NEW COMPANY FORMED

Evening Post, Volume CXXV, Issue 115, 18 May 1938, Page 13

NEW COMPANY FORMED

CAPITAL FROM AUSTRALIA AND AMERICA

' .■ ' ■■■".' Announcements have been made by participating interests that the New Zealand Petroleum Company was yesterday incorporated at Wellington; to develop the natural oil resources,of the Dominion. The new company has an initial capital of, £250,600 in £ljshares, made up of 600 "A" shares and 250,000 "B" shares. The "A' shares alone are to participate in profits, and 120 of them are held on behalf of Taranaki Oil Fields. The "B'' shares represent capital contributed for development by the Vacuum Oil Co., and California Texas Investments Ltd. • .'V '

A memorandum, to shareholders issued by Taranaki (N.Z.) Oil Fields states that the initial nominal and subscribed capital is £250,600 in £1 shares, divided into 600 A shares and 250,000.'8 shares. No shares have been ,issued other 4han for cash. The individual holdings are as follows:— A Shares: Oil Investigations Pty., Ltd. (including '320 shares .'.'■ held, on account of Taranaki (N.Z.) Oil Fields N.L.); 20,0—Vacuum Oil Co. Pty., Ltd.; 200—California ■ Texas Investments Ltd. B Shares:. 125,000—Vacuum Oil Co. Ply., Ltd.; 125,000—California Texas ■ ■ V Investments Ltd. ~ '> The A shares are exclusively ■ entitled to participate in the profits of ( the new company, and the directors of the new company are nominated' by the holders of these shares. The ,'B shares do not confer on the holders the right to participate in the profits of the new'company, nor to attend or vote either in_ person «or by proxy, at any general meeting. In the event of winding up, the B shares rank equally with the A shares. \ As and when additional capital is required, A shares will be created. These new A shares will be offered in the first instance Jo the three shareholding companies, i.e., Shale Oil In-, vestigations 'Pty. Ltd.; Vacuum ; Oil Company Pty. ! Ltd., and California Texas • Investments Ltd., pro rata to their'. then existing holdings of A shares. ; ":\ i '■• ,"..\ THE DIRECTORATE. The - directors of the New Zealand FetrWeum Co., Ltd., are:— Sir Colin Fraser (Melbourne)— chairman of directors of Broken Hill South, Ltd.; director of Nnrth, Broken Hill Ltd. and Zinc Corporation Ltd.;chairman of directors" of Electrolytic Zinc Co. of Australasia Ltd. and of Western New South Wales „ Electric Power Pty. Ltd., etc. V i 6ir Walter Massy-Greene, K.C.M.G. (Melbourne) —director * of Electrolytic Zinc Co. of Australasia Ltd., etc. Mr! Hugh Hamilton (Melbourne)— chairman of directors Of Vacuum OE Co. Pty. Ltd , Mr Wesley A. Ince, solicitor (of the firm of Arthur Robinson and Co., Melbourne), director of Claude Neon Ltd., Hoyfs Theatres Ltd., etc, ' Mr.- I A. K. S. Mackenzie, solicitor (Wellington), director of Rimu Gold Dredging Co. Ltd., Grey River Dredging Co. Ltd., California Texas Investments Ltd., etc. '• -■: Mr; H. H. Sterling .(Wellington),.! diifectof • of Hume (Cobb River) Elec-| trie Power Co, Ltd., etc. Sir Colin Fraser will be chairman of the board. The secretary (prd tern) is Mr. F, H. Bass of Messrs. Bowden, Bass, and Cox, public accountants, Wellington, New Zealand. ■'■■'■''".. PROFITS AND, BOYALTD3S. The benefits which will accrue* to the Taranaki Company as a result of the arrangements- made are as follows:— .(«) An immediate 20 per cent, participating profit sharing interest in New Zealand Petroleum Company Limited through the shareholding of Shale Oil Investigations Pty. Ltd. in •that company. . './ <■'. j' ,' (b) The right, by arrangement with Shale Oil Investigations Pty. Ltd., to preserve its percentage of participating profit sharing interest in New Zealand Petroleum Co. Ltd. as and' when the capital of New Zealand Petroleum Co. Ltd. is increased, which will be by way of new issues of A shares only. ':

(c) The right to receive an overr a riding royalty from oil won and sold j by New Zealand Petroleum' Co. Ltd. Q from certain lands over which Taranaki and its subsidiaries (Gisborne, t N.Z. Oil Fields Ltd., Waitangi, N.Z., \ Oil Fields Ltd., and Waiapu, N.Z., Oil t Fields Ltd.); formerly held oil rights, t and- which lands are now contained r within the licensed areas acquired, by t New Zealand Petroleum Co. Ltd. The ? taranaki Company's snare interest in he Gisborne company is 96.5 per cent.; ' in the Waitangi company 81.7 per cent.; i and in the Waiapu company 87.4 per j .cent. \ x '< (d) The right to receive approximately < one-half of the overriding royalty pay- s able by New Zealand Petroleum Co. ] Ltd. to Moturoa (Oil Fields Ltd; on oil ( won and sold by the former company . from three licensed areas in Tara-,, naki Province. The Taranaki company holds 36.3 per cent, of the share , capital of Moturoa, and arrangements are in train by way of an exchange , of shares to increase Taranaki's holding to rather less than 50 per cent. (e) The right to receive one-third of the overriding royalty which, may be payable by New Zealand Petroleum Co. Ltd. to Oil Search Ltd, on oil won and sold by the former company from portion of an> area in t&e South Island of New Zealand as and when a prospecting licence may be granted over same. ' The overriding royalty which will be payable by New Zealand Petroleum, Co. Ltd. to all the' companies mentioned in (c), (d), and (e) will be 5 per cent, of the value at the well head of all crude oil won and sold. These overriding royalties will be payable to the companies entitled* as they accrue on oil won and sold during the life of the licences irrespective of whether Taranaki maintains its original participating profit-sharing percentage of interest in New Zealand Petroleum Co. Ltd. or not. At March 31 last the number, of registered shareholders 'in Taranaki Oil Fields N.L. was 1515, with a total holding of 435,401 shares. Of the shares, 190,828 are held in New Zealand, and 244,573 in Australia, United Kingdom, and elsewhere. The memorandum is accompanied by 8 circular which' describes the negotiations for the formation of the new company and the new legislation dealing with oil in New Zealand. The annual report of the company, presentecfat its 1937 meeting, the circular states, announced that negotiations with important overseas oil interests for the drilling of the concessions on the East Coast," held by the Taranaki company and its subsidiaries had reached an advanced stage. The completion of an operative agreement was'bound up with the legislation which the New Zealand Government had declared its "intention to pass later in the year to govern the search for and development of oil fields. Since then the Government enacted legislation to encourage the search for oil.

Oil contained in all lands in the Dominion has, under the new Act, operative since January 1, 1938, become the property of the Crown. A period of three months from the date mentioned was given, during which all persons claiming to have' contracts, options, or rights to prospect or mine for petroleum in, any lands could register them with the UnderSecretary for Mines. Registrations were accordingly effected by Taranaki (N.Z.) Oil Fields, N.L., its subsidiary companies, Gisborne (N.Z.) Oil Fields Ltd., Waitangi (N.Z.) Oil Fields Ltd., and Waiapu (N.Z.) Oil Fields Ltd., and afeo by companies associated with Taranaki, viz., Moturoa Oil Fields Ltd.,v and Oil Search Ltd. OVERSEAS ASSISTANCE NECESSARY. Anticipating the passing of the legislation the directors of Taranaki (N.Z.) Oil Fields N.L., sought the association of certain of the major oversea! oil companies. The expenditure in New' Zealand of over half a million pounds since 1924 by the Taranaki Company and subsidiary and associated companies in an unsuccessful attempt to find oil, convinced the board that the association • and assistance of one or more of the large oversea oil companies was essential, Such companies could find the major part of the capital required, an* the necessary trained and experienced technical staff, which would ensure that prospecting and development on modern. and thoroughly" business-like lines would be undertaken". " The managing director of Taranaki (N.Z.) Oil Fields N.L., Sir Colin Fraser, was given the task of endeavouring to bring together a combination of interests, including one or more of the oversea oil companies, to acquire and launch the enterprise. t

AN AUSTRALIAN GROUP. It was clear that if it was possible to obtain the co-operation of some powerful Australian group and obtain a combination of Australasian interests, it would strengthen the new organisation in its negotiations with the overseas oil interests and meet with the approval of the New Zealand Government. The Australian group which decided to become interested in this way consists* of North Broken Hill Ltd., Broken Hill South Ltd., Zinc Corporation Ltd., and Electrolytic Zinc Company of Australasia Ltd. ' These companies, with equal holdings, are the sole shareholders in •Shale Oil Investigations Pty., Ltd., a small company which acquired for investigation arid recently sold the oilshale at Newnes, New South Wales. This proprietary company will be employed, at least temporarily, as the instrument /through which the metal companies named will be interested in the New Zealand oil projectlt will v. also be the company which will hold on account of Taranaki (N.Z.) Oil Fields N.L., shares in the capital of i the new company—New Zealand Petroleum Co., litd.—in which all parties joining in the venture will have shareholdings, r . ; • ■

The Standard Vacuum Oil Company accepted the proposal that.it should join the Australian group mentioned, and it -was given the right to offer participation to one or more .of the other large overseas oil companies on a basis .to, be mutually agreed. This participation was offered to and accepted by California Texas Investments, Ltd. Shale Oil Investigations Pty., Ltd. (the Broken Hill metal companies), carrying the major portion of the expenditure connected with negotiating the business, then proceeded to make an agreement with Vacuum Oil Co. Pty., Ltd. (Melbourne), the nominee of Standard Vacuum Oil Co. (New York)/ and the following oil companies:—The Taranaki Company and its subsidiaries (the, Gisborne, Waitangi, and Waiapu Companies), Moturoa Oil Fields, Ltd. (in which the Taranaki Company holds a large share interest), and Oil Search, Ltd. (Sydney).

NINE LICENCES GRANTED. Nine licences were granted in April by the Minister of Mines covering areas" aggregating- 1800 square miles. ] Of these licensed .areas, Taranaki i (N.Z.) Oil Fields, NX., and/or its sub- i sidiaries, Gisborne (N.Z.) Oil Fields, i Ltd., Waitangi (N.Z.) Oil Fields, Ltd., and'Waiapu (N.Z.) Oil Fields, Ltd., ' are interested from the standpoint of • royalty oh crude'oil won in four of ' them. Moturoa Oil Fields, Ltd., is similarly interested in three. The efforts of the Taranaki Company to find commercial oil in New Zealand date back to 1924—-fourteen years— and have involved the expenditure, directly and through its . subsidiary and associated companies,' of about half a million pounds. These efforts, ■ although they did.not<meet with.the success hoped for, have, through the results of the geological work done by the Taranaki Company and by option holders, and the data afforded by drilling, placed the new company in the very advantageous position of being able to commence drilling operations immediately. Arrangements are consequently now in hand to ship to New Zealand and erect a modern drilling plant capable of sinking wells to a depth of approximately 8000 feet. The greatest depth reached by the Taranaki companies on their most promising areas of the Hawke's BayEast Cape district was 3910 feet—i.e., considerably short of the objective oilhorizons which they were aimed to test. It should here be mentioned that, since this work was done by Taranaki from nine to twelve years ago, great technological advances h'ave been made in connection with drilling equipment and drilling methods, allowing of much deeper penetrations of strata and the testing of deeper horizons. New Zealand Petroleum Co., Ltd., is in the fortunate position of being able to command all the capital required and—what is equally important —the necessary highly-trained and experienced technical staff; The thorough , testing of the oil potentialities of New Zealand, employing modern methods . and the latest type of geological and i drilling equipment,, is thus assured, • and likewise the "development of the . producing industry in accordance • with the best oilfields practice if oil - in commercial quantities is proved to - exist. I MOTUROA OIL FIELDS. 1 Another memorandum' has been t issued by Moturoa Oil Fields, Limited. ■> It has been in existence some eight J years, and although production of oil

has been achieved from three of the four wells put down by the company, the output is limited. The restricted financial resources of the company have precluded it from extending its operations and embarking upon the geophysical and other surveys, costing many thousands of pounds, which would be essential preliminaries to drilling, and which would not be justified by the limited areas controlled the company.

Under the agreement entered into the Moturoa Company has the right, ! subject to the consent of the Minister \ of Mines and such other consent as ! may be necessary, to continue to operate the existing wells until June 17, 1942, and thereafter until the New ' Zealand Petroleum Co., Ltd., gives it thirty days' notice to cease operations ' and deliver up possession of the wells. The New Zealand Petroleum Co., Ltd., then has the right to purchase all the plant and equipment. To enable the Moturoa Oil, Fields, Ltd.,'to participate in developments in certain licensed areas other than the three areas in Taranaki Province from which it will draw royalty from oil won and sold' by the New Zealand Petroleum Co., Ltd., an exchange Of shares has been arranged between the Taranaki (N.Z.) Oil Fields, N.L., and Moturoa Oil Fields,. Ltd., the Taranaki Company taking up 60,797 new fullypaid sharqs of 5s each in the Moturoa Company in exchange for 13,028 fullypaid shares of 30s each in the Taranaki Company. ,v 'When the proposals are finally completed the position will be that Moturoa Oil Fields, Limited, will < derive its income from (a) production of its existing wells for a period of five years from 16/6/37 or until such time as they are taken by the New Zealand Petroleum Co., Ltd.; (b) royalty of 5* per cent, on value of crude oil won and sold from existing wells (if and when taken over by the New Zealand Petroleum Co., Ltd.) and from oil won and sold from wells drilled by the New Zealand Petroleum Company, Ltd., on three licensed areas in the Taranaki Province, aggregating approximately 600 square miles; (c) by way of dividend on its shareholding in Taranaki (N.Z:) Oil Fields, N.L., in respect of its varied interests. VACUUM OIL'S INTEREST. The directors of Vacuum Oil Company Pty., Iftd., in announcing their participation in the new organisation, point out that the company has for many years been interested in the search for oil in New Zealand and Australia. . ' • . In 1918 it procured the services of Mr. W. A. English, an experienced American geologist, for the purpose of investigating certain territories m Western Australia, South Australia, and Victoria. In 1924 Mr. Ben Belt, a geologist of long experience, who had successfully located petroleum deposits in Texas arid elsewhere, was brought to Australia and New-Zealand and conducted exhaustive and expensive geological examinations in both countries. He was followed in the year 1930 by an-eminent (geologist, 'Dr. Jablonski, who, likewise, conducted geological surveys in New Zealand and Australia. None of these efforts was successful. Nevertheless, in the years 1933 and 1934 Vacuum Oil Company Pty., Ltd., in "association with Standard Oil Company of California, carried out a further geologicaLsurvey in the Gisborne district of New Zealand, and also m other parts of the Dominion. This work was performed in co-operation with Taranaki (N.Z.) Oil Fields N.L. and its associated companies. Four well-known geologists, viz., Dr. Jablonski, Messrs. Bremner, Steineke, and Osborne, with a staff and equipment, were engaged in this work for a period of two years. ■ ' -, The Vacuum Oil Company Pty.. Ltd., has now decided to expend a. further considerable sum in the search, for oil' in New Zealand. -The most up-to-date drilling plant, capable of drilling to depths of 8000 ft, will be used by the new company in an effort to determine the oil potentialities of New Zealand. The intention of Vacuum Oil Company Pty., Ltd., to participate financially' and technically with its partners in New Zealand Petroleum Company, Ltd., in a search for oil of a magnitude hitherto not contemplated in "New Zealand is an indication of its real interest and desire to obtain a source of supply of petroleum nearer than its present source. . ■-' ■ It has been encouraged to, commit itself to this substantial expenditure as a result of the« new petroleum legislation passed by the Dominion Government. In this regard it takes the opportunity of placing on record its appreciation of the sympathetic encouragement the quest for oil has received from the Hon. P. C. Webb (Minister of ! Mines), the Hon. W. Nash (Minister of ; Finance), and other members of the 1 Cabinet in New Zealand, and the great ' services in this regard performed by ; Mr. A. Tyndall (Under-Secretary for ' Mines).