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Gusher of Work Has West Texas Firms Hiring Laterals
James Leeton doesn't mince words when describing how crazy-busy West Texas lawyers are in the midst of the current oil and gas drilling boom.
"It's like out of the world. It's frantic," says Leeton, a shareholder in Bullock Scott in Midland, the West Texas city that's dealing with a shortage of housing, crowded schools and restaurants, and rush hour traffic due to the energy business madness.
Leeton isn't the only Midland lawyer gleefully talking about how busy firms are because of the boom in drilling in the Permian Basin in West Texas.
"We are very, very busy -- busier than I guess we have ever been," says Robert Bledsoe, a founding member in the 37-year-old Cotton Bledsoe Tighe & Dawson in Midland.
"If a lawyer lives in Midland and he's not busy, it's because he doesn't want to be," Bledsoe says.
The big boom in energy business is due to the relatively high price of oil, which improves the profitability of new-technology drilling methods such as fracking -- injecting fluid into cracks in a rock formation to allow more oil and gas to flow -- and horizontal drilling. The average price of a barrel of crude oil in 2002 was $29.12, compared to $94.87 in 2011.
Bledsoe says the current energy boom is nothing like booms of the past.
"We have wells being drilled in the city limits; we have wells being drilled all over the county, all over adjacent counties. The boom is because of new discoveries and new methods of producing what's being discovered. That's the basis of it," he says, adding that there's a lot more drilling success using the new technology.
"It's the busiest I've been since I've lived in Midland," says Robert Spears, a shareholder in Lynch Chappell & Alsup, who has done oil and gas work in Midland for the last 42 years. He says it's busier than the legendary boom that started in 1973 and ended around nine years later.
Economist Ray Perryman, president of The Perryman Group of Waco, Texas, says the price of oil is a major factor in the energy boom. He says the Permian Basin, located in West Texas, has a higher percentage of oil relative to natural gas, so the current high price of oil "works in favor of the region."
New discoveries and new technologies -- including fracking, improved seismic capabilities and directional drilling -- are also factors, Perryman says.
"For the first time in decades, production is actually increasing," he says.
At Midland firms, lawyers who do oil and gas title work are very busy, but Spears, the Lynch Chappell shareholder, says the energy boom also has spawned some increased work for litigators, and a substantial increase of work for trusts and estates lawyers because of "money flowing into people's coffers these days."
Due to the increased workload, Cotton Bledsoe, which has 43 lawyers according to its website, has recently hired five or six laterals, Bledsoe says. While the firm has routinely hired first-year attorneys, the firm is new to the lateral hiring market.
"It's the first time we intentionally reached out to laterals, and that's been good. … We found some lawyers in other places that weren't as busy as they would like to be, and they had good, germane experience," he says.
However, Bledsoe notes that not all lawyers are suited for life in Midland, which is located about 300 miles west of Fort Worth.
"It's flat, and there aren't a lot of trees in the country. We also are in the midst of a drought. Water is limited for the first time. It's not all perfect," he says.
Leeton says Midland firms want to hire oil and gas lawyers, but there aren't too many lawyers who want to move to Midland, and the "old vanguard" of attorneys who do oil and gas work are getting closer to retirement age.
Spears says Lynch Chappell hasn't hired lawyers due to the increased business but may do so shortly because it lost a couple lawyers who left to go in-house with clients.
He says things like a housing shortage could deter lawyers from relocating to Midland, even though there are jobs.
The influx of people to Midland prompted the Midland Independent School District to put a $163 million bond issue on the November 6 ballot, says Dale Strauss, a shareholder in Stubbeman, McRae, Sealy, Laughlin & Browder in Midland who is a former MISD school board member. Voters approved the bond issue, which will fund construction of three new elementary schools and renovations to others.
Strauss says that, since he joined Stubbeman McRae in 2009, the firm has added six lawyers but has lost a total of four to in-house positions with energy companies.
Midland lawyers are quick to point out that their city isn't the only market benefiting from the increase in drilling in Texas. Strauss says there's a lot of work throughout West Texas, including lease acquisition work but also including other transactional work related to energy.
Midland lawyers say they are aware of the cyclical nature of the energy business and note that today's boom will eventually lose steam.
"In '78 through '83, it was boom time, '83 through about '90 it was depressed, kind of hit stable time in the '90s, went through bad times again in the late '90s and stable in the early 2000s. And from 2006 to 2008 it was booming again and went down a little bit in 2008 because of the economy, but it's bounced up since then, huge," Leeton says.
Bledsoe says, "We've been through the ups and downs before. We know it will slow down. Those wells will all get drilled, and in time it will all slow down."