Former politician looks to Permian
Former Texas Lt. Gov. David Dewhurst isn’t making a political comeback, but he’s ready to buy into the booming Permian Basin oil fields.
Dewhurst’s 36-yearold Houston energy business, Falcon Seaboard, is seeking outside investors for the first time to lease or buy acreage in overlooked areas throughout West Texas. He’s started the new Falcon Seaboard Permian Fund I to oversee the investments. In an interview, Dewhurst said he hopes to raise anywhere from $145 million to $300 million initially.
Rather than bid against the oil majors like Exxon
Mobil Corp. or big independent exploration and production players like EOG Resources, Dewhurst said the goal is to instead focus on “contrarian niche plays” that are found in overlooked areas of the Permian, including land that’s already drilled but still has value.
The strategy includes buying acreage from financially struggling companies still hurting from the two-year oil bust that need to turn a quick buck to stay afloat.
“That niche small play works,” Dewhurst said. “It has higher returns, I think, and it’s easier to compete than going into bidding wars.”
Dewhurst served as lieutenant governor for 12 years, but he never abandoned his energy business.
The mild-mannered Dewhurst ran for a U.S. Senate seat in 2012 but lost unexpectedly to Sen. Ted Cruz, who had the backing of the conservative tea party movement.
Then he lost his lieutenant governor post after a primary defeat in 2014 by another ideological firebrand, current Lt. Gov. Dan Patrick.
Dewhurst was an oilman long before he became a politician. A Houston native, Dewhurst worked as a CIA officer before leaving government to enter the energy sector in the 1970s. He quickly found success and became a multimillionaire.
Like most people working and investing in oil, he suffered a setback during the 1980s oil crash. But he, like the industry, rebounded. He further built his wealth in the 1990s by developing and selling cogeneration power plants. His net worth eventually exceeded $200 million.
Dewhurst holds a large natural gas acreage position in the Piceance Basin on Colorado’s Western Slope. With a lot of money tied up in Colorado, Dewhurst said he needed to reach out to external investors to grow in the Permian. He just finalized the creation of the new fund.
“We’re just now reaching out to investors,” he said. “I’ve never accepted outside investments in the past. I wish it weren’t so, but I’m not big enough to carry two major investments at the same time.”
Despite the crowd in the Permian, Dewhurst said he still sees opportunities for success. Just the Wolfcamp Shale portion of the Permian Basin holds an estimated 20 billion barrels of recoverable oil, according to the U.S. Geological Survey.
“What’s not to like?” Dewhurst said.
Dewhurst said he has solid verbal commitments from investors, and Falcon Seaboard has begun contract negotiations on certain acreage. In many cases, the company will drill acreage and then sell it for a profit. It will also hold onto some acreage and manage its own wells, he said.
The plan is to work with a separate exploration and production company to produce the wells on Falcon Seaboard’s behalf. Dewhurst, however, said the company hasn’t ruled out running wells without the outside help.
“We’re perfectly willing to operate again,” he said.