Dabney Oil Syndicate
Encyclopedia
The Dabney Oil Syndicate refers to a number of petroleum
-drilling enterprises in California
involving Joseph B. Dabney and his associates.
Joseph Benjamin Dabney, born 1858 in Madison County, Iowa
, was in California at the turn of the 20th century when interest was being awakened in the possibilities of drilling for oil.
In 1900, E. J. (Emmor Jerome) Miley sold his fruit holdings and joined with Dabney in leasing a tract in the McKittrick district
in the San Joaquin Valley
. Ten oil wells were drilled the first year. In May 1901, the Dabney Oil Company was incorporated with capitalization of $1 million, and the two sold their holdings to the corporation.
Frank H. Powers, partner in the law firm of Heller & Powers, with offices at Montgomery and Pine in San Francisco, California
, became the secretary of Dabney Oil Company, Inc., at 330 Pine Street.
In 1913, Miley again joined with Dabney, drilling for oil under the name of Hildalgo Oil Company on and around the Simi Valley, California
ranch owned by the Ventura Land & Water Company, the family firm of Lewis M. Lloyd. At the time, Ralph B. Lloyd, his son, was operating the ranch, and persuaded Dabney and Miley to drill several wells in the area. All of them were dry or failed to sustain production.
Miley sold his interest in Hildago a year later, but continued to work with Dabney for the remainder of Dabney's life, as majority owner of State Consolidated Oil Company.
State Consolidated, formed in March 1911, and capitalized at $1.25 million, did rather well in Kern County, California
, and by 1920 was operating 33 producing wells there. Dabney would become one of the most prominent small operators of the Los Angeles
basin with the discovery of oil at Signal Hill, California
. Between his Dabney Oil corporation and his Joseph B. Dabney and Company partnership, he was operating 17 producing wells by 1920.
Despite their lack of success in Simi Valley, Ralph Lloyd convinced Dabney and Miley to test the ranch lands that lay to the east of the city of Ventura, California
. Lloyd had attended the University of California
, where his study of geology confirmed his belief that his family's ranch, and those around it, lay atop a vast oil pool. When Lewis Lloyd sold his 4500 acres (18 km²) of pasture that straddled the Ventura River
, Lloyd convinced his father to retain the mineral rights. It proved to be a wise decision.
State Consolidated drilled three wells on this property and another on the adjacent Louis Hartman ranch, but drilling crews were unable to cope with the enormous gas pressures that they encountered. Indeed, one well blew out. Dabney and Lloyd decided to bring in a major company with the financial resources and technology to handle the area's difficult geology and steep terrain. In April 1916, they signed a lease with Shell Company of California, a subsidiary of Royal Dutch Shell
.
Lloyd convinced the other landowners in the area to lease to Shell, which leased 13000 acres (53 km²) in all. Landowners received a standard 12.5% royalty on leases. Dabney and Lloyd received an overriding royalty.
Meanwhile, Lloyd acquired three other leases, bought one parcel of land outright, and obtained mineral rights to the ranches that lay to the east (and north of the downtown). Shell was not interested in any of them. By 1919, the Lloyd interests had accumulated more than 6000 acres (24 km²) of oil rights and leases on another 6000.
Lloyd thought he had an exclusive right to negotiate leases for Shell; Shell thought otherwise. When they went directly to Southern California Edison
to negotiate a lease, Lloyd felt betrayed.
Subsequently, Lloyd and Dabney turned to Associated Oil, another California major, offering an option in their "as yet unproven" part of the Ventura field. In February 1920, they and State Consolidated gave an option on 1500 acres (6 km²) to Associated Oil for $30,000. Associated gave them an additional $20,000 for materials and labor incurred in redrilling Lloyd No. 3 during the option period.
When Associated took up the option, they paid another $200,000 for a lease that provided a 20% royalty and one-third of the oil produced, plus an additional 30% that started after Associated had recovered the $250,000 it had paid for option and lease, and ended after the 30% gave Dabney-Lloyd and State Consolidated $500,000. After that, Associated only paid a 20% royalty. The Lloyd lease proved to be one of the most lucrative in the field.http://www.coastalresearchcenter.ucsb.edu/cmi/files/2002-049.pdf
The lease also required that Associated drill so-called offset wells, to prevent draining from adjacent leases. This was part of the strategy of Dabney and Lloyd to develop the field in an "orderly" manner. Indeed, both Associated and Shell cooperated in maximizing the long-term output of the field, which to date has produced almost one billion barrels of crude oil.
The breakthrough in production came in January 1925, with the completion of Associated's Lloyd Well No. 9-A. Royalties from production over the next few years made Dabney and Lloyd wealthy men. For instance, Lloyd Well No. 9-A generated $378 000 total production in its first two months alone.
Their success was such that Dabney and Lloyd often were approached by others, who wanted to buy or give leases.
In April 1927, Dabney and several others incorporated the Goleta Oil Dome Company, capitalized at $1 million, for the purpose of exploring the Tecolote district in the Goleta
area of south Santa Barbara County, California
. Miley, too, searched for oil in this area as well. Indeed, his Miley Oil Company discovered the minor Goleta field in February 1927. Rapid encroachment of water forced Miley and other operators to abandon their wells eighteen months later. Both Dabney and Miley were shut out of the much more lucrative Elwood field, which was discovered in June 1928 near the coast, due south of the Goleta field.
Joseph Dabney died in 1932.
came to work for the Dabney Oil syndicate in 1922 as a bookkeeper and auditor in their Signal Hill (Los Angeles) office. He rose to office manager and vice-president, but was fired in 1932 for drinking, womanizing, and absenteeism. Because he had testified for them in a trial, two of his friends from the oil business offered him $100/month for living expenses. He spent the next year honing his writing skills, and became a master of pulp fiction, turning the hard-boiled detective novel into an art form.
.
Dabney Hall of the Humanities, a gift of Mr. and Mrs. Dabney, is one of the four corner buildings of Caltech's central courtyard. It was built in 1927.
In 1928, the Dabneys gave $200,000 to build Dabney House, one of four new residence halls.
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
-drilling enterprises in California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
involving Joseph B. Dabney and his associates.
Joseph Benjamin Dabney, born 1858 in Madison County, Iowa
Madison County, Iowa
-2010 census:The 2010 census recorded a population of 15,679 in the county, with a population density of . There were 6,554 housing units, of which 6,025 were occupied.-2000 census:...
, was in California at the turn of the 20th century when interest was being awakened in the possibilities of drilling for oil.
In 1900, E. J. (Emmor Jerome) Miley sold his fruit holdings and joined with Dabney in leasing a tract in the McKittrick district
McKittrick, California
McKittrick is a census-designated place in Kern County, California, United States. McKittrick is located northwest of Taft, at an elevation of 1056 feet . The population was 115 at the 2010 census, down from 160 at the 2000 census.-Geography:...
in the San Joaquin Valley
San Joaquin Valley
The San Joaquin Valley is the area of the Central Valley of California that lies south of the Sacramento – San Joaquin River Delta in Stockton...
. Ten oil wells were drilled the first year. In May 1901, the Dabney Oil Company was incorporated with capitalization of $1 million, and the two sold their holdings to the corporation.
San Francisco, California
San Francisco , officially the City and County of San Francisco, is the financial, cultural, and transportation center of the San Francisco Bay Area, a region of 7.15 million people which includes San Jose and Oakland...
, became the secretary of Dabney Oil Company, Inc., at 330 Pine Street.
In 1913, Miley again joined with Dabney, drilling for oil under the name of Hildalgo Oil Company on and around the Simi Valley, California
Simi Valley, California
-2010:The 2010 United States Census reported that Simi Valley had a population of 124,237. The population density was 2,940.8 people per square mile...
ranch owned by the Ventura Land & Water Company, the family firm of Lewis M. Lloyd. At the time, Ralph B. Lloyd, his son, was operating the ranch, and persuaded Dabney and Miley to drill several wells in the area. All of them were dry or failed to sustain production.
Miley sold his interest in Hildago a year later, but continued to work with Dabney for the remainder of Dabney's life, as majority owner of State Consolidated Oil Company.
State Consolidated, formed in March 1911, and capitalized at $1.25 million, did rather well in Kern County, California
Kern County, California
Spreading across the southern end of the California Central Valley, Kern County is the fifth-largest county by population in California. Its economy is heavily linked to agriculture and to petroleum extraction, and there is a strong aviation and space presence. Politically, it has generally...
, and by 1920 was operating 33 producing wells there. Dabney would become one of the most prominent small operators of the Los Angeles
Los Angeles, California
Los Angeles , with a population at the 2010 United States Census of 3,792,621, is the most populous city in California, USA and the second most populous in the United States, after New York City. It has an area of , and is located in Southern California...
basin with the discovery of oil at Signal Hill, California
Signal Hill, California
Signal Hill is a small city in California located in the Greater Los Angeles area. Signal Hill, completely surrounded by the city of Long Beach, was incorporated on April 22, 1924, roughly three years after oil was discovered in Signal Hill. As of the 2010 census, the city population was...
. Between his Dabney Oil corporation and his Joseph B. Dabney and Company partnership, he was operating 17 producing wells by 1920.
Despite their lack of success in Simi Valley, Ralph Lloyd convinced Dabney and Miley to test the ranch lands that lay to the east of the city of Ventura, California
Ventura, California
Ventura is the county seat of Ventura County, California, United States, incorporated in 1866. The population was 106,433 at the 2010 census, up from 100,916 at the 2000 census. Ventura is accessible via U.S...
. Lloyd had attended the University of California
University of California
The University of California is a public university system in the U.S. state of California. Under the California Master Plan for Higher Education, the University of California is a part of the state's three-tier public higher education system, which also includes the California State University...
, where his study of geology confirmed his belief that his family's ranch, and those around it, lay atop a vast oil pool. When Lewis Lloyd sold his 4500 acres (18 km²) of pasture that straddled the Ventura River
Ventura River
The Ventura River is a river in Ventura County, California. The river forms at the confluence of Matilija Creek and North Fork Matilija Creek, upstream from the Pacific Ocean...
, Lloyd convinced his father to retain the mineral rights. It proved to be a wise decision.
State Consolidated drilled three wells on this property and another on the adjacent Louis Hartman ranch, but drilling crews were unable to cope with the enormous gas pressures that they encountered. Indeed, one well blew out. Dabney and Lloyd decided to bring in a major company with the financial resources and technology to handle the area's difficult geology and steep terrain. In April 1916, they signed a lease with Shell Company of California, a subsidiary of Royal Dutch Shell
Royal Dutch Shell
Royal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...
.
Lloyd convinced the other landowners in the area to lease to Shell, which leased 13000 acres (53 km²) in all. Landowners received a standard 12.5% royalty on leases. Dabney and Lloyd received an overriding royalty.
Meanwhile, Lloyd acquired three other leases, bought one parcel of land outright, and obtained mineral rights to the ranches that lay to the east (and north of the downtown). Shell was not interested in any of them. By 1919, the Lloyd interests had accumulated more than 6000 acres (24 km²) of oil rights and leases on another 6000.
Lloyd thought he had an exclusive right to negotiate leases for Shell; Shell thought otherwise. When they went directly to Southern California Edison
Southern California Edison
Southern California Edison , the largest subsidiary of Edison International , is the primary electricity supply company for much of Southern California, USA. It provides 14 million people with electricity...
to negotiate a lease, Lloyd felt betrayed.
When Associated took up the option, they paid another $200,000 for a lease that provided a 20% royalty and one-third of the oil produced, plus an additional 30% that started after Associated had recovered the $250,000 it had paid for option and lease, and ended after the 30% gave Dabney-Lloyd and State Consolidated $500,000. After that, Associated only paid a 20% royalty. The Lloyd lease proved to be one of the most lucrative in the field.http://www.coastalresearchcenter.ucsb.edu/cmi/files/2002-049.pdf
The lease also required that Associated drill so-called offset wells, to prevent draining from adjacent leases. This was part of the strategy of Dabney and Lloyd to develop the field in an "orderly" manner. Indeed, both Associated and Shell cooperated in maximizing the long-term output of the field, which to date has produced almost one billion barrels of crude oil.
The breakthrough in production came in January 1925, with the completion of Associated's Lloyd Well No. 9-A. Royalties from production over the next few years made Dabney and Lloyd wealthy men. For instance, Lloyd Well No. 9-A generated $378 000 total production in its first two months alone.
Their success was such that Dabney and Lloyd often were approached by others, who wanted to buy or give leases.
In April 1927, Dabney and several others incorporated the Goleta Oil Dome Company, capitalized at $1 million, for the purpose of exploring the Tecolote district in the Goleta
Goleta, California
Goleta is a city in southern Santa Barbara County, California, USA. It was incorporated as a city in 2002, after a long period as the largest unincorporated, populated area in the county. As of the 2000 census, the Census-designated place had a total population of 55,204, however, a significant...
area of south Santa Barbara County, California
Santa Barbara County, California
Santa Barbara County is a county located in the southern portion of the U.S. state of California, on the Pacific coast. As of 2010 the county had a population of 423,895. The county seat is Santa Barbara and the largest city is Santa Maria.-History:...
. Miley, too, searched for oil in this area as well. Indeed, his Miley Oil Company discovered the minor Goleta field in February 1927. Rapid encroachment of water forced Miley and other operators to abandon their wells eighteen months later. Both Dabney and Miley were shut out of the much more lucrative Elwood field, which was discovered in June 1928 near the coast, due south of the Goleta field.
Joseph Dabney died in 1932.
The Chandler connection
Raymond ChandlerRaymond Chandler
Raymond Thornton Chandler was an American novelist and screenwriter.In 1932, at age forty-five, Raymond Chandler decided to become a detective fiction writer after losing his job as an oil company executive during the Depression. His first short story, "Blackmailers Don't Shoot", was published in...
came to work for the Dabney Oil syndicate in 1922 as a bookkeeper and auditor in their Signal Hill (Los Angeles) office. He rose to office manager and vice-president, but was fired in 1932 for drinking, womanizing, and absenteeism. Because he had testified for them in a trial, two of his friends from the oil business offered him $100/month for living expenses. He spent the next year honing his writing skills, and became a master of pulp fiction, turning the hard-boiled detective novel into an art form.
The college connections
Joseph B. Dabney was a trustee of California Institute of TechnologyCalifornia Institute of Technology
The California Institute of Technology is a private research university located in Pasadena, California, United States. Caltech has six academic divisions with strong emphases on science and engineering...
.
Dabney Hall of the Humanities, a gift of Mr. and Mrs. Dabney, is one of the four corner buildings of Caltech's central courtyard. It was built in 1927.
In 1928, the Dabneys gave $200,000 to build Dabney House, one of four new residence halls.