Chuck Yates Needs A Job

0:20 Hey everybody, welcome to Chuck Yeats needs a job the podcast the brand new digital wildcatters studios here I am with Josh Young. I think you're breaking the virginity of the new studios. So

0:35 sorry about that or congratulations however you're looking at that. I'll take it. Thank you. Perfect. So now who are you? Because we've never actually met before today. I know nothing about you.

0:41 I follow you on Twitter. I think we've met twice before in person both of the times while drinking. I think once was at a neat party and I think 2010 or

0:56 2009 something like that very briefly. I drunk a lot since then. So yeah I don't remember that. And then another time at your house at a crawfish boil which I don't even eat crawfish so you know.

1:12 Yeah no I remember vividly that day drinking way too much. being arrested by the Richmond Police and singing on stage with Lindsay L. So that was a good day - It was a pretty fun time. I did not

1:26 get arrested, but you know.

1:29 It was great meeting lots of good people. That was a really like, that was a great event - I mean, I think we wound up having almost 400 people there that day, which was great. And what I tell

1:38 people about the crawfish boil is everyone was so respectful of my house. It wound up great It was the digital wildcat or podcasters coming from out of town that spent the night at my house that

1:50 totally trashed it. The next morning it looked like animal house. But oh man, anyway. So give me those stats. Where'd you get a school? What have you done in your career? How'd you get to where

2:01 you are now - Great. Yeah, absolutely. Happy to. So I'm from Santa Monica originally, Santa Monica, California. I went to the University of Chicago and studied economics. I graduated in two

2:13 and a half years from there 'cause I was in a rush for some reason, I don't know. I don't know what I was thinking. It wasn't that much fun to be there. So

2:21 Chicago is like great during the summer, but I could see the winners being a problem - Yeah, and the school really takes advantage of that by you don't really wanna be outside. So you're in the

2:31 library studying almost 100 of the time. It was a blast - So two and a half years - Yeah - Wow -

2:38 I took, I knew I was doing that. So I actually took my junior year off and went to Israel and kind of sat on the top of the mountain and thought about what I wanted to do with my life - Did you

2:47 really - I did, yeah. We went fundraising in Israel. And the way it worked out is I had meetings Tuesday and Wednesday. I was able to be in Israel though late Friday afternoon. So Saturday,

3:00 Sunday and Monday, I literally had a tour guide pick me up at seven in the morning and dropped me off at nine at night. And so I saw all of it and it was gorgeous. I'm a big huge Israel fan I am

3:15 too. It's a, I feel like I lived there for a year and I didn't see all of it. So you obviously did it better than me - Well, my whole thing was if Jesus stepped there, I wanted to go see it.

3:25 That was kind of my thing. The two things I had is, you know, you go to the church of the Holy Sepulcher and you go into the tomb where Jesus was. I was spending so much time trying to get my

3:40 camera to take the picture and they're hurrying you. They're like, all right, come on, come on You know, you gotta move that totally missed that moment. I mean, that should have been arguably,

3:50 you know, big spiritual moment. And now I've got grainy photos that really sucked 'cause there's not a lot of light in there. And the same thing was kind of true at the church of the nativity where

4:01 Jesus was born. You know, it's like you get up there and move along, move along, kid. So anyway - I think the closest I got to that was I did a bike ride around the Sea of Galilee, the Kenerut,

4:12 one day.

4:15 It was pretty fun, 45, 50 miles, something like that. So, you know, doable for, I was 20. But, you know, definitely a lot of different holy sites for different religions all kind of around

4:26 that one lake - Yeah, no, it was interesting because the driver of my car was Jewish and my tour guide was Palestinian. And they actually got along, but when you were separate with them, I mean,

4:43 the driver would be like, they built a mosque on top of our temple, you know, anyway. So, yeah, no, it was interesting, but I was a big fan. So, in effect, two and a half years of school,

4:55 but it took you three and a half years to get out - I know talent, right - Yeah, exactly, that's what I did. So, I finished in December of 2004. I got a kind of temporary job doing executive

5:09 compensation consulting. I basically took two job offers coming out of school. I did exec comp consulting for a few months. And then the idea was if I liked it, I was going to stay. And if not,

5:19 I would leave. And then I had a tech strategy consulting job lined up to start for kind of the normal time in like July of 2005 - And some people, both of them - I did. I actually told them both

5:31 that at what I was doing - Okay, well that's fair - And they kind of didn't mind. One of the, they both thought they were great jobs. It turns out consulting is really tough and no one is happy,

5:41 almost at any firm - So I'm on the edge of my seat, which one won -

5:46 So I lasted an exec comp consulting for about two and a half months. It turned out justifying overpaying CEOs and boards really just was not my thing -

5:57 That'll be 20, 000 or whatever the, 'cause I don't mind the, I didn't mind the consulting fees. I thought the consultants were underpaid relative to the terrible things they were doing in terms of

6:07 rationalizing, overpaying people to the tune of tens of millions of dollars for entrepreneurs. for their companies - Yeah, yeah, yeah - No, I totally picked up on that.

6:19 So you did that and you went to the tech consulting - I did. So I was at a diamond, I guess it started out as diamond cluster and that was, we were doing combination of fixing big projects at

6:34 companies that were broken as well as helping them figure out kind of where they were gonna go from a strategy perspective So tech consulting, do that for over a year. It was kind of half tech

6:44 consulting and half business consulting. The business part got bought out by Mercer Management which then turned into Oliver Wyman. So I went to Mercer and then Oliver Wyman. It's amazing. In two

6:55 years, I had four consulting firm names on my resume. So there you go - Four different business cards - Yep. Four different business cards, two different cities. The exec comp was in Los Angeles

7:08 So I was back there for a little bit, and then went back to Chicago.

7:13 to consulting there, I got a job in private equity in LA in early 2007, which was a great time to go because man, private equity just absolutely blew up shortly after that - Right - And as it blew

7:26 up, I was the last person in the firm. So I was the first one to go. It was a generalist firm doing business strategy or like business services and healthcare and technology related stuff. And I'd

7:39 always invested for fun since I think high school, middle school, something like that. I used to read the Motley Fool newspaper column. And I

7:49 ended up finding this family office that would pay me to invest in public companies. And I couldn't believe it. I'd been to University of Chicago where they teach you that there's efficient markets

7:60 and I had done well investing personally. And these guys were willing to pay me for my essentially hobby. So that was a pretty cool job. And that's our next job figured out the definition of

8:11 friends, families, and

8:15 No, that's cool. So that's, is that the start of Bison? Or is that what was that - That was way before Bison. That was just, that was at this multi-billion dollar single family office. I was

8:26 with them for a while and I learned a lot and I helped them allocate out to different investment funds. I think it might have even been invested in Cane among other products - I was about to say

8:36 which fund number and all the way there I need to apologize or - No, I think we did really well I think it was, I think we were in a couple of the funds around the sort of 2008, 2009 timeframe and

8:48 I think those did quite well because oil spiked and then crashed and then spiked and I think they did well - Yeah, no, I mean, the only fund I think we had lose money was fund three and that

9:02 vintage was,

9:07 I think that was 2007 vintage and the thing we screwed up big on.

9:15 that is natural gas peaked in '07, right?

9:20 And it's kind of winning free fall for whatever the next decade. But it was always in Contango, right? The strip. So we thought we were so smart being so conservative. We're using 75 of the strip.

9:32 Well, it's still Contango. And so in hindsight, and feel free to say, no shit, Sherlock, but in hindsight, you figured out, well, I just paid for a location that I will drill in year three,

9:42 but it's not economic to drill today because of the content. So one of the lessons from Fund Three was flat price decks. And if it's not reasonable to drill today, you probably shouldn't pay for it.

9:56 Yeah, yeah, those are good lessons. Honestly, I made almost every mistake possible investing in oil and gas, including both of those. So, yeah. Yeah, so - It is a painful industry. You

10:07 really just have to, It almost doesn't matter who you are or what you've studied. And I looked at all the different funds and saw the mistakes they made. And I had access to all this information

10:16 from that family office and the different funds that would pitch us and read a lot of books about investing, knew of a lot of stuff. Everyone makes these mistakes. I think it's just a benefit of

10:27 having done it for long enough is hopefully you don't repeat the same mistakes that you've made. Yeah, learn from them. Yeah.

10:34 That was definitely big lessons So, family office, then what are you doing? I left, kept consulting for them for a while after I left, tried to launch a long short hedge fund which never got to

10:51 scale, stayed super small, and ended up mostly for the next few years doing these sort of one-off oil deals, mostly public, mostly sort of gathering together a pool of capital from different.

11:06 family offices and wealthy people I knew, some energy execs and finding situations that were very asymmetric like Chesapeake as Aubrey McClendon was leaving. They sued Gasstar for some land deal

11:21 that was very complicated. And the lawsuit was frivolous, but it looked like the legal, the head general counsel, it looked like this was a way to, they did a number of lawsuits over a very short

11:32 amount of time and it looked like a reason to kind of justify keeping their job for a while. So that was what it looked like, who knows what was actually happening, brought in some lawyers to

11:42 figure it out, who I essentially partnered with. They got my financial diligence, I got their legal diligence and they were free to do with it what they wanted. I think they bought some stock and

11:52 made a lot of money. And so that one, for example, raised a bunch of money, bought a bunch of Gasstar stock at like a dollar. And then I think the last stock I showed up in middle of 2014.

12:08 one of my clients' houses and made him sell the stock at 9. So it was amazing. And some of those were really successful. That was probably the most successful, but that was basically what I was

12:17 doing from 2010 to 2015 - 'Cause we had an interesting thing happen. Treadstone, which was, I think, a 12-bagger. I mean, it was one of the best deals we ever did, if not the best deal we ever

12:33 did It was really interesting because we ran for sale and we had a buyer step up and wanted to preempt the process. And I'll just say it, it was Aubrey. Aubrey actually showed up, this was

12:46 post-chest peak. And he showed up and threw a number on the table and we were like, Yeah, let's do it Aubrey. And he just dragged on coming up with the sale and purchase agreement comments. We

12:60 kept saying, Hey, where are your comments? Where are your comments? And we got to bid date. and somebody came in and topped him. And so anyway, we were like, holy cow. So we started

13:09 negotiating a PSA with them. And it was wild because they said, Hey, we just wanna drive around the field. It'll give us a lot of comfort on the PSA. If we can just go see it. And we're like,

13:23 That's not a weird request. So it's like, okay, site visit, whatever. Yeah, site visit, fair enough. So we did, it had rained the day before And so the rocks were all wet and it was a young

13:36 engineer drive around and he climbed it was oil spills everywhere. And we were just like, no, it's water. I mean, it rained last night. I mean, these are brand new wells. Anyway, so the

13:46 company backed off and then another bidder was there that we had been stiff farming and they actually up their offer 100 million or something like that. So I've never had that happen before in my

13:59 life where the bids keep going up Usually it's the other way, right? going down. But the reason I bring this up is they had to finance it with high yield. And so this was July of 2014. So there

14:11 was literally a two week window in the high yield market where that deal could get done. One week earlier, it wouldn't have gotten done one week later, it wouldn't have gotten done, but they got

14:20 it done. They bought it from us and got it off to the race. Who was the buyer there? That was energy and exploration. It was a private company. I remember them. Yeah, they wound up stepped up

14:31 and bought Fred Stone. And it's so amazing that literally just timing on those things because we all know what happened Thanksgiving day of that year. Yeah, was that East Texas Eagleford?

14:45 Was that the? It was the Fort Trinidad field in East Texas. And it was the Georgetown, the Glen Rose, and the Buddha. And we were going in drilling verticals and commingling it kind of like a

15:00 wolfberry style style. And it was a lot of saying, 'cause we, I forget the metrics, but we paid like 15 million for the field. And PDP was maybe 10, eight or 10. We had four old well bores that

15:16 we could go in and try our thesis on commingling. And those fracks were gonna cost, call it another seven, eight million bucks. So all told we were gonna have, call it 25 million in it, but we'd

15:26 at least get to test our thesis. And those first four wells that we did those recomplations all came on a thousand per hour today. It was just the wildest thing. And yeah, it was just crazy - So

15:40 at that point you stop and you just sell it - Is that the plan - Well, yeah, actually we wound up, we just kept poking them in the, poking holes in the ground. And you know, the low would kind

15:51 of be 300 barrels a day and the high would be 1200 barrels a day, but yeah, it just went crazy. And we went from, we bought 200 barrels a day, I think And when we saw that it was 12. thousand

16:03 barrels a day in like 18 months. I mean, that'll never happen again. Right. That was just kind of dumb luck. But yeah, no, it all, we got that sale done. And we were literally sitting there

16:15 saying, okay, we'll let these guys try to go raise the eye yield to buy it. And we were sitting there going, but we'll just hold it. We'll keep drilling these forever. So lucky. Yeah. So lucky.

16:24 Yeah. So, so you kind of had, you were doing sort of one off deals. And then do you go raise a fund on that? Is that how bison comes around? Yeah. So it turned out so, so those mostly were

16:37 successful. And then the ones that were active at the end of 2014 were highly unsuccessful. Yeah. And it turns out that if you go raise money from people on a one off basis, if you lose a money

16:49 once, they want you to lose their number Yes. That was not a good business model because you cannot have a hundred percent hit rate. If anyone ever tells you they have a hundred percent hit rate,

17:00 they're lying to you or they're And if you have the business that's subject to or contingent to continue on a 100 hit rate, it's a bad business and you shouldn't do it. And so it was just not a good

17:14 idea. The record was good at that point. And one of the two deals that was big and active right then, we were able to get out actually for a very minor loss in early 2015, which was amazing. We

17:27 partly resold it. It was a convertible debt deal with a Permian player They resold it to the company. Partly they helped find us someone to buy it. And so that was helpful too. And through one of

17:41 the participants in one of these deals, I got to know an investment banker who was doing high net worth and family office advisory. And he and I got together and we figured that it was a good

17:55 environment in the middle of 2015 after oil stocks had fallen a lot, oil prices had reset lower. The idea was to use essentially my deal making, stock picking sort of approach and

18:10 have him bring a set of clients. Obviously, he couldn't bring clients from the bank, but he could leverage his relationships. And it turns out actually you guys go way back, I think, childhood

18:20 friends. So something along those lines. And so we set up a fund together to do sort of a portfolio of these sort of one-off investments and that's what Bison is. Gotcha. And so that is what?

18:35 That's circa 2015. That's right. Yeah. And so what's the pitch back then to investors? Was it literally this? Oil's crashed. It's where at the bottom. Now's the time

18:47 to buy. Because part of what I want to hear a little bit about is just investors sentiment during the life of Bison Because I know that 2015

18:59 to me getting shown the door in 2020. in the investor world just, Popsie, Tervy, Crazy. Yeah. Yeah. So, public equity sentiment has been terrible since, probably since 2016. So, it wasn't

19:14 quite terrible yet in 2015. People still were kind of in this, like, by the dip mode. And so, the pitch was less, hey, we know. Well, you know, because I said Thanksgiving Day as I was

19:26 watching oil plunge, and I was faced down in pecan pie because I was going to eat my troubles away. But I was saying there would never be another equity deal done in oil and gas. And first quarter

19:38 of 2015 was whatever, 12 billion. I mean, it was, there was a lot of equity raised. Yeah. Yeah. In the public market. So, my take was, I kind of figured the shale bubble would burst because

19:51 there wasn't that much access to capital, and I was wrong. And that oil prices would slowly recover over time and I was wrong about that too.

20:02 value-oriented strategy, buying companies with good management teams, good assets, and strong balance sheets that were less unconventional, at lower decline rates, had just more survivability

20:14 that that would outperform over time, and that part was right. Yeah. You know, back when I was at Stevens before I joined Caine, I did this study, and it was incredibly, let's call it just

20:28 anecdotal, because I mean, it was not

20:32 a A grand study, if you will, but just. I went through every publicly traded company in some range, call it 100 million to a billion or something, and I divided the companies into thirds, and

20:47 the thirds were my view of the quality of management. You know, so we had good management, okay management, bad management, and the rule we always have is when I was at Stevens don't take my

21:00 opinion about anything. I didn't know anything. But what I found was really interesting is when you looked back through the peaks, the kind of ups and the downs,

21:11 the good management teams actually performed way better in the

21:18 troughs and not as well in the up times.

21:23 And it was the reverse. The real crappy management teams did really well in the bad time or in the good times, but just horribly in the bad times. And I think maybe at the end of the day, that was

21:36 probably just balance sheet because they were over levered, you know, because generally bad management over levered go hand in hand. And so was that what happened in the public markets kind of in

21:50 2015 or you're just saying performance for the good, the value stocks just did better than everything? Um, I think it's complicated I think I'm not measuring. management team is based on their

22:02 sort of recent share price performance. I measure it differently based on their value add, kind of what the situation looks like when they step in and what it looks like over time through their

22:13 involvement, through operational performance, through capital management, through balance sheet management. There's a number of different kind of crazy things to look at. Is that a subjective

22:22 sort of, is that kind of a

22:25 subjective list you have or there's some quantitative measures to that? I mean, it's easier with companies, with management teams that have led multiple companies because you can look at the track

22:36 record of those companies, you look at the MOIC, right, so the amount of money invested versus the amount of money delivered back to investors, and then you can look at the internal rate of return

22:46 and sort of see what their track record is. So if you have a CEO who's in, and we'll get to this one of my active companies that's done really well recently, they are led by someone where they went.

23:00 public in 2014 and the stock got crushed and then it slowly recovered. But the guy had a phenomenal track record at his last two companies. And so you could look at the stock performance and say,

23:11 hey, they went public at 12. And within a year they were at less than a dollar. Man, this guy sucks. Or you could say, Hey, he's had a almost 40 year career, 30 something years independently

23:21 wealthy from the success that he's had at past companies. Senior executive company that went from four to a hundred CEO of a company that went from four to 12 over a short amount of time and then he

23:32 got kicked out. So I don't know. I mean, you look at it. I think there's a lot of complexity. So I guess it's somewhat subjective, but also driven by historical returns and attributable

23:43 performance and activity. Yeah, that was one of the hardest things we'd have to do on the private side is kind of twofold. It's one if somebody was the the South Texas division lead at EOG How good

23:59 were they really? Were they just gift? They have gifted great assets and so they have all these great metrics, but you know, were they able to actually go out and acquire the acreage and come up

24:08 with the thesis that and then two, we had management teams that made a lot of money and they sucked. I mean, it was almost despite themselves and conversely, we had people that were really

24:20 thoughtful, allocated capital well and just got hit by tidal waves of the beta. And so I see what you're saying, you know, it's - I mean, to some extent, this kind of sucks, but you know,

24:33 Napoleon said, Get me lucky generals. So, you know, you got to mix, I think, a variety of factors. So maybe it is more subjective than I'd like to think, but really staying focused on those

24:45 different attributes, which were important to these different special situations that I'd been doing before, I think has served me well and you can kind of see it in, you can't talk about the

24:56 performance that I've had generally but can talk about specific that I had mentioned publicly and we've started tracking them and they've done quite well. And you can kind of see what those people

25:07 look like who are running those companies. And you can kind of see kind of what the balance sheets look like, what the assets look like, and where there was kind of hidden value and appeal that

25:19 maybe wasn't so obvious at the time that we got in And so, yeah, without talking about specific returns, I mean, has it really been that much in the way of bifurcation in terms of folks that have

25:32 actually really outperformed versus has this just been the title wave up because of product prices? So, I've been

25:42 saying it's a little bit like Forrest Gump where I got on a shrimping boat in 2015, and there was a terrible storm and I rode through the storm And my business partner I started with, at some point,

25:58 it wasn't his. passion and he pursued his passion and I held on and at many points it seemed like a terrible decision to hang on but I just saw that it would work and stuck through it and so I think

26:14 some of it was tenaciousness and some of it was faith in

26:19 this sort of this sector specific business cycle being like other sector specific business cycles both in other sectors as well as the history of oil and gas and so understanding the history and

26:34 understanding the dynamics I got the timing wrong but I just was sure that there would be another up cycle and so having that sort of vision I think along with the tenaciousness allowed for the

26:48 ability to be there and if you're there and there's almost no one else who's there from a professional investing perspective I mean I don't think it's beta I think it's stock selection yeah The, you

26:60 know, it was interesting. So January of 2020, I was telling LPs, hey, by the end of the year, we're going to be at 75 or 80. We have maxed out US production and that's been the problem, right?

27:13 I mean, it was doubling US production that caused oil prices to go to the 30s. And yeah, the pandemic came in and I think accelerated obviously the price decline, but it also accelerated the

27:27 decrease in CAPX, if that's even the way to appropriately say that. And it just heightened the bounce back that we're having now, but you could see that back in, in 19 and 20 that this was coming,

27:41 you know? Yeah, that made COVID even more painful. I mean, obviously there was a whole kind of human aspect of it, but knowing that we were running out of cheap oil, knowing that the shale boom

27:52 was over and living through negative oil and then very long kind of negative sentiment. low prices, people just giving up. I mean, a lot of people had hung on and they gave up. And it was very

28:06 lonely and very hard to be able to keep that vision, understand that this would be - there would be a huge recovery. I mean, I don't even think we're - I don't think we're done. I think we're just

28:17 getting started with what this recovery looks like. And the negative sentiment is still there. I had breakfast with people who were managing portfolios that they're still having to sell either

28:27 because of their view or their limited partner's views. And there's still just so much despondency, so much loss. I mean, there's a long way to go for the industry. So three things I want to hit

28:42 on. One, so what's an investor sentiment these days? Are - does the phone ring every once in a while would the generalists say and tell me about energy or is it still we're just on the shun list?

28:59 So people have always kind of wanted free investment advice. They never don't. Maybe for like the second half of 2020 and early 21, they didn't want it, but otherwise people have always wanted

29:11 that. I don't think that's necessarily as much of an indicator. I think the big thing I've been tracking that is wild and not at all what people who are negative about the industry will say or focus

29:23 on is that the shareholder basis for a lot of the public companies are not really expanding. It looks like a lot of them have recovered through retail investment, not through institutional

29:34 investment. And then on the futures side, oil prices have risen, but the open interest is really low. Some of that's the commodity trading, like Trafigura and Vitale and whatever kind of having

29:48 liquidity issues and being forced to deliver some of its margin requirements rising But you can just tell oil prices are high despite oil as a. commodity being massively unpopular. So there's lots

30:02 of anecdotes and lots of whatever. And one of the things I think that's kept me in business is really focusing where I can find data on the data and what the data says. And then keeping in mind kind

30:13 of what the anecdotes are, but sometimes the anecdotes are actually, they kind of lead you the wrong direction and the data often kind of is the ultimate tell. And the data is that oil has maybe

30:26 almost never been as unpopular measured by exposure versus performance, exposure versus momentum, exposure versus value, the relative value for oil. I mean, it's just, it's so compelling. And

30:42 the fundamentals of the market are so compelling. And the price is just not, I know it feels like it's high because it was so low for so long But it's just not anywhere close to where it should be

30:53 based on what the fundamentals are. So I was never a public investor.

30:59 But let me throw this at you, 'cause I think I'm gonna be making the case you just made. I sit there and if you wanted to say that oil is fairly valued today, whether that's company stocks or

31:12 whatever, you sit there and say, okay, we're using the strip and it's just, it's a massive backwardation, you know what I mean? We're at whatever, 110, 115 today. We could go out to calendar

31:25 25 and I think we could buy a barrel for 72 bucks You know, we're in massive backwardation. So if we're gonna say it's fairly valued, we could kind of say, okay, yeah, we've got a blip here,

31:39 but long term we ought to be using 70. We could also say, hey, you guys have bought PDP at PV10 to PV12 forever. The volatility of the commodity, the

31:52 workovers,

31:54 the unscheduled annual workover, on the well and the extra cost always there. Not supposed to talk about this. Yeah, the annual non-recurring workover. Yeah. No, it shouldn't be a 10 rate of

32:09 return. It should be 20. I mean, you could make a case that discount rates should be sort of a lot higher. And if you say, given all that to drill a well, you need a 50 rate of return.

32:21 Don't know that at 70 that there's a lot to do that So you could make

32:27 that case that it's kind of barely valued, if you will, or it's slightly undervalued, not as massive as you say. A lot of that's predicated on the backordation of the strip. My whole point there

32:40 is you don't have a natural buyer for the oil three to four years out, because who was that? Traditionally, it was transportation. It was airlines. And if there's anyone sucking worse than

32:52 anybody else, it's the airlines, right? Because of COVID, they still haven't come out of, I mean, I still think we're at what? 85, 90 of airline traffic. So we're not back. They're still

33:04 having to be careful. They still have their balance sheet issues they need to worry about. So I think the back rotation of the oil strip is because there is no natural buyer and it's ridiculous. I

33:18 would be loading up on all the calendar 25, 72 oil I could buy One of my best friends in the investment world is a macro fund manager and he and I have debated several times. He likes the long dated

33:33 options on oil and I like the equities. And you know, frankly, the equities right now are crushing it versus those options. So I can't take a victory lap yet because I think you're right. I think

33:44 those do well. But right now, I think, I think what's happening is that the front end of the curve is so high that the companies that are unhedged or relatively unhedged are making the nans of

33:57 profits. And those bonanza profits are going to deleveraging, they're going to buybacks, they're going to dividends, and in some cases they're going to growth. All of those things are massively

34:08 positive relative to a very depressed sector that's actually still seeing capital outflow, not inflow. And so it's pretty promising, I think, on both sides. One thing I think is interesting that

34:20 I saw, and one of the things we've done at Bison is a combination of our own sort of proprietary research on various kind of niche macro things. So like, we figured out that Waja basis was going to

34:33 be strong for a while and bought some stuff out in West Texas. We saw that the mid-con basis was going to be real strong. So we bought a bunch of sand ridge, which everyone hated, and we're saying

34:43 it would go bankrupt, and it's up like over 10x. And I almost got you kicked off the podcast right there. Oh, man. Sandrighes. But yeah, I know. I know. Everyone hates it. I love it so much

34:52 that everyone hates it since all the production is falling off of the cliff, it's flat. I went bankrupt, it was terrible, it lost people a ton of money, different people, almost different assets,

35:03 whole different profile. They have almost 5 a share of cash on the balance sheet. And it's building a dollar a share, a quarter of cash. I own the stock, not recommending it, just it's amazing

35:16 to me how much people hate something. They just should have renamed it, right? Like

35:24 people wouldn't care so much You know, get a pharmaceutical name like all the other oil and gas companies are adopting. Yeah. So one of the things that we'll also do is where we find interesting

35:32 analysis that's not ours will incorporate it and cite it. And so we've seen, I think it's four or five different groups that all kind of came out with this around the same time. And then we looked

35:43 at it and validated it. Backwardation is very

35:48 bullish Backwardation tells you that the spot market, the physical market is very tight and it accelerates of inventories and it just tells you that people want oil right now. And I know that's a

36:04 narrative. The data is that in back-ordated markets, oil is highly likely to be rising, not falling. So if you look at the history of oil price movements, at any point, if oil is in

36:20 back-ordation, it is more likely that the spot oil price a month from then will be higher than it is that it will be lower. Well, I mean, and part of that goes to our screw-ups early on in

36:32 Contango. It's really easy to talk yourself into drilling today because the Contango nature, if you can throw in higher prices in the future for the next 40 years, it makes sure economics is so

36:45 much better You put it into backwardation. I mean, yeah, show well as you get half your cash flow in whatever 18 months to three years. But at the same time, time. It crushes IRRs with lower

36:58 prices. So that makes sense - Yeah, I think one thing that I do that's really different from almost everyone that I know in the US who's in oil and gas is I am much less shale-centric. And I know I

37:10 talked about that a little bit in terms of what the vision was for Bison and the type of profile of company, but I don't like companies that have high decline rates because if I'm buying them based

37:20 on cash flow and they have a high decline rate, that means they have to spend a lot of money just to keep their production flat, which means they don't generate a lot of free cash flow unless

37:28 commodity prices are very high. So there's not very much margin of safety. You look at the companies that have gone bankrupt and conventional ones went bankrupt too, but they had so much debt on

37:37 them. If you look at a conventional company with no debt or very little debt on it, it takes a lot for a conventional company with a low decline rate to go bankrupt. And it doesn't take very much

37:48 for a shale company to just blow out their production, reset way lower and just, It's a very different business.

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38:46 Because, you know, the banks missed all that. I think when you went from conventional lending, because if we just make this up and you can borrow 60 of PDPPV10, you know, a conventional decline

38:59 rate will be, call it 15, maybe 20. And your projects,

39:06 your CapEx projects are much more discreet. It's like, okay, we have a 3D seismic shoot here There's a bright spot, or we're going to go drill three puds offsetting this PDP with shale, one, the

39:21 decline curves are much more, are much steeper, right? That's number one. Number two, you can't stop the train. I mean, the train's going. So by the time the bank, who's loaned 60 of PDPPV10

39:36 figures out the beef factor is one instead of 13, and it's time to go stop the train. You already have 12 ricks. And all the asset value you thought that was going to pay your loan back has now

39:52 disappeared. So I think the banks made it just a horrible fundamental decision to not revamp loaning and credit type metrics, statistics, procedures when we moved into the shale revolution. It

40:07 wasn't just the banks though to be fair, it was also bond investors and equity investors So it was everyone that made that mistake. It wasn't just one, it's easy to pick on the banks because they

40:17 end up holding the bag in bankruptcy to some extent if it's a bad bankruptcy. But really it was kind of the capital providers across the board. I made that mistake too. And many people pick on one

40:30 of the biggest pushbacks I've seen in talking to US investors about some of the investments I'm making in Canada is they'll make analogies to Lyn or Brightburn or some of these other disaster blow up

40:42 master limited partnerships that claimed to have very low decline rates. The reality was that by the time these companies were blowing up, they had been active in horizontal development in places

40:52 like the granite wash, like the Permian, et cetera. And their decline rates - Offshore, I mean, there were offshore assets in MLPs - Yeah, but I mean, right, there was that, what was the one

41:06 where there was a offshore infrastructure that they had stuck in, one of the MLPs, and they turned off the production I think it was energy 21 was feeding into it. It was a core rate or something.

41:16 They turned off the production and it's like, okay, well, yeah, we have a, it wasn't a take or pay, it was an area dedication, but if you turn off the production, you just have no cash relief,

41:25 is that a loss? So, yeah - Right, I mean, it was, it was, so I'm way older than you. I remember when MLPs started taking propane businesses,

41:37 public, and you were like, gone, they only use propane in the winter You know, I mean, there's not a lot of state grilling in the summer. not enough to make the profitability - I do my part,

41:47 but yeah - I do my part, but yeah, no, it was amazing what they would jam in the structure - Yeah, but it was less about the structure and more about a claimed sort of business model and a big

41:58 deviation from the claim. And so if you're in a company at a 10 or even 20 decline rate, that just works much better than a company at a 40 decline rate. And it's not the claimed decline rate by

42:12 the company It's actually validated 'cause, man, you listen to some of these claims still. I remember years ago I was at a conference, one of the investment bank conferences and a seasoned

42:21 portfolio manager left the one on one area and people were asking, Hey, you learning things? He's like, Oh, they are slinging the bullshit. And I really, I couldn't appreciate it at the time,

42:33 but really just the level of misrepresentation still in the public market and in the private side, of course, on sale processes and stuff I mean, it's pretty tough, so you've got it. cut through

42:44 that. And I think on the lower decline stuff, there's often really interesting opportunities. Well, because when right before quarantine, like literally whatever that was, March 13th that we all

42:58 went in, I was on a flight back from New York to Houston. So I'd been in Houston that week before, and I'd run around and talk to a bunch of public investors. I was like, Hey, you're public.

43:08 I'm private. Let's talk about what's going on. And that was one of the things I kept hearing time and time again from the public investors is we have no idea what this fucking tail's worth. I mean,

43:19 we see 50 rate of returns. We see the decline curve, but it's like PDP, PV10 is never up at the end of the year in the reserve report. And I think, I've kind of said on the podcast numerous times,

43:34 it's like, if I ran a public oil and gas company, I would just publish all my production data. Let everybody go out make their own reserve reports on on on what my wells are doing. 'Cause I mean,

43:48 I think that's why investors are like, I'll pay you for three years of cash flow or four years of cash flow. That's it, 'cause I don't know what your tails were - It's possible, it's possible that

43:57 those are the valuations for other reasons.

44:01 Companies have published their performance, their well performance, and in many cases, they've misrepresented it after or while publishing it. So it actually doesn't even solve the problem - Yeah,

44:12 well fraud's fraud - It's not, you know. But let's talk Canada, 'cause you seem to know US Canada and being able to get back and forth. Every time I went to Canada, I got my hat handed to me. So

44:25 - It's rough, they're real polite.

44:29 It's just all the boot, yeah. Yeah, it's polite, and then, you know, next thing you know, you don't have your wallet, or it's empty. So I ended up actually taking control of a Canadian

44:39 publicly traded company in 2017. I invested in 2016, there were some board descent. The public markets, the company lost the endorsement of the public market, it had gone from 10 at the peak in

44:54 2014. When I got involved, the stock went down. I think it was at 070 when I joined the board and around that when I became chairman of the board and replaced the board, replaced the management

45:06 team, sold assets and then drilled a little and sold the company to Warburg and CPP backed private company. And so through that process over almost two years, got to know that market really well.

45:20 I'd already been interested in it because there had been these varying movements and valuation between the US and Canada where at any given point, a Canadian company might be at two turns higher or

45:30 two turns lower valuation than a US similar sort of company - Is there a way to arbitrage between that or at least take advantage of that somehow? Yeah, so I'm pretty focused. on the long side,

45:44 and just I find that the best way to get good returns is by really focusing on the best opportunities to compound money and be able to earn a multiple times return over time. And so by doing that, I

45:56 think I end up doing better on my long investments, and I just give up the sort of downside protection associated or the whatever people think they're getting from shorting stocks, and sometimes

46:06 that can be really painful, 'cause you get squeezed or whatever, and it's a big distraction So I'm not doing any sort of direct arbitrage. It's more of a, hey, if Canadian oil and gas stocks are

46:17 generally trading at a big premium to US, I'll go sell some of my Canadian stocks and redeploy cheaper in the US, and vice versa, if they're cheaper in Canada, which they were for a while. I mean,

46:28 for a while, I think people thought that Bison was just a Canadian-focused oil and gas fund. And we had exposure, but it was mostly because there was this history where Canadian stocks have been

46:38 more expensive up until, I think it was 2012, or 2014, something like that. They got eviscerated partly because a very left-wing party got control of Alberta and they were very negative to the

46:50 industry. It'd be like if it's like in Colorado where Colorado drilling got way harder and valuations for Colorado companies fell a lot, similar thing happened in Alberta. So valuations fell. So

47:01 we have to hear about that every day on Twitter. I actually feel really bad for the folks up there, but God, they're bitter. Yeah. Yeah. I don't want to get into a specific current policy I

47:12 don't want to get flamed right now. Yeah, but I mean, look, I think the NDP and Alberta, frankly, the other parties in Alberta haven't, it's just been a tough situation for various kind of

47:24 specific reasons. But NDP getting power in Alberta, the left-wing party, really hurt the cost of capital. And so companies that 10 traded a 70 cents, whereas companies in the US at 10 might have

47:38 gone to 3 or 5 from 2014 to let's say 2015 or so.

47:47 Okay, I'll go ahead and say this. So I'll just get eviscerated out on Twitter, but whatever, it's not as simple as, oh, Biden's going to give us a windfall profits tax. Biden's bad. That's why

47:59 none of us are drilling. I mean, come on guys, let's be real. We destroyed a ton of capital. They put us in the penalty box. We have to be careful. So that's a lot of the reason we're not

48:08 drilling because our investors won't let us. I think there's, there's the truth is somewhere in the middle But I will say this about the situation that happened in Alberta. I mean, it does matter.

48:22 I mean, policy does matter. And it's also kind of just the threat of what could happen matters too. And so I think, I think everything that, that the government did up in Alberta, yeah, there

48:35 were some bad things done, but there was also the Holy Cow, we can't invest capital there. Got those with those radicals are going to do. Yeah, I think that's a good sort of nuance in the sort of

48:47 Biden's fault or the government's fault versus its greedy management and investors' fault. I think government does a big job, unfortunately to some extent, but the government's very involved in

48:59 private industry in the US and around the world these days. It's not a free market. And the government sets the tone. The government is deeply involved in tax and regulation And the government

49:10 regulates lenders and regulates business activity, drilling and permitting and error permitting and all kinds of other sorts of regulations. And so the government really can set the tone of capital

49:27 availability. And so investors might think, oh, I only want to invest in companies that are returning capital, and they might think it's their unique idea But in a lot of respects, that idea and

49:39 that sort of theme or feeling. maybe getting set from a regulatory perspective where when you set a very negative regulatory framework and you set a very sort of negative, hostile approach towards

49:56 an industry, you signal to either directly through regulations and taxes and so on, or indirectly verbally, you signal that this industry is out of favor and should not have capital deployed. So I

50:09 don't know that, I think it's a very nuanced, complicated thing like you're saying, but I think that there is a big part of it where there's a tone that's set as well as direct regulatory

50:20 intervention that impacts, I mean, banks aren't lending that much to oil and gas anymore and I think it's really hard to argue that banks not lending is not affecting drilling activity - Yeah, I

50:30 mean, 'cause we wouldn't, I mean, maybe the war makes it different and energy security is pushed to the forefront And so we feel better about, I mean, we need. something we feel better about it.

50:43 But if I'd asked you two months ago, Hey, in three years, all of the banks are going to be brought before Congress and they're all going to be having to answer why they're polluting the world and

50:59 there's legislation on the table to stop lending to oil and gas companies, would you be shocked? I'm not saying that was the base case, but it wouldn't shock you if AOC was leading the House

51:10 Committee investigation on hydrocarbons. I mean, they're actively talking about that right now. There's a proposal from the SEC to require climate disclosures and it appears that that's intended to

51:22 be. We're in the 60-day comment period on it. Yeah, that's intended. Someone tried telling me, it's been very weird recently. I've gotten some press and there have been more kind of inquiries to

51:32 invest with me and some of them are legitimate and some of them are people just wanting to talk to me, which is really unfortunate. It's just a waste of time and I'm trying to. I'm kidding. No,

51:43 no, no, no.

51:45 This has been fun. That's great. That's not what I mean. I mean, people like trying to solicit either investment advice or just to lecture me or something. And someone really wanted to talk about

51:54 how government policy is not affecting oil and gas industry. And they told me that I said what I just said and you're like, Yeah, it's the comment period. They're like, No, that's wrong. That's

52:05 like, Well, no, I mean, they announced it. This is the regulatory process. You announced something. You go through a comment period and then you address it So, we're still in an increasingly

52:15 negative regulatory environment for oil and gas here in the US. So we have no idea how that's going to play out. I mean - We have some idea and it's not good. Yeah. I mean, we lived through

52:26 Sarbanes Oxley and it cost a whole lot of money. Made it harder to go public if you were a smaller company and all. But I mean, I think that's a fraction of what's going to happen with this

52:39 possibly given what lawyers are going to get I mean, how many lawsuits are we gonna have from everyone touched by any sort of pollution when you have public data that you can walk in and point to -

52:54 That's gonna be tough - Yeah, I mean, I think the thing that's really sad is that there are people that are hurt by us not drilling. And frankly, since Ukraine was invaded, I've actually invested

53:05 in several drilling deals or equity raises by companies to accelerate development So I'm directly supporting additional development where it's highly economic and where it fits with the business

53:15 strategy. But I think that there's real problems with us not, with us not providing more energy to the world. And whether it's a whatever side of the debate you're on, whether it's government's

53:28 fault or investors fault, I think really when there's a shortage of something and poor people and disenfranchised people in India and China and sub-Saharan Africa and South America, need something,

53:41 I think it's really important to be able to get a little bit of a as a human to do what you can to help provide this thing that helps prevent starvation. And we're hearing world leaders talk about

53:51 potentially food shortages. I mean, this used to be a Dumber article, and now it's Biden and Macron talking about there being food shortages. So I think there's really, I think there's a moral

53:60 imperative to try to provide more energy. And here you have regulators, you have politicians saying, oh, we're not against oil, even though they are on video saying they are against oil and gas

54:10 and want to end drilling. And then you have their regulators trying to like setting the stage and introducing additional risk to operating an oil and gas. It's a very, it's a very tough position.

54:21 I mean, I always run around and I've said this my whole career. People die when energy prices are high. They just do. I mean, that's tragic, but it's true. And people also die when we buy

54:32 energy from authoritarian dictators I mean, we just do bad stuff happens because of it. So let's, let's take it here.

54:42 Um, and I'll kind of frame it up with this. I, uh, I actually, you know, there's a meme out on Twitter that says, name the fastest animals on the planet, the cheetah, the hummingbird, chuck

54:56 gates with a microphone running towards someone that hates the oil and gas business. And I don't think I hate the oil and gas business. I think I just, I'll call something out if I see it, but

55:05 that's a debate for another time. So I actually get calls from the other side I mean, environmentalists are reaching out through Twitter or LinkedIn and say, Hey, can we talk? And what's

55:15 interesting is they don't view the burning is hot of hydrocarbons as the evil that they say it is. Um, they don't think it's good, but at the end of the day, they don't think the world's going to

55:31 end in 10 years and the like they, they drive their SUVs I mean, and the like, they just feel like they have to play dirty pool. in the public discourse because they don't trust us as actors.

55:46 They're like, hey, you know, you guys have covered up stuff about climate change, you guys pollute, you guys are bad actors, we just don't trust you and all that. So kind of with that as the

55:59 framework, how do we get the narrative back? Because I do think when you talk about like all of the inventions out there, I mean, you start talking the wheel, fire, hydrocarbons, I mean, your

56:14 life expectancy doubles when you start, stop burning shit and you start burning hydrocarbons plus quality of life goes up. And I'm one of those guys that I think we ignore CO2 levels going from 300

56:27 parts per million to 425 parts per million over the last hundred years and temperature gone up one and a half degrees. I think we ignore that at our own peril. I mean, it's correlation. I don't

56:38 know that it's causation yet. We can debate all that. At the end of the day, we need to watch that, but oh my God, all the things you were just saying, I mean, all these people, poor people

56:51 that want to have their standard of living raised, how do carmen's does that? And how do we get that narrative back? Because that's really what I've been killing brain cells about the last year and

57:02 a half. I don't have a good answer to it. So I think there's a few things to look at that I think are relevant for today's environment One is that politicians and advocates of environmental policy

57:18 that are anti-hydrocarbon have been actively buying beachfront homes in Florida and elsewhere. So I think more focus on Warren Buffett says this, although ironically he supports some of these causes.

57:31 So it's like this very weird thing. He says focus on what people do, not what they say And so when you look at AOC hanging out in Miami when she's supposed to be. pro mask and pro whatever without

57:41 masks, without, you know, at these clubs and stuff when she's pro lockdown and then hanging out in this place that she's saying should be underwater or al gore or these other. I mean, people,

57:52 they're buying houses on islands that if the sea levels rose three inches, they would be underwater in a storm. And so you look at what people do, not what they say, they fly to climate

58:03 conferences and their private jets, they eat steak there, that whatever. And then they want everyone else to not do these different things. It looks like it's more about control. But I think one

58:13 aspect of the narrative is just focusing on people's behavior. And the behavior is not indicative. And frankly, that's a big part of what I do in my management evaluation. I look at what people do.

58:25 Did they buy a bunch of stock? They say it's cheap. Did they buy it with public companies? It's easy. Did they buy stock in the market anywhere close to this price? If they have not purchased

58:35 stock with their money, not granted through some sort of ridiculous. stock option plan or whatever. If they haven't bought stock in the market, they don't think the stock's cheap. It's a

58:43 capitalist system. If a politician doesn't, they buy a beachfront house and a place where the beach is two inches above the water, they do not believe in climate change. They do not believe in

58:54 rising sea levels. They can say whatever they want. They buy that house. You know that they do not believe in it. And, you know, I don't know that they should necessarily get called out on it as

59:03 much as that behavior should be much better documented and should be the front of the conversation - I don't resent you for buying the beachfront house, but it's just to your point, it means if it

59:14 really is going to flood in 10 years, dude - It just cost you 14 million bucks - Right. I mean, it's just, it's indicative. My training in economics is heavily focused on that too. Lots of polls,

59:27 lots of surveys, these mean nothing. What matters is what people do and where they spend their money. And so what they do, what they're spending their money on matters a lot where their money

59:37 comes from matters a lot too. This is something that I think people started talking about briefly a few weeks ago, and then it got heavily suppressed in the media, heavily suppressed. We know that

59:47 the USSR funded Greenpeace. We have documents showing that the USSR funded Greenpeace. I find it hard to believe that a former KGB agent who now essentially is the dictator of Russia is not funding

1:00:01 the equivalent right now. It is hard to believe that. It beggars the imagination that he is not doing that Right now, we are not at war. Thankfully, I'm not an advocate of World War III. I do

1:00:13 not think we should go do various things to provoke. But if we are providing money and resources to oppose him, we should identify where his and where the different oligarchs' money is going, what

1:00:27 causes are being funded, and we should publicize that. And it should be in the front page of the newspaper It is very hard to believe that these people that you're talking about maybe. what they're

1:00:38 telling you is true, or maybe they're taking money to go do these things. And it is amazing what taking money to do something and do to what people actually do. Yeah. I had a job for 20 years.

1:00:52 I kind of remember that.

1:00:55 So here's kind of the framework I've been looking at this stuff through Because I

1:01:01 think basically what you've highlighted is we do need a database, a depository of just flat out information, chronicling the information. I think it's really important so that we have it to work

1:01:15 from because there's a lot of misinformation out there. So I think that's important. What's interesting is if you get into the psychological studies of changing someone's mind, you can do it three

1:01:29 ways One, you can do it by solely asking questions. Actually, if you will not take the position, you just ask questions. you're able to lead people, that's one effective way of changing

1:01:43 someone's mind. Two, making him laugh. I have a huge belief, and you may be in the age demographic where you can opine on this. I think folks, your age and younger are more liberal than they'd

1:01:56 normally be. Kids are always liberal, but they're more liberal because of John Stewart. I mean, so what you want about John Stewart? I watch The Daily Show every night. He made me laugh. I

1:02:06 didn't agree with a lot of his politics, but he made me laugh and I would sit there and go, okay, if John's that passionate about it, I ought to think about it. So making people laugh. And then

1:02:15 the third way you can do it is scare them. And I don't know that we can, well, one, I don't know if it's morally right to scare back, 'cause that's clearly what the environmentalists have done.

1:02:27 But, and I don't even know what the scare back would be, you know, in terms of doing it. But it's almost like we have to do

1:02:38 this education, if you will, within one of those two lenses, or else it's just not going to be effective. I mean, history kind of proves that out. And I think that's always my worry about when I

1:02:49 look on Twitter and watch people advocating for energy, it's like, they're sitting around cheering in the echo chamber, you know? It's like, okay, you haven't changed anyone's mind, you know?

1:03:00 So it's a hard question, but we've got to figure it out I think as this alternative energy bubble burst, and as this tech bubble burst, I think people will look for the next thing to invest in.

1:03:16 And the next thing it looks like is oil and gas and commodities. And as people invest more in these businesses as the percentage of the SP that's allocated to energy goes, traditional energy goes

1:03:29 from 2 to 4 back to its historic highs of 22 or 24 as that happens. people's psychology changes like you were saying because there's money in it. And I don't know if that was one of those two that

1:03:42 you were saying, but I think - No, but that's the, that's the, I've always said there's the red problem and green problem. The red problem is we lost a shit ton of money and you know, the green

1:03:51 problem is the environmental problem. And I don't know that the green problem truly happens if we hadn't had the red problem. If we were making folks money, I think you're right Because when you

1:04:02 look back at the history, you know, you had the shale revolution start natural gas when George Bush was president. And so it take politics out of it. I think it's fair to say he might have been

1:04:14 our most conservative president we've ever had. You could say that. And basically what was said at the national level was, let's let the state steal with it You're going to go regulate oil and gas,

1:04:29 Texas, Oklahoma. We sitting up here at the

1:04:34 EPA. We're not going to do it. Then you get Obama, and you could make a case that Obama's the most liberal president we've ever had. I mean, Biden's probably more liberal, but whatever. But a

1:04:45 very liberal president and the policy basically stayed the same. I mean, the EPA was a little more active. They were doing a little bit more, but for the most part, and that was because we were a

1:04:58 meaningful part of the SP 500. We were also union jobs, et cetera. So we mattered to people And that's why both sides of the spectrum were able to agree that this is the way we handle it. And then

1:05:12 all of a sudden, when we're not a meaningful part of the SP 500, we're not meaningful labor jobs anymore. That's when the green problem was able to take hold in a big way. I think that's a fair

1:05:26 point. I mean, I interned for the Heritage Foundation while Bush was in office. So I don't think conservatives thought he was particularly conservative I don't know if I don't know kind of where.

1:05:36 where that sat from like American perspective broadly, but that was not, I think I was there summer of 2003 and that was right as, I think he expanded Medicare or expanded some sort of entitlement

1:05:54 - I mean, if we're gonna get into the mediation - No, no, no, no, no, that's a fair thing to say 'cause I mean, his education stuff was done with Ted Kennedy - But I think it matters a lot

1:06:04 because I think in the US and in Canada, people look back at the most recent kind of Republican president here excluding Trump for various reasons and in Canada looking at Harper and they think that

1:06:19 they're the embodiment of those ideals and they're not in the same way as the, you know, the Trudeau is definitely not the embodiment of liberal ideals and Obama and Biden or not the embodiment of a

1:06:36 Democratic party ideals, right? You can just listen to people that support or supported them or voted for them in many cases. I mean, their polling is really bad. And the, you know, again, I

1:06:45 said, I don't trust polls, but hey, like people's polling for their ruling party person that they voted for might be more indicative than they're polling for someone that they didn't vote for or

1:06:55 don't like, although it might be worthless. But you just listen to what people say. And they don't, they don't say that they're embodying their values So I think it's hard, I think it matters a

1:07:06 lot because of pipelines and export facilities. And that's more of a candidate issue than US, but in the US and the Marcellus, we're still really suffering - Well, the FERC just changed the rules

1:07:18 on pipeline stuff to now you have to basically consider climate change and there are folks saying we're never gonna build another pipeline in the United States again, if those remain the rules - I

1:07:29 think they just change, I think they just approved really small expansions or something but yeah I think generally interstate pipelines in the US are challenged. Great for Texas internally,

1:07:40 terrible for basically everywhere else in the country. And really not a sustainable policy because you end up importing oil. I think it was from Venezuela or some other sort of country that we're

1:07:52 not really buddies with to, or LNG to supply Boston with gas and heating oil - Yeah, they, I forget the name of the facility in Massachusetts, but they, it's the one LNG intake spot in the United

1:08:09 States, but they import 20 of the natural gas they use in the winter, and it's from Trinidad. That stuff needs to be gone to Europe - Yeah - You know, I mean, and then you've got the Jones Act,

1:08:23 which you can't use big tankers to go from US to US. And so California, I mean, we could be running oil from Texas down through the Panama Canal over there they're buying

1:08:38 the Russian oil over in California. So it makes, yeah. Similar issues in Canada where they don't allow, and there's different groups that blame it on different people, but in the end, it doesn't

1:08:47 matter. It just matters that it doesn't exist. They import oil from Saudi Arabia and Russia to Eastern Canada instead of having a pipe to take it from Western Canada to Eastern Canada. I mean,

1:08:59 it's surreal. I mean, really like just the choice of like who they're supporting as well as how environmentally unfriendly it is. And then there's these different things that are, in my opinion,

1:09:11 just inexcusable kind of like hit pieces where you see these methane emission studies where they send planes and they never really share the calibration. So it's always a little suspect or like the

1:09:23 pictures that various publications showed of certain wells that were supposedly off or whatever in Pennsylvania and West Virginia and they never do it in Russia or Saudi Arabia or Venezuela. They

1:09:37 only do it here. And it's like, okay, well, who's paying for these, right? And why is this here? And why is it, I do not believe that US natural gas production is less environmentally friendly

1:09:49 than natural gas production in Qatar or Venezuela or Russia. It's impossible. It's so far beyond the realm, just understanding how these operations work I mean, operators here want to sell their

1:10:03 gas, where they make money by selling gas. They can get more of their gas in the pipe. They make more money. Money is a very powerful motivator. If you're in Russia and you're working for some

1:10:14 state oil company, your compensation is not driven by the amount of gas that goes through. So I don't know, I think that really bothers me too because that focus, I think it inappropriately labels

1:10:30 the US and the Canadian industries as looters and unfriendly. And then all that happens is they get substituted for less environmentally friendly sources of energy because you really need

1:10:42 hydrocarbons to kind of get the whole system to work - As I always like to say, there's not a peeing and non-pying part of the pool. I mean, you piss in the pool, you piss in the pool - That's

1:10:53 right. Yeah, no, it's, so,

1:10:58 yeah, I don't know what we're gonna do about this. I mean, I will say this, you know, Colin's gone on a couple of podcasts of environmentalist type folks where at the end of the podcast, it

1:11:11 was at least, Hey, I learned a lot about energy today. And so I do think I've been, I have maybe been sitting here overthinking it that we need to create this format, whatever it is. It's

1:11:23 children's character, you know, energy man or just something. Maybe it really is as simple as we all just need to be out there talking in a reasonable voice. I do think we need to show empathy

1:11:35 towards people suffering from higher oil prices because it does no good rubbing in their faces that we're making a lot of money right now. But yeah, now I mean maybe with a lot of education that

1:11:46 helps. I think the narrative needs to shift a little bit in terms of companies that are focusing on returning capitalist shareholders. I don't think that's necessarily bad. I think there needs to

1:11:59 be a lot more honesty about why that's happening A lot of that right now is happening because they can't get service capacity to drill more wells. And so if you're trying to go get another rig and

1:12:10 you can't, don't publicly lie and say that you're trying to be a good steward of capital by buying back more stock and paying a bigger dividend. I mean, there are companies that are choosing to do

1:12:19 that. But in many cases, if not most cases, I've started investing a little more in oil services companies. I've been doing a lot of diligence around that. And it's really hard to get an

1:12:29 incremental rig and you can get it. It starts in six months or it starts in a year, depending on the size of company. Hard to find the people. And so there's a lot of, I think, disingenuousness

1:12:40 around this whole return of capital and slow growth narrative. The world needs the oil, so I don't think it's the same situation as it was a year ago where you really needed that sort of capital

1:12:51 constraint. And I think what the industry can do best is be honest about capital allocation, be honest about supply constraints, be honest about inventory constraints. And I know it sounds weird,

1:13:04 but as companies are more honest, not less, they build their cost of capital because it's like you were saying with publishing your data, if you honestly represent what you have, you have a better

1:13:15 shot at getting fairly valued. And so as a public equity investor, I prefer companies that are more honest that they think it hurts themselves 'cause they aren't good at investor relations from

1:13:27 their perspective and with a little bit of nudging and a little bit of kind of of just massaging to make sure that they have their narrative right, they can share the truth about what's happening in

1:13:39 terms of how much inventory they have, what their emissions are, various things that matter to various people for different reasons. And I think there's room, I think more honesty leads to more

1:13:51 trust and more honesty leads to better outcomes. And I think you're absolutely right there. All right, let's close. Let's go to Twitter We still beefing with Art Berman. Where are we with Art?

1:14:02 No, I think we've resolved that. Actually, Art has a higher under supply for cast than I do. We both think the world's under supplied for oil by a lot. So I think we're on the same page at this

1:14:12 point. So you and Art have hugged it out. Okay, I like Art. I had Art on the podcast right after one of his blokes was somebody and I actually like Art. I've never met him in person because that

1:14:23 was back during quarantine. So we had to do it over Zoom, but I like art so good to hear energy cynic We still beefing with Sinek. He got mad at me.

1:14:35 We disagreed about the trajectory for oil price, repeatedly over a almost 50 move in oil price now. And he also got mad because one of my core positions, I kept talking about it and it keeps doing

1:14:50 well operationally. I think they've moved from 40 million of operating cash flow to over 100 million of operating cash flow in the six months or so that I've been talking about them So their

1:14:59 operational performance is great. And I think their stock performance is great too. And I don't know, I guess, like apparently that is really bothersome. If I were wrong about something, I would

1:15:11 talk about it. I've been right about this. And if people are upset about being right, there's only so much that you can do about that. So I'm still trying to figure out the technology of how we

1:15:24 distort his voice on the way in here so we can settle this on the podcast. It's just tough to figure that out, but we will figure that out. So are you beefing with anybody else on Twitter or is all

1:15:37 well? There was someone who was posting incorrect production forecasts for Sandridge and repeatedly saying they would go bankrupt from when they were at 70 cents a share to stop posting. I think he

1:15:48 deleted his account a few months ago, but I mean, it's at 17 now or something. So at some point, you'd think you'd just say, Okay, their production's been flat for the last eight quarters and

1:15:59 they're not spending a lot of their money to keep it flat. Maybe my forecasts are wrong or maybe I shouldn't have set my engineering software to have it fall off after two years or something. So I

1:16:10 guess, but I think I won. They deleted their account. Nice. So that's it. So honestly, I think I'm trying to, I think it's great to have constructive criticism and open debate, and I'm more

1:16:24 focused on trying to figure out where I'm right and wrong and having constructive conversations with people then in arguing with them - Yeah - No, I think that's right. I always learned as an

1:16:35 investor is, if somebody yells really loud, there's probably some grain of truth in there that I need to go figure out what it is - Yeah, absolutely. I think there's a lot of maturity in that.

1:16:47 And it's just, it's hard. And sometimes you need to embarrass yourself. Sometimes you need to just be really wrong or come to a realization that someone that you argued with was right at some point

1:16:56 in the past to accept that And I'm not sure it's maturity, I just got old - Game fump - That's what they call it - Exactly - Exactly - Big right here. Josh, you were cool to come on, man - Thank

1:17:07 you for having me on, I appreciate it - Absolutely. How do people get in contact with you - If they somehow don't know me yet, they can find me on Twitter, Josh_Young_1 or

1:17:21 my company's website bisoninterestcom companies website bisoninterestscom. Cool.