ENTERPRISE

Applicant: Texmass Petroleum Co., Mercantile Bank Building, Dallas, Tex. Agency No.: LBE-2192.

Date of application: March 30, 1949.

Date of report: June 8, 1949.

Established: October 23, 1946.

Business.-Production of oil and gas which particularly pertains to buying, selling, storing, and transportation of oil, gas, salt, brine, and other mineral solutions and liquefied minerals; also sand and clay for the manufacture and sale of clay products and the exploration, drilling, and production of oil and all other liquefied gases and/or petroleum products and to lay down, construct, maintain, and operate pipe lines, tubes, tanks, pump stations, storage facilities and such machinery, apparatus, devices, and arrangements as may be necessary to operate such pipe lines to own, hold, use, and occupy such lands, rights-of-way, easements, franchises, buildings, and structures as may be necessary for the purposes of the corporation, and to own and operate refineries, casing and treating plants, offices, warehouses, docks, ships, tank cars, and vehicles necessary in the conduct of its business.

The application is being formally made by Texmass Petroleum Co. and a group known as the Investors is being treated as a part of the Texmass Petroleum Co. and for the purposes of this application, their assets, liabilities, etc., have been combined with those of the Texmass Petroleum Co.

For the purpose of this application, it is necessary to take into consideration information, relevant data, concerning each of the following concerns whose joint interest in the oil- and gas-producing properties are to be transferred to the Texmass Petroleum Co. in consideration of certain outstanding liabilities of those

companies to be assumed by the applicant company and the major portion of which liabilities are to be paid out of the proceeds of subject loan: Petroleum Reserve Corporation with headquarters at Dallas, Tex.

Swiss Oil Co. with headquarters at Dallas, Tex.

Midway Oils, Inc., with headquarters at Topeka, Kans.

The applicant and each of the above-mentioned concerns own individual interest and joint interests in oil and gas properties located in the States of California, Kansas, Oklahoma, Louisiana, Texas, and New Mexico. A plat showing the distribution of the applicant's properties in all the States is shown on page 79 of the application, and all of these properties, together with the properties owned by the various entities, have been incorporated and covered in report of appraisal engineers which will be covered later on in this report.

Loan applied for.-Originally applied for, $22,500,000.

Application amended

by letter dated June 7, 1949, reducing amount of loan to $18,950,000. Maturity requested.-July 1, 1959.

Efforts made to obtain the requested loan from banks or other sources and definite reasons for decline. According to the applicant, many banks and insurance companies have been contacted in order to try to obtain the requested loan, and each and all of them have stated that they would not be interested in making any loan which would be sufficient for the needed purposes, nor would participate with RFC in any such loan.

It is further stated that the Mercantile National Bank, at Dallas, which presently holds a loan against the applicant, has declined to make the loan or participate with RFC, and, furthermore, that the insurance companies, namely, the Massachusetts Mutual Life Insurance Co. and the John Hancock Mutual Life Insurance Co., both being large creditors and holding liens against the properties, have stated that they would not make the loan, and in fact are very unhappy with their present loans.

Bank participation.-None.

Previous action.-None on subject request.

The following previous loans, however, were approved by the agency and disbursed, which concerns one of the partners at interest in connection with this application for subject loan:

1. On March 17, 1947, a direct loan, designated as LBE-AGY 1838, was approved to be made to H. W. Snowden and fully disbursed March 20, 1947. The purpose of this loan was for the purchase of war surplus airplanes which were pledged as security to the loan under warehouse receipts. According to the records, this loan did not function very satisfactorily as the borrower suffered one or two fire losses in connection with the collateral, and due to the unsatisfactory condition of the loan it was finally transferred to the Liquidation Branch for servicing and foreclosure, if necessary. The loan was eventually reduced to $43,647.92, and this balance appears to have been taken up by the Aircraft Investment Corp., Fort Worth, Tex., and the note and collateral documents were transferred to that concern November 13, 1948.

2. SLP Loan No. 338 was authorized to be made by First National Bank, Stamford, Tex., under a 75-percent deferred participation with RFC in the amount of $50,000 to the Hamlin Sand & Gravel Co. and Hamlin & Northwestern Railroad Co., with H. W. Snowden being its president, director, and principal at interest in said concerns. This loan was approved April 23, 1948, and fully disbursed May 5, 1948. It appears that this loan functioned satisfactorily and, after being reduced to a balance of $16,341.72, the participating bank took RFC out on January 12, 1949.

Following is a detailed list showing who is to benefit from debt-payment funds due by applicant and obligations of the several entities incorporated and consolidated with the proposed transfer of certain properties and production of the various interests to Texmass Petroleum Co.