Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1932-07-23

~ AAN@Ns " a4AAA &AAa NV
FORD TO LOSE in the event the
new structure fails 20 produce. II
the structure fails TO produce. then
the royalty investor has not been In
jured, yet n Il produces. he ex-
poets to be largely rewarded for
having taken the risk.
The PRICE Of . royalty varies
from a few cents (befors there 10
any oil activity mp to hundI eds Of
dollars latter production r. found)
But the WORTH remains unehang-
ed. Up TO the time that engineers
can measure the sand and compile
estimates. the royalty investor is
guided only BY PROBABLE
WORTH. This probable worth is
based on the experience in other
fields.
The royalty investor learns 10
compare structures. He knows that
a sharply folded field like Cat
Greek is likely to have q much
smaller producing area than 3 FLAT
field like Ksvin-sunburst. He win
By the same token know that the
recovery per acre will likely be
MORE in the sharp fold and LESS
in the flat structure. So he win not
look to Cat Greek to guide him in
arriving at PROBABLE WORTH on
q flat fold which is about to be
prospected. Neither win he Judge
a SAND field BY q LIME field
that is. q field which produces from
a thick sandstone is likely 70 have
a much longer life than that which
produces from vugs or assures in
the lime.
Kevin-suuburst field is fiat struc-
ture. comparable with q big plat
ter turned upside down. while Cat
Greek Is a fold comparable with an
inverted celery dish. KevIn-sunburst
Is mainly LTAEE producing field
while Cat Greek Is a SAND produc-
ing field Kevin-Sunburst is actu-
ally a series OF local fields on a
big uplift, but an AVERAGE Of
these local fields gives a basis OF
expectation for the entire field
First estimates we're higher. but en-
gineers finally arrived at e probable
recovery Of 5000 barrels per acre.
An our members have kept that fig
ure in mind. except that we re-
duced it to e5.0OO--figuring an av-
erage price Of 81 per barrel. Many
tracts have produced more than S.
600 barrels per acre and many have
produced. thus far, much less. bat
we have insisted on taking an Az
BRACE figure and it is for that
reason we have paid no excessive
prices for the royalties which we
purchased in Kevin-Sunburst.
II Is very apparent that without
drilling, royalty in Kevln-sunburst
or any other field is WORTHLESS.
We have to consider dry holes az
we'll az producers as proving or
disproving the area OF q standard
location, and 30 we figure each well
drilled as proving or dlsproving
five acres. Dividing the total yield
OF wells drilled by the acreage tes-
ted by ALL wells drilled, we find
that Kevin-sunburst has thus far
yielded $4,000 worth Of oil to the
acre which to the royalty owners
means sSS from one per cent on
one acre. which 10 approximately
FIVE TIMES As MUCH AS THE
COT OF THE AVERAGE ROYAL
TY WE HAVE PURCHASED. The
field is stu producing and viii
doubtless produce much more in the
future than Il has in the past 10
years for only q fraction Of the op-
en- locations have been drilled.
In Pondera, our early advises
we're that the recovery would be
$500 barrels to the acre. We sGaek
to that figure and refused 70 buy
royalties on any other BASIS IN spats
Of the fact that Ralph Arnold es-
timated the recovery at $500 bar
rels per acre, testifying under oath
In federal court. We passed up
many deals BY holding that the ma
ximum average yield IN Pondera
would be s35 per cent per acre.
The field ia giving promise Of not
only passing the $500 harreIn aati-