TARANAKI PETROLEUM CO.

Taranaki Daily News, Volume LIII, Issue 207, 10 December 1910, Page 7

TARANAKI PETROLEUM CO.

FOURTH ANNUAL MEETING. The annual meeting of the Taranaki •Petroleum Company was held in the Theatre Royal yesterday afternoon, when there was an attendance of about 200 shareholders. The chairman of directors (Mr. C. Carter) presided, and the other directors who occupied scats on the platform were Messrs D. Berry, J. J. Elwin, J. Little, J. B. Roy and C.*E. Bellringer. MANAGER'S REPORT. The chairman read the following report from Mr. L. Keith, the company's manger:— I have the honor to submit my usual annual report for the consideration of your Boand and the information of the shareholders, as to the work done since the last annual meeting and the state of affairs at the works at the present time, as follows: No. I.—At this bore it was decided to draw the 2245 ft of 6in casing, which was in very bad order, and I am pleased to say that it was successfully accomplished. Owing to the state of the bore, I decided, with your consent, to recase the bore with Binch casing. I reamed the bore some 1590 ft, part of the top not requiring reaming and put in about 1800 ft of this Bin casing, but here, unfortunately, some obstructions were met with, but so soon as 1 overcome these, wiich I hope will be very shortly, it is almost a certainty that the water •rill be shut off with this larger casing at about 2000 ft, and when this is done I shall be able to put the 6in casing down quickly to the same or greater depth than Xo. 2, and a really good well should result. I have sunk a very large underground tank at this bore so as not to be •aught napping. No. 2 well has been drilled from 2346 ft, where a little oil had been obtained, down to the present large flow at 3030 ft. This well has been flowing (not pumping) from January 5 to June 17, with oil and gas, but unfortunately a lot of this oil had to be wasted owing to the quantity of silt in it. This gradually lessened, and from the latter date up to the present time, tile well has flowed an average of 100 barrels of 42 gallons each for each and every week since, and shows no sign of any weakness yet, nor is it likely to occur for many years; but even if this did occur, there is a strong probability of an even greater flow not much deeper. It was from this bore that the 25 barrels of oil were sent to the British Admiralty for naval purposes. ; It was also from here that the 100 barrels were supplied to the Railway Department, and which, I am given to understand, has proved such an unqualified success. Some of your directors, I understand, have b*en permitted to watch these trials and can report upon same. No. 3 has been drilled from 2619 ft to the present depth of 3095 ft, and at 3085 ft a very large flow of gas and oil was obtained, running also in this case, without any need for pumping, but unfortunately, for want of 4in casing, some 500 ft had to be left uncased, with the only result possible, that owing to the immense forces at -work, this uncased portion commenced to cave in and silt up, with the result that the bore stopped flowing on August 22 last. An endeavor was made to obtain this casing in both New Zealand and Australia, but without success, and it had eventually to be indented from Glasgow, and only reached here on November 27. However, it is now nearly all in and I am now pumping the cavings out. During the interval between August and the present time, the pressure became so great on several occasions that a considerable quantity of gas and oil has forced its way through hundreds of feet of silt and flowed for a week up to to the time I started potting in the 4in casing, and partially stopped it for the last 21 days. Unfortunately at the end of 'March of this year a very heavy south-east gale arose, and in spite of anything possible to be done while it lasted, the derricks at Nos. 3, 4 and 5 were blown down, and most of the timber split into matchwood. Fortunately not much damage was done to the machinery. I have now utilised the old wire cable on hand to thoroughly stay, not only the three re-erected, but the others as well, and they should now be safe from every imaginable gale. No. 4, as instructed. I have not touched, except to re-erect the derrick so as as to take out some Bin casing not required there but wanted at No. 1 to save the cost of new. No. 5 I have commenced to drill as you desired, and it is now down some 130 ft. A large number of hard boulders have been met with, but they are not a serious matter, except making the work somewhat slower. From its situation this should make a really good bore when down. General.—l would strongly recommend that, as soon as the companv's funds permit, at least one more bore be put down, as I cannot even now work the men to the best advantage, and it seems a pity that the hands, now they are used to toe work, should be allowed to leave the district. I would the more strongly recommend this, as it is almost a certainty that, with the knowledge now gained, every bore would bottom on good oil. ! In conclusion, gentlemen, I would like ' to thank you all personally for the kind- ( ness and courtesy shown to me by all. 1 It is much appreciated, and make's me 1 more determined to put forth my utmost ' efforts to make the undertaking the huge • success it must eventually prove to be. The report was received with applause. 1 REPORT AND BALANCE-SHEET. ■ •The report and balance-sheet :were ' token as read. (The report has already ' been published in our columns). In speaking to the adoption of the re- < port and balance-sheet, the chairman referred to the large attendance at the an- ' nuat meeting of the company, i which this year was even more eventful : than the past, as there had been more i expansion and more oil won than before. ] There were a few matters that he wished | to refer to, but as usual the directors : courted the fullest enquiry, and if there i ■were anything brought up for consideration that the shareholders were not clear i upon, they would do their utmost to ex- ' plain. He thought their stewardship had j been satisfactory during 1910. As to the l increase of the capital and the issue of 1 30,000 preference shares, if it had not ■ been for the way they were taken up i the gathering would not have been pre- , sent that day to receive such encouraging ■ reports and glowing accounts of what had ] been done. The position would have been . that the directors would have found it a , difficult matter to carry on further. The . shareholders, in responding so well, had saved the position for two or three years, even without being forced to dispose of ' the oil that they had. They had strengthened their own position and that of the ] directorate considerably, and enabled them to carry on the industry, and in such a way that in a year or two's time they would feel warranted in having done what they had. Shares to the number of 11,874 had been applied for, which was a long way off the 30,000. One important matter that transpired during the year was the forwarding to the Home Country for the' Navy of 25 barrels of oil, consequent on the decision of the Admiralty to use oil fuel in place of coal, or to assist in burning other material for steam purposes. The directorate had pointed out the possibility of oil being found in New Zealand in large quantities and the nearness of their weOs to the port. The reply to this the directorate were awaiting with great eagerness. The quantity pis was

the only thing in the report that was not above comment, yet some shareholders would no doubt wonder why the amount was not larger. His reply was that Xo. 2 started flowing on January 5 and boring operations ceased on July 17. It was not until that time that it was found possible to save all the oil, owing to the silt, and an enormous quantity of oil was lost. THE WORKING COST. As to the matters arising out of the balance-sheet, they might say that there was an increase in expenditure on the bores of £270. The details with reference to this matter at each bore were as follows:—No. 1: 1900, £1824 16s 7d; 1910, £2435 163 sd; increase £609 19s lOd. No. 2: 1909, £4659 Ifis lid; 1910, £6204 lis 6d; increase £1544 14s 7d' No. 3: 1909, £5724 4s; 1910, £7068 7s: increase, £1344 3s. No. 4: 1909, £2335 6s 9d; 1910, £1529 9s 6d; decrease, £BOS 17s 3d. No. 5: 1909, £6lO 0s 6d, 1910, £619 15s 6d; increase £9 15s; total increase, £3507 12s sd; less £BOS 17s 3d decrease; net increase in cost of bore in 1910, £2701. las 2d. There was an increase in the cost of casing this year of £536 17s 7d, the figures being: 1909 £2335 12s 4d; .1910, £2872 9s lOd. Tools increased by £ 1066 18s 1 Id. They might think it was a large amount for tools, but they must remember that the best tools were a matter of great importance. in the development of the oil industry. A' proper inventory of the tools was in •hand, and he might say that they had debited this year with a certain amount that should have been included in last year's tool account. The storage tanks cost £3OO, an increase of £163 17s lid. The oil in hand was valued at £ll4O 3s 8d more than last year, viz., £385 13 s 4d and £1527 17s, while the. amount of oil sold realised £137 9s 7d, compared with £9l 7s 4d, an increase of £46 2s 3d. The options also showed an increase; in 1909 their value was computed at £50,870, and at present at £53,511, an increase of £264l,;and after deducting £1671 for the options expired, an increase of £970 was left. In regard to THE GOVERNMENT BONUS, Mr. Carter said ihe wished to point out the utter impossibility of this being any use to them as at present offered. The bonus was for 500,000 gallons of oil at j3d per gallon, which amounted to £6250. But when he stated that with the finest oil in the .world—and he was speaking, of course, of Taranaki oil (applause) which had 38 per cent, of kerosene—it required . 1,315,789 gallons of petroleum to fulfil the order, they would see what he meant. Or, in other words, No. 2 bore, with an output of 75 barrels weekly, and No. 3 bore, with 50 barrels weekly, would take five years to win the bonus. The offer of the Government was not of much use to any oil-prospecting company in the Dominion.

A voice; It shows how wise they are. (Laughter). Mr. Carter: We won't question their wrisdom. Proceeding, the chairman said three or four directors waited on the Minister of Mines in Wellington, and pointed out that no bonus was offered on benzine, cylinder oil, etc., and that it was only fair that as these oils were imported, the prospecting company should have the right to the bonus, these things being taken into consideration. (Applause). Another thing which mad« it impossible to take advantage of the bonus was that notice must be given before March 31, 1912, and the claim made before March 31', 1913. Even if their borea were all better than No. 2 there was not much chance of the company winning the bonus. They could only conclude that the Government were not prepared to assist the industry, although it was of such importance to the Dominion. As to the issue of preference shares and

THE ERECTION OF A REFINERY, the directorate had appealed to the shareholders in July last for increased capital, and the response had been for about 12,000 preference share, which would safeguard the shareholders and be used for the purpose of erecting a refinery. The directors had not list time, and had been in communication with enquirers in England, America and in the Dominion, and they had now in their possession figures relating to the cost of the erection of a small refinery in New Zealand. The fact was ,they must have funds, which were necessary to continue boring, and if the order were not given for a refinery it would be because not sufficient shares had been applied for. The position was this: If 10.000 shares were applied for, the annual income would be £4250 from calls made on shares with an approximate expenditure of £6OOQ; that would leave them £1750 short. If they got £12,500 shares, they would still be £IOOO to the bad; so that it would take 15,000 shares, and then they would only be able to cope with the expenditure. The directors had gone into the matter very fully, and as business men they felt that it would'be unwise to consider the erection of a refinery until at least 15,000 shares had: been applied for and allotted. This was not a big matter, and if they were in earnest about the erection of a refinery he advised them just to hand in their names for the difference between the twelve and fifteen thousand, and no doubt the directors would immediately take steps to have the refinery erected. (Applause). The shareholders must recognise that it was.thp directors' first duty to carry on the' industry, and that they should provide the funds. They knew that a certain amount of work had to be done inside of years if they were' ttf htfld tM option. Any further shares above the fifteen thousand could be devoted to the erection of a refinery. The accumulation of oil made it important that it should be converted into a marketable article. The directors were just as anxious as the shareholders to see a refinery erected at the earliest possible moment, and in this matter they had to consider the amount of oil available. The amonut in hand was 01,551 gallons, and with No. 2 bore giving 75 barrels weekly, and No. 3 50 barrels weekly, in twelve months' time they would have 273,00.0 gallons from this source, or a total of 364,551 gallons. This amount in its refined state at M a gallon would he worth £13,670 13s 3d, or in its crude state at 4d.a gallon £6075 17s. They would see then that it was most important that the capital should be increased by the issue of preference shares. One thing the chairman said he noticed was that it was not the want of funds that prevented the shares going off, and this opinion he had formed from the fact that during the year the capital for at least two mining complies had been raised in the town. Of course, the directors could not control the channels into which people should put their money, but they did think that members of the community who had spare funds at their disposal should do their best to keep alive this industry, the importance of which was hard to realise. A TRIED .WELL. To show its importance he asked, What would happen if No. 2 bore continued to flow for another twelve months? With its 75 barrels weekly at Od per gallon net refined, it would produce £5850 equal to: Interest on cost ol bore (£6204) at 6 per cent., £372; part management, one-fourth, £150; part office, one-fourth, £100; night watchmanl. £120; interest on JrefLnery (£5000) at 6 per cent., £300; Total, £1042. That would give an available balance of £4805, equal to 77 per cent, on the capital cost of the bore. Do you want anything better than that, he asked ? ("A Bullfinch," was someone's Further, the &as. from this boie

provided steam for No. 1, which could be estimated at £7 weekly which could be jyut down to depreciation or contingencies. Taking the total capital o: tiie company (£88,000) and the preference shares (£4250), the return from this bore was equal to five and one-fifth per cent. The chairman made a similar comparison of the return from No. 3 bore (producing 50 barrels weekly), and he showed that it would produce three per cent, on the total capital; or carrying the figures out further, the returns from both bores were calculated to produce eight and one-fifth per cent, on the £02,250 of total capital. If those figares would sink into the mind of every person all would realise the immense possibilities of the development of the industry to this place. (Applause.) Taking the value of the oil in its component parts, he stated that benzine was worth Is, burning oil lid, and spindle oil from Is Od to 2s; so that they would see the directors had not over- ! stated the value when they put it at 9d. He was safe in saying that with No. 2 flowing for the past eleven, months it was a record for the Dominion. (Applause.) The directors were contemplating having some special occasion on the anniversary of No. 2, and they were now considering the advisability of inviting the newspaper editors all over the Dominion to be present and let them see for themselves. (Applause.) He recog-. nised that while some people here were not convinced of the importance of the industry it was not to be wondered at that in other parts the industry was not estimated at its true worth. The directors anticipated giving the editors a real good time. (Applause.) And the important event was the approaching visit of Mr. J. L. Henry, who was wellknown as the founder of the Petroleum World and an expert in all matters pertaining to the industry. If they go him here and showed what had beei done and pointed out the possibilities Mr. Carter said he had no doubt the; would soon have the industry on i working basis. (Applause.) The sig nificance and importance of the industr; was apparent, and what was wantei was that public attention should b drawn to it, when he had no doubt im portant developments would soon follow With these Temarks, he would conten himself with moving the adoption of tin report and balance-sheet. (Loud ap plause.) The motion was seconded by Mr. J ■ Duffin. Mr. Eustace asked for lurther infer mation as to the estimated cost of e refinery. Would not a small one sutfi to deal with the present outpui be advisable? The chairman said he would not likt to give an estimate without being abl< to confirm' it. They could get a re finery to deal with from 100 to 125 bar rels weekly for perfiaps £SOOO. In reply to Mr. McAllum as to the meaning of £Bl 4s bonus on oil won ■the chairman said that was the manager's bonus, but as he did not com menee with the company until February last a whole year was not included. Mr. Ellis suggested more complete advertising of the oil returns throughout the Dominion by means of the Press statirig that weather reports and dredging returns were to be seen every day in the papers. The chairman said the directors had considered the matter, and had thought of appointing someone to prepare a weekly report for the Press. He referred to the fact that the price ol shares as published was not the true value, as when endeavours were made to obtain them, they immediately jumped up to a high value. Mr. A. H. Johnstone said, regarding the information given at the July meeting as to the company's sending of official papers to the Home Country, he would like to know if the directors anything to tell them in that direction" The chairman: No, but only last week they had received a letter making reference to the Bank of New Zealand where the documents were placed. Mr. Johnstone: Have no offers -besri received? """"s The chairman: No definite offers. Mr. Duffin referred to the fact that people did hot know-what the oil bores were producing. He said it was becatise they did not go and see for themselves. , They talked about striking oil and making a fortune, but he did not complain oi that. He visited the bores more than anyorie 'else; sometimes he saw Mr. Garter down there, but some of the directors he never saw. (Laughter.) On one occasion he found the men playing "Yankee grab," and sitting smoking, and he remonstrated with them. This 'was not in Mr. Keith's time he subsequently stated. Mr. Enroth advised the directors going on to other markets (Sydney, for instance) for the issue of the preference shares, as they could not be disposed of here. He thought that the money was tied >up in butter factories and other avenues of trade, and that ther.e ,was not the money in the district. The chainnan said the directorate ,jiad had all those sorts of schemes review. The motion for the adoption of, sie report and balance-sheet was then put to the meeting and carried unanimously. MR, BERRY'S ANNOUNCEMENT. Mr. Berry said he went to Wellington as one of the deputation, but veryj3lisht_ hopes were held out regardmg~tKe bonus. The difficulty seemed to be that if the Government assistgA.tlie company in this matter a pseweden* would be established,and thsje,-would be no end of applications from all over the Dominion. He had received a wire from Sir. J. G. Ward stating that the Government would give the £IO,OOO bonus on conditions which practically were the same asi he had endeavoured to get while in Wellington. This meant practically that the company would get the bonus when they had 250,000 gallons of crude oil. • (Applause.) Sums of £2500 would be paid at intervals: £2500 when the first 250,000 gallons of crude oil, including all sales, are obtained; the second £2500 on similar condition; the third on the production of 500,000 gallons, making one million gallons; and the balance when 500,000 gallons of refined oil had been produced. Mr. Berry spoke of his experience on the cab of the engine when the trial of oil was being made on the railway, everything being very satisfactory. Mr. Ronayne told him that if they would take the kerosene out of the oil and give him the residue at Id a gallon he would start and convert the engines into oil ones straightaway. (Applause.) Mr. Berry's remarks were heartily received, and he promised to write out a full -report of the trial and have it published in the Press. It was stated that the Government were prepared to buy the whole of the oil stored at 2d per gallon. ELECTION OF DIRECTORS. Messrs. C. Carter and J. B. Roy were re-elected directors. On the motion of Mr. Fraser, seconded by Mr. E. Griffiths, the sum of £2OO was voted to the directors as remuneration for the year. The mover of the motion spoke in terms of high praise of the directors' qualifications and specially mentioned the" splendid ""Work of the chairman, Mr. Carter—Mr. returned thanks for the vote, and for' the expressions of approval of his <mn and his Golleagues' efforts tfn behalf!! ol the company. Mr Bellnnger proposed a vote of thanks to Mr. Okey, M,P.,.forhis a^sistanc» ; ta

the deputation while in the House, and 1 in many other directions' in favor of ' the company.—Seconded by Mr. Fookes and carried unanimously. 1 The returning auditors, Messrs. Hugh Bailey and C. T. Mills were re-elected , auditors at a remuneration of twelve ' guineas each on the motion of Mr. J. C. Davis. An amendment to make the remuneration ten guineas was defeated. Mr. Teed proposed that the company sell the oil on hand for 2d per gallon.— ' There was no seconder. The meeting terminated with a vote of thanks to the chair.