Claytie: The Roller-Coaster Life of a Texas Wildcatter

1. "As a typical Aggie, I tried to drill my way out of trouble."

It was a silent, solemn group that boarded the company plane in Midland one fine spring morning in 1991 only months after a tumultuous Texas governor’s race had sapped much of Claytie’s strength and spirit—plus $8 million of his personal fortune. If not the worst of times, it was a close second. The destination that day: Houston. The purpose: a bankruptcy briefing. At stake: not only Claytie’s oil company, and not only his reputation, but also his family legacy, which included pioneering forebears who for more than a century had helped settle and enrich far West Texas with sustained contributions to its land, law, and literature. Now it had come to this: Claytie was smothering under nearly $90 million in debt, and his most prominent contribution to family legacy, his good name, suddenly was as vulnerable as bankruptcy was imminent and ugly. Claytie’s personal and professional woes had continued to mount since, a little more than a year earlier on Valentine’s Day 1990, five close friends were killed in a company plane crash. After his narrow loss to Ann Richards in the governor’s race, he discovered his energy companies were not nearly as healthy as he had been told during his twenty-two-month campaign hiatus. “I was off balance and not thinking clearly,” he said. During his absence, and upon his return, the bulk of the company ’s activity was in South Texas in what was known as the Pearsall As a typical Aggie, I tried to drill my way out of trouble.” 1 “ 12 P A R T O N E Field, where the company started drilling in December 1989. “The problem was that the Pearsall reserves were overestimated and substantially devalued and not worth anywhere near what we thought—or what we had borrowed against,” Claytie said. “We were in trouble, and we didn’t realize it until the spring of ’91.” The company drilled some sixty wells in the Pearsall Field while he was gone. “The ongoing drilling program averaged nearly $1 million per well,” said Claytie. “And after my return we drilled thirteen or fourteen more before I came to my senses and realized that the Pearsall project was losing substantial amounts of money.” Worse, the company had borrowed millions against the reserves to continue drilling operations. Vendors such as Halliburton and drilling contractors such as Grey Wolf were squeezing the company for payment. But the wells weren’t producing enough oil to allow the company to cover its debts, which were approaching $90 million. To compound the problem, the price of oil had dropped drastically. “As a typical Aggie,” Claytie said, “I tried to drill my way out of trouble, but just drilled myself in deeper. I was losing money on every well I drilled. It was a devastating time for me. Many drilling operations were curtailed across the country in the wake of falling oil prices.” Besides the negative oil environment and drilling problems, his Midland bank, ClayDesta National, was flirting with failure. Fourteen million dollars in car loans extended to poor credit risks would soon take the bank to the brink of insolvency. Against this dark financial background, Modesta’s mother—also named Modesta—had been diagnosed with cancer and had fallen fatally ill. Claytie and Modesta’s elder son, Clayton Wade, added to the misery by getting busted on drug charges and sent to “boot camp.” After pleading guilty to possession of LSD, the troubled youngster was sentenced by a Midland judge to six months at the federal camp in Lewisburg, Pa. The judge also ordered the twentyyear -old to spend an additional six months at an Odessa halfway A T H O M E I N W E S T T E X A S 13 house, assuming he satisfactorily completed the federal drug treatment program. Claytie had been down before—during the fledgling business struggles in the 1960s, and the oil and gas busts of the 1980s—but never down and out. Given the exhausting governor’s race, coupled now with the family and financial misfortune, he felt, as he told a friend, “whipped and whipped and whipped.” While never one to wallow in self-pity, he had convinced himself that even Modesta had lost confidence in him, which was not true. But as he conceded later, he was not thinking clearly. His personal life was in shambles...