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Then Murchison made the decision that made him rich: he started drilling. Through a system of "financin' by finaglin'," i-e-, getting money in exchange for a share of one lease, a rig in exchange for a share of another, he formed a new partnership, started drilling wildcat wells at the rate of 50 or 60 a year. Murchison always put aside a few shares for himself. He struck it lucky and his income soared to $30,000 a month. In 1925 he sold his oil interests for some $5.000,000, retired to San Antonio, but not for long."What else is a fellow going to do but work? I can't play the piano," says Murchison.
Murchison's first wife died in 1927, and one of his sons died not long after. To take his mind off his troubles, he moved to Dallas, started buying leases and drilling again in West Texas. When his first well in the Pecos Field brought in gas not oil, he arranged to pipe the gas into nearby towns, later expanded his gas lines into Oklahoma, New Mexico, Colorado and Arkansas. That was the start of his Southern Union Gas Co.
During the Depression Murchison and his partners kept right on expanding. He formed the American Liberty Oil Co., so named in protest at the Government cuts in oil production (prorating) to reduce the surplus caused by the big East Texas oil strike of 1930. Murchison himself was hard hit by that strike, had to shut down some of his wells for four years. Nevertheless, he battled proration in the courts and lost. Murchison now grudgingly admits that proration makes oil-producing cheaper, but still opposes it.
Money in the Ground. As the Depression wore on and war approached, Murchison saw inflation coming, sank every cent he had or could borrow into the ground. He worked out a variation of the reversionary interest, applied it to the oil business and made more millions. His trick: to lure buyers, he would sell oil property cheap, with the agreement that after the property had paid off the purchase price plus interest, a half-share in all production would revert to Murchison.
He never stopped gambling. In 1940 he took over a 14,000-acre lease from the Texas Co. and agreed to drill 200 wells on it (at an average cost of $50,000 a well). Texaco's geologists doubted that he could even make interest on his $10 million investment. Instead, he netted $15 million. Following his gambler's instinct, he wanted to spread the risk of the oil business by going into other fields. He chose insurance companies first, since they are not taxed on part of their income. He bought Reserve Loan Life in Indiana, Atlantic Life in Richmond, and Tennessee's Lamar Life. They led to companies that manufactured everything from elevators to tires.