TARANAKI OIL

Taranaki Daily News, Volume LIII, Issue 289, 26 April 1911, Page 3

TARANAKI OIL

FUTI'UE PROSPECTS. CHEAT POSSIBILITIES OF THE INDUSTRY. "Activity continues at the Taranaki Petroleum Company's bore at Moturoa. Shares -which a few months ago were begging at four or live shillings are now selling at par." This was the text of a telegram appearing in the Times on Wednesday morning. With a view to ascertaining what has led up to the rapid rise in the price of shares and obtaining some •information on petroleum matters generally, a Times representative interviewed a New Plymouth resident who was then on a yjsit to Wellington. "You have set me a rather tall contract," was the reply, '-as to do the subject justice would occupy several hours and more space than your paper would probably concede. What I have to say, then, must be regarded a.? but a bare. outline, a mere bird's-eye view of the operations that have been and are being carried on in New Plymouth, and -vliich may lead to important developments not only in so far as they afieet"the welfare of Taranaki's capital' town, but as affecting the welfare of the Dominion as a whole. PAGES FROM THE PAST. "There is, I find, not a little misconception in Wellington regarding the Dominion's baby industry. You will find some people, indeed, who regard the whole thing a.s a gigantic 'fake,' devised for the special purpose of extracting money from the pockets of the unwary investor or speculator. We have had them in Taranaki, too, but seeing is believing, and the local man's prejudice or blindness is fast being dissipated, if both are not already absent qualities. To understand the present position it is necessary to take you back to the early days of the sixties, when the first attempt was made to locate the seat of the oil that used to ooze through the black ironsand and find its way to the sea. The appliances used were, as can be imagined, very primitive. Several bores were put down, the deepest being just on 700 feet, but the oil measures were not tapped. "In ISBS a prospecting company was formed in London by Sir Julius Vogel; the necessary gear was sent out, and a bore put down to a depth of 900 feet. Almost everything went wrong, and the : enterprise was abandoned, although the man in charge of the drilling was confident of success. From that time to 11)04 several other bores were put down v ith local and Australian capital, this time to a greater depth and with more success, some thousands of gallons of oil being obtained. The quality of the petroleum was remarkably good, Professor (now Sir) Boverton Redwood, Ij.itain's greatest authority on ail, declaring it to be by far the most valuable petroleum discovered anywhere.

' j. he Hon. Oliver Samuel was the moving spirit in the prospecting enterprises, which, however, found in the water encountered while boring an insurmountahle obstacle to the gaining of the oil whilst bad luck dogged almost every step they took, and so threw'up the sponge, after losing thousands of pounds. But the prospecting was not going to end. A driller named jfair was so impressed with the possibilities that he persuaded an Adelaide syndicate to try their luck in Xew Plymouth, and they sent Fair's brother over to take charge of operations. Mr. Fair, who had not the best of plants, succeeded in getting a bore down to 2100 feet when funds gave; out. His people were discouraged and would not find further money, but Mr. Fair was sanguine of ultimate success, and he went around New Plymouth and induced several of the townsmen to subscribe additional capital. THE XEW ERA.

The new company was capitalised at £2000—400 shares' at £5. Of the* shares 310 were allotted for cash and 80 fully paid-up shares were given to Mr. Fair for services rendered and for the transference of certain boring rights, etc. In 100 C the capital was increased by the issue of 800 preference shares of £1 each. The boring work was continued, and at the 2331 feet level oil was struck in considerable quantities. This gave rise to the boom in shares (the £5 shares rapidly mounted up to as much as £CS) and' the formation of the present Taranaki Petroleum Company. "I want you to carefully follow the operations of the shares, this being necessary in order to understand what is meant by the telegram that shares which a few months ago were begging at four or five shilings are now selling at par. The new company's capital was fixed at £120,000 in £1 shares. The holders of each original paid-up £5 share were given 100 £1 shares in the new concern as payment for their property. Thus a man holding five original shares obtained 500 share? in the new company, whilst the preference shareholders in the original company received 20 shares for each £1 -hare. This absorbed 50,000 shares. The rest of the shares (64,000) were placed on the market, about 32,000 being allotted. Xow, tliese shares, representing £32.000, provided the money for the carrying on of the operations, but the money was found insufficient, and a little time back it was decided to place on the market a fresh issue of 30.000 shares of £l. Up to date I think about 16,000 have been allotted.

SHARE TRAFFICKING

"The trafficking that has been going on in oil shares has been almost totallyconfined to the original shares—that is, the £5 original shares capitalised in the present company at £IOO. so when you read in the papers that Taranaki oil shares are quoted at, say. 15s, it means that these original £5 shares are worth £75. and when quoted at par. as your wire states, are worth £IOO. The reason why investors bought these shares was doubtless because they carried no liability, whereas the contributing and preference shares did, extending only, of course, to their full value. As a matter of fact, however, the number of shares that has changed hands is not large. But a small proportion has furnished the food for the gambling or investing clement, the great bodv of shareholders preferring to hold until the field was thoroughly tested.

"As showing the faith and consistency of the present directors. T might mention that not one of them lias sold a single.share, even at the time when things' looked their blackest, and some are big holder.-. "George Fair, the driller, died, and his place was taken by Mr. Simpson, a drilling expert from 'Canada, who was in turn succeeded by Mr. Keith, the present manager, who has been doing very good and successful work."

DRTLLTXG WORK. But what of the bores-what has been done?

"Well, here are the results in a nutshell—

'■Xo. 1 (the one sunk by the Me Mr. Fair) put down 23(H) ft: gave oil a good quantity of oil and then was shut down. Clearing operations were conducted up till recently, but obstructions were met with, tools having been lost and become jambed and the piping ripped. "No. -2—Down :UWI)fl. The (lowing well of the held. - Been (lowing continuously for fifteen mouths at the rate of

twenty barrels a rf.ty. The oil is being stored' and nothing else is being done here, except to utilise the gas for fuel purposes at the other bores, where it is conveyed by pipes. , "No. 3—Down ar-tOft. The 'expert mental" bare* Several strata of oil have been met with, No serious attempt has been made to tap all the seams passed through, the desire of the company being to go deeper and tap the main reservoir, which indications show not to bo far off. The gas pressure is enormous. At any time you may hear of a rich body of oil being tapped here. As it is, about ten barrels of oil are being saved from the well, coming up between the two sizes of easing used.

"No. 4—Down 800 or OOOft. In bad country and not being worked. "No. a—Down about 1360 ft. A very promising welt. Gas was struck at 800 and again at 1100 ft. There was a iu'twy 'blow-out' at the latter level week before last, causing not a little consternation in the neighborhood. The strong gas veins at such comparatively shallow depths are considered extremely favorable, showing, as they do, that the oil measures, and big ones at that, are not far distant,"

PRICE OF SHARES. How do yon account for the present sharp rise in shares? "Well, before Easter they were quoted at 14s. If they are now selling at £l, I take it that the company have had a good offer to purchase and are likely to accept. The selling of the concern may happen at any moment. It is known that several wealthy syndicates from. Home and elsewhere have becii nibbling for some time past. Taranaki people wish to see the industry developed; they are'not particular who does the develop-1 ing so long as it is done, and done soon. ! It has been shown that the.public New Zealand will not or cannp.t put up the necessary money (although they seem to have plenty to spare for goldmining and the tote); the Government are not worrying themselves about helping the industry (although ttfey have plenty of money available for hydroelectrical schemes' and other things); so it looks as if we must turn to the out.side capitalists for the money necessary to properly develop the industry. The thing cannot be done for n\ '?vr thousands; it requires hundreds of thousands. Mr. ,T. D. Henry, the British .oil expert, who was in New Zealand the other week|< said he thought, it would take about three millions to develop the known oil fields of the Dominion,

MR. HENRY'S MISSION. "This brings me to another point of some importance. Mr. Henry came out here on behalf of the oil kings of London to report and advise. He occupies a position as a petroleum expert second only to Sir Boverton Redwood. He it was who was responsible for .millions of British money being invested in the oil ventures of Trinidad" Newfoundland, Maikop, Armenia and Egypt. He was very favorably impressed with what he saw at New Plymouth, which, in his opinion, is built on a great oil reservoir, extending some distance inland. You remember what he said before leaving the Dominion: 'I am prepared to say in New Plymouth, and I will not be afraid to repeat it in London, "It will pav us to keep a sharp eye on Taranaki, a'nd some other oil fields in New Zealand." Again, he said, 'The day will eome, probably in as short a period as six years, when' the value of New Zealand's' oil production will be equal to that of gold.' At the end of his visit, he said: 'I am prepared to say that Taranaki deserves w.hat support I can give in my humble way in the future. lam prepared to back Taranaki'against the other fields of the Dominion, and to back the Dominion in what I and other oxperts think it will do and i.s doing.' These are the words of a confident and enthusiastic man. If it weTe not for the high and honored position Mr. Henry occupies in the petroleum world, one would be almost inclined to think they came from an over-sanguine man.

"It was thought Mr. Henrv would have completed the purchase of the property ere he left, So he would have had i't not been for a former New Zealander with an axe to grind who succoeded in influencing Mr. Henry's people in London; What Mr. Henry thought of the proposition may he gauged from the fact that instead of carrying out his original plans and inspecting on behalf of his people the shale oil properties in Xew South Wales, some wells in California, and a new field in Alberta (Canada), he hastened back to London by the quickest route. He is due back about next week."

WHAT MAT HAPPEX.

And if Mr. Henry, or someone else does not buy, what is going to happen? "The company can keep going in a modest way for some three years with their present funds, but the erection of a refinery to deal with the petroleum is out of the question, unless the whole of the latest issue of shares (the preferential shares) are taken up. The process is slo\v and the time has come for a forward movement, for dealing .with the industry in a thorough fashion—for. the expenditure of much greater sums of money than the company possesses or have in sight."

"The fact of the oil being there in payable quantities has been demonstrated beyond all doubt. Take the oil from No. 2 well, 20 barrels a day, or 140. barrels a week . A barrel contains 42 gallons. The crude oil is worth, for fuel purposes, about 4d a gallon. Refined, however, it is worth something like Is 4d a gallon. Say it is only worth Is, and "the barrel at £2 2s. *That works out at just under £3OO a week, and this is but one bore. Supposing there were 50 to 100 mores producing only 20 barrels a day, the profits would he enormous. This gives you an idea of the possibilities of the industry. There is good ground for the belief that Xo. !i will give a greater quantity than is being gained from Xo. 2. But twenty barrels from a well compares very favorably with the average output of the world's payable oil wells, which is 15 barrels a day." But the comparison is more favorable than these figures, indicate, as the oil of Tarauaki is, according to analysis, richer by as much as ]->0 per cent.' than the Old World petroleum, Therefore. Tnranaki oil would stand as .10 barrels to 15 barrels a day. So you see. Tarauaki even now is not doing so badly. The oil is being stored in underground tanks. Over a quarter of a million gallons have now been won, the bulk being stored, and unless something is done soon to refine, it the land in the locality of the bores will be honeycombed with underground tanks. Speaking generally, the outlook fo'' the idustrv is full of promise, and, in right hands, with plenty of capita! available, it will mean a great deal not onlv fo- Xew I'lvniouth. but for the whole of the Dominion."