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interest, payable on demand. The children financed the
transaction with cash gifts from their parents over the years and
with earnings distributions from their prior investments in other
True companies. The owners and ownership percentages immediately
after the purchases were: Dave True (91 percent), Jean True (5
percent), and each of the four True children (1 percent).
5. Black Hills Oil Marketers, Inc./True Oil
Purchasing Co./Eighty-Eight Oil Co./Black Hills
Trucking, Inc.
Black Hills Oil Marketers, Inc. (Black Hills Oil), was
formed by Dave True in 1963 to market and transport crude oil.
Initially, the activities of Black Hills Oil centered on
supporting Belle Fourche’s pipeline operation by moving and
accumulating marketable quantities of oil. However, Black Hills
Oil’s business quickly expanded to include purchasing oil from
unrelated parties and providing shipping services.
Black Hills Oil’s marketing activities consisted of buying
crude oil from lease operators, shipping it through a pipeline
while retaining title, and reselling it with a markup at the
other end. In the late 1970's, the True family began conducting
oil marketing activities through True Oil Purchasing Co. (TOPCO)
rather than through Black Hills Oil. In 1980, one of TOPCO’s
customers could not fulfill a purchase obligation and filed for
bankruptcy. The Trues became concerned that this default might
adversely affect TOPCO’s ability to meet its own obligations.
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