INTEGRATED METALS DISCUSSION BOARD

[Deadeye]

Why do a very few geologist find most of the oil, gas, gold or whatever?
I have spent years discussing and analyzing this fact with knowledgeable oil people and few have a clue. They mention education, training, right connections, work ethics, access to data, even luck but those are not the right answers. I know geologists with all those qualities who have found nothing over a lifetime of hard work. In our East Texas community, our phone book normally list about 200 Geologists/oilmen and about 10 of these generate 90% of the new oil and gas prospects.
So what is it? Is it some ability to connect the dots and see things with an open mind without the bias of past training or experience that blinds them? I always liked the description of being a detective looking for clues or putting together a jigsaw puzzle and seeing the “big picture” with the least number of pieces in place.

So what is it? How does one recognize and hire oil-finders?
A friend of mine, the number two guy at one of the biggest drilling companies, hired five young geologists to find and feed deals to their 105 drilling rigs. A few months later he invited me to lunch and wanted my evaluation of his new geologists that I had been working with on new deals etc.
I told him Mr. A was going to make a good company geologist – he would follow directions, work hard and be loyal to the company but he would not find much oil because he could not commit himself to the chance of being wrong.
Mr. B was a young charger that would find lots of oil but he wouldn’t work for you very long. Because he was a greedy independent aggressive thinker and would have to become the boss or go independent on this own sooner or later. Two years later he went on his own and has become one of the most successful oil finders in East Texas. My wife gets some really nice checks from her investments with him. I encourage her to learn by doing as that is the best way to learn anything.

Mr. C was a very good researcher, report writer and well sitter but had no understanding of rewards vs risks and seemed to think too cautiously, just couldn’t see past the risk of losing company money. Later he quit and went to work for the Post Office where he made a fine postmaster. Mr. D and Mr. E, I had no comments.

OK, is that it? One needs to be a greedy independent aggressive thinker? No it is more than that but that is a good starting place. I learned early on that one of the most valuable things oil finders have to have – the ability to be wrong and try again. Much as a good golfer bogies a hole and birdies the next one.

A short sidebar story -- I was very young and had a very good, low risk prospect and I sold interests to several rich old oilmen. I expected it to produce and was very down when it turned out dry. After being up all night, I drove in and delivered the logs and bad news to my investors. I was listing all the reasons for the well being dry when I really got chewed out by a wise old gentleman. “Stop whining and apologizing for a dry hole!” He said with force! “We are big boys and have been in dry holes before – go find another prospect like that one and we will try again – go get some sleep”

Now that was more important than you may think. Why? That was a good prospect and many good prospects are dry holes. One can’t have guilt for drilling a good prospect that turns out dry. Disappointment yes but guilt no! High risk deals are expected to be dry and are a pleasant surprise when they produce. My rich investors viewed their money lost as petty cash charge-offs and that also is important – never let an investor buy too large an interest so he does not feels hurt by a dry hole.

This is the answer and I may not be getting this point across:
How does being a greedy, independent aggressive guilt free thinker make a geologist an oil finder? Finding oil is all about having the proper mindset based on honesty. Honesty to not be bias, to have an open mind, to consider “black swans”, honesty to trust one’s own judgment and act, honesty to assign the proper reward to risk ratio, honesty to not drill the lesser prospects that will make wells but no profit for investors. "A Geologist finds more oil and gas by drilling more wells on good prospects on good trends in oil country." That simple!

Every word a geologist utters must be credible.
Here is why: Professor Leverson said, “You find oil by drilling holes in the ground and a geologist’s job is to give people good excuses to drill a hole in the ground.” To drill all these needed wells one needs credibility that he is 100% honest. Honesty and credibility are the most important single factors of all. It takes years to establish them and yet they can be destroyed in a careless instant.

Best illustrated by another short story. There was a wealthy oilman in Dallas, (Mr. X) who was buying lots of prospects so I submitted him a good prospect. I was treated very poorly by his staff and they sent a form letter several weeks later rejecting the deal. Being determined to sell them a deal, I submitted several additional deals with the same results. One day, I was showing a new prospect to a local pipe salesman who was in my office to sell me some well casing. He said he was going to Dallas tomorrow to see his brother in law (Mr. X) and I must go with him and show Mr. X this prospect. I was surprised as I didn’t know of the relationship.

We went to Dallas and I was introduced as Nate’s trusted good friend and I was treated like royalty no less when I went through the deal presentation. They took 1/8 of the deal and it produced. From then on they took 1/8 of everything that I submitted to them. The wonderful power of credibility.

The original question and proper answer applies well beyond just finding oil and gas: Why do a very few geologists find most of the oil, gas, gold or whatever?
Now we have “a greedy independent aggressive honest thinker with judgment, determination, integrity, patience and want-to plus credibility! You know that is a pretty good guy to try and be because he will surely find his fair share of whatever he is looking for.

[Deadeye]

How to buy at the ground floor level.

I have discussed at length of how geologist find oil and gas and make money. Maybe of more interest will be how geologist buy at ground level.

I have said before that buying interest in Oil and Gas wells and making a profit is much harder than working and finding oil and gas production and making a profit.

It should be obvious why. In one word Promotion. A car manufacture does not sell you cars at costs, neither does a geologist, even to another geologist.
Once a geologist is making enough to comfortably live on, he has to invest his extra income. Since oil finding geologists know of little else they prefer to invest in their own deals and with some other geologist they trust.

Since even the best deal is likely to be a dry hole it is best to diversify and have interest in many prospects rather than a very big interest in the few a geologist can find in a lifetime. The secrete of buying into an oil or gas deal is not to try and pick out the ones that look the best or the ones you think have the best chance. Why because no one can know as much about a prospect as he who originated it. Keeping in mind that some geologist simply never find production even when drilling prospects that look reasonable and sound.

Therefore the best way is to pick the best geologist with the best track record and not the individual prospects. A good geologist has no trouble selling deals once his credibility is established. He in fact has a waiting list, as I did, and picks the investors he wants. Usually no doctors, lawyers or Indian Chiefs as they are generally poor losers and can cause a geologist grief.

Surprisingly most production is found by a small group of geologist in each area. Generally a geologist becomes a so called expert in a certain group of counties or a specific geologic formation. All geologists will venture almost anywhere always looking for greener pastures so to speak, unless they are catching em faster than they can string em. Are you listening Scruffy?

One of my favorites was a young geologist in Houston who did nothing but re-enter abandoned dry holes and completed the wells in zones that the original driller and geologist had over looked or declared to be non-commercial and plugged the well. Ken is an absolute genius at log analysis and calculations to determine if a well would produce. I bought into several of his deals and most of them made profitable wells. Incredibility he re-entered an old well that two other companies had already re-entered and tried to complete but failed. His was the fourth attempt and he perforated a zone that the others had ignored and it made 150 barrels of pipeline oil per day! He did this on another well that proved so good, he had to drill three other new wells to develop the field.

Another young geologist went to work for a local drilling company when they hired three new geologists back in the 1980 oil boom. I showed his company a deal and this new geologist, John, immediately grasp the critical weakness and strengths of the prospect. Within a month, I made a prediction to my close friends that John was going to be a successful Independent someday as he was too bright and smart to work for someone else.

Three years later John quit and hung out his shingle. He quickly found several producers and invited me into one of his prospects. The first one was dry but the second one made a nice well followed by another. I still get nice checks from those wells 21 years later.

A young Independent Petroleum Engineer that I knew specialized in calculating reserves for various companies so they could get bank loans or have data to market properties as they declined to levels that the majors were no longer making a profit.

Ivan called one afternoon and said he had a deal that he wanted me in as it was sure to make money. He explained it to me over the phone and said a one – eights interest would cost $20,000 and at worst I would get that back as my part of the salvage cost. I knew Ivan had a fine reputation, was as honest as they come, so I took the interest without looking at all the data he had.

The deal was Union of Calif. Oil Company had a large lease with about a dozen old depleted wells in a large field in Freestone County. The wells were up for sale for someone to salvage the old equipment and plug the wells. Ivan had already put in a bid and expected to be the high bidder. He needed $120,000 to cover the cost and he would have a free 1/4 cleared interest for his work and knowledge.

What did he know? The play was certainly not to make a few dollars by selling the old rusted tanks and Christmas trees, etc for enough to pay for plugging the wells and having a small profit left over. He was thinking much bigger. He had done some work for another company on the other side of this field a year earlier where they “fracted” an old well to improve the flow rate. It was a thin zone and the workover job made it into a good gas well. Later Ivan looked at the logs of other old wells in the field and they had the same formation but much thicker and none of them had ever been produced. Then he heard that Unions of Calif. was going to abandon their lease. What an incredible opportunity.

One little problem, the big deep fracture jobs cost about $200.000 each and we would need a dozen of them. The plan was to sell the deal to another big company as a quick flip for cash since these leases were already loaded with no room for additional overriding royalty.

Within six months I was presented with a check for $270,000 for my 1/8 interest. I bought at ground floor for $20,000 and sold retail.

Oh, I had my fair share of dry holes that I bought into like Buzzard Ranch.
That well had to be dry with a name like that. I always tried to give my prospects romantic names or names that stirred visions of grandeur, like “Damascus”, “High Cotton”, Sleepy Hollow”, “Dollarsville” and “Bird-nest on the Ground” of all things. I also had a “goat hill” that produced.

One final thought on buying at ground floor compared to buying stock in an oil company. At ground floor the promotion is minimal. Generally only a small override and a ¼ promotion where 1/4 pays for 1/3 of the cost.

With a company like Exxon, the promotion is closer to 90% with maybe 10% of the profit divided among the stock owners. Big company overhead is too high to even calculate. Stockowners pay for everything from company picnics to $Billion dollar drill platforms, including the army of paper shufflers. I am not picking on Exxon as they are better than most. They don’t steal money, they just waste it and throw it away.

In general when a company like Exxon drills a well, it will cost twice what I can drill the same well for. Even worse their operating expenses after they find a producer is three or four times what I can operate the same well for. Both of us get the same for the oil produced. So a producing well that they will lose money on, I can pay the royalty owners, pay Exxon 10%, pay all other expenses and still make a big profit.
I in fact did this on acreage Exxon farmed out to me even though they knew it was productive. They could also see they would make 10% of the production as profit if I drilled and operated the 12 wells – where they would lose money and not make a dime if they drilled and operated them.

One hears of the people who get rich drilling oil and gas wells but there are many loses and the successful wells must pay back the investors their cost plus the cost of all their dry holes if they are to continue in business. Senator Proxmire was told this and said the solution was simple. “The companies should stop drilling all those dry holes.” As if they could – or like the dry holes were intentional. Humbug!

Ok, the Bottom-line:
Buying shares of an oil company can indeed make nice profits. Maybe 50% or 100% in a bull run. There is minor normal risk – so the stock goes down 10% or 20% in a correction or bear market.

Compare that to a working interest in an individual wildcat prospect. The odds are say five to one that it will be dry and the loss will be 100%! Drilling five of those and you will likely get a producer. Now say this producer pays back 10 to 1 but it has to pay for those five dry holes. Now you have a 500% profit but this will be over a number of years. This game is not for the faint of heart. Mr. Womack holds the record for the most consecutive dry holes at 80!

But now understand the miracle of being an independent Geologist and selling the prospect you have found. We won’t even count or put a value on our time because it is like playing golf – it is fun – not real work.
If we clear an 1/8 interest (12.5%) in the deal, we have no cost to recover if the well is a dry hole. So after five dry holes – we now make a well that pays ten to one of the cost of the promoted deal above. The first dollar is profit without waiting for a payout period. Magic! It is not a 500% profit, it is a 1000% plus profit even if one’s time is valued.

It is even better than that because the IRS treat the earned interest as zero if the well is a dry hole. One can earn a $million dollars worth of earned interest and not owe a dime in taxes, unless one sells part of it. One still pays production taxes, property taxes and income taxes on production of coarse.

Investing in oil and gas is difficult at best unless one is the originator of a deal doing the promotion. Promotion is not a bad word, it is simply doing the necessary work to get a well drilled and is a whole subject that I have touched on above.

Buy at ground floor from a successful, experienced geologist and diversify into at least ten wells to have a chance at success. Generally most geologists don’t want to deal in less than 1/8 or 1/16 interest so it requires deep pockets to go this route when even shallow wells now cost several hundred thousand to drill and complete. An even bigger problem is getting with a really good geologist as most have more investment money available than they can find good prospects to put the money in. This may be changing as tight money is affecting the oil business as much as other business. Investing is difficult as I have always said: “It is much easier to make money working than to make money investing. (regardless of the amounts involved)

PLEASE DO NOT REPLY HERE AS I WILL ADD MORE LATER

[Deadeye]

Create win, win, win situations and deals
A friend recently reminded me of a basic principle that I used that works in all business dealing: Joe said, “The deal should be structured so it is a win, win situation for all involved.” There are unlimited way to do this and sometimes that can lead to quite interesting trades and deals as follows:
Times were really hard for the oil business in the fifties, sixties and early seventies so one had to adjust and figure out ways to do business in creative cheap ways. The good news was there was little competition as most had given up and the people with existing oil incomes just sat and counted their past winning.

Being the new kid in town with no money, I did not have that luxury and proceeded to find prospects. But how could I get them drilled with no money and virtually no buyers. I showed one gas well deal to fifty two companies before I found a company that would drill it if I practically gave it to them. I was convinced it would produce - and it did after all those other dummies turned it down.

I showed another big prospect to 72 companies before I finally found a big independent to “give” it to. He took it and ultimately it was dry and yes he made $750, 000 profit while I made $30,000.
(I discuss this in detail in a story below)

I was getting great practice finding prospects and some oil and gas but was earning very small interests because I was selling (giving) the prospects wholesale to companies who were then re-selling the deals retail in pieces to other companies. OK the answer was: I had to become the big guy selling the deal retail for the big bucks. But how does one do that when he has no money, no track record or creditable reputation and still a young Geologist wet behind the ears?

Think up a plan where everybody wins. Where they have to buy because it is too good to turn down. What do I need? A good reward vs risk drillable prospect. Gee, that was the easiest part for a geologist who could sniff out and recognize oil and gas deals without breaking a sweat. What else? I need to own the oil Leases. No problem, I knew how to have a moneyman buy the leases and get his money back and a small interest before I drilled the well. Therefore he was exposed to no risk, just the possibility of success - a true win, win situation.

What else do I need? I need a drilling contract from a drilling company to physically drill the well for me. What else? I need an Operator to shoulder the Liability of a “Black Swan” blowout, and has an engineering staff to supervise the completion, handle equipment purchases, billing, comply with regulations and staff to operate the well when productive.
What else do I need? One final thing - some retail buyers who were not skin flints or skeptical of the ability a young charger. Quite an impossible list to accomplish! Or was it?

The solution; let everyone be winners, including me. Here is the plan: I went to one person I knew who would listen to my plan with an open mine as he had made money in the oil drilling business by being conservative and essentially was a “Aces, Straights and Flushes” man. He would recognize a sure thing when I presented it to him – and he did and said “OK, it’s a deal” with a firm handshake.

What had I told him? “I have a good low risk prospect that will likely produce a five or ten return and I want one of your drilling rigs to drill it for me. I want you to buy a one eights interest which your profit on the drilling contract will pay for. In addition I will give you another one eights interest free (with emphasis) for being the operator. Of course you will make a profit operating the well each month for the life of the well which should be about ten years. I will only charge a modest 3% overriding royalty plus a geologic fee of $30,000 which will include all well sitting geologic supervision and well log interpretations. So far so good as he could see - so far this has cost him nothing and put one of his idle drilling rigs to work, plus this would give him a huge profit if I was right and the well was productive.” What else?

“I will sell the deal to substantial partners who will be subject to your approval since you are going to be the operator. Should you have any particular people that you prefer as partners, I will give them first call on half interest. I will sell the deal on a cost basic of 1/4 interest pays for 1/3 of the cost. That will clear your free 1/8 interest and a 1/8 interest for me. A fair simple standard deal.”
My plan and presentation worked.

Now the easy part, selling the rest of the deal. I thought maybe Chris would recommend that I show the deal to some of his friends but no, he was using this as a test for me – could I really sell this deep expensive deal? We’ll see.
I had a selling idea that I had been toying with and waiting for the right opportunity. This was it. I was raised up in East Texas where timber, saw mills and paper plants were almost as big as oil and gas and I was aware of their energy needs. I had noticed a large timber company, we will call LA, was making money, expanding, and had just completed a new office building in Houston. They didn’t know it yet but they needed a call on a future natural gas source and I was the guy who was going to sell it to them so they would also be winners in the coming gas shortage that I could see coming.

I walked in cold without an appointment and asked to see the regional manager! Apparently few had found LA yet in their new building and the manager was new in town, having just moved there from Louisiana where he had learned about the oil business from some of his personal friends.
He and I hit it off immediately as we talked hunting and fishing and finally when we got around to business, we were on the same page. He confided that he had recently written a report that said.”Should a future energy shortage develop LA would be vulnerable”. My selling kicker was this gas prospect was near one of their major plants and they could take their part of any gas found “in kind” if they wanted it. It was an easy sale of a quarter interest, a win - win for both of us.

That was so easy, I realized I was on to something special. I asked myself, “Who else uses lots of natural gas and needs their own gas source?” Wala! Alcoa Aluminum Company of America was the biggest user I could think of. Intimidated by bigness? Not me, I called their Texas headquarters at Point Comfort, Texas and finally got to talk to a Vice President. He said they had never bought into any energy ventures but were currently opening an office in Houston with two energy consultants they had retained. He gave me their telephone number and said to contact them. I was in luck big time.

Bill and Tim, the geologist and petroleum engineer consultants, were still moving in furniture in their new office when I called for an appointment. There is nothing like being first in line with an introduction from the boss. Indeed Two days later I sold ALCOA a quarter interest, their first ever Energy deal, including a call on their part of any gas found. When I told Chris that that I had sold all but a one eight interest in less than a week, he was impressed, I had passed the test. In fact he said he had a friend in California that he would like me to show the last one-eights interest to. The next day his exploration manager and I were on a 747, first class, to Los Angeles where we checked into the Beverly Hilton, in Hollywood.

A limo ride out to one of the largest wineries in Ventura valley and a presentation to a big shot and his geologic consultant as a formality concluded the sale and we were on our way home. Needless to say, Mr. big was very happy as he had been let in on a “inside deal” by his friend from Texas, another win, win as the well did indeed produce and everyone made lots of money on a low risk gas deal.
It didn’t end there. I now had the long sought credibility and customers who would buy into other deals as they developed. A long term, win, win for everyone.

As a side bar: This reminds me of the classic story of How Rob McEwen developed a nothing little Goldcorp shell company into a world class company. Few know or remember the story. He bought the little company that had a pile of old data that showed little gold on their property and made little sense so he did a remarkable thing. He put the data on the internet and offered large $100,000 prizes to the best three interpretations and plans anyone could offer. Hundreds of geologists and engineers around the world burned the midnight oil and spent weekends analyzing the data and found where the gold was on the Goldcorp property. Another great classic win, win for everyone involved. Amend.

As a footnote: I would like to explain a little of how easy it was to find this 11,000 foot deep low risk prospect that big companies would buy into and make four Billion cubic feet of natural gas from one well. Bottom-line: it was a simple graph from an adjoining well of pressure decline plotted against cumulative production or in this case against time. There was not a decline, in fact the flowing pressure was rising after a year of production. Impossible? Yes but here is why and why no one but me picked up on it. Another “Bird-nest on the ground” for the taking.

I was driving back to East Texas from Houston and stopped by a new field discovery well that Independent George Mitchell had recently completed.
The drilling rig was still on location but there was nobody there except a gauger and a night watchman for the drilling company. They were flaring the gas over the slush pit and it appeared to be flowing about a half million cubic feet of gas per day. The flowing tubing pressure was about 800 psi and the gauger said the sand was very tight (low permeability) and the well was still cleaning up which ment that some drilling mud and water was still coming out of the Woodbine sand which was about 10,600’ deep at this location. Not a great well but a keeper that would eventually payout. I wished them well and told them about a big Buck I had seen back around the bend in the dirt road.

About once a month when I was in the area on other business I would go by the well and read the pressure on the well gauge and update my pressure graph to see how it was doing. Meanwhile Mitchell drilled several other wells in the field to the east, west and south. Obviously they had concluded it did not extend farther north in the up-dip direction where the sand pinched out against the underlying Buda-Edwards reef. Interesting!
After another six months it became even more interesting, the pressure was still 800# but the well was producing about a million cubic feet of gas per day according to Texas RRC production reports. A month later I got a report showing the well pressure was still 800 psi but was flowing two million cubic feet per day. I asked an oil business friend to stop by the well and see what is going on. He reported back that this gas well was no good – that it was obviously making water with the gas because the flow-line was very hot instead of being frozen with frost and ice as normal gas well experience. Something is not right here, I thought.

I investigated further and found the truth. The well had an adjustable choke and had been gradually opened more and more by the gauger to maintain 800psi as the well flowed greater amounts of gas as it continued to clean itself of drilling mud damage. Since there was no choke with the well flowing wide open there was no ice on the flow line. The line was hot because the well was making a large amount of condensate not water. This well was a cash race horse.

I got very interested and traded for three seismic lines that showed the front edge of the reef where the sand pinch out would be. There was a close 160 acre tract to the north that Mitchell had not put in this closest gas unit and I had heard the landowner was hoping mad.
A careful look the seismic data convinced me that a gas well could be made on this 160 acre tract at the very edge of the underlying sand pinch out. Mitchell’s geologists had screwed up and left room for someone to get a straw into their new gas field. The oil patch is governed by the “rule of capture” and the gas belongs to the well that the gas comes out of. Oil and gas always move up-dip if there is a water drive so the most up-dip well will last the longest and recover the most gas or oil. Where there is no water drive, the gas pressure simply blows down like the pressure in a tank. The best location in the field was undrilled and begging for someone to notice the opportunity and be a winner. I did.

A well location on the 160 acre tract will have sand with gas and is a near cinch to produce a large amount of gas. No time to waste, I send an ole high school friend and hunting companion to buy the lease as my moneyman. His dad had been a banker and he could easily afford the $5000 it was going to take to buy a short term lease on the 160 acre tract. My friend got his money back and a monthly check for about $5000 for about 10 years. Another win, win as I got the lease to make the above deal possible. Very simple geology, a simple plan and simply acting to get it done. Also note the disgruntled landowner also won by leasing his land, getting a productive well drilled and a big monthly check for more than ten years.

Another win, win, win. Just as it should be. Also don’t forget, every tax payer in the county were winners along with the Leggett school district due to the huge property taxes that were paid on this gas production. The winner were almost endless with one loser – Mitchell and associates who had our lease and let it expire without drilling it themselves.

Please don’t post a reply as I will be adding some more, true oil patch stories.

[Deadeye]

Flying and a simple prayer for a dry hole.
Nothing exciting here, just a study in human nature and how a flying geologist takes a shortcut to the rig to do a few minutes work.

This October morning started with a morning report that the No 1 Johnson well was at total depth of 5500 feet and conditioning the hole to run logs. They would need to make a wiper trip then condition the hole for several hours, trip the pipe out of the hole and run logs and take sidewall cores. All that would take most of the day. No need to go to the office as nothing else is pressing. OK, I'll take my Labrador and go dove hunting before driving to the rig, a couple of hours away

I had a great dove hunting lease about 200 miles west so I decided to fly there in my Piper Super Cub, land in a pasture and shoot a few doves, return home and drive to the rig. This was a well I had bought an interest in from my friend John so I hadn't been to the well location before now. My Geologist friend, was the operator and he had taken care of everything to date. All I had done was look at his maps and data and write him a check for an interest in his prospect and well.

I told my wife that Rebel and I were going dove hunting at the Brownswood lease and would be back about 4:00 PM. I expected to then drive to the well and be back about midnight. I went out the back door past our horse barn and rolled the Cub out of it's hanger. After a ground check and loading my 410 Winchester and stuff in the plane, Rebel jumped in and bedded down on the back seat as usual. A short takeoff roll across the knee high coastal hay patch we were airborne and on our way.
After a two hour flight, a three point landing in the pasture beside the cattle pond, we talked to Jim Langford the rancher as he had seen us land. The dove hunting was excellent and Rebel had soon retreaved a limit and I picked and then dressed and cleaned them in the creek to go in my small ice chest.

Flying back home on the two hour flight, I decided to detour by the rig and see how they were progressing. I circled low over the rig and was surprised that they already had the log out as they were loading a sidewall core gun on the pipe rack runway. Boy I was running way late and was going to miss the show and possible delay the evaluation of - did we have a well or dry hole?

Well I saw the obvious solution. There was a small coastal hay patch by the rig road only 200 yards from the rig. I looked it over carefully on a couple of low circles. I couldn't land on the dirt rig road because it was along the edge of the hay patch with the trees over hanging parts of the road. Should I land in the hay patch without prior permission from the owner? Well no but this was rather an emergency of small sorts. In the past I have landed in many pastures without permission but the landowner had always waved from a tractor or standing near a barn or on a porch etc. I even have a message tube with a long streamer to drop messages to people on the ground. It is also easy enough to cut the engine to idle and yell from a fifty foot glide over someone on the ground. But none of that will work here. Remember there were no cell phones back in those days.

Hell! I need to land – so here goes, although I had apprehensions and a bad gut feeling on this one.
Perfect landing next to the road with a short 200 foot rollout in the thick coastal. Well I hadn't even gotten out of the plane when I saw a cloud of dust coming down the rig dirt road at 60mph. This looks like trouble coming! Yep.

I smiled and stuck out my hand to introduce myself to no avail. The streaming curse words were unspeakable and I have never seen a man as angry and belligerent as this dude. You would have thought I had raped his daughter and burned his barn! The rant went on and on – I couldn't get a word in edgewise except a hundred “I'm Sorry” - “I apologize” - “I would have never landed if I thought you would be upset” and on and on. He insisted I had ruined his hay crop by my two 200 foot tire tracts. The grass was already straightening up in the light breeze – but no matter – I was a common criminal, a trespasser on his property. I was wanting a friendly “Farmboy” about now, not this arrogant bastard. He wanted to know how I would like it if he came to my house and drove his pickup back and forth across my front yard? I suppose I had J.R. Ewing written across my forehead! I am surely some evil SOB.!

While listening, I was doing a little character study and I really didn't like this guy. I suspected he was a retired hangman or executioner. Yes, at this point I found myself saying a little prayer “Dear God, please do me a favor and let this well be a dry hole, as I couldn't bear making this jerk rich! Amen”

To finally end this weird oil story, my prayers were answered yet again – Sorry John. The well was dry and a nice tax charge-off. I never landed again without permission – except once when I had engine trouble and had no choice. I did have a balloon land without permission on my ranch but I welcomed him with open arms as it was getting dark and frankly he had run out of options.

Please don't reply to this as I will add a flying adventure next.

[Deadeye]

About flying and not about oil or Geologists for a change.

Yes Geologists that work seven days a week and sometimes all night do take an occasional vacation.
It was early spring in the late 80s and time to fly to the yearly “Sun and Fun Bash” in Lakeland, Florida. This is jokingly referred to by pilots – “Spring Training” for the annual fly-in at Oshkosh, Wis. every August. That is like going to Meca for pilots - there will be 14,000 planes there with 200,000 spectators for the weekend air-show – quite a big-time deal for people who love airplanes from Jennies to Jets.

To talk about flying, one has to mention safety and accidents. Now a Super Cub is a very safe airplane as it will fly just fast enough to barely kill you. It cruses at 115 mph, stalls at 42 mph fully loaded. Lands and takes off in 600 feet or shorter if lightly loaded or with a head-wind. A very stable dependable airplane. Accidents generally don't just happen – they are what one finds at the end of a chain of events that lead to the actual accident. Let's keep an eye on that chain to as we fly from Texas to Florida and back, about 1900 miles packed with a week of adventure and the unexpected. Has anyone ever read “Fate is the Hunter” by Gann? Maybe I should have!

The day before I was to leave for Lakeland an“event” happened: My remote electronic compass stopped working. I had replaced my regular compass with an electronic remote compass with the actual compass located in the wing so the steel brace bars over the instrument panel would not interfere with the magnetic compass. No problem, I could still make the trip as I had other navigation aids, a radio direction finder, a VOR navigation system, more than enough backup redundant systems and besides I would put my Geologic Brunton Compass in my pocket should I need it. Was that that a chain link “event”?

I loaded the Cub with my tent, sleeping bag, lawn chair, ice box, groceries, rain gear, extra clothing, camera, flashlight, maps, hiking boots and misc. gear. Everything but my gun and hunting dog who wanted in as she thought I was going hunting. I took off at first light as the dew was still heavy on the coastal pasture and headed southeast into the rising sun Louisiana and Lake Ponchartrain at New Orleans. Then on across Mobil Bay and landed near the beach at Gulf States airport for fuel and sandwich.

Super cubs are relatively quite so the noise does not bother people when one flies low and the cub wants to fly low along the beach when the girls are sunning! The regulation say 1000 feet altitude or 500 feet from people in rural areas. That translates into 100 feet high and 400 feet from the beach unless one cheats a little in judging distance! Still a spectacular view that gets a return wave from most of the girls. The gulf water turns green and then blue as we get to Destine Florida, and Panama City. Then across the saw-grass flats along Appalachia Bay headed to a little airport near Lake City for fuel..

By now I was seeing lots of airplanes headed for Sun N fun and when I landed at Lake City it was a flash-back in time. The old WW II fighter training base was swarming with WWII fighter planes in the pattern, on the runways, in the parking area, at the hangers, everywhere. I did not know it but Lake City was the gathering point for 50 or so War-Birds on the way to Lakeland. As I fueled up, several of the pilots wanted to see the unusual instrumentation I had in my cub – the only cub anyone ever saw that had a stormscope weather detector with a range of about 200 miles!

These guy were something else – they insisted that I join their beer and Bar-B-Q party which I gladly did. It was soon too late for me to get to Lakeland before dark so they insisted I spend the night as they had plenty of extra motel rooms reserved and the stories and party continued late into the night. They said they would be serving breakfast for all at 7:00 AM and can you believe that everything was free – they refused to take a dime – except my 35 gallons of fuel at half price, Seems the aviation service companies were picking up all the bills. Well an overhaul of a warbird engine was $30,000 so this little gathering was petty cash to them. I came away with almost a dozen free T-shirts with their various company names on them
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The next morning, taking off among fifty fighter planes warming up for their own take off, I had to be careful not to get blown over in my lightweight Super Cub. Being how I had all day to cover the 200 miles or so to Lakeland, I decided to do a little Florida sight seeing. I flew over to the west coast and admired the private houses on some of the private islands in the area. Then on down the coast and a little detour up the swanee river, then on to Tampa bay area, all at mostly 500 to 1000 feet where the view is best. I went on south past Naples to Maco island ant then east over the heart of the Everglades swamp area and took some 50 foot low level pictures of alligators that were out sunning themselves.

Later I realized that I was probably being tracked closely on radar since at that time they were having lots of trouble with drug smugglers in small aircraft flying low dropping drugs to partners in out of the way places. Boy do I have some side stories about that. I was engrossed and having fun but I finally noticed I was low on fuel and headed for a little airport on my map for some fuel. Surprise! When I got there the airport was abandoned and no fuel but a lone guy said a field about 20 miles nothwest might have some. Was this another chain“event”? I would barely have enough fuel to get there.

I leaned the fuel mixture on the Lycoming O320 150HP as much as I dared and headed northwest. Not a good feeling being low on fuel over swampy terrain. As I neared the small airport, I announced my location and landing intentions over the unicom frequency but got not reply. I approached for a straight in landing on the single north south runway as I was not sure I had enough fuel for a full field pattern circle or even a go around should that become necessary. I was damn near out of fuel flying into the north wind. Still no radio traffic and as I crossed the runway threshold at 30 feet – surprise I saw about five parachutes 500 feet over the runway about half way down the 3000 foot runway. Now what? Safer to go ahead and make a short landing than go around as there may be more parachutes up there that I don't see. Good choice, I stopped in 400 feet as more parachutes were landing everywhere about 300 yards in front of me alongside the runway.

Well it turns out this was a remote strip where a parachute training school was located. They announced the drop on an air to air radio frequency but not on the field unicom frequency. No harm done and I refueled and went on my merry way over Lake Okeechobee and landed in Lakeland to join about 7000 other planes and crews who were camping out in tents and under the wings of their planes.

Sun N Fun is heaven on earth for pilots. An air-show every afternoon weather permitting and great camping facilities like plenty of cleans rest rooms, hot showers, eating places, and grocery stores. Lots of educational seminars for pilots, lots of exhibits of aviation equipment and a flea market of every items one can think of. Plus thousands of airplanes to look at and endless interesting pilots to talk to.

After a few days the weather turned bad and thousands of pilots got antsy to leave after a few days of rain storms blowing down their tents. Finally one morning the weather cleared enough for some IFR, instrument pilots to leave plus the ceiling was 1200 feet and VFR, visual pilots could take off. Quickly 4000 airplanes tried to line up to take off and the controller system was overwhelmed. VFR pilots took off as instrument pilots waited for their clearance. Anxious instrument pilots started taking off in their twins with the intention of picking up their flight plan clearance when airborne as hundreds of VFR pilots took off to fly visually under the overcast. I was among that VFR group as I was in the safest scud running plane available, a Super Cub, being the favorite of the bush pilots in Alaska who live and fly often in bad weather. Get home ictus in bad weather is indeed the leading cause of accidents – this was a chain event to accidents and I was sucked in.

At first about 15 miles north I went up to 5000 feet when I came to a wall cloud bank to see if there were any holes to get back down. After a few more miles I turned around and went back to the front of the wall cloud bank and dove down to 1000 feet and followed lots of airplanes going under the cloud overcast. Safe enough at first with good visibility and airplanes to my right and left but the situation began to deteriorate steadily and soon was down to 500 feet in light rain, not a good situation with high towers in the area. I thought of turning around but meeting planes going north in these conditions was a no go – I had already slowed down to 50 mph to see better and give more reaction time to avoid any towers that were coming into view occassionally. I needed a close by airport to get my butt safely on the ground.

The problem was I was too low for my navigation systems to work. The only good thing was there were no thunderstorms anywhere close as this was a stable weather system. I had quite a bit of low level scud running experience but that was over terrain I was familiar with and not lost looking for a landing strip. I began following a road that my trusty pocket compass said was running northwest which was the general direction I wanted to go. All roads eventually lead to a town with a name on the water tower and generally an arrow to the nearest airport. Reliable 1930 technology.

Things were now getting very serious, the ceiling was down to 400 feet and visibility was about a half mile in light rain. I noted what looked like coastal saw- grass below and a check with my trusty pocket compass said I was going west not north as the road had gradually curved west and had me headed out over the Gulf. I hadn't noticed the road curve in the low visibility. I made a careful 360 degreee turn keeping the road in sight and went back down the road with a more careful watch on the hand compass. Yes as the road curved I turned left at an intersection that headed more north.

The ceiling was now down to 300 feet, only a couple hundred feet above the trees - it was time to look for an emergency land spot even if it meant damaging the plane or flipping it in the soft rain soaked ground. Better to be in a walk away accident than getting killed hitting a tower or trees if the ceiling get any lower. I slowed to 45 mph with the landing flap half extended. Prayers answered, on the left side of the road was a new sub-division being built. New graded unpaved roads and a couple of houses under construction but not a car or anyone in sight. I circled to see if there were any electric lines, then flew down the road several times to judge the ruts in the road and compared that to a small grassy area off to the side. Which would be the best choice, a muddy rutted road or a low grassy area that seemed to be covered in several inches of water?

It will be the grassy area but first I will continue up the highway a couple of miles to see if this subdivision was on the edge of a town, which it should be. My hunch was right – the edge of a town.
Yahoo! There was a small airport with hangers off to my left and three tall radio towers dead ahead poking into the 300 foot cloud ceiling. I banked left and entered a down wind pattern for the north leading runway. It was none too soon as it was late afternoon and beginning to get dark. I think my Supper Cub breathed a sigh of relief of not being destroyed in a boggy field.

I taxied into a parking spot close to a hanger that had a door open and a light inside. I ran to the hanger in the rain that was now pretty heavy and came upon two ghostly figures by a wall phone. They were both white as a sheet and barely able to talk. I finally relayed their story which made mine seem tame.

The twin Barron outside is what they came in and their journey from Lakeland was similar to mine except when I was flying at 45 -50 mph, they were flying at 120 mph which gave little reaction time and little maneuvering ability in the twin engine plane to avoid towers etc. and no chance of landing off airport and surviving. They had taken off from lakeland and expected to get an instrument clearance by radio but lost communications and navigation aids at their low altitude. They had literally stared death in the face for the last hour or so. I was not quite so white.

I got a ride to a motel and after a good nights sleep and breakfast, hitched hiked back to the airport and continued on my merry way home but not without a little more adventure. I was almost to Panama City fying at about 2000 feet when I was startled by a loud noise explosion sound and the cub shock in the air turbulence – no more that twenty feet from my right and left wing tips – two F- 86s had buzzed me at 400mph or so. With another going over me and yet another going under me! They were having great fun and I am glad I didn't have a rear view mirror to see them coming up behind me.

I approached Ft. Walton military Field which was named for the famed squadron commander at the Battle of Midway. His entire squadron of 16 torpedo planes were shot down as they attacked the Japanese Carriers. The Jap zeros flying air cover for the fleet dove down to a low level to destroy the torpedo planes and our dive bombers which arrived a few minutes later were free to sink three carriers. This one battle greatly affected our ability to gain air superiority and ultimately win the war.
As a sidebar: my cousin Charles was killed at Guadalcanal flying a Navy Wildcat fighter.

Ft Walton has a runway very near the beach and their air control advise me to take a south heading to avoid two flights of landing jets. Roger, a south heading out over the gulf. After fifteen minutes of waiting, I had no directions to resume my own navigation and I was now about twenty five miles offshore. I called Ft Walton control and advised that I was not a very good swimmer and was I free to head back to the beach. He chuckled and said I had been fee to resume my own navigation as soon as I was clear of those jets which I never saw.

Late that after noon I arrived back home from my relaxing vacation. Back to finding oil and gas.

Please do not reply to this as I will add more true stories later.

[Deadeye]

The Story of Damascus Deep,
a 21,000 foot Wildcat well.

This story is of getting a monumental deal done with absolutely no money.

This story starts with a young struggling Independent Geologist with big dreams who has been told he can do “anything within reason” and simply believes he can find a great oil or gas field like  he has read about and been told about from old heads sitting around doghouses at drilling rigs. He relates to Dad Joiner, Michael Halbouty, Glen McCarthy, and Moncrief, all legions of the oil patch.

First let's review - How does an Independent Geologist go about finding an oil or gas field? Obviously by drilling a well on a good prospect. But how does one find a good drilling prospect and if he finds a drillable prospect, how does one get the leases together and how does he sell or finance the drilling deal? How do we earn an interest when we sell the deal? How do we establish credibility?
I have answered all these questions earlier.

Now, how can we move on to bigger and better things? Again, obviously one must think (out of the Box) and if hungry enough and have the “want to” a way will be found.

I was learning – I combined my principles of using a little bit of credibility with my principle of everybody must win to make up for me having limited money to buy leases or drill shallow wells of modest cost and limited liability. Besides it was easier and made more sense to use other peoples money. Let's set the stage for a bigger deal:

In East Texas there are lots of lumber companies that own 90% of the land in some areas. These lumber companies historically would only deal with major companies who would do very large deals involving thousands of acres and millions of dollars so Independents even large ones were shut out. Therefore much of this land remained unexplored by minds not boxed in by major company training. That has to be good hunting grounds.

Again what do I need? I need access to explore some of this relatively unexplored lands and make a drilling deal on it without spending any money! Yes, I will be laughed out of any lumber company office – no money, hit the road Jack. But I came up with a plan, a damn good one I might add.

I was aware that a large old lumber company years ago had sold all their surface rights, their large sawmill and even their railroad system they had built to transport the logs to their mill, which included several steam engines. They retained all the minerals rights and managed the leasing of these minerals on about 200,000 acres. This CX Lumber Company was managed by Mr. CX who was the 60 year old son of the founder who build the land holding over his lifetime, 1880- 1950.

A little research showed they had leased parts of the land over the years to several major companies but very little production had been found since 1900. Just a handful of shallow wells had even been drilled. The deals were generally that a major would pay them a lease bonus of $1 to $5 an acre agree to run geophysical surveys that started with “Torsion Balance” surveys, later “gravity meters” and “seismic lines” on 10,000 acres or so and drill a well if they found anything worthwhile to drill. No production was found by these major companies.

The only production was found by a small independent that farmed in the acreage after a major drilled a so called dry hole. The production was from a shallow thin sand over looked by the major as too small and too insignificant to bother with. That little field at 3000 feet covered about 200 acres and produced several million dollars worth of oil.

I got one of my mentors to introduce me to Mr. CX and vouch that I was honest and credible in any proposal that I made. My plan and proposal was simple: First I showed Mr. CX a simple chart that compared the total money he had received from major companies over the past 50 years compared to his royalty payments from the tiny insignificant oil field on his minerals. It was shocking, This little production had paid more that all the oil lease bonuses he had ever received. Second he had all this land with probably undrilled production that he was not getting any income from. Third I had a plan to get some wells drilled and make him a ton of money and I too would make a few dollars for my efforts. He was paying attention and listening carefully.

I proposed that I be given access to all the old seismic and exploration data that had accumulated in his files over the last fifty years and never been evaluated except in parts by different major companies. His lease deals had always required that each company give CX lumber Company a copy of all exploration data obtained from their land. I would evaluate the old data in his files and add my own data to find the best places to drill some wells.

I would get a free six month option on 33,000 acres of my choosing.
I would sell a drilling deal or deals to buyers of my choice, who would have six months to commence a well to earn the right to buy a lease block or blocks of 3000 acres each after each completed well or wells. Mr. CX would get his standard ¼ royalty plus a bonus of $100 per acre for any leases selected.
He had everything to gain and nothing to lose beyond tying up his acreage for six months while I worked on the data and selling deals for his and my benefit. He liked the deal and said his secretary would prepare a letter agreement per the terms we discussed. I could use one of his spare offices to work out of in Houston.

My main objective was to find one or two small shallow oil fields like the 200 acre one found on a southern portion of CX acreage. It didn't take but a few days until I found a magnificent surprise beyond anything I could imagine. An old Gulf Oil Company seismic line from the late 1940s showed a very deep buried structure which was deeper than anything being drilled even in the late 50s or 60s. This prospect was huge, it covered 25,000 acres, 2000 feet of structural closure – a monster. The catch? It was a very deep buried structure that would require a 21,000 foot test well! Is there enough money and technology in East Texas to do it? Sure there is and I know where!

I was fresh off my “Win, win, win story” and drilling success described above. I had credibility with one of the largest drilling companies in the United States and they had just unveiled a brand new super rig capable of drilling to 25,000 feet. I also had credibility with several deep pocket companies led by Alcoa. The bigger the deal the better they would like it. My heart sang!

I had expected to find several small shallow prospects that the majors had ignored as too small for them. Never did I expect to find a huge prospect that was too deep in past years to drill. Confidential forgotten data buried in old files that no one but me had access to. This would be a major wildcat effort with many problems and unknowns. First of all there was no stratigraphic correlation within fifty miles up dip and nothing along strike. Will there be any porous rocks uplifted to form a reservoir for any oil or gas? I was not even sure if these deep formations were lower Cretaceous or uplifted Paleozoic. No one would care what the formation was if this huge buried structural uplift has trapped oil and gas.

I built all the necessary maps and cross sections with available correlations and put together a geologic report and presentation. The adrenaline was flowing and I was almost working around the clock. Delta loved what was now my standard deal for them to be operator and use their rig with great partners like Alcoa and our group who desperately needed gas reserves for their plants, mills and now a power company had joined our exploration group. The little deals got shoved aside as we went after this wild monster prospect. The potential was huge and the risk was large but the reward to risk ratio said it had to be drilled as the only way to find this field or condemn it as non productive.

The deepest most expensive prospect that I could dream of and yet it was the easiest to sell. This is incredible, I hadn't spent a penny and earned a large carried interest in the entire project.

The new monster drilling rig moved in and this would take five or six months to drill and evaluate. I will spare you the details of various problems and excitement as we drilled through many formations that produced in other areas but not here as we were not deep enough yet to get into the buried structural closure. However I was watching carefully for any unexpected stratigraphic traps that wouldn't show up on the old seismic.

Finally after drilling for two months, around 19,000 feet deep we encountered some gas shows on the mud logging unit gas detectors. The bottom hole pressures were increasing and the engineers were raising the mud weight to hold the well from blowing out. We were in hard dense lime of lower Cretaceous age and the gas was coming from hairline fractures and not a porous formation that would make a good reservoir. We slowly continued drilling deeper and deeper.

Finally we reached 21,000 feet and the well kicked hard. The engineers were able to work the pipe back up the hole a ways by using the special high pressure hy-drill and then condition the hole to run induction- electric logs as well as various sonic and density and gamma ray – neutron logs, about everything Schlumberger had available to run. The bottom hole temperature was about 500 degrees (water boils at 212 degrees) and the pressure was over 10,000 psi!

We were bottomed in salt and unable to drill any deeper. Edit: this may or may not be true and here is why. We lost cicculation and the bit plugged - upon comming out of the hole we discovered we had about 30 stands of pure solid salt crystals packed into the drill pipe. This made a huge pile of salt on the rig floor that had to be shoveled off and out of the way so the crew could work. This could have been super saturated salt water instead of a solid salt formation. I don't think the point was ever proved by samples or logs.

The logs showed no good porous formations below 18,000 feet, yet we had tremendous gas pressure and the gas was sweet with a high liquid condensate ratio. This didn't look good but the decision was made to run production pipe and attempt to get a commercial gas flow out of the well.
This was quite expensive as special high pressure pipe was required as well as a christmas tree and fittings that would withstand pressures of over 10,000 psi. Plus special cement and special high pressure Haliburton pump trucks and special safety precautions around this high pressure. The Christmas was well over twenty feet tall and itself alone cost over a 100 grand!

The well would flow a huge amount of gas with a pressure of 10,000 psi and slowly blow down to about 200psi. When shut-in the pressure would build back up and then blow down again. We had high pressure and low volume that was not commercial. We investigated the possibility of fracturing the well but the bottom hole pressure was simply too great back then. We tried acid treatments but that was ineffective at the great depths and high temperature.
The “D” word – we had a Dry Hole – it was a non commercial 21,000 well that cost $3 million. Those were real dollars back then and would be twenty million or more today.

I remembered some sage advice that I had received from a mentor many years earlier, “Go home an get some sleep and then find us another prospect to drill like that one!” That friends is the way an Independent Geologist finds oil and gas.

The biggest and deepest and a good place to stop, but first I need to give more details on how a young geologist gets started and goes on his own. A little more of my experiences next

[Deadeye]

I was typical. Working for an Independent getting experience and I was ready to venture out on my own as circumstances gave me the final push. My Boss was moving all operations to Montana and I would have to move away from Texas, my family and wife's family - no way. I gave them two weeks notice and declared I was an Independent. I had little saving but I knew what the wild goose knows and had a plan. I would simple copy what I had seen other Geologists do, both young and old.
I needed a "Grub stake" just like the early Gold prospectors and many young professional golfers obtain nowdays.

I wasn't a pro golfer but I was going to secretely get a sponcer to pay my expenses and share in my comming wealth. I knew a wealthy man who I had "crediability" with. I made a Sunday afternoon appointment and made my sales pitch. We made a year contract and it worked out very well. I earned him interest in two wells worth twice what he advanced me in expenses plus returned all his expendures by earning enough cash fees doing well sitting for others. A great deal for us both.

This was a great deal but I was making enough money well sitting to pay all my expenses plus I was finding drillable, sellable prospects in my spare time working 15 hour days. So I really didn't need a sponcer anymore but it had been insurance to help me get started. Each of our lives turns on certain people and events and my friend and mentor Ben was one of them.

Make no mistake, Going Independent is Serious Business!

This gets serious as this is a major life decision and everyone is not suited or cut out to be an Independent. You have to be more than an experienced knowledgeable Geologist that has found some productive prospects while working for someone else. You must have a burning desire to find oil and gas - you have to be greedy to a certain extent and set out to prove something. Failure is not an option. You have to know you can do this one way or another. It is also a must, to have a loyal understanding. adventuresome wife.

OK, but I have no money saved up, have a family, living expenses, etc.
OK, but are you good at what you do? can you find oil and gas? Can you find it before you starve to death? Do you really want to do this?
OK, one way is to find a financial backer. Much like most young professional golfers do - but you have to be really good, not just pretty good.
OK, Money people will back you for your limited living and working expenses for a negoiated period. In return they will receive all income until they get their money back and then split the income 50-50.
OK, If that is too tough, better stay on your salary, company healthcare plan and hope to have a company car someday and a private office as you move up the company ladder.
Yes it is a hard cruel world out there but rewarding to those who have guts, ability and can act. I know of several Independents who got their start this way, although few of them will admit it publicly.

Can this still be done or is it too late?

Indeed it can. I would still be actively finding Oil and Gas if I was younger and had the energy and "want to".

Oh, the rules of the game change and one's approach has to be modfied somewhat but all the basics are still there. Greed, hidden resources waiting to be found, unlimited ways to skin a cat and many unexplored, ignored hidding places, new technology, new depth targets, and most of all the continueing need for energy as long as man is on this earth. Also there will also be men with big money looking for a chance to make the big find - and all they are willing to do is write a big check for the chance.

Oppertunity is out there to be grasped by young thinking geologists. Natural gas has become so easy to find that the supply now overshadows demand for years to come with ten of thousands of well locations known that will produce natural gas. Finding small oil deposits is not very hard but finding large oil reserves is harder yet not impossible. Off-shore in great water depth is the easiest place to find a major field today but that takes a double ton of money.

I have a geologist friend that is not yet rich but has recently found a huge prospect at modest depth on-shore that is 15 miles wide by 40 miles long, a potential major oil field. He sold the deal to a wealthy oilman who is currently leasing the prospective area. It will take a year or so to lease and drill the well. Yes it is a rank wildcat that will likely be dry for one reason or another but he could be right and become as successfull as Hunt or Moncrief et al. The oppertunity is still there and the potential payoff can be huge, much like finding that mother lode gold vein!
Good luck to all young geologists and have fun along the way. Deadeye

Well, you knew I couldn't end this series. I keep thinking of past experiences faster than I can write about them. I wish I could write in more detail so you could smell the sweet oil, and the diesel fumes from the rig motors. Maybe even feel the heat on your face from a production test flare or feel the gut wrenching fear of a blow-out in progress. All these stores would be three or four times as long if I gave the details. I am more used to writting geologist reports that leave out flowery details.
That must be why the stories are more interesting to me than you - I know the details and can smell the diesel and feel the heat from the flare on my face.

To be continued: "A Bird Nest on the ground"
Please do not reply here.

[Deadeye]

A Bird Nest on the ground

“A Bird Nest on the ground” That is what my friend Clark named this prospect. He was so carried away with it that he said he would sell it for me and I could just sit back an count my money and production checks. Have you ever grabbed a Tiger by the tail and couldn't let go because you would be eaten alive? Sit back with a glass of White Horse Scotch as that is what the participants in this saga drank.

I started to say that this story began when I was in Houston at Exxon's new 44 story office Bldg about 1970 doing research for new prospects. Exxon was kind enough to let me have access to their scouting files in exchange for information I gave them on wells I drilled or knew about. I also suspect that somewhere in the bowels of that Building and organization was some old timer that recognized my connection to an old Geologist that made them millions back when Exxon was still called The Humble Company. If not, maybe the Energy Gods entered my name on the Exxon approved list of honest trustworthy geologists that were approved to do business with Exxon.

After sleeping on this, I have to be more exact and begin at the real beginning of the finding of this prospect. In the 1940s, I had the privilege of driving a famous surface geologist around several counties as he re-check notes on a life time of walking outcrops across Texas. I was just a 14 year old kid with a new hardship drivers license and I thought I was being a great help to J.W. Leggett who was my great uncle. J.W. was an eccentric old surface geologist then in his eighties and too blind to drive his old 1934 A- Model Ford Coupe which he called his “hoope”. I had access to an army jeep which would take us where he used to go in his old black hoppie and in Ford T-models before that.

J.W. was a pioneer Independent Geologist who specialized in Paleontology and did contract work for Humble Oil Company – a little company which later evolved into Exxon. His surface work in the 1920s and 30s led Humble to the Conroe Field which helped propel Humble into the really big time. J.W. Also helped the Boone Brothers find the Kittrel Field. He was a very good paleontologist and could identify most every formation by the fossil content in the drill cutting samples.

I spent the summer helping him but what I didn't know was - he was educating me to be an Independent Geologist and was passing on priceless information and endless hours of constant lectures as we drove from daylight to dusk or spent rainy days in his office Lab or in the mud at an old steam drilling rig. Using his ancient microscope he showed me Foraminifera marker fossils in well samples that were used as core points at the top of the Cockfield – Yegua which was a prolific oil producer at Conroe and other fields.

He told and showed me how an Independent Geologist found oil prospects and how he turned that into owning interests in leases and wells. Later I simply copied what the old gentleman did. I knew the important things and how to make money in the oil patch when I was still in Junior high school. J.W. would find an anomalous geologic area and map the structure and any faulting from surface outcrops and sometimes a few scattered shallow wells. He would then go to a group of rich friends who would put up the money to buy the leases. He would then sell a drilling deal to an oil company, retaining an interest for himself and his investor friends. That is exactly what I did after getting out of college and getting a little experience working for an Independent for a short time. Very basic and simple and I learned it one summer in junior high school.

Some of those old prospects among many that J.W. showed me was one in San Jacinto County, near Point Blank, another in Trinity County northeast of the old Kitrill field and another undrilled prospect west of Leggett. An old town named for his grandfather who started the town in the 1800s. He and a group of investor friends in 1927-28 had bought royalty under 1600 acres of the prospect intending to leave the drilling to others and just profit from monthly royalty checks. Various complicated reasons including the 1929 crash kept any well from being drilled. JW and all the original investors died. I went off to college and Shell Oil Company leased the area and drilled a deep “tite” well off the eastern edge of J.W.'s old prospect. The Shell well had shows but was a non commercial well that produced a very small amount of gas from a shallow sand around 3300 feet.

Now we go back to the 1970s with me sitting in Exxon's office looking for the old Shell well log and records. I was checking for shallow gas production that had been over looked or ignored because of low gas prices that made them non-commercial. Now that natural gas prices had increased from $0.10 to $0.40 per MCF (reads 40 cents per thousand cubic feet) many of these small gas sands and reserves were becoming commercial targets. I was working in my favorite County, being Polk about 80 miles north of Houston. I was looking for information and a log on a ultra deep Shell Oil Company well that had been drill “tite” (no information released). They had completed a small shallow gas well but it never made any commercial production and was abandoned.

I am always surprised and thrilled when I find an acorn when doing research like this, a really fun game! There in the well file was a copy of this secrete log and when I unfolded it – there it was! No, not the shallow gas sand because I had started at the bottom of this fifteen thousand foot hole. A big surprise – a ten foot thick Woodbine sand that calculated to have gas in it at about 13,000 feet deep. Core analysis confirmed gas was in the sand. Sure Shell knew it was there but it was too thin and the reserves were to small to be commercial at $0.15 MCF gas but what about $0.40 MCF gas – that was three time better. Even better I was confident gas would double to $1.00 MCF in a year or two.

The records showed Shell had set a protective string of pipe at 12,000 so we would only need a 1000 foot pipe liner to test the deep sand. Records showed they had set a bridge plugs with 10 sacks of cement on top of them at 11,000 and 4,000 an perforated the shallow gas sand at 3300 feet. No production in several years and no plugging records which I thought was strange but I can get that from the State records in Austin.

Major companies do strange and crazy things sometimes. I could see their thinking here. They would complete and develop a shallow gas field, not for the gas or value but to hold the leases for possible deeper production years later. It didn't work as the shallow gas sand fizzled out as a limited reservoir. Most majors at that time had a rule of thumb that they couldn't pursue ten foot reservoirs below 10,000 feet - a really dumb rule.

Think about it, even a 100 foot pay zone has an edge when the 100 foot thickness goes to 10 feet and then to zero. Read it backwards: zero goes to 10 feet and then to 100 feet.
That was my basic exploration rant – show me two feet or ten feet of pay and I will show you which direction to go to find a thicker sand. “Very basic Mr. Watson”.

I drove my rental car back to the airport where my Super Cub was tied down and waiting for the flight back home. It was early so I decided to fly by the old Shell well location to see if the old road to the location was still there. An hour later I was circling low looking for the old location road off the farm road west of Leggett. There, an over grown road with pine branches almost covering it from sight. Down the road a couple of miles and there is the well location clearing and quite a shock! There is a tall Christmas tree and an old 200 bbl oil tank. How could this be? It was apparent there had not been any traffic into this location in years. This is unreal and I pondered the possibilities as I flew on northward towards home – need to get there before dark as I have no lights on my grass strip back of my house and there is no full moon tonight either.

Back in my office the next day, a few phone calls solved the mystery of an abandoned well with the Christmas tree still there. It seems the landowner had put a provision in his lease that Shell must give the landowner any abandoned well for him to make an artesian water well out of. Shell wanted a legal liability release from the landowner to accept responsibility for plugging the well. The landowner delayed and refused. The lease had a provisions that Shell had 120 days to remove any equipment but that time had expired and the landowner wouldn't let them on the property to remove the Tree, tank and separator which was worth several thousand dollars since it was all high pressure stuff. A Mexican standoff that the landowner won! Only thing, he couldn't afford to convert the well into an artesian water well so there it sat. “A Birdnest on the Ground”

Well, I was quite busy with other prospects so I let my Ole -old friend Clark who had known and played poker with J.W. forty years earlier, sell the deal to two of his old friends. Clark was a real Pioneer himself as he was on the ground and in the middle of the discovery and development of the famous “East Texas Field” and worked with Harrison and Abercrombie on the discovery of the famous “High Island Field”. I will try and write a story on Clark who was a semi-pro golfer, gambler and character in his own right. What a group - three 80 year olds drilling a prospect discovered forty years earlier with me helping them. If you have a faint pain in your stomach and smell disaster coming, you are right.

Clark, Ray and Earl had been partners and drilled wells before I was born. They were typical early oilmen – heavy gamblers, hard drinking “white horse scotch” poker players who didn't drink before 5 o'clock but of coarse they said it was 5 o'clock somewhere. They were back in their youth again and I was their chaperon.

Well, everything went fairly well. The drilling rig got the old hole cleaned out and the shallow perforations squeezed off, The bridge plugs and cement drilled out and a 1000 foot pipe liner set and cemented over the target zone. Probably didn't take more than a case of White Horse Scotch. They released the drilling rig and planned to use a completion rig to perforate and finish the job. We perforated the pipe opposite the target sand and nothing happened – no gas flow! OK, we swabbed the well down to relieve the hydrostatic head and just a tiny gas flow. OK, release the workover rig and we will ponder the situation a few days while flowing the well to let it clean up which it didn't.

OK, we will put a little mud acid on the formation to help get the mud blockage out of the formation. Rather than waiting to get a workover rig back, it was decided to use a small mast attached to the large tall Christmas tree and use a coiled tubing truck to spot the mud acid on the perforations. Big - big mistake.

Picture the set-up because it was the critical mistake. A 10' tall high pressure Christmas tree, with two master valves and several wing valves, one of which is fitted with a two inch adjustable choke to control the amount of flow rate. A twenty foot mast with a pulley assembly at the top to take the 10,000 feet of small flexible tubing from the truck. An acid truck and pump truck to pump the acid to the bottom of the hole once the tubing has reached bottom. Note: the bottom of the mast is held in place by the main bolts that hold the Christmas tree base flange to the Surface pipe flange. New pipe was hard to come by so a used tubing string is in the hole. Redneckokie already sees what's coming.

After a couple of hours the tubing has been reeled off the drum on the truck over the pulley on top of the mast and finally reach bottom opposite the perforated pipe holes into the Woodbine gas sand. The acid is pumped down the tubing for an hour or so. The engineer has a counter on the pump strokes so we know when the acid reaches bottom – about now. Wow! The pressure gage on the Christmas tree immediately starts rising. Boy that acid really did the job and dissolved the blockage! The gas is flowing into the hole. We already have a 1000 lbs pressure! OK, get that coiled tubing out of the hole! Hey! Not so damn fast – that is putting too much pressure and strain on the mast and Christmas tree! We have a tiger by the tail here!

The surface pressure is rising fast, open the choke from 1/8 to 10/64 – no make that a 1//4!
The pressure is now 4,000 lbs and gas is spewing out of the tree! Around the main flange where the mast is bolted down. Stop retrieving the tubing and tighten the flange bolts. - Open the damn choke more to relieve the pressure which is up to 5,000 lbs. OK, try coming out slowly with the rest of the coiled tubing. The pack off is leaking, open the choke to 1 inch! Keep opening the choke to keep the pressure at 4,000 lbs – above that the main flange is still leaking and could cut out the tree and we will have a full blown blowout!

The 2 inch adjustable choke is now fully open and the pressure gage is sitting on 4,000 lbs and seems to be stabilized. Thank God, maybe we are saved! Maybe not!

I neglected to say it was now near midnight on a cold winter night, not so much as a breath of a breeze. The gas was settling like a fog on the location in the low creek bottom! No one strike a match to smoke. Don't even start a car engine. Cut everything off quickly. One spark and this gas cloud will explode! Get everybody off the location and out on the farm road – and walk not ride or this tiger will kill us all.

An engineer poked me on the shoulder and said, “I checked the Halliburton flow chart and 4,000 lbs flowing pressure on a two inch choke is a flow rate over 10,000MCF per day. A huge gas well if we don't get blown away! From here on, I can't fully explain or understand. As quick as the pressure rose it was now dropping and didn't stop – dropped to a few hundred lbs and on any choke setting would only flow about 100 MCF, a non-commercial amount.

We were all just glad to be alive and after a few weeks of flow testing the well, we sold the entire deal to another operator. He tried everything. Swabbed the well dry and never could get a commercial flow rate out of that well. Re perforated, re-acidized, tried a small frac job – spent a ton of money. The well was eventually plugged and abandoned –again with no commercial production – a well that everyone saw flow 10,000 MCF/day ! That is more money than I can count even at today's gas prices.

Drill northwest of this old well and discover a nice gas field? Note: a dry hole was later drilled a short distance to the south. (the wrong direction) Apparently they didn't have a copy of J. W.'s 1927 geologic map and never walked the outcrops in the area. There are numerous gas wells on trend to the east. Of coarse Shell had old seismic and today new 3-D seismic is available if someone wants to pay for it.

For full disclosure, I own a small inherited perpetual royalty interest from 1928 (82 years ago) under this prospect if it is ever drilled. A company has leased the area and my understanding is they are currently clearing titles for a new well when the natural gas prices recover.

That is the story of “A bird nest on the ground” a very old one!


Please do not reply as I have a hundred more stories about the oil patch.
Next how my friend Clark made a Billion dollar mistake.

[Deadeye]

My friend Clark made a Billion dollar mistake!
I have been privileged to meet and know many oil Pioneers starting 60 years ago and I have many firsthand stories about most of them. Bunker Hunt, Abercrombie, Penrose, Halbouty, Wesley West, Cullen, Zeppa, and Lloyd et al and yes Clark Davis a long time family friend.
Clark Davis as a young man of twenty owned a thriving hardware store in a little town in Oklahoma but he was a born gambler at heart and was hearing of great wealth in new discoveries in Oklahoma and fields like Spindletop and Mexia in Texas and wanted part of the action. He sold his hardware store and along with two friends headed to Texas to make their fortune.
Their timing couldn’t have been better. They arrived in Longview Texas just after the East Texas field had been discovered by Dad Joiner and his Geologist partner “Doc”Lloyd. Three wells were completed with 6,000 more wells to be drilled in the field and each would make a millionaire.

The most northerly and southerly wells were twenty five miles apart with one in the middle along on the western edge of the Sabine uplift. . Clark and his two friends each pooled $8,000 each into a $24,000 partnership which was an awful lot of money in 1931. They were going to buy leases between the producing wells. This was a very good plan that would have found well over a Billion dollars of oil.

But fate intervened. Clark ran into an old friend at the hotel who was a geologist working for Sinclair Oil and Gas. This friend confided in Clark and advised him that the best Geologic minds of the day thought these were three separate new fields around the Sabine uplift and there would be dozens of more of these small fields with each covering a couple of hundred acres – not the 140,000 acre field it turned out to be. This geologist friend advised Clark that the leases between the wells were too high and going for $25 an acre while the leases to the north in Upshur County and to the south in Cherokee County could be bought for $1.00 per acre. He was advised he could buy more leases and would have a better chance of some of them being productive.

So Clark took the smart insider advice and they proceeded to buy 8,000 acres at $1.00 per acre. This was considerably more leases than H.L. Hunt had at the time. It is unbelievale that Clark did not proceed and buy some leases between these wells which were making three to six thousand barrels per day and would have been in the middle of the field which would turn out to be the largest field in the world for for 25 years.

One of Clark’s partners came in one day with a lease he had bought between the Bradford and Crim wells. Clark and the other partner said that was not in their agreed buying area and it was likely in a dry spot between the two fields. He would have to eat that lease himself.
You guessed it – that was the only lease that was productive – all 8,000 acres were dry and beyond the north and south limits of the field. Clark had put all his faith in "authority" and being young and inexperienced, he did not spread the risk or control the greed of owning more of the cheap than the surer thing.

Here was the trap Clark and his partners found themselves in after they had bought 8,000 acres. By then the inside leases that they could have bought for $25 were now $10,000 an acre and rising so they sure could not buy any of these overpriced leases now. They would just have to wait for their $1.00 per acre leases to be proven to be in the field and worth $10,000 an acre or more. It didn't happen - a string of dry holes across the north end and across the south ends of the field condemned all of Clarks leases. A big bad gamble that he took and lost.

Over 6000 wells were completed in the East Texas Field and this huge amount of oil production drove the oil price down to $0.10 a barrel as drinking water was ten times higher at $1.00 a barrel. The Texas RRC started controlling the amount of oil a well could produce and 30 years later in the 1960s, I owned interests in wells that were only allowed to produce a small amount for six days a month - the rest of the time they were shut-in. Many oilmen went broke but you don't hear about them. Maybe a story is due about the many oilmen who went broke.

H.L. Hunt and many others made Billions and Clark moved on to the next boom area in the Schwab area where he met up with my great uncle, J.W. Leggett and I had yet another mentor and friend, who was now wiser and more skeptical of what a geologist really knows. There is a lesson here someplace.
Please do not post a reply as I will add another story when I get time.

[Deadeye]

Some oilmen are polecats.

Everyone has their “Nemesis”. Batman and Robin’s was the Joker. Superman and Captain Marvel had theirs and mine was a rich Oilman named Watson and the son in law of a famous Houston oilman. He was from London, attended Cambridge and was as rich and arrogant as they come – A "J.R. Ewing" type with a smooth British accent and ice water in his veins or a slick “Jet Rink” from the movie Giant after he got stinking rich. Watson's wife had inherited a vast oil estate that included many thousands of acres of minerals in one of my favorite counties in Texas where I liked to work. Fate had set up a lifetime struggle for me with a worthy opponent.

I first encountered Mr. Watson when I was a senior in college and had worked up a sellable prospect while my fraternity brothers were out partying and singing “Sweetheart of Sigma Chi”. I guess this was an early sign of a workaholic who was determined to find his fair share of Black Gold. This prospect was partly under minerals owned by Watson and I assumed he would be happy to learn of possible oil under his land. I called for an appointment and his secretary told me his assistant, a Mr. Brian would see me in three weeks. Seemed like a long time to wait.

I showed up for the appointment about forty minutes early so as not to be late. I got off the elevator on the 27 th floor into a blank paneled foyer with one massive closed door that had no marking or name of any kind. Was I at the right place? I tried the door and it was locked. Very strange. I stood around waited, thought and wondered. I heard the lock on the door click so I opened it but no one was there, just a plush large waiting room. Obviously the door had been unlocked by remote control. Strange. Over on one wall was an opening like a bank teller window with very thick glass, bullet proof no doubt, and a small opening underneath. I heard the remote door lock click again and I sat down and waited, securely locked in. I felt as if I was being watched.

Soon a large door opened and an attractive middle aged lady said to follow her and Mr. Brian would see me.
We walked across a wide hallway and I could see the office took up the whole floor of the building. She ushered me into a large plush conference room like you would see in a movie. She left, closed the door and again I heard the familiar office door lock click. I again sat and waited, staring at the door at the other end of the room. Eventually a Mr. Brian appeared and introduced himself, as Mr. Watson’s assistant.

I quickly explained that I was a geologist and had found a drillable oil prospect that extended under one of his tract. I revealed that I had already obtained Leases from several land owners and a large timber company. I offered to do whatever he preferred, he could join and participate in the drilling, lease his tract on an oil company farmout basis or contribute to a well offsetting (proving) his lease with dry hole money.

He showed some interest and wanted to see my geology and evaluate the situation. I had already shown him a land map of the situation and was reluctant to show my geology but I had little choice but to do so. I showed a pile of data, including structural map, various isopach maps, stratigraphic facies maps, logs, cross sections and scout cards. He briefly scanned my data and said they would “Do nothing” I was shocked. He pushed back his chair and said, “We really don’t care if you drill this well or not. Mrs. Jones will show you out!” He walked out the far door as I gathered up my map etc.

I sold the deal to a drilling company explaining Watson would ride us down by not making any kind of deal. We drilled the wildcat well and as most wildcats, it was indeed dry. Watson had gotten a free ride from me and my investors.

Several years later after gaining a little experience I earned my first interest in a gas producer as described at the first of these stories. I didn’t include the details of how Watson was again involved by owning half of the offsetting lease. This time I made the same offer but did not show Brian my geology and the results were the same. They would do nothing. We had better results this time with a nice gas well. Watson again got a free ride.

I leased the other half interest of the Watson tract which prevented an offset well from getting into our newly found gas reserves. I came up with another prospect joining this same lease a short distance to the west and offered to drill a joint well with Watson but again Brian said no, they would do nothing. My investor group drill on the offsetting tract and made a nice oil well in an undepleted Wilcox sand. Watson again got a free ride but no money or oil as we drained the reservoir and they could not drill on their half interest lease. The new kid in town was winning a few skirmishes.

When one is working in an area, one thing leads to another as one accumulates new pieces of the overall puzzle. There it sat, the old A.O. Phillips – Barnes No 1. An old dry hole but the log showed nine feet of oil on top of water. Simply perforate the top two feet and it would make 200 barrels of pipeline oil but it wouldn’t last long enough to pay out the cost of completion. Why not move updip to a higher structural location? You guessed it – Mr. Watson owned the up-dip minerals and would do nothing. Damn there is another one! A 300 foot fault that sets up a “smaller Copeland Cr. Field”

More work and WALA – another new prospect takes shape. This one was a biggie and it was on my large Southland lease where Watson owned half and I owed half. Another Mexican standoff? No, this one is big enough and good enough that he will have to participate. It was early February when I sent a letter this time outlining what I had found and how big it was and the huge reserves it could contain. I stated I had to meet with Mr. Watson and not his assistant Mr. Brian. A week later, Watson’s Secretary called and said Watson was out of the country and would meet with me in the Fall. In the Fall? That was 8 months away! OK, I would wait!

Are you beginning to see a trend here. This area is loaded with undrilled prospects because Watson’s family has owned the minerals forever and would not make deals with other companies to drill and wouldn’t drill the prospects themselves. They didn’t need the money and preferred to do nothing which they were expert at doing.

Frankly being from East Texas Lumber country - my destiny was tied to dealing with Seven lumber companies who accumulated vast landholding in the 1800s up to the Great Depression of the 1930s. In the depression, some sold the surface as low as $1.00 per acre and retained half or all of the mineral/ oil & gas rights. The heirs of these founders were the ones I concentrated on dealing with. They had what I wanted - money and vast landholdings that covered untold and undrilled oil and gas fields. Some of the other lumber companies were bought and absorbed by the largest who surrived. I courted these people, gained their trust, made them money and became expert at dealing with them to our mutual advantage, all except Mr. Watson and their original inherited wealth also went back to a lumber company established around 1900 by the grandfather.

That September, I got another call that Watson would meet with me next Monday at 11:00 o’clock for lunch. Monday arrived and the same locked door routine but then I was ushered into a private meeting room, a corner office overlooking downtown Houston and the room was filled with what appeared to be priceless antiques. A brass telescope or a replica on a brass tripod that could have been from a British Man of war vessel was by the window. I was getting a little different treatment this time. Could it be that my making producers on the last two prospects was having an impact?

Watson Walked into the room and introduced himself. Up until this point I had never even been able to talk to him on the phone and all dealing were through his assistant, Mr. Brian. Watson was a tall handsome man with a slight British accent, dressed as if he was going to a state dinner. He touched his intercom and asked for Tea which arrived almost instantly. A little small talk and he began to spring suppresses! He asked how my wife was and about her champion cutting horse Mark Twist? What else did he know about me? My underwear size? He had obviously done extensive research on me, my family, and my business and probably knew the balance in my checking account – and he wanted me to know it!

He said, “Let’s go have a bit of lunch before we talk business. We walked to another part of his office and took a private elevator to The Houston Club and into a private dinning room with our one table. A waiter in a white Tux coat took our order which Watson ordered for us both. “Your favorite Lobster soup and salad” he murmured! Yeah, he even knew what I generally had for lunch. It was a very uncomfortable lunch for me as he probed just how country I really was. I recalled a mentor saying, “one is not properly educated until he can intelligently discuss the British Pound Sterling.” I failed miserably at that one – I could do a little better today.

Back in his office he requested I lay out my Geology and discuss my offer. Which I did in considerable detail, with visions of my clearing 1/4 or 1/8 of the deal which would be normal.

Upon completing of my presentation the mood changed as If a light switch had been flipped.
He pointed out that his family had owned half the minerals under this large tract for a hundred years and would certainly own them another hundred years. He pointed out that my five year lease from Southland had three and a half years to run and then it would expire. He assured me that I would not be able to renew it. He said I had one option and only one option to make a dime out of this prospect. I could furnish him a copy of my geologic data on this prospect, assign my Southland lease to him and retain a 1/16 royalty interest. He would drill a test well to the Wilcox when he got time. “Take it or leave it.” He said I could think about it for a couple of days and call his secretary. He said Mrs. Jones would show me out and left the room as his secretary magically appeared.

I would have liked to either punched him in the nose or told him to go to Hell. However I knew what he said was true. I was also relatively certain that this prospect would produce oil and gas for the next fifty years. I wimped out and took the 1/16 overriding royalty interest. About a year later he drilled a 7500 foot Wilcox test and it had five productive zones up the hole. I was right but would only get a relatively small check for fifty years or so. I was beginning to understand the locked doors and security – there were a bunch of mad and abused people left in his wake.

No, I was not “shet” of Watson anymore than Batman got rid of the Joker.

Up until this point I had convinced myself that I was just a victim of circumstances both good and bad as Mr. Watson owned large holding of minerals in my favorite area. I rationalized that his stubbornness and need to get the best of everyone on a hard trade had just held up development and accounted for the area being such good hunting grounds for me to explore.

However this next encounter made me feel that I had been stolen from in a very underhanded way. Recall that I had been forced into giving him my maps covering the Wilcox prospect. To show geology, one must extend the maps to connect to the surrounding area for them to make sense. One of the shallower maps of the Jackson sand showed the production likely extended onto the adjoining 160 acre lease owned by Mr. Abe in Houston. Mr. Abe was a rich oilman about 10 years older than me and was an honest respectable businessman. I had seen his father in the oil patch when I was just a kid.
I had already developed the Jackson oil sand production up to the edge of Mr. Abe’s lease and he had told me he did not wish to farm-out but planned to drill on the tract himself. So I jumped across that lease and obtained a Farm-out from Exxon on 320 acres that my maps showed would be productive. After I made the wells on the Exxon acreage, Abe’s lease was proven with no risk so I expected Abe to file a drilling permit any day.

To my shock, I saw a drilling permit on Abe’s tract by my nemesis Mr. Watson – What the Hell? He had farmed out Abe’s proven tract! I called Mr. Abe to find out what I could and why he had farmed out to Mr. Watson rather than me. I fully expected him to say “we are old fraternity brothers” or “was obligated to him” or simply “he is richer than you”. No it was worse than that.
He said Watson had showed him MY MAPS and he assumed I was being carried for an interest in the deal by Watson. Mr. Abe said he had decided to Farm-out rather than drill the wells himself. I watched Mr. Watson drill three nice wells on my prospect that I had proven up for him. These wells are still producing forty years later and I never got a dime. Shades of the way J.R. Ewing (Dallas) treated people. OH Well, there are plenty of other undiscovered fields I can find rather than worry or brood over that one 160 acre lease. Sure I could have won a lawsuit but that would be a stupid move is the close knit oil community.

I was finding various new oil and gas reservoirs and now I found a nice Sparta oil trap at about 6200 feet deep. About ten feet of sand and wells that would make 200 barrels per day. As the field expanded – you guessed it! We ran across a tract where we owned 3/4 lease interest and Watson owned 1/4 mineral interest and it was a proven location. Would Watson now co-operate and either join us as a partner or farmout his 1/4 interest to us? That was simple and quick – NO! They would do nothing as they were not interested in a one well deal or being a minor partner in a well that would only make 200 barrels per day!

Fortunately the State of Texas has a law that prevents stopping development in cases like this. It is called forced pooling where one can drill the well, get 200% of their money back and then the interest and payments go back to the original owner who refused to lease or join. That changes the economics quite a bit when one is paying full cost and taking the risk and limited to only getting a 100% profit instead of five or ten to one. The well paid out in six months and after about a year Watson began getting several thousand a month as a free ride.

Well finally Watson and I retired and left the skirmishes and oil wars to our children and grand children and a few lucky new young Geologists. I am not sure what Batman and the Joker are doing now.

A footnote: watch the movie “Giant” with James Dean as Jet Rink and Rock Hudson & Liz Taylor. I visualized myself as the good guy married to Liz. Also the 1940 movie, the “Wildcaters” Clark Gable, Spencer Tracy, Hedi Lamar & Colburn. again I was the good guy married to Colburn! After fifty plus years being happly married to my college sweetheart, I am permitted that illusion.

Please do not Post Reply as I will add another story in due time

[Deadeye]

Blowouts and how they happen:
In story number nine in section one above, I wrote in detail about my last blowout which was the most significant and dangerous to me since I was the operator and all responsibility and liability was directly on me. No blowout insurance as that is simply too expensive. The hand of fate or God if you prefer was with me in any event.

Over a fifty year career, I was involved in two other major blowouts where the drilling rigs were destroyed and another minor one and several near blowouts as outlined in “Birdnest on the ground” above.
They all happened for the same reason under almost the same exact circumstances. How is that possible? Did I and others learn nothing from pass experience? Apparently not! They were all on the night shift 11:00PM to 7:00AM – known as the “graveyard shift” maybe for good reason. Each time the rig crew was pulling pipe from the hole and each time the borehole was not kept full of mud which acts as a weighted hydrostatic head to control and balance the bottom hole pressure. All very simple stuff but lethal when not done. Do I have to fill the hole with mud myself? I had repeated warned the rig tool pusher and the driller not more that two hours before to keep the hole full when tripping out to log!

A sidebar note: The current gulf blowout was removing drill pipe from inside a cemented production casing string that had just been cemented in place a few hours before. The cement job was faulty because done properly there would have been no avenue for gas and going to go up the hole to the surface. A note about blowout preventers: They are simply a hydraulic tool that squeezes and packs off around the drill pipe to keep it from being blown out of the hole. A high drill blowout preventer simply allows the drill pipe to be rotated as when drilling. The cause of this accident will most certainly be human error.

My first blow out experience shows how the blowout preventers did not do their job because they were not activated as the crew was too busy running for their lives. I received an emergency call as I was at the hospital with my wife in emergency surgery. Trouble on top of trouble! Yep, my production superintendent simply said “The A-1 is blowing out and is a Hell of a mess!”

I had learned yesterday that we had a fine gas well from the good drilling break in the Woodbine sand and the good gas reading we had gotten on the mud gas logging unit. Yes the rig was pulling the drill pipe out of the hole to run confirming electric and gamma-neutron logs. Yes the rig crew had failed to keep the hole full of mud as the pipe was being pulled! No the rig was not burning but an explosions could happen at anytime as the out of control well is spewing and estimated 20,000 MCFGPD! Approximated 8,000 feet of drill pipe has blown out of the well and looks like a huge pile of spaghetti poured over the top of the collapsed drilling derrick, rig and location.

The drilling contractor has already called Red Adair and the main north south Southern Pacific rail line may have to be shutdown due to the danger of a big gas explosion. OK – sounds like there is nothing I can do there so call me if there are any changes. Boy – this is going to be a long night!

Fortunately my wife came through the emergency surgery fine and the well bridged itself over with a sand block before catching fire. The rig was partially destroyed and everyone survived the long night. Where will we drill next is now the question?

My second blowout experience was very similar. The drilling contractor called that they had reached total depth and would be out of the hole about 2:00AM to begin logging operations. We had no cell phones in those days so I was nearing the rig about midnight when I saw a glow in the sky! Yep! As I rounded the last corner I could see the derrick falling as the drilling rig was engulfed in flames and the heat had already melted the derrick legs! Yep! The drill crew failed to keep the hole full of mud and swabbed the well in as they pulled the drill pipe out of the hole.

If I ever drill another well, I will personally be on the rig floor to kick the mud pump in gear as each stand of pipe is pulled out. Count on it as no one can be trusted to do this simple thing.

Please do not reply as I will add another story shortly.

[Deadeye]

Broke oilmen
Ever hear of an oilman going broke?
That is such a normal thing that the Clark Gable’s 1940 move “The Wildcatters” had Gable and Spencer Tracy going broke in Burnett Texas, again in Mexico, and finally in New York City. Most real exploration oilmen are gamblers at heart and very much like the early Gold miners looking for the mother lode. A little western gunslinger is also blended in there so Texas is a natural breeding ground as well as Louisiana along the Mississippi River.
All oilmen worth their salt have gone broke or nearly so including me, but I already told you about that young bullet proof geologist who found what looked like a cinch and got in over his head. The list is long from Cornel Drake to Dad Joiner, H.L. Hunt, McCarthy and a list too long to even start.
In my youth, Dick Schwab was the local legion and Hero. Schwab City sprang up out of the East Texas forest and my grandmother painted and put up the first “Schwab City” sign. Was their ever a Sunday dinner that didn’t include Chicken and Dumplings and a discussion of Dick Schwab? On my wall across from my computer is a framed Front Page of the Polk County Enterprise dated April 29 1933. WELL A PRODUCER – FLOWS 5,000 BARRELs per day!

Dick was 28 years old, a self proclaimed Geologist much as many oilmen before him. Even today an investor after a couple of successful wells thinks he is a Geologist when he looks at a geologic map, cross -section or well log. Young Schwab, who was personable and handsome, showed up one day in our small town as the oil craze was raging to the north at the East Texas Field and to the South at several new Salt Dome fields like Liberty and Harden. He rented a room from my grandmother.

He approached the local business men who had a little money in these depression days and solicited their help to buy leases in a certain area and drill a well. About the time they started buying lease, Shell Oil Company and Texaco Oil Company landmen showed up to buy leases covering the same spot.

Now I am a believer in mental telepathy to a certain extent but this was a little fishy considering a “Torsion Balance” crew had very recently run a survey across this very area. A “Torsion Balance” is a primitive form of Gravity meter and is able to detect the less dense salt in a buried Salt Dome which uplifts the potential oil sands and makes a very good trap for the oil. These domes are generally circular and vary from a mile to three miles across. I knew quite a bit about the Torsion balance early on because I had an uncle who headed up a crew for a little old company named Humble Oil company. They had found a nice salt dome at Humble Texas that put them into the big time and of coarse later changed their name to EXXON after finding Conroe and many other fields in the 30s and 40s.

The lease buying at Schwab City was fast and furious with keen competition for each individual lease being fought for and going to the higher bidder or slickest landman. When the smoke cleared and all the leases were bought, Schwab and partners owned about a fourth of the leases, Shell a fourth, Texaco a fourth and Humble a fourth. The leases were many scattered small tracts except for Humble who had made a deal with a lumber company who owned a large 6,000 acre tract, part of which was lapping over part of the “salt dome picture”.

Now it was normal back then for partners to divide their leases so each owned his own lease and would be free to drill his own well or do with it what he wanted. Dick Schwab divided the leases before the drilling started and the first well was on Dick’s lease. That was the discovery well at Schwab City but the Majors named the field “ Livingston, Field” for the closest town of any size. The development drilling commenced with a hundred plus productive wells drilled, most making over a thousand barrels per day.

Now comes another strange coincidence. It seems that all of the leases Dick Schwab kept were productive and all but one of the leases given to his partners were dry and beyond the edge of the Salt Dome. You would think that maybe Dick had a copy of the Torsion Balance survey or had seen it before he divided up the leases. That speculation was never proven one way or the other. In any event Dick Schwab made millions when he sold his leases and left town amid the wild gossip. My grandmother thought he was a fine young man but my father thought he was a crook.

The last time I ran across Dick Schwab he was sun-burned and broke and running a shrimp boat out of Freeport Texas. A broke oilman, who had been to the top and then lost it all drilling for more oil in south Texas.

Some stories of broke oilmen and broke oil investors are even more tragic!
I knew Johnny well. He had married the girl who was my sweetheart in second grade. Johnny had inherited a family ranch and made a good living raising cattle. For some reason when someone offered him too much money for his ranch, he sold it and bought a motel in a small town near Bryan, Texas. Business was booming as a big oil play developed in the Austin Chalk which in fact was a very poor oil reservoir. Some of the big name Dallas Cowboy football stars bought into these oil wells and stayed at Johnny’s motel when they would go down there to check on their new wells being drilled. Johnny got to know them all on a first name basis and they became his friends giving him tickets to the big games.
They even offered to let Johnny in on part of the new wells they were drilling. He was flattered and borrowed the money from the Bank like the cowboys were doing. Quickly Johnny was in over his head in something he knew nothing about. I had steered clear of this play as too risky and too promotional. I only wish he or his wife had asked for my advice but I did not know what was going on until after the deed was done. The wells would come in big but would quickly drop off and barely pay off the cost. If one was in a big tax bracket the charge offs, depletion deductions and the fun may have made sense but not for someone needing to make a real profit. The price of oil dropped as it does from time to time and the production couldn’t pay off the loans and Johnny’s motel was mortgaged on the loan. The Bank foreclosed.
Johnny went back to his old family farm that he had sold. He drove out to a back pasture and blew his brains out! A Very Tragic story.

Another friend came to me in a state of depression and said he was going to lose his house on a bad construction deal he had gotten himself into. Said he didn’t even have money to buy a gun to kill himself with. I thought of Johnny and asked my friend how much it would take to get out of the deal and save his house. I told my secretary to write a check for the amount and put on the check, “a gift not a loan”.
A mentor once told me to never loan money to a friend or go on their note. “Give them the money if you wish but if you can’t afford to give the money, you can’t afford to loan out the money!”

My friend soon sold his house and moved to California. About ten years later, I received a check in the mail. It had on it “a gift – not a repayment. Thanks” Quite a better ending.

Another oilman friend Jessie had been rich and broke so many times that he had learned to take it in stride. His wife through it all was surely a Saint. Jessie was in the first or second graduating Geology Class at Oklahoma University and was more like a father or grandfather to me than a friend. He got rich in the oil business in Oklahoma and then went broke. He came to East Texas and was a next door neighbor to H.L. Hunt and their children played together. They both got rich and then WWII came along and Jessie lost everything while he was in India building military pipelines. After the war he came back to the shallow oil boom in Illinois but this time got into the refinery business and made a ton of money but quickly lost it drilling for deeper oil.

He moved back to Texas and the Hunt children treated him like their favorite uncle. He introduced me to the Hunts and we three had a very successful business deal together. Jessie was quite a likeable guy, one from the old school where you didn’t need a contract – just a handshake and he would pay off even it meant going broke again. His word was his Bond just like my father and me.

I had so many friend hurting and going broke in the 80s oil price collapse that I couldn’t drive my new Jaguar to town – that was the wrong image to be projecting. Only drove the car to go to Houston or Dallas. My observations were the people who went broke were operating on borrowed money. They simply had to be leveraged to make more money and that breaks a lot of people sooner or later. Fortunately I learned that lesson very early and survived as I wrote about above. I had an early theme: If a deal is not good enough to sell and earn an interest, it is not good enough to put one’s own money in. That again is why making deals is better and easier than investing. Another way of saying making money working is easier than making money investing.

Remember the guy Bob who owned a dress shop in Athens and another in Palestine, Texas in the early 60s? He was making so much money he decided to invest in an oil well but he didn’t know any oilmen. He asked his butcher who referred him to a customer who was an ”Independent oilman”. Boy, that covers a lot of ground. So Bob called Ken and said he wanted to invest in an oil well. Ken told him by chance he had an interest for sale in a well he was going to drill in Louisiana soon and the price was $10,000. This was more than Bob had planned on spending but he said OK and got some deal papers and wrote the check.

As fate would have it – the shallow well made an oil well making about 50 barrels per day. That was great as Bob’s investment would pay out in about a year. But Bob had paid an additional $10,000 to pay for his part of the completion costs. These shallow wells took only about ten days to drill and complete so Ken started a new second well and billed Bob for another $10,000. Yep shortly they were completing and oil producer and Bob paid another $10,000. Wow he had two oil wells that would pay out in about a year. Ken said they were on a roll and spudded another well and Bob spent another $10,000. But this time the well was too far east and was a dry hole. OK, the two oil wells would still pay the $50,000 back in a year or so and besides Bob just got his first check for the first well for $1500 and Ken was already drilling No 4 well and indeed it also made a well but smaller about 20 barrels per day. Now the total investment was $70,000 but the income would shortly be $3500 a month from three wells and Bob had been in the oil business less than two months. Let’s see in five years at this rate, Bob could see a return of his $70,000 back and a profit of over $100,000. Wow this more than his two dress shops were making.

Ken was starting another well in Louisiana but he had a big deep deal in Texas near Athens that he offered Bob an interest in for $50,000 which he bought with more money borrowed from the bank, using his dress stores as collateral. About this time the last well in Louisiana was dry and the other three wells dropped off in production as they began to make saltwater. They would need three pumping units of $20,000 each. Bob investment was now up to $150,000 and his income from the three wells was down to $1,000 a month. All this in less than five months in the oil business. These wells were never going to payout. This deep well would be a big producer and bail Bob out - for certain! Wouldn’t it? Well it was a Wildcat and the odds are about 10 to 1 for a dry hole!

This is where I entered the picture and heard the story first hand from Bob while we were sitting around the rig waiting to run the electric log at total depth. I had a friend geologist who had been hired by Ken to sit on the well and evaluate the log at total depth. My friend had asked me to substitute for him when he got sick and was in the hospital for a week. It seems Ken had bought this deal and then sold it to his Louisiana investors. All these guys were in over their head and even Ken knew very little about this prospect. I personally wouldn’t have touched it with a ten foot pole. Except to well sit and evaluate the log to help a friend out who was in the hospital.

Well of course this well was a dry hole and Bob just couldn’t believe it was not a producer like Ken said it would be. Later I heard that Bob went bankrupt and out of business when the bank foreclosed. There is a lesson here someplace!

Please don’t reply here as I will continue when the mood strikes me.

[Deadeye]

Let’s talk about Wildcat Exploration – let’s isolate a potential un-drilled prospective area that may contain a huge gas field. No! first let’s talk about Thinking. How much time do we spend really thinking? I used to say that about an hour a day I was really productive and the rest was shuffling papers, talking and acting on some productive thought that I had earlier.

I find that my most productive thoughts come between 3:00 & 5:00 AM. Be it in bed or sitting by a pot bellied stove in a “Rig Dog House” or driving on a country road in the Big Thicket, still 50 miles from a waiting drilling rig. GoldRunner can probably relate to that.

How long is the first thought of a good idea? A millisecond? A second? A minute or so? A thought is a fleeting thing. If it is not bounced off of someone for conformation or rejection, it may just die a lonely death. Even a rejection keeps the ball bouncing! Go on a handball court and bat a ball off the wall – if no one bats it against another wall, floor or ceiling, the bounce slowly dies. The same with fleeting ideas and some were very good ones that don’t get batted about. Thousands of good ideas go to waste.

I was once told that a person is lucky to have three original ideas in a lifetime. I have no knowledge about that but certainly most of our ideas are a combination of facts and thoughts from others. Many of those tidbits from years ago are ones that we refine or combine with additional facts and data or opinions. The more one knows or has experienced, the more one is capable of seeing and understanding.

Personally, I specialized in a relative small area of about ten counties so I am very limited in knowledge of other geologic areas. There are similarities and basic truths and principles but each area has it quirks, secretes and tricks of mother nature. Now let’s go find a prospective area.

I have mentioned before that “scale” is all important. Things are easily seen on one scale that are invisible on another scale. I have made maps on 1” = 1000 feet for great detail and made maps on 1” = 16 miles and even 1” =32 miles for the big picture. Most exploration maps are 1’ = 4000’ as a middle ground – that way one does not see detail or the big picture either, a common mistake!

Being an “old timer” I did not have the luxury of computer mapping, 3-D, rotating from every angle and filling in un-known parameters until the wanted picture appeared. We did those things in our “mind’s eye” and yes it was sometimes impossible to explain to others with only an untrained eye.

Here is the way it worked. Look at deep geologic seismic map of Polk County. Visualize a Salt ridge along which several old oil fields exist. Start at the Segno Field, in SE Polk County, It has hundreds of wells, discovered by Gulf Oil in the 1930. Go due west to the Schwab Field, now due north to the Livingston field, then west again to the Goodrich Field, then southwest to the Urbana Field.

These are all structures along a single continuous deep underlying salt ridge. Note that these points connected together make a nice “Bay” East of the Livingston Field. Woodbine sands eroded off the Sabine uplift could be accumulated by prevailing westerly ocean currents with the old salt ridge to the south acting as a slight dam due to differential compaction or simply a hingeline. Clear as mud, most likely.

Wild speculation and dreaming? Yes! but there was a deep well drilled by Arco in the Big Thicket on Carter Lumber Company land that had 16 feet of Woodbine sand below 16,000 feet. It reportedly test flowed 20, 000MCF before the casing collapsed and the well was lost. It was a “tite” hole but my brother and I flew low over it each day keeping track of their activity and progress. We saw that huge flare and the burned pine trees on the back side of the reserve pit! It is really hard to keep a well “tite” even behind a locked gate with guards in the deep forest. Did the Menard Creek environmental Park regulations (Yarbough) stop ARCO from drilling a follow up well? That and low gas prices at the time? This well on my maps was too far north and east to encounter the “mother lode” in my opinion although 20 million cubic feet a day would be a huge pile of money..

A number of years later, Anadarko Petroleum drilled a 22,000’ well several miles farther south and again got thin woodbine sand that reported flowed lots of gas before being abandoned with “mechanical” problems. Again this well was located too far to the east and too far south on top of the salt ridge where thin sands should be expected. The “mother lode” still sits there if it actually exists. Is there really a large thick area of Woodbine sand body that pinches out to the north against the normal continental slope and to the west against the salt ridge at the Livingston Field forming a classic trap for hydrocarbons?

Someday some enterprising young geologist will convince his company boss or his investor group to attempt to answer the question. The late 1930s geologic literature speculated at the possibility of a large gas field on the south flank of the Sabine uplift. Thirty years later that field named “Damascus” was found. What will happen in another twenty years or so? Will the “Moreland Field” be found? If so, in the name of full disclosure and the end of this story, my heirs will own a small inherited royalty under that area.

Now if one wants to really get enterprising – go to the west side of the salt ridge where Superior interpreted their extensive 3-D seismic as a Woodbine Delta. They leased the entire area with my help and proposed a 22,000’ wildcat to test the interpretation. They got slightly below the Base of the Austin and while cementing a protection string – accidently cemented a number of Drill collars in the hole. After a few days reaming cement they abandoned the project without ever reaching the designated target.
But what really happened before drilling started was that Mobil bought Superior so when they encountered trouble – the prospect only had a stepfather (Mobil) who didn’t like the project enough to drill a second well.
There! That should about take care of a hundred million dollar drilling budget.

Now think really big! Current 3-D seismic is being shot on the natural inverted V trap on the southside of the salt ridge southeast of Goodrich. I once wanted to attempt to do (promote) that one but we are talking another $100 million and a 25,000 foot well. I shot two lines of seismic to confirm my idea but I had to shelve that one as too big a dream for me at an advanced age. Well that is a total of six potential monster prospects in my small area of interest. Dream on young geologists, the future has no limit if politicians would get out of the way.

Ideas are really cheap to create. They come in all sizes, good ones, bad ones in various stages of development. Some are instantly sellable even drawn out on a restaurant napkin. Some require more work and research to document and establish their risk factor. Then more work to put them in a sellable form that a moneyman or company can understand. Some take hours and some take many years as shown above. Ideas are fleeting and many good ones will be gone before you even understand them yourself. Being an Independent Exploration Geologist has to be one of the most rewarding and fun ways to make a living if one can find a little oil and gas from time to time.

Please don’t reply here. I will add more later.

[Deadeye]

Above, I alluded to an investor that made big money off of one of my dry holes – so I better explain a little more so no one gets the wrong idea that it was deliberate but that was just the way it worked out.

A rich oilman that we will call “Delbert” moved to our small city from a much larger city and the Bank coffee group was soon telling how rich he was and his plans. It seems he asked what the largest, most expensive house in town was – as he planned to build a larger one. Little did I know as I listened to this story that I was going to indirectly pay for that “largest mansion in town”.

For all struggling young geologists have heart, patience and go for the gold ring. After all it had just been a few years since my first home was a trailer house and I was proudly living in a $17,000 three bedroom house which are now about $!75,000 in East Texas – the reason you had better find and earn your own oil, gas or Gold as modest houses will cost a million in the foreseeable future. Yes, I live in a modest house on a lake as my wife doesn’t count her wealth in the number of square feet or the society circles as many do.

Delbert settled into his large suit of plush offices in the bank building where my office was at the time. Soon I was introduced to Delbert as being a young geologist that was finding lots of good prospects. Delbert invited me to show him the next good “big” deal that I had. Well as usual I had a good big deal that was risky but had a huge potential if successful – Even better it was a deep reef play like where he had made big money on a discovery in New Mexico – This was exactly what he was looking for and wanted.

As a funny sidebar: While showing the maps, seismic, cross sections, data and terms of the deal my partner on this particular deal commented, “Delbert, if this 100 feet of reef pay is there IT WILL MAKE YOU RICH!” A deep frown was on Delbert’s face as he pushed back his chair and said. “I am already rich” WOW this guy had a touché ego! Smoothing his insulted ego, I explained that was just an East Texas expression and meant no offense as we knew he was very rich indeed. Well few others had a Florida vacation house on their own island – are you listening Wanka?

This prospect was a classic prospect for me. It was an old Humble prospect and they had drilled a 17,000 foot dry hole on it and I was second guessing them – that they had drilled in the wrong place on the reef to get production. Boy I wasn’t intimidated by Humble geologist or anyone else – I figured they put their pants on just like me, one leg at a time.

Here was my analysis and simple reasoning and it sold everyone who looked at it. The old Humble well had 105 of oil staining and fluoresce in the top of the Sligo reef which was non porous and no permeability (flow capacity). The well was located on the crest of the reef according to the seismic so the well was plugged, abandoned and all the leases were dropped by nonpayment of rentals.

Had Humble missed a large oil field? Well maybe! The 105 feet of oil staining told me that the oil had been there at one time and moved. After the vugs and cavities were no longer filled with oil, Mother Nature simply cemented the voids with more limestone. OK, but why and where did the oil go? Simple Mr. Watson:

As more and more sediments get deposited on the gulf coast and buried deeper and deeper – a tilt develops and gets greater and greater with depth. Sure everyone wants to drill the crest of a reef but that is not the highest point on the reef a hundred million years later on our Gulf Coast. There right on the seismic – it clearly shows the toe of the reef is 200 feet higher that the crest! Shock! And anybody could see that! That is where oil always moves – to the highest structural position it can get to. The regional reef crosses a structural nose –this is so simple and obvious that a fourth grader can see it –including my new friend Delbert.

OK, here is the deal: The prime structural closure covers approximately 20, 000 acres that need to be leased quietly and quickly before someone else figures out what we are doing. That will cost about $50 an acre including title work and acquisition costs. No problem, Delbert agrees to put a team of fifteen landmen on the ground as soon as he has partners. I get a geologic fee of $30,000 plus a 1/16 free overriding royalty for my geology, data and sitting on the well to pick core points, logging points etc. I will also help Delbert sell 3/4 of the deal on the basis that one quarter pays for one third of the actual costs. A standard oil field deal that clears Delbert a free 1/4 working interest. The deal is done and six months later the rig was moving in and almost ready to start drilling away.

Another funny sidebar: As the land was being leased, the head landman called me up and he was furious! He was under orders to keep a low profile and do the title and lease work very quietly and secretly to not cause undue attention to the leasing. The small county seat town of Woodville and court house was almost deserted except for the landmen in the basement of the court house and the town domino players on the porch of Farmboy’s country store. Now all hell and excitement breaks lose as Delbert dives up and parks at the court house in his new Red Mercedes. Now people in this small rural east Texas town had never seen a Mercedes and in fact called them Mer-ce- des! The word was out on the party lines – a rich oil fellow was in town buying oil and gas leases – that probably ran the lease cost up another $50,000!

This was in the 1970s and the general economy collapsed and this put Delbert in a bind when the Bank called a note on some big loans he had made to expand his other wide spread business ventures and building the largest Manson in town. Delbert needed lots of immediate cash so he sold his free ¼ interest in this wildcat well. Remember that the ¼ interest was sold for 1/3 of the cost. So the more the well cost, the more the interest costs and the more Delbert makes as Delbert only owes the well operator ¼ of the actual cost. Think about that a minute and understand it.

Well, the hand of fate was active on this prospect and everything that could go wrong – did! The well encountered lost circulation and the pipe was stuck several times and extra days were spent to jar it loose and wash over some sections. Bit bearing and cones were lost in the hole and had to be fished out. Gas kicks were encountered in the Austin Chalk and tight thin woodbine sands which ran the mud bills up. Worst of all the reef was tight with no porosity to contain oil. An expensive completion attempt was made to get a commercial gas well in the tight woodbine sands was not successful. Bottomline: A were expensive dry hole.

Very bad for me because my 1/16 overriding royalty interest was worthless but good for Delbert as he made approximately $720,000 profit on this dry hole – just about the cost of his new mansion. Of course, if the well had found the reef mother lode that house would have cost him about the cost of the Hearst Castle. Delbert did get a lot of local criticism for selling all his interests in the well but that was a bad financial time for banks and people with short term debt and he was in a cash flow squeeze.

Now the ironical part: Today every acre of that 22,000 acre lease block has been put in productive gas units as the new technology of horizontal drilling made the gas in the Austin Chalk and tite woodbine sands commercial. Timing is everything. A 1/16 ORR under the block would be worth a fortune today.
Oh well, where do we drill next?

Please do not reply here as I will add another story later.

[Deadeye]

Secretes to finding oil & Gas
Here are the facts: Many thousands of Geologists have access to and look at the same data and records and yet a lone Independent Geologist like me finds a number of new Fields that no one else saw or didn’t pursue the leads that led to the discoveries. I find that amazing. I was a very average student. I had no money. I started at the bottom rung of the ladder in the mud and cold on the graveyard shift. I did't just get luckly and fall into a fortune. I worked and earned interests in well after successful well with my fair share of dry holes and disappointments.
I did have a burning desire to find oil and gas and in reality I just copied what I saw other successful oilmen do, leaving out some of the mistakes I observed others doing.

I tried to explain above why a few geologists find most of the oil. I focused on the qualities of the oil finders as opposed to the paper shufflers. Maybe there are also a few secretes to tell so I will dig a little deeper like Mike Halbouty drilled another 25 feet deeper to discover the Port Acres Field.

I have pointed out in the Dove Hunt story how past well production data screamed out to me that an existing Field was four times bigger than the original five wells. For twenty years thousands of geologists reviewed that production data and didn’t recognize it. Why?
I pointed out how the production data from a Mitchell well showed it was in a super reservoir and Mitchell’s geologists and production people did nothing in a timely manner. Why?
I pointed out that any geologist had access for years to scout and core reports of Wilcox oil shows in the old Oil Reserves dry hole plus seismic data that showed the oil field was immediately north and ignored it. Why?

Endless hours are spent by thousands of company geologists working on big salaries, pouring over old data trying to connect the dots leading to a new field. Many geologists are restricted by their own company guidelines on depth, on reserves, certain trends, formations and even bias against certain counties. Most don’t recognize a significant clue when they see it. I was always amazed when I went into the bowels of the big companies with their badge security, locked doors etc of how little the individuals employees knew. They had to be in a team environment – they knew only their pigeon holed job or area as I related about a Conroe field extension prospect that was pure major company garbage. They presented computer manipulated seismic data that a 9 year old could discount to zero once the original seismic data was made available. The one place that Big Oil Companies do well is offshore. The reason is that is a private club with oil reserved for the very rich. They have no competition. You simply buy a large concession and shoot seismic until you find a large structure sticking up like a sore thumb. That was the way the entire onshore gulf coast was before thousands of oil fields were found. Like shooting fish in a rain barrel. Just as easy as finding a place to drill a gas well is today.

When doing research today onshore many geologists simply don’t know what they are looking for of how to get information if it is not on a computer disc that a program can analyze and evaluate. Oh one can come across red flags, ringing bells and flashing lights, I’ve had a few of those myself. But generally it is stubble clues that connect other dots together like Sherlock Holmes and Watson. Knowing the right questions to ask: Why are some wells producing more or less than they should? I showed several examples of that above. Where and how to get information that is not available? Boy, I gave some good examples of that above. Can we get information from the source that others don’t have? Yep, all the way from a retired field gauger to little known sources in secure enclaves like the Balcones Research Center.

THE SECRETE: I believe the answers are simple. Most geologists, petroleum engineers, production people and office staff work for a monthly salary. They make the same money working for the company regardless of how much oil and gas they find. There is simply very little incentive to find anything except the coffee bar. Independent Geologists either find production and get rich or go broke - quite a difference. Incentives find oil and gas.
That is “The Secrete”. Pay a geologist a small salary plus a generous overriding royalty in any production he finds. Better yet he becomes Independent and his own boss. If he is any good he will get rich, If he can’t find oil and gas he will quit and work for someone who pays a big salary and good benefits. Understand that no geologist deliberately fails to find oil, doesn’t work hard or do his best – but that is not enough – that finds very little oil and gas.

Maybe the real bottom-line secrete to finding oil and gas is to be completely honest and creditable. Also being “Lucky” helps a lot – we have already talked about making our own luck, both good and bad. Secretes? I have given you everything I know in these stories and it all worked for me like magic. Deadeye

Please do not post a reply here as I will post the rest of the story in due time, God willing.