Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1939-02-18
BECOMING AN OIL FARMER

reIs to the acre, the land owner gets
125 barrels from each acre. II the LAND
produces 5000 barrels to the acre, the
landowner get 625 barrels out Of each
acre. and so ON. But when an investor
buys an sOiI farm" he does not buy on
the basis of the oil content He buys
IL at farm land valuation. If he pays
$40 an acre for the land, he knows that
the land will have to yield so barrels
(worth 81 per barely to each acre to pay
bin, hack his investment (He gets ONE
eighth of 80 barrels is 10 barrels.)
eighth of 80 barrels.)
Thus the man who buys an oil farm
e likely to make a large profit PRO
VIDING THERE Is OIL UNDER THE
GROUND. 1t would scarcely be COM
merciaI If the land did not produce
I 900 barrels per acre, which means a
profit of 1850 per cent. Vet 1t might
make 1000 or 1000 or even 5000 bar
reIs per acre. which is not unreasOn-
able expectation in Montana oil fields.
If 1t is gas land, it may make from
one million cubic feet to seven million
cubic feet per acre, worth from - to
$3.50 iDer acre on the basis of 4-cent
gas. showing a possible profit on gas
production alone. Here are typical row
atty earnings Of 'gas farms" on which
we have records in Cut Bank gas field,
during 1887: Farm A, 50, 1877; Farm B,
81, 1913; Farm G, 81, 147; Farm ID. $05S;
Farm e, S042 and Farm F. e, All. 1t
is apparent that am average gas pro-
ductiOn would soon pay ont the cost
of a farm WHEN 1T is PURCHASED
ON THE BASIS OF FARM LAND.
But when we start to buy land as
OIL LAND, the price mounts into fig
pres which the average investor is un-
willing to gamble, although there are
Nwwnr aaef
groups OS lease buyers have paid high
nrices for leases proven oil land and
have sold them at tremendous profits.
However our experience is that the great
est profits go TO those who buy IN AID
VANCE OF THE DRILL. They take
greater risks but are rewarded, when
successful, with greater profits.
To the man who wants to speculate
in oil with a margin of safety, there is
no better way than TO buy lands in fee
simple short distance beyond the drill,
in areas where possible productive hOr-
icons are likely present. The investor
can then choose his operator and can
dictate the terms of the lease and see
to the enforcement of those terms and
in the event of the discovery of oil, the
returns from IAN per cent royalty are
large enough to provide a good 1ivli-
hood, even from mediocre yield.
However, the purchase of farm in
wolves a considerable cash outlay. The
alternative is to organize a group of
four. eight. ten or more, to share the
cost and I'm turn share any resultant
profits. The important thing is to make
absolutely sure of title. After that 1t
is merely a gamble with Mother Nature.
1t is only occasionally that we can pick
up a farm In fee simple. IL is usually
from a mortgage who has no faith In
oil and who wants his money rather than
a gamble. That was the case in our
recent purchase. II there are a number
of our members who are interested i'm
land purchases I'm north Montana oil
fields, we stin be glad to build up a
special list to which offering OF this
type will be submitted