Exhibit 10.2


ASSET SALES AGREEMENT


This
Asset Sales Agreement (the “Agreement”), dated the 24th day of May, 2007, is by
and between FOREST OIL CORPORATION, a New York
corporation (“Seller”) on the one hand, and PACIFIC ENERGY RESOURCES LTD, a Delaware corporation, or any wholly-owned subsidiary
thereof (including Forest Alaska Operating, LLC) (“Buyer”) on the other hand.


In
consideration of the mutual promises herein stated and the benefits to be
derived to each party under this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Buyer hereby agree as follows:


1.             Sale and Purchase.  Seller agrees to sell and convey to Buyer and
Buyer agrees to purchase and receive, on and subject to the terms, provisions
and conditions hereof, the Assets (as hereinafter defined).


2.             The Assets.  For purposes of this Agreement, the Assets
shall mean all of Seller’s right, title and interest set forth in Exhibit “A”,
attached hereto and made a part hereof for all purposes, in and to:


(a)           oil and gas leases, oil, gas and mineral leases, subleases and other
leaseholds, royalties, overriding royalties, net profit interests, mineral fee
interests, carried interests and other properties and interests (the “Leases”)
and the lands covered thereby (“Land(s)”) and any and all oil, gas, water or
injection wells thereon or applicable thereto (the “Wells”); (ii) any
pools or units which include all or a part of any Land or include any Well (the
“Units”) and including without limitation all right, title and interest in
production from any such Unit, whether such Unit production comes from wells
located on or off of the Lands, and all tenements, hereditaments and
appurtenances belonging to, used or useful in connection with the Leases, Lands
and Units; and (iii) interests under or derived from all contracts,
agreements and instruments applicable to or by which such properties are bound
or created, to the extent applicable to such properties, including, but not
limited to, operating agreements, gathering agreements, marketing agreements
(including commodity swap, collar and/or similar derivative agreements),
transportation agreements, processing agreements, unitization, pooling and
communitization agreements, declarations and orders, joint venture agreements,
and farmin and farmout agreements (“Contracts”).  For purposes of this Agreement, the Leases,
Lands, Wells, Contracts are collectively referred to as the Oil and Gas
Properties.  Attached hereto as Exhibit “A-1”
is a description of the Oil and Gas Properties. 
The respective “net revenue interest” and “working interest” of the
Seller or any of its Subsidiaries in the Oil and Gas Properties are also
described on Exhibit “B”


(b)           equipment, machinery, fixtures, improvements and other tangible
personal property and improvements located now on, appurtenant to or used or
obtained in connection with such Oil and Gas Properties or with the production, treatment, sale or disposal of hydrocarbons
produced therefrom or attributable thereto; provided, however,
that the office premises of Seller in Anchorage, including all personal 


 













property, fixtures and improvements now located
in, appurtenant to or used or obtained in connection with such premises shall
not constitute Assets;


(c)           easements, permits, licenses, servitudes, rights-of-way, surface leases
and other surface rights appurtenant to, and used or held for use to the extent
applicable to such Oil and Gas Properties which are described and shown in
Exhibit “A-2” (Rights-of-Way”);


(d)           To the extent transferable without
third party consent, all seismic data owned or licensed by Seller and all
intellectual property related to such seismic data which is described and shown
in Exhibit “A-3” (“Seismic Data”); and


(e)           All stock in the Cook Inlet Pipeline
Company (“CIPL”) owned by Seller (the “CIPL Shares”), including any rights to
acquire additional stock in CIPL which is described on Exhibit “A-4”


For purposes of this Agreement, all of the items
described in Sections 2(a) - (e)     hereinabove
are collectively referred to as the “Assets”.


3.             Consideration.  The consideration for the Assets to be
transferred at Closing shall be:


(a)           the payment from Buyer to Seller at
Closing in the amount of ten million US dollars (US$10,000,000) (the “Cash
Consideration”) plus, subject to approval of issuance by the Toronto Stock
Exchange (“TSX”), 5,500,000 shares of common stock (the “Stock Consideration”,
and together with the Cash Consideration, the “Purchase Price”), which amount
shall be adjusted as provided in Section 5 below.  In the event that the TSX denies the issuance
of all or part of the Stock Consideration, then the Cash Consideration shall be
increased for each share of stock that Buyer is not authorized to issue.  The conversion rate per share shall be the
US$ equivalent of the weighted average closing price per share of the Buyer’s
common stock on the TSX over the five-trading day period immediately preceding
the date on which the TSX issues its denial. 
The US$ conversion shall be made at the noon buying rate as published by
the US Federal Reserve Bank of New York on the date on which the TSX issues its
denial; and


(b)           Buyer
has deposited with Seller a deposit of ten percent (10%) of the Cash
Consideration (the “Performance Deposit”) applicable to the Purchase Price,
which deposit is non-interest bearing and which is non-refundable except as
hereinafter provided in Article 6;


(c)           the assumption by Buyer of the
obligations, liabilities and costs associated with the Assets from and after
the Effective Date, subject to the further provisions hereof (the “Assumed
Liabilities”). Buyer is not assuming any liabilities of Seller other than the
Assumed Liabilities.


4.             Effective Date.  The “Effective Date” of the sale shall be as
of 7:00 a.m., January 1, 2007.



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5.             Allocation of Liability and Adjustments to
Consideration.


(a)           The transactions contemplated hereby
shall be effective as of the Effective Date, and the ownership of the Assets
shall be transferred from Seller to Buyer as of such date.


(b)           The Purchase Price to be paid by
Buyer to Seller for the Assets shall be adjusted as follows:


(i)            subject to Seller’s representations
and warranties in Section 10.1(t), upward by an amount equal to all costs and
expenses incurred and paid by Seller attributable to the ongoing operation,
development and maintenance of the Assets (including without limitation lease
rentals, shut-in royalty payments, lease operating expenses, workover and other
capital costs that are charged pursuant to the applicable operating agreements
governing the Assets) for the period of time on and after the Effective Date to
the date of Closing provided however, that with the exception of Lease rental
payments and the like, there shall be no adjustment for any individual capital
expenditure that exceeds $50,000 and is incurred between the date hereof and
Closing unless Seller has notified Buyer of such expenditure and Buyer has
consented thereto; and,


(ii)           downward by an amount equal to all
proceeds, if any, received by Seller that are attributable to the Assets for
the period of time on and after the Effective Date to the date of Closing,
including proceeds or receipts from disposition of equipment, done with Buyer’s
consent or other revenues attributable to the Assets.


(c)           An estimate of the adjusted cash
payment (the “Preliminary Sum”) shall be determined by Seller and delivered to
Buyer at least 3 business days prior to Closing, and shall be the basis for the
payment to be made by Buyer to Seller at Closing as provided in Section 6
below, provided that Buyer agrees with Seller’s estimates.  For purposes of this Agreement, the
calculation of the Preliminary Sum shall include the Performance Deposit.  Following Closing, Seller shall prepare a
final statement (“Settlement Statement”) setting forth all final adjustments to
the cash portion of the consideration, and Seller shall deliver such statement,
with such other information as may be necessary to substantiate the Settlement
Statement, to Buyer within 90 days after Closing.  If the Settlement Statement reflects that the
final adjusted cash portion of the consideration is more than the Preliminary
Sum, Buyer shall pay to Seller, within 15 days after the receipt of the
Settlement Statement, the difference between the final adjusted cash amount and
the Preliminary Sum; and if the final adjusted amount is less than the
Preliminary Sum, Seller shall pay to Buyer, within 15 days after the delivery
of the final Settlement Statement, an amount equal to such difference.


(d)           Subject to the terms hereof and
except to the extent same have already been taken into account as an adjustment
to the Purchase Price, all monies, proceeds, receipts, credits and income
attributable to the ownership and operation of the Assets (a) for all periods
of time from and subsequent to the Effective Date, shall be the sole property
and entitlement of Buyer, and to the extent received by Seller, Seller shall
within ten (10) business days after such receipt, fully disclose, account for
and transmit same to Buyer 



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and (b) for all periods of time prior to the
Effective Date, shall be the sole property and entitlement of Seller and, to
the extent received by Buyer, Buyer shall fully disclose, account for and
transmit same to Seller within ten (10) business days after such receipt.  Subject to the terms hereof and except to the
extent same have already been taken into account as an adjustment to the
Purchase Price, all costs, expenses, disbursements, obligations and liabilities
attributable to the Assets (i) for periods of time prior to the Effective Date,
regardless of when due or payable, shall be the sole obligation of Seller and
Seller shall promptly pay, or if paid by Buyer, promptly reimburse Buyer for
and hold Buyer harmless from and against same and (ii) for periods of time from
and subsequent to the Effective Date, regardless of when due or payable, shall
be the sole obligation of Buyer and Buyer shall promptly pay, or if paid by
Seller, promptly reimburse Seller for and hold Seller harmless from and against
same.


6.             Closing or
Termination.


(a)           The closing of the transactions
contemplated hereby (the “Closing”) shall occur at the office of Seller on the
later of (i) June 30, 2007, (ii) two (2) working days after satisfaction of all
conditions to Closing, or (iii) five (5) working days after expiration (or
waiver, if earlier) of any applicable preferential purchase rights or consent
to assign period. Notwithstanding
any provision herein to the contrary, in no event shall the Closing occur later
than July 31, 2007.  If the transactions contemplated by the
Membership Interest Purchase Agreement between Buyer and Forest Alaska Holding
LLC have not closed prior to Closing, for any reason, then Buyer and Seller may
each elect to terminate this Agreement. Unless otherwise waived in writing
prior to the Closing, the obligation of Buyer to complete the Closing is
subject to receipt by Buyer of (i) the proceeds of the debt financing
contemplated by the commitment letter to the Buyer, dated the date hereof, a
copy of which has been provided to Seller, or alternative financing sufficient
to fund the transactions contemplated herein and in the Membership Interest
Purchase Agreement, and (ii) the required consent under the PERL Credit
Agreement (collectively, the “Debt Conditions”).  At the
Closing, the following shall occur:


(i)            Buyer shall deliver to the Seller
the Preliminary Sum, either in cash or in the form of the Stock Consideration,
or a combination thereof.


(ii)           Seller shall execute and deliver such
instruments of assignment, bills of sale and other title transfer documents
with respect to the Assets to Buyer on forms reasonably satisfactory to Seller
and Buyer whereby Seller warrants the title to the Assets by, through and under
Seller, but not otherwise, subject to the remaining provisions of this
Agreement. Seller shall also deliver to Buyer stock certificates representing
the CIPL Shares, duly endorsed for transfer.


(iii)          If Stock Consideration is to be paid
to Seller, Buyer and Seller shall have executed a Share Acquisition and Registration
Rights Agreement, consistent with industry standard terms and conditions.


(iv)          Seller shall execute and deliver such
other conveyances, assignments, instruments of transfer or forms required by
governmental agencies or such other instrument reasonably necessary to accomplish
the purposes of this Agreement.



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(b)           If this Agreement does not close on
the date specified above or is terminated other than (i) by mutual agreement of
the Parties, (ii) by either party pursuant to Section 6(a), (iii) by Buyer as a
result of the negligence, fault or willful failure of Seller to perform its
obligations hereunder, or (iv) by Buyer as a result of a material breach of any
of Seller’s representations and warranties hereunder, Seller shall be entitled
to retain the Performance Deposit, together with any interest earned thereon
and in such event, the Seller’s retention of the Performance Deposit is Seller’s
sole remedy against the Buyer. In addition to the foregoing, if this Agreement does not close solely
as a result of the failure of the Debt Conditions to be satisfied, then Seller
shall be entitled to retain the Performance Deposit, together with any interest
earned thereon, and in such event, the Seller’s retention of the Performance
Deposit is Seller’s sole remedy against the Buyer. However, if this Agreement does not close by July 31, 2007 or is
terminated (i) by mutual agreement of the Parties, (ii) by either party
pursuant to Section 6(a) (other than in the case where the Membership Interest
Purchase Agreement does not close because the condition in Section 8.1(f)
thereof is not satisfied), (iii) by Buyer as a result of the negligence, fault
or willful failure of Seller to perform its obligations hereunder, or (iv) by
Buyer as a result of a material breach of any of Seller’s representations and
warranties hereunder, the Performance Deposit, together with any interest
earned thereon, shall be delivered to Buyer.


7.             Restrictions.  Exhibit B sets forth the allocation of total
consideration (prior to adjustments) to be paid hereunder for each property (“Allocated
Values”).  It is understood that certain
title matters relating to the Assets must be cured at or prior to Closing.  Such title matters consist of the necessity
to obtain third party consents to the transfers contemplated hereby and waivers
of applicable preferential purchase rights (collectively “Restrictions”), which
consents and rights are listed on Schedule 7. 
Such third party consents shall not include ordinary course regulatory
approvals and consents to assign.  If, on
the date of Closing, any one or more of the properties is subject to
Restrictions that have not been satisfied or waived, Seller shall continue to
use its commercially reasonable efforts to obtain a waiver of, or otherwise
satisfy, the Restriction(s) applicable to such property, and Closing shall be
postponed until such Restrictions have been waived or have expired.


8.             Title.


(a)           Review of Title Records. Seller has made and shall
continue to make available to Buyer, during reasonable business hours, records
in Seller’s possession relating to the title to the Assets.  Buyer shall be entitled to review said title
records.  Buyer shall have the right to
reasonably request copies of any and all such title records and upon such
request, Seller shall provide the requested copies to Buyer at Buyer’s expense.


(b)           Alleged Title Defects. 
As soon as reasonably practicable (and on an ongoing basis), but in no
event later than three (3) business days prior to Closing, Buyer shall notify
Seller of any Assets which are subject to Alleged Title Defect(s).  As used herein, Alleged Title Defect shall
mean a deficiency in title with respect to an Interest such that Seller owns
less than the Net Revenue Interest shown on Exhibit B or such that Seller owns
more than the Working Interest shown on Exhibit B without a corresponding
increase in the Net Revenue Interest. 
Buyer’s notice asserting Alleged Title Defect(s) shall 



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include a description and full explanation
(including any and all supporting documentation associated therewith) of each
Alleged Title Defect being claimed and a value which Buyer in good faith
attributes to curing the same.  Seller
shall have the right to notify Buyer of any increases in Net Revenue Interest or
decreases in Working Interest in the Assets and request a corresponding
adjustment.  Buyer and Seller shall meet
from time to time as necessary in an attempt to mutually agree on a proposed
resolution with respect to the Alleged Title Defect(s) raised by Buyer and
increases in Net Revenue Interest or decreases in Working Interest raised by
Seller.  The value allocated to each
Asset as set forth on Exhibit “B” and the costs to cure such title defects
shall be used by the parties to determine the amount of any adjustment, if any,
due to the existence of an Alleged Title Defect.  It is recognized that good faith differences
of opinion may exist between Buyer and Seller in connection with the Alleged
Title Defect(s) raised by Buyer and adjustments to the Net Revenue Interests or
Working Interests raised by Seller, including without limitation, disputes as
to: (a) whether or not the alleged defect constitutes an Alleged Title Defect
within the meaning of this Agreement, (b) whether or not the Alleged Title
Defect raised by Buyer was properly and timely asserted by Buyer pursuant to
this Article, or (c) the appropriate upward or downward adjustment, if any, on
account of a change in the Net Revenue Interest or Working Interest from those
set forth in Exhibit “B”.  If any such
differences of opinion are not resolved by mutual agreement of Buyer and
Seller, either party shall have the right, exercisable prior to Closing, to
submit all information relating to the Alleged Title Defect to a mutually
agreeable attorney licensed in the state where the property at issue is located
and who shall have at least ten (10) years oil and gas title experience for
resolution of the difference of opinion. 
If such dispute is not resolved prior to Closing, Closing shall proceed
on the basis of Seller’s valuation, subject to an obligation to refund any
amount, determined under the process outlined above, of any Title Defect that
has been so determined.


(c)           Waiver.  All title objections not raised within the
time period provided in paragraph (b) above shall be waived by Buyer for all
purposes.


9.             Indemnification.  Buyer shall assume full responsibility for
the Assets on and after the Effective Date and shall fully defend, compensate,
protect, indemnify and hold Seller, its officers, directors, employees and
agents, harmless from and against any and all losses, claims, demands, damages,
suits, expenses, causes of action, and any sanctions of every kind and
character (including reasonable attorneys’ fees, court costs, and costs of
investigation) which may be made or asserted by Buyer, Buyer’s assigns, Buyer’s
employees, agents, contractors, and subcontractors and employees thereof, or
(subject to Seller’s representations and warranties in Sections 10.1 (c) and
(d)) by any third parties (including governmental agencies) on account of
personal injury, death or property damage (including claims for taxes,
pollution, environmental damage, and regulatory compliance, any fines or
penalties assessed on account of such damage, and causes of action alleging
statutory liability) caused by, arising out of, or in any way incidental to
operations conducted on the Assets on and after the Effective Date or in any
way connected with the conditions of the equipment or facilities located on the
Assets (including maintenance, repair and abandonment operations), and whether
or not such losses, claims, demands, suits, causes of action, damages and
sanctions are occasioned by, are incident to or are the result of the
negligence or fault in whole or in part of Seller, its agents, representatives
or employees or any other person or entity, or are occasioned by, are incident
to or emanate from the unseaworthiness of vessels or alleged defects in lease
equipment, facilities or pipelines; except 



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however
this indemnity shall not apply to losses sustained or liabilities arising out
of Seller’s gross negligence or willful misconduct.


For a
period of one year after the Closing Date, Seller shall fully defend,
compensate, protect, indemnify and hold Buyer, its officers, directors,
employees, affiliates and agents, harmless from and against any and all losses,
claims, demands, damages, suits, expenses, causes of action, and any sanctions
of every kind and character (including reasonable attorneys’ fees, court costs,
and costs of investigation) which may be made or asserted (a) by Seller, Seller’s
assigns, Seller’s employees, agents, contractors, and subcontractors and
employees thereof, or by any third parties (including governmental agencies) on
account of personal injury, death or property damage (including claims for
taxes, pollution, environmental damage, and regulatory compliance, any fines or
penalties assessed on account of such damage, and causes of action alleging
statutory liability) caused by, arising out of, or in any way incidental to
operations conducted on the Assets prior to the Effective Date or in any way
connected with the conditions of the equipment or facilities located on the
Assets (including maintenance, repair and abandonment operations), and whether
or not such losses, claims, demands, suits, causes of action, damages and
sanctions are occasioned by, are incident to or are the result of the
negligence or fault in whole or in part of Buyer, its agents, representatives
or employees or any other person or entity, or are occasioned by, are incident to
or emanate from the unseaworthiness of vessels or alleged defects in lease
equipment, facilities or pipelines; except however this indemnity shall not
apply to losses sustained or liabilities arising out of Buyer’s gross
negligence or willful misconduct, and (b) by third parties with respect to any
liabilities of Seller other than the Assumed Liabilities.


Production
activities can result in the concentration of certain levels of naturally
occurring radioactive material (“NORM”) on production equipment and pipe so
that, when brought to the surface, a health hazard may exist in connection with
the removal, handling or disposal of such NORM-contaminated equipment or pipe,
if proper environmental, regulatory and industrial hygiene procedures are not
observed.  The presence of NORM in or on
facilities or equipment on the Assets on and after the Effective Date shall be
the sole responsibility of Buyer, and Buyer shall indemnify and hold Seller
harmless from and against any and all claims, losses, damages or liabilities
arising from the presence of or in connection with the purchase, use, resale
removal, handling or disposal of NORM-contaminated equipment or pipe sold under
this agreement.  Such indemnity shall
apply without exception, and regardless of whether the claims, losses, damages
or liabilities arise in whole or in part from the negligence (whether or not
concurrent) of Seller or any other person or entity.


10.           Representations and
Warranties.


10.1         Seller’s Representations and
Warranties. Seller represents and warrants to Buyer as of the date of this
Agreement and as of the Closing Date as follows:


(a)           Organization, Standing and
Power.  Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the state of New York and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.  Seller is duly
qualified to carry on its business and in good standing in the State of Alaska.


(b)           Authority and Enforceability.  The execution and delivery by Seller of this
Agreement, and the consummation of the transactions contemplated hereby, have
been 



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duly and validly authorized by all necessary
corporate action, on the part of Seller. 
This Agreement is, and every instrument, document, or agreement to be
executed hereunder to consummate the transactions contemplated hereby will be,
a valid and legally binding obligation of Seller, enforceable against Seller in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
and to general equity principles. 
Neither the execution and delivery by Seller of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance by Seller
with any of the provisions hereof, will:


(i)  conflict with or result in a breach of any
provision of Seller’s constituent documents;


(ii)  result in a material default (with due notice
or lapse of time or both) or give rise to any right of termination,
cancellation or acceleration under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license or agreement to which Seller is
a party or by which Seller or any of Seller’s properties or assets may be bound
or create or impose any  lien or other
encumbrance upon Seller’s properties or assets; or


(iii) violate any
order, writ, injunction, judgment, decree, statute, rule or regulation
applicable to Seller, or Seller’s properties or assets, assuming receipt of all
routine governmental consents normally acquired after the consummation of
transactions such as the transactions of the nature contemplated by this
Agreement.


(c)           Claims and Liabilities
Affecting the Assets.  Other
than as disclosed on Schedule 10.1(c), there is no suit, action, claim, notice
of violation, investigation or inquiry either pending or, to Seller’s
Knowledge, threatened, by any person or entity or by any administrative agency
or governmental body and no legal, administrative or arbitration proceeding
pending or threatened against or affecting the Assets.  At the Effective Date, the Assumed
Liabilities included trade payables incurred in the ordinary course of business
not exceeding US$50,000.  The Assumed
Liabilities also include, from and after the Effective Date, all obligations
and liabilities owed under the contracts, agreements, and other instruments
applicable to the Assets, all federal and state statutory and regulatory
obligations and liabilities related to the Assets, including without limitation
environmental obligations and liabilities, all costs incurred in relation to
the Assets, and all obligations and liabilities owed as a stockholder of CIPL,
but specifically do not include any of the foregoing to the extent that they relate
to any periods prior to the Effective Date.


(d)           Claims Affecting the Sale.  There is no suit, action, claim, notice of
violation, investigation or inquiry either pending or, to Seller’s Knowledge
threatened, by any person or entity or by any administrative agency or
governmental body and no legal, administrative or arbitration proceeding
pending or threatened against Seller or any Affiliate of Seller which has
affected or could affect Seller’s ability to execute and deliver this Agreement
or to consummate the transactions contemplated by this Agreement.  In this Agreement, “Affiliate” means any
person or entity which controls, is controlled by or is under common control
with, the subject person or entity with the terms “control,” “controlled by”
and “under common control” meaning the possession, directly or indirectly, of
the power to direct or cause the direction of management or policies (whether
through ownership of securities or any partnership or other ownership interest,
by contract or otherwise) of a person. 
For the purposes of the preceding sentence, control shall be deemed to
exist when a person possesses, directly or indirectly, through one or more
intermediaries (i) in the case of a corporation, more than 50% of the
outstanding voting securities thereof; (ii) in the case of a limited liability
company, partnership, limited partnership or venture, the right to more than
50% of the 



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distributions therefrom (including liquidating
distributions); or (iii) in the case of any other person, more than 50% of the
economic or beneficial interest therein.


(e)           No Demands.  Seller has received no notice of any claimed
defaults, offsets or cancellations relating to the Assets, and Seller has no
Knowledge of the existence of any default existing with respect to any of the
Assets or Related Agreements


(f)            Taxes.


(i)            There are no tax liens upon any of
the Assets, nor to the Seller’s Knowledge, is there any basis for the
imposition of any tax liens.


(ii)           Seller has not entered into any
material agreement or arrangement            with
any taxing authority with respect to the Assets that requires Buyer to take any
action or to refrain from taking any action with respect to the Assets after
the Closing Date.


(g)           Oil and Gas Leases.  To Seller’s Knowledge:


(i)            The Leases included in the Assets
have been maintained according to their terms, in compliance with the
agreements to which the Leases are subject;


(ii)           Other than governmental approvals or
consents, there are no third party consent required to be obtain to permit
Seller to transfer or assign the Leases to Buyer; and


(ii)           The Leases included in the Assets are
presently in full force and effect.


(h)           Non-Foreign Representation.  Seller is not a “foreign person” within the
meaning of Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”)
and the Treasury Regulations thereunder.


(i)            Commitments for
Expenditures.


(i)  There are no outstanding authorizations for
expenditures (AFEs) which Seller has received from a third party operator or
has delivered to third parties, but in either case have not been responded to
prior to the date of this Agreement; and


(ii)  Seller has not abandoned any wells (or
removed any materials or equipment, except those replaced by items of
materially equal suitability) included in the Assets since the Effective Date.


(j)            Production Sales Contracts.  There exist no agreements or arrangements for
the sale of production from Leases, Lands, Wells or Units (including calls on,
or rights to purchase, production, whether or not the same are currently being
exercised) other than any agreements or arrangements which are cancelable on 90
days notice or less without penalty or detriment; and Seller is not, and to
Seller’s knowledge, no other party is in breach of any such agreement or
arrangement.



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(k)           Compliance with Laws.


(i)  To Seller’s knowledge, the ownership and
operation of the Assets has been in conformity, in all material respects, with
all applicable laws, rule, regulations, guidelines and orders of all
governmental agencies having jurisdiction over the Assets, including the timely
plugging and abandonment of wells.


(ii)  The Assets are not in violation of (or
subject to) any existing, pending or, to Seller’s Knowledge, threatened,
judicial, administrative or arbitral judgment, proceeding or any non-routine
investigation or inquiry by any governmental authority.


(l)            Related Agreements.  The Assets are subject to the provisions of
various agreements identified on Exhibits “C” and “D” hereto (the “Related
Agreements” and the “CIPL Agreements”, respectively).  If the transactions contemplated hereby are
consummated in accordance with the terms and provisions hereof, Buyer shall
perform all the obligations attributable to the Assets under the Related Agreements
to the extent such obligations are attributable to any period of time after the
date of Closing. No consent of any third party is required in connection with
the assignment of any Related Agreements.


(m)          Governmental Permits.  Seller has all governmental licenses, filings
and permits (including, without limitation, permits, licenses, approval
registrations, notifications, exemptions and any other authorizations pursuant
to applicable Environmental Laws) necessary or appropriate to own and operate
the Assets as presently being owned and operated, and such licenses, filings
and permits are in full force and effect, and Seller has not received written
notice of any violations in respect of any such licenses or permits, in any
case, except where such fact could not be reasonably expected to result in a
material adverse effect on Buyer’s ability to own and use the Assets.


“Environmental Law” means
any Law of any Governmental Authority whose purpose is to conserve or protect
human health, the environment, wildlife or natural resources, including, but
not limited to, the Clean Air Act, as amended, the Federal Water Pollution
Control Act, as amended, the Rivers and Harbors Act of 1899, as amended, the
Safe Drinking Water Act, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act, as amended (“CERCLA”), the Superfund Amendments
and Reauthorization Act of 1986, as amended, the Resource Conservation and
Recovery Act of 1976, as amended, the Hazardous and Solid Waste Amendments Act
of 1984, as amended, the Toxic Substances Control Act, as amended, the
Hazardous Materials Transportation Act, as amended, and Title 18 of the Alaska
Administrative Code.


“Governmental Authority”
means any federal, state, provincial, local or foreign government or
governmental regulatory body and any of their respective subdivisions,
agencies, instrumentalities, authorities, courts or tribunals.


“Law” means any federal,
state, provincial, municipal, local or foreign law, statute, rule, rule, writ,
order, decree, ordinance, code or regulation.


(n)           State of Repair.  To the Seller’s Knowledge, the Assets have
been maintained in a state of repair so as to be reasonably adequate for normal
operations.


(o)           No Oral Contracts.  To the Knowledge of Seller, Seller has not
entered into any oral contracts with respect to the Assets.



 10
 









(p)           Tax Partnerships.  Other than those listed on Schedule 10.1(p),
no Leases, Lands, Wells, Units or other Assets are held in an entity or
arrangement treated as a tax partnership for Tax purposes.


(q)           Liens, Mortgages and
Encumbrances.  The Leases,
Lands, Wells, Units and other Assets are free and clear of all liens,
mortgages, or other encumbrances.


(r)            Preferential Rights or
Consents.  Other than those
listed on Schedule 7, there
are no preferential purchase rights held by a third party or consents required
to be obtained affecting the Assets.


(s)           Environmental Matters. 
To the extent required by Environmental Laws, and solely with respect to
the Assets:


(i)            Seller has conducted and continues to conduct its
business and operated its assets, and the condition of each facility and
property currently owned, leased and operated by Seller is, in material
compliance with all Environmental Laws;


(ii)           Seller has not been notified by any Governmental Authority
or other third party that any of the operations or assets of the Seller is the
subject of any investigation or inquiry by any Governmental Authority
evaluating whether any material remedial action is needed to respond to a
release or threatened release of any hazardous material or to the improper
storage or disposal (including storage or disposal at offsite locations) of any
hazardous material where such investigation or inquiry remains unresolved as of
the date hereof;


(iii)          neither Seller nor, to Seller’s Knowledge, any other Person
has filed any notice under any federal, state or local law indicating that (i)
the Seller is responsible for the improper release into the environment, or the
improper storage or disposal, of any hazardous material, or (ii) any hazardous
material is improperly stored or disposed of upon any property of the Seller;


(iv)          Seller does not have any material contingent liability in
connection with (i) the release or threatened release into the environment at,
beneath or on any of the Oil and Gas Properties, or (ii) the storage or
disposal of any hazardous material;


(v)           Seller has not received any claim, complaint, notice,
inquiry or request for information with respect to any alleged violation of any
environmental law or regarding potential liability under any Environmental Law
relating to operations or conditions of any facility or property (including off
site storage or disposal of any hazardous material from such facilities or
property) currently or formerly owned, leased or operated by the Seller;


(vi)          none of the Oil and Gas Properties is listed on federal or
state list as sites requiring investigation or cleanup;


(vii)         Seller is not directly transporting and is not directly
arranging for the transportation of, any hazardous material to any location
which is listed on any federal or state list or which is the subject of
federal, state or local 



 11
 









enforcement actions or other investigations that may
lead to material claims against Seller for remedial work, damage to natural
resources or personal injury;


(viii)        there are no sites, locations or
operations at which Seller is currently undertaking any remedial or response
action relating to any such disposal or release, as required by Environmental
Laws; and


(ix)           all underground storage tanks and solid waste disposal
facilities owned or operated by the Seller are used and operated in material
compliance with Environmental Laws.


(t)            Operation in Ordinary
Course. Since the Effective Date, Seller has operated the Assets in
the ordinary course of business, consistent in all material respects (including
the incurrence of costs and expenses) with practice prior to the Effective
Date.


As used throughout this Agreement Section 10.1, “Knowledge”,
with respect to Seller, shall refer to the actual knowledge of Leonard C.
Gurule, Glen J. Mizenko and Tim Savoy after reasonable investigation.


10.2         Buyer’s Representations and Warranties.
Buyer represents and warrants to Seller as of the date of this Agreement and of
the Closing Date follows:


(a)           Organization, Standing and
Power.  Buyer is a Delaware
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted.  At Closing, Buyer will be
duly qualified to carry on its business and in good standing in the State of
Alaska.


(b)           Authority and
Enforceability.  The execution
and delivery by Buyer of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly and validly authorized by all
necessary corporate action on the part of Buyer.  This Agreement is, and every instrument,
document, or agreement to be executed hereunder to consummate the transactions
contemplated hereby will constitute the valid and legally binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability and to general equity principles.  Neither the execution and delivery by Buyer
of this Agreement nor the consummation of the transactions contemplated hereby,
nor compliance by Buyer with any of the provisions hereof, will:


(i)            conflict with or result in a breach
of any provision of its certificate of incorporation or bylaws;


(ii)           subject to obtaining required consent under Buyer’s Credit and Guaranty
Agreement dated November 30, 2006 with J. Aron & Company (the “PERL Credit
Agreement”), result in a material default
(with due notice or lapse of time or both) or give rise to any right of
termination, cancellation or acceleration under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license or agreement to
which Buyer is a party or by which it or any of its properties or assets may be
bound; or



 12
 









(iii)          violate any order, writ, injunction,
judgment, decree, statute, rule or regulation applicable to Buyer, or any of
its properties or assets, assuming receipt of all routine governmental consents
normally acquired after the consummation of transactions such as transactions
of the nature contemplated by this Agreement.


(c)           Independent Evaluation;
Permitted Investment. Prior to the
execution of this Agreement, Buyer has been afforded the opportunity to examine
the records with respect to the Assets, including the opportunity to ask
questions of the Seller.  Except as set
forth in this Agreement, Buyer acknowledges that Seller has made no
representations or warranties as to the accuracy or completeness of such
information, and, in entering into and performing this Agreement, Buyer has
relied and will rely solely upon its independent investigation of, and upon its
own knowledge and experience and that of its advisors’ with respect to, the
Assets and their value. Buyer further represents and warrants that:  (i) it is an experienced and knowledgeable
investor in the oil and gas business, (ii) prior to entering into this
Agreement, Buyer was advised by and has relied solely on its own legal, tax,
and other professional counsel concerning this Agreement, the Assets and the
value thereof, and (iii) that it is purchasing the Assets for its own account
or that it will sell or subdivide any interest in the Assets only in a manner
consistent with the applicable registration and disclosure requirements of all
applicable securities laws.


(d)           Suits Affecting the Sale.  There is no suit, action, claim, notice of
violation, investigation or inquiry either pending or to Buyer’s knowledge,
threatened, by any person or entity or by any administrative agency or
governmental body and no legal, administrative or arbitration proceeding
pending or, to Buyer’s knowledge, threatened against Buyer or any Affiliate of
Buyer which has affected or could materially affect Buyer’s ability to consummate
the transactions contemplated by this Agreement.


(e)           Eligibility.  The Buyer is (or will be as of Closing)
qualified under all applicable laws and regulations to own the Assets,
including, without limitation, the oil and gas leases.


(f)            Financing; Authorized
Capital.  Buyer will have the
financial ability as is necessary to fulfill the obligations of this Agreement
(as evidenced by financing commitment letters from an institution satisfactory
to Seller delivered to Seller upon execution of this Agreement), at Closing
will have the necessary immediately available funds to fulfill said
obligations, and Closing of the transaction is not contingent upon obtaining
financing.


11.           Information.  Seller shall make available to Buyer at
Seller’s office for such inspection and copying as Buyer deems pertinent all
relevant records and information in Seller’s possession which pertain to the
Assets.  Such books and records include,
but are not limited to, engineering, geological, production, land, operational,
regulatory, and marketing data related to the Assets, and all ownership records
and title opinions.


To the
best of its Knowledge, Seller has furnished accurate information; however,
except as set forth in this Agreement (including the Schedules and Exhibits) Seller
does not in any way represent or warrant that such information is complete,
accurate or correct.  except as set forth
in this Agreement (including the Schedules and Exhibits), any reliance on
information furnished herewith shall be at Buyer’s sole risk and expense.



 13
 









12.           Prepaid Expenses.  Ad valorem and similar taxes, paid utilities
charges, prepaid rentals and all other pre-paids shall be prorated between
Buyer and Seller, as of the Effective Date.


13.           Costs Borne by Buyer.
Except as otherwise provided herein, any and all costs associated with the
assignment of the Assets, as provided for in the respective Leases, or
otherwise, shall be borne solely by Buyer. 
Buyer shall be solely responsible for all filing and recording of
documents related to the Assets and for all such filing and recording fees in
connection therewith.  Buyer shall
furnish Seller with a certified copy of the recorded and approved assignments.


14.           Notice of Litigation
or Changes in Fact.  Prior
to Closing, Seller shall notify Buyer of any new claims, lawsuits or
investigations, pending or threatened, affecting the Assets.


15.           Miscellaneous.


(a)           Neither this Agreement nor any of the
rights or obligations hereunder nor any of the Assets may be assigned by Buyer
without the prior written consent of Seller, which consent shall not be
unreasonably be withheld. Notwithstanding anything to the contrary, however,
Buyer may assign its rights hereunder to its financing source for collateral
security purposes and/or to a wholly-owned subsidiary of Buyer, including
Forest Alaska Operating LLC, without the consent of Seller.


(b)           All proprietary information and data
furnished to Buyer hereunder shall be kept confidential by Buyer.  Furthermore, Buyer shall not, without first
notifying Seller, issue any press releases or make public announcements
regarding the provisions of this Agreement, except as may be required by law,
applicable regulatory authority or applicable stock exchange rule.  This restriction shall not apply to the
filing of reports required by any regulatory agency in the normal course of
business.


(c)           THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE AND SHALL BE SUBJECT TO ALL
APPLICABLE STATE AND FEDERAL LAWS, RULES AND REGULATIONS OF PUBLIC BODIES
HAVING JURISDICTION OVER THE ASSETS.  IN
THE EVENT ANY PROVISION OF THIS AGREEMENT IS, OR THE OPERATIONS CONTEMPLATED
HEREBY ARE FOUND TO BE, INCONSISTENT WITH OR CONTRARY TO ANY SUCH LAWS, RULES,
OR REGULATIONS, THE LATTER SHALL BE DEEMED TO CONTROL.  THEREAFTER, THIS AGREEMENT SHALL BE REGARDED
AS MODIFIED ACCORDINGLY, AND, AS SO MODIFIED, SHALL CONTINUE IN FULL FORCE AND
EFFECT.


(d)           Subject to the provisions of this
Agreement, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.


(e)           This Agreement constitutes the entire
agreement between the parties and supersedes any and all other written or oral
agreements or understandings between the parties concerning the subject matter
hereof.  No modification or amendment of
the terms and provisions of this Agreement shall be effective unless in writing
and signed by the party against whom enforcement is sought.



 14
 









(f)            The headings of sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part hereof.


(g)           Intentionally left blank.


(h)           Buyer shall comply with all
applicable laws, ordinances, rules and regulations and shall promptly obtain
and maintain all permits required by public authorities in connection with the
property purchased.


(i)            It is expressly agreed to that in no
event shall Buyer contact Seller’s co-owners in the Assets, regarding this
Agreement, prior to the closing without the express consent of Seller.


(j)            The parties agree to execute such
additional instruments, agreements, or documents as may be necessary to
effectuate the intentions of this Agreement.


(k)           This Agreement may be executed in
multiple counterparts each of which will constitute an original and all of
which, taken together, shall be one Agreement.


(l)            Intentionally left blank.


(m)          Except as otherwise expressly provided
in Article 10 above, BUYER ACKNOWLEDGES THAT SELLER HAS NOT MADE, AND SELLER
HEREBY EXPRESSLY DISCLAIMS AND NEGATES, ANY REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, RELATING TO THE CONDITION OF ANY IMMOVABLE PROPERTY, MOVABLE
PROPERTY, EQUIPMENT, INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY
CONSTITUTING PART OF THE ASSETS (INCLUDING, WITHOUT LIMITATION, (i) ANY IMPLIED
OR EXPRESSED WARRANTY OF MERCHANTABILITY, (ii) ANY IMPLIED OR EXPRESSED
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (iii) ANY IMPLIED OR EXPRESSED
WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (iv) ANY RIGHTS OF
BUYER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN
OF THE PURCHASE PRICE, AND (v) ANY IMPLIED OR EXPRESSED WARRANTY REGARDING
ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT OR PROTECTION
OF THE ENVIRONMENT OR HEALTH.  IT BEING
THE EXPRESS INTENTION OF BUYER AND SELLER THAT (EXCEPT TO THE EXTENT EXPRESSLY
PROVIDED IN ARTICLE 6) THE IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT,
INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY SHALL BE CONVEYED TO BUYER
AS IS AND IN THEIR PRESENT CONDITION AND STATE OF REPAIR AND BUYER REPRESENTS
TO SELLER THAT BUYER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS WITH
RESPECT TO THE IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY,
MACHINERY, FIXTURES AND PERSONAL PROPERTY AS BUYER DEEMS APPROPRIATE, AND BUYER
WILL ACCEPT THE IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY,
MACHINERY, FIXTURES AND PERSONAL PROPERTY AS IS, IN THEIR PRESENT CONDITION AND
STATE OF REPAIR.


*              *              *



 15
 









EXECUTED
as of the date first set forth above.


Seller:


	
  FOREST OIL CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ DAVID H. KEYTE

  	
   

  	
   

  
	
  Name:

  	
  David H. Keyte

  	
   

  	
   

  
	
  Title:

  	
  Executive Vice President & Chief Financial
  Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Buyer:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PACIFIC
  ENERGY RESOURCES LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ DARREN KATIC

  
	
   

  	
   

  	
  Name:

  	
  Darren Katic

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
  Attachments:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit “A”

  	
  Assets

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  A-1

  	
  Oil and Gas Properties

  	
   

  	
   

  
	
  A-2

  	
  Rights-of-Way

  	
   

  	
   

  
	
  A-3

  	
  Seismic Data

  	
   

  	
   

  
	
  A-4

  	
  Cook Inlet Pipeline Company Stock

  	
   

  	
   

  
	
  Exhibit “B”

  	
  —

  	
  Properties and Allocated Values

  	
   

  
	
  Exhibit “C”

  	
  —

  	
  Related Agreements

  	
   

  
	
  Exhibit “D”

  	
  —

  	
  CIPL Agreements

  	
   

  
	
  Schedule 7

  	
  —

  	
  Restrictions

  	
   

  
	
  Schedule 10.1 (c)

  	
  —

  	
  Claims Affecting the Assets

  	
   

  
	
  Schedule 10.1 (p)

  	
  —

  	
  Tax Partnerships

  	
   

  
								



 



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