Document:

5G WIRELESS COMMUNICATIONS, INC.

                       NOTE AND WARRANT PURCHASE AGREEMENT

      THIS NOTE AND WARRANT PURCHASE AGREEMENT (the "AGREEMENT") is effective as
of March 4, 2004, by and between 5G WIRELESS COMMUNICATIONS, INC., a Nevada
corporation (the "COMPANY"), and each investor listed on Schedule A attached
hereto (each an "INVESTOR").

      1. Notes and Warrants.

            1.1 The Notes. The Company is authorized to issue Notes bearing
interest at 9% simple interest in substantially the form attached hereto as
Exhibit A (the "NOTE" or "NOTES") in the aggregate principal amount of not less
than $200,000 and not more than $500,000 (including the aggregate purchase price
of the Warrants (as defined below)) to be governed by the terms and conditions,
and repaid in accordance with, this Agreement. Subject to the terms and
conditions of this Agreement, each Investor severally, but not jointly, agrees
to purchase Notes from the Company in the amount set forth next to such
Investor's name on Schedule 1 hereto.

                  (a) Automatic Conversion of Notes into Subsequent Financing.
Each Investor agrees that such Investor's Note shall be converted automatically,
and without any further action on the part of Investor, into the securities
issued by the Company in the next financing in which the Company sells not less
than $500,000 worth of investment securities to investors (the "SUBSEQUENT
FINANCING"), providing such Subsequent Financing takes place within 180 days of
the Closing. Therefore, each Investor agrees that the Notes to be issued
hereunder may be converted without any further action on the part of Investor
into different notes or into equity securities of the Company the terms of which
are not yet known.

                  (b) Optional Conversion into Other Financing(s) Within 180
Days. In the event the Company conducts a financing (or financings) (i) which is
closed prior to 180 days from the date of the Closing and (ii) in which the
Company sells securities in an amount less than $500,000 such that such
financing (or financings) does not qualify as a Subsequent Financing (a
"NON-QUALIFYING FINANCING"), then, within five (5) business days of the closing
of each such Non-Qualifying Financing, the Company shall provide Investor with
written notice as to the timing and the terms of such financing and Investor
shall have fifteen (15) business days from receipt of such written notice (the
"ELECTION PERIOD") to elect to convert the principal amount, plus all accrued
and unpaid interest, of the Note into the securities issued in such
Non-Qualifying Financing.

                  (c) Automatic Conversion in 180 Days. In the event a
Subsequent Financing has not occurred within 180 days of the Closing and the
Notes have not otherwise been converted into another financing under Section
1.1(b) hereof, then the Notes shall convert into Common Stock of the Company at
the lower of either (a) the average closing bid price on the five (5) trading
days preceding the Close (the "CLOSING PRICE") less a 25% discount from such
Closing Price, or (b) the average closing bid price on the fifteen (15) trading
days preceding the date that is 180 days from the Close. Notwithstanding the
above, in the event the Company has provided the notice regarding a
Non-Qualifying Financing and during the Election Period, the 180 day period
shall have lapsed, then, the automatic conversion contemplated hereby shall be
delayed until the end of such Election Period.

                                       1
<PAGE>

      1.2 The Warrants. Subject to the terms of this Agreement, in connection
with each Note (and for the additional consideration set forth in each Warrant),
the Company agrees to issue and shall issue to each Investor a warrant to
purchase Company Common Stock (the "WARRANT STOCK") of the Company (a "WARRANT"
or, the "WARRANTS"), in substantially the form attached hereto as Exhibit B. For
a two year period the Warrant shall entitle the Investor to purchase that number
of shares of Company Common Stock equal to (1) the dollar amount of such
Investor's Note divided by the Closing Price (2) with the resulting product
multiplied by four-tenths (.40). For example, assuming an Investor purchases
$50,000 worth of the Notes and assuming that the Closing Price is $0.10, the
number of warrant shares shall be 200,000 (50,000 / 0.10 x .40 = 200.000). The
resulting Warrant share amounts shall be as set forth on Schedule 1 hereto. The
Warrants shall not be impacted or converted as a result of any Subsequent
Financing or other financing event except with the consent of the Warrant
Holder.

      1.3 Closings. The initial purchase and sale of the Notes and Warrants will
take place at the offices of Pillsbury Winthrop LLP, 2550 Hanover Street, Palo
Alto, California on March 4 , 2004, or at such other time and place as the
Investors shall mutually agree, either orally or in writing (which time and
place are designated as the "CLOSING"). The Company may sell additional Notes
until March 4, 2004 (each such additional sale shall be deemed part of the
original Closing and the Closing Price and all dates to be calculated shall be
based for all Notes on the first Closing date), to such persons as the Company
may determine. Any such sale shall be upon the same terms and conditions as
those contained herein, and such persons or entities shall become parties to
this Agreement and shall have the rights and obligations of an Investor
hereunder.

      2. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Investor as follows:

      2.1 Organization, Standing and Power. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Nevada and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as contemplated to be
conducted. The Company is duly qualified to transact business as a foreign
corporation in any jurisdiction in which the failure to do so would have a
material adverse effect on its business properties, prospects or financial
condition.

      2.2 Authority and Enforceability. The Company has all requisite corporate
power and authority to execute and deliver this Agreement, the Notes and the
Warrants (collectively, the "LOAN AGREEMENTS") and to perform fully its
obligations hereunder and thereunder. The execution and delivery of the Loan
Agreements and the consummation of the transactions contemplated thereby have
been duly authorized by all necessary corporate action on the part of the
Company. The Loan Agreements have been duly executed and delivered by the
Company and constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity, regardless of whether enforceability is considered in a proceeding at
law or in equity.

                                       2
<PAGE>

      2.3 Compliance with All Securities Laws. Assuming the accuracy of the
Investors' representations set forth in Section 3 hereof, the issuance of the
Notes and Warrants, as contemplated by this Agreement, does not violate or
breach any applicable securities laws.

      2.4 Governmental Consents. No consent, approval, qualification, order or
authorization of, or filing with, any local, state or federal governmental
authority is required on the part of the Company in connection with the
Company's valid execution, delivery or performance of this Agreement, the
issuance of the Notes and the Warrants, except such filings as have been made
prior to the Closing, except that any notices of sale required to be filed with
the Securities and Exchange Commission under Regulation D of the Securities Act
of 1933, as amended (the "SECURITIES ACT"), or such post-closing filings as may
be required under applicable state securities laws, which will be timely filed
within the applicable periods thereafter.

      3. Representations and Warranties of Each Investor. Each Investor hereby
represents and warrants severally, and not jointly, to the Company that:

      3.1 Authorization. Such Investor has all requisite corporate power and
authority to enter into the Loan Agreements, and that the Loan Agreements
constitute legal, valid and binding obligations of such Investor, enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, regardless of whether
enforceability is considered in a proceeding at law or in equity.

      3.2 Purchase Entirely for Own Account. The Notes, the Warrants and the
shares of equity capital issuable upon conversion of any such securities
(collectively, the "SECURITIES"), will be acquired for investment for Investor's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and the Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same. The
Investor does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation in any of the Securities to
such person or to any third person.

      3.3 Disclosure of Information. The Investor believes it has received all
of the information it considers necessary or appropriate for deciding whether to
purchase the Notes and the Warrants. The Investor has had an opportunity to ask
questions and receive answers from the Company regarding the Company's business
prospects, properties and condition, financial or otherwise and the terms and
conditions of the offering and sale of the Notes and the Warrants.

      3.4 Investment Experience. The Investor is an investor in securities of
companies in the development stage and acknowledges that it is able to fend for
itself and bear the economic risk of its investment, including the complete loss
thereof, and has such knowledge and experience in financial or business matters
that it is capable of evaluating the merits and risks of the investment in the
Note and the Warrant. The Investor has not been organized for the purpose of
acquiring the Securities.

                                       3
<PAGE>

      3.5 Accredited Investor. The Investor is an "accredited investor" within
the meaning of the Securities and Exchange Commission's Rule 501 of Regulation D
as promulgated under the Securities Act (as defined in Section 3.6 below), as
presently in effect.

      3.6 Restricted Securities. The Investor understands that the Securities it
is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act, only in certain limited circumstances. In this connection,
the Investor is familiar with Rule 144, as presently in effect, and understands
the resale limitations imposed thereby and by the Securities Act. The Investor
understands Rule 144 is not currently available for the sale of the Securities
and may never be so available.

      3.7 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, the Investor further agrees not to make any
disposition of all or any portion of the Securities (other than the valid
exercise or conversion thereof in accordance with their respective terms) unless
and until:

                  (a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition, and such disposition is made
in accordance with such registration statement; or

                  (b) (i) the Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
requested by the Company, the Investor shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Securities
Act or registration or qualification under any applicable state securities laws.

                  (c) Notwithstanding the foregoing, no registration statement,
investment representation letter or opinion of counsel shall be required for any
transfer of any Securities (i) in compliance with Rule 144 or Rule 144A of the
Securities Act if compliance with such rules is available at such time, or (ii)
by gift, will or intestate succession by such holder to his or her spouse or
lineal descendants or ancestors or any trust for any of the foregoing; provided
that in the case of clause (ii) above, the transferee agrees in writing to be
subject to the terms of this Agreement.

      3.8 Limited Trading Market. Investor recognizes that an investment in the
Securities involves substantial risks, including loss of the entire amount of
such investment. Investor also recognizes that there is presently an extremely
limited public trading market for the Company's Common Stock and no trading
market at all for the Securities sold hereunder. Investor understands and agrees
that there can be no assurance that this public market for trading Company
Common Stock ever will become more liquid nor can there be any assurance that
any such public trading market for Company Common Stock or Securities will
continue to exist at all.

                                       4
<PAGE>

      3.9 No Short Trading. Investor by execution of this Agreement agrees that
neither such Investor nor any affiliate, nor any group that investor is a member
of, or may join or become a part of, shall at any time prior to March, 15, 2005
(or such later date as may be required in the event that the Notes are converted
into a Subsequent Financing), directly or indirectly, sell, hypothecate, offer
to sell, loan for short sale, contract to sell grant any option to purchase or
in any other regard, pledge, hypothecate, dispose of or otherwise decrease its
beneficial interest in any securities of the Company held by such party without
the prior written consent of the Company.

      3.10 Confidentiality. Purchaser agrees to maintain the confidentiality of
any material non-public information it receives regarding the Company, including
any information regarding potential New Financing activity.

      3.11 Legends. It is understood that the certificates evidencing the
Securities may bear one or all of the following legends:

                  (a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."

                  (b) Any legend required by the laws of the State of California
or any other applicable state, including any legend required by the California
Department of Corporations and sections 417 and 418 of the California
Corporations Code.

      4. Events of Default; Remedies; Waivers.

      4.1 Events of Default. In the event of any "EVENT OF DEFAULT" as set forth
in the Note shall have occurred and be continuing, Investors holding a majority
in interest of the aggregate dollar amount invested into the Notes (a "MAJORITY
INTEREST") may declare the Notes to be forthwith due and payable, whereupon such
Notes shall become and be due and payable, without presentment, demand, protest
or further notice of any kind, all of which are expressly waived by the Company.
The remedies hereunder are cumulative and not exclusive and Investors holding a
Majority in Interest shall have the right to enforce one or more remedies
hereunder, successively or concurrently, and such action shall not operate to
estop or prevent such Investors from pursuing any further remedy which they may
have.

      4.2 Waivers by the Company. Except as otherwise provided for in this
Agreement and applicable law, the Company waives presentment, demand and protest
and notice of presentment, dishonor, notice of intent to accelerate, notice of
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of the Notes.

                                       5
<PAGE>

      5. Miscellaneous.

      5.1 Waivers and Amendments. Any provision of the Loan Agreements may be
amended, waived or modified (either generally or in a particular instance,
either retroactively or prospectively, and either for a specified period of time
or indefinitely), upon the written consent of the Company and of the Investors
holding a Majority Interest; provided, however, that all parties hereto shall be
bound by any such amendment, waiver or modification that is approved by the
Company and Investors holding a Majority Interest. Notwithstanding anything to
the contrary in this Section 5.1, additional parties may be added to this
Agreement as additional Investors upon such party's execution of a counterpart
signature page hereto.

      5.2 Governing Law. The Loan Agreements shall be governed by and construed
in accordance with California law, without regard to the conflict of laws
provisions thereof.

      5.3 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Investor and the Closing
of the transactions contemplated hereby indefinitely.

      5.4 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.

      5.5 Entire Agreement. The Loan Agreements (including the exhibits attached
hereto and thereto) constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.

      5.6 Notices, etc. All notices and other communications required or
permitted hereunder shall be effective upon receipt, shall be in writing, and
may be delivered in person, by telecopy, electronic mail, overnight delivery
service or United States mail, in which event they may be mailed by first-class,
certified or registered, postage prepaid, addressed (a) if to an Investor, at
such Investor's address set forth on the signature page hereto, or (b) if to the
Company, at its address set forth on the signature page hereto, or at such other
address as the Company shall have furnished to the Investors and each such other
holder in writing.

      5.7 Severability of this Agreement. If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

      5.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument.

      5.9 Non-Liability of Investor. The relationship between the Company and
Investor is a debtor and creditor relationship and not fiduciary in nature, nor
is the relationship to be construed as creating any partnership or joint venture
between Investor and the Company. The Company is exercising its own judgment
with respect to the Company's business. All information supplied to Investor is
for Investor's protection only and no other party is entitled to rely on such
information. There is no duty for Investor to review, inspect, supervise, or
inform the Company of any matter with respect to the Company's business.
Investor and the Company intend that Investor may reasonably rely on all
information supplied by the Company to Investor, together with all
representations and warranties given by the Company to Investor, without
investigation or confirmation by Investor and that any investigation or failure
to investigate will not diminish Investor's right to so rely.

                                       6
<PAGE>

      5.10 California Commissioner of Corporations. THE SALE OF THE SECURITIES
THAT IS THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF THE
SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED UNLESS THE SALE IS
SO EXEMPT.

                                       7
<PAGE>

      IN WITNESS WHEREOF, the parties have caused this Note and Warrant Purchase
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the date and year first written above.

                                              COMPANY:

                                              5G WIRELESS COMMUNICATIONS, INC.

                                              By
                                                 ------------------------------

                                              Its
                                                  -----------------------------

                                              Address:
                                                   ----------------------------

                                              INVESTORS:

                                              Name:
                                                   ----------------------------

                                              By:
                                                   ----------------------------

                                              Its:
                                                   ----------------------------

                                              Address:
                                                   ----------------------------

                                       8
<PAGE>

                                   SCHEDULE 1

                                LIST OF INVESTORS

                                    Principal               Number of
            Name                  Amount of Note          Warrant Shares
----------------------------    ------------------      -------------------

                                        -------------    -------------
TOTAL
                                        =============    =============

                                       SA-1
<PAGE>

                                    EXHIBIT A

                FORM OF CONVERTIBLE SUBORDINATED PROMISSORY NOTE

                                      A-1
<PAGE>

                                    EXHIBIT B

                                 FORM OF WARRANT

                                       11

                              SETTLEMENT AGREEMENT

       THIS SETTLEMENT  AGREEMENT  (hereinafter,  this  "Agreement") is made and
entered  into as of July  31,  2003  between  the  COUNTY  OF LOS  ANGELES  (the
"County"),  the LOS ANGELES  COUNTY FLOOD CONTROL  DISTRICT  ("LACFCD")  and the
WATER REPLENISHMENT  DISTRICT OF SOUTHERN CALIFORNIA ("WRD") [the County, LACFCD
and WRD are sometime  collectively  referred to herein as "Plaintiffs"],  on the
one hand, and RETIRED PACIFIC  PARTNERS,  LP, A CALIFORNIA  LIMITED  PARTNERSHIP
(FORMERLY NAMED,  PACIFIC ENERGY RESOURCES,  A CALIFORNIA LIMITED  PARTNERSHIP),
SCANNER  INVESTMENTS,  LLC,  A  DELAWARE  LIMITED  LIABILITY  COMPANY,  SHAMROCK
RESOURCES,  INC.,  A CANADIAN  CORPORATION,  PETROCAL  INCORPORATED,  A DELAWARE
CORPORATION,  AN]) KATMAN  PETROLEUM,  LLC, A DELAWARE LIMITED LIABILITY COMPANY
(collectively,  "Defendants"), on the other hand. [The parties to this Agreement
are sometimes collectively referred to herein as the "Settling Parties".]

                                    RECITALS

       WHEREAS,  Defendants  are currently the owners of the lessee's  interests
and the working  interests in the  following  oil and gas leases  located in the
Montebello Oil Field in the Whittier  Narrows Basin (the "Basin") in Los Angeles
County:

            (a)   Oil and Gas  Lease,  dated  March  20,  1941  from  Marcus  L.
                  Roberts,  as Administrator with the will annexed of the Estate
                  of Adelaide  Bermuda  DeBarry,  deceased,  as lessor,  to C.C.
                  Killingsworth,  as lessee, recorded in Book 18253, Page 323 of
                  the Official Records of Los Angeles, California, as amended by
                  instruments dated April 30, 1945, recorded in Book 22694, Page
                  1, and March 11, 1946 in Book 22948,  Page 28, of the Official
                  Records of Los Angeles County,  California,  affecting certain
                  property,  as more particularly  described therein (the "Barry
                  Lease");

            (b)   Indenture of Lease,  dated August 29, 1919,  between  Giovanni
                  and Maria Piuma and Paolo and M. Briano,  as lessors,  and St.
                  Helens Petroleum  Company,  Limited.,  as lessee,  recorded in
                  Book 132,  Page 99 of the  Official  Records  of Los  Angeles,
                  California,   and   affecting   certain   property,   as  more
                  particularly described therein (the "Piuma-Briano Lease"); and

            (c)   Lease  Agreement,  dated June 8, 1917 between Timoteo Repetto,
                  as lessor, and H.R. Johnson,  as lessee,  recorded on July 24,
                  1917, in Book 114,  Page 91 of Leases in the Official  Records
                  of Los Angeles County,  California, as amended and modified by
                  instruments  recorded in Book 117, Page 124 of Leases and Book
                  6762,  Page 81 of Deeds,  and as recognized by the  instrument
                  recorded in Book 19179,  Page 157, and by the instrument dated
                  August  28,  1944 filed for record  June 20,  1945,  affecting
                  certain property, as more particularly  described therein (the
                  "Repetto Lease").

                                       1

<PAGE>

The Barry Lease, the  Piuma-Briano  Lease and the Repetto Lease are collectively
referred to herein as the "Leases".

       WHEREAS,  in April 2002,  the County and the LACFCD filed a complaint and
then in May 2002 a First Amended  Complaint  (the  "Complaint")  in the Superior
Court for the County of Los Angeles,  entitled, County of Los Angeles, et al. v.
Kernview Oil Corporatioi~,  et a!., [Case No. BC2723 10] (the "Action"),  naming
Pacific Energy Resources, among others, as a defendant;

       WHEREAS,  subsequent  to the  filing  of the  Complaint,  Pacific  Energy
Resources transferred and assigned its rights and interests in, to and under the
Leases to the Defendants  (other than Pacific  Energy  Resources) and reserved a
carried working interest therein;

       WHEREAS,  Defendants  have answered the  Complaint,  denying the material
allegations thereof and asserting various affirmative defenses;

       WHEREAS,  Defendants  filed  Cross-Complaints  against  the  County,  the
County's  Department  of  Public  Works  and  the  LACFCD  in  the  Action  (the
"Cross-Complaints")  [as used herein,  the term the "County"  shall  include the
County's Department of Public Works];

       WHEREAS,  the County  and the  LACFCD  answered  the  Cross-Complaint  of
Pacific Energy Resources, denying the material allegations thereof and asserting
various affirmative defenses;

       WHEREAS,  the County and the LACFCD have amended the Complaint to name as
defendants certain lessors and royalty owners who own an interest in the Leases,
including but not limited to the Roman  Catholic  Archbishop of Los Angeles (any
and all persons or entities  owning an interest in any of the Leases as a lessor
or royalty owner are collectively referred to herein as the "Royalty Owners");

       WHEREAS, in or around December, 2002, the Water Replenishment District of
Southern California also filed a complaint (the "WRD Complaint") in the Superior
Court for the County of Los Angeles,  entitled Water  Replenishment  District of
Southern California v. Kernview Oil Corp., et a!., [Case No. BC286475] (the "WRD
Action"), naming Pacific Energy Resources as a defendant;

       WHEREAS, Pacific Energy Resources has answered the WRD Complaint, denying
the material allegations thereof and asserting various affirmative defenses; and

       WHEREAS,  the  Settling  Parties have agreed to settle the Action and the
respective  claims of the  Plaintiffs and Defendants set forth in the Complaint,
the Cross-Complaints and the WRD Complaint,  and to provide for a dismissal with
prejudice of the Complaint,  the Cross-Complaints and the WRD Complaint,  on the
terms and conditions of this Agreement.

                                       2

<PAGE>

                                   WITNESSETH

       NOW, THEREFORE,  for valuable consideration,  the receipt and adequacy of
which is hereby acknowledged, Defendants and Plaintiffs hereby agree as follows:

                      1.Effective Date: Settlement Deposit.

            a. As used  herein,  the term  "Effective  Date" shall mean the date
that the Parties fully execute this Agreement.

            b. Within thirty (30) days following the Effective Date,  Plaintiffs
shall cause to be  deposited  the total sum of One Million Two Hundred  Thousand
Dollars  ($1,200,000.00)  (the  "Settlement  Deposit")  in  Escrow  Account  No.
31070514-x86 with Chicago Title Company, 700 South Flower Street, Suite 900, Los
Angeles,  California 90017, Attention:  Lily Bachor, Escrow Officer (the "Escrow
Company"),  which Settlement  Deposit shall be held in escrow (the "Escrow") and
disbursed  in  accordance  with the  terms  and  provisions  of this  Agreement.
Defendants  acknowledge and agree that the payment of the Settlement  Deposit is
in full and fmal compromise and settlement of any and all  cross-claims  against
the County, LACFCD andlor WRD.

            c. Following the full execution and delivery to the County's counsel
of four (4)  counterpart  originals of the this Agreement  signed by each of the
respective  parties  hereto,  Plaintiffs  shall,  within three (3) business days
thereafter, deliver one (1) fully executed original of this Agreement to each of
the Escrow Holder, Defendants' counsel, the County's counsel and WRD's counsel.

            d. Counsel for the County and the LACFCD  shall  execute and deliver
to Joseph L. Golden,  Esq.,  Counsel for the Defendants,  by no later than three
(3) business days following the Effective  Date, a fully executed  original copy
of the  dismissal  with  prejudice of the  County's  and the LACFCD's  Complaint
against  Defendants,  in the form attached hereto as Exhibit "A". The County and
the LACFCD will also  deliver to the Escrow  Company a photocopy of the executed
version  of  Exhibit A. The  foregoing  dismissal  shall be as to all claims and
causes of action against  Defendants  only, and shall be filed with the Court in
the  Action  and  served on each of the other  parties  promptly  following  the
Effective Date.

            e.  Counsel  for the WRD  shall  execute  and  deliver  to Joseph L.
Golden,  Esq., Counsel for Defendants,  by no later than three (3) business days
following the Effective  Date, a fully  executed  original copy of the dismissal
with prejudice of the WRD Complaint against Defendants in the WRD Action, in the
form attached hereto as Exhibit "B". WRD also will deliver to the Escrow Company
a photocopy of the executed version of Exhibit B. The foregoing  dismissal shall
be as to all claims and causes of action  against  Defendants  only and shall be
filed with the Court in the WRD  Action and served on each of the other  parties
in that action promptly following the Effective Date.

            f. Counsel for Defendants  shall execute and deliver to Jeffrey Z.B.
Springer of Demetriou,  Del Guercio,  Springer & Francis,  LLP,  Counsel for the
County and the LACFCD, by no later than three (3) business days following the

                                       3
<PAGE>

Effective  Date, a fully executed  original copy of the dismissal with prejudice
of Defendants'  Cross-Complaints  as to the entire action,  in the form attached
hereto as Exhibit  "C".  Defendants  will also  deliver to the Escrow  Company a
photocopy of the executed version of Exhibit C. The foregoing dismissal shall be
as to all claims and causes of action against the County (including the County's
Department of Public Works) and the LACFCD and shall be filed and served on each
of the other parties promptly following the Effective Date.

            g.  Defendants  shall deliver to the Escrow Company by no later than
three (3) business  days  following  the  Effective  Date, a fully  executed and
acknowledged original Quitclaim Deed for each of the Leases in the form attached
hereto as Exhibit "D".

            h.  Defendants  shall deliver to the Escrow Company by no later than
three (3) business days following the Effective  Date,  fully executed  original
letters, as to each of the Leases,  containing  Defendants'  explanation for the
abandonment  of such Lease and stating that  producing  operations are no longer
justifiable because of circumstances beyond Defendants'  control,  which letters
shall be in the form attached as Exhibit "E" (the "Abandonment Letters").

      2.  Ouitclaim  of  the  Leases:  Abandonment  Letters:  Consent  to  Water
Conservation Pool: Danex Settlement.

            a. Defendants  shall deliver to the Escrow Company,  at the time and
in the  manner  set forth in Section 1 above,  the  Quitclaim  Deeds in the form
attached  hereto as Exhibit "D" (the  "Quitclaim  Deeds"),  by which  Defendants
shall quitclaim  Defendants'  entire right, title and interest in and to each of
the Leases to the record  title owners of the mineral  rights in the  respective
properties  described  in  such  Leases.  The  Quitclaim  Deeds  shall  be  in a
recordable form and shall be properly  executed and  acknowledged by Defendants.
Concurrently  with the Lease  Abandonment  Completion  Date,  the Escrow Company
shall cause the  Quitclaim  Deeds to be recorded in the Official  Records of Los
Angeles  County,  and the Escrow Company shall deliver to counsel for the County
and Defendants conformed copies of the recorded Quitclaim Deeds.

            b.  Immediately  following  the  Escrow  Company's  receipt  of  the
Settlement  Deposit,  the  Escrow  Company  shall  mail  the  originals  of  the
Abandonment  Letters to their  respective  addressees  and deliver copies of the
Abandonment  Letters to the County and Defendants'  counsel.  From and after the
date of this Agreement,  Defendants  covenant that they will not take any action
or make any statements inconsistent with the content of the Abandonment Letters.

            c. Defendants hereby agree and consent to the operation of the water
conservation pool at elevation 201.6 feet as of September 1, 2003.

            d. Plaintiffs represent that Plaintiffs'  settlement agreements with
Danex  Aggregate  Materials,  Inc.  ("Danex")  include an  agreement by Danex to
dismiss  with  prejudice  Danex's  claims  in  the  Action  against  Defendants,
including  claims for indemnity  from any of Defendants.  Defendants  agree that
Defendants shall not seek indemnity from Danex. Defendants agree that Defendants

                                       4
<PAGE>

will not disclose the terms of this  Agreement to Danex or its counsel except as
may be required in  response to a discovery  request,  subpoena or other form of
judicial process calling for the disclosure of any such information.

3. Disbursement of Settlement Deposit.

            a. This Section 3 shall  constitute  Escrow  Company's  instructions
regarding the handling and disbursement of the Settlement Deposit.  The Settling
Parties agree to execute any further  reasonable  escrow  instructions  that the
Escrow Company may reasonably  request that are not inconsistent  with the terms
of this Agreement.

            b. Upon  receipt of the  Settlement  Deposit  into the  Escrow,  the
Escrow Company shall deposit the funds into an  interest-bearing  account with a
fmancial  institution  reasonably  selected by the Escrow Company and reasonably
acceptable to  Defendants.  Interest in the account shall accrue for the benefit
of Defendants.

            c.  Following  receipt of the  Settlement  Deposit  into the Escrow,
Defendants  shall have the right to request the Escrow Company to disburse funds
from time to time from the Settlement Deposit to pay the direct costs (including
advances  and  deposits  to  Defendants'  vendors  who  will be  performing  the
Abandonment  Obligations  on behalf of  Defendants)  incurred by  Defendants  in
connection  with the  performance of the  Abandonment  Obligations as defined in
Section 5 hereof (an "Interim  Disbursement  Request").  An Interim Disbursement
Request shall state: (a) a description of the work performed or to be performed;
(b) the amount that  Defendants  are  instructing  the Escrow  Company to pay on
account  of such work;  and (c) the name and  address of the vendor to whom such
amount should be paid. The Interim  Disbursement Request shall be accompanied by
copies of the bid(s), proposal(s), contract(s), or invoice(s) from the vendor(s)
that will be performing the work,  substantiating  the information  contained in
the Interim Disbursement Request (the "Supporting Documents"). Concurrently with
each submission to the Escrow Company, Defendants shall deliver to the County to
the  attention of the Director of Public  Works and to  Demetriou,  Del Guercio,
Springer &  Francis,  LLP to the  attention  of Jeffrey  Z.B.  Springer  (at the
addresses  set forth in the notice  provision of this  Agreement) a copy of such
Interim Disbursement Request and the Supporting Documents. The County and LACFCD
shall  have  the  right,  within  five  (5)  days  of  receipt  of  any  Interim
Disbursement  Request  and  the  Supporting  Documents  by  the  offices  of the
aforementioned two  representatives of the County (it being understood that such
five (5)-day period shall commence to run upon the confirmed  receipt thereof by
the offices of such two persons),  to give written  notice to the Escrow Company
and Defendants of objection to disbursement if such Interim Disbursement Request
is not consistent with the Supporting  Documents or if the Supporting  Documents
have  not  been  provided  or are  not  for the  services  contemplated  by this
Agreement (which  objection shall state in reasonable  detail the basis for such
objection).  If the County  and  LACFCD do not  object to any such  disbursement
within said 5-day period,  then the Escrow Company shall make such  disbursement
within five (5) days following the  expiration of said 5-day period.  The Escrow
Company shall send copies of the payment advices to Mr. David Dalmann of Pacific
Energy  Resources  and the  County.  If the  County  and  LACFCD  object to such
disbursement,  then the Escrow Company shall not make the requested disbursement
and shall retain the funds in Escrow pending  further  instructions  executed by
the County, the LACFCD and Defendants. If the event of an objection, the County,
the LACFCD and  Defendants  shall promptly meet and confer to attempt to reach a
resolution  of  such  objection.  Any  delay  in  the  payment  of  a  requested
disbursement  which prevents payment for the work contemplated by this Agreement
shall constitute a Force Maj cure Delay under Section 5.a hereof.

                                       5
<PAGE>

            d. On and after the Lease  Abandonment  Completion  Date (as  defmed
below),  Defendants  shall  have the right to  request  the  Escrow  Company  to
disburse any remaining  balance of the  Settlement  Deposit  (including  accrued
interest),  except that there shall be  retained  therefrom  in Escrow an amount
equal to the  estimated  cost to complete  the  remediation  being  conducted at
Defendants'  tank farms (the "Lease  Abandonment  Disbursement  Request")  under
Section S.f (together  with any soil brought  there from the Leases).  The Lease
Abandonment  Disbursement Request shall be accompanied by a Certification Report
by Defendants'  Petroleum Engineer stating (a) that the Abandonment  Obligations
to be completed by the Lease Abandonment Completion Date have been completed and
(b)  the  estimated  cost of  completing  the  remediation  to be  conducted  at
Defendants'  tank farms under Section 5.f (together with any soils brought there
from the Leases). The Certification Report shall be accompanied by copies of the
documents  required  by Section 5.g that have been issued by the DOGOR as of the
date of the Lease Abandonment  Disbursement Request. The County and LACFCD shall
have the  right,  within  ten (10)  days of  receipt  of the  Lease  Abandonment
Disbursement Request and the Certification Report, to give written notice to the
Escrow Company and Defendants of objection to the requested  disbursement if (a)
such Lease Abandonment  Disbursement  Request or the Certification Report is not
consistent  with the  provisions of this paragraph or (b) they disagree with the
cost estimate (which  objection  shall state in reasonable  detail the basis for
such  objection).  If the County  and LACFCD do not object to such  disbursement
within said 10-day period,  then the Escrow Company shall make such disbursement
within five (5) days  following  the  expiration of said 10-day  period.  If the
County and LACFCD object to such disbursement, then the Escrow Company shall not
make the  requested  disbursement  and shall retain the funds in Escrow  pending
further instructions executed by the County, LACFCD and Defendants. In the event
of an  objection,  the County,  LACFCD and  Defendants  shall  promptly meet and
confer to attempt to reach a resolution of such objection, and the time consumed
by that process shall be a Force Maj cure Delay for purposes of Section 5.a. For
purposes of this Agreement,  the term "Lease Abandonment  Completion Date" shall
mean the date on which (i) Defendants  complete all of  Defendants'  obligations
under Sections S.c, S.d and S.c hereof and (ii)  Defendants have removed all the
tanks,  pipelines and related equipment from the tank farms currently  servicing
the Barry  Lease,  Repetto  Lease and  Piuma-Briano  Lease,  and have  begun the
remediation  of the surface of those tank farms under Section S.f (together with
any soils brought there from the Leases).

            e. On and after the Final  Abandonment  Completion  Date (as defined
below),  Defendants  shall  have the right to  request  the  Escrow  Company  to
disburse the balance of the Settlement Deposit (including accrued interest),  if
any (the "Final Disbursement Request").  The Final Disbursement Request shall be
accompanied  by the  Certification  Report  as to the  completion  of all of the
Abandonment Obligations.  The County and LACFCD shall have the right, within ten
(10) days of receipt of the Final  Disbursement  Request  and the  Certification
Report, to give written notice to the Escrow Company and Defendants of objection
to disbursement if such Final Disbursement  Request or the Certification  Report

                                       6
<PAGE>

is not consistent with the provisions of this Agreement  (which  objection shall
state in  reasonable  detail  the basis for such  objection).  If the County and
LACFCD do not object to such  disbursement  within said 10-day period,  then the
Escrow Company shall make such  disbursement  within five (5) days following the
expiration  of said  10-day  period.  If the County  and  LACFCD  object to such
disbursement,  then the Escrow Company shall not make the requested disbursement
and shall retain the funds in Escrow pending  further  instructions  executed by
the County,  LACFCD and  Defendants.  In the event of an objection,  the County,
LACFCD  and  Defendants  shall  promptly  meet and  confer to attempt to reach a
resolution of such objection.  For purposes of this  Agreement,  the term "Final
Abandonment  Completion Date" shall mean the date on which  Defendants  complete
all of the  Abandonment  Obligations  and obtain the  Certification  Report with
respect to such Abandonment Obligations.

            f. The Escrow Company's fees and charges for the  administration  of
the Escrow shall be paid for by Plaintiffs,  provided that Plaintiffs  shall not
be  responsible  for  any  extraordinary   fees  or  charges  for  services  not
contemplated by this Agreement  resulting from  Defendants' acts or omissions in
connection with Defendants' performance of their Abandonment Obligations,  which
fees and charges shall be the responsibility of Defendants.

            g. If any disagreement  arises between Defendants and the County and
LACFCD that results in  conflicting  or adverse  claims or demands being made in
connection  with this  Agreement  or the  Escrow,  the Escrow  Company  shall be
entitled,  at its option,  to refuse to comply with any such claim or demand, as
long as the  disagreement  shall continue,  and, in so doing, the Escrow Company
shall not become  liable for damages or interest to any party for its failure or
refusal to comply with the conflicting or adverse claims or demands.  The Escrow
Company  shall be entitled to continue to so refrain and refuse to act until the
conflicting or adverse  claims or demands have been resolved in accordance  with
the  procedures  set  forth  in  this  Agreement  or  by a  court  of  competent
jurisdiction.  The Escrow Company may also file a suit in  interpleader  to have
the respective rights of any adverse claimants adjudicated, and deposit with the
court all documents and funds held by the Escrow  Company under this  Agreement.
Any delay in the  disbursement  from the Escrow of any portion of the Settlement
Deposit which prevents payment for the work contemplated by this Agreement shall
constitute a Force Maj cure Delay under Section S.a hereof.

            h.  Defendants  and the  County  and  LACFCD  agree  that the Escrow
Company's  duties are only those specified  herein,  that such duties are purely
ministerial in nature, and that the Escrow Company shall not incur any liability
except for willful  misconduct  or gross  negligence  as long as it has acted in
good faith.

      4. Dismissal of Actions.

            a.  Defendants  and their  attorneys  of record  in the  Action  and
Plaintiffs  and  their  attorneys  of  record  shall  sign  and  shall  file the
dismissals promptly following delivery thereof as provided in Section 1 above.

            b. Except as otherwise expressly provided in this Agreement, each of
the parties to this Agreement shall bear their own costs,  attorneys'  fees, and
related  expenses  with respect to the Action,  the WRD Action and in connection
with the  preparation,  signing  and  implementation  of this  Agreement  or the
transactions contemplated hereby.

      5. Defendants' Abandonment  Obligations.  Defendants obligations set forth
below in this Section S are collectively  referred to herein as the "Abandonment
Obligations."

                                       7
<PAGE>

            a. Defendants hereby covenant and agree that,  following the deposit
of the Settlement  Deposit into the Escrow,  Defendants shall commence and shall
diligently  prosecute to completion  the  Abandonment  Obligations in accordance
with the terms of this Agreement. Defendants covenant that in no event shall the
completion of the Abandonment Obligations described in Sections 5.c, S.d and S.c
below and the issuance of the Certification  Report relating to such Abandonment
Obligations  extend  beyond  six (6) months  after the date that the  Settlement
Deposit is deposited  into the Escrow as provided in Section 1 .b above;  except
that  such  six-month  period  may  be  extended  due  to  circumstances  beyond
Defendants'  control,  such as  shortage of rigs or service  company  personnel,
weather, delays in permitting,  operation of the water conservation pool or Acts
of God (herein,  a "Force Maj cure  Delay"),  for a period of time equal to such
Force Majeure Delay. For purposes of this Agreement, the term "DOGGR" shall mean
the Division of Oil, Gas and Geothermal  Resources of the California  Department
of Conservation.  For purposes of this Agreement,  the words "DOGGR regulations"
and words of similar  import shall refer to Title 14 (Natural  Resources) of the
California Code of Regulations  (including,  without limitation,  Sections 1723,
1775 and 1776 of Chapter 4 of Division 2 thereof).  Defendants  acknowledge that
their  Abandonment   Obligations  include  obtaining  any  permits  required  in
connection with the performance of the work, including any required permits from
the Army Corps of Engineers.

            b.  Defendants  agree to permanently  cease all of their oil and gas
production   operations   (other  than  the   performance  of  the   Abandonment
Obligations) with respect to each of the Leases no later than November 1, 2003.

            c.  Defendants  represent  and  warrant  that,  to the best of their
knowledge,  the  following  oil  and/or  gas wells are the only  wells that were
located on the Leases when Pacific Energy Resources acquired the Leases that had
not previously been abandoned:  Piuma-Briano 2, 3 and 5; Barry 1, 2, 3, 4 and 5;
and Repetto 15, 16, and 18. Defendants shall plug and abandon the oil and/or gas
wells  located on the Leases  identified  as follows:  Piuma-Briano  2, 3 and 5;
Barry  1, 2, 3, 4 and 5;  and  Repetto  15,  16,  and 18.  Such  wells  shall be
abandoned in compliance with the applicable  regulations and requirements of the
D000R,  and compliance  with such  regulations  and  requirements  shall satisfy
Defendants' obligations with respect to the same. Subject to compliance with the
time requirements and other obligations set forth herein,  Defendants may decide
the sequence in which the wells will be abandoned.  Plaintiffs have no objection
to Defendants' use of water from the Rio Hondo to make the cement needed for the
well and pipeline abandonment contemplated by this Agreement.

            d. Defendants  shall abandon all pipelines  either owned or operated
by  Defendants  that (i) are located on the Barry Lease,  Piuma-Briano  Lease or
Repetto  Lease and (ii) run from any of said Leases to any of  Defendants'  tank
farms serving any of said Leases.  Such subsurface  pipelines shall be abandoned
in place by purging and filling  them with slurry and capping the ends  thereof.
Such above  ground  pipelines  shall be  removed.  The  abandonment  of all such
pipelines shall be performed  according to the applicable DOGGR  regulations and
requirements,  and  compliance  with such  regulations  and  requirements  shall
satisfy Defendants'  obligations with respect to the same. Subject to compliance
with  the time  requirements  and  other  obligations  set  forth  herein,  such
pipelines may be abandoned in the same sequence as the Leases are abandoned.

                                       8
<PAGE>

            e.  Defendants  shall  remediate the lands burdened by the Leases in
the manner and to the extent  required by the applicable  DOGGR  regulations and
requirements,  and  compliance  with such  regulations  and  requirements  shall
satisfy Defendants'  obligations with respect to the same. Subject to compliance
with the time requirements and other obligations set forth herein, the materials
removed from the surface of the lands  burdened by the Leases may be  remediated
by Defendants at the Defendants'  tank farms.  Plaintiffs shall request the U.S.
Army Corps of  Engineers to allow the  Defendants  to use soil from the Whittier
Narrows  Flood Control  Basin to fill any  excavations  created by or during the
course of Defendants surface  remediation  efforts,  and the County agrees, upon
request from Defendants,  to direct the appropriate  agency to issue any and all
appropriate  excavation,   grading,  hauling  and  other  permits  that  may  be
reasonably  required to perform such  remediation (to the extent that the County
has the authority to do so).

            f.  Defendants  shall  abandon the tank farms that serve each of the
Leases  and  remediate  the  surface of such tank farms in the manner and to the
extent required by the applicable DOGOR regulations and requirements. Subject to
Defendants'   obligation  to  diligently  complete  the  work  and  their  other
obligations set forth herein, the sequence of the abandonment of such tank farms
may be as determined by Defendants.

            g.  Defendants  shall engage a petroleum  engineer  (the  "Petroleum
Engineer") to monitor  Defendants'  performance of the Abandonment  Obligations.
Upon completion of the Abandonment  Obligations (or relevant  portion  thereof),
the  Petroleum   Engineer   shall  issue  a  closure   report  or  reports  (the
"Certification Report") to and for the benefit of Plaintiffs certifying that the
Abandonment Obligations have been performed and completed and that the DOGGR has
approved  the work  performed  and has  issued  the  applicable  certifications,
approvals  or  similar  documents.  Copies  of  all  applicable  certifications,
approvals or similar  documents  required or given by DOGGR shall be appended to
the Certification Report.

            h. Defendants  acknowledge and agree that as between  Plaintiffs and
Defendants (i) Defendants are solely  responsible and liable for the performance
of the Abandonment Obligations and for the sufficiency of the Settlement Deposit
to cover the costs of  performing  the  Abandonment  Obligations  and any excess
costs  are at  Defendants'  risk and  obligation,  and (ii)  Plaintiffs  are not
assuming  nor  shall  Plaintiffs  be  responsible  for  the  performance  of the
Abandonment  Obligations or for the payment of costs or expenses relating to the
Abandonment  Obligations  (other than the payment of the Settlement Deposit into
escrow).  By entering  into this  Agreement,  Plaintiffs  are not  accepting  or
assuming any  responsibilities  or obligations  with respect to the operation or
abandonment of the Leases.

                                       9
<PAGE>

      6. Release.

            a. With the exception of the rights and obligations  created by this
Agreement or as otherwise expressly provided herein, Plaintiffs hereby fully and
forever release and discharge Defendants and each of their officers,  directors,
shareholders,   partners,   employees,   servants,  agents,  attorneys,   expert
witnesses,  representatives,  heirs, successors, and assigns (collectively,  the
"Defendant Parties"),  from any and all rights,  claims,  demands,  obligations,
causes  of  action,  liens,  debts,  costs,  expenses,   compensation,   losses,
liabilities  and  any  and  all  past  or  present  claims,  damages,  expenses,
attorneys' fees, obligations, costs or demands of whatever nature, including any
claims for contribution or indemnity (collectively,  "Claims"),  which they have
or may have against  Defendants or the Defendant  Parties in any way arising out
of or  related  to the acts,  omissions  to act,  violations  and other  matters
alleged  in the  Action,  the  Complaint  or the WRD  Action.  Neither  the term
"Defendant Parties" nor the foregoing release includes the Royalty Owners.

            b. With the exception of the rights and obligations  created by this
Agreement or as otherwise  expressly provided herein,  Defendants,  on behalf of
themselves and the Defendant  Parties,  hereby forever release and discharge the
County,  the LACFCD  and the WRD and each of their  past or  present  elected or
appointed officials,  board members,  employees,  servants,  agents,  attorneys,
expert  witnesses,  representatives,  successors,  and assigns  (the  "Plaintiff
Parties"),  from any and all rights,  claims,  demands,  obligations,  causes of
action, liens, debts, costs, expenses, compensation, losses, liabilities and any
and all past or present claims, damages, expenses, attorneys' fees, obligations,
costs or demands of whatever  nature,  including any claims for  contribution or
indemnity,  which  they have or may have  against  Plaintiffs  or the  Plaintiff
Parties in any way arising out of or related to the acts,  omissions,  facts and
matters  alleged  in  the  Action,  the   Cross-Complaints  or  the  WRD  Action
(including,  but not limited to, claims, damages or other claims for entitlement
to compensation for inverse condemnation,  the taking or damaging of property or
the displacement from property under any condemnation, relocation or similar law
or ruling now or hereafter in effect arising out of or in any way related to the
Leases).

            c.  Each of the  Settling  Parties  represent  that  they  have  not
heretofore  assigned or  transferred  or  purported to assign or transfer to any
other  person or entity  any  released  matter or Claims or any part or  portion
thereof,  except  that  Pacific  Energy  Resources  did assign its  cross-claims
against  the County and the  LACFCD to Scanner  Investments,  LLC as part of the
transaction described in the third recital paragraph above.

      7. No  Admission  of Liability  or Waiver.  The parties  hereto  expressly
recognize  that  the  terms  and  conditions  of  this  Agreement  constitute  a
compromise and settlement of disputed  claims and an accord and  satisfaction of
contested  matters.  This  Agreement  shall not be construed in any manner as an
admission by any party  hereto of any  liability of any kind to the other party,
nor shall be it  considered  or  interpreted  as an  assumption of any liability
under  applicable law. This Agreement is executed by the Settling Parties hereto
for the sole purpose of settling the disputes  which serve as the bases for this
Action. It is expressly  understood and agreed, as a condition hereof, that this
Agreement  is not to be  construed  as, nor does it  constitute,  an  admission,
evidence, or indication,  in any degree, of liability by any party for any claim
asserted or unasserted in the Action or the WRD Action.

                                       10
<PAGE>

      8. Time Is Of The  Essence.  Time is of the essence  with  respect to this
Agreement.

      9. Representations and Warranties.

            a.  Defendants  Representations.  Defendants  hereby  represent  and
warrant to Plaintiffs as follows:

                  (1) Defendants  are duly  organized,  validly  existing and in
good standing under the laws of their  respective  jurisdictions of organization
and under the laws of the State of California  and have all requisite  power and
authority to own,  operate and acquire  their  properties  and to carry on their
business as now conducted.

                  (2)  Defendants  have the legal power,  right and authority to
enter into and perform this Agreement and the instruments and documents referred
to in this Agreement. Defendants have received all authorizations, approvals and
consents  necessary   (including  all  necessary  corporate  or  other  actions,
resolutions  or approvals) to execute,  deliver and perform this  Agreement (and
the instruments and documents  referred to in this  Agreement),  and the persons
signing this Agreement on behalf of Defendants are fully authorized to sign this
Agreement  and to  commit  and bind  Defendants  to each and all the  terms  and
conditions hereof.

                  (3)  Defendants  are the  owners  of all of the  lessee's  and
working  interest  holder's  i-i ght,  title  and  interest  in to and under the
Leases,  free and  clear of any  encumbrances,  claims or other  interests,  and
Defendants have not transferred any interests in the Leases to any other party.

                  (4) Defendants are unaware of any reason which would preclude,
prohibit  or  prevent  them from  making a full and  complete  quitclaim  of the
Leases,  as  contemplated  herein as of the Effective  Date, and the instruments
delivered pursuant to this Agreement are sufficient to terminate the Leases.

                  (5) In executing this  Agreement,  Defendants  have not relied
upon any  statement  or  representation  of any other  party  hereto  nor of any
officer, agent, employee, representative, or attorney for any other party hereto
regarding any facts not expressly set forth within this Agreement.

            b. County's and LACFCD's Representations.  The County and the LACFCD
represent and warrant as follows:

                  (1) The County and the  LACFCD  are  public  agencies  validly
existing and in good standing under the laws of the State of California and have
all requisite power and authority to own, operate and acquire  properties and to
carry on their business as now conducted.

                  (2) The execution,  delivery and performance of this Agreement
on  behalf  of the  County  and  the  LACFCD,  including  the  execution  of the
instruments  and  documents  referred to in this  Agreement,  have been duly and

                                       11
<PAGE>

validly  authorized and approved by all necessary action  (including  County and
the LACFCD Board action,  if required),  and  consunimation  of the transactions
contemplated hereby will not violate or be in conflict with any provision of the
charter of the County and the LACFCD.

                  (3) In  executing  this  Agreement,  the County and the LACFCD
have not relied upon any statement or  representation  of Defendants  nor of any
officer, agent, employee,  representative,  or attorney for Defendants regarding
any facts not expressly set forth within this Agreement.

            c. WRD's Representations. WRD represents and warrants as follows:

                  (1) WRD is a special  district  validly  existing  and in good
standing under the laws of the State of California  and has all requisite  power
and  authority  to own,  operate  and  acquire  properties  and to  carry on its
business as now conducted.

                  (2) The execution,  delivery and performance of this Agreement
on behalf of the WRD,  including the  instruments  and documents  referred to in
this  Agreement,  have been duly and  validly  authorized  and  approved  by all
necessary action (including WRD Board action, if required),  and consummation of
the transactions contemplated hereby will not violate or be in conflict with any
provision of the charter of the WRD.

                  (3) In executing this  Agreement,  the WRD has not relied upon
any  statement  or  representation  of  Defendants  nor of any  officer,  agent,
employee,  representative,  or attorney for  Defendants  regarding any facts not
expressly set forth within this Agreement.

            d. Joint Representations of the Parties. The Settling Parties hereto
represent and warrant to each other as follows:

                  (1) The Settling  Parties  agree that this  Agreement  and all
documents and instruments  relating thereto are, or, upon execution and delivery
will be, valid and binding  obligations,  enforceable against them in accordance
with their respective terms.

                  (2) Each Settling Party  acknowledges and agrees that (A) each
party hereto is of equal bargaining  strength,  (B) each such party has actively
participated in the drafting, preparation and negotiation of this Agreement, (C)
each such party has consulted with such party's own,  independent  counsel,  and
such other professional advisors as such party has deemed appropriate,  relating
to any and all matters  contemplated  under this Agreement,  (D) each such party
and such party's  counsel and advisors have reviewed  this  Agreement,  (E) each
such party has agreed to enter into this Agreement following such review and the
rendering of such advice,  and (F) any rule of  construction  to the effect that
ambiguities are to be resolved  against the drafting  parties shall not apply in
the interpretation of this Agreement,  or any portions hereof, or any amendments
hereto.

                  (3) Each Settling Party hereto has made such  investigation of
the  facts  pertaining  to  this  settlement  and  this  Agreement  as it  deems
necessary.

                                       12
<PAGE>

                  (4) It is agreed that this  Agreement is being entered into in
good faith by all Settling Parties and without fraud, coercion,  duress or undue
influence.

            e. Survival of Warranties. The representations and warranties of the
Settling  Parties set forth in this Section 9 and  elsewhere  in this  Agreement
shall survive the performance of transactions contemplated by this Agreement.

            10. Notices. Except as otherwise specified in Section 3.c above, any
notice,  communication,  request,  instruction  or other  document  required  or
permitted to be sent under this  Agreement  shall be in writing and deemed given
when  hand-delivered  or sent by confirmed  facsimile or certified mail,  return
receipt  requested,  or by overnight,  confirmed express delivery service to the
other party at the following addresses:

       To the County and the LACFCD:

                   Los Angeles County Flood Control District
                   Attention: Craig A. David, P.E.
                   900 South Fremont Avenue
                   Alhambra, California 91802
                   Telephone: (626) 300-3317

                   Fax: (626) 300-3385

                   County of Los Angeles
                   Attention: Director of Public Works
                   900 South Fremont Avenue
                   Alhambra, California 91802
                   Telephone: (626) 458-5100
                   Fax: (626) 457-8897

       With a copy to:

                   Jeffrey Z.B. Springer, Esq.
                   Demetriou, Del Guercio, Springer &
                   Francis, LLP.
                   801 S. Grand Avenue, Suite 1000
                   Los Angeles, CA 90017-4613
                   Telephone: (213) 624-8407
                   Facsimile: (213) 624-0174

                   Mark T. Yanai, Esq.
                   Principal Deputy County Counsel
                   648 Kenneth Hahn Hall of Administration
                   500 West Temple St., #652
                   Los Angeles, CA 90012-2713
                   Telephone: (213) 893-2279
                   Facsimile: (213) 617-7182

                                       13
<PAGE>

       To the WRD:

                   Bruce A Mowry, General Manager

                   Water Replenishment District of Southern California
                   12621 E. 166th Street
                   Cerritos, California 90703
                   Telephone: (562) 921-5521
                   Facsimile: (562) 921-6101

                   J. Arnoldo Beltran,  Esq.
                   Beltran & Medina 221 North Figueroa
                   Street, Suite 770 Los Angeles, CA 90012

       To Defendants:

                   Pacific Energy Resources
                   1065 West Pier E Street
                   Long Beach, CA 90802
                   Attention: Mr. David Dalmann
                   Telephone: (562) 436-6566
                   Facsimile: (562) 436-8474

       With a copy to:

                   Joseph L Golden, Esq.
                   Law Offices of Joseph L. Golden
                   10100 Santa Monica Boulevard, Suite 800
                   Los Angeles, California 90067-4 100
                   Telephone: (310) 772-2260
                   Facsimile: (310) 772-2299

       Any party may change the place where or the person to whom notices  under
this  Agreement  will be given by giving  notice to the other in the  manner set
forth above.

      11. Attorney's Fees: Venue.

            a. Should any party bring any lawsuit or file a claim in arbitration
arising out of or relating to the terms and  provisions of this  Agreement,  the
losing party in such action shall pay to the  prevailing  party,  in addition to
any other relief  ordered by the court or  arbitrator,  the  prevailing  party's
costs and  expenses  in  connection  with that action or  litigation,  including
reasonable  attorneys'  fees.  The  provisions  of this section shall apply with
equal force to any appeal of any  decision  rendered by a lower  court,  and any
enforcement efforts undertaken in connection with such decision.

                                       14
<PAGE>

            b. Any action on this Agreement  will be brought  exclusively in Los
Angeles County Superior Court and the parties agree that such Court has personal
jurisdiction over each of them and that venue is proper in such Court.

      12.  Choice of Law.  All matters  pertaining  to this  Agreement  shall be
governed and determined in accordance with the laws of the State of California.

      13. Further  Cooperation.  Each of the Settling  Parties agrees to execute
any  and  all  further   agreements,   documents  or  other   instruments  (with
acknowledgment  if  necessary  for  recording  purposes)  as may  reasonably  be
necessary  in order to fully  effectuate  the  agreements  and  covenants of the
parties contained in this Agreement.

      14. Terms Used. Whenever the context requires,  words used in the singular
shall be construed to mean or include the plural and vice versa, and pronouns of
any gender shall be deemed to include and designate the  masculine,  feminine or
neuter gender.  If any  obligation  imposed  hereunder  applies to more than one
person or entity,  then such  multiple  parties  shall be jointly and  severally
obligated and liable for the performance of the terms of such obligation.

      15. Amendments: No Waiver.

            a.  This  Agreement  and the  exhibits  hereto,  and  the  documents
referred to herein, embody the entire agreement and understanding of the parties
hereto with respect to the subject  matter  hereof,  and supersede all prior and
contemporaneous agreements and understandings, oral or written, relative to said
subject matter.

            b.  This  Agreement  may  not  be  changed,   amended,   terminated,
augmented,  rescinded or discharged (other than by performance),  in whole or in
part,  except by a writing executed by the parties hereto,  and no waiver of any
of the  provisions  or  conditions  of this  Agreement or any of the rights of a
party  hereto  shall be  effective  or binding  unless such  waiver  shall be in
writing and signed by the party claimed to have given or consented thereto.

            c.  Except to the  extent  that a party  hereto  may have  otherwise
agreed in writing, no waiver by that party of any condition of this Agreement or
breach by the other party of any of its obligations or representations hereunder
or  thereunder  shall  be  deemed  to be a  waiver  of any  other  condition  or
subsequent or prior breach of the same or any other obligation or representation
by the  other  party,  nor shall any  forbearance  by the first  party to seek a
remedy  for any  noncompliance  or breach  by the other  party be deemed to be a
waiver by the first  party of its  rights  and  remedies  with  respect  to such
noncompliance or breach.

      16. Successors and Assigns.  This Agreement and the rights and obligations
arising  hereunder shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs,  successors and assigns;  provided,  however,
that  Defendants  shall  not  assign or  delegate  their  rights or  obligations
hereunder without the prior written consent of Plaintiffs.

      17. Counterpart Execution.  This Agreement may be executed  simultaneously
in multiple counterparts,  each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.

                                       15
<PAGE>

      18.  Confidentiality.  Defendants agree not to disclose or disseminate any
information   or  documents   relating  this   Agreement  to  any  third  party.
Notwithstanding the foregoing, Defendants may disclose, to the extent reasonably
necessary,  the  terms of this  Agreement:  (a) as may be  required  in order to
comply  with  applicable  securities  laws or  regulations;  (b) to  Defendants'
vendors and other  persons  who need to know such  information  for  purposes of
carrying out Defendants'  obligations under this Agreement,  provided Defendants
obtain,  where reasonably  obtainable by Defendants,  such persons  agreement to
maintain the confidentiality of this Agreement;  (c) to Defendants' accountants,
attorneys and management employees,  provided such persons agree to maintain the
confidentiality  of this  Agreement;  and (d) to the extent  such  terms  become
generally  available to the public from a non-confidential  source. In the event
that  Defendants  receive a request  for such  information  or are served with a
discovery  request,  subpoena or other form of judicial  process calling for the
disclosure of any such  information or demanding that  Defendants take any other
action  prohibited  by this  paragraph,  Defendants  shall provide to Plaintiffs
prompt  written  notice of such fact so that  Plaintiffs  may seek a  protective
order or other appropriate remedy in their discretion and at their sole expense.
Defendants  shall not be under any obligation to incur any expense to resist any
such  request.  In the event that such  protective  order or other remedy is not
obtained,  Defendants shall be entitled to comply with the request in the manner
and at the time set forth therein, except and to the extent the request has been
modified  by the  requesting  party or the  court  that  entertains  Plaintiffs'
application for a protective order.

      IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as of
the Effective Date.

DATED: August 28, 2003               COUNTY OF LOS ANGELES

                                        By:s/d
                                        Dirrector
                                        Los Angeles County Department of Public
                                        Works

                                        By: s/d
                                        Principal Deputy County Counsel
                                        Office of the County Counsel

DATED: July__     2003              LOS ANGELES COUNTY FLOOD CONTROL
                                    DISTRICT

                                    By: s/d
                                    Director

                                    Los Angeles County Department of
                                    Public Works
                                    By: s/d
                                    Principal Deputy County Counsel
                                    Office of the County Counsel

                                       16
<PAGE>

DATED: July ___, 2003               WATER REPLENISHMENT DISTRICT OF SOUTHERN
                                    CALIFORNIA

                                    By: s/d
                                       -----------------------------------------
                                       Bruce A. Mowry
                                       General Manager

DATED: August 19, 2003              RETIRED PACIFIC PARNTERS, LP
                                    (formerly named Pacific Energy Resources)

                                    By: Retired Pacific Partners, LLC
                                       -----------------------------------------
                                       Its General Partner

                                    By:  s/d
                                       -----------------------------------------
                                       Richard Young, Managing Member

DATED: July ___, 2003               SCANNER INVESTMENTS, LLC

                                    By: s/d
                                       -----------------------------------------
                                       Vladimir Katic
                                       Manager

DATED: July ___, 2003               SHAMROCK RESOURCES, INC.

                                    By: s/d
                                       -----------------------------------------
                                       Vladimir Katic
                                       Manager

DATED: August 11, 2003              PETROCAL INCORPORATED

                                    By: s/d
                                                Darren Katic
                                                President

DATED: August 6, 2003               KATMAN PETROLEUM, LLC

                                    By:  s/d
                                       -----------------------------------------
                                       Robert Katic
                                       Manager

                                       17
<PAGE>

APPROVED AS TO FORM:

LAW OFFICE OF JOSEPH L. GOLDEN
Joseph L. Golden

By: s/d
   ----------------------------------------
   Joseph L. Golden
   Attorney for PER Defendants

BELTRAN & MEDINA
Agustin Medina, Jr.

By:  s/d
   ----------------------------------------
   Agustin Medina, Jr.
   Attorney for Water Replenishment
   District of Southern California

                                       18
<PAGE>

                           ACCEPTANCE BY ESCROW HOLDER

      Chicago Title Company  acknowledges  that it has received a fully executed
original or original executed counterparts of the foregoing Settlement Agreement
(the  "Agreement") and agrees to act as Escrow Holder under the Agreement and to
be bound by and strictly perform the terms thereof as such terms apply to Escrow
Holder.  Further,  Chicago Title  Company  agrees to be bound by and observe the
terms of the confidentially provisions contained in Section 18 of the Agreement.

Dated: July __, 2003                      CHICAGO TITLE COMPANY

                                          By:
                                             -----------------------------------
                                             Name:
                                                  ------------------------------
                                             Position:
                                                      --------------------------

--------------------------------------------------------------------------------

        [EXHIBITS NOT INCLUDED. PLEASE CONTACT THE COMPANY FOR EXHIBITS]

                                       19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00067-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00067-of-00352.parquet"}]]