Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1943-07-10
Casting Our Lot With Winners

are organized in this country, witha
strong leadership, is self-evident.
In looking into the future, with
whom is the American investor to
align himsefi
Win a wise investor look to
utilities for a secure investment in
the postwar years3
viii wise investor expect the
age of RECOMMENDATION to encourage
small business and small industrial
enterprisef
Or would it be safer for him to
cast his lot with the farmersl
If this last choice is selected, then
one way is for an investor to put his
savings into oil royalties.
Oil rights belong, for the most
part, to farmers. Much of the land
that is oil land is frequently un-
suited to agricultural purposes. Ere
quently it is grazing land. The
farmer leases such lands to oil
prospeetors who agree, in return for
the lease, to give the farmer q share
of all the oil taken from his land,
free of cost of production. In Mon
tana the farmer customarilly receives
121a9o of the oil-1215 barrels out
of every 100 barrels produced.
Property rights of the farmer are
less likely to be disturbed than any
other American rights and this win
apply to wheat land, grazing Land
or oil land. The oil industry may be
nationalized according to plan" but
it is highly improbable that the
farmers rights viii be disturbed for
the reason that the farmers are too
numerous and too powerful to suffer
loss or disturbance of any of their
property rights, be their lands pro-
duetive Of sugar beets, wheat, hay
or oil.
The royalty investor is one who
"gets into bed with the farmer" He
succeeds to prop0rtionate part of
the farmers rights. If an investor
buys half of the farmers oil rights
emitting him to receive 6A barrels
out of every 100 Dbl. produced-he
has all the rights and privileges
of the farmer, under the law. If he
buys 10 royalty-the right to re-
eeive one barrel out of each 100
produced, he inherits rights and
privileges of the farmer to the ex-
tent of his holding. His rights can
no more be wiped out than can the
basic rights of the farmers.
The next best thing to ownership
of potential oil land is ownership Of
the mineral rights. The latter may
be even preferable under the laws
of this state. The ownership of min
erals alone does not carry with it
the burden of land taxes in Mon
tana. When mineral rights are segre-
gated from the land they are sub
Ject to a special form of taxation
provided by the constitution of this
state. This provision is that minerals
shall be taxed as they are removed
from the ground. They are not tax
able in place. The surface rights
are subject to the normal land taxes
but once the minerals are Invested,
the surface and minerals are taxable
under different laws. Accordingly,
mineral rights alone are an even
better longtime investment than
land, yet no more subject to attack
by any new political order than any
other rights enjoyed by American
farmers.
The advantage of a royalty in.
vestment is that the rights are per
petual. Operators may come and GO
but the mineral rights continue. Thus
a "dry hole" may be drilled to an
upper horizon and the well aban-
dOned. The royalty owner is disap
pointed but his right continues
? Years later another operator ms