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Disputed dates: sworn testimony says Arkla-Arkoma deal signed day before Arkla's board voted.

Disputed Dates Sworn Testimony Says Arkla-Arkoma Deal Signed Day Before Arkla's Board Voted

On Dec. 31, 1982, Arkla Inc.'s board of directors held a specially-called meeting in Little Rock at 11 a.m. to sign what is popularly known as the Arkla-Arkoma deal. A deal with oilman Jerry Jones that would eventually cost the utility $174.8 million to escape.

At that meeting, the board thought it was approving the sale of 50 percent interest in 28,500 acres of undeveloped oil and gas leases in the Arkoma basin. Then-Arkla Chairman Sheffield Nelson had written the board a memo Dec. 29 saying the deal would be closed late Friday, if the board approved.

What Arkla's board didn't realize was the contract - which carried a clause saying it had board approval - had been signed Thursday, the day before in Arkla's Shreveport, La., offices at 5:45 p.m.

In a sworn deposition given last week to Springdale attorney Thomas A. Mars, Leonard E. Jordan, a member of Arkla's gas exploration team of the time, verified that the signing had taken place on December 30.

On that day, four Arkla representatives (Jordan, B.E. Harrell, C.C. Burgess, Robert Roberts III) and three Arkoma representatives (Mike McCoy, Jerrel W. Jones, John R. Robertson Jr.) gathered to sign the papers. A memo written Jan. 5, 1983, by Burgess for his files backs Jordan up. It reads: "The purpose of this meeting was to execute the Agreement between Arkla and Arkoma Production Company covering the sale of certain acreage in the Arkoma Basin along with development expenditure commitments and the gas dedication of a substantial acreage position in Arkansas and Oklahoma."

The memo says $3.75 million had already been delivered to Harrell by Jones and a note was signed for the balance of the payment during the meeting. After Harrell initialed the document, Jordan, Jones and Burgess signed. Jordan said he was against the deal and had requested Harrell initial it. The document was dated the next day, December 31.

Why Approve It Again?

The following day, Nelson gathered the board and asked their approval for a deal that had already been struck.

Harrell told the Arkansas Gazette March 30 that the memo was accurate, but added that the board could have backed out if they wanted to. He said most Arkla directors had already informally approved the deal.

In a further conflict, Nelson told the board in a Dec. 29, 1982, memo that the Arkla exploration and production team was "unanimous in their feelings that this is one of the best deals we have made." But that's not what Jordan told Mars in his sworn testimony last week.

Jordan testified he told Nelson he was opposed to the deal and that he could never remember another Arkla contract when the officers involved were not given a chance to study and approve a summary of the contract first.

PHOTO : SHEFFIELD NELSON: Asked the board for approval of deal that had already been struck.
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Title Annotation:Arkla Inc., Arkoma Production Co.
Author:Walker, Wythe, Jr.; Kern, David F.
Publication:Arkansas Business
Date:Apr 9, 1990
Previous Article:Arbor ordinance.
Next Article:Arkla's accuser.

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