While Continental Resources Inc. proved the Bakken oil play in North Dakota in 2004, it was Lyco Energy Corp. that drilled and completed the first successful, horizontal Bakken producer in Montana in 2000. Bobby Lyle, Lyco’s founder, says that making the play work in Richland County was born from a good geological idea and some courageous collaboration.

He sold Lyco’s assets there in 2005 to Enerplus Corp. for more than $420 million. Today, his Dallas-based Lyco Holdings Inc. makes private investments in a variety of industries, including oil and gas ideas. At Southern Methodist University, where he received his graduate degree in engineering administration in 1967, the engineering school took on the name Bobby

B. Lyle School of Engineering in 2008.

His career has included serving as executive dean of the SMU business school, working briefly in the Ford administration on developing the president’s economic policy, coordinating the land acquisition that subsequently led to development of the Dallas Galleria, engineering a leveraged buyout of Bethlehem Steel Corp.’s oil and gas properties in 1983 with 100% debt, and working with the Department of Energy on a policy for selling at market price “old oil” produced as a result of qualified enhanced oil recovery efforts in the late 1970s. Lyle received his undergraduate degree in mechanical engineering from Louisiana Tech University and his doctorate from the University of Massachusetts at Amherst.

Oil and Gas Investor talked with him recently about the Bakken and his outlook for other plays.

Investor What brought you to look at the Bakken as being commercial if fraced?

Lyle (Private investor and capital arranger) Cameron Smith had been approached by a geologist, Dick Findley, and a landman, Bob Robinson, who is now deceased, with a well they attempted, unsuccessfully, to complete in another formation in Richland County. Dick thought he could make a successful well in the Bakken by fracing it.

Investor This was a vertical well?

Lyle Yes. Our team reviewed the data and concluded that it had potential. It was not a gangbuster well, but it incrementally produced commercial quantities of oil. We started looking for additional reentries and we found 10. We bought them, started a reentry program, fracing them in the Bakken, and it worked. The only problem was that we ran out of reentry wells.

Investor What led you to try a wildcat horizontal?

Lyle Extrapolating the data from the vertical Bakken wells, we believed we could complete commercial horizontal wells in the Bakken if we could successfully fracture stimulate them. We started looking around the country for an analog of a horizontally fraced well and found a shallow field project in California, but this had not been done at this depth. We were at 10,500 feet. We convinced ourselves it would work.

At the time, Dick Cheney was chairman of Halliburton (Co.). He and I were serving together on the board of trustees at SMU. I told him what we wanted to do and asked if Halliburton was interested. We agreed to drill one well as a 3,000-foot horizontal. We got out to about 1,700 feet, and the well started to torque up on us. I was concerned we were going to lose it. I said, “We have enough exposure. Let’s stop and test the idea. If we twist off now, we may never get back here again. People might get cold feet.”

The test well worked. That was in early 2000.

Investor Did you think the Bakken play would become as big as it has?

Lyle Absolutely not. We knew it was going to be big; we didn’t think it was to become as big as it is now. We did think it extended into North Dakota. When we sold the company to Enerplus, we had about 40,000 acres in North Dakota and about 100,000 in Montana. The formation where we were beginning to test in North Dakota was different and it was not immediately as productive as the Bakken in Montana.

Investor Was (Continental’s founder) Harold Hamm in the area at the time?

Lyle Harold came in behind us in Montana and was successful in and around where we were drilling. He took that (horizontal Bakken) concept and did gang-buster work in North Dakota. We had no idea it was that big. We had theories about it moving into Canada, but we didn’t have any really good test data to confirm that and, at the time, we had as much as we could say grace over in Richland County.

Investor What new oil provinces pique your interest?

Lyle I think technology will open up additional opportunities even in the Bakken. Another area I’m involved in is the Heath in Montana. It is an interesting reservoir and extremely complex and difficult. We know there’s lots of oil, but we haven’t found the key to unlock it—yet.

Investor What advice would you give to others?

Lyle We have a phrase that we’re fond of using in the engineering school at SMU: “No problem too big.” We’re limited only by our creativity and our imagination. That’s why I want young men and women to get excited about engineering, math and science: to find answers to the really big questions that we face in our industry and beyond. In 1997, people were saying (about the Bakken), “You can’t make money here. You can’t get this oil out of the ground.”

We said, “We can.” And, we did.