PETROLEUM INDUSTRY

Taranaki Daily News, Volume LIV, Issue 145, 15 December 1911, Page 6

PETROLEUM INDUSTRY

Dawn of a New Era The British Oil Trust's Operations Refinery to be Established Six Deep Bores to be Put Down at Once Mr Carter's Great Mission

the negotiations. Your colleagues in New Plymouth, I am sure, will not require to be told that you have represented them in the Old Country with all the business ability and tact they never fail to acknowledge you have always shown as the chairman of their old company. Your London experience will henceforward be of immense service to those who have so loyally supported the industry in the past, and when, under the new regime, your oil fields become prosperous and world-famous I cannot doubt that your work here and your knowledge of the London end of the business will assist materially in bringing us rapidly to the time when every shareholder in New Zealand will be proud of the fact that he has remained true to, and stood • staunchly by, the oil industry of New Plymouth. Will you, then, do me the great kindness of assuring the directors and shareholders of your old company of my devotion and loyalty to the oil industry in New Plymouth., There is nothing hyperbolical about the statement that the Old Country now has its eye on the oilfields of New Zealand. I have done my best to carry out the promise I gave you to gain for it the position which it deserves to occupy in the estimation and good opinion of the English people. 1 hope the success you will now have at the wells and with the refinery it is proposed to erect will be solid recompense for all the sacrifices which have been made by the many faithful oil men of New Plymouth, and give those who take an interest in the new undertaking, a substantial and permanent return on their investments. No memories connected with my visits to oilfields are more pleasant or can be more enduring than those which are associated with my stay in New Zealand. If there is anything that will increase my appreciation of the | exceptional kindness shown me by the I people of New Plymouth it will be the news that you have been equally warm in your reception of my friend and colj league, Mr. H. J. Brown." At the conclusion there was considerable applause, which was redoubled when | Mr. Garter remarked that, as all must | know, Mr. J. D. Henry was now on his i way to New Plymouth.

There was an attendance of over 4(10 shareholders, including a large number of ladies, at the fifth annual meeting of the Taranaki Petroleum Company, which was held in the Good Templar Hall yesterday afternoon. Mr. C. Carter, chairman of directors, presided, and there were also on the platform the other members of the directorate, Mr. Keith, manager of the company, and Mr. H. J. Brown, chairman of the British Empire Oilfields, Ltd. The report and balance-sheet, as already published, were taken as read. Mr. Carter, in moving its adoption, said that he did not purpose at that time making any comments on the balancesheet, and would pass from it with a view to giving them an opportunity of listening to a gentleman who had just come amongst them and who had something important to say. Mr. James asked for some information re the amount of oil in stock. He had a definite object in asking this. The secretary pointed out that this was dealt with in the manager's report. The report and balance-sheet were then adopted without any further discussion. MANAGER'S REPORT. The manager's report was read as follows: No. 2 bore—The No. 2 well has been, and is still, flowing oil, from the date of my last report, or nearly two years, without the quantity varying very much. The yield from this well has been 90,615 gallons up to September 30, 1911, but up to date it is about 103,000 gallons. No. 3—From December 31, 1910, to June, 1011. I have deepened this bore from 3265 ft to -4020 ft. or 75.5 ft deeper. From the latter date this well lias How- ' ert nearly continuously at the rate of 38 to 40 barrels per week. j ■ Xo. s—From December 31, 1910, to | ! date, we have sunk this bore 1803 ft. or, I with the 217 ft previously done, a total I depth of 2020 ft. Several attempts, not j | as yet successful, have been made to shut off water, but I hope to do so ' shortly. I had nearly succeeded, when ' the bottom length of Sin casing showed such a faulty condition that I have had 1 to pull the whole string, and am nowputting it back, with all made good. The oil in stock at September 30, 1911, was 218,047 gallons; plus used during the year, 12,219 gallons, or a total of 231,108 gallons. Less on hand September 30, 1910, 91,551 gallons; total won for year, 139,015 gallons. Mr. James did not yet clearly understand what oil was in stock, say, a week ago, or when the balance-sheet was made I out. | The secretary pointed out that on September 30. when stock was taken, | there was 218,947 gallons. 1

CHAIRMAN'S REPORT THE HOME NEGOTIATIONS. AN IMPORTANT STATEMENT. Mr. Christopher Carter, chairman of directors, reported: | Since the last annual meeting very imI portant developments have taken place in connection with your interests and j with the oil industry of Taranaki geni eri'.lly. Probably the greatest is the in- : terest shown by English capitalists and oil experts. Early in the year Mr. J. D. I Henry, a gentleman with a great reputation, both as an oil expert and literary , authority on oil matters, was asked to I visit this district on behalf of the British j Empire Oilfields, Limited, and he devoted > the greatest part of his time in inspect- • mg our properties and the oil-bearing I territory of Taranaki. It is unnecessary | for me to mention how highly pleased I and enthusiastic he was regarding the ■ prospects of the industry in these parts tor through the Press and in other ways' he made this known to everyone. Then, as soon as he returned to England, he published a work entitled, ''The Oilfields ot New Zealand," which must be regarded as one of inestimable value, containing as it does a complete history of the great Jignt to win oil in these parts. This book stands as a monument to those who have been responsible for the great work done in the past in connection with oil and is a credit to the author. It cannot help but have the most beneficial effect in I'-ngland and foreign oil centres. As a result of Mr. Henry's investigations and impressions, lie, acting on behalf of his principals, the British Empire Oilfields Ltd., entered into negotiations with your directors with a view to purchasing our interests. Those ended in an offer being made, and a request that a representative of your company should immediately P sTi d w with f «" Power to act on behalf of the company. The directors, with that consideration and confidence they had always shown me since I have been chairman, asked me to at once proper to London to act on their behalf lieni ising the great importance attached to the introduction of capital and British interests I willingly acceded to their request.

DIRECTORS. Tha chairman said that at this juncture it was necessary to have a resolution fixing the number of directors, although possibly their services might not be required for a very long time. On the motion of Messrs Wyhurne and Ambury, it was resolved that the number of directors 'be as before, namely, seven. Messrs. H. J. H. Okey and C. E. Bellringer, being the only two nominated for the two vacancies, wore declared elected. Mr. E. Griffiths moved that the sum of £250 be voted to the directors by way of honorarium, to be apportioned among them as they may think fit. The work done by the directors had been of an important nature and that they had carried through to signal success all believed to be correct. It was, he emphasised, to bo regarded as an honorarium, and not in the nature of payment for services rendered. because it was quite impossible for him to estimate what would be a fair sum for such services. The directors were all business men, and time was precious to them; nevertheless they had devoted an enormous amount of time to the company's affairs, and for many j weeks had met once a week, and, in fact,: often twice a week. Also every day one i oi other of the directors took a trip out! to the bores to see that everything was going satisfactorily. This vote would merely be a small recognition of the good work done during their term of office. Mr. D. Me AH u m seconded the resolu-' tion, which was put to the meeting by. the secretary and carried unanimously, j

AUDITORS. On the motion of Mr. A. B. Davis, seconded by Mr. James, Messrs. H. Baity and C. T. Mills were re-appointed auditors for tiro ensuing year, at a fee of £ 12 12s each. Mr. Carter asked if there were any questions to 'be put before he proceeded to give an awount of the business transacted in England. No questions were forthcoming. j

' ARRIVAL IN LONDON. r On arrival in London I found Mr. iJcnry absorbed in the completion of lua r book on New Zealand oilfields, and Mr [ xl. J. Brown, chairman of the company . for which Mr. Henry acted whilst in New Zealand, busily engaged in floating the large company known as the Carpathian Oil Company. Business, I found, was considerably upset as a result of the dock and railway strikes, and international complications arising from the Moroccan . diflietilty. The Stock Exchange was de- | moralised, and the financial institutions r were affected by the uncertainty of what, might transpire in the event of a prolonged period of national differences. At this juncture I would like to explain that even i T this state of financial (uncertainty the gentlemen interested! made no hesitation in signing the agreement and paying the £2OOO deposit Mncw I have returned to the Dominion | a new proposition had been arranged fix- | ing the price. It would be remembered that an extra £IO,OOO was to be paid if oil were struck at No. 5 bore. In underwriting, however, it was necessary that a definite price should be fixed—the price

MR. HENRY'S MESSAGE. The secretary read the following letter from .Mr. ,7. D. JJenry to Mr. Carter: "I am thinking to-night, the eve of .vour departure for New Zealand, that I you may be pleased to take a brief message of goodwill and encouragement to my many friends in -New Plymouth. Before telling you what I would like you to say, I desire to congratulate you'on the splendid success of your work in London. Speaking on behalf of my business colleagues. 1 can with confidence say that the uiost healthy and encouraging It'cliug of optimism which exists 011 every "•"id in connection with the New Plymouth undertaking is in a large way due to the courteous, considerate and able manner in which you have taken part in I

could not be left open. Accordingly an arrangement had been made which fixes the price at £105,000, irrespective of whether oil is struck at No. 5 or not. It is 'thus absolutely certain that the shareholders will get £SOOO for No. 5 bore. (Applause).

DRAFTING THE AGREEMENT. As soon as the way was opened, we proceeded with the drafting of the agreement. I realised how important it was to safeguard every interest of our company and to ensure inclusion of every point of advantage to our shareholders, because whatever was done had to be done then as it was impossible to have any variation of . the terms made when once the agreement was ratified. In other words, what I agreed on then, on behalf of my people, had to form the basis of all future negotiations or dealing in connection with the company that was subsequently to be floated by the British Empire Oilfields, Ltd., to work our oilfields. In this I hope you will find I have succeeded.

TERMS OP THE AGREEMENT. You are already in possession of information as to the purchase price, namely, £IOO,OOO, plus an extra £IO,OOO should oil be struck in No. 5 bore before completion of purchase. The agreement provides for a capital of £400,000. Provision has been made out of this sum to pay purchase money, provide for flotation expenses, and leave a sum sufficient for adequately working the industry, namely, about £220,000. It is also provided that the minimum subscription upon which the company may proceed on allotment shall be such an amount as will suffice to provide the cash portion of the purchase price, payable to the vendors, and all the preliminary expenses of the company. The jJritish Empire Oilfields, Ltd., are also undertaking to underwrite sufficient shares to enable the new company to proceed to allotment.

The following provisions are also incorporated in the agreement:—That any new plant purchased after June 1, 1011, is to be paid for by the new company; that preliminary costs and expenses (including my own expenses to London) be borne by the new company; that the Government bonus be paid to the Taranaki Petroleum Company up to the time of completion of sale; and that the new company purchase all oil stored at 4d per gallon at date of completion of sale. The agreement further controls promoters' interests and limits flotation expenses, defines the lines on which the new company is floated, so as to comply with the terms of the agreement, and also provides for the completion of purchase.

In connection with the latter, I may state that the time has been extended to January 31st, 1911, which was foreseen before I left London, and Mr. Brown left fully knowing that the agreement would have expired prior to his arrival, but was confident that we should act fairly.

ERECTION OF A REFINERY.

Probably the most important desideratum in connection with our industry is the establishment of a refinery. I might meation that the policy of the new company will not only be' to put in hand immediately the work of sinking further bore holes, 'but to erect a refinery to deal with the oil already stored and that which we are obtaining.

THE QUALITY OF THE OIL.

It is very desirable that the oil should be refined rather than that it should be sold as it has been in its crude condition, as analysis has shown it to be the richest oil in tho world, not excepting the Pennsylvania oils, which it surpasses in by-products, especially in that of wax, the quality of which astonished the people to whom it was sent in England for analysis. Even our London principals were amazed at the quality of the oil. It is certain that with capital, skill and experience that will now be available the industry will be an unqualified success, and lead to developments unsuspected by the most sanguine of those before me to-day.

POTENTIALITIES OF THE INDUSTRY. My recent trip Home has conclusively proved to me the potentialities of the industry in our midst. Petroleum is the fuel of the future; nay, it is the fuel of the present, and if we can guarantee supplies there is not the slightest doubt ■ that we can get sale for all we can produce. Shipping companies operating in the Atlantic Ocean are at a great disadvantage at present in regard to fuel, so are the companies operating to and from New Zealand and Australia, and instead of paying the cost of getting coal to different stations, they would gladly turn to oil if it could be got in sufficient quantities. lam just mentioning this point in passing, for, as I have said, our oil is altogether too valuable to sell in the bulk, though it might be possible to extract the most valuable properties and sell the residue for fual purposes, as was suggested by the rail* way authorities of this country after the very successful trial was made over the Eimutaka Mountain with our oil. AN IMPORTANT STIPULATION. But I am getting away from my subject. When I reached London I found that in the flotation of companies, the gentlemen that had to be taken into serious account were the underwriters, and that tlicy did not give their services to the public for nothing. On the contrary, I found that they required and received very handsome remuneration. It | occurred to me that it was but a fair | proposition to stipulate that if our own shareholders were desirous of taking interests in the new company that this underwriting consideration should be extended to them. This was agreed to after considerable negotiations. This represents a concession to our shareholders of between £,jooo and fCOOO. This as- ' pect will be fully dealt with by my friend, Mr. Brown, who is with us to-day. I would only add here that I was able to i arrange that a proportion of the shares in the new company should bo offered in New Zealand.

FINANCIAL INTERESTS IN LONDON. financial men in London are not to be caught nowadays with lifeless propositions. They want something particularly good and attractive, and it is well for us tlnit we have flowing wells and the record of progress for the past few years, otherwise London could not have been induced to look at our proposition. I can say this with confidence, .that they are fully satisfied with the possibilities of the laranaki field and of the great opportunity when the refinery is erected of being able to supply many of New Zealand's requirements, without mentioning the supply of oil. for naval purposes now obtained from foreign parts.

THE LONDON PRINCIPALS. Now I come to the London principals, and it is my duty as your representative to give you ray impressions of them. I might mention for a start tliat I am very pleased with the whole group. Mr. Henry, who is one of the many advisers to the Oil Trust and the British Empire Oilfields, Ltd., some of you already know. Mr. Brown is here and has been amongSt us for the past, ten days. I know his reputation aud high standing in London,

and would: like to mention some of his associates, men who will be our associates. First, there is Sir John Harrington, who has represented the British Government diplomatically in more than one country, and, although comparatively | a now man to oil, has taken it up so thoroughly that in a very short time I anticipate he will be considered one of London's big oil men. There is Mr. Oswald .vettlefold, governing director of Xettlefold and Sons, of screw fame, whom you probably all know in connection with one of the great industrial businesses of the Mother Country. There is Mr. E. T. Boxall, chairman of the Premier Oil Company in Galicia, also chairman of other Galician oil companies, representing the output of practically half the oil on the oilfield of Borislav and Tustaniwice. Mr. Boxall is one of London's foremost oil men. There is a Mr. Leonard, a director of Leonard and Co., tank steamer owners. This firm was the i'irst English firm to adopt tank steamers for the carrying oi oil. Then, among many other names I might mention, there is Mr. Charles Perkins, of the firm of Perkins, Mackintosh and Perkins, oil well owners in Galicia, having large works for the manufacturing of oil tool and plant connected with the oil drilling at St. Alban's, England. The Army 1 is represented by General Sir Reginald Pole-Carew. one of the most famous generals in the Boer war. So that, I think, we may congratulate ourselves in not onlv being associated with oil men of the lirst -degree, but with some of the leading lights in commerce, diplomacy and strategy, all alike useful in starting a new industry.

One cannot have been in London «o long as I was, and spent so much .time in Mr. Brown's office as I did, withou seeing the stamp of men that was con stantly coming in and out. I formed r very high opinion of these men, and have nothing but praise for the way in which they met and treated me with regard to all matters of business. lam quite confident about their ability to carry through what they have undertaken. They have already committed themselves to an expenditure of about £ 10.000 in preliminary expenses. They are hard-headed, shrewd business men, who are not likely to commit themselves to an undertaking of this kind without seeing their way through it, but they have their ideals, and one of these ideals is the development of oilfields within the Empire, hence their strong interest in Taranaki oil. They are in touch with geologists, drillers, engineers, and expert analytical chemists. They know all about the latest and most up-to-date machinery for oil boring, and have a perfectly organised office for carrying out all these important matters. Mr. Brown, for instance. is chairman of a company operating in Kussia which is manufacturing every article required in drilling operations. Mr. R. Simpson, the managing director of the British Empire Oilfields. Ltd., and with whom 1 practically carried on all my negotiations, will be intimately associated with us in the future. His whole heart and soul are centred in carrying through this undertaking :i;si in developing of the Taranaki oil iil' l il - \ v-'. Wll'-.V A STAirr WILL BE .MADE. It may in' a ■ked. "How is it that with ;'( !!• :r :■ : n llk'm' English people to carry ilin::tuii this concern, they did !".! <■():::])!>■: •' t!i • j I'vliase by November 3(1?" To this I would point out, it was impossible to do to the impossibility of reaching -V'.v Zealand in time; and. further, all do. uments were not available \v!i"n we arrived. The turmoils of the (I' Kion-; afterwards prevented us holding the meeting of shareholders till 11> .'-i- . Further, it was inot.; .r.aim ui p.aiv a proposition of this kind on the London market, disturbed as it was at the tune bv I'hirpean complications. I would draw your attention to the fact that we can call upon the British Empire Oilfields, Ltd., to pay i'oO.O(JO in cash for working capital, and as it was at the time by European company, but t hat is not our object. We want the oil industry of Taranaki organised, and in order to arganiso it we want these people's help. Had times on the London money market have prevented the issue of any oil companies, and knowing the position of this croup and their capacity for finding money, and in order to have their interest in us for all time, 1 and my eo-dircctors have thought fit that as regards time we would not press foi ■the fulfilment of the agreement, as it would be decidedly in our interests to obtain all the working capital required rather than force these people's hands to make an issue when financial Loudon was unnerved owing to the unrest previously referred to.

CONCLUSION". It will be in the memorv of shareholders that at a meeting called for increasV ing the capital of this company, your I directors urged as a safeguard, in the event of our disposing of the property, that we should make on:' r.i-ilion unassailable by increasing lh. capital. It was well for the shareholders that the proposal was adopted. At the same meeting the following statements were made, namely, "That never in the history of this company were the prospects .so bright and never so much oil in sight." Aiso. that "increased capital put into tii« industry would mean increased population, increased value of properties, both town and country, greater facilities and opportunities, and greater development of our port." At this very interesting juncture of events, and with a further knowledge of what has taken place and what is taking place, I can only say that we may retraet nothing that was then said. I would, with greater emphasis, reaffirm the conviction that we are on the eve of most important developments, developments that must put our town and district in the front rank of the districts of the Dominion.

Interesting as has been the progress, of petroleum in Taranaki, even more interesting and even greater developments may be expected in near future. Eventful as this Empire year has been that is now drawing to a close, and full of history as it has been, there is no event that has taken place within the whole period that is more momentus to us in this community than the introduction of British capital and British interests for the purpose of developing our oilfields. Mr. Carter's speech was punctuated by frequent applause, and on resuming his seat he was enthusiastically applauded.