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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 AUDITOR’S AMENDED FINAL REPORT REGARDING COMPENSATION AND STAFFING REPORTS OF ZOLFO COOPER MANAGEMENT, L.L.C., FOR COMPENSATION AND REIMBURSEMENT OF EXPENSES FOR FIRST INTERIM PERIOD AND FINAL APPLICATION PERIOD OF MARCH 9, 2009 THROUGH DECEMBER 15, 2010 This is the amended final report of Warren H. Smith & Associates, P.C., acting in its capacity as fee auditor in the above-captioned bankruptcy proceedings, regarding the Compensation and Staffing Reports of Zolfo Cooper Management, L.LC., Regarding Compensation and Reimbursement of Expenses for the Period of March 9, 2009 through December 15, 2010 (the “Application”). BACKGROUND 1. Zolfo Cooper Management, L.LC. (“Zolfo Cooper”), was retained to provide

restructuring management services to the debtors-in-possession. In the Application, Zolfo Cooper seeks approval of fees and expenses in the following amounts: fees totaling $1,060,952.00 and expenses totaling $102,552.45 for its services from March 9, 2009 through May 31, 20091 (the “First Interim Period”); approval of a success fee in the amount of $1,000,000.00; and final approval of

We were not served with Zolfo Cooper’s compensation reports for March through May 2009 at the time of their filing. Accordingly, we are addressing the fees and expenses for that period in this report.
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fees totaling $3,585,988.252 and expenses totaling $184,180.14 3 for its services from March 9, 2009 through December 15, 2010 (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 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

Paragraph 2(e) of the retention order authorizes Zolfo Cooper to file compensation reports instead of fee applications. Accordingly, Zolfo Cooper has not filed a final fee application containing an aggregate request for allowance of all fees charged to date. However, we calculate that the sum of all fees charged in Zolfo Cooper’s prior compensation reports ($2,587,410.25), plus the $1,000,000 success fee, less the $1,422 in fee reductions ordered for the Third and Fourth Interim Periods, is $3,585,988.25. Zolfo Cooper addressed the $1,422 in fee reductions ordered for the Third and Fourth Interim Periods, which periods are discussed in more detail in paragraph 19, by refunding that amount to the debtor, as is explained further in paragraph 15 below. Zolfo Cooper has not charged any fees for the Seventh and Eighth Periods. We note that the Court has ruled on the First through Sixth Interim Periods but has not ruled on the Seventh and Eighth Interim Periods. Paragraph 2(e) of the retention order authorizes Zolfo Cooper to file compensation reports instead of fee applications. Accordingly, Zolfo Cooper has not filed a final fee application containing an aggregate request for allowance of all expenses charged to date. However, we calculate that the sum of all expenses charged in Zolfo Cooper’s prior compensation reports ($193,049.70), less the $8,869.56 in expense reductions for the Second, Third, and Fourth Interim Periods, is $184,180.14. These prior periods are discussed in more detail in paragraph 19. Zolfo Cooper addressed the $6,869.95 in expense reductions ordered for the Second Interim Period through a credit on a subsequent invoice, and Zolfo Cooper addressed the $1,422 in expense reductions ordered for the Third and Fourth Interim Periods by refunding that amount to the debtor, as is explained further in paragraph 15 below. Zolfo Cooper has not charged any expenses for the Seventh and Eighth Periods. We note that the Court has ruled on the First through Sixth Interim Periods but has not ruled on the Seventh and Eighth Interim Periods.
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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 Zolfo Cooper an initial report based on our review, and received a response from Zolfo Cooper, portions of which response are quoted herein. We then filed and served a final report, which prompted further discussions with Zolfo Cooper regarding the issues addressed in paragraph 9 of this report. In view of those discussions, we are filing this amended final report. DISCUSSION First Interim Period 3. In our initial report, we noted that the activity descriptions for a number of the time

entries on pp. 17-23 of the fee detail for April 2009 are cut off by the “Hourly Rate” column. We asked Zolfo Cooper to provide legible copies of these fees. Zolfo Cooper provided the following response: In response to Discussion Item No. 3, please see Exhibit A, appended hereto, which is the reformatted time entries for April 2009, to include activity descriptions detail which was inadvertently omitted. We appreciate this response. We reviewed the time entries in question and identified several that implicate the concerns addressed in paragraph 6 below: 04/17/09 04/17/09 04/24/09 JDC JDC JDC 0.9 2.1 2.3 355.50 829.50 908.50 Review Zolfo bill to Pacific against individual time entries to determine if they match up. Prepare bi-monthly time and expense report for Pacific invoicing. Prepare time descriptions and invoice for March. Check time descriptions against hours billed on hourly time sheets. Follow up on ZC invoicing to date.

04/30/09

MC

0.3

157.50

For the reasons stated in paragraph 6 below, we recommend a reduction of $2,251.00 in fees. 4. In our initial report, we noted two inadequately detailed time entries for travel time

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that is not clearly related to work on this matter: 03/13/09 03/15/09 KST KST 9.0 9.0 2,025.00 2,025.00 Travel Travel

Moreover, as these are the only time entries for Mr. Tomossonie for the period from March 12 through March 15, it is not clear why he traveled or why the time was billed to the estate. We asked Zolfo Cooper to provide further explanation regarding these time entries. Zolfo Cooper provided the following response: Mr. Tomossonie flew to LAX to work from the Pacific Energy Offices in Long Beach on Monday 3/8 and worked on the Pacific Energy case through Wednesday 3/11. Mr. Tomossonie returned to NY on Friday 3/13 and then returned to Long Beach for work the next week on Sunday 3/15. We appreciate this response and have no objection to the associated fees. 5. travel time: 03/23/09 03/27/09 03/29/09 03/09/09 03/13/09 03/15/09 03/22/09 KST KST KST JDC JDC JDC JDC 9.0 9.0 9.0 11.5 8.0 9.0 9.9 2,025.00 2,025.00 2,025.00 2,271.25 1,580.00 1,777.50 1,955.25 Travel Travel Travel Non-working travel Travel Travel Non-working travel In our initial report, we noted several other inadequately detailed time entries for

We asked Zolfo Cooper to provide further explanation regarding these fees. Zolfo Cooper provided the following response: In response to Discussion Item No. 5, please see Exhibit C, appended hereto for further detail of certain of Zolfo Cooper's travel time entries, including the points between which Zolfo Cooper's professionals traveled in each instance. We appreciate this response and have attached the referenced exhibit hereto as Response Exhibit 1. We have no objection to the items in question.

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6.

In our initial report, we noted a few time entries that reflect activities that, as

described, are difficult to distinguish from internal Zolfo Cooper administrative activities rather than billable services: 03/17/09 03/19/09 03/24/09 04/30/09 KST KST KST JDC 1.5 0.5 1.0 1.2 675.00 225.00 450.00 474.00 Engagement Administration. Engagement Administration. Engagement Administration. File various documents into binders for easy reference by other parties. Review billings for Zolfo in order to determine proper retainer / excess advance balance. Discuss calc.... [activity description truncated] Review draft Zolfo Cooper invoices Review and make corrections to draft ZC invoices Review and make corrections to draft ZC invoices Follow up on ZC invoicing to date Participated in discussions with ZC professional’s regarding ZC’s success fee. Review April Zolfo invoice Review hours and expenses for April invoicing Preliminary invoice preparation Preliminary invoice preparation

04/15/09 04/16/09 04/17/09 04/30/09 04/24/09 05/12/09 05/04/09 05/14/09 05/14/09

MC MC MC MC ESK MC KST KST KST

2.0 0.5 1.0 0.3 0.3 0.6 2.0 0.5 3.0

1,050.00 262.50 525.00 157.50 127.50 315.00 900.00 225.00 1,350.00

We asked Zolfo Cooper to explain why these activities should be considered billable services rather than administrative overhead activities. Zolfo Cooper provided a response that is attached hereto as Response Exhibit 2. We appreciate this response and accept the explanation regarding the “Engagement Administration” time entries and the time entry for ESK. With respect to the other time entries, which relate to the preparation of invoices, we believe the same reasoning applies as was used in our analysis of similar time entries in our final reports for the third and fourth interim periods.4 While some of a firm’s activities in preparing a fee application, including drafting the narrative, are compensable, we believe that the compensable activities are limited to those necessary to conform an ordinary invoice (of the sort that would be issued in a non-bankruptcy matter) to the

4

Docket no. 1613 (¶ 3) and docket no. 1890 (¶ 8).

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requirements of applicable bankruptcy law and bankruptcy court orders. We interpret the above time entries as reflecting non-compensable administrative activities. Thus we recommend a reduction of $5,259.00 in fees. 7. In our initial report, we noted that on several occasions Zolfo Cooper professionals

appear to have billed the estate for recording their time and expenses: 03/10/09 03/17/09 03/17/09 03/17/09 05/04/09 05/04/09 JDC 0.5 197.50 197.50 158.00 237.00 525.00 112.50 Created a file to track personal daily time descriptions. Recorded day’s work. Recorded weekly time / expenses. Work on time reports. Work on time reports. Review and prepare time and expenses Prepared time descriptions.

JDC 0.5 JDC 0.4 JDC 0.6 MC 1.0 LCV 0.5

While a bankruptcy court may award fees for the time spent on the preparation of a fee application, the recording of a professional’s time and the submission of expense reimbursement requests are ordinary administrative activities that would need to be performed in non-bankruptcy engagements. Accordingly, they are deemed non-compensable activities. We asked Zolfo Cooper to explain why these activities should be considered compensable. Zolfo Cooper provided the following response: In response to Discussion Item No. 7, Zolfo Cooper has agreed to reduce its fees by $1,427.50, for time incurred for ordinary administrative activities. We appreciate this response and thus recommend a reduction of $1,427.50 in fees. 8. In our initial report, we noted that all of the expense items described as “Ground

Transportation” are inadequately detailed. We asked Zolfo Cooper to provide further explanation regarding these charges. Zolfo Cooper provided the following response: In response to Discussion Item No. 8, please see Exhibit D, appended hereto for further detail of Zolfo Cooper's Ground Transportation, including the mode of transportation, the class of carriage for train travel, and the points between which Zolfo Cooper's professionals were transported, and the number of hours the professional worked on this matter on the day the meal expense was charged.
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We appreciate this response and have attached the referenced exhibit hereto as response Exhibit 3. First, we recommend a reduction for the extra cost ($67 each way) for the first-class rail travel. Additionally, Exhibit A attached hereto reflects a number of car service charges for which we are recommending reductions according to the following guidelines: (1) the reasonable cost of a taxi between Long Beach and LAX is $80,5 (2) the reasonable fare between Manhattan and JFK is $60,6 and (3) the reasonable fare from LaGuardia to Manhattan is $35 and (3) with respect to less easily quantifiable itineraries, we generally recommend a 50% reduction. As is indicated on Exhibit A, we recommend a reduction of $5,466.73 in expenses for the car service charges. Including the $134.00 for rail fares, we recommend a reduction of $5,600.73 in expenses. 9. In our initial report, we noted that all of the expense items described as “Air

Transportation” are inadequately detailed. For each such charge, we asked Zolfo Cooper to provide further explanation. Zolfo Cooper provided the following response: In response to Discussion Item No. 9, please see Exhibit E, appended hereto for further detail of Zolfo Cooper's Air Transportation Charges, including the class of carriage, the airport of origin and the destination, and whether the fare was for one-way or round-trip travel. We appreciate this response and have attached the referenced exhibit hereto as Response Exhibit 4. We note that Zolfo Cooper has offered $1,688 in reductions, and we have no objection to the

See http://www.taxifarefinder.com/main.php?city=LA. This figure was determined in March 2010 in connection with the preparation of our final report regarding Zolfo Cooper’s compensation for the second interim period. It is thus more likely to accurately reflect the fare at the relevant time than would an updated figure. See http://www.nyc.gov/html/tlc/html/passenger/taxicab_rate.shtml. This figure was determined in March 2010 in connection with the preparation of our final report regarding Zolfo Cooper’s compensation for the second interim period. It is thus more likely to accurately reflect the fare at the relevant time than would an updated figure.
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remainder of the airfare expenses. Accordingly, we recommend a reduction of $1,688.00 in expenses. 10. In our initial report, we noted that all of the expense items described as “Hotel

Charges” are inadequately detailed. For each such charge, we asked Zolfo Cooper to provide further explanation. Zolfo Cooper provided the following response: In response to Discussion Item No. 10, please see Exhibit F, appended hereto for further detail of Zolfo Cooper's Hotel Charges, including the hotel name, hotel location, and the number of nights of lodging covered by the charge. We appreciate this response and have attached the referenced exhibit hereto as response Exhibit 5. We note Zolfo Cooper’s voluntary reduction of $24.92 and have no objection to the remainder of these charges. Thus, we recommend a reduction of $24.92 in expenses. 11. In our initial report, we noted that all of the expense items described as “Meals” are

inadequately detailed. We asked Zolfo Cooper to provide further explanation regarding each of these charges and it responded: In response to Discussion Item No. 11, please see Exhibit G, appended hereto for further detail of Zolfo Cooper's Meal charges, including the number of diners, the reason the cost of the meal was charged, and the city in which the meal was consumed, and the number of hours the professional worked on this matter on the day the meal expense was charged. Further, we confirm that the numeral in parentheses in our fee statement denoted the number of diners for the indicated meal. Note that our Firm's internal employee policy establishes a meal cap at thirty dollars ($30.00) for lunch and fifty dollars ($50.00) for dinner for Zolfo Cooper diners (absent unusual circumstances.) As such, all of the meals charged are reasonable and are subject to our Firm's policy on meal caps. We appreciate this response and have attached the referenced exhibit hereto as response Exhibit 6. We have no objection to any of these items other than the working lunches set forth on Exhibit B. Accordingly, we recommend a reduction of $98.21 in expenses. 12. In our initial report, we noted several inadequately detailed “Travel & Lodging”

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charges: 3/16/2009 3/27/2009 4/7/2009 4/15/2009 4/17/2009 4/30/2009 5/15/2009 5/22/2009 Scott Winn Scott Winn Scott Winn Scott Winn Scott Winn Scott Winn Scott Winn Scott Winn Travel & Lodging Travel & Lodging Travel & Lodging Travel & Lodging Travel & Lodging Travel & Lodging Travel & Lodging Travel & Lodging $50.00 $50.00 $50.00 $25.00 $50.00 $50.00 $60.00 $50.00

We asked Zolfo Cooper to provide further explanation regarding each of these charges. Zolfo Cooper provided the following response: In response to Discussion Item No. 12, please see Exhibit H, appended hereto for further detail of certain of Zolfo Cooper's "Travel & Lodging" charges. We appreciate this response and have attached the referenced exhibit hereto as response Exhibit 7. We have no objection to these items. 13. 3/19/2009 4/15/2009 4/30/2009 3/31/2009 5/26/2009 5/26/2009 5/15/2009 5/30/2009 5/9/2009 4/30/2009 In our initial report, we noted several inadequately detailed telephone charges: Scott Winn Scott Winn K. Tomossonie Scott Winn Scott Winn Mark Cervi K. Tomossonie Jesse DelConte Telephone Telephone Telephone Telephone Telephone Telephone Telephone Telephone Telephone Telephone - Premiere Global Services $43.79 $64.66 $125.93 $91.84 $143.28 $46.35 $66.80 $150.72 $31.15 $359.82

We asked Zolfo Cooper to explain these charges. If any were allocated charges, we asked Zolfo Cooper to explain the basis for the allocation. Zolfo Cooper provided the following response: In response to Discussion Item No. 13, please see Exhibit I, appended hereto for further detail of certain of Zolfo Cooper's telephone charges. We appreciate this response, have attached the referenced exhibit hereto as response Exhibit 8, and

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have no objection to these charges. 14. Thus we recommend approval of fees totaling $1,053,664.50 ($1,060,952.00 minus

$7,287.50) and expenses totaling $93,490.59 ($102,552.45 minus $9,061.86) for Zolfo Cooper’s services for the First Interim Period. Final Application Period 15. We previously recommended reductions regarding Zolfo Cooper’s fees and expenses

for the Second, Third, and Fourth Interim Periods. See paragraph 19 below. On each occasion, after the filing of our respective final report, Zolfo Cooper filed a certification to the effect that the fees and expenses would be deducted from subsequent invoices. These certifications, filed at docket nos. 1390,7 1643, and 1901, were dated March 4, 2010, June 8, 2010, and September 23, 2010. We note that four compensation reports were filed after the date of the first certification, at docket nos. 1456, 1498, 1543, and 1753. The February 2010 report (docket no. 1543) reflects a deduction in the amount of $6,869.95 to account for the expense reduction for the Second Interim Period. The reductions for the Third and Fourth Interim Periods, however, do not appear to be accounted for in these invoices. We asked Zolfo Cooper to indicate where these deductions are reflected or confirm that a credit is due the estate. Zolfo Cooper provided the following response: In response to Discussion Item No. 14, the reduction for the Third and Fourth Interim Periods was reimbursed to Pacific Energy on March 28, 2011, by way of a check no. 31892 in the amount of $3,421.61, payable to Pacific Energy and mailed to the attention of Mr. Gerry Tywoniuk. This check was paid on April 2, 2011. We appreciate this response. 16. Zolfo Cooper seeks allowance of a success fee in the amount of $1,000,000 based

7

This first certification was filed again at docket no. 1439.

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on paragraph 3(a) of the Retention Order, which authorizes a $1,000,000 success fee earned upon the occurrence of several contingencies, one of which is the “confirmation of a plan which is consented to by the lenders”. This contingency has occurred, and Zolfo Cooper is therefore entitled to a Success Fee, though the amount of the fee remains to be decided. We note that paragraph 2(f) of the Retention Order states that “Success fees, transaction fees, or other back-end fees shall be approved by the Court at the conclusion of the case on a reasonableness standard and are not being pre-approved by entry of this order.” 17. Thus, it appears that the Success Fee is governed by the reasonableness standard of

11 U.S.C. § 330, as the Application itself acknowledges at p. 18. According to the Third Circuit, a bankruptcy court is generally required to award an applicant a fee that is "reasonable" in light of certain factors set out in section 330(a)(1) of the Bankruptcy Code. In re Federal Mogul-Global, Inc., 348 F.3d 390, 396-97 (3d Cir. 2003). The determination of a restructuring or success fee's reasonableness is a two-part analysis involving (1) the market value of the services rendered and (2) the applicant's contribution to the success of the case. See 11 U.S.C. § 330(a)(3)©. The sort of information relevant to the first prong of the analysis is discussed in In re UDC Homes, Inc., 203 B.R. 218 (Bankr. D. Del. 1996). 18. We note that the Application addresses both prongs of the analysis, but in our initial

report, we informed Zolfo Cooper that we would not make our decision regarding the reasonableness of the requested Success Fee until after we had received its response to our initial report. We invited Zolfo Cooper to supplement the discussion in the Application with additional information or argument. Zolfo Cooper declined to do so, and we accordingly base our analysis on the contents of the Application. In this regard, we note that Zolfo Cooper has cited several comparable

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restructuring fees – including several fees reviewed by this fee auditor. From the information provided by Zolfo Cooper, and from our experience in evaluating similar fees, we believe that the Restructuring Transaction Fee is within the range of reasonableness established by the market for such services. Among the cases cited by Zolfo Cooper in the Application, we note that the blended hourly rate sought by AP Services for its restructuring management and related services in In re Dana Corporation, S.D.N.Y. Case No. 06-10354 (doc. #7947), was $485 per hour when the $4 million contingent success fee was factored in, and $444 without it. However, we note further that, among the cases on which we have worked, in In re Sea Containers, Ltd., Delaware Case No. 0611156 (doc. #2804), we recommended approval of $7,939,514.66 in fees (including a $709,450 success fee) for similar restructuring management services provided by AP Services, LLC, at a blended rate of $1,138.51 per hour. When the success fee is included, Zolfo Cooper’s blended rate in this case would be $633.52 per hour,8 or well within the range of reasonableness represented by the two cases cited above. Moreover, in regard to the size of the success fee as a percentage of the total fees (27.96%9), we note that the 27.96% figure appears typical for restructuring management and consulting services. While the Application does not include such a summary, our review of other fee applications for restructuring management and consulting services has given us an understanding of the market in this regard,10 and the 27.96% is comfortably within the range of reasonableness established by the market. Thus, we believe the first prong of the test is satisfied.

8

$3,577,050.75 divided by 5,646.3 hours. $1,000,000 divided by $3,577,050.75.

9

See, e.g., In re BII Liquidation, Inc. (F/K/A Burlington Industries, Inc.), Del. Case No. 01-11282 (Doc. #3041, Exhibits B-E).
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With regard to the second prong, Zolfo Cooper addressed its role in mediating the parties’ conflicting interests (especially those of the lenders) and otherwise facilitating the confirmation of a plan of reorganization of the Debtors. Based on Zolfo Cooper's descriptions of its activities and our observation of the case, we believe that Zolfo Cooper played a valuable role throughout the case and contributed to the ultimate reorganization of the Debtors. Nor has any party disputed Zolfo Cooper’s characterization of the value of its contribution. While the absence of objections is not determinative, we believe the second part of the test is met as well. Accordingly, we believe the Success Fee is reasonable under the applicable standard. and we have no objection to its allowance. Prior Interim Periods 19. We note that we previously filed the following final reports for Zolfo Cooper’s prior

interim applications, which final reports we incorporate by reference herein, and we also note the following orders that ruled on Zolfo Cooper’s prior interim fee applications: 2nd Period: Fee Auditor’s Final Report Regarding Interim Fee Application of Zolfo Cooper Management, LLC, for the Second Interim Period (docket #1380) filed on or about March 4, 2010, in which we recommended approval of fees totaling $1,012,995.25 and expenses totaling $57,299.71 reflecting our recommended reduction of $6,869.95 in expenses, as further explained in paragraphs 3, 4, 6 and 8 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). 3rd Period: Fee Auditor’s Final Report Regarding Interim Fee Application of

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Zolfo Cooper Management, LLC, for the Third Interim Period (docket #1613) filed on or about May 26, 2010, in which we recommended approval of fees totaling $367,625.50 and expenses totaling $14,862.79 reflecting our recommended reduction of $632.00 in fees and $1,749.76 in expenses, as further explained in paragraphs 3, 4, 5, 6 and 7 of that final report. The recommendations for fees and expenses were adopted in the Omnibus Order Approving Third Interim Fee Application Requests, dated June 23, 2010 (docket #1656). 4th Period: Fee Auditor’s Final Report Regarding Interim Fee Application of Zolfo Cooper Management, LLC, for the Fourth Interim Period (docket #1890) filed on or about September 20, 2010, in which we recommended approval of fees totaling $132,702.00 and expenses totaling $2,580.97 reflecting our recommended reductions of $790.00 in fees and $249.85 in expenses, as further explained in paragraphs 3, 4, 5, 7, 8, 9, 10 and 11 of that final report. 5th Period: Fee Auditor’s Combined Final Report Regarding Those Interim Fee Applications with No Fee or Expense Issues for the Fifth Interim Period (docket #2108) filed on or about November 30, 2010, in which we recommended approval of fees totaling $11,713.50 and expenses totaling $14.27. 20. We have reviewed the final reports and orders allowing fees and expenses for the

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prior interim periods, and we do not believe there is any reason to change the amounts awarded for those periods. We asked Zolfo Cooper to state whether it agrees with our summation of the prior interim periods. Zolfo Cooper provided the following response: Zolfo Cooper agrees with the Fee Auditor's summation of 2nd, 3rd, and 5th Interim Periods, as set forth in the Initial Report. As related to the 4th Interim Period, Zolfo Cooper agrees with the Fee Auditor's summation of the professional fees; however, it appears that there may be a typographical error in this Initial Report which notes a total expense amount for the 4th Interim Period of $2,500.97, which is recorded in both 1) the Fee Auditor's Final Report of the 4th Interim Period and 2) Zolfo Cooper's Certification of the 4th Interim Period as $2,580.97. We appreciate this response and have corrected the typographical error noted by Zolfo Cooper.

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CONCLUSION 21. Thus, we recommend final approval of fees totaling $3,578,700.75 ($3,585,988.2511

We calculate that the sum of all fees charged in Zolfo Cooper’s prior compensation reports ($2,587,410.25), plus the $1,000,000 success fee, less the $1,422 in fee reductions ordered for the Third and Fourth Interim Periods, is $3,585,988.25. Zolfo Cooper addressed the $1,422 in fee reductions ordered for the Third and Fourth Interim Periods, which periods are discussed in more detail in paragraph 19, by refunding that amount to the debtor, as is explained further in paragraph 15. Zolfo Cooper has not charged any fees for the Seventh and Eighth Periods. We note that the Court has ruled on the First through Sixth Interim Periods but has not ruled on the Seventh and Eighth Interim Periods.
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minus $7,287.50 12) and expenses totaling $175,118.28 ($184,180.1413 minus $9,061.8614) for Zolfo Cooper’s 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

12

See paragraph 14 supra.

We calculate that the sum of all expenses charged in Zolfo Cooper’s prior compensation reports ($193,049.70), less the $8,869.56 in expenses reductions for the Second, Third, and Fourth Interim Periods, is $184,180.14. These prior periods are discussed in more detail in paragraph 19 above. Zolfo Cooper addressed the $6,869.95 in expense reductions ordered for the Second Interim Period through a credit on a subsequent invoice, and Zolfo Cooper addressed the $1,422 in expense reductions ordered for the Third and Fourth Interim Periods by refunding that amount to the debtor, as is explained further in paragraph 15 above. Zolfo Cooper has not charged any expenses for the Seventh and Eighth Periods. We note that the Court has ruled on the First through Sixth Interim Periods but has not ruled on the Seventh and Eighth Interim Periods.
14

13

See paragraph 14 supra.

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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 6th day of June 2011.

Warren H. Smith

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SERVICE LIST Notice Parties

The Applicant Scott Winn Mark Cervi Zolfo Cooper Management, LLC 101 Eisenhower Parkway Roseland, NJ 07068 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. O’Neill, 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
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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

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Exhibit A First-Class Rail Travel:
4/15/2009 4/15/2009           216.00            201.00  Train Train First First New York, NY Penn Station Wilmington, DE Train Station Wilmington, DE Train Station New York, NY Penn Station

Car Service Charges:
Date Amount 3/17/2009           145.00 3/17/2009           186.00 3/19/2009           180.00 3/19/2009             94.93 3/29/2009             84.93 3/29/2009           186.00 3/31/2009           180.00 NA NA NA NA NA NA NA Origin Summit, NJ LAX Airport, CA Pacific Energy Newark Airport, NJ Summit, NJ LAX Airport, CA Pacific Energy Destination New York, NY ‐ ZC Renaissance Hotel, Long Beach, CA LAX Airport, CA Summit, NJ Newark Airport, NJ Renaissance Hotel, Long Beach, CA LAX Airport, CA Reduction 72.50 106.00 100.00 47.46 42.46 106.00 100.00 72.50 72.50 120.00 106.00 100.00 42.46 42.46 42.46

4/6/2009 4/7/2009 4/7/2009

          145.00           240.00           186.00

NA NA NA NA NA NA NA NA

Summit, NJ Pachulski Office LAX Airport, CA Pacific Energy Summit, NJ Newark NJ, Penn Station Summit, NJ LAX Airport, CA

New York, NY Philadelphia Airport, PA Renaissance Hotel, Long Beach, CA LAX Airport, CA Newark, NJ Penn Station Summit, NJ Newark Airport, NJ Renaissance Hotel, Long Beach, CA Los Angeles, CA LAX Airport, CA Summit, NJ

4/9/2009         180.00  4/15/2009             84.93 4/15/2009             84.93 4/19/2009             84.93 4/19/2009           186.00

4/20/2009           384.00 Round Renaissance Hotel, Long Trip Beach, CA 4/22/2009           180.00 NA Pacific Energy 4/23/2009             94.93 NA Newark Airport, NJ

224.00 100.00 47.46

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106.00 5/4/2009 5/6/2009 5/6/2009 5/17/2009           186.00          180.00              84.93 NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA LAX Airport, CA Pacific Energy Newark Airport, NJ Summit, NJ Newark Airport, NJ Summit, NJ LAX Airport, CA Pacific Energy Pacific Energy Newark Airport, NJ Long Beach, CA LAX Airport, CA JFK Airport, NY LAX Airport, CA East Moriches, NY Pacific Energy LAX Airport, CA Pacific Energy LAX Airport, CA East Moriches, NY East Moriches, NY Pacific Energy East Moriches, NY LAX Airport, CA JFK Airport, NY LAX Airport, CA Renaissance Hotel, Long Beach, CA LAX Airport, CA Summit, NJ Newark Airport, NJ Summit, NJ Newark Airport, NJ Renaissance Hotel, Long Beach, CA Long Beach Restaurant, CA LAX Airport, CA Summit, NJ LAX Airport, CA Long Beach, CA East Moriches, NY Hyatt Hotel, Long Beach, CA JFK Airport, NY LAX Airport, CA Renaissance Hotel, Long Beach, CA LAX Airport, CA Renaissance Hotel, Long Beach, CA JFK Airport, NY JFK Airport, NY LAX Airport, CA JFK Airport, NY Renaissance Hotel, Long Beach, CA East Moriches, NY Renaissance Hotel, Long Beach, CA

100.00 42.46 42.80 42.80 47.80 106.00 17.50 100.00 47.80 35.20 41.20 52.88 41.20 28.56 35.20 41.20 35.20 41.20 28.56 92.00 35.20 92.00 41.20 94.50 41.20

             85.61   5/20/2009             85.61 5/25/2009             95.61 5/26/2009           186.00 5/28/2009             35.00 5/28/2009           180.00 5/28/2009             95.61 3/9/2009           115.20

3/11/2009           121.20 3/13/2009           105.77 3/15/2009           121.20 3/15/2009             57.12 3/19/2009           115.20 3/23/2009           121.20 3/26/2009           115.20 3/30/2009           121.20 3/22/2009             57.12 3/30/2009           184.00 4/2/2009 4/5/2009 4/6/2009           115.20           184.00           121.20

4/10/2009      189.00  4/12/2009           121.20

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4/12/2009           184.00 4/16/2009          115.20  4/17/2009           223.00 4/19/2009           184.00 4/20/2009           121.20 4/27/2009           121.20 4/30/2009           115.20 5/1/2009 5/4/2009 5/4/2009 5/7/2009 5/8/2009           196.11           121.20           187.11           115.20           182.58

NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA

East Moriches, NY Pacific Energy JFK Airport, NY East Moriches, NY LAX Airport, CA LAX Airport, CA Pacific Energy JFK Airport, NY LAX Airport, CA East Moriches, NY Pacific Energy JFK Airport, NY LAX Airport, CA East Moriches, NY Pacific Energy

JFK Airport, NY LAX Airport, CA East Moriches, NY JFK Airport, NY Renaissance Hotel, Long Beach, CA Renaissance Hotel Long Beach, CA LAX Airport, CA East Moriches, NY Renaissance Hotel Long Beach, CA JFK Airport, NY LAX Airport, CA East Moriches, NY Pacific Energy JFK Airport, NY LAX Airport, CA

92.00 35.20 111.50 92.00 41.20 41.20 35.20 98.05 41.20 93.55 35.20 91.29 41.20 91.80 35.20 35.20 84.66 41.20 91.80 35.20 41.20 91.80 35.20

5/11/2009           121.20 5/11/2009           183.60 5/15/2009           115.20 5/15/2009           115.20 5/16/2009           169.32 5/18/2009           121.20 5/18/2009           183.60 5/21/2009           115.20 5/25/2009           121.20 5/25/2009           183.60 5/29/2009           115.20

Car cancelled too late.  Charges were non‐refundable. JFK Airport, NY LAX Airport, CA East Moriches, NY Renaissance Hotel Long Beach, CA LAX Airport, CA East Moriches, NY Pacific Energy East Moriches, NY Renaissance Hotel Long Beach, CA JFK Airport, NY LAX Airport, CA Renaissance Hotel Long Beach, CA JFK Airport, NY LAX Airport, CA

3/20/2009           115.20 3/23/2009           121.20

NA NA

Pacific Energy LAX Airport, CA

LAX Airport, CA Renaissance Hotel, Long Beach, CA

35.20 41.20

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3/10/2009           121.20 3/13/2009      115.20  3/15/2009           121.20 3/20/2009             93.33 3/22/2009             71.40 4/3/2009 4/3/2009 4/5/2009 4/9/2009             73.44           115.20           121.20           115.20

NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA

LAX Airport, CA Pacific Energy LAX Airport, CA JFK Airport, NY New York, NY JFK Airport, NY Pacific Energy LAX Airport, CA Pacific Energy JFK Airport, NY LAX Airport, CA JFK Airport, NY LAX Airport, CA Pacific Energy JFK Airport, NY LAX Airport, CA Pacific Energy LAX Airport, CA JFK Airport, NY LAX Airport, CA Pacific Energy JFK Airport, NY LAX Airport, CA JFK Airport, NY LAX Airport, CA Southampton, NY

Renaissance Hotel, Long Beach, CA LAX Airport, CA Hyatt Hotel, Long Beach, CA New York, NY JFK Airport, NY New York, NY LAX Airport, CA Renaissance Hotel, Long Beach, CA LAX Airport, CA New York, NY Renaissance Hotel, Long Beach, CA New York, NY Renaissance Hotel, Long Beach, CA LAX Airport, CA New York, NY Renaissance Hotel, Long Beach, CA LAX Airport, CA Renaissance Hotel, Long Beach, CA New York, NY Renaissance Hotel, Long Beach, CA LAX Airport, CA New York, NY Renaissance Hotel, Long Beach, CA New York, NY Renaissance Hotel, Long Beach, CA JFK Airport, NY

41.20 35.20 41.20 33.33 11.40 13.44 35.20 41.20 35.20 32.31 41.20 42.00 41.20 35.20 43.02 38.20 35.20 41.20 36.39 41.20 35.20 35.88 41.20 32.31 41.20 121.38

4/10/2009             92.31 4/12/2009           121.20 4/17/2009           102.00 4/19/2009          121.20  4/23/2009           115.20 4/24/2009           103.02 4/26/2009           118.20 5/1/2009 5/3/2009 5/8/2009           115.20           121.20             96.39

5/10/2009           121.20 5/14/2009           115.20 5/15/2009             95.88 5/17/2009           121.20 5/22/2009             92.31 5/25/2009           121.20 5/25/2009           242.76

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5/28/2009           115.20

NA

Pacific Energy

LAX Airport, CA

35.20

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Exhibit B Scott Winn 4/29/2009 4/30/2009 5/1/2009 5/11/2009 5/12/2009 5/21/2009 Jesse DelConte 5/15/2009 5/29/2009

2.3 4.3 3.3 4.6 4.3 3.5

12.31 17.40 5.60 11.43 15.86 11.13

New York, NY New York, NY New York, NY New York, NY New York, NY New York, NY

1 1 1 1 1 1

Lunch Lunch Lunch Lunch Lunch Lunch

Working Lunch Working Lunch Working Lunch Working Lunch Working Lunch Working Lunch

16.3 13.30 14.7 11.18 $98.21

New York, NY New York, NY

1 1

Lunch Lunch

Working Lunch Working Lunch

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Response Exhibit 2 In response to Discussion Item No. 6, the questioned time entry activities can be grouped into three categories, as follows: Engagement Administration: The items below relate to activities that Zolfo Cooper undertook to organize and prepare bankruptcy reference materials to aid the Debtors in referencing critical information in a timely fashion. 03/17/09 KST 1.5 675.00 Engagement Administration. 03/19/09 KST 0.5 225.00 Engagement Administration. 03/24/09 KST 1.0 450.00 Engagement Administration. File various documents into binders for easy reference by other parties.

Preparation of Fee Applications: The items below relate to activities that Zolfo Cooper undertook to prepare retention documents, invoicing, monthly fee statements and fee applications for Zolfo Cooper, and motions to establish interim procedures. 04/30/09 JDC 1.2 474.00 Review billings for ZC in order to determine proper Retainer / excess advance balance. Discuss calculations with Company to allow them to close the books for March.04/15/09 MC 2.0 1,050.00 Review draft ZC invoices 04/16/09 MC 0.5 262.50 Review and make corrections to draft ZC invoices 04/17/09 MC 1.0 525.00 Review and make corrections to draft ZC invoices 04/30/09 MC 0.3 157.50 Follow up on ZC invoicing to date 05/12/09 MC 0.6 315.00 Review April ZC invoice 05/04/09 KST 2.0 900.00 Review hours and expenses for April invoicing 05/14/09 KST 0.5 225.00 Preliminary invoice preparation 05/14/09 KST 3.0 1,350.00 Preliminary invoice preparation

-

ZC Employment Objections Response: This item on 4/24/09 for ESK for 0.3 hours related to activities that Zolfo Cooper undertook to respond to the objections to the retention of Zolfo Cooper. The description was written incorrect Ms. Kardos' time descriptions and should have read "Participated in discussions with ZC professionals regarding ZC's retention."

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