THE QUEST FOR OIL

Taranaki Daily News, Volume LIII, Issue 103, 9 August 1910, Page 2

THE QUEST FOR OIL

CONFIDENCE OF LOCAL SHAREHOLDERS. TARANAKI COMPANY'S CAPITAL INCREASED. A special general meeting of shareholders in the Taranaki Petroleum Com--', pany was held yesterday afternoon at the Theatre Royal. There was an attendance of over a hundred shareholders. Mr. C. Carter, chairman of directors,, presided, and the other directors present were Messrs. D. Berry, J. B. Roy, H. Okey, M.P., J. Little, C. E: Bellrmger and J. J. Elwin. Mr. L. Keith, the manager, was also on the platform, and presented the following report, which was read by the chairman. MANAGER'S REPORT. Centlemen,—As requested by you, I have the honour to submit the following report:—l took over the works on November 16, " 1909, and will briefly state the position regarding the borwj at that time. At No. I nothing had been done for some two years, and there was some doubt whether it could be cleaned out at any reasonable price. At No. 2 Mr. Berry had finished his trial and Mr. Simpson had withdrawn the perforated casing and recased it with solid casing to the same depth, viz., 2249 ft. No. 3 was then down' to 2640 ft. and water was shut .off at 2564 ft. I did not interfere with Nos, 1, 4 and 5, it being decided to use all efforts to make either No. 2 or No. 3 a payable well before touching the others. On taking over I commenced work on Nos. 2 and 3, but will report on No. 2 first. Here I commenced to drill deeper, and after striking some six smaller seams of oil and gas I eventually obtained the present fine flow of oil. The bore is now down 3030 ft. I have drawn the whole of the sjn. casing from this bore and, have put in a 2%in. pipe down to 2100 ft. It was only put to this depth so as to be sure that none, of the seams were shut off. Since June, the oil has constantly flowed (without pumping) at the rate of not less than 100 barrels, or 4200 gallons per week, and with every indication of continuing this flow regularly. Three large tanks have been sunk and concreted and covered in, near this bore, and I anticipate that further tankage will be required fa about four weeks' time. The oil sold, mostly from this bore, totals 14,751 gallons, while we have in stock some 76,000 gallons. No. 3 bore I carried down from 2460 ft. (the water having been shut off at 2564 ft.) to the present depth of 3014 ft., striking many small seams of oil and gas, ■ but it is now imperative that more casing should be put in to prevent caving. This being done, it should not take long to reach at least as good if not a better flow than even that at No. 2. Here another tank has been excavated, and at the present time contains '393 barrels, or 16:500, gallons. Since taking over, and having obtained all possible information about No, 1 bore, I decided to put any spare workmen, especially as 'the steam power costs nothing, to. try and pull the 6in. 'casing, and-succeeded in getting 2246 ft. out. I then commenced to ream the bore for Bin. casing,, and. have reamed 1070 ft., and have 1008 ft. of this casing in, which is all I have jat present until I take out of No. 4. I hope to get 2000 ft. of this, in all, and then shut off the water with 6in., which, combined will make a really, good well. A large tank has been sunk | dose to this bore. It is 21ft in diameter by 18ft. deep, is the largest tank yet sunk, and will hold 38,800 gallons, or 924 barrels nearly. As you are aware a heavy gale on March 30 blew down the, derricks at Nqs. 3, 4, and 5, splintering and -breaking the timber, but fortunately doing littLe damage to the machinery. I re-erected a 1 derrick at No. 3, but at Nos. 4 and 5 I only covered the machinery over all snug. Since then 1 am erecting a derrick at No. 4 so an to lift erf. the Bin. casing mentioned in No. 1. I have also put wire-rope guys, made of the old rope, to all derricks, and nothing is now likely to give way. A Mr. Grace, from iDunedin, brought a four-gallon still here, and although, of course, not large enough to refine the oil in commercial quantities, it was quite sufficient to show the value of our oil, as by its aid we refined benzine, kerosene of two grades, four or five different 'lubricating oils, and refitted wax of superior quality. Enough was made to send samples nearly all over the Dominion, and we also made ' exhibitions at New Plymouth, Palmerston North and Eawera winter show®, where they were much admired and created a great deal of interest, especially the lamps burning our kerosene. This seems to comprise all dri the nature of a report. | Mr. Carter announced that the manager would be prepared to answer any questions concerning tie company's operations. No questions were asked. Mr. Keith added to his report that in not less than two.months the two bores would be out of hand, and it. would be I necessary to have fresh work for him to go on with. INCREASE- OF CAPITAL. j Mr. Carter then moved the following motion:—"That the capital of the Company be increased from £120,000, divided into 120,000 shares of £1 each, to £150,000 divided into 150,000 shares] of £1 each by the creation of 30,000, additional shares of £1 eacb and that such additional shares be offered for subscription forthwith, in such manner as the Directors think fit, as preference shares, and that such preference shares carry the rights and privileges following:—(a) A preferential dividend each year out of the profits of such year and to be non-cumulative at the rate of 71/., per cent, per annum on the amount paid upon the shares; such preference! shares also to rank equally with the j ordinary shares hi, the distribution of | any further dividend, after the payment of a dividend of V/ 2 per cent, on tlie amount paid up on the ordinary shares, (b) On a winding-up—to the payment of the amount paid up on the preference shares (but not exceeding 10s per share); the preference shares also to rank equally with the ordinary shares in the distribution of any available balance after the dividend of 10s per share on the ordinary shares." The mover explained why the directors had decided to adopt this means of increasing the capital in preference to issuing the company's reserve as preferential shares. To have effected that would have necessitated holding four meetings, and that wduld have involved a great deal of delay, driving the directors too close to tlie end. of their capital. They were already within sight of the end of it, and there was, a possibility that the present capital tyould not be available after the end of the present year. So they were taking the shortest course, and what they considered the best course to increase the capital. He ..iorateH out that the present scheme had

I a great advantage over the previous one, [ for it enabled the company to hold its i 32,000 shares in reserve, and in the event of the industry turning out a big success they might be worth anything up to £50,000. The directors had been com-1 pelled to ask the shareholders to provide more money for tlie development 01 the industry. Why, he 'had been asked, were the new shares made preferential? Because they had to give some inducement to the shareholders to take them up. The directors had been more than pleased with the .shareholders' response to the circular issued with a view of finding what shares were likely to be app ied for. They had been assure.* of at least 10,000 being taken up amongst their own shareholders, which showed a confidence in the concern such as had not been evinced for a very long time. (Applause.) There could be no doubt of the shareholders' confidence when they offered to take up these shares, at a time when, as it had been stated, they could buy the ordinary £1 shares for 10s each. With increased capital, there were increased possibilities. The company, he continued, had held options over a large area of country on which they had not put down bores, and it was necessary to bore in order to hold those options. Options over rather more than 2500 acres of country would have expired in February, but the propertyowners had imet the company in a very generous manner, and had given a two years' extension of time in which it was necessary to sink wells. The directors had found'it very necessary to do this when treating with people who nad wanted to buy out the company's interests, for, of course, the first thing they had asked was, 'What are your assets?" The would-be buyers Had pointed out that before any new company could be brought into existence some of these options would have expired. Now they, 'had two years further in which to bore, and a 21 years' option over the properties. AN UNFOUNDED STATEMENT. A great deal had been said by some shareholders to the effect that if the resolution were carried it was not the intention of the directors to sell out their interests. The directors fully recognised that it was absolutely impossible for a small company', to carry out the prospecting and development of this important industry without a great deal more capital than, this company would 'have, even with the £30,000 increase, but if they wanted to put the directorate in the best position to meet the prospective buyers they must put them in »ucn a position that they could not be compelled to capitulate to anyone who came along, and capitulate 'because they weire at the end of their resources. xae directors had found in negotiating with people that 'they must be able to give them complete information, tad locality plans, managers' reports, directors' reports, and certified lists of. the options were now being prepared, and would be lodged at Home at the Bank of New ea I anil in London. Then any syndicate could, see all these details, samples and copiep of analyses of the oil, then cable to the directors, who would then only need to cable back the terms on which they would sell. The question had been asked, was it not a fact that one company had put down a deposit of £2OOO, and that the company had refused to accept it? No company had offered a deposit of £2OOO as yet. That had been : thp rock on which they had split in nearly all the negotiations.: None of the people who were after the company's interests had been prepared to put down a deposit. Tfye directors had felt that it , would "be unwise, to tie up the company's properties to speculators who 'had not sufficient confidence in the proposition to put money down. , THE INDUSTRY FIRST. Im reference to the numerous letters received from shareholders, objecting to sell the Concern to anyone at all, Mr. Carter said that the directors had, of course, to consider tJhe shareholders, but first of all, the industry. (Applause.) THE REFINERY. The production of oil at present made the erection of a refi«ery imperative,' and evet if they went forward immediately aft* this meeting the refinery could not be available for 18 months. They had at present 87,500 gallons of crude petroleum in stock at the wells, which nieanfc that £1450 was locked up in_ oil. If Nvj>. 2,,we1l went on flowing as at present for the' 18 months, there would at tho end of that time be in stock 415,100 gallons, representing capital of £5540 locked up, without reckoning on any oil from the Birthday and No. 3' wells, and any other producing wells that they might have. Crude oil waa not in as great demand as refined oli, but the company could not refine the stuff. Refined,' -these 415,100 gallons of crude petroleum would be worth £.16,000 to £18,000.' . That was one of the strongest Masons that could be brought forward for the erection of a refinery. Mr. Carter briefly- refer;red;to the. recent' deputation .which.' asked .the Government to expend £IO,OOO in the erection of a refinery, and said he had just received a letter from the Hon. R. McKenzie to the effect that the matter was under consideration. The deputation had also; asked the Governnient to amend .the cpnditions upon which it offered:a bonus upon the production of! petroleum. , The: bonus was to be at the rate of threepence, a gallon upon the first 500,000 gallons of kerosene, and they had asked.to have - the conditions amended so as to. provide for a bonus on the first 800,000 gallons produced. They had pointed out'to the Ministry that this .oil was very rich in' iby-pro-ducts, such as benzine, spindie oil, and kerosene, and' a bonus paid on this basis would wipe out the whole of the £IO,OOO which it was' hoped the Government was going to lend the company. Mention was .made of the interest displayed and assistance given by the Department in allowing Dr. Bell to make a geological survey of the district. That work had had to be discontinued, owing to Dr. Bell's assistant having accepted another appointment. But by the good offices of Mr. Okey, M.P., they 'had now obtained a promise from the Government that the wcrlc will be commenced again at the end of the year. A BRIGHT OUTLOOK. The chairman dwelt on the pleasant outlook at the present time, and claimed that never in the history of the company had things looked as bright as they did to-day. (Hear, hear.) Never had the prospects been as good, never so much in siigJit, giving such hopes for the future. The, No. 2 well had flowed continuously from January 5 till now, and he hoped that it would have a life equal to what they were given to understand was the average—ls to 17 years. Had any of his hearers ever sat down to think what ithe success of the oil industry would l mean to New Plymouth?, If they 'had, he had! no doub.t at all that they would 'give effect to the resolution which he iad put before them. It would mean in the first place an increase in population; an increased demand for labor; greater activity tat harbor,

where they would have to provide ac- * commodation for Dreadnoughts and mer- J chantmen, arriving here to draw their j oil supplies from great tanks on the wharf; greater encouragement of our industrial operations; a greater demand * for our aheep, cattle and products gen- . erally; a wireless station on the Hop of , Paritutu; and greater activities assured . in everything. The people needed to have . faith loyally, for unless they were enthusi- • astic they couldn't expect outsiders to come along and show it. The company couldn't, of course, work on enthusiasm , only, .but on hard cash;, and tfhe; directors asked the shareholders now to back up , the proposal made to increase the capi- . tal of the company. The motion was seconded. by, Mr. Frank Messenger and, Mr. J. Home simultaneously, i | A WELLINGTON OBJECTOR. . i I Mr. Bate, speaking on behalf of sev- j eral Wellington shareholders, said that f he had been instructed to oppose the i j motion. In Wellington, he said, and I amongst a good many of the southern ( shareholders, it was felt that the pro- l posals did not meet the case. In the ] first place, he thought there was very(] little chance of these shares being taken ( up. The inducement of a nen-cumula- j tive preferential dividend was not' at- '] tractive enough. It seemed to him that i the One and only thing to be done was i to sell, and sell as quickly as possible, i The Taranaki Petroleum Company was ' not the only oil proposition on the Lon- ' don market. Hundreds were being sent ■ Home for flotation. The selling of this j concern had to be done while the iron ' was hot, for, of course, oil would not always be Such a favorable speculation as . now, and the whole aspect might change in a fewi months. It was unwise to delay. The raising of this fresh capital would only delay matters, and could lead to no possible good.' The time had not come yet for a refinery, and if any money were raised it should be spent in boring. They wanted to extend the field. They didn't know yet what it was , capable of, and the only way to find that out was to bore. At present they were getting 100 barrels a week, and they required 250 a day for the refinery. They all hoped that this was going to be a good field, but they had no proof of it yet. They wanted more bores, and more money. Where were they to get the, latter? They could only §et it from Home. The issue of these preferential shares would reduce the value" of the ordinary shares, and therefore no very great amount of good would be gained. He was glad to hear that the directors, were going to send Hpme full particulars, a thing that should have been don§ before. The chairman had told them that the rock on which the purchasing propositions had' split was because of the failure to produce a deposit. It was not reasonable to suppose that men were going to pay down a deposit without first perusing tne company's, papers. That was what they had been asked to do, ' Sir. C. E. Bellringer said that the directors were as anxious as even to sell, but unless the meeting carried the resolution the people wanting to buy would knowi they were at the end of their capital, and would have to accept practically whatever tern*s were offered. It would strengthen the company's, hands 1 immensely in the negotiations if it were known that they had enough money to carry on with for a couple of years. They would then get a better price than if it were known that the company was in a' desperate state. The directors had asked a deposit at ,the suggestion of the people making the offer, and the people who suggested it were not up to time with the money. The directors had not felt justified in putting the shareholders' property into the hands of these people to be hawked round London for six months, to see whether they could make £50,000 or £60,000 out of it, without having some deposit. The di-1 fectorate, said.Mr* Bellrjnger, had-been j very pleased with the strong local, response to the circular sent out. . The people of Taranaki had by that response shown that they were prepared to tackle the proposition and to see it through. Success was hearer tbrday than many dreamed of. The prospects of the company were improving all the time, and .because he felt that .that was the position he appealed to them to vote for the resolution. It was quite true that they hadn't send to the London enquirers details about all the options, for some of them would have run out in October next, and the directors had been quietly securing extension of time, working against some of those who hoped the company would not succeed. He was convinced that they owned the best of the options in Taranaki, and that these were worth 100 to 1 of the other options, for they held all the sea coast areas and areas where oil had been located. The property-owners had 'been very generous in extending the options, and had greatly strengthened the company's position. Mr. A. E. Watkins questioned the statement Concerning the relative value of options, and said he considered that options which he held were just as good' as theirs. The Chairman: No doubt, Mr. Watkins, but you've been looking for our options to improve the position. (Laughter.) .-.-...,;. Mr. W. Humphries mentioned that !. Mr. Watkins had told him that he (Mr. Watkins) had been given a cheque of £2OOO to pay down as a deposit, and ( that the directors had refused to accept it. He wanted to know if that was so. Mr. Watkins said he had offered to pay it on certain conditions. He had .asked the company for certain particulars concerning their options, but, unfortunately, the company were unable to supply them. . The Chairman: T have in my hand a list of the twenty-four questions voii asked us. We answered all of them. You wanted people's names. Mr. Watkins: I wanted to know the localitias. Mr. Carter (laughing): I' knovyn all about it. Mr. Bellringer: Did you tell the directors, Mr. Watkins, that you had £2OOO to deposit on certain owHTtions. ...... Mr. Watkins: I thnvTit's better not to say anything more about it. Several Directors: I think so, too. Mr. W. Bewley suggested that the motion was more likely to be carried if the appeal for funds were dissociated from the refinery proposal. The chairman said he wished to make it clear that the directors had asked the Government to provide the money for the refinery. Tf that were not forthcoming, of course, the directors would , have to reconsider the position. In answer to Mr. A. H. Johnstone, the chairman said they were assured by the refinery people themselves that a refinery could be erected for £9OOO. e To Mr. Humphries, he stated that once i- the 250 barrels flow was obtained there !- would he little difficulty in obtaining the money for boxing and canning plant, t Mr. A. H. Johnstone was of opinion that now more than ever should all efforts be directed to the sale to a larger concern. If the capital were increased, where were they? What had the bores at Motnroa cost to date? .j Mr. Carter: We had £32,000 to start u with, and we've still some left. Mr. Johnstone resumed that £32,000 or so had been spent, and there were

now no more bores than when the company was formed. So even with another £30,000 they wo.ild be very little better off. Even if the present resolution were adopted the directors should still do their best to encourage a bigger company to come in. (Mr. Bellringer: The directors are with you, all the time.) Why didn't the directors give to the world all the information as to options, and say to all: "Here are our options; come and see the oil." It was very difficult to obtain any information, at all, and then it was given round the corner, with lights lowered, and bated breath. Why all this mystery? Notwithstanding all the cheery optimism of the chairman and Mr. Bellringer, the fact remained that in three or four months the company would be at the end of its money. Unless they sold quickly the shareholders would lose all they had put in. There was room for improvement, too,' in the internal management. Time and again he had asked for scrip, and he couldn't get it. This was depreciating the value of shares. Mr. James (Inglewood) said that for the past half hour he had listened to little else but complaint and disparagement. Shareholders, he urged, should rise and show the world that they were a little able to help themselves. He himself was delighted with the progress 'made in the past twelve months, and he would stand to his guns as ta man and a New Zealander to show that they could do something for themselves now again. What was the position at Moturoa? Why, if they had such a thing anywhere else the press would be full of it, and all the people enthusiastic about it. The company was being very finely directed, arid/very finely managed, and there was an abundance of oil to be got. He urged the shareholders to support the motion.

Mr. J. J. Elwin replied to the suggestion thj#. these shares could not be float wv?llKf said he had no doubt about that at all. He could have floated 5000 at each of the Hawera and Palmeraton winter shows, and was certain there would be very ready response from those districts.

Mr. H. Okey, M.P., said that the main profit would be in the refinery, and he thought the importance of it should be urged on the Government, who should erect it for the use of all the petroleum companies operating here. He was confident that if the Government would only give the House an opportunity to discuss the matter, the money would be, voted by (Parliament. There , waa a greater confidence outside than in Tara■did itoelf.

Mr. J. Duffin supported the motion, He said he had been at the bores every day for the last eighteen months, and wai quite satisfied with the way the oil was running. "If any of you have any money to spare, go into it," he said. "It's a gamble, but it's a good gamble. Hour after hour, Ive seen nothing 'but pure oil flowing." THE CHAIRMAN' MPLIES.-' ■■ '

Thechairman, in reply, said the tilAii* holders would doubtless like to know that Mr. Bate was one of those who had been in communication with the directors for the disposal of the'company. The directors had not then had information complete as ito its options, but now they had it all. Replying to Mr. Johnstone, Mr. Carter said that when this company came into existence there was only one well, the "Birthday," upon the results of which the company was formed. He urged the shareholders to consider that if the resolution were rejected they could not possibly complete a sale before the capital ran out, with the possibility already explained.

Mr. Johnstone said 'that he had not been here when the company started, and had been misinformed.

The motion was carried practically unanimously. There 'were 102 hands raised in its favor, and only Mr. Bate against. . , ~ .". . The customary vote to the chairman completed the-prpeeedhigSv,-