OIL: The Hollywood Wildcats

In Hollywood, an oilman quipped: “When you see a group of movie people talking on the set, you don’t know whether they’re discussing an oil well or a movie.”

Oil was on Hollywood’s mind. Moviedom’s tax-bitten stars thought they had found a sure—or almost sure—way out of their troubles in the high tax brackets. If they struck oil, they could deduct 50% to 75% of the drilling expenses from their income, and later deduct 27½% of their annual gross from the well, as “depletion.” Moreover, they could sell the well later and pay only a long-term capital gains (25%) tax on the profit. If the well was dry, they could write off the whole cost as a loss, thus cut down taxable income. Though many a hopeful had hit nothing but sand and salt, from Texas to Utah last week a handful of luckier stars had struck it rich.

Black Gold. Near Wichita Falls, Tex., Gene Autry’s sixth well, begun a fortnight ago, had come in handsomely. The drillers had struck oil at 5,000 ft. The well gushed 1,200 barrels the first day, settled down to a tidy daily flow of 1,000 barrels. (Autry owns equal shares in the claim with two Texas wildcatters.) Last week drillers started a seventh well, planned to drill some 20 more on Autry’s property.

Jimmy Stewart reported a steady 800 barrels a day from his No. i well, brought in at 4,180 ft. near Vernal, Utah, last fortnight. Stewart and his partners (among them: Continental Airlines’ President Robert Six; Howard Hughes’s ubiquitous agent, Johnny Meyer; and General Aniline & Film’s Chairman Jack Frye) had risked $75,000 on a tip Meyer got from a geologist who had previously tipped Meyer and Frank Sinatra to another payoff site (Sinatra’s “Crooner No. i” well in Wyoming).

Star Dust. In Texas’ Scurry County, on a 1,700-acre tract leased by Bob Hope and Bing Crosby, drillers brought in a 1,000-barrel well, their second in two months. Hope and Crosby and their two Texas partners promptly began drilling two more. Near by, Don Ameche, who had leased 21,600 acres with three Chicago partners, had put up $200,000 to sink a wildcat. Just east of the small town of Rotan, Tex., where he had leased 1,500 acres, Randolph Scott and his partner found oil sands at 5,700 ft., hoped to be producing “within three weeks.”

Not all of Hollywood’s wildcatters had been so lucky. Directors John Huston and Mervyn Le Roy, and Actor Dennis O’Keefe and several oilmen recently sank $194,000 into a 10,500-ft. dry well near Inglewood, Calif. Even those who had made strikes would not necessarily turn them into profits; they still had the problem of operating the well and marketing the oil. As one California oilman put it: “I can give you an oil well which is actually producing a good amount of oil, and bet you’ll go broke if you don’t know what you’re doing. The stars . . . don’t know enough about the business . . .”