Читать книгу Gamble in The Devil's Chalk - Caleb Pirtle III - Страница 10

Pat Holloway was well versed in the practice of being disliked. Didn’t bother him. Never had. He was, after all, a lawyer, who handled and repackaged truths as deftly as a sleight-of-hand magician. Now you see it. Now you don’t. He was not afraid to break old rules or invent new ones. Holloway was tall, slender, had blue eyes, strawberry blond hair, and was considered quite handsome within the inner circles of Dallas society. Well, if not handsome, he was at least debonair and supremely confident. He was sure of who he was and where he was going, although it was not unusual for him to keep changing directions at the oddest of times.

Attorneys, especially those who had the misfortune of opposing him, regarded Holloway as arrogant and abrasive. He could charm a man as easily as cut his heart out with some dusty law or precedent that the innocent had never heard about and the guilty didn’t know was on the books. Holloway was a schemer – both brash and brilliant.

Some feared him. Others damned him. A few had threatened him. He worked hard and drank even harder, but said he never let an overabundance of alcohol cloud his good judgment. He passed off any bad judgment as bad luck. Holloway punctuated his sentences with intermittent explosions of profanity as though curse words, when cleverly pieced together, were the stuff of poetry. He almost always looked as if he had just walked off the cover of Gentleman’s Quarterly, and he was recognized as one of the more flamboyant figures – lawyer or otherwise – to swagger down the hallways of the Dallas courthouse.

Pat Holloway loved the law. It was a chess game of the mind, a matching of wits, played out with briefs and pleadings, and it was his belief that whenever a legal matter was being discussed, debated, defended, disputed, denied, or negotiated, the best team always won. The facts be damned. He was slick. He was smooth. He was tenacious. He had a deep aversion to losing. Did not like it. Never accepted it. Did not believe it had any place in his life or his profession.

No. It didn’t bother him at all to be disliked. He expected it, even reveled in the rock-hard reputation that he had carved for himself. Holloway had long ago decided that angered accusations or condemnations – the wilder the better – merely came with the territory.

When Pat Holloway left the prestigious Dallas law firm of Thompson & Knight, he kept as a client his good friend Frank West. West had been a petroleum engineer with Continental Oil Company and had left to form his own petroleum consulting business. He was hired by the Wall Street firm of Hornblower, Weeks, Hemphill & Noyes to run its public drilling firm during the early 1970s, and he asked Holloway to work directly with the investment bankers, as well as their Wall Street and Washington lawyers on all the various legal aspects of the public drilling funds.

When Frank West decided to take Hornblower’s offer, it was understood that he would not be required to help Wall Street brokers sell units in the drilling funds in an effort to raise money. The acquisition of capital was their job. West’s responsibility was to find drilling prospects, evaluate them, negotiate to secure them, get the wells drilled, supervise the production, and, in generally, manage the exploration and production business required by the Hanover drilling funds.

In reality, Hornblower and its nationwide network of securities salesmen knew hardly anything about the oil business. They were having a difficult time explaining the fund to customers, and Hornblower prevailed on Frank West to come to just one meeting in a Midwestern city to explain the drilling program to a roomful of potential prospects. One meeting. That’s all. The securities salesmen would listen and learn. He would be teaching them while he was also pitching new customers.

Frank West was an authentic oilman. He knew and fully understood what he was talking about. His presentation was so successful and convincing that, in a short time, he found himself on the road day after day, week after week, traveling the country and moving among high-dollar circles from New York to San Francisco by way of Chicago. He turned the intricacies and details of Hanover and its drilling funds over to his attorney. Pat Holloway was no longer merely reviewing the deals. Now he was out developing the deals as well. When a critical decision needed to be made, Holloway made it. Often faced with critical deadlines, Holloway did not have time to weigh his old friend’s opinions on any matter or situation that he might confront. Frank West was never around. Frank West had left a void, and Holloway was filling it the best way he could.

In the beginning of their working relationship, it had been Holloway’s duty to help negotiate the drilling deals that Frank West evaluated and decided to pursue as a worthwhile venture. Now, with West absent for long periods of time, Holloway moved forward and began evaluating, as well as negotiating, the numerous drilling deals that crossed his desk. He became the active face of Hanover before he even realized it. Wall Street knew it. Promoters knew it. Frank West began to suspect it. Pat Holloway did not slow down long enough to even think about it.

Holloway, however, was not a geologist, and he knew it. But, for the past two decades, he had worked for and with geologists, and he believed that he had learned to read isopach and structure maps as well as anyone. He thought that he could assess the potential risks and rewards of the drilling prospects as well as anyone, and Holloway was convinced that he could read between the lines of the prospect brochures and determine, from a geologist’s map, the risk associated with each possible venture. He was well versed in the way a deal could be structured and promoted, and he knew the best, most effective way to ascertain the potential profit of a prospect.

When Frank West was in town, it was customary for him and Pat Holloway to have lunch together at the Petroleum Club on Fridays, but never before they had at least two drinks at the bar. On one Friday in early 1974, they never left the bar.

In the midst of casual conversation, West suddenly announced, “Holloway, I have a real problem. You are practically running my damned company. People are beginning to talk about it, and I am afraid if those peckerwoods on Wall Street find out about it and see that you aren’t making any bad mistakes, they may hire you as president and give me the full-time job of running around the country selling the drilling funds – which is something I hate to do and am doing only out of necessity. Those assholes can’t sell their own drilling funds, and if I don’t sell them, I won’t have a company to run.”

Holloway stared at West, his eyes hard, his voice soft. “Frank,” he said, “you know that’s bullshit. I am just your lawyer and, to the extent I have gone beyond that, I am only doing whatever I think you would do if you were here because you are not here and hardly ever here.”

“Well, you aren’t acting like just a lawyer,” West snapped. “You are acting like you think you are some kind of geologist, for God’s sake.”

“Frank, I know I’m not a geologist,” Holloway replied. “But then, neither are you. You are merely a reservoir engineer who happens to have a genius for both salesmanship and management. Nobody but a Wall Street banker would ever hire a reservoir engineer instead of a geologist to find oil. But somebody up there must have had sense enough to see that you are a born manager of people and a born salesman. Maybe because I am trained as a lawyer, I have some ability to sell people on things I believe in, but I am not and never will be a good manager of people like you are. As you well know, I am an arrogant asshole and not a good people person like you are. So you don’t have to worry about me stealing either of your jobs, either running the drilling programs or selling them to the public. All this is just bullshit and alcoholic paranoia on your part. Let’s have another drink and talk about something else. Like women we want to bed down or something more important.”

Frank West laughed out loud. “Okay, Holloway,” he said. “Maybe I am imagining or exaggerating things to some extent. But the truth is, you have been taking over part of my job, and the truth of the matter is you haven’t made any bad mistakes, and you have been doing a fairly good job. And that has led me to another idea I want to lay out to you instead of talking about the wanton virtues of women right now.”

West paused. He squared his shoulders. He leaned across the table and continued. “As you know,” he said, “my business philosophy is not to put more than five percent of the drilling program into any one prospect, to spread the dry hole risk. Even without being geologists, you and I both know that if we spread the total available pool of money around twenty intelligent drilling prospects, enough of them are likely to hit and more than pay for the dry holes. Now, I am nearly always offered a larger part of virtually every drilling prospect I see than I can afford to take without breaking my five percent rule. So I need somebody who can take a piece of the deal. That’s where you come in.”

Pat Holloway frowned. He thought he knew where West was heading, but he wasn’t sure. He sat back and let Frank West talk. A good lawyer always knew when it was time to listen. This was one of those times.

West sat in silence for a moment, letting the conversation play out in his mind. He finally emptied one glass of whiskey, asked for another, and said, “I’ve been doing a lot of thinking, Pat. You do understand the business as well as anyone. You’ve been around oil for most of your life. Your grandmother was in the oil business. You’ve represented quite a few oil companies. Oil is what you know best. It makes sense to me that you should form your own private drilling funds. It would allow you to eliminate all of the SEC legal and accounting expenses that dilute a public drilling funds like Hanover, and you won’t have to pay commissions to any securities salesmen like Hornblower does. A no-load drilling funds should be pretty attractive to all of your rich friends.”

Holloway shook his head. “I can’t do it,” he said.

“Why not?”

“I already have a drilling funds company for a client,” Holloway said. “It would be unethical and a conflict of interest in the highest order if I went out and did my own deal. Wouldn’t be fair to you.”

West smiled for the first time all night. “It would not only be fair,” he said, “but it would sure help me out a lot.”

“How you figure that?”

“Well,” West answered, “I hear about a lot of good oil deals, but I can’t take them all. Most people bringing me a deal want their money and want to raise it the easiest way possible. They’re asking me to take either half or all of them, and I have to spread my money among as many prospects as I can. Now if you had your own drilling funds, I could lay off an eighth or a fourth of a deal with you, and I could take the other eighth or fourth myself. It wouldn’t be difficult for you, Pat, because you wouldn’t have to go out and spend a lot of money hiring a bunch of high-priced engineers, geologists, or accountants. I already have them, either in the office or on retainer. And they’ll all be at your disposal. You know – or at least think you know – everything else about this business that I know except maybe the geology and reservoir engineering. And, being the arrogant asshole you are, you may even trade tougher than I do. And I admit you can write up the deals better than I can. You may even know more oil, gas, and tax law than I do. I think you should follow my advice. If we’re as smart as we think we are, both of our funds can do quite well. You will probably end up making a fortune. But even if you don’t, at least I will get you out of my hair at Hanover. And I will get a partner for my drilling funds who is a good friend and someone I know I can trust. So think about it.”

Frank West shrugged. He downed his drink. He stood and headed for the dining room. “Now,” he said, “we can talk about chasing women if you want to.”

The more he thought about the idea, as the days passed, the better Pat Holloway liked it. Several of his wealthy and influential friends, from time to time, had asked about the possibility of investing in the Hanover drilling funds. Holloway, however, had always been quick to discourage them, telling them bluntly, “I won’t take your money. I don’t think it would be entirely wise for you to invest in Hanover because the load is way too heavy. By the time payments are spread to Wall Street and investment banking firms, their accountants, their lawyers, and Security and Exchange Commission attorneys, as much as thirty percent of the public fund is already eaten up. That’s not Frank’s fault. He just has to deal with a bunch of rules, a lot of regulations, and more red tape than you’d care to wade through. That is simply the way the game is played. If you make a decision to invest in public drilling funds, Hanover is the best one around. But I can’t personally justify a deal where only seventy percent of the money paid out by an investor is actually going into the ground in hopes of finding oil. The other thirty percent is overhead, as much as three hundred thousand dollars for a million-dollar deal.” Even Frank West would admit privately that he wouldn’t invest any of his own money in Hanover.

But private drilling funds, Holloway realized, was a different story altogether. He was now being given the chance to develop a no-load investment opportunity where he made his own deals, wrote up the necessary battery of legal documents, would never need to hire a geologist or petroleum engineer, and had the ability to sink a hundred percent of the money in the ground. Investors never had to worry about Wall Street expenses. There were none. Holloway would earn his compensation by taking an override on the working interest of a well after the land and drilling costs had been paid out. No arguments. No complaints. No guarantees. Some wells hit. Some didn’t. Pat Holloway knew better, but he assumed that all of his wells would come blowing in with gusto. He certainly would not make much money unless they did.

He made his way across Dallas, meeting with a dozen or more potential investors, including an old ally from Yale, William Browning, who preferred to be called Bill. Holloway and Browning’s relationship, in fact, went back to their boyhood days as classmates at the prestigious St. Mark’s of Dallas. The two men shared an affinity and passion for fast cars and exotic women. Or was it exotic cars and fast women? Browning was quick to tell him, “I’ll be your first investor and chances are damn good that I’ll be your largest investor.”

Holloway knew that Browning probably had the most dollars, and he had never been shy about looking for a new and better deal. He was a sophisticated investor who owned, among other things, an automobile dealership, a plane dealership, and a boat dealership. Browning was a swashbuckling gambler at heart, having raced automobiles on the road course of Europe during an earlier time in his life, and he already understood the potential financial rewards of the oil business. He had taken a big chunk of acreage in the Slaughter Field, and some were known to whisper that his royalty payment balanced out around a half million dollars a month. Bill Browning had an affinity for oil. Oil had been good to him. With the influential William Browning now on board, other investors would start lining up to make their wager on oil as well. At the moment, it was the only gamble paying off in a tough economy. Pat Holloway would never have trouble tracking down investors, and they could always find the investment dollars. It was, he admitted, a deadly combination.

Pat Holloway resigned Hanover without giving his decision another thought. He promptly moved his operation into a large home he had built in North Dallas as a hedge against inflation and failure. Late one evening over drinks, Holloway began verbally nailing together the legal points for his new drilling funds venture with Bill Browning, after the two men had grown weary of discussing the obvious attributes of the women they knew or wished they had known.

In his mind, Pat Holloway had his strategic plan hammered in place. His idea was to form his own company, raise the money, oversee the drilling funds, locate and close the oil deals, and work with a geologist to choose the prospects. Nothing new. He had done it all before. He had spent years finding and separating out investors for Frank West and Wall Street’s exploration and drilling endeavors. No longer would anyone be looking over his shoulder, and he liked it that way. Pat Holloway was the man in charge, not merely Frank West’s surrogate and masquerading as boss.

Bill Browning suddenly dropped a bombshell into the conversation. It came out of the blue and was totally unexpected. He set his chin defiantly and said he not only wanted to invest in the company, he wanted to be president as well.

“Why?”

“I sure would like to be able to travel around the country and tell people I’m the president of a genuine oil company,” he said. “There’s a significant difference between a player and the man who runs the play.”

“You won’t be running the play,” Holloway said.

Browning shrugged. “They’ll think I am,” he replied.

Holloway mentally departed the table and crawled back into the sanctity of his own mind. He sat deep in thought. He and Bill Browning had known each other for a long time, and Browning would let him run the company anyway he wanted, as long as they found a little oil from time to time. He did not want to run the risk losing the kind of investment funds that Browning could bring him, and he could not remember the two of them ever disagreeing, much less quarreling, on any deal or project where they worked together. Besides titles were cheap. Even the title of president was not worth much more than ink on a business card. Holloway grinned. Browning, as was his nature, was simply buying another plaything. It might be a mistake, he thought, but it wouldn’t be a big one.

“Okay,” Holloway said at last. “Here’s what I’m prepared to do, Bill. I will make you president of the exploration company. I’ve also decided to give Mike Starnes, your business manager, ten percent of the stock to handle all of our accounting needs and make sure the books are kept and audited properly. I won’t have time to do it myself. That leaves me with the remaining ninety percent of the company. If it works for you, Bill, it works for me.”

Browning nodded. He was president. It worked for him.

Holloway recalled, “Because it was anticipated that Browning would be the largest single individual investor in my drilling funds, it seemed appropriate that Starnes watch over the management of Bill’s investment by keeping our books. It allowed Starnes to participate in the profits the company made from his compensation for running the drilling funds. This was a one-eighth overriding royalty interest in the drilling prospects, convertible after payout into a one-quarter working interest after the investors recovered a hundred percent of their investment. It could amount to a lot of money.”

Pat Holloway and Bill Browning believed that the stock would give Mike Starnes a strong reason and incentive to help make the company as successful as possible. Browning was relieved because he would not be obligated to increase his business manager’s salary even though he was increasing the man’s workload.

Bill Browning leaned back, smiled broadly, and poured himself another drink. He had what he wanted and all that he wanted. No negotiations. No hard feelings. No regrets. But one question did concern him. “What’s the name of our company?” he asked.

Pat Holloway had been thinking about it for some time. He wanted a name that had immediate credibility and stature, one that did not belie the small size of a start up company that had not yet drilled its first well. “Humble Exploration Company,” he said.

“Seems like I’ve heard that name Humble before.”

“You have.”

“What will the folks down in Houston think?”

“They don’t use the name anymore. They’d rather be Exxon.”

“Sounds impressive.”

“It is.”

“What’s the next step?” Browning asked.

“Drill.”

“Do we have any locations yet?”

Pat Holloway laughed. “We’ve got the whole world,” he said.

Pat Holloway’s original idea, when Humble Exploration was formed on May 31, 1974, was to organize and operate drilling funds that would take interests in prospects being generated by Robert Nance, a consulting geologist who was working with Frank West’s Hanover Planning Company in Montana, the Dakotas, and the Red River play.

Holloway had long known that geologists were more important to the oil business than lawyers, even lawyers who bore the scars of working for two decades or more in oil and gas. He promptly issued fifty percent of Humble’ stock to Nance for twelve hundred dollars. Holloway personally took forty percent of the stock for a thousand dollars. Ten percent of the stock was issued to Make Starnes for two hundred and forty dollars.

Within a year, however, Frank West began fearing that his Wall Street bosses would decide that Nance, with all of that stock in his pocket, might have a tendency to favor Humble over Hanover when it came to locating prime prospects, After all. Humble had compensated Nance far more generously than Hanover, which did not share with him any of its promotion revenue on Nance’s drilling deals. In reality, it was a mute point. West and Holloway knew from the beginning that it was not in Robert Nance’s nature to show favoritism. He was honest. He was trustworthy. He could not be bought by Humble or anyone else. Those Wall Street bosses, however, were suspicious of almost everyone. For them, a conspiracy was being woven behind the scenes of every deal.

Nance, long before he became independent, had worked as a young geologist for Frank West’s consulting firm. They had a strong father-son relationship, and Nance had no intention of ever doing anything improper if it might injure the familial relationship he had with his mentor. Besides, Frank West was running a major public drilling funds, and he remained firmly entrenched as Nance’s principal customer for drilling prospects.

Nonetheless, West, aware that the powers on Wall Street were forever looking down on the venture like vultures hanging on a tree limb, told Holloway and Nance that he would feel more comfortable if the geologist was not a stockholder in Humble. Both funds, in the eyes of many, were out in the market competing for the same prospects. West did not want any deal to even hint of impropriety. Robert Nance readily agreed. He doubted if Humble would ever amount to much anyway. Hanover was his bread and butter.

Without any hesitation, he endorsed his stock certificate over to Pat Holloway and mailed it from Billings, Montana. Holloway promptly sent him a check for twelve hundred dollars to repay the cost of Nance’s twelve hundred shares. No debate. No dispute. Robert Nance was removed from Humble Exploration. He was no longer a stockholder who had any financial interest in the company.

Holloway immediately apprised Bill Browning of the transaction, explaining that, as far as Humble Exploration was concerned, nothing had really changed. Nance would continue to bring the company prospects, and Frank West was content to lay off to them any percentage of a deal he did not want to take. It would be business as usual.

“Well, that sounds okay to me,” Browning said, frowning, deep in thought. Then he broached a subject that had been long simmering in his head. “But now that you own ninety percent of Humble’s stock, he said, “don’t you think you should give me part of the percentage you got back from Nance? After all, I shouldn’t need to remind you that I am by far the largest investor you have.”

His request was not a surprise. Holloway had been expecting it. “Here’s the problem,” he told Browning. “It would give you preferential treatment over all of the other investors in Humble’s drilling funds, and that would not be fair to the other investors. If I give you some stock, those other investors might demand that I give them stock as well. I could end up with nothing for all of the work I’ve been doing. No stock. Not even a salary. And that would certainly not be fair.”

Bill Browning only smiled. He fired his next shot. “Well, Holloway,” he said, “why don’t you just call them all up and see if any of them have any objections to the biggest investor in Humble’s drilling funds having a ten percent interest in the company. See if they demand any stock for themselves.”

Holloway never made the call. He didn’t have to. It wouldn’t matter, and he knew it. The other investors would neither object nor demand any stock of their own.

A few days later, over drinks, Holloway told Browning that he had mailed him a stock certificate representing two hundred and forty shares of stock. He now owned ten percent of the outstanding stock in Humble. Holloway never asked for payment. And Bill Browning never bothered to pay his two hundred and forty dollars for the stock.

He simply kept what he was sent.

Soon after Pat Holloway formed Humble Exploration and resigned as attorney for Hanover, he and Frank West were approached by petroleum engineer John LaRue, who had a proposition for them to consider. “I’ve found this kid who used to work for Texaco, and I want to hire him,” LaRue said. “He works all the time, has a good head on his shoulders, and, from what I’ve been able to find out, he’s one of the better geologists to come down the pike in a long time.”

“So what’s the problem?” West asked.

“I can’t afford him unless I get a lot more business,” LaRue answered, “and I don’t want to lose him. I’d like for each of you to pay me a retainer each month, and I’ll use the money to bring him on board. You’ll have first call for his services any time you happen to need them.”

“You think he’s that good?”

“He’s been all over Texas, Louisiana, Africa, Australia, and the Middle East.” John LaRue shrugged and continued, “He’s been around, and they tell me that when it comes to understanding what goes on in an oilfield, this kid is an absolute genius.”

“You think he can find oil?”

“Always has.”

“How much money do you need?”

“Four or five hundred dollars a month from each of you,” LaRue said. “Won’t hurt your checkbook any, and it would help me a lot. It’d be a real loss if the kid went somewhere else.”

“What’s his name?” Holloway asked.

“Ray Holifield.”

Pat Holloway thought it over for a minute. He knew he wouldn’t miss the money. Spent more than that on either a good or bad night at the Petroleum Club. Besides, this Ray Holifield fellow might be able to go out and generate some new prospects for them. They already had a straight line to investors, and even with plenty of acres already sewn up, they were always looking for some new hot spot to drill.

He glanced at Frank West. West nodded. “It’s a deal,” Holloway said. “Now, let’s find out if this Ray Holifield is as good as you say he is.”