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By P. B. Baxendell

The appraial of producing properties and profitability ntzalysis of a proposed capital expenditure are based on the same principles. In both problems a projection of future cash income is. cornpared to one or more capital expenditures. Several different methods have been in use either to compute a price to obtain a given earning power on the investment or to compute the earning power which will result from a given capital expenditure. One of these, the "Average Annual Rate of Return" method, computes in a simple manner the ratio of the present value of the future earnings after amortization to the present value of the undepreciated balances of the investment over the life of a project. This method, not well known generally, appears to have some rather unique advantages in reducing the computation work required, eliminating trial-and-error solutions, and providing a more accurate answer when applied to oil industry investments subject to the unit-of-production basis of amortization. Its derivation is given and its versatility demonstrated in the solution of certain everyday investment problems. A number of charts, useful in applying this method to profitability analysis and appraisal work, are provided. The current trend in the market values of producing properties is shown. INTRODUCTION Making sound capital expenditure decisions requires an objective means of measuring the productivity of individual investment proposals. Since the best measure of the economic worth of such proposals is their ability to produce profits, it is common practice to grade proposed capital expenditures according to their annual earning power as a percentage of the outstanding capital. The same principles which govern the determination of the rate of return of proposed capital expenditures also apply generally to the problem of determining the appraisal value or purchase price of income-producing oil and gas properties. Both problems are of prime importance in the producing phase of the oil business, where management is faced daily with decisions to drill or not to drill certain development wells, or with the determination of the appraisal value of producing properties. The common feature in both problems is that a projection of future cash income is compared with a known or estimated capital investment to determine itsiearning power or annual rate of return. In the case of development drilling, the cost of the proposed well can usually be estimated with a fair degree of accuracy and the problem consists of finding the rate of return on the invested capital. In the case of appraising producing properties, on the other hand, the desired rate of return is usually known in advance and the problem consists of determining the purchase price which, for the given income projection, results in the fequired rate of return. Certain accounting procedures common to the oil and gas producing business make these two problems and their solutions somewhat different from corresponding problems in other industries, and, in certain ways, simpler. The main difference is in the amortization policy which, for oil and gas production, is frequently on a unit-of-production basis, compared to the amortization on a time basis used in many other industries. The purpose of this paper is to discuss briefly the various methods currently in use for the measurement of productivity of invested capital in producing properties and, in more detail, the derivation and application of what will be called the "Average Annual Rate of Return Method". This rather interesting and not too well known method has some very definite advantages in the solution of many problems common to the oil industry. For the sake of simplicity, federal income tax considerations have been disregarded in the examples used, since they do not affect the principles involved. The use of the production payment route in the sale or purchase of producing properties, which has been amply covered in many other publications, has also not been included in this analysis. METHODS FOK MEASUKING THE EARNING POWER OF INVESTED CAPITAL, Of the many different methods used to measure the earning power of invested capital, four are applicable to oil or gas production ventures. Depending on whether these four methods utilize one or two interest rates, and whether a fixed amortization pattern is used, they may be classified as follows.

By Benjamin Smith Lyman

THE importance of topography to geology is so commonly underrated as to deserve to be pointed out again and again. The relation of topography to the different branches of geology may be seen best by a glance at them all. Geology is well understood to consist of the observation of facts about rocks as materials of the earth (geognosy), and the explanation of those facts (geognosy). The facts to observe are : I. GEOMETRICAL, as (1) structure, including the dip and strike at different points, the size, shape, and position of basins and saddles; (2) vertical section, that is, the thickness of rock groups and of their parts ; (3) horizontal or geographical position. 11. PHYSICAL, such as texture, whether sedimentary or crystalline ; and, if crystalline, whether granitic, porphyritic, amygdaloidal, globular, or concretionary ; whether compact or granular; coarse or fine; pervious or impervious; hard or soft; firm or tender; with cleavage or without ; massive or thin ; the microscopic structure ; also whether magnetic or not ; soluble or insoluble ; fusible or infusible ; and the constituent minerals. 111. CHEMICAL that is, the composition of the rocks and of their minerals and their affinities. IV. PALAENTOLOGICAL, as what kind of fossils are in the rocks,

By L. Kovisars, F. Buttazzoni

The current demand for copper in the western world exceeds 7 million tonnes annually. The growth in demand is expected to average 2.6% annually to a level exceeding 11 million tonnes in 2000. Copper mine production is currently about 6 million tonnes annually; the annual net addition to mine output in the future will have to average about 190,000 tonnes of contained copper. The industrial nations of Europe and the western Pacific are heavily dependent on copper imports. Currently these import needs are supplied by Canada, Africa and Pacific producers. The increased demand for copper in the future is expected to further weight the trade balance to the Pacific suppliers. An evaluation of undeveloped deposits allows the ranking of these deposits based on total cost of production, including provision for plant and infra- structure investment as well as political/social/ economic risk. Peru, Canada, and the Southwest Pacific are expected to significantly increase exports. The United States will develop deposits to replace depleted mines, maintaining mine production at a level approximately equal to current output, with a consequent increase in copper imports. Chile is expected to become the world's leading copper producer, as well as expanding it's position as the leading exporter.

Jan 1, 1982

Jan 1, 1967

[Separates of all the Technical Publications published in 1928 are available at Institute headquarters. All the papers are on file in public, university and technical libraries, and when so indicated in the list, may be found either in the TRANSACTIONS or in the special volumes issued by the Institute] . METAL MINING TECHNICAL TRANS. PUBLI- TITLE AUTHOR MEETING VOLUME CATION AND PAGE* No. 50 .The Eötvös Torsion Balance D. C. Barton New York Method of Mapping Geologic Feb., 1928 Structure 52 A Cartographic Correction for the C. A. Heiland New York Eötvös Torsion Balance Feb., 1928 61. Liquid-oxygen Blasting at Chuqui- H. C. Schultz, New York camata, Chile F. K. Middleton Hunter Feb., 1928 76, 108, 123 64 Working Methods of Practical Geo- Hans Haalck New York physics Feb., 1928 65 Experiments with Eötvös Torsion P. W. George New York Balance in the Tri-State Zinc and Feb., 1928 Lead District 74 Gravity Surveying in Great Britain H. Shaw New York Feb., 1928 75 The Computation of Eötvös Gravity E. Lancaster-Jones New York Effects Feb., 1928 82 Earth-resistivity Measurements in W. 0. Hotchkiss, New York the Lake Superior Copper Country W. J. Rooney, Feb., 1928 James Fisher 83 Mining Methods and Records at the Roy W. Moore New York 76, 56, 90 United Eastern Mine Feb., 1928 98 Recent Results in Electrical Pros- Hans Lundberg New York

Jan 1, 1928

By Charles Janin

(San Francisco Meeting, October, 1911.) THE first successful bucket-elevator dredge to operate in California was put in commission at Oroville in March, 1898. There had been numerous previous attempts at dredging, but none of the earlier boats proved a success. The gold-miners in California early conceived the idea of a machine to dig gravel from the beds and bars of auriferous streams that were inaccessible by the methods then employed, and it was only a few months after the discovery of gold in California that such a machine was. shipped around Cape Horn from New York to San Francisco. This was, however, but the forerunner of many failures in gold-dredging, and was soon at the bottom of the Sacramento river. During succeeding years many other unsuccessful attempts were made, and it was not until 1897 that a dredge of the single-lift bucket-elevator type was floated on the Yuba river. This dredge was built by the Risdon Iron Works for R. H. Postlethwaite, and would probably have been a success if it had been operated on some of the rich Oroville ground instead of in a turbulent stream, where the dredge was wrecked during a flood, and was not repaired. Fig. 1 is a sketch-map of California, showing gold-dredging areas. It is not my intention to narrate in detail the history of the early failures in gold-dredging, and the various steps in the development of the modern boat, but merely to touch upon this in a general way, and to call attention to the wide difference in capacity and operating-cost between the first successful dredge, with an actual capacity of 600 cu. yd. per day-though its rated capacity was in excess of this-and the present modern dredge with 15-cu. ft. buckets, and an average capacity of 250,000 cu. .yd. per month. Even this enormous capacity has several times been exceeded on monthly runs. The first successful dredges

Mar 1, 1912

Executive JOHN M. LOVEJOY, Chairman ERLE V. DAVELER G. B. WATERHOUSE WISER JUDSON WILLIAM WRAITH J. V. W. REYNDERS, Consultant Finance HENRY KRUM, Chairman PAUL D. MERICA R. M. ROOSEVELT H. G. MOULTON, Consultant Admissions. RALPH M. ROOSEVELT, Chairman GEORGE D. BARRON, Vice-chairman JOHN L. CHRISTI PHILIP KRAFT W. A. SINSHEIMER

Jan 1, 1936

For the first time in its history the Institute will hold a meeting in the State of Arizona. A few years ago Arizona stood third in the copper-producing districts of the United States. Since that time, with the development of porphyry mines, the output has gone up with great rapidity until it not only is the leading district, but its output at the present time is at the rate of nearly double the Montana output, which now stands second in the list. In connection with this .development, most interesting departures have been made in methods -of mining, concentration and smelting. Principles of mining and metallurgy of the greatest interest will be covered by papers which will' appear in the Bulletin and be presented at Technical Sessions, while ample opportunity will be afforded for those who go to the meeting to see all the points of interest .to them. In addition, members will be well rewarded by the marvelous natural features to be seen on the trip, including 'the petrified forests, the cliff dwellings on the Apache Trail and the Grand Canyon of Arizona. It is planned to start the special train from New York, but members and guests may join the special at other points en route as indicated by the following schedule: ITINERARY . , Thursday, September 14th Lv New York, Grand Central Terminal.. ............... 5.30 p. m. Dinner in dining car a la carte New England Members via B. & A. R. R. . Lv Boston. ............. (Regular train). ............. 2.00 p. m. Lv Worcester. ........... (Regular train). ............. 3.12 p. m. , Lv Springfield. ........... (Regular train). ............. 4.37 p. m. Dinner in Dining Car a la carte Ar Albany.. ......... .New York Central R. R.. ....... 7.45 p. m. Lv Albany .......................................... 9.00p.m. Lv Schenectady.. .................................... 9.32 p. m. Lv Utica ............................................ 11.08~.

Jan 8, 1916

By J. A. Morgan

IN the art of roasting sulfides it is well known that the lower the temperature and the higher the pressure of SO, the larger will be the amount of sulfate present in the product. However, the mechanism of sulfate formation is not generally understood. The following experiment" demonstrates in a direct way that, in the roasting of Cu2S, the sulfate forms from the reaction of Cu2O, formed by the oxidation of Cu2s, with gaseous SO, (or SO3) and 0,. Thus, the sulfate does not form at the sulfide surface. The reaction at the sulfide surface is the same whether or not sulfate is formed. Using an indirect method, Ong, Fassell, and Wadsworth' infer that sulfate forms after oxidation, during the roasting of sphalerite, agreeing with the observations of this paper. The method presented here of demonstrating that sulfate forms after formation of Cu2O is to roast a sample of Cu2S and then to locate and identify the phases formed.' A solid cube of cuprous sulfide, made by melting Fisher reagent grade Cu2S powder and measuring about 1.5 cm on edge, was placed on a Nichrome wire grid suspended over the top of an Alundum combustion boat. The assembly was placed in a tube furnace at 600°C and oxygen gas, flowing at 0.60 liters per min, was passed around the specimen for 24 hr. The furnace tube diameter was 1.5 in. The partially roasted sample was removed from the furnace and impregnated with resin No. BR 0014, obtained from the Palmer Products Co., and the impregnated sample was then mounted in Lucite. A cross section was obtained by grinding and the surface was prepared by the following steps: 1) grinding—60 grit, 3M disk, dry; 2) preliminary polishing —60 through 600 grit, 3M disk, dry; 3) polishing— 8 µ diamond putty, silk cloth; and 4) final polishing —1evigated magnesia in isopropyl alcohol, Selvyt cloth. The color micrograph of the polished surface is shown in Fig. 1. The layers present in the micrograph are given along the side. The comwositions of the various layers were established by Debye-Scherrer patterns. From this evidence the following sequence of reactions which occur in the roasting of Cu2S is inferred: 1) The oxidation of Cu2S occurs with oxygen which has been transported through the oxide-sulfate layer by either gaseous or solid state diffu- sion. The products of this reaction at the Cu2S surface are Cu2O and SO,. 2) The SO, diffuses out through the pores in the Cu2O and finally reaches a position in the Cu2O where the oxygen pressure and the SO, pressure have values such that the thermodynamic conditions for the formation of CuSO4 are fulfilled. Then, the mixture of SO2, SO3, and oxygen reacts with the Cu2O to form CuSO1. 3) The CuSO, decomposes by the evolution of SO,, or SO, and O2, to form the basic sulfate. This is reasonable, since the SO, gradient will decrease toward the oxygen gas phase from the CuSO4 layer. 4) For this same reason the basic sulfate will decompose to form CuO. The above sequence of events is based on the assumption that diffusion through the oxide and sulfate layers, rather than the reaction at the sulfide-oxide interface, is rate-determining. This assumption is supported by the observation that these oxide and sulfate layers combined are almost nonperme-able to the flow of gases through them. Acknowledgments This research was supported by the U. S. Air Force, through the Office of Scientific Research of the Air Research and Development Command. The authors wish to acknowledge the helpful suggestions of Ralph Wells of the Applied Research and Developmeit Laboratory, U. S. Steel Corp. References E. A. Peretti: A New Method for Studying the Mechanism of Roasting Reactions. Discussions Faraday Soc. (1948) 4, p. 174. - J. N. Ong, Jr., M. E. Wadsworth, and W. M. Fassell. Jr.: Kinetic Study of the Oxidation of Sphalerite. Trans. AIME (1956) '206, pp. 257-263; Journal OF Metals (February 1956).

Jan 1, 1957

By H. Jehn

Like some other Pt-group metals palladium shows a low but considerable solid solubility of oxygen, which was found already from oxidation studies. The oxygen solid solubility of palladium in equilibrium with gaseous oxygen has been investigated at 900 - 1300 °C in oxygen (665 mbar) and air by gassing and analyzing polycrystalline samples. The 0-concentrations range from 40 to 90 ppm and decrease with rising temperature. The isobaric solubility can be represented by the least-squares fit log c0 = 0.5 log p02- 0.32 + 920/T (c0 in wt. ppm, p02 in mbar, T in K). The thermodynamic data of the exothermic solution reaction are calculated to ?H°= -17.6 kJ?mol-1 and ?S° -76.5 J?mol ? K-1. The behaviour of palladium in an oxygen atmosphere is characterized by the simultaneous reactions of the solution of oxygen in the metal and the formation and evaporation of volatile oxides besides the pure metal evaporation.

Jan 1, 1984

Jan 1, 1968

By Claus Goetzel

THE object of this investigation was to determine whether silver alloys could be used instead of the currently employed insert of high-expansion AVERAGE COEFFICIENT PER DE G. C. OVEN RANGE 20° To 200° C. Pure aluminum '31.6 X 10-6 Cast low-expansion Si-Cu-Ni-Al piston alloy 20.0 X 10-6 High-expansion austenitic Cu-Ni cast iron 19.3 X 10-6 Cast steel (0.25-0.35 C, 0.10-1.0 Mn) 12.6 X 10-6 Cast iron (3.15 total C, 2.16 Si) 12.8 X 10-6 Pure silver 18.9 X 10-6 austenitic ferronickel alloy, to reduce the wear of ring grooves in light metal pistons. A typical example of a piston containing a ferronickel insert is shown in Fig. 1. The high coefficient of expansion of silver made it worthy of consideration, while the small size of the insert would render it use feasible in Germany as an emergency in is- tire. The coefficients of linear expansion of several metals and alloys are as shown in the table above. Obviously the melting point of the insert must be high enough to prevent it from melting when the light alloy is cast around it. This imposes a lower limit of about 850° C. for the solidus of the silver alloy. Pure silver melts at about 961° C., so that the Fin. 1.-PISTON CONTAINING tolerable depression in the solidus is rather FERRONICKEL INSERT. small. To avoid deformation of the insert during use a Brinell hardness number of at least 60 appears necessary.

Jan 1, 1937

By T. K. Smith

The comments contained in the discussion of the paper concerning the prediction of fracture gradients are of considerable interest, since the subject is of a very controversial and timely nature. It is regrettable and Fairhurst2 contradicts the author's statement in the third paragraph of Other Applications. These references create significant doubt that Eaton's Eq. 1 predicts fracture pressure during the injection of fluid into old wells. 3. No evidence is presented in this paper to support the author's Conclusions 2 and 3. While an empirical coefficient related to back-calculated field data is correlated with depth (Eaton's Fig. 4), there is no reason to suspect that this coefficient might be the Poisson's ratio of the various formations involved. 4. Until the field data supporting the empirical approach proposed by the author are presented and evaluated, the accuracy claimed in Conclusion 5 is without substantiation. References 1. Geertsma, J.: "Problems of Rock Mechanics in Petroleum Production Engineering", Proc., First Intl. Symposium on Rock Mechanics, Lisbon (1966) 585. 2. Haimson, B. and Fairhurst, C.: "Hydraulic Fracturing in Porous-Permeable Materials", I. Pet Tech. (July, 1969) 811-817. that the comments are those of a critic and do not offer an alternative and better method for the prediction of fracture gradients. Nevertheless, a reply is in order.

Jan 1, 1970

Executive A R LEDOUX, Chairman ARTHUR S DWIGHT CHARLES F RAND E P MATHEWSON J V W REYNDERS Membership E DEGOLYER, Chairman W Y WESTERVELT, Vice-chairman WILLIAM H BASSETT H G MOULTON C MINOT WELD Finance WALTER H ALDRIDGE, Chairman GEORGE D BARRON GALEN H CLEVENGER Library GEORGE C STONE,' Chairman JOHN H JANEWAY ALEXANDER C HUMPHREYS, ROBERT LINTON FREDERICK F SHARPLESS

Jan 1, 1923

By C. F. Jenkins, G. V. Smith

Serrated plastic flow in stable austenitic alloys based on Fe/Ni has been shown to be related to the presence of carbon and/or chromium in the systems. Strength peaks and plateaus in the serrated-flow temperature region for a commercial alloy correlate with an increased dislocation content, arising, presumably, from enhanced multiplication as a result of a strong interaction between dislocations and solute atoms. The data generally support a mechanism controlled by migration of vacancies, with the energy for vacancy motion being modified by the presence of chromium. Chromium atom -dislocation interaction is responsible for effects above 500°C, whereas the defect interacting with dislocations between 200" and 500°C is suggested to be a carbon-vacancy Pair. ThE phenomenon of jerky flow, serrated flow, or the Portevin-le Chatelier (P-C) effect in austenitic stainless steels is usually attributed to substitutional at1,2 mospheres1,2 or to precipitates&apos;-4 which form at dislocations during plastic deformation. On the other hand, evidence exists which supports a direct inter-stitial-dislocation interaction mechanism for serrated flow in fcc Ni-C,5,6 Ni-H7-9 and in nickel-austenites containing carbon." The present work consists in a study of serrated plastic flow in stable austenitic al-loys. The effects of carbon and of chromium were investigated separately, and a commercial stainless steel with different levels of interstitial impurity concentration was studied in an attempt to delineate the combined effects of the alloying elements. EXPERIMENTAL TECHNIQUES a) Materials and Fabrication. A commercial AISI 330 stainless steel and several specially prepared aus-tenitic alloys have been studied. The experimental alloys were prepared by arc melting the constituents under purified argon. Analyses of the materials are given in Table I. The commercial alloy was obtained as 5/8 in. bar stock and rolled to 0.092 in. sq, with several intermediate anneals. At this stage some of the material was annealed in Pd-purified hydrogen at 1100°C to establish different levels of interstitial content. All other heat treatments were in vacuum (10-5 torr). The "pure" alloy ingots were swaged to 0.120-in. rod and annealed in Pd-purified hydrogen at 1100°C. The analyses for these conditions are also contained in Table I. Following the above treatment, the final wire sizes Table I. Chemical Analyses of Test Materials Hrin Hydrogen at Cr, Ni, Alloy 1lOO°C wt pct wt pct C, ppm* N, ppm* Type 330 As-received 14.78 33.25 430 300 Type 330 64 14.78 33.25 40 50 Type 330 200 14.78 33.25 27 21 Fe/35 Ni 72 - 35.10 <10 62 Fe/35 Ni 200 35.10 <I0 44 Fe/35 Nil15 Cr 72 14.95 34.94 <I0 61 Fe/35 Ni/15Cr 200 14.95 34.94 <10 45 Fe/35 Ni/C $ 35.OM 380 *Sensitivity: N t 5 ppm Ct10ppm. f Nominal Ni content. % A master NiC alloy was used in preparation of this material; courtesy of D.E. Sonon. were obtained by either swaging or cold drawing. The test results did not vary with these techniques. b) Specimen Preparation. Two sizes of specimen and two gripping systems were used. i) 0.070-in. wire with a chemically milled gage section: 0.75 in. long, 0.060 in. in diam. These were fastened into grips containing tapped grooves. ii) 0.050 in. wire, gage length 1.5 in. Ball bearings were welded to the ends of the wires and the gage length was taken to include all material between the welds. Socket-type grips were used with these specimens. With specimens of type ii), joining was performed in a specially constructed brass jig, under argon, and automatic timing was utilized in the procedure. No adverse effects of welding were noted. Specimens were encapsulated and solution treated for 1 hr at temperatures selected to produce the same average grain size, -50 µ. Annealing twin boundaries as well as normal crystal boundaries were counted. The temperatures used are listed in Table 11. Table 11. Specimen Size. Temperature of Heat Treatment and Resulting Grain Diameters for Test Materials Recrystallization Resulting Material Condition Temperature Grain Sue AISI 330 Not H purified 0.070 120O°C 45 to 55µ in, wire AlSl 330 H , pure, 0.070 in. 1150°C 45to55µ wire Fc/35Nil15Cr Pure, 0.070 in. wire 1000°C 45tossp Fe/Ni Pure. 0.070 in. wire 775°C 45 to 55µ Fe/Ni/C Pure, 0.050 in. wire 850°C 10 to 20p AlSl 330 Not purified, 0.050 1150CC 45to55p in. wire AlSl 330 ti, pure, 0.050 in. 1150°C 45to55p wire

Jan 1, 1970

By Ray W. Ballmer

"For his leadership in developing and managing large, complex, and technically innovative mines, particularly the outstanding and successful Bougainville mine and for his lecture, &apos;The Moving Targets of Mine Development &apos;. " Recipient of the 1981 D. C. Jackling Award

Jan 1, 1982

By Ivan B. Cutler, Milton E. Wadsworth

Coprecipitation of anionic and cationic polyelectrolytes has been applied to flocculation of several mineral systems. Results obtained in a study of the flocculation of kaolinite and hematite suspensions of polycationic and polyanionic electrolytes are presented. Greatly increased settling rates were observed following precipitation of positive and negative polyelectrolytes on the surface of finely divided minerals in aqueous suspension. The ratios of polycationic to polyanionic electrolytes required to produce maximum sedimentation have been shown to correspond closely with the equivalence points obtained by light scattering studies of systems containing the positive and negative polyelectrolytes by themselves.

Aug 1, 1956

Jan 1, 1971

By Robert Glass Cleland

[Incorporated under the laws of the State of New York OFFICE, 41) WALL STREET, NEW YORK 5, N. Y. Authorized4,000,000 shares $150,000,000.00 Outstanding-5,071,260 shares 126,781,500.00]

Jan 1, 1952

By H. J. Wasson

WITH the close of 1932 and the third year of the depression, the activity of oil production presents, amidst the general wreckage and chaos of industrial society, a somewhat unique picture of rationalized economic effort. East Texas still dominates the contemporary horizon, but it has become, at least for the time being, a definitely known factor. With its 9500 wells it is approximately 90 per cent drilled up. So long as production control obtains, it is merely one important factor of the national oil reserve. Each succeeding month of stabilized production tends to lull the industry&apos;s fears and the menace, both actual and psychological, of this giant field becomes ever more remote.

Jan 1, 1933