Now and then, a tall, polished man enters a double-wide trailer somewhere in West Texas to talk mineral rights and starts to feel the stares.

“I’ve seen you before,” some say.w

“You very well may have.”

Former Lt. Gov. David Dewhurst waits a few moments more and then they start guessing who he is. Sometimes he’s recognized, sometimes not.

“It’s really kind of funny. Sometimes they know who I am,” Dewhurst said.

Dewhurst, of course, was a central figure in Texas politics for 12 years, leading efforts to cut state taxes 54 times. He unsuccessfully ran for the U.S. Senate in 2012.

But he has followed a tangled trajectory, volunteering for the U.S. Air Force during the Vietnam War; covertly working for the CIA in Bolivia; even riding and roping his way into an induction in the Texas Rodeo Cowboy Hall of Fame in 2009.

But his most persistent calling has been the oil and gas industry, a part of his life for 35 years. Dewhurst serves as chairman and CEO of Falcon Seaboard, a company he helped co-found in the early 1980s.

Dewhurst, who is from Houston, has turned his attention squarely toward the Permian Basin only to find his time spent picking up jagged—but profitable—pieces. On July 24, Dewhurst's company launched a $145 million investment fund, Falcon Seaboard Permian Fund I LP that aims to buy up acreage in the basin.

No Contest

Advice for the budding Permian buyer: don’t step on a supermajor’s cape. Or a large E&P’s for that matter.

After leaving office in 2015, Dewhurst returned to his company to search for opportunities in the Permian and Powder River basins. He soon learned that chasing large pieces of acreage in the Permian was wasted time.

“If you get involved in a bidding contest, you’re probably going to lose,” he said.

His strategy changed.

Falcon Seaboard began working on rolling up smaller or distressed operators that might need cash or need to sell some acreage and talking with individual mineral rights owners.

For large companies, paying top dollar for acreage makes sense. Falcon Seaboard is more interested in developing small tracts that it can develop and arbitrage over time.

Dewhurst said his advantage is essentially a nimbleness that larger E&Ps lack. Falcon Seaboard has deals on the table for 80,000 net acres in Permian.

The company is now purchasing assets piecemeal, a “section here or there,” throughout the basin. While longer laterals are the general preference for Midland and Delaware basin E&Ps Dewhurst isn’t concerned about a lack of contiguous acreage.

“I can see where having disparate leases… is not a detriment but an advantage,” he said. “At some point, when we’re ready to sell, the adjoining operator will probably want that acreage and be willing to pay a few dollars more than he would normally want.”

The recent drop in commodity prices has left Dewhurst unfazed. He said transactions are moving faster than when oil was at $50.

And he’s seen bad times before.

In the 1980s, Falcon Seaboard invested in offshore Gulf of Mexico assets and later onshore assets. By 1982, Dewhurst sensed a downturn coming.

It was his first brush with downturn misery. The market rapidly deteriorated and he nearly lost everything in an oil and gas and real estate bust.

“I learned a lot,” he said.

Dewhurst already had an aversion to taking unnecessary risks. When he was 3 years old, his father, a World War II bomber pilot, was killed by a drunk driver.

His mother went to work as a secretary, and he grew up in “modest circumstances.”

“Consequently, when I got into business and got into the oil and gas business, I wasn’t in a position to take much risk,” he said.

Those experiences have clearly shaped a man as comfortable heading a policy discussion as he is talking to mineral owners in rural Texas counties.

When the former lieutenant governor sits down in West Texas homes, he spends hours taking the time to hear their experiences—gates left open; roads that need to be plowed once a year.

The hours he spends listening are also part of Dewhurst’s strategy. Knowing what ranchers and homeowners want can help close a deal. It’s also attention to detail that is lost on larger companies.

“There’s still plenty of opportunity in the Permian Basin if you’re willing to work harder than other companies,” he said.

It Doesn’t Hurt

During the past 20 years, Falcon Seaboard has likely generated $1 billion in profits and debt reduction without using outside investor money, Dewhurst said.

Still, the capital needed to execute its plans in the Permian requires the company, for the first time in its history, to solicit money from investors.

The strategic change comes after seeing so many opportunities in the basin.

“The last 25 years, we’ve only used our own money,” Dewhurst said. “We’ve lost some opportunities because we didn’t have the cash to invest. But we’ve never used other people’s money.”

Nevertheless, he is “carefully reaching out, bringing in partners to join with us in this, I think, very attractive opportunity” to invest with the company. Dewhurst said he has roughly $100 million of potential investment, based on his conversations.

The company is conducting an offering to raise a minimum of $145 million and up to $300 million. About $200 million will be used to acquire leases, assets and purchase small companies. The remainder will be devoted to capex.

Falcon Seaboard plans to use Entoro Group’s OfferBoard to attract some investment. Entoro was created in February through a combination of Clearinghouse Securities and OFSCap LLC. Entoro will focus on the distribution of direct investment opportunities to family offices and small institutions.

Dewhurst’s move to find investors comes after the industry has witnessed a short but lucrative burst of IPO activity by special purpose acquisition companies (SPAC).

Most have been successful—and headed by big names in the oil and gas business, such as former CEOs and presidents of Occidental Petroleum Corp. (NYSE: OXY); Anadarko Petroleum Corp. (NYSE: APC); and Encana Corp. (NYSE: ECA).

Dewhurst said he isn’t intentionally tapping into that wave and his company isn’t going public.

“It doesn’t hurt at all, obviously, that I served as lieutenant governor for 12 years, and the reason I say that is because … my life is very transparent,” he said. “Our success in the oil and gas business and the pipeline business and the cogeneration business is all transparent.”

Falcon Seaboard has experience in drilling horizontal wells after years of activity in Piceance Basin. In the mid 1980s and 1990s, Falcon Seaboard developed cogeneration power projects that later sold for more than $1 billion.

“That’s the reason why I think we’re getting the reception that we are. People have known me and know that I’ve always been straight with the people of Texas,” he said. “There’s never been any controversy involving me. I think that makes people feel good about investing.”

Darren Barbee can be reached at dbarbee@hartenergy.com.