INTERVIEW | DAVID DEWHURST OF FALCON SEABOARD
Dewhurst: Sure, it’s a concern if you have to pay higher acreage
prices. But I see a successful business model where we are not
going to try and corral 20,000 to 40,000 expensive acres, but
discipline ourselves to acquire Tier I acreage when it opens,
preferably operated, but also non-operated, where we know we
can make money, either holding or drilling horizontal wells.
Also, we are looking at partnering with an outstanding service
company with over 1,000 stripper wells, which I think is an
excellent strategy to increase profits.
Some say despite the high acreage costs, technological advances in drilling and completion make the
play economic even sub-$40/barrel. Do you think this
holds true regardless of OPEC moves and what may be
an upward trend in services costs?
Dewhurst: Some do say this, but it appears challenging to be
economic across large parts of the Permian in sub-$40/barrel
oil. Again, it’s a question of rock, precision drilling, maximizing
EURs and being a low-cost producer. And all that can be affected
by OPEC moves and upward trends in service costs. Hopefully,
OPEC has seen first hand what happens to their national econ-
omies in a low-price environment, but the industry has to
monitor this carefully. I think we are a mistake or two away
from lower prices, and a lot of work and some luck to get prices
back into the mid-$50s. I don’t use “hope” as a strategy. We lease
acreage where we are a low-cost producer.
What kind of niche acquisitions does the fund
target? Are there specific areas within the Permian that
you’re focused on?
Dewhurst: In real estate, you make your money when you
buy, and there are some parallels to the oil and gas business.