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Terra obtained the funds necessary for capital
expenditures from its own internal cash-flow. Terra always
retained its profits for operating capital. At the end of
its fiscal year 1982, Terra’s balance sheet showed retained
earnings of approximately $92 million. Terra’s other
source of funds was loans from petitioner and other
affiliates. By the end of 1981, the outstanding balance of
the loans petitioner and other affiliates had made to Terra
was $120,557,651.
Terra’s oil and gas acquisition and development
expenditures for 1977 through 1982 were as follows:
Year Expenditures (in Millions)
1977 43.300
1978 54.900
1979 50.300
1980 75.700
1981 88.800
1982 85.628
Total 398.628
From 1970 to 1983, Terra consistently retained its
full share of the uncommitted production of wells in which
it held an ownership interest and sought to acquire as much
of the crude oil held by its co-owners or subject to
contractual obligations as possible. Sales of uncommitted
production to parties other than petitioner, other than
those incident to exchanges for CRA’s benefit, were
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