Brandon Davis, CEO, and Imran Khan of Swan Energy talk about how risk management is critical in times of uncertainty. One way to manage risk is to invest in yourself.
Jason Spiess: I wanted to bring the two of you on to talk about investing in yourself, because so many people out there, you know, we talked about some laid off workers rolling their 401k into some programs that you guys have for some, well, sharing. And that’s an option for some people. We talked before about investing and just flat out wells take some cash and do that. And we mentioned that before. And now how about like, you know, some people just want to invest in themselves and if they’re out of the oil and gas industry. But that’s their background. Boy, that’s really a good place to start with what you know and what you understand. And that way you can have a little more confidence and a little bit more understanding on an investment as opposed to just giving it to someone and hoping it works out OK. Now that I’ve just taken the last 20 minutes to intro our two special guests today, I do apologize, but I just wanted to lay the context a little bit, because really is, you know, part of investing is understanding what you know and what you believe in. And that really kind of helps out. But let’s talk about some of those opportunities out there. And if you guys wanted to comment on that, investing in yourself kind of just attribute in the world of investing, you certainly can. So either one go ahead and start off.
Brandon Davis: Well, I believe that someone has the want to they should invest in themselves and go start their own opportunity, whatever it may be, and, yes, use the skills that you have to do so and then learn as you go on the rest of it. There’s nothing super complicated about getting in the oil and gas business. I believe anyone can do it. Some businesses take a lot of capital up front. You can get into the oil and gas business with very little capital up front. There’s a lot of opportunities to do that. And it’s exciting to me to think about just the industry that’s been hardest hit next. There the hardest hit industry from covid-19 is hospitality. Number two is basically oil and gas, mining and drilling and the reality is that there have been a lot of jobs lost, their hyper focus right now on specific areas that work at this price point very well, kind of like we were in 2016 and we’ll see what comes of it. But it’s traditional oil and gas fields. There’s a lot of international investors right now just wanting out. We bought a group of assets earlier this year. That was exactly that scenario where they literally had spent 70 million dollars using consultants and they spent about half that drilling in about half of it on consultants that didn’t do a very good job for them except spend their money, but they got to a point they wanted out. So we picked up the assets for literally a drop in the bucket. And we’re getting ready to start expanding on those. And there’s lots of those opportunities right now for my understanding. Most most money and the oil and gas space from Asia is getting out. So we’ll see how that goes on a forward basis. But it’s creating a lot of opportunities for individuals that understand completions and understand how wells work to start their own companies. I mean, I I implore anybody to do that. It’s exciting. It’s fun. And, you know, you can you can kind of write your own check at some point, but you have to be willing to take the risk. And that risk is no different than if you invest in wells. The difference is you were in the middle of it. Your involvement, your your brain is part of the decision making process every day. Our opportunities have the same kind of situation where people are in control and tell us what to do. Essentially, we come up with ideas and then we vet them through our investor base or partner base. So it’s very similar in that regard. But I you know, again, it’s it’s not a it’s not a high level of entry from a cash position, knowledge base, there’s lots of people out there that know plenty of well about oil and gas to be able to get get out there and get started. It’d be awesome to see this resurgence of the independent oil and gas companies because of all of this cutting and craziness that we’re dealing with.
Imran Khan: I think that’s a great, great, great point. And, you know, if you think about what America is about, I mean, the backbone of America is based on small business. Overall, it’s about people taking the opportunity and chances on themselves and and making that happen, you know, from a from oil and gas perspective. I actually used to teach at a at a local college here some different oil and gas related classes. And there’s a lot of folks that are very interested in being able to learn a lot of opportunities out there. If you are interested in and finding out and learning about those items, you definitely can. For us, it just is a great time to be able to learn about this industry. And I think there’s many industries out there that are that are that have some great opportunities right now. I know about real estate because it seems in Houston at least, it’s really high. But from a from an oil and gas perspective, you know, having hit the bottom not too long ago, it really has a big potential. You know, we’re seeing natural gas starting to pick back up again. We’re seeing oil obviously is very steady in the in the low 40s, which is a great number right now considering where we’re at. A lot of the technologies that are that are being developed over the last 10 years have just gotten better. And and we’re taking advantage of a lot of that, a lot of the horizontal drilling that goes on in the methods to be to be able to get into the right reservoirs. There’s lots of good technologies like Geo Steer that’s that’s come a long way in the last 10-15 years that allow you to be able to stay within a zone that that that you’re that you’re drilled into. So I think those types of things are important to be able to understand. You know, obviously these days everyone Googles everything. So there’s there’s plenty of places if you’re looking to be able to invest in yourself and figure things out, you know, you don’t even have to go to school. You can do a lot of that on your own. And, you know, obviously, there’s there’s a lot of different resources available out there for you to be able to look into. And, of course, we’ve got a lot of different investments in those areas, too. And we’re always willing to take a phone call or get an email and and help anybody who needs to in that space to better understand the investments.
Jason Spiess: It’s interesting that the startups are starting to percolate more and more and the international dealers are starting to shift out. And and that sort of thing is that’s really good news, honestly, because if that is starting to have the the momentum in the marketplace, then then there’s going to be some some good activity that’s going to happen in the future. I think one of the biggest things that people worry about is risk management. And, you know, last week we talked quite a bit about, you know, the risk involved with investing and in that sort of thing. But that’s what any investment and the thing that I really like about an oil and gas investment. And I’m going to talk a little bit about risk management here, because this is a different perspective that a lot of people do not understand, especially if you want a long term investment or something that is solid, let’s say solid. Imran, you have a restaurant, right?
Imran Khan: I do.
Jason Spiess: Ok, so when the weekend happens and you’re shut down because of covid and the government won’t allow anybody to open and that sort of thing, those days are gone. And if you don’t cash flow your five grand a night or ten grand a night or one thousand a night or whatever the budget numbers are. Well, that’s that’s gone in oil and gas. That commodity, that resource ain’t going anywhere. So it’s like there’s a dollar to each one of those things. Whereas in a lot of other places, time is really the biggest enemy versus regulation. But that’s one of the securities and one of the safe sides of risk management when it comes to oil and gas is when that commodity or that resources discovered, you know, you can pretty much put a pretty good price on it or put it a pro forma, at least on the balance sheet on it. Does that make sense, guys? Am I talking crazy? Do I not get this industry like I thought I did?
Imran Khan: It makes sense that, you know, I think the reserves are like anything else. You want to be able to pull up as much of it as you can as quickly as you can to be able to take advantage of it in current markets. And yeah, you’re not wrong about the risk part of it, too, right. In in order for you to be able to have the right risk, you need to have the appropriate upside. Right. So if you’re taking the risk, you need to be able to get something out of it. And I and I believe that, again, the technology and and the opportunity right now with where numbers are still in the upward trending direction, it’s the it’s the time to be able to get in within the market. Right. I think that that’s, you know, and again, that doesn’t have to deal with just oil and gas. Just in general, I think folks are hesitant to be able to get in. It’s great to see that foreign investment is lower now and more of the American investments are getting into our own lands and our own different types of investment tools out there. I think overall you need to just be able to understand that and move forward from that standpoint.
Jason Spiess: Taking a look at some of the diversity involved with, you know, investing. And when I hear startups and I start hearing about some foreign money going back and it just I see the cycle happening again. And Branon, if you wouldn’t mind, take a second to talk about some of the investing that’s been happening in your past, because, you know, first of all, people like to know about investing and et cetera. And, you know, you’ve got your fingers in a lot of different areas, whether it be natural gas or oil or gold mines. You know, I mean, you don’t have to name your portfolio or name all of them. But, you know, I always like to get a gold mine update, so I’ll start with that. But, you know, when somebody is trying to figure out how to. What’s that?
Brandon Davis: So over the years, I’ve done a lot of different things.
Jason Spiess: Yeah, you know, it just kind of let somebody know how they get started on something like that, because it does springboard fast.
Brandon Davis: It in one direction or the other. Yeah, that’s the way it works, is that it all comes down to your confidence and your understanding of what you’re getting into and understanding the risk and the reward. And in trying, the most important thing is to know all of the negative things that can happen. So you can make sure you’re comfortable with that, because, you know, the things that I’ve gotten into, the situations that I’ve dealt with. And look, I’m just going to say I’ve been in the oil and gas business for 12 to 13 years. I’ve also invested into nutrition companies, NASCAR race teams, local dirt track race teams, gold mining, trucking disposal wells, car dealerships. And I’m sure I’m missing several things. We used to look at start ups and look at them every day, which we did participate in some and didn’t participate in some. But at the end of the day, the thing that has made it easier as I’ve gotten older and understand things a little better, is that not only do you have to understand the big risk, you have to understand all the risk and what you’re getting into. And I say all all known risk and those today, it’s a lot easier to find them than it used to be with the Internet and all of the sources and searches and data out there. But the best way to do it is talk to someone who has succeeded in someone who has failed in that industry to get the gist of what what makes it click. And that’s how I go into anything as I try to find someone that succeeded to talk to them, try to find someone that’s failed and talk to them. So you get the both sides of the coin, not just the rosie it’s all going to work side because it’s never like that. It doesn’t matter how good a plan is, it’s going to change and it doesn’t matter how how amazing an opportunity looks is going to be hard. And they all are. And it’s the guy that fights through, sticks with it and doesn’t quit that. That makes it. Harold Ham is a good example, I mean, that guy came from nothing to have what he has today is just an amazing story. And so there’s lots of those in this industry and other industries. And I just it’s exciting to me to think about it like like other people going out and doing that. It’s it could be really cool.
Jason Spiess: Well, you just figured out my secret source that I failed so much in life. I have to bring experts like you on that to succeed all the time. It’s a good balance in my show. So you just figured out my program. And, you know, that’s why you guys are every success.
Brandon Davis: For every success I have had, Jason, I’ve had about two dozen failures before or after or around it. So I don’t know if it’s literally not how many times you win, it’s how many times you get back up after you get knocked down. And period.
Jason Spiess: Yeah, I tell people it’s all about momentum. And if you’re moving backwards, at least you’re moving, man, because you got it. You got to move ahead. You got you got to keep trying to move ahead. But when you stand still, that’s the fear. That’s the paralyzation. That’s when problems happen. That’s how we find ourselves and what we’re dealing with today. That’s how we’re going to places. And I mean, I went to three different restaurants last night that I didn’t go into because they had some covid regulations. And, you know, I’m I’m visiting from a place from out of town, so I don’t want to take the time to figure everything out. So I’m just looking for something easy and there’s problems there. But hey, and I did want to ask you I’m sorry to opine and sidebar there. I do that from time to time. But I did want to ask you, you mentioned some pretty cool stuff, you know, like your gold mine and NASCAR. I didn’t know you invested in NASCAR. And, you know, each one of those has their own little pros and cons and their positives and negatives. And, you know, like for me, I would think NASCAR is just kind of got some sex appeal and it’s pretty cool. And at the same time, it’s probably got a lot of hidden costs you never thought of from ball bearings to, you know, wax whoknows and diva diva drivers. But that’s a different story. But what’s the one thing that really sticks out to you about oil and gas when it comes to risk management and the thing that you really either learned underestimated or think that somebody should know going into oil and gas, that’s really going to help them. And from an investment side, I hope that question makes sense.
Brandon Davis: It does. The first thing that I discovered after drilling a lot of dry holes is that you drill wells where there are lots of wells, not in areas that don’t have them. I think that’s probably pretty commonplace, especially these days with all the unconventional drilling going on in areas that have been drilled for 30, 40, 50 years. But, you know, back when I got into the business, that’s not whatever one did, you found a unique opportunity that had ridiculous upside and went drilled it. And sometimes they in most of the time it didn’t work. I mean, that was just the way it was. And, well, we went in, started drilling wells and or acquiring assets in areas that had five to twelve potentially productive zones in them. We stopped having failures on the drilling side and then it was a production thing. So then it was about how much oil and gas can we get out of the well. And sometimes that worked really well and sometimes it didn’t. And that I still haven’t figured out which ones to pick and which ones not to because you really don’t know until you go do the work. You know, I’m currently participating in a project in an area where there are vertical wells that have produced one million plus barrels, Vertical wells in the same formation and we have a horizontal well and the best horizontal well we can find in the area in the same formation. And we found wells that did eight hundred thousand barrels and five hundred thousand vertical. But the best horizontal well in the area in the same formation is two hundred ninety one thousand barrels. And why, who knows, the IP was lower on that well than the wells that produced four or five to a million barrels in a vertical well. So I don’t understand all that and they’re not next to each other. So it’s not an obvious thing. And that’s that’s the fun of the business, is that there are a lot of unknowns. But the reason that I think that anyone that has worked in oil and gas should be able to get into business and really anyone should be able to is it’s not that big of an entry point. You can find opportunities in oil and gas for a few thousand dollars that you could turn into millions of dollars if you know how, and that know how would, but a lot of people that don’t have jobs right now have.
Jason Spiess: So, you know, I’ll give an example, but my my little company and listen, we’re not a multimillion dollar company by any by any stretch of the imagination, but it has allowed me to be a full time father, a very engaged father, pay my bills and go on few trips a year and this and that. And, you know, leave the. The above average lifestyle and I started with about eight grand, honest to God, I bought a food truck sight unseen off Craigslist, spent a thousand bucks on recording equipment doing it. And I did a food truck out in the back and for a year or about six months where we did our radio show. So we had Harold Hamm come by and did our he sat a food truck and did a radio program. And they didn’t even have them. They didn’t even have Internet in the back. And yet they didn’t even have Wi-Fi. They were they didn’t even have a Cat five yet. It was just awful. We were so far ahead of ourselves. But but to prove your point, my opinion, this is me, because I’ve only been in this industry for less than 10 years since 2012, really. I have never seen an industry that has allowed somebody to be so quick and nimble to shift their dollars and figure out ways to reinvest within their original intentional investment in order to keep nimble like the oil and gas industry. And that sentence may not make a lot of sense to a lot of people, but I know it resonates to a lot of people, too.
Brandon Davis: It’s absolutely a fact. And eight thousand dollars, I mean, your story is awesome. There’s so many people out there that I’ve run into that have businesses that do well but have similar stories where they took the last twenty five grand and turned it into a business as they sold five or ten years later for thirty or 40 million dollars. It happens every day and it’s possible every day. And it just takes the the commitment. I mean, you can’t do it part time, you can’t do it while you’re doing it. You have to go for it if you’re going to go into business for yourself. I say the biggest lesson that I’ve learned over the years from people that I’ve seen that have failed and succeeded is that you have to absolutely go in with everything you’ve got. And if you go in with any less, you’re going to fail. So don’t bother.
Jason Spiess Imran, let’s shift over to you, because I interrupted and if you’d like to continue on that thought you had twenty minutes ago when I interrupted, you feel free. But I do.
Imran Kahn: No, not at all. The funny thing is I just kind of reiterate at the same point. So no real loss there, overall are just about courage and confidence. Right? When you really think about these types of things, these aren’t things that are taught in school. These are things that you either have or you don’t. And you need to be able to if you don’t have a need to be able to come up with that somehow. If you want to be able to take advantage of the times, you know, research is used to be able to do, you can be able to go out and network with different folks. It’s not that hard to do. You know, you need to build a better understanding of whatever that topic is. And in our case, it’s oil and gas. And there’s lots of lessons learned. Right? I mean, like you got to be able to take the lessons learned, as Brandon was pointing out right now, you know, just because you drill a dry well the first time around doesn’t mean that you’re always going to be doing that. It’s going to be you know, you’re going to develop on that and understand the lessons learned around it and build from it. Right. I think that’s really the key there. And I think if you can have a method to your madness around that, that’s really what’s going to what’s going to make you successful in long term.
Jason Spiess: One of the things I like to do is get a little existential at times. And Ihran, I wanted to ask you the same question as Brandon. Your background’s a little bit different. I’m not sure about your portfolio, but I do know that you’re in the restaurant business and you’ve had restaurants and you and I have joked in the past about how that’s one of the riskiest ones out there. I mean, that’s up there with oil and gas and what’s the other I forgot the other one that we talked. It was a real estate. The other risky one. You’re in another one anyway. You’re in another risky one, too.
Imran Khan: If I tell you, Jason, I’m just background wise of myself and the and the investments that I made. You know, I’ve owned things from convenience stores to jewelry stores in the mall to all sorts of different things. And it’s you know, that’s really how you know, that’s how I’ve made my living for a while. Yeah. Yes. I am an engineer, but I always had that side hustle idea going on in my mind, right to where this isn’t. What I want to be able to do is just work for someone from nine to five. You want to really do it. You need to come out of the shell and come out and do it right.
Jason Spiess: Ironically the jewelry store in the mall sounds like about the safest investment I’ve heard yet, but that’s not a great investment.
Imran Khan: But it’s a great way to be able to survive and raise a family. Right? I mean, you have to do what you have to do to to make things happen. And I think I started my first business when I was 16 and I got audited the first year. So just to kind of give you an idea, I mean, literally it just, you know, so you learn early, you learn fast. That’s the real bottom line. And, you know, I’ve been fortunate to lose hundreds of thousands of dollars rather than millions of dollars. Right. I take that as a as a big benefit. I know I know my buddy that I’m sitting next to here has lost millions of dollars. So it’s you know, I mean, like, you take advantage of whatever you can and you learn from it as fast as you can.
Brandon Davis: Well, the downside for you is that you own. Get out of it what you put in, so if I go lose 20 million, I that means I was trying to make two or three hundred, a hundred percent and that stings. But it is what it is. And you learn from it. And if you don’t learn from it, work. If you don’t learn from it, that’s where you get problems. That’s that to me is the problem is that you fail to know why you fail to understand it, learn from it, and then move on and don’t dwell on it because dwelling doesn’t do any good either. I can sit around and tell stories for days right here on all of the things that I have done that I have lost money on, that everyone else I know that has has attempted or succeeded and made money. It’s like sometimes you just don’t get in the right situation at the right time. It doesn’t work. And that’s just the way it is. So failure failure is just one step closer to success and it doesn’t take many successes to make it. It really doesn’t.
Jason Spiess: Listen, you need to fail your background and convenience store it. I thought, boy, if somebody would invest it in a convenience store 10 years ago, they probably had four heart attacks by now because that industry has had to adapt and reinvent their business plan more than me. And I’m in the media and I’ve had to do it four times in the last 12 years. I can be a very I can I can explain just vividly, thoroughly how we’ve had to change our business models. But the convenience store, holy smokes, they had to turn in to compete with McDonald’s. They’ve turned into food preparation because pay at the pump about killed their Snickers. You know, people people used to put gas in the car. They’d maybe lose a nickel or break even on the gas. They’d go in and buy a Snickers for twice as much as they should. And everything was fine. Everybody loved it. But as soon as the pump happened is convenience stores, they went through a decade of trying to figure out how to get people into their store from. Some of these people are like little, little, little small Runyon’s and little small Dick’s Sporting Goods stores and in general stores when you get in there. But that’s an example of somebody might have thought investing in a convenience store was really safe, but all of a sudden, out of nowhere, they had a decade where she started, had to really figure out. And I bring up the convenience store Imran, because you probably understand what I’m talking about, where they it seems like now. Yeah. They’ve had they’ve had to turn into like some sort of high end quick food operation to get people in the store.
Imran Khan: Yeah, you got to do all sorts of stuff in that business to just stay around and, you know, there’s you know, and I’ve left that business a long time ago, but there’s just a few sharp people that are that are in that business that have been able to make money on pennies. Basically, that’s pretty much what you do in that business. And it’s it’s it’s a numbers game. Right. You need to be able to have enough stores. As you pointed out, there’s there’s a gas station on every corner now. So you’re competing against all four the other three corners of wherever your your convenience store is. Right. So, you know, there’s two. And on top of that, like you said, the Dick’s Sporting Goods, the Walmart’s, everything else that’s around there. So, you know, this is one of the reasons why, you know, I thought it was a better bet to get into oil and gas. And, you know, having seen a lot of other industries, it’s. Yeah, you know, you can go bust any time, but you can do that anywhere. I’d rather do it fast and slow. And I and I think, as Brandon pointed out, you know, when you’re when you’re losing 20 million, you’re probably looking for two hundred million. Right. So you just need one of those to be able to hit and you’re doing well.
Jason Spiess: Well, I sure appreciate you guys coming on here, because you know what what we’ve been able to explain to people over, you know, a few weeks, months or whatever is that you guys have a diversity in your investments. And the reason we bring you in here is to talk about the oil and gas investments and whether they’re valid or not. Because if they’re not, you’re going to let us know because you’re going to say go invest in gold, go invest in convenience stores, because that’s what you guys are doing. So appreciate the honesty on that. And I want to give you guys an opportunity to let people know how they can contact you. But for that person out there, they just want to know more information, how they can invest, be a part of some of the investments that you guys have going on or how to invest in the oil and gas industry will give you an opportunity to let people know how they can contact you.
Brandon Davis: Swan Energy Inc.com as our website. There is a lot of information on there. There’s also a place that you can fill out requests for information on what we’re doing and you can feel free to do that if you like. It’s SwanEnergyInc.com and otherwise, no, we’re here every day, so we’re working. And if somebody contact us looking for information via our website, we’ll reach out and go from there.
Imran Khan: I think a great topic today and invest in yourself. I think both Brandon and I and you have basically shared with with the listeners how we’ve invested in ourselves over the years. Right. And did whatever we needed to do to kind of make it happen. I think everyone has a story that that they’ve, you know, spent time and developed. So I think you just have to be able to take the time, understand it and do what makes sense to you.
Brandon Davis: Well, Jason, just I get I get a lot of from a lot of requests for conversations, information and and it’s all it’s always based around success and what you know, how did you become successful and or tell me about the greatest opportunity, greatest deal you ever had, the best deal you’ve ever had. And that’s for me, that’s the last thing I ever want to talk about. You know, those those to me are are the exception. The rule is all the times that I’ve failed and things haven’t worked and they haven’t gone my way. Those are the conversations that I like to have with people because it’s more of an educational situation. It’s kind of like the kid that goes through high school and he’s on a great team and he’s an all star and never loses a game and goes to college and he never loses a game and it goes into the NFL and gets his ass kicked and then never can come overcome that, pardon, pardon my language. But at the end of the day, losing is what makes you stronger, not winning. But it seems like our society tends to only want to lean towards people that succeed all the time. When those people that succeed all the time fail, that’s when you see what they’re actually made of, because everyone does it. It’s just part of the deal.
Imran Khan: So you just reach out to us at SwanEnergyInc.com again, it was SwanEnergyInc.com. That’s the best and easiest way to be able to get in touch with us. There’s a contact us contact us area within the site that you can reach out and put your comments and questions in there and we’ll be able to get back with you. There’s there should be there is a phone number on there. Choose the best where you can reach us from. From that sort that way to.
To contact Swan Energy’s Davis and Khan, click here
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