by Bruce Wells | Sep 29, 2022 | Petroleum Companies
Elk Basin United Oil Company incorporated in 1917 seeking oil riches in Wyoming’s booming Elk Basin oilfield. Oilfields found in North Texas, including a 1911 gusher at Electra, already had resulted in a rush of new exploration ventures – and created boom towns like Burkburnett.
Wherever found, America’s newly discovered oilfields led to the founding of many exploration ventures that competed against more established companies.
Newly formed companies frequently struggled to survive as competition for financing, leases, and drilling equipment intensified, especially as exploration moved westward.
Wyoming Oilfields
In a remote, scenic valley on the border of Wyoming and Montana, a discovery well opened Wyoming’s Elk Basin oilfield on October 8, 1915. Wyoming’s earliest oil wells had produced quality, easily refined oil as early as 1890.
Drilled by the Midwest Refining Company, the wildcat well produced up to 150 barrels of oil a day of a high-grade, “light oil.” Credit for oil discovery is given to geologist George Ketchum, who first recognized the Elk Basin as a likely source of oil.
“Gusher coming in, south rim of the Elk Basin Field, 1917.” Photo courtesy American Heritage Center.Ketchum, a farmer from Cowly, Wyoming, in 1906 had explored the area with C.A. Fisher, who had been the first geologist to map a region within the Bighorn Basin southeast of Cody, Wyoming, where oil seeps were discovered in 1883.
The Elk Basin, which extends from Carbon County, Montana, into northeastern Park County, Wyoming, attracted further exploration after the 1915 well. More successful wells followed.
Once again, petroleum discoveries in unproved territory attracted speculators, investors, and new companies – including the Elk Basin United Oil Company.
Established petroleum companies like Midwest Refining — and the Ohio Oil Company, which would become Marathon Oil — came to the Elk Basin. These oil companies had the financial resources to survive a run of dry holes or other exploration hazards.
The exploration industry’s many smaller and under-capitalized companies would prove especially vulnerable.
Audacious advertising claims helped Elk Basin United Oil Company compete for investors.
Is My Old Oil Stock Worth Anything features several such small players in Wyoming’s petroleum history, including the notorious Dr. Frederick Albert Cook (Arctic Explorer turns Oil Promoter). Even Wyoming’s famous showman, Col. William F. Cody, got caught up in the state’s oil fever (Buffalo Bill Shoshone Oil Company).
Elk Basin United Oil Company
Elk Basin United Oil Company of Salt Lake City, Utah, incorporated on July 30, 1917, and acquired a lease of 120 acres in Wyoming’s Elk Basin oilfield. By February 1918, company stock sold for 12 cents a share.
Enthusiastic newspaper ads promoted its “6 properties in 3 different fields…A 6 to 1 shot!” Twenty producing wells were reputed to be within one mile of Elk Basin United Oil’s Wyoming well site.
Meanwhile, Elk Basin United Oil reported expansion plans underway in a growing Kansas Mid-Continent oilfield. The company secured leases near Garnett and completed four producing oil wells, yielding a total of about 500 barrels of oil a month. It added an additional 112 acres and planned a fifth well.
Prairie Pipe Line Company (later Sinclair Consolidated) completed pipelines into the Garnett field through which several companies looked to transport their oil production.
However, growing competition from better funded exploration ventures and low crude oil prices ranging between $1.10 and $1.98 per barrel of oil in 1917 and 1918 drove many small companies into consolidations, mergers or bankruptcy.
Elk Basin United Oil, exploring back in Wyoming by March 1919, sought a lease on the property of the First Ward Pasture Company bordering the Utah line, “with a view of prospecting the property declare the surface showing to be very favorable for an oil deposit.” But financial issues continued to burden the company.
In December 1919, Oil Distribution News reported Basin United Oil Company was negotiating mergers with the Anderson Oil Company and the Kansas-United Oil Company, with a proposed capitalization of $1 million. With no results of the planned combination documented, Elk Basin United Oil Company disappeared from financial records soon thereafter.
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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? Become an AOGHS annual supporting member and help maintain this energy education website and expand historical research. For more information, contact bawells@aoghs.org. Copyright © 2022 Bruce A. Wells. All rights reserved.
Citation Information – Article Title: “Elk Basin United Oil Company.” Authors: B.A. Wells and K.L. Wells. Website Name: American Oil & Gas Historical Society. URL: https://aoghs.org/old-oil-stocks/elk-basin-united-oil-company. Last Updated: September 29, 2022. Original Published Date: October 1, 2021.
by Bruce Wells | Aug 2, 2022 | Petroleum Companies
Oil stock certificate from 1901 helps tell story of the Boulder oilfield and early Colorado discoveries.
Colorado oil history revealed from researching an old oil company stock certificate.
Dated March 1902, a stock certificate had been issued by a Wyoming venture — the Savannah Oil, Coal and Gas Company. The company president’s signature was too hard to make out, according to the guest post on the the American Oil and Gas Historical Society (AOGHS) Stock Certificate Q & A Forum — a popular section of Is My Old Oil Stock worth Anything?
The poster added: “I would appreciate any information available on this company. Researching for my 90-year-old Mom!” Like many others, the visitor to AOGHS website sought information about his family’s stock certificate.
Drilling for natural gas in 2005 in the Denver Basin’s Wattenberg gas field, discovered in 1970. Photo courtesy geologist and engineer Dan Plazak.
The story of Savannah Oil, Coal and Gas began just before its incorporation — when a headline-making oilfield discovery at Boulder, Colorado, inspired the founding of many exploration companies. Most of these ventures would not survive.
According to a 1902 biennial report from the Colorado Secretary of State, Savannah Oil, Coal and Gas Company had a principal office in Cheyenne, Wyoming, for doing business in Colorado. The also report listed a T.F. Little as a sales agent with Boulder as a place of business.
Boulder Oilfield
Natural oil seeps first drew “bobbers” to the Boulder area, according to a 1905 Colorado Geological Survey report.
“The principle on which the use of a bobber rests is the same as that by which the proper site of a water well is determined by the involuntary turning of a witch-hazel sprout when held in the hand,” the survey noted.
In the Boulder field, bobbers fixed “the exact location off a large proportion of the wells, the geological survey added. One such oil well was on the McKenzie farm, about three miles northeast of town. It was the discovery well that opened the Boulder oilfield — the first of many in the Denver Basin.
The McKenzie well that launched drilling in Boulder field would pump oil until 2007.
Initially producing 70 barrels of oil a day, the 1901 McKenzie well spawned a scramble for nearby mineral leases as the local newspaper, The Daily Camera, reported a thousand companies formed in three months. Savannah Oil, Coal, and Gas Company was among them.
Despite the disdain of petroleum geologists, modern bobbers and other dowsing tools are available from the American Society of Dowsers (ASD), established in 1961. For attempts of finding Texas oilfields using psychic readings, see Luling Oil Museum and Crudoleum.
Savannah Oil, Coal, and Gas
Savannah Oil, Coal, and Gas incorporated on February 11, 1902, with C.B. Younglove as president and its principal agent in Boulder. The vice president was T.F. Little.
Capitalized at only $15,000 with its main office in Cheyenne, Wyoming, the company needed early success in the Boulder oilfield to survive. When Younglove learned the Otero Company had drilled and completed producing oil wells northeast of Boulder, he managed to secure leases close by.
Savannah Oil, Coal, and Gas Company would drill in Boulder County’s Section 8 and Section 9, Township 1 North, Range 70 West (Public Land Survey System – PLLS). Today, the well sites are near the intersection of Valhalla Drive and Kelso Road.
By late 1902, a business journal reported Savannah Oil, Coal, and Gas drilling for oil in the Boulder field.
“T.F. Little, the vice president says they have one well 2,600 feet deep with about 1,000 feet of oil in it, and have recently moved derrick to land adjoining the Otero well (which is now producing about 100 barrels per day), and the run hole is now about 300 feet deep, just over the fence from the Otero property,” noted the American Investor, adding Vice President Little, “also says they are not now offering any stock for sale.”
By 1905, the U. S. Geological Survey (Bulletin No. 265) published more detail on the Younglove and Savannah producing oil wells, depths, unsuccessful attempts or “dry holes,” and use of nitroglycerin for fracturing oil-producing geologic formations (learn more in Shooters – A Fracking History).
Citing earlier wells drilled by the Savannah Oil, Coal, and Gas Company, Mining American magazine in 1918 noted, “Possibilities of Greater Production in Boulder Oil Fields,”
The first three wells of Savannah Oil, Coal, and Gas produced enough oil to support more drilling in the booming Boulder field. After production peaked in 1909 at more about 85,000 barrels of oil, some people would claim Boulder made Colorado oil history as, “one of the wildest, crookedest, and most disastrous booms.”
Local historian Silvia Pettem summarized, “Although the oil under the land northeast of Boulder was real, no amount of drilling could keep up with inflated expectations. In just a few months, the bottom fell out of the market.”
Although C.B. Younglove and T.F. Little’s Savannah Oil, Coal, and Gas Company would fade away, by World War I, Mining American magazine teased speculative investors with “Possibilities of Greater Production in Boulder Oil Fields” (January 5, 1918), citing the exploratory wells of Savannah Oil, Coal, and Gas. The magazine proclaimed, “Recent Survey Encourages Deeper Drilling…Younglove Well Commended by Expert.”
But the Boulder boom was already part of U.S. petroleum history. So was Savannah Oil, Coal, and Gas Company.
First Colorado Oil Well
The first commercially successful Colorado oil well was drilled in January 1862 near the mining supply town of Cañon City, about 45 miles southwest of Colorado Springs. The well produced oil just three years after the first U.S. oil well, which was drilled in Titusville, Pennsylvania, by Edwin L. Drake for the Seneca Oil Company of New Haven, Connecticut.
In 1860, businessman Gabriel Bowen had established what many consider Colorado’s first oil venture, the G. Bowen & Company. Bowen claimed ownership of natural oil seeps at Oil Spring — above what would later prove to be the Florence oilfield.
However, Bowen’s claim, “apparently was jumped in the winter of 1860-61 by J.L. Dunn, who dug four pits at the spring,” according to Colorado Encyclopedia. “One of the pits produced a barrel per day, but the others yielded little. Dunn left the area in early 1861, after being charged with cattle rustling.”
Although Bowen regained control of Oil Spring, Alexander Cassidy bought the claim in January 1862 and formed the Colorado Oil Company, “the state’s first commercially productive oil enterprise,” the encyclopedia noted in 2021. Cassidy’s well produced “at most a few barrels per day, which the company sold in Cañon City, Denver, and Santa Fe.”
With wells reaching a depth of 1,445 feet by the 1890s, production in Colorado’s Florence oilfield would peak at more than 3,000 barrels of oil per day.
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Recommended Reading: Geology of the Boulder district, Colorado: USGS Bulletin 265 (2013); High Altitude Energy: A History of Fossil Fuels in Colorado (2002). Your Amazon purchase benefits the American Oil & Gas Historical Society. As an Amazon Associate, AOGHS earns a commission from qualifying purchases.
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The American Oil & Gas Historical Society (AOGHS) preserves U.S. petroleum history. Join today as an AOGHS annual supporting member. Help maintain this energy education website and expand historical research. For more information, contact bawells@aoghs.org. Copyright © 2023 Bruce A. Wells. All rights reserved.
Citation Information – Article Title: “Exploring Boulder Oilfield History.” Authors: B.A. Wells and K.L. Wells. Website Name: American Oil & Gas Historical Society. URL: https://aoghs.org/oil-almanac/oil-riches-of-merriman-baptist-church. Last Updated: August 6, 2022. Original Published Date: August 24, 2021, 2021.
by Bruce Wells | Aug 1, 2022 | Petroleum Companies
At the start of the 20th century, a growing number of Mid-Continent oilfields began their long history of oil discoveries. With them came the drilling boom and bust cycles of the U.S. petroleum industry. Major oilfield discoveries in North Texas during and after World War I, launched new, inexperienced ventures, including Sunshine State Oil & Refining Company
Although oil wealth would helped build Wichita Falls schools, infrastructure, hotels, banks, churches, and civic pride, competition increasingly made drilling prospects hard to come by. Oilfield equipment costs rose as excessive production lowered oil prices.
New oil exploration and production companies often arrived too late and went bankrupt without drilling single well. This did not discourage the rush for new investors (see Exploiting North Texas Fever).
A 1918 oil discovery near Wichita Falls joined earlier discoveries at Electra (1911) and Ranger (1917) to make Texas a worldwide leader in petroleum production.
The Texas Panhandle oil drilling boom began when the giant Ranger oilfield was discovered in October 1917 near Electra — where a 1911 shallow oilfield discovery already had attracted drillers. The “Roaring Ranger” well alone reached a daily production of 1,700 barrels of oil. The giant oilfield helped fuel the Allies’ victory in World War I.
Meanwhile, Conrad Hilton, who visited the Ranger area intending to buy a bank, saw the crowds of oilfield roughnecks and bought his first motel in nearby Cisco instead — learn more in Oil Boom Brings First Hilton Hotel.
Boom Town Burkburnett
Just outside Wichita Falls, at Burkburnett on July 29, 1918, a wildcat well erupted on S.L. Fowler’s farm just north of Wichita Falls near the Red River border with Oklahoma.
The new drilling boom made Burkburnett yet another famous American boom town. Two decades later it inspired the popular 1940 motion picture, “Boom Town,” which won an Academy Award. The oilfield drama featured Clark Gable (himself a former Oklahoma roughneck), Spencer Tracy, Claudette Colbert and Hedy Lamarr.
Even prior to the Burkburnett discovery, North Texas oilfields were producing half of all the state’s oil. Wichita Falls prospered and the town’s railroad line expanded. Refineries began to appear in 1915. That year Wichita County reported 1,025 producing wells.
In 1920 there were 47 factories within Wichita Falls. One year later the Wichita Falls and Southern Railroad Company added an extension for trains between Wichita Falls, Ranger and Fort Worth.
Sunshine State Oil & Refining
Among those rushing to the region’s boom towns was Sunshine State Oil & Refining Company, which incorporated in New Mexico on April 21, 1917. The new company set up its main operations in Wichita Falls capitalized at only $300,000.
Although Wichita Falls already hosted no less than nine competing independent refineries, the company built its own 3.5 miles north of town with an initial capacity of 1,250 barrels of oil a day that grew to 2,500 barrels of oil a day.
By 1920, Sunshine State Oil & Refining had increased capitalization to $650,000 and secured ownership of a 45-mile pipeline to connect with oil producers in the Burkburnett and Kemp-Munger-Allen fields.
Sunshine State Oil & Refining Company had offices in the American National Bank Building in Wichita Falls, Texas.
By July 1922 the company marketed its brand of gasoline and kerosene in Wichita Falls, Burkburnett, Electra, and Gainsville. It also explored opportunities in Eddy and Chavez counties in New Mexico to secure further oil supplies.
The company sold its finished products, principally gasoline and kerosene, in railroad tank cars and managed a fleet that grew from 50 cars to 150 cars. “Manufacturers and Distributors – Gasolene, Naptha, Kerosene Distillates, Fuel Oil and Gas Oils,” proclaimed advertisements with the registered trade name of “Sunshine Special” for products.
Sunshine State Oil & Refining Company was reported to pay 100 percent dividends – but those dividends were paid in shares of company stock. To raise money, the company increased capitalization again and issued more stock.
However, a refining company’s margin for success was inevitably linked to the cost of crude oil and the price of refined petroleum products.
Sunshine State Oil & Refining sold its finished products in railroad tank cars and managed a fleet that grew from 50 cars to 150 cars.
Small independents faced additional challenges, as Sunshine State Oil & Refining Company President George C. Jensen would later note:
“The larger companies will pay posted price and the only way that the independent refineries are able to buy crude oil is to offer a large bonus, in some cases as much as 40 cents per barrel premium over prices paid by Standard Oil,” Jensen complained to Petroleum Magazine’s “Open Forum” readers. “They consequently cannot make a fair profit on refined products.”
Under these and other market pressures, Sunshine State Oil & Refining Company’s refinery began to operate well below capacity.
Sunshine sets in North Texas
As the drilling industry and the refineries competed, Wichita Falls prospered, thanks to “Black Gold.” The city added a municipal auditorium in 1927 and an airline passenger service in 1928 – the same year the city’s first commercial broadcasting station, KGKO, was established.
However, as early as July 1924 Sunshine State Oil & Refining Company was struggling with debt. The company issued more stock to raise capitalization to $1.5 million and in an agreement with shareholders changed its name to Sunshine Consolidated Oil Company.
Shareholders had to exchange their old stock certificates for the new Sunshine Consolidated Oil shares. The old Sunshine certificates were canceled. Efforts to sell new shares on the New York “curb market” did not fare well.
“Say Sunshine” advises this card for newly renamed but still financially troubled Sunshine State Oil & Refining Company and its “made in Wichita Falls product.”
As fundraising efforts failed, creditors forced the renamed company into receivership, which was contested but ultimately adjudicated by the 89th District Court in Texas. Assets were sold off to pay creditors. By November 5, 1925, the Corsicana Daily Sun reported:
A sale involving a cash consideration of $159,000 was consummated in the Wichita Falls oil district Wednesday when Bridwell & Heydrick closed a deal with receiver of the Sunshine Consolidated Oil Company whereby a number of leases in the Sunshine State and Freeman Hampton pools of Archer county changed hands.
After an intense and competitive seven years in business, Sunshine/Consolidated Oil Company failed, joining other oilfield ventures in the high-risk business of petroleum exploration, production and refining. The industry’s boom and bust cycles continue to this day.
North Texas petroleum prosperity began on April 1, 1911, when geyser of oil erupted at the Clayco No. 1 well at Electra,which would later be awarded the title of “ Pump Jack Capital of Texas.”
More stories of many exploration companies trying to join petroleum booms (and avoid busts) can be found in an updated series of research in Is my Old Oil Stock worth Anything?
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Recommended Reading: Trek of the Oil Finders: A History of Exploration for Petroleum (1975); The Prize: The Epic Quest for Oil, Money & Power (1991); Myth, Legend, Reality: Edwin Laurentine Drake and the Early Oil Industry
(2009). Your Amazon purchase benefits the American Oil & Gas Historical Society. As an Amazon Associate, AOGHS earns a commission from qualifying purchases.
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The American Oil & Gas Historical Society preserves U.S. petroleum history. Join today as an AOGHS annual supporting member. Help maintain this energy education website and expand historical research. For more information, contact bawells@aoghs.org. Copyright © 2022 Bruce A. Wells. All rights reserved.
Citation Information – Article Title: “Sunshine State Oil & Refining Company.” Authors: B.A. Wells and K.L. Wells. Website Name: American Oil & Gas Historical Society. URL: https://aoghs.org/old-oil-stocks/sunshine-state-oil-refining-company. Last Updated: August 2, 2022. Original Published Date: July 22, 2018.
by Bruce Wells | Jul 29, 2022 | Petroleum Companies
In October 1917, Wyoming Peerless Oil Company stock promotions first appeared in the pages of the Cheyenne State Leader, Laramie Republican and Wyoming Tribune newspapers.
Oil investment ads in Milwaukee Journal on June 2, 1918.
Within a year the new exploration company’s advertisements appeared in newspapers as far away as Milwaukee, Wisconsin: “Action Not Promises Our Motto,” noted one placed in the June 2, 1918, Milwaukee Journal (above).
Many U.S. newspapers at the time included similar promotions as oilfield discoveries proliferated from California to Kansas.
Peerless Oil Company promotions appeared in Wyoming newspapers.
Demand for gasoline was skyrocketing, both for Model T Fords and World War I, which the United States would soon join. Oil companies proliferated.
Some used questionable claims to keep investors unaware of how risky and expensive the business finding and producing oil truly was. Nine out of 10 exploratory well attempts proved to be dry holes – and drilling was expensive in such remote areas.
The Big Muddy
The Wyoming Peerless Oil Company set its sights on drilling a well six miles from the nearest producer in the Big Muddy oilfield east of Casper.
Peerless Oil stock was initially offered at three cents per share. “Don’t wait for our first well to come in. You might not be able to get this stock then for less than 25-cents or 50-cents per share.”
Wyoming Big Muddy Oilfield Marker
The Big Muddy oilfield, located about four miles west of Glenrock in Converse County, was discovered in 1916, a discovery that touched off widespread drilling and brought about one of Wyoming’s famous oil booms. Today, a marker on the south side of Hwy. 230 at the junction with County Road 33 describes the historic field:
Big Muddy oil field is a typical Wyoming oil producing structure. The field, discovered in 1916, has produced over 30 million barrels of high quality oil.
Strata here were arched upward at the time the Rocky Mountains originated over 60 million years ago, to form anticline, or dome. Because oil is lighter than water, it rose to the crest of the dome where it was trapped in pore spaces between sand grains. The Wall Creek sand lies at a depth of near 3,000 feet and the Dakota sand at about 4,000 feet. The first oil well in Wyoming was drilled in 1884. There are now about 100 oil fields in the state.
Seeking more investors, advertisements reported Wyoming Peerless Oil ‘s drilling progress on its Big Muddy exploratory well: Down 1,475 feet by June of 1918; down 1,675 feet by July and down to 3,315 feet by August of 1919.
Although rumors of a dry hole began to circulate, the company continued to solicit more investors to fund deeper drilling. But after reaching 4,050 feet without finding oil, company officer Charles Straub announced the well would be abandoned.
If more funds could be secured, Wyoming Peerless Oil would drill a second well, Straub added.
“Efforts have been made to extend the limits of the (Big Muddy) field in every direction, but these efforts have all been failures and the area of the field is plainly marked,” reported the Oil and Gas News reported (this would change in 1950 with a discovery to the east of the field).
Failed Well
By February 1920, stockholders from Denver had petitioned a court to put the Wyoming Peerless Oil Company into receivership, alleging mismanagement by Straub and other company officers. Straub responded with a $50,000 libel suit, reported by the Casper Daily Tribune on March 5, 1920.
The results are obscured, but Wyoming Peerless Oil never drilled a second well and the company disappeared from newspaper accounts.
The Big Muddy oilfield now has produced more than 300 million barrels of oil and wells are still pumping.
The first record of oil in Wyoming came in 1832. An expedition led by Captain B.L.E. Bonneville took the first wagons through South Pass. Fifty years later, prospector Mike Murphy, bought an oil lease on the site of Capt. Bonneville’s “great tar spring” southeast of Lander.
Learn more in First Wyoming Oil Wells.
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?
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Recommended Reading: William F. Cody’s Wyoming Empire: The Buffalo Bill Nobody Knows (2007); The Salt Creek Oil Field: Natrona County, Wyo., 1912
(reprint, 2017); Kettles and Crackers – A History of Wyoming Oil Refineries
(2016). Your Amazon purchases benefit the American Oil & Gas Historical Society. As an Amazon Associate, AOGHS earns a commission from qualifying purchases.
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The American Oil & Gas Historical Society preserves U.S. petroleum history. Become an AOGHS annual supporting member and help maintain this energy education website and expand historical research. For more information, contact bawells@aoghs.org. Copyright © 2023 Bruce A. Wells. All rights reserved.
Citation Information – Article Title: “Wyoming Peerless Oil Company.” Authors: B.A. Wells and K.L Wells. Website Name: American Oil & Gas Historical Society. URL: https://aoghs.org/oil-almanac/buffalo-bill-oil-company. Last Updated: January 27, 2023. Original Published Date: July 29, 2013.
by Bruce Wells | Jul 26, 2022 | Petroleum Companies
Although geologists, petroleum engineers and other earth scientists were far more helpful for finding “black gold,” Oil Prospectors Inc. preferred unscientific methods to sway unwary investors.
During the Great Depression, some fortune seekers were convinced a “divining rod, a doodlebug, a switch, or a twig” could find oilfields. In the 1950s, others invested in doodlebug technology they were told came from flying saucers. Then as now, any “miraculous machine” could help fleece the gullible.
In the rush to print stock certificates during drilling booms, many companies printed certificates with a field of derricks vignette — often using the same artwork.
Not long after the December 1931 discovery of the Conroe, Texas, oilfield, a “doodlebug” device swindled Houston oil investors out of $20,000. It also sent Ralph Malone and Vivian Buie to jail in 1935.
During their trial in district court, a prosecution witness told of receiving letters describing the doodlebugger as capable of finding oil and natural gas in Polk County.
Malone and Buie claimed their device would find “another field like the Conroe field” worth millions of dollars. They described their doodlebug as “a wonderful instrument that could locate oil pools.”
Learn about Conroe’s oilfield in Technology and the “Conroe Crater.”
Despite their defense attorneys efforts, Malone and Buie (the alleged “brains” of the doodlebug scam), were convicted of mail fraud and sentenced to terms in the federal penitentiary at Leavenworth, Kansas. Then their defense attorneys were indicted as well.
While their former clients headed off to prison, Arthur Heemann and C. Ray Smith hired their own legal council. The new defense team asserted the accused, “merely were attorneys for the swindlers and did not participate in the scheme.”
It did not help that attorney Heemann had been charged five years earlier with the same crime while promoting the similarly fraudulent Oil Investors Company.
Nonetheless, the lawyers got the lawyers off when the judge ruled them not guilty on April 15, 1938. Two months later, Ralph Malone was transported from Leavenworth to a Tucson, Arizona, prison to finish his three-year sentence.
Doodlebugs, Magnetic Loggers, and Flying Saucers
Although Malone was absent from oil stock scams for several years, investors did not abandon their fascination with doodlebugs. The convicted con man resurfaced in the early 1950s when his penchant for mail fraud landed him in trouble with the Securities and Exchange Commission (SEC).
“Often investigation is directed to highly objectionable sales literature which greatly over emphasize the possibilities of success from the proposed security purchase,” the SEC noted in its 17th annual report. “So it was in the case of Oil Prospectors, Inc. and Ralph Malone.”
One year later, the SEC again addressed the issue of doodlebugs, explaining the necessity of resorting to the courts to get compliance with the Securities Act.
“A substantial number of cases requiring injunctive action are those relating to oil and mining promotions,” noted the June 30, 1952, annual report. “The ‘gold brick’ aspect of many of these promotions has by now become quite stereotyped.” The SEC’s complaints seeking injunctions pointed out that, “sellers were omitting to disclose that these individuals had criminal records.”
The commission cited another example of “the almost perennial doodlebug” where the “defendants used in their operations a device called a ‘Magnetic Logger’ and the claims made for its efficacy in discovering oil were the usual ones and were false…There is reason to believe that the injunction obtained by the commission saved the investing public a substantial sum.”
An SEC injunction in 1951 finally brought an end to Oil Prospectors and Ralph Malone disappeared from the news. Doodlebug hoaxes continued.
Most notably, Silas Newton and Leo GeBauer, claimed their doodlebug machine “operated on the same magnetic principles as the flying saucers.” The $800,000 contraption had been developed secretly by the government.
They promoted the tale of a 1948 flying saucer crash site near Aztec, New Mexico, that had yielded 16 humanoid bodies (Roswell’s aliens had reportedly arrived a year earlier).
Newton and GeBauer claimed the Aztec crash site included revolutionary technology for finding oil.
Silas Newton and Leo “Dr. Gee” GeBauer convinced author Frank Scully (at right) the government was hiding UFO crash sites and humanoid corpses. Investors believed their claims that a secret alien device could locate vast petroleum reserves.
Although some still maintain an elaborate government cover-up has concealed the real Aztec UFO story, the petroleum exploration technology has received little mention. By 1952, the terrestrial luck of Newton and GeBauer ran out. The Denver Post’s October 14 headline proclaimed, “Saucer Scientist in $50,000 Fraud.”
In 1950 Frank Scully had published Behind Flying Saucers, a book reporting crashed UFOs (powered on magnetic principles) and the discovery of dead extraterrestrial beings.
In September 1952, True Magazine investigated Frank Scully, Silas Newton, and Leo GeBauer, the three principals involved in Scully’s best-selling book, Behind the Flying Saucers.
In 1952 and again in 1956, True magazine published articles that exposed doodlebug machine promoters Silas Newton and “Dr. Gee” (identified as Leo GeBauer) as “oil con artists who had hoaxed a gullible Scully,” according to the 1998 book, UFOs & Alien Contact: Two Centuries of Mystery.
It turned out the UFO inspired oil doodlebug was just a box covered in dials and switches made from $3.50 in surplus radio parts. The revelation brought little comfort to swindled investors.
Stock Certificate Derricks
Speculating in oil stocks has been hazardous since the first company incorporated in 1854 in Pennsylvania (see First American Oil Well). As drilling booms moved westward, thousands of exploration companies competed to exploit “black gold.” Most failed after a few expensive dry holes — or without drilling a single well.
Especially during the major oilfield discoveries beginning after World War I and continuing through the Great Depression, the rush to form oil companies led to certificates that looked remarkably alike. Printing boiler-plate stock certificates was not uncommon in the scramble to find investors.
For example, many short-lived companies’ stocks features the same artwork as Oil Prospectors Inc. Here are just a few:
Buck Run Oil and Refining
Buffalo-Texas Oil
Craven Oil and Refining
Evangeline Oil
Hog Creek Carruth Company
Texas Production Company
Modern Doodlebuggers
The Society of Exploration Geophysicists (SEG) published its first journal, Geophysics, in 1936. It included articles about the petroleum industry’s three major prospecting methods then used – seismic, gravity, and magnetic. All were based on the scientific method.
The journal’s lead article warned young geophysicists about employing “black magic” or “doodle-bug” methods based on unproven properties of oil, minerals or geological formations. “This is the first time that the term ‘doodle-bug’ was applied to scientific methods, particularly if they had no scientific validity, according to the 1982 book, Geophysics in the Affairs of Men.
“Twenty years later, it was a badge of honor to be known as a doodlebugger, i.e., the field personnel of geophysical crews,” noted the authors Charles C. Bates, T. F. Gaskell and R. B. Rice. “Still later, the term was applied to everyone who worked in exploration geophysics.”
A bronze statue, “The Doodlebugger,” welcomes visitors to the Society of Exploration Geophysicists headquarters in Tulsa. The name is a badge of honor for geophysical crews seeking oil. Photo by Bruce Wells.
Editor’s Note – The sculptor of the SEG statue, Jay O´Meilia of Tulsa, Oklahoma, also was the artist who created two “Oil Patch Warrior” statues – one in Ardmore and another across the Atlantic. See Roughnecks of Sherwood Forest.
More research and articles about U.S. exploration and production companies joining petroleum booms (and avoiding busts) can be found updated in Is my Old Oil Stock worth Anything?
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Recommended Reading: The Prize: The Epic Quest for Oil, Money & Power
(2008); The Extraction State, A History of Natural Gas in America (2021); The Birth of the Oil Industry (1936); Trek of the Oil Finders: A History of Exploration for Petroleum (1975). Your Amazon purchase benefits the American Oil & Gas Historical Society. As an Amazon Associate, AOGHS earns a commission from qualifying purchases.
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The American Oil & Gas Historical Society preserves U.S. petroleum history. Join today as an annual AOGHS annual supporting member. Help maintain this energy education website and expand historical research. For more information, contact bawells@aoghs.org. Copyright © 2022 Bruce A. Wells. All rights reserved.
Citation Information – Article Title: “Oil Prospectors, Inc.” Authors: B.A. Wells and K.L. Wells. Website Name: American Oil & Gas Historical Society. URL: https://aoghs.org/stocks/oil-prospectors-inc. Last Updated: August 8, 2022. Original Published Date: May 13, 2016.
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by Bruce Wells | Jun 28, 2022 | Petroleum Companies
Finding oil near at natural seeps in Indian Territory.
Drilled in 1889 and completed a year later near oil seeps at Chelsea in Indian Territory, the story behind the another first Oklahoma oil well is not as well known as the Bartlesville gusher seven years later.
Under President Andrew Jackson, Congress enacted the Indian Removal Act of 1830, forcibly relocating native American tribes westward to what would later become known as Indian Territory.
The Cherokee Nation town began as a stop on the Atlantic and Pacific Railroad in 1881.
Land west of Arkansas, “remote from white settlements,” seemed a good place to send them at the time, explained a 1900 report by the American Geographical Society of New York (Vol. 32). “It was intended to settle them there for all time, whereby they could live to themselves, according to their own pleasure, with self-government, under the protection of the general Government.” (more…)
