Dabney Oil Syndicate
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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, less than a block away.
In 1913, Miley again joined with Dabney, drilling for oil in Ventura County, California under the name Hildalgo Oil Company. 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; by the end of 1920, they were operating 33 producing wells there. Dabney was one of the most prominent small operators of the Los Angeles valley, between his Dabney Oil corporation and his Joseph B. Dabney and Company partnership. Those two organizations had 17 producing wells at the end of 1920.
Ralph Lloyd had been attending the University of California when his family sold their 4 500 acres (18 km²) of pasture that straddled the Ventura River east of the city of Ventura, California. They got $5 an acre ($1200/km²) for the land from a sheep rancher - but at his suggestion, the family retained the mineral rights. It proved to be a wise decision for them.
Between 1915 and 1920, Lloyd approached other landowners in the area on behalf of Shell Oil, leasing 13 000 acres (53 km²) with the landowners receiving a standard 12.5% royalty on leases. For this, Lloyd received an overriding royalty.
At the same time, Lloyd acquired three other leases, bought one parcel of land outright, and obtained mineral rights to the Sexton ranches east of the proven field. Shell was not interested in any of them. By 1919, the Lloyd interests had accumulated more than 6 000 acres (24 km²) of oil rights and leases on another 6 000. Lloyd and Dabney worked with State Consolidated to develop four wells on the Lloyd properties, but State Consolidated did not have the resources to do it properly.
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.
Consequently, it was to Associated Oil that Lloyd and Dabney went, offering an option in their "as yet unproven" part of the Ventura field. In February, 1920, they and State Consolidated gave an option on 1 500 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, 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. Another provision in the lease required Associated to drill at least two more wells every year. That was very important to the Dabney oil syndicate, for they did not have the resources to develop the oil field. The so-called Lloyd lease proved to be one of the most lucrative in the field.[1]
The lease also required that Associated drill protection wells, to prevent draining from adjacent competitive wells, or surrender the lease. This gave them the incentive to develop the field in an orderly fashion, and set a standard which others soon adopted.
Lease management and ownership gave Lloyd, Dabney, and their associates the money to develop their own wells. For instance, in 1925, Shell paid Lloyd $1.2 million for his override royalty on the Taylor lease. They also did well on their own wells. In 1925, Associated's Lloyd Well 9-A came in, generating $378 000 total production in two months.
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.
Joseph Dabney died November 29, 1935.[1]
[edit] The Chandler connection
Raymond Chandler 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 spend the next year honing his writing skills, and became a master of pulp fiction, turning the hard-boiled detective novel into an art form.
[edit] The college connections
Joseph B. Dabney was a trustee of California Institute of Technology.
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.
