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Mr. DYAR. I was told there had not been any wells put down in that seetion.
Mr. TESTERMAN. West of the northwest township the wells were dry. The Burkburnett was over there.
Mr. DYAR. That was away to the eastward of the Texas Chief.
Mr. TESTERMAN. Oh, yes; they were to the eastward of the Texas Chief. The Burk-Waggoner well proved to be one, and the Texas Chief and Burk Senator were all drilling about the same time. I was in the river bed and was held up on account of the condition of the river. The Texas Chief was drilled in before the Burk Senator; that well flowed first. There is a strip of dry territory, so proven since the Texas Chief was drilled, between that and the Burk Senator. There is almost a mile and a half of dry territory there between the two wells now. The territory east of the Texas Chief is very close to the east edge of the structure, and that is about the recollection I have.
The CHAIRMAN. I gathered from the purpose of this gentleman's testimony it was to show that several months before the Testerman well came in this Texas Chief was brought in.
Mr. DYAR. Yes; sometime before. I have known this all the time, but my knowledge was so indefinite that I did not want to make any statement on it at all. It happened Mr. Tellier came in to town to the department to-day, or last night, late, from Detroit, and I just asked him to come up and make a statement. Now I sent a telegram to Judge Carrigan, late last night—I did not know Mr. Tellier was hereasking him to wire me about when the Texas Chief came in, and the rate of flow.
The CHAIRMAN. Is it not apparent from what Mr. Testerman says that they were drilling about the same time?
Mr. TESTERMAN. I judge you would so determine, yes.
Mr. TESTERMAN. Well, when the Texas Chief came in-may I just state I had to buy a pile driver. There was no pile driver to be had and I shipped one from south Arkansas in there, and while I was driving my piling they were getting material out and we all had to get material from all over the country; the supply houses out there had nothing. I can not say whether my machinery was on the floor there before theirs or not.
The CHAIRMAN. When did the Texas Chief get oil?
Mr. TESTERMAN. The latter part of June is when I first heard they had a showing, but then they cover up a well and any wildcat well is liable to be in a month or two months before anybody else knows it.
The CHAIRMAN. You did not go into here because they were drilling on the Texas Chief?
Mr. TESTERMAN. No.
Mr. BURTNESS. Since that time, have there been wells brought in between the Texas Chief and yours?
Mr. TESTERMAN. Yes, sir.
Mr. TESTERMAN. No: there is undoubtedly a break in the structure there. There are dry holes between the Burk Senator and the Texas Chief.
Mr. BURTNESS. Are there dry holes between your well and the Texas Chief?
Mr. TESTERMAN. They have come in since; oh, yes.
The CHAIRMAN. I am asking about this not in any unfavorable sense, you understand; but is it fair to contend, now, that Mr. Testerman was induced to drill by any developments on that land?
Mr. DYAR. No; I do not contend that. My contention is this: This whole country was wild with excitement, and I am going to show you, if you want to do it, that they knew; that away over here [indicating on map), here is where the development. is in the river bed, the Burk Bet, Burk Divide, and General Well, away over here on this side of the river, and the superintendent of the Kiowa and Comanche Reservation sold leases at one-eighth royalty, at auction, to the highest bidder, on May 16, 1919– before you began drilling, I think?
Mr. TESTERMAN. No.
That means about $25,000 or $26,000 for a lease on 160 acres of land, with a payment of a royalty of one-eighth
Mr. BURTNESS. Did the later results show they knew what they were doing when they paid those prices?
Mr. DYAR. Wait a minute. When these lands were sold over there, at those prices, why isn't it absolutely certain that somebody was going to drill the lands intervening. At that time, the Superintendent says the nearest well (I have his report right here) is 61 miles away, on the south side of the river.
(The committee thereupon adjourned until tomorrow, Thursday, January 25, 1923, at 2 o'clock p, m.)
COMMITTEE ON PUBLIC LANDS,
Thursday, January 25, 1923. The committeee met at 2 o'clock p. m., Hon. Nicholas J. Sinnott (chairman) presiding.
STATEMENT OF MR. W. W. DYAR-Continued.
The CHAIRMAN. We will be glad to hear you further, Colonel.
Mr. DYAR. Mr. Chairman and gentlemen of the committee, I want to correct an impression created by something that was said by Senator Gore yesterday, which I am sure he did not intend, but which, nevertheless, is injurious to the receiver and is rather a reproach to the court. Of course, he did not have any idea of that. kind. I know that he was misinformed, and it only shows that the parties appearing here for private claimants do not have a view of the whole case, and that they have a great many impressions that are very incorrect. Now, he said, in substance, I think, that the receiver had taken in over $10,000,000, and had spent all of it but about $3,500,000.
His language was something of that kind. Now, that does great injustice to the receiver. In his ninth report that I have before me he states his income and expenditures or outgoes as follows: Gross proceeds from all sources, $10,785,378.71; expenses of administration, $271,881.77; of operation, $1,502,159.87; of development, $724,308.87, making a total for expenditures, not simply for operation, but for putting down 19 wells de novo and cleaning out and finishing a large number of others, or expenditures both for development and operation, of $2,498,348.46, being 23.2 per cent of the total income.
Now, you will remember that these flood plain wells, to which it has been adjudged that we have not the title, were on a different basis under the orders appointing and controlling the receiver from those river bed wells. The court impounded from the flood plain wells only three-sixteenths of the total of the gross production, because the claimants were thought to be in good faith under color of Texas patents.
The CHAIRMAN. They won out?
Mr. DYAR. Yes, sir; and they get back the other three-sixteenths, less the expenses that have been charged up. Here is the feature that I want to point out: He charged himself with the total production of those wells, and whether he actually got the money and returned it, or simply collected the three-sixteenths, I do not know. He charged himself with the total production of the flood plain wells. He does not specify what it was, but the thirteen-sixteenths which he returned as their proportion as good faith claimants amounted to $4,581,724.98. So that was not an expense at all. Over $4,500,000 was just simply returned to them under the orders of the court and it was no expense at all.
Mr. BURTNESS. He probably has in his hands another $1,000,000–
Mr. DYAR (interposing). No, sir; here is another statement that puts it in a somewhat different way.
Mr. BURTNESS. I mean the $1,000,000 that he has not turned over to those owners of the flood plain wells.
Mr. DYAR. No, sir.
Mr. BURTNESS. The amount that he has paid represents thirteen-sixteenths of the production, and he has three-sixteenths left to pay out, less the expenses?
Mr. DYAR. Yes, sir. As I figure it out, there are between $500,000 and $600,000 of the three-sixteenths to go back to the Texas people who were adjudged to have full title to these lands. On the 20th of October, 1922, he had on hand $3,288,168.59.
The CHAIRMAN. Will not some of that have to go back to the Texas people?
Mr. DYAR. No, sir; the three-sixteenths less the expense that he has charged up against that part of the operations.
The CHAIRMAN. He has probably gotten something in since October?
Mr. DYAR. Yes, sir; this would indicate that he has gotten a good deal above the figure that he had on hand at that time.
On January 12, 1923, the receiver wrote me the following letter, which will be read into the record. I read from the letter as follows:
“At the time the receivership was inaugurated, to wit, April 1st, 1920, there were only six producing wells in the area later defined by the court as the 'river bed section. The receiver, however, brought into production 13 wells which were partly completed, and completed three additional wells which proved to be failures. Of the thirteen wells brought in one was later lost in the flood of July, 1921, and could not be recovered. From the above you will see that the six producing wells, plus thirteen * completed, made nineteen wells, of which one was subsequently lost, reducing the number of producing wells to eighteen."
The CHAIRMAN. Does he state where those 13 wells were?
“In the sixth report you will learn that 19 wells were drilled de novo by the receiver which, added to the 19 previously mentioned, made 38 wells. Of the 19 new wells, there were no dry holes; but all were not equally productive. At the present writing 14 have ‘paid out' and 5 have only partially "paid out' while 3 of them, I think, will never ‘pay out'in full.”
Mr. LARSEN. By that you mean that the production of the wells will not be sufficient to pay the expense?
Mr. DYAR. Yes, sir.
“Each of the reports thus far has carried a table showing the number of producing wells each month from the day of inception to date. For example, in the area east of the Grandfield Bridge, which embraces only flood plain wells, there were 76 wells already in existence in 1920, and the maximum number at any time was in May of that year, to wit, 99. In the last report of the receiver—the ninth report, dated October 20, 1922—you will find that there were still 76 of these wells producing, but the total production has gone down from a maximum daily average of 3,020 barrels to 503 barrels.
“In the area west of the Grandfield Bridge, which embraces all of the river bed area and only a few flood plain wells, you will see that the record shows that there were 15 producing wells in April, 1920 (6 river bed and 9 flood plain) and that the maximum number was 59. In the same way, you will notice that the daily production in April, 1920, of these wells west of the Grandfield Bridge was 2,312, which increased to the maximum daily average of 4,280 barrels in July, 1920, and dropped down in September, 1922, to 1,791 barrels per day. At the present writing the receiver only has 45 producing wells in the river bed area, and the production of these has gone down to 1,300 barrels per day.”
So that was what he was getting at the date of this letter.
Mr. RAKER. That is, in the area in controversy?
Mr. DRIVER. Do you know the amount of the production of any of the flood plain wells as compared with the river bed wells?
Mr. DYAR. Yes, sir; that is shown in this paragraph of the letter.
“For example, in the area east of the Grandfield Bridge, which embraces only flood plain wells, there were 76 wells already in existence in 1920, and the maximum number at any time was in May of that year, to wit, 99. In the last report of the receiver-the ninth report, dated October 20, 1922—you will find that there were still 76 of these wells producing, but the total production has gone down from a maximum daily average of 3,020 barrels to 503 barrels."
The letter continues:
"Mr. Flannery tells me that you are interested in knowing the amount of money which has been refunded by the receiver for wells completed or drilled in part by other parties before the receivership. You will find this figure in detail in Appendix A of the ninth report, on page 23, to wit, $300,115.92. These are refunds out of net proceeds on 15 wells—the receiver not being authorized to refund to operators any part of the expense of drilling dry or unprofitable holes.
In the seventh report, dealing particularly with claims (pp. 21-23), there is a chapter relating to claims by nine parties who put down eleven wells which either proved dry holes or did not produce sufficient net proceeds to pay the cost of drilling out of the 13/16 funds. The receiver pointed out that these operators contended that the proceeds of the entire group of river bed wells drilled by them should be drawn upon instead of the proceeds of individual wells only. As you are aware, the suggestion of the receiver was opposed by counsel for the United States Government, and the court has not decided the matter."
Mr. RAKER. The report does not indicate that the river-bed wells on the territory involved are exhausted, or that that territory is exhausted?
Mr. DYAR. No, sir.
Mr. Dyar. Yes, sir. That [indicating] was producing territory. The wells were practically all down here (indicating) at the time the receiver was appointed, and they were just putting down wells in the river-bed area.
Mr. DRIVER. By far the greater production now is on the river bed?
Mr. RAKER. The Flood Plain wells are out of our jurisdiction now.
Mr. DYAR. The Flood Plain wells have produced more than half the total income of the receiver.
The CHAIRMAN. Outside of the Flood Plain wells, is there a daily production of about one thousand barrels?
Mr. DYAR. He says here 1,300. The daily production of the river-bed area is practically 1,300 barrels.
Mr. DRIVER. And proctically two-thirds of that is produced from the sand bed? Mr. DYAR. All the production we are talking about now is from the sand bed.
The CHAIRMAN. There are five or six hundred barrels per day from the BurkDivide property?
Mr. DYAR. I do not know about that.
Mr. LARSEN. The chairman refers to a statement made yesterday. I remember some such statement.
Mr. Dyar. It was a guess.
Here is a group of wells right in here [indicating] that were put down by the receiver. In order that the derricks and machinery might not be washed out, as had happened often before, they put down piling. People who knew nothing about the character of that stream rushed in there and began operations. The river bed was as dry as the Desert of Sahara when they put in their derricks, but when the rains came the derricks were washed out. The receiver put up what he called bridge work, about 8 feet above the sand bed. They had to drive 24-foot piling into that substratum, or down below the sand. It is practically quicksand, 10 or 15 feet in depth, and the water sometimes runs 8 feet on top of it.
Mr. RAKER. They are on what land? Is that Burk Divide land?
Col. Roote. The east line of the Burk Divide is a continuation of this section line that I am indicating, between this section and this one here (indicating).
Mr. Raker. Running due south?
Mr. Dyar. All of these wells are on the Burke Divide claims, except that possibly here are two or three up here (indicating), which may be north of what they took to be the medial line when they located their claims.
The CHAIRMAN. When you say “all of these wells” what do you mean?
Mr. DYAR. I mean to the west of that line there, to the west of that point (indicating). All of these wells here [indicating], I take it, are within the Burk Divide claims.
The CHAIRMAN. Are there no wells to the west on any other claims?
Mr. DYAR. You see, the receiver took charge when the work was extending up the river; he shut if off right there [indicating) and his own drilling was in this immediate region indicating).
Mr. LARSEN. Referring to the other wells, east of those, are they in the flood plain area too?
Mr. Dyar. No; from that point eastward the wells are practically on the Mellish placer claims, I take it, reaching clear down to the Burk Senator well, which is some