7/ie TEXACO STAR MARCH 1930 - k- Producing Activities of The Texas Company on the Willard Lease, South Mountain, Santa Paula, California tfhe TEXACO STAR A PUBLICATION OF THE TEXAS COMPANY MARCH, 1930 The Crude Oil Situation E are bound to recognize that we are in a been in a large measure successful. They have re­ period of chronic overproduction, quite dif­ sulted in the recognition of all classes of producers, Wferent from overproduction situations we have hadlarge and small, that their best interests lie in the in the past where the over-supply brought about ultimate success of this activity. The movement has price conditions that discouraged new activities and generally had the sympathetic support of the Fed­ in a comparatively short period of time resulted in eral Oil Conservation Board and the state author­ production declining to and even below market re­ ities. The failure to accomplish all that was hoped quirements. lies in the legal difficulties, particularly in the States At the end of 1929 there was in storage in the of California and Texas. California’s crude produc­ United States over 500,000,000 barrels of crude oil, tion in 1929 exceeded the 1928 production by over with estimates of potential shut-in production run­ 60,000,000 barrels. Texas’ production exceeded that ning as high as 1,200,000 barrels daily in the United of 1928 by 41,000,000 barrels. The increase of the States and 800,000 barrels in other countries. entire United States amounted to 104,000,000 bar­ New and scientific methods of finding producing rels. structures and improved methods of drilling that This company took the position publicly about a permit of producing from greater depths are likely year ago that the remedy for the condition of over­ to prolong this condition over a much longer period production rested with these two states. It repeats than we have ever experienced before. This condi­ that position today. If California under its present tion should not and need not, however, be a menace conservation laws can bring its production back to or handicap to the industry if proper advantage is near the 1928 level, and if the legislature of Texas taken of this ability to explore and determine the now in session will improve its conservation laws underground reserves without the necessity of pro­ so that the producers of that state can bring their ducing and storing above ground. production back to the 1928 level, such economic The remedy does not lie in legislation penalizing reasons as warranted the recent price cut can be re­ the purchasing and transportation companies. The moved. Any attempt to check the situation through legislatures cannot repeal the law of supply and regulation of refinery runs or gasoline stocks would demand. The remedy would appear to lie in suitable appear to lead into almost insurmountable tech­ conservation legislation which permits producers nical and legal difficulties, whereas each state can themselves in the principal oil producing states to deal with production within its own borders. cooperate more freely in maintaining a balance be­ We were among the last of the large purchasing tween production and market requirements. If the companies to meet the recent price reduction and 1929 production had been kept within the limits followed reluctantly. It is obvious, however, that of 1928, according to the economic program out­ competitive conditions do not permit us to pay more lined at Houston a year ago, there probably would for crude than our principal competitors. We be­ have been no cut in the price of crude oil. This lieve that the general spirit of cooperation within course has in it about the only promise of a stability the industry that was and is followed by the pro­ of crude prices that will admit of the operation of ducers should have influenced the principal pur­ smaller producing properties and wells of small chasing companies to attempt to maintain crude production, of which there are many thousands. prices until the cooperative movement had received The efforts of the industry to voluntarily restrict every possible opportunity of succeeding. production, while not entirely satisfactory, have —R. C. HOLMES. -1- Vhe TEXACO STAR f S Inspection Party Nearing East Side Stills at Our Port Marine Equipment Used in Arthur Refinery Visiting Our Lake Pelto Properties, Louisiana President R. C. Holmes at South Mountain, Cal. Part of Our Port Arthur Refinery from Roof of Corner of Our Landslide the Compounding Plant Lease in Humble Pool- No. 269 IVell in Center L.to R.—Messrs.H olmes, A Group Pauses to Pose Norris, Hill, Angell, for the Photographer Lapham. Rockwell, Ste­ at Coalinga, California vens, Hover and Ames THE ANNUAL INSPECTION TOUR FFICERS and several members of the Board the Producing Department, and Lester J. Norris, Oof Directors of The Texas Company have re­ of St. Charles, Illinois. cently returned from an inspection of some of the The properties inspected on the trip were sales Company’s properties. facilities at Chicago, the refinery at Lockport, The party, leaving New York on January 14 and Illinois, producing activities in Southern Louisiana Chicago on January 15, included R. C. Holmes, and Southern Texas, refining facilities at Port James N. Hill, J. H. Lapham, Albert Rockwell, Arthur, Port Neches, Houston, San Antonio and El Eugene M. Stevens, C. B. Ames, W. S. S. Rodgers Paso, Texas, and producing, refining and marketing and I. Rieber, all Directors of the Company, as facilities in the State of California. well as R. Ogarrio, Vice President in charge of The party returned to New York on February 5. •2- Annual Report of the President for 1929 The text of the President’s Annual Re­ port to the Stockholders is reproduced in this issue, for the benefit of those readers of The Star who may not have received a copy of the original. Lack of space makes it necessary to omit the tables. New York, N. Y., March 15, 1930 feature of the Debentures and to have treasury To the Stockholders: stock available for possible future requirements. Investment expenditures during the year by de­ We submit herewith Annual Report of The Texas partments or divisions of activities were as follows: Corporation and its subsidiary companies for the Producing 821,164,067.09 year ended December 31, 1929. The report through­ Refining 27,845,823.79 Sales—Domestic and Foreign 19,072,952.83 out is on a consolidated basis except as may Tank Fanns and Tankage .......................... 3,531,541.16 be otherwise stated. There is reflected in these Pipe Lines 9,129,973.28 statements a material increase in investment expen­ Other Facilities 1,818,262.87 ditures and an increasing volume of business. In­ Total 882,562,621.02 ventories are carried at cost, lower than market. Earnings for the year available for dividends and Producing Operations surplus, after deductions for Federal Income Taxes United States and all reserves, were 848,318,072.22, being 85.12 Our gross production of crude oil for the year per share on the average of 9,433,164 shares out­ amounted to 50,410,685 barrels, an increase over standing during the year, as against $45,073,879.73, 1928 of 6,140,715 barrels, or 13.9%. Our net in­ or $5.56 per share on the average of 8,107,763 terest in the production, plus oil produced by shares outstanding in 1928. As of April 2, 1929, others for our account, amounted to 43,599,124 1,403,671 new shares were issued and became out­ barrels, as compared to 38,594,965 barrels in 1928. standing pursuant to the offer to stockholders, on On the last day of the year our gross daily produc­ October 16, 1928, of additional stock at $40.00 per tion was 129,110 barrels, with approximately 43,- share in the ratio of one share of new stock to each 000 barrels per day shut in. six shares then held. In June we acquired the producing properties of The desirability of providing more fully for the the Josey Oil Company in Oklahoma, consisting of financial needs of the Corporation became evident 2,563 acres of producing leases and 1,256 acres of after the middle of the year, and at a special meeting undeveloped leases, together with 66 oil wells hav­ of the Board of Directors on October 8, 1929, plans ing a net daily production of 1,760 barrels. were made for the sale of $100,000,000 par value Acreage held at the end of the year amounted Convertible Sinking Fund 5% Gold Debentures, to to 5,631,424 acres. be dated October 1, 1929, and maturing October Drilling operations throughout the year were 1, 1944. On November 6, 1929, the stockholders confined almost entirely to necessary offset wells for ratified and approved the action of the Directors the prevention of drainage and for the protection and Officers in the issuance and sale of Deben­ of expiring leases. tures, and further authorized an increase in the Our Geological and Geophysical Divisions have, capital stock of the Corporation from $250,000,- however, been active, and leases have been acquired 000 to $350,000,000, or an increase in the number on more favorable structures and on a larger num­ of $25.00 par value authorized shares from 10,- ber of structures than in the past. 000,000 to 14,000,000. The purpose of the stock Drilling operations, under our contract with increase was to make provision for the conversion The Louisiana Land and Exploration Company re­ Vhe TEXACO STAR ferred to in our Annual Report for 1928, resulted from Gray County to our refinery at Amarillo.