- 63 -
$9.75 million, if not more. Consequently, we conclude that
petitioner did not pay more for Tri-Power than its assets were
worth.
Additionally, we note that petitioner's acquisition of Tri-
Power was competitive with other acquisitions that took place
during the fourth quarter of 1986. Petitioner paid $4.64/BOE
($9.75 million � 2.1 million BOE) to acquire the Tri-Power
reserves. Accordingly, the price per BOE paid by petitioner for
the Tri-Power reserves was below the fourth quarter 1986 median
of $6.45/BOE reported by Strevig in its 1986 fourth quarter
report and below the revised fourth quarter 1986 median of
$5.18/BOE reported by Strevig during February 1992. Accordingly,
petitioner actually acquired the Tri-Power reserves at a discount
rather than a premium as respondent contends.
Size of Tri-Power's NOL's
Respondent contends that the sheer enormity of Tri-Power's
NOL's in comparison to the value of its assets and their income-
producing potential indicates the primacy of tax motivations.
Respondent stresses the fact that by the end of 1993, petitioners
used almost $55 million of the Tri-Power NOL's but had yet to
recoup their $9.75 million investment through the cash-flow of
the Tri-Power properties. Respondent further emphasizes that, as
a result of the NOL carryforwards in issue, petitioner paid no
regular Federal income tax during the period 1987 to 1993.
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