Chatting With Mike Cantrell

Third-generation oilman Mike Cantrell has owned an E&P company since 1975, but that is the least of his busy days.

Since the early 1980s, he’s been a vocal advocate in Oklahoma and nationally. Working with his longtime friend Harold Hamm, he co-founded the Domestic Energy Producers Alliance and was president of Save Domestic Oil, another of Hamm’s initiatives. Through several organizations, Cantrell has promoted crude oil exports, oil import tariffs and preserving the percentage depletion allowance, which, along with the expensing of IDCS, makes up about a third of the capital needed by small independent producers.

He is active in the Oklahoma Independent Petroleum Association and has participated in numerous civic groups across Oklahoma and Texas.

In 1992, Cantrell co-founded and was the first chairman of the Oklahoma Energy Resources Board, the nation’s first check-off program to gather millions annually from producers in order to educate the public about the Sooner State’s petroleum industry. OERB also has used that money to properly plug some 15,000 abandoned wells and restore the land. The week before we chatted, he was in Washington, D.C., to promote exports and preserve the percentage depletion allowance.

Investor: As chairman of the National Stripper Well Association this year, what are you hearing from your members?

Cantrell: Everybody is in crisis mode, cutting everything they can, but most of them have been through this before. About half the people I talk to are looking for opportunities. The mood is not good, but some people look at this as a time of great opportunity, and if they are out of debt and have their powder dry, this could be a good time. Some people will fall by the wayside.

I was at a meeting in Dallas in January and 25% of the people in the room said they are trying to buy properties, but I think the sellers will try to hold on for as long as they can and work with their bankers instead.

Investor: How long do you think this downturn will last?

Cantrell: I think most of us are preparing for it to last a year, but who really knows? There are so many geopolitical variables, and anyone who tells you they know what’s going to happen … well, you shouldn’t believe them.

You know we’ve never really had a free oil market. Somebody has always controlled it. First it was John D. Rockefeller and the Standard Oil Trust, then it was the Texas Railroad Commission. At one time, the Oklahoma Corporation Commission kept prices low by enforcing production allowable limits. In the last 50 years, it’s been OPEC. It’s definitely not been a free market … but the world has always had the oil it needed. I am not criticizing those who’ve controlled it; it’s just the reality we have to live with.

Investor: How did you enter the industry?

Cantrell: My grandfather was a rotary driller and my dad had production when I was in high school. I drilled my first well, 100% interest, in 1971 in Pontotoc County, Oklahoma. I leased the land, did the geology and hired my brother’s company to drill it. I had my own completion rig. It was such a great feeling to watch it all come together. That well only made 4 bbl/d, but it did that for a long time. I haven’t operated since 2000; I only take nonop interests now.

A lot of us had bigger wells, usually one larger one that catapulted us. About 10 years into my career, I had a well that flowed 80 bbl/d and that really helped me—but Harold had a well early on that did 40 bbl an hour! We all have a story of one good well. We all had different skill sets and worked different geographies.

Investor: Your best advice?

Cantrell: Don’t look at this as a way to get rich quick. Look at every well and every deal like it’s a separate business and run it that way. Roll with the punches. This is such a wonderful business, so don’t get down on it just because we’re in a tough time now. There’s not an economy in the world that has grown without oil. There will be a demand for our product for at least another century.

Investor: How do you fit it all in: business, advocacy, family, charity work, flying and scuba diving?

Cantrell: If you live long enough you can fit it all in. I always said my epitaph would be, “Here lies Bubba. He’s only here because there’s nothing left to do.” Just slide me on in and say, What a ride!

I love the freedom and the adventure of it. The opportunities challenge you on the way up and you’re challenged on the way down. I’ve become very Zen-like about it. It just is what it is.

Investor: On balance, it sounds like you’re still an optimist.

Cantrell: Oh absolutely. There’s no place for a pessimist in this business.