Jim McNeely hit a dead end…
He dropped out of high school to care for his sick mother. Then, Madelon Wales put an end to Jim’s plan to marry her daughter. She wouldn’t accept a grocery checker as a son-in-law.
The Wales family did toss one crumb Jim’s way, though… They connected him with someone at Bison Oil. And soon after that, he started working in the Texas oilfields.
But Bison Oil representative Dent Paxton made it clear from the start that Jim faced long odds to success in the oil business. In their first meeting, Dent warned Jim…
“You can’t go up in this Company without a college degree…
“You’ll either get banged around and run off in a week, or what’s worse you may think you have to prove you’re a tough character and stick it out. That’s how you’ll get indentured for life, buddy…
“You realize where you’ve come to? The sinkhole of the universe – only here they phrase it less delicately. And they’re not kidding, buddy. All hopes and illusions are finally blasted to pieces here. There’s no future in Dead Lake for you, McNeely. None.“
But Jim couldn’t just walk away. He was already mired in late 1930s West Texas. “I got no place to go back to,” he told Dent.
Well, Jim beat the long odds… With a lot of hard work, he ultimately struck it rich in the oil business. However, in the end, Jim fell victim to his own greed and got wiped out.
It’s a great story. In fact, that’s exactly what it is… Jim, Dent, the Wales family, and Bison Oil are all made-up characters in Tom Pendleton’s 1966 novel, The Iron Orchard.
That didn’t matter to the folks in West Texas, though…
After the book came out, it developed a huge cult following.
The locals identified with nearly everything in it. Oil-industry veterans and other prominent members of society attended theme parties to celebrate it. And after many attempts to turn the book into a movie over the decades, it finally happened in 2018.
Although the characters are fictional, the oil industry embraced The Iron Orchard because of how real it felt. It helped uncover a big part of the Permian Basin’s early development…
When Pendleton wrote his novel in 1966, total production in the Permian Basin had reached 600 million barrels of oil and 2.3 trillion cubic feet of natural gas. But after peaking in the early 1970s, production started to fall…
It bottomed in 2008. Rig counts fell from roughly 300 in the previous year to less than 100.
Then, the Iron Orchard got a new life…
Spurred by high oil prices in the late 2000s and early 2010s, new drilling technologies emerged. For generations, companies could only drill straight down to shallow depths for oil. But thanks to these new technologies, they started drilling sideways…
This longer, horizontal drilling technique revealed much larger reserves. And it could be done at much lower costs, too.
The Permian Basin soon roared back to the fast lane.
Today, the Permian Basin pumps roughly 5 million barrels of oil per day. It makes up about half of all U.S. production.
So it’s no surprise that the Power Gauge rates the energy sector as “very bullish” today. In fact, the Energy Select Sector SPDR Fund (XLE) has the highest Power Bar rating of the sectors that the Power Gauge tracks – with 17 “bullish” stocks and no “bearish” ones.
Oil prices are already nearing $100 per barrel. And with Russia invading Ukraine last week, you better believe they’re headed higher – perhaps up to $200 per barrel in the long run.
So in short, there’s still a lot of money to be made in the Permian Basin of West Texas.
Good investing,
Marc Chaikin
P.S. In the February issue of our Power Gauge Report newsletter, I alerted subscribers to a powerhouse in the Permian Basin. This company shines as oil prices rise. And if things play out perfectly, it could more than double in the years ahead. Find out how you can claim instant access to this report – and all of my research for the next year – right here.
