Lehman Brothers Collection - Contemporary Business Archives

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Lehman Brothers Collection

Twentieth-Century Business Archives

Plymouth Oil Company - Lehman Brothers Collection

Plymouth Oil Company

List of Deals

Incorporated in Delaware in 1923, Plymouth Oil Company was founded to discover, tap, and refine petroleum and natural gas. The company was engaged in exploring for, acquiring, and developing oil and gas fields. Plymouth Oil’s headquarters were in Pittsburgh. The company owned oil fields in the United States, Canada, and Australia. It operated a refinery in Texas City, Texas, and sold most of its products in Pennsylvania, Texas, and the American Southwest.

The company was formed by businessmen in Charleston, West Virginia. Plymouth Oil Company initially gained most of its income from Big Lake Oil Company, a Delaware corporation that mined oil in Reagan County, Texas. Plymouth Oil owned 75 percent of the stock in Big Lake Oil. By 1925 the Big Lake oil fields were yielding 9,000 barrels of oil a day. By 1941 Plymouth Oil had extracted 66.8 million barrels from the Big Lake fields. Total production increased to 3.9 million barrels of crude oil and natural gas in the 1961 production year.

Plymouth Oil Company acquired the remaining stock of Big Lake Oil Company in 1956. It continued its expansion in 1957 by acquiring the property of a wholly owned subsidiary, the Texas corporation Republic Oil Refining Company.

Plymouth Oil’s net income fluctuated widely. The company made $4.4 million in 1925, $2.2 million in 1929, $825,000 in 1931, and $1.7 million in 1932. That remained flat through 1941, when net income was $1.5 million. In 1957 net income was $5.3 million; in 1960 and 1961 net income was negative, at losses of $2.6 million and $566,000 respectively. The company was struggling.

Plymouth Oil Company went out of business in 1962. The deal books in the Lehman Collection detail the company’s efforts to save money and stay above water in 1961, and the sale of the company’s assets in 1962 when the salvage effort failed. In a letter to shareholders, Plymouth Oil called for the dissolution of the company, citing a multitude of problems: high oil exploration costs, the company’s outdated refinery, competition in pricing, government regulation, and expansion of rival companies.

Plymouth Oil liquidated its assets, selling them and its properties in a three-way deal. The Ohio Oil Company (renamed the Marathon Oil Company later in 1962) bought Plymouth Oil for $57.6 million in cash and a $48 million pledge of future production payment. Albantu Oil & Gas Corporation agreed to buy that production payment for $48 million; in exchange Ohio Oil would pay Albantu Oil & Gas 73.5 percent of the income from the former Plymouth properties until the loan should be repaid. Albantu Oil & Gas was a financing corporation led by Lehman Brothers employees. The production payment was scheduled to be paid off in eight years. Ohio Oil financed its purchase of Plymouth’s assets through an issue of $90 million in debentures. At its liquidation, Plymouth Oil distributed $18 million to its shareholders.

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