UTILIZATION OF VALUATION DATA 439 



such as those in California, where lithologic conditions and pressures arc 

 more or less uniform, even the quantity and rate of production may be 

 fairly accurately forecast. In many localities, especially in the Mid- 

 continpnt and Appalachian and intervening fields, where the structural 

 conditions may be uniform over wide areas, the lithologic character of 

 the reservoir rock is so variable that any but very generalized predictions 

 are practically valueless. In the Mexican field, where the oil is asso- 

 ciated with volcanic intrusives, the uncertainties are magnified. Here 

 one may have a "gusher'^ at one point and 200 feet away, or even less, a 

 practically dry hole. Other things being equal, values are in proportion 

 to the certainty with which predictions can be made. 



Utilization of Valuation Data 

 utilization in commercial transactions 



Having pointed out some of the relations existing between geologic 

 factors and valuation of oil properties, let us see how this relationship is 

 utilized in a practical way. 



Attention was called in the introduction to the fact that only within 

 the past few years has oil geology been developed and used in a business 

 way. This has been due to two factors: (1) the prejudice against any- 

 thing that savors of science or system on the part of the type of pioneer 

 or "wild-catter'^ who makes a successful individual oil operator, and (2) 

 the failure of properly trained men to study the geologic conditions sur- 

 rounding the origin and accumulation of oil and the methods of its dis- 

 covery and recovery. Once the attractiveness of the field of oil geology 

 and technology, both from a pure scientific and commercial viewpoint, 

 was appreciated and it was overrun by geologists and engineers desirous 

 of getting into the game; and the word "game" is used advisedly, for, 

 after all is said and done, the element of chance rules almost supreme in 

 the initial stages of the industry. 



At the present time the science of oil geology is utilized (1) in ex- 

 ploratory work, where the areas involved are vast and the appraisals of 

 possibilities are along broad qualitative or very general quantitative lines ; 

 (2) in detailed surveys of prospective areas, where conclusions must be 

 roughly quantitative as well as qualitative and where the experience of 

 the geologist is put to the vital test of converting surface geologic evi- 

 dence into definite location for wells, the success or failure of which will 

 make or break his reputation; and (3) in the estimating of oil reserves 

 and the rate at which they may be recovered and the ultimate transla- 



