History of DeGolyer and MacNaughton
Following the Drake discovery in 1859, the early oil industry in the U.S. was at the mercy of boom-and-bust cycles. Closely spaced wells flowed wide open, accelerating depletion of the oil. The gas, necessary to move inert crude, was discharged into the air, exhausting this potential energy source. Coupled with inaccurate and incomplete assessments of reservoir conditions, inefficient and primitive production practices led to great losses in potential reserves. Had such procedures remained unchecked, billions of barrels of oil might never have been produced.
In the 1930’s, productive capacity under the old open-flow system overwhelmed limited markets, and the oil industry’s economic life was threatened. The nation was forced into conservation through proration, catalyzing a need for sound engineering techniques in petroleum production. Scientific methods and conservation principles began stabilizing the shaken industry. Innovative financing methods were called for, creating a need for reliable independent reservoir studies and evaluations. When long-term loans were cautiously proffered on unseen underground collateral of oil reserves, bankers had to rely on the integrity and competence of those apprising the properties.
The formation of DeGolyer and MacNaughton in 1936 was in direct response to industry needs and the founding of the company heralded a new era in the economics of energy.
Since 1919, oilmen have regarded Everette Lee DeGolyer as the pioneer in geophysical exploration. Few, if any, individuals have founded or headed more enterprises of transcending importance to the international oil industry. From discovery of the world’s greatest oil well at the time —prior to college graduation — to forecasting the huge Middle East reserves, DeGolyer’s legendary career was marked by brilliance, confidence, patience, and a sort of anticipatory sense. His stature in the industry was recognized by his peers through the creation of an industry award.
Lewis MacNaughton was also an extraordinarily capable geologist with solid work experience overseas prior to obtaining his college degree. The scholarly, methodical MacNaughton was hired in 1928 by DeGolyer, then president of Amerada Petroleum Corporation. Upon retirement in 1932 at a youngish 46, DeGolyer was called ceaselessly by financial institutions and oil companies seeking advice based on his scientific professionalism and nonprovincial perspective. Faced with the essentiality and inevitability of more demand for reliable, realistic consultation, DeGolyer prevailed upon MacNaughton to join in the first organization to provide services with an international scope.
DeGolyer and MacNaughton has no stockholders other than employees who have demonstrated their ability and value. The original partnership traits are still evident after more than 75 years—the pioneering spirit, the desire to innovate, a quest for scientific knowledge, and the ability to apply knowledge creatively and honestly. These traits have made D&M one of the most sought after advisors to the petroleum industry.