The largest U.S. private oil lease ever negotiated was signed in 1933. The 825,000 acre King Ranch oil deal with Humble Oil and Refining will lead to ExxonMobil. The agreement, which has produced more than $1 billion in royalties, has been extended ever since.

king ranch oil

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.

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).

According to the Texas State Historical Association, King Ranch began in 1852, when Richard King and Gideon Lewis set up a cattle camp on Santa Gertrudis Creek southwest of Corpus Christi.

The ranch expanded into Nueces, Kenedy, Kleberg and Willacy counties. Its Running W  brand appeared in the 1860s.

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 the America – were dry holes.

Humble Beginnings

Humble Oil and Refining Company, a Houston company founded in 1917, drilled the King Ranch’s early “dusters.”

With no 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,” explains a 2010 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 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, will 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. The first successful oil well on the King Ranch was completed in 1939.

“Drilling was minor until 1945, when the Borregas oil field was discovered,” note Ashton and Sneed in their Handbook of Texas Online King Ranch article.

“After that, several major oil and gas discoveries were made on the ranch, where in 1947 Humble operated 390 producing oil wells,” they add. The company constructed a refinery in Kingsville to handle its growing oil production in South Texas.

Destined for Greatness

By 1953 King Ranch had 650 producing oil and natural gas wells.

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 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,” conclude  Ashton and Sneed.

“By 1994 the King Ranch had received oil and gas royalties amounting to more than $1 billion since World War II,” they add.

king ranch oil

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.

“The King family became the closest thing to royalty in Texas,” Nanette Watson proclaims 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 writes. “The ruling family’s tiered Mediterranean-style main house at the headquarters looms like a palace over the kingdom.”

Watson also says the family’s “destined for greatness” legacy was portrayed in the 1956 Hollywood epic Giant, starring Elizabeth Taylor, James Dean and Rock Hudson.

Although the rancher (Hudson) and the roughneck (Dean) are thrown into conflict prior to an 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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