In the early 1900s, the Ohio-Kansas Oil & Gas Company financed drilling operations with capital raised from stock sales. It had wells 12 miles southeast of Burlington, Kansas, and secured a franchise to supply natural gas to the town.
The Burlington Republican newspaper in April 1905 reported that “a prospectus of the Ohio-Kansas Oil and Gas Co., advertising its stock for sale, is in circulation, and a copy has been received here. It is circulated by J.H. Andrews & Co, Broker, 40S Fidelity Trust Co. Building, Kansas City, Mo., who will give all necessary information concerning the matter.”
The company’s account to the newspaper included a map of Woodson County showing the lease holdings and the location of five oil and two natural gas wells. “On the sixth page is another picture of a flowing gas well in flames. The first few pages of reading matter contain an introduction, an argument in favor of corporations and a list of companies that have proved very profitable to the stockholders.”
The newspaper futher noted Ohio-Kansas Oil & Gas statement that the company, incorporated in Arizona, “has an authorized capital of one million dollars divided into one million shares of the par value of one dollar each.”
The prospectus also claimed that the Ohio-Kansas Oil and Gas Company, “absolutely controls the perpetual oil and gas rights upon seven thousand acres of land in the defined oil belt of Kansas. These lands are located in Woodson county and our leaseholds were obtained at a time when the most liberal terms were procurable. Since then we have drilled in five excellent oil wells on the southern end of this tract. Three of these flow naturally. Yet this is not all. Even better, to produce quick returns, is the fact that we also have gas. We have located on the north end of this tract a gas field which develops immense pressure. We have drilled in two wells in this part of the field that have an estimated capacity of 3,000,000 cubic feet each of gas daily. This will have a ready market in the near by cities of Burlington, Emporia and Topeka….”
The company prospectus sent to the newspaper proclaimed, “This company will be run for the benefit of the investor, to which class its officers and directors belong. It is the purpose of the directors to sell a limited amount of the stock at 35 cents for each share, for the purpose of drilling several wells, installing a pumping-plant and getting our product on the market. Not one share of stock will be sold beyond this issue unless we find it absolutely necessary for the purpose of making improvements. The less stock outstanding the more valuable will be that of those fortunate enough to hold it.”
This was at a time before “Blue Sky” laws were enacted to protect investors from false advertising and operators from “engaging in any practice or transaction or course of business relating to the purchase, exchange, investment advice, or sale of securities or commodities which is fraudulent, or in violation of law, or would operate as a fraud on the purchaser.”
Despite the prospectus’ enthusiasm for Ohio-Kansas Oil & Gas, the company was subject to the same petroleum exploration risks and hazards that often led to bankruptcy. In August 1913, newspapers reported the company’s lease holdings just east of Longton had suffered heavy loss by fire (the Longton oilfield had been opened in 1902, starting a brief oil boom). The damage must have been substantial, because that same year, Ohio-Kansas Oil & Gas lost its charter to do business for failure to file required annual reports with the state. Stockholders were left with valueless certificates. Learn more history in Kansas Oil Boom.
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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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