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				“The Wildcatters” "There has never been a heroin, there has never been a cocaine, there has never been a woman as habit-forming as the search for oil and gas." - Dallas independent oilman Bill Stonaker Dallas Times Herald By Phil H. Shook Born at Spindletop in 1901, the tradition of the Texas wildcatter was nurtured over seas of oil at such places as Kilgore and Ranger, Longview and Iraan. Some, like Dad Joiner and H.L. Hunt guessed right and made fortunes - thousands of others guessed wrong and died poor. But a gritty individualism and a willingness to take big risks for huge rewards became the measure of the Texas oilman. The oil crash of 1986, which trapped many oil legends in the great wave of failures, became another test for those entrepreneurs who operate outside the corporate security offered by Big Oil. Veterans of the oil patch now say the price crash robbed some of that risk-taking spirit. Even the more successful and prudent among the survivors say it will be difficult to throw the dice in the oil fields again. One independent oilman said he was shocked to find that much of the oil wealth once thought to be "the foundation and fabric" of Texas rested instead on "borrowed money and good ol' boy connections." Can the scrappy wildcatters who rely on guile, instinct and a dose of luck survive in the toughened oil climate of today? Dallas author and historian A.C. Greene suggests the emergence of another H.L. Hunt or J. Paul Getty wil be as improbable as finding another giant East Texas oil field. He says Texas' colorful wildcatter image could suffer. "The IRS won't let you be too colorful anymore," Greene says. Still others fear that commercial banks, traditional lenders to the petroleum industry, burned by bad energy loans in the '80s, will have a say in who plays the game in the future. And their first choice is not likely to be the smaller, higher risk operators. "Obviously the ability to accumulate a large amount of capital to go into a significant exploration program has been greatly hurt," says Tom Haywood, executive vice president of the North Texas Oil & Gas Association. "Oil and gas can't carry the Texas economy again," pronounced electronics and investment magnate Ross Perot at a recent gathering of Dallas business leaders. Perot, who owns a group of energy companies, says the oil industry may only have "two or three little booms" left. "And I hope we don't go out and buy champagne when it happens." But while the brunt of the crash was felt by everyone in the oil industry, its impact in the exploration industry varied greatly among three general groups: The old-timers. This group of experienced players had acquired large amounts of wealth or influence. Some of these independents, like Bunker Hunt or John Connally, now have enormous financial and legal problems and will have to direct their attention to resolving these difficulties - not drilling for more oil. The opportunists. Looking for the latest hot industry, they can be expected to embrace the oil industry again. "They jump around from oil to real estate and they don't know where they are going next," says one industry observer. The self-financed. This third group of independent producers survived the downturn without being overly burdened with legal difficulties or debt. Many unjder 40, these players are considered the future of the industry because they understand the business and are willing to wait patiently and build reserves until the next upturn. While the bankruptcy courts are busy sorting out the fianances of crippled oil titans, a measure of stability has returned to the exploration industry. Oil prices settled at $18 this year - two-thirds of its pre-crash level - and the volatile price swings have subsided. The number of oil business failures has declined and the rig count has improved from last year's record low. Membership in the Independent Petroleum Association of America, the people who drill 85 percent of the wells in the United States, has dropped by 1,000 in 1987 to around 6,600 members but shows signs of leveling off. But the wildcatter spirit also runs deep - so deep that no oil bust, no matter how severe, will ever diminish the allure of the hunt for oil. "There has never been a heroin, there has never been a cocaine, there has never been a woman as habit forming as the search for oil and gas," says Dallas independent Bill Stonaker. "I see this as the best opportunity that ever existed," says M.B. Rudman, another veteran wildcatter who noted that the cost of drilling is 50 percent lower than a few years ago. This mixture of ambition and optimism, dismal failure and anxiety over the future is part of the paradox of an industry trying to emerge intact from its worst setback ever. The colorful adventurers like Columbus Marion Joiner, who discovered the East Texas Field but got snookered by other opportunists, are gone. The larger than life players like Haroldson Lafayette Hunt Jr., who would take the $100 million he made beneath the red clay of East Texas and turn it into a $5 billion fortune, are part of the past now. The more successful Dallas oil operators, the people that will perpetuate the spirit of the Texas wildcatter, don't fit into any particular mold. But all say they learned valuable lessons during the oil bust. Like the Daisy Bradford 3, the discovery well of the great East Texas field that is still pumping oil 57 years after it hit pay dirt, the spirit of the wildcatter endures. Just ask the survivors. Bill Stonaker Bill Stonaker and his wife, Patricia Wilson, are among the fortunate Dallas independents who managed to keep their company solvent through the worst of the downturn. It was an experience, Stonaker says, not without some bad moments and it taught him some lessons he will never forget. And it changed their company, Wilson & Stonaker, forever. An equities investor and real estate developer, Stonaker began expanding aggressively into the oil business eight years ago. He said money was easy to raise and the company shot miles and miles of seismic tests in a five-county region in the Hardeman Basin area near Vernon. With oil then priced in the $28 to $34 per barrel range, Wilson & Stonaker began to grow. At one point, the company had an interest in as many as 12 wells at once, brought five geologists on board and began to run an overhead of $250,000 a year in salary and acquisition expenses, Stonaker says. Wilson and Stonaker knew the risks were high but so were the potential returns. "We knew that if we were right we could increase our wealth -- our net worth 10 times or 100 times. There are million-barrel fields up there and we owned a piece of every field that we drilled." Despite the urge to try to cash in on the moment, the company held to its conservative business strategy. "We never stuck one penny of borrowed money in the ground," Stonaker says. But it wasn't easy to resist the many opportunities to take on debt. Stonaker says he remembers being wined and dined from 11:30 in the morning until 7:30 in the evening by a Dallas bank that was trying to get the company to put up its oil reserves as security on a revolving line of credit. He didn't accept the loan but he recalls the novelty of the "spend now, pay later" mood. "It was a hoot - kind of like being back in high school and having the best looking cheerleader in school following around to carry your books." The discipline paid off because it wasn?t long before oil prices began to drop. Last year when the price of oil fell to $15 with no support level in sight and with the company running a deficit of $250,000 a year, Stonaker and his wife made a difficult decision. They called in their geologists and secretaries and told them the company was out of the exploration business and Wilson & Stonaker?s six-person staff was laid off. "Boy we had the stuff knocked out of us," Stonaker says. "It did us in." He says he and his wife will stay in the oil business as a buyer and investor in oil and gas reserves but not as operators. The industry's sudden reversal convinced Stonaker that he will never again have a big staff. "We now think we should be good asset managers instead of trying to run those dice up against the wall in exploration." Bill Brosseau At 6 feet 10 inches in cowboy boots and in his early 30s, Dallas oilman Bill Brosseau looked the part of the Texas wildcatter. During the oil boom of the late 1970s, plenty of magazines agreed. Brosseau and his snakeskin boots and Rolls Royce made the cover of Venture and Money magazines and the stories of the flashy young eccentric graced the pages of may others. When writers and photographers from back East came to Brosseau's Turtle Creek office and saw him dressed in a business suit, they would ask him to go change into Western clothes. He willingly played the role but knew it had nothing to do with finding oil or being successful in the oil business. "I think the publicity made me be an oilman," he says. "I didn't want to fail and for people to say all this was only hype." Today as the industry struggles to recover, he says he doesn't consciously try to play down his flamboyant image. "I can only be as cocky as I want to be, but the deals have to stand on their own," he says. Brosseau started his Argos Resources nine years ago - incorporating the Greek word for risk in his company name. Earlier he had been a successful stockbroker and had forced himself to finish dental school even though he says he hated dentistry. His varied background and good looks attracted considerable press coverage, spurred by a PR man who once said he could "market (Brousseau) from here to eternity." But today, at 40, Brosseau is more involved in drilling projects than posing for magazines. The oilman, who keeps a framed listing of J. Paul Getty's annual income from age 30 through 82 on his office wall, says he didn?t get in a lot of trouble during the bust because he was an outsider who couldn't borrow any money. "I didn't know about Penn Square Bank, I don't know how I missed them," he says. Brosseau, who has always sported long hair, says he wasn't a solid-based Dallas businessman who could go down to the local bank and get all the money he needed. "When the times got bad - and they really got bad when the price went from $30 to $20 to $10 almost overnight - I just kept working," he says. Brosseau says he feels much more comfortable about the oil business today than during the boom times. Although photographers are not coming around as often, the deals are bigger and partners better. Brosseau says oilmen are not on target very often in the oil business, but when they are, the rewards beat most other lines of work. To make the point, he uses the arithmetic of the successful wildcatter. "If I have a well that makes 100 barrels a day, that is $2,000 a day, $60,000 a month, and $72,000 a year." Pulling out an oilfield map, he points out one of his wells in Louisiana that has been operating 60 days and has made $256,000 so far. He explains that between now and year's end he is going to drill 13 wells in the area and says "any one of those can do that again." Brosseau admits that the oil business has matured him. "I was cocky when I was 30 but now I am 40," he says. "I hadn't yet seen wells that started off at 200 barrels a day drop to two barrels (daily) in 10 days. I hadn't yet drilled dry holes and lost money." Brosseau says his track record through the oil price crash also has changed the way he is viewed by others in the industry. "Now they need me as a partner and all of a sudden I have gone from being out of vogue to someone who has survived." M.B. Rudman M.B. "Duke" Rudman, a crusty 79-year-old Dallas independent who wears a black hat with a white feather plume, has prospected for oil since it sold for 10 cents a barrel. A successful independent, Rudman is still searching for the big find, the oil discovery that could turn a wildcatter's last name into a logo on the side of a gas pump. Rudman says the opportunities are better than ever to make such a find even in the United States' oil patch. "There are 50 million square miles of sedimentary basins that haven't been touched yet and the big ones are out there," Rudman says. "There are company makers still out there and my target is to make a company." Like many of the surviving wildcatters, Rudman had philosophically steered clear of bank financing. Those that drilled on borrowed money made up most of the failures in last year's oil bust, he says. "Greed was what broke most of these people. Of course we got about 10,000 out of the business that shouldn't have been there." Rudman says that in 1951 he learned the hard way about borrowing money to drill for oil. "It cost me 250 million barrels of oil in North Dakota. I sold leases with that much oil for $35,000." He still grates at the recollection that if he had not owed the money, he could have kept all the oil. "I sacrificed 10,000 acres of leases for $35,000 on a debt that a bank kept asking me to pay." Rudman, who says he owns a stake in 92 wells that have been drilled or will be spudded before the end of the year, says he reinvests "every dime" of his income into new prospects. "It is hard money," he says. "I may as well be borrowing it." December 7-13, 1987