Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1938-11-26

CONFINEMENT is the word which
best fits this weekend, following Thanks
giving-something that comes at no
other holiday season-just as Joyous"
fits Christmas and happy" fits New
Years. This contentment follows thank
fitness for the good gifts of the past
year
While the year has been a lean" one
in the oil business, as compared with
the days when Canada was taking Mon
tanas oil products, those Of us who
have been in royalties for 10 or Is years
realize that we can well be THANKFUL
for the lean year" The greatest rule
of success is:
BUY CHEAP AND SELL DEAR
If we had no lean years, how would
we ever be able to apply this rule OF
success? If we are going to make any
money we MUST buy cheap, part Of the
time The depression was something
that everyone hated, yet the depression
made fortunes for countless people
people who were willing as well as able
to follow the adage of BUY CHEAP"
Before the depression, we had little
alternative than to buy high. Everyone
knew that it was impossible for values
to continue on upward and upward for
ever Everyone knew that peak
would be reached and then would fol-
low a slump That applied to stocks,
thing else. We paid more for some
royalties, before the depression, than we
wanted to pay, but it was a sellers
market and we had to pay going prices
else drop out of royalties
Royalties are unlike stock market in
vestments in that we know ABOUT how
high to go If we know in a general way
that a royalty will participate in a
yield of 10000 barrels per acre, worth
$4,000, naturally we will not buy
on a basis that would require MORE
than $4,000 per acre recovery. So in
high markets or low markets, we have
a pretty good idea where to stop on the
way up. But in LOW markets such as
provided by the depression and by the
recent loss of the Canadian crude market
are we provided with the greatest oppor-
tunities to BUY CHEAP.
So we have reason to be thankful that
we have had lean year to again put
us in position to make fortunes from a
small investment.
There is always the one who comes
forth with the cry: 81 bought royalty,
once. and it has never made me dime.
That is true in many cases There are
a few instances where a man buys just
ONE royalty and makes money, but we
insist that it is the exception rather
than the rule. 1t is possible that this
mans royalty covers the best pool in the
state yet no well has yet been drilled
upon it. If there is oil under that tract,
he may rest assured that in due course
of time, WHEN THE OIL CAN BE
PROFITABLY PRODUCED, some oper-
ator is going to drill for that oil and
bring it to the surface. At that time,
the royalty owner will get his share OF
the oil If it is a great gusher tract,
this royalty will make him large profit
and possibly a fortune. He will make
a profit, if there is oil enough to justify
an intelligent operator in drilling it out,
so long as he has bought his royalty
cheaply enough, - bringing us back to
the adage.
How can we know that royalties are
cheap"
In Is years of experience, this or
ganization has seen the ups and downs
of an industry from it's creeping infancy.
Our members have a pretty firm idea
of the average price for various types
of royalty over that period of time. Also,
the production of the several fields give
us a pretty good idea of the ultimate