Some explorers find success hunting elephants.
Dan Hughes Sr. found it hunting birds.
Hughes is the 2012 recipient of AAPG’s Norman H. Foster Outstanding Explorer Award, presented each year to one of the Association’s most distinguished and outstanding members who has “shown a consistent pattern of exploratory success.”
The description fits Hughes perfectly.
But start this story in 1954.
Hughes, just out of the U.S. Army, had gone to work as a geological scout for Union Producing Co. in Louisiana.
“I was sent to New Orleans,” he said. “Well, New Orleans was a great place for a single guy to work but I was making $350 a month, and I could spend that much every night.”
He requested a transfer, and Union Producing found him a spot in Beeville, Texas, about 40 miles northwest of Corpus Christi.
Jump forward to today. Hughes still operates out of Beeville, with a long career of oil and gas exploration stretching well beyond South Texas, to the far reaches of the world.
“I started going overseas pretty early,” he said. “A lot of the independents don’t even think about going overseas, but it’s lucrative, mostly because the land positions are so large.
“And you don’t have to be Exxon to do it.”
Among those rewarding ventures, Hughes has operated or participated in exploration successes in Canada, Australia and Colombia.
More recently, he’s ventured into the unconventional resource opportunities opened up by horizontal drilling and hydrofracturing.
“For our latest we got into the Barnett Shale and drilled about 20 wells. Then we got a big offer and sold out,” he said.
Dan A. Hughes Co. LP also entered the Eagle Ford play in South Texas, assembling a block of about 50,000 acres, drilling a string of prolific wells and then selling the project to a publicly held company.
Match Game
But the subject was birds.
In his response to the award nominating committee, Hughes described two bird-hunting outings that led to profitable exploration.
The first contributed to the very first major find for his company.
“Back in 1967 I was an independent here, and I got to working a goat pasture in the part of the district near north Laredo (Texas),” Hughes recalled.
He discussed a mineral lease with John Beasley, a local attorney and friend who happened to own a ranch over a low relief structure Hughes had mapped. Beasley invited him to go quail hunting at the ranch.
During that visit Beasley tossed a match into the casing of an old, abandoned well on the property. When a two-foot flame erupted, Hughes wrote, “I knew I had found a good prospect.”
After putting together a leasehold, Hughes drilled the discovery well for the Las Tiendas Wilcox gas field, which eventually covered 11,000 acres.
“It’s a series of sands down to around 3,500 feet,” Hughes said. “It was profitable for me because it was cheap drilling.”
That find put the company on its way to a number of other discoveries in Louisiana, Mississippi and Alabama, plus more success in south Texas.
“We’ve played nearly all the trends down here, mostly the Cretaceous and the Wilcox,” Hughes explained.
From there he moved into drilling oil wells on the shallow, promising prospects in the company’s area of operations.
“It was something the majors didn’t care about,” he said. “We drilled around 400 wells down here. It was mostly in the Cretaceous, mostly about 2,000 feet. Those wells made 15 to 20 barrels a day.”
Globe Trotting
Later, an investor in New York invited him to England to shoot driven birds. Hughes said he continued going to the event annually and met a geologist from Australia who had developed several prospects. One involved a large concession north of Perth, along the pipeline that supplied the city with natural gas.
“A deal was made to farm out this permit from some small Australian operators and, after doing seismic, we began drilling a well on what I thought was one of the better prospects,” Hughes recounted.
After touring an aircraft factory in Japan, Hughes caught a flight to Australia to check on progress. On that flight he saw a newspaper report about a new gas discovery in the Perth Basin.
Their drilling had opened the Woodada field, which Hughes called the first Permian Reef limestone discovery in Australia. Both the location and the timing were fortunate.
“At that time there was only one gas field serving Perth, and it was depleting,” Hughes said.
In 1996, Hughes and his company looked for exploration opportunities in South America. Several countries were evaluated for potential.
“We tried Bolivia and never could find anything good,” Hughes said. “In Venezuela the terms were so tough you couldn’t make any money.”
In the end, the Llanos Basin in Colombia seemed to offer the best chances, with good source rocks and promising reservoir conditions.
Hughes decided 3-D seismic would help identify subtle structural closures. The large surveys led to several significant oil discoveries, and Hughes later was able to sell one of the producing concessions for a ten-figure price.
‘Lucky Enough’
After earning his degree in geology at Texas A&M in 1951, Hughes had no doubt he would enter the petroleum business and eventually start his own company.
“I always had an ambition to do my own thing,” he said.
First, though, he joined the U.S. Army.
Stationed at Fort Bliss near El Paso, Hughes spent his off-duty hours doing mapping in southern New Mexico. He purchased a federal lease there, then sold the prospect to a Carlsbad operator for an overriding royalty.
The operator drilled the discovery well for the Saladar Oil Field on the lease and Hughes was on his way – to the Korean conflict, where he served as an artillery officer and was awarded a Bronze Star.
Friends, associates and business connections have played major roles in Hughes’ lifelong success. He said a friend from San Antonio moved to Calgary, which led Hughes to a cooperative venture with Anderson Exploration Co.
And that led to a share of the Dunvegan field in Alberta, with 1.6 trillion cubic feet of gas reserves, and several other discoveries.
“The first well they drilled hit one billion 600 thousand feet of gas,” he said. “That was their discovery, not mine, but I was lucky enough to get in on it.”
His personal advice to young petroleum geologists is to do what you love and to look beyond your own backyard.
“First of all, I’d say do something you really enjoy doing. Don’t enter a business just because it looks like there’s a lot of money in it,” Hughes said.
He talked about acquiring a company airplane in 1972, which gave him a broader range of operations and the ability to be “in Houston for breakfast and in Jackson, Miss., that same afternoon.”
Close examination of his successful career could indicate two other rules:
- Understand the implications of the local geology.
- Use the latest technologies in the most effective ways.
His contributions to Texas A&M have included restoring the Military Walk and endowing the Berg-Hughes Center for Petroleum and Sedimentary Systems. Hughes credited the university with developing both his petroleum geology skills and his devotion to the work.
“We happened to have some good professors who were interesting,” he said. “We took a lot of field trips. I'd rather do that than play golf.”