The New York herald., 1922-05-02
EXPERTS in OIL SEE
GOVERNMENT LOSER
in SINCLAIR LEASE
Estimate Average Amount
OF Royalty Production
Below 25 Per Cent.
CALLED BAD BUSINESS
Lessee Company's Head to
Be Asked for Stock Spec
ulation Data.
HUNT WALL STREET LEAK
Smoot Committee Requests In
terror Department Records
Text of Lease.
CALLED BAD BUSINESS
HUNT WALL STREET LEAK

Special Dispatch TO THE New YORK HERALD
New York Herald Bureau.
Washington. ID. c., May l. :
Senator's who are sponsoring the in
vestigation of the lease of the Teapot
Dome naval oil reserve in Wyoming
TO the Mammoth Oil Company charge
that an erroneous impression was given
to the public In recent statements
issued by the Navy and Interior de-
partments regarding the amount of
royalty the Government is to get by
the terms of the contract.
Senator La Toilette (Wis.) and SEN
ator kendrick (Wyo.), who have been
studying the terms of the lease, be-
iieve the Government has been
dragged into 4 poor business deal re-
gardless of the question whether the
navy's oil reserves should have been
leased TO private companies under
any conditions.
The New YORK HERALD has obtained
copy of the lease signed on behalf
of the Mammoth Oil Company by II. r.
Sinclair president, and on behalf of
the United States by Secretary Fall.
who acted also for Secretary of the
Navy DENLY.
Range of Royalties.
This lease shows that the royalties
start at 12h per cent. and range up
ward TO so per cent. according to the
average daily production of each oil
well that may be sunk.
Oil experts have been going over this
lease at the request of Senator La
Toilette. author of the, resolution OF in
.eftigaton, and IT is said they nave ex !.
prt ssod the view that the average
smount Of royalty oil which the Govern
nient would receive under the contract
" ould be less than 25 per cent
senator La Toilette also conferred
t-'-dsy with members of the American
& reservation Association, Clifford Pin
CT OTIS old organization. The question of
starting injunction proceedings to rrc-
vent carrying out of the lease of the
Teapot Dome was discussed. Senator
Sr,oot has not selected the subcommit.
tee TO make the investigation but II is
lely the ranking Republicans AMI
Democrats on the Public Lands Com
in;ttee will be asked 10 serve.
WIZ Ask Sinclair for Records.
Mr., Sinclair will be asked to submit
all the records of the deal and stock
transactions just after the signing uf
th, lease and before IL was pubiiclv
r1ode known. 1t Is the determination
of the committee to learn IL possible .f
there was a leak In Wall Street between
Al ril Z. when the lease was signed, am
Alnil "a, when it was publicly an
roInced. by which certain personsare said
20 have cleaned UP $4,000. 900 in specu-
lations in Sinclair oil. as charged by
Senator La Toilette
The committee also will try TO find
who benefited by those deals and who
is responsible for the tip.
With these objects In view. prom-
nent financiers in New York are likely
to be called before the committee, in
Guiding several closely allied with Mr..
Sinclair, with the hope they can throw
some light on this phase of the matter.
Senator Smoot (Utah), chairman OF
the committee. has called upon the
Interior Department to furnish all docu-
ments and data in its possession bear
ing upon naval leases. He was in
formed that nothing could be turned
over until the return of Secretary Fall.
who signed the Mammoth Oil Company's
lease on behalf of the Government.
Mr. Fall is supposed to be either on
his ranch near Three Rivers. ". NJ, or
in Arizona. He is not expected back to
Washington. his assistants say. for two
or three weeks.
Provisions of Contract.
The following is che text OF the roy
atty provisions OF the Teapot Dome
naval oil resetve contract. the lessee
referred to In the contract being the
Mammoth Oil Company, r. f. Sinclair
president. and 1the lessor being the Gov
ernment OF the United states:
3. ROYALTIES.
The-icssee agrees to pay and deliver
to the lessor as royalties under this
lease a royalty on all gas and casing
head gasoline produced and sold from
said lease, or used other than for pro-
lection purposes on the lease. and on
all oil produced, except that used for
production purposes or unavoldably Lost.
as follows:
on gas produced and sold whether
same shall be gas from which the sing
head gasoline has been extracted or
otherwise, 12R per cent. of the value
thereof In the field where produced.
where the average amount produced and
sold per day for the calendar month
from the land leased IL less than
q. 900. 900 cubic feet. and 2 2-3 per cent
Where the average daily amount pro
duced and sold is 100000 cubic feet
or over.
on casing head gasoline rs 2-3 per
cent. OF the value OF the casing head
gasoline extracted from the gas pro-
duced and Sold computed on the basis
provided for in the present existing op-
Grating regulations OF the Department
of the Interior promulgated pursuant 60
the provisions of the act OF February 20.
1920 hereinafter In Article III hereof
Confined on Page Seventeen.