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incorporated herein by this reference. At the time the petition
was filed, Samson's principal place of business was located in
Tulsa, Oklahoma.
On December 31, 1986, Samson acquired all the stock of CDC
(the change of ownership). From 1981 through 1986, CDC had
generated NOL's from its contract drilling business. On its
consolidated Federal income tax returns for the taxable years
ended June 30, 1990 through 1993, Samson deducted the NOL
carryforwards generated by CDC prior to the change of ownership
against other income of the Samson group.
Definitions and Industry Conditions
The operator of an oil or natural gas well has the right to
drill the well. It is generally an owner of a working interest
in the well and thus has an economic interest in the well. A
drilling contractor usually owns one or more drilling rigs, and
it contracts with an operator to drill a well. It drills a hole
at a particular location to a depth specified under an agreement
with the operator and typically prepares a daily drilling report
of its progress in drilling the well. Often a drilling
contractor acquires working interests in oil and natural gas
wells in payment, or partial payment, for its drilling services
or in order to generate an additional source of cash-flow to
supplement its income from drilling operations.
Operators are reluctant to hire drilling contractors whose
rigs have not been adequately maintained because such rigs might
require extensive, costly, and time-consuming repairs during
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