Oil Empire | Booming Business

Amid the bustle of hard-working landmen and the occasionally cantankerous county clerk, KXAN has discovered a veritable oil empire tangled in a web of deeds and conveyances between Texas Railroad Commission Chairman Christi Craddick, her influential father and the companies they built over the past half-century.

In her elected role, Craddick oversees Texas’ oil and gas industry, making her perhaps the state’s most powerful regulator. Critics, however, say her vast investments in that same sector raise troubling questions.

To avoid the roadblock of paying thousands of dollars on public information requests and industry website subscriptions, KXAN journeyed hundreds of miles to Craddick’s hometown of Midland and nearly a dozen other isolated communities on the west Texas plains — like tiny Mentone, population 18. Our team of investigators scoured county courthouses in person, sifting through internal computer databases and leather-bound books for mineral and royalty deeds, trusts and more.

The weeklong effort underscored how public records are often not easily and readily available to the public and how politicians’ personal financial disclosures don’t always provide the whole truth. The records laid bare not only the breadth of the Craddick family’s holdings but also the complexity of its oil and gas leases and profits.

Comparing the results of that research to matters brought before the Railroad Commission, KXAN found Craddick has voted on items that appear to overlap with specific leases in which she and her family have financial stakes. Our review of meeting minutes reveals no disclosures of possible conflicts of interest.

Adrian Shelley, director of the government watchdog group Texas Public Citizen, said that revelation makes him skeptical of the commission’s stance that it can self-police.

“It looks a whole lot like impropriety to have people voting on matters in which they have direct financial interests,” Shelley said.

Financial conflicts

KXAN discovered, since the start of 2014, Craddick voted at least 320 times on agenda items brought by companies that pay her and her family royalties or dividends, according to her personal financial disclosures. We also found she cast more than 100 votes on enforcement actions against those companies.

In one vote that underscores Christi’s overlapping roles of investor and regulator, she approved a rule change on a lease called Ringo 9, while having a financial interest in it.

  • The Craddicks created two companies — Quarry LLC and Craddick Partners Ltd. — to manage their mineral and royalty interests. Craddick lists herself as managing partner of Quarry and general partner of Craddick Partners, according to her personal financial disclosures. Deed records show Quarry received a stake in the Ringo 9 lease in 2013, Craddick’s first year on the Railroad Commission.
  • The following year, records show a company, Mexco Energy Corporation, also received a stake in Ringo 9. Christi’s father, state Rep. Tom Craddick, R-Midland, has sat on the Mexco board of directors for more than a decade, according to Securities and Exchange Commission filings.
  • Then, in 2017, operator Parsley Energy Inc. asked the commission for a gas flaring exception to ignite and burn off 1,500 million cubic feet of gas per day from Ringo 9. Granting that exception would have allowed Parsley to burn off gas for emergency purposes because of unexpected pipeline constraints and help avoid stopping production on four wells on the lease, according to the company’s application.

Craddick did not disclose her and her family’s interest in the Ringo 9 oil lease when she cast her vote, according to meeting minutes.

‘Legal doesn’t mean it’s right’

The potential, undisclosed conflicts are not unique to Ringo 9. KXAN uncovered other questionable votes related to leases in Reeves, Scurry and Martin counties.

In 2014, Christi approved another flaring exception for operator Energen for its Yater Milt lease in Martin County, from which records show Tom had received royalties. In its application to the commission, Energen estimated it could lose $4 million, if it did not get the exception and its wells had to stop production.

The following year, Oxy USA applied to the commission for rule changes for the Wolfbone Field in Reeves County. The Wolfbone is an underground geological formation, and Oxy sought changes to drilling regulations in that field. Records show Craddick Partners had stakes in more than two dozen overriding royalty interests in Reeves County leases in which Oxy was the operator with wells permitted in the Wolfbone.

In 2017, Christi voted and signed orders approving tax incentives for Kinder Morgan’s operations in a Scurry County lease called the Sacroc Unit. Records show, when she approved those tax incentives, she held her own interest in the lease. Kinder Morgan paid her royalties that same year.

“Just because something is legal doesn’t mean it’s right,” Shelley said upon reviewing KXAN’s findings. “And we’ve seen some things here that just don’t look right.”

Shelley said commissioners should disclose possible conflicts of interest and recuse themselves rather than voting on such items.

‘Working interests’

Both father and daughter declined multiple on-camera interview requests and avoided our investigative team when approached after recent public meetings and panel discussions. They also did not dispute the specific votes or interests detailed in questions we emailed.

Both justified their stakes as mineral and royalty interests, not “working interests.” Royalty owners do not share the cost of drilling, and they have no power to control how and where an operator drills wells.

Working interest owners, however, pay a portion of the profits to the royalty owner. In email replies, Christi claimed she has no working interests, and her father said he has owned just two small working interests for more than 40 years.

“The rest of my interests are minerals and overriding royalty interests which have no say or conflict with the operations or permitting of the oil and gas property,” he added.

This argument is an important one, as Christi asserted to KXAN that the commission has no jurisdiction regarding mineral interests, royalty interests or stock investments — an interpretation that would suggest no conflicts on her part.

“The routine votes you highlighted allow for the ability to flare gas and do not consider the many aspects that affect the viability of a well and the production of minerals,” her office said in an emailed statement. “Most importantly, the Railroad Commission’s paramount responsibility is to prevent waste, and that was the only issue Chairman Craddick considered before taking a vote on these items.”

Christi also said she fully follows ethics laws and has been “transparent in her personal interest filings.” But it would be impossible to know the extent of her interests, as KXAN found ethics filings fail to paint a complete picture of the Craddick family’s widespread, complex and longstanding oil and gas holdings.

Oil Empire | Explore the Evidence

KXAN journeys to West Texas to investigate a political family’s ties to an oil empire.

KXAN journeys to West Texas to investigate a political family’s ties to an oil empire.

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