J. A. Scott being first duly sworn deposes and says:

I reside in San Buena Ventura, California. In the spring of 1865 I went to Titusville in the oil regions of Pennsylvania and engaged in the oil business and continued actively engaged in the same until I left for California in December 1875.

During the time I was in the oil region of Pennsylvania I was engaged in almost every branch connected with the producing, refining and tanking of oil. A large number of wells were controlled and operated under my personal supervision, and I have at various times been part owner in over fifty operating wells.

Shortly after I went to Pennsylvania I commenced dealing more or less in refined oils and purchased an interest in, and took charge of, an oil refinery in Titusville in 1867 and from that time until I left for California I had an interest in two oil refineries and most of the time was manager and superintendant of these oil refineries. I was also at this time superintendent in the drilling of oil wells. The oil refineries of which I was superintendent, and both of which I reconstructed from small refineries, had a capacity sufficient to product about three hundred (300) barrels of refined oil per day and we frequently produced that much. I am the inventor of the process from which the “luster oil” is made and said oil acquired quite a reputation in the East before I left there as a fine oil.

I was first induced to come to California by Mr. R. C. McPherson, now a resident of Los Angeles County, California, who came to Titusville in the fall of 1875 and represented that they had found some green oil in California and had been unable to refine it and that he believed I could refine it; that he would like to have me come out and try, and that a large amount of money could be made if I succeeded. He further agreed with me to see that my fare out here was paid and if I was not satisfied that he would see that my expenses were also paid back, and in fact through his influence, money was sent out from California by Mr. Denton to defray my expenses out.

I went down to the San Fernando Oil District, Los Angeles, County, in January 1876, having been detained a few days in San Francisco, and found that a small refinery (so called) had been erected near Lyons Station, which was about a mile from the site of the refinery afterwards constructed at Andrews Station.

I was informed that various attempts had here been made for some time previous to refine the oil then being obtained from the Pico claim but that such attempts had been conspicuous failures.

The oil which they were producing when I got there was certainly not marketable oil, and indeed, after I took charge of the refinery, forty barrels were returned from certain merchants in Los Angeles and re-refined. I immediately took charge of this refinery and worked it until March on a salary and there entered into an arrangement with Mr. Denton and obtained an interest in the lease described in the complaint in this action and subsequently by my interest, was conveyed with Denton’s and others to the defendant corporation. From the time I commenced working I continued as general superintendent of the refineries and, after the company was organized, as general superintendent of the company in said mining district until May 30th, 1878.

I enlarged the refinery at Lyon’s station more than double its capacity, and subsequently built the present refinery at Andrew’s station, which is also as complete as any refinery of its capacity in the United States. I also superintended the construction of the refinery in Ventura County, built by said defendant corporation.

After I took charge of the refinery at Lyon’s Station, I succeeded in making a fine illumination oil and have often been informed and believe that I am the first person who ever produced first class merchantable refined oil from California Petroleum. I have had very large experience in California and Pennsylvania in refining oils and believe I know more about refining oils, and the nature of California oils as compared with Pennsylvania oils, than any other man in the business in the state of California.

While the oil from the Pico claim is of much heavier gravity than the ordinary Pennsylvania oil, it is from its nature much more volatile, that is to say it will deteriorate more rapidly than the Pennsylvania oils, and I really believe from tests that I have made and from practical experience, that the oil produced at the Pico wells would deteriorate more than twice as fast as oils in Pennsylvania, until the volatile portions had passed away and the oil had lost its value for illuminating purposes. I believe if the oil were to be tanked at the Pico claim in the manner in which it is usually tanked at wells in Pennsylvania, it would deteriorate so much within three months and lose so much of its illuminating qualities, that it could not be refined for illuminating oil profitably and could only be profitably refined for lubricating oil, and for which at present there is a very limited market on this coast.

The market for crude petroleum is very limited on the Pacific Coast and the Pico wells could not be profitably worked except by refining the oil shortly after its production, and I believe that no profit could be made, but in fact large losses entailed if the oil is tanked at the wells and kept for any considerable length of time. During the time I was general superintendent as aforesaid for the defendant corporation, I also superintended their refinery when it was in operation in Ventura County and refined the oils, and therefore had practical experience as to the deterioration of oils, and I know that the oil produced by Adam Thayer which stood forty gravity when coming from the wells, deteriorates fully from twenty to twenty five per cent within thirty days from the time it is produced, and that in taking the oil a short distance from the Pico oil well to Andrew’s Station in barrels it deteriorates two degrees or about six or seven per cent.

I have read that portion of the affidavit of R.C. McPherson wherein he states substantially that even if the Pico oil, by reason of the dryness of the California climate, should evaporate more than the Pennsylvania oils, it could be brought back to its original condition by pumping in fresh oil and I am of the opinion that he is mistaken with regard to this. The deterioration is caused as above stated from evaporation of the volatile portions which are valuable for illuminating purposes, and without which, illuminating oil cannot profitably be made, and when such volatile portions have passed off into the air they can never by restored and I don’t see how putting fresh oil would restore that which has been lost, or add any more volatile portions to the oil than that contained in the fresh oil, and the result would be that fresh oil would be correspondingly deteriorated.

I am well acquainted with the manner in which Mr. C.A. Mentry has operated the oil wells in the Pico claim, having had general supervision of the affairs of the company in said district. My general supervision extended over all the operations of the company there, including all the wells, and I have been very often and at short intervals up to last May upon said Pico oil claim and Mr. Mentry and I have consulted frequently together as to the proper mode of operating said wells, and I have no hesitation in saying that they have been operated and used in a workmanlike, proper, and skillful manner and know that I endeavored and believe that said Mentry endeavored in good faith to work , operate, and use said wells in the most skillful workmanlike and proper manner, and I don’t believe that said wells or either of them have been in any way injured by anything that has been done therewith by the defendant corporation or its agents.

I have read the affidavit of M.S. Loomis herein, and know that about the time he says he saw the spurt of oil coming from the well No 1, they were deepening said well and I believe that such spurt was occasioned by the drill coming unexpectedly upon a deposit of oil, before they had placed what is known as an “oil saver” over the mouth of the well. Of course such spurts would not be common, and any one stating the occurrence ought to have stated that it was while the wells were being drilled. Said Loomis also states that he had seen, while there last summer, well number one plugged with an iron strap fastened over the plug. This no doubt was a contrivance known as an “oil saver”, a thing used almost universally in drilling wells where they are nearing the oil producing rock. While it apparently plugs the hole, there is a pipe leading from the side of the saver and, in the saver used on this well, the pipe was about two inches in diameter and capable of taking away under the pressure in this way about two thousand (2000) barrels a day and the fact that anyone should have supposed that this oil saver plugged the well is conclusive evidence of remarkable ignorance on the subject.

With regard to the allegations as to waste, I have to say that I do not believe there has been any more wastage than is ordinary in the operation of wells, except upon two occasions namely in the summer of 1876 when the oil in number two well was unexpectedly struck at a shallow depth a few barrels escaped before we could fix a reservoir for it which reservoir was made by damming up the creek and in February last the roads became impassible by reason of the very heavy rains, and there was a short time when oil could not be moved away, and it was impossible for teams to reach the tanks and take the oil away at which time the surplus oil was permitted to escape. This was unavoidable under all the circumstances and was caused by circumstances over which we had no control.

There is a spring on said claim from which some oil runs into the creek, and as a very small amount of oil makes when spread upon water considerable show, and much more than any one unacquainted with the subject would suppose. It is possible that some of the parties who believed who believed there was a large wastage were deceived by the oil flowing out of the spring.

I know the so called plug mentioned by Mr. Lyon in well number two (2). There was a pipe from the plug of more than sufficient diameter to carry off all the oil and said plug did not check or impede the flow of oil in any way, and I think this would have been apparent to anybody knowing anything about the business or who gave any observation of it.

The well that are not flowing on said claim have been, as a rule, pumped by heads or at intervals, and I am satisfied that it is unnecessary to pump these wells continually as there is but little water in them. I think the plan pursued by said Mentry was proper and under all the circumstances the best mode of operating these wells. He has often consulted with me in relation to pumping in this way and I advised him so to do. He informed me upon several occasions that he had made a number of tests and experiments with these wells and had ascertained that the wells would produce as much by pumping by heads as by continual pumping.

I know from experience that in Pennsylvania a majority of the wells are pumped by heads and in the manner adapted by the defendant and corporation. For more than a year before I left Pennsylvania I had adapted a plan for pumping the wells by heads after testing the matter thoroughly, and during said year operated about eighteen wells in that way, and was satisfied that none of them were injured by that course, in fact, in some localities in Pennsylvania it was considered that continual pumping of the wells injures them, that is to say that whenever the head of oil is exhausted that pumping them on a vacuum was injurious.

I have read George Armstrong’s affidavit and I know the so called refinery to which he alludes operated by him at the County of Los Angeles. Such refinery had a capacity to use not exceeding six barrels of crude petroleum per day of twenty four hours. I don’t think that the contract mentioned by him for a thousand barrels could have been bona fide, as he had but little tankage not exceeding ten barrels for crude oil, and the price of four dollars per barrel at the well would have made the oil cost him at least $6.50 delivered at his refinery in Los Angeles, at which price no one could have afforded to have it refined.

I know that for some months past the California Star Oil Works Company have sold refined oil delivered in the cars at Andrew’s Station in bulk at $4.00 or $4.20 per barrel. Although it was well known that I was general superintendent at the company, no demand was ever made upon me by anyone for the royalty reserved in Denton’s lease.

I saw Mr. R.S. Baker about one year ago at Andrew’s Station and had a conversation with him respecting the oil wells and oil matters, and heard no complaint of any kind from him as to the operation of the oil wells, or as regards his royalty, and, in fact, never heard any complaint by any of the parties interested of the manner in which the wells were being used, operated, or worked until Mr. Baker brought his first suit for a receiver this year.

The Sanford Lyon well which has been under the control of Mr. Sanford Lyon and is reserved in the lease to him, has been pumped by him solely by heads and never continuously. I made an agreement with Mr. Sanford Lyon at a time when petroleum was worth from thirty to forty cents per gallon, agreeing to pay him two and 50/100 dollars ($2.50) per barrel for the oil delivered at the refinery which was nine miles from the wells and I then considered that I was paying him every cent that I could afford to pay him, and that but a small margin was left for the profits of the refinery, and when the price of the refined oil declined, I was compelled to cease taking it at that price, and he afterwards contracted for all his oil full term of his lease at one dollar per barrel at the well.

J. A. Scott

July 8, 1878