This week on Mining Money, Brandon Davis, CEO, Imran Khan and Jeremy Pate of Swan Energy are live on location at Cowboys and Indians restaurant in Houston, Texas.
Jason Spiess: Welcome, folks. This is an episode of Mining the Money Meets Living the Crude Life in Houston, Texas, right outside of Cowboys and Indians, right in the patio area. You can see the lovely mural. We’re going to bring Imran Khan in just a moment to talk about the mural and the restaurant. Brandon Davis, the CEO, next to Imran, and then Jeremy Pate down at the end. Swan Energy as well, and it’s our Mining Money segment here, live location, and gentlemen, how are we doing today?
Imran Khan: Doing great.
Brandon Davis: I can’t complain.
Jason Spiess: All right.
Jeremy Pate: No complaints here.
Jason Spiess: Well let’s dive right into it, but first off, let’s do a little commercial for the restaurant, if you don’t mind. I don’t know. It’s up to you guys, but it’s a very nice mall back here I’m having in the mid-afternoon, but let’s talk about the restaurant Cowboys and Indians. I was at the dog park earlier down in, uh, right outside of Seaport to— Sea, uh, brook, I apologize, brought it up and, uh, people thought interesting concept of a restaurant if— People back in the Bakken have said the same thing. So how did this restaurant come about?
Imran Khan: Well, oil and gas wasn’t enough for me and I wanted to kind of bring together some cultures. Uh, a lot of what, uh, we’ve been eating from, uh, childhood on was Indian food, and then growing up in Texas, you-you learn to eat chicken fried chicken and, you know, other, uh, southern comfort foods and we just kind of put it together. And, uh, you know, that’s-that’s what, uh, Cowboys and Indians is.
Jason Spiess: What kind of menu items you have on there as far as, uh, from the American fare, the-the cowboys fair?
Imran Khan: Yes.
Jason Spiess: Steaks?
Imran Khan: Yes, we’ve got, we’ve got chicken fried steaks. We’ve got, uh, po boys. We’ve got, um, you know, some-some different style wings, some different fusion items that we kind of blend into, and then, uh, uh, go into some traditional Indian cuisines that are, uh, put together by my aunt and my, uh, mother. So original recipes.
Brandon Davis: And I must say they have the best chicken fried chicken in town and it absolutely could feed a family of four so. Um, I’ve tried to talk him into having smaller portions and he won’t do it, so it’s-it’s cool.
Jason Spiess: Have you eaten here often?
Brandon Davis: That’s how we met!
Jason Spiess: Oh!
Brandon Davis: I ate here so much, this happened. That’s how much I eat here.
Jason Spiess: I told somebody the other day, I mean, and this is weird coming from North Dakota, Minnesota, the Indian food is my comfort food. I absolutely love Indian food and so I’ve been frequenting this one Indian food restaurant for 20 some years. And it doesn’t surprise me, you know, and so, uh, I’m glad that we’re able to do this, make this work. The mural, talk to me about the mural a little bit before we get into what the folks at Swan Energy are doing, because I understand you guys have a lot going on right now. But the mural, let’s talk about that.
Imran Khan: Yeah, definitely so, you know, we wanted to kind of represent, uh— So the way it’s set up, it’s actually the Texas flag and then the Indian flag that’s built into the center of the Texas, uh, itself, so just kind of wanted to show a blending of cultures, uh, and, you know, a lot of the colors are very similar between the Indian flag and the Texas flag so we kind of blended that together. And then, you know, some of our local, uh, uh, celebrities that, uh, are always, uh, pretty popular in Houston are kind of up there, from football, baseball, soccer, and also basketball. So just kind of wanted to blend it in together and kind of give it a sports feel, uh, and-and, uh, just kind of represent the city.
Jason Spiess: Jeremy, you awake down there? How you doing, man?
Jeremy Pate: I’m doing very well. How are you doing today, Jason?
Jason Spiess: Doing well, and folks, if you see me looking, I’m checking mic levels just to make sure that things are okay with— When we’re outdoors, we’ve got wind and everything we’ve got to worry about. So, I didn’t, I just wanted to include you in the conversation. We hadn’t at this point yet, so I just wanted to, but, uh, let’s talk Swan Energy a little bit, what you guys have going on before we get into too much. I like to tease without getting into your business plan too much because one of the things that’s been prevalent over the last 10 years is that a lot of really smart people I trust seem to think that 60, 70 percent, a lot of the drilling activity for Shale Play USA is going to come from the Permian and the sub underneath, sub layers underneath. Well you mentioned there’s some other plays that are in the hot-hot, uh, uh, phone calls and things like that but, uh, let’s talk a little bit about what you guys have going on. You mentioned that you’ve, uh, are looking or got into the Permian recently so, uh, tell me what Swan Energy has going on and what is current of the day.
Jeremy Pate: Yeah, so we are in the process of closing a deal in Howard County in the Permian, so that will give us a presence there. Uh, we picked up a nice little acreage position with a few active wells on it. Uh, we’re really excited about that because it fits-fits hand in hand with some other stuff we’re doing in the Palo Duro Basin. Uh, we’re really looking forward to and excited about those projects and what they’re going to bring to the table for Swan Energy and Oak Energy in the future but, uh, we we have a lot of excitement centered around the Howard, Howard County acquisition as well as Palo, Palo Duro Basin.
Jason Spiess: Brandon, let’s bring you into the conversation, if you wouldn’t mind, a little bit. Um, the Permian. What’s your thoughts on, uh, getting some acquisitions in the Permian? is that, uh, where are we at?
Brandon Davis: Uh, still scary.
Jason Spiess: Is it, is it still?
Brandon Davis: It’s expensive, it is, yeah. We-we’re working on this, the one he’s speaking about and it, um, it’s perfect for-for us, but most of it is a little bit out of our reach. Um, it’s a very, the entry cost is not-not low.
Jason Spiess: Okay.
Brandon Davis: It is exceptionally high and then the well cost is high so it’s, uh, for us it’s-it’s something we’re going to tiptoe into, not necessarily dive off into at first.
Jason Spiess: Right.
Brandon Davis: Um, but I’m happy that we’re able to get in-in a property there with some wells on it.
Jason Spiess: Can I ask, why did you invest in the Permian if that is scary and, you know what I mean?
Brandon Davis: I mean, the way we got it done.
Jason Spiess: Okay.
Brandon Davis: Um, it was not a traditional transaction and it reduced our risk significantly so, um, not to get into the details, but that’s-that’s how we did it.
Jason Spiess: Yeah.
Brandon Davis: Um, versus, uh, writing a massive, uh, eight figure check of some sort.
Jason Spiess: Yeah, did you set out to get to, in the Permian or…?
Brandon Davis: No, we just happened upon the opportunity.
Jason Spiess: Okay.
Brandon Davis: So, um, once we evaluated it, looked at the, uh, potential, and-and made an offer and it was accepted.
Jason Spiess: Okay.
Brandon Davis: I’m not exactly sure why they accepted our offer versus others but, um, my guess is that they believe in the upside of it more than they believe in what, um, cash they get today.
Jason Spiess: What kind of play is this in terms of, um, is it, is it horizontal? Is it a vertical?
Brandon Davis: it’s horizontal. Everything in the Permian, everything everywhere, really, is kind of turned into horizontal.
Jason Spiess: That’s what I thought. I-I still see these, you know, vertical well guys that, you know, they’re still around, so I gotta ask.
Brandon Davis: Well, you have to drill vertical wells to find out what’s down there, then once, you know, you can go in and drill horizontals but, um. So, areas that aren’t as prevalently drilled vertically, it takes a little more, a few more vertical wells to be drilled before you can determine exactly how to drill your horizontal. I mean, that’s, uh, yeah, just-just getting the data, and so, um, yeah. I-I we still do vertical projects, so it’s not out of the question. It’s just they aren’t very, not very often.
Jason Spiess: Is-is there still wildcat, I mean, much wildcatting going on? I mean, in the Bakken, everybody knows where everything is and they’ve known since like the 70s, and all they needed was price point to be this, and price point to be this, and so it’s-it’s very different. But I do know there is some wildcatting still going on, isn’t there?
Brandon Davis: It depends on how you define it.
Jason Spiess: Okay.
Brandon Davis: Well, by the technical definition, yes.
Jeremy Pate: I think everybody has their own version of wildcatting these days, right?
Jason Spiess: Well, I—
Jeremy Pate: it’s not like, it’s not like, okay, we’re just going to get our witch and sticks together and go out here and-and find a spot and drill the hole. You know what I mean?
Jason Spiess: Well, that’s what I mean. I think that’s what the average person thinks wildcatting is like. “Oh, let’s try right there. Let’s see if we can get anything Jed Clampet style. Start shooting first and we’ll bring in the drills later.”
Jeremy Pate: Yeah, no, yeah.
Jason Spiess: That’s-that’s-that’s not erroneous, that’s not— Clamping oil is gone.
Jeremy Pate: There’s much more efficient ways to do it these days.
Brandon Davis: it might still happen; I just don’t know about it.
Jeremy Pate: Yeah, we’re not doing it, that’s for sure. Yeah, it’s not the way we wildcat now. We may go pick up some existing web wars (?) and— that we think have some potential in them, and we may go explore that potential through uphold recompletions or-or, uh, pop in a zone and testing it or something like that, you know, but we’re not going to go out here and-and just go, you know, Jed Clamping on somebody and-and just pick a spot and drill a hole.
Brandon Davis: I heard they do that in Kentucky.
Jason Spiess: They probably do.
Jeremy Pate: They used to do it in North Dakota, that’s for sure.
Jason Spiess: Well, actually, the one thing about North Dakota that is very unique, like, Montana doesn’t have this, uh, they’ve started it. But back in the 50s, they started this library called the Laird Library. It’s named after I think the the guy who who, uh, it was his idea, and it’s up at our university, and they have every core sample from like the 50s recorded. That’s how they knew where everything was. I’m not sure what Texas’s core sample library at the state is like or whatever, but I know Montana’s, they’ve started to, but Montana is a big state, much like Texas, so it’s difficult it’s, you know, much like, uh. We were talking about some abandoned wells earlier, you know, you get out to Ohio and Pennsylvania, there’s wells that are abandoned and nobody even knows about. Still to this day, drones are finding them, because life used to still happen before we had cell phones recording everything, people did things, you know. So, um, Imran, is that petroleum geologist your background, do you know much about how much advanced notice somebody has before they drilled? Do you know what I mean? Like-like I said, North Dakota, they know where everything is.
Imran Khan: Well, I think that’s, you-you brought up a good point right there, when you talked about Ohio and Pennsylvania. These are one of the earlier areas that, you know, wildcatting was done to be able to do work and-and drill, right? I think nowadays, with everything being so far explored, uh, compared to what it was back in whatever, early 1900s, whatever you want to call it, it was a different time, so I think wildcatting was more done because of those reasons. Now with the technologies that are out there, I mean, you know, we were in a meeting this morning with the sales guys and we were talking about how technologies improved from, you know, 2018 to 2020. It’s like iPhones, right? It’s like, you know, you have an iPhone from 10 years ago compared to today, it’s like a whole ‘nother story. And that’s kind of what technology that’s going on right now that helps you to be able to figure out what’s in the ground beforehand from a geology standpoint and, uh, and the development standpoint.
Jason Spiess: By the way, when it comes to big data, I’d like to just point this out, that there’s a lot of changes that are happening with big data, and the integration into the oil patch is-is happening so fast and it’s in every department. So when-when CEOs and-and Chairmans of the Board come out and say ‘paradigm shift’ and ‘oil and gas,’ they mean it, because they’re going to get sued if they don’t mean it. I mean, that’s, they can’t be chucking divers (?) is what I’m saying. A lot of people are listening. It’s, uh, and so when you think of HR, for example, think about the roughneck that would start in Alaska and he’d go all the way down to, you know, Alabama, and he would be doing the outlaws the whole way. But nobody could do background checks. Well now HR knows your background before you even come to the meeting. I mean, so, big data has changed HR in the world of marketing and media and everything. Now we’ve got, uh, “Hey, Tom, you want to grab the dog real quick?” And at HR now in marketing, we’ve got, you know, we’ve got Facebook and we’ve got LinkedIn and we’ve got all kinds of different ways to micro niche. You can get a left-handed soccer player in the middle of night marketed too, if you want to. So that’s changed everything, and so it’s just interesting on the petroleum geology side how much it’s changed with the science and with the fracking and the innovation and things. So, um, it’s a very long-winded question. What I’m getting at, though, is that big data has changed every single area of oil and gas, and I’m going to get to the finance inside in just a second, in the investing side, but from the petroleum side, how has it changed?
Imran Khan: So I think one of the— So my background is chemical engineering and I actually worked, um, uh, one of my first jobs out of college, I actually drilled water wells, uh, for salt. So, we we explored salt domes and pulled out brine and basically processed in a plant and-and made salt out of it. Um, the process is exactly the same from a drilling standpoint in oil and gas. Uh, one of the big things when I when I came into oil and gas, a lot of the different data points to your, to your exact point, uh, wasn’t really, it wasn’t looked at, um, you know. We would be doing so much different work around maintenance and reliability, uh, around equipment and, you know, a lot of different data points that you’d be able to collect weren’t collected in oil and gas. When I, you know, I started in a midstream area for one of the majors and, you know, I was, I talked with different folks at-at different, uh, terminal stations and-and-and, uh, pumping stations, they had no clue. And this is, you know, 10, 15 years ago, but within the last 10, 15 years, I mean, like, we implemented a lot of these different types of details and have been gathering a lot of that data. And I think now 10, 15 years later, you’ve got that data built on the different types of equipment, you know, to your point, geology, things of that nature. And that’s really helped us evolve, and part of the reason why is because of the way that the cyclical nature of oil and gas has been in the last 15, 20 years, right? You’ve got high up points where your oil was 100, 120 dollars, you know. No one cares about all these little, little details around those times, but then when you go down to 25 dollars, it’s a big change, right? Paradigm shift is what you said earlier, and that’s exactly what it is. So now you’re looking at, you know, making a product that doesn’t have the same margins as it did, you know, when it was 120 dollars. So, based on that, everything’s kind of gone through, and now data has really become a big part of what what you have to do. Even within our offices, we’ve been working on getting a lot of the title documents, things like that, into systems, and these systems are just, you know, coming together with, you know, one company buying another company, and you’re getting conglomerate type of setups, and that’s allowing us to be able to, you know, bring data into one repository, and that really helps a lot to be able to do what we need to do.
Jason Spiess: And that’s why I wanted to preface before we brought in, uh, Brandon and Jeremy into this, and Imran, have you hand the mic over to Brandon. Thank you. Uh, one of the things that I wanted to talk about was the big data change because nobody’s really talked about the big data from the investing side. And I think about an example of when I invested over a quarter million dollars in the internet when I had a small publication and we did not get five dollars back. I’m not kidding you. But you had to go on the internet, right, and we are sitting across the table from these guys and they’re telling us up and down we ain’t ever gonna need a website. So, we’re like, “how can you not see the future?” And the more I think about it now, and actually, it was the present. Those guys are out of business now, by the way. Um, from Brandon, either from the CEO side, the big picture side, Jeremy from, you know, the sales and marketing business development to the guy who’s disseminating that polished finalized information out there. That has got to be a real frustrating time right now for people, because we are actually entering in a time where oil and gas is going to be needed more than ever. I don’t care if it’s the PPE angle or it’s the renewable energy angle, which needs petroleum, um, products to-to go about. Guys, let’s talk a little bit about that barrier to the mental entry a little bit as big data has really helped you on the investing communication side.
Brandon Davis: I hope someday I can see into the future, you that-that would be great, um.
Jason Spiess: Climate scientists can!
Jeremy Pate: Or Elon Musk, one or the other.
Brandon Davis: I-I’ve, you know, as as a business owner like you, you’re often in situations where you’re presented with information as absolute, which nothing is, uh, but-but it comes that way a lot and you have to make a decision on what you believe or you don’t believe or what you think is going to happen. And, you know, I think that there’s a huge element of luck involved, um, and, uh, the rest is just, you know, it just works itself out. You put yourself in the right position make the best decisions you can. Yes, it’s difficult, because you could spend— As a small company, we could spend a million dollars a year on software for data easily. Um, we don’t; we probably spend two-thirds of that and we’re a very small company, so I can’t imagine what the larger operators are spending on technology and probably having to staff full-time teams of programmers. Um, you know, it’s-it’s moving quickly and the price dropping, like Imran said, has made made it all get kind of more aggressive. So, the price is dropping faster, uh, for the price dropped and it caused the, sped up the process. What would have maybe taken five years took two, um, etc. and once that ball gets rolling in the technology world, it seems to keep moving. It doesn’t really slow down, which is, which is good and bad. I mean, the things that we were doing two years ago are absolute— obsolete with some of our stuff so that’s a never-never ending moving target and I don’t think it’s ever going to change as we go forward. I saw and now the day that Hyundai was making a walking car. Yeah, a walking car. What the hell are you going to do with a walking car? I-I don’t know. Anyway, so, we’ll see what happens. I didn’t see that coming, by the way.
Jason Spiess: Apparently your car talks to you so you go on a walk with it, right? I mean, I don’t know. A walking car. Well, who would have thought we ever needed a walking oil rig, I guess, but we do. [Laughter] I mean, so there we go. Jeremy, how about from your perspective, you know, I mean you’ve got, you’ve got more answers to questions probably than-than people have got questions for, so how is it, uh, you know, big data has really kind of impacted what you got going?
Jeremy Pate: Well, first of all, there’s, you know, companies just put out so much data out there that, you know, you know, Brandon has a saying, ‘analysis by paralysis.’ Is that right? You know, and sometimes, you know, we we overthink it, over engineer it, and there’s just so much data that you have to, you have to really find a defining characteristic of what you’re looking for to be able to analyze that data and move forward with the project or do a deal. Um, you also have to be able to use utilize those, utilize that data to kill a deal if you need to, uh, if you will because, you know, there’s just so much of it out there and there’s so many companies putting so much shine and flash on their stuff, trying to, you know, give it marketability to move on from it. And, uh, so, you know, a lot of what I do is utilizing those tools to kill deals in order to see if that’s one something that we want to move forward with, you know, and so that that kind of is where I kind of find the rubber meets the road as far as the data goes.
Jason Spiess: One of the reasons why I wanted to kind of go along these steps is because, you know, when when we did that quarter-million-dollar investment I had into the internet, at that time, for a small company that did, that put me out, that put me out of business. The only time I’ve lost my business, had to shut it down, went and worked for another company for three years, realized I was not an office a cube worker at all. Uh, I went out to the oil patch, put in my notice the next week back. Now I’m, you know, MRM today, uh, but I could have made it if I would have had more money. Honest to God, I could have made if I had more money, because eventually people started paying for the internet and what happened— and I remember sitting with a couple other independents, you know, we call ourselves the third world of media. You’ve got, you know, your big radio conglomerate. You’ve got your newspaper that’s had a monopoly for a hundred years, and then you’ve got your, you know, excuse me, television conglomerates, and then everybody else is in the third world of media, you know. We’re scrapping for the ten percent of the marketing budgets type of a thing and we-we did talk, we talked about a JOA. We talked about trying to figure out a way to make us stop hemorrhaging money, because we knew we had to invest in the internet, because it was the future. So some of us made it, some of us didn’t, and, um, that’s one of the reasons why I like what you guys have going on, because you bring people in to get through the hard times so that there is enough resources there to really offer a new type of risk management that I never had in my life. So, it’s-it’s, anyway, I wanted to just kind of let people know a little bit about that, because in times of uncertainty strength in numbers means a lot. Jeremy.
Brandon Davis: Strength in numbers is everything, I-I think. Go ahead, Jeremy.
Jason Spiess: I’m sorry, I meant Brandon but, uh, Jeremy, go ahead anyway, so.
Jeremy Pate: Um, yeah, I mean, that’s, that-that-that’s, uh, one thing that, um, we found a niche at, you know, not only bringing our partners in, you know, to fund projects, but also working with other smaller companies and sticking together, uh, so to speak, you know, being there to, you know, help a company, you know, put-put out, you know, put together one of their projects and put it out there, you know. That mutually benefits everybody, you know, and I think that’s one one area that, you know, we’ve gotten very good at over the last, in this past year that, um, has really stood out to me and has-has, it seems like that’s a good direction right now, as good as any to keep everybody going.
Jason Spiess: Brandon, you know, you mentioned strength in numbers as far as, you seem like you had something to say, so I apologize, because I should have said your name there but, um, you’re dealing with people’s money. This is a really emotional topic whether people, you know, know it or not and strength in numbers can really help people out during these times. I remember back I said in 2009 when the housing crash was going on, five thousand dollars was a lot of money to a lot of people at that time. For some reason, they were just like sitting on their hands and they had a quarter-million dollars in the bank, for example, but five-grand, they were just sitting on their hands, really nervous talk to me about how the relationship with money can really be satisfied with that strength in numbers.
Brandon Davis: Well, I look at it like this. If-if you have 10 people throw 50-grand into a, an opportunity and if it fails like your internet example, and 500,000 dollars is lost, every person lost 50,000 dollars – which we’ve had this happen in wells that didn’t work – then-then the, it minimizes the downside. But compared to if you had two people do 250,000 dollars in that same project, you have two people involved and a lot more money. It doesn’t really matter how financially set they are it’s, uh, more of a mindset. It’s-it’s that, you know, it’s-it’s much less impactful from the negative side when it’s a smaller amount of money spread out, um, so instead of putting 250,000 dollars in one opportunity, you put 50-grand and five of them and that gets you more diversified, so if something does fail, it doesn’t kill you. And I, you know, as far as tight and-and-and people sitting on five-grand or whatever, it, right now everything, uh, there’s a lot of money on the sidelines but it’s really, it’s really hard to get, um, people are not excited about moving. Uh, but at the same time there is a lot of opportunity, so if you find the right opportunity and find the right person that has money on the sidelines, deals happen, and they’re happening on a regular. Right now, we’ve been slammed.
Jason Spiess: And by the way, I brought up five-grand because we started at 75,000 and we worked our way down to five just to see what the number was of entry because I, and-and—
Brandon Davis: Wow.
Jason Spiess: It could have been, it could have been 50 cents and people still would have been sitting on their hands in 2009. I mean, it was, it was one of the f— Well the banks got bailed out, too big to fail. That was, you know, that was the deal back then and that’s why I wanted to bring an analysis for paralysis and talk about some of the ways to overcome the hurdle, because here’s the thing, guys. They just printed like three trillion dollars out in the marketplace, four trillion, five, I-I lost track after three trillion, to be honest, so there’s a lot of money out there. And when I look at what I’m doing now, I-I-I didn’t invest much money into what I was doing but I did what you said. I had to diversify myself a little bit. I also had to be realistic about what my returns were going to be, and the part I messed up, though— I used to think 20 percent was pretty good for a business owner. Apparently, you need to make 100 percent every year. So, I don’t know, I’m just, I’m just kidding, I don’t know what investments are, but as a business owner my rent goes up, my business insurance goes up. But that’s another reason to actually do some joint operating sharing is because if you got a brick and mortar or you got a, you know, insurance is going to go up. I had 800 dollars’ worth of increases last month in rates. It’s like our governor said, “Okay, now landlords, you can now raise your rent,” so this and that, the COVID rules came. Everybody dove in. Insurance rates went up, this went up, this went up. And so, people are, you know, kind of getting left hooked and things like that. And so, I go back to the collaboration the strength in numbers and just how that is such a great thing to get you through. So, when you are ready to jump and do your own thing, man, what an opportunity to be in, it’s— Anyway, so, um, sorry, you guys got me going a little bit and I’ve had half a glass of wine, so Imran, thank you very much.
Imran Khan: That always helps, doesn’t it?
Jason Spiess: It does. It helps me a lot. I get a little peppy at times.
Imran Khan: From an exploration side of things—
Jason Spiess: Camera guy’s laughing, too. Rasheed! Go on.
Imran Khan: If you look at, um, just the offshore world, for example, right, you know, you think about we’ve got, uh, different types of platforms that are in the Gulf of Mexico, uh, that have been developed. You know, none of these things were developed by one company, right? It was partnerships of larger companies that, you know, number that was 50,000 is probably more like 50 million.
Brandon Davis: Or 100.
Imran Khan: Or 100, something like that, where they’re, they’re putting in a lot bigger numbers but, you know, they’re, they’re working together, right? Because that’s really what-what helps you to be able to eliminate or reduce and mitigate the-the, uh, risk that’s out there. So, I think that’s really something to think about.
Jason Spiess: So what’s next, guys? Let’s-let’s get people investing. We talked about, you know, some ways to risk manage. It’s so funny, because sometimes, you know, you get a bunch of guys in that have rode the roller coaster of business, the guys who have been knocked down and got back up. I don’t know about you, but I love talking about getting knocked down and getting backed up part of it. So, let’s talk about getting back up, okay, let’s talk about taking that step, because I did. I got my ass kicked and I invested with my family on the line in the oil and gas industry and I’ve had opportunities to leave the oil and gas industry over the last four years and I’ve decided not to, not because I think it’s just, you know, but well, I’ll tell you why. Because I think it’s the best opportunity for my family. I really do. And I know what the obstacles are, but I don’t see it going anywhere. Ninety-six percent of what we use on a daily basis, from my toothpaste, to my toothbrush, to how the hell it got on my door, takes oil and gas. And whether it’s the the COVID plastic protection equipment wave we’re going to go into or it’s the autonomous drones that are going to need all the different materials needed for us to deliver, we ain’t going anywhere, guys. Right now is when you buy Apple at two bucks. So, let’s talk about how people can make money over the next couple years. And guess what, folks, it might take six months. It might take six months that— It took me a year before I saw things come back, but guess what? It came back and then it came back with some roots, it came back more solid, and I think that’s where we’re at right now. Didn’t you and I just talk about the next six months are going to be critical investing?
Brandon Davis: Yes.
Jason Spiess: Brandon.
Brandon Davis: We did and the next six months are gonna be critical, because there’s gonna be a lot of opportunity and-and we’ll see how that comes together as far as, uh, oil and gas and investing goes. Right now, there’s never been a better time, um, prices are down.
Jason Spiess: Not in these generations. (?)
Brandon Davis: Values down. The way, the way opportunities are viewed right now compared to even six months ago has changed over the last four years. It’s completely changed, um, so where things are today, uh, it is definitely time to buy. And that’s, you know, I-I’m sure that we’re not the only ones thinking about that, um. And as far as investing goes, you have to pick whatever you’re investing in, um, and make sure you’re comfortable with the risk, and obviously you-you’re-you’re doing it for upside, but the risk is-is a big part of it. Um, and-and now, I just never, never forget that in oil and gas, anytime you buy into anything, you could lose everything. That’s part of the deal, um, so as far as getting knocked down and getting back up, it’s-it’s probably the most obvious of all, uh, things. You drill a well, it’s a dry hole, you all get knocked down, and then everybody gets back up and goes and drills another well. So, uh, that-that’s just the way the game is played and, uh, though dry holes are a lot less frequent, uh, to drill than they used to be, um, it still happens. I mean, you still have issues so, um, I’m excited to see what happens the next six months. I think you’re right, um, no matter what course the-the-the world takes as far as energy consumption goes, power generation, et cetera, there are so many other, um, uses for oil and gas products, that it’s not gonna, it’s not gonna go away, no matter what. Um, if every vehicle on the, on the planet went solar tomorrow, or-or something else besides, um, uh, hydrocarbons, then there’s still going to be the use of those products to make plastic, to make all the pieces and parts that go into all of the products, um, including solar panels so, you know, that’s the interesting thing.
Jason Spiess: People don’t know this, but, and-and I don’t know who knows the exact, but 25 percent of a barrel of oil goes to diesel fuel, and-and then, you know, there’s the other, but the bulk of its diesel and then it gets to a bunch of different things. Our consumption of Amazon, our consumption of Door Dash, our consumption of Uber is increasing. It is increasing, and guess what? Diesel is-is-is still needed, so it’s kind of funny, because probably diesel is actually getting consumed more than before, because people are traveling less, because unleaded etc. Also, we’re going towards a natural gas revolution, whether it’s from a base load or whether it’s from the plastics that can come from the feedstock of the combination or what it might be. When you’re talking about the hydraulic fracturing, I really see that as-as the security blanket in this whole thing and people aren’t going to talk about it because it’s, there’s a little bit of nimby here, not in my backyard. Once kind of some of the public stuff goes away, as long as people can put their Keurig coffee cup going, they don’t care. They’ll go to the next protest, get their next Keurig coffee, you know, is and so, as long as they can’t see it, things are going to be fine. So, I don’t know how you guys want to handle. It’s a, it’s-it’s a, it’s a transition to give a good plug, in my opinion, for natural gas, so if you disagree, certainly disagree with me. Prices are a factor right now. However, the future is coming, I don’t know, 10, 20 years, five years, it’s just, I don’t see it going away for a while.
Jeremy Pate: Um, no, I totally agree with you, you know, I think a couple weeks ago on-on our radio segment, I mentioned that if there was a law passed tomorrow that outlawed gasoline-driven powered vehicles, and it went to all EVs, we would need twice as much, maybe even three times as much oil and gas and that’s fact. Elon Musk knows it; everybody out there knows it. So, while they keep talking about getting rid of fossil fuels and doing away with them, where are you going to get the-the, where are you going to get the oil that you need to make all the plastic? Where are you going to get the cobalt? How are you going to make the titanium? All that becomes a factor in all those parts that they need to make EVs. Like Brandon said, um, so, you know, I think right now, um, is a great opportunity, uh, I think you have to play the long game with oil and gas, um, and I think you have to have the wherewithal to be able to sit back and-and-and watch it unfold, and it’s, and it’s going to be a couple years before you see a return on your investment. But, you know, that’s one thing I like about what we’re doing here at Swan and Oak Energy right now is we’re laying the ground floor for the future and when that time comes, we’re going to kick ass and take names and that’s all there is to it.
Jason Spiess: But it’s not unusual to get payouts for-for these types of things, you know, I mean, get several thousand bucks in a month or something like that, roll over some things. I don’t know. Is it, is it unusual to get the payouts like that-that, Brandon, Brandon?
Jeremy Pate: No, not at all.
Jason Spiess: You responded, so—
Brandon Davis: You’re talking about oil and gas?
Jason Spiess: Yeah, I mean, chunk in 50-grand.
Brandon Davis: Wells produce 24/7, so they’re producing—
Jason Spiess: That’s what I’m saying.
Brandon Davis: Unless they’re negative cash flow, there’s distributions every month.
Jason Spiess: All I know is here’s what’s—
Brandon Davis: Pretty simple.
Jason Spiess: Here’s what hooked me on oil and gas, okay? I was, I’m not kidding, I was doing a live remote at a sporting goods store in Dickinson, North Dakota and this guy comes up and I— He was a little socially awkward, okay, but he had, he had an oil and gas lease, so he made all kinds of money. He built a go-kart track in his backyard that cost 680-thousand dollars and he did it in three months. Paid cash. And he did it because he had an oil and gas mineral lease. So that’s what I’m saying. You said two years before you might get a payoff. I’m saying this dude, he hit the jackpot, so—
Brandon Davis: That’s a little different.
Jason Spiess: It is.
Brandon Davis: A little different and look, it can happen, wait, it can happen quick, but—
Jason Spiess: But that’s one of the success stories.
Brandon Davis: Not that it’s a reasonable expectation. Well, it, this is different. He said, he probably had minerals that he leased to someone. They drilled wells and he got paid in big chunks. Yeah, and that happens and and it’s-it’s a lot, a lot, a lot of cash quick.
Jason Spiess: No, that was family land and the whole—
Brandon Davis: Sure.
Jason Spiess: Oh, that, no, that was, that was a different story we’re talking about.
Brandon Davis: Absolutely different, but I mean, that is, I mean, it does— Once-once the well starts producing it, until it’s either negative cash flow or runs out of oil and gas, you get paid and that can, you know, the thing of the wells in areas that are being developed now is not unusual for wells to produce for 20, 30, 40 years.
Jason Spiess: Oh, they can do that?
Brandon Davis: Oh absolutely, yeah.
Jason Spiess: No kidding?
Brandon Davis: Uh huh.
Jason Spiess: See, we’re not used to that up in the Bakken. They-they, uh, they were supposed to produce and then they-they forgot to carry the one and then it, realized there’s only half this amount, so then they, then they realized they could do something on the redux, you know, that sort of thing. It’s-it’s been a little bit of a juggling act up there in some areas, because somebody forgot to carry the one at one point and so they’ve had, they’ve had to kind of make up some areas, that’s for sure.
Brandon Davis: Yeah, we actually took a hard look at the Bakken back in the early, what, 2011?
Jason Spiess: Mmhmm.
Brandon Davis: And we couldn’t make the math work that we were receiving and seeing and reading from other companies, um, probably for the same reason you’re talking about.
Jason Spiess: Well I was going to say that.
Brandon Davis: Just did it really, like, we couldn’t get our arms around it enough to be comfortable spending any money up there and that, um, I think it got better as time went on but, um, at the outset, it was, it was a little too sketchy for us. Um, we try to go into areas that are that are proven and developed and/or up and coming and so.
Jason Spiess: Where are you at right now?
Brandon Davis: Um.
Jason Spiess: I mean just the ones that you can remember, I guess.
Brandon Davis: Uh, right, well, we’re in the DJ Basin Heavy.
Jason Spiess: Oh really?
Brandon Davis: Yeah. In the Wattenberg Field Proper. Actually, we have a lot of interest in wells there and leases, and we have some wells in the scoop in Oklahoma, um, and in addition to that we are working on a new project in the Palo Duro Basin, um, and then we have some east Texas properties which is just an area that’s always been good and will be, so.
Jason Spiess: East Texas pretty good for gas normally too?
Brandon Davis: Yes, both.
Jason Spiess: That’s what I thought, yeah.
Brandon Davis: Gas and oil, yeah, but absolutely.
Jason Spiess: Yeah, uh, are you looking anywhere on the east coast, by the way?
Brandon Davis: No.
Jason Spiess: Okay.
Brandon Davis: No.
Jason Spiess: Is that due to regular—
Brandon Davis: I’m not looking for anything on the east coast.
Jason Spiess: Okay.
Brandon Davis: No property, no girlfriends, nothing.
Jason Spiess: No-no mindset, no conversation.
Brandon Davis: As far as that goes, I’m not looking on the west coast either.
Jason Spiess: “I don’t want a beer from the east coast, I don’t want kombucha from the east coast!” That’s California, sorry. [Laughter] That’s great. All right, so, let’s wrap her up here, guys, because our food is about cold here. By the way, it looks fantastic. We’ll have some photos up of the, uh, spread as well from Cowboys and Indians. Here we got the mural behind us. Uh, just kind of in conclusion, we’ll, uh, whoever wants to go first, I’d like to give guests, of course, the final word of the show so, uh, talk about whatever’s on your mind. Anything you want to reiterate, anything we left out? If you got a great chili recipe, if you want to get it out there, feel free, because hey, sometimes you never know what’s going to connect with people these days.
Imran Khan: You know, I don’t have a chili recipe but we we do have a chili cheeseburger over there that-that’s calling my name, so. But-but thank you so much for your time, Jason, it’s great to be able to have you here and-and, uh, do this whole event, uh, together.
Brandon Davis: Yeah, I really appreciate you coming down. Um, it’s time to get back to work for me. They literally had to drag me over here to do this, um.
Jason Spiess: We saw you doing your emails in between.
Brandon Davis: I have, I have some key people out of the, out of the game today because of health reasons so I’m having to do a bunch of extra work, so I’m literally working between talking. Um, but yeah, it was great to meet you. Happy you came down.
Jason Spiess: Thank you.
Brandon Davis: Um, I-I might keep your dog, um, just, she’s-she’s really cool.
Jason Spiess: (Her name is) Frackleberry Hound.
Brandon Davis: Um, and-and, uh, it was, it was neat to do this. So, Cowboys and Indians does have amazing food and without, without it, I wouldn’t know Imran, which I could say most days that’s a good thing anyway.
Jeremy Pate: Yeah, so, man, look we’ve known each other for several years now. It’s-it’s, we’ve done several podcasts together. Glad you were able to make it. We’ve been talking about doing an event, you know, an interview, something like this for a long time. Uh, it’s great to be on your show today in a live format here at Cowboys and Indians with Imran and-and my good buddy here Brandon, um, just looking forward to the best for the rest of 2020 and-and looking forward, forward to the future in 2021 for our group.
Jason Spiess: Well that’s gonna do it, folks. Well Mining Money Meets Living the Crude Life. That’s what we have here, but it’s Mining Money weekly segment on the Crude Life. Of course, you can check it out at thecrudelife.com, swannenergyinc.com as well, and you can email us questions if you’d like.
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