Oil: Small Oil Companies Embrace the Boom

May 9, 2006 — -- What a difference $50 a barrel makes -- not just to angry drivers filling their gas tanks but also to the oilmen and women who've suffered through lean years in Texas, Oklahoma and beyond.

Seven years ago, Tim Poplin and his business partner, Dan Wallace, had to shut down some of the oil wells that make up their small family-owned company in Seminole, Okla.

"It was costing us $16 a barrel to get the crude out of the ground, and we were selling it for around $12 at the time. We were losing money on every tank of oil we sold, but we still had to have cash flow and keep some oil running to pay utilities," Poplin said.

Wallace was the brains behind the enterprise called Columbus Oil. He died in May 2004. He had dreamed about the day his company could be profitable again.

Wallace's wife, Darlene, now manages the company's 30 wells. She recalled the days her family did without just to keep the company going. Now that oil prices have climbed above $70, Columbus Oil is seeing much better days.

But Wallace points out that while many U.S. consumers are now burdened by paying nearly $3 for a gallon gas -- largely because of the recent spike in crude oil prices -- it isn't necessarily a windfall for her company. Some companies faced difficult financial times before the run-up in oil prices.

"You have people who can make a living now; that is really what it is. But some people are afraid to come back because they are afraid that the oil business is just for a short time. As long as we can make a living, that is all that we ask for," she said.

Darlene Wallace said running an oil company isn't for the meek, and she had many sleepless nights after she inherited her husband's duties in the company.

"I was a housewife for all the years I was married to Dan. But I knew what was going on, and I have had more than one person say today, 'You can't be doing this, you don't know what you are doing,'" she says. "Every day I go out of my way to prove I can too do it."

Melvin Moran, who runs Moran Oil in Seminole, said for an oil company just to break even requires a minimum price of $25 a barrel. Moran agreed that these are boom times in the oil patch, but even he believes the price is too high right now and said $50 a barrel would be a good price for everyone.

Will this boom last? Moran hopes so.

"You wouldn't be an oil man if you were not optimistic."