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(KM), an oil and gas company located in Lakewood, Colorado.
Petitioner pursued the acquisition and investigated KM's
reserves. In investigating the reserves, petitioner analyzed the
report prepared by KM's reserve engineers without investing the
time and expense of commissioning a new reserve report from a new
petroleum engineering firm. Petitioner's board, at its March 7,
1986, meeting, discussed and authorized an offer for the KM
properties located in the States of Oklahoma and Texas at a price
not to exceed $10.6 million. The price proposed by petitioner
for the KM properties was not acceptable to the seller, and the
acquisition failed. At petitioner's next board meeting on May 8,
1986, Mr. Billings reported on the failure to make the authorized
acquisition and the ongoing search for an oil and gas acquisition
within the limitations set by the board:
Mr. Billings advised that the Company had been
unsuccessful in acquiring those properties which had
been shown to the Board of Directors at the last
regular meeting. Although there is no current follow-
up activity on that prospect, Mr. Billings advised that
the properties may remain available for purchase, and
that, at a later date in 1986, the party owning those
properties may be more inclined to sell them.
Otherwise, Mr. Billings advised that the Company
continues to look for an attractive acquisition within
the parameter earlier defined for the Board.
Currently, there are no candidates for acquisition
which are appropriate to bring before the Board.
[Emphasis added.]
During petitioner's discussions with Mr. Brock concerning
Brock Exploration, Mr. Brock identified several other acquisition
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