NOTICE OF PROPOSED FINAL SETTLEMENT OF LAWSUIT AND PLANNED SALE OF PARTNERSHIP ASSETS

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1 NOTICE OF PROPOSED FINAL SETTLEMENT OF LAWSUIT AND PLANNED SALE OF PARTNERSHIP ASSETS Please read this Notice carefully. This Notice is solely to inform all current Unit Holders of the Mesa Offshore Trust of a proposed final settlement between the Plaintiffs and Defendants and the request for entry of a final judgment in the lawsuit titled Cause No , MOSH Holding, L.P., et al. v. Pioneer Natural Resources Co., et al., in the 334th Judicial District of Harris County, Texas, and the planned sale of the Partnership assets (owned percent by the Trust). As a Unit Holder in the Mesa Offshore Trust, the proposed final settlement might affect the value of your beneficial interest in the Trust. You have a right to comment on or object to the proposed final settlement at a scheduled hearing in the 334th Judicial District Court of Harris County, Texas, in Houston, Texas, on June 18, 2009, at 9:00 a.m., as further described herein. To obtain a copy of the Final Settlement Agreement, or any other materials described in this Notice, please call or visit

2 NOTICE OF PROPOSED FINAL SETTLEMENT OF LAWSUIT AND PLANNED SALE OF PARTNERSHIP ASSETS 1. Purpose of This Notice. This Notice is to inform Mesa Offshore Trust Unit Holders of the Lawsuit and of the proposed final settlement between the Plaintiffs and the Defendants and the request for entry of a final judgment, the Unit Holders opportunity to comment on or object to the proposed settlement and final judgment, and to provide notice of the planned sale of the Partnership assets. 2. Notice of the Lawsuit. A lawsuit titled Cause No , MOSH Holding, L.P., et al. v. Pioneer Natural Resources Co., et al., is pending in the 334th Judicial District Court of Harris County, Texas (the Lawsuit ), brought by MOSH Holding, L.P. ( MOSH ) and Dagger-Spine Hedgehog Corporation ( Dagger-Spine ), both in their individual capacities and on behalf of the Trust and all Unit Holders (collectively, the Plaintiffs ), stating various causes of action against JPMorgan Chase Bank, N.A. ( JPMorgan or Trustee ) both individually and in its capacity as Trustee of the Mesa Offshore Trust (the Trust ); Pioneer Natural Resources Company and Pioneer Natural Resources USA, Inc. (collectively, Pioneer ); and Woodside Energy (USA) Inc. ( Woodside ). JPMorgan, Pioneer, and Woodside are hereinafter collectively referred to as the Defendants, and the Plaintiffs and Defendants are hereinafter collectively referred to as the Parties. The Plaintiffs own approximately 13.5 percent of the outstanding units in the Trust. Pioneer Natural Resources Company is the sole managing general partner of the Mesa Offshore Royalty Partnership (the Partnership ), a Texas general partnership that holds and manages the royalty interests that ultimately benefit the Trust. The Trust owns percent of the Partnership. Pioneer is also the operator and/or Subject Lessee under the Overriding Royalty Conveyance. 3. Summary of Claims Asserted in the Lawsuit. In the Lawsuit, Plaintiffs allege that Pioneer acted wrongfully in connection with its management of and operations on properties in which the Partnership holds an interest, including alleged wrongful acts concerning a farmout to Woodside affecting those properties. Plaintiffs allege that, in entering into this farmout agreement, Pioneer breached contractual obligations and committed various wrongful acts against the Trust, including fraud, breach of fiduciary duty, and gross negligence which claims Pioneer denies. Plaintiffs also allege that Woodside helped Pioneer in its alleged breaches, which Woodside denies. Plaintiffs also allege that the Trustee is operating under a conflict of interest regarding Pioneer, and that it has breached its fiduciary duty to the Trust which claims the Trustee denies. These claims against the Defendants are more fully stated in Plaintiffs Fourth Amended Petition, Application for Temporary Restraining Order, Temporary Injunction, Show Cause Order, and Permanent Injunction. In addition, the Trustee has asserted claims against the Plaintiffs, and Pioneer and the Trustee have asserted claims against each other. Copies of the relevant pleadings are available as described in Paragraph 5 of this Notice. 4. Notice of Settlement. The Parties have investigated the claims asserted in this Lawsuit and have reached a settlement of the following: (1) all claims that the Plaintiffs, on behalf of the Trust and its Unit Holders or the Partnership, have or might have against the Defendants; (2) all claims that the Plaintiffs, in their individual capacities, have or might have against the Defendants; and (3) all claims that any Party has or might have against any other Party, concerning the subject of the Lawsuit. The settlement includes the dismissal, with - 2 -

3 prejudice, of the Lawsuit, including, without limitation, any and all claims that were or might have been brought in the suit in any capacity, be it individual, derivative, representative, or other. The Agreed Final Judgment and the Settlement Agreement will be binding on the Plaintiffs, the Trustee, the Defendants, the Trust, and all Unit Holders of the Trust. The settlement is expressly conditioned on the Court s approval of the Final Settlement Agreement and entry of an Agreed Final Judgment dismissing the Lawsuit with prejudice, after a hearing on the terms and conditions of the settlement, as well as the arguments in favor of and any objections to the settlement. The Parties, after seeking the advice of their respective counsel, believe that the proposed settlement is fair to and in the best interest of the Trust and its Unit Holders/beneficiaries in light of the probable validity/invalidity of the claims asserted, the delay, expense, and uncertainty of litigation, and the benefits of the terms of the settlement as compared to any ultimate judgment that might be obtained through the litigation of this matter. 5. Summary of the Proposed Settlement Terms. Subject to the express conditions precedent contained in the Final Settlement Agreement, the following payments will be made to the Trust: $13 million from Pioneer, $5 million from JPMorgan, and $1 million from Woodside. In addition, following the approval by the Court of the Final Settlement Agreement and the entry of the Agreed Final Judgment, the Trustee will complete the Trust liquidation process, in accordance with the Royalty Trust Indenture ( Trust Indenture ). As part of this process, the assets of the Partnership and the assets of Pioneer (as offered in its tender letter of October 10, 2008 available online as set forth below) will be offered for sale at a public auction. The Plaintiffs and Plaintiffs counsel will seek $6,250,000 for attorneys fees and approximately $2,500,000 in expenses. The actual amount awarded will be subject to Court approval. In accordance with the Court s orders and the terms of the Final Settlement Agreement, the Trustee will apply the settlement proceeds and proceeds from the public auction to pay attorneys fees and expenses as awarded by the Court, as well as costs related to the public auction and administration of the Trust, with the remainder to be distributed to the Unit Holders as of a future record date to be set by the Trustee and approved by the Court. Furthermore, Pioneer has agreed not to pursue any indemnity claim against the Trust or the Partnership which would have exceeded $5 million. Moreover, Pioneer has agreed to fund $1.6 million into escrow for the future plugging and abandonment of the interests it is contributing to the public auction relating to the A-39 Block. JPMorgan has also agreed, as part of the settlement, to forgive repayment of the existing $5 million loan provided to the Trust; however the Trustee may use the remaining balance of this loan as well as any other Trust income to pay Trust liabilities and expenses, in accordance with the Trust Indenture, prior to receipt of the proceeds from the settlement and the final distribution to the Unit Holders. The Final Settlement Agreement also provides that any disputes prior to the date of Final Distribution will be submitted to binding arbitration before Grant Cook as sole arbitrator, and that any disputes arising after the Final Distribution will be submitted to binding arbitration with a single arbitrator under the Commercial Arbitration Rules of the American Arbitration Association. To obtain a copy of the Final Settlement Agreement and related documents, please call or visit You are encouraged to obtain and review the Final Settlement Agreement, as this Notice provides only a brief summary of the details, and is qualified by the actual terms of the Final Settlement Agreement and its exhibits. 6. This Notice Does Not Constitute an Admission of Liability. The proposed settlement is a compromise of disputed claims between Plaintiffs and Defendants, and neither the - 3 -

4 settlement nor this Notice is an indication of liability or to be construed as an admission of any sort. 7. Settlement Is Conditioned on Court Approval. The proposed settlement is expressly conditioned on approval by the Court, with entry of an order that will be binding on all Unit Holders of the Trust, that specifically (1) approves the settlement, (2) finds that the settlement is fair to and in the best interest of the Trust and its Unit Holders/beneficiaries, and (3) dismisses the Lawsuit with prejudice as to all claims that were or could have been brought against any of the Parties directly or on behalf of the Trust. Furthermore, the proposed order would release the Parties from any liability to the Trust or the Trust s beneficiaries/unit Holders for any claims arising from their agreement to and performance of the Final Settlement Agreement. 8. You May Comment on or Object to the Proposed Final Settlement. As a Unit Holder of the Trust, you have the following options regarding the proposed final settlement: a. If you agree with the proposed final settlement, you need not do anything. On the Court s approval of the settlement and its entry of a final, non-appealable order, the Parties shall effectuate the terms of the settlement. b. If you oppose the proposed final settlement, you may appear and voice your opposition at the settlement hearing, or you may file a written objection, as described in Paragraph 9 of this Notice. 9. Settlement Hearing. A settlement hearing shall be held on June 18, 2009, at 9:00 a.m., before the Honorable Sharon McCally of the 334th Judicial District of Harris County, Harris County Civil Courthouse, 201 Caroline Street, 15th Floor, Houston, Texas The purpose of the settlement hearing shall be for the Court to determine whether the settlement should be approved as being in the best interests of the Trust and its Unit Holders/beneficiaries. Any comments to the proposed final settlement should be filed in writing with the Court by Friday, June 12, 2009, and served on Trustee s counsel, Andrews Kurth LLP, Waterway Plaza Two, Woodloch Forest Drive, Suite 200, The Woodlands, Texas 77380, Attn: Craig L. Stahl; Facsimile: (713) Notice of Planned Sale of Partnership Assets. In the event that the Court approves the Final Settlement Agreement as described in Paragraph 7 of this Notice, the Trustee will instruct Pioneer to offer the Partnership s assets for sale at a public auction. This proposed sale of Partnership assets is required by Section 3.02 of the Trust Indenture, which provides that the Trust shall liquidate if the total amount of cash per year received by the Trust falls below certain levels for each of three consecutive years. As a result of insufficient production on royalty properties nearing the end of their estimated productive lives, royalty income received by the Trust in 2002, 2003 and 2004 fell below the termination threshold set forth in the Trust Indenture. The proposed sale will include all of the oil and gas assets of the Partnership, including the Partnership s current interests in West Delta Block 61 and Brazos Block A-39. In addition to the oil and gas assets currently owned by the Partnership, Pioneer will include as part of the sale all of its interest in Brazos Block A-39. Pioneer has agreed that the net proceeds from the sale of these assets by Pioneer concurrent with the sale by the Partnership will also be paid to - 4 -

5 the Trust. The sale of the properties will be conducted via public auction through The Oil & Gas Asset Clearinghouse on or about July 8, The properties will be offered and sold by the Partnership and Pioneer on an as is basis to the highest cash bidder, subject to a potential right of first refusal option held by the Plaintiffs designee, MOSH, LLC, and additional terms, as more fully described in the Final Settlement Agreement. Plaintiffs represent that neither they nor their owners, officers, or affiliates have any ownership or interest, direct or indirect, in MOSH, LLC, which is an Oklahoma limited liability company. 11. Where to Direct Written Inquiries Regarding this Notice. Other than obtaining copies of the relevant documents as provided for in Paragraph 5 above, any inquiries concerning this Notice or the underlying Lawsuit should be made in writing to JPMorgan Chase Bank, N.A., as Trustee of the Mesa Offshore Trust, c/o Michael Ulrich, Vice President of The Bank of New York Mellon Trust Company, N.A., 919 Congress Avenue, Suite 500, Austin, Texas 78701, mike.ulrich@bnymellon.com. No inquiries should be directed to the Court