In the fast-growing “suburbs” northwest of Midland, Texas, amid new housing and retail developments, the family-owned Fasken Oil and Ranch Ltd. celebrated its 100th anniversary in conjunction with the opening of its new corporate headquarters this summer. The two-story, 60,000-square-foot modern sandstone-and-glass structure on Holiday Hill Road is the crown jewel of a century of successes—all born from a real-estate investment gone bad.

The story of Fasken Oil and Ranch began in 1913, when a Toronto lawyer by the name of David Fasken, who had success investing in Canadian mining operations, bought a 220,000-acre ranch in West Texas—sight unseen—for $6.50 per acre. Fasken aspired to carve up the ranch into farm sites and sell them off individually for a nice profit.

The fact that he failed to account for the lack of water in West Texas to support farming left him holding a vast, contiguous block of land with no profitable exit apparent. He instead hired his nephew to continue managing the land as a cattle ranch until his death in 1929. And while he started a railroad and built a town in his years in West Texas, David Fasken never knew of the mineral treasure that lay below his land.

“Fortunate for us, he held the ranch,” says Fasken general manager Norbert Dickman, alluding to the livelihoods of the 225 employees working for the Fasken family heirloom, now involved in oil and gas and real-estate development as well as cattle. “The history we have in Midland is just amazing. We're delighted to look back at our history, where we came from and where we are today.”

Now and then

Fasken Oil and Ranch operates more than 400 leases spanning West Texas, South Texas and New Mexico, encompassing some 390,000 gross acres and 1,400 wells. It is currently running five rigs and drilled 140 wells last year, primarily vertical Wolfberry wells on its fee simple land. In the past three years, its production has quadrupled to 22,000 barrels of oil and 70 million cubic feet of gas a day, thanks to the adoption of unconventional technologies.

“We've got three rigs running continuously in the Wolf-berry,” says Dickman. After decades of steadily drilling conventional wells, “we've adopted the unconventional,” he says. “Almost every one of these wells we drill now, we frac. We've been using these technologies with enormous success.”

After watching the success of fellow Midland independent Henry Petroleum to the south of its holdings, Fasken began drilling and hydraulically stimulating Wolfberry wells in 2008, its first foray into the unconventional. It now has 400 producing Wolfberry wells and growing. Fasken's Wolfberry production tops 18,000 barrels of oil equivalent per day.

“We're drilling around 90 Wolfberry wells a year,” Dick-man says.

At a cost of $2.3 million per well with no royalty payment, imagine the economics. “We get good payouts,” he says.

Like many in the company, Dickman has a long tenure with the Fasken family. He has worked for the family for 40 years, and now almost considers himself an oil and gas man, albeit not on the level of an engineer or geologist. “I'm a California lawyer,” he says of his inauspicious beginnings in the oil and gas industry.

Shortly after passing the bar exam in 1973 as a young lawyer in San Francisco, Dickman was assigned to personal legal work for the family interests of David Fasken Jr. “He was a kind and gentle man,” Dickman remembers. “I had an enormous respect for him.”

David Jr. was the grandson of David Sr., the opportunistic Toronto barrister. A Bay Area, California, native, in the 1930s he inherited the ranch, which spans much of southeastern Andrews County and some of Ector, Midland and Martin counties. Branded “C Ranch,” for Chicago, by its original owner, a Chicago meat-packer tycoon, the ranch now stands at 165,000 acres after a portion was sold to pay taxes following the elder Fasken's death. The C Ranch name remains to this day.

The fate of the ranch and the family changed forever in 1942, when Stanolind Oil Co. discovered oil in the Grayburg and San Andres formations there. Richard Brooks, a Midland attorney managing the ranch at the time, leased out three-quarters of each section while holding back one-quarter. Today, Occidental Petroleum Co. operates that original Midland Farms Field on the ranch as a water-flood unit. Current production is about 1,700 barrels of oil a day. Fasken Oil and Ranch holds a 25% interest plus the royalties.

But David Jr., an entrepreneur at heart, wasn't content watching other oil and gas explorers drill up the ranch. In 1953, he drilled the family's first operated well on the north end, the 4,744-foot-deep J&A well. He followed that well with another a few feet offset, the 1X, drilled to almost 14,000 feet into the Ellenberger formation. That well came on at 1,628 barrels per day. It's cumulative production is 691,000 barrels of oil to date and it is still producing. An oilman was born.

Fasken set a drilling pace of 12 to 15 wells a year, and expanded his reach with leases beyond the ranch in West Texas and New Mexico. A resident of Marin County, California, he left much of the business activities to Brooks, who held that responsibility for 45 years.

C Ranch horizons

Tommy Taylor has worked for Fasken for 28 years. Coming from a family stocked with petroleum engineers, including his dad, uncles and brothers, he followed suit and began working for Fasken as a pumper straight out of Texas Tech. He's never worked for anyone else.

“When you're with a small company, you're involved in all facets—from the stake to the rake,” he says, referring to the timeline from the initial staking of a new well site to the plugging of the well after it is depleted.

Why stay with the same company his whole career? “Everybody knows everybody,” he says. “We're just a close-knit group.”

Taylor has risen through the ranks to director of oil and gas development, overseeing the entirety of Fasken's oil and gas operations. He recently assumed that role from Mark Merritt, himself a 29-year Fasken veteran, following Merritt's death after battling cancer. Merritt began the company's transition to unconventional. Now the mantle is Taylor's.

“Ten years ago, we would have never thought we would have had a play like the Wolfberry on the ranch,” he says. “Now, over the last couple of years, 100% of our drilling has been resource plays.”

Fasken's Wolfberry wells now reach down 11,300 feet to include the Spraberry, Wolf-camp, Dean and Strawn formations. “We're not doing the over-pressured Mississipian,” Taylor says. A Fasken processing plant to handle associated Wolfberry gas eight miles north of Midland should be completed near year-end.

Taylor has tested spacing down to 16 acres, which he deems too tight. “We are seeing signs of interference. We're probably looking at 30-acre spacing.”

While these new wells are costlier to drill, the unconventional revolution hasn't changed Fasken's game plan, which is to drill out of cash flow. “We're still the same company we were 30 years ago. We're here to find oil and gas in whatever manner. It's slow and steady; we're not going to get too high or too low.”

Horizontal technology, however, has opened vast new horizons on the ranch. “There's a lot of interest in the horizontal Wolfcamp B,” he says. “That has the most potential. We're watching other operators to see how those wells turn out.”

At least eight other horizons hold horizontal promise as well. “How are we going to develop all this?” he asks. “We're trying to get all the oil out we can, but it's an economic question. We've got a big area to explore.”

Beyond the Permian

In the 1960s, David Jr. sought to replicate the C Ranch's advantage of combined minerals and surface rights. He acquired the 65,000-acre La Mesa and the 12,000-acre Loma Blanca ranches in Webb County, Texas, and the 30,000-acre T Diamond Ranch in Culberson and Reeves counties, Texas, not knowing what—if anything—lay beneath.

Fast forward to the Eagle Ford shale play. Fasken hit the jackpot with Loma Blanca, in the core of the prolific condensate window of the play. “That's where we plan to do most of our drilling” in the Eagle Ford, Dickman says.

Here, Fasken last year drilled three wells with 1.5-mile laterals from one pad at $8 million apiece. The wells are currently flowing about 400 barrels of condensate and 3 million cubic feet of gas a day on choke. “That's not wide open,” says Taylor. “We have the wells pinched back. Our engineers feel if you draw those wells down, you could lose some productivity.”

Not without upside, in addition to coal development, La Mesa Ranch is in the Eagle Ford dry-gas phase, but considered less economic at current natural gas prices. However, as the ranch is largely “mineral classified”—half of the minerals are owned by the state—Fasken has drilled two dry-gas wells to hold its rights.

Five to eight Eagle Ford wells are budgeted for 2014, with two targeting dry gas.

Neither oil nor gas are believed to be present in commercial quantities on T Diamond, in far West Texas. “But who knows,” says Dickman. “With new techniques, some day there may be something there. We intend to retain the ranch.”

Fasken also holds numerous leases in Eddy and Lea counties, New Mexico, where it drilled for Morrow gas from the 1970s through the 1990s. Today, the Bone Spring and Yeso formations hold its attention with up to 75 drilling locations identified.

“The Bone Spring is hot right now,” says Taylor. “There are a lot of good wells being made.”

Fasken has drilled four Bone Spring wells with mile-long laterals in Lea County, with two producing and two awaiting completion. Initial 24-hour production rates exceeded 500 barrels of oil.

“They're very good wells,” Taylor confirms. “I'd take all of those we can get.”

Seven Bone Spring wells are planned in 2014, at a cost of about $6 million each. The pace will be measured, however. “We don't drill back to back because of cash flow,” he says. “We're going to complete them and get them producing to get some of our money back.”

Fasken has also drilled two horizontal Yeso wells in Eddy County, with plans for another next year, but permits on Bureau of Land Management land slow the process.

“We have the prairie chicken to contend with,” Taylor notes. “We know if we stake a well on federal lands, it will be at least 90 days to get a permit.”

In an area of new exploration, Fasken plans to test the horizontal Wolfcamp on four leased sections in Irion County, Texas.

Barbara's era

Late in life, David Jr. married Barbara Towne Dickson, in 1970. Barbara had achieved notoriety during World War II as one of the original 28 female pilots in the Women's Auxiliary Flying Squadron, which flew transports across the US when male pilots were fighting the war overseas. David Jr. died in 1982, leaving his entire estate to Barbara.

Exhibiting the dare and confidence required to pilot planes in a male-dominated industry, rather than sell off the oil and gas holdings, Barbara took the flight controls. For decades, the company had used independent contractors to operate the oil and gas assets, with no direct employees. Barbara changed that, incorporating all the contractors along with their employees into one company reporting to her. “That increased efficiencies and improved the economics of the operation,” Dickman says.

In 1988, at Barbara's behest, Dickman moved from San Francisco to Midland to oversee the company's operations, a role and residence he's held ever since.

“I love the family and have always appreciated working for them,” he says, including personal legal matters and business matters. “It's been a rewarding career.”

Barbara's lasting legacy, he says, was her commitment to the lifestyle of the company's employees. “She was interested in building the company and in the welfare of her employees,” Dickman remembers. “She set up the structure we follow today.”

At the time of her passing, in 1995, Barbara Fasken still owned a fixed-wing airplane and two helicopters, one based in Marin County, California, that she would roll out on her own and fly until shortly before her death. She received the Congressional Gold Medal posthumously two years ago for her contributions during the war.

“She was an extraordinary woman,” he says. Two elementary schools are named after her—one in Laredo, the other still to be built in Midland—for her financial philanthropy.

Surface value

Farias Farm, nestled against the Rio Grande near Laredo, came to Fasken's holdings as an unwanted add-on in the 1960s with one of the acquired South Texas ranches. When the World Trade Bridge opened in 2000 on the 1,400-acre farm site, a flood of cross-border commercial traffic into and out of Mexico streamed through the undeveloped plot. Dickman saw opportunity.

“It became clear to us that there was considerable real estate development potential there, especially in the area of warehousing.”

Currently, Fasken owns seven warehouses with more than 1 million square feet of space on the former farm site. It followed with three multifamily apartment communities and has developed 650 single-family lots with plans to develop more. “We're still building,” he says.

Farias Farm seeded the idea that the concept could be duplicated. Since, Fasken has built multi-family units in San Antonio and New Braunfels, Texas, and is in the process of developing more than 2,500 units across the state. It has constructed or has plans to construct single-family developments in San Antonio, Laredo, Boerne and Midland. Before her death, Barbara bought and renovated the La Posada Hotel in Laredo, a town with which she fell in love. Fasken also has projects in the family's homeland in the Bay Area.

Fasken's newest and featured real-estate project is a multiuse development in Midland that will marry the oilfield with the city. Situated on the southeastern edge of C Ranch, the Vineyard will be a 1,000-acre master-planned community with commercial, residential, retail and multifamily development. Fasken's own newly built headquarters anchors the project. Interspersed into the community are 31 active pumpjacks producing from the Wolfberry, developed on 40-acre spacing.

“We're creating a model for integrating the oil and gas development with the surface development,” says Dickman. “We own the land and the minerals. Of course, we did it right; we've already developed the oil and gas.”

Forever family friendly

To Dickman, the gleaming new headquarters represents not only a monument to the past, but also a foundation for Fasken's future. “We continue to increase the value of our oil and gas assets, which are 95% of the company, and the real estate has been good for us,” he says.

Ownership of Fasken Oil and Ranch passed to Fasken Ltd., a family limited partnership set up by Barbara. As David Jr. left no direct heirs, the interests are held by Barbara's son, who is a manager of the business, with a 50% interest, and two grandchildren in trust.

And while Dickman manages Fasken, the company is in fact led by five members of an executive committee. In addition to Dickman, they include Lynda James, assistant general manager who handles the company's financial matters; Chuck Hedges, general counsel and who also oversees the real estate development; Taylor, leading the exploration and engineering departments; and Jimmy Davis, director of operations. The executive committee members are chosen by Dickman, in consultation with the Fasken family members.

Fasken's long-term plan is to develop the assets that will be available for the family for years to come, all within cash flow. “We're in no hurry,” he says. “We're trustees for a family, so we want to grow them at a reasonable pace, but not excessive.”

And Dickman maintains the commitment to a family-friendly atmosphere—to the point of curbing growth. “I'm comfortable with where we are on the employee side,” he says. “That's going to be a limiting factor. That may not be the way most would make a business decision, but it's important to us.”

That's because, ultimately, loyal employees are a treasure that defines a company, he says. “We have a marvelous group of people working here dedicated to the company and family; they are exceptional both professionally and personally. Barbara Fasken was concerned about the welfare of her employees, and we continue that today.”

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