BOB: In any business, there are many roads. You know in our business, you can go to Mexico, Texas, offshore. There're just all kinds of variables that you can choose. And what we chose is what we knew and had learned in our prior career, that we want these basins -- Texas, Oklahoma and New Mexico -- really long-life properties.

HATTIE: And somebody else doesn't want them.

BOB: And somebody else thought it was all over. So what we do is take our talent and look for the missed nuggets. And we've been very successful at that. But what you get in our strategy is lesser risk than drilling a wildcat. And, as it turns out, there is virtually no risk in an otherwise -- depending on your strategy -- very risky business. I mean, you can be broke in a hurry in this business. So what we've done is take a strategy which, in our minds, is failure-proof and then make it better. And so we were able to pause in hard times because we had a strategy that would not put us out of business.

The most likely way you'll fail is if you're not properly capitalized . . . you have a good idea with no staying power. It's just like anything in life whether you're in the market or in commodities or in a business, capitalization is probably the killer issue.

HATTIE: Staying power -- where does that come from?

BOB: Staying power is both your will and again, your financial resources. You know, don't get out there too far if you can't afford to be there. If it's a 50/50 idea, don't just get one swing at the bat; you need two.

HATTIE: Why did you go public?

BOB: I would say we didn't have a choice. If you go back and look at our background, this particular one, our godfather's Bob Rubin, former Secretary of the Treasury. He raised the seed money in a couple hours, $35 million. And that group of people wants to liquefy or harvest.

HATTIE: They want to cash out.

BOB: In five years. We were in our sixth and then our seventh. So from our viewpoint, we could either sell the company and harvest or go public and let those people harvest. And so the initial decision was, `Which would you rather do?' And obviously we wanted to continue the company. This was a right answer for both parties.

HATTIE: Louis Baldwin is chief financial officer and talks about going public.

LOUIS BALDWIN: We felt like that was the best way to maximize the value for our investors.

HATTIE: For the other investors, the private investors.

LOUIS: That's right. And we were a private investor, just like we're a public investor now. Oil and gas is not a growth business. Oil demand in the US goes up about 1 percent a year; gas, 2 percent or 2 1/2 percent a year.

HATTIE: Why did you start a business in an industry that isn't growing?

LOUIS: It's what we knew how to do. And I would say that most of the people that are starting businesses or are successful are doing what they know how to do. And if it's a growth industry, that's great. But you can be a successful start-up and growth firm in an industry that doesn't have a lot of underlying growth. If you can determine what niche of it you want to play and you've got a good plan, you can grow.

We started with eight employees of Cross Timbers. We went public in '93 with about 40 million barrels of oil reserves. With four years we're close to 200 million barrels. So somewhere in there, we were growing. And the real hard part is not only to grow but to grow profitably -- to make sure that you're making money for your investors, not just getting bigger by issuing more stock -- and we've done that.

HATTIE: Louis' daughter, Laura, wrote her undergraduate thesis at the University of Texas on what she saw her father living through, "The Decision To Go Public and the Initial Public Offering." In the introduction, she says, `There are only two reasons to go public: to raise capital and to provide liquidity to selling shareholders.' She also points out that the process is complicated and expensive and should only be undertaken when the company can demonstrate clear growth potential.

We suggest going public with your eyes wide open. It's not easy and changes entirely the way you do business.