By: Mark Odintz

Type: General Entry

Published: December 1, 1995

Updated: October 26, 2019

In 1994 Pennzoil, headquartered in Houston, was one of the major oil producing, refining, and marketing companies in the state, with 10,000 employees and more than $2.5 billion in revenue. The company traces its origins back to two companies, Zapata Petroleum and South Penn Oil Company. In 1953 two brothers, J. Hugh and William C. Liedtke, Midland lawyers who had grown up in the oil business in their hometown of Tulsa, entered into a partnership with George H. W. Bush, future president of the United States. They formed Zapata Petroleum Company, so named for the movie Viva Zapata, which was playing at the time. Starting with an initial capitalization of $1 million, the company successfully brought in wells at the Jameson field in Coke County and in 1954 entered the field of offshore drilling by forming Zapata Offshore Company. Zapata Canadian Petroleum was formed in 1958 to handle the company's oil exploration efforts in Canada. In 1959 Bush went his own way with the offshore drilling company, and the Liedtkes bought out his share of Zapata Petroleum.

In the early 1960s Hugh Liedtke sought to expand the company's operations and oil reserves by a merger with South Penn Oil Company. Formed in 1889, South Penn's early success stemmed from its development of the Bradford field. South Penn was one of the original companies of John D. Rockefeller's Standard Oil; it was forced into independence when the Standard trust was broken up in 1911. By 1960 the company was stagnant, a regional producer that was primarily known for its Pennzoil motor oil. Just under 10 percent of the company stock was owned by oil magnate J. Paul Getty, who communicated to Liedtke that if he could get the financial backing to purchase a comparable share of the company stock, Getty would allow him to take over direction of the company. Liedtke put together an investment partnership that soon secured 10 percent of the stock, and he was appointed president of South Penn in 1962. The merger was accomplished the following year, when Zapata and South Penn, along with Stetco Petroleum of Midland, were combined to form Pennzoil Company, a name chosen because of the popularity of South Penn's motor oil. The new company began trading shares on the stock market on July 8, 1963. In the 1960s Pennzoil aggressively marketed its trademark yellow can of motor oil, using golfer Arnold Palmer as the center of an advertising campaign, and used the profits from its products to further expand its oil supplies and operations. Early acquisitions included Wolf's Head Oil and Refining Company and Elk Refining Company, and controlling interests in National Transit Company and Eureka Pipeline Company. In 1965 the Liedtke brothers achieved the dramatic takeover of United Gas Corporation, a company five times the size of Pennzoil. Among United Gas Corporation's affiliates were the United Gas Pipeline Company of Shreveport, operator of the busiest natural gas pipeline system in the country; Union Producing Company; Duval Corporation, an important mining concern; and Atlas Processing Company. In 1968 United Gas was merged into Pennzoil, and the firm was renamed Pennzoil United, Incorporated. The retail gas distribution assets of United were spun off into Entex Corporation in 1970. United Gas Pipeline stock was distributed to Pennzoil shareholders in 1974, and that company was eventually restructured as United Energy Resources, Incorporated.

From the beginning Pennzoil drew its legal talent from Baker and Botts , the prominent Houston law firm, and several members of the firm, including Baine Kerr and Perry Barber, became important figures at Pennzoil. In the late 1960s and early 1970s Pennzoil sought to improve its holdings in natural resources through new mining operations and offshore oil drilling. Pennzoil invested in copper, potash, and gold mining, and operated a large sulfur mine in Culberson County. The heavy costs attendant on offshore drilling effectively barred Pennzoil from developing offshore holdings in the Gulf of Mexico until the company developed innovative financing strategies. In 1970 POGO (Pennzoil Offshore Gas Operators), an exploration subsidiary of Pennzoil, offered shares directly to the public, thus financing the operations for the most part through new stockholder money. A similar subsidiary, PLATO (Pennzoil Louisiana and Texas Offshore, Incorporated), was set up two years later. In 1977 William Liedtke left Pennzoil to become chair of an independent Pogo Producing Company. POGO and PLATO allowed Pennzoil to compete successfully for offshore oil, an area that became one of the company's most lucrative operations in the 1970s. Pennzoil Place, the architecturally striking headquarters of the Pennzoil Company in Houston, was built between 1972 and 1976, and served as a visible symbol of the company's outstanding growth during the decade.

In 1983 Hugh Liedtke and Pennzoil began maneuvering to secure control of Getty Oil in one of the more colorful and public battles among American oil companies. Gordon Getty, who had inherited the oil empire founded by his father, J. Paul Getty, and the Getty Museum, together constituting a majority of the shareholders, signed an agreement with Pennzoil for the latter's purchase of three-sevenths of Getty. The agreement was approved by Getty's board of directors by a 15 to 1 vote on January 3, 1984, and was publicly announced by Getty Oil the next day. Two days after the announcement, Texaco purchased all of Getty Oil. Pennzoil reacted by bringing suit against Texaco for interfering with its agreement with Getty Oil. Pennzoil emerged with a $3 billion settlement after four years of litigation and a series of favorable court decisions. A major part of the Texaco settlement was used by Pennzoil to purchase shares of Chevron Corporation starting in late 1989 and continuing through the early 1990s. In 1992 Pennzoil traded almost half of its Chevron stock for a $1.1 billion package of domestic oil and gas properties owned by Chevron, thus allowing Pennzoil to almost double its oil production and increase its gas production by some 75 percent. The exchange also dramatically increased the company's oil reserves and provided leases on a further 415,000 undeveloped acres. Other important acquisitions in the late 1980s and early 1990s included Facet Enterprises and Jiffy Lube. Facet, maker of Purolator filters, was acquired in 1988 and was sold in 1992. In 1990–91 Pennzoil acquired Jiffy Lube and moved the headquarters of the quick-oil-change franchiser to Houston. J. Hugh Liedtke retired in 1994 and was succeeded by James L. Pate as president, chairman, and chief executive officer. Under Pate's leadership, the company launched a strategic plan aimed at making Pennzoil a global company while strengthening domestic operations. In 1995 Pennzoil contained three major operating companies: Pennzoil Exploration and Production Company, which locates, develops and produces oil and natural gas; Pennzoil Products Company; and Jiffy Lube International, Incorporated, which manufactures and markets a variety of petroleum products. See also OIL AND GAS INDUSTRY.

Thomas Petzinger, Jr., Oil and Honor: The Texaco-Pennzoil Wars (New York: Putnam, 1987). Daniel Yergin, The Prize: The Epic Quest for Oil, Money and Power (New York: Simon and Schuster, 1991).

  • Oil and Gas Industry
  • Oil Companies
Time Periods:
  • Texas Post World War II
  • Houston
  • Upper Gulf Coast
  • East Texas

The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this entry.

Mark Odintz, “Pennzoil,” Handbook of Texas Online, accessed May 16, 2022,

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December 1, 1995
October 26, 2019

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