INDUSTRY
Playing the Long Game By: Bill Keffer
46
SHALE MAGAZINE MARCH/APRIL 2020
times during busts. Oilmen spent like drunken sailors when prices were high; but when the busts came, they filed bankruptcy and/or packed up and left town. As a result, it was always hard for Midland to ever get traction and enjoy any kind of sustained growth. When the 2015 bust arrived, it was expected by those living in Midland that the industry would once again pack up and head for higher ground and return one day in the future when crude prices recovered. Instead, not only did no one leave, they doubled down and declared their intentions to stay for the long term. Concho was in the middle of building a huge campus for their employees. Instead of stopping construction when the bust hit, they didn’t miss a beat because they saw something this time that hadn’t been present in past busts. Chevron laid off employees at their offices around the world; everywhere but in Midland. Anadarko decided to build a new office complex in Midland. Everyone who was already in Midland at the time stayed; those who were making plans to build a presence in Midland came anyway. What was different this time? The massive reserves that have been confirmed in the tight-shale formations in the Permian Basin that are now accessible by hydraulic fracturing and economic because of hori-
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here is something about getting older — age brings experience, which can often appear to be wisdom. Wisdom can also come from intelligence and education. But, in the end, older folks who might not have much formal education and might not score well on a standardized test can still come across as wise. Age provides a long view that can only come as a result of having lived through certain times and events. I graduated from law school and became a licensed lawyer in 1984. Since that time, there have been no fewer than six “busts” in the crude oil market. I can remember a local Rolls Royce dealership in Midland advertising in the 1980s something about buying a new Rolls Royce and they would throw in a new jet airplane — or vice versa. It was so over the top that it was hard to comprehend the actual offer. That, of course, happened during one of the “boom” times. A bust came along not too much later, and hard lessons had to be learned all over again. A local steak restaurant was opened in Midland shortly thereafter; it was called “Tanstaafl.” Everyone assumed it was owned by someone from the Middle East, and that was his last name. It turned out that it was an acronym for “there ain’t no such thing as a free lunch.” Ain’t it the truth! The boom-bust cycle is as much a part of the oil and gas business as gushers and dry holes. People in the business know that it’s going to happen. It’s a global commodity that is influenced by an endless list of factors, most of which are as unpredictable as the weather in West Texas. It has always been a part of the industry, and companies have had to learn how to adapt or die. I remember in my final interview with ARCO Oil & Gas Company’s general counsel for a job in their legal department in 1987, he boasted about how ARCO had reduced headcount through its generous earlyretirement program and taken other aggressive budget-tightening steps to be able to turn a profit at $10 a barrel crude oil prices. The other repeat victims of the boom-bust cycle have been the towns that live and die with the price of crude oil. Midland has been the perennial poster child for the great times during booms and the barren
