Investors in the United States took note when a major Canadian oilfield was discovered south of Edmonton.
The Imperial Oil Company’s February 1947 wildcat well had revealed the Leduc formation, which turned out to be the most prolific geological formation in Alberta.
Established the same year, the American Leduc Petroleum Company’s future quickly came into doubt when a Wall Street con man became its president. Lowell Birrell used the company”s impressive name to promote bogus drilling ventures to investors.
Birrell, who would spend several years in Brazil as a fugitive, falsified details about wells reportedly drilled in Cuba. He went overseas to avoid prosecution by the U.S. Securities and Exchange Commission (SEC).
“In the three years after Birrell became president of American Leduc Petroleum in 1954, the company issued six million new shares of common stock,” explains SEC prosecutor Arthur L. Liman in the 1998 book, Lawyer: A Life of Counsel and Controversy.
With exaggerated claims in his promotions, Birrell sold millions of company shares illegally, “using a boiler-room telephone and mail campaign run by a New York brokerage firm, J.A. Winston & Company,” Liman says.
American Leduc’s actual production of oil in Cuba was minimal; the company had no earnings, and its prospects were doubtful to say the least, according to Liman. For a time the fraud was spectacularly successful.
In one year, from August 1955 to August 1956, Birrell and J.A. Winston sold 3.5 million shares of American Leduc Petroleum at an average price of $1.05 per share. Three months later, the price dropped to about 50 cents a share. By July 1961, “the stock was trading for about eight cents a share and was overpriced at that,” Liman states. With an indictment returned on July 20, 1951, Birrell and his co-conspirators faced a possible sentence of 55 years and a $60,000 fine.
Although they were found guilty, government prosecutors decided not to pursue the case, which was dismissed. The stock has collectible value only.
According to the Petroleum History Society of Canada, the 2002-2003 Oil Register shows American Leduc Petroleum Company was incorporated in 1947 in Alberta and by 2002 had seven employees based in Calgary. Veteran Resources Inc. acquired the American Leduc Petroleums Limited in October 2003.
A Canadian oil museum today educates visitors about the true importance of the nation’s petroleum industry.
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The stories of exploration and production companies joining petroleum booms (and avoiding busts) can be found updated in Is my Old Oil Stock worth Anything? The American Oil & Gas Historical Society preserves U.S. petroleum history. Please support this AOGHS.ORG energy education website. For membership information, contact bawells@aoghs.org. © 2018 Bruce A. Wells.
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