As petroleum booms spread from Texas and Oklahoma to California in the early 1920s, exploration companies competed desperately to find investors.
While some companies may have exaggerated drilling successes, others resorted to fraud using the U.S. mail.
In 1922, the Ranger Petroleum Company was indicted along with five other companies by a federal grand jury in New York.
The indictment described a stock promotion scheme based on the merger of Ranger and the others into the Century Consolidated Oil Company, capitalized at $10 million.
“The federal prosecutor explained that the consolidation of the five oil companies and the organization of the finance corporation was to enable the promoters under indictment to launch a gigantic stock-selling campaign through the mails,” reported the New York Times.
Investigation revealed that the promoters had made false representations in their stock selling campaign, claiming to have “over 100 producing wells in proved territory” when in fact the total was less than six wells under the company’s control.
Ranger Petroleum Company soon disappeared. Today its stock certificate is valuable only to collectors.
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 email@example.com. © 2018 Bruce A. Wells.