Falcon Drilling tackles shale sites with mid-sized equipment

David Conti
| Monday, June 9, 2014, 11:06 p.m.

Executives at the big, publicly traded energy companies exploring the Marcellus and Utica shales like to tell investors they're drilling gas wells more quickly and cheaply than before.

Indiana County-based Falcon Drilling is helping them make their case, with its focus on using mid-sized rigs and air drilling, a less-expensive approach.

“We can do it more efficiently because this has been our focus for the past 13 years,” said company President Dan Donahue. “We have the equipment and people to best get this done quickly and safely for the customer.”

Donahue, 35, of Fox Chapel has sharpened that focus since he bought the company in 2011. He shed a side operation in water transportation, and is investing in employees and rigs that can drill a well in the Marcellus or the “top hole,” or vertical portion, for a deeper Utica well.

He boosted payroll from the 100 employees when he bought the company to nearly 325. He added seven drilling rigs, including the purchase in March of three mid-sized, powerful “super singles” that were drilling in northeast Pennsylvania, bringing the fleet to 13 rigs.

Falcon is refurbishing the equipment, which can drill more deeply than its other rigs. Donahue could not say how much Falcon paid for them because of an agreement with the seller, and he declined to provide financial figures for the company because it's privately owned.

“This puts us in a whole new market,” Donahue said recently as the first of the 250-ton rigs started on a Rice Energy site in the Utica shale south of St. Clairsville, Ohio.

The companies for which Falcon drills include Rice, Antero Resources and Range Resources, a longtime customer.

“There's a big incentive to use Falcon on as much of the drilling as possible,” said John K. Applegath, senior vice president for the southern Marcellus division at Range. He said boring a well costs about $20,000 a day when a firm hires an air-drilling operation such as Falcon, versus about $60,000 for companies that user bigger rigs and rely on fluids and mud.

Donahue noted that Falcon can move its smaller operation to a site faster with about 40 truckloads — compared with more than 100 for the biggest rigs — and drill several wells on one site with little movement of equipment. He hired employees who are experienced in drilling with fluids and mud.

The equipment and employees mean more solid footing for Falcon, which once operated in a smaller niche as a shallow-well driller.

“We were missing the boat in the top-hole Utica market,” Donahue said. “But if the Utica dries up, we can bring this back to the Marcellus and keep working there.”

Energy companies like Falcon's flexibility, Applegath said. For Donahue, it's about pushing customer service, something he learned in the hospitality business, his profession before he bought Falcon from the Kozel family.

On the drill site, Donahue stresses service and safety. He instituted training for employees and tries to make sure workers have necessary personal equipment.

“He's the guy who backs me up out here,” said Wendell Keener, one of three safety supervisors on Falcon sites. “I get his support and it comes from the top.”

Falcon has had no operational deaths since Donahue bought it, he said.

There have been stumbling blocks. A year after Donahue bought the company, Falcon's chief operating officer and controller were caught in an embezzlement scheme in which investigators said they funneled out $9 million over eight years. They pleaded guilty and are awaiting sentencing in federal court.

Donahue credits other longtime employees and additions with maintaining the operations side of the business while he looks to expand.

“We're in the service industry. You work with a client and show you're committed, and the technical side can be taken care of with the people you have around you,” said Donahue, a North Hills native with an MBA from Duquesne University.

If Donahue's background or young age are unique in the unconventional drilling world, that's OK, Applegath said.

“It takes unconventional people to work and succeed here,” he said. “Dan has brought forward-thinking to the company.”

David Conti is a Trib Total Media staff writer. Reach him at 412-388-5802 or dconti@tribweb.com.

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