EXHIBIT 8
AKIN GUMP STRAUSS HAUER & FELD LLP
Attorneys at Law
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4618
(214)969-2800/fax: (214)969-4343
www.akingump.com
February 5, 2004
Westport Resources Corporation
1670 Broadway
Suite 2800
Denver, Colorado 80202-4800
Re: Registration Statement on Form S-4, File No. 333-105834
Ladies and Gentlemen:
Akin Gump Strauss Hauer & Feld LLP, a registered limited liability
partnership organized under the laws of the State of Texas, has acted as counsel
to Westport Resources Corporation, a Nevada corporation (the "COMPANY"), in
connection with the registration, pursuant to a registration statement on Form
S-4 (as may be amended from time to time, the "REGISTRATION STATEMENT"), filed
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "ACT"), of (i) the proposed offer by the Company to exchange (the
"EXCHANGE OFFER") up to $125,000,000 of its 8 1/4% Senior Subordinated Notes Due
2011 issued in a private offering on April 3, 2003 (the "OLD NOTES") for an
equal principal amount of its 8 1/4% Senior Subordinated Notes Due 2011 to be
registered under the Act (the "EXCHANGE NOTES").
For purposes of this opinion letter, a "United States Holder" is a
beneficial owner of the Exchange Notes who, for United States Federal income tax
purposes, is:
o an individual who is a citizen or resident of the
United States;
o a corporation or another entity taxable as a
corporation created or organized in or under the laws
of the United States or any political subdivision
thereof or therein;
o an estate if its income is subject to United States
Federal income taxation regardless of its source;
o a trust if (1) a United States court can exercise
primary supervision over its administration and (2)
one or more United States persons have the authority
to control all of its substantial decisions; or
AKIN GUMP STRAUSS HAUER & FELD LLP
Attorneys at Law
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4618
(214) 969-2800/fax: (214) 969-4343
www.akingump.com
Westport Resources Corporation
February 5, 2004
Page 2
o specified electing trusts that were in existence on
August 20, 1996 and treated as domestic trusts on
that date.
A "Foreign Holder" is a beneficial owner of the Exchange Notes other than a
United States Holder. Terms not defined herein shall have the meaning assigned
to them in the Registration Statement.
In rendering our opinion, we have examined the Registration Statement
and such other documents, agreements, and instruments as we have deemed
necessary or appropriate and have made such legal and factual inquiries as we
have deemed necessary as a basis for our opinion set forth below. We have
assumed, without making any independent investigation, that all documents as
furnished to us are complete and authentic, that the signatures on all documents
are genuine, that all such documents have been, or in the case of drafts, will
be, duly authorized, executed and delivered, and the legal capacity of all
natural persons. We have further assumed that the Exchange Offer, and any
transactions related thereto, will be consummated in the manner described in the
Registration Statement (including satisfaction of all covenants and conditions
to the obligations of the parties without amendment or waiver thereof); all
reporting obligations with respect to the Exchange Offer required under the
Internal Revenue Code of 1986, as amended (the "CODE") and the applicable
Treasury Regulations currently promulgated under the Code (the "REGULATIONS")
will be complied with; and all documents and instruments referred to in the
Registration Statement are valid and binding in accordance with their terms. We
are also relying on the truth and accuracy at all relevant times of the
statements and representations contained in the Registration Statement.
In connection with this opinion letter, we have made no special
investigation or review of any laws, regulations or judicial or administrative
decisions, other than a review of the current provisions of the Code, applicable
Regulations, and current judicial and administrative authority (including
published revenue rulings and revenue procedures) with respect thereto
(collectively referred to as the "TAX LAW"). We have made no investigation or
review of any matters relating to the Company or any other person other than as
expressly set forth herein.
Based upon the foregoing and subject to the assumptions, exceptions,
qualifications and limitations set forth hereinafter, we are of the opinion that
the following accurately describes the material United States Federal income tax
consequences of the Exchange Offer to the holders described therein and of the
ownership and disposition of the Exchange Notes:
1. Interest paid or payable on an Exchange Note will be taxable to a
United States Holder as ordinary income, generally at the time it is received or
accrued, in accordance with such holder's regular method of accounting for
United States Federal income tax purposes.
AKIN GUMP STRAUSS HAUER & FELD LLP
Attorneys at Law
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4618
(214) 969-2800/fax: (214) 969-4343
www.akingump.com
Westport Resources Corporation
February 5, 2004
Page 3
2. The exchange of Old Notes for Exchange Notes in the exchange offer
will constitute a tax-free recapitalization for United States Holders.
Consequently, a United States Holder will not recognize gain or loss on the
exchange, the holding period of the Exchange Note will include the holding
period of the Old Note, and the basis of the Exchange Note will be the same as
the basis of the Old Note immediately before the exchange. If a United States
Holder receives additional interest, we believe it should be treated in the same
manner as regular interest on the Exchange Notes. However, the United States
Holder might instead be required to report it as income when it accrues or
becomes fixed, even if the United States Holder is a cash method taxpayer.
3. The holding and disposition of Exchange Notes may be affected by the
market discount provisions of the Code. These rules generally provide that if a
United States Holder purchases a debt instrument at a market discount and
thereafter recognizes gain on a disposition of the debt instrument, including
payment on maturity, the lesser of such gain and the portion of the market
discount that accrued while the debt instrument was held by such United States
Holder will be treated as ordinary interest income at the time of the
disposition. For this purpose, a purchase at a market discount includes a
purchase after original issuance at a price below the debt instrument's stated
principal amount. The market discount rules also provide that a United States
Holder who acquires a debt instrument at a market discount and who does not
elect to include such market discount in income on a current basis may be
required to defer a portion of any interest expense that may otherwise be
deductible on any indebtedness incurred or maintained to purchase or carry such
debt instrument until the United States Holder disposes of the debt instrument
in a taxable transaction. A United States Holder of a debt instrument acquired
at a market discount may elect to include the market discount in income as the
discount thereon accrues, either on a straight-line basis or, if elected, on a
constant interest rate basis. The current inclusion election, once made, applies
to all market discount obligations acquired by such United States Holder on or
after the first day of the first taxable year to which the election applies and
may not be revoked without the consent of the IRS. If a United States Holder
elects to include market discount in income in accordance with the preceding
sentence, the foregoing rules with respect to the recognition of ordinary income
on a disposition of the Exchange Note and the deferral of interest deductions on
indebtedness related to the Exchange Note would not apply.
4. Generally, if the tax basis of an obligation held as a capital asset
exceeds the amount payable at maturity of the obligation, such excess may
constitute amortizable bond premium that the United States Holder may elect to
amortize under the constant interest rate method and deduct the amortized
premium over the period from the United States Holder's acquisition date to the
obligation's maturity date. A United States Holder who elects to amortize bond
premium must reduce the tax basis in the related obligation by the amount of the
aggregate
AKIN GUMP STRAUSS HAUER & FELD LLP
Attorneys at Law
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4618
(214) 969-2800/fax: (214) 969-4343
www.akingump.com
Westport Resources Corporation
February 5, 2004
Page 4
deductions allowable for amortizable bond premium. The amortizable bond premium
deduction is treated as an offset to interest income on the related note for
Federal income tax purposes. The election to amortize bond premium, once made,
applies to all taxable bonds owned by such United States Holder during or after
the first taxable year to which the election applies and may not be revoked
without the consent of the IRS.
5. Upon the sale, exchange, redemption, retirement at maturity or other
disposition of an Exchange Note, a United States Holder generally will recognize
taxable gain or loss equal to the difference between the sum of cash plus the
fair market value of all non-cash property received on such disposition (except
to the extent such cash or property is attributable to accrued, but unpaid,
interest, which will be taxable as ordinary income) and such United States
Holder's adjusted tax basis in the Exchange Note. A United States Holder's
adjusted tax basis in an Exchange Note generally will equal the cost of the Old
Note to such United States Holder, increased by any market discount previously
included in income and decreased by any amortizable bond premium deducted over
the term of the Exchange Note. Subject to market discount and amortizable bond
premium rules above, gain or loss recognized on the disposition of an Exchange
Note will be long-term capital gain or loss if, at the time of such disposition,
the United States Holder's holding period for the note is more than one year.
Long-term capital gain realized by individual taxpayers is generally taxable at
a maximum rate of 15 percent. The deductibility of capital losses is subject to
limitations.
6. Backup withholding and information reporting requirements may apply
to payments made with respect to the Exchange Notes. The Company, its agent, or
a broker, as the case may be, will be required to withhold from any payment that
is subject to backup withholding United States Federal income tax a portion of
such payment not to exceed 28% (31% beginning January 1, 2011), if a United
States Holder fails to furnish its taxpayer identification number (social
security or employer identification number) or otherwise fails to comply with
the applicable requirements of the backup withholding rules. Corporations and
certain other entities are generally exempt from the backup withholding and
information reporting requirements. Generally, income on the notes will be
reported to non-exempt United States Holders on an applicable Internal Revenue
Service Form 1099. Any amounts withheld under the backup withholding rules from
a payment to a United States Holder will be allowed as a credit against such
United States Holder's United States Federal income tax liability and may
entitle the United States Holder to a refund, provided that the required
information is furnished to the Internal Revenue Service by the United States
Holder in a timely manner.
7. Payments of interest to a Foreign Holder that are not effectively
connected to the conduct of a United States trade or business will generally not
be subject to United States Federal income tax, or the withholding thereof,
provided the Foreign Holder:
AKIN GUMP STRAUSS HAUER & FELD LLP
Attorneys at Law
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4618
(214) 969-2800/fax: (214) 969-4343
www.akingump.com
Westport Resources Corporation
February 5, 2004
Page 5
o does not own (directly or indirectly, actually or
constructively) 10% or more of the total combined
voting power of all classes of the Company's capital
stock entitled to vote;
o is not a controlled foreign corporation that is
related to the Company through stock ownership; and
o is not a bank receiving interest described in section
881(c)(3)(A) of the Code.
A Foreign Holder that receives interest payments that are not effectively
connected with a United States trade or business but that does not satisfy each
of the three above mentioned conditions will be subject to withholding tax at a
rate of 30%, unless a United States income tax treaty applies to reduce or
eliminate withholding. To qualify for exemption from withholding, the last
United States payor in the chain of payment prior to payment to a Foreign Holder
(the "withholding agent") must have received in the year in which a payment of
interest or principal occurs, or in either of the two preceding calendar years,
a statement that:
o is signed by the Foreign Holder under penalties of
perjury;
o certifies that the holder of the securities is a
Foreign Holder; and
o provides the name and address of the Foreign Holder.
The statement may be made on an Internal Revenue Service Form W-8BEN or a
substantially similar form, and the Foreign Holder must inform the withholding
agent of any change in the information on the statement within 30 days of any
change. If the notes are held through a securities clearing organization or
certain other financial institutions that are not qualified intermediaries, the
organization or institution may provide a signed statement to the withholding
agent along with a copy of Internal Revenue Service Form W-8BEN or a substitute
form provided by the Foreign Holder. If the financial institution is a qualified
intermediary, it generally will not be required to furnish a copy of the
Internal Revenue Service Form W-8BEN. A qualified intermediary is a financial
institution that has entered into a withholding agreement with the Internal
Revenue Service.
8. The exchange of Old Notes for Exchange Notes in the exchange offer
will not constitute a taxable event for Foreign Holders. Consequently, for
United States Federal income tax purposes, a Foreign Holder will not recognize
gain or loss on the exchange, the holding period of the Exchange Note will
include the holding period of the Old Note, and the basis of the Exchange Note
will be the same as the basis of the Old Note immediately before the exchange.
If
AKIN GUMP STRAUSS HAUER & FELD LLP
Attorneys at Law
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4618
(214) 969-2800/fax: (214) 969-4343
www.akingump.com
Westport Resources Corporation
February 5, 2004
Page 6
a Foreign Holder receives additional interest on the Exchange Notes, we believe
it should be treated in the same manner as regular interest on the notes.
9. A Foreign Holder will generally not be subject to United States
Federal income tax, or the withholding thereof, on any gain realized upon the
sale, exchange, redemption, retirement at maturity or other disposition of the
Exchange Notes. If, however, the gain is effectively connected with the conduct
of a trade or business within the United States by the Foreign Holder or if the
Foreign Holder is present in the United States for 183 days or more during the
taxable year of sale, redemption, retirement or other disposition and certain
other conditions are met, the Foreign Holder may be subject to income tax on all
income and gains recognized.
10. If a Foreign Holder holds the Exchange Notes in connection with a
trade or business that the Foreign Holder is conducting in the United States:
o Any interest on the Exchange Notes, and any gain from
disposing of the Exchange Notes, generally will be
subject to income tax as if the Foreign Holder were a
United States Holder; and
o If the Foreign Holder is a corporation, the Foreign
Holder may be subject to the "branch profits tax" on
the earnings that are connected with Foreign Holder's
United States trade or business, including earnings
from the notes. This tax is 30%, but may be reduced
or eliminated by an applicable United States income
tax treaty.
11. Backup withholding and information reporting requirements do not
apply to payments of interest made to Foreign Holders if the certification
needed to avoid withholding tax on interest, as described above, is received,
provided that the payor does not have actual knowledge that the holder is a
United States Holder. If any payments of principal and interest are made to the
beneficial owner of an Exchange Note by or through the foreign office of a
foreign custodian, foreign nominee or other foreign agent of such beneficial
owner, or if the foreign office of a foreign "broker" (as defined in applicable
Regulations) pays the proceeds of the sale of an Exchange Note effected outside
the United States to the seller thereof, backup withholding and information
reporting will not apply. Information reporting requirements (but not backup
withholding) will apply, however, to a payment by or through a foreign office of
a broker of principal and interest or the proceeds of a sale of an Exchange Note
effected outside the United States if that broker has specified types of
relationships with the United States, unless the broker has documentary evidence
in its records that the holder is a Foreign Holder and certain other conditions
are met or the Foreign Holder otherwise establishes an exemption. Payment by a
AKIN GUMP STRAUSS HAUER & FELD LLP
Attorneys at Law
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4618
(214) 969-2800/fax: (214) 969-4343
www.akingump.com
Westport Resources Corporation
February 5, 2004
Page 7
United States office of a broker is subject to both backup withholding at a rate
not to exceed 30% (31% beginning January 1, 2011) and information reporting
unless the holder certifies, under penalties of perjury, in the manner required
as to its Foreign Holder status or otherwise establishes an exemption.
The opinion and other matters in this letter are qualified in their
entirety and subject to the following:
A. We express no opinion as to (i) any laws other than the Tax
Law; (ii) the accuracy of any statements of law relating to
the Exchange Offer except as set forth above; or (iii) any
other matters relating to the Registration Statement.
B. Except where we state otherwise, this opinion letter addresses
only Exchange Notes held as capital assets, as defined in the
Code by a United States Holder or a Foreign Holder who is the
initial beneficial owner of the Exchange Notes. This opinion
letter addresses the material United States Federal income tax
consequences of the Exchange Offer to the holders described
herein and the ownership and disposition of the Exchange Notes
and does not address any other tax consequences or all of the
tax consequences that may be relevant to a United States
Holder or a Foreign Holder. It also does not address any of
the tax consequences to holders that may be subject to special
tax treatment, including banks, thrift institutions, real
estate investment trusts, personal holding companies,
insurance companies, and brokers and dealers in securities or
currencies. Further, it does not address:
o the United States Federal income tax
consequences to stockholders in, or partners
or beneficiaries of, an entity that is a
holder of the Old Notes or the Exchange
Notes;
o the United States Federal estate and gift or
alternative minimum tax consequences of the
purchase, ownership and sale of the Old
Notes or the Exchange Notes;
o the United States Federal income tax
consequences to persons who hold the Old
Notes or the Exchange Notes in a "straddle"
or as part of a "hedging," "conversion" or
"constructive sale" transaction or whose
"functional currency" is not the United
States dollar; or
AKIN GUMP STRAUSS HAUER & FELD LLP
Attorneys at Law
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4618
(214) 969-2800/fax: (214) 969-4343
www.akingump.com
Westport Resources Corporation
February 5, 2004
Page 8
o any state, local or foreign tax consequences
of the purchase, ownership and sale of the
Old Notes or the Exchange Notes.
C. The opinion expressed herein is as of the date hereof. Any
change in the Tax Law (including pursuant to any legislation
which Congress may be currently considering), which may change
at any time with retroactive or prospective effect and which
is subject to differing interpretation, or any change in the
facts, representations or documents upon which the opinion
expressed herein is based, could change our conclusions and
render the opinion expressed herein inapplicable. We undertake
no obligation to advise you of any facts or circumstances that
may come to our attention, any new developments in the law or
in the application or interpretation of the Federal income tax
laws, or any other change in legal authorities that may occur
after the date of this opinion letter, that may affect the
opinion expressed herein or to update the opinion expressed
herein in the event that there is a change in the legal
authorities, facts or documents upon which the opinion
expressed herein is based.
D. This opinion represents and is based upon our best legal
judgment regarding the application of relevant current
provisions of the Code and the Regulations, and
interpretations of the foregoing as expressed in existing
court decisions, administrative determinations (including the
practices and procedures of the Internal Revenue Service (the
"IRS") in issuing private letter rulings, which are not
binding on the IRS except with respect to the taxpayer that
receives such a ruling) and published rulings and procedures
all as of the date hereof. An opinion of counsel merely
represents counsel's best judgment with respect to the
probable outcome on the merits and is not binding on the IRS
or the courts. There can be no assurance that positions
contrary to our opinion will not be taken by the IRS, or that
a court considering the issues would not hold contrary to our
opinion. The Company has not requested a ruling from the IRS
(and no ruling will be sought) as to any of the Federal income
tax consequences addressed in this opinion.
E. The opinion expressed herein is limited to the matters
expressly stated herein and no opinion is to be inferred or
may be implied beyond the tax opinion expressly set forth
above. This letter does not address any other Federal, state,
local or foreign tax consequences that may result from the
AKIN GUMP STRAUSS HAUER & FELD LLP
Attorneys at Law
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4618
(214) 969-2800/fax: (214) 969-4343
www.akingump.com
Westport Resources Corporation
February 5, 2004
Page 9
Exchange Offer or any other transaction (including any
transaction undertaken in connection with the Exchange Offer).
F. Our opinion set forth herein is based upon the description of
the Exchange Offer as set forth in the Registration Statement.
If the actual facts relating to any aspect of the Exchange
Offer differ from this description in any material respect,
our opinion may become inapplicable. No opinion is expressed
as to the Exchange Offer if all the transactions described in
the Registration Statement are not consummated in accordance
with the terms set forth therein and without waiver or breach
of any material provision thereof, or if all of the
representations, warranties, statements and assumptions upon
which we relied are not true and accurate at all relevant
times. In the event any one of the statements,
representations, warranties or assumptions upon which we have
relied to issue this opinion is incorrect, our opinion might
be adversely affected and may not be relied upon.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the prospectus forming a
part of the Registration Statement under the caption "Legal Matters." In giving
this consent, we do not thereby admit that we are within the category of persons
whose consent is required under Section 7 of the Act and the rules and
regulations thereunder. We also consent to your filing copies of this opinion as
an exhibit to the Registration Statement.
Sincerely,
/S/ AKIN GUMP STRAUSS HAUER & FELD LLP