The New York herald., 1920-12-02
$6OO,OOO,OOO OIL
LANDS PARCELLED
Southern Pacific Adopts Plan
to Separate Petroleum, Land
and Rail Properties.
NEW COMPANY is FORMED
To Holders Of Stock Costing
SIS Is Assured SO a Share
Each Year.

The board Of directors of the South
ern Pacific Company at special
meeting yesterday adopted the final
plan to separate from it's railroad
properties the California oil properties,
valued by the Government at $780,
600 900 and the stock holdings in the
Associated Oil Company.
The official announcement was made
at 6 o'clock, after the San Francisco
Exchange had closed.
The plan provides that stockholders
of the Southern Pacific Company reg
istered on January IA and holders OF
convertible bonds antedating January
Il may subscribe az SIS share to
one share of stock of the Pacific OIL
Company for each share of Southern
Pacific stock so held.
In the meantime directors of the
Southern Pacific have taken steps to
organize the Pacific Oil Company under
the laws of Delaware. with capital stock
to consist Of 100000 shares OF no par
value. The Southern Pacific Company
will subscribe to this stock at $40
share. paying out $52.500,000. and OF
this sum the Pacific Oil Company VIII
retain $3.50. 900 as working capital.
The Southern Pacific Land Company.
all the capital stock of which Is owned
by the Southern Pacific Company, will
receive S4S.750.000, selling for that sum
to the Pacific oil Company the follow
ing possessions
25o,0ookscres OF Land.
About 259.OOO acres OF land. now
owned by the Southern Pacific Land
Company. in California, of which about
25. 600 acres are proved oil lands and
the remainder lands heretofore with
drawn from sale as possible oil lands
together with existing field Improve
ments and materials and supplies, and
2OO.69O shares, par value $2OO69,OOO'
representing 50.49 per cent. of the out
standing capital stock of the Associated
Oil Company.
Each stockholder who pays SO
share for Pacific Oil stock will find
that only $3.50 a share goes to the new
company as working capital. the bal
ance Of $3.50 going to the Southern
Pacific Land Company, all of whose
stock is owned by the Southern Pacific
Company. It is understood that divi-
dends on the new stock will be inaugu-
rated at SO share year.
The Associated Oil Company stock is
now paying Sc share, or an Income at
the annual rate of S1,200,000. for the
Pacific Oil Company. Its earnings.
however, for 1920 were approximately
SIG share. so that Pacific Oil Com
pany's equity in Associated OIL Com
pany in 1920 would have been SS.2O0-
600.
The net earnings Of the oil properties
a. be transferred 70 the new company
will be approximately s12.0o0.00O in
1920 after the deduction Of all taxes
and proper reserves for depreciation.
according to the official statement,
which adds that the earnings for 1921.
based upon the present estimated Oh
production and prices should exceed
S12.000,000 considerably
Thus II is pointed out that to the Pa
clflc oil Company is assured minimum
surplus available for dividends of Sl5'-
200 900. which is equal to almost -
share on the 3.500,000 shares Of stock
which will be outstanding, with an OIL
clal prediction that the actual surplus
available for dividends will be consider
ably in excess Of that sum. II Is pointed
out also that irrespective OF a majority
stock ownership in the Associated on
Company, the oil lands thus transferred
% tho Pacific OIL Company got final
revised estimate OF value by the United
states Government of S6o0,o00,OOO
Pacific oiTS Directors.
The board OF directors Of the Pacific
Oil Company will consist Of James 5.
Alexander. president Of the National
Bank OF Commerce and n director Of the
Federal Reserve Bank. b. y. Caldwell
Charles A. Peabody, president OF the
Mutual Life Insurance Company; Samuel
Rca. president OF tho Pennsylvania
Railroad Company Mortimer L. Schiff
Of the banking firm OF Kuhn, Loeb a
Co.; Paul Shoup. president Of the AS
ISOLATED Oil Company OF California
Henry W. De Forest and II T. Sven
son, n director of the National city
Bank and understood :. be affiliated
with the Rockefeller interests
The purpose OF fixing tho stock Of the
Pacific oil Company at 3500.00 shares
Is that it may correspond as nearly
as may be to the total number OF shares
Of the Southern Pacific Company
stock outstanding. together with shares
reserved for the conversion OF the per
cent convertible bonds. Southern Pa
cifc stockholders of record on January
"A must pay in full for the new stock on
or before March at SIS n share.
Holders Of the > per cent convertible
bonds. in order to avail themselves Of the
right to purchase stock Of the new COM
pany. must exchange their bonds for
Southern Pacific stock on or before
January IA. Detailed Information Is
given In letter 90 stockholders signed
by A. u. Mcdonald. vice-prcsident and
comptroller.
KORaI-NOOR PENCILS. famous throughout
the world for high quality. can now be
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