The sun., 1919-06-16
TELLS HOW TO PICK
GOOD OIL CONCERNS
District.Attorney's Agent Says
TheysDo Not Sell Promo
ton Stock.
EASY TO OBTAIN FUNDS
Investigator, Just Returned
From Texas. Explains De-
vel0pment Methods.

In order TO help the public know
good oil investments from bad District
Attorney Swami makes public a report
made by one OF his agents, who has
just returned to New York after spend
ing I'VE weeks In Texas. The report
says:
This Is the usual arrangement fol-
lowed by honest promoters and de-
velopers:
II plot OF land In leased for Ave
years at a given price an acre. subject
to royalty of one-eighth Of the find
Of oil to the owner. A guarantee Of
$1,000 is generally deposited in some
local bank. conditioned that the person
leasing tho land will drill and complete
a we'll 5000 feet deep within ninety days
Of the time the transfer Of the prop
erty Is made. This $4,000 is returned
when the we'll is completed. The lessor
Of the oil land locates a favorable SEQ
ton Of 100 acres for his drilling opera
tons Tho sections surrounding the plot
where the operations are carried on are
divided into smaller sections ranging
from 20 acres UP to 1s0 acres.
ITO erect a derrick and equip Il with
derrick irons and machinery in order
that a drilling contract may be let coste
in the neighborhood OF $1,000 to s15.-
600. The drilling contract Is for about
- a foot, which makes the cost of
drilling n 1000 foot hole $4,000. In
order to properly drill a well there are
a number Of outside expenditures, such
as preparing tanks to hold any possible
finds OF oil, water wells. the purchase OF
trucks to convey material and other
minor incidentais. which brings the cost
Of completing a well up to at least
$4,000.
when q we'll has been driven to 400
feet II Is possible to sell the leases OF
the plots Of ground which surround the
drilling operations. These leases are
subject to the clause providing that the
lessor will complete his we'll to 1000
| feet. In this way considerable money
Is realized from the leases. and Il prac-
tically brings back to the company the
cost Of drilling the we'll These leases
are bought eagerly by the large, sub
stantial oil companies, refneries and
| distributing companies who wish to have
new sources OF supply in territory that
| has been proved without expense to
them.
I'm the organization of the company
that intends to really seek oil 1t is hardly
| necessary for the organizer to resort
to namboyant advertisements In tho
newspapers. The reputable oil men of
Texas resent very much the methods
| that are now employed by the so-caIled
promoters and brokers Of oil companies.
They say a man who has a reputa BILE
proposition hardly ever has to 20 out
side his own circle OF friends to get
the required capital to operate.
with the sale of leases the company
| has almost enough capital to drill a
! second we'll in case q dry hole is brought
in the first time There Is xeneralIy
| about 100000 worth of machinery and
assets left on a dry hole. which can
be utilized in development in another
Location. It IS intended by the reputable
I oil men that several drillinKs can be
made out OF the original capital
In the beginning Of a rush to a now
\ field there has been moro or Less con.
gestion Of freight and of labor. There
Is no shortage Of labor and no real
shortage OF supplies. It takes at least
month to get the tools on the ground.
II You sink an artesan we'll. inside of
two months you have water. A reputa-
BILE company has no difficulty in secur-
Ing all tho necessary material and labor
Tor drilling the well. Conditions In the
Oil country are now becoming normal
and freight deliveries are made within
| reasonable periods. The heavy rains
| have impeded the progress Of the work.
but In the last week great progress has
| been made as the roads are now in bet
ter condition.
THE banking conditions are very bad.
the legal rate OF interest being 10 per
cent"