FIRST AMENDED CHAPTER 11 PLAN OF REORGANIZATION DATED MARCH 28, 2013 OF VIRGIN OFFSHORE U.S.A., INC

7/28/2019 FIRST AMENDED CHAPTER 11 PLAN OF REORGANIZATION DATED MARCH 28, 2013 OF VIRGIN OFFSHORE U.S.A., I

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UNITED STATES BANKRUPTCY COURTEASTERN DISTRICT OF LOUISIANA

IN RE:

VIRGIN OFFSHORE USA, INC.,

DEBTOR

CASE NO. 11-13028

CHAPTER 11

CHIEF J UDGE ELIZABETH W. MAGNER

FIRST AMENDED CHAPTER 11 PLAN OF REORGANIZATION DATEDMARCH 28, 2013 OF VIRGIN OFFSHORE U.S.A., INC.

SUBMITTED BY GERALD H. SCHIFF,CHAPTER 11 TRUSTEE FOR THE ESTATE OF

VIRGIN OFFSHORE U.S.A., INC.

GORDON, ARATA, MCCOLLAM,DUPLANTIS & EAGAN, LLC

By: /s/ Louis M. PhillipsLouis M. Phillips (La. Bar No. 10505)GORDON, ARATA, MCCOLLAM,DUPLANTIS, & EAGAN, LLCOne American Place

301 Main Street, Suite 1600Baton Rouge, LA 70825Phone: (225) 381-9643Email: [email protected]

- AND -

Patrick Rick M. Shelby(La Bar. No. 31963)James D. Rhorer (La. Bar No. 34052)201 St. Charles Avenue, 40th FloorNew Orleans, LA 70170-4000Telephone: (504) 582-1111Email: [email protected]

- AND -

Armistead M. Long (La. Bar No. 33949)GORDON, ARATA, MCCOLLAM,

DUPLANTIS, & EAGAN, LLC400 East Kaliste Saloom Road, Suite 4200Lafayette, LA 70508Phone: (337) 237-0132Facsimile: (337) 237-3451Email: [email protected]

Attorneys for Gerald H. Schiff,Chapter 11 Trustee

Dated: March 28, 2013

Case 11-13028 Doc 402 Filed 03/28/13 Entered 03/28/13 15:46:43 Main DocumentPage 1 of 46


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TABLE OF CONTENTS

I. DEFINITIONS, RULES OF INTERPRETATION, COMPUTATIONOF TIME, AND GOVERNING LAW ................................................................ 1A. Rules of Interpretation, Computation of Time, and Governing

Law ............................................................................................................. 1B. Defined Terms ........................................................................................... 2

II . UNCLASSIFIED CL AIMS ................................................................................ 13A. Unclassified Claims ................................................................................. 13B. Time for Filing Administrative Claims and Professional

Compensation Claims ............................................................................. 13C. Allowance of Administrative Claims ..................................................... 14D. Allowed Priority Tax Claims ................................................................. 14E. United States Trustee Fees ..................................................................... 14

III. CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMSAND EQUITY INTERESTS .............................................................................. 14A. SUMMARY ............................................................................................. 14B. CLASSIFIED CLAIMS AND TREATMENT ..................................... 15CLASS 1 EMPIRE SECURED CLAIMS...................................................... 15Claim.................................................................................................................................. 15Treatment.......................................................................................................................... 15Voting................................................................................................................................ 16CLASS 2 RLI INSURANCE CLAIM ............................................................ 16Claim.................................................................................................................................. 16Treatment.......................................................................................................................... 16Voting................................................................................................................................ 16CLASS 3 UNSECURED CLAIMS ................................................................. 17Claim.................................................................................................................................. 17Treatment.......................................................................................................................... 17Voting................................................................................................................................ 18



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CLASS 4 EQUITY INTERESTS ................................................................... 18Classification...................................................................................................................... 18Treatment.......................................................................................................................... 18Voting................................................................................................................................ 18

IV. ACCEPTANCE OR REJ ECTION OF THE PLAN........................................ 18A. Voting Classes.......................................................................................... 18B. Voting Rights as to Confirmation of the Plan; Necessity of

Allowance of Claims ............................................................................... 19C. Acceptance by Impaired Classes ........................................................... 19D. Non-Consensual Confirmation .............................................................. 19

V. PROCEDURES FOR RESOLUTION OF DISPUTED,CONTINGENT AND UNLIQUIDATED CLAIMS OR EQUITYINTERESTS ........................................................................................................ 19A. Prosecution of Objections to Claims ..................................................... 19B. Allowance of Claims ............................................................................... 19C. Controversy Concerning Impairment................................................... 20D. Payments and Distributions on Disputed Claims and Class 3

Claims....................................................................................................... 20

VI . MEANS OF IMPLEMENTATION OF THE PLAN ...................................... 20A. Operation of Reorganized Offshore Post-Effective Date .................... 20B. The Offshore Equity Trust and Appointment, Powers and

Removal of the Offshore Equity Trustee .............................................. 22i. Establishment of the Offshore Equity Trust ........................................ 22ii. Purpose of the Offshore Equity Trust ................................................... 22iii. Issuance of Equity by the Debtor to the Offshore Equity Trust......... 22iv. Appointment of and Compensation for the Offshore Equity

Trustee ..................................................................................................... 23v. Powers and Duties of the Offshore Equity Trustee ............................. 23



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vi. Indemnification of the Offshore Equity Trustee .................................. 24vii. Tax Treatment of the Offshore Equity Trust ....................................... 24C. Offshore Equity Trust Distributions ..................................................... 24D. Term and Termination of the Offshore Equity Trust and

Offshore Equity Trustee ......................................................................... 26E. Causes of Action and Avoidance Actions.............................................. 27

VII. EXECUTORY CONTRACTS AND UNEXPIRED LEASES ........................ 28VIII. CONDITIONS PRECEDENT TO CONFIRMATION AND

CONSUMMATION OF THE PLAN ................................................................ 29A. The Effective Date ................................................................................... 29B. Conditions Precedent to Effective Date ................................................ 301. Confirmation Order................................................................................ 302. Documents ............................................................................................... 303. Authorizations ......................................................................................... 30C. Waiver of Conditions .............................................................................. 30D. Effects of Confirmation .......................................................................... 301. Assets of the Debtor ................................................................................ 302. Cancellation of Existing Class 4 Equity Interests ................................ 313. Issuance of New Equity .......................................................................... 314. Conversion of Allowed Class 3 General Unsecured Claims into

Beneficial I nterests in the Offshore Equity Trust ................................ 315. Findings by the Bankruptcy Court ....................................................... 31

X. MODIFICATIONS AND AMENDMENTS ..................................................... 32XI . RETENTION OF J URISDICTION .................................................................. 32XII. MISCELLANEOUS PROVISIONS.................................................................. 34

A. Severability of Plan Provisions .............................................................. 34



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B. Successors and Assigns ........................................................................... 34C. Notices ...................................................................................................... 34D. Compromise and Settlement .................................................................. 35E. Section 1146 Exemption ......................................................................... 35F. Post-Confirmation Reporting Requirements. ...................................... 35G. Modification of the Plan ......................................................................... 35H. Reservation of Rights .............................................................................. 36I. Governing Law ........................................................................................ 36J . No Admission or Waivers ....................................................................... 36K. Continuing Viability of Other Orders/Agreements ............................. 36L. Limitations on Liability. ......................................................................... 36

XIII. DISCHARGE OF OFFSHORE, INJUNCTION AND RELATEDPROVISIONS ...................................................................................................... 37A. Discharge of Debtor ................................................................................ 37B. Injunction................................................................................................. 37C.

Exculpations ............................................................................................ 37

D. Indemnification Obligations .................................................................. 38E. Limited Release ....................................................................................... 38F. Releases by Consenting Parties.............................................................. 38G. Subordination .......................................................................................... 39H. Binding Effect .......................................................................................... 39I. Revocation, Withdrawal, or Non-Consummation ............................... 39J . Section 1129(b) ........................................................................................ 40K. Section 1125(e) ......................................................................................... 40



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Page 1 of 41First Amended Plan of Reorganization Dated March 28, 2013

INTRODUCTION AND OVERVIEW

Gerald H. Schiff, Chapter 11 Trustee for the Bankruptcy Estate of Virgin OffshoreU.S.A., Inc., proposes this amended Plan of Reorganization dated March 28, 2013 pursuant toChapter 11 of Title 11 of the United States Bankruptcy Code for the resolution of outstanding

Claims against and interest in the Debtor, Virgin Offshore U.S.A., Inc. Reference is made to theamended Disclosure Statement for this Plan for a discussion of the Debtors history, businesses,assets, results of operations, projections for future operations, risk factors, and a summary andanalysis of this Plan and certain related matters, including procedures for voting on this Plan andDistributions to be made under this Plan. The Trustee is the proponent of this Plan within themeaning of section 1129 of the Bankruptcy Code.

As more particularly described in the Disclosure Statement, the primary purpose of thisPlan is to provide for the sale of the Debtors Assets, provide for the disallowance and/ormodification of certain Secured and Unsecured Claims, pay the Allowed Claims of the Creditorsof the Debtor, provide for the settlement and compromise of Claims and Causes of Action

against the Debtor, and provide for a liquidation of the Debtors Assets.

ALL CREDITORS AND PARTIES IN INTEREST ARE ENCOURAGED TOCONSULT THE DISCLOSURE STATEMENT BEFORE VOTING TO ACCEPT OR REJECTTHIS PLAN.

Subject to certain restrictions and requirements set forth in section 1127 of theBankruptcy Code, Rule 3019 of the Bankruptcy Rules and Article XII of this Plan, the Trusteereserves the right to alter, amend, modify, revoke or withdraw this Plan prior to its substantialconsummation.

I. DEFINITIONS, RULES OF INTERPRETATION, COMPUTATION OF TIME,AND GOVERNING LAW

A. Rules of Interpretation, Computation of Time, and Governing Law

For purposes herein: (a) whenever from the context it is appropriate, each term, whetherstated in the singular or the plural, shall include both the singular and the plural, and pronounsstated in the masculine, feminine or neuter gender shall include the masculine, feminine and theneuter gender; (b) any reference herein to a contract, instrument, release, indenture or otheragreement or document being in a particular form or on particular terms and conditions meansthat such document shall be substantially in such form or substantially on such terms andconditions; (c) any reference herein to an existing document or exhibit Filed, or to be Filed, shall

mean such document or exhibit, as it may have been or may be amended, modified orsupplemented; (d) unless otherwise specified, all references herein to Sections, Articles andExhibits are references to Sections, Articles and Exhibits hereof or hereto; (e) the wordsherein, hereof and hereto refer to the Plan in its entirety rather than to a particularportion of this Plan; (f) captions and headings to Articles and Sections are inserted forconvenience of reference only and are not intended to be a part of or to affect the interpretationhereof; (g) the rules of construction set forth in section 102 of the Bankruptcy Code shall apply;and (h) any term used in capitalized form herein that is not otherwise defined but that is used in



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the Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned to such term inthe Bankruptcy Code or the Bankruptcy Rules, as the case may be.

In computing any period of time prescribed or allowed hereby, the provisions ofBankruptcy Rule 9006(a) shall apply as though the Plan is an order of the Bankruptcy Court.

Except to the extent that the Bankruptcy Code or Bankruptcy Rules are applicable, andsubject to the provisions of any contract, instrument, release, indenture or other agreement ordocument entered into in connection herewith, the rights and obligations arising hereunder shallbe governed by, and construed and enforced in accordance with, the laws of the State ofLouisiana, without giving effect to the principles of conflict of laws thereof.

All references in the Plan to monetary figures shall refer to United States of Americacurrency, unless otherwise expressly provided.

B. Defined Terms

Unless the context otherwise requires, the following terms shall have the followingmeanings when used in capitalized form herein:

Administrative Claim means (a) any Professional Compensation Claim, (b) any Claimconstituting a cost or expense of administration of the Bankruptcy Case asserted or authorized tobe asserted in accordance with sections 503(b) and 507(a)(2) of the Bankruptcy Code during theperiod up to and including the Effective Date, and (c) any fees or charges assessed against theEstate pursuant to section 1930 of chapter 123 of title 28 of the United States Code.

Administrative Claim Bar Date means (a) the 60th day after the Effective Date or (b)such other date established by Final Order of the Bankruptcy Court.

Administrative Claim Objection Deadline means (a) the earlier of the 28th day afterthe filing of an Administrative Claim or the 28th day after the Administrative Claim Bar Date or(b) such other date established by Final Order of the Bankruptcy Court.

Affiliate means any Person or Entity described under section 101(2) of the BankruptcyCode.

Allowed means that, with respect to a Claim, (i) such Claim has been listed by Offshorein the Schedules, as such Schedules may be amended by Offshore from time to time inaccordance with Bankruptcy Rule 1009, as liquidated in amount and not disputed or contingentand no contrary Proof of Claim has been filed, (ii) a Proof of Claim with respect to such Claimhas been timely filed and no objection thereto has been interposed within the time period setforth in this Plan or such other applicable period of limitation fixed by the Bankruptcy Code, theBankruptcy Rules, or the Bankruptcy Court, or an objection thereto has been interposed and suchClaim has been allowed in whole or in part by a Final Order, (iii) such Claim has been expresslyallowed by a Final Order or under this Plan, or (iv) such Claim has been compromised, settled, orotherwise resolved pursuant to the authority granted to the Trustee or Debtor pursuant to a FinalOrder of the Bankruptcy Court or under this Plan; provided, however, that Claims allowed solely



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for the purpose of voting to accept or reject this Plan pursuant to an order of the BankruptcyCourt shall not be considered Allowed Claims under this Plan.

Allowed Claimmeans an Allowed Claim in the particular Class described.

Asset means any property of the Debtor and the Estate as defined in section 541(a) of theBankruptcy Code.

Assumed Executory Contracts and Unexpired Leases means any Executory Contractsand Unexpired Leases assumed by the Debtor or by the Trustee on behalf of the Debtor.

Avoidance Claims means any and all Causes of Action which a trustee, debtor-in-possession, an estate, or other legal representative or appropriate party-in-interest may assert,including Causes of Action under sections 502, 510, 541, 542, 543, 544, 545, 547, 548 through551, and 553 of the Bankruptcy Code, or under similar or related state or federal statutes, civillaw, and common law, including fraudulent transfer laws, and also including Offshores rights ofsetoff, recoupment, contribution, or indemnity in connection with the foregoing (as those terms

are defined by the non-bankruptcy law of any relevant jurisdiction) whether or not litigation hasbeen commenced as of the Confirmation Date to prosecute such Avoidance Claims.

Ballot means the ballot form accompanying the Disclosure Statement upon whichHolders of Impaired Claims and Equity Interests who are entitled to vote under this Plan shallindicate acceptance or rejection of the Plan in accordance with the Voting Instructions.

Bankruptcy Case means the involuntary bankruptcy case filed against Offshore byPrecision Drilling Company, LP, Dynamic Energy Services, LLC and Tanner Services, LLC,and styled and numbered as follows: In re Virgin Offshore, USA, Inc., Case No. 11-13028(Bankr. E.D. La).

Bankruptcy Codemeans Title 11 of the United States Code, 11 U.S.C. 101 et seq., asnow in effect or hereafter amended.

Bankruptcy Court means the United States Bankruptcy Court for the Eastern District ofLouisiana.

Bankruptcy Rulesmeans the Federal Rules of Bankruptcy Procedure, FED.R.BANKR.P.1001 et seq., as promulgated under 28 U.S.C. 2075, and the Federal Rules of Civil Procedure,FED. R. CIV. P. 1 et seq., and the Local Rules of the Bankruptcy Court, as applicable to theBankruptcy Cases, and as now in effect or hereafter amended.

BP Claim means that certain claim for economic loss filed by Offshore pursuant to theDeepwater Horizon Economic and Property Damages Settlement Agreement.

Business Day means any day other than a Saturday, a Sunday, legal holidays (asdefined under Bankruptcy Rule 9006(a)), or any other day on which banking institutions inBaton Rouge, LA are required or authorized to close by law or executive order.



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Cash means legal tender of the United States of America, cash equivalents, and readilymarketable securities or instruments, including, but not limited to, bank deposits, accounts,certified or cashiers checks, timed certificates of deposit issued by any bank, commercial paper,and readily marketable direct obligations of the United States of America or agencies orinstrumentalities thereof.

CIT means CIT Capital USA, Inc.

Causes of Action means any and all actions, proceedings, causes of action, suits,accounts, controversies, agreements, promises, rights to legal remedies, rights to equitableremedies, rights to payment and claims, whether known, unknown, reduced to judgment, notreduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,undisputed, secured or unsecured and whether asserted or assertable directly or derivatively, inlaw, equity, or otherwise including, but not limited to, (i) Avoidance Claims unless otherwisewaived or released by Offshore or Reorganized Offshore, (ii) any and all rights under applicablestate and/or non-bankruptcy law to assert, pursue, prosecute, and/or commence actions to enforceand/or collect the BP Claim, (iii) the D&O Litigation and Paxton Intervention, and (iv) all rightsto assert, pursue, prosecute and/or commence action, to enforce the rights of Offshore in any wayrelated to the P&A Work and related liabilities.

Claim means a claim, as defined in section 101(5) of the Bankruptcy Code, againstOffshore, including, but not limited to: (a) any right to payment from Offshore whether in remorin personam or whether or not such right is reduced to judgment, liquidated, unliquidated,contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or(b) any right to an equitable remedy for breach of performance if such performance gives rises toa right of payment from Offshore, whether or not such right to an equitable remedy is reduced tojudgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured.

Claim Holder orClaimant means a holder of a Claim.

Claims Objection Bar Date means, for all Claims, the latest of (a) 180 days after theEffective Date, or (b) such other period of limitation as may be specifically fixed by a FinalOrder of the Bankruptcy Court for objecting to such Claim.

Classmeans a category of Holders of Claims or Equity Interests.

Clerk means the clerk of the Bankruptcy Court.

Collateral means any property or interest in property of the Estate subject to a Lien,charge, or other encumbrance to secure the payment or performance of a Claim, which Lien,charge, or other encumbrance is not subject to avoidance under the Bankruptcy Code.

Confirmation means the Entry of the Confirmation Order, subject to all conditionsspecified in Article VIII hereof having be (i) satisfied or (ii) waived pursuant to Article VIII.

Confirmation Datemeans the date of Entry by the Clerk of the Confirmation Order.

Confirmation Hearingmeans the hearing to consider Confirmation of the Plan.



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Confirmation Order means the order Entered by the Bankruptcy Court confirming thePlan pursuant to section 1129 of the Bankruptcy Code.

Consenting Parties means, collectively, each Holder of a Claim or Equity Interest whohas affirmatively voted to accept the Plan and is a Holder in a Class that has, as a Class, voted toaccept the Plan.

Creditor means any Person who holds a Claim against Offshore.

Cure means the distribution by the Trustee on behalf of the Debtor, on or within areasonable period of time following the Effective Date, of Cash, or such other property as maybe agreed upon by the parties or ordered by the Bankruptcy Court, with respect to the assumptionof an Executory Contract or Unexpired Lease, pursuant to Section 365(b) of the BankruptcyCode, in an amount equal to all unpaid monetary obligations, without interest, or such otheramount as may be agreed upon by the parties, under such Executory Contract or UnexpiredLease, to the extent such obligations are enforceable under the Bankruptcy Code and applicablenon-bankruptcy law.

Cure Claim means the Claim of any party for monetary damages arising out of theassumption of an Executory Contract by the Debtor pursuant to Section 365 of the BankruptcyCode.

Debtor means Virgin Offshore, USA, Inc.

D&O Litigation means those certain proceedings commenced on August 19, 2011 styledThe Official Committee of Unsecured Creditors of Virgin Oil Company, Inc., et al v. RobertFulton Smith, J r., et al, Civil Action No. 2011-8906 pending before the Civil District Court forthe Parish of Orleans, State of Louisiana.

Disallowed Claimsmeans a Claim or any portion thereof (a) that has been disallowed byFinal Order, (b) to which a party in interest has filed an objection and no Final Order ofallowance has been entered, (c) proof of which was untimely filed, or (d) listed as disputed,contingent, or unliquidated on the Bankruptcy Schedules.

Disclosure Statement means the FIRST AMENDED DISCLOSURE STATEMENT INSUPPORT OF CHAPTER 11 PLAN OF REORGANIZATION DATED MARCH 28, 2013SUBMITTED BY GERALD H. SCHIFF, CHAPTER 11 TRUSTEE FOR THE ESTATE OFVIRGIN OFFSHORE, USA, INC., as amended, supplemented, or modified from time to time,describing this Plan, that is prepared and distributed in accordance with sections 1125, 1126(b)and/or 1145 of the Bankruptcy Code and Bankruptcy Rule 3018 and/or other applicable law.

Disputed Claims means all Claims: (a) which are listed in the Schedules as disputed,contingent, or unliquidated, (b) all Investor Claims, or (c) as to which (i) a Proof of Claim hasbeen filed, (ii) an objection, or request for estimation, has been timely filed (and not withdrawn)by any party in interest, and (iii) no Final Order has been entered thereon. In the event that anypart of a Claim is disputed, such Claim in its entirety shall be deemed to constitute a DisputedClaim for purposes of Distribution under this Plan unless a Final Order has been Entered



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allowing such Claim or portion thereof. Without limiting the above, a Claim that is the subjectof a pending objection, or any other proceeding seeking to disallow, subordinate, or estimatesuch Claim, shall be deemed to constitute a Disputed Claim.

Distribution means any transfer, payment under or in accordance with the Plan, thecorporate documents of Reorganized Offshore, or the Offshore Equity Trust Agreement of Cashor other property.

Effective Date means the first Business Day that is at least one (1) full Business Dayafter the Confirmation Order becomes a Final Order and all conditions precedent to the EffectiveDate have been consummated or waived pursuant to Article VIII, hereof.

Empire Lease means the Louisiana State Oil and Gas Lease referred to as SL 18165,Empire Field, Plaquemines Parish Louisiana.

Empire Lien Compromisemeans the December 3, 2012 Order of the Bankruptcy Courtapproving the Joint Motion to Approve Settlement and Compromise filed by the Trustee and lien

claimant Dynamic Energy Services, LLC and the settlement related thereto between the LienAdversary parties.

Empire Secured Claims means the Lien Claimants set forth in the Empire LienCompromise with Allowed Claims secured by Liens filed against the Empire Lease and payablepursuant to the terms of the Empire Lien Compromise and this Plan in the total amount of$3,983,954.02. The Empire Secured Claims consists of three tiers with each tier only receivingpayment upon satisfaction of all Claims within the preceding tier. A schedule of the EmpireLien Claimants and the amount of each Empire Secured Lien Claim is attached as Exhibit A.For avoidance of any doubt, Holders of Empire Secured Claims in each tier are as follows:

Tier 1 - Dynamic Energy Services, LLC, Industrial & Oilfield Services, Inc.,Tanner Services, LLC, Global Vessel & Tank, LLC, Ranger Specialty Supply &Control Systems, LLC, Newpark Mats & Integrated Services, LLC, NewparkEnvironmental Services, LLC, Weatherford International, Inc., GE Oil & GasPressure Control, LP as successor in interest to Wood Group Pressure Control,LP, Quality Energy Services, Inc., and Stokes & Spiehler Offshore, Inc.

Tier 2 - Workover Specialties, LLC

Tier 3 - Precision Drilling Company, LP

Entity means an entity defined in section 101(15) of the Bankruptcy Code.

Entry orEntered means entry or entered by the Clerk into the records and dockets of theBankruptcy Case within the meaning of Bankruptcy Rules 5003 and 9021.

Equity Interest or Interest means any equity security as defined under section101(16) of the Bankruptcy Code.



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Estate means the bankruptcy estate created upon the commencement of the BankruptcyCase pursuant to section 541 of the Bankruptcy Code, or thereafter acquired as provided insection 541 or any other applicable section of the Bankruptcy Code.

Excess Cash means, in the sole discretion of the Offshore Equity Trustee, availableexcess Cash in an amount sufficient to render feasible a Distribution of Cash to the OffshoreEquity Trust Beneficiaries.

Executory Contracts and Unexpired Leases means executory contracts and unexpiredleases as such terms are used in section 365 of the Bankruptcy Code.

Existing Oil and Gas Assets means and includes the Empire Lease, Ship Shoal, theFederal Oil and Gas Lease referred to as East Cameron Area, Block 2 bearing serial numberOCS-G 32124, the Federal Oil and Gas Lease referred to as East Cameron Area, Block 219bearing serial number OCS-G 33580, and the Federal Oil and Gas Lease referred to as WestCameron Area, Block 78 bearing serial number OCS-G 33043.

Expired Leases means Federal Oil and Gas Leases operated by the Debtor pre-petitionwhich have expired and require abandonment. Attached as Exhibit D is a schedule of ExpiredLeases and Existing Oil and Gas Assets as reflected by record title.

Fees means any reasonable and necessary fees, charges, or expenses, includingProfessional Compensation Claims and Claims arising under any contract, Executory Contract,or any other form of agreement.

File, Filing, or Filed means file, filing or filed with the Clerk into the record of theBankruptcy Case in accordance with the applicable Bankruptcy Rules.

Final Decreemeans the decree contemplated under Bankruptcy Rule 3022.

Final Order means an order of the Bankruptcy Court or court of competent jurisdictionwhich, not having been stayed by order of a court of competent jurisdiction, has becomeconclusive of all matters adjudicated thereby and is in full force and effect.

General Unsecured Claim means any Claim that is not an Administrative Claim,Priority Tax Claim, Secured Claim, or Priority Non-Tax Claim.

Gordon Arata means the law firm of Gordon, Arata, McCollam, Duplantis & Eagan,LLC, attorneys for the Trustee.

Governmental Unit means United States; State; Commonwealth; District; Territory;municipality; foreign state; department, agency, or instrumentality of the United States (but not aUnited States trustee while serving as a trustee in a case under this title), a State, aCommonwealth, a District, a Territory, a municipality, or a foreign state; or other foreign ordomestic government.

Gros Firm means Patrick Gros, APAC, accountant for the Estate.



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Holder means a Person or Entity holding an Equity Interest or Claim.

Impaired means a Claim or Equity Interest that is impaired within the meaning ofsection 1124 of the Bankruptcy Code and applicable case law.

Insider means any Person or Entity described under section 101(31) of the BankruptcyCode.

Interest Holder means Holder of an Equity Interest.

Internal Revenue Codemeans title 26 of the United States Code, 26 U.S.C. 1 et seq.,as now in effect or hereafter amended.

Investors means third party investors granted certain unrecorded contractual workinginterests in the Virgin Oil and Offshore properties.

Investor Claimsmeans any Claim evidenced by a Proof of Claim filed by any Person or

Entity in the Bankruptcy Case that assert an ownership, economic or revenue interest and/orclaim for damages for loss thereof based upon certain contractual investment agreements withthe Debtor. The Investor Claims are Disputed by the Debtor. A schedule of the Investor Claimsand Claimants is attached as Exhibit B.

Lien orLiens means mortgages, security interests, privileges, conditional sale or othertitle retention agreements, pledges, liens, judgments, demands, encumbrances, taxes, includingwithout limitation, property taxes, sales, use and ad valorem taxes, easements, restrictions orcharges of any kind or nature, if any, including, but not limited to, any restriction on the use,voting, transfer, receipt of income or other exercise of any attributes of ownership, debts arisingin any way in connection with any acts of Offshore, Claims, obligations, demands, guaranties,

options, rights, contractual commitments, executory contracts, unexpired leases, employmentagreements, restrictions, rights of lesion beyond moiety, tort claims, product liability claims,interests and matters of any kind and nature, whether arising prior to or subsequent to thecommencement of the Bankruptcy Cases, and whether imposed by agreement, understanding,law, equity or otherwise.

Lien Adversary means the Adversary Proceeding No. 11-01111 filed in the U.S.Bankruptcy Court for the Eastern District of Louisiana by Dynamic Energy Services, LLC,Precision Drilling Company, LP, Tanner Services, LLC and Industrial & Oilfield Services, Inc.against Offshore and assorted parties claiming liens against the Empire Lease.

Lien Compromisemeans the compromise between the Trustee, the Debtor and various

lien claimants involved in the Lien Adversary, which was approved by order entered by theBankruptcy Court in the Bankruptcy Case on December 3, 2012. The Lien Compromiseincludes all agreements executed pursuant to the agreement of the parties including thesettlement agreement and mutual release. The terms and conditions of the Lien Compromise areincorporated into this Plan as if fully set forth herein.

Offshoremeans the Debtor, Virgin Offshore, USA, Inc.



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Offshore Claims Bar Datemeans the last date for filing Claims against Offshore, whichwas December 7, 2012.

Offshore Governmental Claims Bar Date means the last date for filing GovernmentalUnit Claims, which was January 7, 2013.

Offshore Equity Trust means the trust to be established as of the Effective Datepursuant to the terms of the Offshore Equity Trust Agreement which shall be the owner of thenew Equity Interests in Reorganized Offshore which shall be held for the benefit of Holders ofAllowed Unsecured Class 3 Claims.

Offshore Equity Trust Agreement means that certain agreement to be filed by the PlanProponent prior to the Confirmation Hearing and approved in connection with the ConfirmationOrder, which contains provisions customary to trust agreements utilized in comparablecircumstances, including but not limited to, any and all provisions necessary to govern the rights,powers, obligations and appointment and removal of the Offshore Equity Trustee or anysuccessor Offshore Equity Trustee.

Offshore Equity Trust Assets means all Equity Interests in the Reorganized Debtorwhich shall be issued upon the Effective Date to the Offshore Equity Trustee for the benefit ofthe Holders of Allowed Unsecured Claims who shall be become Offshore Equity TrustBeneficiaries.

Offshore Equity Trust Beneficiaries means the Holders of Allowed Unsecured Claimsthat shall receive a beneficial interest in the Offshore Plan Trust created pursuant to this Plan.

Offshore Equity Trustee means Gerald H. Schiff, or his successor as provided in theOffshore Equity Trust Agreement.

Oil/Offshore Settlement means the compromise between the Virgin Oil bankruptcyestate and Offshore Estate approved by order entered by the Bankruptcy Court in the BankruptcyCase on January 5, 2012 and the terms and conditions thereof that are incorporated into this Planby reference to the agreement. The Oil/Offshore Settlement includes all agreements executedpursuant to the agreement of the parties including the joint operating agreements, contractoperator agreement, and decommissioning term sheet. Furthermore, the releases and obligationsset forth in the Oil/Offshore Settlement are incorporated into this Plan as if fully set forth herein.

Order for Relief means the order for relief entered by the Bankruptcy Court in theBankruptcy Case.

P&A Work means the requisite plug and abandonment work relating to Offshoresexpired oil and gas leases. A schedule of the P&A Work is attached hereto as Exhibit B.

P&A Properties means the Expired Leases and non-producing Existing Oil and GasAssets subject to abandonment as part of the P&A Work.



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Paxton Intervention means those certain proceedings commenced on December 5, 2011(Trustees intervention filed on May 17, 2011 and Granted on May 21, 2011) styled MontecitoOffshore LLC v. Paxton Energy Inc. and PaxAcq, Inc., Civil Action No. 2011-12640 pendingbefore the Civil District Court for the Parish of Orleans, State of Louisiana.

Per Annummeans for a calendar year of 365 or 366 days, as the case may be.

Person means any natural person or juridical entity to the broadest extent the termperson is defined under the laws of the State of Louisiana. Person also includes anyGovernmental Unit.

Petition Datemeans September 16, 2011.

Phelps Dunbar means the law firm of Phelps Dunbar, LLP, special litigation counsel forthe Estate and Reorganized Debtor in the D&O Litigation and Paxton Intervention.

Plan means this FIRST AMENDED CHAPTER 11 PLAN OF REORGANIZATION

DATED MARCH 28, 2013 SUBMITTED BY GERALD H. SCHIFF, CHAPTER 11 TRUSTEEFOR THE ESTATE OF VIRGIN OFFSHORE, USA, INC., either in its present form or as it maybe altered, amended, modified or supplemented from time to time in accordance with the Plan,the Bankruptcy Code and the Bankruptcy Rules.

Plan Proponent means the Trustee.

Plan Supplement means the compilation of documents and form of documents,schedules and exhibits to be filed prior to the Voting Deadline, as modified or supplementedprior to the Confirmation Hearing.

Post-Petition means any date on or after the Petition Date.

Pre-Petition means any date before the Petition Date.

Priority Non-Tax Claimmeans any Claim given priority in payment pursuant to section507 of the Bankruptcy Code, but not including Priority Tax Claim and Administrative Claims.

Priority Tax Claim means any Claim (or portion of a Claim) of a Governmental Unitentitled to priority under section 507(a)(8) of the Bankruptcy Code.

Pro Rata Share means, at any time, the proportion that the amount of a Claim in a

particular Class or Classes (or portions thereof, as applicable) bears to the aggregate amount ofall Claims (including Disputed Claims) in such Class or Classes, unless the Plan providesotherwise.

Producing Wells means and includes wells producing on the Ship Shoal and the EmpireLeases, and shall also include any wells in which Offshore holds an interest that begin producingafter the Confirmation Date.



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Professional Compensation Claim means a Claim for compensation or reimbursementof expenses of a Professional retained in the Bankruptcy Cases, and requested in accordance withsections 326, 327, 328, 330, 331, 503(b), and 1103.

Professional means a professional person, as that term in used in section 327 and 1103 ofthe Bankruptcy Code.

Proof of Claim means a Claimants written statement that is filed with the Clerk inaccordance with applicable provisions of the Bankruptcy Code and Bankruptcy Rules in therecord of the Bankruptcy Case to show the basis and amount of such Claimants Claim.

Property of the Estate means all property or interests in property of Offshore and theEstate of every type and nature pursuant to section 541 of the Bankruptcy Code and applicablecase law.

RLI means RLI Insurance Company.

RL I Insurance Claimmeans the Class 2 Claim of RLI Insurance Company.

Recovery Allocation Agreement means the compromise between Virgin Oil Co., Inc.Plan Trust and collectively, Cahaba Partnership, Ltd., Lagniappe Productions of Louisiana, LLC,Ann Broome Priske, Horizon Energy, LLC, B.A. Adams Oil and Gas Investments, LLC, KathyRoberts, The Carlton Capital Group LLC, ADM Properties, Inc., W.D. Mounger, Delta RoyaltyCompany, Inc., Silver Sands Offshore, LLC, Silver Sands High Island 198, LLC, Silver SandsShip Shoal, LLC, Paul McMullan, Jr., in his capacity as Executor for the Estate of Dr. PaulMcMullan and Mrs. Georgie McMullan and Offshore approved by order entered by theBankruptcy Court in the Bankruptcy Case on May 3, 2012 and the terms and conditions thereofthat are incorporated into this Plan by reference to the agreement.

Rejection Claim means any Claim arising out of the rejection of an Unexpired Lease orExecutory Contract pursuant to Section 365 of the Bankruptcy Code. Allowed Rejection Claimsare classified as General Unsecured Claims and treated in Class 3.

Reorganized Debtor means Offshore as of and after the Effective Date.

Reorganized Offshoremeans Offshore as of and after the Effective Date.

Schedulesmean the schedules of assets and liabilities, schedules of executory contracts,and the statement of financial affairs as the Bankruptcy Court requires a debtor to file pursuant tosection 521 of the Bankruptcy Code, the Official Bankruptcy Forms and the Bankruptcy Rules,

which have been filed by Offshore, as they may be amended and supplemented from time totime.

Secondary Offshore Equity Trust Beneficiaries means the Class 4 Equity InterestHolder(s) that shall receive a subordinated beneficial interest in the Offshore Equity Trustcreated pursuant to this Plan.



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Secured Claim means a Claim against Offshore (a) secured by a valid, perfected, andunavoidable Lien on Collateral or (b) subject to setoff under sections 553, 555, 556, 559, 560,and 561 of the Bankruptcy Code, in each case to the extent of the value of the Collateral or to theextent of the amount subject to setoff, as applicable, as determined in accordance with section506(a) of the Bankruptcy Code or as otherwise agreed to, in writing, by the Trustee, Offshore or

Reorganized Offshore, as the case may be, and the holder of such Claim; provided, however,that, to the extent that the value of such interest is less than the amount of the Claim which hasthe benefit of such security, the unsecured portion of such Claim shall be treated as an UnsecuredClaim unless, in any such case, the Class of which such Claim is a part makes a valid and timelyelection in accordance with section 1111(b) of the Bankruptcy Code to have such Claim treatedas a Secured Claim to the extent Allowed.

Securities Act means the Securities Act of 1933, 15 U.S.C. 77a et seq., as now in effector hereafter amended.

Security shall have the meaning ascribed to it in section 101(49) of the BankruptcyCode.

Security Interestmeans a Lien created by agreement.

Seismic Material means certain geophysical and geological data covered by the TGSNLicense resulting from seismic surveys performed by or on behalf of TGSN, together with theresults of all processing, reprocessing, and re-display thereof.

Ship Shoal means the Federal Oil and Gas Lease referred to as Block 153, Ship Shoal,bearing Serial Number OCS-G18011.

Treasury Regulations means title 26 of the Code of Federal Regulations, 26 C.F.R.

1.0-1 et seq., as now in effect or hereafter amended.

Trustee means Gerald H. Schiff, Chapter 11 Trustee for the Estate of Virgin Offshore,USA, Inc.

Trustee Discharge Datemeans the date of Entry of the Final Decree.

Unimpaired means a Claim or Interest that is not Impaired within the meaning of section1124 of the Bankruptcy Code and applicable case law.

United States Trusteemeans the United States trustee appointed under section 581(a)(3)

of title 28 of the United States Code, as now in effect or hereafter amended, to serve in theEastern District of Louisiana.

Unsecured Creditor means the Holder of a General Unsecured Claim.

Virgin Oil means Virgin Oil Company, Inc., a corporation incorporated under the laws ofthe State of Louisiana and formerly the sole shareholder of Offshore.



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Virgin Oil Bankruptcy Case means the Chapter 11 case of Virgin Oil styled andnumbered as follows: In re Virgin Company, Inc., Case No. 09-11899 (Bankr. E.D. La).

Virgin Oil Committee means the Official Committee of Unsecured Creditors of theVirgin Oil bankruptcy estate.

Virgin Oil Plan Trust means the trust formed pursuant to the Virgin Oil Chapter 11 Planof Reorganization, as modified and amended.

Voting Classes shall mean those Classes of Claims or Equity Interests entitled to vote toaccept or reject the Plan.

Voting Deadline means the date stated in the Voting Instructions by which all Ballotsmust be received by the Trustee.

Voting Instructionsmean the instructions for voting on the Plan contained in the sectionof the Disclosure Statement entitled VOTING PROCEDURES AND REQUIREMENTS and

in the Ballots.

II . UNCLASSIFIED CLAIMS

A. Unclassified Claims

As provided in section 1123(a)(a) of the Bankruptcy Code, Administrative Claims,Priority Tax Claims, and Professional Compensation Claims are not classified for purposes ofvoting on, or receiving distributions under this Plan. Holders of Administrative Claims, PriorityTax Claims, and Professional Compensation Claims are not entitled to vote on the Plan but,rather, are treated separately in accordance with Article II of this Plan and under section1129(a)(9)(A) of the Bankruptcy Code.

B. Time for Filing Administrative Claims and Professional CompensationClaims

On or as soon as practicable after the later of (i) the Effective Date or (ii) the date that anAdministrative Claim, becomes an Allowed Administrative Claim, each Administrative Claimthat is an Allowed Claim shall be paid in full, in Cash; provided, however, that AdministrativeClaims, the payment of which are not expressly provided for elsewhere in this Plan and thatrepresent indebtedness incurred in the ordinary course of business by the Debtor, shall be paid bythe Trustee either (i) in the ordinary course of business in accordance with the terms andconditions of any agreements related thereto or (ii) as otherwise agreed among the Trustee and

the Holder of such Administrative Claim.Additionally, any fees due to the U.S. Trustees Officepursuant to 28 U.S.C. 1930 will be paid as they become due by the Debtor or the Trustee.

All Professionals seeking payment of an Administrative Claim pursuant to an award bythe Bankruptcy Court of compensation for services rendered or reimbursement of expensesincurred through and including the Effective Date under Sections 503(b)(2), 503(b)(3) or503(b)(4) of the Bankruptcy Code shall file their respective final applications for allowances of



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compensation for services rendered and reimbursement of expenses incurred through theEffective Date within thirty (30) days of the occurrence of the Effective Date. If granted, suchProfessional Compensation Claim shall be paid by Reorganized Offshore in full in such amountsas are Allowed by the Bankruptcy Court (i) on the date such Administrative Claim becomes anAllowed Administrative Claim, or as soon thereafter as is practicable or (ii) upon such other

terms as may be mutually agreed upon between the Holder of an Administrative Claim and theTrustee or, on and after the Effective Date.

C. Allowance of Administrative Claims

An Administrative Claim with respect to which notice has been properly filed and servedshall become an Allowed Administrative Claim if no objection is filed on or prior to theAdministrative Claim Objection Deadline. If an objection is timely filed, the AdministrativeClaim shall become an Allowed Administrative Claim only to the extent Allowed by Final Orderor as such Claim is settled, compromised, or otherwise resolved by the Trustee.

D. Allowed Priority Tax Claims

Each Holder of an Allowed Priority Tax Claim shall receive Cash in an amount equal tothe amount of such Allowed Priority Tax Claim on the latest of (a) the Effective Date or (b) the30th day after such Priority Tax Claim is Allowed pursuant to (i) any agreement between theTrustee and the Holder of such Priority Tax Claim or (ii) a Final Order.

The Trustee retains the right to prepay any Allowed Priority Tax Claim, or any remainingbalance of such a Claim, in full or in part, at any time on or after the Effective Date withoutpremium or penalty.

E. United States Trustee Fees

All fees payable under 28 U.S.C. 1930 shall be paid in Cash in full as they become dueby the Debtor and/or Reorganized Offshore, as applicable, up until issuance of the Final Decree.

II I. CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMS ANDEQUITY INTERESTS

A. SUMMARY

The categories of Claims and Equity Interests listed below classify Claims and EquityInterests for all purposes, including voting, confirmation, and distribution pursuant hereto andpursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code. A Claim or Equity Interestshall be deemed classified in a particular Class only to the extent that the Claim or EquityInterest qualifies within the description of that Class and shall be deemed classified in a differentClass to the extent that any remainder of such Claim or Equity Interest qualifies within thedescription of such different Class. A Claim or Equity Interest is in a particular Class only to theextent that such Claim or Equity Interest is Allowed in that Class and has not been paid orotherwise settled prior to the Effective Date.



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Class Number Claim Status Voting Rights

Class 1 Empire Secured Claims Impaired Entitled to Vote

Class 2 RLI Insurance Claim Impaired Entitled to Vote

Class 3 General Unsecured Claims Impaired Entitled to Vote

Class 4 Debtor Equity Interests Impaired Entitled to Vote

B. CLASSIFIED CLAIMS AND TREATMENT

1. CLASS 1 EMPIRE SECURED CLAIMS(1) Claim.

Class 1 consists of the Empire Secured Claims. As of the Effective Date, the EmpireSecured Claims shall be reduced by all payments made by the Estate to Holders of EmpireSecured Claims after the Petition Date. As of the Petition Date, the Empire Secured Claimstotaled $3,983,954.02. A schedule of the Empire Secured Claims is attached as Exhibit A. Asof the date of the filing of this Plan, the Empire Secured Claims have been reduced by$864,595.28.

(2) Treatment.The Holder of an Allowed Empire Secured Claim shall receive in full and final

satisfaction of any and all Class 1 Secured Claims against the Debtor payments from the EmpireLease production proceeds in accordance with the Oil/Offshore Compromise and the EmpireLien Compromise, or, in the event of sale of interest of the Debtor or Reorganized Debtor in theEmpire Lease (i) 80% of the proceeds attributable to such interest plus (ii) an amount equal to80% of the interest of the Virgin Oil Plan Trust in the Empire Lease if such interest is sold or ifsuch interest is not sold a continuation of the share of the payments by the Virgin Oil Plan Trustto be made to the Reorganized Debtor under the Empire Lease Compromise and the Oil/OffshoreSettlement as called for under the Oil/Offshore Settlement and the Empire Lease Compromise(80% of such payments).

In the event that proceeds from the Empire Lease and the Empire Lease Collateraldiscontinue and are insufficient to satisfy the full amount of the Empire Secured Claims anyunsecured portion of an Empire Secured Claims shall be treated as a Class 3 General UnsecuredClaim.

Confirmation of the Plan shall constitute the reaffirmation of all Liens in favor of theHolders of Allowed Empire Secured Claims as of the Petition Date and all Liens granted underthe Empire Lien Compromise. Further, Confirmation shall constitute the granting to Holders ofAllowed Empire Secured Claims a Lien on eighty percent (80%) of the proceeds received by the



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Debtor and/or Reorganized Debtor from the Empire Lease production and/or the proceedsallocated to the value of the Empire Lease in connection with a transfer of the Empire Leaseapproved by Final Order of the Bankruptcy Court in the amount of the Empire Secured Claims.At all times the terms, conditions, and obligations of Offshore and the Holders of AllowedEmpire Secured Claims under the Empire Lien Compromise shall remain in full force and effect

until the Empire Secured Claims are paid, in full. To the extent that additional documentation isnecessary, Reorganized Offshore shall be authorized and directed to execute suchdocumentation. The Holders of Allowed Empire Secured Claims shall not take any affirmativeaction to foreclose on or otherwise attempt to affirmatively enforce the Liens of the Holder(s) ofEmpire Secured Claims against the Empire Lien collateral.

(3) Voting.The Holders of Class 1 Empire Secured Claims are IMPAIRED and shall be entitled to

vote to accept or reject the Plan.

2. CLASS 2 RLI INSURANCE CLAIM(1) Claim.

Class 2 consists of the RLI Insurance Claim. RLI Insurance Company is the Holder ofthe RLI Insurance Claim.

(2) Treatment.On the Effective Date, the Debtor shall pay its portion of the outstanding bond premiums

on Existing Oil and Gas Assets. In connection with this Plan, those certain indemnityagreements and assignments of P&A escrow accounts (the P&A Escrow Accounts) executed

by the Debtor and/or Virgin Oil in favor of RLI (collectively the Bond Documents) will beassumed and the Debtors obligations under the Bond Documents shall continue. As to oil andgas leases that expired prior to the Petition Date (Expired Leases) for which Bonds wereissued, the Reorganized Debtor shall honor its obligations to continue the plug and abandonmentwork on the Expired Leases (the P&A Work) as specifically set forth in the Oil/OffshoreSettlement and approved by the Bankruptcy Court. To satisfy the P&A Work obligations, theReorganized Debtor shall utilize funds provided by RLI, arising out of and limited to theappropriate bonds, in conjunction with and with the prior approval of BOEM, to pay for theinitial expense of any such P&A Work. Thereafter, RLI shall (i) draw down on any applicableP&A Escrow Account(s) to reimburse itself for any draws under any Bond, and (ii) receive aGeneral Unsecured Claim to be treated as a Class 3 Claim under this Plan, to the extent RLI is

not reimbursed out of the P&A Escrow Account. For the avoidance of doubt, RLI shall receiveupon the completion of the P&A Work, a Class 3 General Unsecured Claim in the amount of thetotal draws under all Bonds less the funds drawn down by RLI on the P&A Escrow Accounts.

(3) Voting.Class 2 is IMPAIRED. Class 2 will be entitled to vote to accept or reject the Plan.



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3. CLASS 3 UNSECURED CLAIMS(1) Claim.

Class 3 consists of all Allowed General Unsecured Claims.

(2) Treatment.On the Effective Date, each Holder of Allowed Class 3 General Unsecured Claims shall

contribute the Allowed amount of such Class 3 Claim in exchange for a beneficial interest in theOffshore Equity Trust, which shall be the owner of the new Equity Interest in ReorganizedOffshore, to be issued as of the Effective Date. Each Holder of an Allowed Unsecured Claimshall receive a beneficial interest equal to such Holders pro rata share of the Allowed Class 3Unsecured Claims (the Offshore Equity Trust Beneficiaries).. Each Holders pro rata share ofthe Beneficial Interest in the Offshore Equity Trust shall be determined as of the date on whichall Allowed Unsecured Claims have been determined by final and unappealable Order pursuantto the Claims Objection process described in Article V of this Plan. Additionally, due to the

treatment of the Class 2 RLI Insurance Claim and the uncertainty of Reorganized OffshoresP&A liability, no Distributions shall be made to Holders of Class 3 Claims until completion ofthe P&A Work and determination of all Allowed Claims.

Based on the uncertainty of the timing and cost of the P&A Work and subsequentdetermination of the final RLI General Unsecured Claim, the Trustee cannot determine theamount, if any, of Distributions that shall be made to Holders of Class 3 Claims at this time.Upon completion and determination of Allowed Claims, including the RLI General UnsecuredClaim, and the liquidation of Reorganized Offshores assets as set forth in Article VI of the Plan,Reorganized Offshore shall be able to report to the Offshore Equity Trust the identities of theOffshore Equity Trust Beneficiaries and pro-rata share of Distributions to be made to each

Offshore Equity Trust Beneficiaries. Due to the material uncertainties related to the P&A Workand liquidation of Offshores remaining assets, Distributions to Allowed Unsecured Claims maynot occur. Furthermore, the timing of a final determination of all Allowed Claims is dependentsolely upon completion of the P&A Work. As of the filing of the Plan, the anticipatedcompletion of the P&A Work is October 2013. It is expected that within 30-60 days of the P&AWork completion, Reorganized Offshore should have a final determination of the AllowedClaims. At that time, Distributions will only be deliverable from a successful outcome of theD&O Litigation and/or a successful liquidation of Reorganized Offshores assets. Presently, it istoo speculative for the Trustee to estimate any amount of Distributions. Furthermore, because allrevenue from the Producing Wells is being utilized by Offshore and/or Reorganized Offshore forcost and expenses, the Trustee does not anticipate making any partial Distributions.

Within thirty (30) days after the later of the determination of Allowed Unsecured Claimsor completion of the P&A Work, Reorganized Offshore shall provide to the Offshore EquityTrustee a final list of Allowed Class 3 Claims that shall identify the Offshore Equity TrustBeneficiaries. The Offshore Equity Trust Beneficiaries shall receive pro-rata shares of periodicDistributions as set forth in Article VI of this Plan. A current schedule of the General UnsecuredClaims that have been filed by Creditors and/or scheduled by the Debtor is attached as Exhibit



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C, but Exhibit C does not, in the estimation of the Plan Proponent, represent the relativeinterests that shall become the interests of the Offshore Equity Trust Beneficiaries.

To the extent that (i) any Holder of an Allowed Class 3 Claim receives a payment inpartial or complete satisfaction of such Allowed Class 3 Claim from a source other than the

Reorganized Debtor, including without limitation, recovery from the Virgin Oil Plan Trust; or,(ii) RLI and/or Holders of Allowed Empire Secured Claims become entitled to an Allowed Class3 claim pursuant to Section III(B)(2) of this Plan, the pro ratacalculation for future Distributionsand division beneficial interests in the Offshore Equity Trust Assets shall be adjustedretroactively to the Effective Date and future Distributions to Holders of Allowed Class 3 Claimsshall be adjusted accordingly.


4. CLASS 4 EQUITY INTERESTS(1) Classification

Class 4 consists of existing Equity Interests. The Virgin Oil Plan Trust is the only Holderof an Equity Interest in the Debtor.

(2) Treatment.On the Effective Date, all existing Equity Interests shall be converted into a secondary

subordinated beneficial interest in the Offshore Equity Trust, to be issued as of the EffectiveDate (the Secondary Offshore Equity Trust Beneficiary). The agreements, instruments, and

other documents relating to any Equity Interests, shall be cancelled, and any rights, obligations,and Claims under all such agreements, instruments, and other documents will be deemed fullyand finally waived, released, cancelled, extinguished, and forever discharged. The rights of theSecondary Offshore Equity Trust Beneficiary to receive Distributions shall be subordinate to therights of the Offshore Equity Trust Beneficiaries and the Secondary Offshore Equity TrustBeneficiary shall only receive Distributions from the Offshore Equity Trust in the event that andafter all expenses of the Offshore Equity Trust are paid in full, all Allowed Claims in Classes 1and 2 are paid in full, and Distributions in the aggregate amount of the Allowed Class 3 Claimshave been made to the Offshore Equity Trust Beneficiaries, including Distributions to theHolders of Class 2 Claims on account and in the amount of any such Holders Class 3 Claim.


IV. ACCEPTANCE OR REJ ECTION OF THE PLAN

A. Voting Classes



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There are four (4) voting Classes under this Plan. Holders of Allowed Claims inClasses 1, 2, 3 and 4 are IMPAIRED, and therefore are entitled to vote to accept or rejectthe Plan.

B. Voting Rights as to Confirmation of the Plan; Necessity of Allowance of

Claims

If a Claim is a Disputed Claim prior to the Confirmation Date, such Disputed Claim shallnot be entitled to vote with respect to the Plan unless such Claim is estimated, for votingpurposes, by Final Order of the Bankruptcy Court.

C. Acceptance by Impaired Classes

An Impaired Class of Claims shall have accepted the Plan if (a) the Holders (other thanany Holder designated under section 1126(e) of the Bankruptcy Code) of at least two-thirds inamount of the Allowed Claims actually voting in such Class have voted to accept the Plan, and(b) the Holders (other than any Holder designated under section 1126(e) of the Bankruptcy

Code) of more than one-half in number of the Allowed Claims actually voting in such Class havevoted to accept the Plan.

D. Non-Consensual Confirmation

The Trustee reserves the right to seek Confirmation of the Plan under section 1129(b) ofthe Bankruptcy Code, to the extent applicable, in the event of a rejection by any of the VotingClasses.

V. PROCEDURES FOR RESOLUTION OF DISPUTED, CONTINGENT ANDUNLIQUIDATED CLAIMS OR EQUITY INTERESTS

A. Prosecution of Objections to ClaimsAs of the Effective Date, Reorganized Offshore shall have the exclusive authority on or

before the Claims Objection Bar Date to file objections, settle, compromise, withdraw or litigateto judgment objections to Claims. Hearings on any such objections shall be fixed for hearing atleast twenty-eight (28) days after the filing of the objections or at such other time as may befixed by the Bankruptcy Court or agreed to by the parties (subject to the authority of theBankruptcy Court). Reorganized Offshore shall litigate to judgment, settle or withdrawobjections to Disputed Claims, and with regard to objections, if any, pending as of Confirmation,Reorganized Offshore shall be deemed, without further action of the Bankruptcy Court, to be the

judicial substitute as the party in interest with Bankruptcy Court approved standing inBankruptcy Case, under the Plan, or in any judicial proceeding or appeal to which the Trustee isa party, and shall be entitled to litigate to judgment, settle or withdraw objections to DisputedClaims without the necessity of notice or hearing. From and after the Effective Date,Reorganized Offshore may settle or compromise any Disputed Claim without approval of theBankruptcy Court.

B. Allowance of Claims



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Except as to Claims allowed by this Plan or as otherwise expressly provided herein or inany Final Order by the Bankruptcy Court prior to the Effective Date (including the ConfirmationOrder), no Claim shall be deemed Allowed, unless and until such Claim is deemed Allowedunder the Bankruptcy Code or the Bankruptcy Court enters a Final Order in the Chapter 11 Caseallowing such Claim. Except as to Claims Allowed by the or any order entered by the

Bankruptcy Court prior to the Effective Date (including the Confirmation Order), theReorganized Debtor, after confirmation, will have and retain any and all rights and defenses theDebtor or the Trustee had with respect to any Claim as of the Petition Date or thereafter. To theextent that Reorganized Offshore objects to any filed Claims and there has been no finaldetermination regarding allowance of such Disputed Claims prior to any Distribution,Reorganized Offshore shall escrow such claimants pro-rata share of any Distribution and retainsuch amount until the Bankruptcy Court enters a Final Order in the Chapter 11 Case allowing ordenying such Claim.

C. Controversy Concerning ImpairmentIf a controversy arises as to whether any Claims or any Class of Claims are Impaired

under this Plan, the Bankruptcy Court shall, after notice and a hearing, determine suchcontroversy before the Confirmation Date.

D. Payments and Distributions on Disputed Claims and Class 3 ClaimsNotwithstanding any provision herein to the contrary, except as otherwise agreed by the

Debtor and/or Reorganized Debtor, in its sole discretion, no payments, partial payments,Distributions, partial Distributions, treatment or Plan classification will be made with respect to aHolder of a Disputed Claim and Holders of Class 3 General Unsecured Claim until the resolutionof all Disputed Claims by settlement or Final Order. Upon resolution of all Disputed Claim, bysettlement or Final Order and the providing by the Reorganized Debtor of the final list of

allowed Class 3 Claims to the Offshore Equity Trustee, the beneficial interests in the OffshoreEquity Trust shall be deemed to have been issued to the Offshore Equity Trust Beneficiaries.Thereafter, distributions to the Offshore Equity Trust and to Offshore Trust Beneficiaries shall bemade in conformity with Article VI of this Plan. No distributions to Holder(s) of Class 4 Claimsshall be made unless and until all Allowed Claims in Classes 1, 2 and 3 have been paid in fulland there are remaining assets to be liquidated and/or funds available for Distribution.

VI. MEANS OF IMPLEMENTATION OF THE PLAN

A. Operation of Reorganized Offshore Post-Effective Date

Reorganized Offshore will exist after the Effective Date as a separate entity, with all thepowers of a corporation under the applicable law, without prejudice to any right to terminatesuch existence (whether by merger or otherwise) under applicable law after the Effective Date.Except as otherwise provided in the Plan, on the Effective Date, all property, includingappurtenant rights and privileges, comprising the Offshore Estate will vest in ReorganizedOffshore, free and clear of all Claims, Liens, charges, encumbrances and interests of Creditorsand Holders of Equity Interests (except as otherwise expressly provided in the Plan). As of theEffective Date, Reorganized Offshore may operate its business and use, acquire and settle and



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compromise Claims without supervision of the Bankruptcy Court free of any restrictions of theBankruptcy Code or Bankruptcy Rules, other than those restrictions expressly imposed by thePlan and Confirmation Order. Reorganized Offshore may also pay the charges it incurs forProfessional fees, disbursements, expenses or related support services after the Effective Datewithout any application to the Bankruptcy Court. The Confirmation Order shall also provide that

Reorganized Offshore will be responsible for the timely payment of all statutory fees under 28U.S.C. 1930 relating to the Bankruptcy Case.

In conformity with applicable non-bankruptcy law, Reorganized Offshore shall cause tobe filed with all appropriate governmental agencies appropriate Restated Articles ofIncorporation and/or By-Laws, to the extent necessary under the Bankruptcy Code and asnecessary to conform to the terms of this Plan. A form of the Restated Articles of Incorporationand the Restated By-Laws, if any, shall be contained in the Plan Supplement. The articles oforganization of Offshore shall be amended and restated to the extent necessary: (i) to prohibitthe issuance of nonvoting equity securities as required by section 1123(a)(6) of the BankruptcyCode, subject to further amendment as permitted by applicable law; and (ii) to effectuate the

provisions of the Plan, without the need for any further approval action by Offshore or itsshareholders, officers, or directors, or Reorganized Offshore or its shareholders, officers, ordirectors. After the Effective Date, the Equity Interest in Reorganized Offshore shall be held bythe Offshore Equity Trust for the beneficial interest of Holders of Allowed Claims.

On the Effective Date, all matters provided for under the Plan that would otherwiserequire approval of Offshore and/or Reorganized Offshore or its shareholders, officers, ordirectors, including, without limitation, the adoption and effectiveness of the Restated Articlesof Incorporation and/or By-Laws, and the election or appointment, as the case may be, of officersof Reorganized Offshore as provided for under this Plan, shall be deemed to have occurred andshall be in effect from and after the Effective Date without any requirement of further action byOffshore or Reorganized Offshore or its shareholders, officers, or directors. As of the EffectiveDate, the officers of Reorganized Offshore shall be authorized and directed to issue, execute anddeliver, through authorized representatives, the agreements, documents, securities andinstruments contemplated by the Plan in the name of and on behalf of Reorganized Offshore. Bymeans of Confirmation, the Trustee, Gerald H. Schiff, shall be deemed and appointed (and shallhave all past acts ratified) as President and sole Director of Reorganized Offshore, and LoriMontecino shall be deemed and appointed as Secretary of Reorganized Offshore. Gerald Schiffshall compensation as a director and president of Reorganized Offshore equal to 3% of paymentsto creditors of Reorganized Offshore (which shall not be inclusive of distributions to theOffshore Equity Trust) and Lori Montecino shall continue to receive her contract rate of $3,500per month as compensation. Reorganized Offshore shall be entitled to retain professionals of itschoosing.

Reorganized Offshore shall make periodic Distributions to the Offshore Equity Trust asfollows: (i) Distributions of the net proceeds, if any, from the sale and/or transfer of Existing Oiland Gas Assets by Reorganized Offshore within sixty (60) days of receipt of the proceeds,subject to payment of the Class 1 Empire Secured Claims from any proceeds allocated to theEmpire Lease; (ii) Distributions of the net proceeds from currently Producing Wells, less theDistributions due to the Class 1 Empire Secured Claims and after payment of reasonable and



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ordinary expenses; (iii) Distributions of the net proceeds, if any, from the prosecution and/orsettlement of the D&O Litigation by Reorganized Offshore within sixty (60) days of receipt andafter payment of all fees and expenses; (iv) Distributions of the net proceeds, if any, derivedfrom the BP Claim by Reorganized Offshore within sixty (60) days of receipt of the netproceeds; and (v) if, in the sole discretion of the management of Reorganized Offshore, available

Excess Cash exists in an amount sufficient to render feasible a Distribution of Excess Cash to theOffshore Equity Trust for the benefit of the Offshore Equity Trust Beneficiaries, ReorganizedOffshore shall make such a Distribution.

B. The Offshore Equity Trust and Appointment, Powers and Removal of theOffshore Equity Trustee

i. Establishment of the Offshore Equity Trust

On the Effective Date, the Debtor, by and through the Trustee, shall execute the OffshoreEquity Trust Agreement, a form of which will be filed by the Plan Proponent as part of the Plan

Supplement at least twenty (20) days prior to the Confirmation Hearing, and shall take all othersteps necessary to establish the Offshore Equity Trust. The Confirmation Order shall specificallyinclude and constitute approval of the Offshore Equity Trust Agreement and authorization of theTrustee to execute the Offshore Equity Trust Agreement on behalf of the Debtor.

ii. Purpose of the Offshore Equity Trust

After the Effective Date, the Offshore Equity Trust will make Distributions to OffshoreEquity Trust Beneficiaries according to the terms of this Plan and the Offshore Equity TrustAgreement. The Offshore Equity Trust shall be established for the sole purpose of holding theEquity Interest of Reorganized Offshore and distributing the Distributions made by ReorganizedOffshore to the Offshore Equity Trust, which shall hold such Distributions as necessary to payexpenses of the Trust and thereafter for the benefit of Offshore Equity Trust Beneficiaries inaccordance with Treasury Regulation section 301.7701-4(d). The Offshore Equity Trust shallnot have as its objective the conduct of a trade or business for profit but shall own the newEquity Interests in Reorganized Offshore for the purpose of directing the liquidation the assets ofReorganizing Offshore by virtue of the sole membership interest of the Trust and the officer anddirector status as regards Reorganized Offshore of the Offshore Equity Trustee. Interests in theOffshore Equity Trust shall not be certificated or transferable, except with respect to a transfer bywill or under the laws of descent and distribution, as set forth in the Offshore Equity TrustAgreement.

iii. Issuance of Equity by the Debtor to the Offshore Equity Trust

Upon the Effective Date, all Class 4 Equity Interests shall be cancelled and the Debtorshall issue new equity interests to the Offshore Equity Trust for the benefit of the OffshoreEquity Trust Beneficiaries and Secondary Offshore Equity Trust Beneficiary, free and clear ofany and all Claims, Interests, debts, Liens, Security Interests, and encumbrances but subject tothe Liens specifically provided for under the Plan or in the Confirmation Order. Under section1145 of the Bankruptcy Code, the interest of the Offshore Equity Trust Beneficiaries and



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Secondary Offshore Equity Trust Beneficiary in Distributions, if any, from the Offshore EquityTrust shall be exempt from registration under the Securities Act of 1933, as amended, andapplicable state and local laws requiring registration of securities. The interests of the OffshoreEquity Trust Beneficiaries and Secondary Offshore Equity Trust Beneficiary in Distributionsfrom the Offshore Equity Trust shall be exempt from registration under the Securities Exchange

Act of 1934 and the Investment Company Act of 1940 because: (i) the interests in the OffshoreEquity Trust will not be represented by certificates; (ii) the Offshore Equity Trust exists for thesole purpose of directing the liquidation and distribution the Reorganized Offshore Assets; (iii)the Offshore Equity Trust shall only exist for the period of time necessary to accomplish thisstated objective; (iv) the Offshore Equity Trust and Reorganized Offshore will issue annualunaudited financial statements to Offshore Equity Trust Beneficiaries and Secondary OffshoreEquity Trust Beneficiary; (v) the Bankruptcy Court shall have continuing jurisdiction over allmatters related to the Offshore Equity Trust; and (vi) the interests in the Offshore Equity Trustwill not be transferable, except with respect to a transfer by will or under the laws of descent anddistribution, as set forth in the Offshore Equity Trust Agreement. If, however, the OffshoreEquity Trustee determines, with advice of counsel, that the Offshore Equity Trust is required to

comply with the registration and reporting requirements of the Securities Exchange Act of 1934,as amended, the Investment Company Act of 1940, as amended or any state or local laws, thenthe Offshore Equity Trustee shall take any and all action to comply with such registration andreporting requirements.

iv. Appointment of and Compensation for the Offshore Equity Trustee

The Trustee shall serve as the Offshore Equity Trustee following Confirmation of thisPlan. On the Effective Date, the Trustee shall be appointed as the Offshore Equity Trustee. Anysuccessor Offshore Equity Trustee shall be appointed as provided for in the Offshore EquityTrust Agreement. The Offshore Equity Trustees powers and duties are described below, and arefurther explained in the Offshore Equity Trust Agreement. The Offshore Equity Trustee, andany successor Offshore Equity Trustee, shall receive, without Bankruptcy Court approval,reasonable compensation for services rendered equivalent to three (3%) percent of (1) allDistributions made by the Offshore Equity Trustee, including but not limited to all paymentsmade by the Offshore Equity Trustee in the ordinary course to maintain the Offshore EquityTrust, all Distributions, if any, made to Offshore Equity Trust Beneficiaries and the SecondaryOffshore Equity Trust Beneficiary according to the terms of this Plan and the Offshore EquityTrust Agreement, and (2) reimbursement of out-of-pocket expenses of the Offshore EquityTrustee in handling his duties as Trustee of the Trust. Further, the Offshore Equity Trustee shallbe entitled to retain counsel of his choosing, including counsel for the Trustee and ReorganizedOffshore (i.e. Gordon Arata) and such entitlement shall be recognized by the Offshore EquityTrust Agreement, Reorganized Offshore By-Laws and Confirmation Order. No Offshore EquityTrustee shall be required to give any bond or surety or other security for the performance of itsduties. Procedures for selection of a successor Offshore Equity Trustee shall be as set forth inthe Offshore Equity Trust Agreement.

v. Powers and Duties of the Offshore Equity Trustee



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The rights, powers and privileges of the Offshore Equity Trustee (to act on behalf of theOffshore Equity Trust) will be specified in the Offshore Equity Trust Agreement and willinclude, among others, the authority and responsibility to: (i) accept, preserve, receive, collect,manage, invest, supervise and protect the Distributions from Reorganized Offshore, as providedin the Plan and the Offshore Equity Trust Agreement; (ii) liquidate, transfer or otherwise dispose

of the Offshore Equity Trust Assets or any part thereof or any interest therein upon such terms asthe Offshore Equity Trustee determines to be necessary, appropriate or desirable, pursuant to theprocedures for making Distributions prescribed in the Plan, and otherwise consistent with theterms of the Plan; (iii) calculate and make Distributions, if any, made to Offshore Equity TrustBeneficiaries and the Secondary Offshore Equity Trust Beneficiary; (iv) comply with the Planand exercise its rights and fulfill its obligations there under; (v) retain and compensate, withoutfurther Order of the Bankruptcy Court, the services of professionals or other persons or entitiesto represent, advise and assist the Offshore Equity Trustee in the fulfillment of its responsibilitiesin connection with the Plan and the Offshore Equity Trust Agreement; (vi) file appropriate taxreturns on behalf of the Offshore Equity Trust and pay taxes owed by the Offshore Equity Trust,if any; and (viii) terminate the Offshore Equity Trust as provided in the terms of the Plan and the

Offshore Equity Trust Agreement.

vi. Indemnification of the Offshore Equity Trustee

The Offshore Equity Trust shall indemnify and hold harmless the Offshore EquityTrustee and its professionals, and any duly designated agent or representative thereof (in theircapacity as such), from and against and in respect to any and all liabilities, losses, damages,claims, costs and expenses, including without limitation,