The people's voice. [volume] (Helena, Mont.) 1939-1969, 1952-12-26
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ator says this provision knocks him
out of drilling on MP land. "Most of
us have to sell part of the acreage
we hold under lease to raise money
to drill. There wouldn't be enough
left to sell under SO per cent deal, y
he complains.
George nj. Washington, general
manager of NP's oil development
department., answers, 1--WE think
that if oil development in an area
indicates an operator has more than
the usual one to los chance of find
ing oil, that our deal is just as good
as the usual farmout provisions"
In farmout, an operator may drill
on land leased to another company
for a share of the production, which
Mr.. Washington says ordinarily is
SO per cent. Usually the operator
also gets an interest.
AS for land close to the railroads
holdings, it has set aside $2.5 million
for "dry hole" contributions. This is
a common arrangement by which
larger oil company usually guaran-
tees small independent part of the
cost of drilling a well if it doesn't
find oil. If it does, the larger COM
pany may retain an interest in the
production.
If oil is discovered, MP says it will
discuss first with the operators drill
ing such wells arrangements for de- |
velopment and operation of Northern
Pacific and adjacent land on a joint
operation basis, but with no prior
commitment as to terms"
mp HOLDS THE BLUE CHIPS
An Independent oil operator says:
81 cannot imagine any except the
largest oil companies taking a deal
whereby the MP holds all the blue
chips. They take no risks of any kind,
they even have written into their
agreement a provision that if they
exercise their option to take the roy
atty in oil instead of money that the
operator must pay for the cost of
storing, handling, treating and de-
livering owners royalty
Furthermore, if oil is discovered
on mp land and thereby raises the
assessed valuation of that land, the
man who discovered the oil has
to pay the increase in taxes"
A geologist for large operator
said the company has mapped a belt
eastern Montana which seems
ideal for photographic traps or pinch
Outs-structures that often contain
Oil-on the western flanks of the
Williston Basin. He adds:
eve would like to drill one or
TWO wells year in the difficult search
for this type of oil, but regardless of
the geology or geophysics, whenever
we come up against MP acreage, we
forget about the whole deal"
But Northern Pacific's spokesman |
say their arrangements are similar
to those of Union Pacific in Califor-
ala, where oil development hasn't
been held up. 1t adds that MP offers
land in big chunks, with good title,
and a perpetual lease as long as pc
5roleum products are being pro-
iuced" By contrast, it notes that
and leased from the state must be
obtained at public auction, where as
much as $3.50 an acre has been bid, II
or leases that expire after 20.years
wen if the wells are still producing. II
Chances of striking oil in Willis II
ton Basin are one in six, as COM H
pared to usual one in nine, accord II
ing to Samuel F. Bowlby, vice H
president, Shell Oil Co., in speech H
before American Petroleum In n
stitute in Chicago, early in No II
vember, 1862. H