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for crude oil. Beginning in 1973, CRA acquired in its own
name interests in oil and gas properties in Texas, Montana,
Louisiana, Nebraska, Oklahoma, and Wyoming. On March 1,
1976, these interests, as well as Federal leases, were
transferred to a newly formed company called CRA Oil
Exploration Co.
On January 28, 1975, CRA purchased 90 percent of
the capital stock of Cayman International Co., which was
engaged in exploring for crude oil in Colombia, South
America. Cayman International Co. was later renamed
Farmland International Energy Corp. (FIEC) and began
operating in the United States.
FIEC was merged into Terra during petitioner's 1978
fiscal year. CRA Oil Exploration Co. was merged into Terra
on or about May 1, 1980. Terra was the only subsidiary of
petitioner engaged in oil and gas exploration from the date
of this merger until 1983 when petitioner sold its interest
in Terra.
Sale of Terra
Sales of petitioner's petroleum-based products
declined rapidly between 1980 and 1983. Petitioner's
refinery margins, earnings from fertilizer sales, and
overall net earnings also declined during this period. As
a result, petitioner reported consolidated losses in 1982
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