Oil Night Long

Amid all the drink tickets, bikini-clad hostesses, and outrageous displays of wealth at the world's largest expo for independent oilmen, I was determined to get some answers about the future of the business.
SWARTZ
WHAT A GAS!: NAPE has long been the conference for independent oilmen, a friendly, optimistic, and occasionally wild bunch.
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Picture the independent oil industry’s version of the Sundance Film Festival—no movie stars, but more alcohol and money—and you’ll have the North American Prospect Expo, known to oilmen worldwide simply as NAPE. Held every winter in Houston’s sprawling George R. Brown Convention Center (a much smaller summer NAPE is also held every year), NAPE is, after eighteen years, the world’s largest exploration and production emporium, a marketplace for the buying, selling, and trading of oil and gas prospects, or, as the NAPE website crows, “Billions of Dollars Looking for Deals.” Yes, the appropriate scenery is all here: the vast hall demarcated with corridor names such as Oil Street and Gas Boulevard; the Pacific-blue, thirteen-miles-per-gallon Ferrari on display; the stunning young “industry experts” in short skirts and stilettos, their bare arms goosefleshed in the subarctic air-conditioning; and, of course, the 16,000 or so beefy guys in sports jackets, Dockers, and open-necked shirts looking to close on anything from shale plays in Canada and oil deals in the Permian to investment opportunities in Turkey and a date with a high-class hooker—in other words, to network and party like it’s, well, 1981.

Oh, sure, there are other oil and gas events (the bacchanal that is the Offshore Technology Conference, for one), but NAPE has a special place on the calendar. For many years, it was attended almost exclusively by independent oil companies, and this gave it a small, chummy, benignly bad-boy atmosphere. Recently it has expanded, becoming something of a must for the likes of ExxonMobil and BP, who now have fancy-pants booths that look as though they were styled by Manhattan interior designers. This corporate presence has given the conference the feel of a teen party where the parents won’t leave the rec room, prompting more than a few people to recall the good old days when, for instance, Noble Royalties—a company that buys oil and gas royalties from cash-hungry recipients—filled a wind tunnel with dollar bills and invited guests to come in and grab all the money they could in a limited amount of time. “It wasn’t very long,” one of Noble’s comely hostesses told me. Another year Noble set up a replica of the Deal or No Deal TV show, complete with briefcase-carrying babes and a host dressed “just like Howie Mandela,” the same woman recalled. Noble may have pushed the edge of the envelope too far a few years back, when it brought in a baby chimp named Joey and an ape named Wilson to cavort beneath a banner that read “Don’t Monkey Around, Sell Us Your Royalties.” It was a good stunt until Joey escaped from the arms of a model dressed as Jane and made a brief run for it on the back of a rolling suitcase.

Oilmen—that is, independent oilmen—have always been friendly, optimistic, and opinionated. Put 16,000 of them in one place and you get a pretty good snapshot of the business, which is why I decided to drop in on the festivities in February. What were the independents thinking about as we closed in on the first anniversary of the BP oil spill, with the Middle East and North Africa in turmoil and oil approaching $100 a barrel? By all accounts, the crowd at this year’s NAPE was better behaved than at previous confabs. The looniest booth (again, Noble) featured a faux beach scene with a white “sandy” carpet, captioned “This could be your view … You take the cash, we take the risk.” A bikini-clad model reclined in a deck chair, but because it was so cold in the George R. Brown, she sometimes wrapped herself in a sarong. Still, if the displays were tame, the mood was anything but glum, owing to the fact that at least one expert was predicting that oil would hit $300 a barrel by 2020. “Everyone wants to be an oilman these days,” I heard more than once, though a few old hands noted the lack of doctor, dentist, and lawyer investors, a sure sign that the business was soon to go “toppy,” a nice euphemism for “completely off the rails.”

NAPE is, not too surprisingly, middle-aged-white-guy heaven. The layoffs that occurred during the oil bust started from the bottom, so the youngest people lost their jobs first and have only begun to return to the business. Hence an abundance of gray hair and hefty bellies. Minorities? They were driving the cabs lined up outside. Women? There were about ten for every one thousand guys, and then you had to make allowances for the difference between professional women and hostesses. NAPE-goers are guy’s guys: Ten free drink tickets came with the price of admission. (“You are neither required nor encouraged to use all ten,” one of the organizers cracked. “If you run out of tickets, see me and I’ll try to arrange some counseling for you.”) Nearby steakhouses reported some of their best nights ever.

But first there was homework. The opening day of the expo, Wednesday, was devoted to a conference focused on “hot prospecting in unconventional times.” The dim ballroom was packed, though many people seemed to be listening while simultaneously texting for prospects. A less robust group might have been more concerned when Steve Mueller, the president and CEO of Southwestern Energy, admitted that he wasn’t sure whether or not the business was in the midst of a massive paradigm shift. “Everything we learned in the past doesn’t necessarily help us in the future,” he said. His PowerPoint presentation indicated that there were four ways to make money currently: doing old things in old markets, old things in new markets, new things in old markets, and, the riskiest, new things in new markets. Though Mueller acknowledged that the last choice was “not a good trajectory for small businesses,” it happened to be the best route to success. Or, as he put it, “We are now forced to get in a box we were told to stay out of.” In other words, despite rising oil prices,

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