Deal had not yet come to the field, nor did Williams expect him. Bill Walker, the moment he arrived, had spent more time on the M&K than Irv Deal, who, with no apologies, preferred the luxury and amenities offered by the stylish life in Dallas.
Williams glanced down at his hands. They were covered with good, honest dirt, spackled with a trace of oil. He sadly shook his head. Irv Deal had no idea what he was missing.
The M&K settled down to flow more than four hundred barrels a day without any signs of ever giving up or running out. It was, most conceded, the hottest well ever drilled in the chalk. Even the City of Giddings No. 1 paled somewhat by comparison. When the news reached Dan Hughes in his Beeville office, he was elated. He had missed out on the big chalk well, he knew. Maybe the M&K would make up for it and ease the pain. Such was the complexion of oil. Such was the nature of the business.
Max Williams wrapped his arm around Holifield’s shoulder. “You must be a genius,” he said. “You told me you could outsmart the chalk, and I believe you did.”
Ray Holifield’s grin grew broader. “Now what?” he asked.
“Well, we’ve got sixty days to drill two more wells,” Williams said. ”Otherwise, we lose the leases. We’ll celebrate tonight. Tomorrow, it’s back to work.”
At the moment, Holifield was not worrying about tomorrow or the day after. He may have been grinning for all of the world to see, but the grin was a lie.
A big lie.
Ray Holifield was lucky, and he knew it.
The drill bit had hit the hard chalk and twisted off at a crooked angle. No one realized it during the chaos and frenetic activity on the rig, but the bit had badly lost its direction, strayed off course, and missed the critical fault that had been Holifield’s primary target, the one based on the Knox No. 1 log.
Instead, it had driven quite accidentally into a greater fault that harbored a much larger fractured reservoir of oil. It was a mistake, perhaps, but a mistake worth millions.
Holifield kept his secret to himself and basked in the glory of the moment. His face was streaked the color of honey. The residue on his lips tasted like oil. Oil had never tasted so sweet.
Chapter 12
Pat Holloway pointed Humble Exploration out of Texas, headed northward to the high country, and targeted an expanding oil play in the Williston Basin of Montana and the Dakotas. The early going was rough, and it tested every facet of Holloway’s resolve. Raising money was no problem at all. Being an oil operator, however, had its challenges and its drawbacks. If something could go wrong, it usually did. He was face to face with men and machines, and he preferred the machines. But Holloway rode clear of the hard days and found production in six western states, then moved on down to Louisiana. He was a virgin no more.
Pat Holloway was still running production costs and figures on the Williston Basin when Mike Starnes called and asked him for a meeting. This afternoon would be fine. This morning would be even better. It must have something to do with the books, Holloway immediately thought. But then, there was no way Starnes could be blaming him for anything. Numbers spoke for themselves, and Mike Starnes was keeping the books.
The two men seated themselves, and Starnes got right to the point. “It looks like your oil exploration business has a chance to be pretty good,” he said.
“We’ve done all right coming out of the chute.” Holloway smiled. “Montana. The Dakotas. Louisiana. That was only the beginning,” he said as though he had just made the first move in a philosophical chess game.
Starnes nodded. “We may have a problem we need to correct,” he said.
“What’s that?”
“Well,” Starnes continued, “you’re making a lot of money for Bill, but all it’s doing is increasing his estate taxes when he dies. We don’t like to think about it, but that’s sure to happen someday, and we need to start planning for the future if Humble Exploration continues to make as much money as it already has.”
“What’s your solution?” Holloway asked. He and Bill Browning had written a clean and simple deal. Both men knew where each other stood in the business. One owned ten percent of the company, was a stockholder, and remained the largest single contributor to the drilling funds. The other owned eighty percent and ran the company. On the ground. At the rig. Making the decisions. Engineering the risks. Making it work. Pat Holloway owned the eighty percent. He was not comfortable with making revisions that would drastically change their agreement.
“We need to figure out some way for Browning’s children to be alleviated of any potential estate problems,” Mike Starnes replied. “What H. L. Hunt did was set up a trust for his children, and it seems to have worked pretty well. Pat, I think you should consider starting such a trust on Bill’s behalf. He and his wife can put some money in it, you can go out and buy some leases for the trust, then farm out the leases to the drilling funds and let Bill and the other high-income tax bracket investors drill the wells and get all of the income deductions. The drilling funds shouldn’t be spending money buying leases anyway. Lease costs are not deductible, and the drilling funds are supposed to maximize income tax deductions. You and I will be the co-trustees, and our compensation can be set up like Humble’s with a convertible overriding royalty interest instead of a salary or a percentage of the money invested. A trust will simply be a much more favorable deal for the children, for the family, and, in the long run, for Bill.”
Pat Holloway had a gut feeling that was more like a stab of nausea. He didn’t like the idea, and he didn’t know why. On paper, it made sense. As a lawyer, he knew well the estate consequences ultimately faced by the children of a wealthy man. In the high-finance world of business, a man was always looking for every break he could get, every loophole the law allowed him to find.
“Is that what Bill wants to do?” he asked.
Mike Starnes said that it was.
“I wish you had brought Bill with you,” Holloway said.
Mike Starnes shrugged and smiled. “Bill leaves the accounting work to me.”
Pat Holloway recalled, “I told Mike I would talk it over with Bill, and I did. He did indeed want to set up the trust.”
Holloway rolled the idea over in his mind a time or two, then, in defiance of his better judgment, he agreed to the trust.
Mike Starnes said that Bill and Jane Browning would provide thirty thousand dollars to set up the trust. That amounted to six thousand dollars apiece for each of five children. In fact, six thousand dollars were all that any man and his wife could invest without paying a gift tax. As co-trustees, both Pat Holloway and Mike Starnes were required to sign any document or check on behalf of the trust. One couldn’t do it alone, which made it necessary for Starnes to approve everything done by the Browning’s Children Trust. Even though it was permitted for him and Holloway to receive payment for their positions as co-trustees, neither of the two men ever withdrew a cent from the trust.
Pat Holloway promised to spend the entire thirty thousand dollars buying leases for the Browning children. He still didn’t like it. But he did it. In his life and in business, Pat Holloway had made mistakes of all shapes, sizes and denominations. He
