Tabell’s Market Letter – May 17, 1957

1\ ,, Walston &Co.—–Inc. Memben New York Stock Exchange NEW YORK PHILADElPHIA LOS ANGELES SAN FRANCISCO BASLE (Switwlood) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET LEnER May 17, 1957 BRITISH PETROLEUM CO. LTD. Statistics Current Price Current Dividend Current Yield 21 0.399 (1) 1.9 With the Suez crisis over, for the time being, at least, it is perhaps time for the growthminded investor to examine the Funded Debt. Pfd. Stock (;,l Ordinary Stock Units) possibilities in Middle Eastern ;,18,697,400 oil. When these possibilities 12,706,252 s hs. are looked at closely, the result 101,025,568 shs.(2) can be staggerIng. For example, Sales – 1956 '721,633000 Earned Per Share-1956 1.5Q 60 of the world's kr.own oil re serves are now located in the Middle East. These reserves, Mkt. Range 1957-1956 (A.D.R's) 25 3/8 – 13 1/2 three times as extensive as those in the United States, serve a European market which, it is (1) Paid in 1956 in U.S.Funds on A.D.R's Free of British Tax (2) American Depositary Receipts representing 1 share traded on ASE generally agreed, is growing at a rate twice as fast as in the United States market. Furthermor the time may well arrive when th United States itself will be substantially dependent on Middl Brewster Jennings, Board Chairman of SoconyEMasot bcilruOdiel,prpoodiunctetidono.ut Ains Ba. recent speech – The odds against finding another oil province on this earth comparable to that around the Persian Gulf are too great to make such a hope a sound basis for the free world's long range planning. He also pOinted out that oil reserves in the United States and Venezuela were being drawn on five to seven times as fast as those of the Middle East. developmMenidtsd,lebEutasttheernbcarSuidcegwroiwllth, poof tceonutriasel, inahlwearyesntbeinsuthbijsecgt igtoanptiocliptiocoal of oil in the ground cannot be overlooked by the investor. As a participation in Middle Eastern oil growth, the American Depositary Receipts for thE common stock of the British Petroleum Co. Ltd. appear to offer considerable merit. This huge oil enterprise ranks second only to Standard Oil of New Jersey in terms of overall size and is unique among oil investments in that practically all of its production is located in the Middle East. Its Middle Eastern reserves have been estimated to be as high as 30 billion boaurtsrtealnsdoinfgo. il or nearly 300 barrels for each share of common stock now British Petroleum itself is a holding company with the larger part of its production, refining and marketing operations being carried on through subsidiaries. 101 million shares are outstanding with about 58 million shares owned by the British government and 27 million shares owned by Burmah Oil, Ltd. Thus, floating supply is only some 16 million shares. Some 2! million of these shares are represented by American Depositary Receipts traded on the American Stock Exchange. The major part of British Petroleum's prodUction comes from three sources. The first of these is a 50 interest (jointly with Gulf Oil) in the Kuwait Oil Co. Ltd. Kuwait production amounted to 54 million tons of oil in 1956. A 40 interest is owned in the so-called Iranian Consortium which now operates the Iran oil properties since denationalization in 1954. In addition to its interest, British Petroleum also receives a royalty of 10 cents per barrel on all oil produced for the account of other partners and is scheduled to receive some 70 million from the Iranian government over the next ten years in settlement of its claims due to nationalization. The Consortium produced almost 26 million tons of oil in 1956. British Petroleum's third major producing interest is in the Iraq Petroleum Co. Ltd. Its share holding is 23 3/4 and the company produced 21 million tons of oil in 1956. In addition to the above, British Petroleum has numerous producing interests in other parts of the Middle East, in Trinidad, the United Kingdom and Canada. hn tThl!; TYlllrket letter 1'1 not, nnd unller no clrcum'ltnnces IS to he con')trllid LOTlt.nlned hereIn IS not KUdTl,ntcc,j 11; to accurncy or t. e n ofl'hel to thble,.lll oodrfJba1'1tn'nlnOo'lh&tc- lntCantorLl.,ounInndtcoe,rbonuory cuLnrycu8mc,cltlnnnhccc5s IrSeftoerbreedcotnosthreureedmfi.b,T1Ihreepmrcf!o.rcmntaahtwonn nny Officer, DIrector or, Stockhdlder by Wnltnn & C nhUe.H… !'! nIiIllldmnteolt(a'st o. Inc All eprCl!BIOOS of ImI luthm('pletc mcntAlUdnd(i'tui o nearlemm , o 'Jec k rmIaStImOanr WeI t hc1ere!.pec t to any and SecUIltIC merell' liS a J.('neral, Informal comment,lry referre,l to herem \\ III be rut nlshed upon rCCJ\lcst on ay t 0 a'VNraUl '. 1– – -2- The company is also active in refining with ,a total through- put in 1956 of 32.6 million tons, 3 million tons more than 'in 1955. Re- fineries are operated both in the Middle East, the Jnited KingGoOC and on the European Continent. The B. P. Tanker Company, a wtY.'lly I)wned subsidiary, now owns 143 ships totaling more than 2 million dead weight tons and have about 3 million tons of tanker shipping under charter. This has been siad to represent about 10 of the world's tanker tonnage. Products are marketed throughout almost all of Europe, Africa, India and Australia. In 1956, British Petroleum earned roughly 1.54 per ordinary share, up from 1.24 in 1955. Earnings for the first half of 1957 will, of course, be adversely affected by the Suez closing, but should resume their strong growth trend in the latter half of this year. Divi- d3eSn.9ds received cents per by U. S. holders, after British income tax, amounted share. The relatively small yield is due first to to .British income tax payments and, second, to the company's policy of retainin capital g funds investm fo ent r inex1p9a5n6s.ion. A total of 240 million was spent on Due to its dynamic Middle Eastern position, this huge enter- prise is felt to have the best opportunity to partiCipate in the huge growth of world-wine petroleum consumption which is expected to double over the next ten years. These excellent long term growth pros- pects are pa at t1te9r.n w re-enforced with an ou ith an upside objective tostfan2d6i-n3g0. intermediate term There is strong technical support With the addition of British Petroleum to our recommended list, we are recommending the acceptance of profits in Calgary & Edmonton CLaanldgar(y34&), origina Edmonton lly has recommended just about at a price of 16 on February 18,1955. reached its intermediate term object- ive and funds realized from this sale may be invested in British Petroleum. NOTE All dollar figures assume a value of 2.80 for the Pound Sterling. EDMUND W. TABELL WALSTON & CO.INC. AWTamb