LANDS The acquisition of oil lands is an important branch of the oil business. These lands should first be carefully selected and then obtained either by purchasing outright or by lease. The usual procedure of large companies is to send a geologist or a scout over an area called to their attention. If this man recom mends a tract of land a lease man is sent out to obtain the land, either by purchase or on a lease.
Often lands are purchased in the office from land dealers or brokers who buy and sell oil leases or oil properties. In the Mid-Continent fields, such dealers in leases are called "lease grafters." This name is not used in a derogatory sense, but is applied generally to the men who handle leases irrespective of the honesty or dishonesty of individuals.
A good lease man must have many qualities. He must be re sourceful, a good talker, should have a good grounding in law especially in contracts, and have "nerve." Many people think a lease man is a liar and a cheat but the best lease getters are honest and cleancut men who are convincing in their talk to the rancher, farmer, merchant or banker whom they may meet. There have been some marked cases of sharp practice but on the whole the lease men leave the lessors feeling well treated.
Lands may be classified: 1. Privately owned lands. Obtained: (a) By purchase or grant. (b) Patented lands.
2. State lands.
3. Government lands.
4. Government ward lands.
The titles to privately owned lands are vested in the owners, and comprise the largest portion of the lands of the Eastern United States. These lands may be bought in fee or are leased on a royalty basis.
State controlled lands have the titles vested in the states. Most of the western states own millions of acres of State school lands, granted them by the Federal Government. Generally Sections 2 and 16 are state school lands although in some states, such as New Mexico, 2, 16, 32 and 36 are the state lands.
The State of Texas owns all the public domain, due to its annexation treaty with the United States Government.
United States Government lands are those in which the title is vested in the United States Government. The California oil lands, and Wyoming oil lands were largely of that class. Title was obtained from the Government under the Oil-Placer Act in the early life of the oil industry.
Government ward lands are lands like those in eastern Oklahoma, where the Government considers the Indians as wards, and leases are made with the Indians direct upon ap proval of the Department of the Interior.
Oil leases generally run for 5 years. Drilling must com mence before the expiration of that time, or the lease is cancelled. See Lease, page 21.
The non-payment of annual rentals also gives grounds for cancelling leases.
It is customary to pay rentals for a year in advance. Such rentals range from 5˘ to $2 per acre, and in some rare cases higher.
The advance rental is often spoken of as a bonus. A bonus, properly speaking however, is the amount paid in excess of the rental. Bonuses are generally paid where competition is keen and the land is unusually desirable. Bonuses range from a few cents to as high as $1000 per acre.
Acquiring Oil Lands.—There are four main divisions of oil lands which are defined in another Chapter.
1. Prospective or wildcat lands.
2. Probable lands.
3. Proven lands.
4. Producing lands.
The acquisition by lease or purchase of these classes of lands falls within the functions of the Land Department of an oil company.
Information about these lands may be obtained by studying the results of geological surveys, from the reports of scouts who keep in touch with new drilling activities, dry-holes, and pro ducting wells, and from the reports of expert appraisers of oil properties.
Wildcat lands are generally acquired by leasing, though in some cases they are purchased outright.
Four systems of acquiring such lands are employed: 1. By checkerboarding, i.e. taking pieces here and there over areas thought favorable for oil, regardless of geological conditions.