Official report to the House of Representatives of the 58th Legislature of Texas Page: 14 of 94

The money commenced flowing to this interest effective April 1, 1958,
following application to drill the Jacobs 2A Well which was filed December 3,
1957 by J. W. Baton. The application was notarized by H. M. Harrington, Jr.
Trust Oil Company was listed as operator of the lease. Drilling was completed
March 1, 1958 as a new well which potentialed 15. 24 barrels in 24 hours (a
marginal well). The drilling contractor was Gibson Drilling Company. The production
history of the lease was zero. Commencing with the completion of the
Jacobs 2A, the lease began to produce and by December was producing 2,000
barrels a month. The survey of that particular well run by Eastman Survey
Company on June 24, 1962 indicated the well had been deviated a maximum of
56-1/2 to a total depth of 5,177 feet and kicked horizontally a distance of 3,406
feet.
The money from the Jacobs Lease was deposited in the South Main State Bank
of Houston in an account opened by Haskell Carter and designated "Haskell Carter,
Trustee." The opening entry was $566.00, comprising the run checks from the first
four months of production in 1958 indicating that Murphy's pay-offs coincided with
the first production. He received checks monthly thereafter. The run checks increased
as lease production increased through the addition of wells No. 3, 4 and 5,
which were put on production schedule although they were dummy wells. The second
kicked well, No. 6, was completed December 21, 1958 by Gibson Drilling Company.
Coincidentally, on December 30, 1958, $5,000 was paid into the Haskell Carter
Account from Trust Oil Company.
August 1, 1958, Carter assigned the interest to W. O. Davis and August 25,
the Carter Account received $25,000 from Trust Oil Company. (Trust Oil Company
shows its agent to be E. B. Hearn, Sr., 303 Park Towers, Houston. He was never
located for service of subpoena.)
On April 6, 1960, $10,000 was deposited from W. O. Davis.
On March 12, 1961, $12,000 was deposited from W. 0. Davis.
On April 8, $660 was deposited from W. O. Davis.
Approximately $58,000 went into this account and $31,000 was paid out to
Margaret Murphy (wife of L. D. Murphy) and $23,000 to Robert V. Jobe. (Identified
as an alias for Murphy).
Although Murphy's annual salary was approximately $7,000, he deposited
$13,000 in the Citizens State Bank occupation--oil business. The signature card states "recommend by E. W.
Scates." A total of $26,500 went into this account. $20,000 was paid out of it to cash.

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