BULLETIN OF THE GEOLOGICAL SOCIETY OF AMERICA 

 Vol. 31, PP. 433-440 November 30, 1920 



OIL gp:ology in relation to valuation 1 



BY RALPH ARNOLD 



{Presented before the Society December 2S, 191S) 



CONTENTS 



Page 



I iitroduction '^^^ 



Factors governiug the valuation of oil properties 434 



Classification of the factors 434 



Character of oil 434 



Quantity and rate of production 435 



Water associated with oil 436 



Estimation of oil reserves 437 



Cost of production 43S 



Certainty of predicting factors 438 



Utilization of valuation data 439 



Utilization in commercial transactions 439 



Utilization in relation to taxation 440 



Introduction 



It is iiitcncU'd in this ])apor to discuss the relationship which exists 

 between oil geology and the valuation of oil properties, or, more properly 

 speaking, oil deposits, as the natural assets only will be primarily referred 

 to. As introducing the subject, it may be asserted as obvious that the 

 l'un(himental law of supply and demand governs the valuation of oil prop- 

 erties, the same as it does all other commodities. The causes which 

 affect the demand arc largely artificial and need not be taken up here; 

 the factors governing supply and production are primarily natural or 

 geologic and as such properly come under the head of geology — oil geol- 

 ogy, to be more precise. The relationship existing between the natural 

 and artificial elements, as affecting oil production, are so intimate that 

 it will be impossible to discuss the one without mentioning the other — 

 in fact, oil geology and oil technology are so closely related that any one 



Manuscript received by the Secretary of tlio Society April L"J. 11)1!». 



XXX— Bull. Geol. Soc. Am., Vol. ;U. 11)10 (433) 



