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acquisition of Tri-Power, petitioner also acquired interests in
nonproducing prospective leaseholds, undeveloped acreage, and
Tri-Power's records concerning the acquired properties.
E. Public Announcements Concerning the Acquisition
In a letter to the shareholders dated November 15, 1986, Mr.
Jackson announced that petitioner had signed a letter of intent
to acquire the stock of Tri-Power. In that letter, Mr. Jackson
reported that Tri-Power owned proved and producing reserves,
estimated by independent engineers to be 10.1 billion cf of gas
and 404,925 barrels of oil. In addition, Mr. Jackson indicated
that Tri-Power had certain tax loss carryforwards available from
prior operations. Petitioner again announced the pending
acquisition in a press release issued on November 18, 1986.
Finally, petitioner reported the acquisition agreement in its
September 30, 1986, Form 10-Q filed with the Securities and
Exchange Commission during November 1986. The press release and
Form 10-Q each contained substantially the same information as
Mr. Jackson's November 15, 1986, letter to the shareholders.
Petitioner's 1986 annual report announced the completed
acquisition of Tri-Power for $9.75 million, the estimated
quantity of reserves acquired, and the fact that Tri-Power had
certain loss carryforwards available from prior operations.
Among the favorable developments for 1986, the 1986 annual report
recited petitioner's expectation of "lower income taxes for the
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