Replies to post #77 on LL&E Royalty Trust (fka LRTR)

[LLnEorBust]

They have an obligation (per the trust agreement, revised by a Mehta-initiated proxy when he took over) to report financials to holders of valid trust certificates. Did the letter disclose any numbers? This is really fishy. I suspect the settlement figure is in the $20-40mm range based on the (rational parts of) the damage models disclosed in various exhibits, and some commentary in other exhibits around historical settlement discussions. Quantum was simply making up the future capex numbers, they virtually admitted to it in one of their pleadings ("the Trust is inventing contract language where it doesn't exist! There's no requirement that the estimation of future costs be reasonable or prudent!"). It was decades of pure, unadulterated fraud initiated by the most sophisticated oil & gas investment firm on the planet, given a free pass by Conoco, one of the largest oil companies on the planet. You don't settle after two weeks of jury trial because you're expecting a good outcome. (The Trust wasn't in a perfect position either: they likely didn't want to risk a reversal-dismissal of a big verdict on appeal, having already lost the 'capacity' argument twice before the Court of Appeals but in a non-dispositive way relating to a TRO).

Many comments ago I warned about the possibility of CITG / Mehta simply claiming the litigation costs leaves no net proceeds left. That's bullshit, for a few reasons. First of all, they had a solid case on the factual merits of the fraudulent accounting, and would not have settled on the eve of a verdict after 9 years if they were going to lose money on it. This was a complex case and it's not clear to me whether John Kim was on contingency or fees. There was something like 80 GB of discovery and a number of experts to depose... but even so, the UBS presentation on Jay that surfaced (they tried selling the field in 2021) says Maverick was spending $200,000-$300,000 on the case. And they were definitely using a more expensive firm with a lot more attorneys involved. The action picked up before the trial, of course, but all-in I can't imagine it was more than ~$5 million for the Trust's legal costs, including experts and so on.

So I'd definitely want to see some support for their contention it was all for nothing. (Mr Holty, I'll shoot you an email).

[LLnEorBust]

They have an obligation (per the trust agreement, revised by a Mehta-initiated proxy when he took over) to report financials to holders of valid trust certificates. Did the letter disclose any numbers? This is really fishy. I suspect the settlement figure is in the $20-40mm range based on the (rational parts of) the damage models disclosed in various exhibits, and some commentary in other exhibits around historical settlement discussions. Quantum was simply making up the future capex numbers, they virtually admitted to it in one of their pleadings ("the Trust is inventing contract language where it doesn't exist! There's no requirement that the estimation of future costs be reasonable or prudent!"). It was decades of pure, unadulterated fraud initiated by the most sophisticated oil & gas investment firm on the planet, given a free pass by Conoco, one of the largest oil companies on the planet. You don't settle after two weeks of jury trial because you're expecting a good outcome. (The Trust wasn't in a perfect position either: they likely didn't want to risk a reversal-dismissal of a big verdict on appeal, having already lost the 'capacity' argument twice before the Court of Appeals but in a non-dispositive way relating to a TRO).

Many comments ago I warned about the possibility of CITG / Mehta simply claiming the litigation costs leaves no net proceeds left. That's bullshit, for a few reasons. First of all, they had a solid case on the factual merits of the fraudulent accounting, and would not have settled on the eve of a verdict after 9 years if they were going to lose money on it. This was a complex case and it's not clear to me whether John Kim was on contingency or fees. There was something like 80 GB of discovery and a number of experts to depose... but even so, the UBS presentation on Jay that surfaced (they tried selling the field in 2021) says Maverick was spending $200,000-$300,000 on the case. And they were definitely using a more expensive firm with a lot more attorneys involved. The action picked up before the trial, of course, but all-in I can't imagine it was more than ~$5 million for the Trust's legal costs, including experts and so on.

So I'd definitely want to see some support for their contention it was all for nothing. (Mr Holty, I'll shoot you an email).