Chuck Yates Needs A Job

0:21 Hey, everybody. Welcome to Chuck Yates needs a job. The podcast. Sean, I hate to tell you this, but sequels always suck. No, we talked about this. Remember? So what did we say? We said that

0:33 born identity or it was born supremacy, right? Okay. That was a good one. That was a good one. So that's our bar here. That's our bar for this podcast. Empire Strikes Back was better than Star

0:44 Wars. You know what happened to me when I was a kid is dad we go see Star Wars the original. Yeah. And I'm talking 1976. All right. And we get home from seeing that and dad tells us oh yeah Darth

0:60 Vader is Luke's father and we're like what the hell and we're telling like kids at school and we're getting beat up and all this. Yeah. Like you ruined Santa Claus. Yeah ruined Santa Claus. Easter

1:10 Bunny all that tooth fairy. Yeah. You know how dad knew that? Oh grandma Manani spoke German around the house. Darth Vader is basically dark father in German. Really? Darth Vader. Yeah. Okay.

1:26 So anyway, that's how it happened. Well, your grandmother figured it out, but Germany didn't. Exactly. Should we talk about nuclear now? Yeah, let's do it. Sean, thank you for coming back on.

1:37 Last time you were on, it was really cool. We talked to Covenant House, that was amazing. Now, I get former Morgan Stanley research analyst, longtime energy investor at RCH, now free agent

1:52 unleashed. I get Sean unleashed to talk investing. So of none 'cause lonely and my needy feeling actually I'm, because here start let's

2:03 former LPs have been reaching out as much as they used to. So tell me what investors are thinking these days about energy. I think that there's been a phrase real the. coined I've, of reality the

2:15 to awakening

2:20 when PowerPoint meets politics, right? So, and I'll attribute that entirely to Sheffield, a pioneer, and a couple of years back in the shale revolution he came up with when PowerPoint meets Excel,

2:35 when he was talking about how research analysts went out and just extrapolated well results into perpetuity. So,

2:42 PowerPoint meets politics is just the rationale that you can't effectively get to what the market is trying to achieve from a renewable, clean tech perspective as easily and as efficiently as it

2:57 otherwise would seem. And so, your question about what are investors thinking? They're coming to terms with the fact that this is going to be a lot longer evolution. It's not a transition. We're

3:08 not leaving anything behind, right? It's a longer evolution and there are good ways to facilitate that evolution and then it's going to start with investing in those technologies and those companies.

3:21 that can really do the most to bring the carbon footprint down through efficiency, technology, optimization, all that to say, there's a lot of uncertainty out there because there's still plenty of

3:34 sound bites coming in from all sorts of sources. And the narrative of what the energy management teams are doing is not fully digested or appreciated in the market today And that's something which I

3:51 think there's a huge chasm that needs to be bridged. 'Cause the thing that I will say is somebody that was an energy investor for 25 or 30 years, however long you wanna say, I'm not even sure. I

4:05 can fully appreciate the magnitude of what we're actually trying to do to shift to this world where we're not gonna have any, we're not gonna emit any CO2 anymore and I don't know how. it as an

4:21 investor and I feel like I'm pretty smart about these things and so if I'm a CIO at a university with a three billion dollar endowment, I wouldn't even know what to think about this. I think that

4:37 people started to, people got away from energy because for the reality was that the industry was destroying returns for a decade. The red problem. Exactly. And so when

4:53 ESG started to come in to Vogue, really in 2020, the environmental narrative was being defined for the companies by external forces. You know energy executives as well as I do. Most of

5:09 the companies, most of the executives that you know are extremely environmentally conscious. There just hadn't been a focus and motivation to really spend a lot of time articulating that into the

5:20 market. So, the E narrative was defined for the marketplace and it took a couple of years for the companies to start to present frameworks of how they were actually being proactive in terms of

5:36 trying to protect the environment and work towards a lower carbon footprint.

5:41 But it was the G that kept people out of energy, it was the governance, it was the shareholder returns and the like And so when you think about where we are today, the traditional energy companies

5:55 are generating massive amounts of free cash flow. There was a Mackenzie study that actually came out this morning that forecasts even with the curve, the way that it is, they're going to generate

6:04 50 to 70 billion a year of free cash flow over the next few years per year. And that's a lot of money that can go towards really interesting technologies to lower their own carbon footprint So

6:17 whether it's about CCUS. or methane capture, there are a lot of things that traditional energy companies are doing right now, which I think will go a long way to lower their own carbon footprint

6:32 and arguably in a more efficient from a time perspective and economic way than what we're seeing with some of the newer technologies, which have their own challenges. And it's not that they're not

6:44 important and necessary. We have three, even a half billion people in energy poverty So we need all of this.

6:53 For perspective, in 2000, 80 of electricity demand came from fossil fuels. In 2020, 80 of electricity demand came from fossil fuels. Right. In Bangladesh, they've got the same energy capita per

7:10 person as the United States in 1965. They're building out coal and LNG That's what is available to them. Coal is the cheapest source of fuel possible. It's more efficient than burning

7:27 biofuels or wood or cow dung, right? And I mean, that's the reality. And so when you put all these pieces together, it's a lot of information. And when you move away from this myopic view of

7:43 it's the US and Europe, which is seen actual electricity demand decline over the last 10, 15 years, digress a little bit, Princeton in their, did a study through their group called repeat in the

7:55 fall of

8:00 2022. And that study forecasted that electricity demand in the US was gonna grow at 30 over the next 10 years. Electricity demand in the US has been negative for 15 years. So take that, put it

8:16 together. What about the 35 billion people who are emerging from energy poverty, who don't care if it's coal, natural gas, propane, butane, crude oil. They just don't want to burn cow dung

8:33 anymore. And so when you think about the, get really far down the rabbit hole here, but when you think about the UN and the sustainable development goals that the UN came up with, they came up

8:47 with 17 sustainable development goals back in 2017,

8:54 education,

8:56 health, and

9:01 we're number one and two in terms of the priorities of the sustainable development goals. Clean energy was number seven. So they understand that health and education, GDP growth, all this comes

9:14 from access to electricity.

9:17 When you look at this narrative of how are we going to replace six, seven million barrels a day of crude oil supply, just from normal depletion?

9:33 When we're investing half of what we did in 2014

9:38 with traditional hydrocarbons, but then we're adding demand every single year because we're not doing anything for demand abatement Right, so how do you put all those pieces together? The IEA's out

9:50 this morning saying that crude oil demand is gonna grow two million barrels a day this year. Where's that gonna come from? Yeah, so I did a podcast a little over a year ago called the Energy Policy

10:04 Draft, where I took, I think, eight people and made them energy czar of the world and they could come up with one policy and dictate it to the world you know, everybody. chose something on the

10:18 supply side, except Paul Sankey. And Sankey went to man's side and Sankey said, You guys in America gotta jack up your gasoline tax. Right. 'Cause you're right about that. So let's unpack this

10:30 real quick 'cause ultimately where I wanna go with this is, how are we gonna make any money out of this? Yeah.

10:39 I subscribe to the theory that this transition is being led by consumers. I mean, this is not just big, bad government imposing something on us. People care about this. I mean, it's - Agree.

10:54 Yeah, it's kids and stuff. Agree. So education is an entirely different concept that we need to talk about because education's a big problem with all of this stuff. Right, yeah. No, we have

11:04 totally seeded that narrative. I run around, it's funny. I was looking, LinkedIn sends me ads for jobs

11:16 I guess. Can they send them to me? Yeah, there we go, me and you. You don't want to be on my list 'cause it's usually like an Applebee's manager. And I would screw up an Applebee's in a hard way.

11:26 You can work out of Bucky's place pretty much. Maybe I could do that. But one of the things they actually sent me that was interesting the other day was a partner in charge of content at Andreessen

11:38 Horowitz for their gaming division. So they literally have a partner that needs to be doing podcasts, TikTok videos, et cetera. And you read that job description and it's amazing. They're talking

11:52 about we need to educate the world on gaming. We need to be the thought leader in gaming so people that need money in that industry want to come to us. And anyway, I have just 'cause I'm a little

12:05 snarky and can be a bit of an asshole. I've been clipping that, sending it to all my private man, I want to see your content Hey equity brethren and oil and gas..

12:13 partner.

12:15 But no, you're right. We've got to do something on the education front because this is way too important. I mean, this deserves a thoughtful conversation because I think what you just laid out to

12:24 me, and I'll throw this out and then what you opine on it, is what you just threw in front of me was, hey, a lot of poor people, they're going to want, they're going to need energy. They

12:37 deserve it. Yeah. I actually think it's any of the isms you want to throw out there, if you deny them that, we got ours. So it's going to be a lot of cold burning. I always say this on the

12:49 podcast, there's not a peeing and non-pying section of the pool. It's all one. It's all one environment. It's going to happen. And I think accepting those realities is what we ought to be looking

13:02 at the lens through on investment from a policy point of view is, that's going to happen

13:10 So I kind of lean towards we got to take shots on gold. out technology to reduce carbon in the air, given that that's going to happen. But of course not, that's not what we're doing. And people

13:22 are starting to do that. I think that's one of the things that frankly is one of the most exciting to me over the next couple of years, is there is a true appreciation for what can you do with what

13:33 you have. The energy industry has been on its back feet for a long time here, always having to respond to market needs. So let's talk about traditional energy companies for a second. They can sit

13:44 there today and they can be proactive in terms of how they think about allocating capital, how they can think about energy efficiency, how they can think about managing

13:55 their existing suite of assets, because they're no longer beholden to this growth at all cost model, which was growth of assets versus growth of returns, their self-funding, their free cash flow

14:08 generative. They don't need the equity markets. They don't need the 25-year-old hedge fund manager sitting in a room telling them, Hey, you should do this because I saw this in a Harvard Business

14:19 Case study. The

14:22 energy companies are doing this. I think that one of the things that the market is going to be surprised by is how much traditional energy companies can lower their environmental footprint by

14:35 optimizing and utilizing existing technologies, existing engineering, now that

14:44 they've got the ability to actually spend time on that as opposed to the e-grab or the exploration grab of

14:59 EP. You know what? I actually think, oh, I'm blanking on her name over at Pickering, I did a podcast with her kind of a year, year and a half ago, her last name's Holmes. Anyway, she's one of

15:06 their ESG consultants. point, I've become a total believer. The SEC rules that we're going to have to report emissions and stuff, going to be great for oil and gas companies. Because people are

15:11 going to realize it's the Amazon vans running around that are polluting, not us. Now, that's kind of like maybe in some people's eyes, it's the crack dealer saying, Well, that gets to Sanki's

15:11 comment about demand. Let's just come back to demand for real quick. So when we were going through the winter of last winter with all of the issues around natural gas supply in Europe, and there

15:11 were all the concerns, what were the actions that

15:44 were being taken by the governments? They were subsidizing. They were nationalizing electricity companies. They were subsidizing consumer demand. No one was saying change. Put on

15:56 a sweater, right? They're saying, use what you need to use. And we're just going to subsidize it. So we start getting into debt levels. And what what the consumer doesn't appreciate Yeah, it is

16:09 that.

16:11 subsidies or nationalization just is going to be paid back by the consumer in time. It's just going to come in the form of debt or lower service costs or

16:23 lower benefits to the population.

16:27 But the energy companies are simply trying to be responsible citizens. And if you're in an environment right now where the E is not as important, and it's more about the efficiency of that

16:48 production, increasing the resource recovery in a basin, you think about how well piped out we are. Talk about how we're going to make money. If you ran a bulldozer through any of this, would it

16:59 matter? Well, I'll tell you what, it would matter if you ran a bulldozer through Mount Bellevue. It would matter if you ran a bulldozer through the Houston Ship Channel. We have spent hundreds of

17:09 billions of dollars over the last 10 years making the US. the largest exporter of crude oil, refined product, natural gas, and natural gas liquids in the world. We don't need to re-pipe that,

17:22 and so when you think about the value and how these companies make money, it's the reality, it's the

17:29 truth that in 2050, we might not see crude oil or natural gas demand grow, I argue that we will, but on an absolute level, it's going to stay about the same, and when you think about that, I've

17:45 got 35 years of cash flow flowing through assets that just require maintenance now, and that free cash flow enables me to fund new technologies which will, in augment efficiency, it will lower my

17:60 waste heat, right, cut waste heat by 25, and that's the power equivalent. of some renewable fuel sources, just by efficiency. 'Cause I believe this totally. We're not, and we're using the term

18:19 transition. I think you said addition earlier, which - Addition or evolution, and I take, and here's the thing, right? I take exception to transition because we're not leaving anything. Yeah,

18:30 we burn more wood today for fuel than at any point in the plant. Transition, if you look it up in the dictionary, actually, it says to move from one thing to another We're not moving from one

18:40 thing to another. We are adding to it. Yeah, so if we're going to add, you've got to leverage the existing Absolutely. in our fuel infrastructure. We're not going to suddenly tear down all our

18:48 pipelines and put in hydrogen pipelines, for instance. I

18:55 mean, so I believe that is really important as we kind of think through this. And then the thing I worry about though, is I think we have moved on a policy side from the US. government metals way

19:17 too much but historically they meddle with, here's the outcome we want market go figure it out. They have crossed the line into, here are prescribed policies. The IRA says it's electric vehicles,

19:29 period. It doesn't say, hey, if you can make lower emission, fuel out of natural gas, we're all good. You'll get it They've said, so with those two held beliefs I have, that's

19:41 why I'm pessimistic, kind of on this front. You sound way more optimistic than I am. Pessimistic on our ability to kind of navigate our way forward, profitably make money, generate returns, as

19:47 well as do the

19:57 evolution. So,

20:00 interesting point. So I would argue, or I would say that I'm actually very constructive on the return on capital or the economic value add that traditional energy companies are going to bring over

20:15 the next 20 to 30 years because of all the things that you just laid out. PowerPoint meets politics. So we're going to mandate that we go to lithium batteries, right? But Maine has one of the

20:27 largest lithium deposits in the country recently discovered

20:35 The state just

20:37 passed legislation banning mining in the state of Maine. So how does one meet the other? The answer is it doesn't. But

20:49 the pessimism I think that you're feeling is to me just the reality of how pragmatic and how reasonable are the timelines being put in place for the evolution because energy companies are going to

21:05 want to find a solution We need to find a solution. We're going to bring 800 million people with no access to electricity to 400 million people with some access to electricity. Then we're going to

21:20 need additive sources of energy, and that's not going to come from traditional hydrocarbons if production growth rates are starting to flatline. The Permian is going to continue to grow I'm a firm

21:36 believer in the value of the Permian, but at the same time, can the Permian grow at the same rate that it has over the course of the last 10 years? No, absolutely not, but you're a comment about

21:49 politics. That's part of the reason why it won't, because if you're a CEO, CFO, board of directors today in a traditional energy company, you have got to underwrite that scenario where you're

22:01 saying, maybe in 15 years, the value of this is zero.

22:08 10 years ago, you didn't have to do that. You reasonably have to sit there and say, no, I don't believe that this is gonna be the case, but some bank, some investor, somebody is gonna ask me,

22:19 what's your zero-case scenario? That's gonna inhibit investment. You know, it's interesting. So we did our Empower event and Bitcoin mining for the energy business. And I did a fireside chat with

22:31 Eric Mullins of Lime Rock Resources. And I said, hey, Eric, is there a tail issue with investors? I mean, do you hear from investors? You're gonna be regulated out of business in 10 years. And

22:43 Eric said, yes,

22:47 I do see that as a real thing. You're not making that up, Chuck. And he goes, we now model that. He goes, when we're investing, we're looking at, hey, what are we getting five years? Okay,

22:58 now we think there's gonna be value left there, but we certainly are cognizant of tail and it may be worth zero. are your question earlier about how do you make money on it? That's how you make

23:09 money, right? In my opinion, the way that you make money on this is you sit back and say, all of this sounds really good. But we are in a society, which is

23:25 TikTok, Instagram, Snapchat, happens

23:27 right away. Somebody signs a piece of paper in Washington and all of a sudden we've got new clean fuels. Well, the trans West, there's a, there's a, there's a transmission line running from

23:38 Wyoming to Las Vegas. It's trans West system. I'm blanking on the actual name. 3 billion, 732 mile transmission line. We'll be online in 2027. The Bureau of Land Management started looking at it

23:54 in 2008.

23:57 So, the regulatory environment is prescriptive for old energy and new energy. We haven't done anything to improve transmission lines, storage capacity, battery technology. There are so many ways

24:14 that I think that we can improve efficiency without adding to supply. We keep wasting it. Well, look, we've got this, so let's go find this new shiny new toy. No, let's take the toy that we

24:29 have and let's make it work I've got insight there that I don't think I had a month ago. I had a dear friend, Kelly Mitchell, who when she graduated from school, went to work for Greenpeace, she

24:45 would like hand cover self to coal plants till they tear it down. And it's funny, we've become pretty good friends and it's she'll go, Hey, what are your people saying about this? And I'm like,

24:55 What are your people saying? But one of the points she made, because my whole thing was, why can't we just incrementally keep making things better. I go. If you'd run a natural gas pipeline from

25:07 the Appalachian Basin into Massachusetts, guess what? We could stop using, having days where 50 of the heating in Massachusetts is fuel oil. Even the oil and gas guy thinks fuel oil is nasty. You

25:19 don't need to be burning that. And two, we could stop all those ships coming from Trinidad to, you know, 'cause you're importing LNG into Massachusetts. And her take on it was, yes, I would

25:33 agree that incrementally, that's better. But the second we accept that means we are pushing further out,

25:44 you know, deadlines on adoption, and we're not looking at heating pumps and things that could be better technologies. And I, look, I can appreciate that. I just, maybe, and look, maybe it's

25:57 polyanish, but I just think that people are going to be more grounded as. trying to make something better doesn't mean that you're foregoing the future, right? And so, and I'm in full agreement.

26:12 I think if we could, because the problem here is that by not trying to make what we have today better, it's only going to make the cliff that we're gonna face that much more challenging, right?

26:27 And so, it's don't let perfection impede progress So, all right, let's figure out how we can do natural gas pipelines. I mean, you're talking about the Northeast, the Dutch are gonna close

26:41 ground engine, right? The natural gas field. And in the alternative scenario for closing ground engine, they're increasing LNG imports. So, you're cutting off your notes despite your face. It

26:55 just doesn't make a lot of sense. It's like, well, if we just cut supply, then everything will be fine No, it's not a supply-lend conversation. energy, hydrocarbons, electricity, you don't

27:06 just throw it out there and then people pick it up. It's being pulled, like somebody wants it, right? There's a reason why I've got five iPads in my house. And I mean, five years ago, you know,

27:19 you didn't have that. It was, electricity demand continues to go up. And there's a lot of conversation with all the data centers and on the onshoring being done in the US right now. Electricity

27:31 demand is gonna go up here Where's it gonna come from? And, yeah, going back to the transmission line from Wyoming to Nevada, California, 2027. I mean, there's been a lot of press and a lot of

27:47 conversation about hydropower in the Southwest. Is that new transmission line going to be additive? Or is it simply gonna replace what's being lost?

28:02 And I think, and so to your friend, Kelly's. point, yeah, we don't want to just make a switch and forget about the fact that we've got bigger issues down the road, but we've got to make sure

28:13 that we're tackling and grabbing the things that we can, the low hanging fruit, because if we don't do that, if we don't optimize, if we don't improve efficiency, if we don't lower our carbon

28:25 footprint

28:27 with the things that we have, then it's always a nimby issue. It's always somebody else's problem It's our problem, and there are energy companies that are going a long way and have gone a long way

28:40 to improve their environmental footprint, and whether it's carbon sequestration on the Gulf Coast and EP companies are doing this, mid-stream companies are doing this, there's a lot of focus on the

28:52 technology, flaring in the Permian was a huge issue a number of years ago, and that was one of the things that got into 2020 with the whole ESG narrative. Of course, flaring is going to be a big

29:04 issue when all of a sudden you're drilling a whole bunch of oil wells and you've got associated gas that you can't do anything with because there's no infrastructure. What happens when you put in a

29:14 pipeline? You're not flaring the gas anymore. That's good for the environment. That feeds into the US Gulf Coast. That helps build out to the fact that we've exported 16 BCF a day of LNG off the

29:29 US in the most recent measurement That's a record. When you start thinking about those numbers, all of that was wasted energy that's now being utilized.

29:44 Let's be efficient with what we have. The people that are best positioned to take advantage of that are the existing energy companies with the existing infrastructure, with the existing resource,

29:56 the free cash flow, the engineering know-how. How do we make this all better? And it's just work together on it. So, I'm glad you brought that up 'cause this is a question I wanna ask you. Is it

30:11 fair for, and we'll pick on Exxon since they're the big boys, is it fair for the world to sit there and say, hey Exxon, you're a provider of energy. Therefore, you need to become wind power,

30:27 solar power, and all of that, and get rid of your oil and gas. I have a, and I'll give you my answer so that I'm not sandbagging you. I'm like, there's nothing in Exxon's skillset that's gonna

30:40 make them any better at wind and solar than like Apple computer, you know? No, I think, so I think it actually opens up a much bigger question, which is, what is the role of a company as it

30:52 relates to social mandates and more race, right? And I don't want to go down a rabbit hole with this one, Look, if Exxon has the ability to do something, to generate an economic return on

31:07 investment for its stakeholders, not shareholders, right? So stakeholders are your equity holders, your debt holders, your employees, your consumers, the environment, the areas in which you

31:21 operate. I mean, you know that huge Exxon campus up in the woodlands, they're not gonna do anything to destroy that environment, right? So if they have an opportunity to do something that's gonna

31:30 generate a return on capital for their stakeholders, then yeah, they should go ahead and underwrite that. But they're doing that anyway, right? And so the notion that Exxon is gonna look at a

31:42 project and not accept it, oh, it's wind, I'm not doing that. No, they're gonna look at it and say, that's a 30 return on capital project, I'm gonna do it all day long, right? That's how they

31:55 should be underwriting their business model. And my point is they look at it and they go, That may be a 30. percent rate or return. But not for us. I mean, we don't know how to build wind

32:07 turbines. Well, exactly. And if they have

32:13 the extra skillset. Yeah. And if they have it in-house. But that's where the exons of the world, just because you brought them up. That's where the exons go in and say, There's other things that

32:21 I can do. There are other ways that I can add to or improve my environmental footprint, my environmental narrative, whether it's through carbon sequestration, which I do know and I do have the

32:32 access to. And so I'm going to pick and choose in terms of where is my time best spent to be the most efficient and generate the best return. Okay. So here's what we're going to do. We've talked

32:45 about all this. We're going to do kind of two-part thing Okay. First part, I'm going to make you energy czar of the world, what Sean says goes, and So lay it out for me real quick, kind of what

33:04 the steps you're taking. And this is really to your PowerPoint meets policy. This is your policy guy now for the world with whatever criteria you think, whether it's saving the planet from CO2,

33:19 whatever. Give me the big picture points of what you're doing. Look, I think, so the big picture points of what I'm doing is I am taking regulation and

33:31 I'm

33:33 basically taking it off the table in terms of trying to get new processes,

33:39 new facilities, new infrastructure. I'm enabling companies to do what they need to do without a lot of bureaucratic red tape. I'm also doing it under the guise and the pretense of it is a global

33:54 conversation. This is a global environment.

33:58 unless we are looking at improving the global economy, we have a problem. And so I wanna embrace and use and encourage the clean

34:12 production of traditional sources of energy. So whether it's crude oil, natural gas, use of LPGs, I wanna encourage nuclear. I mean, small scale nuclear is a huge opportunity But tomorrow

34:28 Germany is closing a bunch of nuclear power plants, right? So

34:33 I think that I want people to sit back and say, there's a goal that we want to get to a cleaner environmental footprint, but there's ways to improve every single technology. And let's take where we

34:47 are right now today. And I didn't tap the table, don't worry. Yeah, yeah. Let's say where we are today and a year from now, Let's make sure we did something better. And a year after that,

34:60 let's make sure that we're doing something. Let's get 1 better every single day in terms of what we're doing. Let's attack it from all sides. Let's attack it from the supply side in terms of where

35:10 we're sourcing energy from electricity from. It's really an electricity conversation. There's 80 of what we use every single day comes from hydrocarbons. And it's not in the car outside. It's this

35:22 table. It's the microphone. It's your clothes. I mean, it's, you know, go look at an energy transfer commercial, right? They're really good about all this, right? But

35:31 it's, it's, I want people to stop and think about just because this is what we want. Doesn't mean it's what we're going to get right now without a lot of hard work. And we've gotten really lazy

35:44 and just think we can snap our fingers and things will happen. It takes work. It takes investment. It takes appreciation of me, you sitting with your friend Kelly from Greenpeace and saying, What

35:56 are your people talking about? and you're saying, well, this is what my people are talking about. Why are you doing that? Because there's good ideas on both sides. So bring it all together. So

36:06 I like your 1, there's a, I'll get these details wrong, but there's a famous Pat Riley story, Coach of the Lakers. And I wanna say it was '86 when the Lakers lost to the Rockets early on in the

36:21 playoffs. And everybody said, this is the end of the Lakers' dynasty Cream is old, worthy's old, magic's old, and it's all over. Pat Riley, that off-season, wrote a 10-page letter, this was

36:37 back in the day, it wasn't an email, wrote a 10-page letter to basically every player, went through their careers and basically highlighted their best season in each statistical category. And he

36:52 said, all I'm asking for is for you be one percent better than that year. and detailed the steps he thought that player needed to do. The Lakers don't change the roster and boom, they come back

37:04 when the championship a game. And it was all focused on the 1. That was over and over in his letter. So I love that. I think the other thing too that's imperative that's underappreciated is, and

37:20 we're starting to have dialogue about this now, is at the end of the day, and I've seen some data on this I don't know if the data's right, but I've seen it. Until somebody worldwide makes, call

37:31 it five grand, 10 grand a year, I don't give a shit. You know, they don't care about the environment, they're struggling to just live. So I think embedded in, if we really wanna get there, to

37:44 your point is, let's incrementally do better each day, it's also, let's get as many people as we can have some measure of prosperity, 'Cause then they can afford to think your way. They can

37:58 afford, this is not meant to sound pejorative or they can afford to think. They're not being reactive. Exactly. And that, what an amazing ability to be able to sit back at the end of the day and

38:11 not think about, well, what do I have to do tomorrow so that I can make sure that I can feed my family tomorrow morning, like, oh, I've got a refrigerator. I've fed my family. Now I can think

38:22 about other things in the world, other opportunities, other ways to add value, other ways that I can help It's just a, it's

38:30 an ecosystem. We're all one collective part. And the

38:38 fear is

38:40 that you start to onshore or you start to eliminate the concerns for others. But think about the intellectual resource in the 800 million people that don't have access Imagine what they could deliver

39:01 to the world. Think about the three and a half billion people in energy poverty. Think about what they could deliver to

39:07 the world. Think about it locally, right? I mean, the success stories that I see, we talked about Covenant House at the beginning, the success stories that I see when you just, when you empower

39:16 one person to be able to be in a position where

39:20 they're not reactive, they're not in fight or flight mode I think there's a real ability to change one person's life, which ultimately changes other people's lives. And I think that that's why

39:32 energy is so critically important. Energy's not,

39:38 energy isn't changing. And you're not changing the, it's not like Netflix where you're changing from

39:48 selling or sending DVDs out to streaming, right? That's a consumer choice Energy is not changing, the way that people are thinking about energy and using energy and funding it is changing. But the

39:58 power that it brings to the table is that it's in everything. And if we can facilitate and build

40:08 and improve the appreciation for what energy is, where it comes from and how important it is to improving HDI and GDP and developing economies and what it means for livelihoods, we can accomplish a

40:23 lot of these goals And that's what's really exciting about this renaissance and energy is that

40:32 cost of capital is higher, things cost money and hard assets are hard assets, you can't replace them. So let's take what we have, let's use it more efficiently, let's make it better, let's

40:43 embrace what we have, always aspire to be better, always aspire to be greater. But don't just stop with, well, this is how it should be so I'm getting rid of that So, if you all be kind enough

40:55 to make me assist on. Secretary of Energy Zardness or something, or Galactic Viceroy of your goal. Well, you realize we're both unemployed. Yeah, exactly. Perfect. Yeah. I have figured out

41:07 I'm fundamentally the laziest person I've met, I know. So this is totally my jam. I am like excelling at unemployment. I'm so good at this. But the one other thing I would add, and I'll get your

41:18 take on this too, is is, and I'm a libertarian. I really am I've only voted for the Libertarian candidate for president my whole entire life. I read Free to Choose by Milton Friedman when I was

41:31 young. I could even live with the government instead of, you know, funding X, Y, and Z. Just throw money at carbon type technologies. Because I do think we need more shots on goal. And I don't

41:46 know that those shots on goal are necessarily going to be driven by the private sector because I'm not sure of what the revenue model is there, you know what I mean? Corporations are willing to pay

41:57 for lower carbon stuff, but it's kind of a mess, you know Yeah, I mean it's got to compete there. It's got to compete. Yeah, right so yeah I'd take more shots on gold go government government

42:11 money as much as it paints me. Okay, so let's wrap this up We're sitting here You are now instead of being energies are the world your chief investment officer of the Yates family office I'm sorry.

42:27 You've really you've really fallen

42:31 Are you at Applebee's or buckies? Yes, you make a difference. All right, so And your one mandate is the pot of money You can only invest in energy Tell me what you're investing in I'm not talking

42:47 individual stock names Give me kind of the buckets and the rationale for that on what we're doing Yeah, so look I think that I think that you want to be part of the solution. You want to make that 1

43:00 better, right? So I think that when you look at energy, you've got to look at it holistically. Energy is not a, it's not siloed, right? That's something that I think that's part of what's

43:11 created this rift between the market's understanding of energy

43:18 and companies. So I'm sitting with Chuck Yates pot of money I own a very healthy amount of traditional energy companies, right? So traditional hydrocarbon companies, companies generating free cash

43:30 flow, companies generating the economic return on capital, those are the company and the ones who are doing things to try to be 1 better every single day, right? So it's, what are you doing to

43:42 mitigate or improve your carbon footprint while still generating a good economic return? So I want to own those companies and then, And we're thinking stuff like that is, it's like.

43:54 You think you're thinking cash cows, you're thinking producers, you're thinking about the producers who are dealing with carbon sequestration, you're thinking about the producers who are focused on

44:06 improving resource recovery. You're thinking about midstream companies that,

44:12 what's the value of a TCF of gas in the ground if you can't get it out of the ground? It's zero, right? So like the lifeblood of energy globally, but in the US, it's infrastructure. The value of

44:26 the infrastructure that we have in place is it's irreplaceable. And so, and I'm not here to say that things should trade at replacement value, but vastly misunderstood and underappreciated. So

44:39 those are great long-term cash, cash, cash, how generative assets. But then you also want to be thinking about what does the future look like? And you want to be thoughtful about how you're

44:49 allocating that dollar. As opposed to having the, I've got the pot of money here that's going all clean tech. I've got the pot of money here that's going all, old tech, old hydrocarbon. No, you

45:02 blend it and you create a portfolio where you can be part of the future of energy because at some point,

45:14 the nascent technologies, the newer technologies, the renewable technologies, solar, wind, nuclear, whatever, however you want to define them, they have an absolute role to play in global

45:28 electricity and energy demand or supply, excuse me. So of course you want to own that, but I don't think you want to own it from zero to 10. You want to own it from when it goes from call it 10 to

45:43 30, right? So you don't want to be the first dollar in Like Captain Kirk everywhere, no man. Exactly. It's called the floor. because there is a lot of unknowns out there and there's a lot of

45:57 work being done. There are a lot of things that seem really good in theory but they're not applicable. They're not commercial. They're not scalable. And that doesn't mean that they're not good

46:08 ideas but there's gonna be a lot of fits and starts as that technology tries to evolve, to be in a position where it can compete for a dollar because we're 15 years out of the global financial crisis,

46:27 interest rates until recently have been zero. We're just now starting to see the ramifications of a higher cost of capital. And when cost of capital goes up, well, that means that your term

46:42 profile goes down and you've gotta be able to endure that in an inflationary environment for an extended period. And that's why, again, the iceberg, a lot of that capital investment to me is

47:00 in traditional energy. Got it, got it. So, well, Sean, you've been cool to come on. This hasn't sucked. This is born supremacy. We'll see, yeah. Yeah, we'll see.

47:14 Trust me, we will get texts, we'll get emails and the like But this has been awesome. No, it's been cool to come on. And if you had to say it in 30 seconds or less, what are you gonna do next?

47:29 That is a great question. I think that what I'm excited about is being able to see a lot of different things and being able to help a lot of different people. I've had a lot of interesting inbounds.

47:44 And so it's the thing that's most important to me and the next step is to. to be able to add value and

47:55 hopefully continue to learn and continue to grow because there's such an incredible, incredible opportunity and story to tell with energy going forward, that I just want to be part of that. No, I

48:06 totally agree with you there. How do people inbound LinkedIn, Twitter? LinkedIn, LinkedIn's probably

48:14 the easiest way. I mean, or Twitter too, but

48:19 LinkedIn's easiest Okay, cool, man. Just look up Chuck Asen, he's a job. With his sidekick, Sean. Oh, there you go. We got to guess those spots right here. It used to be the coolest thing

48:31 about Carson, Johnny Carson, looking at his career. Yeah, yeah. Two things that were cool. One, Ed McMahon, you can come be Ed McMahon any time. The other thing is late in life with his

48:41 contract, he was only working about half the year. He had Leno filling in for him, Joan Rivers, et cetera. Wasn't that what happened Kevin Costner in Yellowstone. Isn't that been the big issue?

48:51 Like he doesn't want to go up to Montana to film the balance of Yellowstone. So the last contract's right. I think that's right. I would love to have that contract dispute with Colin. I would love

49:02 to be in that problem. Exactly, good problem to have. Sean, thanks for coming on. Thanks Chuck, appreciate it.