Nielson-True Partnership, True Oil Company, Tax Matters Partner - Page 3

                                        - 3 -3                                        
                                  FINDINGS OF FACT3                                   
               On October 14, 1983, True Oil Co., the tax matters partner,            
          and Nielson Enterprises, Inc., a Delaware corporation, formed the           
          Nielson-True partnership.  The partnership's principal place of             
          business was Casper, Wyoming, at the time the petition was filed.           
          The primary objective of the partnership was to drill two wells             
          in the "J" Sand formation in the Wattenberg Field in northern               
          Colorado, a gas field covering parts of several counties,                   
          including Weld County, Colorado.  Wells were drilled in Weld                
          County, known as the Alvin Vonasek "B" well (the Vonasek well)              
          and the Castor Hanson True well (the Hanson well).  These wells             
          draw from the "J" Sand formation and produce only gas.                      
               The Federal Energy Regulatory Commission (FERC or the                  
          Commission) made an administrative determination that the "J"               
          Sand formation in the Wattenberg Field was a tight formation and            
          that the gas produced from that formation was tight formation               
          natural gas.4  The Commission's determination was pursuant to the           

               3 The parties' stipulated facts and exhibits are                       
          incorporated by this reference.                                             
               4  A "tight formation" is a sedimentary layer of rock                  
               cemented together in a manner that greatly hinders the                 
               flow of any gas through the rock.  Because such a                      
               formation is characterized by low permeability, wells                  
               drilled into gas-bearing formations of this kind                       
               usually produce at very low rates.  To stimulate                       
               production from these formations, producers must use                   
               expensive enhanced recovery techniques.  [Citation                     

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011