Case KG Doc 102 Filed 05/04/17 Page 1 of 12 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

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1 Case KG Doc 102 Filed 05/04/17 Page 1 of 12 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re Venoco, LLC, et al., Chapter 11 Case No (KG) Debtors. 1 (Jointly Administered) Hearing Date: May 25, 2017, at 10:00 a.m. (ET) Objections Due: May 18, 2017, at 4:00 p.m. (ET) DEBTORS FIRST OMNIBUS MOTION FOR ENTRY OF AN ORDER (I) AUTHORIZING THE DEBTORS TO (A) REJECT CERTAIN UNEXPIRED LEASES AND EXECUTORY CONTRACTS AND (B) ABANDON CERTAIN PROPERTY, AND (II) GRANTING CERTAIN RELATED RELIEF PARTIES RECEIVING THIS MOTION SHOULD LOCATE THEIR NAMES AND THEIR UNEXPIRED LEASES OR EXECUTORY CONTRACTS LISTED ON EXHIBIT B, ATTACHED HERETO. Venoco, LLC ( Venoco ) and its affiliated debtors and debtors in possession (collectively, the Debtors ) in the above-captioned chapter 11 cases (these Cases ) hereby move (the Motion ) for entry of an order, substantially in the form attached hereto as Exhibit A (the Proposed Order ): (i) authorizing the Debtors to (a) reject certain unexpired leases and executory contracts listed on Schedule 1 annexed to the Proposed Order (each a Rejected Lease 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, are: Venoco, LLC (3555); TexCal Energy (LP) LLC (0806); Whittier Pipeline Corporation (1560); TexCal Energy (GP) LLC (0808); Ellwood Pipeline, Inc. (5631); and TexCal Energy South Texas, L.P. (0812). The Debtors main corporate and mailing address for purposes of these chapter 11 cases is: Venoco, LLC, th Street, Suite 3900, Denver, CO #

2 Case KG Doc 102 Filed 05/04/17 Page 2 of 12 or Rejected Contract, and collectively, the Rejected Leases and Contracts ) and (b) abandon certain equipment, fixtures, improvements, furniture, other personal property that is of inconsequential value or burdensome to the Debtors (the Personal Property ); and (ii) granting related relief. In support of this Motion, the Debtors rely on the Declaration of Bret Fernandes, Chief Restructuring Officer of Venoco, LLC in Support of Debtors First Omnibus Motion to (I) Reject Certain Unexpired Leases and Executory Contracts and (II) Abandon Certain Property, attached hereto as Exhibit B. In further support of this Motion, the Debtors respectfully represent as follows: Jurisdiction 1. The United States Bankruptcy Court for the District of Delaware (the Court ) has jurisdiction over these Cases and the Motion pursuant to 28 U.S.C. 157 and 1334, and the Amended Standing Order of Reference from the United States District Court for the District of Delaware dated as of February 29, This is a core proceeding within the meaning of 28 U.S.C. 157(b)(2). Venue of these Cases and the Motion in this district is proper under 28 U.S.C and Pursuant to Rule (f) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the Local Rules ), the Debtors consent to the entry of a final order by the Court in connection with this Motion to the extent that it is later determined that the Court, absent consent of the parties, cannot enter final orders or judgments consistent with Article III of the United States Constitution. 3. The bases for the relief requested herein are sections 105(a), 365(a) and 554 of title 11 of the United States Code (the Bankruptcy Code ), Rule 6006 and 9014 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ). 2

3 Case KG Doc 102 Filed 05/04/17 Page 3 of 12 Background A. General Background 4. The Debtors are independent exploration and production companies based in Denver, Colorado. As of the Petition Date, the Debtors primary oil and gas properties are located both onshore and offshore in Southern California. 5. Since their restructuring in 2016, the Debtors have suffered material operational and regulatory setbacks. The Plains All American Pipeline line 901, which the Debtors previously used to transport approximately 50% of their production to market, remains offline and the Debtors anticipate that it will remain offline for approximately four to seven years from the Petition Date. Additionally, in early 2017, two of three members of the California State Lands Commission stated publicly that they were against Venoco s application for a lease line adjustment (the LLA ) related to the South Ellwood Field, thereby assuring that the project would not be approved. As described more fully in the Declaration of Bret Fernandes, Chief Restructuring Officer of Venoco, LLC in Support of Chapter 11 Petitions and First Day Pleadings (the First Day Declaration ) 2 [D.I. 12], Venoco s prior restructuring was based in large part on anticipated approval of the LLA. With these setbacks, and with looming and significant asset retirement obligations, the Debtors commenced these Cases to effectuate a sale process or other disposition of their assets, and to facilitate an orderly wind down of operations. 6. On the Petition Date, the Debtors filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. The Debtors continue to operate their business and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 2 Capitalized terms used but not defined herein shall have the meanings ascribed to them in the First Day Declaration. 3

4 Case KG Doc 102 Filed 05/04/17 Page 4 of 12 No trustee, examiner, or official committee of unsecured creditors has been appointed in these Cases. These Cases are consolidated for procedural purposes only and are administered jointly. 7. A full description of the Debtors business, corporate structure, prepetition indebtedness, and events leading to these Cases is set forth in the First Day Declaration and incorporated herein by reference. B. Leases and Contracts to Be Rejected 8. With the assistance of their advisors, the Debtors have undertaken an analysis of executory contracts and unexpired leases relating primarily to the South Ellwood Field Leases, which were abandoned prior to the Petition Date. Because the Debtors no longer conduct operations in the South Ellwood Field, they have determined the burdensome leases and contracts the Rejected Leases and Contracts, set forth on Schedule 1 to the Proposed Order are uneconomical and impose unnecessary expenses on the Debtors estates. The Debtors are continuing to review their contract and leasing portfolios and anticipate additional such agreements will be the subject of further motion practice as these Cases and the sale process proceed. 9. Accordingly, after consultation with their advisors, the Debtors determined in their business judgment to reject the Rejected Leases and Contracts immediately because doing so is in the best interest of their estates. C. Personal Property to Be Abandoned 10. In addition, the Debtors evaluated the Personal Property located at premises leased under the Rejected Leases (the Leased Premises ) and determined that (a) the Personal Property to be abandoned hereunder is of inconsequential value or (b) the cost of emptying, removing and storing the Personal Property to be abandoned hereunder for future use, marketing, or sale exceeds its value to the Debtors estates. Moreover, much of the Personal Property to be abandoned hereunder is for location-specific purposes, and not readily useable or transferable to the Debtors 4

5 Case KG Doc 102 Filed 05/04/17 Page 5 of 12 other projects. Since the Debtors no longer maintain operations at the Leased Premises and no longer hold any possessory interest in the Leased Premises, the Personal Property is no longer necessary for the administration of the Debtors estates Accordingly, to reduce costs and in the exercise of the Debtors sound business judgment, the Debtors believe that the abandonment of their Personal Property is appropriate and in the best interests of the Debtors, their estates, and their creditors. Relief Requested 12. By this Motion, the Debtors request entry of the Proposed Order: (a) authorizing the Debtors to (i) reject the Rejected Leases and Contracts listed on Schedule 1 to the Proposed Order, and (ii) abandon certain Personal Property that may be located at Leased Premises; and (b) granting related relief. Basis for Relief A. Rejection of the Rejected Leases and Contracts is a Sound Business Decision 13. Section 365(a) of the Bankruptcy Code provides, in pertinent part, that a debtor in possession, subject to the court s approval, may assume or reject any executory contract or unexpired lease of the debtor. 11 U.S.C. 365(a); see also Univ. Med. Cent. v. Sullivan (In re Univ. Med. Ctr.), 973 F.2d 1065, 1075 (3d Cir. 1992). For the benefit of the estate, a debtor may, under section 365 of the Bankruptcy Code, relieve itself of burdensome agreements where performance still remains. See Sharon Steel Corp. v. Nat l Fuel Gas Distrib. Corp. (In re Sharon Steel Corp.), 872 F.2d 36, (3d Cir. 1989); see also Stewart Title Guar. Co. v. Old Republic Nat l Ins. Co., 83 F.3d 735, 741 (5th Cir. 1996) (stating that section 365 allows a [debtor] 3 Moreover, to the extent any of the Rejected Leases is determined not to be subject to rejection under section 365 of the Bankruptcy Code, the Debtors seek to abandon any property interests in the subject leasehold. 5

6 Case KG Doc 102 Filed 05/04/17 Page 6 of 12 to relieve the bankruptcy estate of burdensome agreements which have not been completely performed (citation omitted)). 14. The Debtors rejection of unexpired leases and executory contracts is governed by the business judgment standard. See NLRB v. Bildisco & Bildisco, 465 U.S. 513, 523 (1984) (recognizing the business judgment standard used to approve rejection of executory contracts); see also, e.g., In re Sharon Steel Corp., 872 F.2d at 39 (citing In re Wheeling-Pittsburgh Steel Corp., 72 B.R. 845, (Bankr. W.D. Pa. 1987); In re AbitibiBowater Inc., 418 B.R. 815, 831 (Bankr. D. Del. 2009). The business judgment standard requires a court to approve a debtor s business decision unless that decision is the product of bad faith, whim, or caprice. See In re HQ Global Holdings, Inc., 290 B.R. 507, 511 (Bankr. D. Del. 2003) (holding that the debtors satisfied the business judgment standard because the decision to reject was not the product of bad faith, whim, or capriciousness); see also In re Trans World Airlines, Inc., 261 B.R. 103, 121 (Bankr. D. Del. 2001) (stating that [a] debtor s decision to reject an executory contract must be summarily affirmed unless it is the product of bad faith, or whim or caprice. (internal quotes omitted) (internal citations omitted)). 15. Rejection is generally considered a sound business decision if it benefits the estate. See, e.g., In re Sharon Steel Corp., 872 F.2d at 39 (explaining that the bankruptcy court properly granted [the debtor s] motion to reject [an executory] agreement upon finding that the rejection would benefit the estate ); In re Taylor, 103 B.R. 511, 517 (Bankr. D.N.J. 1989) (The only test employed to aid in judicial review of the trustee's decision to reject is that rejection of the contract benefit the estate. ); In re Balco Equities, Inc., 323 B.R. 85, 99 (Bankr. S.D.N.Y. 2005) ( In determining whether the debtor has employed reasonable business discretion, the court for the most part must only determine that the rejection will likely benefit the estate. ). Thus, upon finding 6

7 Case KG Doc 102 Filed 05/04/17 Page 7 of 12 that a debtor has exercised its sound business judgment in determining that rejection of certain contracts or leases is in the best interests of its creditors and all parties in interest, a court should approve the rejection under section 365(a). See In re Federal Mogul Global, Inc., 293 B.R. 124, 126 (Bankr. D. Del. 2003). Further, [s]ection 365 enables the trustee to maximize the value of the debtor s estate by assuming executory contracts and unexpired leases that benefit the estate and rejecting those that do not. L.R.S.C. Co. v. Rickel Home Centers, Inc. (In re Rickel Home Centers, Inc.), 209 F.3d 291, 298 (3d Cir. 2000). Courts generally do not interfere with or second-guess the debtor s sound business judgment unless and until evidence is presented that establishes that the debtor s decision was one taken in bad faith or in gross abuse of its retained business discretion. In re Wheeling-Pittsburgh Steel Corp., 72 B.R. at 849; accord In re Nickels Midway Pier, LLC, 332 B.R. at 271 (citing In re Balco Equities Ltd., Inc., 323 B.R. 85 (Bankr. S.D.N.Y. 2005). 16. Here, in the exercise of sound and considered business judgment, the Debtors have determined that rejecting the Rejected Leases and Contracts is in the best interest of their estates. The Rejected Contracts generally consist of contracts related to information technology services the Debtors no longer need, and the Rejected Leases relate to locations, particularly in the South Ellwood Field, where the Debtors no longer maintain operations and no longer hold any possessory interest, and are therefore unnecessary to the Debtors business. Rejection of the Rejected Leases and Contracts will reduce the financial burdens on the Debtors estates and rid the Debtors of certain obligations that are financially burdensome and no longer necessary. Additionally, the Rejected Leases and Contracts have no marketable value that could be generated through assumption and assignment. Finally, the Debtors continued performance under the Rejected Leases and Contracts would constitute an unnecessary depletion of the Debtors remaining assets. 7

8 Case KG Doc 102 Filed 05/04/17 Page 8 of Accordingly, because the Debtors have decided in their sound business discretion to reject the Rejected Leases and Contracts, rejection is warranted under section B. Abandonment of the Personal Property is Warranted Under Section 554 of the Bankruptcy Code 18. The Debtors submit that abandonment of the Personal Property is warranted under section 554 of the Bankruptcy Code. As discussed above, the Debtors determined that the costs of emptying, moving and storing the Personal Property would outweigh any benefit to the Debtors estates. The Personal Property that is location-specific to the Leased Premises is, at best, of inconsequential value because either the Debtors no longer maintain operations at the Leased Premises or no longer have any possessory interest in the Leased Premises, and at worst, burdensome because it cannot be moved without the cost outweighing the benefit to the Debtors estates. Moreover, to any extent it is judicially determined a Rejected Lease is not subject to section 365, the Debtors submit that abandonment of any property interest therein is also a sound business decision. 19. Section 554 allows a debtor, after notice and a hearing to abandon any property of the estate that is burdensome or that is of inconsequential value and benefit to the estate. 11 U.S.C. 554(a). In abandoning property under 554, the debtor need only demonstrate that it has exercised sound business judgment in making the determination to abandon. In re Contract Research Sols., Inc., No KJC, 2013 WL , at *4 (Bankr. D. Del. May 1, 2013) (citations omitted). This requires a showing that the debtor made (1) a business judgment; (2) in 4 Rejection is also necessary and appropriate for the Debtors to carry out the Bankruptcy Code s provisions. Pursuant to section 105(a) of the Bankruptcy Code, [t]he court may issue any order, process or judgment that is necessary or appropriate to carry out the provisions of the Bankruptcy Code. 11 U.S.C. 105(a). Here, the Debtors burdensome and unnecessary obligations under the Rejected Leases and Contracts serve only to exhaust the Debtors remaining assets and therefore inhibit the Debtors from preserving the value of their estates. Because estate preservation is essential to the Debtors ability to consummate a sale of their business as a going concern or facilitate an orderly wind down, rejection is necessary and appropriate under section 105(a). 8

9 Case KG Doc 102 Filed 05/04/17 Page 9 of 12 good faith; (3) upon some reasonable basis; and (4) within its authority. See In re Truong, 557 B.R. 326, 340 (Bankr. D.N.J. Aug. 30, 2016) (citing In re Slack, B.R. 282, 284 (Bankr. D.N.J. 2003). 20. Here, the Debtors, authorized under section 1107(a) as debtors in possession, soundly exercised their business judgment in determining to abandon the Personal Property and any interests in the Rejected Leases that are determined not to be subject to rejection under section 365 of the Bankruptcy Code because such property is either of inconsequential value or burdensome to the estates. Accordingly, the Debtors submit that abandonment is warranted under section 554 of the Bankruptcy Code and should be granted as such. Compliance with Bankruptcy Rule 6006(f) 21. Bankruptcy Rule 6006(f) establishes requirements for a motion to reject multiple executory contracts or unexpired leases that are not between the same parties. Rule 6006(f) states, in part, that such a motion shall: (1) state in a conspicuous place that parties receiving the omnibus motion should locate their names and their contracts or leases listed in the motion; (2) list parties alphabetically and identify the corresponding contract or lease; (3) specify the terms, including the curing of defaults, for each requested assumption or assignment; (4) specify the terms, including the identity of each assignee and the adequate assurance of future performance by each assignee, for each requested assignment; (5) be numbered consecutively with other omnibus motions to assume, assign, or reject executory contracts or unexpired leases; and (6) be limited to no more than 100 executory contracts or unexpired leases. Fed. Bankr. R. 6006(f). The Debtors respectfully submit that the relief requested herein complies with the requirements of Rule 6006(f). 9

10 Case KG Doc 102 Filed 05/04/17 Page 10 of 12 Waiver of Bankruptcy Rule 6004(h) 22. Given the nature of the relief requested herein, the Debtors respectfully request a waiver the 14-day stay under Bankruptcy Rule 6004(h), to the extent that it applies. Bankruptcy Rule 6004(h) provides that [a]n order authorizing the use, sale, or lease of property other than cash collateral is stayed until the expiration of 14 days after entry of the order, unless the court orders otherwise. The relief requested herein is essential to avoid the potential accrual of unnecessary postpetition expenses. Accordingly, the Debtors submit that, to the extent that Bankruptcy Rule 6004(h) applies, ample cause exists to justify a waiver of the 14-day stay. Reservation of Rights 23. Nothing contained herein is intended or should be construed as: (a) constituting an admission as to the validity or priority of any claim against the Debtors; (b) constituting a waiver of the Debtors rights to dispute any claim; (c) prejudicing any party s rights to assert that the Rejected Leases and Contracts are not executory or unexpired within the meaning of section 365 of the Bankruptcy Code; or (d) constituting assumption of any contract pursuant to section 365 of the Bankruptcy Code. The Debtors further reserve the right to assume, assign, or reject other executory contracts or unexpired leases and to abandon other property of the estate pursuant to separate motion of the Court, and nothing herein shall be deemed to affect those rights. In addition, the Debtors reserve the right to remove any of the Rejected Leases and Contracts from Schedule 1 until the entry of an order on this Motion (unless the applicable parties mutually agree, in writing, to a different date). Finally, to the extent they deem necessary, the Debtors reserve the right to deliver schedules of property to be retained or abandoned to the applicable lessors. 10

11 Case KG Doc 102 Filed 05/04/17 Page 11 of 12 Notice 24. The Debtors have provided notice of this Motion to: (a) the Office of the United States Trustee for the District of Delaware; (b) the entities listed on the Consolidated List of Creditors Holding the 20 Largest Unsecured Claims filed pursuant to Bankruptcy Rule 1007(d); (c) all parties requesting notice pursuant to Bankruptcy Rule 2002; and (d) the non-debtor counterparties to the Rejected Leases and Contracts listed in Schedule 1 to the Proposed Order. In light of the nature of the relief requested in this Motion, the Debtors respectfully submit that no further notice is necessary. No Prior Request 25. No prior motion for the relief requested herein has been made to this or any other court. [Remainder of this Page Intentionally Left Blank] 11

12 Case KG Doc 102 Filed 05/04/17 Page 12 of 12 WHEREFORE, the Debtors respectfully request entry of the Proposed Order granting the relief requested herein and granting such other relief as is just and proper. Dated: May 4, 2017 Wilmington, Delaware MORRIS, NICHOLS, ARSHT & TUNNELL LLP /s/ Robert J. Dehney (No. 3578) Andrew R. Remming (No. 5120) Marcy J. McLaughlin (No. 6184) 1201 North Market Street, 16th Floor P.O. Box 1347 Wilmington, Delaware Telephone: (302) Facsimile: (302) and- BRACEWELL LLP Robert G. Burns (admitted pro hac vice) Robin J. Miles (admitted pro hac vice) David M. Riley (admitted pro hac vice) 1251 Avenue of Americas, 49th Floor New York, New York Telephone: (212) Facsimile: (212) and- Mark E. Dendinger (admitted pro hac vice) CityPlace I, 34th Floor 185 Asylum Street Hartford, Connecticut Telephone: (860) Facsimile: (800) and- Jason B. Hutt (admitted pro hac vice) 2001 M Street, NW Washington, District of Columbia Telephone: (202) Facsimile: (202) Jason.Hutt@bracewell.com Proposed Counsel for Debtors and Debtors in Possession 12

13 Case KG Doc Filed 05/04/17 Page 1 of 3 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re Venoco, LLC, et al., Debtors. 1 Chapter 11 Case No (KG) (Jointly Administered) Hearing Date: May 25, 2017, at 10:00 a.m. (ET) Objections Due: May 18, 2017, at 4:00 p.m. (ET) NOTICE OF DEBTORS FIRST OMNIBUS MOTION FOR ENTRY OF AN ORDER (I) AUTHORIZING THE DEBTORS TO (A) REJECT CERTAIN UNEXPIRED LEASES AND EXECUTORY CONTRACTS AND (B) ABANDON CERTAIN PROPERTY, AND (II) GRANTING CERTAIN RELATED RELIEF PLEASE TAKE NOTICE that on May 4, 2017 the debtors and debtors in possession (the Debtors ) in the above-captioned cases, filed the Debtors First Omnibus Motion For Entry Of An Order (I) Authorizing The Debtors To (A) Reject Certain Unexpired Leases And Executory Contracts And (B) Abandon Certain Property, And (II) Granting Certain Related Relief (the Motion ). PLEASE TAKE FURTHER NOTICE that objections, if any, to approval of the relief sought in the Motion must be (a) in writing and served on or before May 18, 2017 at 4:00 p.m. (ET) (the Objection Deadline ); (b) filed with the Clerk of the Bankruptcy Court, 824 N. Market Street, 3rd Floor, Wilmington, Delaware 19801; and (c) served as to be received on or before the Objection Deadline by the undersigned proposed counsel to the Debtors. 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, are: Venoco, LLC (3555); TexCal Energy (LP) LLC (0806); Whittier Pipeline Corporation (1560); TexCal Energy (GP) LLC (0808); Ellwood Pipeline, Inc. (5631); and TexCal Energy South Texas, L.P. (0812). The Debtors main corporate and mailing address for purposes of these chapter 11 cases is: Venoco, LLC, th Street, Suite 3900, Denver, CO

14 Case KG Doc Filed 05/04/17 Page 2 of 3 PLEASE TAKE FURTHER NOTICE THAT only objections made in writing and timely filed and received, in accordance with the procedures above, will be considered by the Bankruptcy Court at such hearing. PLEASE TAKE FURTHER NOTICE THAT A HEARING ON THE MOTION WILL BE HELD ON MAY 25, 2017 AT 10:00 A.M. (ET) BEFORE THE HONORABLE KEVIN GROSS, AT THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE, 824 N. MARKET STREET, 6TH FLOOR, COURTROOM #3, WILMINGTON, DELAWARE IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF REQUESTED IN THE MOTION WITHOUT FURTHER NOTICE OR HEARING. Dated: May 4, 2017 Wilmington, Delaware MORRIS, NICHOLS, ARSHT & TUNNELL LLP /s/ Marcy J. McLaughlin Robert J. Dehney (No. 3578) Andrew R. Remming (No. 5120) Marcy J. McLaughlin (No. 6184) 1201 North Market Street, 16th Floor P.O. Box 1347 Wilmington, Delaware Telephone: (302) Facsimile: (302) rdehney@mnat.com aremming@mnat.com mmclaughlin@mnat.com -and- BRACEWELL LLP Robert G. Burns (admitted pro hac vice) Robin J. Miles (admitted pro hac vice) David M. Riley (admitted pro hac vice) 1251 Avenue of Americas, 49th Floor New York, New York Telephone: (212) Facsimile: (212) Robert.Burns@bracewell.com Robin.Miles@bracewell.com David.Riley@bracewell.com 2

15 Case KG Doc Filed 05/04/17 Page 3 of 3 -and- Mark E. Dendinger (admitted pro hac vice) CityPlace I, 34th Floor 185 Asylum Street Hartford, Connecticut Telephone: (860) Facsimile: (800) Mark.Dendinger@bracewell.com -and- Jason B. Hutt (admitted pro hac vice) 2001 M Street, NW Washington, District of Columbia Telephone: (202) Facsimile: (202) Jason.Hutt@bracewell.com Proposed Counsel for Debtors and Debtors in Possession

16 Case KG Doc Filed 05/04/17 Page 1 of 10 Exhibit A Proposed Order

17 Case KG Doc Filed 05/04/17 Page 2 of 10 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re Venoco, LLC, et al., Chapter 11 Case No (KG) Debtors. 1 (Jointly Administered) Re: D.I. FIRST OMNIBUS ORDER (I) AUTHORIZING THE DEBTORS TO (A) REJECT CERTAIN UNEXPIRED LEASES AND EXECUTORY CONTRACTS, AND (B) ABANDON CERTAIN PROPERTY, AND (II) GRANTING CERTAIN RELATED RELIEF Upon the motion (the Motion ) 2 of the Debtors for entry of an order (this Order ) 3 : (i) authorizing the Debtors to (a) reject certain unexpired leases and executory contracts listed on Schedule 1 annexed to the Proposed Order (each a Rejected Lease or Rejected Contract, and collectively, the Rejected Leases and Contracts ) and (b) abandon certain equipment, fixtures, improvements, furniture, other personal property (the Personal Property ); and (ii) granting related relief, all as more fully described in the Motion; and the Court having jurisdiction to consider the Motion and the relief requested therein in accordance with 28 U.S.C. 157 and 1334, and the Amended Standing Order of Reference from the United States District Court for the District of Delaware dated February 29, 2012; and consideration of the Motion and the relief requested therein being a core proceeding pursuant to 28 U.S.C. 157(b)(2); and venue being 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, are: Venoco, LLC (3555); TexCal Energy (LP) LLC (0806); Whittier Pipeline Corporation (1560); TexCal Energy (GP) LLC (0808); Ellwood Pipeline, Inc. (5631); and TexCal Energy South Texas, L.P. (0812). The Debtors main corporate and mailing address for purposes of these chapter 11 cases is: Venoco, LLC, th Street, Suite 3900, Denver, CO Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Motion. 3 To the extent any conclusions of law constitute findings of fact, they are adopted as such.

18 Case KG Doc Filed 05/04/17 Page 3 of 10 proper in this District pursuant to 28 U.S.C and 1409; and due and proper notice of the Motion being adequate and appropriate under the particular circumstances; and a hearing having been held to consider the relief requested in the Motion, if necessary (the Hearing ); and upon consideration of the First Day Declaration, the record of any Hearing and all proceedings had before the Court; and the Court having found and determined that the relief sought in the Motion is in the best interests of the Debtors estates, their creditors and other parties in interest; and that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; and any objections to the requested relief having been withdrawn or overruled on the merits; and after due deliberation and sufficient cause appearing therefor, IT IS HEREBY ORDERED THAT: 1. The Motion is GRANTED as set forth herein. 2. The Rejected Leases and Contracts listed on Schedule 1, attached hereto, are hereby deemed rejected by the Debtors. Rejection shall take effect as of the date of entry of this Order, unless the Debtors and the respective counterparty to a Rejected Lease or Rejected Contract mutually agree, in writing, to a different date. 3. The Debtors are authorized to abandon any Personal Property that may be located at the Leased Premises. Any Personal Property to be abandoned hereunder remaining at the Leased Premises is deemed abandoned as of the date of entry of this Order, unless the Debtors and the respective counterparty to a Rejected Lease mutually agree, in writing, to a different date. All such property may be disposed of by the applicable counterparty without further notice or liability to any party claiming an interest in such abandoned property. 4. Any counterparty to the Rejected Leases and Contracts shall not be entitled to any claim other than an unsecured claim for rejection damages, and shall only have an unsecured claim 2

19 Case KG Doc Filed 05/04/17 Page 4 of 10 for rejection damages if it files a proof of claim on or before the deadline for filing proofs of claim established in these Cases. 5. To the extent any of the Rejected Leases is judicially determined not to be subject to rejection under section 365 of the Bankruptcy Code, any property interests in the subject leasehold are deemed abandoned as of the date of entry of this Order, unless the Debtors and the respective counterparty to a Rejected Lease mutually agree, in writing, to a different date. 6. The rejection of the Rejected Leases and Contracts complies with the requirements of Bankruptcy Rule 6006(f). 7. Notwithstanding the relief granted herein and any actions take hereunder, nothing in the Motion or this Order shall constitute: (a) an admission as to the validity or priority of any claim against the Debtors; or (b) a waiver of the Debtors rights to dispute any claim. 8. Nothing in the Motion or this Order shall be deemed or construed as an approval of an assumption of any contract pursuant to section 365 of the Bankruptcy Code. 9. The Debtors reserve the right to assume, assign, or reject other executory contracts or unexpired leases and to abandon other property of the estate, and nothing herein shall be deemed to affect those rights. 10. To the extent the Debtors deem necessary, the Debtors reserve the right to deliver schedules of property to be retained or abandoned to the applicable lessors if the Debtors and the respective counterparty to a Rejected Lease have mutually agreed, in writing, to a date subsequent to the entry of this Order. 11. Notwithstanding the possible applicability of Bankruptcy Rules 6004(h), this Order shall be immediately effective and enforceable upon its entry. 3

20 Case KG Doc Filed 05/04/17 Page 5 of The Debtors are authorized to take all actions necessary to effectuate the relief granted pursuant to this Order in accordance with the Motion. 13. The Court retains jurisdiction with respect to all matters arising from or related to the interpretation or implementation of this Order. Date:, 2017 Wilmington, Delaware THE HONORABLE KEVIN GROSS UNITED STATES BANKRUPTCY JUDGE 4

21 Case KG Doc Filed 05/04/17 Page 6 of 10 Schedule 1 Schedule of Rejected Leases and Contracts

22 Case KG Doc Filed 05/04/17 Page 7 of 10 Schedule of Rejected Leases / Contracts Lease (Lessor) / Contract Counterparty Lease / Contract Title Lease / Contract Effective Date Address (if applicable) Merrill Corporation Merrill Bridge Services September 2, 2015 Drilling Info Basic Subscription All States July 13, 2016 Bloomberg Bloomberg Terminal Services August 1, 2013 Bay Alarm Company Commercial Alarm Installation and Services Agreement January 30, Carpinteria Ave, Ste 200 Carpinteria, California IHS Global, SA Data License Agreement November 3, 2010 IHS Global, Inc. 15 Inverness Way East, Englewood, CO County of Santa Barbara (Pipeline) Franchise Ordinance No. 3238, Mobil E&P USA-Line 96 June 29, 1981 City of Goleta Planning Dept. 130 Cremona Drive, Suite B Goleta, CA ATTN.: Ann Wells, Planning Manager (805) Union Oil Co. of California License Agreement, Four Corners Pipeline August 14, 1981 The Regents of the University of California (UCSB) 1325 Cheadle Hall, MC 2032 Santa Barbara, CA ATTN.: Daniel Sweeney Real Estate Services Director daniel.sweeney@ucsb.edu (805) The Regents of the University of California (UCSB) License Agreement for Line 96 Decommissioning Project [Venoco, Inc. Ellwood PL] July 12, 2016 The Regents of the University of California (UCSB) 1325 Cheadle Hall, MC 2032 Santa Barbara, CA ATTN.: Daniel Sweeney Real Estate Services Director daniel.sweeney@ucsb.edu (805) California State Lands Lessor / California State Lands Commission Lease PRC (offshore marine terminal) March 1, 2003 State of California STATE LANDS COMMISSION 200 Oceangate, 12 th Floor Long Beach, CA (805)

23 Case KG Doc Filed 05/04/17 Page 8 of 10 Lease (Lessor) / Contract Counterparty Lease / Contract Title Lease / Contract Effective Date Address (if applicable) Beverly Hills Unified School District Surface and Subsurface Oil and Gas Lease June 2, 1959 William Ireland, Esq. Haight Brown Bonesteel 555 South Flower Street Forty-Fifth Floor Los Angeles, California Beverly Hills Unified School Dist. 255 So. Lasky Drive Beverly Hills, CA ATTN.: LaTanya KirkCarter Latham, Chief Administrative Officer (310) ext Thomas B. Bishop Co. / Bankline Oil Co. Thomas B. Bishop Co. / Bankline Oil Co. Thomas B. Bishop Co. / Bankline Oil Co. Thomas B. Bishop Co. / Bankline Oil Co. The Agreement Dated August 12, 1929, acknowledged August 12, 1929 No title Dated August 1, 1930, acknowledged September 8, 1930 The 1948 Agreement Dated December 23, 1948, effective date unknown Agreement Dated October 31, 1952, notarized November 21 and December 2, 1952 The Regents of the University of California (UCSB) 1325 Cheadle Hall, MC 2032 Santa Barbara, CA ATTN.: Daniel Sweeney Real Estate Services Director daniel.sweeney@ucsb.edu (805) The Regents of the University of California (UCSB) 1325 Cheadle Hall, MC 2032 Santa Barbara, CA ATTN.: Daniel Sweeney Real Estate Services Director daniel.sweeney@ucsb.edu (805) The Regents of the University of California (UCSB) 1325 Cheadle Hall, MC 2032 Santa Barbara, CA ATTN.: Daniel Sweeney Real Estate Services Director daniel.sweeney@ucsb.edu (805) The Regents of the University of California (UCSB) 1325 Cheadle Hall, MC 2032 Santa Barbara, CA ATTN.: Daniel Sweeney Real Estate Services Director daniel.sweeney@ucsb.edu (805) Signal Oil & Gas Co. / Bankline Oil Co. No title (assignment agreement) Dated November 1, 1952, effective date unknown Unknown (likely UCSB) 2

24 Case KG Doc Filed 05/04/17 Page 9 of 10 Lease (Lessor) / Contract Counterparty Lease / Contract Title Lease / Contract Effective Date Address (if applicable) Transamerica Title Insurance Co. / Signal Oil & Gas Co University Exchange Corp / Aminoil USA, Inc. University Exchange Corp/ Phillips Petroleum Co. No title (new access easement) Dated August 10, 1965, effective date unknown No title (ratified 1948 agreement) Dated July 28, 1982, effective date unknown Agreement Dated October 24, 1985, acknowledged October 24 and 25, 1985 Unknown (likely UCSB) The Regents of the University of California (UCSB) 1325 Cheadle Hall, MC 2032 Santa Barbara, CA ATTN.: Daniel Sweeney Real Estate Services Director daniel.sweeney@ucsb.edu (805) The Regents of the University of California (UCSB) 1325 Cheadle Hall, MC 2032 Santa Barbara, CA ATTN.: Daniel Sweeney Real Estate Services Director daniel.sweeney@ucsb.edu (805) ConocoPhillips 600 N. Dairy Ashford Office: EC3-06-W054 Houston, TX ATTN.: Bill Borgh, Risk Management & Remediation +1 (832) University Exchange Corp. Consent to Assignment And Agreement Dated and notarized October 25, 1985 The Regents of the University of California (UCSB) 1325 Cheadle Hall, MC 2032 Santa Barbara, CA ATTN.: Daniel Sweeney Real Estate Services Director daniel.sweeney@ucsb.edu (805) Phillips Petroleum Co. / ARCO Phillips No title (assignment and bill of sale) Dated December 20, 1985, effective date unknown ConocoPhillips 600 N. Dairy Ashford Office: EC3-06-W054 Houston, TX ATTN.: Bill Borgh, Risk Management & Remediation (832) BP ARCO N Central Expressway Dallas, TX ATTN.: Ms. Duronda Smith, Esq. (972) (214) (cell) Duronda.Smith@bp.com 3

25 Case KG Doc Filed 05/04/17 Page 10 of 10 Lease (Lessor) / Contract Counterparty Lease / Contract Title Lease / Contract Effective Date Address (if applicable) University Exchange Corp., Atlantic Richfield Co (ARCO), and Mobil Oil Co. No title (assignment by ARCO to MOBIL) Dated June 1, 1994, Executed on June 2, June 16, and June 23, 1994, Exhibit A executed April 1, 1993 and notarized March 31, 1993 BP ARCO N Central Expressway Dallas, TX ATTN.: Ms. Duronda Smith, Esq. (972) (214) (cell) Duronda.Smith@bp.com Mark W. Staff Legacy Asset Team ExxonMobil Production Springwoods Village Pkwy., Wellness 4.2A.416 Spring,TX (832)

26 Case KG Doc Filed 05/04/17 Page 1 of 6 Exhibit B Fernandes Declaration

27 Case KG Doc Filed 05/04/17 Page 2 of 6 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re Venoco, LLC, et al., Chapter 11 Case No (KG) Debtors. 1 (Jointly Administered) DECLARATION OF BRET FERNANDES, CHIEF RESTRUCTURING OFFICER OF VENOCO, LLC IN SUPPORT OF DEBTORS FIRST OMNIBUS MOTION TO (I) REJECT CERTAIN UNEXPIRED LEASES AND EXECUTORY CONTRACTS AND (II) ABANDON CERTAIN PROPERTY Pursuant to 28 U.S.C. 1746, I, Bret Fernandes, hereby declare under penalty of perjury that the following is true and correct to the best of my knowledge and belief: 1. I serve as the Chief Restructuring Officer ( CRO ) of Venoco, LLC (together with the above-captioned debtors, the Debtors or Venoco ). I have served in this capacity since February I am a Senior Director at Zolfo Cooper, LLC and I have over 20 years of financial advisory and operational experience. I hold a B.A. in business economics from the University of California at Santa Barbara, and I am a Certified Insolvency and Restructuring Advisor. In my role as the Debtors CRO, I have become familiar with the Debtors history, day-to-day operations, business and financial affairs, and books and records, as well as the Debtors restructuring efforts. 2. I submit this declaration (this Declaration ) in support of the Debtors First Omnibus Motion for Entry of an Order (I) Authorizing the Debtors to (A) Reject Certain 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, are: Venoco, LLC (3555); TexCal Energy (LP) LLC (0806); Whittier Pipeline Corporation (1560); TexCal Energy (GP) LLC (0808); Ellwood Pipeline, Inc. (5631); and TexCal Energy South Texas, L.P. (0812). The Debtors main corporate and mailing address for purposes of these chapter 11 cases is: Venoco, LLC, th Street, Suite 3900, Denver, CO

28 Case KG Doc Filed 05/04/17 Page 3 of 6 Unexpired Leases and Executory Contracts and (B) Abandon Certain Property, and (II) Granting Certain Related Relief (the Omnibus Rejection Motion ) 2 for an order (a) authorizing the Debtors to (i) reject certain unexpired leases and executory contracts listed on Schedule 1 annexed to the Proposed Order (each a Rejected Lease or Rejected Contract, and collectively, the Rejected Leases and Contracts ), and (ii) abandon certain equipment, fixtures, improvements, furniture, other personal property that is of inconsequential value or burdensome to the Debtors (the Personal Property ). Unless otherwise indicated herein, all statements set forth in this Declaration are based upon: (a) my personal knowledge; (b) information supplied to me by other members of the Debtors management team and the Debtors advisors that I believe to be reliable; (c) my review of relevant documents; or (d) my opinion based on my experience, knowledge, and information concerning the Debtors assets, liabilities, operations (including related obligations) and financial condition. If called upon to testify, I could and would testify to the facts set forth in this Declaration. I am authorized by the Debtors to submit this Declaration. 3. The Debtors are counterparty to hundreds of unexpired leases and executory contracts. With the assistance of their advisors, the Debtors have undertaken an analysis of executory contracts and unexpired leases relating primarily to the South Ellwood Field Leases, which were abandoned prior to the Petition Date. Because the Debtors no longer conduct operations in the South Ellwood Field, they have determined the burdensome leases and contracts the Rejected Leases and Contracts, set forth on Schedule 1 to the Proposed Order are uneconomical and impose unnecessary expenses on the Debtors estates. The Debtors are continuing to review their contract and leasing portfolios and anticipate additional such agreements 2 Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Omnibus Rejection Motion. 2

29 Case KG Doc Filed 05/04/17 Page 4 of 6 will be the subject of further motion practice as these Cases and the sale process proceed. Accordingly, after consultation with their advisors, the Debtors determined in their business judgment to reject the Rejected Leases and Contracts immediately because doing so is in the best interest of their estates. 4. I believe rejection will reduce the administrative burdens on the Debtors estates and rid the Debtors of certain obligations that are financially burdensome and no longer necessary. The Rejected Contracts consist of contracts related to information technology services the Debtors no longer need and the Rejected Leases relate to locations where the Debtors no longer maintain operations and/or no longer hold any possessory interest in the Leased Premises, and are therefore unnecessary to the Debtors business. 5. I believe rejection of the Rejected Leases and Contracts will reduce the administrative burdens on the Debtors estates and rid the Debtors of certain obligations that are financially burdensome and no longer necessary. Additionally, I believe the Rejected Leases and Contracts have no marketable value that could be generated through assumption and assignment. Finally, I believe the Debtors continued performance under the Rejected Leases and Contracts would constitute an unnecessary depletion of the Debtors remaining assets. Accordingly, I believe immediate rejection of the Rejected Leases and Contracts will alleviate the Debtors estates from the burden of accruing unnecessary postpetition obligations for goods, services, and property usage and occupancy no longer required by the Debtors. Moreover, the Debtors no longer hold and have not held since prior to the Petition Date any ownership or possessory interest in certain of the Leased Premises related to certain Rejected Leases identified on Schedule 1 to the Proposed Order. Nevertheless, out of an abundance of caution, the Debtors seek to reject those certain leases to any extent necessary. 3

30 Case KG Doc Filed 05/04/17 Page 5 of 6 6. In addition, the Debtors evaluated the Personal Property located at premises leased under the Rejected Leases (the Leased Premises ) and determined that (a) the Personal Property to be abandoned pursuant to the Omnibus Rejection Motion is of inconsequential value or (b) the cost of emptying, removing and storing the Personal Property to be abandoned for future use, marketing, or sale exceeds its value to the Debtors estates. Moreover, much of the Personal Property to be abandoned is for location-specific purposes, and not readily useable or transferable to the Debtors other projects. 7. Since the Debtors no longer maintain operations at the Leased Premises and/or no longer hold any possessory interest in the Leased Premises, I believe the Personal Property is no longer necessary for the administration of the Debtors estates. Further, I believe the Personal Property that is location-specific to the Leased Premises is, at best, of inconsequential value because either the Debtors no longer maintain operations at the Leased Premises or no longer have any possessory interest in the Leased Premises, and at worst, burdensome because it cannot be moved without the cost outweighing the benefit to the Debtors estates. Moreover, to any extent it is judicially determined a Rejected Lease is not subject to section 365, I believe that abandonment of any property interest therein is also a sound business decision. Accordingly, I believe the Personal Property is no longer necessary for the administration of the Debtors estates and should be abandoned. 4

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