Several weeks ago, the letter carrier handed Bill Goodwin, a onetime $30,000-a-year Washington press secretary, a check for $230,000. That was his payoff for shaking off a near-terminal case of Potomac Fever to join the desperadoes and dream merchants wildcatting for oil in the "poor man's patch" of east Tennessee.
"I just got to the point where I decided I wanted to be rich rather than famous. And the oil business is more fun than politics -- you get the excitement of election day every time you drill a well," Goodwin said with a laugh. He had dug his share of dry holes before he and his three partners hit their first "barnburner" this summer, a 250-barrel-a-day gusher in Vernon Lawhorn's cow pasture just up the road.
OPEC has turned the rolling Cumberland plateau of pine forests and farmland north of here into a wildcatters' paradise. With the price of oil skyrocketing in recent years, penny-ante independents like Goodwin can afford to crapshoot for the relatively modest finds that once were passed over as uneconomical.
Goodwin's check came from the Kentucky refiner who cashes in the winners' chips for small oilmen hereabouts. They cannot afford to buy into the high-risk, high-reward oil game that costs the major oil companies millions per well to drill in Texas, Oklahoma, offshore in the Gulf of Mexico and elsewhere.
"Texas is out of my league," says Goodwin. "It's big money to be made, but it's a big gamble. Here, it's a small pie, but there are fewer of us trying to cut it up."
So the wildcatters flock to Tennessee, where it costs a modest $40,000 to sink a 2,000-foot hole, a relatively shallow depth at which oil and less-profitable natural gas are found beneath the scraggly brown cornfields and tar-paper shacks of Appalachia. At $34 a barrel, the spot price for crude, a paltry, four-barrel-a-day well can recoup drilling costs in a year, oilmen say. And, they add, while Tennessee may rank 26th out of 36 oil-producing states (1 million barrels a year compared with first-ranked Texas' 980 million), it has a 50-50 "strike ratio," or ratio of wells to dry holes. That's one of the highest in the country.
"In Tennessee, a man with no money, a small helping of brains and a lot of b---- can get into the oil game and strike it rich or lose his shirt," says Goodwin, executive vice president of the Tennessee Oil and Gas Association. "The average guy can't get into Alaskan oil. In Alabama, Mississippi and Louisiana, you're going up against the majors, and the drilling is deep and expensive.
In Tennessee, a guy could hitchhike to Knoxville, buy a standard lease form in the bookstore, sign up a farmer, raise money to drill and have a 50-50 cance of hitting gas or oil. Overnight, you can go from a bum to a respectable oilman."
Production of hillbilly oil in Tennessee won't put much of a dent in the U.S. energy crisis. Still, the state is believed to hold part of the largely unexplored oil and gas reserve of the Eastern Overthrust Belt. That's a 40-to-100-mile-wide swath on petroleum engineers' charts that stretches 900 miles, running north from Alabama, through parts of Georgia, Tennessee, Kentucky, West Virginia, Pennsylvania and New York.
From soundings, seismic testing and computer mapping of underground formations, they theorize that forces similar to those that sculpted the oil- and gas-rich Rockies of the Western Overthrust Belt shaped its eastern counterpart.
Of course, that includes Tennessee, which represents "the best shallow drilling opportunity in America today," according to Robert Barnes, 54, a Tennessee State University geology professor with a $1.4 million net worth (from oil) who signed Goodwin on as a partner. Oilmen credit Barnes with discovery of four of six large fields (50,000 to 1 million barrels apiece) found in nearby Morgan and Scott counties since 1973.
Goodwin's share of royalties from the Lawhorn well near Oneida, Tenn., virtually down the road from the large landowners of Sen. Howard H. Baker Jr.'s (R-Tenn.) family, will "put my two daugthers through college and make me a millionaire in three years," he boasts. "Gawd, I'm going to be obnoxious when I'm rich."
Already he's dressing for the part. He sports $400 lizard-skin boots, a cowboy hat, brown tinted sunglasses and a brass belt buckle that declares, "ROUGHNECK," against a horizon of oil wells.
"It's better to live rich than to die rich," says Goodwin, who has gone political cold turkey since drawing more votes than any Republican ever had in his losing 1974 congressional race from a Democratic district in Nashville.
He pilots an $18,000 Porsche about the winding mountain roads of Crossville, 130 miles northest of Nashville, fast-talking farmers into leasing their pastures for a piece of the action. He'll stoop to almost any slur to get them to sign on the dotted line. "I'll tell 'em anything to get a lease," he says. "I'll lie. I'll tell a farmer my competitor is a bastard to deal with, or a homosexual -- because he's saying the same things about me.
"I might say, 'Is he married?' or, 'Ever seen him with a woman?' Now, you wouldn't want one of them homeysexuals running around your property, would you?' I wouldn't steal a nickel from a partner, but I'd do anything to get a lease. The legitimate operator is at a disadvantage up here with all the con men running around."
Vernon Lawhorn, 66, a drawling white-haired farmer with bad teeth, a cur dog and 71 acres, leased drilling rights to Goodwin's partners for 12.5 percent of the well. He's earning about $30,000 a month from the oil strike, and takes pride in his new white Dodge Diplomat. It sits beside a rusting tractor in the front yard. "Paid $6,500 for it," he grins. "All cash."
Goodwin holds court in the Diamond Bit Lounge. It's a redneck Elaine's here, where J.R.s on the make nurse beers and brown-bag bottles of bourbon, swap lies and bargain for percentages and lease deals. "Here, I can stomp around in blue jeans and boots, get dirty in the oilfields and drink whiskey with all these tough guys," says Goodwin. "Tomorrow I'll be drinking martinis in Nashville with my third wife [an airline stewardess] and dining on filet mignons in some fancy French restaurant."
Goodwin is among the wildcatters who sunk more wells in Tennessee last year than in Ohio, Pennsylvania and West Virginia combined. And Tennessee state geologist Robert Hersey estimates that Goodwin and the other good ol' boys who frequent the Diamond Bit will drill a record 1,000 wells this year, an all-time furious drilling pace that reflects the national trend.
Last week, Hughes Tool Co. of Houston, which keeps tabs on such statistics, counted 3,500 drilling rigs punching holes in U.S. soil, a pace that exceeds the record of 3,100 rigs operating one week in 1955. In addition, many analysts estimate that 60,000 oil and gas wells will be completed this year, exceeding another record of 58,160 in 1956.
Goodwin joined the hunt after four years in Washington as former senator Bill Brock's press secretary and political strategist for the Republican Senate Campaign Committee. He was "bored to death," and returned to Nashville to dabble in local politics and ressurrect a bankrupt oil drilling outfit. "In Washington, everyone is so cautious and uptight," says Goodwin. "People there make a good living, save their money and say, "Someday I'll amount to something.' Here you can make it faster."
He learned the ropes -- and the art of conning the appropriate people -- drilling holes for other wildcatters. As a drilling contractor, Goodwin said, he was paid to drill more than one well that looked to him like a deliberate dry hole for oilmen who had taken investors' money up front and didn't much care what came out of the ground.
Two years ago, after the drilling company was sold, he packaged his first oil deal, parlaying a $500 lease into a small interest in a five-barrel-a-day well that earned him $600 a month. The trick, says Goodwin, in oil as in real estate, is "to use other people's money." His partnerships' sugar daddy is a mysterious Canadian stockbroker who showed up one day at the office, listened to Bob Barnes' sales pitch, and started wiring thousands of dollars into a Nashville bank account.
So far, the Canadian has pumped in about $700,000 for exploration on a little more than a handshake. Goodwin's group puts up no money and receives one-quarter working interest for putting together the deals.
Every deal is different. And over breakfast in the Holiday Inn, where oilmen plot the day's adventure over maps and coffee, wildcatters in blue jeans and diamond rings hungrily eye gray-flannel investors at the next table. More than one oilman has pitched a deal to a fat cat with plenty of tax-free dollars to spend, excused himself for the men's room, and returned to find his client spirited away by the competition. One oilman was eternally banned from the restaurant for such flagrant bad manners. Another has been known to gain a few pounds so he can visit Duke University for its famed rice diet and pitch his deals to starving fatties.
The frontier towns of Tennessee oil rival Dodge City for adventure. Murder is not infrequent in the oil rich hills of Scott, Morgan and Fentress counties, where illiteracy and poverty are high. One-third of the people are registered for food stamps, and the wildcatters, with their underdeveloped sensitives, think it is the height of humor to say that anyone with more than two good teeth is bound to be a tourist.
The key to deal is the lease. Without drilling rights from poor dirt farmers a wildcatter is nowhere. And farmers are getting ever cagier at taking a percentage, insisting on one-year leases and extracting promises to drill right away.
Sooner or later, a wildcatter is bound to bump heads with "Wild Bill (Override) Ray, 43, the undisputed king of Tennessee oil who blinds strangers with seven-carat diamond and gold pinky ring, keeps his tailored pants about a trim waist with a solid belt buckle and carries a derringer just in case some ol' boy gets a mite jealous. A former Ohio tool and die maker who migrated to Tennessee 10 years ago, Ray is a respected oil man who has acquired vast leases and a tough reputation for exacting a percentage, or "override," from wildcatters seeking to drill on his property. He farms out the risk, and if they hit, he drills his own offshoot well on the next plot, a strategy called "checkerboarding" that virtually guarantees a gusher.
Ray drives a gray 450 Mercedes sedan, one of 24 cars and trucks in his stable, and keeps his girlfriend, Anne Byrd, covered in diamonds.
Ray's record for drilling this year is 12 for 12, ranging from a small 5-barrel-a-day well to a 150-barrel-a-day barnburner. His philosophy: "You've got to be nice to everyone on the way up, because you'll need them on the way back down."
"If you've hit, it's gorgeous," says Goodwin, the "windfall profits" tax notwithstanding. "Even a teeny 2-barrel-a-day well. At $40 a barrel, you gross $25,000 a year. Twenty-two percent is not taxable because of the depletion allowance.
If you're in the 70 percent tax bracket, you're playing with 30-cent dollars. If you hit a dry hole, you can get an immediate tax writeoff on most of it. And the Georgetown fat cats I know would much rather throw dice down a hole than give it to Uncle Sam.
"This is not a game for orphans and widows. If they're in it, they ought to be shot. Only those who can afford to lose it should be in this game. Otherwise, you should stay the hell out." CAPTION: Picture 1, Bill Goodwin: "A small pie, but there are fewer trying to cut it up."; Picture 2, So the wildcatters flock to Tennessee, where it costs a modest $40,000 to sink a 2,000-foot hole, a relatively shallow path depth at which oil and less-profitable natural gas are found in Appalachia.; Picture 3, "Wild" Bill Ray, the undisputed king of Tennessee oil, and his seven-carat diamond ring; Picture 4, Goodwin talks with oil rig worker David Summers at Hall-Lawhorn No. 3 well near Oneida. Photos by Art Harris -- The Washington Post