Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1936-03-07
TITLES IN ROYALTIES

AVERAGE yield per acre Of one par
ticuIar field. 1t Is possible TO translate
royalty acres into decinals but it all
seems very needless, 20 us.
Another variation OF our western prac-
tice is that we buy royalties on a form
a certain share Of the oil produced
and saved" In early days we used the
Mtdcontfnent form whereby we bought
oil Sin and under" The early day min
eral deeds were called expanding royal
ties" under the terms of which the roy
atty expanded into a greater interest,
should the existing lease expire. This
may seem very inviting to the royalty
investor. Naturally, we all want TO get
all we can. But he who has q royalty
ON a farm where there are expanding
royalties IS quickly convinced that he
does not want any more Of this kind.
Under these ''in and under" royalties,
the owner of one tiny fraction of royalty
can hold up development. It is impos-
sfble to get a dozen men owners Of
royalties on a given farm without hav-
ing at least one chiseler among them.
That One-perhaps with the smallest i'm
terest-win refuse to sign the new lease
unless he 'gets his" with the result that
a self-respecttng operator won't submit
to a hOid-up. This may seem strange
to the MidcOntinent where operators are
used to paying a large cash bonus for
each lease. That is not done here in
Montana. Accordingly, one midcontinent
royalty investor who can't understand
why a lease shouldn't bring a big bonus
can prevent Montana development.
Expanding royalties have caused more
lawsuits in Montana than perhaps any
other title feature. The courts have
frOwned them, a rule. For our
part we have carefully avoided expanding
royalties in our is years in dealing i'm
Montana royalties. In some cases where
we have come into expanding royalties,
we have decided them back to the land
owner. When one lease expires, the
landowner is able to get another oper-
ator and give him good and quick title.
He is far more likely to get speedy de-
veIopment than the landowner who has
to go to California, then to Florida and
then to Maine to get the consent of CO.
owners to the new lease.
"HE royalty owners interest is in the
PURCHASE OF CRUDE OIL IN
UNDER GROUND STORAGE He
isn't interested in chiseling in on a rental
of 25 cents per acre per year. He isn't I'M
terested I'm making some operator pay
from the nose before he VIII be allowed
to prospect for oil on that land. He wants
DEVELOPMENT, to get the oil on the
surfce of the ground at a time when 1t
win bring the most money in the open
market.
We started out to discuss titles and
rambIed off into this matter of termtnO-
Iogy, which is important, yet 1t Is Ordin-
ariIIy overlooked We have no recol-
lection of having discussed it in any OF
our publications.
We frequently joke about the hick buy
ing the Brooklyn bridge, but 1t is not
Joke. There are men walking up and
down the streets of every city and ham,
let who will gladly sell the courthouse
or the postoffice to any boob who VIII
buy it. Accordingly, we appreciate that
whether we buy a town lot, farm,
lease or a royalty, we must be sure OF
the TITLE. What good does 1T do a man
to get a great bargain in the purchase OF
royalty, If he later finds that when It
becomes OF great value that he viii not
get the oil, for the reason that it belongs
to someone else?
Accordingly, of the first Importance is
TITLE bad title win rum along
smoothly until something happens. AS
an example, the Lander farm. Had the
Lander farm been developed with 10 or