'Wildcatters' Hoping for High Oil Prices

At gas stations across the United States, people aren't very happy about where the price of oil is heading this week, this month and this year.

But if you're the one pumping the oil, like Cactus Schroeder, those oil prices just keep getting better and better.

"When I get out of the state of Texas I don't spread the news around that I'm in the oil business," said Schroeder.

Schroeder is most certainly in the oil business -- he owns several boutique-scale oil wells in and around Abilene, Texas, and with crude bumping up near $100 a barrel, he faces a whole new landscape. The price of crude oil has never hit the triple digit mark, and just yesterday Schroeder and his team were out drilling a brand-new well. By this morning, they had already drilled a mile into the earth.

Little Oil

Schroeder has a notion there's some new oil to be found beneath the Texas earth, and he has struck oil not too far from his new well site. Whenever you see one of the horsehead pumps in oil territory -- some people call them nodding donkeys -- there's a hole with oil under it that someone's found.

"What I'm looking for out here [are] wells that'll make 100,000 barrels per well … ;in it's lifetime," Schroeder said.

Actually, that's not big oil. It's the opposite: Guys like Schroeder are little oil, working the fields the major oil companies abandoned long ago. The area around Abilene used to be Texaco territory; Schroeder and his ilk lease the land, get some acquaintances to put up money, and then they go for it. You could call it a mom-and-pop operation, but those in the business call risk taking guys like Schroeder wildcatters.

"People think of them as being gamblers, but I'm more of a taking a calculated risk," he said. "And once you weigh the risk versus reward, then you've got a much better idea of your business plan."

Business plan? Risk-reward ratio? Wait. His name's Cactus. This is Texas. Don't we have stereotypes to protect here?

As it turns out, Cactus is a childhood nickname. His full name is Charles Schroeder III, and he's the son of a military officer.

A former junior high school tennis teacher, Schroeder got a second college degree and became a geologist. Schroeder was on hand yesterday morning as that drill kept drilling. He had done his homework on the geology of the location, and he knows how to analyze the soil that's coming up.

"That's roughly about 70 percent oil and about 30 percent saltwater, which is still a pretty good oil cut," he said, holding up a sample.

Money in the Bank, or Down the Drain

But Schroeder is a gambler as well as a scientist, and he always wants to hit it big.

"Our costs on this particular well are running about average -- to drill a well is half a million dollars," he said.

Now there are some interesting numbers. Schroeder hopes to find wells that yield 100,000 barrels in their lifetimes. At $100 a barrel, that's $10 million per well. But if he drills and finds nothing it's called a dry hole, which is not $10 million in the bank. It's half a million down the drain.

"The hardest part of my job is when we do drill a dry hole, calling my partners, and you know, it's disappointing to tell them, you know, we've done all this work, sunk all this money into it and we've come up with nothing," he said.

Still, Schroeder "absolutely" believes that under the surface there are still "billions of barrels" oil out there in Texas, even if the oil is hard to get to.

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