This week on Mining Money, Brandon Davis, CEO, and Imran Khan of Swan Energy discuss the “new frontier” in oil and gas. Even before the recent presidential election, changes in oil and gas were happening.
Both Davis and Khan comment and react to several of the large corporation’s CEO’s comments of what a Joe Biden presidency means for the oil and gas industry.
Pipeline issues impacting the market, the rise of the Asian middle class, manufacturing and energy efficiency are also discussed as angles of energy investment this week.
Imran Khan: Imran Khan, Swan Energy.
Brandon Davis: Brandon Davis, Swan Energy.
Jason Spiess: Gentlemen, thank you for joining the program here this week, a little Mining Money, finding out some investments where to— Well, how to, actually, more how-to than where-to, because it’s more about how-to than it is— I know there’s where-to involved but we can get to that in just a second. So, anyway, before we get existential, how you guys doing today?
Imran Khan: Doing great, um, you know, it’s a little cloudy day today in Houston but, uh, weather’s great, um, enjoying the the fall winter, uh, season over here, which involves wearing short t-shirts and just hanging out, having fun.
Brandon Davis: The weather’s only perfect in Houston ten months a year so, you know, um.
Imran Khan: One of the perks.
Brandon Davis: It’s probably eight, but still, um, there are four months that can be extremely hot and humid but the rest of the month, the rest of the year is amazing here, so.
Jason Spiess: We have the flip side of that. We have jokes that we have road construction season and winter, and those are our two seasons up here, and then the other jokes, of course, are that, you know, it’s so cold that you can’t go outside, which is a reality sometimes. And we’ve got a little bit of snow on the ground here right now before Thanksgiving, as we’re talking about. But, uh, speaking of which, you know, we’re a few weeks after the election now. It’s a week and a half, whatever it is, and, you know, there’s still no official declaration of a winner, but a lot of people are certainly, uh, going the Joe Biden route. And I’m noticing there’s a lot of articles out there, and one in particular – and I was very curious to get your guys’ reaction on – and it has to do with, you know, what some of the, uh, leaders, five US energy leaders offer takes on potential potential impacts of a Biden win. And a gentleman has been on this program before, Lee Tillman, he’s the Marathon chief executive officer. Lee Tillman, um, he is— I found it interesting because what he said is what we’ve been talking about for three four weeks now. In fact, leading up to it, which is we are realistic that with a Biden win, doing business on BLM land will become more difficult, and that’s been basically one of our big chunks of conversation. So, I just wanted to get you guys’ reaction to what, you know, Lee Tillman is talking about and how it kind of correlates with what you guys were also, uh, referring to over the last few weeks even before the election started.
Imran Khan: Yeah, definitely. I think, you know, it’s interesting to see the views of different folks chiming in and, you know, yeah, the BLM land is a-a big item for, um, for for the different companies more from, uh, from a new development standpoint of assets and being able to utilize the the areas for new oil and new gas developments. I think, you know, having those, uh, spaces available really do make a big difference and-and making those available from the government standpoint. But keep in mind, there’s a lot of private land out there also, uh, that, you know, we’ve got in the US. It’s probably different than a lot of other countries out there, which we-we are very fortunate to have that people can still be able to go out and, uh, drill on.
Brandon Davis: I think it’s interesting that we actually may know what we’re talking about! Because we’re not the only ones saying what we’re saying. Um, it seems to be across the board, and overall, you know, the environment will get a little harder, but yeah, at the end of the day, I think the impact will be insignificant in general, um, overall, in my opinion.
Jason Spiess: Another one I wanted to mention was energy transfer. They talked about the pipeline companies and how some regulation might be of concern. They’re still, you know, pretty positive that, you know, the pipelines are going to be moving forward, because India, China, they’re getting a middle class and-and they’re going to start wanting, you know, certain products and a certain lifestyle. And so, whether it’s, uh, being pipelined and then shipped over or whether it’s being produced here in the US, there at least seems to be some optimism when it comes to whether it be natural gas or crude oil moving through the pipelines, once some of this dust settles. What are your guys’ thoughts when it comes to the, you know, the next four years or whatever, when it comes to regulations and pipelines and either exporting it or maybe keeping it here?
Brandon Davis: I believe that there will, if there is impediment, it’ll be minimal. I don’t think it’ll make a big difference. I’m much more concerned of our country heading towards socialism than I am being able to get oil and gas out of the country, uh, personally, because I believe that they’re, it’s not going to change. The demand is not going to go away, so those things that-that are required to-to move the product or, are going to have to be there. Yeah, maybe it’s harder to get permits, but at the end of the day, um, I-I only know of one pipeline that got stopped ever that was that needed to be put in, so.
Imran Khan: It’s good to be able to understand, like, the, you know, this is a four-year window, uh, in this situation what we’re talking about. Um, the development and-and creation of these of these pipelines and, uh, methods of transfer, you know, take ages to build and to-to be able to get approved and, you know, move forward. So, um, from-from that standpoint, you know, a typical project that an oil and gas company puts together, uh, you know, in the, that are in the billions, it might take them ten years to be able to put it all together and from-from start to finish. And, um, you know, I think that, uh, from that standpoint, you know, one administration is not going to, uh, change things that drastically. At the end of the day, it’s just more of, you know, how you can work together and make things happen and I think that’s going to be a key thing that, uh, we’ll be, we’ll be working towards, I’m sure, in the next four years, depending on how-how it moves forward from a presidency and also, uh, from-from the other, uh, branches.
Jason Spiess: Brandon, you brought up a very good point that we’ve been kind of following for the last three years, specifically here on The Crude Life, which is this shift away from capitalism and socialism is a great, you know, way to kind of throw that out there, whether it’s paying people to stay at home and work— Or there’s a new trend now that Texas tried to do where they tried to control the production, and I-I think that got voted down, and then in North Dakota, they shifted some Cares Act money to-to oil companies, and I see they did the same thing in Wyoming now. And I understand the rationale behind it, but it’s-it’s a trend and it seems that there’s more and more of this trend to convert the oil and gas industry to more of a socialistic industry. And I’ll be honest, the whole reason I’m in the oil and gas business because I-I think it’s the last bastion for capitalism. I take a look at every other industry, it’s so controlled from ag to tech to UAVs to everything else, that you, anytime you can get a roughneck to figure out how to make a vibrating tube go twice as fast and he’s running a company with ten employees within a year, that, that, baby, that’s America. That’s-that’s what it’s all about and I’ve seen that go more and more away. And, you know, you brought that up about your concern shifting away from, or shifting towards socialism, which I assume is away from capitalism. Can I talk to you more about that or have you flushed that out a little more just in the way that I did with a couple examples?
Brandon Davis: I wasn’t really speaking of it in a sense that was towards oil and gas. As far as I’m talking about in general overall, and I agree with you that the oil and gas work business is-is-is the last bastion. It’s-it’s the, there’s nothing else like it in-in this country right now, um, or in the world, so, um, as far as innovation and, uh, just freedom, and-and I-I hope that doesn’t change. And I-I can’t think of anything specifically, Jason, to be honest with you. I just, it doesn’t, I haven’t thought that deep into it, um, so sorry but—
Jason Spiess: No, no, that’s okay, but I mean you’ve, you know, I’ve heard some frustrations over, you know, the paying people to stay home and, you know, the-the lack of motivation and it’s generally, uh, the frustration is-is centered in that sort of accountability, if you will, that a lot of entrepreneurship and capitalism brings to the table. And so, I-I get those examples that you’ve-you’ve had through the-the time but, uh, I-I guess I brought it up just more for that last bastion of capitalism, and that’s really how I look at the oil and gas industry. And, um, Imran, I don’t know, you’re, you own restaurants and, you know, you’ve got, you got your fingers in a few other pies too. Uh, talk to me about your thoughts on that. Is-is the oil and gas industry the last bastion for capitalism?
Imran Khan: You know, I think, I think the oil and gas industry is, um, is the new frontier, uh, and, you know, what I mean by that is, you know, especially these smaller independent oil and gas producers that are out there, it’s not an easy business to be in, right? Like, you know, you-you might have folks that are in oil and gas and/or other industries and they may or may not understand what’s actually, you know, happening as time moves forward. And, you know, if there is a steer away from oil and gas, um, you know, or a steer to stay home, right, I think these types of things a lot of folks don’t really understand the full impacts of just because they’re not privy to running their own business. Um, it’s challenging, right? When you think of, uh, in an independent oil and gas producer and, you know, the different work that we do, uh, sure we’re probably not the innovators. We’re probably, in a sense, uh, following some of what the bigger companies out there are doing, the BPs, the Shells, the Chevrons of the world. Uh, you know, they’ve got technology out there going into the middle of the Gulf of Mexico or Nigeria or, you know, wherever off of Australia that is probably more challenging than to be able to send a man onto the moon. Uh, but with that said, I think, you know, coming back to the small business part of it, yeah, it’s difficult, you know, from, you know, from an entrepreneurial standpoint, uh, to be battling legislations or regulations and things of that nature, but it’s nothing that, you know, it’s nothing out of the ordinary that a person who’s running a small business doesn’t deal with on a regular basis, right? You know, you always have different competing priorities and you always have different new challenges that pop up and you learn how to adapt around it, and I think we obviously want to be able to do whatever we can to be able to make that as simple as possible, and I think that’s really our-our main approach. But, you know, depending on what type of regulations, we’ll see, and how things are going to move forward, you know, maybe you’ll see that the larger, uh, oil and gas companies that are out there, um, produce less. But then, you know, you’ll have these independents that are smaller guys that are going to produce more. At the end of the day, you know, whatever energy outlook you look at, there’s always a big push for more energy needed, right? And where does that really stem from? It stems from folks actually using that energy, right? So, you know, unless you want to, I guess, sit at home and do nothing that, you know, some-some want you to do, uh, I think that-that’s really what will kill that industry more than anything else. But changing the way that you do things is probably more the-the key thing there, right? If you need to be able to use less energy, you need to change the way that you do your work, the way that you do, uh, everyday shopping, the way that you turn on your air conditioner, uh, down to 68 degrees rather than 75. You know, all these types of things make a big difference and people have to make that decision to make that change.
Jason Spiess: I love it, the new frontier. In fact, that’s what we should probably focus on is this new frontier that’s going to happen. And I mentioned China, India, they got that emerging middle class that’s happening. You know, here in America, we’ve got this whole rebuild thing that’s happening, whether it’s new appliances or it’s new energy efficient windows. There-there is a rebuilding that is going on, whether it’s through tax credits or regulations, whatever the-the case might be. My point is is that I-I’ve seen articles percolating more and more about the resurgence happening in the manufacturing industry and anytime that happens it can’t be powered without the natural resources to make it go around. And a lot of, uh, you know, things that are happening is more of, you know, nimby ‘not in my backyard’ when it comes to drilling or offshore. But it’s still happening, and these countries that have got major populations that have been without a middle class for so long, that’s happening regardless. So, from the safe standpoint, I’m taking a look at back at what we’re here to talk about, which is investing in the oil and gas industry and fossil fuels and etc. Swan Energy swannenergy.com, you know, inc.com/invest for those who want to check out a video. And a little more specific but a very long way to talk a little bit about where we’re going with the new frontier, and whether it’s rebuilding America with energy efficiency, whether it’s powering America to keep it great, whether it’s these emerging middle classes over in China and India. I do see fossil fuels, natural resources as being a very safe investment over the next five, ten, 20 years. Talk to me about how you guys are looking at the new frontier from that aspect, from an investment aspect, if you wouldn’t mind.
Brandon Davis: Energy efficiencies are-are constant and have been for-for a long, long time, and I-I don’t ever, that should never stop and—
Imran Khan: There’s always those against that.
Brandon Davis: No, no, I always should get better, cleaner energy sources. Absolutely. I mean, I-I-I am not against any of that. I’m 100 percent for it, and, uh, you know, I actually-actually considering it. Um, but at the end of the day, it all has to work together to get, to get us all, to keep us moving, um, to keep us living, to keep us building, to keep us growing. Uh, all of the, whatever the sources of energy are have to, have to be able to collaborate, uh, whether they get along – I’m air quoting that – or not. You know, it’s like, at the end of the day, uh, energy is energy and the-the cheaper, easier way to get it is always better. Uh, burning less, being more efficient is always better, because, you know, even with the solar and wind that they’re working on and all the other potential, um, renewable sources of energy, we only have a finite amount and – how much is the question – um, of oil and gas in the ground. You know, it’s a depleting resource, so we’re idiots if we aren’t getting more efficient as we go, um, whether that’s making plastic or keeping your house warm. Either way, it’s got to get more efficient, because at some point, there’s going to be less and down the road, at some point way down the road, there’s going to be maybe none. And so, we’re going to have to find replacements for all these things. I mean, that’s just reality, uh, so I-I’m-I’m all about efficiency and, um, I think that-that as far as the industry goes, that’s where we always are moving. We’re trying to get more efficient, get our wells drilled cheaper, get our wells frac cheaper, use less water than we have to, um, but get it, use as much as we need. So, there’s this-this fine line, and-and that’s— The-the oil and gas business constantly pushes those limits.
Imran Khan: Yeah, cost savings are always important, right? Around that stuff, I mean, at the end of the day, you know, the more you want to be able to, the more you can save, the more you can put into your pocket, so that-that’s never really an issue. And to Brandon’s point, who doesn’t want energy efficiency? I think that-that’s really a big key, but I think it’s important to be able to understand first world problems, as people talk about, versus third world situations, right? I mean, in the third world, there’s lots of paradigm shifts that are happening, right? There’s a building of the middle class, you know, their objectives and their momentum is totally different than what ours is in-in America and I think it’s just important to be able to understand that, you know, we all need to work together towards that, you know, better energy efficient lifestyle for everyone.
Jason Spiess: Well, let’s talk about what you guys are working on, and I mentioned that, you know, the website swanenergyinc.com/invest, which gives a little bit more information and a video and etc. But let’s-let’s talk a little bit about, you know, easing the calms if somebody wants to talk to you guys about investments and everything. Just, uh, what’s-what’s been going on this week in the war room?
Brandon Davis: It’s top secret. Top secret. We have a lot going on, but it’s top secret. Um, now, anyone that’s interested can go to our website, swanenenergyinc.com and, uh, contact us and, uh, we-we can talk about what we have working on, um, if someone qualifies, but in general, we actually have several things cooking, but nothing we want to talk about.
Imran Khan: Now that-that’s, you know, that’s really funny. I think one of the big things there is just, you know, we’ve got a lot of strategies going on right now. We’ve, you know, we’re-we’re really planning on 2021. Uh, you know, you brought up some good points around the, how the nation’s moving forward, um, you know, I think there’s, uh, different people that are thinking different things, uh, with respect to the president-elect, who it is, what it is. Um, you know, I think there’s a million-man march or something like that going on in Washington right now. Uh, I think there’s-there’s a lot of different things that are going on, as you pointed out earlier, you know, all these different companies right now, you, I think you mentioned Marathon, you mentioned Energy Transfer. Uh, they’re all working on strategies, figuring out which ways to go, depending on what legislations would be implemented as-as time moves forward. I think we’re doing the exact same things right now. So, we’re-we’re trying to keep it under wraps, but, uh, we-we hope to be able to share more with you in-in the in the coming months, and obviously everyone is always available to reach out to us, uh, and-and call us or-or take a look at our website at swanenergyinc.com, a lot of information presented there but, you know, you can always get us on the phone or-or on the web.
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