Cheap oil doesn’t slow Texas boom

Prices would have to drop a lot more for producers to hit brakes

bust,” Tunstall said.

For David Arrington, a Midland oil executive investing heavily in the Permian Basin, dropping crude prices has been a hot topic of conversation around town but no reason to panic or slow down. His company, Arrington Oil and Gas Operating, is currently running 50 wells and developing 200 more. Arrington has employed what’s known as a “hedge” to lock in future selling prices that will allow him to drill for the foreseeable future, regardless of crude prices, he said.

Texans have learned to navigate the fickle terrain of oil booms from past busts, including the massive collapse of the 1980s that sent crude prices plunging to under $10 a barrel, wiped out wealth overnight and bankrupted towns across Texas. A popular bumper sticker at the time read: “Please God, send me one more oil boom. This time I promise not to blow it.”

In Karnes City, the epicenter of the Eagle Ford boom, city leaders have reinvested the new oil money into repaving roads battered by oil trucks and water management strategies. They’re also planning a new convention center, 1,000-room hotel and a longhorn steer museum to draw visitors, city manager Don Tymrak said.

“It could stop at any moment,” Tymrak said of the cash influx. “We’re trying to plan for post-Eagle Ford shale.”

Few people know the perils of the oil business more intimately than Phillip, the real estate developer. In the 1980s, he lost more than 50 wells and a large chunk of his wealth to the oil bust.

“It was blood in the streets,” he said. “I had many, many sleepless nights in the 1980s.”

When money from the recent boom began flowing in, Phillip paid off all his debts and bought four radio stations and a restaurant, among other investments. Many of his newly-enriched neighbors did the same, he said, buying everything cash and wiping out debt — knowing this type of wealth vanishes as fast as it arrives.

“It’s a hands-on type of investor you have down here,” Phillip said. “We all keep our money and investments close to chest.”