and influential friends, from time to time, had asked about the possibility of investing in the Hanover drilling funds. Holloway, however, had always been quick to discourage them, telling them bluntly, “I won’t take your money. I don’t think it would be entirely wise for you to invest in Hanover because the load is way too heavy. By the time payments are spread to Wall Street and investment banking firms, their accountants, their lawyers, and Security and Exchange Commission attorneys, as much as thirty percent of the public fund is already eaten up. That’s not Frank’s fault. He just has to deal with a bunch of rules, a lot of regulations, and more red tape than you’d care to wade through. That is simply the way the game is played. If you make a decision to invest in public drilling funds, Hanover is the best one around. But I can’t personally justify a deal where only seventy percent of the money paid out by an investor is actually going into the ground in hopes of finding oil. The other thirty percent is overhead, as much as three hundred thousand dollars for a million-dollar deal.” Even Frank West would admit privately that he wouldn’t invest any of his own money in Hanover.
But private drilling funds, Holloway realized, was a different story altogether. He was now being given the chance to develop a no-load investment opportunity where he made his own deals, wrote up the necessary battery of legal documents, would never need to hire a geologist or petroleum engineer, and had the ability to sink a hundred percent of the money in the ground. Investors never had to worry about Wall Street expenses. There were none. Holloway would earn his compensation by taking an override on the working interest of a well after the land and drilling costs had been paid out. No arguments. No complaints. No guarantees. Some wells hit. Some didn’t. Pat Holloway knew better, but he assumed that all of his wells would come blowing in with gusto. He certainly would not make much money unless they did.
He made his way across Dallas, meeting with a dozen or more potential investors, including an old ally from Yale, William Browning, who preferred to be called Bill. Holloway and Browning’s relationship, in fact, went back to their boyhood days as classmates at the prestigious St. Mark’s of Dallas. The two men shared an affinity and passion for fast cars and exotic women. Or was it exotic cars and fast women? Browning was quick to tell him, “I’ll be your first investor and chances are damn good that I’ll be your largest investor.”
Holloway knew that Browning probably had the most dollars, and he had never been shy about looking for a new and better deal. He was a sophisticated investor who owned, among other things, an automobile dealership, a plane dealership, and a boat dealership. Browning was a swashbuckling gambler at heart, having raced automobiles on the road course of Europe during an earlier time in his life, and he already understood the potential financial rewards of the oil business. He had taken a big chunk of acreage in the Slaughter Field, and some were known to whisper that his royalty payment balanced out around a half million dollars a month. Bill Browning had an affinity for oil. Oil had been good to him. With the influential William Browning now on board, other investors would start lining up to make their wager on oil as well. At the moment, it was the only gamble paying off in a tough economy. Pat Holloway would never have trouble tracking down investors, and they could always find the investment dollars. It was, he admitted, a deadly combination.
Pat Holloway resigned Hanover without giving his decision another thought. He promptly moved his operation into a large home he had built in North Dallas as a hedge against inflation and failure. Late one evening over drinks, Holloway began verbally nailing together the legal points for his new drilling funds venture with Bill Browning, after the two men had grown weary of discussing the obvious attributes of the women they knew or wished they had known.
In his mind, Pat Holloway had his strategic plan hammered in place. His idea was to form his own company, raise the money, oversee the drilling funds, locate and close the oil deals, and work with a geologist to choose the prospects. Nothing new. He had done it all before. He had spent years finding and separating out investors for Frank West and Wall Street’s exploration and drilling endeavors. No longer would anyone be looking over his shoulder, and he liked it that way. Pat Holloway was the man in charge, not merely Frank West’s surrogate and masquerading as boss.
Bill Browning suddenly dropped a bombshell into the conversation. It came out of the blue and was totally unexpected. He set his chin defiantly and said he not only wanted to invest in the company, he wanted to be president as well.
“Why?”
“I sure would like to be able to travel around the country and tell people I’m the president of a genuine oil company,” he said. “There’s a significant difference between a player and the man who runs the play.”
“You won’t be running the play,” Holloway said.
Browning shrugged. “They’ll think I am,” he replied.
Holloway mentally departed the table and crawled back into the sanctity of his own mind. He sat deep in thought. He and Bill Browning had known each other for a long time, and Browning would let him run the company anyway he wanted, as long as they found a little oil from time to time. He did not want to run the risk losing the kind of investment funds that Browning could bring him, and he could not remember the two of them ever disagreeing, much less quarreling, on any deal or project where they worked together. Besides titles were cheap. Even the title of president was not worth much more than ink on a business card. Holloway grinned. Browning, as was his nature, was simply buying another plaything. It might be a mistake, he thought, but it wouldn’t be a big one.
“Okay,” Holloway said at last. “Here’s what I’m prepared to do, Bill. I will make you president of the exploration company. I’ve also decided to give Mike Starnes, your business manager, ten percent of the stock to handle all of our accounting needs and make sure the books are kept and audited properly. I won’t have time to do it myself. That leaves me with the remaining ninety percent of the company. If it works for you, Bill, it works for me.”
Browning nodded. He was president. It worked for him.
Holloway recalled, “Because it was anticipated that Browning would be the largest single individual investor in my drilling funds, it seemed appropriate that Starnes watch over the management of Bill’s investment by keeping our books. It allowed Starnes to participate in the profits the company made from his compensation for running the drilling funds. This was a one-eighth overriding royalty interest in the drilling prospects, convertible after payout into a one-quarter working interest after the investors recovered a hundred percent of their investment. It could amount to a lot of money.”
Pat Holloway and Bill Browning believed that the stock would give Mike Starnes a strong reason and incentive to help make the company as successful as possible. Browning was relieved because he would not be obligated to increase his business manager’s salary even though he was increasing the man’s workload.
Bill Browning leaned back, smiled broadly, and poured himself another drink. He had what he wanted and all that he wanted. No negotiations. No hard feelings. No regrets. But one question did concern him. “What’s the name of our company?” he asked.
Pat Holloway had been thinking about it for some time. He wanted a name that had immediate credibility and stature, one that did not belie the small size of a start up company that had not yet drilled its first well. “Humble Exploration Company,” he said.
“Seems like I’ve heard that name Humble before.”
“You have.”
“What will the folks down in Houston think?”
“They don’t use the name anymore. They’d rather be Exxon.”
“Sounds impressive.”
“It is.”
