February 12, 2007

Phillips

And the man behind the brand is...
Frank Phillips

In February 1905 Frank Phillips and his younger brother Lee Eldas, always called L.E., drilled their first oil well. They had spent the last two years tirelessly selling shares in the Anchor Oil & Gas Company to raise operating revenues. The Phillips’ first wildcatting venture was under way.

And on June 23 they struck oil!

Their jubilation was short lived. There proved to be only a small pocket of oil and the well soon fizzled. Hole #2 came up dry; so did #3. Now there was barely enough money to try a fourth well. If this didn’t come in what would Frank Phillips, now 32, do?

He had started as an apprentice barber at the age of 14. With a naturally engaging personality Phillips was soon able to buy his own shop and by the age
of 24 he owned all three barber shops in Creston, Iowa. One of his regular customers was the banker upstairs at the Iowa State Savings Bank.
Their relationship blossomed and soon Phillips was married to his daughter
and selling his bonds in Chicago and New England.

Returning from a sales trip Phillips ran into a friend who had been doing missionary work in the Indian territory in Oklahoma. The man reported that
there were tremendous oil possibilities lurking in Oklahoma. And so Frank Phillips, former barber and bond salesman, found himself in the wilds of the Indian territory staking his future on a hole in the ground.

Well #4 was named Anna Anderson for the young Delaware Indian girl from whom the lease was obtained down in the juncture of the Big and Little Caney Rivers, some 3 1/2 miles north of Bartlesville. Phillips had no fancy geology reports to guide him; he selected Anna Anderson because it was the closest
spot to a producing well he could find.

On September 6, 1905 Anna Anderson gushed in - 250 barrels worth a day. The Phillips brothers embarked on a string of 81 consecutive producing wells.
They formed numerous small oil companies to back these drilling ventures and used their profits to start a bank. Deep down what Frank Phillips really wanted was to be a big time banker.

In 1916 the brothers decided the boom and bust oil game was not for them. They opened a bank in Kansas City with a dream of starting a chain of midwestern banks. But World War I intervened, sending oil prices soaring from 40¢ to $1.00
a barrel. The bank plan was put on hold and all their holdings were consolidated into the Phillips Petroleum Company in 1917.

From the beginning, the Phillips brothers found much natural gas while drilling for oil. At the time, without pipelines and distribution systems, most drillers regarded gas as a nuisance and flared it off at the wellhead. But the Phillips sought to tap the gas by extracting liquid products from it. In shot time Phillips Petroleum was the largest producer of these by-products, which could be used in motor fuels.

Frank Phillips’ greatest attribute turned out to be attracting loans and investors to a small, unknown Oklahoma oil company. In New York financial markets backing such a venture was regarded as pure gambling. In 1919 alone Phillips spent 116 days in New York City. He attracted enough money that the company had 900 wells in production by 1921. After ten years in business Phillips Petroleum assets soared from $3 million to $266 million.

In 1927 Phillips decided to enter the gasoline retail business.
For months company officials puzzled over a trade symbol for their
new gasoline. Marketing people were leaning toward the current fad of
combining a numeral with a word or two. The first gas station was
scheduled to open on November 19 and still no name had been tapped.

A special executive meeting was called for the sole purpose of settling
the question of a trademark.
On the eve of the meeting a Phillips official was road-testing the new gasoline. “This car goes like 60 on our new gas,” he exclaimed.

“Sixty nothing,” roared the driver, glancing at the speedometer, “we’re
doing 66.” The incident took place on Highway 66 out of Tulsa. That clinched it.
“Phillips 66” would be the brand name. A now defunct premium grade was tagged “Phillips 77.”

The first station opened in Wichita, Kansas, placing Phillips in direct competition with the industry giants. To help boost sales a manager proposed a promotion idea to Phillips: fill up once and get a coupon for 10 free gallons next visit.
His reply befitted a man who had never bothered to learn to drive and was selling gas for 17¢ a gallon. “Sure, go ahead,” he said, “It isn’t worth as much as water anyway. Give ‘em all you want.”

By 1930 there were 6750 dark green, orange and blue Phillips outlets in
12 states. Elsewhere Phillips was building up its aviation fuel business.
The Depression dealt Phillips Petroleum hard as stock prices plunged from $32
to $3 and hundreds of employees were laid off. Frank Phillips quickly restored profitability and had sufficiently weathered the crisis to turn over the presidency
in 1938.

Phillips remained as chairman until 1949, the year before his death. He had built one of the largest oil companies in the United states but he left his successors a special challenge. Always opposed to overseas ventures he had turned down exclusive rights to mideast oil tracts in 1947. Future Phillips Petroleum leaders were forced to play catch up in developing international sources of oil.
There weren’t any places left in the United States where you could drill 81
straight gushers.

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