In a tiny Middle Eastern country, government officials have accused Dallas oilman Ray Hunt's company of cheating them out of millions.

Hatem El-Khalidi, a geologist, first surmised the presence of the underground basin in 1957, when he was sent to map the region for an ambitious U.S. company called the Yemen Development Corporation. El-Khalidi thought there might be oil, but Yemen was too untamed for an outside company to risk undertaking an expensive drilling venture. Strife between various tribes made the area around Ma'rib particularly chaotic.

The Yemen Development Corporation ran into financial problems, and decided not to pursue prospects in Yemen. El-Khalidi went on to other things. Born in Jerusalem in 1924, he had come to the United States as a student in 1946, and earned his master's degree in geology from Michigan State University in 1950. Three years later, he became a naturalized U.S. citizen. He has spent a large part of his life scouring the Middle East for oil and minerals on behalf of companies large and small.

In 1967, 10 years after he first mapped the Ma'rib area, El-Khalidi and other investors formed Arabian Shield Development Company, a small concern, based in Dallas, that counts members of the Saudi Arabian royal family among its shareholders.

The company's stated goal was to find minerals--copper, zinc, gold, and silver. But 28 years later, it still has little to show for its efforts. Arabian Shield, according to its 1994 annual stockholders' report, holds a mineral lease on 44 acres in Saudi Arabia, but doesn't have the money to begin full-scale exploration or development.

Virtually all of the company's $17 million in 1994 revenues came from a refinery ArabiR>an Shield owns in Texas. The company also owns a coal company that has no coal mines, and a passel of inactive mining claims in Nevada. The company boasts $41 million in assets in its stockholders' report, but three-quarters of that is the presumed value of the Saudi Arabian mineral lease.

Arabian Shield is making little money and carrying a load of debt, its annual report shows. Its stock trades at less than $2 a share on NASDAQ, and it has never paid its shareholders a dividend. The company's 1994 report is able to make only lukewarm predictions that the future will look any better.

El-Khalidi certainly hoped that Arabian Shield would have done better by now. What he hoped, specifically, is that the company would be rolling in profits from Yemeni oil.

For the past 38 years, ever since he first mapped the Safir salt dome, El-Khalidi has watched Yemen, yearning for the time when he could return and help tap into the rich basin of oil that he believed lay under the Ma'rib desert.

When that day finally came--El-Khalidi would allege in court--the Hunt Oil Company cheated him out of the chance.

Sitting at a conference table in a small office building on Central Expressway, surrounded by boxes and boxes of documents, he spins out a tale of intrigue and deceit. The conference room is part of the modest offices of Arabian Shield, of which El-Khalidi remains president. The boxes are jammed with documents he has accumulated in his efforts to prove that Hunt Oil stole his dream.

El-Khalidi has some circumstantial evidence to bolster his allegations, mostly documents unearthed during a lawsuit his company filed against Hunt Oil in a Dallas district court in 1987. Arabian Shield and its partner claimed that Hunt Oil fraudulently obtained the oil concession in Yemen, and illegally interfered with Arabian Shield's efforts to win the drilling rights.

The claims were never fully aired in court. Arabian Shield's case was lost when a judge ruled that the company waited too long before filing the suit, a ruling that was eventually upheld by the Texas Supreme Court.

But El-Khalidi waited too long for a shot at the riches of the Safir Basin to easily forget the events of 1980, when Hunt Oil beat out Arabian Shield in a race for the oil concession.

Those same events are again coming back to haunt Hunt Oil under the name of Yemengate.

About 15 years ago, Yemen broke with tradition and finally seemed to settle down.

At the time, there were actually two Yemens. Ma'rib, and the oil field coveted by Hatem El-Khalidi, was in the Yemen Arab Republic, also known as North Yemen. It was a Western-leaning country, with a constitution based on Islamic law and a history of losing its leaders to assassination.

The Northern Yemenis skirmished periodically with the People's Democratic Republic of Yemen, also known as South Yemen. A former British colony, South Yemen dumped its monarchy in the 1960s and evolved into the only Marxist state on the Arabian peninsula. Its leftist political inclinations and ties to the Soviet Union were not appreciated by rich neighbors like Saudi Arabia.

By 1980, the two countries settled into relative calm. In particular, North Yemen was able to quell problems with the cantankerous tribes around Ma'rib. A paved road was even built to the village from the capital of San'a.

The time seemed ripe for someone to plumb the desert around Ma'rib and see if there really was oil in the underground Safir Basin.

El-Khalidi saw a chance for his long-held dream to come true. His Arabian Shield Development Company allied itself with the Dorchester Gas Company, a much larger U.S. oil and gas outfit, and the partners began pursuing rights to the Ma'rib field.

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