the Reply) to Silver Point Finance LLCs (Silver Point) reply (the Silver Point Reply)1 (i) to the Objection of Union Oil Company of California to the Debtors Motion for Order Implementing Prior Orders of This Court by Authorizing Debtors to Pay Net Proceeds of Certain Collateral to the Debtors Postpetition Lenders (the Proceeds Motion) and (ii) to the Objection of Union Oil Company of California to the First Amended Chapter 11 Plan of Liquidation for Pacific Energy Resources Ltd. et al. (the Plan). In support of this Reply, Union respectfully states as follows: I. None of the Orders Silver Point Cites Support Silver Points Conclusions 1. Silver Point argues that the Beta Sale Order, the Final DIP Order, and the Alaska

Sale Order support its contention that it holds liens superior to Unions, and that Unions failure to object to those orders somehow waives Unions lien priority. Union did not object to the cited orders because they did not purport to (nor could they) adjudicate or alter Unions lien rights. The very portions of the Beta Sale order and Final DIP Order Silver Point quotes from make this clear. The Beta Sale Order states that that the Successful Bidders rights in the Collateral

Capitalized terms used but not defined shall have the meanings assigned in the Silver Point Reply.

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Proceeds existed as such rights existed immediately prior to entry of this Order. Beta Sale Order 27; Silver Point Reply at 2. By its express terms, the Beta Sale Order did not alter existing lien rights in any way. Similarly, the Final DIP Order states that the DIP lenders liens are junior only to Prior Permitted Liens, a defined term which includes Unions liens. Final DIP Order 6; Silver Point Reply at 6. Further, the portions of the Alaska Sale Order cited simply assert that the Collateral Proceeds were not among the assets sold in the Alaska sale. That is irrelevant to the question at issue here, namely who holds the superior lien. 2. None of the cited orders adjudicated the issue of lien priority, nor could they. An

adversary proceeding is required to adjudicate the validity, priority, or extent of liens in a debtors property. See Fed. R. Bankr. P. 7001(2). None of the Beta Sale Order, the Final DIP Order, or the Alaska Sale Order was issued in the context of an adversary proceeding. Thus, as a matter of fact, the express language of the Beta Sale Order, the Final DIP Order, and the Alaska Sale Order offer no support for the notion that Silver Point was granted a lien superior to Unions. More important, as a matter of law, none of those orders could have granted Silver Point a lien superior to Unions. II. The Silver Point Reply Is an Improper Attempt to Relitigate a Pending Matter Through Motion Practice 3. The Silver Point Reply is both untimely2 and full of bare legal conclusions to the

effect that: (i) none of the Collateral Proceeds relate to Trading Bay; (ii) to the extent they may relate to Trading Bay they are not proceeds; and (iii) to the extent they are proceeds, Silver Point has a superior interest. There is already pending before the Court an adversary proceeding (the Lien Priority Adversary) in which Union and Silver Point have set forth their respective

Responses to the Proceeds Motion were due May 12, 2010. Responses to the Plan were due September 29, 2010. The Silver Point Reply was filed October 6, 2010, a week after plan responses were due and nearly five months after responses to the Proceeds Motion were due. 2

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positions on lien priority in great detail. These matters have been fully briefed and argued, and the Silver Point Reply appears to be an improper attempt to relitigate the matter through motion practice. Union has properly and timely filed objections to preserve its rights in certain elements of the Collateral Proceeds pending this Courts decision in the Lien Priority Adversary so that if the Court decides that Unions liens have priority over Silver Points, Unions collateral will still be in the estates, permitting Union to properly enforce its liens and security interests. Union is prepared to present further oral argument on these matters, if necessary, but if Silver Point has nothing more to add than what it included in the Silver Point Reply, further argument would not likely prove worthwhile. As Union has stressed in its objections, the Courts decision in the Lien Priority Adversary should control as to each element of collateral relating to Trading Bay.

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CONCLUSION For the foregoing reasons, Union respectfully requests that this Court (i) grant all of the relief requested in the Proceeds Objection and the Plan Objection; (ii) deny the relief requested in the Silver Point Reply in its entirety; and (iii) enter such other and further relief as may be just and proper. Dated: October 8, 2010 Wilmington, Delaware

Respectfully submitted,

By: /s/ Norman M. Monhait Norman M. Monhait (ID No. 1040) Rosenthal, Monhait & Goddess, P.A. 919 North Market Street, Suite 1401 P.O. Box 1070 Wilmington, DE 19899-1070 Telephone: (302) 656-4433 Facsimile: (302) 658-7567 nmonhait@rmgglaw.com and Richard L. Epling David A. Crichlow Pillsbury Winthrop Shaw Pittman LLP 1540 Broadway New York, NY 10036 Telephone: (212) 858-1000 Facsimile: (212) 858-1500 Counsel to Union Oil Company of California, a California Corporation

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CERTIFICATE OF SERVICE I, Norman M. Monhait, hereby certify that on this 8th day of October, 2010, I caused the foregoing of Union Oil Company of Californias Reply to Silver Point Finance LLCs Reply to Union Oil Company of Californias Pending Objections to be served on all parties registered with the CM/ECF System for the United States Bankruptcy Court for the District of Delaware in this case and in the manner indicated to the individuals listed below. Via Hand Delivery James E. ONeill, Esquire Pachulski Stang Ziehl & Jones LLP 919 North Market Street, 17th Floor Wilmington, DE 19899-9705 (Debtors) Via First Class Mail Ira D. Kharasch, Esquire Pachulski Stang Ziehl & Jones LLP 10100 Santa Monica Blvd. 11th Floor Los Angeles, CA 90067-4100 (Debtors) Via First Class Mail Maxim B. Litvak, Esquire Pachulski Stang Ziehl & Jones LLP 150 California Street, 15th Floor San Francisco, CA 94111 (Debtors) Via First Class Mail Jeffrey Sabin, Esquire Bingham McCutchen 399 Park Avenue New York, New York 10022 (J. Aron & Company) Via First Class Mail Amy Kyle, Esquire Bingham McCutchen One Federal Street Boston, MA 01221-1726 (J. Aron & Company) Via Hand Delivery Ian S. Fredericks, Esquire Skadden, Arps, Slate, Meagher & Flom LLP One Rodney Square Wilmington, DE 19801 (Silver Point Finance) Via First Class Mail Albert L. Hogan, III, Esquire Chris L. Dickerson, Esquire Jordan M. Litwin, Esquire Skadden, Arps, Slate, Meagher & Flom, LLP 155 North Wacker Drive Chicago, IL 60606 (Silver Point Finance) Via Hand Delivery Office of the United States Trustee J. Caleb Boggs Federal Building 844 N. King Street, Room 2207 Lockbox 35 Wilmington, DE 19801 (United States Trustee)

Via First Class Mail Katherine Piper, Esquire Steptoe & Johnson LLP 2121 Avenue of the Stars, 28th Floor Los Angeles, CA 90067 (Official Committee of Unsecured Creditors) Via Hand Delivery James C. Carignan, Esquire Pepper Hamilton LLP Hercules Plaza 1313 N. Market Street, Suite 5100 Wilmington, DE 19801 (Official Committee of Unsecured Creditors)

Via Hand Delivery Don A. Beskrone, Esquire Ashby & Geddess 222 Delaware Avenue, 17th Floor P.O. Box 1150 Wilmington, DE 19899

_/s/ Norman M. Monhait__________ Norman M. Monhait (Bar No. 1040)