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oil and natural gas exploration. Petitioner’s management
also hoped to reduce petitioner’s oil exploration costs, to
control more of the crude oil processed in its refineries,
to stabilize its petroleum production costs, and to
increase patronage refunds. Petitioner was required to
seek outside capital because it had assumed a large amount
of debt in the process of expanding its other business
interests, especially its fertilizer production facilities.
Petitioner’s board of directors approved the formation
of Terra during its February 4-5, 1970, meeting. Later in
1970, petitioner’s board of directors caused CRA to
transfer all of its crude oil production properties and
undeveloped acreage to Terra, but to retain its refineries
and pipeline system. Petitioner’s management envisioned
that Terra would raise capital by periodically selling
equity to the public, but that petitioner would retain
control of the enterprise by holding at least 51 percent
of its outstanding capital stock. CRA was also to retain
the right of first refusal to purchase all of the crude oil
produced by Terra at the posted field price.
On or about March 25, 1970, CRA transferred all of
its crude oil and natural gas production assets to Terra.
On the same day, petitioner transferred to Terra its stock
interest in CRA International, Inc., which was conducting
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