Developers Oil and Refining Company
Oil discoveries in northwest Louisiana’s Bull Bayou in 1913 prompted exploration companies to drill wells to define the field’s limits. Many of these companies organized quickly and had little oilfield experience.
Aspiring entrepreneurs infected by Louisiana oil fever included a group of capitalists from Beaumont, Texas, and Phoenix, Arizona, who acquired leases in Pine Island and De Soto parishes. In September 1915, they incorporated their Developers Oil & Refining Company with $250,000 capitalization.
Finding investors to begin and sustain drilling operations required promotion and sale of Developers Oil & Refining stock. With states slowly passing laws to discourage fraudulent promotions, newspapers were awash with exaggerated claims and imaginary profits. (In 1912, Arizona had followed Kansas to become only the second state with “blue sky” laws designed to protect investors. ) Fraudulent financial schemes nonetheless continued.
Developers Oil & Refining Company began its promotional campaign in April 1916 with an Indianapolis News advertisement offering stock shares for 25 cents each, noting the company, “will complete independent oil drilling on 3,000 acres; refining our own oil will pay double dividends…not a wildcat proposition.”
Another Developers Oil & Refining promotion appeared in the Oregon News’ Business Opportunities column: “FORTUNE within your grasp; owning 3,000 acres Louisiana’s rich oil fields, will drill 15 wells and buiId refinery; want 1,000 investors each with $20 to join us; this buys 100 shares, par value $100; strictly legitimate enterprise.” In an adjacent column, the already notorious stock swindler, Henry H. Hoffman, trolled for “suckers” with his own scheme: “$10 invested with us has made others $300 in less than six months; let us send you our magazine, ‘Profitable Investments,’ six months free, which tells how to make your money make you independent.”
Developers Oil & Refining also advertised in Bisbee, Arizona, newspapers seeking 1,000 investors to advance $10 each to get in on the ground floor of a sure thing. By December 1917, the company had drilled its Safford No. 1 well down to 1,680 feet on a De Soto Parish lease. The Oil Trade Journal reported the company increased its capitalization from $1 million to $3 million and, “has perfected plans for the building of a large refinery ‘somewhere on the Gulf Coast.’”
“There is every indication also that the new field will be extended for miles south of the present Bull Bayou production,” added the Oil Paint & Drug Reporter. The Safford No. 1 “blew itself in, spurting oil all over the top of the derrick” in July 1918. Encouraging reports noted, “it would only take a small producer to make it a paying proposition.”
Investors rejoiced, but salt water intrusion and a failed down-hole “fishing” job near 1,800 foot depth junked the well. Successful completion of the Safford No. 1 well was prevented only by “accident or inexperience,” according to Oil Paint & Drug Reporter. Despite the failure, the Oil & Gas News soon after reported, “unmistakable evidence of the presence of oil and gas in large quantities and the entire territory lying between the Bull Bayou and the Developer’s (abandoned) well is now dotted with derricks.”
Financial World warned its readership, “A.C. McClaughry of the Developers Oil & Refining Company pursues his goal of “making the poor man rich overnight. How can a person believe a security is secure when it is admitted that unless $2,500 is at once raised, the company will lose all it so gallantly fought for?”
By March 1919, McClaughry’s promotions provoked another harsh rebuke from Financial World: “He expects to do it by putting everybody into the stock at ten cents a share and expects the stock then to ascend like an aeroplane to one dollar a share.”
Developers Oil & Refining tried once again with the Safford No. 2 and got deep enough to set casing, but there was insufficient production to make the well commercially viable. The exploration company failed, leaving behind its fairy tale epitaph in the August 30, 1920, issue of Financial World, headlined “In the Land of Fairy Finance.”
The article condemned company officer R.E. Davidson: “Finding that he could not succeed in making an oil company out of the Developers Oil & Refining Co., he admits the fact to the stockholders and then throws up the sponge.”
Davidson made his case to stockholders, “I used your money for the purpose for which it was intended…I put the drill bits into the oil sands and used the funds of the company to do it, and if the Lord, when he made this earth, did not put oil under the wells we drilled, blame the fault on nature and not on me.”
Financial World editors suggested dissatisfied stockholders, “direct their complaints to the Lord, post office address – Heaven.”___________________________________________________________________________________
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 firstname.lastname@example.org. © 2019 Bruce A. Wells.___________________________________________________________________________________