West was an authentic oilman. He knew and fully understood what he was talking about. His presentation was so successful and convincing that, in a short time, he found himself on the road day after day, week after week, traveling the country and moving among high-dollar circles from New York to San Francisco by way of Chicago. He turned the intricacies and details of Hanover and its drilling funds over to his attorney. Pat Holloway was no longer merely reviewing the deals. Now he was out developing the deals as well. When a critical decision needed to be made, Holloway made it. Often faced with critical deadlines, Holloway did not have time to weigh his old friend’s opinions on any matter or situation that he might confront. Frank West was never around. Frank West had left a void, and Holloway was filling it the best way he could.
In the beginning of their working relationship, it had been Holloway’s duty to help negotiate the drilling deals that Frank West evaluated and decided to pursue as a worthwhile venture. Now, with West absent for long periods of time, Holloway moved forward and began evaluating, as well as negotiating, the numerous drilling deals that crossed his desk. He became the active face of Hanover before he even realized it. Wall Street knew it. Promoters knew it. Frank West began to suspect it. Pat Holloway did not slow down long enough to even think about it.
Holloway, however, was not a geologist, and he knew it. But, for the past two decades, he had worked for and with geologists, and he believed that he had learned to read isopach and structure maps as well as anyone. He thought that he could assess the potential risks and rewards of the drilling prospects as well as anyone, and Holloway was convinced that he could read between the lines of the prospect brochures and determine, from a geologist’s map, the risk associated with each possible venture. He was well versed in the way a deal could be structured and promoted, and he knew the best, most effective way to ascertain the potential profit of a prospect.
When Frank West was in town, it was customary for him and Pat Holloway to have lunch together at the Petroleum Club on Fridays, but never before they had at least two drinks at the bar. On one Friday in early 1974, they never left the bar.
In the midst of casual conversation, West suddenly announced, “Holloway, I have a real problem. You are practically running my damned company. People are beginning to talk about it, and I am afraid if those peckerwoods on Wall Street find out about it and see that you aren’t making any bad mistakes, they may hire you as president and give me the full-time job of running around the country selling the drilling funds – which is something I hate to do and am doing only out of necessity. Those assholes can’t sell their own drilling funds, and if I don’t sell them, I won’t have a company to run.”
Holloway stared at West, his eyes hard, his voice soft. “Frank,” he said, “you know that’s bullshit. I am just your lawyer and, to the extent I have gone beyond that, I am only doing whatever I think you would do if you were here because you are not here and hardly ever here.”
“Well, you aren’t acting like just a lawyer,” West snapped. “You are acting like you think you are some kind of geologist, for God’s sake.”
“Frank, I know I’m not a geologist,” Holloway replied. “But then, neither are you. You are merely a reservoir engineer who happens to have a genius for both salesmanship and management. Nobody but a Wall Street banker would ever hire a reservoir engineer instead of a geologist to find oil. But somebody up there must have had sense enough to see that you are a born manager of people and a born salesman. Maybe because I am trained as a lawyer, I have some ability to sell people on things I believe in, but I am not and never will be a good manager of people like you are. As you well know, I am an arrogant asshole and not a good people person like you are. So you don’t have to worry about me stealing either of your jobs, either running the drilling programs or selling them to the public. All this is just bullshit and alcoholic paranoia on your part. Let’s have another drink and talk about something else. Like women we want to bed down or something more important.”
Frank West laughed out loud. “Okay, Holloway,” he said. “Maybe I am imagining or exaggerating things to some extent. But the truth is, you have been taking over part of my job, and the truth of the matter is you haven’t made any bad mistakes, and you have been doing a fairly good job. And that has led me to another idea I want to lay out to you instead of talking about the wanton virtues of women right now.”
West paused. He squared his shoulders. He leaned across the table and continued. “As you know,” he said, “my business philosophy is not to put more than five percent of the drilling program into any one prospect, to spread the dry hole risk. Even without being geologists, you and I both know that if we spread the total available pool of money around twenty intelligent drilling prospects, enough of them are likely to hit and more than pay for the dry holes. Now, I am nearly always offered a larger part of virtually every drilling prospect I see than I can afford to take without breaking my five percent rule. So I need somebody who can take a piece of the deal. That’s where you come in.”
Pat Holloway frowned. He thought he knew where West was heading, but he wasn’t sure. He sat back and let Frank West talk. A good lawyer always knew when it was time to listen. This was one of those times.
West sat in silence for a moment, letting the conversation play out in his mind. He finally emptied one glass of whiskey, asked for another, and said, “I’ve been doing a lot of thinking, Pat. You do understand the business as well as anyone. You’ve been around oil for most of your life. Your grandmother was in the oil business. You’ve represented quite a few oil companies. Oil is what you know best. It makes sense to me that you should form your own private drilling funds. It would allow you to eliminate all of the SEC legal and accounting expenses that dilute a public drilling funds like Hanover, and you won’t have to pay commissions to any securities salesmen like Hornblower does. A no-load drilling funds should be pretty attractive to all of your rich friends.”
Holloway shook his head. “I can’t do it,” he said.
“Why not?”
“I already have a drilling funds company for a client,” Holloway said. “It would be unethical and a conflict of interest in the highest order if I went out and did my own deal. Wouldn’t be fair to you.”
West smiled for the first time all night. “It would not only be fair,” he said, “but it would sure help me out a lot.”
“How you figure that?”
“Well,” West answered, “I hear about a lot of good oil deals, but I can’t take them all. Most people bringing me a deal want their money and want to raise it the easiest way possible. They’re asking me to take either half or all of them, and I have to spread my money among as many prospects as I can. Now if you had your own drilling funds, I could lay off an eighth or a fourth of a deal with you, and I could take the other eighth or fourth myself. It wouldn’t be difficult for you, Pat, because you wouldn’t have to go out and spend a lot of money hiring a bunch of high-priced engineers, geologists, or accountants. I already have them, either in the office or on retainer. And they’ll all be at your disposal. You know – or at least think you know – everything else about this business that I know except maybe the geology and reservoir engineering. And, being the arrogant asshole you are, you may even trade tougher than I do. And I admit you can write up the deals better than I can. You may even know more oil, gas, and tax law than I do. I think you should follow my advice. If we’re as smart as we think we are, both of our funds can do quite well. You will probably end up making a fortune. But even if you don’t, at least I will get you out of my hair at Hanover. And I will get a partner for my drilling funds who is a good friend and someone I know I can trust. So think about it.”
Frank West shrugged. He downed his drink. He stood and headed for the dining room. “Now,” he said, “we can talk about chasing women if you want to.”
The
