New-York tribune., 1921-05-22

were subsequently abandoned. During
the last year few operations were CAR
rled on by other companies in the vi
cinity of this original Texas acreage
or the Simms company, so that except
as to the extent to which the above
referred to drilling of the Simms COM
pany disproved certain facts, there
is little to indicate whether the bal
ance of the original Texas acreage is
of substantial promise.
I'm March of this year your company
allowed it's Dibrell lease of about
3,4o0 acres to expire rather than to
continue drilling on already disproved
acreage. This lease was part OF the
original Texas acreage and has been
carried on the books since the organi-
cation of the company at approximate
ly $6,700,000. The abandonment of the
DibreH lease, which was made only
after the most careful consideration
and study, will accordingly, mean a
charge against 1921 income of approx
mately $6,700,000. This will reduce the
book value of the original Texas acre
age to about s3,2o0,OoO. Your manage
ment is considering the abandonment
of other parcels OF this original Texas
acreage, which seem to have been dis
proved by drilling operations.
Since December 81, 1920, four other
inactive leases, having a book value of
1915, have been abandoned and
charged off the books.
Tank Cars Idle
early in 1920 the company ordered
500 tank cars of 10000 gallons ca
pacity, which stood on the books at
s1,679,a15 on December a., 1920. Part
of these cars were placed in service
Immediately upon their arrival, and
others were leased on profitable terms.
At the close Of the year almost the
entire lot of 800 tank cars was mac
tive. and these cars are now stored.
T During the year the plan initiated
! in December, 1919, for building an
s-inch pipe line from Sibley, La, to
New Orleans was given up, and the net
loss incident thereto, amounting to
S9u, ,41s, was charged to profit and loss.
Likewise. the operating lease made as
of January l, 1920, on the Milliken re;
flnery at Arkansas City, Kan, was re-
scinded, after loss of $751; ,67S, which
also was charged to profit and loss.
The final profit and loss deficit for the
years operations was $2,03s,072.et, all
of which is more fully shown in the
attached income statement"
Another important factor in oil pro-
duction which is not touched upon here
in the Simms report is the deteriora-
stantly be in search of new property,
for the life of the average well is com
paratively short. Figures compiled
from careful surveys of all the impor-
tant fields in this country by govern
ment experts show the general trend
under various conditions.
Life of Wells
A report by Carl H. Beal for the
Department of the Interior on, the
| Oklahoma fields is interesting in this
connection. at is interesting to note
the uniformity Of the second years
percentage in the individual pools OF
large area where the conditions that
affect production are approxim ately
the same" he writes. "For the Okla
homa fields Excluding Cushing and
Muskogec) the lowest percentage FOR
| the second year is AZ per cent Of the
first years production in the Bartles-
Vile field, whereas the highest. s3 per
cent is in the Usage Indian Reserva.
ticn, few miles west.
"The probable cause for this differ
ence is that the area allotted each we'll
in the Bartlesville field is only about
one-half of that allotted in the Usage
Indian Reservation. Inasmuch as the
rate of decline of oil wells is infiu-
enced by the spacing Of the wells, such
difference in spacing ought to exert
marked influence on the decline of
the average wells.
"In other words, it is fairly safe to
assume that a we'll which averaged
| thirty-three barrels daily the first
year, which is the average for all the
pools, will average between 80 and 60
per cent Of that much the second year
"For these normal fields in Okla
homa, the ultimate percentages show
the same uniformity, ranging from 24O
to $50 (per cent of the first years pro-
duction at the time Of exhsustion). In
other words, the average we'll in these
fields will produce ultimately not less
than "a times and not more than 3.a
times its first years production" .