The Pre-Presidential Failures of Bush

An article from 1999 in the Washington Post on how Bush failed in the oil business.

As world oil prices plummeted in the winter of 1985-86, George W. Bush faced the most serious crisis of his 11-year career as a West Texas oilman.

Spectrum 7, his exploration and development company, had reported a net loss of $1.6 million in 1985, due to the fast-deteriorating value of its holdings. As the price of oil fell from $25 to $9 a barrel, the firm was on its way to losing another $402,000 by mid-1986. Bush’s company owed more than $3 million in bank loans and other debts with no hope of paying them off in time. His investors had disappeared.

On the cusp of his 40th birthday, Bush had two choices: Cut his staff to the bone, hunker down and pray for oil prices to climb before the banks foreclosed; or find a bigger company that was willing to scoop him up, debts and all. “I’m all name and no money,” the son of the then-vice president used to say.

Bush’s name, however, was to help rescue him, just as it had attracted investors and helped revive his flagging fortunes throughout his years in the dusty plains city of Midland. A big Dallas-based firm, Harken Oil and Gas, was looking to buy up troubled oil companies. After finding Spectrum, Harken’s executives saw a bonus in their target’s CEO, despite his spotty track record.

By the end of September 1986, the deal was done. Harken assumed $3.1 million in debts and swapped $2.2 million of its stock for a company that was hemorrhaging money, though it had oil and gas reserves projected to produce $4 million in future net revenue. Harken, a firm that liked to attach itself to stars, had also acquired Bush, whom it used not as an operating manager but as a high-profile board member.

“One of the reasons Harken was so interested in merging was because of George,” said Paul Rea, a geologist who had been president of Spectrum 7. “They believed having George’s name there would be a big help to them. They wanted him on their board.”

The buyout not only rescued Bush financially but gave him the collateral for an investment a few years later in the Texas Rangers baseball team that eventually made him a millionaire. In addition to the seat on the board, he received more than $300,000 of Harken stock, options to buy more, and a consulting contract that paid him as much as $120,000 a year in the late ’80s, when he was working full time on his father’s presidential campaign.

It was one of the biggest breaks of Bush’s life. Still, the Harken deal completed a disappointing reprise of what was becoming a familiar pattern. As an oilman, Bush always worked hard, winning a reputation as a straight-shooter and a good boss who was witty, warm and immensely likable. Even the investors who lost money in his ventures remained admirers, and some of them are now raising money for his presidential campaign.

Three times during his years in Midland, Bush was saved from financial trouble or stagnation by the appearance of new partners or financial angels who gave him a fresh start. One was a Princeton classmate and friend of James A. Baker III, who was to serve as his father’s secretary of state; another was a fellow Yale man who shared Bush’s love for baseball.

The third was Harken, which was to save Bush from humiliating failure but also create a target for later criticism. Reporters would scrutinize the deal as early as 1990. Led by then-Texas Gov. Ann Richards, Bush’s opponent in the 1994 gubernatorial election, his political critics have asked whether Harken used Bush’s name to obtain oil business. Even now, questions linger about a 1990 sale of Harken stock by Bush that was the subject of a probe by the Securities and Exchange Commission.

When it was over, Bush’s oil career had merely perpetuated the nagging pattern that marked his life until past the age of 40: Once again, he had followed his father’s path but failed to achieve his father’s success.

Wikipedia’s entry on Arbusto Energy.