This week on Mining Money, Brandon Davis, CEO, and Imran Khan of Swan Energy pontificate what investments will be like after a Donald Trump reelection or a Joe Biden election.
The risk involving BLM leases, natural gas futures and foreign investments are several topics discussed in detail.
Voice Artist: Time now for Mining Money.
Brandon Davis: Brandon Davis, Swan Energy.
Imran Khan: Imran Khan, Swan Energy.
Jason Spiess: Gentlemen, thank you for joining us here today. Let’s talk a little bit about Mining Money. Last night, of course, there was a debate, or was it a couple nights ago? Forgot when it was because my days blurred together.
Brandon Davis: Last night.
Jason Spiess: Was it last night? Okay, days blur together. My phone blew up, because apparently Joe Biden said he was going to ban fracking or didn’t want to do anything with fracking. Are you guys following this? Do you know what I’m talking about?
Brandon Davis: You said that, then he didn’t say it too, right? He said that, he didn’t say it, so I’m kind of confused on which one it is.
Jason Spiess: Well, that’s where I’m at too. I’m still trying to figure it out, because people are saying, well, he didn’t say he was gonna ban it. He said he was gonna—
Brandon Davis: Tell you what he did say is that he was going to phase out, last night, he’s going to phase out oil and gas for alternative energy. That’s what he said, and that’s what’s got everybody up-up roaring, and I don’t blame them. It’s insane, basically sitting there, telling everyone – the whole world – that he’s going to kill an industry in our country. Which puts us in a weak position for, to the rest of the world, by the way, um, and it’s absolutely the dumbest thing I’ve ever heard in my life.
Imran Khan: Yeah, it’s like, we’re energy dominant right now. Like, we’ve never been so energy dominant in our entire existence, and you want to get rid of that? I, you know, I don’t know how much sense that makes.
Brandon Davis: Anyone that votes for that guy has to literally hate this country. That’s the only reason that someone would vote for Joe Biden, because there’s no other reason.
Jason Spiess: What I’m wondering is, do they even talk about a plan? Does any reporters or anybody follow up about what the plan is? I mean, we’ve talked about this before, about—
Imran Khan: No, no, I heard him say, uh, to the effect of he can’t discuss his plans, because if he does, they’ll kill him or something like that, and I just was like cracking up about that one. Of the times in his—
Brandon Davis: Well, if you watch the debate, Jason, the best part of the whole debate was in the beginning when they asked what-what would Joe Biden have done with the COVID–19 pandemic? And he explained exactly what Trump has done, like to a T. To a T. He did the same— exactly what trump has done, exactly what has happened: rapid testing, mask. Well, everything that he said has been done. So, what? He’s not gonna do anything new when he gets in there. It’s, uh, except for shut the country down, which is another thing that did not sit very well with me last night, because that about put me out of business.
Jason Spiess: What are people saying about this when he, when they talk about phase out the industry? What I’m, what I’m trying to figure out is, at what point do we say what the plan is? Because I don’t hear any plan beyond just, hey, we got to do this, and-and it sounds like a great idea, you know, and let’s put—
Brandon Davis: It-it would be no different than, you know, those of us that are very anti-media for the most part. Because there’s so much bias and one-sidedness and saying that we’re going to phase out media. How would that work and what would replace it? Social media, which has proven to be not such a good source? Talk about putting—
Imran Khan: In recent days.
Brandon Davis: Yes, absolutely. I mean, it’s very, it’s more, it’s more biased than the news because they can, they basically can determine what you look at or you don’t look at and that is just crazy to me. Um, but, there’s no phasing out the oil and gas industry. Everything that they mentioned related to the phase out takes oil and gas products, as we’ve discussed on this show many times, to produce, um, from solar panels to the windmills to, uh, charging stations to the— Where is it gonna, where’s all the electricity gonna come from that’s gonna power these cars? I mean, it’s just comical to me.
Jason Spiess: When I think about what you guys are doing out there, buying, you know, oil and gas leases and-and being aggressive, moving ahead while presidential candidates are trying to ban the industry… Talk to me a little bit about that whole, that-that whole thing. I’ve, I’m in the camp that I don’t think, no matter who wins or loses, it’s going to matter, because we’re not going to go away from a petroleum fossil fuel–based society anytime in the near future. But I understand how uncertainty is in the investment world and everything like that. What-what-what makes you guys so certain that, you know, you guys are having no problem investing in fossil fuels and petroleum and then oil and gas?
Brandon Davis: There is no certainty in business, period. I mean, if things change, if regulations push to the point we can’t do anything, then we figure out something else to do. Like, that’s just, that is what it is.
Imran Khan: Yeah, with that said, um, you know, in-in recent news, there’s a lady from Mylamar who bought up a lot of leases. I think she bought up all the leases in Wyoming and some of the other states that are out west.
Brandon Davis: CLM leases, right?
Imran Khan: Right, that’s right, CLM leases. So, you know, obviously others are taking advantage of the times and the markets that-that are out there right now, so…
Brandon Davis: That’s probably the riskiest thing that you could do, because that would be the first thing that they, you know— If Biden’s already said he’s not going to allow it on federal land, uh, to allow drilling, which is, which is insane, because it’s one of the country’s biggest resources.
Imran Khan: And she’s gone out and bought, like, I mean, hundreds of thousands of acres from a leasing standpoint, so it’s— Anyway, I mean, it’s good to be— Again, we’re, you know, it’s nice, because from our end of things, we’re, we’re looking at obviously much smaller portions than that but, you know, we’re looking at a lot of the-the privatized areas that are out there and, you know, mainly in the Texas areas, so, uh, and there’s a lot out there. And-and we keep on talking with different folks that are, you know— I actually was on a call earlier this morning on some stuff in the Permian, so we’re always looking out.
Brandon Davis: And we’re also looking for people in the, in the Houston area and in the fields around Houston that are looking for potentially just a financial partner for 25 percent or 75 percent or a piece of what they have. As far as the field goes, we don’t necessarily have to own the whole thing. We’re absolutely looking for partners and places to partner with, people and assets that may be suppressed now but can can grow and be better as we go forward. So, um, you know, we’re, we’re wide open to-to about any kind of relationship that way.
Jason Spiess: I wanted to ask you about the job creation part, about when it comes to oil and gas, because, uh, Brandon, you’re familiar with how the supply chain works, just off of a lot of the different businesses that you’re involved with. And Imran, you’ve got some other businesses as well, so you understand how the whole job creation thing works from start to finish. I remember about three years ago, four years ago, I was talking with Stephen Moore – he’s with Fox News. Well, I drop a name there quick, but he does, uh, some heritage work and he’s an economist for Fox News. Stephen Moore is S-T-E-P-H-E-N Moore. And he told me and he showed me the graph where, uh, Texas was the number one job creator for the nation for, like, I think it was, like, four years during, during the shale boom. And for, like, a decade it was, you know, without a doubt the number one, but there was, like, four consecutive years where Texas carried the nation, including with the Bakken. That’s— but the Bakken played a smaller role compared to Texas, so when they talk about banning the industry, this is a significant job crunch that goes well beyond oil and gas. Because you’re talking trucking, you’re talking about, you know, there’s fluids, and there’s, there’s the whole midstream, which I don’t even know if they’re considered in the mining industry technically. At the end of the day, I’m not, I’m considering the communication industry even though I make my living from oil and gas, but because I’m in the media, I’m considered in the communication industry. So—
Imran Khan: Right. (?) Like many others that would be out there, for example, bankers, right?
Jason Spiess: Right?
Imran Khan: I mean, there’s deals that bankers are making. There’s people that are in other fields that actually co- basically -mingle with the the oil and gas direct fuels like we’re doing, things that are direct in oil and gas, but there’s so many different aspects that oil and gas benefits, it’s got to be millions of jobs.
Jason Spiess: And-and that’s the part that I’m just so blown away, that the media and the, even the Democratic Party for-for allowing this narrative to get-get, gotten as far as it is. Um, talk to me a little bit about that supply chain and how vital it is for the economy, and-and really the reality behind it, because, you know, you guys are dealing with it every day in the thick of it down in Houston.
Imran Khan: Yeah, you know, honestly, as I just pointed out, I mean, you know, the industries that are surrounding— For example, in Houston, we’ve got, we’ve got a great banking industry, we’ve got a great, uh, uh, medical industry, and-and-and then we’ve got oil and gas. Believe it or not, there’s both— The other two actually probably employ just as many if not more, uh, in that same space, but oil and gas is the reason why those actually exist, right? If you really think about, you know, from the 80s onward within the Houston area, um, and-and Houston being, you know, whatever top four, top five in-in population all over America, you know, the reason why those areas have been able to grow so much is because of the fact that, you know, from an oil and gas industry perspective it’s grown so much on its own, right? So, because of the growth from there has really transferred a lot of growth into these other industries in the space to where others have moved in. If you look at, uh, 80-86 time frame, um, in-in, uh, oil and gas, things were not, Houston wasn’t too good as a city but as you move into the 90s, 2000s, 2010s, you know, these time frames, you’ve seen a big increase in population. You’ve seen a big increase in pricing with respect to housing. I mean, Houston, uh, we didn’t even talk about the housing part of it. I mean, real estate right now, Houston is booming even with all the things that are going on right now, right? You’ve got an incredible— I have a lot of friends that are in the real estate, real estate industry and they’re telling me they’ve had the most incredible year back in June, July time and this was, you know, straight COVID time, uh, and they’ve done whatever they would have done the previous year within six months of the, of 2020. So that kind of shows you the growth factor that’s there that, in my opinion, a lot of it deals with oil and gas.
Brandon Davis: From my office, I can see no less than 25 cranes that are building high-rise or mid–rise apartments or office buildings and it’s been that way for three years, since I’ve, you know, based five years, since I moved to, um, and it hasn’t stopped or slowed down. I thought they might pause because of all the things going on right now, but that just isn’t happening, so that’s why this city, it’s got everything, um, and it’s-it’s still growing and changing and turning into something better than it is, so.
Jason Spiess: That’s-that’s interesting because when I was, I think, probably 18 or 19 years old, um, you know, a mentor, I guess it would be called now, he always told me, “Listen, if you’re ever starting off out on your feet or you’re looking for work or you want opportunity, go to where the cranes are.” And I looked at him. He said, “Oh, there’s more little economies going on underneath that crane than you have any idea.” And when you think about it, as the older I got and I looked at what a crane does represent, my goodness, it is. It is its own little economy underneath that crane, because from the electricians to the concrete guys to just the manual laborers to the, to the paper pushers in the middle to the real estate guys to the everything. It’s just incredible how that works. And then when I got to the oil and gas industry and saw that a well is like a crane on steroids, oh man, it was just it was, it was entrepreneur overload for me. Um, one of the things I wanted to ask you guys, too, is about last night’s election, because, you know, how a lot of the economic development works. Just the-the other part was people said Trump lost, or I’m sorry, Biden lost Pennsylvania. Um, you know, Brandon, you mentioned before, you don’t want to touch the east coast with investing and along those different lines, and anyway, so that stood out to me. I got a bunch of texts last night that said Biden just lost Pennsylvania, so I-I-I thought it’d be a good time to comment about just kind of the east coast, uh, either the the mindset towards energy or if this is going to help change that mindset towards energy as kind of a reality check for the east coast.
Brandon Davis: I think we’ll see after this election, but in my opinion, uh, Biden lost Pennsylvania a long time ago, lost Ohio a long time ago, Michigan a long time ago, Wisconsin is my next guess that he also lost a long time ago, because of the policies of of the that that side of the the aisle if you will. Um, that being said, the, there’s some great assets on the east coast related mostly natural gas that we’ve looked at and now, for us, it’s logistics more than anything right now, um, but if things go well, and the-the state legislatures in those countries in those states start, um, becoming more conservative and more business friendly and more oil and gas friendly, we would absolutely consider it.
Imran Khan: Well, keep in mind also, Pennsylvania has really strong ties with oil and gas, right? Uh, there’s some, there’s some big investments in the high billion dollar, uh, numbers, uh, with respect to, uh, converting natural gas into ethylene, uh, and that’s, uh, that’s a huge market that really has probably put together some some different towns, uh, in Pennsylvania. So yeah, that’s something to keep in mind and that’s, that’s people’s, uh, way of living, right? I mean, that’s how they’re making money and surviving with their families.
Jason Spiess: Well, let’s talk about making money, surviving with the families, because you guys do have some investments that you’ve recently done and you’ve got some great bank rates and a number of different things that have been pretty good news over the past month. So, as we kind of wind down a little bit here, uh, this week’s Mining Money, let’s talk a little bit about some updates that you guys have had recently in the investing side, and maybe even mention that, uh, that bank rate and that officer again, if you want to give him a plug. Because I-I just heard three times last week people complaining about banks not loaning. I said, well I know one in Texas that is, uh, so go ahead.
Imran Khan: Yeah, there’s not that many that are, that’s true.
Jason Spiess: No, no, there’s not. Their, their hands are getting tied more and more and a lot of them are scared, too. They’re, a lot of them are scared too after that, uh, you know, the big bailouts and the PPP and all that other stuff, because they feel like they’re under the microscope even more now, whereas the-the smart aggressive ones are like, oh no, now is the time where we’re really finding the right buyers with the right, uh, loans and everything like that. But, uh, just give me a, give me an update. Are you guys still doing some Permian action down there?
Imran Khan: Well, it’s funny that you mentioned that. I was, I was in a meeting around that earlier, right before this call, so we’re definitely looking into those areas and, um, you know, to your point also with respect to, uh, capital, it’s-it’s pretty crazy because if you look at it, you know, I think, uh, from the feds, it’s like, you know, banks are paying point zero nine percent, you know, basically zero percent interest. But yeah, from a loan’s perspective they’re not, you know, they’re not too happy about loaning out stuff, and-and probably a lot of it’s due to being leveraged on their previous loans, and-and the way that they’ve kind of done business in the past. But yeah, the-the banks that we’re dealing with, you know, I feel that they’re extremely conservative, um, you know, even with our our, uh, uh, RBL that we got, our reserve-based loan. Um, you know, they were very conservative with the numbers and that’s something that we wanted, quite honestly. Uh, it was something that we didn’t, you know, I don’t want to get money for stuff that just because, you know, some guy says it on a report that it’s okay that, you know, you just, that’s how we create these situations that we’re in right now.
Brandon Davis: 35, 40 percent leverage that at the most and, um, that was right in their wheelhouse which worked well for us, and the last thing you want in business is to be over leveraged. If you’re over leveraged, you’re, you’re going out of business, bankrupt at some point, and it’s just, it’s a given.
Imran Khan: Well, and who are you working for at that point, too, right? At that point you’re working for the banks or you’re working for whatever, uh, private equity company or whatever it is that you’re doing, um, you know. But if you really want to have control of your business, you need to make sure you understand what leverage can do and be able to be leveraged at a right level. I think that’s very important. Uh, First Capital Bank of Texas has, you know, provided that opportunity for us. Um, you know, Marcus Vadreen is our loan officer there and he is just a pleasure to speak with, you know. I probably give him a call, uh, once or twice a week and, you know, we-we-we talk about all sorts of different topics and, you know, it just kind of shows the character of him and the bank that he works for. Because I feel that, yeah, at the end of the day, the people that work for a company represent that company 100 percent, uh, and they’re just good people, you know, easy going, understand the leverage market well, and, you know, have positioned themselves to be able to still be providing loans even at times like these, uh, that we’re going through right now. So, and, you know, and this is something that we were, we’ve been working on with them through COVID, by the way, too, so, I mean, it’s, uh, it wasn’t, you know, most when once banks said no, these guys were like, yeah, like, you know, it sounds like you guys are onto something, and that’s really what, you know, you have to have that, like, mentality and I think they have that.
Brandon Davis: In addition to that, we are hiring. I think we identified six positions yesterday, and so we’ll have, um, job descriptions coming out soon. But we’re, we’ve been hiring for the last 60 days and, um, it’s going to get more aggressive because we’re so busy, so a lot going on and it’s all positive right now which surprises—
Imran Khan: The fact that we’ve created the positivity, though, right? I mean, that’s one of those things that I don’t think, you know, in industry, you don’t get credit for these types of things, right? Yeah, reality-wise, we, we’re creating jobs even in markets like these, because the fact that we’re looking for opportunities that other people are not, are not even capable of, quite honestly, because they’re not able to find the right financing. They’re not able to find the right deals. I mean I, you know, I spent a lot of my time looking at different deals that Jeremy and others put together and, you know, it’s like yeah, you know, a lot of them are, “no, no, no, I’m not, I’m not getting into that,” but at the same time, there’s ones that, “hey, this makes sense. Let’s talk with them.” And as Brandon pointed out earlier, we’re looking to be able to, you know, the pie is large, guys. You know, you just need a small piece of that pie and if you can be able to share it and everyone can be able to make something off of it, that’s the best opportunity, because that’s how you’re going to de-risk your actual investment, and that’s really what we’re focused on. And, uh, and that’s kind of, you know, the earlier call that I was talking about, we’re looking at being able to partner the things that are going on the Permian are expensive, so if we can be able to partner and get a piece of it and be able to provide that for our for our partnerships, uh, I think that’s a great opportunity to be able to get into.
Jason Spiess: I think there’s something to be said too about, you know, if you’re somebody in industry and you’re listening to this, for example, and you’re thinking about where to put money, what direction to do it, there’s something to be said about reinvesting in your own industry, because what you just said is very important. That especially during times like this those that are creating jobs are the ones that really should be the ones that are being supported, because they’re the ones that are finding the-the new niches in the marketplace to ignite the opportunity that’s going to create the jobs. So, if it’s somebody from industry, there’s something to be said about reinvesting within your industry as well, so I thought I’d just throw that out there.
Imran Khan: This is new territory, so we’re really— The way that I look at it, we’re really pioneers, uh, again, right? I mean, like, even though the times have moved forward, you know, in this new time, we’re pioneers and we’re actually going out there and finding opportunities for people, I mean, for-for our partners, for our, the folks that are in our office, right? We, you know, you either, you can go out of business or you can go in and dig in deeper and-and find the right areas to be able to benefit from and-and, uh, allow that to be able to get you to grow further.
Brandon Davis: There’s— The way I look at it, there’s two kinds of people. There’s the kind that make, um, make lemonade out of lemons every time, because that’s what they do and that’s what we try to do, um, and then there’s people that just let it sour them and sit around and complain about how sour the lemons are, you know, that’s it.
Imran Khan: I don’t know, Brandon, I think we make margaritas out of the lemons. I’m just saying, but—
[Laughter]
Jason Spiess: I was gonna say, for me, I never let them get sour. I just throw them back at the bus.
[Laughter]
Jason Spiess: After a while, I realize they don’t taste good anymore, just chuck them back, because you got to move on.
[Laughter]
Jason Spiess: Well, I mean, that’s, that, as we’ve talked about this before, sometimes, hey, you just got to move on sometimes, you know, and-and things aren’t good, but other times, hey, it’s Margaritaville, you know, it is. So, is it Margaritaville, guys, or what I know, it’s Friday, you know, but, uh, but—
Imran Khan: Whenever you come back down to Houston, we’ll have Margaritaville over at Cowboys and Indians. How about that?
Jason Spiess: That sounds like a good time, man. In fact, we should do a nice financial show from that patio one day. That was a good time, uh, nice patio that you have there and got a lot of compliments on, uh, just the mural that, uh, that color.
Imran Khan: It was a blast, by the way. I really enjoyed that she came down. It was really a lot of fun. I really enjoyed it. [Laughter]
Jason Spiess: Anyway but, uh, just kind of wrapping up, guys. We’re getting close to, you know, uh, election time and we’re getting close to where people are gonna start spending their money again, because, you know, as soon as the, uh, election season is over, there’s gonna be this big kind of sigh of relief and this dam and this whole thing’s going to happen. And so, uh, talk a little bit, you know, kind of center people a little bit. Why do you believe that the oil and gas industry or just that whole sector is a very good place and time to invest?
Imran Khan: You know, a lot of this just has to do with timing, right? Um, if you look, honestly, we just updated. Jeremy, uh, was kind enough to be able to update a lot of our website, uh, content-wise from a blog perspective, so we’re starting to do, like, a a blog and kind of keep it up to date with different current events, um, and a lot of what I was kind of going through from COVID onward. Just a, just a great, uh, great story, right? You know, things hit bottom, things went negative, uh, you know, came back up to 20 bucks that same day, and it just slowly progressed forward, you know. Still a lot of volatility out there but, you know, volatility is where people make money and, um, you know, with that said, you know, gas is at three dollars, uh, which is incredible. I mean, who would ever thought, considering that it was at a dollar sixty or something like that earlier in the year, uh, and then oil has been very consistent. I mean, it’s been, even with the volatility, it’s been consistently over forty dollars which is a great place to be, because when we’re looking at deals, you know, and-and we always have skin in the game in our deals, right? So, it’s very important to kind of, you know, provide that input to folks, because we’re not just selling something. We’re part of it. I think that’s a big different, differentiation com, considering some of the competition out there, uh, but I think one of the biggest things there that I have to say is that, you know, we’re looking at deals that make sense to us at today’s dollars and, um, and that’s what we’re trying to share with our partners too and I think that’s the real opportunity that’s out there. Uh, if you guys want more information around that www.swanenergyinc.com. Uh, if you’d like to reach out to us info at Swan Energy Inc dot com, uh, and that’ll get to the right department within our group and, um, that’s about it.
Jason Spiess: All right. I got one more question. Let’s say if I was going to entertain a nice lady down in Houston, hey, Brandon, where should I take her out to dinner?
Brandon Davis: Um, depends on what she looks like.
[Laughter]
Jason Spiess: Oh gosh, you.
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