Texas cattle ranch signed largest lease U.S. oil lease ever negotiated in 1933, helped launch major oil company.

 

The largest U.S. private oil lease ever negotiated was signed in Texas during the Great Depression. The 825,000 acre King Ranch oil deal with Humble Oil and Refining helped establish a major petroleum company. The 1933 agreement has been extended ever since.

Despite dry holes drilled more than a decade earlier, a geologist convinced his petroleum company to further explore a big ranch in South Texas. At one point covering one million acres, King Ranch today is still bigger than the state of Rhode Island (776,960 acres).

king ranch oil LIFE magazine 1957 cover

Well known in 1957, Robert Kleberg, the grandson of ranch founder, Richard King, made hundreds of millions of dollars in royalties from his grandfather’s 1933 lease deal.

The King Ranch began in 1852, when Richard King and Gideon Lewis established a cattle camp on Santa Gertrudis Creek southwest of Corpus Christi, according to the Texas State Historical Association. The ranch expanded into Nueces, Kenedy, Kleberg, and Willacy counties. 

The King Ranch’s distinctive  “Running W”  brand, registered in 1869, is said to represent a moving rattlesnake or the curves of Santa Gertrudis Creek.

As King Ranch became famous for its Texas longhorn cattle, petroleum exploration there began as early as 1919. Exploratory wells drilled by a future major oil company — the largest in America — were dry holes.

Humble Beginnings

Humble Oil and Refining Company, a Houston company founded in 1917, drilled early unsuccessful wells on the King Ranch. With no oil discoveries by 1926, the company let its lease expire. Years would  pass as new exploration and production terms were negotiated.

“Agreement was not reached until 1933 because Humble’s top management was uncertain about the oil potential of this part of Texas,” explained a 1976 article by John Ashton and Edgar Sneed. Company geologist Wallace E. Pratt finally convinced Humble Oil and Refining President W.S. Parrish to lease the King Ranch for $127,824 per year, plus a one-eighth royalty.

King ranch oil Humble Oil Houston logo

Humble Oil and Refining Company’s first home office was built in 1920 at Main and Polk streets in downtown Houston.

The petroleum lease, signed on September 26, 1933, would bring wealth to both the ranch and the young petroleum company. Subsequent leases from neighboring ranches gave Humble Oil and Refining nearly two million acres of mineral rights between Corpus Christi and the Rio Grande River.

Although King Ranch completed a successful oil well in 1939, drilling new wells lagged until 1945 and discovery of the Borregas oilfield. “After that, several major oil and gas discoveries were made on the ranch, where in 1947 Humble operated 390 producing oil wells,” noted Ashton and Sneed in their Handbook of Texas Online King Ranch article.

Humble Oil constructed a refinery in Kingsville to process growing oil production in South Texas.

Destined for Greatness

King Ranch had 650 producing oil and natural gas wells in 1953. In 1980, a subsidiary — King Ranch Oil and Gas — was formed to conduct exploration and production in five states and the Gulf of Mexico. Eight years later, the company sold its Louisiana and Oklahoma holdings to Presidio Oil Company for more than $40 million.

“In 1992 King Ranch Oil and Gas was one among several companies to discover natural gas off the coast of Louisiana,” concluded  Ashton and Sneed. By 1994, the King Ranch had received oil and natural gas royalties amounting to more than $1 billion since World War II, they estimated.

King ranch post card of Kingsville, Texas, mansion.

In Kingsville, Texas, the tiered Mediterranean-style main house of King Ranch headquarters, “looms like a palace over the kingdom.”

Humble Oil and Refining Company will consolidate operations with Standard Oil of New Jersey. By the 1950s it merges operations with Esso, leading to Exxon.

Today, as ExxonMobil,  the company continues to extend the King Ranch lease agreement that has been in effect since September 1933. “

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The King family became the closest thing to royalty in Texas,” Nanette Watson proclaimed in her April 2012 article in Houses with History. “Admired for their hard work and generosity, the family is expressly private and protective of their land,” she reported. “The ruling family’s tiered Mediterranean-style main house at the headquarters looms like a palace over the kingdom.”

Watson claimed the family’s “destined for greatness” legacy inspired the family portrayed in the 1956 Hollywood epic “Giant,” starring Elizabeth Taylor, James Dean, and Rock Hudson. Despite the rancher (Hudson) and the oil driller (Dean) in conflict prior to a oil gusher, by the time the movie was made, well control had been around more than 30 years (see Ending Oil Gushers – BOP).

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Recommended Reading:  Kings of Texas: The 150-Year Saga of an American Ranching Empire (2003). Your Amazon purchase benefits the American Oil & Gas Historical Society. As an Amazon Associate, AOGHS earns a commission from qualifying purchases.

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The American Oil & Gas Historical Society preserves U.S. petroleum history. Become an AOGHS annual supporting member and help maintain this energy education website and expand historical research. For more information, contact bawells@aoghs.org. Copyright © 2021 Bruce A. Wells. All rights reserved.

Citation Information – Article Title: “Oil Reigns at King Ranch.” Authors: B.A. Wells and K.L. Wells. Website Name: American Oil & Gas Historical Society. URL: https://aoghs.org/oil-almanac/king-ranch-oil. Last Updated: September 20, 2021. Original Published Date: April 29, 2014.

 

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