Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1940-02-03
Basing The Future On The Past

prise. The industry has been able TO
reduce the price of its products steadily
while constantly increasing quality and
variety The price of gasoline today,
exclusive of taxes. is less than one-half
of that of 1920 and is the lowest of any
country in the world"
gWV HIS is quoted to stress the tremen-
dous forward strides of the pet
roleum industry indicating to US
that a man who makes an investment
in the oil business, especially in some
thing as stable as the purchase of oil
lands or oil royalties. need have no fear
that his investment is not likely to be en-
HANGED in value as the years go by.
Improved methods increase the value of
the oil reserves which he owns in un-
darground storage On top of that
Montana affords greatest promise in that
the development of the known oil hori-
IONS below the massive limestone has not
yet begun. A person buying oil land to-
day buys in terms of oil reserves ABOVE
the lime. If there is oil below the lime.
and we know none who believes that
there is not then the value of oil land
may be doubled and trebled when deeper
drilling comes.
The figures printed last week were
of especial interest to the driller and
investors in drilling. This week we wish
to reduce these to terms of the royalty
investor.
One eighth of the oil, under Montana
oil leases, is delivered to the landowner
free of cost of production If the aver
age well has yielded S25.51S, then one
eighth of that went to the landowner or
his assigns, called royalty owners Thus
each one of the 1894 wells drilled in
Kevin-Sunburst proper has paid royalty
owners $3,189
In Pondera field every we'll drilled
has paid royalty owners $5,124.
In Cut Bank field every we'll drilled
has paid royalty owners $4,21O
In Cat Creek field every well drilled
has paid royalty owners S1S,255. (The
actual figure is much greater because of
the large amount of overriding royalty
but this accounts only for the custom
airy 12A % or one-eighth share.)
In Dry Creek every well drilled has
paid royalty owners $8,956. 1T is an
interesting fact that while this is
large yield to royalty owners, the profit
to the operator in this field is not as
great as in other fields because of the
greater drilling costs to reach the oil at
$500 feet. This is Montana's deepest
commercial oil field Royalties on deep
portonately, than royalties on shallow
fields. That was true DIN Dry Creek
where we paid higher prices than in any
other Montana field. even where we
bought ahead of the drill.
For that reason we are fortunate that
we own royalties on the shallow fields,
purchased on the basis of shallow drill
lings. for these royalties should prove
doubly profitable when deep drilling
comes, inasmuch as deep drilling was
no factor
"HERE is another interesting fig
ure to be determined from the
per-well production of the various
fields. That is the yield per acre of
the developed portion of the field. The
spacing arrangement in Kevin-Sunburst
field has been nine wells to 40 acres in
the past but the Oil Conservation Board
of Montana figures a recovery basis of
one well to five acres. If well drains
five years Ga dry hole is said to drain
five acres, in arriving at the average)
then we can arrive at the indicated