TAX SHARING AGREEMENT

TAX SHARING AGREEMENT

TAX SHARING AGREEMENT (the “Agreement”), dated as of September 9, 2005, by and between Forest Oil Corporation, a New York corporation (“Forest”), SML Wellhead Corporation, a Delaware corporation (“Spinco”) and Mariner Energy, Inc., a Delaware corporation (“Mariner”).

W I T N E S S E T H

WHEREAS, Spinco is currently a member of the Forest Consolidated Group (as defined herein);

WHEREAS, pursuant to the Distribution Agreement entered into between Forest and Spinco dated September 9, 2005 (the “Distribution Agreement”), (a) Forest shall transfer or cause to be transferred to Spinco all of the Spinco Assets (as defined in the Distribution Agreement), as a result of which Spinco shall directly own the Spinco Business (as defined in the Distribution Agreement) (the “Contribution”) and (b) Forest shall distribute all of the outstanding capital stock of Spinco to its stockholders (the “Distribution”);

WHEREAS, pursuant to the Agreement and Plan of Merger entered into between Forest, Spinco, Mariner and MEI Sub, Inc., a Delaware corporation and a direct wholly-owned Subsidiary of Mariner (“Merger Sub”) dated September 9, 2005 (the “Merger Agreement”), Merger Sub shall merge with and into Spinco (the “Merger”);

WHEREAS, the parties intend that for United States federal income Tax purposes the Contribution, the Distribution and the Merger shall qualify as tax-free transactions pursuant to Sections 355 and 368(a) of the Code (as defined herein);

WHEREAS, the parties wish to (a) provide for the payment of Tax Liabilities and entitlement to refunds thereof, allocate responsibility for, and cooperation in, the filing of Tax Returns and provide for certain other matters relating to Taxes and (b) set forth certain covenants and indemnities relating to the preservation of the tax-free status of the Contribution, the Distribution and the Merger.

NOW, THEREFORE, in consideration of the mutual promises and undertakings contained herein and in any other document executed in connection with this Agreement, the parties agree as follows:

ARTICLE I

DEFINITIONS; CERTAIN OPERATING CONVENTIONS

1.1                                  For the purposes of this Agreement, the following terms shall have the meanings set forth below:

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Affiliated Group shall mean an affiliated group of corporations, within the meaning of Section 1504(a) of the Code, including the common parent corporation, and any member of such group.

Code shall mean the Internal Revenue Code of 1986, as amended.

Counsel means Weil, Gotshal & Manges LLP and Baker Botts L.L.P.

Distribution Date shall mean the date and time as of which the Distribution shall be effected.

Final Determination shall have the meaning given to the term “determination” by Section 1313 of the Code with respect to United States federal Tax matters; and with respect to foreign, state and local Tax matters Final Determination shall mean any final settlement with a relevant Tax Authority that does not provide a right to appeal or any final decision by a court with respect to which no timely appeal is pending and as to which the time for filing such appeal has expired.  For the avoidance of doubt, a Final Determination with respect to United States federal Tax matters shall include any formal or informal settlement entered into with the IRS with respect to which the taxpayer has no right to appeal.

Forest Consolidated Group shall mean the Affiliated Group of which Forest is the common parent corporation.

Forest Group shall mean, individually and collectively, as the case may be, each member of the Forest Consolidated Group, other than Spinco.

Indemnifying Party shall mean any Person from which an Indemnified Party is seeking indemnification pursuant to the provisions of this Agreement.

Indemnified Party shall mean any Person which is seeking indemnification from an Indemnifying Party pursuant to the provisions of this Agreement.

IRS shall mean the United States Internal Revenue Service.

Merger Opinions shall mean the opinions of Counsel with respect to certain Tax aspects of the Merger.

Person shall mean and includes any individual, corporation, company, association, partnership, joint venture, limited liability company, joint stock company, trust, unincorporated organization, or other entity.

Post-Distribution Taxable Period shall mean a taxable period or portion thereof that begins after the Distribution Date.

Pre-Distribution Taxable Period shall mean a taxable period or portion thereof that ends on or before the Distribution Date.

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Spinco Group shall mean, individually and collectively, as the case may be, Spinco and its present and future direct and indirect Subsidiaries.

Spin-Off Opinion shall mean the opinion of Weil, Gotshal & Manges LLP with respect to certain Tax aspects of the Contribution and the Distribution.

Straddle Period shall mean a taxable period that includes, but does not end on, the Distribution Date.

Tax or Taxes shall mean all taxes, charges, fees, imposts, levies or other assessments, including all net income, gross receipts, capital, sales, use, gains, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, custom duties, fees, assessments and charges of any kind whatsoever, together with any interest and any penalties, fines, additions to tax or additional amounts imposed by any Tax Authority and shall include any transferee liability in respect of Taxes.

Tax Authority shall mean the IRS and any other domestic or foreign governmental authority responsible for the administration and collection of Taxes.

Tax Benefit shall mean a reduction in the Tax Liability (or increase in refund or credit or any item of deduction or expense) of a taxpayer (or of the Affiliated Group of which it is a member) for any taxable period.  Except as otherwise provided in this Agreement, a Tax Benefit shall be deemed to have been realized or received from a Tax Item in a taxable period only if and to the extent that the Tax Liability of the taxpayer (or of the Affiliated Group of which it is a member) for such period, after taking into account the effect of the Tax Item on the Tax Liability of such taxpayer in the current period and all prior periods, is less than it would have been had such Tax Liability been determined without regard to such Tax Item.

Tax Detriment shall mean an increase in the Tax Liability (or reduction in refund or credit or item of deduction or expense) of a taxpayer (or of the Affiliated Group of which it is a member) for any taxable period.  Except as otherwise provided in this Agreement, a Tax Detriment shall be deemed to have been realized or received from a Tax Item in a taxable period only if and to the extent that the Tax Liability of the taxpayer (or of the Affiliated Group of which it is a member) for such period, after taking into account the effect of the Tax Item on the Tax Liability of such taxpayer in the current period and all prior periods, is more than it would have been had such Tax Liability been determined without regard to such Tax Item.

Tax Item shall mean any item of income, gain, loss, deduction, expense or credit, or other attribute that may have the effect of increasing or decreasing any Tax.

Tax Liabilities shall mean all liabilities for Taxes.

Tax Returns shall mean all reports, returns, declaration forms and statements (including amendments thereto) filed or required to be filed with respect to Taxes, and any attachments thereto.

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Transaction Taxes shall mean (i) any Tax or Tax Detriment (without regard to the second sentence in the definition thereof and applying a 38% rate) resulting from any income or gain recognized by Forest, Spinco or their Affiliates as a result of the Contribution or the Distribution failing to qualify for tax-free treatment under Sections 355 and 368 and related provisions of the Code or corresponding provisions of other applicable Tax laws and (ii) any Tax resulting from any income or gain recognized by Forest or its Affiliates under Treasury Regulation Sections 1.1502-13 or 1.1502-19 (or any corresponding provisions of other applicable Tax laws) as a result of the Contribution or the Distribution.

Treasury Regulations shall mean the regulations under the Code promulgated by the United States Department of the Treasury.

1.2                                  Other Definitional Provisions .  (a) Capitalized terms not otherwise defined in this Agreement shall have the meaning ascribed to them in the Distribution Agreement.

(b)                                  The words “hereof, “herein”, and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

(c)                                   The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa.

1.3                                  Termination of Taxable Years .  For federal income Tax purposes, the taxable year of Spinco shall end as of the close of the Distribution Date.  Forest, Spinco and their respective Affiliates shall, unless prohibited by applicable law, take all action necessary or appropriate to close the taxable year of Spinco for all other Tax purposes as of the close of the Distribution Date.

ARTICLE II

ALLOCATION; PAYMENT AND INDEMNIFICATION

2.1                                  Responsibility for Taxes; Indemnification .  (a) Forest shall indemnify and hold harmless each of Spinco, Mariner and their respective Affiliates for all Tax Liabilities (and any loss, cost, damage or expense, including reasonable attorneys’ fees and costs, incurred in connection therewith) attributable to (i) any Taxes (or the non-payment thereof) of Spinco or attributable to the Spinco Business for all Pre-Distribution Taxable Periods and for the Pre-Distribution Tax Period portion (determined pursuant to Section 2.2) of any Straddle Period Taxes; (ii) any Taxes of Forest or any member of the Forest Consolidated Group imposed upon Spinco by reason of Spinco being severally liable for such Taxes pursuant to Treasury Regulation Section 1.1502-6 or any analogous provision of state or local law; (iii) all Transaction Taxes, except as otherwise specifically provided in Section 2.1(b)(iii); (iv) its portion of any Transfer Taxes determined pursuant to Section 2.4; (v) any Taxes of Spinco, Mariner or their Affiliates resulting from the breach of any obligation or covenant of Forest under this Agreement; and (vi) any Taxes of Forest or the Forest Group for any Post-Distribution Taxable Period.

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(b)                                  Spinco and Mariner, jointly and severally, shall indemnify and hold harmless each of Forest and its Affiliates for all Tax Liabilities (and any loss, cost, damage or expense, including reasonable attorneys’ fees and costs, incurred in connection therewith) attributable to (i) any Taxes of Spinco or the Spinco Group for any Post-Distribution Taxable Period other than Taxes described in Section 2.1(a); (ii) any Taxes of Forest or its Affiliates resulting from the breach of any obligation or covenant of Spinco or Mariner under this Agreement; (iii) Transaction Taxes, but only to the extent such Transaction Taxes arise from (w) a breach by Spinco, Mariner or any of their respective Affiliates of the representations or covenants under Article III, (x) a Disqualifying Action of Spinco, Mariner or any of their respective Affiliates, (y) the inaccuracy of any factual statements or representations made by Mariner or Spinco in its representations letters to Counsel and (z) an action taken by Spinco, Mariner or any of their respective Affiliates which is not required or permitted by the Merger Agreement and which causes the Contribution, the Distribution or the Merger to be taxable; (iv) Mariner’s or Spinco’s portion of any Transfer Taxes determined pursuant to Section 2.4; and (v) any Taxes of Mariner and its Subsidiaries other than Taxes described in Section 2.1(a).

(c)                                   If the Indemnifying Party is required to indemnify the Indemnified Party pursuant to this Article II, the Indemnified Party shall submit its calculations of the amount required to be paid pursuant to this Article II, showing such calculations in sufficient detail so as to permit the Indemnifying Party to understand the calculations.  Subject to the following two sentences, the Indemnifying Party shall pay to the Indemnified Party, no later than ten (10) business days after the Indemnifying Party receives the Indemnified Party’s calculations, the amount that the Indemnifying Party is required to pay the Indemnified Party under this Article II.  If the Indemnifying Party disagrees with such calculations, it must notify the Indemnified Party of its disagreement in writing within thirty (30) business days of receiving such calculations.

(d)                                  Any claim under this Article II with respect to a Tax Liability must be made no later than thirty (30) days after the expiration of the applicable statute of limitations for assessment of such Tax Liability.

(e)                                   For all Tax purposes, the Forest Group and the Spinco Group agree to treat (i) any payment required by this Agreement as either a contribution by Forest to Spinco or a distribution by Spinco to Forest, as the case may be, occurring immediately prior to the Distribution and (ii) any payment of interest or non-federal Taxes by or to a Tax Authority as taxable or deductible, as the case may be, to the party entitled under this Agreement to retain such payment or required under this Agreement to make such payment, in either case except as otherwise mandated by applicable law or by a Final Determination.

(f)                                     The amount of any indemnification payment with respect to any Tax Liability shall be reduced by any current Tax Benefits actually realized by the Indemnified Party in respect of such Tax Liability by the end of the taxable year in which the indemnity payment is made.  The calculation of such Tax Benefit shall be included in the calculation required to be submitted pursuant to Section 2.1(c).  If, notwithstanding the treatment required by Section 2.1(e), any indemnification payment hereunder is determined to be taxable to the Indemnified Party by any Tax Authority, the indemnity payment payable by the Indemnifying Party shall be increased as necessary to ensure that, after all required Taxes on the indemnity payment are paid (including Taxes applicable to any increases in the indemnity payment under this Section 2.1(f)),

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the Indemnified Party receives the amount it would have received if the indemnity payment was not taxable.

2.2                                  Straddle Periods .  In the case of any Straddle Period, the amount of any Taxes based on or measured by income or receipts of Spinco for the Pre-Distribution Taxable Period shall be determined based on an interim closing of the books as of the close of business on the Distribution Date and the amount of other Taxes of Spinco for a Straddle Period which relate to the Pre-Distribution Taxable Period shall be deemed to be the amount of such Tax for the entire taxable period in which the Straddle Period occurs multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the Distribution Date and the denominator of which is the total number of days in the Straddle Period.  If the Distribution Date is not the last day of a month, the closing of the books computation shall be performed as if the Distribution Date did occur on the last day of such month and the computation shall be adjusted on a pro rata basis to reflect the number of days of such month between the Distribution Date and the last day of the month.

2.3                                  Preparation of Tax Returns .  (a) Forest shall prepare or cause to be prepared, and shall file or cause to be filed, all Tax Returns of Spinco for any Pre-Distribution Taxable Period (other than a Straddle Period).

(b)                                  Spinco shall prepare or cause to be prepared and file or cause to be filed all Tax Returns of Spinco for any Straddle Period (each a “Straddle Period Return”) on a basis consistent with the past practice of Forest with respect to the Spinco Business, except that Spinco may complete such Straddle Period Return in a manner that is not consistent with past practice if such Straddle Period Return preparation is allowed by law and such Straddle Period Return preparation does not adversely affect the Tax Liability of Forest or any of its Affiliates.  If the Straddle Period Return reflects Taxes attributable to the Pre-Distribution Taxable Period, Spinco shall provide a copy of each such Straddle Period Return together with a computation of the pre-Distribution Taxes reflected in such Straddle Period Return (such computation, the “Statement”) to Forest for its review and comment not later than 30 days prior to the deadline for filing each such Straddle Period Return.  Forest shall provide comments, if any, to Spinco at least 15 days prior to the deadline for filing such Straddle Period Return (the “15-Day Review Period”).  Forest’s failure to notify Spinco of any disagreement prior to the end of the 15-Day Review Period shall indicate its concurrence with such Straddle Period Return and Statement.  If Forest disagrees with the allocation in such Straddle Period Return and Statement, Forest shall notify Spinco in writing of such disagreement prior to the close of the 15-Day Review Period, and Forest and Spinco shall consult and attempt to resolve in good faith the disagreement.

(c)                                   Unless otherwise required by a Tax Authority, the parties hereby agree to prepare and file all Tax Returns, and to take all other actions, in a manner consistent with this Agreement.  All Tax Returns shall be filed on a timely basis (taking into account applicable extensions) by the party responsible for filing such returns under this Agreement.

(d)                                  The party responsible for filing a Tax Return under this Section 2.3 is also responsible for paying to the relevant Tax Authority the amount of Tax Liability reflected on such Tax Return, subject to any indemnification rights it may have against the other party.

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2.4                                  Payment of Sales, Use or Similar Taxes .  All sales, use, transfer, real property transfer, intangible, recordation, registration, documentary, stamp or similar Taxes (“Transfer Taxes”), (i) applicable to, or resulting from, the Contribution and the Distribution, to the extent of $200,000, shall be borne equally by Forest on the one hand and Mariner and Spinco, jointly and severally, on the other, and any such Transfer Taxes in excess of $200,000 shall be borne solely by Forest, and (ii) applicable to, or resulting from, the Merger, to the extent of $200,000, shall be borne equally by Forest on the one hand and Mariner and Spinco, jointly and severally, on the other, and any such Transfer Taxes in excess of $200,000 shall be borne solely by Mariner and Spinco, jointly and severally .   Notwithstanding anything in Section 2.3 to the contrary, the party required by applicable law shall remit payment for any Transfer Taxes and duly and timely file such Tax Returns, subject to any indemnification rights it may have against the other party, which shall be paid in accordance with Section 2.1(c).  Spinco, Mariner, Forest and their respective Affiliates shall cooperate in (i) determining the amount of such Taxes, (ii) providing all requisite exemption certificates and (iii) preparing and timely filing any and all required Tax Returns for or with respect to such Taxes with any and all appropriate Tax Authorities.

2.5                                  Audits and Proceedings .

(a)                                   Notwithstanding any other provisions hereof, if after the Distribution Date, an Indemnified Party or any of its Affiliates receives any notice, letter, correspondence, claim or decree from any Tax Authority (a “Tax Notice”) and, upon receipt of such Tax Notice, believes it has suffered or potentially could suffer any Tax Liability for which it is indemnified, the Indemnified Party shall promptly deliver such Tax Notice to the Indemnifying Party; provided , however , that the failure of the Indemnified Party to provide the Tax Notice to the Indemnifying Party shall not affect the indemnification rights of the Indemnified Party pursuant to this Article II, except to the extent that the Indemnifying Party is more than insignificantly prejudiced by the Indemnified Party’s failure to deliver such Tax Notice.  The Indemnifying Party shall have the right to handle, defend, conduct and control, at its own expense, any Tax audit or other proceeding that relates to such Tax Notice (except to the extent that such Tax Notice, Tax audit or other proceeding r