New-York tribune., 1920-11-02
SoutI'n Pacific
To Segregate
Its Oil Lands
Action Separating Railroad
and Petroleum Properties
Believed to Foreshadow
Melon for Stockholders
New High Mark for Stock
Estimates Place Holdings To
BE Released by Plan at
More Than 5000, 100000

The Southern Pacific Company an
nounced late yesterday its intention to
divorce from its railroad prope rites its
valuable California oil properties, con-
sisting of several hundred thousands
of acres of oil lands, and its holdings
of stock in the Associated Oil Com
pany. A plan for the separation of
these properties is to be worked out
by the executive committee The ac-
ton, it is believed, foreshadows a large
melon cutting, involving possibly the
distribution of the oil land and stock
assets of the Southern Pacific Com
pany to its stockholders
The announcement made by Julius
kruttschnitt, chairman of the executive
committee of the Southern Pacific, on
behalf Of the company, said:
AT special meeting of the board
OF directors of the Southern Pacific
Company, held today, the board passed
resolutions approving the general prin-
clple of the separation Of its Cali
1ornla OIL properties and its stock
holdings in the Associated Oil Com
pany from its railroad properties, and
referred the matter to the executive
committee to work out an appropriate
plan.
The board intends that the benefits
from this arrangement shall inure to
the stockholder and this advance no
tice is given for his projections"
Nothing more than this brief state
ment was made at the Southern Pacific
offices, the officials of the company re-
tusing to amplify the facts. The reason
for the action on the part of the COM
pany at this time was not given, al
though the opinion was expressed else
where that the railroad company in
planning to divorce itself from its oil
properties was moving in accordance
with the trend of the times, which is
in the direction of the breaking up Of
railroad industrial company combina-
tions
The southeA Pacific Company owned
on December 81, 1919, $20,O69 900 par
value of the $39, ,756,0S5 outstanding
capital stock of the Associated Oil
Company, which owns valuable oil pro-
ducing, refining and Oil transporting
properties in California.
1t also owned on that date title to
6,724.S2l acres Of land along its right
of way. a large part Of which was OBJ
tanned in the form of land grants when
the system was built to the Coast. Part
of these lands is located in rich soil
bearing districts of California. The
government brought suit against the
company several years ago, charging
title had been obtained to some Of the
land through Misrepresentation, but
the Southern Pacific came out of the
litigation with clear title to the prop
erty.
1t is the stock held by the Southern
Pacific in the Associated Oil Company
and the California land which it is
planned to segregate from the railroad
system proper.
The value of the oil lands is unknown
definitely, although Wall Street esti-
mates have placed it at anywhere from
S200,000,000 to S7O0,000,O00. The opin-
ion is held in financial circles that the
move toward segregation is the first
step toward a distribution of these as
sets in favor of Southern Pacific stock
holders.
Southern Pacific stock has been a
feature of the stock market for several
days, rising sharply on buying that has
borne the earmarks Of accumulation. In
August the stock sold at S994 and the
low for the year is S8's, made last Feb
ruary. Yesterday Southern Pacific rose
to 10578, a new high for the year, and
closed at 1861, up 2la points,