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Interview with: Mr. George Mitchell
Interviewed by: Jim Barlow
Date: November 20, 2007
JB: This is the Houston Oral History Project. The date is November 20, 2007. I am Jim Barlow. We are in the offices of George Mitchell, a man of many parts. He is one of the best petroleum geologists of his era. He was a founder of one of the largest independent oil companies, the developer of a new town north of Houston - The Woodlands - a man who, out of his own pocket, rejuvenated the downtown of the place of his birth, Galveston, and a philanthropist who has given large sums of money to a number of different things including M.D. Anderson, and his alma mater, Texas A&M. Let's start with Galveston. You were born in Galveston shortly after World War I, weren't you?
GM: I was born really in 1919, May 21, 1919, so that was my beginning.
JB: Growing up in Galveston, how did the folks in Galveston regard Houston?
GM: Well, really, Galveston was a nice town to grow up in because they had good schools at that time. Now, they are not so good. In other words, it was a great thing for young people because you could go down to the beach, you could go fishing down the west island. My uncle taught me how to hunt a little bit. But anyway, it was a good town. My parents were Greek immigrants. They are well-respected in the Greek society down there. And yet, all the Anglos also spoke highly well of my parents, too. They melded quite well, yet, we were kind of different. We were immigrants, you know, immigrant children. But really, Galveston was a good town to grow up in.
JB: How did the people of Galveston regard the people of Houston?
GM: Well, Houston was a big neighbor to the north even then, and I used to ride to Houston quite a bit on the interurban. In one hour, I would be from Galveston to Houston. And I would go up there with my parents, I would go up there with my father occasionally, and it was a fun trip to go to because Houston was about 200,000, 300,000 then, where Galveston was about 60,000. But Galveston was really a very popular city. It was really a wealthy city, even though the hurricane had caused quite a bit of damage in the 1900s. Galveston had a lot going for it. But Houston was a very close neighbor and very important.
JB: Didn't one of your relatives own a very famous restaurant in Houston?
GM: No. One of my uncles had Christy's Sandwich Shop in Galveston. My aunt, she was very popular, and she was popular in Houston, too. They eventually had a restaurant in Houston, and that is where Christy's Restaurant in Houston came from. And, you know, the Drakes were good restaurant people and they worked hard. They went well with the society of Galveston. They never had any money to speak of but we managed pretty much to get by.
JB: Was there much rivalry between Galveston and Houston?
GM: Yes, there was some rivalry even at that time because the Port of Galveston was very important to them. And that is when Houston was trying very hard to get the Houston Ship Channel in. There was a big rivalry about . . . Galveston saying, well, if they could do it, that was going to be a tough job for them to do, but the rivalry was going on at that time because Galveston was the most important seaport we had for cotton and the goods coming in to this country. So, I think there that was rivalry but yet, it was not as fierce as it is now because Houston dominates it now. Galveston still has a port but it is subservient to Houston.
JB: After you completed your education at Texas A&M, you had a degree, as I recall, in petroleum engineering and geology?
GM: Yes, well, thermal engineering and emphasis on geology. In other words, I took the 5 year course in 4 years. They later made it a 5 year course at A&M. So, therefore, I was able to get a lot of geology in with the petroleum engineering. And then, my mother wanted me to be a doctor so I had come up with my father to Rice to get ready to try to go to Rice. And I was accepted at Rice. So, I went back to high school because I had to have 3 years of Latin. I only had 2 years. So, I went back for an extra year when I was about..... I graduated when I was about 15 years old. So, I took Latin, but I then took advance mathematics with a great professor at A&M, at Ball High School named Milton Underwood. And therefore, I took solid geometry and advanced algebra and advanced trig and all those things and I did very well in those. But I still had plans to be a doctor and wanted to go to Rice. But that summer, I went in the oil field with my older brother, Johnny, Johnny Mitchell. I fell in love with the oil industry at that time. So, I decided at that time I did not want to be a doctor, I wanted to be a petroleum engineer and geologist. So, I had to switch because Rice did not have that course. So, I switched to Texas A&M because they had a great petroleum engineering and geology course. And so, that is what has happened to me.
JB: When you left Texas A&M, you went to work, I believe, for Amoco?
GM: Well, yes. I went to work for Amoco in South Louisiana. I graduated in 1940 with a petroleum engineering degree and geology major. And also, I went to work for Amoco in South Louisiana because I was offered a . . . as a reserve officer at A&M College, because all the students there usually went in the Corps, and we had 6,000 people and they were all male. There was one gal that was in the class and when she walked across the campus, 6,000 eyes were following her across the campus. But anyway, it was a great school. It was a wonderful school. So, I graduated from them but then I was offered a commission in the regular Army because the war was just threatening, was just about to come on, and I said, no, I wanted to be a petroleum engineer and geologist. So, I turned it down. I was doing very well. I was cadet colonel not a cadet lieutenant colonel. And they offered me a commission in the regular army and I said no. A lot of my classmates did that. So, I went to work for Amoco in South Louisiana. They had just bought Young Oil Company. Had tremendous operations. I was down there about 1-1/2 years. Wonderful experience to do that. Then, the Army called me. The war had started. The Army called me to come in. My assignment was to be at the San Jacinto Ordinance Depot. There were 3 officers that were running that depot. We had 2 big engineering firms - Lockwood and Andrews - and I think one other big firm that were doing the engineering. We had 2,000 people working on the big San Jacinto Ordinance Depot on the Ship Channel, and they were preparing these igloos for storing explosives and ships that docked there. The ships would head overseas where they needed the explosives. So, I worked on that. Lived in Houston at that time. I came in the Army. Left Louisiana, came to Houston. I remember staying at the old YMCA, the YMCA building, for the first month before I found a place to stay. So, Houston then became my home. About 1-1/2 years of that, when the war was about half over, I was here with 3 officers. They needed to reassign me to the Dixon Gun Plant on the Ship Channel - a big gun plant that they just had developed the centrifugal way of making these gun barrels, these anticraft gun barrels a new way. And therefore, it was a very important assignment. So, I did that for about 1 year. Then, after that, I was assigned to do military production at the district offices of Galveston. So, what happened, they shipped me over there and then said, "You finally got overseas," and I did not want to go overseas. So, I went to Galveston.
We designed all the air fields for this part of the country and Louisiana. We designed the Berkster Murray field (sp?), Galveston Air Field, the one. They were designed for the Corps, for the Navy, was done by the Corps of Engineers. So, I was involved in that and military production. We also handled all the production of military goods that went overseas. A lot of the oil and gas things that were used for when they had to follow up Patton's armies, were made in this part of the country. We had to worry about getting those built and done. So, I had a lot of experience, tremendous experience, where my brother was with Patton's army. He wrote 2 books, fascinating books. My older brother, Johnny. He was about 10 years older than I was. But he was with Patton. He was the captain in the artillery and he made some . . . his World War II experience, he spent 3-1/2 years. And he mentioned how his division was always the main division Patton used to salt the rivers. And all the breakthroughs that Patton did were done by his division and the 4th Army Division. His was the 5th Infantry Division. He wrote a nice book on it. It was very fascinating. He mentioned about the casualties because he had noticed about every 6 weeks, they would have to wait because they deplete all the officers in the infantry because they were in salts. And I knew that if I was in the Corps of Engineers, that was disaster. I did not want any part of that. However, he mentioned how difficult it was. They had these divisions of 24,000 people, and they had 23,000 casualties in 3-1/2 years. That is a terrible ordeal. But anyway, the war was out . . . luckily, I was able to help supervise a lot of people. I got a great experience between the Dixon Young (sp?) plant ______ the airfield's construction and what happened . . . the colonel that I had here, his name was Colonel Sevillo (sp), an old Houstonian, he was the colonel, and I had 3 of my officers ask for me. One to go to Berma and then one to go right after ___Beach was opened. And they kind of would not let me go. They said, "You've got too damned much going on here and you are doing a good job. Just stay here." So, that is what happened.
JB: Let me see. You got out of the Army in 1946?
GM: I got out of the Army in 1946. We had to shut everything down, close out all the contracts. Got out of the Army and I knew I wanted to be in the oil and gas business. I had some offers because we had done some work with oil and gas companies on military production on a followup of the supplies of oil that you had to get behind Patton's army, things like that. We had it all shipped over there and things like that. So, I think that . . . I got out of the Army and I had an offer for _______, a big company here. He wanted me to come work for him. I said no. Amoco asked me to come back, too. And then, I said, well, no, I have only had 1 year experience, and I had a degree in petroleum engineering and geology major . . . I said, no, I want to be in the oil business. That is what I wanted to be. So, Johnny had come back . . . this ordeal out of Europe. He had gotten out maybe 5 months before I did. So, he was working in the oil business. He had been an ex-employee of Exxon, petroleum engineer. He was a chemical engineer but they always trained engineers, whatever they wanted. So, he was working with some individuals here in Houston and Galveston of supporting little operations on some of these old oil wells here in Vinton, Louisiana. And that is what made me, when I went to work for him the summer before, after I had talked about going to Rice . . . then I decided I wanted to be a petroleum engineer because I worked for him in the oil fields in Vinton, Louisiana for one summer.
But anyway, so he had a lot of friends here, a lot of people that you remember -- the Weingarten family and a lot of the Jewish families were friends of Johnny, and some in Galveston. So, they were backing him on some things. So, I came back and I made a deal with 6 of them to give me $50 a month, because I had one child and another one coming and a little override, and I would try to find oil and gas for them and I would do their engineering for them. And they were drilling wells with other operators and I was watching for their interest. So, that is how we started. And Johnny and I started a little company here in Houston. We had a partner called Merlin Christi. We were in the Esperson Building. We had a little office a little bit bigger than a closet, not much bigger. We had one assistant secretary or whatever she was. Then, I would do the geology and engineering. I worked the deals together and Johnny and Merlin (sp?) would go out and sell the deals at the Esperson Drug Store downstairs. So, I would put the deals together and they would go out and sell them. Johnny would get the leases together and he and Merlin would go out and sell them. We finally got partners, you know . . . we would go down there and find out who is doing what at Esperson Drug Store while the brokers were there every morning for coffee. And that is how we started drilling wells.
JB: How was the oil business different then than it is now?
GM: Well, I will tell you - there had been such a shortfall of drilling because of the war. You could not get pipes, you could not get anything. Everybody was anxious to do something, somewhat like it is now. Right now, if you could find a good deal, you could get the money. Then, the money was hard to get and the deals were pretty good but you had to hustle to get the deals that were good enough to drill. It is much different. The independents, like John Mayo, had people. John Mayo was fascinating. He was a person who had a good rapport with all the major companies. They were always giving him little lends of money to drill wells. He drilled 21 straight dry holes. If I had drilled 10 straight dry holes, I would not have any customers. But he just kept going. He finally made a big discovery at Port Neches and did pretty well. But, I will tell you, there was a lot of independence and a lot of action going on, but the geology was hard to get by. You did not have seismic. You would have to get what you could out of some of the . . . the ______ would give you some but not much. You did not do a lot of 3D shooting then like we do now. So, you really had to do subsurface. Of course, we are a small company, we were just trying to figure out how to get started. So, I had a good friend named John Todd who had the Camby Log Service and I made a deal with him -- I would borrow the logs at night and work half the night working on prospects, and would bring the logs back the next morning because he sold them for a profit. That is what he did, he sold logs. That is how I did my geology because I could not afford to buy those logs. And he was a good friend of mine so I worked out a deal with him. So anyway, that is how we got started. I would do the geology and engineering and Johnny and Merlin and Chrissy would go out and sell the deals.
JB: Let me ask you something. One of the things that I have often heard is that in the early days of the oil business, it was a different business. It was a handshake business. It was not the lawyers and contract business. Is that a myth?
GM: That is true. It was a lot more on handshakes. However, it got more complicated as time went on. But, in general, there was a lot of that, a friendly way of dealing with people and not a bunch of legal instruments that had to make it work. And there were a lot of deals floating around. You had to really be astute to get the better deals and to see how to put things together. And then, for the people who had to give me $50 each, 6 of them which was enough ______ and I had a little override, I was able to find a lot of oil and gas for them as a consultant. And so, therefore, I was able to get enough money within about 2 or 3 years to build a house on North MacGregor on the east side of town. So, that company began to get bigger and bigger. We would put the deal together, we would get maybe a 30 second interest, they would carry us, and if we drilled a well, if we made a well, we would go to the bank and borrow some money against it. If we drilled a dry hole, we would just sit back and cry! It is a tough business, and we drilled a lot of wells. We found a lot of oil and gas. So, we had an ability to find oil and gas and to manage them properly, too. So, we finally got to be a big company because when we sold the company, we had 2,000 people working for us in oil and gas.
JB: How did you get from being an independent consultant to getting an override to Mitchell Energy?
GM: Well, what I did, I became a consultant to those 6 people that helped me start. I had to have them to have money because I had a child and a wife. So, that was a very good start. I had a 1 year contract with them but within 1 year, I had found quite a few little discoveries for them or extensions or deepening wells or things that . . . they got plenty of gas from the very beginning because I knew gas was going to be the future. So, we would work that. And then, I would use those overrides to do that thing. So, what we would do - we would take a little interest and we finally would take a little more and a little more. We finally got bigger customers. We eventually had Barbara Hutt as one of our customers. We had ______ in New York. Bob Smith eventually became more of a main partner. I was Bob's most main partner, the best partner he ever had for 10, 15 years. Hofheinz fell out and a lot of others fell out. Bob was a smart guy. He was tough. He had called me over there and said . . . he is the one that put the Astrodome together, then they fell out over that. So, Bob Smith would always raise hell about operations, operating. And I said, "Well, Bob, some of these things are just expensive. You have to do it this way." And he stuck his hand and he said, "Like hell you do it that way." He was a very wonderful person. But anyway, that is how we met a lot of the top people of Houston in the oil and gas business. And I had ________ participants and _______ were participating. I had the whole bunch of them. We developed a good company. We got to be bigger and bigger and bigger as the years went on and found a lot of oil and gas.
Houston was a dynamic place at that time. When I came back here in about 1946, 1947, there were only about 400,000 people in the town. And a great opportunity in oil and gas because there had been such a dearth of drilling during the war - you could not get pipes, you could not get them then ___________ and activity took up and became the center of oil and gas . . . Houston became the center for oil and gas at that time. And so, that is where I knew I had to be because I knew that is where the action was going to be. And then, I concentrated on natural gas at the very beginning. It is surprising, the first well I drilled in 1946, down at Jackson County, a Baylor gas well . . . ______ Houston Production Company and the price that I got for my gas was 3-1/2 cents. I knew some day it is going to be better. But anyway, it is interesting. I remember we made another gas well in Jackson County - it was the first gas that Oscar Wyatt ever bought. So, we all worked together to try to make things work.
JB: Almost everybody who was somebody in the oil and gas business, did you all know each other?
GM: Yes, we knew each other, but a lot of them, we didn't. But we knew most of the people trying to make trades here. We knew most of them. The brokers, we knew most of them. And then, we knew the major company people. We got friendly with them. And you get farm outs and you get ways to drill wells. We farmed out some stuff from Shell and some good places, other places. So, the major companies did not like the gas. They just wanted oil. So, you could make a better deal on gas than you could on oil. And that made it better because I knew gas was the future.
JB: Houston had this tremendous growth in the 1960s and the 1970s. Oil and gas - was that the reason for that growth?
GM: I think it was a very important part of it. We had a few downturns, you know. Over the 50 years, I have had 2 or 3 occasions where the price of oil fell several dollars a barrel. And when we started out, we had controls on natural gas, we had controls on the price of oil. It was a tough business. It was very tough. And you had to figure out how to keep the costs down and make things work. You had to ______ to be able to find oil and gas and not drill too many dry holes. We would always use a rule. I used a rule, geological rule. For every 4 wells you drilled, don't make them all wildcats. Just have 1 wildcat out of the 4 or 5 wells you drilled because the chances of finding some on a wildcat is about 1 in 7 or 8. And ______ block, you might have a chance of 1 in 2 or 1 in 3. So, you had to play it that way; at least I played it that way, and I think most people that were successful did it that way.
JB: What was it like to be the leader of a large oil and gas company in the oil slump of the 1980s?
GM: It was tough. We finally became a good sized company. We had 700 people. And we were drilling oil wells and I had a lot of good partners. Finally, I bought out most of them as time went on. After about 10 or 15 years, usually most of them would say, "I would like to sell out." I bought out my partners, Merlin Christi. Eventually, Johnny and I split up and I bought out Johnny. So, I think what you had to do was to figure out how to make things work because it is still a tough business. Even then. Then, when you have a slump like you talked about, it can be very depressing. I think we went through . . . I know of 2 big cycles where the price of oil went down or the price of natural gas was controlled where you could not get a decent price. We have always had a stupid energy policy. I have done so much work with Congress and the State of Texas trying to help the energy policy from whatever experience I have had. Never could get anything right. It is still not right. It is still a bad policy. But anyway, Houston is the headquarters for all of this, and they had a lot of power in the state levels and the national levels. I became president of the Texas Independent Producers, and chairman for 6 years. So, Houston is the headquarters for much of this operation. So, a lot of the independents came in, a lot of the majors finally began to come here. And then, we worked with the Houston Chamber of Commerce and with the Houston Partnership to try to get more oil and gas companies here because this was the national place for all the international oil and gas companies, and national ones. So, it has worked out. It is a big, important force of what helped Houston to be what it is.
JB: Why did you decide to purchase the 50,000 acres tract of land?
GM: Well, that shows you what happens when you have a downturn. We had some good brokers and they were all starving to death. We were not actively trying to get leases. So, I mentioned to one of them, "Maybe I will just find a piece of real estate. Maybe we can find a piece of real estate and make a good buy." So, we took a look at that. We had a little bit of real estate. We made a deal with Pelican Island in Galveston, on the west end of Galveston, because I knew Galveston, to try to do a development there. So then, we decided then, O.K., let's see what we might find. So, one of the people we had working for us that was doing some timber work for us . . . we had a little piece of land - we wanted to cut timber on it. So, we hired this person because he was a timber man. So, he worked as a contractor, I was impressed with what he did and I said, "Well, I will tell you what" . . . There is a person up here with a group called Grogan Cochran (sp?) Company. They have 50,000 acres, a lot of it in east Texas here and a lot of it there in ______ east Texas, and they furnish the timber for their mills. They each have 3 brothers, all cousins, who own this Grogan Cochran (sp?) Company. And they were using timber to run their three mills, separate mills. The brothers were all separated by that time that it was ______. And so, they got in a big fight with each other because everybody accused the other one of stealing timber. So, I said, "Well, all right, let's see what we can do." Now, I know that other people tried for 2 or 3 years to make a deal with ______ and I began to work on all 3 of the families separately to get their confidence and try to figure out could I make a deal, if I could settle this lawsuit between them? They had lawsuits between them. They said, "Yes." And so, they gave me an option to try to put it together. And it took a long time because I had to get about 300 participants in that _____ family was separate now because the brothers had gone astray. And therefore, I had to get them all convinced to say, all right, let's figure out . . . and I figured what the value of the land would be if I could acquire it and sell the timber. Big bills over in this area. That is how I arrived at the price of $125 an acre for the 50,000 acres because I could make enough money off the ______ or off the leases, the little leases they did on the land and on the timberlands, they get financing on making the purses.
So, I got Bank of Southwest at that time - Harold Bass (sp?) I knew from years before - he used to be ________ College Station when I was a senior there and I knew him very well. So, they were backing me in oil and gas, so they knew I built an oil and gas . . . so, I came in and I said, "All right, I need more." Six and a half million dollars is what it was, and I got 20% release. So, I was able to get them an assignment on 20% of the released acres. And I had this timber contract. Now, it was an over 10 year contract ______ specific mills or 1 of the 2 mills. So, therefore, I was able to finance the 50,000 acres. Surprisingly, after I had done that one, we got that one, we got it sold. That was not the main part of The Woodlands. Only 4,000 of that acreage is used for The Woodlands. The rest of the other acres were acquired later on. But the thing is that the 50,000 acres was a very important purchase. And then, I started working on the Kingwood 50,000 acres on the other group had it. I had 21% signed up options and Dunway moved in and got Exxon and the _______ people to come in and blow me out of the water. So, I lost my rights on the Kingwood 50,000 acres. Of course, I made about one half million profit out of the options that I had but I was trying to get the whole 50,000 acres. But it was not as good a piece of land as The Woodlands was. I knew it had a lot of drainage problems and I had thought we would just red flag it. That is what I was thinking about doing.
JB: Just put some roads in and no infrastructure . . .
GM: That is right. And flag it. Because The Woodlands was a better piece of land, so I knew that was a better place to work on. But then, we lost it anyway. Exxon and _______ took it over and they have done a good development. But they had to spend a lot of money on drainage and roads, more than we did up here in The Woodlands. But anyway, we started getting the land business because the energy business was so bad that my top brokers out there had no way to make a living. And I said, let's find something, do something. And so, we went through, I remember, 2 or 3 cycles over the last 50 years that were very tough to handle to get through.
JB: So, when you started building The Woodlands, I know that you wanted to go absolutely first class. Do you think you succeeded? Do you think you succeeded in building an absolutely first class new town?
GM: Well, let me say how The Woodlands started because being in Houston here, I know a lot about what is going on. I was a member of the Young Presidents Organization. That was people who were under 40 who had done fairly well, had businesses that were worth two or three billion dollars of income stream as a member. And they had a lot of bright people in there. So, we had started Pirate's Beach about that time, about 1965, and Indian Beach. That was the west end of Galveston. Because I knew Galveston. That has been a very successful project. But what happened then . . . we went up to Bedford Stuyvesant in 1965 and I could see that these poor blacks that had Harvard business degrees could not get any financing for anything. I just felt very bad about that. And the next year, the same group - we went to Watts, Los Angeles, to see the disaster that was going on in Watts. The race riots. And I just got to thinking, we can do better than that, because what was happening . . . all our big cities were in deep trouble. The whites were fleeing cities and the disadvantaged cannot manage the cities. Washington had the same problem. New York City had the same problem. Philadelphia had the same problem. They were all having deep trouble with their cities because the people left to manage it could not manage it.
They did not have enough talent. So, that was what the concept of The Woodlands was all about. So then, we put our thoughts together while we were still doing oil and gas -- oil and gas was our main business -- to say, how can we make this thing work? How can you organize better? So, that is when we found the EMA ______ and those were environmentalists who did environmental studies - very talented person, probably the best they have ever had around here in the country. So, he and I got Bill Perrera who had done big projects. I could not find the talent here in Houston that could do that kind of work - the master plan environmentally and the master plan on the project. Perrera had done Irvine, the big project Irvine and McHargett (sp?) had done some big projects on the East Coast. He had done a lot in Columbia and a lot of other places. So, we put that team together to come up with a formula for The Woodlands, the concept being but the concept that we put together back in 1966 and 1967 never changed. The concept was 125,000 people, 7 villages, environmentally pure - at least 25% would be free without any building on it - and that is what The Woodlands had done. You go there now, it is a beautiful place. It is a great project and ___________ and Irvine are the best 3 in the country. And I agree with them. I think it is a great project. So, that is how we put it together because the concept was how in the world do you urbanize an area? And the original concept was I had . . . in fact, Mayor Welch just called me about 6 months ago, making a deal with the State on what The Woodlands would be and how Houston would work with The Woodlands, on how we would work together because, see, I worked out don't do like Kingwood which was a disaster when the city took it over too fast. And Kingwood is still having trouble. We said we have to figure how to work with the city of Houston and Shenendoah and Conroe. And Mayor Welch called me, he said, "I want to thank you because you had the vision back in 1965 with Barry Welch to fight Conroe so they would not divide and cut off all the area and Shenandoah take all The Woodlands ________. You left it intact. __________ jurisdiction. So, some day, we can either nix it or do something with you to do it another way. And he thanked me for doing that. And that is why it is available to work out a deal with The Woodlands and a few in Conroe now . . . the first step has been done. We will see what happens.
JB: Shortly after The Woodlands opened, didn't it almost go broke? Didn't you have to pledge your personal credit?
GM: Let me tell you this: It was tough. Well, yes, those interest rates went up to 8.5%. You can tell how many _______ you would sell. None. So, it was tough. We had a tough time, a couple of tough times in The Woodlands when interest rates spiked. That is what hurts you. Financing, you could get but then the banks would always hammer you pretty hard when something goes wrong; you know, interest rates. Lucky we had some energy resources, too, that helped us. And we had HUD's $50 million guarantee we used to buy the land, give them a mortgage on it, but they did not give us the ________ they were supposed to give us and we had to do that alone. But The Woodlands has been a great project. But out of the 13 that HUD supported, only one did it without bankruptcy but The Woodlands. But it was well thought out, it was done well, and it is a beautiful project.
JB: Let's talk about when you decided to sell The Woodlands and your real estate projects.
GM: Well, what happened -- same old story that happens
every once in a while. We drove our wells up in north Texas and we found a good
field up there. We made about 200 discoveries of new fault blocks and new
things, that is with the oil and gas. And we drilled a lot of wells. Very
active. So, what happened . . . we made this field up there in north Texas, the
gas field. Some of these trial lawyers got to thinking, well, they are going to
sue someone. And they work it where they tell the jury things that you cannot
believe the jury would accept. But they do it. They manage to do it. So, they
claimed we had poison gas or H2 Exxon gas which was never true. They claimed
this, they claimed that, and they wanted a $200 million judgment against us.
Well, if you had to finance a $200 million judgment, you know you have got
problems because just the financing cost $5 million. So, we had to hustle and
get the finance and then we had to get organized to get the team of lawyers we
had on this first suit were not that good. We ended up getting Jack O'Neal who
is here in Houston, a talented person, working on this kind of suit. He then got
me 9 lawyers: 3 in Dallas, 3 at Wise (sp?) county and 3 here at $450 an hour to
fight this lawsuit. But with that lawsuit on us, we could not sell The
Woodlands. I mean, the energy company. I really wanted to keep The Woodlands and
sell the energy company but we could not sell the energy company because it had
a lawsuit because no one will touch it with a $200 million judgment. So, we had
to fight that. So anyway, but we did manage to team up with Jack O'Neal and
it worked out. And we finally beat them through a case in the Supreme Court,
proved to them that we had testimony at the Supreme Court, that people had been
_______, they had _______, too, and it was not poison gas but it was just
regular gas in the water wells, because what happens - if you look at the 3D
seismic, you could see these fault blocks from what we now know to be the
Barnett was what we found, through a big discovery on the Barnett. You could see
how the gas seeps up and _______ to the water wells. [end of side
JB: What do you think is the future of Houston?
GM: I think the mid risers seemed to be doing quite well. I think Houston still is the peak of the energy company although there is a lot more action now into buying other places and not worry about _________. But Houston is still the central point of all the energy business in the worldwide ______. And, of course, the medical profession built _______ here and I think so much other stuff. The real estate _______ and one thing that is important that you will find out now, housing, like in The Woodlands, in spite of all this downturn . . . I talk to them all the time . . . the housing up to a point is going pretty well ________. So, because our cost is so far in line compared to Los Angeles and New York, that is why the companies are moving down here because cost is cheap to operate. And that has been a very important factor for Houston's future, too. So, they got a lot going on and a lot of good people working at it but still a tough job.
JB: What do you feel is your most significant contribution to Houston?
GM: I think the energy contribution because I did a lot of work on energy, a lot of work with the federal government, a lot of work with the state. I made a lot of discoveries. See, we also on the big field we did in north Texas, we noticed when we were drilling, one of the wells had _______ beyond the ______. We penetrated a rock that had a slight show on the gas detector. And I told the engineers, well, let's break it and see what we have got there.
JB: You are going to break it up?
GM: Break it up. They said, "You are wasting your money. It is just like slate. There is no gas in that thing." I told them to keep at it. So, that started in 1981. It took us 7 years and about 10 wells to figure how to make it work. Now, it is the largest gas field in North America. It has got about 6,000 acres, productive. They now produce a billion and a half feet a day on that field. Devin (sp?) who bought us is now producing one billion feet a day out of the acres that they got from us. So, it has been a tremendous asset to the state and to the country. Houston has been _______ a lot of people here and I think that the energy business is still located here in Houston, most of the energy business in the country, and most of the offshore business and the worldwide business comes out of Houston now, too. So, it has been a big drawing factor. And, of course, that is one thing. The other thing is, you know, I did Pelican Island, Pirate's Beach and things like that, resort living, which has been a very good project. But The Woodlands is the best project we did because when we sold The Woodlands, then I sold all my other real estate because I lost my interest in anything.
The Woodlands is just the main thing that we are doing. So, I sold Pirate's Beach and the other areas down there, little stuff . . . we had the Aspen and a lot of ski areas we had around the country. So, we got out of that type of the real estate business. We were still in the energy business but we sold to Devin later. We collected that money and we sold those into the energy business, and then we sold that to Devin, which has done very well. And they have got probably a couple of hundred people working in Houston, too, so it helped Houston. But I think that the effort that we helped working with the economy, working with the infrastructure ________ we helped start with Ken Schnitzer (sp?) years ago, the Houston Partnership has been very successful, very helpful. Working with the mayor, Mayor White. He is doing a good job. I am glad that he is running for another term. I do think that Houston has a great future. And because we have such a low cost base, that is where it is going to come. Right now, they are shying away from California and New England and that area, the northeast now. So, it will help Houston because you are able to keep a fairly low cost base.
JB: One final question. If you can think back to when you were a young man, did you ever think that you would be the success that you were, that you have been?
GM: Well, I have always been a fairly aggressive person and so I think that . . . well, I knew that I wanted to be an engineer and a geologist. I knew that. So, I knew the business well and I found a lot of oil and gas for a lot of people. Mike Haliburton and I are big friends. Mike was a great guy. And, you know, he and my people would go out wildcatting. He would say, "God damn, _______________." I said, "Well, Mike, we wildcatters have this big discovery, what we called the Barnett. It is the biggest gas field in the country. Now, Mike, I have got to give you credit for that." Right before he died, I told him that. But he was a great person. But anyway, you have a lot of great people in this town and geologists and engineers working with major companies because I know a lot of them. So, I think that it is a good thing. So, it ought to be a good future. Now, how we work through this energy crisis that is going to hit us . . . we are working on trying to help with ideas that might help on that. But I do think that a lot is going to be done by the people in this town to help make these things happen. It is going to be tough.
JB: O.K. Thank you very much, sir.