Dear Investor Partners,
We hope this update finds you well. The legal case is starting to build momentum as more investors' legal fund contributions have been received and passed through to our legal team.
Since the news regarding the MXP receivers, we did have a few more questions from investors which our attorneys have now addressed.
Please note, the subject of the following Q&A with our attorney is the new information regarding the MXP receiver.
Q1: What bearing does this have on our case and in your experience could this assist in expediting the legal process?
We intend to argue that the receivership evidence that MXP is deemed to have resigned as Operator. Article V(B)(3) of the JOA states: “If Operator becomes insolvent, bankrupt or is placed in receivership, it shall be deemed to have resigned without any action by the Non-Operators, except the selection of a successor.” We are working on a summary judgment brief to that effect.
Q2: Are there any other positives we can glean from current events, especially now that the receivers are in control of MXP and it will cut off their cash flow and hinder their ability to cover their mounting legal expenses?
We have no way of knowing whether MXP is actually funding their legal expenses. The harder we press them, however, the more legal expenses they will incur. But that works both ways. On one hand, MXP’s insolvency is a positive in that it sets the stage for our efforts to remove them as the operator; on the other hand, it likely reduces your ability to actually recover for any money judgment you may ultimately be awarded against them.
Q3: What will now happen with the oil & gas revenue currently being held in suspense, and will any oil purchasers (still picking up oil) now have to pay the courts the revenue?
We cannot say for sure whether other purchasers might pick up the oil. If ASE hears word that a new purchaser is doing so, it would be advisable to send them a letter placing them on notice as we did with the other purchasers.
We have now provided responses to all investor questions, so we kindly ask all investors in Phases 1-4 who have still not paid their contribution to do so as soon as possible.
Thank you for your continued support.
Sincerely,
The Alpha Seven Energy team
