Chuck Yates Needs A Job

0:00 All right, we're live. Hey, Clyde, welcome to our monthly AMA, ask me anything. This is really, really cool. We got Dick Stoneburner, Steve Hared, the architects of Petrohawk, who have

0:14 agreed to take our questions, not so much of our abuse, but just take our questions and say, How did you two guys meet? Do you all remember that? Yeah, I do.

0:28 This is in 1999. I was working for a very small microcap public company called Middle Bay Oil in Houston. I remember that. As a property along the Gulf Coast and a little bit in West Texas. And

0:42 doing okay, but '99, gas went to dollar, oil went to 10, it wasn't the greatest time. Company was

0:50 stalled out, needed more equity, needed something if things were going to stay bad. And

0:57 Someone we knew introduced this to

1:02 Floyd Wilson, who had sold Hugueten and was in the process as starting a new company with in-cap backing at that time. And it was like a20 million backing. And this was the first time in-cap had

1:15 done a deal where they backed a manager that didn't have properties yet. So this was like very beginning of the whole PE. And the intent to go public Yeah, the intent to go public. And they wanted

1:28 to go public, which was not their style at all at that time. But you could have been public. He had sold it to Chesapeake in '97 or '98, and was starting over. And through a guy named JW. Brown,

1:41 who I had known for a past life,

1:46 introduced us to Floyd. And we started talking during the summer about a recapitalization in Middle Bay with their capital coming in. And it took two or three months to negotiate that. And that's

1:58 where I met Dick and some of the other core team that Floyd was putting together. At that time, they were in Dallas. And we closed that deal in about August, a 99, changed the name from Middle

2:12 Bay to 3TAC. 3TAC, yeah. And moved it to. I moved it to Houston. At that time, I thought when I met Floyd and everybody, 'cause he was bringing his own group, I thought the Middle Bay was

2:23 small, like 10, 15 employees. I thought, I'll be out of a job in 30 days. He's got his own team, all that. We were together for 20 years, so you never know. Well, the team was not very

2:35 substantial at that point in time, believe it was me and Floyd, and an engineer by the name of Allen Nichols, and a land man by the name of Mark Holt, and maybe an admin, but that was it. And so

2:47 we did the merger, and we stayed there for a few months, but then moved to the next. acquisition, which was Floyd oil. And we talked about that a little bit at the last podcast, but that was a

3:02 really, really creative transaction. That's the one that I told Floyd. I said, he wanted to move to Houston. And I said, let's not move to Houston 'til we actually have a company.

3:14 I don't know if I don't move my family down there on a lark. And he said, okay. And that's when we got the Floyd oil transaction, which again was just a very creative

3:26 opportunity that Floyd created. I mean, just by talking to Alex Floyd and convincing him, he'd be better off with a bunch of mailbox money and sell the company to us. And it worked out well. Well,

3:38 you know what was crazy back then that I don't know if people appreciate today, but I mean, it was a real tool to be a public company and have stock that you could give to folks a lot of the great

3:51 success stories. were exactly that. I have public stock. You're better off with my public stock than in those assets. And so, as crazy as it sounds, Floyd's sitting there saying, let's go find

4:04 a small public company so we can go acquire stuff. Well, that's how you turn 5 million into 350 million because that's your currency and you have the ability to attract sellers with that currency,

4:17 along with some cash and debt, whatever, but. And they can buy in the, you know, they can buy into the upside. Yeah. Yeah Well, that's how we convinced the middle-day man, you know, because

4:25 they were gonna have a different currency. Their currency was not worth much as their public company, but then Floyd, again, convinced John. Bassett. Bassett, who was. John Bassett, I hadn't

4:37 heard that. A good guy, good guy, it was a good group. From Mobile, yeah. Yeah. But you were the only one, Kelly, came over. Yeah. I think, was anybody else come over from middle-day? Not,

4:48 not for long. Yeah, yeah. Yeah But anyway, that's how that started. And then we had three tech for about, I guess, three years and sold it to planes in '03 to Jim Flores. Oh, okay. Which was

5:01 an interesting transaction in and of itself, but a lot of fun. So I had a

5:09 couple of wild Jim Flores stories. The one I like the most is the house that the former Mrs. Yates has. We bought from Paul Van Wagenen Remember the old CEO, Ogo, who's recently passed away.

5:25 Yeah. But

5:28 anyway,

5:30 we're supposed to close on a Friday on this house. And it had been one of these deals where back in the day, you kind of had to hunt a house out and figure out before it went on the market to be

5:42 able to get it. So I badgered Paul, hey, when you sell your house, let me know, I'll buy it and he calls one day and says, Hey. You know, I want to sell my house. Why don't you come over,

5:54 take a look at my list in a week or two, came over, looked at it, said, Great, we'll take it. And he was building the house in River Oaks and his house just got delayed. So we basically had a

6:06 handshake deal for about 10 months. And I was like, Hey, I'm fine. We got a nice house. Everything's great. We still want to buy your house. We're there. So we show up to close And we show up

6:20 and there was something wrong on a credit report of mine that was causing the insurance company an issue, long story there. But anyway, we got all that sorted out, but we're just sitting around

6:31 chatting. And he made an offhand remark about, Yeah, I've just been signing documents all day. And he talked about being in Hugh Licki's old office at Penzor and I went,

6:43 Holy cow, he just sold Pogo to planes. He didn't have

6:56 to tell you. Yeah, that's like, I figured this out, you know, yeah. Yeah, so, you know, Monday it was announced that Pogo was being sold to planes. Wow. Yeah, that was so - We have a bunch

7:03 of floor story stories, but I don't think we need to bog down the podcast.

7:08 Telling funnies on him. He's a good guy. He's one of the unique personalities in our business. No doubt Oh yeah, which is great. Wake 'em up.

7:15 Wake 'em up.

7:18 Yeah. So one last floor story, and then we'll get to folks' question, but I had just joined Caine Anderson. Maybe I'd been there a year, still kind of new to the world at Caine Anderson, and I

7:32 don't know if you remember, but it used to be Plains resources, and it owned the GP interest of Plains All-American. Right.

7:43 And no research analysts could figure that out. I mean, they would - And Greg Armstrong was the CEO. Greg Armstrong was the CEO. And nobody could figure it out. Like, they would consolidate the

7:54 debt on the balance sheet and subtract that out for the valuation. And we kept saying, well, the units of Plains All-American already account for the debt. And anyway, it was just a mess. So we

8:06 were like, we got to separate these two company. And basically went to Greg Armstrong He said, you've got to choose one, choose one or the other. Which one do you want? He said, I want to run

8:15 the pipeline company. And so we brought Flores in to run the oil and gas company, Plains of Resources. And anyway, we're having - so split. And so we're having this big board meeting about all of

8:30 it. And I asked the single dumbest question I have ever asked in my life. I mean, I knew - you know when you just say something, you realize right at the end of it, that you just like, I haven't

8:41 messed that up. This is so embarrassing that the end cap guys are in there. I mean, I think Zorich and Marty are in there and Bob Sonot came. I asked the single stupidest question and Jim goes,

8:55 Chuck, stop. And I just thought he was going to let me have it. And Jim, Jim goes, Chuck, I know exactly what you're doing. You went from here to here to here. I did the same exact thing.

9:07 Here's how I got comfortable with this, you know, blah, blah, blah You know, you were so right to think there, but I think we're okay because of this, this, this, this. And everybody's, oh,

9:16 good question, Chuck, wait a minute. I think Jim looked at me and he winked. I saved your ass. And so you owe me one. Totally. If he would have called and said, you get my first born. Yep.

9:29 There you go. So yeah, Florida is a character. Yeah. All right. Let's jump on here and see some questions we've got.

9:39 I don't see a name on here, but somebody said they actually worked for Petrohawk in the Tulsa office for nearly four years in the land department under Jack Keenan and Weldon Holcomb. Yeah. I've

9:51 got a Weldon Holcomb story. We all do. But just an amazing culture they created, a culture that really had everybody ruin in the same direction. Always treasure my time there and experience I had.

10:05 Talk about culture. How'd you guys do that? I'll start and again, I gave it the credit to Floyd because we had such a flat organization.

10:18 Everybody basically did their job alongside. You did your function, but Steve did his function and others did their functions, but there was no hierarchy. I think we were all just, again, rowing

10:34 the boat together And because of that, that, that. culture that Floyd created of a very flat organization that translated to once we became sizable and we had that Tulsa office, which, you know,

10:47 ended up developing the entire Haynesville asset. I think that culture rubbed off on the Tulsa office. And they in turn had a very flat organization that was very, very successful in developing the

11:02 Haynesville. Steve add on to that Yeah, no, I think that's right. It started with Floyd and his vision and his style, but it was all for one, one for all. And Floyd was never, you know, some

11:15 CEOs or they talk about it's always my or I. Floyd was always we and always gave everyone else the credit. And that was all part of the culture and part of the way things were done. And everybody

11:28 worked together. There was no rivalries between, you know, departments. people pointing fingers at each other when things didn't go right or whatever. It was all about getting the job done. And

11:40 we had a structure, everybody all the way to feel people where everyone had options or restricted stocks. So everyone had equity in the company. And that was purposeful to motivate everybody to

11:52 think about company success, not just getting a paycheck or keeping your job or whatever. It was all about everyone having the right mindset. And that was from the beginning and it worked great.

12:05 And we had a lot of fun. I mean, that's the thing about the upper management between me and Steve and others. It's not all work. We had a lot of play and people enjoyed that. When you work hard,

12:20 you work hard, we play hard, you play hard And we did a lot in a short period of time, but it

12:30 was fun while we did it, and we were just doing it. it was unique. Yeah. No, that's cool, that's cool. All right, give me one Weldon Holcomb story. I'll start with mine, so y'all can think

12:42 just second. So my business partner, Mike Hines, for 20 years, great dude, former no-one soul, former Exxon. And he was a young engineer at Exxon. And I believe Weldon came from Exxon. Oh,

12:57 very Exxon. Very Exxon. And Weldon was Mike's boss And Mike is out in the middle of nowhere in Louisiana. And there's a blowout happening on a well. And this is, the Exxon rule was you wouldn't

13:13 work on a well unless it was daylight. You couldn't do night operations back at that point. And so Mike's sitting there with a well that's a mess. And he called Weldon and he's like, Weldon, what

13:24 do I do? And Weldon said, Well, if you lose the well, you're fired and hangs up. It sounds like Weldon That's pretty much right on. You know, what I would say is that, you know, we inherited

13:36 welding. He came from the KCS culture. And this is not a knock on welding. If he was sitting here, I'd tell him the same thing. We had to kind of mold him into becoming a pecter hawk manager. He

13:48 was kind of a hard-ass and he had a group of engineers and mainly engineers, you know, land mangeologists. He had a really, really strong group of engineers And I had to, I was basically welding

14:02 his boss because I was chief operating officer at the time. And so we had to get on the same page and sometimes that wasn't easy, but I would tell you that again, that because weldon adopted a lot

14:16 of the pecter hawk culture, along with his Exxon culture, that he didn't all of a sudden become jovial overnight, even though he could be. But he could also be, you know, very stern, not me,

14:27 you know, I was not that guy. But he kind of was, but he kind of wore both hats. He was the stern taskmaster of that office and it was very effective. But he also developed some peter-hot culture

14:38 along the way that I think added to the success. So the guys could respect him for both of what he was, being a peter-hot kind of guy, but also being an excellent kind of guy. Yeah, I'd say

14:50 that's right. And we took, as we grew over time and made acquisitions and took people, people joined from other organizations, they picked up the peter-hock way or whatever, but we learned from

15:03 what other people did too. We didn't have the whole crystal ball on how to do things. Yeah, you know, that's the one thing that is maybe somewhat underappreciated in our industry, but maybe not.

15:18 It's really impressive to be trained at Exxon. I mean, for all their faults whatever we want to say about them. I mean. It's really impressive. Have you guys been out to the new campus? Never

15:30 been on it. Oh, it's really cool. It's wanky. Yeah. Well, you know, there's not a lot of Exxon people, honestly, out there, most people stay. I mean, I think in my experience, you know,

15:42 you get the opportunity to be a life-red Exxon. It's kind of hard to walk. 'Cause you were treated very, very well, trained very well, paid very well. You get stock and you live off your

15:52 dividends for the rest of your life. Exactly You're not gonna make a big lick, but you're gonna make a big steady lick. Yeah. I think particularly, whether it's Exxon or any of the big companies,

16:03 if you get past about the 15-year point, it's hard to - Why would you walk from that? Yeah, no, that's totally right. All right. What advice would you give a young person start in their career?

16:19 Work hard, hard work can overcome most everything Ask lots of questions. Try to keep learning every day, meet as many people as you can, and you know, don't be afraid to take some risks sometime

16:32 along the way. Yeah, I like the take risks, I'm a firm believer in, you never regret the risk you take and fail, but you always regret that you didn't take it because

16:46 my daughter Sarah's friends with your daughter and Sarah was really wanted to go to Duke and she was thinking about where to early decision and for some reason Duke just doesn't like a Episcopal high

16:58 school in Houston because Episcopal 30 years ago had problems and Duke hasn't gotten over that so Sarah's like I don't know if I'm going to get in do I really want to use my early decision and I was

17:09 like no you know try to get into Duke and if you don't and you fail go to North Carolina and then just buy and be really successful, buy every billboard around Duke and paint it Carolina blue and you

17:21 know whatever it says Yeah, to both of those points. You know, I really kind of live by a motto that I think is saying the same thing and that you miss every shot you don't take. And again, being

17:34 a geologist, you're going to fail a lot. I was as a kid. I thought I wanted to be a meteorologist. I was always fascinated with the weather. My dad was a geologist video. He taught me about the

17:46 weather and all. And I liked a joke as I got in the business and said I chose geology because meteorology and geology The two professions you can fail at half the time and still be successful. Still

17:57 be good. But that's it. I mean you're taking shots. I think we ought to drill over there and you're drawing a map and the map's wrong but you drilled it and failed. But you go get up and do it

18:08 again. Ted Lasso via Goldfish. There you go. Yeah. All right. Starting a company today, what would you do, Steve? And is there, and maybe in terms of saying things you do start in your

18:25 company day or the things maybe that you would have done differently than Petra Hock?

18:31 Good question. I think you got

18:37 to have an idea where you want to be a certain basin or two where you have some background and know something about it. Be hard to go in just totally cold somewhere And you got to look at a way to

18:48 get in different now than early days, Petra Hock and early Shale. You know, the core all these plays is held by somebody, at least up, whatever. So you got to have a way to get either into some

19:02 bits and pieces in those areas or look at something that's a tier two that you think you can turn into tier one and get a position and build from there and have the right people with you You have the

19:14 right

19:16 core competencies and different disciplines that can work together. try to get somewhere. Yeah.

19:24 Yeah, it's so different. As you know, in private equity, I was in private equity for 10 years, you were in private equity. What private equity or private capital is just called private capital.

19:35 Expects of a startup company today is so different than what we were able to do back in the early late zeros in the early teens. You could drill exploratory wells. You could buy a bunch of acreage

19:48 and have somebody think that's a good idea that you can develop that and build value. That's not the way it is today. I mean, so you have to be, I think, building an oil and gas company from

19:59 scratch today has to have a PDP component. You're just not gonna get any capital behind you unless you can find something that'll cash flow and you're not gonna go into this big J-curve. We all saw

20:12 the J-curve and it always didn't pull out

20:16 And so you can't have a J curve. you have to have cashflow to begin with. Maybe if you have upside potential within that PDP asset base, you can drill some wells, but your provider's not going to

20:30 say, hey, let's go run two rigs. So it's a different, I think, formula for success. And it starts with quality PDP that has some level of upside that you get to as you harvest your

20:46 PDP It's interesting because

20:50 people have come and say, oh, when are you going to go raise your own fund? And I honestly don't know what I would tell investors today that I would do. Yeah, it's hard. Yeah, it's hard, it's

20:59 a lot harder. Yeah, a lot harder kind of thinking through it. And

21:06 we talk about the Roman numeral CEOs, the people

21:10 that have done it multiple times. And I was having dinner with one of those folks And I was sitting there going, well, there - There's more capital in the industry than there was five years ago,

21:21 but still a lot less than 10, 15 years ago. This has got to be easier, and the Roman numeral CEO said, Now, the players left on the court are LeBron James. I'm out competing against LeBron every

21:35 day, so it's really tough, so

21:39 I don't think I have any good advice It's just different, the era of least in 20, 000 acres and drilling three wells and then selling it to whoever, that's long gone. So one thing to that point

21:55 that I've wanted to talk about with you on the air is, back in the beginning of kind of the Haynesville, and I talked to Dick about this on the podcast, it was, we had all the private equity firms

22:08 that tried to do cotton valuing, we all screwed up What's up, the Travis Peak, the Redessa, we tried to do it, but we all had that acreage, and lo and behold, there was the Haynesville on it.

22:19 There was a period, as I recall, where we would literally take our acreage map, we'd shoot it to you at Petra Hawk, we'd shoot it to Chesapeake, maybe Goodrich, and you kind of said, give me a

22:31 bid within 48 or 72 hours, you'd give us a bid. Yep, yeah, that was the most fun I've ever had in my career, was that like six or four months, that's all it was, it was fast. It was fast. And

22:44 it went up, you know, once the thing got going and when the play became public that March and Chesapeake, it was a real - When we convinced Aubrey to admit that the play was really good. Yeah,

22:58 yeah, the flushed him out, flushed him out. That was a classic, that was a classic boy move. But once that, the acreage prices were just going up every week and we were paying more and more and

23:12 getting the position together and we had a very well-defined area we were trying to buy in Complicated because you're looking at all these sections and who else owns acreage in them because we wanted

23:23 to operate all we could so You know a hundred and sixty acres in a section where we weren't going to operate wasn't working nearly as much to us as 160 in a

23:33 section where we already had 80 Right, you know So it was very there was a lot of chests that way and and it was changing real time with what other Companies were doing what we're here and then we'd

23:44 make these offers and

23:47 People would call back the next day and say well, you know You need to increase by two thousand an acre because we got an offer from somebody else We knew it was jesspy and so we were pulling the

23:57 trigger on things just as we went and filling in as we could and You know and we spent a lot of money, but we got down to it was basically us and Chesapeake Yeah, there were so many incumbents that

24:08 that you just described that El Paso I forget about Mexico You know the old Comstock none of those guys they went out it was us and Chesapeake and in Canada It was a two-man knife fight. Yeah, it

24:21 pretty much and and we were going at it every day And it went on for through the summer and we raised money like five times in four or five months The last time didn't go so well. I mean, but we we

24:38 the last offering we did was in August of old and We got roundly criticized for selling more equity and all this But it turned out to be really critical because a month later The financial crisis hit,

24:51 you know, Lehman went down and all that and so a month later the capital markets completely closed For several months and we were restocked and we were restocked and so that that that let us carry

25:03 Through through all of that. I mean and so when the financial Market when that when that happened the price of acreage in the Hangeville went for 30, 000 to zero in about two days I mean, it's not

25:14 much of an exaggeration. No, it came to a complete stop. And there were people that we were talking to that were holding out for more. They were thinking it's gonna go to 40 or whatever. They

25:26 ended up with nothing. I mean, when the door shut, it shut quickly. But it was great. And we put together, we started, you know, we had positioned at Elm Grove. 30, 000 acres. 30, 000

25:39 acres. And again, being, you know, in the game gives you chances and turned out to be, you know, right in the core.

25:50 And we added 250, 000 acres to it in four or five minutes. That's right. We ended up about 300 plus. We ended up with over 300, 000 acres. So we, I mean, and did it all quickly. Yeah, it was,

26:02 I mean, we were running300 billion. It's been a billion months. I mean, I think that's before we ever completed a while. Yeah. I think we were literally just selling stuff to you Yeah, I mean,

26:13 yeah, I think a lot of them mean PSA's. Yeah, a lot of them, the smaller thing for would be an assignment, some were PSA's, you know, just depended on what it was. But yeah, we spent a

26:21 billion dollars where we had the first, our first operated well online. And that was, you know, Floyd with the backing and knowledge of our technical team, pushing the chips and going for it.

26:33 And, but you had to get, it was all, you know, if you sat around and waited six or eight months for results on everything and so you couldn't study, you couldn't study it for six or eight months

26:46 or wouldn't be anything to do to get it. And that's the public knife fight in the Haynesville. And then we went down to the Eagleford at the exact same time. At the same time. And bought 160, 000

26:54 acres for. Totally under the 3 million bucks or something like that, I don't know, it wasn't very much. 'Cause what were the failed plays down there as the wild cocks, right? Well, you're in

27:05 between the wild cocks. It's really No Man's Land You're down dip from the Cretaceous chalk eagle.

27:13 or Edwards, all that. But you're up to it from most of the Wilcox. So you were in an area that there were a few scattered Wilcox fields and a few scattered chalk wells where we were in that

27:26 Hanesville or a Hockville area. But really, it was other than the fact that they had very astute attorneys that pretty much required a quarter. So we really didn't get many leases better than a

27:38 quarter, but we didn't have to pay very much. A hundred bucks an acre, two hundred bucks an acre Yeah, they hadn't, their phone hadn't been ringing. No, they had leased in ages. Yeah, and

27:48 you're right. Those are generally bigger ranches type stuff. So you've got us more sophisticated. Yeah, 'cause I mean up in Louisiana in the Haynesville, I mean, it was all small tracks and all

27:60 that. Yeah. The Hawkeville area, bigger ranches, and they had CDCs and all that, but still cheap on the front end. Yeah, so my favorite story during that we had a company called Caddo. And we

28:13 drilled probably 12 really crappy cotton valley wells. And we maybe were going to get a third of our money back, one of those type deals. And unfortunately, this was just tagged right on my

28:27 forehead. That came. Hainesville pops up, and we do the drill. And we wind up selling to Goodrich, who made the highest offer. And they wanted to pay us in stock So we took the stock, and we

28:43 were going to take the stock and immediately go sell it into the market. I mean, I had the traders that came lined up to go do this. And their Vincent Nelkin's attorney went on vacation. So we

28:56 closed the deal. We get this stock, but they hadn't done the filing. Now, under the agreement, they had two weeks to do the filing. But Rob Turner and I are sitting there talking about it. Now,

29:05 we're going to have that filing rent in place. You can go do it and vinnyo. attorney's gone, they can't do it. I mean, I'm hitting the roof. This is, we were, at this point, we're getting

29:15 about 60 of our money back. And I'm like, this is the biggest win ever. Press release comes out, pops all that good rich, stock price triples. And we made 12 times our money on that deal. And

29:29 so, because we had to hold the stock for three more weeks. Yeah. And it ran. I was like, I got to take your time on that

29:39 We're all good.

29:42 Okay, somebody asked any favorite memory from your time at Petra Hawk? Yeah, I'll give you one. It's, we're, flow testing the first Eagleford well. It's October 9th, 2008.

29:59 I'm walking into the cotton bowl for the UTOU game And so I'm walking up to the stadium. Kennical - it's a 11 o'clock game. 930, something like that. I got three of my buddies with me. And all of

30:14 a sudden I get the first flow back report.

30:19 It's already making a million a day or whatever it is. And I

30:23 call Floyd and send him a note, whatever. I said, Floyd, this is looking pretty good. And

30:31 I work PG-13 here. Yeah. So Floyd says - You can be outrated Can I have a boner yet?

30:41 I said, no, I think it's a little early to have a boner. Let's wait a little bit. That's awesome. So then we continue to get, you know, flowbacks throughout the course of the game. And then by

30:52 the end of the game, it's making five million a day or whatever. We know we've made a commercial discovery. And I report back to him and he asked me the same question. Yeah, I think it's about

31:03 time. You go ahead and get that boner.

31:06 Yeah.

31:07 Full of porno, but yeah, go all about it. I would say, well, we had so many good memories and good times with Dick and Floyd and everyone, but for me it'd be the day we signed the BHP sale.

31:22 Yeah, yeah. That was, with our group, we sold for3875 a share and forever that'll be known as3875 a day

31:32 Yeah, August 11th. Yeah, that's really cool. That's close. That was close in July 14th when we signed.

31:39 Yeah. And that was the culmination of eight years of real work to get to that point. Yeah, that's really cool. I remember we, so I joined Caine at the end of energy fund one, raising energy fund

31:57 two, and energy fun too was. 2002 that we raise it. So we literally deployed the whole fund. It was240 million. We deployed the whole fund and monetized the whole fund in less than five years.

32:15 Hit carry. And we sold our Bocking Company like O, and we sold Dave Lenormand's Crusader, and we sold Medicine Boil which was Mitch Solich. We sold all of those companies within a six-week period.

32:32 So all that money came in. We hit the carry and we got big wires. And I remember this was back before you had apps on your phone. I drove to the office four or five times that night just to go pull

32:43 up my computer. So I can look at my cane account to see the money in it. So yeah, I remember. That was cool All right. This is a really good question that I like that I like to ask and somebody's

32:59 asked that. What innovations do you see on the horizon for the next five years that maybe get you excited? I don't know if it gets me excited, but I think the

33:13 future growth from the shale industry, which is really the only place to get growth in the United States, right? We're not gonna get growth from onshore, conventional

33:26 exploration and production I think it's developing some sort of enhanced recovery in the shale. There's just too damn much oil left. And I'm not even remotely qualified to say, what are the six

33:40 options available to the industry to try and have that happen? Exxon's already alluded to it. What was it within last year? They kind of teased the market about things they're working on. Yeah,

33:52 and it's all due to - That's why we're buying pioneer Yeah, we're gonna, we're gonna, and I believe it. I mean, yeah.

34:00 If anybody can do it, they can do it. So we're back on, okay, cool. You guys just missed the best story. If Dick will tell it again, I'm all for it. I think it was hysterical.

34:13 You want me to go now? Yeah. Well, yeah, I don't know. Unless you don't want to. But I did tease the whole story about me in Floyd and his use of the term boner. As we all obviously know what

34:27 I'm talking about And so we make a discovery and now we've got a file for a field name with a railroad commission. And so we kind of have a contest and submit names for the fields and for the field.

34:41 And we had the Fayetteville and we had the Haynesville. And so there was a reason to believe we'd follow that terminology of the bills and Floyd came out and said, Why, why don't we just call a

34:51 bonerville?

34:56 That's great, Mike, Mike. Convail became the compromise choice. After further discussion.

35:04 Well, my story like that is, you know, we've morphed into an AI enterprise software company, our, first NOV clients

35:15 , we've got an installation of ProFrak and other folks starting to use this. And so there

35:22 is an element of we need to grow up and not be podcast frozen, all. So my running joke is I negotiated a fuck ban on Twitter with Colin. So he's not using that word anymore, so. Right. We're

35:38 gonna

35:41 do it. So what happens in shale? Do we, I mean, is the consolidation over? What do you think happens there?

35:52 No, I don't think so. I mean, the big names are starting to tumble in. And I can't even think off the top of my head. You're not going to have Chevron and Exxon merge, obviously. There's a

36:04 handful of people that form the top of the pyramid. And then how many are below that top of the pyramid that comprise collectively 90 of the shale production today And very few peter hawks and very

36:18 few BCF a

36:23 day companies, two BCF a day companies in a gas world,

36:29 those are going to go away if they haven't already. So I just think it is going to continue to consolidate. Where it ends, I'm not smart enough to know, but it'll end up in the top of the pyramid

36:41 Right. Yeah. Yeah, I think that's right. It'll continue to consolidate and you'll end up with four or five, three or four or five big players in each basin and then a few small guys. But the

36:53 it'll continue, you know, it's more efficient, cheaper capital, all of those things. I'm wondering if there's not something that happens and I haven't killed enough brain cells on this so it's a

37:07 stupid question. Just being able to make fun of me. And I'll give you the example. So we back at Caine, one of our largest holdings was Kraken, the Bakken players And they have been up there

37:21 since, I want to say, I mean, I think Bruce and Brad, before they started Kraken had been, so let's say they've been up there since 2005.

37:32 Mm-hmm. Yeah. It's been easy. It's been a long time. Yeah, could have been before. Long time, drilled a lot of wells there, had the same team together that's drilled, I think more wells than

37:41 anybody else in the Bakken. And what's interesting is they have locations that they can drill and make a 40 rate of return on. And you're like, Okay, well, we can sell that at a 20 rate of return,

37:53 make a lot of money. And every buyer's like, We can't drill for what you can drill for. And so there is this kind of disconnect in that Exxon and Chevron and everybody can buy up all the acreage,

38:08 but they still drill for two million more per well. And so I don't know if there's a lot of - But they're cost of capital a whole lot less, too. So the delta between your cost of capital and the

38:16 rate of return may not be that different It's kind of like a BHP when they bought it. It costs capital three percent. Yeah, that super cheap cost, yeah. And it costs them more to do everything.

38:27 Of course, they fail miserably at that example of being able to execute with any competency and cost

38:36 efficiencies. Right.

38:40 Now, that's an interesting point. I hadn't really thought of that. All right. We've got one final question here. because I think we've touched on almost all these, but someone obviously has a

38:56 horrific permitting type issue on a field that they're looking at and they've asked 27 questions all about permitting without trying to give us what it is. So maybe the global question is, is you

39:14 get permitting headache stuff. How much did you get into government type things? Talk about dealing with the regulatory bodies. Lost art, just operational. He's probably not talking back into

39:26 well-permitted, but even getting well-permitted in 2008 versus getting well-permitted in 2025 is a hell of a lot of different process. But I think we, and I wasn't involved in the midstream, And

39:43 this is probably more where he's talking about, you know, getting, you know, held up on, you know, built in pipe or, you know, putting in a production facility or whatnot, you know, I don't

39:53 know how many miles of pipe we built between the Fayetteville and the Haynesville and the Eaglebird. But we owned all three of those systems and built very, very elaborate midstream systems. I

40:07 don't ever remember being held up. Of course, again, I wasn't involved. No, not in a meaningful way. You were probably more involved than I was No, we got out ahead of it all. And of course,

40:17 a little bit different era, but we were able to get all that done. And we'll say, and we knew it at the time, since Petro Hocha worked other bases in other states, Louisiana and Texas are as

40:31 friendly as it gets in terms of being able to get things done on a regulatory standpoint, you know, whatever it is. And that's really good for our industry and good for building production and jobs

40:45 for people and all of that. say it's not that way in Colorado, right? Or New Mexico or, you know, other places. So we were fortunate that we were doing what we were doing in a place that was

41:00 happy to have us come do it. Yeah. Yeah. I think you're just basically asking two old farts to hide on the current state of regulatory affairs when we weren't burdened by that. You know, this is

41:13 15 years ago, right? Right. More than that. This is 2008, 2008, when we were in our heyday of infrastructure, midstream infrastructure, this 2007 to 2010.

41:25 Yeah. And then we were done, you know, then we sold it to Kenner Morgan. Yeah. Well, you know, and kind of my view from that from the sidelines was, you had, and I don't want to get into

41:37 politics, but arguably as conservative and administration as you've ever seen with the Bush administration, you had eight years of that and the shale revolution starts taking out under

41:47 that. And Bush basically said, okay, states, you deal with that. And it became so successful, first at natural gas, and then we moved into oil, that you had as liberal an administration as

42:01 we've ever had, again, not trying to get into politics, but Obama. And it felt like the deal was kind of cut. We'll just let the states deal with it. And even the Obama administration honored

42:12 that. I think so. They tweaked the EPA a little, but you know, not much. And I think at some point, and I'm not sure exactly when it happened, but at some point, the federal government stepped

42:25 in and said, Now. Yeah, no more. And maybe that was a Biden administration. And in terms of just, Now, our deal is off, you know? 'Cause under Obama, you know, the other part about it was

42:36 it was successful, and it was union jobs. And it really meant economic development for traditional blue areas like Pennsylvania. And we're still growing production and we're still trying to become

42:46 independent, energy independent, right? Exactly. Yeah. Yeah. Well, you guys were really cool to do this. This was fun. Very much. Yeah. Thank you. I appreciate it. It was fun to, you

42:58 know, go back and talk about what we did and how we did it. And, you know, we had a great run. We had a great team led by Floyd and Dick and, you know, a lot of others and a whole team of all

43:11 pros and we won the Super Bowl and, you know, and we were able to play a part in the early days of the shale revolution, which is really turned into something America can be proud of. It's great

43:22 to be part of that. Yeah. I agree. That's very, very cool. Steve, standing invite to come on the podcast whenever you want. Hopefully we don't have technical difficulties. I think it's just

43:32 that and it's probably just me. Yeah, exactly. Well, we'll see everybody in Vegas next week for the little moments Go ahead and just give me the money now. I'm gonna beat you again Yeah, no.