I do not see an issue here - both methods can work.MAD was a...

I do not see an issue here - both methods can work.

MAD was a drilling company making its bread by contracting to the very type of companies of which you speak. They captured a profit from drilling and the companies made money from the oil.

If you think about it MAD are increasing their profit in terms of reduced development costs every time they drill a well on their own leases. If they cannot beat industry costs this is not so but they have been in the business a long time.