Lani,As you state, this 3% overriding royalty was disclosed in...

Lani,

As you state, this 3% overriding royalty was disclosed in the annual accounts of Arturus in 2011. It was and is public knowledge.

Merchant Striker was a company set up by a director of Arturus. It appears it was solely set up to receive a 3% gross commission on any income generated from the Permian leases that GGP purchased. This 3% gross income has approximately a 9% effect on the net income or bottom line of the project after the Scottish Rite Hospitals 25%, state taxes of approx 6%, and operating and production costs. If you add the possibility of Petro Raider paying and then receiving 25% of the income, then the margin for profit becomes very thin if not uneconomic. Certainly what appears as a small 3% could add upto a significant percentage of the profit that is left. Now you may understand why the company is defending the claim. The time it takes for well payback is also greatly extended.

A company that provided services to Arturus to find oil leases such as the permian leases was left unpaid. It appears an Arturus director may have formed an entity with this company called Chalk Sea as a way of payment, or transferred the royalty to Chalk Sea.

The royalty was registered with the appropriate authority and is thus a lien over the lease income.

Management of GGP have chosen to challenge what appears a rightful lien over income generated from the leases. The cost of this would now be approaching one million dollars and now with a jury trial and what appears as low chance of winning will at least double. Due to what appears on face value to be a legitimate claim I believe GGP has chosen a Jury trial instead of a judgement from the presiding judge. Any loss would require GGP to also provide the royalty from income already generated plus Chalk Seas costs and the costs of the Jury.

As Nathanblack suggested two days ago, the project has been slowed down.

The questions that arise from this action are,
GGP signed off on an impaired asset at purchase and it appears did not disclose to the market this overriding royalty at the time of purchase or the capital raising that followed.
Frank Petruzzelli`s company MDB and Co charged the company $180,000 to do the due diligence on the Permain Purchase. Does GGP now have a legal obligation to have its costs of defending this action and the cost of the royalty,past and future, repaid by MDB& Co

It appears that Notification of this royalty was not disclosed to the market until a full 12 months after the company lodged its first defence against it. It was finally disclosed about the same time the GGP Investor Group made it public knowledge.

GGP received a certified delivered claim of this royalty approximately two weeks after it announced that the first well SRH1 had flowed 367 barrels a day and SRH2 appeared to be at least as good as SRH1.
It would be useful for all shareholders to retrace and read the company announcements from two weeks after the SRH1 flow test was announced.

The company was in the process of a capital raising when it received the royalty claim . It lodged a defence but appears never notified the market until approximately one year later.

The current court case which lukeben called `poop` is likely to have a material impact on the company. This is the first in a line of court cases.

I will leave it up to shareholders to decide if the project has been deliberately slowed down due to this royalty. Any claim should have appeared in the annual report as a potential liability in the least. The auditors also have to be questioned as do the directors that signed the annual accounts and also passed them.

I find it interesting that SRH 5 has been locked in with no recent announcements. The regular frequency that ALL other vertical wells have had production problems and irregular production. That the company has a current court case it has not informed the market about. That the two new replacement directors as of December 2012 have not made any comment to market or signed off on any public statement since taking up their positions.

I provide this information as my opinion only

DYO research.