The Manitowoc pilot. [volume] (Manitowoc, Wis.) 1859-1932, 1888-07-05
THE UGLY OF 1lcER
How Producers t.ays lost 1000, ,o0o
in Speculation.

DR.. ShamburG. of this city. saws
Titusyiile pa letter to the St. Louis
Globe Democrat, who has large inter
est in St. Louis, is one of the oldest
and best known oil-producers i'm Penn
sylvania. He has been constantly en-
gagged in the business since 1865 and
has amassed q large fortune in the oil
industry. The rich pool known rs the
'Shamburg district was developed by
him. Dr. Shamburg has given a Globe
Democrat correspondent some inter-
esting "reminiscences which show the
profits that are sometimes made in the
production of OIL When the first well
was struck, at a place afterward known
as Cash-up, the doctor was early on the
ground. The new strike stood alone
four miles from any producing wells
of consequence 1t had barely touched
the oil sand and was flowing in fine
spray about 10 barrels day. The
we'll was owned by three Young
men. After negotiation, extending
over a day or two, DR.. Shamburg
bought the well for $50 900 cash. 1t
WAS located on a iive-acre lease, and
he then succeeded in buying this for
S32. 600 cash. There was small strip
of land on one side of him that he
wanted, and for this he was obliged
10 paw about $50. 900 cash in hand.
The manner in which these purchases
were made gave the place the name of
'Ca6h-up," by which it is known in
our history. The doctor drilled the
well deeper, and it immediately in
creased to eight hundred barrels day,
at which rate it continued to produce
for three months. Oil was tuen 81 %
a barrel. The well fell off in produc-
ton until it was down to three hun
drcd barrels day, when still deeper
drilling increased it to twelve hundred
barrels a day. While it was flowing
at this tremendous rate DR.. Shamburg
sold his production ahead for two
months for 81 barrel.
Mr.. Hilton, later OF the firm of Hill
ton u Waugh, agreed to take the pro-
duction of the well at this figure for
the period named. Mr. Hilton made
this proposition without knowing that
the well had increased from three hum
dred to twelve hundred barrels a day.
When it became known in the trade
that the well had increased to such an
extent the market broke from $4.25 to
81 a barrel.
During the two months that the con
tract had to run-and it was simply
verbal cOntraCt-thc well produced
twenty-six thousand barrels of oil,
which Mr.. Hilton accepted, and for
which he paid DR.. Shamburg 81 a bar
rel. The first months production of
this well paid back the 100000 which
the property had cost the doctor, and
the net profits Of the we'll in nine
months and the few acres around it
were upward of &2j0,0OO
Even with the present low prices for
oil four farms in Washington county
have yielded $4,000,000 within the past
ten months.
There is another side to the oil pie
ture that is not drawn in such bright
colOrs. The latest calculations of The
Producers association show that the
aggregate oil has been produced at a
loss since 1888. Since that year 8, ,452
wells were drilled; Of chesc 6.SSS were
producers and 1,564 were dry holes.
The total cost of drilling these wells,
including cost of leases, amounts to
$5S, 700. The net income of these
wells to the producers, after dcducting
the share of the landowners. was S53,-
314,700. During the last six years it
has cost on an average $1.29 per bar
rel to produce oil, and the price of oil,
during this time has averaged so cents
The annual loss to oil sepculators on the
floor Of the exchange has been $1OO0O,-
600, or total of so, coo, ,OO0 since 1881.
Add to this $2l 900, 600 for brokers'
commissions and $50,OOO,O00 for stor-
age, and a total Of $141, 900, 900 has
been lost in the junglcs of the oil tiger
in seven years. 1t should be stated in
this connection that large producing
companies, like the Forest, Archer, and
Union, that have operated in a con-
servativc way, have declared large
dividends during the 5. re period.