The Mildcatters

Unlike their daredevil counterparts of old, today’s energy entrepreneurs want a sure thing— or, at least, a surer thing. Which is why they’re betting on gas, not oil.

July 2005By Comments

IF YOU HAVE LIVED IN Houston for a certain period of time—since the oil boom of the late seventies, say—it is nearly impossible to avoid feeling your pulse quicken whenever oil and gas prices look to be headed for an extended uptick, as they seem to be right now. The more that energy gloom and doom settles upon the world—the war in Iraq, the much-threatened collapse of the Saudi government, the success of books like Paul Roberts’s The End of Oil—the more a certain segment of Houston edges toward euphoria, even though it is supposed to remember what happened last time. A story in the Houston Chronicle’s business section on April Fools’ Day, for instance, carried the jubilant (for Houston’s oil sector) subtitle “Report raises prospect of oil reaching $100,” but it also contained an uncharacteristic concern for the dangers of a worldwide recession that might be caused by a “super spike” in prices. That conflict, in a nutshell, is Houston today: Post-bust and post-Enron, the city is trying on a brand-new mood: cautious ecstasy.

At least that’s what struck me at a meeting this spring, high atop the JP Morgan Chase Tower, which, long ago in the very good times, bore the name of Texas Commerce Tower. Houston’s new mood was represented by Keith Spickelmier, a 43-year-old natural-gas entrepreneur who was a bankruptcy lawyer during the bust. “I know what can happen,” he told me, shaking his head and taking a sharp intake of breath, as if the money lost had been his own. He was handsome, in a youthful, all-American way, his broad, open face and rosy cheeks revealing his Nebraska origins.

The old mood—unbridled optimism—belonged to a man named John Olson, who had recently put together an energy hedge fund, a private-investment vehicle that ostensibly reduces risk. The occasion for the meeting was to discover whether Spickelmier might be interested in investing. Any student of social interaction would have been able to tell at a glance that Spickelmier did not share a mutuality of interest with Olson, who, as an analyst for Merrill Lynch in the early nineties, was an early Enron critic. Spickelmier was assiduously groomed in a pin-striped suit, rep tie, Montblanc, and a very fine watch. Formality clung to him. Olson was casually dressed in an oxford shirt and khakis, as was his partner, who had added a no-stress burgundy pullover to his ensemble.

Spickelmier was polite while Olson made a pitch for his fund: “Five years ago, if you wanted another barrel of oil, you called up the Saudis,” he said. But after 9/11 in particular, the Saudis slowed production, and the promise of vast new reserves in Russia and what are now called “the Stans” hadn’t borne out. “Everyone in the world wants a stable supply of oil,” Olson continued, “but there is no stable supply. The price of oil is going to stay high for a long time.”

Everyone in the room knew what that meant: “a gigantic cascading waterfall” of money—Olson’s term for all the exploration money, drilling money, construction money (We’re going to rebuild the Middle East!) rushing into Houston, proof that investing with him was the prudent thing to do. “The next five years will be the best in your career and my career,” he said emphatically. “It’s all here. That’s the beauty of it. I’ve been an analyst for thirty-seven years, and it’s big.”

A quarter of a century ago, this would have been the moment for someone like Spickelmier to fall all over himself trying to get in on the action. He did chuckle when someone mentioned that Wall Street investors, who didn’t know a Christmas tree from a drill stem, were desperate to get in on new oil and gas deals, and he tacitly agreed when it was suggested that the “dumb money” was flowing Houston’s way again. But he was restrained, in a way that an earlier generation of Houston oilmen were not. Spickelmier was a rich man, with several businesses of his own, including a partnership in a private equity firm. Even so, he had a nervous little laugh that telegraphed his suspicion that his success might evaporate at any time. He knew things were looking good in Houston, but he also knew that a lot of energy hedge funds had taken a beating this year. He believed he had a better, safer prospect: the Barnett Shale. Why should he pay somebody else to pursue energy riches on Wall Street when he had already formed an oil-and-gas production company called Westside Energy last year to take advantage of the hottest gas play in Texas, probably the hottest in the entire United States?

The Barnett Shale is a vast underground swath of rock that runs through Fort Worth and out into suburbia, stretching northwest of Dallas almost to Oklahoma and southwest as far as sparsely populated Erath and Bosque counties. As Spickelmier listened politely to Olson’s pitch, a subtle restlessness suggested he knew that deals in the Barnett were slipping through his hands. The price of a drilling lease had shot up from $25 an acre to as high as $8,000 in just a few short years. Potential sellers were exchanging intelligence over the Internet, attaching smiley faces to their queries. Companies from Oklahoma, Denver, Kansas, and, yes, downtown Houston were puncturing the rolling North Texas landscape in hopes of making a killing. As was he.

The Barnett was the real new thing in the energy business: a sprawling, wildly beneficent gas field, trapped deep in unyielding rock for about 320 million years, whose moment had arrived. As Morgan Stanley reported in April 2004, “Producers previously skeptical of the Barnett have recently established positions in the play.” The Barnett Shale was “viable in virtually any gas price environment.”

It was that notion of low risk and high reward that particularly appealed to Spickelmier: The Barnett was described in knowledgeable circles as an engineering play, or a mining play. Everyone knew the gas was down there, but now, finally, it made sense to extract it. In recent years, new technology and higher gas prices had made drilling in the Barnett seem, suddenly, like a no-brainer to a man of Spickelmier’s temperament, one who wanted to play but not to plunge. In that way, he was representative of a new Houston, where gas had replaced oil in the romantic imagination and caution and care had replaced wild abandon. “I don’t have the stomach for drilling ten-million-dollar wells,” Spickelmier told me. His approach was a different kind of deal, for a different time, and a different, chastened Houston.

At least that’s what he liked to tell himself.

“THIS REMINDS ME A LITTLE OF NEBRASKA,” Spickelmier told me, eyeing the tall spring grass as we drove through the Barnett country in a deluxe, frigidly cooled Ford Excursion piloted by the laconic Chris Knowles, who manages Westside’s staff of land men. We were traveling on a sparkling limestone road through what is known as the core area, rolling farmland about half an hour northwest of Fort Worth, where the first large gas deposits were brought into production more than two decades ago. Virtually all this land had been leased for drilling by 2004. Now, small herds of cattle and hay bales shared the landscape with ecologically hued—green, beige—separator tanks and soaring, skinny rigs, brightly painted according to colors chosen by their owners. It seemed that around each bend—football fields apart, say—a patch of farmland had been cleared for construction or the tower of a working rig already sat regally in place, a slim, proud beacon of commerce. Eighteen-wheelers bearing enormous rig parts rumbled down the roads, kicking up dust, making it hard for us to follow. We were touring and snooping, a variation on what early oilmen, who liked to drill close to each other, jokingly referred to as “closeology.”

Signs of new wealth shimmered in the sun—new houses, new pickups, new satellite dishes—and from Knowles’s gossip, landowners had grown shrewd. Water that once quenched livestock, for instance, was now being sold to producers to fracture, or “frac,” the mile-deep shale formation, releasing the much-sought-after gas. Knowles told Spickelmier that landowners were trying to double fees that had started in the low five figures.

“We don’t need clean water, just wet water,” Spickelmier said, aghast.

Just beyond a rise, Knowles turned the Excursion toward a gate and stepped out to unlock it. We had arrived at Westside’s first well, the Lucille Pruitt #1, named after the landowner. Spickelmier had described it to me as an average well, which was earning the company about $60,000 a month. “It was average because we were very cautious in everything we did,” Spickelmier said of their drilling techniques. “We’ll be less cautious on the second well.”

He got out of the car and walked over to some parched land near his property line. “Over here—Dynegy,” Spickelmier said, pointing to the area where the giant energy company would soon build a pipeline to Westside’s wellhead.

A shareholder who had reached Spickelmier on his cell phone just as we were passing Denton had requested a photo, so Spickelmier posed obligingly in shirtsleeves in front of the tanks, and again in front of the well, grinning into the sun before a stubby collection of valves and tubing. It reminded me of a famous photo of the late wildcatter Michael Halbouty waltzing with his second wife in an East Texas oil field, he in a tuxedo, she in an evening gown. But this wasn’t Gusherville: Spickelmier was having fun, but not too much. That’s the way Houston is these days.

There survives here a deep if unspoken longing for a return to the collective dementia of the late seventies and early eighties, as well as the awesome intellectual overconfidence of Enron’s heyday, when the company’s motto went from “The World’s Best Energy Company” to “The World’s Best Company.” But no one is eager to repeat the pain and embarrassment that followed these expeditions into madness. This may be one reason why oil now hovers at around $50 a barrel and gas is trading at $6.50 per million British thermal units—up from $12 and $2, respectively, in 2000—but few people are gloating about it, at least not in public. Yes, there are a few signs of a return to really happy times: Squillionaire Jim Flores’s mansion on River Oaks Boulevard is now virtually three times the size it was when it belonged to Oscar Wyatt and his predecessor, that wildcatter of wildcatters, Hugh Roy Cullen. (That Wyatt’s sometime partner David Chalmers was recently indicted in the Oil for Food scandal is somehow reassuring—it’s evidence that the old freewheeling mentality is still around.) Tony Vallone reopened his eponymous boom-era restaurant, still shockingly expensive and still featuring social Siberia, this time in front of a violently swinging kitchen door. And yes, after a magnanimous attempt to draw the outsourced with a downscaled Galleria IV, the city’s most beloved shopping mall once again hosts stores for the super-status-conscious (Louis Vuitton now keeps company with Versace, Carolina Herrera with Ralph Lauren). It’s tempting to take these new signs as evidence that our natural optimism has been rewarded, past failures forgotten, and that, as that apocryphal bumper sticker promised, we are more than ready to receive the next oil boom, having sworn not to mess things up this time.

But this is, as the Chronicle noted, a much quieter boom, a contradiction in terms that makes perfect sense in Houston. For the first time in the city’s history, there is real debate about America’s dependence on foreign oil and the future of Houston as an energy capital. Michael Zilkha, the city’s edgiest energy entrepreneur, has been vocal about the shortsightedness of the current administration’s energy policy. Venture capitalist Matt Simmons’s Web site offers a compendium of doomsday speeches, including “An Energy Tsunami Ahead” and “Twilight in the Desert: The Coming Saudi Oil Shock.” Rice University energy scholar Amy Jaffe falls in the middle, between futurists like Zilkha (a proponent of wind power) and local oilmen who, she says, are mired in old ways. Jaffe doesn’t believe that we are running out of oil, but neither does she believe that Houston can afford to bet on foreign oil to the exclusion of new technologies. “People are horribly risk-averse, so no one is willing to take a flier on anything,” Jaffe said. “The companies have record profits, but all they’re doing is buying back their own stock and paying dividends. They went to the Caspian because it seemed like a no-risk play. Their so-called safe bet has broken the bank.” Despite their advertising, the majors are not innovating or developing new technologies with any great passion; instead, they are merging to boost profits (ExxonMobil, ChevronTexaco) and coddling shareholders. To Jaffe, the city that prides itself on innovation is falling behind. “There’s a train blowing a whistle, and we’re not even on the platform,” she insisted.

Spickelmier, however, is a traditionalist, which means he understands that the energy business is cyclical. “Remember 1973?” he asked me. “The gas lines? The world was running out of oil?” It wasn’t true. High prices encouraged more exploration and, in turn, more production, which caused gluts, which dropped prices, which discouraged exploration, which caused shortages, which raised prices, and so on. Now, for instance, is the moment in the cycle when it is a good time to be in the energy business. The Barnett Shale makes the point: Back in the eighties, it was largely ignored. Few saw the potential for gas then, and no one had the technology to get deeply embedded gas out of the ground profitably anyway. And why bother, when it was cheap and plentiful elsewhere?

Then, of course, the world changed. Oil wasn’t so plentiful anymore, and people started looking at gas as a replacement fuel. “In the U.S., we’re moving everything to natural gas,” Jaffe said, adding that a return to coal is also on the horizon. In the past decade, 90 percent of all the power stations in the U.S. were built to run on natural gas; gas is also critical to the manufacture of fertilizers, like ammonia. Gas is cleaner than coal and, at this moment, cheaper than oil. Jaffe told me that as more uses have been found for gas, and as more companies have joined the business, prices have risen by as much as a third. Growth in China and India, for instance, will be generated with natural gas, while places like Qatar, with enormous gas reserves, will grow in influence. As a world market for gas increases, so too will issues of access. “It’s not going to be any more stable than oil,” Jaffe said.

But for an ambitious gas man in the U.S. like Spickelmier, opportunities abound, especially with the help of his partner, Jimmy Wright, a dryly humorous 45-year-old with more than 25 years in the business. To them, drilling for gas in the Barnett Shale, which could cost about $2.5 million per well, made a lot more sense than drilling off the coast of Africa, where a well might cost $20 million. “It’s lower risk,” Wright explained. To Wright, an unconventional gas play like the Barnett would evolve into a “blue-collar, grind-it-out investment for your portfolio. It’s not glamorous, but it provides the opportunity to create a cash-flow stream, and it doesn’t go away overnight. We focused on the Barnett because you know what you’ve got and you know what it’s gonna give you. It’s a chance to build a long-term company.”

Or, as Jaffe put it, “All these wildcatters and independents you see—these people are all drilling for gas now. The oil part of their business is shrinking. If you’re a little guy, the play is to do gas.”

Low risk, steady returns: What happened to the wildcatters who took fliers? “People are much more measured in what they’re doing now,” Spickelmier said of his colleagues in Houston. “Much more…” He trailed off, knitting his brow, searching for just the right word.

“Rational?” I asked.

“Rational,” he answered.

WHEN I FIRST SUGGESTED to Spickelmier that he embodied a new sort of energy executive, he responded, appropriately, with concern. “You have to do whatever you can to try to spice me up,” he joked. “I’m kind of a boring personality.” Wright told me essentially the same thing. “I personally don’t have a life. This is my total deal,” he added, “this” being Westside. It’s hard to imagine Michael Halbouty or Oscar Wyatt being so reticent; Ken Lay might have been, but you might have suspected that he didn’t really mean it. Successful Houston oilmen (who wants to be called a “gas man”?) now strive to be tasteful, quiet, and understated, sort of like Academy awards presenters, who for the same reason are also not as exciting as they used to be. Where’s Glenn McCarthy or Silver Dollar Jim West when you need him?

Spickelmier wanted a company that was lean and mean and flew under the radar. Westside’s office space, for instance, is well located between the posh St. Regis Hotel and the Galleria and offers a perfect, Oz-like view of downtown. But the company’s lobby is really just a bend in a hallway decorated with two chairs and a few dog-eared copies of Oil & Gas Journal. The conference room is similarly appointed, with brashly colored seismic maps of the Barnett stuck to a whiteboard with magnets. Spickelmier has no pictures of himself with (a) Ronald Reagan, (b) “41,” or (c) “43,” a decorating tic once de rigueur among local oilmen, and there aren’t a lot of co-workers around to distract him: Spickelmier is chairman of the board; Wright is president, CFO, and CEO. A controller and a very laid-back office manager work on salary, and a small corps of land men work on contract. That’s it. Spickelmier touts his skinny staff as more evidence of his caution and, not coincidentally, his success: Westside spent its money on leases rather than payroll and now has about 63,000 acres in twelve counties under its control. (Big players, by comparison, have hundreds of thousands.) There are plenty of remaining risks, however: skyrocketing lease prices, for instance, and the scarcity of drilling equipment and drill pipe. Every day that a producer can’t move his gas to market—or get a new well completed—is a wasted one.

Westside is nearing completion on that second, less cautious well and is a minority partner in two more. (The right well can make about $10 million over its life; Oklahoma-based Devon Energy, a big Barnett player, now has about 1,900 wells, with plans for many more.) Westside’s budget for 2005 is a sensible $19 million, most of which will go to drilling and leasing. The stock price hit $5.50 a share last March but has recently hovered around $3.50—although, as Spickelmier optimistically pointed out, it has doubled in value since opening in December 2004 at around $2.

Spickelmier is aware that more than money is at stake: His reputation, which he has honed vigilantly for the past twenty or so years, is on the line. “The risk here is you’re in an industry that has had a lot of shady characters,” he explained. “It’s refreshing to Wall Street and investors not to have a lifetime oil-and-gas guy, not to think we’re a bunch of yahoos in Houston. Enron did not help in that respect. We are not promoters, period, end of story.”

Even so, Spickelmier has the right psychic credentials for success inside the Harris County line. In the small Nebraska town where he grew up, his father managed a feed mill, but Keith was an entrepreneur from the beginning; he had a paper route, a house-painting business, a lawn-mowing business, a snow-shoveling business, and he sold night crawlers. “I’ve always loved starting things and seeing them work,” he told me. And then, near the end of college, at the University of Nebraska at Kearney, he had a fateful epiphany while scraping snow off his windshield. “I didn’t want to be in the cold anymore,” he said. And so he moved to Houston, at the exact time when the oil boom was disintegrating. When he wasn’t in classes at the University of Houston law school, he sometimes jogged through River Oaks, like a lot of young men who hoped to be rich one day.

He set himself on a course that would make that a reality. He joined Sheinfeld, Maley, and Kay as a bankruptcy lawyer (what else did you do in Houston in 1986?) and became one of its youngest partners in record time. Selling assets for former SMU football stars reinforced his natural conservatism, but he also put his friendly, open nature to work for himself, first as a Houston partner at the prestigious Washington law and lobbying firm of Verner Lipfert (he had Lloyd Bentsen, Bob Dole, and Ann Richards as colleagues) and then as an attorney of counsel with Haynes and Boone, where, in tune with the times, he shifted into raising capital for a major client, a cable TV operation.

In 2002 Spickelmier became engaged to Sara Paschall Dodd, from an old River Oaks family. Soon he was a regular in the society columns. “Beth and Jess Moore threw [a] dinner party that included their houseguests Sara Dodd and Keith Spickelmier . . . ,” Chronicle society columnist Shelby Hodge wrote that year. “All eyes were on Dodd’s left hand, where she wore a major rock confirming her recent engagement to Spickelmier.”

In other words, he was a rich man still intent on proving himself. He was always well scrubbed and well appointed, a self-made man moving with a very fast crowd—jetting to hobnob with wealthy, influential friends in New York and Los Angeles, hitting the links near his home in Colorado, making the scene with his wife at charity balls for the Houston Museum of Fine Arts, the Contemporary Arts Museum, and the Menil Collection. But building a company is very different from raising capital, especially in the post-Enron age, when a wrong turn—or a wrong turn by one of your executives—can send you directly to jail. The fact that Spickelmier had married into the social stratosphere and had limited experience in the energy business meant that the rungs on his particular ladder had been extended while he was still climbing and that people would watch to see whether he would fall. Hence the Barnett, which looked like a sensible, rational, safe way to make a lot of money.

THE BARNETT’S REPUTATION as a sure thing is relatively new. Dan Steward, a 57-year-old geologist who is part of a team credited with discovering it, told me, “Three to four things had to come together for the enormous find to make its way to the surface and into the homes of Americans. All these circumstances came together at the right time, and to me, this was one of God’s miracles.” Steward now works for Dallas-based Republic Energy, but he commutes from his home in the Woodlands, the development created by his former employer and Barnett pioneer, George Mitchell. Maybe because he was a rock guy and not a money guy, Steward talked about the Barnett the way someone talks about the only person he’s ever really loved. Unlike Spickelmier, who was drawn to the Barnett’s lack of ambiguity, Steward was drawn to its mysteries. “We didn’t understand the Barnett,” he said, still a little breathless about it. “The Barnett was so unconventional you couldn’t get your arms around it.”

What created the Barnett boom was a profound change in the gas business. It was for many years the stepchild of the oil industry, an enterprise whose price was federally regulated, in which people bought their gas from the guy who took them to the best golf course or on the best hunting trip. (Gas guys were boring and careful; oil guys were wild and crazy.) It wasn’t until deregulation—a small round of applause, here, for Ronald Reagan, Ken Lay, and others who pushed for change—that gas became a commodity bought, sold, and traded like anything else and subject to wild fluctuations in price caused by gluts, shortages, heat waves in Boston, and cold snaps in Atlanta. At the same time, oil became more expensive, scarcer, and more dangerous to acquire—Angola and Nigeria are just a couple of places competing with the Middle East for extreme drilling—so gas’s application as an alternative fuel increased. In turn, it became subject to the same economic cycles as oil: Natural gas became ever more expensive and harder to find, and so, like old oil fields, old, abandoned, or cantankerous gas fields in the U.S. started looking better and better. Because gas is still tricky to transport, a world market remains in its nascency, which has kept the industry small in comparison with the oil business.

Nevertheless, Mitchell Energy, a Houston-based oil company, was exploring for gas in the Barnett twenty years ago. Mitchell then had wells covering seven North Texas counties—the company wasn’t particularly beloved, either for the deals it made or for its lack of environmental concern—and even had a processing plant in the area. Mitchell also had a big customer demanding more gas for its operations; with tax breaks from the federal government, the company tried drilling approaches that were working well in the Austin Chalk formation in Central Texas. They didn’t work particularly well in the Barnett. The company also tried injecting a mixture of gelled water and sand into the shale that lurked more than a mile beneath the surface to fracture the stone and release the gas. Mitchell got more gas out of the hard rock that way but nothing to write home about. “A brick on a house is more porous than the Barnett,” Steward said. The wells were designated “S&R,” for “science and research,” while the company looked for profitable production elsewhere. Still, it would prove lucky for Spickelmier that Mitchell persisted. The company had the infrastructure and the financial muscle to keep going, albeit slowly.

As exploration and experimentation continued, with improvements in seismic technology, Mitchell engineers suspected that there was a lot more gas below the surface than they had initially thought—maybe, in fact, three times as much. Not everyone at Mitchell agreed. “During this period, people in the company were saying, ‘You are wasting our time and wasting our resources in the Barnett,’” Steward said. But by 1986 a find in Wise County was producing at rates Mitchell believed could be commercial, and it began leasing even more land.

Still, in 1995 demand was low—Mitchell had just lost a major customer—and so were prices. A young engineer suggested that the company cut costs by using water instead of gel to frac the shale. A great many people inside the company grumbled again, but the water frac produced about 15 percent more gas than the gel mixture. Mitchell also realized that it could frac wells two or three times; old wells thought to be played out could be brought back to life. “You have to do some things on faith and understand them later,” Steward said.

Around this time, George Mitchell, in his eighties and already a billionaire, started thinking about selling his company. The best way to make the company attractive for sale was to drill more wells and increase production, which it did. Oklahoma-based Devon looked at purchasing Mitchell around 2000 but turned up its nose at the Barnett experiment. By the time it took another look, Barnett gas production had increased 55 percent, and it ended up buying Mitchell in 2002 for $3 billion. Devon subsequently stepped up work in the Barnett, experimenting for the first time in the Fort Worth Basin with horizontal drilling. Instead of simply going vertically into the shale, drill pipe could now be pushed down and then gradually curved to traverse the shale itself, allowing four times as much gas to flow as in older, vertical wells. There were risks—drilling close to fault lines had been profitable in the Austin Chalk but problematic in the Barnett—but they paled in comparison with the advantages. As it happened, gas prices started a steep climb that coincided nicely with Devon’s acquisition: from $2 per billion cubic feet in 2003 to around $6 today.

It was about this time that someone approached Keith Spickelmier with an oil-and-gas deal in the Barnett. Needing advice, Spickelmier contacted Wright, a fellow investor in previous deals. The two got beat on that particular enterprise, but Spickelmier asked himself: Why buy into someone else’s deal when they could do their own? Soon, he and Wright invested about $500,000 of their own money and, thanks to investors like Sid Bass and Wellington Investments, had a $22 million stake. By then, interest in the Barnett had increased substantially. “We could have raised a multiple of what we got,” Spickelmier told me.

Soon after, Knowles teamed with the company and found that leasing mineral rights in the Barnett had become much dicier. “One day I’m trying to convince people that they have minerals that can be exploited and produce gas,” he told me. “They don’t believe me. The next day they’re media-savvy. They all have minerals and they’re all sitting on a gold mine.” Larger companies were holding town hall meetings just to introduce themselves to landowners; at the end of their presentations, they even had paperwork ready, should locals get the urge to lease on the spot. Knowles decided to move away from the Barnett’s crowded core, in Denton, Tarrant, and Wise counties, south toward more speculative areas in Johnson, Hill, and Ellis counties and then farther south, into Erath, Hamilton, and Comanche counties. The great Barnett land rush was on: Unproven land that Westside wanted to lease for $25 an acre was going for $300. No one wanted to look like the guy who’d leased cheap. Knowles would offer $200 an acre only to be told that offers for $300 were already on the table. All Knowles could do was wait to see who was bluffing. “Well, send your offer over,” they’d say if he started to withdraw. “We’ll take a look at it.”

As of last September, 3,700 Barnett wells were pumping about 1.1 billion cubic feet of gas, worth about $6.6 million a day, with a believed 26.2 trillion more cubic feet to exploit, enough gas to heat the entire U.S. for a year. This explains why there are now wells under Fort Worth’s Gateway Park and Woodhaven Country Club and why players in the gas business don’t like to hear about wind power: “This Barnett is marvelous,” Steward said. “It’s a story I love talking about. It happened at exactly the time it had to happen.”

Spickelmier, of course, kept his exuberance in check. Westside’s Lucille Pruitt #1 came on line in October 2004, and in December the company filed its first annual report with the Securities and Exchange Commission. It was even more carefully drafted than usual, due to the post-Enron Sarbanes-Oxley Act, which makes all CEOs prison-bound for any criminal activity discovered within their companies: “There can be no assurance that sales of our oil and gas production will ever generate significant revenues,” the 10K said, “[or] that we will ever generate positive cash flow from our operations or that (if ever attained) we will be able to sustain profitability in any future period.”

I WOULDN’T HAVE EXPECTED Manhattan to make Spickelmier nervous, but it seemed to. The occasion was the Independent Petroleum Association of America’s Oil and Gas Investment Symposium last April, and Wright and Spickelmier were there on a lobbying mission, hoping to persuade stockholders to hang on to their shares, analysts to assess the company favorably, and fund managers to invest in Westside on behalf of their clients. Perception is everything on Wall Street, and Westside had to look like a winner in order to grow. “This is our chance to tell our story,” Spickelmier told me, striding through the lobby of the Sheraton, clutching his briefcase. “To get the word out.” Unfortunately, Westside’s competitors had come to New York for the same reasons, bearing glossy brochures about their Barnett successes; executives from Denver-based Infinity Inc., a small company much like Westside, had even been asked to give a presentation, which had to have been annoying. “We’re not gonna issue press releases just because we woke up this morning,” Spickelmier told me. “If we build value, all that will take care of itself. Value will be reflected in the price of our stock or the private market. Our job isn’t to run the stock up; it’s to manage the business.”

No one on the seller side of the crowd looked like my idea of an oilman, much less a Texan—no boots, no backslapping, no belly laughs. Everyone resembled Spickelmier and Wright, who wore elegant, conservative suits and slightly clenched jaws. Some things haven’t changed since the humiliating oil bust: Gas may be a commodity now, traded like pork bellies and hedged to reduce risk in all sorts of novel ways, but the money—from initial financing to fund managing—still resides largely on Wall Street, so Texans, who sold their own banks in the early eighties, are still drawn here, hat in hand.

Traipsing upstairs into a reserved conference room with a sunny view of the middle floors of several Manhattan office buildings, Wright and Spickelmier prepared for what was, essentially, an oil-and-gas version of the movie Groundhog Day: Over and over, all day long, they would describe the Barnett and their business there. It became clear in the first few meetings that the “dumb money” didn’t seem to be so dumb anymore. As the manager of one fund said to me of the Barnett: “All the easy money has been made. Now you have to know what you’re doing.” The men—and they were all men and, except for one, all white—who paid calls on Westside were as vague and noncommittal as Spickelmier had been to John Olson. Casually dressed—they had the money, after all—they had the calm, secure air of people paid to know when to hold and when to fold. It wasn’t long before Wright and Spickelmier took off their jackets.

Their pitch was good enough: They had close to 60,000 acres under lease; they had one well producing and were drilling a second; they had no debt; they had money in the bank and a prestigious if small board of directors; and, of course, the Barnett was enjoying a reputation as a sure thing, thanks to better seismic studies, horizontal drilling, and the ability to frac and refrac the rock. “The Barnett is the gift that keeps on giving,” Wright said, more than once.

But the money managers had questions that showed they had done some homework: Drilling equipment was now hard to get. Did Westside have access? “The capital might be easier to get than the rigs,” someone joked. How much land, in general, was still available for lease? “Chesapeake [a very large, very successful competitor] will own the whole state of Texas before this is over,” one manager cracked. Spickelmier and Wright didn’t think the jokes were funny. How much would Westside pay to get the acreage it wanted, when some of the big companies were paying $8,000 an acre?

Spickelmier took a deep breath. “Five hundred dollars an acre for the right parcel,” he said.

Finally, a shaggy-haired, expensively dressed older man from Santa Barbara seemed more than politely interested. How much had their first well produced, he wanted to know. Wright gave him the number.

“Production will go up?” he asked hopefully.

“If not, you will not see me around here next year,” Wright answered.

Silence descended, and the man got up to go. He nodded, smiled, and shook hands encouragingly. “It’s a good story,” he said.

Wright grinned. Spickelmier beamed. And just like that, everything new was old again.

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