Claytie: The Roller-Coaster Life of a Texas Wildcatter

29. "We bought $300 million worth of seismic data for $7.5 million."

As 2001 surrendered itself to historians, Claytie and his exploration team had emerged from recovery mode. “We’re back growing again, in intermittent spurts,” he said. Armed with an abundance of the scientific 3-D seismic data—and gathering more—they were prowling now for even bigger, better, but elusive prospects. “It has always been difficult to drill a well and get rich, and it is more difficult than ever now because the shallow deposits of oil and gas have been drilled,” Claytie said. “It is a tough business, and I’m particularly proud that our group has made a living wildcatting. Since the early ’80s, most of the people who’ve made money in the oil business did so by acquisition—buying companies in trouble or buying the castoffs of the major oil companies. We never did that. In hindsight, I wish I had but that wasn’t what we did. We are accustomed to risk and risk management, and that’s what an exploration company does.” For sure, the post-Fazzino era was no picnic, but at least it produced a steady cash flow. “After we maxed out our Chalk and Fazzino area, we debated where to go from there,” Claytie recalled. “We took the cash flow and we went here, there, and yonder, and really didn’t do any good with it.” This period included unsuccessful wildcats in Mississippi, South Texas, California, and Arizona and a drilling venture in New Mexico that developed some “nice” production. But it soon became We bought $300 million worth of seismic data for $7.5 million.” 29 “ A N E W M I L L E N N I U M 361 clear the immediate future of the company lay in Louisiana, for several reasons. One was expensive 3-D seismic technology purchased at bargain basement prices from a couple of cash-strapped companies caught up in the economic downturn of the late 1990s. In 1998, Claytie and crew developed a relationship and friendship with North American Schlumberger, which had purchased a large seismic acquisition interpretation company called Western Geco. “In the economic troubles that evolved in the late ’90s, Schlumberger was generating no income from its Western Geco acquisition ,” Claytie said. “Their company was at a standstill, and Pat Reesby [who headed CWEI’s Houston office] and I got the idea of maybe buying their whole seismic data set.” Early efforts to work out a deal failed. But when the economic woes of the energy industry continued, he and Reesby arranged a meeting with Schlumberger president Maurice DuJols and executives of his subcompanies, particularly Jim White, who headed Western Geco. “Tell us what you’ll do,” DuJols asked. “What would you pay for the three thousand miles we have in the transition zone where you have been doing some work?” Claytie calmly pulled from his pocket an offer of $7.5 million— $2.50 per mile. DuJols looked at Jim White and said, “Jim, is that all right with you?” White gave the go-ahead. “We made a deal in that room, and we bought $300 million worth of seismic data for $7.5 million,” Claytie recalled happily while admitting that he didn’t actually have $7.5 million. “We were able to do it because, number one, they let us have a year and a half to pay the money, and, number two, we had the cash flow from the Chalk and the Fazzino complex. We also committed to pay them two hundred thousand dollars for every well we drilled in the seismic package. Anyhow, the timing was absolutely perfect.” That was because many of the companies that somehow survived the wrecks of the ’80s had encountered new economic challenges in the late ’90s and were not exploring when oil prices tumbled to nine dollars a barrel. 362 P A R T F I V E “The whole industry was having fits,” Claytie said, and his timely acquisition of the cut-rate scientific data would be another instance of what colleagues called his oil-patch “guts and vision.” In January 1999, as luck would have it, Claytie had been the keynote speaker at the NAPE oil prospect exposition and he took a gloomy message to his contemporaries. “I told them if you did not really enjoy the oil business, you should change careers because the future looked dim.” But just days later...