By Jack Z. Smith
Fort Worth Star-Telegram
FORT WORTH _ U.S. oil production has sunk to a 35-year low.
Crude prices have cascaded below levels of six years ago, and
a fractious Organization of Petroleum Exporting Countries is
threatening to send prices plunging further.
The giant American oil companies are shedding domestic
properties and devoting ever-larger percentages of their drilling
budgets to foreign exploration.
Amid this troubled industry environment, Texland Petroleum of
Fort Worth epitomizes the opportunities still available in the
United States to small oil companies with a sharply focused
"We're absolutely in the right business," insisted R.J. "Bob"
Schumacher, the relentlessly upbeat president of Texland, an
80-employee company that this year expects to post revenues
exceeding $30 million.
Schumacher, 64, says he can now drill a west Texas well for
$275,000 _ nearly 40 percent less than the $450,000 it cost him
to drill the same well a dozen years ago in the oil boom year of
And with Big Oil selling many of its domestic petroleum
properties, Little Oil is gaining access to promising drilling
leases it never before had a crack at, Schumacher said.
As an example, he cites Texland's recently announced agreement
with oil giant Unocal Corp. of Los Angeles, whose $9 billion in
annual revenues make it roughly 300 times the size of Texland.
Under the agreement, Texland has gained the right to explore
for oil on Unocal leases in a 5,500-square-mile area that spans
eight counties in the oil-sated Permian Basin of west Texas.
The deal is particularly appealing to Texland because the
leases are in the Lubbock area and westward, where Texland has
the bulk of its existing oil production, geological expertise and
longstanding relationships with oilfield service companies.
In addition, the deal gives Texland access to reams of highly
detailed seismic data that was collected by Unocal in an
extensive study performed over a four-year period. The data will
help Texland pinpoint likely locations of oil deposits and
determine where to drill most effectively.
Under the agreement, Texland gained the drilling rights and
seismic data in exchange for agreeing to drill at least 25
exploratory wells in the area over the next five years. Unocal
will receive 2 to 6 percent of production revenues from any
successful wells that Texland drills, Schumacher said.
Jerry Namy, a geologist who is Texland's executive vice
president for exploration, says the Unocal pact offers Texland
the potential to double its proven oil reserves from 26 million
barrels to more than 50 million barrels within five years.
With major oil companies such as Unocal scaling back U.S.
exploration in search of bigger drilling targets overseas, "there
are some tremendous opportunities" for smaller companies such as
Texland, Namy said.
The smaller companies can operate domestic oil properties more
profitably because they have substantially lower overhead costs,
As a keystone of its strategy, Texland confines itself almost
solely to the north rim of the Permian Basin, where the company's
geologists and petroleum engineers have become intimately
acquainted with the nuances of the basin's complex oil