New Oil: The Giddings Gamble
The Austin chalk is the most perverse, contrary, incorrigible oil field known to man. The big oil companies tried it and gave up. But one man learned the way to make the chalk yield its secrets—and its oil.
James says: Who is that on the cover of the February 1981 publication ? I think his name is David Perkins, anfriend of my brothers from younger years. IF that’s him where is he now ? (October 21st, 2009 at 4:22pm)
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Holloway also took Humble into and out of a Chapter 11 bankruptcy between the fall of 1979 and the spring of 1980, a period when his company’s oil production was reaching new peaks every day. The reason for the unlikely bankruptcy was a fight over the estate of Holloway’s late friend and partner, Bill Browning. Though primarily a technical legal tactic, Holloway’s decision to have Humble file bankruptcy only added to his image as the most controversial operator in the Giddings field.
The string of controversies continued last December as Exxon’s suit against Humble for alleged trademark violation went to trial in Amarillo. By that time Exxon had dropped all monetary damage claims and was merely asking the court to require Holloway’s company to stop using the name Humble. The trial lasted four days. A decision is still pending.
But Holloway’s adventures in the Giddings Austin chalk field have also been marred by personal tragedy. While driving down FM 141 one day in the fall of 1979, Holloway’s daughter, Marcy, swerved to avoid an animal in the road and crashed into the side ditch. The accident paralyzed her from the waist down. Holloway’s son, Patrick, crashed on the same road a short time later; although he survived, two steel plates had to be inserted in his leg to mend his injuries. On top of all that, last fall Holloway’s wife, Robbie, filed for divorce.
The second-ranking producer in the field, Max Williams’s U.S. Resources (which had been renamed U.S. Companies), has pumped out a total of more than 5 million barrels of oil and more than 20 billion cubic feet of gas, or roughly $200 million worth of energy, since 1976. Success came to Williams before he knew it. As he put it, “I was broke, I was broke, I was broke, then I was rich. There never was a time when I sat down to think what was happening. I never said, ‘By God, I’ve got it made.’” But as Williams now admits, he does have it made. He and his wife and two children have moved into a big house in Dallas with a swimming pool, tennis courts, and three acres of land. He flies about in a Citation, a King Air, a helicopter, or one of the two single-engine planes his company owns.
By all appearances, the Giddings Austin chalk play has been good to Irv Deal, too. Windsor Energy ranks third in the field behind Humble and U.S., with cumulative oil and gas production in the last four years worth over $100 million. According to his former partner, Max Williams, Deal has been spending much of his time away from the office. According to Deal himself, he works just as hard as he always did. Still active in real estate, he claims to be the second-largest residential developer in Nevada. He also holds, through Windsor, 100,000 acres of leases in the Austin chalk trend and will have a $60 million drilling program this year, which will include not only Austin chalk wells but ventures in California and the Rocky Mountain Overthrust Belt. Deal describes his success with Windsor as “very gratifying.”
Although Ray Holifield’s clients still have the best records of all, Holifield no longer has a monopoly on success in the Austin chalk. Most of the operators in the play are now using seismic to pick their drilling locations, and several other geologists have come up with what appear to be effective interpretation techniques of their own.
Next to Holloway, Williams, and Deal, the most successful operator in the field thus far is Thomas Coffman of Austin, who has produced roughly $100 million worth of energy from the Giddings area, or just about as much as Deal. Several other companies and individuals, among them Champlin Exploration and Keith Graham, have also done well in the Austin chalk, though not on a par with the top four. Clayton Williams, who had ten wells drilling and had announced 140 prospective locations by late summer, 1980, is probably the most active of the new operators, but whether or not he will make another big killing is still open to question. By the end of the year Williams had produced roughly half a million barrels of oil from the field, only a fraction of the production of companies like Humble and U.S. According to Railroad Commission figures, the average production for all wells in the Austin chalk is 88 barrels of oil and 200,000 cubic feet of gas a day, which is fair but not earthshaking and demonstrates that not everyone in the field is getting rich quickly.
Chuck Alcorn, the man whose well kicked off the Giddings boom, has made a fortune from his discovery, but only a relatively small one. As of the end of 1980 his company had produced a little more than 800,000 barrels of oil from the Giddings area. Roughly two thirds of Alcorn’s production has come from the No. 1 City of Giddings, which no has a cumulative production of 540,000 barrels since 1973 and is still sending up about 20 barrels a day. Even at an average price of only $10 a barrel, the total gross from the No. 1 City of Giddings alone is $5.5 million. By virtue of his various farm-out agreements Alcorn also claims a part-interest in one hundred other wells in the Giddings field and is planning more Austin chalk ventures in the near future.
In the meantime, he has moved into a magnificent mansion on 35 acres near the Victoria County Club and flies about his business in one of two private planes. But Alcorn’s success hardly compares to the hundreds of millions made by the operators who followed him into the Giddings area. Alcorn admits, “I made the conservative choice in farming out my leases to Houston Oil & Minerals back in the beginning. I kind of wish I hadn’t now.” But this he says with the benefit of twenty-twenty hindsight. Through the farm-out agreement, Alcorn has been able to profit very nicely from the field with a minimum of risk. “I haven’t gotten wildly rich like some of those other guys,” he says, “but it’s been the biggest thing in my oil field career.”
The same holds true for Ray Holifield. Besides making hundreds of millions for his clients, he has also done pretty well for himself. With a 2.5 per cent override on every well his clients have drilled in the field, he has grossed an estimated $10 to $12 million from the Austin chalk boom in the last four years. While he was still in the employ of La Rue, Moore & Schafer, Holifield had to give 75 per cent of his override money to the firm. In March 1979 he went into business for himself. He now operates his own geological consulting firm, Ray Holifield & Associates, in North Dallas and has built a large house for his family. But he still works fourteen- and sixteen-hour days seven days a week and pays regular visits to the Giddings field. Although he no longer has holes in his shoes, he remains modest and unassuming and, predictably, secretive about the seismic method that has served his clients so well. The most notable change in his personal appearance is the addition of a diamond-studded Rolex watch, which he wears primarily because it was given to him by Max Williams. Though not a publicity seeker, Holifield has been written up in the business pages of newspapers across the state as the “genius,” the “artist,” and the “magician” of the Austin chalk. But the accolade of which he may be proudest is inscribed on a small plaque some Humble employees have hung outside their new two-story brick office in Giddings: “The House That Holifield Built.”
The Last Boom?
Veteran Oklahoma geologist A. A. Meyerhoff calls the Austin chalk trend “the South Slope.” Obviously intending a comparison with the great oil find on Alaska’s North Slope, Meyerhoff bases his optimism about the area on more than the Austin chalk. He believes that once the chalk is played out, oilmen will find even larger deposits of oil and gas in deeper layers like the Smackover. Many other geologists and oilmen agree.
Though Ray Holifield is also optimistic about the possibility for deeper pay zones in the Giddings field area, he is more conservative in his estimates of current potential. Holifield says that the Giddings field itself may be good for about 250 million barrels from the Austin chalk layer, but he declines to speculate on the potential of the oil-bearing part of the trend, from Mexico to Louisiana. Others involved in the play, among them Max Williams of U.S. Companies, predict that the Austin chalk trend will yield at least 1.5 billion barrels of oil. In any case, the Giddings field alone has already produced 30 million barrels of oil and 60 billion cubic feet of gas to date, and few doubt that it will produce at least four times that amount in years to come. Even if the most optimistic 4-billion-barrel recovery estimates prove to be true, the Austin chalk trend will rank far below the Alaskan North Slope, which contains an estimated 9 billion barrels. But if only the conservative recovery estimates hold, the Giddings Austin chalk trend will qualify as an “A” field, a find that will add significantly to the nation’s energy reserves.
Already some are calling the Giddings play “the last boom.” This is partly because it is one of the few big plays in recent years that have been dominated by independent oilmen—old-fashioned wildcatters—rather than by the major oil companies. But it is also because many believe that the era of significant oil finds in the continental U.S. is over. The big play today is in deep natural gas. On the other hand, many oilmen say that if oil prices rise high enough (and the windfall profits tax is repealed), major new oil discoveries will follow. They also point out that Texas is full of oil fields that nobody believed existed until someone drilled discovery wells to prove them. The East Texas field was one of those, and it has been producing oil for more than forty years. The Austin chalk might do the same.
It is safe to say that the Austin chalk will continue to provide plenty of action for oilmen in the near future. Austin chalk discoveries have been made in Louisiana, suggesting that the productive part of the trend may not be confined to Texas, and several Texas operators are already extending the play to the northeast and southwest of the seven-county Giddings field area. Giddings itself is also due for a second boom soon, since many of the leases in the area will expire in April 1981 and those that have not been drilled on will be up for grabs again. As Chuck Alcorn, who plans to get in on the upcoming leasing action, recently observed, “The play isn’t over yet.”
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