Daniel Pedrotti - From My Generation to Yours
Part I - Introduction | Part II - 1958-1965 | Part III - Becoming an Independent Geologist
 Part III - Becoming an Independent GeologistMy first two weeks as an independent housed in an office provided by Texas Oil & Gas were rather exciting. I was learning to use the Log Library, how to read and copy scout tickets from microfilm and where to find maps and logs. I was deluged by independent operators who wanted to make sure that I knew that if I had any Texaco secrets they would be more than happy to have me share them. I developed a great sense of judgment of people during these days as I felt some of them might want to take advantage of my ideas. Most, however, turned out to be nice guys and wanted to help me get started. Those days turned out to be some of the best times of my life as I was able to work as long as I wanted, and I never lost a minutes’ night sleep despite the risky position I had created for my family. Working conditions were great. I was able to present what I considered to be a new prospect each week for the entire six months. I now think new leads would be a better definition of my prospects as Texas Oil & Gas only bought acreage on two during my entire tenure with them. Nevertheless I was not discouraged as this gave me the time and incentive to recreate the many ideas I remembered from undrilled prospects I generated during my Texaco days. So at the end of six months my retainer was terminated, and I had to learn the difference between a “prospect” and a “deal.” Not unlike today, there were several ways to get a well drilled to test your idea. You could take it to a trusted Independent Operator, and ask if he liked it to check out the acreage, put the prospect together, get it drilled and pay you a minor finders fee and an override. You could go to another Independent Geologist and partner with him to help put it together, jointly sell it to an operator, split the fees and overrides or you could partner with an Independent Landman and do the same. Ultimately if you were able to assemble the acreage yourself, either through farm out or leases it became a “Deal” that could be sold, quite different from a prospect. Crafting a “Deal” thus soon became the goal. Once you had the acreage in hand you were no longer at the mercy of a few trusted peers. You could now expose your idea throughout our industry because no one could go around you to participate in the prospect. Now the challenge was to find someone to buy your “Deal”, and this led to many interesting encounters where life long friends were made, disappointments were frequent, and occasionally a successful sale was made. During this era, the late 60’s and early 70’s, Deal buyers were hard to find. Remember oil was less than $3.00 per barrel, gas was around 8 to 10 cents per MCF, proration was in full force and the maximum tax bracket had been reduced from 90 to 70 percent. There were a lot of tire kickers, but when someone sold a ‘Deal” the coffee shops and log libraries were alive with excitement. Who sold the Deal? Who bought it? Are they looking for more? Do they have money to spend? How many Deal buyers are in town? More often than not it was necessary to take your “Deal” to Houston, Dallas or San Antonio. These cities are where we met the players, the promoters and some of the oil company managers. My first ”Deal” involved two prospects on a 2,000 acre lease held by Amerada with one year to go. It was my favorite area between the prolific Portilla Field (100 million barrels of oil) in San Patricio County and Roach Field (20-30 million barrels of oil) in Refugio County. After several approaches Amerada gave me the farm out on the entire block with 75 percent net revenue interest and subject to a quarter back in. I was off and running, but after showing this 20 or 30 times, I realized that although my ideas had huge potential and everyone who saw it complimented me on my work, the quarter back in was a killer for such rank wildcats. As I said I met a lot of good people who appreciated my work and would later become partners in other deals. One local company, Carrl Oil & Frio Drilling, promised that if I couldn’t sell the deal, and the lease expired, and they could pick up a decent lease they would honor my position with a $3,000.00 bonus and a three percent override. Sure enough it didn’t sell, and one year later Carrl picked up the lease, honored their commitment to me and drilled dry holes on both prospects. One day while I was showing my dream deal, a geologist from San Antonio, J. B. Means, wandered into my office, and when I proudly explained my expectations, he counseled me “Dan what you need is an interest in an oil well, and after you build up some income then you can chase after an oil field”. Although I was able to sell one half of my override for $10,000.00 based on the two well commitment and could thus extend my livelihood for another year, I heeded his advice and started looking a lot closer in. True to J. B.’s advice I eventually had a small revenue stream from several single well deals. During this time I began to share ideas with Bill Miller, another independent geologist in our library on the 9th floor of the then Vaughn Plaza. I had known Bill from my days at Texaco when we both worked the Wilcox in Duval County. Bill had just been let go by Ramada Oil Co., a small independent. This happened right after he discovered Southeast Loma Novia Wilcox for Ramada, a rather significant gas field for its time. Bill had a consulting retainer with Vaughn Petroleum Inc. of Dallas to attract and screen deals, so most of the ideas came from me as he tried to sell them to Vaughn. After the retainer expired we became much closer partners. We got a lot of wells drilled as unofficial partners, mostly dry holes, but a few turned out to be small producers that gradually added up. During this time and ever since I have been an independent. Once a deal was sold I never let myself count on it being a discovery otherwise I might have been driven to drink, excessively that is, but rather knew that I now needed another deal and went right along with my mapping and selling. One year, however, when I reached my peak of drilling 12 of my best prospects in 12 months and the first 11 were dry holes. I left home in December, and I told my wife that if this last well was a dry hole I was going to shave the mustache that I had been wearing for several years. Well at 2:00 AM I called to tell her that I was not shaving. Bill had a saying that we were in the only business where you could go to sleep poor and wake up rich. This was the night – we found a Wilcox oil field at 5,500 feet and shared a quarter working interest in a million barrels of oil. Next month: Part IV - “Becoming an Oil Man” Dan Pedrotti |
 Part II - 1958-1965Corpus Christi was definitely an oil town in 1958. It was the hub for oil & gas exploration in South Texas, and every major oil company had complete exploration offices here including geology, geophysics, land, scouting, well spotters and in some cases engineering. There were also many independent companies and a number of independent geologists busily trying to compete with the Majors. Regional maps, scout tickets and log files were our main tools for exploration with some analog seismic that was of a rather primitive vintage. Every major company maintained a complete set of well files, and a set of scout tickets for each county in Railroad Commission Districts 1, 2 & 4 and some also carried District 3. These tickets were updated each week after “Scout check”. Log libraries, available to independents, had the old tickets on microfilm, a fair collection of logs, county maps and a subscription to Rinehart’s weekly drilling reports. The local paper carried a fairly complete daily report of new locations, completions and significant oil related activity, however it was important for independents to know someone from the majors where they could swab tight logs and get the latest scout ticket data. By the late 50’s and through the 60,s, with the level of technical knowledge and procedures, few on shore oil fields large enough to attract the majors were to be found, except on the King Ranch. Natural gas was barely economical, and there were three factors that made exploration viable and exciting despite low prices and few elephant size prospects that were successful. These were proration, a maximum income tax bracket of 90 percent coupled with the full write off of intangible drilling costs and the 27.5 percentage depletion allowance. Proration was important because each month the Texas Railroad Commission would put out the schedule of how many days you could produce an oil well at full allowable, that was set based on depth of production. At this time it was usually 10 to 12 days, which greatly limited old oil wells. As an incentive to encourage new exploration, a rule was adopted that allowed newly discovered oil fields to produce full allowable every day for the first 18 months or until the fifth well was completed in the reservoir. Even at $3.00 per barrel the low cost of drilling and completing made new oil discoveries payout quickly and quite profitable. Finding wildcat and step out prospects was thus very exciting and rewarding for both majors and independents. The 90 percent tax bracket coupled with the write off of intangible drilling costs made huge sums of capital available from wealthy easterners, Hollywood actors, pension funds and even shoe clerks eager to become oil tycoons and join their rich Texas millionaire friends. Someone in the uppermost tax bracket could literally participate in oil and gas exploration activities for ten cents on the dollar, otherwise he would be paying that ninety cents to the government in income taxes. Most of these funds came through legitimate channels, but there is no telling how large the promotion was on the individual investor after overrides to the generator, carries by the prospect developers and operators, commissions to brokers and kick backs to promoters. At any rate drilling activity continued at a brusque rate. The depletion allowance of 27.5 percent provided for in the tax code, commonly referred to as a “loop hole” and despised by liberal congressmen from the eastern nonproducing states allowed the producer to recapture capital from a depleting asset in order to continue exploration activities to replace reserves that he had already produced. This was a very important economical incentive in these times of low prices, proration and shortage of pipe lines for gas production. It was also fair and similar to deprecation schedules that allowed manufacturers to provide capital for outdated and worn out equipment. So this is the economic climate and challenges in our industry as I began my life long career as an exploration geologist, trying to find oil and gas in South Texas. Our offices (The Texas Company) were on the 15th floor of the Wilson Tower and except for the District Geologist who had an office with a door, consisted of open cubicles with each geologist assigned a drafting table and a stool. Fortunately shortly after I arrived, The Texas Company merged with Seaboard, and we moved to the Sun-Seaboard building where two geologists shared a real office with desks, chairs and drafting table. Most of the Seaboard people declined to work for The Texas Company, so we soon had new recruits from college coming to work with us. Although South Texas Onshore was bursting with activity, few oil discoveries were being made that were of significance to the Majors except by Humble on the King Ranch. There were still big land plays, and a lot of analog seismic was being shot. Quiet a few wildcats were drilled, but very little success was achieved. Since I started out working the Jackson-Frio strand line trends, our goal was to find another field similar to Prado Field that had recently been discovered in Jim Hog County. Incidentally this was the last major shallow oil field found in South Texas until much later when Big Wells Field was found by Sun Oil Company in Dimmit County of RR District 1. I was soon moved to working the Wilcox trend across Bee, Live Oak and Duval counties where our Company was conducting a regional seismic project. By 1962 our district exploration office consisted of nine geologists, one geophysicist and a district geologist. Four of these were assigned to exploitation of older producing properties and the development of the few wildcat discoveries that were made. I can recall only two decent discoveries made by our district prior to 1965 – Vicksburg gas in the Encinitas Field of Brooks County and Miocene gas at Holly Beach Field in Calhoun County. Some significant Vicksburg production was found around the flanks of Driscoll Field in Nueces County. The Wilcox trend was still being evaluated by seismic. Gas transmission lines were very sparse, especially in the western counties of District 4, despite the development around the big inch line that ran from Zapata County to the eastern seaboard. Intrastate gas marketing was tightly controlled by the FPC, and the few transmission companies were able to set very low prices and restrict allowables. These companies also demanded long term fixed price contracts that really became onerous when marketing conditions got better and demand increased. The discovery of natural gas at the Thompsonville Field in northwestern Jim Hogg County, not only sparked interest in the Wilcox trend but promised the development of much needed pipeline development. I inherited the job of seismic coordinator of the Wilcox project when its leader, Jim Eiffert, was transferred to the Houston District Office. I also became manager of our portion of a regional study of the Wilcox structure and stratigraphy that extended from the Louisiana border to the Rio Grande River, our Border with Mexico. Working conditions for me at Texaco were very satisfactory, and I got to drill quiet a few wells. In fact I drilled my first well within three months of my arrival in Corpus Christi. Of course it was a dry hole, but I knew I was on the way to succeeding in my life’s ambition. However after five years of a few meager raises, I realized that out of some fifteen or twenty fellow geologists who had worked with me in our offices in Corpus only one had got promoted to District Geologist. There were numerous side transfers to other districts and staff jobs, but only one genuine promotion so I decided to look on the other side of the fence. During my first interview with an independent company, I became convinced that I was not ready for the independent world when I saw their geologists scrambling for information using a microfilm reader to copy well information that was so readily available to me at Texaco. I wasn’t sure a career change was in the cards for me, but I knew that I needed to become more acquainted with other independent geologists and how they worked, gathered information and put prospects together. My involvement with the Corpus Christi Geological Society thus became very significant. Then on a fateful day in September of 1965 my decision was made for me. I got a call from the Division Geologist inviting me to move to Houston to be a district geologist in a newly formed Texas Offshore District. My response was “Is that THE District Geologist?” His reply was no, you will be working for a District Geologist coming from New Orleans. I replied I would have to think about that. After talking this situation over with Carolyn and several of my respected friends in the independent world the decision was made to stay in Corpus Christi. I immediately took two weeks vacation and started looking for a job. Well as you might expect, there was not one single opening for a geologist with seven years major company experience (deja vu). I was offered a job by Tenneco, but decided that was like jumping out of the frying pan into the fire, so I turned it down and opened an office in Vaughn Plaza building (now The American Bank Plaza), joined a log library and became an independent geologist. I did manage a small six month retainer with Texas Oil & Gas, working for Bernard Dietz, that provided bean money for my family. In our next issue I will describe my perceptions of the independent world in the late 60’s. Dan Pedrotti |
 Part I - IntroductionWhen I graduated from Texas A&M with a Bachelor of Science Degree in Geology the Korean War was winding down, and our business was in one of its slumps. Out of our class of thirty-five geology graduates less than 15% received job offers from Major Companies, and I being in the exact middle of my class with an obligation to enter the Air Force in September found very little interest from potential employers. In other words I couldn’t get a job in the oil industry. I actually wasn’t called up until November 6th, but that was too late. While doing my tour in the Air Force and becoming a fighter pilot, President Eisenhower ended the Korean War. We tigers, who were looking forward to air-to-air combat in the supersonic F-86s against the Russian Mig-15s were offered the option of signing up for three more years or taking a desk job at some Air Force Base in the Continental United States. I was very disappointed, but I did not feel that I could wait three more years to see if I could realize my dream of becoming a petroleum geologist. I learned that a job was open at Lackland Air Force Base in San Antonio where 10 jet fighters were available for our use at any time we needed a break and to insure that we kept up our flying skills. This was only 150 miles from where my fiancée, Carolyn, was living, so my choice was pretty obvious. In the Summer of 1956, when my three year tour of duty with the Air Force was coming to an end, the Air Force was heavily lobbing their fighter Pilots with College Degrees to stay on with them. I had to tell my commanding officer that I started out to be a petroleum geologist and that I had to find out if I could become one, but if it didn’t work out I’d be back to see him. Little did I realize that sputnik was just a year away, and the United States would be needing a geologist to go to the moon. As a rated jet pilot with a degree in geology, who knows I might have been chosen to become an Astronaut. By now I have a wife and new baby girl, born on July 4, 1956, and no job prospects, so I made a trip back to the Texas A&M Geology Department to see what chances I had to pursue my life’s goal. I met with Mr. Shirly Lynch, head of the department, who knew me from my undergraduate days. His first words to me were “come back here and get a Master’s Degree and I’ll get you a job that pays $100.00 more a month than you can get with a Bachelors Degree. I explained my family situation, and that I had no means of support except some bonds I had purchased while in the Air Force and that I was getting out in November and couldn’t get the GI bill money until I was fully enrolled. No problem, Mr. Lynch informed me-- he would let me take seven hours, and since I would be making up for the first half of the semester he would count it as a full load and get approval for me to start getting paid in November. On November 8th I was back in college taking courses in petroleum geology and planning my thesis. The job market in our industry was pretty good in 1956 probably due to uncertainties in the Middle East caused by the Suez Canal crisis, so we were pretty enthused. My course work went well, and in the summer of 1957 I worked on my thesis, a mapping project in Grimes County involving the Jackson and Catahoula formations that outcropped in the map area. Determined to finish up by the end of the fall semester (February 1958), I worked diligently – walking the creeks, killing snakes and constantly being chewed on by seed ticks, chiggers and every bug you could imagine. By September my mapping was complete and Carolyn, then 7 months pregnant with our second child sat on a pillow and typed three drafts of my thesis on a portable Remington typewriter with three carbons. By fall of 1957 the job market was starting to get a bit shaky, but with the end of my degree in sight I was able to interview a number of oil companies and my first offer came from The Texas Company, later to become Texaco, Inc. The salary of $550.00 per month sounded huge, and they wanted me in Corpus Christi to work the Jackson and Yegua strandline trends due to the mapping of these formations that I did for my thesis. It didn’t take us long to make up our minds to accept, but two weeks later I did receive an offer from Exxon to work in Oklahoma for a slightly higher salary. I decided that I had already made a commitment and would not go back on my word. Incidentally my classmates who finished in May had a very difficult time finding jobs in the Oil Industry. In February 1958 after completing all post graduate studies and an accepted thesis in only 14 months, I received my Masters Degree in Geology. So, with a job as Junior Geologist with the Texas Company, Carolyn and our two daughters’ ages 2 months and a year and a half, headed for Corpus Christi where we stayed and hoped that I could succeed as a geologist. In the next issue I will tell you more about my perceptions of exploration techniques and conditions in the industry as I started my lifelong career. Dan Pedrotti |