Bandits and revolution in Mexico are not good for petroleum exploration.
National Oil Company of New Jersey originally formed in August, 1910, as a holding company with multiple subsidiaries, including shipping as well as oil exploration drilling operations in Texas and Louisiana. The subsidiary National oil Company of Mexico (formerly Cie Exploradora Del Petroleo) held title to about 36,000 acres of oil land as well as a tidewater terminal and other facilities on the Panuco River near Tampico, Mexico.
The leases on La Herradura and Los Chijoles came under attack during Mexico’s turbulent revolutionary period. On April 17, 1914, Constitutionalist forces raided, appropriated livestock and equipment, and forced the company to abandon a 30,000 barrel a day gusher that had yet to be capped. They returned 30 days later, but negotiations with Mexico over damages would last for decades.
In the intervening years, National Oil Company of New Jersey continued to operate in Mexico and was reported still solvent in 1919 and 1920. Moody’s Analyses of Investments gave the company’s New York Curb Market dividend-paying preferred stock a “Caa” rating: “Bought for possible appreciation, such a stock may in time become a satisfactory investment, but the purchaser should always realize that he is taking a considerable chance in buying issues of this class.” The company’s common stock did not pay dividends and earned the lesser and more speculative “C” rating.
By May 15, 1922, owing to default on debt and “the depressed condition of shipping and readjustment in the oil business,” National Oil Company of New Jersey was placed into receivership by a New Jersey Federal District Court. The bankruptcy included the Panuco River terminal oil properties in Mexico. John F. Penrose, former president of the failed company, was appointed as an ancillary receiver, “in subordination to a foreign receiver for the purpose of collecting and taking charge of the assets of the insolvent corporation.”
The receivers took charge and incorporated a New National Oil Company of Delaware on April 20, 1923, in order to acquire the Mexican properties of the bankrupt National Oil Company of New Jersey. They created the new company and issued 600,000 shares (preferred) and one million (common) as well as bonds.
As executing the receivership continued, in September 1923, the United States and Mexico agreed to the creation of a Special Claims Commission to litigate “claims which arose during the revolutions and disturbed conditions in Mexico from November 20, 1910, to May 31, 1920, due to the acts of certain specified forces, including bandits, provided in any case it was established that the appropriate authorities omitted to take reasonable measure to suppress the bandits or treated them with lenity.”
Former receivers Penrose and Thomas D. Wickham presented their claim to the Commission as “a majority of the surviving directors and trustees” from the now defunct National Oil Company of New Jersey. Their initial claim was for $1,880,050 for the successor company, the New National Oil Company of Delaware for the loss of 900,000 barrels of oil as well as equipment and livestock during the Mexican Revolution.
During next ten years of negotiations between Mexico and the United States, the receivers reduced the New National Oil Company of Delaware’s final claim to $573,854.59 on December 31, 1937.
The Special Claims Commission took small notice of New National Oil Company of Delaware – “The Commission does not find that it is incumbent upon it to determine the validity of the assignment and therefore considers the claim as one on behalf of the National Oil Company, a New Jersey corporation.” After reviewing the evidence, the Commission dismissed all but $11,400 of the $573,854.59 claim. Five more years of litigation followed.
Negotiations between the United States and Mexico continued until a November 19, 1941 agreement to settle with an “en bloc” (lump sum) payment of $40,000,000 as described in the 769-page tome: General Claims Commission (Convention of September 8, 1923) (United Mexican States, United States of America) 4 February 1926 – 23 July 1927 VOLUME IV pp. 1-769
What became of National Oil Company of Delaware’s $11,400 remains obscured by history, but today, the company’s obsolete stock certificates are valued by some collectors and its history by others.
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