gone as far as prudence dictated in the spending of money to accomplish and understand these facts.

Senator FULBRIGHT. When you were confronted with this difference, you had inquired about the reliability and ability of Mr. Garrett and Mr. Keplinger. You are confronted with a different report from Mr. White, yet you made no effort to check his qualifications, did you? Mr. DUNHAM. No.

Senator FULBRIGHT. Do you not think you should have?

Mr. DUNHAM. No; and the reason is I do not think it is up to RFC or anybody else to check the qualifications of another Government employee.

Senator FULBRIGHT. Did it not ever occur to you that maybe Mr. White, assuming he was competent, that his advice and assessment might be even more disinterested than an employee of Texmass Co.? Mr. DUNHAM. Well, I would think that it would be; yes. Senator FULBRIGHT. I would, too.

Mr. DUNHAM. Yes.

Senator FULBRIGHT. Therefore, I would be inclined to give it considerable weight, it seems to me, and I thought you would.

Mr. DUNHAM. I never saw Mr. White's figures, what he represented. That was all turned over to our engineer, who came back and reported to the Board that there was nothing further to do in that respect, and that Mr. White's figures could not be reconciled with Mr. Garrett's or Mr. Keplinger's.

Senator FULBRIGHT. Well, you were quite disturbed by that difference, were you not?

Mr. DUNHAM. Yes, indeed.

Senator FULBRIGHT. And you immediately sent Mr. Willard over to inquire about that?

Mr. DUNHAM. Well, he told the Board about it, and the Board authorized that to be done; yes, sir.

Senator FULBRIGHT. Well, it seems to me it would have been very prudent and an ordinary thing to do to say, "Well, what about this fellow White? Does he know what he is talking about?"

Mr. DUNHAM. Perhaps it would have been a very prudent thing. Senator FULBRIGHT. You did not do that, though?

Mr. DUNHAM. No; I did not.

Senator FULBRIGHT. Especially when you feel that he would be probably more disinterested than a direct employee; is that not true? Mr. DUNHAM. Yes; that would seem indicated.

Senator FULBRIGHT. Mr. Dunham, did you ever hear of a petroleum engineering firm by the name of DeGolyer & MacNaughton?

Mr. DUNHAM. Yes.

Senator FULBRIGHT. Is it a reliable firm?

Mr. DUNHAM. I would like someone else to answer that. My impression is they are.

Senator FULBRIGHT. Did you ever hear of them, Mr. Gunderson Mr. GUNDERSON. No, sir.

Mr. DUNHAM. I think they have offices in Houston or Dallas; is that correct?

Mr. CONSIDINE. I have heard of them, but I do not know. Senator FULBRIGHT. Did you ever hear of them, Mr. Considine? Mr. CONSIDINE. I think I have, sir, but I do not know anything about them nor their reputation.

Senator FULBRIGHT. What is their reputation?

Mr. CONSIDINE. I say, I do not know anything about them.
Senator FULBRIGHT. Do you know, Mr. Ronan?

Mr. RONAN. I do not.

Mr. DUNHAM. It seems to me somewhere in a file there is a reference to them, and it is complimentary.

Senator FULBRIGHT. I see.

Well, for your information, one of the men very closely associated with this company, a Mr. Smith, I believe, indicated he thought it was probably one of the outstanding engineering firms in the country, and I might say that from other sources I have also heard that, and I assumed that you had heard of them. I believe you will find, if you investigate, that they are conceded perhaps the best known, one of the oldest and the best-known firms of petroleum engineers in the country.

I inquired of them, because I wished to be satisfied with regard to Mr. White, although the SEC does not like that practice, but I inquired of DeGolyer & MacNaughton what they knew of Mr. White, and I received a telegram yesterday from Dallas, dated April 21. I wish to read it into the record.

This is addressed to me:

Pursuant to your recent request to Mr. MacNaughton with regard to Mr. Tell T. White, this is to advise that we have known Mr. Tell White for 7 or 8 years, during which time we have come to regard him very highly. Mr. White has been a professional man for some 30 years. Our business interests with him during recent years permit us to say without qualifications that we regard him very highly as a petroleum-evaluation engineer who has had very broad experience and whose integrity, in our opinion, is above question.

DEGOLYER & MACNAUGHTON.

Now, in this prepared statement for the RFC, you have presented testimonial letters in order to show that the petroleum engineers, Melvin Garrett and C. H. Keplinger, have standing in their profession and are of good repute.

The Corporation points out also in its statement that it knows nothing of Mr. White's reputation, ability, or standing.

The committee wishes to show that Mr. Tell T. White, the petroleum engineer who represents the SEC and is associated with its Oil and Gas Unit, is a man of considerable standing in his profession and a man who enjoys the confidence of recognized leaders in his field.

The chairman of the subcommittee was asked by officials high in the Securities and Exchange Commission not to request testimonial letters with respect to Mr. White's standing.

These officials said it would be necessary, if Mr. White were to appear in these proceedings, that he stand on his own background. The reason for this decision is a commendable one. The SEC did not wish to place Mr. White in a position which might be misinterpreted. They do not want it to appear that Mr. White is in any way beholden to professional geologists who might at another time sit across the table from him as the representatives of persons whose statements to the SEC are under critical scrutiny by him, or by other members of the SEC staff.

Neither do they wish to put any professional geologists or petroleum engineers in the position of having had to respond to the request that

they endorse the reputation of a man who may at a later date be critically examining their work as the representative of one of the Government's regulatory agencies.

The chairman of the subcommittee has given full consideration to the merit of these views, but has decided nevertheless to request the opinion of certain leaders in the petroleum engineering profession with respect to Mr. White's ability and fairness.

The chairman is of the opinion that the professional integrity of all of these men is such that no reasonable question can be raised with regard to the propriety of such a free expression of views.

I should like to place in the record the testimonials which have been sent to me, at my request, by Mr. Lewis W. MacNaughton of the firm of DeGolyer & MacNaughton, Dallas, Tex., which I have already read; Mr. Ralph E. Davis, of Houston, Tex.; and Mr. Raymond F. Kravis, of Tulsa, Okla.

Mr. Ralph E. Davis is very well regarded and does most of the appraisal and the reserves estimation work in the natural for the large pipe-line companies.

gas field Mr. Raymond F. Kravis is well known in Tulsa and does a large amount of the appraisal and estimating of reserves for the smaller oil and gas companies around Tulsa.

I, for the record, would like to read Mr. Davis' letter. He says:

DEAR SENATOR FULBRIGHT: You have requested of me a statement regarding my knowledge of the qualifications of Mr. Tell T. White, as a geologist and appraiser of oil and natural-gas properties.

Mr. White has been employed for a number of years by the Securities and Exchange Commission in the department passing upon estimates of petroleum and natural gas and the value of such properties. During the past several years, there have been submitted to the Securities and Exchange Commission quite a good many reports prepared by me dealing with either petroleum or natural-gas reserves. A large proportion of these reports have been reviewed by Mr. White. In a number of cases it has been found desirable to discuss various features of my reports with Mr. White, either by personal contact in Washington or occasionally by long-distance telephone.

I have found that Mr. White really studies the reports that he has responsibility of reviewing and that he does not hesitate to be critical whenever he feels it proper. I have found that he is a very capable man in his work and I feel. that he has invariably been fair in his criticism and in his final conclusion. Yours very truly,

RALPH E. DAVIS.

Mr. Davis is an engineer, with offices in Houston, Pittsburgh,. and New York.

Mr. Raymond F. Kravis, Kennedy Building, Tulsa, Okla.:

DEAR SIR: You have inquired of me as to whether I am acquainted with Mr. Tell White of the Oil and Gas Section of the Securities and Exchange Commission, and also as to my opinion concerning his qualifications as a petroleum engineer and geologist, and his ability to estimate oil and gas reserves and value oil and gas properties.

I have known Mr. White for more than 10 years. During this period of time, I have had occasion to appear before him numerous times with respect to engineering and appraisal reports which I have prepared for companies filing registration statements with the Securities and Exchange Commission. Because of the discussions which I have had with him in connection with such reports, I have obtained knowledge of his qualifications, ability, and experience as a petroleum engineer and geologist.

It is my opinion that Mr. White is well qualified to pass on oil and gas reserves and to express a sound opinion concerning the values of oil and gas properties. In my dealings with him, I have at all times found him to be fair and reasonable.

Very truly yours,

RAYMOND F. KRAVIS.

Mr. White, I wish you would come forward. I do not believe we swore you this morning.

Mr. WHITE. I was sworn.

Senator FULBRIGHT. Mr. White, will you give the committee a brief statement of your background and qualifications as a petroleum engineer?

TESTIMONY OF TELL T. WHITE, ENGINEERING STAFF, SECURITIES AND EXCHANGE COMMISSION

Mr. WHITE. I have prepared a short statement, which I will read. As a petroleum engineer and geologist for the Oil and Gas Section in the Division of Corporation Finance of the Securities and Exchange Commission, with which I have been associated since August 1937, I have been required to pass upon a very large number of estimations of recoverable oil and gas, valuation reports, and geological reports, from the standpoint of reasonableness, which were submitted to the Securities and Exchange Commission under the various acts which the Commission administers.

Over the course of my employment with the SEC, I have made. hundreds of estimations of recoverable oil in connection with the sale of oil royalties offered under regulation B of the Securities Act of 1933, I have testified on frequent occasions as an expert witness, both in connection with administrative proceedings held under the Securities Act of 1933, and the Securities Exchange Act of 1934, and in connection with court proceedings, involving violations of these acts.

Prior to my employment with the SEC, which was several years ago, I was graduated from the University of Arkansas with the degree of bachelor of science in civil engineering, in the year 1915.

For the next 3 years, I was employed in heavy construction work as a civil engineer with the Chicago, Milwaukee & St. Paul Railroad in Chicago.

In March 1918, I became associated with Guffey-Gillespie Oil Co. as a field geologist, where I remained until 1920, with the exception of a 6 months period in the Army.

In the course of my employment with this company, I actively participated in valuation work in connection with the purchase of oil and gas leases and properties.

From 1930 to 1924, I was employed by a partnership formed by two former associates of the Guffey-Gillespie Oil Co. to do field and subsurface geological work, as well as valuation work in connection with the purchase and sale of oil and gas leases and properties.

From 1924 to 1933, I was in business for myself as a consulting geologist, petroleum engineer, and promoted oil wells.

From 1933 to 1937, I was engaged in geophysical surveys as an employee of Shell Petroleum, Phillips Petroleum, and the Geophysical Research Corp.

From January to July 1937, I was employed by the United States Bureau of Mines in their Petroleum Economics Division.

As indicated before, I entered the employment of the SEC in August 1937.

I might add that I am a member of the petroleum branch of the American Institute of Mining and Metallurgical Engineers, and am also a member of the American Association of Petroleum Geologists.

Senator FULBRIGHT. Now, Mr. White, will you tell the committee what function you performed for the Securities and Exchange Commission with respect to the registration of securities proposed to be issued by Texmass Petroleum Co.?

Mr. WHITE. Well, first, I examined Mr. Garrett's report and, secondly, the report of Mr. Keplinger.

In the meantime, I consulted with other members of the staff as to language which would result in full and fair disclosure under the rules as interpreted by the Commission under our acts.

Senator FULBRIGHT. In the statement which the RFC prepared for the subcommittee, it is pointed out at page 7 as follows:

We had the experience during the war of seeing the Government subsidize the production of stripper wells which had been abandoned * * * in order to obtain the necessary oil production for war purposes.

Mr. White, what is a stripper well?

Mr. WHITE. A stripper well can usually be defined as a pumping well which is approaching the point where it is not particularly profitable to operate.

Senator FULBRIGHT. You say it is just on the verge of becoming unecomonic; is that what you mean?

Mr. WHITE. Well, it is when the well is approaching it. The larger wells are just considered good wells, and stripper wells are considered secondary ones which, while they may produce a small amount of oil for quite a while, are not really too valuable.

Senator FULBRIGHT. They are not too valuable?

Mr. WHITE. That is right.

Senator FULBRIGHT. They are not considered very desirable as oil properties go; is that correct? They are the least desirable? Mr. WHITE. That is right.

Senator FULBRIGHT. In terms of production per well per day, could you tell the committee what kind of oil wells were put or kept in production by the Government's subsidy program during the war?

Mr. WHITE. They subsidized all the wells in fields which averaged less than 9 barrels per well per day. It was a sliding scale subsidy; it went up to 35 cents a barrel but it did not start quite that high.

Senator FULBRIGHT. The presumption was that without Government subsidy, these wells might not produce their output for the war effort because private operators could not make them go economically; is that correct?

Mr. WHITE. That was the object of the subsidy, to keep them producing.

Senator FULBRIGHT. Mr. White, it is true, is it not, that the production of the Texmass wells averaged about 9 barrels of oil per day during the last part of 1949?

Mr. WHITE. They have actually averaged between 8% and 9, I believe.

Senator FULBRIGHT. Would you say that the Texmass wells on the whole are less than average producers?

Mr. WHITE. Oh, definitely.

Senator FULBRIGHT. Could it be said with fairness that they are comparable, generally, to the wells which came under the Government's wartime subsidy program?