Just How Badly Run Was Ewing Oil?

stevew

Telly Talk Star
In my opinion it was a (quite accurate) image of the business world at that time. Apart from (some of) the criminal activities JR as Ewing president did, many other elements of office/business politics were portayed accurately. I‘ve been working in big (European) companies twenty years ago - alcohol and smoking at desk, hiring people by their looks, dominant decision-making, backstabbing of long-standing business relations...

With „me-too„ and society changes in general many things aren‘t possible today which were common back in those days.
As Ewing Oil had been a family owned company, board members had to be picked by them. So you can‘t expect much resistence by them.
Agreed - at least for most of the run. What ever details they left out could be explained as part of the story just not seen. But toward the end they got sloppy, like Miss Ellie just giving South Fork to Bobby, not trust, not gift taxes, not fuss, nothing. And even the illegal things JR did, they happened, and I'm sure still are happening in business at all levels.
 

stevew

Telly Talk Star
Question. Why would there be a "Board" if Ewing Oil was an Independent Oil Company? It was privately owned by the Ewing family therefore a board was not required. While the company would have a Chief Financial Officer as an example imagine how boring it would be if we had to contend with Board of Director scenes. These meetings took place in the Southfork living room...between members of the Ewing family. This is what made Dallas entertaining.
More than likely it would have a board even as a private company but because it isn't public it wouldn't have to have all those outsiders required. So the board could very well be the family and hold their meetings in the living room just as you saw. One could say that was the board. But I'm sure it was incorporated and as such it would have something, no matter how informal.
 

stevew

Telly Talk Star
Not all private companies have a board. It's up to the owner(s), if they think it's necessary.

And yes, like J.R. said at one point to Miss Ellie "100% makes us owners. 80% makes us shareholders".

But in 2021, a company with the profits of Ewing Oil is not likely to be an independent oil company. The oil business now is not the oil business of the 1970s and 1980s, and Ewing Oil were under pressure from the likes of West Star Oil even in the 1980s. It would be far harder to resist them today.

In a similar way, the oil business of the 1970s and 1980s is not the same as the wildcatting days of Jock Ewing and Digger Barnes in the 1930s.
In the United States all corporations must have a board of directors. A lot of this is based on state law. I'm not a lawyer, let alone a Texas corporate lawyer, but in order to protect themselves Ewing Oil would have most likely been incorporated and as such it would have had to have a board meeting I'd guess at least once a year. It would require officers like a President and Secretary and Treasurer too. Things are different certainly, but even by the '80's this would have been true.
 

stevew

Telly Talk Star
Each one of you are correct, and I have some inside knowledge about this I'm happy to share with you:

Let's use Ewing Oil as an example, and let's say it's the early years when Jock owned and ran the company. Now, Jock may be smart but he can't know everything. So he creates an advisory board. This advisory board would consist of people who are active and successful in their industries, and would consist of a banker, an attorney, a real estate professional, a tax pro, and a compliance expert, among others. They would meet monthly to advise Jock and give him a point of view from their experience. Here is how a discussion could flow:

Jock: I'm thinking of purchasing the Mainwaring Refinery

Real Estate Pro: They aren't issuing permits to build new refineries, so Mainwaring should go up in value over the years. Sounds like a good investment.

Compliance expert: Be careful, Jock. There may be spills from 20 years ago that everybody forgot about. Once you buy that refinery, you buy the liability for any spill that ever happened there, even before you owned it.

Attorney: I know a good remediation company. They can do soil and water tests at Mainwaring and also in the two towns near the refinery. I'd make the deal contingent on those tests.

Banker: I agree, and would go one step further. You and Mainwaring can each contribute one million dollars to an escrow fund, to be used for monitoring and compliance while you are working towards closing the deal.

Jock: Sounds good. I'll set up the deal that way, and will move ahead on it next week. Now, the next order of business . . .

By reading that example, you can see how helpful it is to have an advisory board.

"But, Lastkidpicked, wouldn't Ewing Oil already have attorneys, bankers, and compliance officers working for them?"

Glad you asked!

The difference is that the board is made up of people outside Ewing Oil, so they bring a whole different perspective. And they are there to advise Jock, but they don't work for him and are not paid by him, so they can speak freely and not worry about saying the wrong thing."

"Wait-- They're not paid for this?"

Again, glad you asked! Most of the board members are successfully employed or own a successful business. They don't need the money from being on the board, and so they are not paid at all, or paid a small stipend. The general agreement is that the banker serves on Jock's board once a month, and Jock serves on that banker's board once a month. Jock would bring to the table his knowledge of the oil business and his opinion of where the market is headed.



Mustard makes a good point here, and again I am in the middle of it right now here in Texas. The Seven Sisters (or today, the Supermajors) have lots and lots of reserve cash on hand. When times are good, they add to that cash reserve. When times are bad, they use that cash to go on buying sprees and buy up the smaller companies who are struggling.

There is a great scene in J.R. Returns . Carter Mckay is president of Westar and is getting ready to buy Ewing Oil from Cliff Barnes.

J.R. I thought we should talk. You're buying Ewing Oil from Cliff. Why? He's no threat to you.
McKay: Ewing Oil has some good fields and we have the money to develop them.
J.R. And if this deal goes through, what would happen to Ewing Oil? Would it cease to exist?
McKay: Like Jonah and the Whale, we would swallow it whole.
J.R. Picking off the independents, one by one. Is that it?
McKay: Something like that.

And this is happening in Texas right now. The price of crude is down from a few years ago, the world is moving toward renewables, and it's a bit of a scary time for the independents. So the bigger fish are swallowing the smaller fish as we speak.

It's fascinating to watch Dallas, all these years later, and see how well they mirrored what is happening now. Or as @James from London would say, life imitating art.
And even though we don't see this (as it can be the boring stuff) we can assume it was part of the story around which they worked. I think that's what made the story believable early on. We didn't need to see every detail of story. Over all the company must have been run well.
 

stevew

Telly Talk Star
Jabari makes a good point, and that point stands up well in 2021. But if you'll allow me to offer a perspective from 1980:

Around Dallas, I could go into most smaller hardware stores or warehouses and as long as I was in my company truck, with company logos, I could basically say, "We don't have an account here yet, but I really need these three valves." And they would give them to me. Why? They knew we would become customers and this was a great way to get us started. There's a small risk of me running off and them never getting paid, but it's a small risk compared to the potential reward.

To put a finer point on it: Ray Krebbs shows up at your store in a Southfork Ranch truck and asks for a stock tank. Do you want to be the one who tells him, "No. Southfork doesn't have an account here."

Or do you want to be the one who landed the Southfork account by giving Ray that stock tank.

The same thing happened when Jock took out the money. Think about if you were a junior level executive. Do you want Jock Ewing to go marching up to your bosses and tell them you refused his request to take money from the Ewing Oil account?

Now, I'm not saying any of this is correct, legal, or proper. We have an expression in the oil field that "You go along to get along" and it all works out in the end.

On a personal note, I don't mean to contradict the smart posters on here. You just hit on a subject that I see every day and love talking about it. And very much enjoy the back and forth. But I'll step out a bit and lot others have their say now.

Again, really enjoying the back and forth and hope you are, too.
I get your point, but Ewing Oil wasn't a hardware taking a risk on gaining a major ranch as a client, it was a billion dollar, global corporation, albeit owned by own man or one family.

They completely ignored the tax issues such as the IRS would have swooped in at Jock's death and wanted an accounting of every last thing. It's an opportunity I thought Dallas TNT missed in 2012. I would have started with JR's death in 2010 (not federal taxes) and had Larry Hagman help with flashback scenes over the years between the last movie and the start of TNT including showing that JR used up every but of political capital to get passed the year without an estate tax, leaving everyone to wonder, "is JR dead?" But I think sometimes writers don't want to deal with these issue so they ignore them. Sometimes they can be ignored, like what Bobby got at the end of the original run was South Fork in trust, not Miss Ellie just gifting him a billion dollar piece of property.
 

Jabari Lamar

Telly Talk Fan
I thought going forward such an inspiration would have worked as a great template. With Carlos DelSol ending up in the Howard Marshall role. I heard much of J.R. was as a business man was inspired by J. L. Hunt and I always got a J. Paul Getty feeling from Wendell. Truth is stranger that fiction and I think it's always a good idea to look at those real characters when attempting to write fiction. Interesting none of the Koch brothers ended up broke either, but I guess for drama some writers just want to go for broke when they're creating a story.
Well, talking about real-life inspirations, Carlos Del Sol was clearly modeled after Carlos Slim Helu, the Mexican businessman who at the time DallasTNT started was the richest man in the world (I recall J.R. congratulating Del Sol for being "number one on the Forbes list" when we first see them meet in season 1). I recall an episode on the original Dallas where J.R. compared himself to H.L. Hunt (it was when he was talking to the shrink in the psychiastic hospital), and I know Patrick Duffy brought up Hunt's real-life secret family when talking about the revelation of J.R.'s secret daughter in the TNT finale.

But, yeah, people that rich don't ever go broke the way the Ewings occasionally were seen to be. Even if they were cash-poor at some point there's always some bank or investors willing to front them loans.
 

Jabari Lamar

Telly Talk Fan
More than likely it would have a board even as a private company but because it isn't public it wouldn't have to have all those outsiders required. So the board could very well be the family and hold their meetings in the living room just as you saw. One could say that was the board. But I'm sure it was incorporated and as such it would have something, no matter how informal.
That last part is key. Even if it was just the family members sitting around in the living room discussing how to run company there would need to be some formal legal paperwork to enforce whatever directives were made. Again, going back to the Jock/Bobby confrontation, this is a billion-dollar corporation not a local hardware store, where the dad can tell one of his sons to go into the store and run the cash register that day. When Bobby was made President, even if it was just meant to be temporary, there had to have been some kind of legal paperwork drawn up to specify exactly what responsibilities and rights he had, otherwise any deals he made, any contracts he signed, could be challenged in court as invalid. And that was the same when J.R. was President, or when the J.R. and Bobby were running it together. It would have to put in writing exactly who could do what.
 
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DallasFanForever

Telly Talk Supreme
I would’ve given just about anything back then to have Alexis and J.R. sit at the same board room table!
 

Lastkidpicked

Telly Talk Dream Maker
Believe it or not, some of these high-level shenanigans happened in the real world, and happened recently enough that we had a big conversation about it on these very boards back in the day.

We are talking about a Texas company that filed bankruptcy, and even after the bankruptcy it was the fifth largest company in the United States. Here are the players:

Ken Lay-- The real life J.R. Ewing
Jeffrey Skilling-- The real life Jeb Ames
Andy Fastow-- The real life Vaughn Leland

Ken Lay and Jeff Skilling formed Enron. This company shot up in value overnight. They were rated on the Most Admired Companies and the Most Innovative Companies lists. People were becoming millionaires overnight. It seemed too good to be true. Everybody was getting rich until much like the scene where J.R. suckers his friends into the Asian Oil Leases, everything came crashing down.

Here's how it happened:

Jeff Skilling would find an energy deal, such as a natural gas field. Ken Lay would look it over and agree that over the next 10 years, this field would produce $ 50 million in profit. He would take this information to Andy Fastow.

Here's where J.R. Ewing would be proud: They announce this gas field will over the next 10 years will generate a $ 50 million dollar profit. So they pay themselves a $ 50 million dollar bonus THAT DAY! Yes, they steal fifty million dollars from the company and hide it by saying that the deal is EVENTUALLY worth fifty million.
@Jabari Lamar is probably asking, "How is that possible?"
It's possible because there were so many people wanted to get rich, that they were investing in Enron like crazy. So it was easy to steal fifty million and hide it.

Oh, it gets better!

They would set up a shell corporation, let's call it Willie Joe Garr incorporated. (thought of you when I chose that name, @Taylor Bennett Jr. ) The shell corporation would buy oil and gas futures. Then, Enron would buy those oil and gas futures for pennies on the dollar. Of course, partners would hand each other million dollar bonuses at each deal.

"Wait a minute!" @DallasFanForever might ask. "Wouldn't Billy Joe Garr Incorporated eventually run out of money?"
Yes, they would. And they would just dissolve, along with all that bad debt and then Enron would start another shell company.

It's like Jeremy Wendell asked in one episode. "Really, J.R. You think you're the only one who can set up dummy corporations?"

Oh, it gets even better! In the middle of all this theft and blatant looting, Enron got into the electricity business.

As you can imagine ,the local governments who bought electricity always had a restriction on what you could charge them for electricity. Nothing to be done there, right?
Wrong!
Enron would send a "Three B's Man" (Bobby Ewing Type) to wine and dine and bribe local officials to do away with restrictions on what you can charge for electricity.

@stevew , I know you are asking if that could really happen?

Yes! Right in front of the whole world, these government officials were announcing, "Starting next year, we will allow Enron to charge us whatever they want for electricity" And they announced this with a straight face! And as taxpayers, we KNEW they were bribed, but there was no proof.

I know @Mustard is wondering, "Wasn't ANYBODY watching over this, and tried to stop them?"

Yes, some government bodies did try to stop them. They came to a compromise, that only in an EMERGENCY, such as when one power plant went out, could Enron charge any amount they wanted for electricity in their remaining (active) power plants.

Sounds good, right?

Well, in a brilliant J.R. type move, Enron bought several power plants. So when demand for electricity was high, they would shut one plant down for "maintenance" and declare EMERGENCY. All their other plants can now charge whatever they want and they marked up the price by 800%.
They could do this any time they wanted. Just shut one plant down for "maintenance" (it's hard to even type that with a straight face) and now it's an emergency and their other plants can charge whatever they want.

But get this! Enron then set up corporations to rescue the government from Enron. There is an official memo that describes their business model:

"We get paid for moving energy to relieve congestion, without actually moving any energy or relieving any congestion."

Ken Lay even had a great Jock Ewing type quote. He said of the governments tying to stop him:
"In the final analysis, it doesn't matter what you crazy people do, because I got smart guys who can always figure out how to make money."

So, you are asking, how can a huge company get away with this? Where was the oversight, where was the board, where were the auditors?

I'm glad you asked.

The auditing and oversight was done by Arthur Anderson, one of the biggest accounting companies in the world. They had a sterling reputation and employed 28,000 people in the United States and 84,000 people around the world. So, they are on the case, right?

HA! Haven't you been watching Dallas this whole time?

In a stunning display of arrogance, Andy Fastow (think Vaughn Leland) announced to the top management of Arthur Anderson, "If we go down, you are going down with us." and the next thing you know, over at Arthur Anderson they are shredding Enron documents. Like Holly Harwood with J.R.-- Arthur Anderson, a proud and principled company, is now in bed with Enron.

Once things begin to unravel, they bankrupt the company like Cliff Barnes did his mothers company.

But they were still able to steal and loot. How?

Once the scandals were known, people obviously wanted their investment money back. So, in a move worthy of Andy Bradley at the Cattleman's Bank, the guys at Enron announce, "Oh, we changed the company we use for clearing transactions, so it will take a while for you to get your investment back".

And this gave them extra time to continue plundering.

Oh, yes. It was a story that only the writers of Dallas could create.

Problem was, it happened in real life.
 
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stevew

Telly Talk Star
Believe it or not, some of these high-level shenanigans happened in the real world, and happened recently enough that we had a big conversation about it on these very boards back in the day.

We are talking about a Texas company that filed bankruptcy, and even after the bankruptcy it was the fifth largest company in the United States. Here are the players:

Ken Lay-- The real life J.R. Ewing
Jeffrey Skilling-- The real life Jeb Ames
Andy Fastow-- The real life Vaughn Leland

Ken Lay and Jeff Skilling formed Enron. This company shot up in value overnight. They were rated on the Most Admired Companies and the Most Innovative Companies lists. People were becoming millionaires overnight. It seemed too good to be true. Everybody was getting rich until much like the scene where J.R. suckers his friends into the Asian Oil Leases, everything came crashing down.

Here's how it happened:

Jeff Skilling would find an energy deal, such as a natural gas field. Ken Lay would look it over and agree that over the next 10 years, this field would produce $ 50 million in profit. He would take this information to Andy Fastow.

Here's where J.R. Ewing would be proud: They announce this gas field will over the next 10 years will generate a $ 50 million dollar profit. So they pay themselves a $ 50 million dollar bonus THAT DAY! Yes, they steal fifty million dollars from the company and hide it by saying that the deal is EVENTUALLY worth fifty million.
@Jabari Lamar is probably asking, "How is that possible?"
It's possible because there were so many people wanted to get rich, that they were investing in Enron like crazy. So it was easy to steal fifty million and hide it.

Oh, it gets better!

They would set up a shell corporation, let's call it Willie Joe Ames incorporated. (thought of you when I chose that name, @Taylor Bennett Jr. ) The shell corporation would buy oil and gas futures. Then, Enron would buy those oil and gas futures for pennies on the dollar. Of course, partners would hand each other million dollar bonuses at each deal.

"Wait a minute!" @DallasFanForever might ask. "Wouldn't Billy Joe Garr Incorporated eventually run out of money?"
Yes, they would. And they would just dissolve, along with all that bad debt and then Enron would start another shell company.

It's like Jeremy Wendell asked in one episode. "Really, J.R. You think you're the only one who can set up dummy corporations?"

Oh, it gets even better! In the middle of all this theft and blatant looting, Enron got into the electricity business.

As you can imagine ,the local governments who bought electricity always had a restriction on what you could charge them for electricity. Nothing to be done there, right?
Wrong!
Enron would send a "Three B's Man" (Bobby Ewing Type) to wine and dine and bribe local officials to do away with restrictions on what you can charge for electricity.

@stevew , I know you are asking if that could really happen?

Yes! Right in front of the whole world, these government officials were announcing, "Starting next year, we will allow Enron to charge us whatever they want for electricity" And they announced this with a straight face! And as taxpayers, we KNEW they were bribed, but there was no proof.

I know @Mustard is wondering, "Wasn't ANYBODY watching over this, and tried to stop them?"

Yes, some government bodies did try to stop them. They came to a compromise, that only in an EMERGENCY, such as when one power plant went out, could Enron charge any amount they wanted for electricity in their remaining (active) power plants.

Sounds good, right?

Well, in a brilliant J.R. type move, Enron bought several power plants. So when demand for electricity was high, they would shut one plant down for "maintenance" and declare EMERGENCY. All their other plants can now charge whatever they want and they marked up the price by 800%.
They could do this any time they wanted. Just shut one plant down for "maintenance" (it's hard to even type that with a straight face) and now it's an emergency and their other plants can charge whatever they want.

But get this! Enron then set up corporations to rescue the government from Enron. There is an official memo that describes their business model:

"We get paid for moving energy to relieve congestion, without actually moving any energy or relieving any congestion."

Ken Lay even had a great Jock Ewing type quote. He said of the governments tying to stop him:
"In the final analysis, it doesn't matter what you crazy people do, because I got smart guys who can always figure out how to make money."

So, you are asking, how can a huge company get away with this? Where was the oversight, where was the board, where were the auditors?

I'm glad you asked.

The auditing and oversight was done by Arthur Anderson, one of the biggest accounting companies in the world. They had a sterling reputation and employed 28,000 people in the United States and 84,000 people around the world. So, they are on the case, right?

HA! Haven't you been watching Dallas this whole time?

In a stunning display of arrogance, Andy Fastow (think Vaughn Leland) announced to the top management of Arthur Anderson, "If we go down, you are going down with us." and the next thing you know, over at Arthur Anderson they are shredding Enron documents. Like Holly Harwood with J.R.-- Arthur Anderson, a proud and principled company, is now in bed with Enron.

Once things begin to unravel, they bankrupt the company like Cliff Barnes did his mothers company.

But they were still able to steal and loot. How?

Once the scandals were known, people obviously wanted their investment money back. So, in a move worthy of Andy Bradley at the Cattleman's Bank, the guys at Enron announce, "Oh, we changed the company we use for clearing transactions, so it will take a while for you to get your investment back".

And this gave them extra time to continue plundering.

Oh, yes. It was a story that only the writers of Dallas could create.

Problem was, it happened in real life.
I remember all the great press on Enron, even talking to business professors praising them, reading about them in text books teaching future leaders to look up to them. I have no doubt that what we saw on Dallas was believable (give or take some details not seen on screen), BUT these situations are kind of burn out situations with bankruptcies, prison and death. The people you mentioned crashed, burned and were buried (some literally). Now of course that’s a situation where they got caught. This stuff happens and people don’t get caught. BUT what we saw on Dallas was usually taking it to a burn out situation where JR would be in prison or worse (of course what we saw at the very end of the original run was the end of JR and it made sense). The writers couldn’t just take it there and destroy their show - like it was a movie or miniseries so we saw the come back, like Trump back from a bankruptcy. So it does happen. Certainly far more believable than Miss Ellie giving up tens of billions of dollars to keep her word to her dad and not drill on SF decades after his death.
 

Jabari Lamar

Telly Talk Fan
Certainly far more believable than Miss Ellie giving up tens of billions of dollars to keep her word to her dad and not drill on SF decades after his death.
Exactly, I know we've talked about it before. That with the real-world value that that oil supposedly had, it was practically immoral not to drill it.

And then in DallasTNT they eventually came up with the compromise of slant drilling to get the oil without technically drilling on Southfork. Okay, but slant drilling is a practice that's existed since the 1930's (I think), so now we have to believe that in all that time, none of these great oilmen, Jock, J.R., Bobby, ever thought to suggest that themselves to get all that valuable oil? That's quite an oversight.
 

Billy Wall

Telly Talk Dream Maker
From what I can find on the subject, slant drilling actually began in the early 70s. I thought it was much earlier than that too but I guess I’m mistaken. But that part is irrelevant because it would’ve still been available to the Ewings during the time of the show.

I had never heard of slant drilling, which is also called directional drilling until this thread. But I had a pretty good idea what you were referring to so I looked it up. Wikipedia says it was pioneered in 1934 by H John Eastman and Roman W Hines.
 

Taylor Bennett Jr.

Telly Talk Winner
They would set up a shell corporation, let's call it Willie Joe Garr incorporated. (thought of you when I chose that name, @Taylor Bennett Jr. ) The shell corporation would buy oil and gas futures. Then, Enron would buy those oil and gas futures for pennies on the dollar. Of course, partners would hand each other million dollar bonuses at each deal.

man, I just *knew* Willie Joe must have been at least partially responsible for all that Enron scandal business!

RZ6zprC.png

(the dastardly fraudster seen above during the company's glory years, gleeful after closing yet another shady multi-million deal)
 
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Lastkidpicked

Telly Talk Dream Maker
I want to tell all of you that the fun and intelligent conversation on this thread is why I enjoy posting with you all so much.

My job has me travelling around Texas full time. It's a lot of fun to drive past some of the filming locations and think, "I want to log on and share this with everybody on the boards." It's amazing how many out of the way filming spots are exactly the same, all these years later.

The other reason these boards are entertaining is that there is a real "feel" to Dallas and the smaller towns around here. Many of the scenes and episodes do a great job of capturing the atmosphere around here. It's one of quiet confidence, an enjoyable place where the millionaire owner of a ranch can spend time with his lowly hired hand and they both have a great time.

1615322989017.png

I hope others find it interesting to hear, "This picture of Ray and Jock is EXACTLY what you would see at the Fort Worth Stockyards."
Or
"Remember when Bobby Ewing was re-opening Ewing 23? He told the project manager, 'Keep me posted. Anything you can't handle, I will.' This is exactly the way a project manager around here would talk. "
 

stevew

Telly Talk Star
It's possible you're both right. The technique may have been invented in 34, but maybe didn't become perfected and then widely available until the 70's. We know that's the case with a lot of technology. The ability to make electric cars has existed for decades, but the oil companies have helped suppress it.
Good point. Mrs. Henry Ford drove an electric car.

The thing here is if the technology came into play in the early '70's then it's even less likely they wouldn't have done it in the original. But still by 2012 they're still arguing over it. Miss Ellie is gone and her father is long gone, at point point were the writers going to say, this is not longer relevant? I mean if Aaron Southworth had been in the buggy business would they still be mass producing a stockpile no one wants? Time to move on. Frankly that story belonged on Giant and it's time period and even by the '50's (if I recall the movie) they relented and drilled on the ranch. Its some of those piece that make me question of the believability of the show.

Then Bobby is "GIVEN" South Fork - I'm suppose to believe that the right thing to do. OK so Miss Ellie believes Bobby won't drill. But how about Christopher? OK she maybe he won't. But how about his son? Or his grandson? You just give all that land and oil and money to one child and his heirs? Then there's the gift tax? Bobby would be forced to drill just to pay the gift tax. Plus even if we buy she's a prior naïve little woman, Clayton played her mediary in the transition and we're suppose to believe he could take on JR. Wouldn't he have suggested a bunch of way's to protect the land? Separate all the pieces, the house from the land from the oil from the cattle business and set up a foundation to take care of the land, stripping it of development rights? Donate it to the state of Texas or set up their own foundation?
 
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