Common use of Hedging Contracts Clause in Contracts

Hedging Contracts. No Restricted Person will be a party to or in any manner be liable on any Hedging Contract, except: (a) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor with the purpose and effect of fixing interest rates on a principal amount of indebtedness of such Person that is accruing interest at a variable rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such contracts or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, (ii) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest on the corresponding indebtedness to be hedged by such contract and (iii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (b) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor with the purpose and effect of converting to a variable interest rate on a principal amount of indebtedness of such Person that is accruing interest at a fixed rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of such indebtedness or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, and (ii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (c) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor as an Offsetting Position to a Petroleum Inventory Position, provided that at all times: (i) no such contract fixes a price for a term of more than twelve (12) months after the date the contract is entered into; (ii) the aggregate quantity covered by all such contracts (determined, in the case of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) at any one time does not exceed 2,000,000 barrels, and (iii) each such contract is either (A) New York Mercantile Exchange contract or (B) with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders.

Hedging Contracts. No Restricted Person will be a party to or in any manner be liable on any Hedging Contract, except: (a) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor Restricted Person with the purpose and effect of fixing interest rates on a principal amount of indebtedness of such Restricted Person that is accruing interest at a variable rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such contracts or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, (ii) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest on the corresponding indebtedness to be hedged by such contract and (iii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate one of any Lender at the time such contract is entered intoits Affiliates) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A AA or A2 Aa2 or better, respectively, by either Rating Agency or is an investment grade-rated industry participant or otherwise acceptable to Majority Lenders. (b) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor with the purpose and effect of converting fixing prices on crude oil then owned by a Restricted Person or which a Restricted Person is then obligated to a variable interest rate on a principal amount of indebtedness of such Person that is accruing interest at a fixed rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of such indebtedness or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, and (ii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (c) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor as an Offsetting Position to a Petroleum Inventory Positionpurchase, provided that at all times: (i) no such contract fixes a price for a term of more than twelve (12) months, except for time trades in which the length of time between the purchase and sale contracts shall not exceed thirty-six (36) months after and further provided that such time trades shall not exceed 30% of the date the contract is entered intoXxxxxxx Terminal's storage capacity; (ii) with respect to crude oil constituting the linefill carried in the All American Pipeline, the aggregate quantity covered by all such contracts (determined, in the case amount of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) oil so hedged at any one time does not exceed 2,000,000 500,000 barrels, (iii) with respect to crude oil owned by Restricted Persons other than linefill carried in the All American Pipeline, the aggregate amount of such other crude oil so hedged at any one time does not exceed the aggregate Open Position at such time, (iv) such contract is entered into for the purpose of hedging the price risk on oil anticipated to be disposed of and for which no other fixed sale price or other price fixing arrangement exists, and (iiiv) each such contract is either (A) New York Mercantile Exchange contract or (B) with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender Party or an Affiliate one of any Lender at the time such contract is entered intoits Affiliates) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A AA or A2 Aa2 or better, respectively, by either Rating Agency or is (B) entered into on the New York Mercantile Exchange ("Nymex") through a broker listed on the Disclosure Schedule or otherwise acceptable to approved by Majority Lenders; provided that if a Nymex position is converted to a physical position by way of an "exchange for physicals" or an "alternative delivery procedure" then such Restricted Person may extend credit in connection with such physical position so long as such credit would comply with the credit requirements of the definition of "Approved Eligible Receivables."

Hedging Contracts. No Restricted Person will be a party to ----------------- or in any manner be liable on any Hedging Contract, except: (a) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor Restricted Person with the purpose and effect of fixing interest rates on a principal amount of indebtedness of such Restricted Person that is accruing interest at a variable rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such contracts or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, (ii) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest on the corresponding indebtedness to be hedged by such contract and (iii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender Lender, a "Lender" as such term is defined in the Revolver Agreement, or an Affiliate of any Lender or "Lender" at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (b) Hedging Contracts entered into by Pacific Energy Partners, Borrower a Canadian Subsidiary (or by a Guarantor Restricted Person on behalf of a Canadian Subsidiary) with the purpose and effect of converting to a variable interest rate fixing foreign exchange rates on a principal amount of indebtedness of such Person that is accruing interest at a fixed rateits reasonably anticipated net revenues, and not for speculative purposes, provided that (i) no such contract fixes an exchange rate for a term of more than 5 years, (ii) the aggregate notional amount of such contracts (determined, in the case of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) for any single month never exceeds (A) ninety percent (90%) of the reasonably anticipated net revenues to be hedged by such contracts plus (B) one hundred percent (100%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such indebtedness or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balancescontracts, and (iiiii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender Lender, a "Lender" as such term is defined in the Revolver Agreement, or an Affiliate of any a Lender or "Lender" at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (c) Hedging Contracts entered into by Pacific Energy Partners, Borrower or relating to heating oil used to hedge price risk for fuel requirements of the truck fleet of a Guarantor as an Offsetting Position to a Petroleum Inventory Position, provided that at all times: (i) no such contract fixes a price for a term of more than twelve (12) months after the date the contract is entered into; (ii) the aggregate quantity covered by all such contracts (determined, Restricted Person in the case ordinary course of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) at any one time does not exceed 2,000,000 barrels, and (iii) each such contract is either (A) New York Mercantile Exchange contract or (B) with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lendersbusiness.

Hedging Contracts. No Restricted Person will be a party to or in any manner be liable on any Hedging Contract, except: (a) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor Restricted Person with the purpose and effect of (I) fixing interest rates on a principal amount of indebtedness of such Restricted Person that is accruing interest at a variable rate, or (II) applying a variable rate of interest on a principal amount of indebtedness of such Restricted Person that is accruing interest at a fixed rate; provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such contracts or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, (ii) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest on the corresponding indebtedness to be hedged by such contract and (iii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender Lender, a "Lender" as such term is defined in the Marketing Credit Agreement, or an Affiliate of any a Lender or "Lender" at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (b) Hedging Contracts entered into by Pacific Energy Partners, Borrower a Canadian Subsidiary (or by a Guarantor Restricted Person on behalf of a Canadian Subsidiary) with the purpose and effect of converting to a variable interest rate fixing foreign exchange rates on a principal amount of indebtedness of such Person that is accruing interest at a fixed rateits reasonably anticipated net revenues, and not for speculative purposes, provided that (i) no such contract fixes an exchange rate for a term of more than 5 years, (ii) the aggregate notional amount of such contracts (determined, in the case of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) for any single month never exceeds (A) ninety percent (90%) of the reasonably anticipated net revenues to be hedged by such contracts plus (B) one hundred percent (100%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such indebtedness or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balancescontracts, and (iiiii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender Lender, a "Lender" as such term is defined in the Marketing Credit Agreement, or an Affiliate of any a Lender or "Lender" at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (c) Hedging Contracts entered into by Pacific Energy Partners, Borrower or relating to heating oil used to hedge price risk for fuel requirements of the truck fleet of a Guarantor as an Offsetting Position to a Petroleum Inventory Position, provided that at all times: (i) no such contract fixes a price for a term of more than twelve (12) months after the date the contract is entered into; (ii) the aggregate quantity covered by all such contracts (determined, Restricted Person in the case ordinary course of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) at any one time does not exceed 2,000,000 barrels, and (iii) each such contract is either (A) New York Mercantile Exchange contract or (B) with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lendersbusiness.

Hedging Contracts. No Restricted Person Loan Party will be a party to or in any manner be liable on any Hedging Contract, Swap Contract except: (a) Hedging Swap Contracts existing on the date hereof. (b) Swap Contracts entered into with the purpose and effect of fixing prices on Projected Oil and Gas Production for production expected to be produced no more than 48 months in the future that do not exceed for any single month during such term (i) ninety percent (90%), excluding puts and floors or (ii) one hundred (100%), including puts and floors, in each case of the aggregate Projected Oil and Gas Production for such month. (c) Except for Letters of Credit and the Collateral under the Security Documents with respect to Swap Obligations owing to Lenders, no Swap Contract shall require any Loan Party to put up money, assets, or other security against the event of its nonperformance prior to actual default by such Loan Party in performing its obligations thereunder, and each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or one of its Affiliates) at the time the contract is made has long-term obligations rated AA or Aa2 or better, respectively, by either Rating Agency. (d) Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor Loan Party with the purpose and effect of fixing interest rates on a principal amount of indebtedness of such Person Loan Party that is accruing interest at a variable rate, provided that (i) at the time such Swap Contract is entered into, the aggregate notional amount of such contracts never exceeds one hundred does not exceed fifty percent (10050%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such contracts or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, (ii) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest on the corresponding indebtedness to be hedged by such contract and (iii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate one of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (b) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor with the purpose and effect of converting to a variable interest rate on a principal amount of indebtedness of such Person that is accruing interest at a fixed rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of such indebtedness or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, and (ii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (c) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor as an Offsetting Position to a Petroleum Inventory Position, provided that at all times: (i) no such contract fixes a price for a term of more than twelve (12) months after the date the contract is entered into; (ii) the aggregate quantity covered by all such contracts (determined, in the case of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) at any one time does not exceed 2,000,000 barrels, and (iii) each such contract is either (A) New York Mercantile Exchange contract or (B) with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered intoits Affiliates) at the time the contract is made has long-term obligations rated A AA or A2 Aa2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority LendersAgency.

Hedging Contracts. No Restricted Person will be a party to or in any manner be liable on any Hedging Contract, except: (a) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor Restricted Person with the purpose and effect of fixing interest rates on a principal amount of indebtedness of such Restricted Person that is accruing interest at a variable rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such contracts or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, (ii) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest on the corresponding indebtedness to be hedged by such contract and (iii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate one of any Lender at the time such contract is entered intoits Affiliates) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A AA or A2 Aa2 or better, respectively, by either Rating Agency or is an investment grade-rated industry participant or otherwise acceptable to Majority Lenders. (b) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor with the purpose and effect of converting fixing prices on crude oil then owned by a Restricted Person or which a Restricted Person is then obligated to a variable interest rate on a principal amount of indebtedness of such Person that is accruing interest at a fixed rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of such indebtedness or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, and (ii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (c) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor as an Offsetting Position to a Petroleum Inventory Positionpurchase, provided that at all times: (i) no such contract fixes a price for a term of more than twelve [thirty-six (12) 36)] months after the date the contract is entered into[provision dealing with time spreads to be discussed]; (ii) with respect to crude oil constituting the linefill carried in the All American Pipeline, the aggregate quantity covered by all such contracts (determined, in the case amount of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) oil so hedged at any one time does not exceed 2,000,000 500,000 barrels, (iii) with respect to crude oil owned by Restricted Persons other than linefill carried in the All American Pipeline, the aggregate amount of such other crude oil so hedged at any one time does not exceed the aggregate Open Position at such time, (iv) such contract is entered into for the purpose of hedging the price risk on oil anticipated to be disposed of and for which no other fixed sale price or other price fixing arrangement exists, and (iiiv) each such contract is either (A) New York Mercantile Exchange contract or (B) with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender Party or an Affiliate one of any Lender at the time such contract is entered intoits Affiliates) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A AA or A2 Aa2 or better, respectively, by either Rating Agency or is (B) entered into on the New York Mercantile Exchange through a broker listed on the Disclosure Schedule or otherwise acceptable to approved by Majority LendersLenders [provision dealing with counterparty credit rating on an exchange for physical contracts].

Hedging Contracts. No Restricted Person Company will not, nor will it permit any of its Subsidiaries to, be a party to or in any manner be liable on any Hedging Contract, Contract except: (a) contracts entered into with the purpose and effect of fixing prices on oil or gas expected to be produced by Company, provided that at all times: (i) no such contract fixes a price for a term that ends later than the Maturity Date; (ii) the aggregate monthly production covered by all such contracts (determined, in the case of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) for any single month does not in the aggregate exceed ninety percent (90%) at any time of Company's aggregate Projected Oil and Gas Production anticipated (at the time such Hedging Contracts Contract is entered into) to be sold in the ordinary course of Company's and its Subsidiaries' businesses for such month, (iii) no such contract requires Company or any Subsidiary to put up money, assets or other security (excluding unsecured letters of credit and, in the case of Lender Hedging Obligations only, Collateral under the Security Documents) against the event of its nonperformance prior to actual default by Company or such Subsidiary in performing its obligations thereunder, and (iv) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or one of its Affiliates) at the time the contract is made is rated at least A by S & P or A2 by Mxxxx'x; and (b) contracts entered into by Pacific Energy Partners, Borrower Company or a Guarantor any of its Subsidiaries with the purpose and effect of fixing interest rates on a principal amount of indebtedness of such Person Credit Party that is accruing interest at a variable rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred fifty percent (10050%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such contracts or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, (ii) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest on the corresponding indebtedness to be hedged by such contract, (iii) no such contract requires Company or any of its Subsidiaries to put up money, assets or other security (excluding unsecured letters of credit and, in the case of Lender Hedging Obligations only, Collateral under the Security Documents) against the event of its nonperformance prior to actual default by Company or such Subsidiary in performing its obligations thereunder, and (iiiiv) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate one of any Lender at the time such contract is entered intoits Affiliates) at the time the contract is made has long-term unsecured and unenhanced debt obligations is rated at least A by S & P or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority LendersMxxxx'x. (b) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor with the purpose and effect of converting to a variable interest rate on a principal amount of indebtedness of such Person that is accruing interest at a fixed rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of such indebtedness or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, and (ii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (c) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor as an Offsetting Position to a Petroleum Inventory Position, provided that at all times: (i) no such contract fixes a price for a term of more than twelve (12) months after the date the contract is entered into; (ii) the aggregate quantity covered by all such contracts (determined, in the case of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) at any one time does not exceed 2,000,000 barrels, and (iii) each such contract is either (A) New York Mercantile Exchange contract or (B) with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders.

Hedging Contracts. No Restricted Person will be a party to or in any manner be liable on on: (a) any Hedging Contract, except: (ai) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor with the purpose and effect of fixing interest rates on a principal amount of indebtedness of such Person Borrower that is accruing interest at a variable rate, ; provided that (iA) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of the indebtedness Indebtedness to be hedged by such contracts or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, (iiB) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest on the corresponding indebtedness Indebtedness to be hedged by such contract and (iiiC) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority LendersEligible Counterparty. (bii) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor Restricted Person with the purpose and effect of converting fixing the price for Hydrocarbon Inventory not to a variable interest rate on a principal amount exceed 100% of indebtedness of such Person Projected Open Hydrocarbon Inventory for the current month and future months; provided, that is accruing interest at a fixed rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of such indebtedness or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, and (ii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (c) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor as an Offsetting Position to a Petroleum Inventory Position, provided that at all times: (i) no such contract fixes a price for a term of more than twelve (12) months after the date the contract is entered into; (ii) the aggregate quantity covered by all such contracts (determined, in the case of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) at any one time does not exceed 2,000,000 barrels, and (iii) each such contract is either Eligible Counterparty. "Projected Open Hydrocarbon Inventory" means (A) New York Mercantile Exchange contract the Hydrocarbon Inventory held by such Restricted Person for which price risk is not otherwise substantially eliminated, or (B) with a counterparty the Hydrocarbon Inventory anticipated to be acquired and received, or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term obligations rated A or A2 or better, respectivelyanticipated to be sold and delivered, by either Rating Agency such Restricted Person (including, without limitation, natural gas liquids from processing by a Restricted Person), with such volume and period as corresponds to the volume and period under such Hedging Contract, for which price risk is not otherwise substantially eliminated (such as Hydrocarbon Inventory to be acquired or sold under any contract that is otherwise acceptable to Majority Lenders.priced on index that substantially eliminates price risk for such Hydrocarbon Inventory). 004726 000020 DALLAS 1786243.3 SECOND AMENDED AND RESTATED CREDIT AGREEMENT [CONFORMED THROUGH AUGUST 2004]

Hedging Contracts. No Restricted Person will be a party to or in any manner be liable on any Hedging Contract, except: (a) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor Restricted Person with the purpose and effect of fixing interest rates on a principal amount of indebtedness of such Restricted Person that is accruing interest at a variable rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred seventy- five percent (10075%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such contracts or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, (ii) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest on the corresponding indebtedness to be hedged by such contract and (iii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate one of any Lender at the time such contract is entered intoits Affiliates) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A AA or A2 Aa2 or better, respectively, by either Rating Agency or is an investment grade-rated industry participant or otherwise acceptable to Majority Lenders. (b) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor with the purpose and effect of converting fixing prices on crude oil then owned by a Restricted Person or which a Restricted Person is then obligated to a variable interest rate on a principal amount of indebtedness of such Person that is accruing interest at a fixed rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of such indebtedness or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, and (ii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (c) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor as an Offsetting Position to a Petroleum Inventory Positionpurchase, provided that at all times: (i) no such contract fixes a price for a term of more than twelve (12) months after the date the contract is entered intomonths; (ii) the aggregate quantity covered by all such contracts (determined, in the case amount of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) oil so hedged at any one time does not exceed 2,000,000 (A) for the period of six (6) months beginning with the acquisition under the Acquisition Documents, the number of barrels hedged by Borrower's Subsidiaries immediately prior to Borrower's acquisition of such Subsidiaries and (B) at any time thereafter, 500,000 barrels, (iii) such contract is entered into for the purpose of hedging the price risk on oil anticipated to be disposed of and for which no other fixed sale price or other price fixing arrangement exists, and (iiiiv) each such contract is either (A) New York Mercantile Exchange contract or (B) with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender Party or an Affiliate one of any Lender at the time such contract is entered intoits Affiliates) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A AA or A2 Aa2 or better, respectively, by either Rating Agency or is (B) entered into on the New York Mercantile Exchange through a broker listed on the Disclosure Schedule or otherwise acceptable to approved by Majority Lenders.

Hedging Contracts. No Restricted Person will be a party to or in any manner be liable on on: (a) any Hedging Contract, except: (ai) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor with the purpose and effect of fixing interest rates on a principal amount of indebtedness of such Person Borrower that is accruing interest at a variable rate, ; provided that (iA) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of the indebtedness Indebtedness to be hedged by such contracts or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, (iiB) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest on the corresponding indebtedness Indebtedness to be hedged by such contract and (iiiC) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A BBB+ or A2 Baa1 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders.. SECOND AMENDED AND RESTATED CREDIT AGREEMENT (bii) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor Restricted Person with the purpose and effect of converting fixing the price for Hydrocarbon Inventory not to a variable interest rate on a principal amount exceed 100% of indebtedness of such Person Projected Open Hydrocarbon Inventory for the current month and future months; provided, that is accruing interest at a fixed rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of such indebtedness or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, and (ii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A BBB+ or A2 Baa1 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (c) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor as an Offsetting Position to a Petroleum Inventory Position, provided that at all times: (i) no such contract fixes a price for a term of more than twelve (12) months after the date the contract is entered into; (ii) the aggregate quantity covered by all such contracts (determined, in the case of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) at any one time does not exceed 2,000,000 barrels, and (iii) each such contract is either . "Projected Open Hydrocarbon Inventory" means (A) New York Mercantile Exchange contract the Hydrocarbon Inventory held by such Restricted Person for which price risk is not otherwise substantially eliminated, or (B) with a counterparty the Hydrocarbon Inventory anticipated to be acquired and received, or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term obligations rated A or A2 or better, respectivelyanticipated to be sold and delivered, by either Rating Agency such Restricted Person (including, without limitation, natural gas liquids from processing by a Restricted Person), with such volume and period as corresponds to the volume and period under such Hedging Contract, for which price risk is not otherwise substantially eliminated (such as Hydrocarbon Inventory to be acquired or sold under any contract that is otherwise acceptable to Majority Lenderspriced on index that substantially eliminates price risk for such Hydrocarbon Inventory).

Hedging Contracts. No Restricted Person will be a party to or in any manner be liable on any Hedging Contract, except: (a) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor Restricted Person with the purpose and effect of (I) fixing interest rates on a principal amount of indebtedness of such Restricted Person that is accruing interest at a variable rate, or (II) applying a variable rate of interest on a principal amount of indebtedness of such Restricted Person that is accruing interest at a fixed rate; provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such contracts or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, (ii) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest on the corresponding indebtedness to be hedged by such contract and (iii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender Lender, a "Lender" as such term is defined in the Revolver Agreement, or an Affiliate of any Lender or "Lender" at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (b) Hedging Contracts entered into by Pacific Energy Partners, Borrower a Canadian Subsidiary (or by a Guarantor Restricted Person on behalf of a Canadian Subsidiary) with the purpose and effect of converting to a variable interest rate fixing foreign exchange rates on a principal amount of indebtedness of such Person that is accruing interest at a fixed rateits reasonably anticipated net revenues, and not for speculative purposes, provided that (i) no such contract fixes an exchange rate for a term of more than 5 years, (ii) the aggregate notional amount of such contracts (determined, in the case of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) for any single month never exceeds (A) ninety percent (90%) of the reasonably anticipated net revenues to be hedged by such contracts plus (B) one hundred percent (100%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such indebtedness or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balancescontracts, and (iiiii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender Lender, a "Lender" as such term is defined in the Revolver Agreement, or an Affiliate of any a Lender or "Lender" at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (c) Hedging Contracts entered into by Pacific Energy Partners, Borrower or relating to heating oil used to hedge price risk for fuel requirements of the truck fleet of a Guarantor as an Offsetting Position to a Petroleum Inventory Position, provided that at all times: (i) no such contract fixes a price for a term of more than twelve (12) months after the date the contract is entered into; (ii) the aggregate quantity covered by all such contracts (determined, Restricted Person in the case ordinary course of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) at any one time does not exceed 2,000,000 barrels, and (iii) each such contract is either (A) New York Mercantile Exchange contract or (B) with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lendersbusiness.

Hedging Contracts. No Restricted Person Loan Party will be a party to or in any manner be liable on any Hedging Contract, Swap Contract except: (a) Hedging Swap Contracts existing on the date hereof. (b) Swap Contracts entered into with the purpose and effect of fixing prices on Projected Oil and Gas Production for production expected to be produced no more than 36 months in the future that does not in the aggregate exceed ninety five percent (95%) of the aggregate Projected Oil and Gas Production for such period; provided that the aggregate production covered by all such contracts for any single month does not in the aggregate exceed ninety five percent (95%) of the aggregate Projected Oil and Gas Production anticipated to be sold in the ordinary course of the Loan Parties' businesses for such month. (c) Except for Letters of Credit and the Collateral under the Security Documents with respect to Swap Obligations owing to Lenders, no Swap Contract shall require any Loan Party to put up money, assets, or other security against the event of its nonperformance prior to actual default by such Loan Party in performing its obligations thereunder except for Swap Contracts entered into prior to the date hereof, and each such contract (except for contracts with SemCrude, L.P. entered prior to the date hereof) is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or one of its Affiliates) at the time the contract is made has long-term obligations rated AA or Aa2 or better, respectively, by either Rating Agency. (d) Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor Loan Party with the purpose and effect of fixing interest rates on a principal amount of indebtedness of such Person Loan Party that is accruing interest at a variable rate, provided that (i) at the time such Hedging Contract is entered into, the aggregate notional amount of such contracts never exceeds one hundred does not exceed fifty percent (10050%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such contracts or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, (ii) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest on the corresponding indebtedness to be hedged by such contract and (iii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate one of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (b) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor with the purpose and effect of converting to a variable interest rate on a principal amount of indebtedness of such Person that is accruing interest at a fixed rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of such indebtedness or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, and (ii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (c) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor as an Offsetting Position to a Petroleum Inventory Position, provided that at all times: (i) no such contract fixes a price for a term of more than twelve (12) months after the date the contract is entered into; (ii) the aggregate quantity covered by all such contracts (determined, in the case of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) at any one time does not exceed 2,000,000 barrels, and (iii) each such contract is either (A) New York Mercantile Exchange contract or (B) with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered intoits Affiliates) at the time the contract is made has long-term obligations rated A AA or A2 Aa2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority LendersAgency.

Hedging Contracts. No Restricted Person will be a party to ----------------- or in any manner be liable on any Hedging Contract, except: (a) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor Restricted Person with the purpose and effect of fixing interest rates on a principal amount of indebtedness of such Restricted Person that is accruing interest at a variable rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such contracts or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, (ii) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest on the corresponding indebtedness to be hedged by such contract and (iii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender Lender, a "Lender" as such term is defined in the Marketing Credit Agreement, or an Affiliate of any a Lender or "Lender" at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (b) Hedging Contracts entered into by Pacific Energy Partners, Borrower a Canadian Subsidiary (or by a Guarantor Restricted Person on behalf of a Canadian Subsidiary) with the purpose and effect of converting to a variable interest rate fixing foreign exchange rates on a principal amount of indebtedness of such Person that is accruing interest at a fixed rateits reasonably anticipated net revenues, and not for speculative purposes, provided that (i) no such contract fixes an exchange rate for a term of more than 5 years, (ii) the aggregate notional amount of such contracts (determined, in the case of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) for any single month never exceeds (A) ninety percent (90%) of the reasonably anticipated net revenues to be hedged by such contracts plus (B) one hundred percent (100%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such indebtedness or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balancescontracts, and (iiiii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender Lender, a "Lender" as such term is defined in the Marketing Credit Agreement, or an Affiliate of any a Lender or "Lender" at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (c) Hedging Contracts entered into by Pacific Energy Partners, Borrower or relating to heating oil used to hedge price risk for fuel requirements of the truck fleet of a Guarantor as an Offsetting Position to a Petroleum Inventory Position, provided that at all times: (i) no such contract fixes a price for a term of more than twelve (12) months after the date the contract is entered into; (ii) the aggregate quantity covered by all such contracts (determined, Restricted Person in the case ordinary course of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) at any one time does not exceed 2,000,000 barrels, and (iii) each such contract is either (A) New York Mercantile Exchange contract or (B) with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lendersbusiness.

Hedging Contracts. No Restricted Person will be a party to or in any manner be liable on any Hedging Contract, except: (a) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor Restricted Person with the purpose and effect of fixing interest rates on a principal amount of indebtedness of such Restricted Person that is accruing interest at a variable rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of the indebtedness to be hedged by such contracts or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, (ii) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest on the corresponding indebtedness to be hedged by such contract and (iii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate one of any Lender at the time such contract is entered intoits Affiliates) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A AA or A2 Aa2 or better, respectively, by either Rating Agency or is an investment grade-rated industry participant or otherwise acceptable to Majority Lenders. (b) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor with the purpose and effect of converting fixing prices on crude oil then owned by a Restricted Person or which a Restricted Person is then obligated to a variable interest rate on a principal amount of indebtedness of such Person that is accruing interest at a fixed rate, provided that (i) the aggregate notional amount of such contracts never exceeds one hundred percent (100%) of the anticipated outstanding principal balance of such indebtedness or an average of such principal balances calculated using a generally accepted method of matching interest swap contracts to declining principal balances, and (ii) each such contract is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or an Affiliate of any Lender at the time such contract is entered into) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A or A2 or better, respectively, by either Rating Agency or is otherwise acceptable to Majority Lenders. (c) Hedging Contracts entered into by Pacific Energy Partners, Borrower or a Guarantor as an Offsetting Position to a Petroleum Inventory Positionpurchase, provided that at all times: (i) no such contract fixes a price for a term of more than twelve [thirty-six (12) 36)] months after the date the contract is entered into[provision dealing with time spreads to be discussed]; (ii) with respect to crude oil constituting the linefill carried in the All American Pipeline, the aggregate quantity covered by all such contracts (determined, in the case amount of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Administrative Agent) oil so hedged at any one time does not exceed 2,000,000 500,000 barrels, (iii) with respect to crude oil owned by Restricted Persons other than linefill carried in the All American Pipeline, the aggregate amount of such other crude oil so hedged at any one time does not exceed the aggregate Open Position at such time, (iv) such contract is entered into for the purpose of hedging the price risk on oil anticipated to be disposed of and for which no other fixed sale price or other price fixing arrangement exists, and (iiiv) each such contract is either (A) New York Mercantile Exchange contract or (B) with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender Party or an Affiliate one of any Lender at the time such contract is entered intoits Affiliates) at the time the contract is made has long-term unsecured and unenhanced debt obligations rated A AA or A2 Aa2 or better, respectively, by either Rating Agency or is (B) entered into on the New York Mercantile Exchange through a broker listed on the Disclosure Schedule or otherwise acceptable to approved by Majority LendersLenders [provision dealing with counterparty credit rating on exchange for physicals contracts].