Oil Titan Reshaping Texas GOP Targets a $10 Billion Windfall

Mitchell Ferman and David Wethe
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(Bloomberg) -- Oil tycoon Tim Dunn has spent millions to try to bend Texas toward his conservative politics. Now, as he considers bids for his drilling company that’s said to be valued at more than $10 billion amid a merger-mania in the shale patch, Dunn is poised for a windfall that could dramatically boost his giving – and his influence.

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The head of CrownRock LP is a devout Christian who has bankrolled candidates and groups that favor book bans and a private-school voucher system. He is a patron for immigration hardliners who have pushed to block asylum-seekers from crossing the US southern border.

When Republicans are not sufficiently conservative by Dunn’s measuring, he and his allies in the state recruit and fund primary challengers who meet their standards.

Those tactics are sure to make Dunn a potent force in the 2024 election, pulling candidates to the right in races up and down the ballot in the second-most populous US state. His dollars could also shape the presidential contest: He has backed GOP frontrunner Donald Trump before, contributing $300,000 to his 2020 reelection effort. He has not donated this cycle to Trump or any other presidential candidate.

Read More: Occidental Petroleum in Talks to Buy Shale Driller CrownRock

It’s not certain that Dunn would use proceeds from an acquisition to ratchet up his political donations. Officials at his company declined to comment about its potential sale. But close observers of Texas politics say they expect his giving could increase if he sells his company.

Wherever Dunn decides to flex his political muscle, he’ll have the help of former Trump digital strategist Brad Parscale, who has relocated to the West Texas desert and is consulting for an advertising company that a Securities and Exchange Commission filing shows Dunn has financed.

Since 2011, Dunn has made political donations to candidates and committees at the federal level and in Texas totaling $31.9 million. He was the nation’s 65th-largest donor to super political action committees in the 2022 election cycle, according to OpenSecrets.

Power Broker

A wave of consolidation in the shale industry could soon make Dunn an even more formidable power broker: The likes of Occidental Petroleum Corp., Devon Energy Corp. and Diamondback Energy have eyed closely held CrownRock as an acquisition target, according to people familiar with the situation who were not authorized to discuss the matter because the bidding process is private.

A sale would score its owners — which include Dunn and private equity firm Lime Rock Partners — a massive payout. It could also have lasting implications for Texas’s political landscape.

“If he pulls this off, he can seriously change politics for the next 10 years,” said Republican donor Bryan Sheffield, a prominent figure in the Texas oil industry and billionaire founder of Parsley Energy who regularly donates to Republican candidates.

The Dunn political machine isn’t invincible. He recently fought against a bond referendum aimed at improving the crumbling school system in Midland that voters ultimately approved.

Dunn, 67, who delivers sermons at an evangelical church in his hometown of Midland, Texas, and founded a private Christian school, stands apart from other big Texas GOP donors – including pipeline magnate Kelcy Warren and real estate mogul Harlan Crow — because the interests of his industry don’t appear to be the primary driver of his giving.

“It’s been much more with an ideological and policy agenda” for Dunn, said Mark Jones, a political science professor at Rice University in Houston.

Rightward Shift

In his appearances on the pulpit and his remarks at conferences, Dunn is often a study in contrasts. He is alternately folksy and cerebral, dissecting Bible passages on the fly and peppering his speech with Greek and Latin phrases — all in a Texas drawl.

Dunn uses dark and bellicose language to describe the forces he sees as threatening to America, railing against “elites” and “Marxists.”

“They are becoming bolder and more brazen in their quest for tyranny,” Dunn said during a 2019 talk at a conference organized by the Convention of States project, which seeks to limit federal spending and oversight. “It’s becoming clear they want to kill us.”

Dunn has been associated with people espousing extreme views on some of the issues most likely to be top priorities for voters in 2024. He supports lawmakers who push for Texas — instead of the federal government — to prosecute anyone who crosses the border illegally. His allies backed proposals to bar people from driving through certain jurisdictions on the way to get an abortion out of state — rules that, where implemented, may not withstand legal scrutiny.

Dunn declined to comment for this story.

Showdown In Austin

A recent showdown in Austin illustrates how state government has aligned more with his interests. Governor Greg Abbott has tried repeatedly to muster support for a bill that includes a voucher-like program for schools, and has threatened to keep holding special legislative sessions until it passes. The overhaul would be a boon for Christian schools.

While Dunn’s allies say Abbott is leading on the voucher issue, it’s just one example of Abbott tacking toward Dunn’s positions – especially since he faced a Dunn-backed primary challenger in his quest for a third term. Don Huffines, the opponent, has claimed that Abbott’s move to fortify his conservative bona fides reflected Huffines’ campaign-trail criticisms.

Read More: Texas Billionaires Team Up to Push Governor Even Further Right

Abbott’s announcement in 2021 that Texas would build its own border wall came after Huffines proposed just that. The same year, Abbott signed a near-total abortion ban after Huffines denounced Abbott for allowing some abortion exceptions. And after Huffines criticized Abbott over a state government website providing resources for LGBTQ youth, the state took it down.

Dunn acknowledged that he loomed large in education debates, writing in an op-ed, “the state-wide educational establishment positions me as the villain in their political theatre to divert attention from sagging performance.”

His loss on the referendum is unlikely to loosen his grip on the Texas GOP.

“If you want to stay in your office, you sure don’t want Tim Dunn against you,” said Kel Seliger, a former Texas state senator who faced tough primary challenges from Dunn-backed candidates before retiring in 2023.

‘Lasting Franchise’

Dunn grew up just outside Midland, in Big Spring, Texas, on a flat expanse of the Chihuahuan Desert. His father was a farmer who never graduated high school. Dunn became an Eagle Scout, played guitar in a rock band and married his wife after their junior year at Texas Tech.

In an October address from his church’s pulpit, Dunn warned the congregation against being overly focused on immediate gratification.

“The best investments take time,” he said.

Dunn certainly has shown patience in building his own business empire. It has taken more than a decade to grow CrownRock into one of the Permian Basin’s most-prized assets.

Through Dunn’s other company – CrownQuest Operating LLC, which manages the assets of CrownRock – production has climbed by 15% through the first six months of this year, according to industry data provider Enverus. That’s on top of last year’s 21% output growth and the 36% expansion in 2020, according to CrownQuest.

With core inventory spread across 94,000 net acres, CrownQuest is tied with Double Eagle Energy Holdings IV LLC as the second-most active private driller, with five rigs working in the Midland Basin of the Permian.

“He’s built a lasting franchise,” said Steve Pruett, a Midland oil explorer who has known Dunn for roughly three decades.

Indeed, five of his six children work in the oil sector. (The one who isn’t in the business, David Dunn, is a Christian singer-songwriter. The father and son jam together sometimes, with the elder picking the guitar or mandolin.)

More Scrutiny

More than a decade after the shale revolution upended global energy markets, some companies have exhausted their most prolific rocks and are moving to scoop up quality replacements. That’s what Exxon Mobil Corp. did this fall when it agreed to purchase Pioneer Natural Resources, the Permian’s biggest independent producer, for $60 billion.

Read More: US Oil Dealmaking at Full Tilt in Race to Acquire Best Drilling Sites

Against that backdrop, Dunn is weighing a sale of CrownRock.

If he pumps some of the proceeds into politics, it may bring him more scrutiny. A group that Texas Ethics Commission records show Dunn bankrolls, Defend Texas Liberty, hosted a prominent white supremacist at the office of a GOP consulting firm for six hours. The meeting prompted outcry from across the Texas capitol — some of it aimed directly at Dunn.

Other wealthy Texans will be working to counter Dunn’s political maneuvers. That includes Sheffield, who credits Dunn for warmly welcoming him to Midland as Sheffield set out to build his company.

“I don’t necessarily agree with his political views, and I’ll try to offset him where I can to help out more moderate Republicans,” said Sheffield. “But I don’t have the same passion and pockets as deep as him — especially if he does sell that company.”

--With assistance from Bill Allison.

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