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Rocky Mountain Oil: 1875-1913
Conoco began in 1875 as the Continental Oil and Transportation Co., one of the first petroleum marketers in the West. Isaac E. Blake, Conoco's founder, observed that townspeople in Ogden, Utah, still used candles and whale oil to light their homes. Although kerosene was available, hauled by the case from a primitive refinery in Colorado, it was too expensive for the thrifty pioneers. Blake figured if kerosene were imported from eastern refineries by railroad tank cars and sold in bulk, prices would drop and demand would rise. Continental was formed to capitalize on this idea. On Nov. 25, 1875, the Continental Oil and Transportation Co. was born.
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Looking for a way to sell kerosene in bustling San Francisco, Blake directed the construction of the first pipeline in California, from a railroad station in Pico to Ventura, where the oil was loaded onto steamers sailing to the Golden Gate. New products were introduced, including benzene to clean stoves, candles, ready-mixed paints, hoof oil for horses and even a popular medicinal ointment.
Standard Oil took control of Continental in 1885, relinquishing it in 1913 upon order by the U.S. Supreme Court. By then, Continental was the top marketer of petroleum products in the Rocky Mountain region, much of its output refined into gasoline as automobiles took to the road in greater number. Continental built the West's first filling station in 1909 and invested in a fleet of delivery trucks, each with three tanks to deliver different types of fuel.
Over the next 20 years, the company built more than 1,000 service stations in 15 states, each emblazoned with the trademark Continental soldier. It eased its way into the production and refining of crude oil, merging with several other producers, but always retaining the name Continental Oil. One of them was an upstart company in the unlikeliest of places, Ponca City, Okla. Together they would take on the whole industry.
Marland's Oil: 1913-1928 After losing his luck in Pennsylvania’s oilfields, E.W Marland headed west to Ponca City and made several excursions to the famed 101 Miller Bros. Ranch in search of oil, convinced immense deposits lay beneath. On nearby land, Marland secured a lease from the Ponca Indian tribe to drill at the base of a sacred burial plot. The first well struck oil in 1911. The gusher provided the first real evidence of oil in the mid-continental region, sparking the equivalent of a gold rush for oil.
Marland quickly built a small refinery to process the crude, and incorporated the Marland Oil Company to market the refined output and built hundreds of service stations. Wells began to pop up all over the region, including the giant Burbank and Tonkawa fields. As money flowed like the oil beneath, Marland invested the proceeds in the industry's first research division, which developed seismography techniques and new drilling methods to discover even more oil.
In the late-1920s, the financier J.P. Morgan Jr. obtained control of the Marland Oil board upon providing a $5 million line of credit to the company. When profits fell in 1928, the board replaced E.W. Marland as president with Dan Moran, a hard-boiled Texaco vice president. Not one to be down for long, Marland later resurfaced as the Governor of Oklahoma. Moran oversaw the merger of Marland Oil Co. with Continental Oil and Transportation Co. in 1929.
The new corporation, based in Ponca City, was named the Continental Oil Company. It was a reckoning force, owning nearly 3,000 wells and thousands of retail outlets in 30 states. Conoco was on its way.
Tough Times, Tough Men: 1928-1945 One month after Conoco stock first traded on the New York Stock Exchange, on Sept. 15, 1929, the stock market crashed. To save the company, difficult decisions - cutting salaries, selling marginal oil producing properties and abandoning big exploration plays - were necessary.
The company salvaged money, which helped expand refinery capacity, built the Great Lakes pipeline connecting Ponca City with Chicago and funded many new products, among them the first lubricant to reduce engine friction. Conoco's Germ-Processed Motor Oil was a hit, tested successfully against other brands in contests across Death Valley and in the Indianapolis 500.
Conoco favored clever marketing programs, like "Gentlemen Prefer Bronze," the advertisement for the newest gasoline brand, and the Conoco Travel Bureau, which provided drivers free travel information marked with the location of Conoco service stations. Eager to reward hard work, the company
handed out 5,000 bonus checks worth $770,000 in 1937, one of the largest bonuses bestowed by any company that year.
During World War II, a period when many Conocoans shipped overseas, the company operated a separate refinery to manufacture high-octane aviation gasoline for the U.S. government, boosting the power of Allied airplanes and helping to win the war. To fill jobs previously performed by men, more than 1,000 women were hired, many wearing blue denim overalls adorned with the trademark Conoco red triangle.
Overseas Expansion: 1945-1972 During this era, the company funded a new $2 million research facility in Ponca City, expanded refineries in Ponca City, Baltimore, Denver and Lake Charles, and erected a new refinery in Billings, Mont.
Ambitions extended overseas, as well - to Libya, where oil was discovered at the Dahra field, and Dubai, yielding two major offshore finds. To exploit the retail potential of these holdings, Conoco engineered acquisitions throughout Europe, creating a network of service stations in West Germany, Austria, Belgium, Luxembourg and the United Kingdom, each marketing different Conoco gasoline brands.
By 1972, Conoco had diversified into coal, chemicals, plastics, fertilizers and minerals. Executives had transformed a small regional oil company into an integrated, worldwide enterprise with more than $2.3 billion in assets.
Oil Crisis: 1972–1979 In the 1970s, the U.S. oil industry was challenged by two Arab oil embargoes, intense government scrutiny and a public outraged over long lines at service stations. Once heralded by the media for heating homes and powering the freedom of Americans on the road, the oil industry was routinely vilified in the press. It was a period of tight credit availability and uncertain oil supplies.
The Organization of Petroleum Exporting Countries severely curtailed oil supplies, compelling a quadrupling in the cost of crude. To make up the difference, the U.S. oil industry had no recourse but to hike gasoline prices at the pump. The public was furious and urged by their constituents to do something to alleviate the crisis, the U.S. Congress required oil companies to freeze prices and comply with onerous reporting rules and regulations.
On the bright side, the run-up in gasoline prices increased Conoco's revenues, money later invested to explore for oil in Indonesia, the Gulf of Mexico and the North Sea. New technologies were funded to stimulate older wells for additional production and to develop innovative synthetic and coal-based energy alternatives to oil.
Company Transformation 1979-1990 In 1981, Conoco was challenged by an even more formidable foe than angry motorists. In the spring of 1981, Canada's Dome Petroleum made overtures about acquiring a Conoco subsidiary, Hudson's Bay Oil and Gas. This simple proposal sprung into motion a series of events that made the company vulnerable to a takeover.
Unsolicited bids came from many companies. For a while it looked like Seagram, which had assembled a large block of Conoco stock through a tender offer to shareholders, would acquire the company. As regulators neared approval of the acquisition, executives searched for a more suitable match, a company financially strong, highly regarded on a global basis and one that would not merge Conoco out of existence. That company was DuPont.
Company executives approached DuPont, about a merger of the two giants. With both boards' approval, a deal was struck. The terms called for DuPont to acquire 100 percent of Conoco's stock in a transaction worth about $7.4 billion -- the largest merger in U.S. history at the time. On Sept. 30, 1981, Conoco became a wholly owned DuPont subsidiary.
By 1987, Conoco was highly regarded for project management and cutting edge technology. Major gas deposits were found in the North Sea's "V" fields -- christened by Prime Minister Margaret Thatcher in September 1988. Other big projects included building tension-leg (TLP) platforms in both the North Sea and the Gulf of Mexico. The floating TLP, derived from government studies on floating airfields, was an industry first, permitting deep-water production at less cost than conventional fixed production platforms.
Paving a New Path: 1990-1997
As part of a set of aggressive environmental initiatives, Conoco vowed in 1990 that it would use only double-hulled tankers to transport oil, well before the industry was required by law to do so. Company leaders expanded the company's upstream and downstream presence in many new regions of the world, shepherding the development of several major projects, among them Petrozuata, a mammoth oil project in Venezuela; Polar Lights, a landmark oilfield development in Russia; and Britannia, a large gas discovery in the North Sea.
At home was a joint venture with Pennzoil to produce specialty lubricants at the Lake Charles refinery, commissioned the building of two giant double-hulled drillships and acquired nearly a billion dollars' worth of gas assets in South Texas. Yet, the most exciting event of the decade was saved until the final hours of the 20th century.
Company Independence: 1997-2002 Company executives had long sought to separate Conoco from DuPont. In 1997, the timing never seemed better. Both companies planned to pursue new corporate strategies: DuPont wanted to transform into a life sciences company focused more on biotechnology and less on petrochemicals, and Conoco desired financial independence to make significant foreign asset investments. In just the last four years, 26 countries had opened their doors to foreign investment, and they knew timing was critical.
In 1997, discussions began about the possibility of cleaving Conoco from DuPont. In May 1998, DuPont's board of directors were persuaded that an independent Conoco benefited both companies and shareholders. After nearly 18 years as a DuPont subsidiary, Conoco was moving toward becoming an independent oil company once again.
A successful road show kicked into gear to sell Conoco Inc. to the investment community, culminating in the largest IPO in history, nearly $4.4 billion. Many financial analysts were skeptical the deal would be pulled off, given tremendous upheaval in both the oil and stock markets and a dried-up appetite for public offerings. But company personnel, from top executives to support people, worked countless hours to make the IPO a success. On Oct. 22, 1998, their efforts paid off: Conoco stock began trading again, using a new symbol, "COC," honoring the name it had held for so many years - Continental Oil Company.
In November 2001, Conoco agreed to merge with Phillips Co. The merger, completed in August 2002, created the sixth-largest publicly traded oil company in the world and the third-largest in the United States.
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