Part IV – Becoming an Oil Man

DanPedrottiGen4In my previous essays on the subject of becoming a petroleum geologist, I left out a very important group of individuals who played such a critical part in the careers of so many of us and especially mine — OUR MENTORS. Starting with my professors in graduate school at Texas A & M and continuing through my time with Texaco, the people who provided the counsel, taught me the exploration techniques and showed confidence in my work, which made the difference. I point this out now because I think members of our society are doing a bang up job of mentoring by hiring geology students as geo-techs. What better way to mentor an aspiring student than to have him in your office pulling logs, checking records and looking over your shoulder while you work on the computer or draw maps. Being around for the successes, as well as the dry holes has got to be the influence that drives them to success in their studies and gives them a desire to pursue a career looking for and finding oil.

Speaking of mentors, I had some of the best both inside of Texaco and out in the independent world. By actively participating in the Corpus Christi Geological Society, the Corpus Christi A & M Club, the Oil Man’s Bowling League and even playing soft ball with a group of independents, I became part of a peer group that would become my mentors. As I socialized with these oil men, I became intrigued with the idea of owning a part of the income from my work. They did not consider me a threat or a competitor, but rather encouraged me to look around and think about joining them. When the time came for me to make the big decision, these were the people who gave me the confidence to move forward.

There was one geologist in particular, Joe McCullough, whom we all know as one of the most well known oil finders among our membership. Joe had an exemplary and successful career in oil & gas exploration until his retirement from Carl Oil, Inc. After making many significant discoveries I became acquainted with Joe through our church and family. We both served as officers of the A & M Club and the Geological Society and were founders of St. Pius X Catholic Church. We became very good friends. Our families were close, and when the time came for me to make a career change Joe was my number one advocate. He arranged a number of interviews, and I am sure he was instrumental in setting up my retainer with Bernard Dietz.

During my first year as an independent I did not have to have a second car, which I could not afford because Joe had a company car and gave me a ride to and from work everyday when he was not on company business. These rides also became mentoring sessions as Joe was an “All American Swabber”, and by the time we got down town he knew all the details about every project I was working on. I did not get any of his secrets, but he helped me greatly on how to solve my own deal problems. Ultimately this relationship became very profitable for both of us as the first three wells drilled by Carl Oil Company, after the sale of Carl Oil and Frio Drilling Company, were completed as good gas wells on deals put together by Lawley and Pedrotti. We also made some land purchases on very good terms that provided great recreation for our combined brood of nine children.

There were others as well. One day when I was busily slipping logs a landman, Everett Lawley, whom I had know casually, stepped into my office. He wanted to know if I would like to work with some data he had acquired from Alcoa Aluminum Company. It seemed that ALCOA had decided to shut down its exploration offices in Point Comfort, Texas and move everybody to Houston. Of course I jumped at the chance to explore using their regional maps that were full of leads based on a lot of single fold seismic. A lead supported by any kind of seismic data was sure to appeal to some deal buyer or promoter. This encounter led to some very successful and interesting ventures, and Everett taught me much about the independent world.

First I would develop the prospects using the Alcoa data then we would go to the county records where they showed me how to check on mineral ownership. If they were unleased they would take me to the mineral owners and try to buy reasonable leases. If successful we would borrow the bonus money from our bank, and once we had the leases tied up we would start showing the deal. Buying leases with our own money was pretty scary, but knowing that you had enough confidence in the prospect to take some of the risk yourself made deals much more salable, and thus we could ask for substantially higher interests, and a lot more cash. This system worked quite well, and we made three significant gas/condensate discoveries with nice overrides in the Calhoun/Matagorda Frio Melbourne (K-2) sand that was nearly 100 feet of very porouspermeable sand. We also turned a lot of deals based on this data as although ALCOA had first right of refusal, they did not have a drilling budget.

Everett was also well acquainted with a number of Major Company landmen and was near the top of their list when farmouts became available. Several of our prospects were developed after we knew that we could acquire the acreage from the companies on a favorable basis.

In the meantime I continued working with Bill Miller trying to sell deals to Vaughn Petroleum and even tried to integrate Lawley into a three way partnership with Bill, but the personalities did not mesh, and I finally had to choose between partnering with a geologist or a landman. Now that I better understood lease buying and controlling deals, I knew that creating new prospects was much more important than relying on land deals. Sometime in 1970, Bill’s retainer with Vaughn had been terminated, and a very successful life time partnership began, originally called Miller-Pedrotti and later named Suemaur, that lasted for over 36 years.

Bill was a prolific prospect generator and a good deal checker, so by the time we collaborated on his and my ideas we usually had a Class “A” prospect ready to show. We had our favorite places to start even though we knew they wouldn’t take the deal, but once these screeners pointed our weaknesses we would correct their objections and have de bugged a deal that was bulletproof. Both of us continued to pursue ideas that pre dated our partnership, and together we were drilling 6 to 8 wells per year, mostly dry holes of course.

Hurricane Celia that nearly wiped out Corpus Christi in 1970 was the turning point. The roof of Bill’s house was blown off during the storm. Downtown was a wreck, and our offices in the Vaughn Plaza, now the American Bank Plaza, were devastated. I was able to get into my office and salvage my wet maps and logs that I took home and hung out on the clothes line to dry. Bill was so busy with his house problems that he did not get to town until the building cleanup crew had literally taken a front end loader and dumped his entire office out through the broken window onto the parking lot six stories below. He lost all his maps, filing cabinets, desk, lamps, work tables and all his personal items.

I was sharing an office and a log library membership with Joe Uri at this time, so all three of us needed temporary offices and found a suite on the tenth floor. Bill with his great sense of humor immediately put a sign on the door “UMP Oil Company” for Uri, Miller and Pedrotti, even though we had no direct dealings with Joe. This also required us to hire our first receptionist-secretary, and we continued to share offices with Uri even after we moved “down the hill” to the Corpus Christi National Bank building on Water Street.

Surprisingly, after Bill lost all his old maps, we started finding oil and gas. Bill loved Duval County and the Queen City-Wilcox trend, and I mostly worked in the Frio-Vicksburg trends. We came up with a lot more Duval County deals than anywhere else. One reason was that Mobil had the entire Duval County Ranch (100,000 acres) held by production under a lease, dating back to the 1930’s, that required the drilling of a well every 90 days. Bill focused on this area, and we had a standing farmout request so that any time Mobil did not have a location ready, we were first in line. I don’t know how many wells we drilled to save Mobil’s lease, but after three discoveries in a row we were cut off from any more farmouts.

We also pioneered the Olmos-Escondido trend in Western Webb County. Two discoveries led us that far out of our usual exploration areas: Las Tiendas, a shallow gas field found by Dan Hughes and Tom Walsh, an Escondido gas field developed by John Hada. This meant that there was now a gas market in the area, and all we did was look at the old Edwards dry holes. Both the Olmos (we called it the almost sand) and the Escondido, though thin, were obviously passed up pays in these wells. We ended up with interests in a dozen of these wells, but due to the low production volumes and small overrides, we missed the big play that was developed by Bill Colson and Bob Rowlings on a lease that we turned to Bill Colson. They eventually extended this play all the way from Encinal to the Mexico border, but we were not included.

My biggest challenge in our new partnership was to convince Bill, who was considerably more conservative with his money than I, that we should buy our own leases. Our first effort was so financially rewarding, even though the well ended up dry, that we never again asked others to front our lease acquisitions. This worked well until we finally realized that the promoters buying our deals were getting the big interests and making all the money. So our next big step was to move out of the override business into the working interest side. This also took a lot of courage. Neither of us had any engineering experience, but Bill had a good friend, Frank Forester a petroleum engineer with a lot of well site experience, who agreed to consult for us and handle the drilling. We would develop a prospect, get three drilling contractors to give us a turnkey bid through the log, and then we would operate the well to either casing point or usually plugging.

We doubled the price of the acreage as a finders fee, carved out any overrides the deal would stand, used the highest drilling bid, and then we would sell three quarters of the interest based on one third for a quarter. Once the deal was sold we would contract for the cheapest bid and pocket the profit. This enabled us to cover overhead if the well was dry, but if productive we would have enough cash to cover our one quarter of the completion costs. We had to have good prospects to accomplish this, but as I said, by now we knew what type of deals would sell and which ones to avoid.

Now that we were putting our deals together, buying our own leases, drawing some of our own agreements and operating our wildcat wells to casing point, I began to consider us more than “Geologists”, so I started thinking of us as “Wildcatters” and maybe even “Oil Men”.

Next month: Part V – “The Roaring 70’s”

Dan Pedrotti

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