Max M. Dillard has seen the contract drilling industry from all angles. “I went from working on an antiquated cable-tool rig to later drilling holes in Nevada for underground atomic-bomb tests.” Today, as Dallas-based founder of The Dillard-Anderson Group, he co-manages a boutique investment bank for the industry, brokering mid-sized service and manufacturing companies. Sam Anderson is the managing director in Houston.

illard began his career at the tender age of 14 as an unlicensed, unpaid driver for Dillard Drilling Co., his father’s cable-tool outfit. “I’m a drilling contractor by early training and I was cheap labor for my Dad,” he jokes.

From the small oilfield town of Lueders, Texas, north of Abilene, he entered Ranger Junior College in 1953, but transferred to the University of Texas in 1955. He graduated as a petroleum engineer in 1959 with a minor in geology.

Arriving at an offshore platform for his first job, he was lifted aboard in a personnel basket from a crew boat, in rough seas. “I’d never been on a body of water bigger than Possum Kingdom (a lake in West Texas). I imagine it took them two minutes to pry my hands off the rope,” he recalls.

In those days, drilling engineering was new. Fascinated by R&D, Dillard was involved with drillbit selection using electric logs, helped design the first high-pressure mud programs, and introduced drill-collar weight programs to shallow formations in Kansas and Oklahoma.

“I still have a slide rule. My grandchildren are fascinated that it runs without batteries.”

Dillard worked in the Santa Barbara Channel off California from 1967 to 1969 for Peter Bawden Drilling Co., but he and his wife decided to move the family back to Dallas. There, he founded Drillers Inc. in 1969.

His operations spanned the U.S., Mexico, Argentina and Venezuela. Drillers went public in 1980. But in 1982, when oil plummeted to $10 a barrel, the company turned to commercial drilling, adopting the slogan, “Earth removal by the rotary method.” It set records in mine-shaft drilling. As the industry recovered, it grew through acquisitions, later became Grey Wolf Inc., and was ultimately sold to Precision Drilling.

Dillard left Drillers in 1996, switching gears to form an investment banking firm. We caught up with him recently to learn more.

Investor Your career really tracks the history of drilling.

Dillard I’ve lived in the best time, when the industry went through the most important changes. When I came out of school, most drillers only had on-the-job training. They’d been drilling for 20, 30, 40 years and weren’t interested in a bunch of college kids telling them what to do.

But at the same time, many innovations were coming along. The companies wanted young people who would try new equipment. I was one of the first drilling engineers. Nearly everything we did was new.

Investor What was the most expensive rig you ever bought?

Dillard It was $14 million for a new rig. But the cheapest was a land rig I bought from a bank for $100 down and $100 a day.

Investor How did the switch from drilling contractor to investment banker come about?

Dillard I was ready to leave Drillers Inc. so I took a retirement package. I was encouraged to consider joining an investment banking firm…but I told them I’d rather build my own, smaller investment bank and they helped me start. We’re in our fifteenth year now. We work with mid-sized companies, usually the sellers, on deals of $20- to $40 million or so, sometimes up to $100 million.

Investor What did you learn from your father?

Dillard He was a “poor-boy contractor” with no high school education, but he was smarter than I’ll ever be, and tough as a boot. He always said, “If you take the roughest job around and don’t gripe about it, people will find you. If everybody else turns down a job, you do it and people will see you are the one to promote.”

Investor Do you prefer drilling or the investment banking business?

Dillard I love project work. I’d plan the well, pick the bits, pick the mud, and in 45 days I’d know if I’d won or lost. That was fun. I like that about the banking business, too. You go in, meet new people, sell their company for them, and quickly see how well you did. These people are the salt of the earth, but often, they’re strong in operations and not financially trained. We help them understand what their company is worth.

Investor What was the last deal you did?

Dillard In May 2011, we sold High Plains, Elk City, Oklahoma, to Rockwater, a division of SCF Partners.

Investor In this boom, are multiples going up?

Dillard Not really. We are in a true drilling boom, but strangely, idle equipment is standing by in some places because people are not available to work. A lot of these companies are being bought for their personnel. Strategic companies are the more aggressive buyers right now.

Many companies were sitting on their cash reserves and didn’t buy equipment after 2008…but as activity comes back, they are pushing the limit on acquiring equipment and training new personnel.

—Leslie Haines