This is not to imply that there is a bad side of the oil business as many people would insist. This is merely to talk about the good side or a couple of good sides that I have seen in my 40 years of chasing, catching and producing oil.
We don’t take anything from anybody. We go out to the rancher, farmer, doctor, lawyer or Indian chief and pay money for a lease. In the last ten years, the money we pay for an oil and gas lease exceeds by magnitudes the value of the surface of the land and by many magnitudes the amount paid for the surface and the minerals. In many, many, many cases we make people rich, we change lives.
Then we go drill wells and make them richer.
To drill and produce 2000 acres in Pennsylvania we disturb at most five or ten acres and we pay damages for the disturbance, usually much more than the five or ten acres is worth in the current market. We also agree to restore the surface when we leave the premises in ten or twenty or thirty years. I hope you get my point – we disturb less than 1% of the surface and will eventually return it to its pristine nature. The people on whose land we operate are generally ecstatic that we are doing so – they are about to have new barns and new fences and new cars and trucks and tractors.
An old friend said to me years ago, “when we do this we take nothing from anybody. We simply pay for the taking and provide energy to increase the standard of living of the world.” And that is absolutely true: the standard of living of the world is directly tied to the amount of energy available. Yes, it is. Absent oil and gas energy workers in even the richest nations would be spending all day walking behind plow horses just to provide food and shelter for their families. And we would actually be about knee deep in stinky stuff.
In the Barnett Shale play near Fort Worth, a land owner who was fortunate enough to be included bought a new car and put a license plate on it with the name of the oil company which drilled his land. He sang their praises. Imagine this: Thank God for Exxon!!! That’s the way it is. Fact is, those who own the oil and gas, unless they are rich from some other source, want the drilling. It’s the freaks in Manhattan who have declared the oil business to be the devil. And those who don’t own land or minerals line up every day to buy the gasoline that Exxon makes and the natural gas it supplies to the burner tip and enjoy the standard of living it provides. And, of course, that includes the freaks in Manhattan.
I am in the oil business, for 40 years now. Last year I bought a particular lease covering land in Pennsylvania from a man (living in Florida) who had no idea he even owned minerals in Pennsylvania or anywhere else until I discovered that he did. I paid absolute top dollar because I thought it was a good deal even at top dollar and I gave him information that allowed him to determine what top dollar was. It wasn’t a big lease. I paid him and his brothers cash plus the royalty they will receive for the next forty or fifty years at 18% of the production.
So I recently got a text message from this particular man who was at a celebration dinner looking out over the Gulf of Mexico. He sent me a beautiful picture of the sunset and the following message: “Here we are (at the restaurant where he and I had made the lease deal) celebrating what we have done. We have just paid for the entire college education of our ten month old grandchild. We did it with the money you paid for our lease.”
I am here to tell you, no matter what your business, if you ever get a note like that it will bring a tear to your eye.
It certainly brought a tear to my eye. And I am a dirty-rotten-scorched-earth-global-warming oilman.
Hopefully, with the royalty he receives over the years, he will be able to send more grandkids to college – and that’s the way to bet.
I am feeling so good.
Eat your heart out.