“It Looks As Though Hard Luck Was Camping On My Trail”: Drilling for Black Gold with a Letter from Mike Mikels, Signal Hill Royalty Well, 22 March 1923

by Paul R. Spitzzeri

One of the recurring themes of the Workman and Temple family history conveyed here on many occasions was the risk of financial speculation undertaken by them at various periods during our 1830 to 1930 interpretive period. It was most pronounced in the first half of the 1870s when William Workman and his son-in-law F.P.F. Temple, among the wealthiest persons in Los Angeles County, dove headlong into a wide array of mining, oil, real estate, railroad and other business projects during the region’s first boom—much of this financed through their Temple and Workman bank, one of the first in the Angel City. They were, however, wiped out when that institution failed in 1876.

A half-century later, Temple’s son, Walter, having come into a small fortune after 1917 thanks to oil found on his Montebello ranch by his nine-year-old son Thomas, launched into substantial projects in the search for more black gold throughout greater Los Angeles as well as real estate building projects in Los Angeles and several San Gabriel Valley towns, including Alhambra, El Monte, Puente and San Gabriel, not to mention the founding of his Town of Temple, renamed Temple City in 1928. By the time the Great Depression burst forth late the following year, Temple was in dire financial straits and lost everything by mid-1932.

When it came to speculative projects in oil and real estate requiring large amounts of upfront capital with no certainty that profits would follow, Temple was hardly alone in Roaring Twenties greater Los Angeles. There were many individuals and companies that went under financially during the era with projects that, on the surface, may have looked promising, but, once it came to heavy investment, could very easily prove a failure.

Such is the case concerning an endeavor tied to the featured artifact from the Museum’s holdings for this post, a fascinating 22 March 1923 letter to shareholders from Mike Mikels, owner of the Signal Hill Royalty Well, in that community surrounded by Long Beach and one of the flashpoints of an enormous oil boom during the early Twenties that included such localities as Huntington Beach and Santa Fe Springs. The story of the well and its owner is a very interesting one and we’ll start with the latter.

Ira M. Mikelsky was born in Bath, Maine in September 1886 to Jewish immigrants Isaac Mikelski, from Kaunas, Lithuania (then part of the Russian empire) and Sarah Libby Cohen, who hailed from Latvia (also under Russian control). Sarah came to the United States as a child and Isaac as a young man and they met and married in Massachusetts. All ten surviving of twelve children were born in Bath, a town about 40 miles northeast of Portland, and where Isaac long ran a music store.

Ira attended local Bath schools, the Hebron Academy (some 45 miles to the northwest of his hometown) and then Colby College (close to 60 miles north of Bath), where he played football but left before receiving his degree in 1913. With a new moniker of Mike Mikels, the young man ended up by 1916 in the little town of Wirt, Oklahoma, south of Oklahoma City and near the Texas border. He helped start an electric company there and ran a clothing store in nearby Healdton, but, in spring 1918, he closed the business and got into prospecting at Ranger, Texas, situated southwest of Dallas/Ft. Worth.

Among his projects there were the Ranger-Duncan Oil Company and the Texas Oil Lease Syndicate, while he also briefly had a men’s furnishings (clothing accessories) store in Ranger. There were some successful wells and some money made in the Lone Star State’s burgeoning petroleum industry and, by late 1919, Mikels came out to Long Beach, where two brothers, Benjamin, a pathologist, and Frank, a physician and surgeon, resided. Frank was married to Delia Marx, daughter of a wealthy meat market owner who’d built a small fortune in Detroit and who owned a seaside residence in the rapidly growing city, and Mike soon married her sister, Frieda.

The 12 December 1919 edition of the Long Beach Telegram ran an advertisement from J.G. Lybarger and Company, which dealt in investments and which reprinted part of a telegram from Mikels in Fort Worth concerning a well owned by the Waldrun Oil and Gas Company. Early the following year, the Lybarger firm took out another ad with Mikels reporting on the successful production of the new Waldrun well. By summer 1920, Mikels, identified as an oil operator in that year’s census as he resided in the Marx household, was on his own advertising the sale of units of stock in a “Walker-Parton Royalty” syndicate and he expanded his interests to the Conejo field in Ventura County.

Meanwhile, Signal Hill emerged as a phenomenal new field with Shell Oil bringing in a discovery well there on 23 June 1921 and the site is now Discovery Well Park on Temple Avenue—that thoroughfare named for Walter’s uncle, Jonathan, owner, from 1844-1866, of the Rancho Los Cerritos, which encompassed that area. Two days prior to Shell’s producer coming in, the Los Angeles Express reported that the “Mike Mikels Company” was entering the fray. On the 29th, a full-page ad was taken out in the Telegram promoting the Signal Hill Royalty Well, located at the extreme southern edge of the field, and exhorting readers to “PLAY THE OIL GAME WITH US AS OIL MEN PLAY IT” and emphasizing a new approach to investing in oil wells.

Instead of standard stock, Mikels, as he had done in Texas, promoted the “pipeline deed” concept, and he explained that,

A Pipe Line Deed is an absolute guarantee that the owner thereof will receive the full market value of a definite stated proportion of every barrel of oil that will ever be produced on the entire tract covered by this deed. The owner of a Pipe Line Deed never pays one cent of any expense of any kind incurred on said well or wells now or hereafter. He pays no part of operating or marketing expenses, but he receives a definite, fixed, unchanging proportion of gross returns of all the productions.

Mikels further claimed that “from every conceivable view point the Pipe Line Deed is the best and most profitable form of investment that can be made” because the money came “direct from one of the big oil buying pipe line companies such as the STANDARD OIL COMPANY, THE UNION OIL COMPANY, or other large companies buying oil in the field.” Because of this, it was added, “the Pipe Line Deed towers head and shoulders above every other investment in the ratio of profit and in fairness to the investor.” Deeds were to be recorded with the county as one would do with a deed to a house or other real property.

In asserting that “pipe line deed owners will always receive a profit,” Mikels added that the scheme meant that owners would get “at least 31% on a daily production of 250 barrels at the present price of oil” and even 6% for 50 barrels per day—this was compared to a traditional stock situation where a 10% return might be possible for the large amount of production. The key difference, it was repeated was that the Signal Hill venture paid out of gross proceeds, not net earnings as with stock investments.

As for the proprietor’s petroleum pedigree, the ad stated that “for the past seven years Mr. Mikels has been operating in the Texas and Oklahoma Oil fields” and “has successfully completed thirty-seven wells under this PIPE LINE DEED PLAN.” Moreover, he was said to be working with ten wells in the Nacogdoches field of east Texas, northeast of Houston and not far from the Louisiana border, and that investors were receiving their dividends. It was noted that he was drilling a well at the Conejo field.

The drilling superintendent for the Signal Hill Royalty Well was O.J. Rinebarger, who was said to have 16 years experience in California drilling with a background in Texas and Louisiana prior to that and it was later said he was involved in the field’s first well. A map showed the well on the west side of Freeman Avenue north of State Street (now Pacific Coast Highway), where today are small commercial/industrial structures and under a half mile from the Shell discovery well.

Consistent marketing continued in Long Beach newspapers afterward, with one on 8 July featuring a quote from Rinebarger that he anticipated a record time in drilling the well and including the tag line of “Come With Mike And Play The Oil Game Right.” It was also stated that the Long Beach Trust and Savings Bank was the trustee of funds with two local men approving all expenses, while the pipe line deeds were denoted as “The Gold Bonds of Oil.” A 13 July ad had a chart explaining that, at $1.50 per barrel of oil at the market rate, a $100 investment would yield, for each 500 barrels daily, $76.05 per year, while the amount would be north of $3,000 annually for 20,000 barrels each day.

Notably, though, the Long Beach Press of 27 July was told by Mikels that he would personally drill the hole for the well as “there is too great a danger that the oil sands might be mudded off by careless drillers and that tools might be lost through the same agency, to take a chance on the delay” that would result from any mistakes and mishaps.

The edition of the paper from 3 August reported that contracts were expected to be finalized imminently for a new electric drilling apparatus from General Electric for use on the well, while timber for the foundation for the engine and a sump hole were also anticipated to be in place soon. Excavation of the hole began two weeks prior and an office, water house and engine house were to be started and three crews were to operate around the clock. In mid-August Captain W.S. Lowe, said to have been a close friend of the late Theodore Roosevelt, was hired as sales manager and it was noted that he managed Oklahoma oil fields for indigenous people.

Despite the flurry of initial activity in soliciting investment and in getting material ready for the well, there was a delay of over a year before the “spudding in” of the well, this being the first step in drilling the hole and then installing a casing around the surface of the well. The Express of 9 September 1922 ran an ad about a “Spud In Party” that likened the initiation of work to the launching of a newly completed ship. Buses were to leave from the corner of Cahuenga Avenue and Santa Monica Boulevard in Hollywood at 10:30 a.m. and readers were invited to

See the monster drill bit bite into the ground on its journey to the oil sands below. Hear the roar of the machinery, mingle with the crowds—enjoy the cool ocean breezes, and an interesting, instructive and fascinating day as our guests! Absolutely free! A day you will never forget.

By then, Lowe was replaced by the Arthur K. Shrader Organization as selling agents, so it appears that simply not enough deeds were sold to get the project started until that late date. Brief reports were made through the end of 1922 concerning the depth of drilling and, the 3 January 1923 edition of the Telegram noted that there were “very good oil showings” at just beyond 4,000 feet with an encouraging sign being the bringing into production Shell’s Alamitos #5 two blocks to the east with some 3,500 barrels daily generated since it was completed a month prior.

The Press of 7 February, however, with a headline of “Signal Hill Royalty Well Is Fighting Gas Pressure” referred to “a thirty-hour battle between man and nature” including repeated attempts to clean the well after the injection of mud to clear the pressure, but the gas continued thinning the material. The paper added,

Two years ago next month, Mike Mikels erected the derrick for his well, being the third independent to start rig construction in the local field. Since them, with financial set-backs, loss of interest in the southern section of the field, scarcity of drilling equipment and numerous other troubles, he continued his efforts and not until September 10 of last year was he able to start drilling operations.

Even since then, though, there were problems with casing material deliveries, a lack of drilling pipe and other equipment, the fishing jobs to clean the well and more that led to another six weeks of delay. The piece concluded cautiously that “how soon the well will be in production and what its production will total are largely problematical,” with Mikels said to be intent on continuing until all the sands were explored, but the end was more hopeful with the assertion that “the well at present virtually proves a large new area for the field and is expected t cause a great increase in operations in the southern section of the field.”

The 23 February edition of the Telegram reported some progress after the cable tool bit was briefly lost three weeks prior and it was averred that there would soon be a drilling through the oil sands and the well to be “on production in a short time,” according to superintendent Wade Antie, who added that “the sluices show extensive oil colors and a heavy gas pressure is evident.” The 15 March issue stated that the well was down to nearly 4,300 feet and that Mikels was building a derrick for a second well.

A week later, however, came the letter featured here, addressed to “Dear Friend” and opening with the statement that “I really did not wish to write you again until I could announce the Signal Hill Royalty Well officially to be upon production,” but, because the last letter was from the first of February, Mikels knew “you are anxious to hear the present state of affairs.” Here, he noted the question of fishing followed by the gas pressure causing “a blow-up” which buried the tools with sand and necessitating “a shot of nitroglycerine to be set off to open a way for us to proceed with the drilling.”

This was done and crews “have since that time made fair progress,” though he added that it had to be understood that pulling pope and running it back in with a fresh bit took some time at the depth of close to 4,400 feet. Yet, Mikels insisted that “so flattering are the prospects to me that I am building the rig for my second well three hundred feet east of the Signal Hill Royalty Well,” this being along Obispo Avenue near Grant Street,” and practically completed all the details for the drilling of the No. 2 well,” to be started when the Royalty was on production.”

Then came the notable part of the missive:

You have heard the old saying “An honest confessions is good for the soul”; well, I am going to confess that it is taking quite a while longer to finish the Signal Hill Royalty Well than I ever thought it would, it looks at times as though hard luck was camping on my trail, for I am the most anxious of all to get the Signal Hill Royalty Well on production; I need the profits, the expense of delay is heavy, and the longer time it takes to finish the Signal Hill Royalty Well is that much additional delay in my getting started to drill No. 2.

More disconcerting was Mikels’ report that he’d been phoned “and was accused of delaying the well for some purpose.” He insisted that “I certainly of all others would not purposely delay the bringing in of the well, when all this additional cost is up to me to stand.” He then ended by offering that he was certain “from all the indications that we could have a very good well” where it was, “but why should I stop going further into the oil sand when by so doing I have a good chance to bring in one of the largest wells in the field.”

The 7 May edition of the Press, though, stated that “a partially confirmed report” was that the well was to be abandoned and Mikels, having secured a site nearby for drilling a well, intended to apportion the interests in the Royalty well deed holders at the new location so that they “will be given a chance to get their money back.” Ten days later, he advertised the rent of rotary drilling equipment and there is no indication that he took on the second well project, having invested $160,000 in the failed Royalty project.

From then on, Mikels could barely be located in newspaper accounts. In 1930, he rented a house in Los Angeles with a second wife (Frieda Marx having died in 1921 just as he was embarking on the Royalty project) and worked at an alloys factory mechanic. Shortly afterward, he moved to San Francisco to reside with his brother Lewis, a chemist, and, in October 1933, he received some attention for his having, after a half-dozen years of unremitting effort, developed a metal alloy nearly as hard as a diamond and so promising that Mikels was “believed to be on the verge of potential millions in wealth.” The formula for his “Durox S-20” was secret, but fame and fortune proved elusive.

After spending most of the Great Depression years in San Francisco, Mikels, who was widowed a second time, returned to Los Angeles and in 1940 lived with Lewis in an apartment north of the University of Southern California, working as a rubber company salesman. Two years later, after the outbreak of the Second World War, he registered for the draft and noted that he was unemployed. In mid June 1943, he died at home at age 56 and it was briefly observed in the Bath Times that “for many years he was engaged in the oil business in Texas and California.”

A couple of years after Mikels’ failed attempts at Signal Hill (which celebrates its centennial as a city this year), Walter P. Temple, another independent, engaged in drilling there and, while he did come up with a few producing wells, the revenues were not enough to help him chip away at the mounting debts discussed in yesterday’s post. The stories of the two men were not unusual in the risky world of oil speculation during what was quite literally the Roaring Twenties for that industry.