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partnership, Wheeler advised petitioner that he needed blank
checks drawn on the partnership account to pay for oil field
services. Petitioner allowed Wheeler access to the requested
checks.
From April 1 to about May 1985, the partnership had spent
$250,000 to $300,000 in working over four or five oil wells, and
production had not increased. Wheeler approached petitioner
several times about acquiring a package of leases on "good-
producing wells" from Amoco Oil Co. (Amoco).
On July 31, 1985, the partnership was incorporated and
became Permian Energy Co. (PEC). Petitioner was the sole
shareholder of PEC. The members of PEC's board of directors were
petitioners and Cisneros.
On September 27, 1985, the board of directors of PEC
authorized and directed petitioner and Cisneros to borrow up to
$1,900,000 on behalf of PEC for the purpose of purchasing certain
oil and gas properties from Amoco. On October 1, 1985, PEC
borrowed $1,700,000 from InterFirst Bank Odessa, N.A.,3 (the
bank) to purchase those oil and gas properties from Amoco. PEC
and the bank executed a promissory note (the note) with an
original maturity date of October 24, 1986. Petitioner
guaranteed the note. After several extensions of the maturity
3 InterFirst Bank Odessa, N.A., subsequently became First
Republic Bank Odessa, N.A., then became NCNB Texas National Bank
of Odessa, Texas, and now is known as NationsBank.
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