Estate of H.A. True, Jr. - Page 65




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          Montana).  Dave True was also a pioneer in the successful use of            
          water flooding to increase recoverable reserves.                            
              Dave True believed that the only way to perpetuate his                  
          business would be to find and develop replacement reserves and              
          that doing so would require substantial exploration and                     
          development outlays.  True Oil expended considerable funds                  
          without generating substantial additional production.  From 1972            
          to 1998, True Oil spent approximately $174 million on exploration           
          and drilling costs that resulted in dry holes.6  Dave True’s                
          continuing commitment to exploration for new reserves, and his              
          aversion to incurring outside debt, required the partners to                
          channel their profits from True Drilling and other True companies           
          into True Oil in order to finance continued exploration                     
          activities.                                                                 
              Effective August 1, 1973, Dave True gave each of his                    
          children 8-percent general partnership interests in True Oil and            
          True Drilling.  The owners and ownership percentages immediately            
          after the gifts were:  Dave True (63 percent), Jean True (5                 
          percent), and each of the four True children (8 percent).                   
                   4.  Belle Fourche Pipeline Co.                                     
              In 1957, Dave True and other Wyoming operators organized                
          Belle Fourche Pipeline Co. (Belle Fourche) as a Wyoming                     

               6True Oil’s total intangible drilling costs from 1972                  
          through 1998 were $301,016,235, which included costs of drilling            
          on proven properties, developmental drilling, and exploratory               
          drilling.  Fifty-eight percent of total intangible drilling costs           
          (approximately $174 million) were spent on nonproductive wells.             




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