Replies to post #8162 on Mesa Offshore Trust (fka MOSH)

[GO MOSH]

interested_observer, you ask, "The other question in my mind was ORR's are usually in 1/8 or 12.5%. 1/2 of 12.5% is 6.25% and our ORR is 4.8%, so it looks like we came up short. If I am missing something, I don't see how I figured wrong."

When pxd did the farmout, their illegal Farmout Agreement calculations with Woodside were explained in detail in the plaintiff's First Amended Original Petition filed 11/28/2005, beginning with item #28 on page 8, and again in their Second Amended Original Petition. The ORRI's assigned to our Trust were 5% before payout of E&D expenses and 6.25% after payout. The missing link in your calculations of our Trust's net revenue interest (NRI) is the 1/6 federal royalty (.1667). So then, .833 (reciprocal of the 1/6 MMS royalty) X .05 pre-payout = 4.165%, and 5.2% post-payout.

Based on a reading of the court filings (from memory), the core claim of the lawsuit laid out by the plaintiffs, is that pxd maintained its pre-farmout 50% gross interest in Midway at the expense of our Trust, and remained as OPERATOR in a non-arm's length CONTROLLING position. The framers of our Trust expressly prohibited farmouts of our Trust properties to our operator, or affiliates of our operator, to prevent operator abuse of our Trust. Why did the framers do that?????
Their reasoning was pretty obvious when you see what happened here when that rule was violated.

Plaintiff filings show that pxd's own internal geophysicists presented to Woodside, a scenario for Midway that there was 30%+ chance of encountering at least a billion dollars worth of gas on that first well; so why didn't pxd front the then- estimated $20 million drilling costs for our Trust ($10 million net to our Trust's then 50% WI? Afterall, our W.Delta 61 wells alone would have repaid our share of the possible Midway dry hole expenses in a matter of just a few months. So, pxd has been lying when they maintain that they did the illegal farmout to protect us from possible bankruptcy if they got a duster on Midway.

Pure and simple greed at our expense, and now they, Woodside, and jpm are going to have to "pay the piper".