Chuck Yates Needs A Job

0:20 Hey, everybody.

0:21 Welcome to Chuck Yates needs a job.

0:23 The podcast.

0:24 I am jet lagged as hell, but it's because I spent the last two weeks with Brian Sheffield down in Australia going through his beetaloo basin play.

0:34 We literally have a

0:36 terabyte worth of video because Brian was cool enough to let me follow him around with a camera crew.

0:41 So we're going to create some dope ass content there.

0:44 I swear it's going to take me a while because there's so much to go through.

0:47 But I got to meet a couple of cool people when I was there.

0:50 So you all saw Stephanie Berlin last week talking about the Northern Territory and all things energy.

0:57 Today's podcast, Alex Underwood, publicly traded company, Empire.

1:03 They've got a position in the beetaloo.

1:06 Alex is a great dude.

1:07 I hope you find this cool.

1:09 But anyway, it's all things Australia.

1:11 See ya.

1:19 And my great-grandfather

1:23 ran a mine in Burma called Boredwan.

1:26 His boss was Herbert Hoover.

1:28 No way.

1:29 Who was a very successful mining engineer, but there's just some cool intercept between the Australian mining industry and family history through the,

1:41 just an interesting little link into the US. No, that's so cool.

1:45 So, we generally acknowledge Hoover would be one of our worst president.

1:49 Oh, really?

1:50 Yeah.

1:51 I'm so aware of that, but

1:53 it's gotta be - He feels a dab.

1:57 And you've been rolling, right?

1:58 Yeah.

2:00 Like, got all that.

2:01 'Cause he, yeah, so Hoover was the president right before the Great Depression.

2:07 Oh, right.

2:08 And so, he gets tagged with the Great Depression, even though I think we've all figured out, it doesn't really matter who the president is.

2:15 It was a good time until then Yeah, exactly.

2:18 Up until then.

2:21 So, was there family talk, like around the dinner table with Dad, I mean, is that how you call it?

2:28 Oh, so it's my mum's father and her grandfather.

2:30 So, her grandfather.

2:32 Yeah, mum's written this full family history on it and yeah, it was all

2:37 sort of a big motivation for me to go into the industry that my grandfather and his father built some of the biggest mining projects in the world of their day and,

2:46 you know, that's the opportunity we have to be low, right?

2:49 Like, yeah.

2:51 So, so how did you get your start?

2:54 What'd you do?

2:55 College, finance major?

2:58 Yeah, so at uni, I studied commerce and law, but then I really wanted to go into the industry.

3:04 So I started my career at BHP Billison in their petroleum division and I just happened to be allocated to the petroleum division for my first rotation as a grad 18 months into that, I went to

3:16 Macquarie Bank and their commodities business.

3:19 financing oil and gas projects and it was like debt and which city are you and so I was in Sydney and you sleep and then I went to Singapore for the last three and a half so I was in Sydney for six

3:30 and a half years with Macquarie then they moved me up to Singapore

3:34 but

3:36 that was an awesome business so it was all the bank's money it wasn't funds or anything like that and we got a big group in Houston so we were interacted with those guys in Houston yeah right so Paul

3:47 Beck and all those guys yeah so yeah they were my bosses yeah gosh there were some Ray Wiens Ray the

3:56 2000s well the former Mrs Yates has got the house in the boys right but I lived two houses down from one of Beck's uh Ken Williamson was the technical guy yeah Brian Hughes Jerry Brian Hughes was two

4:11 houses down so yeah yeah yeah it was it was Maynard Holt of Tutor Pickering Holt, Bryan Hughes.

4:18 two lawyers, and then the eights is.

4:21 Yeah, right.

4:22 And the former Mrs. Yates still lives there.

4:24 So, I was in the same team as them.

4:28 They were the biggest team globally, and then we were a little offshoot business here in Sydney.

4:33 But there were a few ASX listed companies that were investing in like the Eagle Ford Trail, for example, and then, you know, we were doing lots of deals out of Houston.

4:42 And so, that was where I kind of

4:46 understood the playbook for shale gas, right?

4:49 Huge resource.

4:51 And you've got to show that it's economic and that's where you get the huge value up left.

4:55 Did you remember Dave LaNorman out of Oklahoma City, Paul did a

5:03 big deal with him at one point.

5:05 I just told a joke the other night in my speech about Dave LaNorman and I panicked for a second.

5:11 Oh shit, it's going to get back to him.

5:12 Oh no which company was that i was crusade

5:21 Yeah, or that bagel, he says familiar.

5:21 Night, Templar, it was always some variation.

5:21 Yeah, but he, I remember he did a big deal with Paul at one point.

5:25 Yeah.

5:25 'Cause I served as a reference for little Norman.

5:28 So yeah, we backed him, we backed him three times and figured out and made a lot of money with him and he just better deal this later on, which, you know, made for him.

5:40 So yeah.

5:42 So how long were you, Macquarie?

5:44 So nearly 10 years Oh, wow.

5:46 And then I moved over to Commonwealth Bank of Australia up in Singapore for a couple of years, but wasn't much going on there.

5:54 I stayed in touch with the former CEO of Empire Bruce McCloud, who was one of my clients when I was at Macquarie.

6:01 So that's a really interesting story as well.

6:04 So Empire,

6:09 it was a company that had gone through many iterations back in, you know, 2030 years ago.

6:16 The mid-2000s, Bruce decided to move into oil and gas, and - So when you say iteration, it was a mining retail - Yeah, mining, mining company.

6:25 Mining, OK, gotcha.

6:26 And then - As you know, we do - like, we have oil and gas companies in America, they're all sorts of crap.

6:32 Retail, tireless, just scariest.

6:37 But I think they had a mineral sands project in Western New South Wales.

6:41 They sold it to the Saudis, collected some money Then Bruce started buying conventional mature producing assets in the US. He picked up an old conventional

7:06 asset in Northwest Pennsylvania that was like a whole bunch of world wars collectively doing like 5 million cubic feet a day.

7:07 And then he bought an asset package in New York State, which is why we're called Empire possibly the worst.

7:13 place in America to do oil and gas business other than California,

7:17 and then what happened was, so the Marcella shale, I think we bought the PA assets in like

7:25 2006, there was no value on the Marcellus rights, and then by 2008, we sold them to, I want to say range or someone like that,

7:36 for like 4, 250 US dollars an acre

7:40 And that was all the money in the world then, to hell yeah, the first, yeah, the beginning of this.

7:46 Yeah, and so we sold off the shale rights, and then Bruce kept buying assets in America, so he bought the New York gas production, he bought oil production in Kansas, but then the other thing he

7:58 did, which was really smart, so he thought, well, if there are shale basins in the US, there must be shale basins in Australia And so,

8:08 yeah, so he met up with John Warburton, who's a.

8:12 geologist who now sits on our board and said to John, go and find me some shale basins in Australia.

8:17 And so at the time, I think the only company in the Beadlew that had leased acreage was Balconon and Gas. And John did a trip around Australia and in Australia the minerals are very different to the

8:31 US where they're owned by the government rather than in America where the minerals are owned privately.

8:37 So the way you would lease exploration acreage in these frontier basins is you'd literally walk into a government office called their geological survey.

8:46 So he went into the Northern Territory Geological Survey,

8:50 met up with the guy who runs it, who's still there, a guy called Bunch, who's another great Northern Territorian and said, What shale basins have you got?

8:57 And he said, Well, we've got the Greater MacArthurand

8:59 the

9:04 beetaloo is sub-basin.

9:05 And so John delineated 14 and a half million acres on that.

9:11 in the application and got it and that's how we got started.

9:15 So yeah, there was sort of a bit of that US shale history that got us into shale here in Australia and

9:24 you know, this base and it's sort of been, it's like the overnight success that's used in the making, right?

9:30 It was

9:31 a pretty slow start.

9:32 There was a moratorium on fracking from 2016 to 2018.

9:37 The government lifted that moratorium And supposedly, I heard this from the Tambor and guys, only government ever to put a frack man in place and then remove it.

9:49 In the history of the world.

9:51 That's probably right.

9:52 New York still has their frack moratorium on

9:57 and I don't know if California has one yet, but yeah, everywhere they put a moratorium on,

10:03 except for the Northern territory Well, in the state of Victoria, which is down to the south of us here in Australia.

10:10 Not only did they ban fracking, but they put it in their constitution that you cannot frack.

10:16 And guess what?

10:16 They've run out of gas and prices, I think it was last week or the week before prices spiked to28 Australian dollars in MCF, so.

10:25 And that was greed.

10:27 Oh, I don't agree.

10:28 What?

10:30 How about that?

10:30 But yeah,

10:34 so I joined in 2018 as the moratorium was being lifted and we've sold off all our US. assets We're beetaloo pure play now and

10:43 getting after it.

10:45 I'm gonna move into production.

10:46 So the way I understand beetaloo, we had Santos, Origin, at least poke some holes around.

10:58 Yep. So we kind of knew where the shale was and we had some evidence of deliverability, I think

11:07 origin had monkey.

11:10 A Mungi Northwest 1-H, yep.

11:12 Yeah,

11:13 a million cubic feet a day for 90 days, basically out of the heel.

11:17 Yeah, like a couple of hundred meters, yeah.

11:18 Yeah, you at least figured out there was gas there.

11:21 Yep. So, my understanding, I've drilled a couple of wells.

11:25 What do we know there?

11:26 Yeah, so we've drilled two verticals and two horizontals.

11:29 Okay 110,,.

11:34 000 acres on the east of the basin and then like a million acres on the west of the basin, sort of where the daily waters pub is.

11:42 And I am familiar.

11:45 Yeah, and so - Did we show you the clip?

11:47 Yeah, that was awesome.

11:48 We said that to you, great.

11:50 I've been sharing that literally.

11:52 Yeah, it sounds funny.

11:53 Yeah.

11:55 And so, when I started with Empire, we didn't own the stuff on the west.

12:00 So we just had the 110, 000 acres on the east and completely unexplored.

12:05 All we knew is where the basin out cropped further out to the east.

12:10 interesting bit of history, so Aubrey McClendon was actually going to farm into our asset when he was at American Energy Partners, and there was a deal fully paper up ready to go, and unfortunately

12:23 it never completed due to

12:25 his unfortunate accident.

12:27 But

12:28 the way we got started with our exploration program was we literally shot the 2D program that he had designed, like the exact lines that he was planning to shoot Then we drilled our first world carp

12:41 interior one in about

12:44 2020, and where we are in the basin it is a bit shallower than the centre of the basin, but also we've got this genuine stacked pay, I mean like four really nice zones.

12:59 The other amazing thing about this basin is the logs are like, you can put a whole spread of logs from 300 kilometers west to east.

13:08 And they're just like carbon copy lookalikes that whole way across.

13:13 So we drilled that well.

13:14 Then we did another infill seismic survey and then started drilling short horizontals.

13:20 So,

13:22 or sorry, we did a four stage vertical frack on that first well and got gas to surface from each zone.

13:29 The B shell was the best performer out of the four which is the zone that we're all targeting at the moment So then we drilled our first horizontal carp to age a couple of years ago, very

13:44 funky well designed.

13:45 So it was in four and a half, not five and a half inch casing.

13:47 We're going to move to five and a half on this next well.

13:50 In Australia, we have a higher stress regime than the US. So that increases the risk of screen out on slick water fracks.

13:58 And so we trialed some slick waters but we also trialed them into different gels.

14:03 And yet we got about three million cubic feet a day that well which we were very happy with.

14:08 Then we've drawn another horizontal well, more recently, Carpentaria 3-H,

14:14 starting to hone in on frat designs and all the rest of it, but that was also in four and a half inch.

14:21 Due in large part to just lack of availability of equipment.

14:25 So, you know, here in Australia, when you audio drill pipe, you've got to bring it from the States, from China, right, and the lead times are huge.

14:32 We don't have inventories of pipe lying around

14:37 But then while we had the rig out there, we drilled an extension vertical carpentaria 4V, which, again, had just awesome logs and carbon copy of where we've been drilling, but probably 500 or so

14:51 feet deeper.

14:53 What we're planning to do now is drill our first pilot development well.

14:58 So, it's going to be a two mile lateral, five and a half inch casing.

15:03 Obviously, on the back of that amazing result, Shenandoah and give it the data that we've

15:10 I'm going to cut you off.

15:11 Yep. What's the Shenandoah reference you just made?

15:14 Oh, the Shenandoah South One H. Well, that tambourine

15:20 and daily waters and Falcon have just drilled.

15:22 So incredible result.

15:25 Because they produce, they drilled a five and a half inch slick water frack, right?

15:30 Yeah.

15:30 And, and correct me on this, but they produce it, I think 90 days at what, 20 days, 20 days, and correct me on this, but they produce it, I think 90 days, at what, 20 million a day?

15:39 So, so the actual rate across the 500 meters was like three million cubic feet a day, which extrapolated to a two mile lateral, gets you to your 20 million cubic feet a day.

15:50 One thing that was incredible about that well was how shallow the decline is.

15:54 I mean, like the IP 30 and the IP 90 are almost, like, only slightly different numbers It's, it's a barnstormer of

16:06 a well.

16:06 And, you know, what's so exciting is that.

16:08 This is only, that was probably only like the fifth or sixth horizontal drilled in this entire basin, right?

16:14 So to be getting results like that so early in the evolution of the players, extremely exciting.

16:21 But the other really important relevance of this for anyone from the States who's watching this is that our gas

16:30 market is completely different to the US gas market.

16:34 So despite being one of the world's largest exporters, we're facing chronic shortages in our domestic market.

16:40 You know, I just mentioned the price that got to Victoria the other day.

16:43 Typically, Australian gas in the domestic market tends to trade at around nine US dollars in MCF. So when you get 20 million cubic feet a day, but you're getting paid nine bucks.

16:58 That's a little money.

16:58 I don't know, like a 60 million cubic feet a day well when you're getting 253, right?

17:03 Right, right.

17:03 Yeah, it's an incredibly exciting result.

17:07 You know, I think it's the base note being well, and it's just an awesome result for that JV. Yeah, and it seems like we've got equipment now.

17:15 Yep. Who brought in the drilling rig?

17:20 So H and P's brought a rig in?

17:22 Yep.

17:23 Liberty's frack spread, I think is on the water right now, so that'll be in country soon, and.

17:29 I've got a picture of it in the port of Houston being loaded up, so we'll throw that in the middle of the nice, nice.

17:36 Nice, yeah.

17:38 Definitely sent that to me.

17:39 Yeah, I mean, on frack, right, so,

17:43 you know, I think we had 12, 000 horsepower at our disposal for our first couple of wells.

17:49 I think when Tam Boren

17:52 did their most recent well before Shenandoah South One H, they had to bring in half a spread from New Zealand just to get it up to 18.

17:60 And the frack equipment in Australia was never designed for shale,

18:05 like really small, Colson methane wells, you guys call them Colbed methane wells,

18:11 you know, tight sand verticals.

18:13 So, you know, bringing in the specialist equipment

18:18 and the expertise from the States, I think means that results like that Shenandoah South 1H could almost become like a baseline with opportunity to grow from there.

18:29 So, yeah So, give me kind of financial metrics on you guys.

18:35 What?

18:36 Plus or minus 200 million dollar market cap company.

18:40 Yeah.

18:40 So, 250

18:42 million Aussie market cap, which is about what?

18:45 170 US.

18:49 You know,

18:51 in terms of our resource numbers against that market cap, we've got over 42 TCF of prospective resource books by the Netherlands.

18:58 So, the limiting factor on conversion to 2C is literally just well controlled.

19:04 So,

19:05 We know the gas is there, but we've just got to drill more wells to deviate more 2C.

19:09 We've converted 16 TCF to 2C with only that handful of wells that I just described,

19:18 aiming to move into 2P shortly with our plans to move into production.

19:24 We recently raised money and Brian Sheffield and Liberty

19:29 provided Cornerstone support to that raise, which we're very appreciative of.

19:34 In that raise, we started getting US institutions onto our register for the first time and also very strong support from existing shareholders here in Australia, but that leaves us with a cash

19:45 balance of around50 million Australian dollars right now, which is best financial position we've ever been in, and that will see us fully funded for the drilling of this well-fracked flow test, and

19:58 we're also working on some other financing that in the success case will be

20:09 low dilution or no dilution around installing a second hand gas plant that we bought late last year.

20:12 So we were very fortunate to pick up a gas plant that just happened to be all the right specs.

20:19 For us it was actually produced processing gas on the outskirts of Sydney here for a number of years.

20:26 We picked that up for two and a half million Australian dollars to refurb the compressors and install it.

20:34 Very limited amount of capital there, probably 20 million Aussie or so of capital there.

20:39 So

20:41 if we can get all that financing to come together the way we think it will, then we should be fully funded to first gas.

20:48 I think I gave you the Yates rule of financing when we had lunch the other day.

20:53 But I'll say it again just because I'm going to beat the dead horse on this.

20:58 I've had a million beers with CEOs in my career where the CEO is like, You know, if I just had a little bit more money, I could have done this during the downturn.

21:10 Yeah.

21:10 I could have done this.

21:11 I could have ridden through here.

21:12 I've never had a beer with a CEO, where they looked at me and said, I just raised too much money.

21:19 My problem is, there's always a wash and money.

21:22 Raise money every time you get a chance.

21:24 Oh, 100.

21:24 I mean, you've got so much resource in front of you.

21:28 Yeah.

21:28 You've got use of proceeds.

21:30 And I, so I couldn't agree more.

21:32 It almost sounds like I'm an investment banker I don't even have a dog in this, mate.

21:37 Yeah.

21:38 Well, I guess like you, I'm sort of like a recovering investment banker or a reformed investor in the space.

21:46 And,

21:48 you know, when I was at Macquarie Bank, you know, we used to see every cap raise that was coming through the Australian capital markets for oil and gas, right?

21:56 And so I used to sit on the other side of that table And, you know, I mean, one of my golden rules is, You don't take the money when you need it.

22:05 You take it when it's there and it's available, right?

22:08 I used to work for this old crusty at Stevens and he said two great things.

22:13 And number one was use of proceeds is bullshit.

22:16 You sell equity when the market will give it to you.

22:18 'Cause the other one,

22:21 the other one he always said, 'cause we were talking one time and some of that about investment banking is hard because all hell it's easy.

22:28 Just state the obvious with an air of discovery.

22:33 So, okay, so we've got the big huge mass of gas play.

22:38 We've got enough holes in the ground so we can map it.

22:41 We've got proof of deliverability.

22:42 We

22:44 got Shenandoah, at least with a recipe of something that, that's gotta be an economic well, right?

22:50 Oh, yeah, honey.

22:51 Even though it's costing a whole lot of money, you guys have the same thing on your acreage, although your shallower,

23:02 Historically shallower is two-edged sword.

23:05 Maybe you don't have as much pressure, flipside, costless to drill.

23:08 Any ideas there?

23:08 Yeah, I

23:12 mean - Or do we not know yet?

23:14 It is certainly earlier days and absolutely, you know,

23:19 the deeper you go, the more gas storage there is.

23:22 Right, I mean, more pressure.

23:25 What I would say is this basin is over-pressured throughout

23:30 You know, where we are, we're well over 05 psi per foot.

23:35 So you know that you've got good drive there.

23:39 In terms of our cost to date, we have been running consistently at lower costs than other operators in the basin.

23:47 But, you know, I should stress with Tamborin and Brian now coming in, they understand that lower cost mindset as well.

23:56 It tends to be when very large companies really struggle to bring their costs down in these earlier stages.

24:03 You know, we do see the potential, but for some what of an enduring, you know, cost benefit of being shallower.

24:12 The other thing is, you know, speaking to some of the technical experts out of the US who are helping us, you know, on this upcoming program on design and so on and so forth.

24:24 You know, we will have a bit better permanent porosity going forward.

24:29 So we don't expect the same peak rates as others, but we're hoping that, you know, we have a slightly shallower to climb out the back end.

24:37 But, you know, what I would say is, even at this early stage, I think everyone in this basin is gonna make a lot of money and,

24:45 you know, it is yet to be seen where the best parts of the basin are.

24:51 The other thing that's very interesting about where we are in the basin, so on the basin flanks, the gas is a little bit less thermally mature, so you've got a bit more ethane.

25:06 in your gas and ethane is normally a bit of a distraction.

25:07 Like you don't want too much ethane in your methane stream 'cause you might have to strip it.

25:12 But interestingly, the

25:15 composition of our gas is actually very well suited to the way the Japanese domestic gas market was set up.

25:22 So the Japanese reticulation system is a high ethane system.

25:28 And so we see that further down the track, that gas composition could be very interesting to the parties that are exporting gas to Japan.

25:37 And interestingly, you know, you would have seen the LNG plants flying in and out of Darwin last week.

25:47 There was actually a tanker on the Ictos project when I was flying in on Wednesday, but.

25:53 I think we tried to get footage of it.

25:56 We just kept missing it.

25:57 Oh no know

25:60 if we wound up having footage of it or not.

26:03 Jacob, do we didn't get any footage?

26:05 That's a shame, because when they're going through the harbor, like, you know, we're Parliament houses.

26:10 Yeah, well, we are towering in front of you.

26:13 It's awesome to see you.

26:13 Well, you know, Mark's my new best friend.

26:15 Oh, yeah, he's amazing.

26:16 Yeah, so Mark actually showed us around Parliament, and we stood out there 'cause supposedly the tanker was coming by.

26:24 Yeah.

26:24 It was just massive, these big huge tankers.

26:27 Yeah, they're huge.

26:28 But yeah, so Darwin already provides Japan with 11 of its total guesstimate So we see potential opportunities down the track that once the local market's supplied and once Australia's East Coast is

26:40 supplied,

26:42 the specific

26:44 speck of gas we have could be very well suited to export to Japan down the track.

26:50 I mean, I don't think I appreciated this until I started digging in.

26:56 I'm gonna say this kind of snarky and sarcasticly.

26:59 It's a little easier to get LNG from Australia to Japan.

27:02 than it is from the United States.

27:05 Yeah, I've heard a little cheaper as well.

27:08 Yeah, and Darwin is literally as close as you can get to the major demand centers of Asia from any major gas supply source in the world.

27:16 So much closer than Qatar, much closer than the

27:22 US. There's also issues getting ships through the Panama Canal as well, right?

27:26 Like blockages and all the rest of it I'm sure we can mess that up somehow,

27:32 we'll send it up.

27:33 The US just put a halt on LNG. Yeah, that was mad.

27:37 Yeah, which

27:39 is, it's an election year.

27:40 You got to, you know, the Democratic base needs to hear that you're halting hydrocarbons.

27:46 But the rest of the world's cutting deals.

27:49 And these deals are like 30 and 40 and 50 year deals.

27:53 And we'll just go to the sidelines for a while.

27:55 That's real smart.

27:56 You know, when you crank heaked off, got so dire that there were actually.

28:01 I'm not sure how many, but at least one cargo of LNG went from Australia all the way to Europe.

28:06 That's a long way.

28:08 So, yeah, I mean, the future of LNG is really exciting, I reckon, because

28:18 the more renewables you have, the more gas you need.

28:20 But the other thing is that

28:23 looking at it from a macro perspective, right?

28:25 So we're facing these major gas shortages, and the Australian energy market operator is constantly coming up with long-term forecasts of demand and then long-term forecasts of supply.

28:37 Those forecasts show gas demand staying flat for decades and then supply dropping.

28:43 I think all of those analysts are getting the demand forecast totally wrong.

28:48 The stuff I've been learning about AI, with this exponential increase in the amount of energy that's going to be required, like, we've had exponential increase in energy demand of all types since

28:60 Indo-Hidhi.

29:04 And we burn more wood today for fuel than at any other point in the history of the planet.

29:10 There is no such thing as a transition.

29:12 We haven't, except for maybe whale blubber.

29:15 We really haven't transitioned away from anything.

29:21 AI is going to be crazy.

29:22 I did a podcast with the head of AI for Intel, the big chip manufacturer.

29:27 And we were sitting there talking about it And there are actually very smart people on both sides that talk about

29:37 AI. It's going to be interesting to see how much will actually pay for it.

29:42 You know, it's kind of cool.

29:44 But at the end of the day, you know, there were a lot of things in the early days of the internet where you would build websites and all and we wound up not paying for it It's like, yeah, yeah,

29:52 if we could get it for free, we would do it.

29:56 And so you can make an argument for will have.

30:00 three to five super massive AI

30:03 language models that get trained and everybody else will just have these small little databases that run, help rag models.

30:11 And so we might actually not use as much electricity 'cause really over the last, call it 20 years in the United States, electricity usage has gone down, except for including the AI data centers

30:30 that have been built in the state of Virginia.

30:33 And so it's up just slightly.

30:36 And it's because all these data centers got really efficient, they got really good, because energy was a cost.

30:42 And one of the things Zane talked about, this guy was like, imagine if we start turning AI on the design of these centers, take go, go solve for energy.

30:53 So there's a case that it actually may not take that much of electricity.

30:56 Then there's the case that, You know, you're driving home and you maybe, you stop at Taco Bell, you walk in, your heated toilets all ready to go and stuff because AI is watching all this.

31:10 And we may pay a fortune for it, in which case, we're gonna embed AI in everything.

31:14 Yeah.

31:15 Yeah, so it's something to watch.

31:17 I talked when I was talking to Mark, the mining minister for the Northern Territory.

31:23 When I was talking to him, I go, If you wind up with all this gas, then you're gonna wind up with data centers.

31:29 Yeah.

31:30 And he talked about how they've put in high tech

31:35 telecommunication lines from Darwin to various places.

31:39 Yeah, they're coming up to Asia and into the Pacific.

31:42 And yeah, it's gonna become a bit of a dynamic hub.

31:45 Yeah, it's gonna be a hub, so.

31:47 That's the, so kind of the message that we say a lot around digital wildcatters in the United States is, Hey, natural gas guys,

31:57 thinking that you're selling natural gas, you're actually selling electrons.

32:00 Yeah, right.

32:01 And go figure that out, because the one thing that might happen in the United States, but I want to actually hear what you have to say about this.

32:09 In the United States, nukes nuclear might power the future.

32:14 Y'all have no nukes in Australia.

32:16 There is actually a nuclear power plant in Sydney, where Lucas Heights, and it's been in operation for decades, but it's only used for medical purposes Oh, I didn't know that.

32:27 I didn't know some work around it.

32:28 Yeah, research.

32:29 But yeah, so we, in Australia, we're actually just, we've just started a big political debate about nuclear energy.

32:39 So in Australia, we've got the equivalent of the Republicans, it's called the Liberal Party, and they're in coalition with the Nationals, which is all the farmers.

32:46 So they're like the Conservatives.

32:48 Then on the Progressive side, we've got the Labour Party, who are the equivalent of the Democrats.

32:57 Labor is anti-nuclear and they just want to keep going with renewables with gas backup.

33:00 Whereas the conservative parties have just released their policy platform, which would start with a

33:04 handful of SMRs, more modular reactors, and then look to go from there.

33:04 So

33:20 there's this huge debate raging.

33:23 And it's

33:25 really interesting like the way that the general population is reacting to it, right?

33:29 So 40 or 50 years ago, there was a big anti-nuclear movement here in Australia, Greenpeace

33:38 were big on it.

33:40 Interestingly, in Australia, it's a bit split on party lines.

33:46 But one of the really interesting things coming out of the polling is that young people today are actually much more supportive of nuclear than young people were 30 or 40 years ago

33:57 kids these days are so tech savvy and so they they they research it and they understand the technology they understand that it's safe and you're not going to have you know three-eyed koalas walking

34:09 around and all the rest of it so

34:12 yeah it's um but I think it's essential I mean you know we talk about no transition and that it's actually addition of everything I think we need a lot of nuclear in this country but I do think it's

34:24 going to take quite a while to get up and running.

34:27 So what's the Australian band that sings

34:32 how do we see it when I got oil midnight because that guy ran for Prime Minister on totally no nukes.

34:40 He got like 2 of the vote or 3 of the vote.

34:42 Yeah he actually ended up becoming a member of Parliament for the life of Parliament.

34:45 Did you really?

34:46 Yeah yeah yeah.

34:47 So that's it so walk me through what happens discussion wise on unnatural gas.

34:55 What is the population?

34:57 think, what do both political parties think?

35:00 Because we did see a no fracking sign when we were in Darwin.

35:04 Yeah.

35:04 We did.

35:05 Yep. The yellow triangle.

35:07 Yeah.

35:07 Yep. Yep. So,

35:11 it's interesting, like, I think

35:15 within the inner cities, we have a political dynamic that is

35:22 becoming quite similar to what I've seen of what's happening in politics in the US, right?

35:27 I go to the US quite a lot, and I have been right through my career, and, you know, in the US, you've got, you know, California and New York have become very left-leaning.

35:40 And actually, as they become wealthier, a lot of those inner city hubs have become even more left-leaning.

35:49 And then you've just sort of got the rest of the country that, you know,

35:54 in the way I've you know, they want less government in their lives, more economic development, more independence.

36:02 It's kind of similar here in Australia.

36:04 So,

36:06 you know, in the inner cities, and particularly in some of the very wealthy enclaves of the inner cities,

36:12 there is a lot of anti-gas sentiment.

36:15 And it's people who I think are fundamentally well-meaning.

36:19 They want the world to be a cleaner place.

36:22 They believe in climate change They want a reduction in emissions.

36:29 But then outside of a lot of those sort of inner city groups and amongst those sort of inner city elites, I think there are a hell of a lot of people who, first of all, a lot of people who come off

36:43 the land, not everyone, but a lot of people who come off the land have co-existed with the mining industry for a long time.

36:49 And so they know that if it's done the right way, there's mutual benefit I think there are also.

36:56 A lot of Australians who are really suffering under cost of living pressures at the moment.

37:01 So, you know, we had a golden run in our economy for like 30 years where interest rates literally just dropped in a straight line for 30 years.

37:10 They've now turned around, inflation's very high.

37:14 People are struggling to pay their bills.

37:16 And I think a lot of those people are starting to work out that

37:21 it's not necessarily, you know, solar panels, for example, are not necessarily the cheapest form of energy because their power bills keep going up.

37:29 The more solar panels come into the system.

37:31 So,

37:33 you know, it has been a pretty politically charged issue, gas over the last couple of years.

37:41 But

37:44 the more renewables that are being put into the system, I think more people are understanding how important gas is as a compliment And you know, as an example, um, Our federal government just

37:56 released a big thing called the Future Gas Strategy, which was really about underlining their support for our industry, pointing out that we're gonna need gas well beyond 2050.

38:08 And from a Northern Territory context, and fundamentally Northern Territorians are by far the most important stakeholders for the beetaloo, because it's their land that we're gonna be developing

38:19 this industry on

38:23 And there are the anti-frackers as they call them, as they call them, but

38:30 I must say I

38:34 meet a lot of people from right across the spectrum in the Northern Territory, and

38:39 there is very, very broad support for us up there.

38:43 And it's interesting, in Australia, we have this concept called the quiet Australians, and quiet Australians are people that are pro-mining, pro-willing gas, pro-small government, whatever.

38:56 but they don't talk about it publicly, right?

38:57 They just get on with their lives, but each one of those quiet Australians has just as many votes as a very loud.

39:04 Yeah, we call it the seeperson, and then we're in America.

39:06 And actually in America.

39:08 That was under Nixon, that same sort of concept.

39:11 Yeah, yeah.

39:13 So, and you know, I think,

39:18 I've seen with other types of resource developments in Australia, the activists, they tend to make a big song and dance

39:28 to drum up support.

39:30 And particularly as you get to the key

39:33 point of moving into initial production, and

39:37 they run fear campaigns and all the rest of it.

39:39 But then these big projects start producing, they start creating thousands of jobs,

39:46 creating a hell of a lot of tax revenue, and people realise that the sky didn't fall in.

39:54 The activists tend to move on to the next thing and you get general acceptance.

39:57 So, you know, there are anti-frackers in Darwin, but,

40:03 you know, I think once we get the gas flowing, that'll put downward pressure on people's household, energy bills, jobs will be created.

40:11 You know,

40:13 the restaurants will be full, which is good for local businesses and employment and all the rest of it.

40:17 I think

40:19 we'll get through that phase and move on to bigger and better things 'Cause my vibe when I was up there, and of course it's total selection bias, right?

40:29 Yeah, you surrounded by all the guests.

40:31 Yeah, surrounded by all these all the guests.

40:33 So, of course, you know, plus they know I'm an oil and gas person.

40:38 But it felt a lot more accepting and almost felt like being in Midland out, you know, in West Texas.

40:44 Yeah, there is a bit of that.

40:45 You know, it definitely felt more accepting.

40:49 Ultimately, in the United States, I just, I don't know how to say it, except.

40:54 We suck in the energy business on telling our story.

40:57 I mean, you just were very eloquent there, laid out jobs, lower cost of living, all that.

41:03 We can't do that.

41:04 We throw facts and figures out if we even try to do it and we mess it up and we just piss everyone off.

41:11 So kudos to you guys in Australia for seemingly doing it better.

41:17 Well, I think our industry in this country has some of the same issue

41:24 But I guess that's one of the reasons I was very keen to have a chat with you today.

41:28 I think we do need to get the message out.

41:30 And

41:32 on Thursday night, when you were introducing Brian at that dinner, you made the point that we need to be proud of our industry.

41:39 And I'm very proud to work in this industry.

41:42 I think it's an awesome industry that people don't realise how much positive impact it has on their lives.

41:48 And we've got to get the message out It's really important because

41:56 Without reliable and affordable energy, we'd be having this conversation in the dark, right?

42:02 So. Oh, and I said this the other night, and we should probably say it on every podcast every time.

42:07 It's when you go from burning dung and wood in your house for heat and cooking.

42:13 Yep. Burning hydrocarbons and using electricity, your life expectancy doubles.

42:18 Yeah.

42:19 I mean, you know, and so it's a big deal

42:25 Yeah, it's, I've

42:27 been, have you read Liberty Energy's new bettering human lives?

42:33 I've read some of it, I need to read the same.

42:34 Yeah, I'm about halfway through.

42:36 I mean, the way it talks about the history of the increasing density of energy sources through history and the way that that, and you know, it's fascinating.

42:46 Like, I love history, right?

42:47 So,

42:50 the fact that like the Dutch trading empire actually was built on.

42:55 heat, which was a more dense form of energy than wood, which allowed them to start moving into the cities and generating excess wealth.

43:03 Then the United Kingdom, a big driver of their wealth, was moving from peep to coal, which is a denser form of energy.

43:12 Obviously, your great country, I think in many regards, was built on the back of the incredible oil and gas wealth that it has We say that

43:21 time and time again, these texts as well feel probably won World War II. When I say we, I mean

43:29 the allies, all of us, Australia, Great Britain, the United States, had fuel for our tanks and the Germans didn't.

43:39 Exactly.

43:39 Well, the Germans went and got slaughtered at Stalingrad, trying to get into the Russian oil fields, right?

43:46 Millions of people

43:48 unfortunately passed away there.

43:51 But the other more modern example of this, I think, is that

43:55 Again, I'm totally biased because I come from the oil and gas industry, but

44:00 when the world was pulling itself out of the global financial crisis, printing heaps of money and dropping interest rates to zero, sure, that helps.

44:09 But it's like

44:11 taking a drug, short-term gain, bloody long-term pain But I think the explosion of shale gas in America just was as important as monetary policy in pulling the US. and ultimately the world out of

44:29 that great recession.

44:30 You know, cheap energy, manufacturing started coming back to the US, all the jobs created around that.

44:40 I'm a little snarky when I do this, but there's some seriousness to it, because people talk about, Well, we have these unplugged wells in America that we need to plug.

44:49 And it's like, Yes, we do need to do that.

44:52 They always say, Oh, the industry needs to do that.

44:55 And I always jokingly say, No, I think Amazon should do it because we don't have all these Amazon vans running around unless we have cheap oil.

45:04 And that's what, you know, the US. shale revolution did.

45:08 US. went from decade upon decade in decline to actually doubling the amount of oil we're producing, made it pretty cheap, made vans go everywhere.

45:18 Absolutely.

45:19 Yeah.

45:20 I'm not gonna promote that because we have a very strict regulatory regime in the Northern Territory where we have to take responsibility for the plugging of wells, but I certainly get what you're

45:28 saying.

45:29 We're

45:31 getting better about it.

45:32 We'll start plugging our wells.

45:35 So,

45:37 all right, I hate to put you on the spot.

45:40 We've talked energy, you've sold me.

45:44 So the podcast that I will drop in the past when this actually airs, but since we're - It'll be the podcast this week, is actually titledIs Darwin the next Midland Texas?

45:58 Because it's going to be my interview with Stephanie Berlin and then my speech and all that.

46:04 So, you've talked to me up, I'm sold, I'm ready to come be an Aussie oilman, but I'm going to throw you on the spot.

46:13 What is cricket?

46:14 Oh, explain to me, what is this?

46:18 So cricket is one of my favourite sports.

46:22 I'm a huge rugby fan and the Australian team is called the Wallabies and they won on the weekend after a horrendous run, so I'm enjoying a bit of false hope.

46:32 But cricket is a crazy sport.

46:34 I can follow rugby.

46:36 Yeah, sort of get it, I go, I've seen soccer, I've seen American football, let's combine it.

46:41 Okay, I got it

46:43 Because I can watch any sport I've never seen, and within about 20 minutes I'll tell you the rules.

46:49 Yeah, yeah.

46:52 telling you strategy.

46:53 The cricket, the best I can figure is it's the reason to have a weekend bender.

46:59 That's all.

46:59 Well, it's nearly a week-long bender.

47:03 So

47:05 cricket started, it actually started in France, the English claim that they started it, but it started with this French cricket, which was a very, very simple bat and ball game where you had the

47:15 bat and somebody would throw the ball at you and their aim was to hit your legs and then you were out or you could hit the ball and knock it away.

47:24 The English then exported it around the world with their empire.

47:29 As us as Australians, we are absolutely cricket mad.

47:33 Also, if you ever go to India,

47:37 it is like a religion for them.

47:39 They were in a World Cup final for a shorter version of the game recently.

47:44 Literally 900 million Indians watched the game live.

47:48 900 million people watching a game out of a population of

47:52 billion.

47:54 It is a very strange sport.

47:57 What I love about test cricket, which is the purest form of the game, which lasts for five years, is that.

48:04 Five years?

48:05 Oh, sorry.

48:06 Five days.

48:06 Okay, wow.

48:07 You would feel like it was five years watching it.

48:09 Yeah, you'd be about to say.

48:10 So, it's my.

48:10 They're doing baseball in America.

48:13 It feels like five years to me, but go ahead.

48:16 So, it's five days long.

48:17 It starts at 1030 in the morning.

48:18 It goes till 6 o'clock at night The most likely outcome of this five-day saga is a draw.

48:25 So, often neither team wins.

48:30 I developed a love for that game because the Australian test team will host another country's test team over the Christmas period, which is our summer holidays.

48:41 And so, it's that time of year where you've forgotten what day of the week it is.

48:45 You go for a swim in the pool, cook a barbecue for the kids You've got it on in the background.

48:50 Are you just sitting there lying on the couch?

48:52 hour on end having a beer or two.

48:54 If you develop a

48:58 lifelong understanding of it, it's an incredibly exciting game.

49:02 If you haven't watched it before, it's really boring.

49:06 But what I will suggest to you, which I think you'd really enjoy.

49:09 So they've developed these shorter versions of the game.

49:13 Next time you're out in Australia, we'll take you to what's called a 2020 match It takes four hours, and the beauty of that is that there's only 20 overs of six balls each.

49:24 And so on every single shot, the batter is trying to hit the ball out of the park, and that is fun to watch.

49:31 So we'll take you to a derby.

49:34 Yeah, it's literally.

49:35 We did that.

49:36 We did that.

49:37 Okay, cool.

49:38 So I'm gonna take you up on that, because I'm not for sure.

49:41 Quite certain we will be back to Australia.

49:44 This meant cool You do have to support the Sydney sexes, though.

49:48 Okay.

49:49 So I'm a.

49:50 I'm a.

49:50 I'm a Hawthorne.

49:53 when it comes to the AFL. Yep. But the Sydney, what is it?

49:58 Sydney Sixes is my 2020 crickets.

50:01 Okay, like number six, sixers?

50:03 Okay, 'cause they hit, if you hit the ball over the fence on the floor, you get six runs, so that's one of the sixes.

50:08 Got it, the sixers.

50:10 I will take you up on that.

50:12 Alex, you were cool to sit down with us.

50:14 Not great to see it.

50:15 Where do people find out more about Empire?

50:17 So our web address is empireenergygroupnet

50:21 We're also listed on the Australian Stock Exchange, our stock code is EEG. And for people out there who want to buy it, you just press the green button.

50:34 But yeah, our website's got heaps of presentations, all the information about our company.

50:39 And if anyone out there in Digital Wildcatters World wants to get in touch, our email address is infoempiregpnet.

50:51 delighted to tell people about the story, 'cause we're pretty proud of it

50:55 and excited about it.

50:56 Oh, awesome.

50:60 Anything we should have covered that we didn't?

51:02 I don't think so.

51:03 Yeah, no, I think like, I've gotten pretty good at editing these things in my head as I go, where I say, Ah, maybe we'll cut that out, or sometimes I'll even stop a guess, and say, Hey, you

51:11 shouldn't have said that.

51:11 Could you catch 'em?

51:11 Yeah, yep I crushed it, also I couldn't imagine editing this thing.

51:13 No worries.

51:13 Yeah, it seems great.

51:13 Well, if you don't have a deal.

51:13 Let's do it.

51:13 I'm in.

51:28 That's one of my favorite things.

51:30 No two words have ever gotten me in more trouble in my life than I'm in.