Opinion ID: 456274
Heading Depth: 2
Heading Rank: 3

Heading: Value of the Oil Reserves

Text: 17 Plaintiffs contend that Frank knew prior to their investment that Nucorp had overstated the value of its heavy oil reserves in its South Texas fields. Nucorp announced the addition of nine million net barrels of proven and one hundred and twenty-five million net barrels of probable heavy oil reserves in South Texas in a February 1981 press release. In April 1982, Nucorp reclassified its oil reserves from proven to unproven in its 1981 annual financial statement because of high production costs and the decline in the price of oil. 18 Plaintiffs argue that Nucorp made misleading projections of the production time for the South Texas field. They rely principally on the February 1981 press release announcing the reserves and a confidential report prepared by the lead underwriter. Because the report was found in Frank's files, the plaintiffs argue that he knew about Nucorp's misleading projections. Plaintiffs admit that they would need additional discovery to establish the extent of Frank's knowledge of the value of the reserves. 19 We agree with the district court that plaintiffs failed to raise a triable issue on the materiality of the value of the oil reserves, and that they were afforded sufficient opportunities for discovery. Even with all inferences drawn in plaintiffs' favor, no evidence in the record shows that the defendants knew that the reserves were overstated prior to plaintiffs' investment.