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opportunities. One of those was Equitable Oil, a potential
acquisition target that had also been recommended to petitioner
by its investment banking firm, Kidder Peabody. During June
1986, Mr. Jackson traveled to New York to meet with Equitable
Oil's management. Consideration of the acquisition of Equitable
Oil, however, was deferred until the conclusion of the Brock
Exploration deal.
At the August 8-9, 1986, meeting of petitioner's board, Mr.
Billings reported on petitioner's ongoing acquisition efforts,
including two specific targets:
Mr. Billings reviewed the status of acquisition
activities including a general description of two
potential acquisition candidates that are currently
being evaluated by the Company's staff and outside
consultants. Mr. Billings indicated that because the
process of gathering information on these acquisition
candidates had not been completed, no specific
proposals would be brought before the Board at this
time. Mr. Billings indicated, however, that a
recommendation with respect to at least one candidate
should be finalized in the next few weeks.
Sometime during the summer of 1986, as negotiations with
Brock Exploration continued, petitioner commissioned an
independent petroleum engineering firm to prepare a reserve
report relating to Brock Exploration's reserves. Mr. Jackson
directed petitioner to engage an independent reserve study for
the Brock Exploration acquisition because he wanted to avoid any
appearance that his longtime friendship with Mr. Brock, the owner
of Brock Exploration, influenced the transaction. On September
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