- 20 -
compounded annually. After that, principal was amortized
over 11 years and was payable annually with interest.
At the time the Settlement Agreement was executed, the
total estimated recoverable reserves of natural gas from
the wells subject to the Contract exceeded the amount
necessary to recoup the $1,850,000 payment. During 1988,
Arkla recouped $19,501.54 of the settlement payment from
deliveries of natural gas by Malibu, pursuant to paragraph
2 of the Settlement Agreement, resulting in an unrecouped
balance of the settlement payment of $1,830,498.46 as of
the end of 1988. Malibu treated this amount as a liability
and reported it on the line designated "Mortgages, notes,
bonds payable in 1 year or more" on the balance sheet that
is attached as Schedule L to Malibu's 1988 income tax
return on Form 1120S, U.S. Income Tax Return for an S
Corporation. As of June 1990, the unrecouped balance of
the settlement payment was $1,797,175.15, and as of
March 31, 1994, the unrecouped balance was $1,627,241.23.
The amounts reported on Malibu's 1988 income tax
return are summarized as follows:
Gross receipts or sales $24,914
Cost of goods sold
and/or operations 2,945
Gross profit $21,969
Depreciation 3,204
Dryhole costs 53,000
Legal and professional 1,882
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011