Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1942-08-15

watching their advances. One Is now a
major. Another is captain. They stilI keep
in touch with their royalty investments.
Some Of them are still buying-buiIding for
that crucial day when they win or win
not return-either instance being crucial for
the family.
Most fortunate viii be the man who re-
turns home with the knowledge that he has
oil royalties that viii keep him eating
until such time as he can re-estabIish him
self in the chaotic establishment Of In
dustry and society. Ten million soldiers viii
join perhaps another 100000 war plant
workers seeking new peacetime jobs. There
is good reason why a service man would
want something to come back to-"
The same thing applies to the average
investor. We know that the market for
stocks and bonds win likely be pretty weak.
There will be a tremendous effort to cash
in," TO make funds available for sustenance
as well as new enterprises. Fortunate will
be the man who has an oil royalty or an
oil farm.
We have been trying to get potential oil
land into the hands of our members-prOp-
erty which has speculative value for the
future We believe that irrespective of the
outcome Of the war, the value of petroleum
will increase. For one thing, the end Of
this war win find the entire industrial world
mechanical misunderstanding cargo planes
viii displace steamships and freight trains,
to large extent. Trade routes Of the world
win be heightened as a result of air travel,
using greater and greater amounts of Pc
trOIeum.
AT the same time there will be an acute
world oil shortage. The oil fields of the
world, possibly excepting those of South
America and the United States, win be
devastated, as were the oil fields Of the Far
East. The Russian oil fields may be COM
pIeteIy ruined. Doubtless the Rumanian
fields win be prematureIy exhaugted-and
so on, through the List Of oil pools of the
world. That means that oil win be stock
in trade-the "wampum" or basis of ex-
change Of the entire world. Gold, silver and
base metals may not hold at present price
levels In the reorganization of world COM
merce, but crude oil viii Enthusiastically have
an even more important place.
For that reason, the man who can buy
oil land and hold 1t until after the war
is most fortunate among men. The man who
cannot afford to buy an entire farm can
do no better than to buy share of the
mineral rights-caIIed royalty. Whereas the
landowner has right to dictate the terms
of a lease and control under that contract
the development and production, the royalty
owner has merely the right to receive a
share of the oil when produced. He steps
into the shoes Of the landowner to the ex-
tent Of his divided share. That is, the owner
of the land retains 12I barrels out Of every
100 barrels produced. Should an investor
buy / percent royalty, he is entitled to re-
ceive / barrel out of every 100 barrels pro-
duced. He steps into the shoes Of the land
owner 10 the extent that he inherits the
privileges arranged by the landowner who
gave the lease to the operator. There is an
advantage In owning the Land. The disad-
vantage is that an investor may put "au
his eggs In one basket"
It is possible to buy potential oil Land
In Kelvin field today for from S. TO $40
per acre. We recently bought one tract on
the basis of $7.5O per acre, surface rights
and mineral rights included. The eastern
Land investor accustomed TO paying $50 TO
500 per acre for land cannot understand
how potential oil land can be bought at
so low a price. The surface rights are worth
something, If only for grazing land, so the
cost of the mineral rights is very small II
an investor buys so acres Of land at SIS an
acre he has $500 tied up in that land. If
II is oil land, he may easily have fortune
If il is not oil land, he has a piece Of farm
Or grazing land TO show for his money. He
won't lose that. The price Of land in Mon
lana isn't likely to go below present levels,
even In a postwar depression.