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oil exploration and production activities, both directly
and through a joint venture named CRA International, Ltd.
The net book value of the assets transferred was
$31,143,589. In exchange, Terra issued 2,693,015 shares
of common stock to CRA and 187,985 shares of common stock
to petitioner. In addition, Terra assumed $11.6 million
of liabilities that petitioner had assumed incident to its
purchase of AMAX in 1967.
On August 31, 1970, CRA purchased an additional 96,998
shares of common stock in Terra for $1,050,000 in cash.
At the time CRA transferred its assets to Terra, Terra and
CRA entered into a General Conveyance, Assignment, and
Transfer Agreement. The agreement identifies the
properties transferred by CRA to Terra and the assets that
were to remain in CRA’s possession. The agreement also
granted CRA:
the prior call and option to purchase all
uncommitted crude oil and other liquid or
liquefiable hydrocarbons that are produced and
saved from the Subject Properties after the
Effective Date and from all other oil and gas
properties hereafter acquired by [Terra] or its
wholly owned subsidiaries or its controlled
affiliates, at the posted field price or prices
from time to time prevailing for the area in
which such properties are located.
During its August 24-25, 1971, meeting, petitioner’s
board of directors approved the sale of 800,000 shares of
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