Letter from William Loeb, Jr. to E. A. Hitchcock
This item is a letter regarding a statement made by the Osage Indian Agent, Frank Frantz about the Osage Oil royalty. Also included is a letter regarding the lease of land with the Indian Territory Illuminating Oil Company.
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OCR Page 1 of 7Page 5.
adjacent oil fields and feel that they are making good bargains or
they would not take these leases.
Now, the question is, what percentage of royalty is the
parent company justly entitled to in addition to the large cash
bonuses received, acting purely in the capacity of agent, and what
percentage is the tribe entitled to as the owner of the land?
Royalties paid in other developed fields vary to such an
extent, ranging from 1/10 to 1/6 and even 1/4 to 1/2 in exceptional
cases, that it is hard to arrive at the average royalty paid, except
by deductions based upon reliable information obtained from practical
oil men. In no instance have I been able to learn of a lower
royalty than 1/10 being paid, and in addition to the royalty exacted,
in every instance, a cash bonus is paid to the owner of the land
often equal to, and in many cases far in excess of the actual surface
value of the land.
In talking over the matter of royalty with a large number of
the most extensive oil operators in the country, I find that they are
practically agreed that the average royalty paid to the land owners
over the entire country is one-eighth, in addition to the cash bonuses
exacted.
It is claimed by the parent company that the cost of product-
ion is greater here than in any of the older oil fields. This is un-
true, in that it is misleading. It is true that the cost of develop-
ment is some greater than in many of the older fields, but the
production is so much greater that it more than offsets any difference
in the cost of development.
It is also claimed by the parent company in support of
their argument that the grade of oil produced in this field is much
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