Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1936-07-04

NAY HEN we printed the statement
w that one lease in Kevin-sunburst
field has produced 10000 barrels
of oil to each acre, we started a lot of
discussion among operators. We find out
there are a lot of operators as well as
royalty investors who have no idea what
ever of oil land values. Many operators
drill an oil well with the idea that they
will get "a lot of Oil' and they haven't
a really good idea how much oil an
acre Of oil land should contain.
Cat Greek has Notwithstanding in
dollars rather than barreIs--arOund
$4,000 per acre. Cat Greek differs
from other Montana fields in that it
covers only 600 acres in it's productive
area. Kevin-Sunburst covers 10000 acres
of proven ground. Cut Bank contains
better than 100000 acres of proven
ground--more than 100 times as large
as Cat Greek. So the fields are not
comparable in expected recovery per acre.
In KeVin-Smburst field we find one
4O-acre tract that has produced 10000
barrels to the acre. The tract has pro-
duced 40 times 10000 barrels on 81 ,60O,-
600 worth of oil. The tract is the FAM
GUS EmmOns 40 acres. Each 40 royalty
has earned $4,000. The royalty owners
received $780, 900; the operators re-
ceiyed 81, 400, 900 from this small tract.
So far as we know, only ONE lease
has produced that much oil per acre.
We believe that some individual forties
OF the Byrne farm, the State lease in =,
Section SO and possibly the Stannard
lease come pretty close 20 duplicating
that figure, these being nearby tracts
i'm the same East SunburSt pool How
ever, for an entire lease, there is no
other record of 10000 barrels to the
acre. These figures come from the
record of royalty earnings. One per cent
royalty has paid 10 OF $1,6OO,OOO or
$4,000. Back in the early days OF the
field, any newsbOy could have afforded
80 royalty ON this 40 acres, at cur
rent royalty prices.
However, the man who proceeds 10
buy ON the basis of an expectancy OF
10000 barrels TO the acre In Kelvin
Sunburst field is very likely to be dis
appointed. Heavy odds are against him.
~ he assumes those odds are 100 to
against him and buys on a basis Of an
expectancy of 400 barrels to the acre
we believe that he Is as certain as he is
certain that an ounce of gold is worth
35 silver dollars.
However, the operator who drills a
well must have assurance of more than
$500 per acre III he gets $4OO per acre
out OF each OF 40 acres, he win have
but $4,000 OF income. Inamuch as 1t
takes at least eight wells to drain 40
acres, he will of necessity have greater
investment than $4,000.
The mathematics Of the operator are
Just that simple. The operator MUST
see his way clear to get back his in-
vestment plus profit. The operator
who doesn't figure is the one who "goes
broke The operator VINO hasn't
good idea OF what to expect from an
acre of oil land I'm Kevin-sunburst doesn't
deserve to succeed, I'm our humble opinion
This brings us back to the elements Of
success I'm the oil business. We have
often wondered why the pioneers, who
had the really big holdings, have failed
and others following them have made
tremendous fortunes. The question ans
wers itself The operator who gets him-
self spread out all over the map is the
one who fails Or--if he be a big one
takes heavy losses. The operator who
takes a tract and DRILLS 1T OUT, is the
one who makes q fortune.