Estate of Fairbank ex rel. Fairbank v. United States

Davis, Judge,

delivered tbe opinion of the court:

Through this Congressional reference 1 we are asked to pass upon still another phase in a continuing dispute over a famous tract of land — Section 36, Township 30 South, Range 23 East, in the Elk Hills of Southern California — a dispute which has remained alive for three generations. As before, the controversy centers on the issue of whether Section 36, which is now concededly oil-bearing, was known to be mineral land in January 1903.

The problem arose because Congress, in the Act of March 3, 1853, 10 Stat. 244 , 246, granted to the then new State of California, out of the public lands, Sections 16 and 36 for school purposes — with certain exceptions, among which were “mineral lands.” Minkig Co. v. Consolidated Mining Co., 102 U.S. 167 (1880). The Act made no provision for determining what part of these sections, if any, was to be excluded from the grant on the basis of minerality; there was no provision for the issuance of patents or for any comparable action by the Interior Department to evidence the transfer of title to the State. If the land was not excluded, title would automatically pass upon the Department’s approval of the survey of the area. United States v. Wyoming, 331 U.S. 440, 443-44 (1947); West v. Standard Oil Co., 278 U.S. 200, 208-09 (1929); Wyoming v. United States, 255 U.S. 489, 500-01 (1921).

Although the surface of the statute excludes all “mineral lands,” the Supreme Court has construed it, along with comparable legislation, as barring only those lands known to be mineral at the time of the survey (or when title otherwise passes), and not lands thereafter discovered or adjudged to be mineral. 2 It is also settled that oil and gas are “mineral” *4 within the meaning of such Congressional legislation excepting mineral lands from federal grants. Burke v. Southern Pacific R.R., 234 U.S. 669, 676-79 (1914).

The area of Township 30, including Section 36, was surveyed by the Federal Government in 1901, and the Interior Department approved the survey on January 26,1903. The surveyor returned all of the lands covered by his survey, including Section 36, as mineral . This designation was not binding; it was more in the nature of a warning to prospective purchasers from the State that, in the eyes of the Federal Government, California had not acquired title to the land under the 1853 Act. Initially acquiescing in the surveyor’s return, California applied, early in 1903, for lieu land to replace Section 36, but in 1905 the State — apparently changing its mind as to the character of Section 36 — sought to substitute other base lands for the lieu land it had selected. In 1909, California sold Section 36. In the same year, one of the purchasers in turn conveyed his part of the land to Carman and Fairbanb. It is the latter’s estate which is the plaintiff here.

Meanwhile, the Federal Government was developing its own position on Section 36 and the nearby lands. For some time before the approval of the survey, lands in that region (Kern County, California) had been suspended from disposition as agricultural land “until further orders,” because of a petition (known as the “Miners’ Petition of 1899”) claiming that much of the area was mineral. Late in 1903 (after the approval of the survey returning Section 36 as mineral) the General Land Office directed an agent (Ryan) to examine the lands covered by this withdrawal. As a result of his recommendations, Section 36 (among others) was relieved from suspension in April 1904. In 1908, after some further study by the Geological Survey, lands including Section 36 were again temporarily withdrawn, pending a more definite classification. In 1909, the Geological Survey concluded that much of the land, including all of Township 30 (thus covering Section 36), was oil land. The Interior Department then withdrew the township (and other areas) from all forms of disposition. President Taft approved this withdrawal in 1910, placing the land in a petroleum reserve. *5 By an Executive Order of September 2,1912, the President put the township in Naval Petroleum Reserve No. 1, “for the exclusive use or benefit of the United States Navy.” 3

In January 1914 the General Land Office directed the institution of administrative proceedings against California (and its transferees) to consider whether Section 36, among other lands, was known to be mineral on January 26, 1903 (the date of the approval of the survey). These proceedings limped along until June 1921 when Secretary Fall dismissed them without deciding the issue of minerality. In February 1924, Congress, spurred by the oil controversies of the early 1920’s (see footnote 3, supra), directed the Secretary to begin proceedings to establish the Government’s title to Section 36. 43 Stat. 15 (1924). Administrative proceedings were again commenced in May 1925. The Standard Oil Company of California, which claimed ownership of parts of the section and leased other parts (including the portion now claimed by plaintiff), 4 sought to enjoin these renewed proceedings on the theory that Secretary Fall’s action in 1921 had terminated all control by the Interior Department over the land. The Supreme Court held otherwise in 1929 (West v. Standard Oil Co., 278 U.S. 200 ) and the administrative proceedings were then resumed. Ultimately, in January 1935, Secretary Ickes, reversing decisions of the Register who had presided at the hearings and of the Commissioner of the General Land Office, ruled that Section 36 was known to be mineral on January 26,1903.

The United States then brought suit against plaintiffs’ predecessor (and others) to quiet the Government’s title to the Section. Rejecting a plea by the defendants for a de novo trial on the facts, the Southern District of California held that the administrative determination was binding since it was supported by substantial evidence and in accord with the law. United States v. Standard Oil Co., 20 F. Supp. 427 (1937), 21 F. Supp. 645 (1937). This judgment was affirmed, in a divided vote, by the Court of Appeals for the *6 Ninth Circuit. 107 F. 2d 402 (1939). The Supreme Court denied certiorari on January 29, 1940, 309 U.S. 654 .

Some twenty years earlier, litigation involving nearby sections in the Elk Hills had come to a similar conclusion. The United States sued to cancel a patent issued to the Southern Pacific, in December 1904, for lands in Township 30, including two sections immediately adjoining Section 36 {i.e., Sections 25 and 35); the ground of the action was that the company had fraudulently misrepresented that the lands were non-mineral. 5 After a judicial trial, the District Court held for the Government and ordered cancellation of the patent. The Court of Appeals reversed, but in 1919 the Supreme Court reinstated the District Court’s decision. United States v. Southern Pacific Co., 251 U.S. 1 . The Court ruled that the lands were in fact mineral and were known to be such when the Southern Pacific applied for the patent. The particular area reverted to the Federal Government at that time.

Mr. Fairbank (plaintiff’s decedent) and plaintiff did not stop with the final termination, in 1940, of their administrative and judicial efforts to obtain the areas of Section 36 in which they claimed an interest. Unlike the Southern Pacific, there was no hint of fraud or overreaching on their part; Fairbank and his partner 'had purchased in good faith from the State of California. Monetary relief was ultimately sought from Congress. The main ground offered was that Mr. Fairbank (and the others interested in Section 36) had never had a de novo judicial trial of the issue of the miner-ality (as of January 1903) of Section 36. In April 1956, a bill was introduced in the House of Eepresentatives to grant the Fairbank estate such monetary relief. On May 21,1956, the House of Eepresentatives referred the bill to this court under 28 U.S.C. §§ 1492 and 2509, with the request that our findings and conclusions should cover “de novo the question whether such land was known mineral land on January 26, 1903.”

The petition filed pursuant to this reference asks $15,000,-000 for losses and expenses incurred as a result of Fairbank’s *7 being deprived of the part of Section 86 to which he asserted title. The court directed that a separate trial be had, in the first instance, on the issue of whether the claimed land was known to be mineral on January 26, 1903. A trial de novo on that question was held before Trial Commissioner Saul Richard Gamer. The entire record of the administrative hearing in the Interior Department, culminating in Secretary Ickes’s ruling of January 1935, was received in evidence, as well as a comparable administrative record on Section 16 of Township 30. In addition, both sides presented oral testimony and documentary exhibits.

Commissioner Gamer has rendered a most comprehensive, careful, and detailed report in which he has thoroughly canvassed the history of the controversy and the subsidiary facts bearing in any way on the mineral character of Section 36. On the basis of the whole record he has also drawn elaborate factual conclusions as to the state of knowledge in 1903, actual and potential, as to the minerality of the Section. Plaintiffs have excepted to none of the commissioner’s findings. The defendant has filed certain minor exceptions which we have considered. 6 It is fair to say that the parties have accepted the heart of the commissioner’s findings, and almost all of the rest. We, too, accept and adopt, with a few modifications, the helpful and ably-drawn findings as the basis for our determination.

The commissioner’s findings, which are now the court’s, conclude, as the result of the de novo trial, that: (i) Section 36 is undoubtedly mineral land, in the sense that it contains oil of sufficient quantities for development (finding 66); (ii) Mr. Fairbank and the great mass of those interested in oil lands in that part of California, at that time, did not believe, in January 1903, that Section 36 contained oil capable of development, but these views were not based on adequate scientific studies (finding 67); (iii) a few practical operators, likewise untutored in the relevant science, did believe that the Elk Hills area (of which Section 36 forms a part) might well turn out to be valuable (finding 67(f)) ; (iv) *8 there were reasonable grounds for competent geologists, in January 1908, to recommend to a client-operator the purchase of Section 36 and the making of expenditures to drill for oil with the prospect of a profitable commercial venture (finding 68); (v) it would have been equally reasonable for a competent geologist to recommend against the purchase and development of Section 36 (findings 68, 69); and (vi) it would have been reasonable for an interested oil operator, in January 1903, to adopt either set of recommendations (finding 71).

These ultimate findings, carefully balanced as they are, necessarily stir the problem of the precise meaning of the legal rule that land must be known to be mineral before it is excluded from the grant. Once the basic findings are accepted, as the parties and the court all do, this legal issue becomes the major focus of the case. But since this is a Congressional reference coming after extensive litigation on the same subject, it is also important that we discriminate between those legal issues which are open and those which have already been finally decided. The resolution of the House of Eepresentatives referring the matter here speaks of a de novo inquiry into the question of whether the land was known mineral land on January 26, 1903. But that resolution of a single branch of Congress is not a statute and does not seek to change the applicable rules of law or to set aside the doctrines of res judicata and collateral estoppel. Insofar as the House of Eepresentatives asks our views on the claim as a legal one, we cannot ascribe to the resolution of reference any effect on the governing rules of law. In that context, the request for a de novo inquiry must be limited to a suggestion that the court make a de novo investigation of the facts. On the other hand, to the extent that we are asked to consider the claim in its “equitable” facets — -with the somewhat special meaning which has heretofore been given that term in Congressional reference cases — we are freer to comment upon the content and application of the legal rules which would control the legal claim.

It is clear that, at the present time, plaintiffs have no legal claim. Any cause of action for just compensation for the worth of the lands taken from them was long since barred *9 by the six-year statute of limitations, 28 U.S.C. § 2501 , when the bill on their behalf was introduced in the House of Representatives in April 1956. In addition, any legal claim would be precluded by the doctrine of collateral estoppel. The litigation in the 1930’s specifically determined, as between plaintiffs and the Federal Government, that Section 36 was known to be mineral in January 1903. Under the principles of collateral estoppel which normally govern suits in this and other federal courts, that issue could not now be reopened, even if we might reach a different conclusion than did Secretary Ickes and the courts which reviewed his decision. Commissioner v. Sunnen, 333 U.S. 591 (1948).

The request by the House of Representatives that we find the facts de novo does not improve plaintiff’s position— insofar as its claim is a legal one. The burden of the plaintiff’s argument is that the estate is entitled to prevail as a matter of law “unless Section 36 was commonly supposed by those who were acquainted with it to be mineral, on January 26,1903.” We have found as a fact that the great majority of interested persons did not so regard Section 36 at that time. The insuperable difficulty, however, is that the Ninth Circuit, in the earlier case, rejected the very legal standard which plaintiff presents to us today. The Court of Appeals said ( 107 F. 2d at 415 ):

It was not necessary to show that appellants [plaintiff’s decedent and the others in the same class] themselves, in 1903, believed the land to be valuable for oil, or that there was unanimity of contemporary opinion to that effect. The erection of such standards would require, in the one case, proof of fraud, and, in the other, proof of conditions pointing so unerringly to the existence of valuable oil deposits as to be the equivalent of actual discovery. Nor, as we understand the rule laid down in the controlling decisions, need it be shown that contemporary belief was such as to prompt a willingness immediately to risk money in the exploitation of the land. .

This pronouncement refusing to accept plaintiff’s contention is binding on us, under the principle of collateral estop-pel, to the extent that we are asked to uphold the claim as a legal one.

*10 The end-result, for a legal claim, would be the same if we were to measure the facts we find today against the standard affirmatively used by the Ninth Circuit in deciding minerality — a standard which collateral estoppel likewise demands that we accept. In that opinion, the court (10T F. 2d 414-415) applied the test of whether the known conditions in January 1903 were such as reasonably to engender the belief that the lands contained oil of such quality and in such quantity as would render its extraction profitable and justify expenditures to that end; the court also said, as indicated by the portion of its opinion quoted above, that there need not be a “willingness immediately to risk money in the exploitation of the land.” This test of known minerality is adequately met by Section 36, under the facts found by Commissioner Gamer and now adopted by the court. The ultimate finding (finding 71 (a)) is that it would have been reasonable for a prudent operator in January 1903 to acquire the land for ultimate oil development on a commercial basis. That finding fits the Ninth Circuit’s rule, which is phrased in terms of a reasonable belief. 7 It does not detract from the effectiveness of the finding that we also decide that it would have been equally reasonable for such a prudent operator to leave Section 36 severely alone (finding 71 (b)). The Ninth Circuit’s criterion simply requires the existence of a reasonable belief, based on known and observable conditions, that the land could be developed profitably. That belief is not required to be overwhelming or dominant, so long as it is reasonably grounded.

Accordingly, we hold that plaintiff has no legal claim, whether the case be viewed on the record before the Ninth Circuit in 1939 or on the record now before us. The Fair-bank estate is barred both by limitations and by collateral estoppel. Years ago, its Claim was litigated in the federal courts and found wanting. The rulings in that earlier case dispose of plaintiff’s legal claim.

The resolution of the House of Representatives also seeks our consideration of whether plaintiff has any extra-legal equitable demands upon the United States. As for equitable *11 reasons to remove the bar of limitations (see 28 U.S.C. § 2509 ), we say only that there is no explanation why plaintiff waited from January. 1940, when the earlier litigation ended, until April 1956, when the relief bill was introduced, to seek legislative relief. Sixteen years is a long delay. However, we do not stress this point because the major argument in plaintiff’s petition and in the committee report accompanying the resolution (H.E,. Eep. No. 2124, 84th Cong., 2d Sess.) for a determination by this court is that plaintiff has never heretofore had a judicial assessment of the evidence bearing on the mineral character of Section 86, since the District Court and the Ninth Circuit both accepted the administrative findings. Today, we make such de novo judicial findings. Under them, as we have already pointed out, plaintiff would not be entitled to prevail according to the legal standard adopted by the Court of Appeals in 1989. If the District Court had held a de novo hearing and rendered the same findings we now do, the Ninth Circuit would still have ruled in favor of the Government. Plaintiff has not been hurt by the failure to grant Mr. Fairbank a de novo trial in the earlier litigation. The estate has, therefore, no equitable right to relief on that ground.

Plaintiff also asserts, in effect, that the legal test promulgated by the Ninth Circuit was erroneous and should not be followed. Although Congress has enacted no legislation altering or erasing that rule, either generally or for this particular case, we shall assume the liberty — in passing upon the equitable aspect of plaintiff’s demand — of discussing the Ninth Circuit’s legal standard; such a reconsideration may fall within the de novo inquiry the House of Eepresentatives has sought from us.

We do not agree with plaintiff that the Ninth Circuit erred in its rule of law. Its criterion seems to us the same as that of the controlling Supreme Court decisions. 8 The highest Court, as we observed at the beginning of this opinion, held in the latter part of the 19th century that mineral lands have to be known to be valuable for minerals, at the critical time, *12 to be excluded from a Government grant. Deffeback v. Hawke, supra, 115 U.S. 392, 404-05 (1885). This position was taken “to prevent any doubt being cast upon titles to lands afterwards found to be different in their mineral character from what was supposed when the entry of them was made and the patent issued” (id. at 405). In Diamond Coal & Coke Co. v. United States, 233 U.S. 236 (1914), the Court explored more precisely what it meant by “land known at the time to be valuable for its minerals.” Mr. Justice Van Devanter’s opinion said that “there is no fixed rule that lands become valuable for coal [the mineral in that case] only through its actual discovery within their boundaries” (id. at 249). Rather, “it must appear that the known conditions at the time * * * were plainly such as to engender the belief that the land contained mineral deposits of such quality and in such quantity as would render their extraction profitable and justify expenditures to that end” (id. at 239-40). The Court pointed to evidence giving the coal company “reasonable ground for believing” that the land in question could be mined profitably (id. at 244), and the opinion recited with approval the Government’s expert’s view “that when the known surroundings are such that practical coal men would invest in particular lands for coal mining, or advise others to do so, those lands are to be deemed coal lands, even though coal has not as yet actually been disclosed within their limits” (id. at 245). Elsewhere, the opinion refers to conditions which “were open to common observation, and were such as would appeal to practical men and be relied upon by them in making investments for coal mining” (id. at 248-49). The emphasis was all upon the reasonable estimates of practical, knowledgeable operators.

This teaching was applied by the Supreme Court to Township 30, and to oil, in United States v. Southern Pacific Co., supra, 251 U.S. 1 (1919). In that suit to cancel the railroad’s patents to portions of Township 30, including two sections immediately adjacent to Section 36, the Court declared that lands are known to be valuable for oil when “the known conditions at that time were such as reasonably to engender the belief that the lands contained oil of such qual *13 ity and in such quantity as would render its extraction profitable and justify expenditures to that end” {id. at 13-14). The Court summarized the Government’s evidence as showing “that an ordinarily prudent man, understanding the hazards and rewards of oil mining and desiring to engage therein for profit, would be justified in purchasing the lands for such mining and making the expenditures incident to their development, and in that a competent geologist or expert in oil mining, if employed to advise in the matter, would have an ample warrant for advising the purchase and expenditure” {id. at 13) . 9 Again, the theme pervading the opinion is that the reasonable belief of informed oil-men, founded on the known and observable conditions, is decisive.

It is explicit or implicit in these two Supreme Court opin ions — Diamond Coal and Southern Pacific — that (a) the actual discovery of oil is not essential; (b) there need not be a firm conviction or firm proof that oil is present; (c) the overriding standard is the reasonableness of a belief that the land contains oil which can be developed commercially; (d) this is an objective test, based on the known and observable conditions as they should be evaluated by practical, prudent, informed business men; (e) uninformed speculation or inadequate investigation or appraisal is not a substitute for proper inquiry; and, finally, (f) the actual state of the knowledge or belief of local or otherwise interested operators is not determinative.

There can be no question, we think, that the Diamond Coal and Southern Pacific decisions, together with their underlying principles, establish the governing rules for Section 36. In West v. Standard Oil Co., sufra, 278 U.S. 200, 218 (1929), in which the Supreme Court cleared the way for the administrative proceedings ending with Secretary Ickes’s determination in 1935, the Court referred to the significant question to be decided as “the known mineral character of the land within the meaning of the decisions in Diamond Coal Co. v. United States, 233 U.S. 236 and Southern Pacific Co. v. United States, 251 U.S. 1 .”

*14 Plaintiff, however, denies that these two Supreme Court opinions announce an objective test based on observable conditions. Those were fraud cases and the Court held no more, plaintiff says, than that the two companies subjectively knew, when the patents were issued, that the lands were mineral. The answer is that the opinions do not yield to so restrictive a reading. Since the cases did involve fraud, the Court might have confined its holdings to instances of actual guilty knowledge. But it went further. In both decisions the opinions, so it seems, deliberately chose to state the test in broad objective terms — stressing “observable geological and other physical conditions”; “conditions [which] were open to common Observation”; the reactions of the “ordinarily prudent man, understanding the hazards and rewards of oil mining and desiring to engage therein for profit”; “external conditions upon which prudent and experienced men in the oil mining regions are shown to be accustomed to act and make large expenditures”; “known conditions” which “reasonably engender the belief that the lands” contain oil of commercial character. It would contradict the Court’s basic rationale for us now to say that Diamond Goal and Southern Pacific stand for the proposition that minerality depends on the subjective knowledge and belief of the claimant or others in the area. Similarly, it is clear to us that the opinions were written to establish a general rule of minerality, and not merely a special holding applicable to fraud cases alone. The Supreme Court recognized this in West v. Standard Oil Co., supra (a non-fraud case like plaintiff’s), when it observed that the rule of Diamond Coed and Southern Pacific controlled the administrative proceedings on Section 36.

The history of Congress’s attitude toward federal mineral lands gives the clue, we think, to the Supreme Court’s adoption of this objective standard of reasonable grounds engendering a belief that minerals are there and can be developed. For the most part, Congress has been careful to preserve federal mineral lands for the public or for private exploitation under special legislation pertaining to mineral lands. *15 Mining Co. v. Consolidated Mining Co., 102 U.S. 167, 172-75 (1880); United States v. Sweet, 245 U.S. 563, 567-74 (1918); United States v. Union Pacific Railroad Co., 353 U.S. 112, 115-16 (1957). See, also, Oklahoma, v. Texas, 258 U.S. 574, 599-602 (1922) ; Charleston Mining Co. v. United States, 273 U.S. 220 (1927). At the same time, in order to protect the unsuspecting grantee or entryman, the rule has developed that lands not known to be mineral at the time of patenting (or like event) cannot be deemed to be excluded mineral lands. See supra. To harmonize both of these goals— preservation of the special public interest in lands which are mineral in fact, as well as protection of the private holder of land which was once public — it is fitting to utilize the objective test chosen by the Supreme Court. That standard safeguards the public interest in a double way: first, by excluding lands reasonably believed to contain valuable minerals capable of development the formula retains all or most of the territory likely to be worth the separate treatment Congress envisaged; second, a more nearly accurate judgment will be obtained by using as the measuring stick the belief of a knowledgeable operator based on objective conditions, and not the subjective guesses of the interested but unskilled. On the other hand, the private grantee or purchaser is protected by this objective external standard because, presumably, he too can apply it at the critical time to evaluate the character of the land he is about to obtain. The validity of his title is more readily ascertainable than if it depended on the subjective consensus of the half-informed. And if there be doubt as to which interest, public or private, merits greater consideration, the “established rule” is that “land grants are construed favorably to the Government, that nothing passes except what is conveyed in clear language, and that if there are doubts they are resolved for the Government, not against it.” United States v. Union Pacific R.R., 353 U.S. 112, 116 (1957).

The Ninth Circuit’s opinion in the earlier proceeding fully conformed to the rulings in, and principles of, the Diamond Coal and Southern Pacific cases. Plaintiff has no just com *16 plaint on that score. Our detailed findings show, too, that, if the matter had come before us for initial consideration, we would have been compelled by the Supreme Court’s decisions to reach the same result as the Ninth Circuit. Oil men who were prudent, informed, and experienced could reasonably have believed it worthwhile to acquire and develop Section 36. That is enough, even though others in the same class would have reacted adversely. We do not summarize all the considerations, pro and con, which are set forth in the findings. But it is significant that the only competent geologist who, after careful survey and investigation, actually reached a conclusion, at the time, concerning lands in the immediate vicinity of Section 36 — a geologist for Southern Pacific — thought that the lands were prospective oil territory (finding 68(d)). It is also telling that in the Southern, Pacific case the Supreme Court decided, on the basis of a judicial trial, that neighboring lands of Township 30, including two sections next door to Section 36, were mineral in character. The record in that case differed, of course, from the present record, but the major facts about the Elk Hills on which the Supreme Court largely relied are not disputed. Hindsight is not the test, and we do not invoke the rich oil history of the Elk Hills, of Township 30, and of Section 36. That development, however, sprang from geological and other conditions which “were open to common observation.” Diamond Goal, 233 U.S. at 248 . If properly appraised as of January 1903, these observable characteristics could reasonably have “engender [ed] the belief that the lands contained oil of such quality and in such quantity as would render its extraction profitable and justify expenditures to that end.” Southern Pacific, 251 U.S. at 13-14 .

In sum, it is our judgment that plaintiff has neither a legal nor an equitable claim against the United States on account of Section 36.

This opinion and the findings of fact incorporated herein will be certified by the Clerk to the House of Eepresentatives pursuant to House Eesolution No. 488, 84th Congress, 2d Session.

*0

*17 FINDINGS OF FACT

The court, having considered the evidence, the report of Trial Commissioner Saul Bichard Gamer, and the briefs and argument of counsel, makes findings of fact as follows:

History of the Case

1. By section g of the act of March 3, 1853 ( 10 Stat. 244 , 246), Sections 16 and 36 in each township in the State of California were, with certain exceptions, granted by defendant to the State for public school purposes. 10 The parties are agreed that, under the law as subsequently established by the courts, this grant did not include lands known to be mineral upon the effective date of the grant, which was the effective date of the statute as to all such lands theretofore officially surveyed and, as to unsurveyed lands, upon the date the official survey was subsequently accepted and approved by the Commissioner of the General Land Office. The act further provided for the making of such surveys.

2. In 1901 defendant caused certain of its land located in Kern County, California, to be surveyed in accordance with the provisions of said act of March 3,1853. Included in this survey was Section 36, Township 30 South, Eange 23 East, Mount Diablo base and meridian in said county. (For convenience, said section will hereinafter sometimes be referred to simply as Section 36, and townships and ranges will be abbreviated as “T.” and “K.”) On January 26, 1903, the Commissioner of the General Land Office approved the survey.

3. The plaintiff estate claims that the deceased Charles O. Fairbank had an ownership interest in certain parts of Section 36. It is claimed that said Fairbank and one Frank J. Carman, also deceased, each owned, through agreements between them, an undivided half interest in fee simple to 158.82 acres of land, consisting of lots 5, 6, 7, 8, 11 and 12, in Section 36. On February 8, 1909, there was issued by the State to one Mason Buffington a Certificate of Purchase of *18 certain lands in Section 36, including said lots, the sale price being $1.25 an acre, and the lands being described as “Lands sold by the State for which no patent has been issued * * On August 21,1909, Buffington granted to Carman an option to purchase the aforesaid lots for $20 an acre, the option to be exercised on or before April 1,1910, “or as soon thereafter as he [Buffington] may be able to secure patent from the State of California * * The patent from the State was granted to Buffington on January 20,1910, and on January 25,1910, Buffington conveyed said lots to Carman. The first relationship of record between Carman and Fairbank with respect to said lots was created by a quitclaim deed dated September 4, 1909, whereby Carman conveyed his interests in said lots to Fairbank. Joint ownership between Carman and Fairbank is based lipón a further series of transfers.

4. On January 14,1914, the Commissioner of the General Land Office directed the Begister and Beceiver of the Land Office at Visalia, California (the land at that time being in the Visalia land district), to institute adverse proceedings against the State of California and its transferees which included the issue of whether Section 36 was known to be mineral on January 26, 1903. The Begister and Beceiver (hereinafter referred to as the Begister) was a regional official of the General Land Office. The Visalia office thereupon requested its field office at San Francisco to supply the names and addresses of all interested parties. However, due to an apparent misplacing of this letter in the field office, no action resulted. A report of the status of the case was made by the Visalia office to the General Land Office on November 26, 1917. Oil and gas commenced being produced from Section 36 in 1919. On March 2,1921, the General Land Office preferred amended charges. Upon being advised of said charges, representatives of claimants to the land appeared before Secretary of the Interior Fall who, after hearing argument, directed the dismissal of the proceedings on June 9, 1921.

5. By Joint Besolution No. 6, 68th Congress, approved February 21, 1924 ( 43 Stat. 15 ), the Congress directed that the Secretary of the Interior institute proceedings to estab *19 lish the Government’s title to Section 36. The Resolution read as follows:

Resolved by the Senate and House of Representatives of the United States of America i/n Congress assembled, That the Secretary of the Interior be, and he hereby is, directed forthwith to institute proceedings to assert and establish the title of the United States to sections 16 and 36, township 30 south, range 23 east, Mount Diablo meridian, within the exterior limits of naval reserve numbered 1 in the State of California, and the President of the United States is hereby authorized and directed to employ special counsel to prosecute such proceedings and any suit or suits ancillary thereto or necessary or desirable to arrest the exhaustion of the oil within said sections 16 and 36 pending such proceedings.

6. On May 8, 1925, Secretary Work vacated Secretary Fall’s order of dismissal and directed the Register at Visalia, California, to hold a hearing on charges as to Section 36 that:

(1) The land is mineral in character, containing valuable deposits of petroleum and natural gas, and

(2) The land was known to be mineral in character at and prior to the date of the acceptance of the plat of survey by the General Land Office on January 26, 1903.

On August 17, 1925, the Secretary denied a motion for a rehearing of the decision of May 8,1925.

7. On October 9,1925, the Standard Oil Company of California, the lessee under an oil and gas lease from Fairbank and Carman covering their aforesaid lots in Section 36, filed an action to enjoin the Secretary of the Interior from continuing the adverse proceedings. The company contended that Secretary Fall’s action dismissing the prior proceedings constituted a final determination by the Department of the Interior as to the nonmineral character of the land which served to deprive the Department of jurisdiction over the land. Subsequently, Secretary West, who succeeded Secretary Work, was substituted as defendant. However, on January 2, 1929, the Supreme Court, in West v. Standard Oil Go., 278 U.S. 200 , after reviewing the proceedings before Secretary Fall, decided that he had made no determination of the contested issue as to the mineral character of the land, *20 but that he based his order of dismissal on the legal ground that the known mineral character of the land as of January 26,1903, was of no legal consequence and was immaterial because the Government had become estopped, by certain events occurring prior to 1921, from questioning the company’s title. The Court held that such action did not preclude a resumption by the Department of the inquiry looking to a final determination of the factual issue as to the known mineral character of the land.

8. After the decision in the West case, the proceedings ordered by Secretary Work resumed, and hearings were commenced on October 7, 1929, before a Substitute Register, Walter Spencer, at various places in California. The Register at Visalia, because of a former connection with the Standard Oil' Company, was disqualified and the Register of another region served in his stead. Evidence was closed on April 25,1931, after testimony was given by 160 witnesses in 9,570 pages of record and the introduction of 995 exhibits. The Substitute Register personally heard all but four of the witnesses and personally examined Section 36 and the surrounding region. By that time there was no issue as to the mineral character of Section 36, the only issue being whether such character was known as of January 26, 1903. On February 24, 1932, the Substitute Register, by a written opinion, decided that “There appears to be no other conclusion but that Section 36 * * *, by the acceptance of the survey on January 26, 1903, became the property of the State of California, its subsequent mineral character being unknown at that time.”

9. The Substitute Register’s decision against the Government was appealed to the Commissioner of the General Land Office, C. C. Moore, who, by written opinion of February 23,1933, affirmed the Register’s decision. In accordance with the usual practice in such matters, the case had been assigned for review and for the preparation of a proposed decision by the Commissioner. The proceedings were thereafter thoroughly reviewed and a proposed decision drafted which would have reversed the Substitute Regis *21 ter. However, Commissioner Moore rejected said proposed decision, and so noted in bis written opinion, which stated: “A paper with contrary views was prepared in this office, which I have carefully considered, but with which I do not agree.”

10. Commissioner Moore’s decision was appealed by the Government to Secretary of the Interior Ickes who, by a lengthy opinion of January 24, 1935, overruled the Substitute Register and the Commissioner and held “that section 36 * * * was known to be mineral in character at the time of its formal identification by approval of the survey, and that title to this section has never vested in the State of California or its transferees, but remains in the United States.” 55 Interior Dec. 121 . A rehearing was denied on May 20,1936. 55 Interior Dec. 532 .

11. In 1937, the Government filed an action in equity in the United States District Court for the Southern District of California against the Standard Oil Company of California and the other claimants to interests in Section 36, including the representatives of Fairbank, to quiet title to said section, for an accounting, and for an injunction against trespassing on the lands and drilling any additional wells thereon. After the disposition on August 25, 1937, of preliminary motions 'by the claimants to transfer the case to the law side of the docket and by the Government to strike certain defenses (United States v. Standard Oil Co. of California, et al., 20 F. Supp. 427 ), including the determination that the claimants were not “entitled to a trial de novo before this court upon the issue of the known mineral character of the land, which carried title with it” (21 E. Supp. 645, 649), the case went to trial upon “the determination of the validity of the Secretary’s decision” which, the court held, “calls for a review of the evidence presented during the contest” (id.) since the claimants contended that “there was no evidence before the Secretary of Interior to sustain his finding of title in the United States” (id). In accordance with the court’s prior ruling, the only evidence before the court was the record of the evidence before the Secretary. The court stated that the problem “is to de *22 termine whether there is any evidence to sustain his [the Secretary’s] finding that the land was known mineral on January 26, 1903” (id.). To determine this issue, the court reviewed “the full record” and concluded that there was evidence, which was reviewed by the court, upon which the Secretary could rely to make his determination. The court concluded that the “facts * * * alluded to are sufficient, under the limited scope of our power of review” to constitute “a factual basis for the decision of the Secretary”, and that this would be so even if “the evidential preponderance is on the part of the defendants” (p. 653). Accordingly, the Secretary’s decision was held to be conclusive, neither fraud, error of law, nor “absence of evidence to support” the decision being shown, these being the only “contingencies which might rob of finality the Secretary’s decision.” As to the last of these contingencies, the court stated that “we have indicated the existence of a solid factual basis for it” and that “It follows that the determination of the Secretary of the Interior was right” (p. 653). As a result, the court issued a decree declaring the Government to be the absolute owner of the lands and quieting its title, and awarded damages against the Standard Oil Company. United States v. Standard Oil Co. of California, et al., 21 F. Supp. 645 .

12. On November 16, 1939, the Circuit Court of Appeals, Ninth Circuit, in a 2-1 decision affirmed the decision of the District Court. Standard Oil Co. of California v. United States, 107 F. 2d 402 . It stated:

On the trial below the court declined to receive further testimony but admitted in evidence the record and testimony in the land office contest. It held that the Secretary’s decision as to the known mineral character of the land was conclusive if supported by evidence. The land office record was read and considered for the purpose only of determining whether there was evidence in support of the finding mere made. The Standard contends that the court’s examination went no further than to see whether the record contained any evidence to support the Secretary’s conclusion. However, it is clear from the opinion below (D.C. 21 F. Supp. 645, 653 ), as well as from the findings, that the court was satisfied that *23 the Secretary’s decision was based on substantial evidence. (p. 408)

It held that the District Court was correct in denying “a trial de novo on the question of the known mineral character of the land” and that “the record made before the department was to be examined only for the purpose of determining whether the finding of the Secretary was based on evidence.” (p. 414) Further, it agreed with the District Court’s finding that:

* * * it is not true that there is no evidence in the record in the said land office proceeding to support the decision of the Secretary of the Interior therein; but that, on the contrary, there is sufficient evidence in the said record in said proceeding to sustain the decision, (p. 414)

The dissenting judge felt that the District Court erred in treating the Secretary’s decision as conclusive, that it should have permitted evidence to be introduced “and, on the evidence, made its own determination.” (p. 429)

On January 29,1940, the Supreme Court denied certiorari. 309 U.S. 654 .

13. On April 25, 1956, there was introduced in the House of Eepresentatives, 84th Congress, 2d Session, a bill (H.E. 10826), which provides as follows:

A BILE

For the relief of the estate of Charles O. Fairbank

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Treasury is authorized and directed to pay, out of any money in the Treasury not otherwise appropriated, to the estate of Charles O. Fairbank, Morro Bay, California, the sum of $-. The payment of such sum shall be in full settlement of all claims of the said estate of Charles O. Fairbank against the United States arising from its depriving said estate of the use and enjoyment of full rights of ownership of 158.82 acres of land described as lots 5, 6,7, 8,11, and 12 of section 36, township 30 south, range 23 east, Mount Diablo base and meridian, Kern County, California: Provided, That no part of the amount appropriated in this Act in excess of 10 per *24 centum thereof shall be paid or delivered to or received by any agent or attorney on account of services rendered in connection with this claim, and the same shall be unlawful, any contract to the contrary notwithstanding. Any person violating the provisions of this Act shall be deemed guilty of a misdemeanor and upon conviction thereof shall be fined in any sum not exceeding $1,000.

On May 21,1956, the House of Eepresentatives, 84th Congress, 2d Session, agreed to House Eesolution 488, which provides as follows:

Resolved, That the bill (H.E. 10826) entitled “A bill for the relief of the estate of Charles O. Fairbant”, together with all accompanying papers, be referred to the United States Court of Claims pursuant to sections 1492 and 2509 of title 28, United States Code; and said court shall proceed expeditiously with the same in accordance with the provisions of said sections and report to the House, at the earliest practicable date, giving such findings of fact and conclusions thereon, including de novo the question whether such land was known mineral land on January 26, 1903, as shall be sufficient to inform the Congress of the nature and character of the demand, as a claim legal or equitable, against the United States, and the amount, if any, legally or equitably due from the United States to the claimant.

On August 24,1956, the petition herein was filed pursuant to said Eesolution. The petition claims $15,000,000 as losses and expenses incurred as a result of Fairbanks being deprived by defendant of the use and enj oyment of the property in Section 36 which was involved in the prior proceedings hereinabove described.

14. On December 10, 1958, the court entered an order directing that a separate trial be had in the first instance on the issue of whether the land claimed by the plaintiff was known to be mineral in character on January 26,1903. The order reads as follows:

Whereas, it appearing that, at a pre-trial conference held on November 13, 1958, plaintiff conceded that his claim set forth in the petition filed herein is dependent upon the Court’s sustaining his contention that, as alleged in paragraph 5 of the petition, the land referred to in said petition and which is the subject matter of *25 this case was, on January 26, 1903, not known to be mineral land and therefore not within the exception as to mineral lands contained in the act of March 3, 1853 ( 10 Stat. 244 ), referred to in paragraph 3 of the petition; and

Whereas, plaintiff at said pre-trial conference agreed that, if this issue is decided against him by the Court, he would not further prosecute the claim set forth in the petition; and

Whereas, it therefore appears that the decision on this single issue may be dispositive of this case; and

Whereas, plaintiff desires that said issue be separately tried, and, as a result of the agreement made by plaintiff at the pre-trial conference that, if this issue is decided against him he would not further prosecute the claim set forth in the petition, defendant has no objection to so proceeding.

It is ordered, this, the 10th day of December, 1958, that, in accordance with Eule 38(b), a separate trial be initially had on the issue of the known minerality of the subject land as of January 26, 1903.

Pursuant to the House Eesolution and the court order, a trial de novo was had pertaining to the question whether the land herein involved was known mineral land on January 26, 1903. The entire record of the Section 36 proceeding before the Substitute Eegister has been offered in evidence. In addition, both sides offered further evidence, consisting of both oral testimony and exhibits. 11

*26

The Southern Pacific Oase

15. On December 12,1904, the Government granted a patent to the Southern Pacific Eailroad Company for parts of Sections 17 and 19, and for all of Sections 15, 21, 23, 25, 27, 29, 33 and 35, comprising approximately 6,100 acres of land, in Township 30 South, Range 23 East, being the same township and range in which Section 36 is located. The lands were located in what are presently known as the Elk Hills, although the hills were not so known at that time. Until approximately 1910, these hills were known by various names, such as the Outer Hills, or the Sand Hills. In December 1910, the Government sued to cancel the patent because of the alleged fraud of the company in representing to the Land Department that the lands were nonmineral when it was known that they were oil or mineral' lands. By decree entered August 9, 1915, the District Court for the Southern District of California, Northern Division, held for the Government, but the Circuit Court of Appeals for the Ninth Circuit, with one judge dissenting, reversed on May 6, 1918 (Southern Pacific Co. v. United States, 249 Fed. 785 ). On November 17, 1919, the Supreme Court, concluding that the lands were known to be valuable for oil when the patent was first sought on November 14,1903, and granted in 1904, reversed the Circuit Court of Appeals (United States v. Southern Pacific Co., 251 U.S. 1 ).

Two of the sections involved in that case, being Sections 25 and 35, adjoin Section 36 herein involved on the north and west, respectively, and the other sections are located a relatively short distance to the west and northwest of Section 36. In its opinion, the Supreme Court stated:

“All mineral lands” other than those containing coal or iron were excluded from the grant, and this exclusion embraced oil lands. Burke v. Southern Pacific R. R. Co., 234 U.S. 669, 676-679 . * * * there can be no doubt that the patent was procured by representing that the lands were not mineral. Whether this representation was false turns upon the character of the lands as known when the patent was sought and obtained. If they then were known to be valuable for oil, as the Government *27 asserts they were, they were mineral in the sense of the granting act. (p. 7) * * *

The observable geological and other physical conditions at the time of the patent proceedings, as shown by the evidence, were as follows: The area called the Elk Hills was about six miles wide and fifteen long and constituted an anticlinal fold or elongated dome — an occurrence favorable to the accumulation and retention of oil. The lands in suit were about its center. From five to ten miles to the west was the Temblor Eange, the main uplift of that region. Along the east flank of that uplift for a distance of thirty miles was a series of outcrops or exposures of Monterey (diatomaceous) shales, the source of oil in California, and porous sandstone in which oil generally finds its ultimate reservoir. These strata were of exceptional thickness and it was apparent that oil in considerable quantity had been seeping or wasting from the sandstone. The dip of the strata was towards the Elk Hills and there were no indications of any faulting or thinning in that direction. Between the outcrop and the Elk Hills upwards of two hundred wells had found the oil-bearing strata and were being profitably operated, several of the wells being on a direct line towards the lands in suit and within three or four miles of them. In and beyond the Elk Hills were oil seepages and other surface indications of the existence of oil in the underlying strata, one of the seepages being near the lands in suit. Two wells had been sunk in the Elk Hills but obviously had not gone to an adequate depth and were not productive, although some oil was reached by one.

Geologists and men of wide experience and success in oil mining — all of whom had examined that territory and some of whom had been familiar with it for years— were called as witnesses by the Government and gave it as their opinion, having regard to the known conditions in 1903 and 1904, as just outlined, that the lands were valuable for oil, in that an ordinarily prudent man, understanding the hazards and rewards of oil mining and desiring to engage therein for profit, would be justified in purchasing the lands for such mining and making the expenditures incident to their development, and in that a competent geologist or expert in oil mining, if employed to advise in the matter, would have ample warrant for advising the purchase and expenditure.

Other geologists and oil operators, called by the company, gave it as their opinion that the lands were not, *28 under tbe conditions stated, valuable for oil; but as respects the testimony of some it is apparent that they were indisposed to regard any lands as within that category until they were demonstrated to be certainly such by wells actually drilled thereon and producing oil in paying quantities after a considerable period of pumping. This is a mistaken test, in that it takes no account of geological conditions, adjacent discoveries and other external conditions upon which prudent and experienced men in the oil mining regions are shown to be accustomed to act and make large expenditures. And the testimony of some of these witnesses is weakened by the fact that their prior acts in respect of these lands, or others in that vicinity similarly situated, were not in accord with the opinions which they expressed.

After considering all the evidence, we think it is adequately shown that the lands were known to be valuable for oil when the patent was sought and obtained, and by this we mean that the known conditions at that time were such as reasonably to engender the belief that the lands contained oil of such quality and in such quantity as would render its extraction profitable and justify expenditures to that end. See Diamond Coal Co. v. United States, 233 U.S. 236 . (pp. 12-14)

Defendant contends, among other things, that under this decision (as well as others) the “observable conditions,” as well as those conditions actually observed, must be considered in determining whether Section 36 was “known” to be oil land on January 26,1903. Plaintiff disputes this contention, but further contends that, in any event, the “observable conditions” pertaining to Section 36 were not such, in the light of the geological knowledge then existing, as to cause the section to be considered “known” oil land as of that date.

16. The Elk Hills, a compact range of hills, are a single geological formation located in the western part of Kern County, California, and in the southwestern part of the San Joaquin Valley. The relatively narrow south end of the valley, in which the hills lie, is surrounded by mountains, the Temblors of the Coast Eange being approximately 5 miles to the west of the hills, the Sierra Nevadas approximately 35 to 40 miles across the valley to the east, and the *29 Tehacbapi Mountains, forming the southern end of the valley, approximately 30 miles on the south. The Sierra Nevadas on the east rise gently from the valley, but the Coast Eange on the west rises more abruptly. The Temblors run in a southeast-northwest direction, and the Elk Hills run substantially parallel to them, but in a slightly more east-west direction. The San Joaquin Valley extends almost 400 miles to the north, also running in a southeast-northwest direction.

The Elk Hills are, from northwest to southeast, about 15 miles long and, at their central part, about 6 miles wide. They rise approximately 700 feet above the floor of the valley on the south side, approximately 1,000 feet above the valley on the north, and about 1,300 feet above the valley at their highest point, which point is approximately 1,550 feet above sea level. The structure is actually more in the nature of a single hill, the name Elk Hills being, in this respect, somewhat misleading. The formation is roughly elliptical and has been variously described as an elongated dome, as mound shaped, and as similar to an upturned canoe. The hills are immediately adjacent to the McKittrick Valley on the west, which separates them from the McKittrick Hills, and the Buena Vista Valley on the south, which separates them from another less extensive formation of hills, called the Buena Vista Hills, and which are cut almost at their central point by a gap, referred to as McNee’s Gap. These hills also lie in a northwest-southeast direction, approximately halfway between the Elk Hills and the Temblors, and generally paralleling them. Between the Buena Vista Hills and the Temblors lies the Midway Valley. At the eastern end of this valley, and extending practically up to the southeastern end of the Elk Hills and down to the northeastern end of the Buena Vista Hills, is Buena Vista Lake. At the northwest end, the Elk Hills are divided from the McKittrick Hills, also sometimes called the McKittrick Front, which parallel the Temblors, by a dry stream bed or gap, through which a railroad line runs, completed by the Southern Pacific Bailroad in 1893. The McKittrick Hills are sometimes referred to as a part of the Temblor foothills, but they lie in a direct line with the geographical axis of the *30 Elk Hills, and are actually a continuation of the Elk Hills structure. The railroad runs northeast from the town of McKittrick, located approximately 1% miles from the western end of the Elk Hills, through the gap, then east approximately 30 miles across the San Joaquin Valley to Bakersfield, on the eastern side of Kern County. Another railroad line, completed around the early part of 1902, runs from Bakersfield southwesterly, around the eastern edge of the lake, and down to the town of Maricopa, known at that time as Sunset, and located at the base of the Temblors approximately 25 miles southeast of McKittrick.

A map, introduced in the proceedings before the Register as “U.S. Ex. 5-W,” and constituting part of plaintiff’s exhibit 2 herein, illustrating the relationship between the Elk Hills, the Buena Vista Hills, the Temblors, the Mc-Kittrick Valley, the Buena Vista Valley and the Midway Valley, is reproduced at the end of these findings.

17^ Section 36 is located in the approximate geographic center of the Elk Hills and near their crest, about 1,225 feet above mean sea level. The highest topographical point of the Elk Hills is approximately 2 miles northwest of Section 86, but the section lies approximately on the summit or crest of the Elk Hills ridge. The surface soil of the township in which it is located, which is typical of the Elk Hills in general, is sandy in nature, containing growths of low sagebrush and seasonal grasses. There is no timber. It is not suitable for agriculture and has only limited uses for grazing. The slopes of the Elk Hills are in many places scored by gulches or washes, from as little as 20 to as much as 200 feet deep.

18. As of January 26, 1903, there were in the foothills of the Temblors, facing and approximately parallel to the Elk Hills, three recognized oil fields or districts, i.e., the Mc-Kittrick, the Midway, and the Sunset. The first wells were drilled in the McKittrick District in the 1890’s, in the Sunset area around 1898, and in the Midway District around 1900. These three fields lay in a northwest-southeast line along the foothills, the McKittrick field lying to the northwest, the Sunset field to the southeast, and the Midway being between *31 them. These three districts represented a strip of approximately 30 miles in the foothills. However, at that time large areas in the strip remained undeveloped between the three districts.

19. As of August 1900, the McKittrick oil field, which was approximately 8-10 miles northwest of Section 36, had 16 producing oil wells as well as several prospect wells. At that time, the Sunset oil field, which was approximately 10 miles south of Section 36, had 17 producing wells and numerous prospect wells. Drilling was just commencing in the Midway field, which was approximately 15 miles southwest of Section 36. The railroad line to McKittrick afforded transportation facilities to the McKittrick area. However, development of the Midway and Sunset fields was at that time adversely affected by lack of water and transportation facilities. As of this period, the production of the Sunset and Midway fields was of little commercial importance. The early development of these fields concerned itself more with the production of asphaltum than with oil.

20. In 1901, there were approximately 160 producing oil wells between Sunset and McKittrick. By January 26,1903, there were approximately 200 producing oil wells in and between the Sunset and McKittrick oil districts. However, there were large areas in the line between McKittrick and Sunset where there were no wells or production. The Midway field was still only slightly developed.

Across the San Joaquin Valley, about 30-35 miles northeast of Section 36, oil in great quantities had been discovered in the eastern part of Kern County in 1899 at Kern River, near Bakersfield, in the foothills of the Sierra Madre. A year later, more than 130 producing wells had been completed and by 1903 there were approximately 500 producing wells in the Kern River field. This field developed quickly, transportation and water being available, and soon became the major oil producing area in the State. It was the development of this great field that stimulated further activity on the east side of the county in the Temblors. Drilling in the Midway field first commenced after the Kern River wells began producing. In 1902, more than half of the oil pro- *32 cLuced in California came from Kern County, with most of it coming from the Kern Eiver field, which was commercially of far greater importance at that time than the fields in the Temblors.

On a clear day, a person standing on Section 36 in 1903 could see the oil derricks in these proved oil fields to the northeast (Kern Eiver), and to the northwest, west, southwest and south, along the McKittrick-Midway-Sunset line of development. The wells in the McKittrick field were approximately 3 miles from the southern and western margins of the Elk Hills.

21. As of January 26, 1903, great importance was placed by oil operators upon petroleum or asphaltum seeps and surface deposits as indicating possible oil territory. The oil wells on the west side of Kern County, i.e., the McKittrick-Midway-Sunset line of development, were in close proximity to, normally on the hillsides just below, and sometimes directly upon, a visible, pronounced, and easily recognizable line of petroleum seepages and asphaltum deposits in the Temblor foothills, sometimes referred to as the “break.” The first wells on the east side of Kern County, i.e., those in the Kern Eiver oil field, were also located in close proximity to pronounced oil seepages there located. Although the presence of such petroleum seeps and asphaltum deposits in the Temblors was known for many years prior to 1900, the actual development of the region as oil-producing territory was commenced in the 1890’s, as set forth above. Near McKittrick, in the Temblor foothills there are very large oil springs and asphaltum exudations which are located approximately 214 miles west of the western end of the Elk Hills and around 9 miles from Section 36. The town of McKittrick itself is approximately 1 y2 miles from the western edge of the hills. The asphaltum seeps and deposits at Sunset were approximately 15 miles southwest of the Elk Hills. There are only slight surface indications of oil on the western side of the McKittrick Valley in the McKittrick Front, and the area there was much less developed than in the Temblor foothills proper near McKittrick or in the Sun *33 set area. At the southern end of the San Joaquin Valley, there are also oil springs at Wheeler Nidge.

22. There were no petroleum seeps on Section 36 itself, and in the Elk Hills as a whole there was only one place which, as of 1903, would have raised the possibility that it was an inactive seep of a petroliferous nature. This consisted of a small exposure of black and dark brown impregnated sands, wholly devoid of vegetation, located in the NW % of Section 32, T. 30 S., R. 24 E., about a mile east of Section 36. It was not a live seep of oil or gas. This exposure was seen in 1899 by one J. I. Wagy, who did farming and was also in the hauling or teaming business. He came upon the location while driving a team across the hills. Wagy thought the occurrence had the appearance of an oil or gas blowout. At that time, the discoloration was about 6 feet long and 4 feet wide, and was located near the bottom of a ravine or gulch. It penetrated the earth to a depth of approximately 10 feet. About 75 feet farther up in the ravine was a second small area of similar material. The lower occurrence, because of the subsequent association with it by one Lamont, as hereinafter set forth, has become known as the “Lamont seep.”

Defendant contends that surface deposits, petroliferous in nature, and stains of petroleum origin, were present in the railroad cut, a dry stream bed, which bordered the northwestern end of the Elk Hills, being located in the NW % SW % °f Section 14, T. 30 S., R. 22 E., about 7 miles west of Section 36, and in the NW % oí Section 23, T. 30 S., R. 22 E., approximately 6 miles west of Section 36, and that these deposits and stains constituted or indicated seepage leakages from below the surface of the Elk Hills. However, the evidence is not sufficient to establish this contention. The record indicates that these deposits were washed down by freshets and floods from seepages or oil production upstream in the Temblor foothills.

23. At the eastern end of the Buena Vista Hills, in Section 11, T. 32 S., E 24 E., at a location approximately 8 miles southeast of Section 36 and about 5 miles from the southeastern border of the Elk Hills, there was a large, approx *34 imately 200,000-square foot exposure of oxidized asphalt deposits, similar in appearance to the aforementioned Lamont seep, but much more extensive. These deposits were the only surface evidence of the existence of petroleum in the neighboring Buena Yista Hills. This area, sometimes referred to as a gas blowout, since gas was escaping therefrom, was seen and known to exist prior to January 26,1903. The Buena Yista Hills, lying between the Temblors and the Elk Hills, were closer to the proved oil fields in the Temblors than were the Elk Hills. Their anticlinal structure was sharper and more clearly visible and observable. However, prior to 1903, only one attempt had been made to drill for oil in these hills. In 1902, the so-called Aroostook well was drilled in Section 2, T. 32 S., B. 24 E., but only water was struck and it was abandoned as a failure, which tended to discourage further attempts during this period. No further drilling was undertaken in these hills until 1908.

24. Following his discovery of the discolored area as set forth in finding 22, Wagy showed a sample of it to one Blodgett of the firm of Jewett and Blodgett, then the principal operator and one of the pioneers on the west side of Kern County- Commencing operations at Sunset in 1889 (by surface workings of the asphaltum seeps), this firm was the only one operating in that field for approximately 10 years. After obtaining the opinion of one W. E. Youle, an employee of the Blodgett firm, who at that time had attained a reputation as a practical oil drilling expert, Wagy, Blodgett, Youle, and others, in 1899 made a large number of mining claim locations for oil and gas covering some 50 sections of land in the Elk Hills, including part of the section in which the discoloration was located. These locations (the “Bajah Co.” claims) consisted of the greater part of the entire Elk Hills. An important factor in the making of such locations was the locators’ belief in the possibility of the discolored area’s being an oil or gas blowout which indicated the presence of oil below the surface. Wagy considered the occurrence to be similar in appearance to other exposures of obvious petroleum origin which he had observed in the Sunset oil field.

Similarly, in 1899, one C. W. Lamont, a prospector and miner, had also come across the same discolored area and, *35 considering it to be a possible asphalt exposure or a gas blowout, had, in association with others, made mineral locations (the “Pelican” claims) in various sections of Elk Hills, including part of the section upon which the discolored area was located.

One C. W. Sylvester, a dentist, also saw the discolored area in 1899 and, also considering that it might be an oil seepage, made, in association with others, locations in Township 30 (the “Bustler” claims).

On March 6,1900, Wagy and Lamont, and their associates, organized the Wagont Development Company, to which were assigned most of the claims they had theretofore made. Their action was based principally upon the belief that the discolored area might be an indication of petroleum. Its appearance indicated that some black or brown substance, apparently deposited originally in some liquid form, had surrounded the sand particles and cemented them together. None of the Wagont locators had any technical knowledge of a scientific, geological nature. Reliance appears to have been based principally upon Youle, whose practical experience and resulting knowledge caused him to be better informed about many phases of the oil industry than the others. In any event he was so regarded by the other locators. Lamont was employed by the company to reside on the claims, and was posted on Section 32, where the alleged seep was located. He lived in a cabin on the section for 3 years.

The above-mentioned locators of Section 32 and the other sections in the Elk Hills had no intention of developing the locations themselves but instead hoped to interest others to develop the locations or to invest in the company. However, they were unsuccessful in doing so, which reflected the general opinion of oil operators and investors at that time of the nonpromising nature of the Elk Hills as prospective oil territory, and of the insignificance of the seep. Although some assessment work was done by the Wagont Company, such as road work, no substantial amount was spent. Reloca-tions were made every 2 years, in 1901,1903, and 1905, to prevent a lapsing of the claims. However, the number of reloca-tions progressively lessened. On December 14,1905, the company’s charter was canceled for failure to pay the State’s *36 license tax. By 1907, tbe company’s remaining eight locations lost legal protection through failure to perform the required assessment work and to file timely the relocation notices. No customary notices of labor and expenditures for assessment work were ever filed in respect of the company’s claims.

After making his locations in 1899, Dr. Sylvester too attempted, throughout 1901 and 1902, to interest others, including the Standard Oil Company and the Southern Pacific Bailroad Company, to invest in the development of his claims, but similarly failed.

25. There is no evidence indicating that Wagy, Lamont, or the other locators associated with the Wagont Development Company ever performed, or had performed, any tests of a scientific or technical nature in an attempt to ascertain the true nature or origin of the discolored material in question. The material did not react to the simple field tests then in common use by prospectors in a way which would indicate that it was of petroliferous origin. It does not give off a petroleum odor when heated. It showed no appreciable solubility when the solvents for petroleum which were commonly carried in the field by prospectors of that day, such as ether, chloroform, or gasoline, were applied. The locators were relying principally upon the similarity in general appearance of the material to that of seeps of unquestioned petroliferous origin which they had seen in the Temblors. However, subsequent laboratory tests, made during the course of the lengthy proceedings hereinabove described, have quite clearly demonstrated the bituminous character and therefore the petroliferous origin of this so-called Lamont seep, although it is not bituminous in its present form. Similar tests could have been made as of January 26, 1903, and similarly interpreted, considering the state of scientific knowledge at that time. However, the record does not indicate that any such tests were made as of such date, or that anyone knew at that time that the discoloration was of petroliferous origin. Had such a determination been made as of January 26, 1903, that factor would have been an important one in the consideration of whether *37 Section 32, as well as the sections nearby, including Section 36, were promising oil territory.

26. There was much activity in posting and recording location notices on Elk Hills, including Section 36, as herein-above described, from 1899 on. Practically the whole of Kern County was thus “located” following the opening of the Kern Kiver field in 1899, when the county became overrun with prospectors. Such activity prior to around 1908 afforded slight evidence of general opinion concerning the petroleum nature of the lands located because such acts generally involved no drilling or other material investment. Prior to 1911, there was, with one exception hereinafter referred to, no drilling in the Elk Hills for oil or gas. For the most part, such locators were not informed or experienced persons who believed that the Elk Hills contained oil of such quality and quantity as would render its extraction profitable and justify expenditures to that end. They were generally speculators, often not even engaged in any aspect of the oil business. Without making any material effort or investment of their own, they hoped that other persons might come along who entertained a favorable belief as to the oil possibility of the land, and to whom they could dispose of their interests at a profit. Many were persons engaged in general types of business in and around Bakersfield. Generally, as was true of the Wagont Company locations, such locations lapsed through failure to perform the required assessment work, and this was also true of the locations which were made at or about 1903 in various parts of the Elk Hills. Under the then applicable law, the posting of notices and.the performance of the necessary assessment work ($100 per location per year), in the absence of “discovery” by actually striking oil, did not give a valid title as against the United States. None of the mineral locations made on Section 36 prior to the sales thereof by the State of California in 1909 to Hay and Buffington, as hereinafter set forth, was ever perfected by discovery, all the subsequent claimants to said section as set forth in the above-described administrative and court proceedings having traced title from patents issued by the State.

*38 Many of the locations of the type hereinabove discussed, which widely covered Kern County during the 1903 period, were colloquially referred to as “court house” locations, meaning locations made of record without posting or staking of any location notices on the ground, or doing any assessment work, or even considering the property was any good as oil land. Names of alleged locators were frequently used without knowledge or permission, or, when with permission, as an accommodation by friends or acquaintances who had no interest in the particular property, but only so that the requisite number of names could appear on the notices. For the above reasons, the making of the above-described locations in the Elk Hills by the Wagont Company had, in and of itself, little significance so far as prevailing general opinions were concerned in appraising the Elk Hills as prospective oil territory.

27. The only drilling accomplished in the Elk Hills prior to 1911 was performed by one Hoy, who organized the Western Union Oil and Development Company and commenced drilling in 1901 in Section 11, T. 31 S-, E. 24 E., which is located approximately 5 miles southeast of Section 36 and approximately 4 miles southeast of the Lamont seep. Said section is on the southwest edge of the Elk Hills, near Buena Vista Lake. Hoy was without experience in or knowledge of the oil business or accepted oil exploration techniques. The location was selected only because there happened to be a natural roadway on it and there was easy access to water, which was hauled from the lake. He raised funds from Illinois investors for this particular enterprise by taking photographs allegedly showing a gas seepage burning in Section 1, T. 31 S., E. 24 E., which adjoins on the northeast the above-mentioned Section 11. There was in fact no such seepage, a blackened discoloration of a small area in such section being located at a then well-known wild bee cave and attributable to torch fires used to gain entrance to the cave to obtain honey. The Hoy well was located near this mythical gas seepage. Hoy was without skill as a driller. He had a portable star rig that could not drill to a depth exceeding 1,300 feet. Drilling ceased upon reaching 560 feet, which was not sufficiently deep even to penetrate *39 the cap rock. No oil was struck, although, a small amount of gas, sufficient to operate a cooking stove, was obtained from the well. Further capital could not be raised to permit deeper drilling and the Hoy interests and equipment were sold out at a sheriff’s sale, the successor purchasers refusing to proceed further with the venture.

No serious importance was attached to this 1901 drilling attempt by the oil operators and investors of that day. The small gas showing was not considered significant. Furthermore, small pockets of gas were often struck in the early stages of drilling, without the production of oil resulting from deeper drilling. Such pockets were sometimes considered as constituting so-called “marsh” gas, and which is unrelated to gas of a petroleum origin. Even if the gas were considered to be of petroleum origin, many operators considered the encountering of a gas zone as a disadvantage rather than an advantage. Although by 1903 satisfactory techniques had been developed to handle gas by permitting it to blow off over a period of days or weeks, and then hoping that the well would be converted from a gas well to an oil well, it was still a very troublesome problem to most operators who preferred avoiding this additional obstacle.

No oil was struck by drilling in the Elk Hills until 1911, and there was no proved commercially successful well until 1919.

28. In 1903, drilling in California was done with cable tool equipment. The use of the present rotary drilling equipment in California commenced only about 1910. It was peculiarly difficult to drill for oil in California in 1903 with cable tools. When water was struck it was necessary to seal it off with pipe, and successive strata required strings of pipe to pass inside the preceding string, until the hole became too small for the insertion of further pipe. The California rock was softer than that of the East, and tended to cave in on the bit. Consequently, in California the wells generally had to be cased to the bottom. As a result, as of January 26, 1903, no California well had been drilled below approximately 2,500 feet, and in the Midway-Sunset area, none below approximately 1,500 feet. Approximately 3,000 feet was at that *40 time regarded as the outside limit on the west side of Kern County with the tools and the techniques then available, despite the fact that in the eastern oil fields, wells had been drilled to greater depths. As early as 1889, a well had been drilled at Erie, Pennsylvania, to a depth of approximately 4,500 feet.

29. The great San Joaquin Valley, in the southern part of which the Elk Hills are located, is a vast structural and geological basin or depression. Its geological history and features were as readily ascertainable by a competent geologist in 1903 as they are today.

There are numerous exposures or outcrops of geological formations and strata along the rim of the mountains and foothills forming the eastern and western sides of the San Joaquin Valley, as well as along its southern rim. The appearance of these formations is virtually the same today as it was prior to 1903.

30. (a) The history of the geological formations in the southern part of the San Joaquin Valley pertaining to the generation and accumulation of oil and gas beneath the surface can be traced through several geologic ages, and was understood by qualified geologists in 1903 and prior thereto. Of particular significance is the Miocene Age when the sea invaded the San Joaquin Valley area and deposited thick sediments of microscopic marine organisms, referred to as diatoms. These marine sediments constitute a series of shaly rock known in oil geology as source or generating rock. It is also referred to as the organic series. The rocks are diatomaceous shales which were called “Monterey” or “Maricopa” rocks by California geologists. Although there is not universal agreement with respect thereto, as is true about almost every aspect of oil geology, nevertheless the theory is quite extensively accepted now, as it was in 1903, and long prior thereto, that these diatomaceous shales are generally the source of the oil in California.

(b) Overlying the thick Monterey source shales is another series of sedimentary material consisting of formations of porous, organic rocks. This series is called the reservoir series because of their suitability for containing subterranean *41 fluids, and to which the oil generated in the source bed could migrate if under pressure. The lower part of the series is in part intrastratified with the upper part of the organic series. The lower part of this reservoir series is sometimes called the Santa Margarita, and the upper part as the Etchegoin, although it does not appear that the latter term was applied to this part of the series in 1903. The reservoir series consists of sandstones or sandy shale, or it may consist of a coarser grit or conglomerate. Geologists recognized long before 1903 that, in order to obtain commercial deposits of petroleum, the existence of diatomaceous shales alone was insufficient, and that it was also essential to have a suitable rock of a porous nature, so situated stratigraphically in relation to the generating rock that it could act as a reservoir for the accumulation of the oil as it moved out of the source series.

(c) Above the reservoir series is another series of sedimentary rocks, referred to as the capping, cap rock, or overlying series. This series was recognized as a fresh water lake or swamp deposit. Geologists referred to it variously as the Tulare (since they are of the Tulare age) or the Paso Eobles formation. It consists of an impervious layer, composed of loosely cemented sandstones, grits and conglomerates, and also contains layers of clay, as well as limey and marly shales. It was known in 1903 that such a seal was necessary to prevent the escape of oil to the surface, the consequent evaporation of its volatile elements, and its general dissipation. It was recognized that sometimes the escaping oil itself could coagulate and act as a seal, but an impervious rock stratum was recognized as being preferable.

Sometimes, the term “McKittrick” is applied to the entire group of strata overlying the Monterey and would thus include both the reservoir and cap rock series. In this terminology, the lower part of the McKittrick would consist of the Etchegoin and the upper part of the Tulare.

Overlying the cap rock series in many places, and sometimes concealing it, is a fourth type of more recent material, referred to as alluvium. This material has been washed down by streams and deposited in the form of flats, fans, and terraces.

*42 The above basic principles relating to oil accumulations were well accepted and known prior to 1903. It was known prior to 1903 that the sandstones and conglomerates of the series overlying the Monterey shales constituted an excellent reservoir for the oil, since oil was being produced from these strata from the McKittrick, Midway and Sunset fields in the Temblors, as well as from the Kern River field. The impermeable nature of the Tulare, which enabled it to act as a satisfactory cap rock, was also known, since wells were being drilled through such series to the underlying oil sands from which the oil was obtained.

31. In many areas on the eastern slope of the Temblor Mountains and in the foothills, from McKittrick to Sunset, the geological formations of source rock (generating series), reservoir series, and cap rock are exposed and can be evaluated by a competent geologist.

There are also outcrops and exposures of these formations, except the Etchegoin, on the southern and eastern edges of the San Joaquin Valley, and at Kern River there are some exposures of the reservoir series.

In the Temblors, the Monterey shales are exposed in several places in great thicknesses, with an indicated thickness of from 3,000 to 5,000 feet, and may be observed dipping under the Midway Valley, the angles of dip varying greatly. They give the appearance of silicious shales, varying in color, hardness, and thickness of beds. The exposures of the reservoir series are not as extensive or plentiful, but the sandstones and conglomerates composing this series are present and were recognized as of 1903 as a suitable reservoir bed for the underlying source rock. The thickness of the series at the few places of exposures in the Temblors ranges from approximately 200 to 1,000 feet. The Tulare series is exposed in the Temblors in vaiious thicknesses of up to approximately 2,000 feet.

In addition to these exposures along the western, southern and eastern edges of the San Joaquin Valley, there are, as hereinabove described, also numerous oil and asphaltum seepages and deposits in the region, such as along the McKit-trick-Midway-Sunset line of development, and in the Kern *43 River area. Some were recognized as early as 1855 in T. 30 S., R. 22 E., where the McKittrick oil field is located, by a United States Deputy Surveyor and were so reported by him in his official survey of the township made in 1855. That township adjoins Township 30 S., R. 23 E., in which the Section 36 herein involved is located.

The Midway and Buena Vista Valleys are covered by a blanket of alluvium, which begins at the base of the Temblors. No rock strata of any of the three series are exposed in these valleys. In the Buena Vista Hills and the Elk Hills, only the Tulare is exposed.

32. (a) The geological formations of source rock, reservoir series and cap rock variously exposed along the eastern and western rim of the San Joaquin Valley, as hereinabove described, continue toward the center of the valley and underlie it in Kern County, including the Elk Hills, although not necessarily in an absolutely uninterrupted and continuous blanket.

The general continuity of these formations underlying the San Joaquin Valley from the Temblors in the west to the Sierra Nevadas in the east was postulated as early as 1894 by one W. L. Watts, then employed by the California State Mining Bureau as an “Assistant in the Field” and reported by him in the Bureau’s official Bulletin No. 3 (1894), entitled “The Gas and Petroleum Yielding Formations of the Central Valley of California,” where he stated:

Petroleum and gas bearing formations are found on both sides of the San Joaquin Valley in Kern County. At the Sunset Oil District and at Asphalto, on the western side of the valley, the petroleum and gas yielding rocks are extensively exposed, and oil and asphaltum industries are carried on. * * * On the eastern side of the valley, oil, bituminous matter, and gas are found * * *. On the eastern side of the valley, however, the showing of hydrocarbons is insignificant compared with that on the western side. This is partly accounted for by the fact that the geological disturbance of the tertiary rocks on the western side is very great, while on the eastern side it is very slight. Moreover, it is not improbable that on the eastern side of the valley the formations contemporaneous with the rocks yielding oil on the west *44 ern side are overlaid by more recent tertiary strata, in which the hydrocarbons are not very abundant. On the eastern side of the valley, the tertiary formation is well represented, as shown by fossils * * *.

As can be seen by examining the record of the strata penetrated by wells which have been sunk for water in the valley lands of Kern and Tulare Counties * * *, the recent filling of the valley appears to contain sufficient clayey strata to serve as a cover under which gas could be stored in underlying porous formations. A review of the situation, therefore, warrants the opinion that deep borings in the valley lands of Kern County would be quite likely to penetrate gas-yielding and possibly oil-yielding strata. * * * (pp. 20-21)

(b) Six years later, Watts, who had been appointed in 1899 as “State Expert in California Mining,” stated in California State Mining Bureau Bulletin No. 19 (1900), entitled “Oil and Gas Yielding Formations of California”:

During the past two years, there has been great development in the oil-yielding formations of Kern Comity, on both the eastern and western sides of the San Joaquin Valley. On the western side numerous productive wells have been drilled in the Sunset oil-district and the McKittrick District. On the eastern side of the valley an extensive and promising oil-field has been developed in the Kern Diver district, (p. 109)

He restated his conclusions of 1894 concerning the continuity of these geologic formations under the San Joaquin Valley and added:

* * *, the geological formations in the foothills of the Sierras at Kern Diver are of similar age to the rocks forming the first bench of foothills of the Coast Danges [Temblors] at Mud Creek, on the western side of San Joaquin Valley.

It is not surprising that evidences of petroleum should be found in the outcropping rocks of both localities, and that discoveries of petroleum at Sunset and McKit-trick were a prelude to the development of the Kern Diver oil-field, (p. 110)

Watts was recognized as one of the outstanding experts of that day in the field of California petroleum geology. He spent considerable time in the San Joaquin Valley area and *45 was widely read by the more informed and experienced California oil men.

While the above writings indicate Watts’ broad consideration of the stretch of San Joaquin Valley lands ranging from the Temblors to the Sierra Nevadas, there is no showing that he, or any other such geological expert, addressed himself, as of January 26, 1903, specifically to the particular area therein now known as the Elk Hills, or to any localized part of such hills, such as Section 36, or to the advisability, from a profitable commercial aspect, of drilling in such specific locations.

33. By letter dated September 11,1902, one E. T. Dumble, Consulting Geologist for the Southern Pacific Railroad Company, gave instructions to the company’s field geologist, Josiah Owen, concerning certain geological work Owen was to do as oil geologist for the company in the southern San Joaquin Valley. Attached to Bumble’s letter was a sheet containing two rough sketches and another sheet containing notes which he had prepared as a result of preliminary investigations he had made. The sketches indicated the horseshoe shape of the southern end of the San Joaquin Valley, and also indicated the McKittrick field on the west side and the Kern River field on the east side. They traced in a general way the presence and continuity of the geological strata and formations of oil-bearing sands and shales beneath the valley from McKittrick in the west to Kern River in the east, a distance set forth as 50 miles. However, in the notes, Dumble stated:

The Kern river and McKittrick oil fields are different in every particular. The oil at Oil City [Kern River] is in a heavy bed of sand containing more or less clay in irregular masses. This bed seems to underlie the entire region, sloping very gently to the northwest, so that wells may be sunk anywhere within an area of several thousand acres with a certainty of striking oil.

The McKittrick field, however, shows a very sharp anticlinal structure and is confined to a comparatively narrow line along its crest. I think there can be little doubt that the oils belong to entirely different series of deposits, that at McKittrick being in older beds than those of Oil City.

*46 34. In 1910, there was issued by the United States Geological Survey its bulletin 406, entitled “Preliminary Report on the McKittrick-Sunset Oil Region, Kern and San Luis Obispo Counties, California.” The report was written by two competent and highly regarded geologists employed by the Survey, Ralph Arnold and Harry R. Johnson, and was based upon geologic field studies made in 1908. This work appears to have been the first detailed geologic survey of the Elk Hills area specifically, as well as the adjoining areas, including the Buena Vista Hills and the Temblor oil fields. In this report, in which the name Elk Hills was first used (a herd of elk being known to live in the hills), the continuation of the organic shales and oil sands out into the valley was also assumed. However, subsequent to the completion of their field studies in 1908, but prior to the final preparation and publication of their report in 1910, the first successful well drilled in the Buena Vista Hills, as will be hereinafter set forth, produced large quantities of gas, and the authors not only included this fact in their report but also drew conclusions therefrom. The part of the report which specifically refers to the Elk Hills states as follows:

The Buena Vista district includes the region of the Elk Hills and Buena Vista Hills, and lies northwest of Buena Vista Lake, northeast of Midway Valley, and east and southeast of McKittrick Valley. The structural conditions in both the Elk and the Buena Vista hills are practically ideal for the accumulation of petroleum. As the shales of the Monterey and the Santa Margarita (?), which are believed to be the source of the oil throughout this region, underlie the McKit-trick beds that form the surface of the hills, the chances for obtaining commercial quantities of petroleum in the district are excellent. Assuming the thickness of the McKittrick formation to be about the same in the hills as it is in the Midway and McKittrick districts — that is, between 1,500 and 2,000 feet — it seems probable that at the axis of the Elk Hills anticline the oil-bearing zone is from 900 to 1,400 feet below the surface. As the edge of the hills is approached the dip of the beds carries the formations down, so that wells drilled near the edge would have to go at least 600 or 800 feet deeper than they would near the summit of the hills. Furthermore, *47 the dip, at least on the southwest flank of the main anticline, steepens perceptibly toward the edge of the hills, and this would still further increase the depth to which the wells would have to be put down to penetrate the oil-bearing zone.

At least two of the test holes that have been drilled in the Buena Yista Hills have struck large quantities of gas in sands below thick clay deposits. As these wells are both near anticlinal axes the gas strikes indicate one of two things to the writers. Either the gas is the accumulation above oil that lies lower down the dip in the same stratum, or else the gas has been able to penetrate higher beds than could be penetrated by the oil from which it is believed to be derived, and the oil lies in the same formation as that containing the gas but in lower beds. In either case the occurrence of the gas is believed to be indicative of the presence of oil in the hills under discussion.

The arguments favoring the occurrence of petroleum in the Elk Hills are also applicable to the formations in the Buena Yista Hills, the anticlines apparently offering the strongest inducements because of the less depths at which the supposed oil-bearing formations would be encountered, and also because as a general rule the greatest accumulations of petroleum occur near the axes of anticlines.

A particularly advantageous locality for exploitation is that southeast of the region of the Belgian (now Temblor-McKittrick) wells in sec. 34, T. 30 S., R. 22 E. Not only are there indications of petroleum along the southeastward continuation of the Dabney anticline, but the dips on the flanks of this anticline support the theory that it is fractured little, if any, and therefore is more likely to retain its petroleum than it would be were it crushed and fractured. The flat country between the Buena Yista Hills and the hills southwest of the Mc-Kittrick Yalley is covered by recent deposits which mask the underlying structure. It appears quite likely, however, that the anticlines which plunge southeastward under this masked area are continued in the anticlines found in the Buena Yista Hills, and in some instances this supposed relation has been shown on the map (PI. I). Assuming therefore that the conditions are continuous across these flats, it is almost certain that if petroleum is encountered on the flanks of these anticlines it will also be found beneath the flats along the continuation of the same anticline.

*48 The only surface evidence of the occurrence of petroleum in Buena Yista Hills is the oxidized asphalt deposits in sec. 11, T. 32 S., R. 24 E. These occurrences strengthen the belief that commercial deposits of petroleum underlie the hills. In selecting points for development work the localities where the beds dip steeply should be avoided and those chosen where the dips are moderate and the conditions less favorable for faults and sharp flexures, (pp. 209-211)

35. Another factor supporting the geological inference or conclusion that the source, reservoir and cap rock series continued under the Elk Hills was the presence of the above-mentioned seep in the Buena Yista Hills in Section 11, T. 32 S., R. 24 E., referred to by Arnold and Johnson, as herein-above set forth, as “oxidized asphalt deposits.” This would indicate the existence of the organic series beneath the surface of Buena Yista Hills, despite the fact that there are no exposures of the organic and reservoir beds in the Buena Yista Hills, as there are in the foothills of the Temblors. At this occurrence, similar in appearance to the Lamont seep, but more extensive, sulphurous fumes are given off and gas is escaping. This exposure is frequently referred to as a gas blowout.

36. A technical article entitled “The Oil Fields of Kern Co. California,” by Marius Duvall, a geologist, was published in the National Oil Reporter, a trade magazine, on December 26,1901, in which the author discussed the marine history of the San Joaquin Yalley. He concluded that oil mining operations to that date had merely touched the rim of the vast oil basin in the southern end of the San Joaquin Yalley and that it was certain that oil would be produced from the foothills and well in toward the center of the valley. He too stated as a “fact” that the “oil-bearing strata * * * underlie the entire San Joaquin Yalley from the Sierra Nevada mountains on the east to the Coast Range mountains on the west” and that “there can be no question but the oil-bearing strata underlie the entire San Joaquin Yalley * * *.” Pertinent portions of the article relating to the basic oil geology of the San Joaquin Yalley are as follows:

* * * the Sierra Nevada Mountains to the east, and the Coast Range Mountains to the west, come together *49 about 30 miles south of the town of Bakersfield, thus forming a horse-shoe shaped basin, which is now the southern end of this valley.

geology. — At the close of the Jurassic Period, what are now the Sierra Nevada Mountains were uplifted and formed the eastern shore of the Pacific Ocean. At this time the layers of sediment that are now the oil-bearing strata of this valley began to be deposited. During the first part of the Tertiary Period what are now the Coast Range Mountains appeared above the ocean, thus making the present San Joaquin Valley a vast inland sea, which then received the sediment from both shores. About the middle of the Tertiary Period this inland sea, together with both shores, underwent a further uplift, and its water sought the ocean through the Golden Gate, thus forming what is now called the San Joaquin Valley. This is the history, briefly told, of movements of the earth’s crust, that required, no doubt, hundreds of centuries to accomplish. The main fact to which I wish to call attention is that the oil-bearing strata are not rocks, but sand, and that they were laid down and distributed by water at a geological period after the uplifting of the Sierra Nevada Mountains, and before the elevation of the Coast Range Mountains and hence underlie the entire San Joaquin Valley from the Sierra Nevada Mountains on the east to the Coast Range Mountains on the west.

^ ‡ ^ $

the on. districts. — The Kern River district lies a little northeast of Bakersfield, and at present is being developed in a westerly and northwesterly direction. It is spoken of as an oil belt. In my opinion it is the eastern marginal rim of the main oil basin of this valley. The drill has shown an almost horizontal stratum of oil sand, dipping at a slight angle to the west and northwest. The dip, I believe, is approximately 100 feet to the mile. If this angle of dip continued across the valley, the stratum of McKittrick, Midway and Sunset districts would be approximately 3,500 feet beneath the surface of the land. The drill in these districts, however, reach the oil sand at different depths, approximately at an average depth of 600 feet. Tins and the oil seepages and asphaltum beds show that the oil sands have been brought to the surface by the elevation of the Coast Range Mountains, and I therefore consider the so-called West Side Oil Belt nothing more than the western marginal rim of the main oil basin of this valley.

On account of the great geological disturbance shown by the rocks of the Coast Range Mountains, the oil *50 sands here have in many places been detached from the main strata and uplifted and tilted at different angles, which will make drilling uncertain if operations are carried on to the west of the fault line that runs irregularly along the axis of this range of mountains. Detached and tilted oil sands may produce good wells, but there will be many failures if a careful selection of the ground is not made before operations are begun. In other words, the oil-bearing strata of Kern County are similar to blanket veins in metal mining, and the elevation of the Coast Range Mountains, occurring as they did after the formation of these strata, have broken them, thus tilting at high and irregular angles and in many places bringing to the surface these strata; the lines of fracture collectively being the fault line referred to, and hence operations carried on to the east of this line will prove to be the safest. From the fact that the oil sands of the Kern Fiver district dip toward the Sunset, Midway and McKittrick districts, and that the oil sands of the Sunset, Midway and McKittrick districts dip toward the Kern River district, and that in the oil districts to the north the sands dip toward the four districts named, it seems reasonable to consider the southern end of the San Joaquin Valley in Kern County a vast reservoir of oil and that development so far is only upon the outer edge or rim.

value of LANDS. — The value of land depends upon the thickness of the oil sands. In the Kern River district, the sands grow thicker toward the west. In the Sunset, Midway and McKittrick districts the sands grow thicker toward the northeast and east respectively. A thickness of over 500 feet has already been obtained in the first-named district, and over 200 feet in the other three. On the basis of a flat stratum of oil sand 100 feet thick * * * a conservative estimate * * * and estimating that one-fifth of [the oil] can be recovered * * * at 50 cents per barrel [the value of the land] amounts to $14,500 per acre. With thicker oil sands or other oil strata when deeper wells are drilled, you may draw your own conclusions as to the value of those lands.

conclusion. — There can be no question that the oil-bearing strata underlie the entire San Joaquin Valley, and that development so far is only upon the outer edge or rim. The question, therefore, is how far in toward the centre of the valley will it be possible to drill without encountering insurmountable difficulties. The larg *51 est artesian well in the State is in the centre of this valley near the north line of Kem County. This artesian area, no doubt, extends north and south through the county. This might make drilling in this part of the valley an impossibility. Therefore, I think that the sure oil territory will be found in a belt extending around the margin of this valley, embracing in its path part of the foothills and part of the flat land, and that the wells on the flat portion of this belt will produce a larger quantity and better quality of oil than has yet been obtained, and that the deepest wells in this territory should reach the sands at a depth not to exceed 2,000 feet.

The Elk Hills as such, or the question of whether any oil thereunder (or any particular part thereof) could be reached by the drill and obtained in commercial quantities, were not specifically mentioned or discussed in this article.

37. (a) In the Temblors, the exposures of the reservoir and organic series indicate that the former rests in angular unconformity on the latter, although the cap or Tulare series is generally conformable with the reservoir series. That the reservoir series rests unconformably on the organic Monterey series was observable and known as of 1903. This means that the dips in the two strata are not parallel. An uncon-formity indicates that the strata were deposited in different geologic time sequences. If the lower bed was folded upward, or partly eroded, before the upper bed was deposited, the lower bed would not be parallel to the upper. This results in so-called angular deformity, i.e., the rocks below may rest at an angle different from the angle of the overlying bed. An accepted geologic theory accounting for the uncon-formity is that while the valley was part of the ocean, earth pressures caused the uplift resulting in the Temblor Eange, with its folds and faults, after which the waters withdrew, exposing the shales to erosion. Subsequently, the ocean re-advanced, and the deposition of the reservoir series sandstones and conglomerates followed upon the partly eroded shales, resulting in the unconformity. The conformity of the cap series and the reservoir series is accounted for by the further theory that there then followed a general uplifting *52 of the floor of the valley, with such localized more extensive uplifts as resulted in the Elk Hills. The ocean water in the valley then gradually changed from salt to brackish water, and formed lakes, on the floors of which was deposited the Tulare, with no long period of geologic time intervening between the deposition of the reservoir series and these events resulting in the deposition of the Tulare, so that no substantial erosion in the reservoir series resulted.

As Watts noted in his 1900 bulletin, and as is more fully hereinafter set forth in finding 44, the question of conform-ability is “very important,” because if the reservoir series rests conformably on the organic series, “the oil prospector would know that there might be a good chance of finding oil in the formations immediately underlying” the reservoir series, even though the organic series “did not crop out at the surface.”

Thus, since these two series varied in thickness in different places, where they were not visible, or where the organic series alone was not visible, the presence or thickness of the organic series could not be foretold accurately. As of 1903 the Monterey shale did not outcrop nearer Section 36 than approximately 10 miles, and no drilling any nearer by had reached it.

(b) The unconformability of the source rock with the reservoir series would prevent accurate calculation of the dip and strike of the reservoir series under Section 36 (assuming such series extended under the hills) either from distant exposures, since there were no exposures of such strata in the Elk Hills, or from exposures of the younger strata of the cap rock series in the Elk Hills, which was the only series exposed thereon. The dip or strike of an unexposed bed could not be calculated when unconformability was known to exist, since the attitude of the bed would be unknown.

In his aforesaid 1900 bulletin, under the heading “Geological Structure Pertaining to the Occurrence of Petroleum in California,” Watts also emphasized the importance of ascertaining whether the reservoir series was conformable to the cap rock series, i.e., “whether or not the oil-sand is folded in the same way as the rocks which are exposed at *53 the surface.” As shown, in the Temblors, these two series are conformable. W atts’ statement isas follows:

In prospecting for petroleum * * * the outcrop is a most important guide. * * * an examination of the outcropping stratum would show the direction in which the oil-sand extends, and the angle at which it dips or is inclined. Consequently, the depth at which the oil-sand could be struck by drilling at any distance from the outcrop might be calculated. * * * In locating an oil-well, the character of the fold affecting the rocks about to be prospected should be taken into account * * *.

In most instances, however, only glimpses of the outcrop can be obtained. * * * the oil-sand may be covered by a great thickness of overlying rock, and the existence of oil-yielding formations may be indicated only by an oil-spring, or they may have been accidentally discovered by drilling. When such buried oil-yielding formations have been discovered on any particular fold, and the position of the oil-sand with regard to the inclosing rocks has been determined, the probable course of the oil-lines may be ascertained by tracing the course of the fold. It is quite important to ascertain whether or not the oil-sand lies conformably beneath the rocks which cover it; or, in other words, whether or not the oil-sand is folded in the same way as the rocks which are exposed at the surface. In hills and mountains, however, it is more than likely that the prospector will be assisted by glimpses of the oil-sand in ravines and canons, where the overlying rocks have been cut through by erosion. * * * (p. 189)

In elaborating about prospecting in new territory, and the importance of ascertaining the dip and strike of the oil sands, Watts emphasized the considerable risks involved in prospecting for oil in an area “where no outcrop of oil-sand has been discovered,” although the risk would be minimized somewhat if “the strike and dip of a remunerative body of oil-sand in an adjacent oil-field are known, and the rocks overlying the oil-sand can be traced to the territory about to be prospected.” Watts’ full statement in these respects is as follows:

The financial risks of prospecting for oil vary greatly. Oil-prospecting propositions may be divided into two orders:

First — The “orthodox” proposition. In this case the prospectors have in view a definite oil-yielding stratum, *54 which has proved remunerative in adjacent territory, and from which stratum they expect to obtain their oil. Moreover, they have satisfactory geological evidence in sight that the oil-stratum they have in view forms an oil-line through the territory they are about to prospect.

Second — The “wild-cat” proposition. In this instance the prospectors have no definite oil-stratum in view which has proved remunerative in adjacent territory, or they have not satisfactory geological evidence in sight that an oil-yielding stratum, which is known to be productive in adjacent territory, forms an oil-line through the land they are about to prospect.

In prospect wells of the first order the least risk is taken where the outcrop of an oil-sand, which has proved remunerative in a certain oil-field, can be actually traced through the territory to be prospected, and the geological structure of the locality is known.

More risk, however, is undertaken where there is no outcrop of the oil-sand, although the strike and dip of a remunerative body of oil-sand in an adjacent oil-field are known, and the rocks overlying the oil-sand can be traced to the territory about to be prospected. * * *

Most oil-mining enterprises which have for their object the development of new territory, especially when operations are conducted at a distance irom any known oil-field, are “wild-cat” propositions. Some idea of the conditions regulating the amount of risk involved in such enterprises may be gathered from the following statements:

The least risky “wild-cat” proposition is the case in which the strike and dip of a remunerative stratum of oil-sand in adjacent territory have been ascertained, and, although there is no conclusive geological evidence in sight, it is found after carefully platting a map of the territory that, if the stratum of oil-sand were extended in the direction of its strike, without any material alteration of the angle of the dip, it would form an oil-line across the territory to be prospected. * * *

It is a still more risky “wild-cat” proposition when a stratum of oil-sand has been discovered, concerning which nothing is known except that the sand gives evidence of containing oil, and a well is sunk for the first time to determine whether or not the oil-sand contains oil in remunerative quantities.

It is a much more risky “wild-cat” proposition where no outcrop of oil-sand has been discovered, but where a well has been sunk in a certain formation because it *55 shows some irregular seepages of petroleum, or because the formation appears to be similar to that containing a remunerative body of oil-sand in other places..

It is well for oil-prospectors to study the risk they are about to take before expending money, and care should be taken to control sufficient territory that they may have sufficient room to develop their oil-field, in case their venture proves successful. No one should undertake the more risky forms of prospecting unless he can well afford to lose the money to be put into the enterprise.

In California petroleum is found in shales, lime-stones, sandstones, and conglomerates, and in a few instances crystalline rocks are found impregnated with it; but in nearly all of the productive wells the oil is found saturating sandy strata. In this State the folding of the rocks has brought these oil-soaked strata near the surface, and the oil-lines, or lines along which remunerative wells can be obtained, are parallel to the axes of folds, or to the lines of faulting. The oil-lines extend in breadth only a certain distance down the limbs of the folds or down the block of tilted strata, which has been isolated by faulting. The lateral extent of the oil-line is limited at its upper margin by the outcrop of the oil-sand, or'by a line of geological disturbance such as a fault, or by the oil-sand being brought too close to the surface at the axis of the fold on which the oil-line is situated. On its lower margin it is limited by the dip of the formation, which carries the oil-yielding stratmn to too great a depth for it to be profitably reached by the drill; or, where the oil-sand is struck below a certain depth, it may be found that water has displaced the oil.

As geologists and oil-men know, the dip and the strike of the oil-sand are of the greatest importance in locating the site of an oil-well, and in the case of prospect wells the dip and the strike have to be ascertained irom the exposed rocks.

$ $ $ $ $

The dip of a stratum of rock is the angle which its surface, when inclined, makes with the horizon. The strike is the horizontal direction in which a stratum of rocks extends, and is always at right angles to the dip. Therefore, if the direction of the dip is known, the strike can be readily determined.

The direction of the dip of an inclined stratum corresponds to a line drawn along the inclined surface in *56 the direction of its greatest inclination, and is always at right angles to the strike. * * * (pp. 192-194)

38. After the thick deposits of marine sediments or diato-maceous shales were laid down during the Eocene, Miocene and Pliocene ages of the Tertiary period of geologic time in the region now comprising the Temblor Mountains, the San Joaquin Valley and the Sierra Nevadas, a folding and uplifting of these sedimentary layers occurred as a result of tremendous horizontal pressures, causing the formation of the mountains on either side of the valley, and later the Elk Hills and Buena Vista Hills near the foothills of the Temblor Eange.

Geologists term the structural, arch-like, condition resulting from the folding and uplifting of the strata an “anticline,” which has long been considered to be favorable for the accumulation and retention of oil where the stratigraphy of the area indicates the presence of the source, reservoir and cap rock series.

The form and directions of the exposures of the Tulare formation (cap rock series) in the Elk Hills show that the Elk Hills is an anticlinal structure. It could have been determined to be such a structure in 1903 by competent geologists.

The Elk Hills anticline is referred to as a “doubly plunging” anticline, because the exposed layers of the cap or covering series dip in different directions. On the northeast slope of the hills, they dip downward toward the northeast, while on the southwest slope, the same formations dip downward toward the southwest.

39. (a) Prior to January 26, 1903, no known careful geological work was accomplished by any competent geologist which led to the informed conclusion that the Elk Hills was an anticlinal structure. However, the anticlinal nature of the Elk Hills had been observed and, as it turned out, correctly understood by at least two oil operators prior to that date. One of them was Colon F. Whittier, who in 1901 had passed around the hills, although he did not enter them prior to 1903. Whittier was not a geologist but knew that geologists considered anticlinal structures favorably. His recognition *57 of this possible anticlinal structure led him to attempt to persuade others to interest themselves in the area, but he was not able to do so. It was not his intention to cause drilling to be commenced immediately in the Elk Hills at that time, since he felt that if oil did exist there, it would be so deep that it would result in an extremely expensive undertaking. However, although he knew a large number of other operators in the Temblor fields, he was unable to interest any of them in the Elk Hills. His brother, Max Whittier, who was at that time a well-known operator there, was also uninterested. These operators refused to invest in an area which lacked seepages of the type visible in the Temblors and at Kern River. Whittier made no locations in the Elk Hills.

One B. K. Lee, who was also operating in the McKittrick area prior to 1908, became generally familiar with the Elk Hills area at that time and also concluded prior to 1903 that it was an anticline. He saw indications of the formation at the railroad cut separating the western end of the hills from the McKittrick Hills, and, followed it up in a northwest-southeast direction into the hills, approximately 3 miles. However, he did not explore the matter further until around 1909, when he went deeper into the hills up to Section 36 and somewhat beyond, correctly concluding that the anticline extended to such section and as far as he went beyond.

(b) The first known conclusion based on detailed geological work by a competent geologist that the Elk Hills constituted an anticlinal structure was made by Josiah Owen. A map showing the Elk Hills anticline, as well as other data, was made by Owen in connection with the geological work in the McKittrick district which he did for the Southern Pacific Company pursuant to the instructions contained in the letter of September 11, 1902, from E. T. Humble, hereinabove referred to (finding 33). Owen’s work was commenced on February 3,1903, and completed sometime prior to February 28, 1903, since his original handwritten field notes bear that date. The map of the Elk Hills anticline was forwarded to Humble with a typewritten copy of the field notes on March 25, 1903. In these notes, Owen also *58 confirmed Dumble’s conclusion as to the continuity of the oil sands from the oil fields on the eastern side of the valley to the Kern Diver fields on the west side, stating:

There is but one oil horizon in this field [McKit-trick] and below this horizon there are 1500 feet of white slate strata below which the slates are noncon-formable and probably belong to another series of rock.

There are several thousand feet of these slates or shales; they compose the main Diablo range and are tilted up almost vertical and these in turn rest upon sandstone of great thickness which are exposed * * *. * * * Northeast of Temblor the oil horizon rests directly upon these massive sands. In the direction of Midway, I find that the McKittrick fold flattens out in the valley, 'but other hills further on in the same direction would indicate that it may extend to near the Kern Lake. * * * I have traced the outcrop of the oil horizon all the way to Sunset Oil field and find that there is but the one oil sand and I believe it will be possible to trace the same horizon to the Kern Eiver fields. There are several reasons for believing that they all belong to the same zone.

v The ultimate technical conclusion that the Elk Hills structure is anticlinal in nature could have been made with certainty by a competent geologist as of January 26, 1903, only after a period of careful study and after making numerous measurements. The dip of the strata is gentle and averages approximately 5 degrees. It was not immediately or readily ascertainable simply by untrained or casual observation, although some indications of the anticlinal structure of the Elk Hills were readily observable, as they were observed by Whittier and Lee, the visible dipping of the rock strata generally toward the north on the north flank of the hills (although not wholly uniformly), and toward the south on the south side, being the basis for a reasonable early postulation of an anticlinal arch. However, exposures of recognizable strata, or layers of rock, the accurate inclinations of which can be observed, are not common in the Elk Hills. Most of the surface is covered by alluvial deposits and only the top strata of the rock are exposed in a few places. For this reason, careful topographic mapping would be neces *59 sary to demonstrate a consistent anticlinal pattern rather than a heterogeneous hodge-podge of inconsistent formations. Nevertheless, such careful geological investigation could have been made as of January 26,1903, given sufficient time, as it was made by Owen just subsequent thereto, and would have inevitably led a competent geologist as of January 26, 1903, to conclude that the Elk Hills was an anticline.

It was on the basis of Dumble’s and Owen’s work that their employer, the Southern Pacific Company, applied for a patent on the lands described in finding 15, claiming them to be agricultural, and which claim the Supreme Court held to be fraudulent. The land involved was “lieu” land, and not land which the company had to purchase. There was no recommendation by Owen for immediate exploration of such lands, nor was there any such immediate exploration, although his report did lead to their immediate acquisition by Southern Pacific. In 1907, Owen himself participated with others in making locations in the Elk Hills.

(c) As shown in finding 34, in their 1910 publication, geologists Arnold and Johnson also referred to the Elk Hills anticline. Elsewhere in their report, they stated:

The Elk and Buena Vista hills are of very recent origin. The broadly arching anticlines to which they owe their existence have been traced as carefully as time would permit. The low angles of 5° to 10° at which the incoherent sandy and clayey beds dip makes the exact drawing of the axes with reference to the topography difficult, (p. 99)

40. Section 36 lies on the crest or apex of the Elk Hills anticline, a particularly favorable location for oil accumulation and exploration. It is approximately midway between the northwest-southeast extremities of the anticline. Owen’s February 1903 map traces the apex of the anticline through the north part of Section 36. The accuracy of Owen’s map is corroborated by the subsequent tracing of the axis or apex of the Elk Hills anticline by R. W. Pack, a geologist employed by the United States Geological Survey, as shown by Plate II of a report he wrote and which was published in *60 1920 as United States Geological Survey Professional Paper 116, entitled “The Sunset-Midway Oil Field, California.” 12

However, Section 36 is not in the vicinity of any exposure disclosing to the observer only of surface phenomena on such section that it is at the crest of an anticline. Such a conclusion could have been arrived at with certainty only as a result of careful geologic work tracing the anticline axis, such as was done by Owen and Pack.

41. The anticlinal theory of the accumulation of oil rests upon the hypothesis that, due to the pressure of deep ground water, which is heavier than oil, the oil generated in the source rocks is forced to migrate upward into the reservoir series until it meets an impervious barrier. In addition, the weight of the thick cover of the impervious cap rock series also serves to force the oil, gas, and water out of the capillary spaces in the organic rocks, with the oil then being forced upward by the water into the pores of the more porous sandstones of the reservoir series. When the strata are tilted or inclined, as in an anticline or arch, the oil will then move laterally up into the incline, migrating to as near the top of the structure as it can, considering the effect of the inclined impermeable cap rock series in stopping the upward migration. Thus, the oil becomes trapped, forming a large pool. A doubly plunging anticline like the Elk Hills, the strata sloping downward from the apex in all directions, is considered an exceptionally favorable structure in which oil may be trapped beneath the crest. Sometimes, if gas is *61 present, the gas rises to the very summit of the doubly plunging anticline, witF the oil being just below the gas, and the water being below the oil on the outer flanks of the fold.

The anticlinal theory was well-known and generally accepted by oil geologists long prior to 1903. It had been advanced as early as 1860. Although there had been early doubts and differences of opinion among geologists about the validity of the anticlinal theory of oil accumulation, nevertheless by 1903 it was generally accepted by leading geologists. It was even understood as of January 26, 1903, by many of the better informed oil operators. Many articles on the subject had been published in scientific and trade journals prior to 1903, and California geologists as well as other geologists throughout the United States considered it to be a fundamental principle of oil geology that oil and gas accumulate and are trapped in anticlines. For example, in Volume 27 of the American Geologist published in 1901, Edward W. Claypole, who was then Professor of Geology and Biology at the Polytechnic Institute, Pasadena, California, in an article entitled “Notes on Petroleum in California,” stated that “The accuracy of the anticlinal theory of the accumulation of oil and gas * * * has received abundant confirmation from California. In many of the fields the line of development on the surface clearly coincides with the anticlinal line underground * * *. Where the anticlinal ridges can be traced they are in most cases relied upon as safe guides for extending the investigation.” Similarly, Watts’ aforesaid 1900 publication, entitled “Oil and Gas Yielding Formations of California,” devoted considerable attention to the subject of anticlines and folds and the occurrence of petroleum therein. G. H. Eldridge, a geologist employed by the United States Geological Survey, made an investigation of the California oil fields in 1901 and 1902, the results of which were published in 1903 by the Survey as its Bulletin 213, entitled “The Petroleum Fields of California.” In this bulletin, Eldridge concluded: “From the facts established in the preliminary examination of the oil fields of California it appears — That the productive areas *62 have been in every instance developed in connection with, anticlines, either in proximity to their axes, along their flanks, or about their terminals.”

However, the mere existence of an anticlinal structure does not insure the existence of an oil pool. Such a structure is only one factor, although an important one, which must be considered along with others, such as the existence of the oil shales and the reservoir sands. However, as shown, the existence of these strata throughout the valley had been postulated prior to January 26, 1908, by Watts, Duvall and Dumble. Further, basic to the anticlinal theory is the presence of sufficient water to exert the upward pressure. Barren anticlines may be due to this factor. However, while such a condition is always possible, it would not have been considered as a serious probability in this particular area. Many of the wells drilled prior to 1903 in the San Joaquin Valley fields had struck large quantities of water and the problems caused by the striking of such water was one of the more troublesome ones encountered by the driller of that day. Indeed, it was such striking of large quantities of water in these areas which frequently caused the abandonment of wells.

42. It is not only the existence of the reservoir series that is essential to the creation of an oil pool, but it is also essential that such series be composed of the proper grain of sands so as to give it adequate porosity to act as a suitable reservoir. As Pack pointed out in his above-mentioned 1920 Professional Paper 116:

The lithology of the beds which overlie the diatoma-ceous shales and which now contain the oil in the Sunset-Midway field is, for several reasons, important in a consideration of the occurrence of oil. The porosity of the beds must be great enough to permit them to absorb a very considerable quantity of fluid; the open spaces in the rock — -that is. the “voids” — must be of sufficient size to permit these fluids to move fairly freely through the rock; and finally the porosity of the different beds must be different, for otherwise there would be no particular tendency for the oil to concentrate in certain beds, but rather would it tend to disseminate through all the beds. (P- 78)

*63 He then points out that in the Sunset-Midway field the lithology of the bed is “diverse to the extreme,” ranging from very coarse to very fine, in which there are “many admirable reservoirs in which the oil may collect,” and many places containing impervious clay, so that the productive oil sands are not continuous, “and the field is in consequence somewhat ‘spotted’.” He stated:

The practically barren belt along the northeastern slope of Twenty-five Hill is an example of the control that the lithology exercises over the concentration of petroleum, for * * * the lack of oil here is due to the fact that there are in this area no suitable porous sands in which the oil might collect, and the oil has therefore collected in the immediately adjacent areas, where such sands are plentiful, (p. 79)

He explained that porosity is not dependent upon the size of the grains “but rather upon the shape of the individual grains, the arrangement of the grains, and their regularity in size”; that, while “other things being equal, the coarser-grained beds are the ones that offer the more attractive reservoirs in which the oil, particularly viscous oil, may collect,” nevertheless, “many very fine grained sands are much more porous than coarse-grained sands near by, and these fine sands offer by far the more attractive reservoir for light oils”; and that “the coarse fragments were deposited near the edge of the basin of deposition while the smaller and lighter ones were carried farther out toward the center of the basin.” Specifically with respect to the Elk Hills, he stated:

In considering the possibilities of undeveloped portions of the field a great deal of attention has frequently been given to the size of the grains making up the bed, and certain areas, as, for example, the Elk Hills, have been condemned, for it was believed by many geologists that the sands were too fine grained to permit them to act as reservoirs. It is remarkable, however, just how fine grained some of the producing oil sands really are, and the writer believes that no portion of the whole Sunset-Midway field lacks beds porous enough to make satisfactory reservoirs for the oil. Small areas * * * lack porous beds * * * but no large area seems to be without adequately porous beds. (p. 81)

*64 He then cautioned that “those who have condemned parts of the field because of the lack of coarse-grained sands forget” that “fine-grained beds may be very porous” and that it is more important “to have beds of different porosity than to have coarse-grained beds.”

43. As shown, outcrops of the geological formations comprising the source and reservoir series were exposed in numerous places in the eastern slope of the Temblors opposite the Elk Hills. The angles of the dips of these strata toward the valley ranged from less than 20 degrees, and in some places as little as approximately 10 degrees, in the lower foothills, to 45 degrees or more on the higher slope of the mountains, where the folds had been uplifted sharply. The angles of the dips could have been measured by a geologist as of January 26,1903, and the formations projected into the valley and under the Elk Hills. Of course, such a projection based upon exposures miles away from the Elk Hills would have been hypothetical, based upon assumptions, and therefore speculative. It would have assumed that the exposed series would continue conformably out to the Elk Hills, with sufficient continued thicknesses in the organic and reservoir series to generate and collect oil in sufficient quantities so as to make drilling commercially feasible, and that the formations would continue without interruption by reason of hidden faults or the interposition of unknown strata either above the reservoir series, which could cause such series to be below reachable depths, or below such series, which would interfere with the passage of oil from the source rock to such reservoir series.

On the eastern side of the San Joaquin Valley at the Kern Eiver oil field there were only a few exposures of these strata, but the logs and borings of the many producing wells which had been drilled prior to 1903 would have shown the source and reservoir series to be dipping gently toward the Elk Hills. As shown in finding 36, Duvall noted this in his 1901 article.

Also, from the visible flattening out of the angle of dip of the strata in many places along the Temblor foothills as they entered the valley, a 1903 geologist could reasonably postulate that the strata dipping toward the valley gradually *65 flattened out so that they lay horizontally nnder the valley floor. For instance, as set forth in finding 39 (b), Owen, the field geologist for the Southern Pacific Eailroad Company, reported in February 1903: “In the direction of Midway, I find that the McKittrick fold flattens out in the valley * * The varied and sharper tilts in the Temblors were attributable to the localized geological disturbances which resulted in the formation of these mountains. It would thus be reasonably concluded that in the valley the strata flattened out, as they were seen to flatten out in many places in the Temblors as they entered the valley. Duvall, in his 1901 article, did not take the steep angles of dip in the Temblors as the basis of projecting the depth of the oil sands out into and across the valley, recognizing that the steep angles of the strata in these hills resulted from the localized geological disturbances which caused the uplifting and formation of the mountains. Instead, he made his projections on the basis of the gentle angle of dip (100 feet to the mile) of the oil sands at the Kern Eiver field. Furthermore, as noted, such a geologist coidd reasonably postulate that the underlying reservoir and organic series folded upward in the Elk Hills anticline and that the altitude of the reservoir series would be higher near the center and crest of the anticline, where Section 36 is located. Duvall’s 1901 article also shows that the oil sands in the Temblor fields are at a considerably higher elevation than a projection of their angle of dip at Kern Eiver would put them, if such projection were made at the same angle across the valley westward to the Temblors.

44. (a) Not all proved oil fields bear such favorable visible or surface evidence of underground pool accumulations as obvious anticlinal structures or exposures of such geological formations as organic diatomaceous shales, reservoir shales, and cap series rocks, such as exist in the Temblor foothills. Naturally, the absence of such indicia makes diagnosis of the area as possible oil territory by a competent geologist more difficult. For instance, as Watts noted in his aforesaid 1900 publication, “Oil and Gas Yielding Formations of California”: “There are very few rock-exposures in the Kern Eiver oil-field.” However, he did note significant rock exposures in this field at certain locations on the bank *66 of the Kern Eiver where “strata of sandstone, somewhat impregnated with petroleum, dip to the west of south at an angle of less than 10°.” (p. 113) These were the reservoir rock series. There were no exposures of the organic series diatomaceous shales in this field as there were in the Temblors. Watts also noted the difficulty of estimating “the precise direction of the dip of the oil-sand, even when the depth at which the oil-sand was struck has been given.” One reason for the difficulty was that “the angle of the dip is so slight that it is necessary to use the records of wells which are far apart for the purposes of calculation.” (p. 113)

However, despite this rich oil field’s lack of an obvious anticlinal structure, Watts was able, by collating “the well records kindly furnished * * * by the well owners in this oilfield”, to calculate the strikes and dips of the oil sands.

The history of this field shows its development resulted from successful initial explorations in 1899 made near the surface outcrop of oil sand at a certain location and the consequent gradual extension of drilling from such outcrop.

Actually, the Kern River field is not anticlinal in structure. Instead, it is referred to as a gentle monocline, the inclination of the rocks being in one direction only. The record does not indicate that it was definitely regarded as an anticline by any competent geologist as of January 26,1903, although there was some speculation at the time that the field might be anticlinal in nature.

(b) In his aforesaid 1900 publication, under the heading “The San Joaquin Yalley — Geological Sketch,” Watts made certain, comparisons between the eastern and western sides of the valley, pointing out, as did Duvall in his 1901 article, the more violent disturbances of the formations, and their consequent steep angles, on the west side. From the fact that a inch oil field was found in an area of such slight disturbance, as at Kern River, he assumed that similar good fields would be found in other areas of moderate inclination, thus in effect rejecting the popular theory subscribed to by many of the laymen operators that preferably oil was to be looked for in steep folds, such as in the Temblors. He noted that as between the west side and the east side of the *67 valley, “the place to look for such conditions [of little disturbance to the oil-yielding rocks] is on the east side of the San Joaquin Valley.” (pp. 108-109) As noted, although the Elk Hills area is on the west side of the valley, it too is only gently inclined. Watts’ discussion with respect thereto, which also included references to the importance of con-formability between the reservoir and source rock series, referred to in finding 37(a), is as follows:

* * * The productive oil-fields that have been developed in this region are in the foothills of the Coast Eanges and the lowermost foothills of the Sierras at the southern extremity of the San Joaquin Valley.

The formations to which the oil-yielding rocks of the San Joaquin Valley belong are the Eocene * * * and the Neocene; the latter formation having been deposited during an era which embraced the Miocene and Pliocene periods. Of recent years, geologists have decided that it is best to include the Miocene and Pliocene formations of California under the head of Neocene, and to divide the Neocene formations into the Upper, Middle, and Lower Neocene. The Eocene rocks are for the most part rather hard sandstones and dark-colored shales, with some strata of hard limestone. The sandstone is characterized by numerous concretions. * * * The only place in the Central Valley where valuable oil-measures have been developed in this formation is at Oil City, near Coalinga, on the western side of the San Joaquin Valley in Fresno County. * * *

The Lower Neocene formations consist of a series of sandstones and shales * * *. The exposed rocks are usually bleached, and they are sometimes found to be either white or whitish for a considerable depth below the surface. * * * These shales are interbedded with numerous strata of chert and cherty limestone. They also contain a few strata of sandstone and diatomaceous earth. The sandstones are usually more or less impregnated with petroleum. In many places springs of heavy, tar-like bitumen issue from these shales, forming beds of impure asphaltum. Wells sunk in this formation in most instances yield a heavy, tar-like oil * * *. There is little doubt that the Lower Neocene rocks rest non-conformably on the Eocene formations, for we find them resting on different material in different portions of the Coast Ranges. In most cases, however, they rest on the Eocene rocks, and very frequently it is difficult to detect any absolute non-oonformability between the *68 Lower Neocene and the Eocene rocks at their points of contact. In some places, as at the Sunset oil-wells in Kern County, the whitish shales show a thickness of several thousand feet. In the San Joaquin Valley these shales form a conspicuous feature in the scenery throughout a large portion of the foothills of the Coast Eanges. * * ❖

Nesting with apparent nonconformability on the colored shales are the Middle Neocene formations, in which are the most important oil-measures yet developed in the San Joaquin Valley. These are composed of a series of comparatively soft sandstones, bluish shales, and clay strata. * * *

On the eastern side of the San Joaquin Valley, the Neocene rocks differ somewhat in character from those forming the foothills of the Coast Eanges. The sandstones are interbedded with clay, and are made up largely of granitic material; volcanic ejectamenta appear also to have contributed to their composition.

* * * Throughout the greater portion of the San Joaquin Valley, the Neocene formations are covered with alluvium. These formations are evidently many thousands of feet thick, but the rocks are so covered with alluvium that it is difficult to determine the extent to which faults may have increased the apparent thickness.

* * * The question of conformability and noncon-formability between the Eocene and Neocene formations is very important. If the Neocene formations rested conformably on the Eocene, the oil-prospector would know that there might be a good chance of finding oil in the formations immediately underlying the Lower Neocene rocks, even though the Eocene rocks did not crop out at the surface.

The Neocene formations on the eastern side of the valley are much less disturbed than those on the western side. On the eastern side they are usually inclined at a very slight angle, generally less than 15°, while on the western side the inclination is seldom less than 20°, and sometimes as high as 10°. The reason of this is that the earth-movement which so greatly disturbed the rocks of the Coast Eanges at the close of the Neocene period, affected but slightly the Neocene formations in the foothills of the Sierras. The development of the remunerative oil-field at Kern Eiver, on the eastern side of the San Joaquin Valley, where the formations are so slightly disturbed, warrants the assumption that other localities may be found where oil-yielding rocks which *69 have been subjected to but very little disturbance form a wide and extensive oil-line. The place to look for such conditions is on the east side of the San Joaquin Valley. As previously stated, a great drawback to prospecting in the lowermost foothills of the San Joaquin Valley is alluvium, which to a great extent covers the Neocene formations.* * * (pp. 106-109)

In his next chapter, Watts noted that “During the past two years there has been great development in the oil-yielding formations of Kern County, on both the eastern and western sides of the San Joaquin Valley,” and that “On the western side numerous productive wells have been drilled in the Sunset oil-district and the McKittrick district,” that “On the eastern side of the valley an extensive and promising oilfield has been developed in the Kern Kiver district” (p. 109), that “the geological formations in the foothills of the Sierras at Kern River are of similar age to the rocks forming the first bench of foothills of the Coast Ranges at Mud Creek, on the western side of the San Joaquin Valley,” and finally, that “it is not surprising that evidences of petroleum should be found in the outcropping rocks of both localities, and that th8 discoveries of petroleum at Sunset and McKittrick were a prelude to the development of the Kern River oil-field.” (p.110)

45. As of 1903, the fields in the Temblors were generally in areas characterized by seeps, outcrops of oil sands, faulting and sharp anticlines. At Sunset, as noted by Watts in his 1900 publication, “Numerous seepages of heavy petroleum exude from these [Lower Neocene (Miocene) ] shales, forming beds of asphaltum, which, in some places, before these deposits were mined * * * extended over an area of several acres.” (p. 121) At McKittrick, as noted by Watts in the same publication:

The formation penetrated by the productive wells in the McKittrick district is that portion of the Middle Neocene formation which immediately overlies the light-colored silicious shales. The oil-yielding strata are inclined at a very great angle, which makes the oil-line a narrow one. * * *

Following the strike of the formation in a northwest direction * * * the character of the debris cover *70 ing the hills and occasional outcropping ledges of rock, evidence the proximity of the sandstone and diatoma-ceous rocks. The sandstones are frequently oil-soaked, and seepages of maltha may be seen in nearly every cañón. These features warrant the conclusion that the source of the oil and maltha is at or near the contact of the sandstone [the reservoir series] and the diatoma-ceous rocks [the organic series], (p. 127)

At Midway, between these two older fields, the shales also outcropped.

As distinguished from these fields, the Elk Hills are a moderate anticline with dips under 10 degrees. As noted by Pack in his aforesaid Professional Paper, the Elk Hills anticline is “broad and low, the beds rarely being tilted more than 5° or 6° on either flank,” with no large faults apparent. Exclusive of the “Lamont seep,” it is without seeps and there is no outcropping of oil sands. Thus, the Elk Hills did not in a great many respects resemble, in outward physical appearance, the Temblor oil fields which were proved in 1903. Other areas in the mountain foothills in the eastern parts of Kern County resembled, in their outward appearance, the proved fields as of that date more than did the Elk Hills.

Watts, in his said 1900 publication, pointed out the desirability of having petroleum seepages “at or near the locality in which prospect wells are to be drilled,” stating:

A review of. the oil-fields in the Coast Eanges leads to the conclusion that the most favorable locality in which to drill “prospect wells” is one wherein a definite stratum of oil-sand has been discovered in a formation belonging to a geological horizon known to include productive oil-measures in other places; preferably there should be seepages of liquid petroleum at or near the locality in which prospect wells are to be drilled, and the angle at which the oil-sand dips should not be more than 50° nor less than 10°. * * * in a general way, the oil-lines, or lines along which remunerative wells may be found, follow the strike of the axes of folds in the rocks, or the course of faults which have isolated blocks of strata inclosing the oil-yielding rocks. It is evident that the oil-yielding formations * * * show great geological disturbance, and the complex structure resulting therefrom gives rise to somewhat difficult geological *71 problems. It follows that the tracing of oil-lines in this State, and the development of oil-fields, necessitate a competent knowledge of structural geology, without which the risks of oil-mining are greatly increased. (pp. 200-201)

46. (a) From a study of the exposures and dips of the cap, reservoir, and source series along the Temblors opposite Elk Hills, a competent 1903 geologist could, on the assumption of the continuation of these series to and under the Elk Hills, reasonably conclude, on the basis of various theories, that the oil-bearing reservoir series could be reached at depths of somewhere between 2,000 and 4,000 feet beneath the surface.

Oil wells had been drilled in California prior to January 26,1903, to depths of more than 2,500 feet and approximately 3,000 feet was then considered a possible depth. Thus, the estimated depth of the oil-bearing series was within the capabilities of the cable tool method of drilling used in California in 1903 at least to the extent of approximately 3,000 feet.

As shown by Watts (finding 45), experience prior to 1903 in the San Joaquin Valley oil fields indicated that the oil was found “at or near the contact of” the source and reservoir beds. Arnold and Johnson also so stated in their above-mentioned 1910 “Preliminary Report”:

The McKittrick formation is the principal oil reservoir of the developed fields of the McKittrick-Sunset region, its basal conglomerates and sand yielding practically all of the product of the McKittrick, Midway, and Sunset fields. The oil is believed to originate in the Monterey and Santa Margarita (?) formations, and at least part of it to migrate across the line of un-conformity between these and the overlying porous beds of the McKittrick. In these fields the zone of impregnation varies in thickness from 200 to 1,000 feet or more above the base, most of the commercially productive sands lying within the lower 200 feet. Besides the evidences of petroleum found in the McKittrick in the developed fields, the group offers indications of oil in the * * * Buena Vista Hills, and the region east of the developed Sunset fields. It is upon such evidence that the conclusions are based that productive wells will *72 be obtained in the McKittrick formation in areas other than those already developed.

A study of the thickness and structure of the Mc-Kittrick is necessary before proper predictions can be made concerning the probabilities of the occurrence of and depth to oil-bearing beds at the base of this group of rocks, (pp. 89-90)

Cracks or faults in the reservoir series would enable the oil to move up to higher levels in the series. However, ordinarily the driller in the Temblor region expected to find the oil at approximately 200-300 feet above the contact between the reservoir series and the Monterey shales, although, as Watts points out, the oil in some places was known to rise 1,000 feet or more in the reservoir series. However, if the relatively conservative 300-foot figure were taken as the basis for calculation, the depth of the top of the source rock where it contacted the reservoir rock would normally control the ability to reach the oil in the 300-foot zone above the top of the source rock.

Watts further noted:

The formations most extensively exposed in the Mc-Kittrick district are light-colored silicious shales [i.e., the organic series] similar to those in the Sunset district. * * * The dip of the exposed rocks at McKit-trick is about N. 30° E., and in many places the rocks stand at a very high angle, 60° or more. The strike of the formation corresponds to that of the oil-line, which is about N. 60° W. (pp. 126-127)

If the 60-degree angle of dip in the Monterey shales exposed in the Temblors at certain places continued without change until it came to the Elk Hills, it would be approximately 5-6 miles deep under the Elk Hills. If it continued at a 40-degree rate, it would be 3.3 miles below the surface at a distance of 4 miles to the east of McKittrick, which would be at the extreme western end of the Elk Hills. Such depths would put the oil zone far out of reach of the drill.

However, competent geologists could, on the basis of the considerations and theories set forth below, reasonably put the reachable depths of the oil under Section 36 within the 2,000-4,000-foot area above-mentioned.

*73 (b) At Section 22, T. 32 S., R. 23 E., which is at the foot of the Temblor Range as it flattens out into the Midway Valley, there are good exposures of the reservoir and source series. The exposed portions of the formations overlying the diatomaceous shales at this point, i.e., the reservoir and cap series, collectively referred to as the McKittrick, would be the basis for a calculation that, without the complete erosion that occurred at such point and which exposed the source series, the overlying McKittrick would be approximately 1,400-1,600 feet thick. This calculation would be derived from (1) a cross section of the last exposed strata before reaching the valley alluvium, and (2) a projection to the surface exposures across Section 22. The assumption would be made that all the formations flatten out in the valley, the dip gradually lessening until they become horizontal in the heart of the valley. (The area between the Temblors and the Buena Vista Hills is referred to as a “syncline,” which is a structure between the crests of two folds, the flanks of the anticlines also constituting the flanks of the adjoining syncline.) Thus, the formations would not continue to plunge down into the valley at the same angle as they dip into the valley at Section 22. (The 30-degree dip at this point, if so projected, would carry the shales to a depth of approximately 24,000 feet under the Elk Hills.) The formations would then rise again in the Buena Vista anticline, partaking in the same earth movement as the cap rock, then flatten out again in the Buena Vista Valley, and then rise again in the Elk Hills anticline. The center of Section 36 in the Elk Hills is approximately 10% miles from the center of said Section 22. However, it would also be assumed that the various strata would progressively thicken in the valley, where the former sea basin was deepest, and the period of deposition was the longest. A reasonable assumption would be that the overlying beds thickened to the extent of approximately 3,000 feet, which, added to the 1,400 feet at the last exposure in the aforementioned Section 22 point in the Temblors, would give a thickness of approximately 4,400 feet of strata overlying the source series at Section 36 in the Elk Hills. However, an anticline like the Elk Hills would, especially at its crest *74 where Section 36 is located, be subject to erosion throughout the ages, occurring after its original uplift. A reasonable estimate of the extent of such erosion as of 1903 would be approximately 800-1,000 feet. Subtracting this amount from the total 4,400 figure, results in a depth to the source series at Section 36 of approximately 3,400 feet. The oil would be expected to be reached at approximately 300 feet above in the reservoir series, or at approximately 3,000 feet from the surface of Section 36, or even higher if cracks or faults would cause the oil to become more greatly elevated in the reservoir series, or if the pressures or the porosity of the sands were such as to cause it to rise higher in such series. As shown, in some cases oil had been found in the reservoir series in California as high as 1,000 feet or more above the contact between the origin and reservoir series.

A variation of this theory, which would reduce or even eliminate the bed thickening factor, would place the top of the source series at an even higher level. There was evidence that the waters of the former marine basin were not of great depth. A shallow sea would thus not produce greatly thickened beds. Arnold and Johnson, as shown in finding 34, postulated “the thickness of the McXittrick formation to be about the same in the hills as it is in the Midway and McXittrick districts — that is, between 1,500 and 2,000 feet,” and then further postulated that “it seems probable that at the axis of the Elk Hills anticline the oil-bearing zone is from 900 to 1,400 feet below the surface.” This calculation would thus assume a 600-foot rise of the oil in the reservoir bed. While this statement was made in a 1910 publication and with the benefit of the exploratory work accomplished subsequent to 1903, including a gas strike in the Buena Yista Hills, insofar as it was based upon the thickness of the McXittrick formation and the anticline theory, it could also have been postulated in 1903.

(c) At points in Sections 27 and 28 of T. 30 S., X. 22 E., in the McXittrick field,

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