By Younas Chaudhary
Have you ever had a constable deliver a lawsuit to your office?
This happened to me in the mid-eighties as I was buying up oil producing wells with investors led by a local physician in Wichita, Kansas. The investors would pay 100% of all the costs for me to buy the oil & gas wells and they would own 90% of the assets before payout. I would own 10% before payout and the interests would be adjusted to a 70/30 split after payout.
I single-handedly managed their oil and gas assets in California, Kansas, Oklahoma and Texas. It was hard work. With a lean crew, I looked after operations in various states. My investors made good money until the oil prices crashed in late 1985. As that occurred, they were quick to blame me for their losses without understanding a volatile oil market. They were angry and soon filed a lawsuit accusing me of causing losses.
I was nervous as I was just five years into this business and couldn’t even think of being in a courtroom. Nightmares followed!
I was pushed against the wall and had to defend myself.
An older investor, a local grocer, was a good friend. With the lawsuit over my head, I invited him for breakfast. I convinced him that I was the only one who had the expertise to run the business as nobody else had any clue about the oil industry. My friend had a worried look on his face as he thought about the fate of his own investment. The only thing he knew was to run a grocery store, so he wanted to make a deal with me and get out of this bad investment. Ironically, he was a board member of the local bank that gave the investors’ money to purchase the oil wells. He suggested that I meet with the bank’s president and CEO. The CEO genuinely listened to my story. Later, he convinced his clients (my investors) to try to cut a deal with me and he agreed to extend the loan terms so that I would be able to buy my investors out as long as I did not default on the loan.
I took control of all my investors’ loans and had all oil & gas wells and leases transferred to my oil company’s name. Ironically, within six months oil prices went up and I made a lot of money.
I learned a few lessons:
- I got pushed against the wall, but I solved the problem thinking long-term. My investors wanted quick money, but I was in it for the long haul.
- I understood that I was the type of person who craved the freedom to create a bold vision for my business. In a joint venture, everybody has their own ideas.
- I learned to operate with consistency and managed my costs efficiently without investors. I survived at $8 a barrel and judiciously invested when oil prices went up to $150 per barrel. I became the master of my destiny.
- I had greater leverage negotiating loan terms because bankers looked at me as an individual with a solid track record and consistency.
- I don’t have anything against joint ventures. It simply was not for me!
Find out more about me in my best -selling book “From dirt roads to black gold.” Note that 100 percent of the proceeds from the sale of this book will help people in need through my foundation, the YBC Foundation.