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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 FEE APPLICATION OF LAZARD FRRES & CO. LLC FOR THE FIRST 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 Fee Application of Lazard Frres & Co. LLC for the First Interim Period (the Application). BACKGROUND 1. Lazard Frres & Co. LLC (Lazard) was retained as financial advisor to the

Debtors-in-Possession. In the Application, Lazard seeks approval of fees totaling $274,193.32, and costs totaling $1,595.31 for its services from March 9, 2009, through May 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 February 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,

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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 Lazard an initial report based on our review, and received a response from Lazard, portions of which response are quoted herein. DISCUSSION General Issues 3. Lazards compensation structure includes a $100,000 monthly advisory fee, which

was prorated for the post-petition portion of March 2009. Thus, Lazard is seeking $274,193.32 in fees for the Application Period, during which it recorded a total of 349.5 hours of activities devoted to these bankruptcy cases. Thus, for this period, Lazards imputed hourly rate is $784.53. 4. In our initial report, we noted that the order authorizing the employment of Lazard

(the Retention Order) relaxes the information requirements of Local Rule 2016-2 to allow Lazard to keep time records in increments of halves rather than tenths of an hour. 5. In our initial report, we noted a number of references to a CIM in the time entries.

We asked Lazard to tell us what CIM stands for. Lazard provided the following response: Confidential Information Memorandum (CIM) is a detailed description of the assets being held for sale. The Unsecured Creditors Committee has a copy of the CIM. We appreciate this response. Specific Time and Expense Entries 6. day: 05/04/09 Work on Alaska PSA and Bid Procedures 20.00 In our initial report, we noted that Robert Lynd recorded 50.0 hours of time on one

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05/04/09 05/04/09 05/04/09 05/04/09

Weekly Internal Update Call (8 calls in 4 weeks) PERL Capital Raise Teaser work (RLL & JP) Sales process update calls (10 calls in 4 weeks) VDR and due diligence requests from Pyramid

8.00 8.00 10.00 4.00

We asked Lazard to review its records and provide the dates upon which this work was actually performed. Lazard provided the following response: The initial report notes that Robert Lynd recorded 50.0 hours of time on one day and requests Lazard provide the dates the work was actually performed. Lazard reviewed Mr. Lynds time entries and concluded all of the hours associated with biweekly calls for the entire month were lumped into one line item/day. Mr. Lynds time detail has been corrected in the attached spreadsheet. We have attached the referenced spreadsheet hereto as Response Exhibit 1. We appreciate this response. 7. In our initial report, we noted a number of other time entries for Robert Lynd that

appear to encompass time from more than one day and, in one instance, from the pre-petition period: 4/2/2009 4/7/2009 4/8/2009 4/10/2009 Weekly Internal Update Call (9 calls in 5 weeks) Discussions with potential buyers (April 7-9) Amended Engagement Letter (Multiple days) Amended Engagement Letter (Multiple days) 9.00 13.00 12.00 12.00

We asked Lazard to review your records and provide the dates upon which this work was actually performed. In addition, we asked Lazard to indicate how much of this work was performed before the petition date. Lazard provided the following response: The initial report notes a number of time entries for Robert Lynd that appear to encompass time from more than one day and, in one instance, from the pre-petition period. As mentioned above, biweekly calls for the entire month were lumped into one line item/day. This has been corrected in the attached spreadsheet. The referenced spreadsheet is attached hereto as Response Exhibit 1. We appreciate this response. 8. In our initial report, we noted three expense items in the Car Services and Taxis

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category for dates on which the indicated professional did not record any time on these cases: 4/8/2009 4/24/2009 4/24/2009 Martin-Lazard/Penn station 03/09/2009 Martin-Lazard/home 03/13/2009 Martin-Home/Lazard/weekend 03/15/2009 8.40 7.30 6.30

We asked Lazard to explain why the estate should reimburse these expenses. Lazard provided the following response: Lazard voluntarily withdraws it request for the reimbursement of the ground transportation charges identified in paragraph 10 totaling $22.00. We appreciate this response and recommend a reduction of $22.00 in expenses. 9. In our initial report, we noted 16 expense items in the Employee Meals category

for dates on which the indicated professional did not record any time on these cases: 5/1/2009 5/1/2009 5/1/2009 5/1/2009 5/4/2009 5/4/2009 5/4/2009 5/4/2009 5/5/2009 5/29/2009 5/29/2009 5/29/2009 5/29/2009 5/29/2009 5/29/2009 5/29/2009 Lynd-STAR PIZZA # 1 650000 HOUSTON T 03/29/2009 Lynd-PRONTO CUCININO 8843 HOUSTON T 03/31/2009 Lynd-FLYING SAUCER-HOUSTO HOUSTON T 04/05/2009 Lentz-FLYING SAUCER-HOUSTO HOUSTON T 04/05/2009 Peng-PHO SAIGON RESTAURAN HOUSTON T 03/16/09 Peng-PHO SAIGON RESTAURAN HOUSTON T 03/21/09 Peng-BERRIPOP #2 87886200 HOUSTON T 03/29/09 Peng-TAYDO RESTAURANT 015 HOUSTON T 04/05/2009 Peng-Mardi Gras Grill 03/20/2009 Lentz-HUNAN DOWNTOWN HOUSTON TX 05/11/2009 Lynd-PRONTO CUCININO 8843 HOUSTON T 04/15/2009 Lynd-ESCALANTES MEXICAN G HOUSTON T 04/14/2009 Lynd-PRONTO CUCININO 8843 HOUSTON T 04/30/2009 Lynd-CAF EXPRESS #11110 HOUSTON TX 05/02/2009 Lynd-FREEBIRDS - SHEPHE 5 HOUSTON T 04/26/2009 Lynd-FLYING SAUCER-HOUSTO HOUSTON T 04/19/2009 15.00 12.45 9.90 9.90 19.54 14.00 13.42 12.00 25.00 25.00 21.05 19.84 15.91 12.32 8.52 7.57

We asked Lazard to explain why the estate should reimburse these expenses. Lazard provided the following response:
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These charges in question relate to overtime meals for Lazard professionals working on the weekend or after normal business hours. Lazards general policy permits employees to bill dinner meals to a client if the employee is required to render services during such mealtime to the client due to extreme time constraints. Lazard employees are permitted to order dinner in the office (for no bill more than $25.00 per person) if the Lazard employee is required to work after 8:00 p.m. or on weekends. However, Lazard acknowledges that the Court requires all professionals to accurately record their time expended on behalf of the estate and realizes the Fee Auditor can not reasonably determine the necessity for a meal on a date for which adequate time entries have not been recorded. Therefore, Lazard voluntarily withdraws it request for the reimbursement of the Employee Meals listed in paragraph 11 in the amount $225.51. We appreciate this response and recommend a reduction of $225.51 in expenses. 10. Ordinarily, if a professional bills three or more hours on a case in one day, we do not

object to the individuals reimbursement request for an overtime meal or taxi home. However, in our initial report, we noted the following overtime meal charges which were billed on dates when the billing professional recorded less than three hours of time on tasks related to the Estate: 5/1/2009 5/4/2009 5/5/2009 5/29/2009 5/29/2009 5/29/2009 Lynd-11TH STREET CAF 542 HOUSTON T 03/16/2009 Peng-CABO RESTAURANT 0074 HOUSTON T 04/04/2009 Lynd-LA GRIGLIA - HOUSTON HOUSTON T 04/13/2009 Lynd-HUNAN DOWNTOWN HOUSTON TX 05/11/2009 Lynd-BWW - MIDTOWN 800000 HOUSTON T 04/24/2009 Lynd-PEI WEI ASIAN DINER- HOUSTON T 04/27/2009 9.20 15.00 25.00 25.00 25.00 12.45

We asked Lazard to explain why these expenses should be reimbursed by the estate. Lazard provided the following response: Lazard voluntarily withdraws it request for the reimbursement of the Employee Meals listed in paragraph [10] totaling $111.65. We appreciate this response and recommend a reduction of $111.65 in expenses. 11. In our initial report, we noted four expense items in the Employee Meals category

that do not indicate the professional in question:

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3/26/2009 3/26/2009 3/26/2009 3/26/2009

M 12-MAR-2009 Lennys (48th St / SEAMLESSWEB PROFESSIONAL) M 15-MAR-2009 Hawaiian Island / SEAMLESSWEB PROFESSIONAL M 09-MAR-2009 Bocca / SEAMLESSWEB PROFESSIONAL M 13-MAR-2009 Sherwoods Fine F / SEAMLESSWEB PROFESSIONAL

24.71 24.23 22.59 21.50

We asked Lazard to name the professional whose meal was expensed in each instance. Lazard provided the following response: Lazard voluntarily withdraws it request for the reimbursement of the Employee Meals listed in paragraph 13 totaling $93.03. We appreciate this response and recommend a reduction of $93.03 in expenses. 12. In our initial report, we noted an expense item in the Meals-Meetings/Travel

category that does not indicate which meal the charge relates to: 05/13/2009 Rutherford-River Oaks Country Club (1p) 03/13/2009 58.56

We asked Lazard to provide further explanation regarding this expense. Lazard provided the following response: Mr. Rutherford met for lunch with interested parties from two different companies. A revised description is included below. 05/13/2009 Rutherford-River Oaks Country Club (1p) 03/13/2009 Rutherford-River Oaks Country Club (lunch - 3p) 03/13/2009 58.56

We appreciate this response and have no objection to this expense. 13. In our initial report, we noted one expense item in the Employee Meals category

that appears to predate the debtors bankruptcy: 4/9/2009 Peng-PHO SAIGON RESTAURAN HOUSTON T 03/08/2009 15.00

We asked Lazard to provide further explanation regarding this charge or confirm that a reduction is

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warranted. Lazard provided the following response: Lazard voluntarily withdraws it request for the reimbursement of the Employee Meals listed in paragraph 15 in the amount of $15.00 We appreciate this response and recommend a reduction of $15.00 in expenses. 14. of taxis: 5/11/2009 5/29/2009 5/29/2009 Lefkovits-R 03/10/2009 05:43 Origin 111 E 80TH ST Dest: 401 7TH AVE / ROYAL DISPATCH Leite-D 04/04/2009 21:00 Origin 50 W 50 ST M Dest: 511 CLINTON ST 11231 BK / DIAL CAR INC Holmes-R 04/09/2009 00:05 Origin 49 W 49TH ST Dest: 650 W 204TH ST / ROYAL DISPATCH 31.82 44.88 35.70 In our initial report, we noted three instances in which car services were used in place

We asked Lazard to explain why a lower-cost taxi could not be used in these instances. Additionally, we noted that Leite and Holmes did not record any time in this matter. We asked Lazard to provide further explanation regarding these charges. Lazard provided the following response: Ms. Leite and Ms. Holmes are two non-professionals who assisted the team during the month of April 2009 but are not in the practice of recording their hours. Lazard acknowledges taxi service may have been available on certain of these dates and therefore voluntarily proposes a 50% reduction of the amount requested as a more reasonable amount to charge the estate. We appreciate this response and recommend a reduction of $56.20 in expenses. CONCLUSION 15. Thus we recommend approval of fees in the amount of $274,193.32 and expenses in

the amount of $1,071.92 ($1,595.31 minus $523.39) for Lazards services for the Application Period.

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

By: Warren H. Smith Texas State Bar No. 18757050 Mark W. Steirer Texas State Bar No. 19139600 325 N. St. Paul Street, Suite 1250 Republic Center Dallas, Texas 75201 214-698-3868 214-722-0081 (fax) whsmith@whsmithlaw.com FEE AUDITOR

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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 16th day of November 2009.

Warren H. Smith

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SERVICE LIST Notice Parties The Applicant John Rutherford Lazard Frres & Co. LLC 30 Rockefeller Plaza, 61st Floor New York, NY 10020 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 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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Pacific Energy Resources, Inc. Time Detail Lazard Frres & Co. LLC Robert Lynd - Associate Date: 3/12/2009 3/13/2009 3/14/2009 3/15/2009 3/16/2009 3/17/2009 3/18/2009 3/19/2009 3/24/2009 3/26/2009 Description of Work: Worked on CIM, Sale Process Conf Call, Transaction Comps (request from Silver Point) Sale Process Conf Call, Process Timeline, Reviewed CIM Worked on CIM Worked on CIM Process Timeline Conference Call(s) Process Timeline Conference Call, Revised Timeline Process Timeline Conference Call Weekly Internal Update Call Lender Update Call Weekly Internal Update Call Hours: 6.0 8.0 7.5 4.0 2.0 2.0 1.0 1.0 1.0 1.0 Code 7 7 7 7 7 7 7 2 7 2

MARCH HOURS

33.5

Pacific Energy Resources, Inc. Time Detail Lazard Frres & Co. LLC Robert Lynd - Associate Date: Date: 4/1/2009 4/2/2009 4/2/2009 4/3/2009 4/4/2009 4/6/2009 4/7/2009 4/7/2009 4/8/2009 4/8/2009 4/9/2009 4/9/2009 4/9/2009 4/9/2009 4/2/2009 4/10/2009 4/13/2009 4/13/2009 4/14/2009 4/15/2009 4/15/2009 4/16/2009 4/16/2009 4/17/2009 4/20/2009 4/21/2009 4/22/2009 4/24/2009 4/24/2009 4/24/2009 4/27/2009 4/27/2009 4/28/2009 4/28/2009 4/28/2009 4/29/2009 4/29/2009 4/28/2009 Description of Work: Description of Work: Call with potential Beta Bidder Call with potential Beta Bidder Weekly Internal Update Call Distributed CIM, Follow-up calls with prospective buyers Emailed prospective buyers, Worked on Marketing Presentation Call with Albrecht to discuss bids, Executive Summary, Virtual Data Room Discussions with potential buyers Lender Update Meeting Discussions with potential buyers Amended Engagement Letter Discussion Call with Albrecht to discuss bids Discussions with potential buyers Alaska interests discussion Amended Engagement Letter Discussion Weekly Internal Update Call Amended Engagement Letter Discussion Internal Call re Pacific Amended Engagement Letter Discussion Weekly Internal Update Call Internal Call re Pacific Work on time sheet Amended Engagement Letter Discussion Weekly Internal Update Call Virtual Data Room, discussions with bidders Alaska sale process (various) Weekly Internal Update Call Alaska package discussion Internal Call re Pacific Pacific Energy Meeting Pacific Energy sale call(s) Alaska Lease Operating Expense Discussion PSA conference call Lender Update Meeting Pacific Sale Call Pacifica Employement Application Discussion Pacifica Employement Application Discussion Capital Raise Discussion Alaska LOE discussion, PSA conference call APRIL HOURS Hours: Hours: 1.5 1.5 1.0 8.0 2.0 6.0 4.5 1.0 4.5 2.0 2.0 4.0 2.0 2.0 1.0 2.0 1.0 2.0 1.0 2.0 2.0 2.0 1.0 3.0 3.0 1.0 1.0 1.0 3.0 3.0 1.0 2.0 1.5 0.5 1.0 1.0 1.0 3 82.0 Code Code 7 7 7 7 7 7 7 7 7 10 7 7 7 10 7 10 7 10 7 7 10 7 7 7 7 7 7 7 7 7 2 7 1 7 10 10 8 7

Pacific Energy Resources, Inc. Time Detail Lazard Frres & Co. LLC Robert Lynd - Associate Date: Date: 05/01/09 05/01/09 05/02/09 05/03/09 05/04/09 05/04/09 05/04/09 05/05/09 05/05/09 05/05/09 05/06/09 05/04/09 05/06/09 05/07/09 05/07/09 05/08/09 05/11/09 05/11/09 05/11/09 05/12/09 05/12/09 05/12/09 05/13/09 05/14/09 05/14/09 05/14/09 05/15/09 05/20/09 05/19/09 05/20/09 05/20/09 05/26/09 05/26/09 05/26/09 05/27/09 05/27/09 Description of Work: Description of Work: VDR and due diligence discussions with NordAq Work on Alaska PSA and Bid Procedures Work on Alaska PSA and Bid Procedures Work on Alaska PSA and Bid Procedures Work on Alaska PSA and Bid Procedures Sales process update call VDR and due diligence requests from Pyramid Weekly Internal Update Call Work on Alaska PSA and Bid Procedures Beta and Alaska valuation work (RLL & JP) Beta and Alaska bid analysis (RLL & JRR) Work on Alaska PSA and Bid Procedures Sales process update call Beta and Alaska bid analysis (RLL & JRR) Sales process update call Beta and Alaska bid analysis (RLL & JRR) Pacific Board of Directors Meeting Meeting with Stellar Oil & Gas (RLL & JRR) Sales process update call Weekly Internal Update Call Sales process update call Call with Beta Bidder Sales process update call Sales process update call Weekly Internal Update Call Conf Call with Stellar Oil & Gas Conf Call with Stellar Oil & Gas Sales process update call Weekly Internal Update Call Call with Unsecured Creditors Committee (RLL & JRR) Sales process update call Meeting with ERG at Albrecht Office (RLL & JRR) Meeting with Chevron Sales process update call Breakfast with Stellar Oil & Gas (RLL & JRR) Sales process update calls Hours: Hours: 2.0 4.0 4.0 4.0 4.0 2.0 4.0 1.0 4.0 6.0 5.0 2.0 2 1.0 1.0 2.0 1.0 2.0 2.0 1.0 2.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 2.0 2.0 2.0 1.0 2.0 3.0 Code Code 7 7 7 7 7 7 7 7 7 5 7 7 7 7 7 7 2 7 7 7 7 7 7 7 7 7 7 7 7 1 7 7 7 7 7 7

Pacific Energy Resources, Inc. Time Detail Lazard Frres & Co. LLC Robert Lynd - Associate Date: Date: 06/01/09 06/02/09 06/03/09 06/03/09 06/04/09 06/04/09 06/06/09 06/07/09 06/08/09 06/09/09 06/09/09 06/09/09 06/10/09 06/11/09 06/12/09 06/19/09 06/20/09 06/20/09 06/23/09 06/23/09 06/25/09 06/26/09 06/28/09 Description of Work: Description of Work: PSA Discussion PSA Discussions and Call with Bidder Weekly Internal Update Call Bid update call, PSA discussion Sales process update call Weekly Internal Update Call Work on AK sales process Work on Beta sales process Work on Beta sales process Weekly Internal Update Call PSA discussion Travel to Long Beach Beta Field trip Weekly Internal Update Call Call with Bidder Work on AK & Beta sales process Work on AK sales process Work on AK sales process Weekly Internal Update Call PSA discussion Weekly Internal Update Call Sales process update call Work on AK sales process Hours: Hours: 2.0 4.0 1.0 4.0 1.0 1.0 4.0 4.0 2.0 1.0 2.0 2.0 8.0 1.0 2.0 4.0 4.0 4.0 1.0 1.0 1.0 1.0 4.0 Code Code 7 7 1 7 7 1 7 7 7 7 7 9 9 1 7 7 7 7 1 7 1 7 7