ACCEPTED current practice for A the valuation of mineral property is based upon Hoskold's theory and valuation tables first published in 1877, and popularized by Herbert Hoover's "Principles of Mining" issued in 1909. In more recent years the procedure has been developed further in the course of the extensive valuation work required for Federal taxation purposes. The 1-aluation of oil and gas properties and of mines is based upon the same principle-the estimation of the present worth of future net revenues. However, in valuing oil and gas properties the method used for discounting future revenues differs somewhat from that adopted for mines, owing principally to the nature of the re- source. production from oil and gas properties usually declines from year to year, whereas coal and ore de- posits are adapted to a more uniform rate of output.
THE province of Saskatchewan, situated in the center of the Great Plains region of Canada, has, like most prairie areas, an essentially agricultural economy. Most of its population of about 860,000 is located in the southern half of the province in the farming and ranching areas. To the north of the prairie is a broad forested belt supporting a considerable timbering industry, and the northern one third of the province is glaciated pre-Cambrian rock formation. This latter area is, relatively barren of vegetation, but the presence within it of a considerable variety of radioactive, noble and base metals, and industrial minerals has been shown by prospecting in recent years.1 Glacial Geology The Keewatin ice sheet, considered to have accumulated in the country to the west of Hudson Bay in Pleistocene time, covered at its maximum advancement almost all of Saskatchewan and extended south of the international boundary. Only in the Cypress Hills in the southwest and around Wood Mountain in the south central portion of the province did the preglacial formations escape the action for this glacial period. The bedrock of the plains and forest areas therefore is overlain by moraines and modified glacial drift, which vary in thickness from a few feet to 400 or 500 ft.2 Glacial action in the pre-Cambrian area of the province was largely erosional, most of the more recent formations and some of the pre-Cambrian rock being transported out of the area to the south and west. It has been estimated that about 13 pct of this area is composed of lakes and rivers not too adaptable to rail or water transportation, so that until the use of aviation for exploration purposes became general; development of the area was slow. To the south, the heavy. mantle of glacial drift has to some extent deterred the discovery of industrial minerals in the bedrock underlying the forest and prairie regions.3 At the same time, this drift contains numerous deposits of those most elementary and necessary industrial minerals, sand and gravel. Sedimentary Basin The major feature of the sedimentary deposits underlying the plains regions is the basinal structure known as the Moose Jaw syncline, which runs from the southeast corner of the province in a northwesterly direction. To the west. of this syncline the formations curve upward, then have been faulted and further upthrust to appear at the surface in the foothills of-the Rockies in Alberta; to the east and north they curve upward into Manitoba and northern Saskatchewan, but the surface contacts are covered mostly with glacial drift.2,3 The axis of the syncline dips to thee southeast, so that there is also an upward trend of the formations along the axis to the northwest. In illustration of the regional structure underlying the province, the pre-Cambrian basement has been logged in drillholes at the following depths in several locations: Ogema (south central), 9390 ft; Gronlid (northeast), 2599 ft; Vera (northwest), 4422 ft; Big River (north northwest), 2348 ft. Fig. 1 indicates the general surface geology of the province, ignoring such glacial overburden as may overlie many of the bedrock formations. Also indicated is the approximate location of the axis of the Moose Jaw syncline.4 Industrial Minerals Clays: The province is fortunate in possessing a widespread distribution of clays of ceramic value, ranging from those used for heavy structural products to the high grade pottery and china clays. Shales suitable for brick and tile production are found in the Upper Cretaceous and Tertiary formations across the south of the province where the glacial drift is thin or nonexistent. Many deposits of glacial lake clays suitable for such wares are found scattered over the rest of the province south of the pre-Cambrian area. The Whitemud formation of the Upper Cretaceous is a narrow sedimentary, band of secondary clays found intermittently, at points, across the, south of the province where glacial action did not disturb or remove them.8 In the southwest corner of the province, around Eastend in the Frenchman River valley, the refractory clays of this formation are contaminated somewhat with iron compounds or other alteration products of basaltic rocks. This eliminates the use of those clays in true whitewares, as they fire to creamy buff shades at the lower temperatures and to a blue-specked grey at cone 8 to 12, (2280°F to. 2390°F), the range commonly used in firing whiteware. However, for use in the production of colored artware, caneware, stoneware or crockery, and sewerpipe, this type of clay makes an excellent body that requires little or no addition of flint, feldspar, or other fluxing materials such as are required in the higher class of ware.9 It is not a grade of clay that can be shipped great distances to the manufacturing centers, but a market for considerable tonnages has developed at nearby Medicine Hat, where cheap natural gas is available for the firing of the ware. Farther east in the south central portion of the province, the clays of the Whitemud formation are generally more refractory and white burning. The formation is divided into three zones, consisting of white clays, brown shale, and white sandy clays.
The Valuation of Oil and Natural Gas Properties as Distinguished from Mines