Up from the Old Mill Stream

For many years the Rotarians and Lions of Findlay, Ohio (pop. 34,000) have launched most of their boasts on the nearby Blanchard River, which in 1910 inspired Findlayite Tell Taylor to write Down by the Old Mill Stream. Lately, Findlay has become equally proud of another local phenomenon: Marathon Oil Co., which has expanded in a few years from a small oil producer into a $500 million-a-year company. In a business where great exploration costs and fierce competition can easily break a firm, Marathon has competed successfully against the oil giants by acting as if it were one of them, and expanding rapidly far beyond the peaceful banks of the Blanchard.

Capping a recent series of strikes in places as diverse as Libya and Alaska, Marathon last week announced that it had begun drilling the first exploratory oil well ever attempted in Northern Ireland, also prepared to tow a large drilling rig from the British coast into the North Sea, where it will explore one of the world's richest new oil and gas regions. In Bavaria, where it is making its first big move into petrochemicals, it is starting to build a plant that will use Libyan crude to manufacture acetylene and ethylene. In the U.S., the company is about to move beyond its traditional Midwestern marketing area to invade the Southeast with new gas stations.

Frustrating Drought. Marathon's rise to worldly wealth and power has been so recent that few outside the Midwest have ever heard of the company. It owns 9,000 wells and has interests in 11,000 others around the globe, spends a large part of its capital expansion and exploration budget--which averages $100 million annually--looking for more. It owns refineries in Spain and Germany, has a 7% stake in the Trans-Alpine pipeline. Its big red "M" flies over 3,800 gas stations in six states and nearly 700 more in Europe. Last year all these operations produced record sales of $496 million, lifted earnings 22% to $60 million; in 1965's second quarter, earnings rose 52%.

The firm's expansion began in 1948 when scholarly James Donnell II, inheriting a job held by his father and grandfather before him, became president of the company (then known as Ohio Oil). Founded by 14 Ohio investors during an oil boom in 1887, the firm has been dominated since 1911 by the Donnell family, who were among the original backers. Geologist Donnell (Princeton '32, Phi Beta Kappa) set about to increase the company's scope by stretching into the refining and marketing ends of the business and doubling exploration outlays. As bigger and more experienced oilmen looked on smugly, Donnell fell on his face. For a frustrating decade, Ohio drilled one dry hole after another from Guatemala to Egypt.

Cash for Complaints. The drought ended dramatically in 1958 when the Oasis Oil Co., which Marathon owns jointly with Continental Oil and Amerada Petroleum, hit the Dahra field in Libya. "That success alone," says Donnell, "more than justified the decision to venture abroad." The find has in creased Donnell's proven reserves by more than 100% (to 1.7 billion bbl.) and expanded his production by 150,000 bbl. per day. With that, Donnell moved into high gear. He acquired four more refineries and hundreds of gas stations by taking over Michigan's Aurora Gasoline Co. and Texas' Plymouth Oil Co., and in 1962 highlighted his company's rising scope by changing its name from Ohio to Marathon.

Marathon retains the neighborly image of a small-town firm. It has begun to offer cash refunds to customers who write in with legitimate gripes about service in its stations: one man asked for his gas money back because the attendant neglected to wipe his windshield (complaint accepted), and one woman wanted back the $2.50 that her son had put in the vending machines (accepted). For Jim Donnell, 55, who spends more than half his time jetting to inspect his many outposts, success has its disappointing aspects. He feels most at home down by the old mill stream, and he should. There is a Donnell Building, a Donnell Stadium, a Donnell Junior High--and Marathon even owns the town's airport.

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