Lehman Brothers Collection - Contemporary Business Archives

Harvard Business School Baker Library Historical Collections

Lehman Brothers Collection

Twentieth-Century Business Archives

Rowan Drilling Company, Inc. - Lehman Brothers Collection

Rowan Drilling Company, Inc.

List of Deals

Rowan Drilling Company began in 1923 when brothers Charlie and Arch Rowan bought a drilling rig. The brothers incorporated in 1924 as Rowan Drilling. They hit a gusher in November of that year, which launched the business and created an oil boom in the city of Wortham, Texas, that lasted for three years. In 1927 the Rowans founded a second company, Rowan Oil Company, to sell the oil produced by Rowan Drilling. Rowan Oil Company dissolved in 1933.

Drilling with steam power was state-of-the-art for the 1920s, but by 1935 Rowan was moving ahead of the industry by purchasing its first diesel electric rig. The company extended its reach beyond Texas in the late 1930s into the marshland of Louisiana. Due to an excess flood of oil in the market, the Texas Railroad Commission began regulating the production for oil wells. In response to this regulation, Rowan sued the state agency in a case that eventually went all the way to the U.S. Supreme Court. However, Rowan lost the case, as the Supreme Court refused to overrule the judgment of a state agency.

As the United States entered World War II in 1941, oil production became a key factor in the war effort. Rowan, as well as other oil drilling businesses, experienced difficulties after the end of the war. In 1947 the company incorporated as Rowan Companies. In 1948 imported oil began to have an impact and exceeded domestic oil for the first time. However, demand increased with a growth in automobile and aircraft use. In 1948 Rowan Drilling Company split into two companies when Rowan Oil was resurrected. By the end of that year, the company had seventy-eight wells: fifty-five in Texas, twelve in New Mexico, and eleven in Louisiana.

Rowan began the 1950s aggressively. In 1951 the company began offering benefits to its employees as well as establishing a joint headquarters for Rowan Oil and Rowan Drilling. In 1954 the company first attempted deep-water drilling, establishing rigs in the Gulf of Mexico. In 1958 the company decided that operating two companies was not advantageous and sold the assets of Rowan Oil to Texas Pacific Coal & Oil Company. The remaining company, Rowan Drilling, extended operations into Mississippi that year.

Rowan expanded into Alaska in 1966. Drilling in Alaska proved to be challenging, as transportation to the rigs became a problem. To resolve the problem, Rowan bought ERA Helicopters, Alaska's largest helicopter business, in 1967. The company also launched its initial public offering in 1967. The decision to become a public company resulted from the need for more operating capital to fund offshore work and technological advances. As of September that year, Rowan had assets of $8.7 million. Offshore drilling accounted for 42 percent of contract drilling revenues and 65 percent of net income from contract operation.

Harvard Business School Harvard Business School Baker Library Histrorical Collections