Phase 5 (Lois 2)
Dear Investor Partners,
We hope this message finds you well. In this update we will provide the latest news on the Seminole County legal case and evidence of the ASE 3's oil production, which has proven to be (as we were told verbally) producing between 150-200 Bopd.
Over the past 3-4 weeks we have received overwhelming support with regard to everyone rallying together, with a good portion of Phase 1-4 investors paying their share of the legal fund, and we still have money in-transit. We believe once all outstanding questions have been responded to by our attorneys the remaining funds will be transferred by these investor partners.
Our legal cases are building momentum and our legal team has been working relentlessly to ensure we have the absolute highest probability of winning the case and regaining control over Seminole County, which is now proven (based on the ASE 3 well) to be a very valuable asset indeed!
We have received a large volume of questions predominately from Phase 1-4 Investor Partners, yet we thought we would share some of them with Phases 5, 7 & 8. Here are the most commonly asked questions that were directed to our attorneys. Please see their responses below:
Attorney Q&A
What is the current status of the legal case and is it against both the oil collector/gatherer and MXP-Patman?
We are at the outset of discovery. We need to get a scheduling order entered. No, the only remaining defendants are MXP Operating and Rachel Patman.
What evidence does the legal team have currently?
We only have the materials which have been provided by the client. We also have some document production from MXP which will take some time to review. The documents from MXP have been provided to the client. MXP’s responses thus far have been cagey and of little help. We will probably need to go to the Court to get an order compelling their good-faith cooperation in discovery. It takes time to develop evidence. And we won’t even begin to take depositions in this case until we have the documents and communications we are seeking in discovery.
What is the likely outcome and timeframe of the case based on the current limited evidence?
This question is hard to answer. If we press them hard in discovery and get what we need, we might be able to file a motion for summary judgment relatively quickly, say, six months or so. I typically try to wait until the close of discovery to move for summary judgment because it hampers their ability to say that our motion should be overruled on the grounds that additional discovery is necessary. Since we do not even have a scheduling order entered, I cannot say for sure how long the Court will direct for discovery to last. I would probably press for a 6-8 month discovery window. Short of winning on summary judgment or settling, the case would need to be tried. I would expect it to take at least 18 to 24 months for us to get this to trial. After that, the loser might appeal which would take additional time.
What capacity is there to obtain additional evidence? And what evidence would be pursued?
“Discovery” is all about obtaining evidence. The evidence to be pursued are facts that support our claims and our defenses to MXP’s counterclaims.
Will there be subpoenas of Patman staff/Gather staff/truck drivers etc?
Maybe, that’s part of the discovery process.
Can we win this case?
We do not and cannot guarantee any particular outcome. However, we feel like you have a good basis for your claims. In particular, I think you have a strong case for removing MXP as an operator. Right now, it is impossible to predict where the evidence will lead. We are at the outset of discovery and these types of cases tend to have many twists and turns before final resolution.
Who legally owns the Seminole County Wells?
The working interest owners.
On what basis are the contractors relying that they can continue to operate, and even sell the production volumes from the well(s)? i.e. what are they basing their legal case on?
MXP can operate until they are removed as operators.
On what basis do the ASE legal advisors believe that ASE has a very strong case to take back control of the well(s)?
See our amended petition for the details. It is our understanding that you own a majority interest in the contract area. The JOA allows for the removal of the operator for good cause (gross negligence or willful misconduct or insolvency) upon the vote of the majority interest owners. Rachel Patman drafted the relevant contracts between her company, MXP, and your entities as her clients. This is a conflict of interest for an attorney to do and seems to be a good basis for arguing willful misconduct. Also, MXP had a default judgment against them which has resulted in a levy that potentially impacts you, as well as MXP’s ability to operate. This seems like a good basis for arguing gross negligence. It also may be evidence of MXP’s insolvency.
Here are the most commonly asked questions that were directed to ASE. Please our responses below:
Can we liaise directly with the legal team?
Due to the large number of investors involved in Phases 1, 2 & 3, it will not be possible to directly contact the attorneys, yet with that being said, we are happy to pass on questions to our legal team so that they can provide their responses. We have just received the responses back from the attorneys who have answered all of the legal questions.
Can an independent company be organised to inspect the ASE 3 well to see what pay zone MXP is taking oil from?
It is our intention to seek a 3rd party to confirm this when we regain control of the wells. Our strategy is to subpoena Deane Pierce & Wayne Beninger to disclose this information. Also the perforation company via discovery questions and through depositions.
Can you please provide evidence showing the ASE 3 well is producing 150 to 200 Bopd?
Chris (CEO) spoke to the purchaser (their accounts dept.) who on the call stated that 494 barrels were picked up between the 27th-29th of April and we now have a statement showing the total oil this company picked up in April. It is our belief that after ASE contacted the previous oil purchaser on the 25th of April and they immediately stopped buying the oil from MXP, then MXP contact the current purchaser who commenced picking up oil on the 27th of April. The statement shows a total of 853.08 barrels collected from the ASE 3 tank battery and 173.06 barrels from the ASE 2 well.
Who initiated the Lis Pendens and when was it executed?
Our Oklahoma attorneys (Mahaffey & Gore). The Lis pendens (in the District Court of Seminole County) were sealed by the County Clerk of Seminole County on the 9th of January 2023.
Does the Lis Pendens mean no oil/gas is to be taken from the asset?
Lis pendens refer to any pending lawsuit or to a specific situation with a public notice of litigation that has been recorded in the same location where
