Chuck Yates Needs A Job

0:20 Hey everybody, welcome to Chuck Gates. Needs a job, the podcast. I have now become best friends with Paul Clark, who I don't think I'd ever met before this. Paul, nice to meet you and welcome

0:32 on. Nice to meet you too, Chuck. Thanks very much for inviting me. It's a pleasure to be here. So, you know, we've never met. I think we started going back and forth on Twitter and DMs or

0:44 something stupid, I had said, but I went to your LinkedIn page and I started reading it and like, What the hell do you do?

0:54 Absolutely, thanks for asking. So,

0:58 by way of background, a little bit of my pasts. I'm from Texas, I grew up in Houston in a fictional town called the Woodlands. And I went to the University of Texas and graduated back in 2001,

1:12 between 2001 and

1:15 somewhere in the mid teens. I spent most of my life drilling wells between the Barnett and Baliq Papan and everything in between. I was drilling for a consultancy, a small consultancy and we were

1:31 contracted out to people like Shell and Chevron, et cetera. So, by hook and crook, I ended up taking a job with Shell overseas and that ended up being an opportunity or an introduction to a much

1:46 broader

1:48 set of the global energy industry, if you like. And I ended up going from Shell to work in Geneva with a company that had assets in West Africa and in the Kurdish region of Iraq. And that company

2:04 ended up getting bought by a Chinese company called Sinopek in 2009. And

2:11 when that happened, I was working, I had moved on from Grillin' and I was workin' in the portfolio team. And that portfolio team was really the introduction to me understanding how to look at

2:22 things in terms of assets on a value basis, to look at it on an expected value and risk adjusted and all that good kind of stuff. And when signup bank bought us, I started scratching my head and

2:37 wondering how they came up with that value. And I figured the best way to go figure out how to value companies was to go work for a bank. Whether I was right or wrong, that's another story. But I

2:48 ended up working for BMP Perry Ball, who at the time was the biggest RBL Bank in the United States, as well as the Bixar BBL Bank in Europe. But I was working for him out at Geneva, and we were

2:59 doing structured commodity finance for companies all over the region of the world called the CIS. And the CIS is basically everything that used to be the Soviet Union, including Russia.

3:12 And I did that for five years. BNP ended up shutting down that group and there's a long history behind BNP and what happened to them without getting too much into the details. They got a9 billion

3:27 fine from the United States government and that pretty much changed their risk appetite in terms of doing stuff upstream, especially in Russia and Kazakhstan and Uzbekistan. So I worked for a couple

3:40 years after that with a couple of different global markets groups and big investment banks doing very similar activities, mostly structured commodity finance. The last place I stopped off at was a

3:53 commodity trader in Zug, which is a small city in Switzerland just outside Zurich. And that commodity trader was doing a very similar exercise. We were basically putting together structured

4:09 commodity deals where we would go and do a prepayment for a whole bunch of coal or prepayment for a whole bunch of nickel. to different commodity producers. And then we would sell that in the future

4:20 to a commodity refiner. So we were intermediating those flows. And in 2022,

4:28 that all got shut down because the owner of that commodity trader was the Russian government. And so in 2022, I lost my job because it was no longer legally tenable. The fact that they became

4:42 sanctioned by the United States government made it a place where I could not work. And from a personal perspective, it wasn't something I really wanted to do anymore, either, quite frankly. As

4:53 you can probably imagine. Other than that, Ms. Lincoln, how was the play? I mean, gosh.

4:59 So if you kind of follow all that by background of troll image in here, but I spent the last decade and change working in a lot of different parts of the value chain and not only on. upstream oil

5:14 and gas side, but on other types of commodities. So when I came out of that,

5:20 I'm an age and I was at a level of seniority that finding a new job was pretty tough and finding a new job and energy and Switzerland was like next to impossible. There's a couple of commodities,

5:32 traders over in Geneva, but they're all pretty well staffed up. And so their advice and my own desire was, why don't I just set up a shop and I'll look at deals. And when I see a deal that I think,

5:46 man, I would invest my own money in that. I like this deal. Then I'll pick up the phone and I'll call people like the traffic eras or the credit funds or family offices on this side of the world

5:56 and see if I can't get them to follow into that deal and be a capital provider.

6:04 What it turns out to be, it's a job where I wear a multiple hats across the entire deal process. So if you think of a typical investment cycle, it's the due diligence, it's the structuring, it's

6:22 the negotiation, it's the execution, and it's also the monitoring. And there's commercial aspects to it, there's technical aspects to it. But, you know, shops like these credit funds and family

6:34 offices over here, they're very lightly staffed. So having that third party resources valuable to them And it's something which has proven to be very, very interesting and a hell of a lot of fun

6:45 for

6:46 me. So, give me an example and it can be a made up generic example or it can be a specific deal you worked on, but I have no idea what kind of deal you would see sitting in Geneva, Switzerland.

6:60 It's, so I think, take it a step back. Now, absolutely address that. But taking a step back, If you look at what's happened to energy. And this started happening before COVID, but I think

7:14 COVID just put it on steroids and really accelerated what's happened in the energy space. But the ability to access information on producing fields in North America, whether that's Canada or the

7:27 lower 48, is unbelievable. It's something that's, you can log on to, and you've had the guys from Well Database come on to your show You've got outfits like that who provide data at very

7:43 reasonable costs and unbelievable access with incredible quality that you can dig in and start looking at deals in the US very easily. In terms of figuring out where those deals actually exist,

7:58 understanding when they come to the market, that's a matter of just continuing to keep my network up in the United States so that there's a relatively.

8:08 good number of touch points I've got in the US who still call me up and say, Hey, we've got a process. It's about to launch and we're wondering if you'd like to look at it. And so that's generally

8:21 how I source deals. The same thing for deals that are coming to the market here in Europe, but the reality is the deal flow in Europe is in order of magnitude at least less than what you see in the

8:33 United States. The United States is a much more liquid market. So in terms of the deals that I'm looking at, a lot of them. And Keith from Stevens came on your show as well and talked about the

8:45 family offices and their activity over here in Europe and their interest in the deals in America. And it's absolutely accurate. Interesting. So I mean, do you have a staff, a team, and you're

8:59 actually buying a property and operating it? Or are you backing management teams? How do drill down on some of these deals on what they look like? Absolutely, so in some we're introduced to a

9:13 management team that's existing and they're looking for acquisition financing order, looking for development capital. In some cases, there was a case recently in Mississippi where we were working

9:24 with the management team that we've known well before they set up in Houston. We knew it's a management team that worked together over here on this side of the pond in a previous life And now they've

9:35 shown up in Houston, and they're all from the United States, and they've started to build an EP company there in Houston. And so we backed them on an acquisition. And that was through the entire

9:47 capital stack that was providing both

9:51 equity and debt capital

9:54 as a single unitronship you like. And then we'll look at club deals as well.

10:01 If you look at some of the deals that were done and the not-too-distant past deals that were - like the high peak and the mock refinancing. We looked at those types of deals as well, where multiple

10:16 credit funds come in and provide the full slug of capital but in smaller ticket sizes. So do you have a fund per se or are you playing agent on these things or somewhat of both? Ace, so there are a

10:33 couple of different funds that I'm not employed by but I'm retained by and those funds are fully regulated. They're well established. They have not only a track record but they've got billions of

10:49 dollars of a UM and they either have an existing mature energy or commodity type strategy or they're looking to build that strategy because they see the opportunity in that space. Oh wow, pretty

11:05 cool.

11:07 That's, I want to go, I have ADD and I'm sorry about it. And so it's just hitting. First and foremost, I find the Russian stuff fascinating. And here's what I'm fascinated by. And I wonder if

11:25 you have an opinion on it. You know, the left in America will say that Trump is an agent of Putin And, you know, there may or may not be a PP tape that

11:38 exists. Yeah, I don't know if that's been fully debunked, but that's what the left says. The right will make the point that, you know, Putin took land from Bush. He took Georgia, took

11:53 Crimea under Obama, and obviously has marched into Ukraine under Biden and took no land under Trump.

12:07 do you have an opinion on who's right about that? Is Trump an agent? Is Putin actually scared of Trump?

12:19 I mean, I certainly don't have an opinion, and I don't have any insight or any type of insight knowledge on the workings of the Kremlin. I

12:30 can certainly say that

12:36 the American

12:39 foreign policy of whichever administration is in there has a significant impact, not only on Russia, but on China as well. So I worked for a Chinese bank, and I worked for a Chinese refiner,

12:56 and both China and Russia are tremendously impacted in terms of their risk appetite, but depending on which administration and depending on the foreign policies that are in place. And so I think a

13:08 lot of it comes down to

13:12 both the language that rhetoric, the administration is pushing or endorsing as well as some of the actual actions or some of the body language that suggests there's gonna be an action. And that

13:25 definitely changes the way that both Russia and China operate globally. And whether that's investments or the way that they're carrying out things like military exercises.

13:36 As this current one is being called by the Kremlin. You know, in terms of

13:44 what their incentives and what the drivers were, I think it's much more complicated than I have. The wisdom or insight to be able to sort of characterize why they did what they did. Yeah. So I

14:01 used to always joke that I was the greatest private equity investor.

14:07 Anywhere, Southwest Airlines flew. So, 'cause it was all sort of oil field stuff. Give me a few examples of something that investing in outside the United States andor working for someone that's

14:26 foreign, that sitting here in Houston, Texas is someone that's never invested a dollar outside of Texas or Oklahoma would go, Oh my God, that's so strange. What are the comparing contrast

14:42 question?

14:45 I think in the context of what an investor worries about, and some of the stuff that comes up, there's that overarching political concern that somebody's gonna take my assets away from me, because

15:00 assets outside of the United States are not. real property interest. So in the United States, owning that asset, owning that working interest in those minerals is a real property interest. And

15:15 it's separable from the property. That concept didn't exist outside of the United States. And so people get really concerned that the Nigerian government is going to suddenly swoop in and take away

15:29 the licenses of people that are out of favor with them.

15:36 So you go through a lot of conversations. You know, I think back to the different investment committees that sat in and the questions that you get asked, there's always tons of concern around, are

15:48 they going to take our assets away from us? Because that's our collateral, that's our security.

15:53 And it's when you look at game theory, it's absolutely contrary to what's in the interest of Nigeria. The last thing they want to do is take that away because that is their revenue stream.

16:09 Other things that strike me is being, and it's probably, I guess you probably see some of this in the United States, but if you're looking at investments where the export route is through another

16:23 country, then it just wildly complicates the picture because people get instant concerned and we actually were faced with an issue where we were exporting gas out of, and I won't get too much into

16:37 the weeds on it, but we were financing the development of a gas field where the gas was being exported from one country to another country that was obviously different, and

16:48 there was leakage. Basically when it crossed the border, there was a toll, there was a fee-be charge, and couldn't figure out what we were monitoring it to. enough and running for a couple of

16:60 years and we were looking at where's the cash going and it turns out that

17:06 there was a company that was being paid which was essentially a shell company and that shell company was presumably owned by the president's daughter and the president's daughter president's daughter

17:17 actually turned out to live literally a couple of miles away from our office and Geneva and she had filled the she bought the most expensive house that had ever been purchased on the lake shore and

17:30 she filled it with a bunch of her country's artifacts their archaeological artifacts and all of this was from the gas flows that we were financing out of her country and into another country so

17:43 there's things like that it's it's um I think it's similar types of challenges and risks and uncertainties that you have in the United States but they're just magnified or amplified by

17:58 political issues Yeah, and quite frankly, I'm not sure that's that different thing the state of California if I I've I've made Everyone I know and now that we're best friends I'm gonna make you take

18:11 the pledge if I ever buy another oil and gas asset in California, you know, they're I just come kick me in the balls and knock knock knock me over and kick me as much as you want I will testify in

18:24 front of the judge now. I told Paul to do that but Yeah,

18:30 so we we wound up making a lot of money when we bought the La Brea field kind of the the basically the tar pit around LAX whenever You know you fly in and you you head over into Hollywood You drive

18:47 right through the La Brea tar pits and this was the craziest thing because we bought these

18:55 And the first thing our CEO wanted to do is send a vacuum truck out to just clean up all the oil on the ground. And the lawyers are like, no, no, no, no, no, no, no. You can't do that. And

19:05 we're like, what do you mean? And they go, then you're acknowledging that you actually caused the oil there as opposed to natural seepage. So literally, we just had to leave oil on the ground,

19:18 which was bizarre. But then we, God, what was it? Oh, and then we bought Kettleman Dome,

19:26 which isn't so, yeah. Chevron had the Kettleman field that produced a TCF, and then you came over and then there was this little dome. And it was the craziest thing in that back in the '30s, they

19:44 had drilled three wells to the Craig and Hagen

19:49 formation that literally we're producing. call it 25 barrels a day, you know, 70 some odd years later, right? And if you look at the total production, one well, it done, you know, 500, 600,

20:06 000 barrels, another one had done 400, 000, another one had done 400, 000. And they drilled these open holes. And see, so you're sitting there going, okay, how hard could it be, you know, I

20:19 get drilling to 10, 000 feet is not what Californians do. But we're Texans, right? We can go do this. We spent so much money, and we can get a drop of oil to come out of that. And then I, this

20:34 is not the Chuck Yates podcast, but unfortunately, we're going through California. Then, uh, then we, uh, we bought a steam flood in Santa Barbara County. And believe it or not, we got it

20:46 permitted. So we actually got the Big risk was government risk. We got that done.

20:53 And when the steam flood was actually starting to work, as advertised, it's just oil prices collapsed. And it probably needed 80 and we were in a world of 40. So, yeah. That'll burn your fingers.

21:08 Yeah, this gray hair that you see, that's all California. So, man. It always looks good on paper. California looks like a drain. And so many different ways Yeah,

21:23 I mean, the third most prolific oil basin in America. I mean, they've got, you know, Beverly Hills High School has a well right on campus and all, but yeah, just a mess out there politically.

21:38 So.

21:40 So what were we fighting about, or not fighting about on - We were, yeah. Yeah, I think we agreed. Yeah, no, 'cause I think what the tweet I sent was natural gas guys need to be selling

21:55 electrons and so that of a selling natural gas. And I -

22:01 It's exactly what you had said. And the one line I wanna highlight that you sent in your message was that the natural gas guys need to be more like the Michelin rating guide.

22:13 That was awesome.

22:16 Well, and I think, you know, just kind of level set up, talked about this on BDE and I've tweeted about it And I've talked a little bit about it on Chucky, it needs a job. But, you know, when

22:27 you look out,

22:31 all of the growth and power demand in the United States is going to come from some sort of tech company. It's AI, it's data centers. Yeah. And what I worry in my anecdotal talking to those folks,

22:45 like I've got a friend, he came on the podcast that's head of AI for Intel. They're all choosing nukes. I mean, they talk openly about it and you see all the joint. And I just worry that the

22:59 natural gas folks are sitting there saying, Well, they're gonna need power demand by natural gas. And they're looking through the lens of being an energy company as opposed to what tech can

23:10 actually do with nukes if they wanna throw money at it and their political might. So that, I think that was kind of the point of my tax or my tax

23:20 And let me go back to your Michelin guide and this resonated with me because when you talked about the Michelin guide and just to put that out there, essentially a tire company incentivizing people

23:33 to go drive their car more and go to restaurants. And that's kind of

23:39 the same way. What can natural gas do to incentivize tech companies of all different shapes and sizes to use natural gas or to at least consider natural gas in the spectrum of different. source of

23:51 power. The reason it resonates is because if you look at the history of where I've been working up until last two years, it's been in places where everything is stranded, not just gas. Everything

24:03 is stranded. And oil is a lot more portable, but anything that's even remotely gassy or natural gas liquid, it has to find a domestic market. And that domestic market is not, a lot of times it's

24:18 not, it doesn't exist. So you've got to come up with a way to create it. Russians did it by putting things like plastic companies in western Siberia, makes a hell of a lot of sense. They're going

24:31 to consume the gas to create plastics. The plastics are a lot more exportable. They're a lot easier to move around. And they end up selling a whole bunch of plastic

24:41 to China. And it's a fantastic business model. So why can't you take something that's very similar to that and lift it up and put it into West Texas, where gas is also stranded and struggling

24:55 because of Waja and negative prices, and find a consumer in tech. And I think, you know,

25:06 the reason it really resonated with me is because if I go back and look at what I do as a hobby, I love, I absolutely get nuts about digging into how companies work It's just, it makes me smile and

25:21 so I've gone through companies like Peloton during COVID because it suddenly was a bubble and I wondered what the heck's Peloton. And so how's it work? I did the same thing with Apple in video to

25:32 just kind of get a feeling for how these companies work. And Google, Apple, Amazon, et cetera, as a group, those companies now, Google is the largest purchaser, the largest consumer of

25:45 electricity in the United States That's staggering when you think about it. the United States has a pretty big steel industry. And most of the United States steel industry is electric arc furnaces,

25:56 electric being the key word. Google's using more electricity than all of the steel companies in the United States. And if you look at the total amount of energy being consumed by data centers in

26:09 2023, it just about met and it's not quite exceeded the total amount of energy consumption, including both electricity and the cocaine coal that the steel industry and the United States consumes.

26:23 It's just a tremendous scale. So all of that got me really excited when I read that. I thought that that's a fresh way of looking outside of what we normally do in oil and gas. What we normally do

26:38 is just sell it to planes all American, or just sell it to Vittel and be done. Coming up with a concept of well, We don't have to sell to planes, do we? Can we pick up the phone and call Google

26:50 and see if Google would be interested in this? It's absolutely a viable conversation. So that's why I was really excited about the podcast, man. Well, and kind of where we were going in our

27:01 direct messages, as you can look at it two ways. I'm a little cynical and jaded and they're like, no natural gas has to do this. They have to reach out to tech because if they don't, nukes are

27:17 gonna take over.

27:20 The flip side, if I wanted to be more positive is, hey, this is a tremendous opportunity. But I really do think the Toby Rice's of this world need to come together as a group and go sit down

27:33 straight with Google and the like and make their pitch about how good natural gas is and take along a solution. Whether that is they've partnered with somebody or they're gonna show up with

27:45 generators, that's way above my pay grade. But I think we have to do that. I think there's so many different reasons we should have already done it. And there's no reason we shouldn't do it. And

27:60 I mean, looking at Toby Rice is a great candidate. I've met Toby. I know that you and him are friends. He's a charismatic and hyper-intelligent individual and perfectly suited to be the face of

28:14 Silicon Valley for oil and gas

28:17 And more fundamentally or more, more in terms of just what he has with regard to fire power EQT,,

28:28 they're double A-rated in terms of their ESG rating by MSCI. How many people at Google, if you ask them what they thought, the ESG rating of an oil and gas company would guess double A. I

28:41 guarantee the number is zero. So going out there and waving that flag, Not necessarily waving the flag, but. You have to have this energy, this energy is something that's critical for your

28:53 industry because I think that's probably not going to necessarily take the horse to water,

29:00 but going out there and changing the rhetoric and controlling the narrative a little bit ourselves and advertising that we are a very clean industry. And yes, we have an impact on the environment

29:13 that's different than Google, but without necessarily turning their face, Google is the largest consumer of electricity. You tell me that you think they're not consuming some electricity that's

29:24 generated by coal. I guarantee

29:28 you they are. So there, there has to be an intelligent measure conversation. And I think, you know, at the risk of beating a dead horse, I do think that everybody in energy business that's there

29:44 and says, Oh, well, permitting is going to be so bad. going to take such a long time to build an all. I always say that's looking through our lenses as energy companies. Tech has no problem

29:55 getting what they want out of DC and

29:58 they throw money at things and make shit happen quick. They do. Google in 2013,

30:08 if I'm not mistaken, which I might be, they became FERC regulated to be a wholesale energy consumer. So in terms of Diamondback going out and getting the FERC license to sell wholesale, why not?

30:22 It's absolutely within the context of possible. You just got to ask. I'm sure there are challenges, but our job is challenging and being successful at creating new demand for gas is not a walk in

30:38 the park, otherwise gas prices would be5 an MCF. The reason they are where they're at is because that work hadn't been done. And it's certainly within the realm of graspable. And I think there's

30:54 companies out there that are well positioned as sort of an intermediary if you like, in terms of land bridge is a good example. And the position they took on the Texas, New Mexico border, and

31:08 they're specifically with five points behind them, proposing or claiming that they've got data centers that are going to be showing up in West Texas. That's a great first mover. It's a great way to

31:21 break the ice. I think it's a good way to prove a concept. Yeah, if I was the mayor of Monahan's Texas, I'd be out in Silicon Valley talking about how great it is and that Ben again really is

31:35 luxury timing.

31:39 Maybe we can do something to upscale it to see the other thing I think. kind of comes out of

31:49 this, is I just don't believe the existing grid is gonna be able to grow, adapt, to be able to power this. I truly think the monopolistic utilities are almost gonna have to just take the hostage

32:08 out of the situation to quote Keanu Reeves But I think

32:16 one of the things that is

32:20 an opportunity for oil and gas people is to go out to Silicon Valley and ask questions first and listen, really listen to what Silicon Valley are trying to achieve. Don't go out there and tell them

32:34 you need to buy natural gas because that's, I think, the quickest way to end the conversation. Go out there and say, what are you guys trying to achieve. If you look at what Google and Amazon end.

32:46 Microsoft and Apple have been doing, they've been signing long-term power purchase agreements with renewable providers. But then they tapped themselves into the grid. They tapped themselves into

32:60 the grid because of a couple of different reasons. And it's stuff that you probably are already thinking of. It's stuff like, what happens if this project gets canceled? If you look at what

33:11 happened with the wind projects off the Northeast coast of the United States, a couple of them got canceled and the power purchase agreements

33:20 that were associated with those also got canceled. So if you're already tapped into the grid, your data center projects timeline doesn't get knocked off by your wind project that Orsted was

33:30 sponsoring, falling over.

33:34 The other reason that they tap into the grid is because these are long-term contracts. They're usually doing fixed price and they're usually doing them for 10 to 15 years.

33:45 I think it's a question we need as an industry to ask if that's how they continue to want to structure their projects and plan their data centers. Then it's a question we need to ask ourselves or are

33:60 we prepared to sell fixed price for 10 or 15 years? That starts looking like a VPP.

34:06 Is that what our investors want? And is that something that within the mix of our total revenue streams, can it be balanced to where it does meet our investors objectives? And I think as well,

34:24 I've heard a lot of people push back when I talk to them about VPP or talk to them about hedging or talk to them about just holding more cash and not divviting out all of your cash every single

34:34 quarter. And the pushback I get from a lot of the management teams is, well, that's what the investors ask for I think if you really. Sit and ask yourself honestly the way that you're suggesting

34:49 the energy industry might need to do, sit down and ask yourself, Should I push back on my investors? And tell them that having fixed prices for a slug of our gas is a good thing. It makes us more

35:05 sustainable, it makes us more durable, but don't have to go through negative gas prices at Waja, where we may not get the15 gas when it spikes, but I can guarantee you, 15 gas disappears, faster

35:18 than it appears.

35:21 That's a really good point because

35:25 my take on investors has been,

35:30 we in effect lied to them in terms of saying, Well, we're drilling 40 rate of return wells, and even a 27-year-old who's not incredibly fluent, in the industry can sit there and say, Well, why

35:43 did PDP-PV10 not go up then? You know, that tends a lot less than 40. And if you're drilling 40,

35:52 where's the rest of the money going through? Where are the rest? Yeah. So I think that that was an issue. I do think, you know, when we, we bungled up spacing and it just took a while to kind

36:04 of figure that out. And then I don't know that an investor truly has enough in the way of information. They get one reserve report a year. It's done at, you know, the average price for the year.

36:18 No sensitivities to that. I mean,

36:24 I don't wanna say that we should be publishing daily production from every well you have in a company, but there ought to be more so that you can have independent eyes on a reserve report and get a

36:38 better idea 'cause right now, I mean, the reason they want. cash flow, they want dividends and buybacks, et cetera, is they're basically saying I'm willing to give you three to five years of

36:47 cash flow period. That's all I can get my head around. Yeah, it's absolutely right. And,

36:57 you know, can our industry plan much further out than that? And I think there is a pushback in the sense that if I'm divoting to not all my cash and prices go down, of course, my three to five

37:10 year plan is going to come unhinged. You know, I would need to think around that and how holding a bit more cash might be healthy for us and not divoting it all out and holding a little bit more

37:23 cash also provides you with a little bit of a war chest. When prices do go down, you could potentially be taking advantage of other people who were not thinking through the cycle. But, you

37:38 know, going back to how well we're adapted or fit to the tech industry, I do think there's tremendous opportunity to go sit down and ask questions and engage with a market that we've never engaged

37:55 with before. And I guess to me too that

37:58 you'll know a lot better than I do. How much do

38:02 a lot of the independent oil and gas companies engage with the market further than just engaging with a marketing company, somebody who's selling their gas or selling their oil for them.

38:17 It never hurts to go have those conversations and you always learn something. And it may not be, I think one of the reluctance is, is when you're doing that, you're kind of taking on a role of

38:31 being a salesman and I've sold stuff in my past when I was in high school and college and you get a lot, knock on a lot of doors and have a lot of doors. either stay shut or be shut in your face

38:44 before you sell one, get one sale successful. And that's hard work, it's not fun. Yeah, it's interesting you say that because I think at other times when I've tweeted out my, Hey, natty boys,

38:59 you gotta be selling electrons,

39:18 not natural gas stuff. More than once there's been the mention of, you know, if Aubrey were still around, Aubrey would be running around in Silicon Valley right now, convincing these guys that,

39:18 hey, we're the wave of the future. You know, you should be on board with us. I have heard that several of the private companies, like Hillcorp, have hired some of these old IPP independent power

39:30 producer guys that were building all the projects back in the '90s They've hired some of that type talent to at least start exploring this notion. It makes a lot of sense, doesn't it, for a private

39:44 company, because it's one or two people who are deciding whether or not that fits their risk appetite and what they want

39:53 an oil and gas company to do for them. If you look at the ownership of a lot of the public companies, it's 40 BlackRock or 40 of a couple of different BlackRock entities, 20 Vanguard It's kind of

40:08 hard to get your head around what your investors really want you to be other than a proxy to what oil and gas price is doing. And I think

40:20 getting away from that and seeing ourselves as businesses rather than a proxy to oil and gas price to just another entity to WTI or Henry home is a great first step And going out to Silicon Valley and

40:37 presenting yourself as a business and a business partner Google or Apple certainly empowers you and puts you in that position where you do feel like, wait a minute, you know, I'm out here seeing it

40:51 through the entire value chain. I'm a business that is having a direct impact on one consumer. And that's,

41:00 that changes the dynamic. It's a lot more satisfying than just selling the planes. I would imagine No, it's just the planes, but yeah, let's, and I guess notable disclosure, arguably my second

41:25 largest investment in the Yates family portfolio is Plains All American. We had just done a bunch of, now you can fire away. We'd done a bunch of stuff with a McCain Anderson. So I wound up with a

41:27 bunch of PAA stock V.

41:32 This was interesting when, when I got fired and was sitting around doing nothing because I was, I was taking COVID very seriously, 'cause the kids were going back and forth between me and my

41:45 ex-wife and she had asthma,

41:52 and you know, early days of COVID, you didn't know if asthma was a co-morbidity. It turned out that shooting out buterol in your mouth twice a day killed COVID. So it was actually really good for

42:06 COVID, but so, you know, I was kind of up there by myself in Richmond, Texas. I wrote an S1 for an entity called True Tracker. And what it did is it basically was a better mouse trap on USO. I

42:22 don't know if you've ever messed around with USO, but it just has, that's the in effect proxy for oil price basically buys the, it's not an ETF, but

42:34 it's an ETF that basically buys the front month. uh, the WTI contract and tries to track oil pricing because of the role, et cetera, just is a horrible product, but there's3 billion worth of

42:48 shareholders in it. And I came up with the better mouse trap on how to do it. Uh, we were basically doing it through an old fashioned royalty trust. We were going to distribute the cash at the end

43:00 of the holding period. That way it could be arbitrage by traders and that's half the tracks So I draft this as one and just typical Chuck Yake's arrogance. I'm not going to get any investment bank

43:13 involved because I don't want them stealing my ideas. So I've, you know, I hired Lake and Watkins and Kirkland Ellis. And we just drafted this beautiful S one. I go around to all the investment

43:23 banks and the question was, well, will any institutions own this? And I had to say, I don't know. I do think we can make the case of, Hey, why are you buying? No offense to case, but why are

43:37 you buying diamond back? You just need a proxy for oil prices. And this is a good one and you can't trade commodities. And so I had that whole case. And I said, but clearly you can birth this

43:49 through your retail network. Somebody wants to take a bet on oil prices. And every corporate finance department loved it. And then they would go over to the crusty old guy that ran the retail

44:00 apartment of all these investment banks And they'd go, you're bringing me a flow through entity and the energy business screw you. I lost so much money off your MLP, get that out of there. So

44:12 anyway, I have a nice S1 if you

44:14 ever want to read it.

44:17 How were you doing that? Was that through physical contracts? Or were you doing financial contracts? So it was financial contracts. Okay. And basically what we were gonna do is prepay for a swap.

44:34 And, you know, 'cause if you think about it, what's the most quoted thing out there? It's, you know, somebody wants the hedge, right? And you call up Jay Aaron or whoever and you're like,

44:47 Okay, what's these, you know, 24? And they'll quote you a price, right? So anyway, I was just taking the other side of that. We were gonna prepay, we were gonna go raise money, almost like a

44:59 SPAC, raise money, prepay for the swap And then, and we were, in effect, creating DS24. So we did it over the 30 days, like, 'cause DS24 is basically a third of November and, you know,

45:16 two-thirds December. And then when the swap paid off, we were gonna just distribute the cash. And so that way, all these banks that everyday quote, you know, DS24 to, all these oil and gas

45:34 companies, I would, this unit that would trade out on the NASDAQ would have to be the same price because you could arbitrage it. I mean, you could, yeah. And so I thought that way it would track

45:48 and kind of the market would be, hey, you want to take a bet on oil price over the next year, going to be higher or lower. And anyway, I thought it was a great product It's a really clever idea.

46:01 And it addresses the weakness of the more popular product, which they ended up having to sell a whole bunch of contracts when COVID happened. And that's why

46:13 if I understood it correctly, that's one of the key drivers to why WTI went negative. Yeah, no, that's exactly right. And they got sued and they had to go further out on the curve than they

46:26 wanted. And so yeah, no, I thought I was that I thought I was really smart, but uh, couldn't get it done. The, I had some tax losses, so. And speaking of investment banks, that's a really

46:40 interesting sort of spin or turn back, pivot back over to the natural gas and tech companies. You know, if you're, I think one of the concerns a tech company would have is a sole provider, single

46:54 source. And depending on how big you are, if you're diamondback and you can demonstrate that you've got 15 years of stable gas production, I think even diamondback would probably have a hard time

47:06 convincing people of that. And that's where investment banks can be incredibly useful. Although I kind of have a hard time seeing investment banks that are really doing that today. And when I say

47:18 seeing them, I've put my finger on an investment bank like a Wells Fargo or JPM or Goldman Sachs. I know they're trading a whole bunch of gas. I don't know how much they're intermediating or

47:29 sleeving between companies that have

47:34 a credit risk profile that the buyer doesn't necessarily want to face. Yeah, that's a really good point that I hadn't thought through on all this. And maybe there's something in the end up, maybe

47:51 it's even a coalition. It's Toby at all that goes to Silicon Valley and it's, hey, where do you want a data center? Oh, we got the pipeline X there We're going to be able to provide this for you.

48:05 So it's not necessarily just solely diamond-backed gas, but that's a really good point. I hadn't thought of that, but I guess it's kind of like the big mineral codes or the big non-op codes that

48:22 have 10 different investment-grade operators across their entire position, their entire portfolio and that ends up giving them either a better rating themself or the ability to go out and sell

48:37 something like an ABS if they want to sell an ABS to try and lever it. Same thing would go if you're trying to sell gas to Google. It'd be great if it looked an awful lot like an ABS, but it was a

48:47 physical, I guess a lot of ABS is physical, but you're basically saying, all right, we've come together as a coalition. If you need a Goldman Sachs, although I think Goldman Sachs would

49:01 potentially take a disproportionate share of the, they're pretty proud that way.

49:12 Maybe there's other banks out there, or maybe just a coalition that was structured the right way in terms of putting it into a royalty type of a structure

49:24 Maybe even kind of like how you were talking about, we're going to have this renewable project, but we're connected to the grid. Maybe there's. Maybe that's the, hey, we're gonna build your data

49:35 center off this field. No, by the way, there's the XYZ pipeline that runs here. There's the two of the largest data centers being built globally or being built outside of Dallas right now of all

49:51 places. And it's because of that wind farm that's outside of Dallas, somewhere towards Abilene,

49:58 which is great And, you know, I think I'm not knocking wind and I'm not knocking the data centers plan or their idea. However, anybody and everybody agrees that wind has to have some sort of a

50:15 base load. It has to and wind isn't there 247 data centers, needed 247 batteries or viable, but batteries would end up being a potential risk, especially during a cold abilene winter, things like.

50:31 a gas-fired turbine that's there and it's run in the base load constantly and providing you something that looks like nuclear power would be fantastic. I think, for me, that's an absolute

50:45 enhancement in terms of project risk and sustainability of the project. And it's a heck of a lot better if you can point to it and say, I know it's natural gas. I know it was produced cleanly and

50:56 safely in the United States It's not coal that's coming from somewhere else and firing the grid and we're not necessarily able to put our finger on the electron and say, That's a clean electron. So

51:10 that's kind of my thought around a fallback position. I think it's, I think the first position to go out and talk to data centers around is we want to be the sole provider of electricity because

51:22 we're clean and we're stable and we're reliable and we're also affordable. The fallback position is obviously well. if you want to pair us with a renewable project, that's great. In terms of the

51:35 nuclear, which we haven't really addressed, but I wanted to go back to that and just make a couple of comments. I mean, one, everybody talks about project lead time for setting up, whether it's

51:46 an SMR, whether it's a full-scale, full-blown nuclear plant. The thing that we don't talk about very much is fuel, and where the fuel is coming from, you know, uranium, 60 percent of the

51:59 world's uranium comes from Kazakhstan. It's not a bad thing, but it is a risk when it comes to energy security. Born a percent of the world's refined or enriched uranium, which is what you need to

52:11 be able to produce, nuclear power, comes from Russia. And that is a problem for us right now. And it's been such a problem that they passed the law in August, which said we can no longer import

52:24 enriched uranium from Russia, but they passed it with the ability to have a waiver.

52:31 We're in September right now, and in the first month, they've already provided a waiver through 2026 to be able to enforce enriched uranium from Russia. It's a real problem. United States doesn't

52:42 have the infrastructure for the full value chain of nuclear. We can build a nuclear, you can build an SMR, although there has not been one built and put into commercial operation as of yet. So

52:54 it's still an untested idea. So there is some degree of proof of concept risk that's still there But then even if you get the thing built and up and running, where are you getting the fuel from?

53:05 And with natural gas, it's great. It's right there. It's in West Texas. It's part of the United States, the American economy. And that's agnostic to Republican or Democrat. Yeah, now that's

53:18 interesting. That's a good point, 'cause I, you know, when you think of where are other places for uranium that are safe. for the Western world. It feels like it's in a bunch of

53:35 places that are gonna be not my backyard, you know? Well, it's not my backyard, but the biggest reserves in the world, interestingly, are in a very friendly country, but I'm not sure. And

53:46 you'll be able to tell me more about this 'cause you were there recently, the largest Uranium reserves in the world are Australia. Yeah, and that's where I was going with. They do a lot of mining

53:56 there, but. Yeah, but

53:60 it, there's still, I mean, they had, one that long ago, they had a ban on fracking, you know, in Australia. So it's, yeah, I'm all for Sheffield and Hope and he gets the Beetle Ooh basin up

54:14 and producing gas, but that's exactly who I was referring to when I was like, hey, not in my backyard. Did you start throwing nukes? The, what was the name of the Australian ban

54:29 midnight oil. Midnight oil. The lead singer of midnight oil ran for a prime minister like 30 years ago on the No Nukes platform and got 4 of the vote. This

54:44 has been fascinating. This has been fun. It's been amazing. Chuck, I really appreciate it, man. Yeah, no, it's always wild When I was in New York, well, I shouldn't. Now I can't say the

54:58 joke. I don't know that. Anyway, some of the anonymous names out there on Twitter, you know, I'll randomly meet up for with a drink wherever. And my girlfriend's always just mortified. Oh my

55:11 God, you know, slaughterhead. You're gonna go meet somebody named slaughterhead. You don't know who they are. I was like, you know, so it is fun being able to meet people on

55:24 Twitter and particularly people from Geneva, Switzerland. So. Well, man, mom and dad still live up in the woodlands. So next time I'm home. Were you a, were you a Woodlands high school or did

55:36 you get a John Cooper? I went to John Cooper for one year and sixth grade. And then I was in McCullough, which was the high school in the Woodlands up until my senior year in 1997. And then 1997,

55:53 we all switched over to the Woodlands high school first year and I'll grow a year, we were first graduating class. Nice, so. Nice, so.

56:05 I went from a class of 900 kids in the Woodlands to a class of 19 and petroleum engineering at the University of Texas. Oh, shit, that's crazy. It was not popular, man. Well, do you want people

56:20 reaching out to you? And if so, how best for them to find you? Absolutely. People can find me on LinkedIn. They can find me on Twitter, or they can look at my website. I can provide it all, or

56:33 they can reach me at -

56:36 Fireaway on all those names. And we'll have Jacob post the graphics on it, too. Great. So the name of my company is CounterPoint Analytics. And it's the web addresses,

56:52 wwwCPanalyticscom And my email address, you can find it on the website. And then my LinkedIn, you can find me under whole clerk at CounterPoint Analytics. Cool. Well, I appreciate you coming on.

57:05 This has been fun. It's been a great time, man. Looking forward to staying in touch.

57:11 Hope you have a great afternoon. Yeah, likewise.