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The Coburn report itself mentioned “Stonehurst Energy” once,
on the first page, in a typeface different from the remainder of
the report. In the same paragraph, the last sentence, which
claimed that a projection of the future net revenue of a notional
well drilled in Bartlesville Sand was included in the report, was
also in a typeface different from the rest of the report. The
report contained no projection of future revenue from a notional
well. It included only a “pro-forma” projection of production
from a notional well from 1980 to 1994. The typeface of the
address for Stonehurst on the cover letter signed by Coburn is
also different from the typeface of the rest of the letter.
f. The Meserve Firm Federal Tax Opinion Letter
The Meserve firm wrote a letter to Freemond, which was
reproduced in the Memorandum (“opinion letter”), expressing legal
opinions on various tax issues. The Meserve firm was counsel to
Craig, Wind River, and all their affiliates. The Meserve firm
was to receive an overriding royalty of an undisclosed percentage
of production as its fee for legal services. Additionally,
certain partners and associates of the Meserve firm purchased an
additional overriding royalty of “less than one half of one
percent.” The opinion letter asserted that, based upon the
Coburn report, Stonehurst had economic substance because the
economic projections showed that the:
oil and gas reserves expected to be produced are
adequate to fully pay any Minimum Annual Royalties
incurred and to return a profit to investors. The
Partnership therefore anticipates a profit independent
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