Oil landman Fred Hambright still working after 60 years of booms and busts
08/15/2014 3:58 PM
08/15/2014 4:59 PM
In an industry that has seen euphoric highs and crushing lows, one thing has been certain for 60 years: Fred Hambright’s desk has been – how shall we say it politely – busy.
A few years ago, a news crew interviewed Hambright in his office. An old acquaintance saw the interview on television and mentioned it later.
“He said, ‘I knew it was you, I recognized your desk,’ ” Hambright said with a laugh.
It’s a mark of the sheer number of deals that Hambright still has going. Hambright has been an oil and gas landman in Wichita since 1954 and continues to run his company at age 85.
The oil half of the industry is enjoying an interesting five years, with high prices, increased drilling and the drama of the horizontal drilling bubble. The gas half of the industry remains in the doldrums as an oversupply keeps prices low.
Hambright’s company is hired by drilling companies when they get interested in a new area. A landman will go to a county courthouse, camp out at the register of deeds office to find out who owns land in that area and whether their mineral rights – the rights to produce assets sitting below their farms or pastures – are available. The landman will write a report for the client and, if the client gives the OK, the landman will track down the landowners to negotiate a contract.
Being a landman can be a lonely job, involving being on the road for a week at a time. Hambright has about 20 contract landmen covering Kansas, eastern Colorado, southern Nebraska and a little of Oklahoma.
They put in big miles. Hambright said some of his landmen put 1,000 miles a week on their cars.
“It’s people work; it’s contacting people,” he said. “You have to get them to sign, have to convince them they won’t have the same trouble that Grandpa did when people came in and tore everything up.”
Kansas is a small enough state for people in oil-rich areas to get to know you by reputation, he said. When deals are negotiated, promises are made. It gets around if you don’t keep your word.
“In the coffee shops, they generally know who you are and what you’re doing after a little while,” he said.
Leases are typically for three years and as much as five in less active areas, sometimes with options for additional years. They include a cash bonus up front, which can range in Kansas from $10 an acre to and unspecified number – Hambright gets cagey about how high it goes – plus a percentage of the production royalties, typically 12.5 percent.
It’s also a competitive field, he said. People are always interested in where a company is looking for oil. The question comes up a lot during chit-chat in the small-town cafes out on the road.
“That is my first sermon when we take someone on is: Keep your mouth shut,” Hambright said. “Don’t visit with people about what you’re doing. Talk about the weather and football, not where you’re going.”
Hambright said the land-leasing business hasn’t changed much since 1954. People are away from home a little more than they used to be, he said, but the attitudes are much the same.
“My uncle who I worked with said you got to remember you’re about the same thing as a magazine salesman ’cept you are bringing some money in, although not as much as they want,” Hambright said with a laugh.
He recalled the curt reception he got on one occasion when he walked up to a house where a man sat rocking in a screened-in porch.
“He said, ‘What you want?’ I said, ‘I want to talk to you about some land.’ ‘You selling some magazines?’ I said, ‘No.’ So he got up and unlocked the door.”
In 2010 and 2011, large oil companies entered the state seeking to cash in on what they thought might be a bounty of oil made possible by horizontal drilling.
It was all hush-hush at first, as companies sought to lock up tens or hundreds of thousands of acres at bargain lease rates. They may have thought it was a bargain, but the landowners were ecstatic.
Hambright recalls negotiating leases in Sumner County for $15 to $20 an acre when he got a call from a major out-of-state company that wanted leases in several counties along the Oklahoma border in a hurry.
“We got around to what they intended to pay, and they said, ‘$500 is your top’ – that was something,” Hambright said. “They already had two crews working, and it was already $500 country, and I didn’t know it, but we caught on quick.”
Soon companies and their landmen were competing and prices started to rise, hitting $1,000 an acre and higher for the best locations.
The companies bought all over southern and western Kansas, driving up land prices and temporarily ending lease acquisitions by Kansas’ traditional drillers.
There was plenty of skepticism on the part of the local industry. They had been drilling vertical wells for decades, understood the geology and didn’t think the economics would work.
It’s still too early to say, for sure. But by late 2012 to mid-2013, most of the big guys decided drilling horizontal wells in the Mississippian Limestone layer was too expensive for the oil recovered. At this point, only the biggest player, SandRidge Energy, plus a few others remain and are trying to improve their understanding of the geology and their drilling techniques to make the wells more profitable.
“I had one guy tell me: ‘In about a year, you’re not going to find any vertical wells, everything will be horizontal,’ ” Hambright said. “He was wrong.”
‘No heavy lifting’
Hambright is one of the grand old men of the industry in Kansas.
Born in the tiny town of Roby, Texas, he graduated from Texas A&M in 1951 with a degree in petroleum engineering. He followed an uncle who worked for Wichita-based Lewis Drilling to Colorado, where he got into the land lease business. A few years later, he moved to Wichita and began his career as an independent landman.
He has kept at it through good times and bad, passing the usual retirement age during President Bill Clinton’s first term. He still works a full day, still keeps in contact with the landmen out in the field. Why?
“I like it,” he said. “And there’s no heavy lifting.”
Mike Pisciotte, land manager for Murfin Drilling, for one, is grateful Hambright is still in business. Hambright hired him in 2004.
“He is one of the most kind, straight-forward and gentle individuals,” Pisciotte said. “He kind of operates under the radar; not many people know who J. Fred Hambright is outside of the oil and gas industry, but he has created more professionals than any jobs program. He has taken a wide variety of people and taught them the business, so that they can go on to other aspects of the industry.
“There are very few in the oil and gas industry who haven’t been influenced by and owe some debt of gratitude to J. Fred Hambright,” Pisciotte said.
Hambright put it a little more simply.
“I’m honest,” he said. “I don’t tell any secrets. And we hold our own as far as being able to buy leases.”
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