Encore Permian | J.D. Smith on Oil & Gas Startups Podcast - OGS063


This is the oil and gas startups. podcast where we showcase emerging technology in the stories of industry founders investors in leaders with your host Jay Corley and Colin Macleod. What is going on digital well? KANTER's welcome back to another episode yesterday as podcast. It's the day after nape tired or here. We've got a new friend. Jackie Smith CEO of encore. Permian thanks for being here but thank you guys for the for the invite and the early morning early Friday morning. Only guys up driving into the office. What we schedule A podcast or eight? Am this is ridiculous and apologize. Everyone listening my voice probably sounds I mean. We had Wade Bowen plane last night. I'm sitting there yelling at everyone just having normal conversation station so my voice is shot. Everybody who made it out man. It was it was a great party. huge hats off to detract for taking the lead on that and getting US involved and tracks database database. Who else mineral wear were main Man It was fantastic huge thanks to Wade Bowen for plan Iraq the House so Looking forward to doing that again next year. Yeah absolutely so JD. Tell me a little bit about encore. What do you guys do so On course kind of a small little a private equity company. We started a couple of years ago and Early twenty seventeen kind of got the ducks done with a capital provider out of Minnesota. Okay Minnesota SORTA interesting the soda. Great Guys They're kind of generalist fund and don't have a ton of oil and gas exposure so is a pretty nice little feed we We kind of have to companies with our one company there in its mineral acquisition. Kind of group get guys who are calling originating getting that getting a deal done on the on the ground but also you know we kind of had that The lease game in the least game was really hot. That's kind of my background there. So okay putting together a bunch of treks rex. Get them and flip them. But then but then that's Kinda dead now so yeah. We recently got to try our hand. we we. We got a we back to our provider in a got a little bit more capital and hold off about a pretty good size asset for us eight thousand acres all blocked up and we we get to our hand at drilling on that one so Pretty exciting but just so the smallest peba companies out there so you said that you have to try your hand at drilling so is that a is that a transition and actually operating assets. Yes so we always we always kind of would operate so we'd get those stripper wells or whatever never was hp out there in the middle of base in the Delaware Basin Putting together tracks. And we weren't you scared of that What was new though is going after horizontal little development? So it's been a goal of mine for Twenty Years Shade under twenty years in the industry. So Yeah I've always wanted to lead a group get a group together and so we got a We got to Jill our team together very cool. You'll do it and everything I mean so far so good awesome. So let's talk about your background and what led up to this this point. So how'd you get into the industry. What's what's your background from a technical standpoint so so it's a lot like yours is actually yeah? Graduated graduated out of big spring another West Texas guy. Yeah in two thousand and I thought I wanted to be a pilot so we get that old airbase out and and and there was a there was a guy I think Norwegian. He was given flightless for cheap. And there's a reason for that. His planes kept catching on fire. So so this is a Norwegian guy out in west Texas given flight lessons on some cheap. He'd he'd have a bunch of guys from West Africa Gabon. Cameroon Sri Lanka either and And then me and I thought well I got I got to pay for this. I was this is gonNA come out of pocket and this was like man. I'm going to go offshore on a drilling rig approach to. That's great two weeks on two weeks off so I got a list first off the Internet you know back in two thousand it was dialup. Still up there and I had one hundred something names of vice presidents of human resources in their their phone number so I started going down the list and I'm like you know I heard diamond. Offshore was looking for a good hand. It just really kind of getting Eddie Haskell. On you know sounded like a good boy you know hey hurt. SLUMBERGER was looking for its slumber J.. Clip it's been like three episodes of the last five or six people had similar story like Schlumberger Slumber J.. It's crazy as you look at that word. Go down a list and hit that that was like a right of passage to get into the oil business. I gotta say slump slumberger one time. I should it known better growed up in West Texas probably heard. It just didn't know that was yeah. Yeah with through that list and you know get a few applications to fill out now. Those applications just ruin called me back and talked to that lady and we went back and forth a little. She's like you're you're kind of young. I was just turned nineteen and got on that drilling rig and it was the Charles Ruin Jack Up Rig and I'll never forget my first hitch out of there we. I'm driving down and it's it's a helicopter L. A. Copyright Out South Louisiana Cameron Louisiana. And I get there at like three in the morning to make my seven. AM flight and you know the cockroach comes out out of the sink at the hotel we were pulling through town. Have you ever been to Cameron Louisiana. This is the end of the world. Right there's a man you you know. South Louisiana is a foreign country. It is a different place. It's actually the only place I've ever been anywhere. We have to sign a waiver at hotels. You're saying I will not foil seafood in my hotel room. Where else in the United States can sign a waiver saying that for a hotel room there was an s ten pickup? Never Forget it at that a convenience store until the only gas station in there was like an old recliner in the back of it and there was a grandmother had to be three hundred pounds in the back of their sitting in the two. Mike what these people do. Maybe they're shrimpers. Just thought who am I what Spend a Lotta time offshore as well and so just flying out of you know South Louisiana dishes. I mean one. I think it's kind of like depressing. You had like you said you wake up at three three. AM either for five. AM flight like you don't want to be there. You know carrying your one or two offshore bags and sit there with check in and just like I don't it's just a certain certain type of feeling brings back bad memories. You're you're hitting that Reagan in the smell always got me. I guess from the Galley Ali. But I I I got on that rig and I realized like I knew I was born. Oilfield Trash me in the Charles road had the exact same birthday August twentieth nineteen anyway I got a man. It's a sign I might as well not even try to get out of. This industry tried tried my hand at that. It was It was pretty good. I made her updike pretty quick but Few months into this ridiculous. These guys are crazy and This this boat came up to our rig rig and we were doing a FRAC job and these guys come out Set the basket on the rig and they hit it just as big team they are all these big guys like thirty five years old and what you guys do and they start telling me about fracking. How do I start to work with y'all and just happened to be there was There's one guy the kind of fluid tech attack had got he was from Midland Texas Richard. Pitzer Hawk Really good guys and I think midland was you you know in the State Championship at that. Time Yep Yep so he's like what. Are you doing here because there was not a whole lot of West Texas guys. Maybe like it's odd. At first. I mean he said that you grow up in big spring and the first movie made was to go offshore. I mean it doesn't make a lot of sense in you. Have Noel field right in your backyard. Right yeah but those guys are really crazy right money. Buddy wasn't as good. I wanted us to yeah. Yeah you can't beat that two week rotation so you see these guys come on Then that that got your your your interest kind of peaked in what they were doing and so what happened. They So they gave me a a number in the office call in Lee Kilpatrick think. He's he's actually midland. Now Sign Up Lincoln but I just wore him out like hey you gotta give me a job job this coming. It's called Oscar. They had to FRAC DOC boats in the Gulf of Mexico and went down in Brazil. You GotTa get me on. Let's do this and I think it was still nineteen at the time he He he brought me onto ethic. I'm the youngest this modern day. Franken ever because all the other companies Haliburton Slumber J. How who else was out there? There's somebody else out there that you had to be. Twenty one honor you gotTa be twenty one on land. Yeah I feel like I kind of got that title out there. Nobody's been able to anybody modern day. Ah something probably happened. In the fifties he's But did that in man. I love that work. You got this crew environment It was still really old school like the first day on the boat. I go down there and this legal patrick. He gave me a envelopes. Don't read it handed to him and I later found out like years years later. My trigger told me yet. Said we're his ass out what they wanted to see what I was made of but I get on there in This one guy from Graham Texas. He's he's he's says you know I was just talking trash trying to trying to fit in. He's like you keep popping off like that and I'm GonNa Roll. You Ain't GonNa do anything anything y'all my turns back to the galleys guys in. I mean in one minute they had me slammed on the deck duct taped up put my boot off dictate to my head in strung me upside down on the second hand railing of the of the okay a step back a little quit talking so much trash. It is so funny. They did that to me on my rig to when I turned twenty one for my twenty first birthday they strapped me down duct tape me and then put me up on a wall fucking friend strategy that at my My party all of a sudden we're sitting in the lights go off and WANNA get. Bum Rushed by eleven days. So it's a No. It's funny because when you're telling the story like I'm thinking about back in my days on the rig and it's funny when you're roughneck you're always looking for what's better i-it's see all these service companies coming on. I remember I'd see see mentors. Come on the rig wireline handsome man. These guys don't do shit. How do I get get it clean? How do I get a job like that? Yeah I'm covered in mud. It's been busting my ass job like that and that's what actually led me to getting. wireline was once I turned twenty one and I could get my CD. Yeah private truck house out of there. I got off the rigs. So it's funny to you know I guess that's probably just all roughnecks always looking for the next move so yours is frat you've got into that. So how. How long did you work on the floors for rigs sunlight here about seven or so months in maybe be five on the floor for on the floor or something like that and not a lot of people? Don't have you know Ostro Communities Pretty small right. So people aren't familiar with offshore. But a Jack Up Rig rig is essentially just a really similar to land rig on steroids. You know they've they've got a deck and it's a little bit bigger but it's very comparable to land rig and I'm sure you know back in early. Two thousands Land rigs there is now right got their CRESA Gracie fucking these top driver as you here in the the drillers cabin is the size of this room drilling like man. This is fucking wild because I broke out on little shitty Kelly radio you know like I feel like I was like the last of the old school rig breeds. And it's very much how this Jack up rigs were especially early. Two thousands I'm sure so When you got into fracking you know what what happened? After after that. What what transpires though I really liked the. I loved offshore so I love the rotation my wife and I got married she she. We were high school sweethearts. We artsy was nineteen and I was just turned twenty one when we got married but We just like the life she she was WORKED FOR DEAD In their restaurant there in town so she worked a whole lot while I was gone and then we often Texas country music scene was coming on and we'd get out of town. We lived in Snyder Snyder. Texas I'm being all our friends are gone. They're gone to college. We were bored but I mean it was. It was kind of a great life there for a long time but always wanted to kind of advance and I always want to international so I guess about four years into it. I really started trying to put my feelers out international international And I got in with Baker oil tools. They had this group called the gap group and it was really cool. They had kind of like the model was like special special forces of it was like we had to say that the heart so we'd have succeeded equipment in it. Could it was built on a shipping container kind of ISO type type skit in. I mean we would just be anywhere they helicoptered into Columbia jungles. We'd We'd put a grid down and put it on just some work boat in Boho h China In in other places like that so I got to get to go to In China and that was that was really interest for that's an experience and offshore. It was so crazy All the last company that I worked foreign venture global technology analogy They run expandable casing and before the downturn. They're doing a lot of work over in China and it was onshore and one of the guy said he lost lost thirty pounds in a month. Because it's not like you're working in Beijing you're working out somewhere in rural China and you have no clue what the food is. And he's I just didn't eat. It just didn't eat. It was crazy. Thank God for the Cajun's they brought a huge deal Louisiana hot sauce still a tiny sachets and we just we get the race that was easier than just pick a gravy like it was. It was wild one one of my buddies. He he pulled a chicken head out of there and I mean it was be gablers blur feathers everything. Everything and I I ran outside. Hit The handrail. Just junkin like it was so bad so funny though like everything going on with Krahn Virus I people talking about you know Chinese cultures much You know the crazy shit right. Everyone them eating bats. Go back to South Louisiana. It's like these guys Squirrel Gumbo with the school head. And that's not normal. Might not trader said the best fight he ever saw. Two Cajun's is fighting over a turtle in the road. Certainly become super so like okay so I go on a platform. It was a Hercules rig and energy twenty one was The operator in both of these guys filed bankruptcy simultaneously. And so all we had in the Galley was big Bola peanuts first necks. And then like what they were. Cooking is like Turkey Knicks or something can can we just go fishing exactly. So how was it offshore and or was it was the actual rig offshore in China. Was it it was Imbo High Bay and and it was it was a mess. was like a new billion dollar multi billion dollar probably facility and you get on there it was brand new and sinks coming off off the walls like nothing works up to the rig floor in That platformer style. And so it was a nice looking rig but but You get to look around. And there's like one crow crow foot air connection to run. Whatever you need diver pump start your motors? And there's like eight wise on everybody trying to get into that aired so there wasn't enough for anyone that's what that's why when people talk about this Cordova Corona virus are. I don't think it's GonNa work because it's made in China. Sorry that's my bed and yeah but it was. It was just so wild working out there. The maintenance on everything was really tough. You know we. We were always like at that Oscar company. We we had to do everything we had a mechanic or ticker just whatever because we didn't have the biggest budget for maintenance so we were getting things going but out there man it was. It was wild world like just getting a pair of channel locks. It didn't slip while you put pressure on them or just anything like that was was difficult all the time when they'd by By rigid pipe. wrenches honoree they buy the cheap. Chinese shit wouldn't grit like grip on anything. Yes like hormone dies. Exactly exactly how it is and you're sitting there trying to get a bite on something and it's just slipping in your yard. You have a frustrating job in the first place and then when you're told doesn't work properly just makes it that much worse. Yeah you gotta be careful loading up on that with. Let's just say if it's a brand name wrench before I start your put up. Put a cheater pipe on it but so you go international and that's actually a big thing for me when I enjoy adventure because this was in two thousand fourteen and they're telling tell me man you're going to go all over the world. Hell Yeah I WANNA make that next step I wanna go work You know Brazil Saudi. I WanNa see all these different places and then oil fell allows so get the chance to go international. Very much So you got you got that experience you know how. How long were you going off internationally? I think I think we had about a year and a half Somewhere around our time. Our oldest daughter was a her oldest kid was born was two thousand five and I did it for a little bit longer. I I really actually thought I'd I was GONNA move international I got out of China and then all of a sudden I needed to Italy and man that that was amazingly call the weight I lost China. Found it's called palace. Oh it was so do Easter Room. There's a you can a little town piss car in Kona like a little kind of fishing. Yeah old old towns and They were they were drilling gas. Wells out in the middle of the Adriatic Adriatic and it was. It was a blast. It was kind of a unique time. we I was their ally in. I really wanted to get in favor with the the Italians in So they request being I could rotate in and out at somebody and it worked and So at least a year I got to rotate in and out of there My first trip over there it was it was crazy Boss called me. Hey you gotta get on a plane in two hours. The airports our from where I live in so I get on this plane. Get over in Italy. Landing around got picked me up. Get off get over to about three three and a half hours to the yard. And they're like yeah. You gotta get on on behalf like me and my my bag by bag didn't make it. They got held up at the airport. I need some fourteen so we do a frantic search for fourteen to to to go offshore and then all of a sudden it's like extend down. Well the stand down like lasted for a whole two weeks. So they put me up in basically the South Padre of Of Italy early so the locals goes terrible. It's beach town. Youthful beach down in all these restaurants and for two weeks I basically got an Italian vacation in the middle a eastern successor as best thing about offshore. Like I love when jobs get delayed. But I'm already in New Orleans waiting for a helicopter. Ships got it Bourbon Street for a couple nights hurricanes coming back. That's just wrong so little time. Get a natural disaster possessively always. Yeah I imagine a I mean it's kind of a known thing in the United States like we never drill for oil and pretty places. This is right and her places. So it's it's it's not very many entertaining places to go to but I mean Shit you go to Italy. I mean that's all the experience that's right. Yeah that's a trying to tie the story together here because it's it's funny start out in West Texas You go off shore. You continue living living in Snyder which it just kind of blows my mind to be honest because it working offshore and you're not dependent on living in West Texas. It's like why would you. How would you live in Snyder at of all places theorize I know so It's a that's a good. That's a really fair question. I think it was always like family. We get real close. Yeah that makes sense. I figure you know his family. That kept you guys. Is there so you go work international sunlight. You had your oldest kid Sometime during that point is that what kind of brought you did that bring you back. I'm sure I mean kids change. It is sucks being gone for two weeks or a month at a time offshore. When you have kids so is that is that kind of wood? Transitions you to come. I mean trying to bridge the gap between International Talent Beckham. To where you're at now. Yeah so that's exactly what happened my daughter. I think she just started walking. Walking in a Carameli- gave her the keys into standing at the bottom of the escalator. Coming out of the Midland airport. Yeah I'm like that's it. That was that was it. I can't do it anymore. That is that is it so Getting back home. You know things still weren't like that active. I think we're kind of off seven or so something like that. Yeah hidden downturn. We had gas but yeah it was that was about it. But I got an engineer tech position at Kendra Morgan okay. And it was really interesting. I thought well I've got all this field experience. Feel Kinda do they go to operations or something. The I thought man could. I DIDN'T WANNA go to school but cannot become an engineer. Kind of by name you know early by title but got into that and really loved. It had a real good production engineer over me and they made me go through. All these old well falls on the cats field over in a King County or King County out there way out on the eastern show and Learned a lot just to learn that production profile and all of this stuff kept at it kept at it and finally this engineer gave me the best advice. I ever took my life us like. Jd You just got too much bullshit. You need a land man. So what. What is that? He told me that's what they're called. Still you know ready local in in. I guess it was just so so kind of ignorant to the whole big picture picture and I the PPC over Midland. You know they had a lot of classes oxy Smith. He was really good guy 'cause but took off work at and you paid and He would give me a discount. He's like yeah. You WANNA learn so to call the land classes. He got caught in the bottom of the Midland County Library. And that's all just started reading all these old books that were turned like farm out books from the fifties. Yeah he's a checkerboard farm out or far manner. Just kinda learn how deal went and got ETA job with shy interest manner Shaw. He's A. He's a neat guy Kind of He's definitely you know the old guard. He's been doing it for a long time and he he ran his guys really tough he had. He had a good knack for quality but he gave me a shot. Just kind of going in there we were talking and he. I just noticed the at a solemn on his on his his book on his Bible Open I think it was like nineteen one of my favorites. It may not. That's my favorite song and So we get to talk in that. Hit it off. It wasn't that I did all this. And he gave me a job in the courthouse and I nearly got missile fired. A couple of times like running out in it was the wrestler heels area of Culbertson and just missing a couple little details but did eventually pick it up. did really good on the on the courthouse out of the running until I had a two week stint sent a landman. Did she do. Yeah so is 'cause when I worked on the rigs on land us four weeks on two weeks off and so I come. I'm from a family of Landman and always wanted to get off the rigs and my dad and uncle like whole bunch. Come do some contract work for us. You know we'll pay you two hundred dollars a day or whatever so okay cool. So they're Middle County courthouse. You know in the basement going going through records on entitle and I'm like twenty time and I'm like screw this and I'll go back to the rigs like that's my type it's it's you got to get like. I think I was at that point in life. You know when you have kids you you chill out. So I was calm definitely he has still still roughing out at that point so being in the courthouse run entitled wasn't is in Wasn't my scope. I'm a little pissed though. I was at one seventy five a day. How'd you get two hundred? I guess I I don't know which said that was just good negotiating on my part but I was just what I was offered. You just take any in what price was fifty and I probably would have taken it so So you obviously you started getting a lot of experience experience in land and then. When did you decide like when did you decide that you wanted to go off and do your own thing? What kind of what was the genesis of Well I always wanted to do deal. So you're in the courthouse in these deals you read about these deals. Whatever capacity so yeah you just get the and the? This is where I want to go so I tried things like optioned up the graph ranch for zero dollars and you know three months can give me a jump. Shot for seventy seventy five bucks and try to see if I could take that to somebody and flip it or things like that we had. I don't know if you sections slacker county at that. We just talked people into they want the least bonus and still wasn't too busy at the time but Kept doing that in a title attorney and Midland. Really good guy he he would follow behind me to do the drilling opinions and whatnot and I guess he thought I did get enough. Worke made a recommendation to one of his other clients. This little group of Midland store. Only guess so they were looking for wolfberry locations out in the Midland Basin. And you know This Guy Mentor my Jim cauthen. Good guy you're kind of stereotypical typical like West Texas. Oilman right. You had a saying forever. He's a great guy In a in a in a couple of other guys that grew to gary lamb mineral bar from years and years they They gave me a shot. They interviewed me and said Hey just go out there and so kind of open book to look for things over midland map and sure enough found like a couple of attracts got well under sub market. So this is kind of my first shot into leasing. I I was really good at it like I didn't realize I was but we'd get in there and really kind of talk about anything but the lease because they're already wanting to do it and we just we get the deal done so did a royalty rate wouldn't have to pay too much for the bonus money and then I was I knew all the clauses well enough to to keep them. I'm in there and so and these guys told me. Hey if you get if you get it below this you get an override. Well let's just what added to Get at those going and and Gary Lamb. He was working over In the Delaware Basin and hit a lot of mineral interests so just scattered throughout the Permian. So He'd get these offers offers and then he talked one of the groups into saying. Hey let me go out there and lease for you and we'll split the difference on what I can save you so we kind of went out there with that and they put a few million in there ear and they said hey go lease in the permian. So I'd find some stuff north of Paco's or loving yes. Five hundred thousand Acre too expensive too expensive so moved a little further south south. You know kind of in and around. It's got a few ranches here. Two Hundred Fifteen. That's too much. So we basically went into the Alpine high proper. An an put together about forty two thousand acres down there And for a low low price just a few million Petra heart comes in and they're are kind of coming in the Permian Chesapeake right. They just come in in a big way back then buying of everything they they just. We're going to get a foothold. We're GONNA do this so they he came in there just blew it out of the water for like forty two million bucks and say Oh. That's awesome so ahead. A enormous or miss over at over the whole Alpine hide expired. And you know but but we did that. A couple more times and You know what was great about that. What is it was to chiefs and I was Indian and one of the owner? Sun's Kinda came in and was was also there. I was training him. But Man You got to do the whole thing and we made we get to make pitches and stuff like that Just a land manager in jack-of-all-trades and deal so that kind of gets in your blood I mean you just can't get rid of that yet. We did twenty five thousand Acres Northeast Howard County that we sold to some Chinese individual investors. I wanted to get the Permian about fourteen that we did. That and was just really interesting so I got to I. I think I've least up like personally drafted dark skin and a lot of that on about a hundred and fifty thousand acres. Yeah made the land rush on the cline shale and luckily you know I wasn't wasn't in there for the long run. I did hold the bag on a few leases but most part yeah It was just a wild time right that least Russia's yeah for sure so when did you when did you start on core so my My partner right now. destler ends mm I'd set up a manufacturing company and Fourteen so I kind of thought well all these leases are doing anything to buy and I'm a bit of an entrepreneur here so you remember how hard it was to hire anybody or do anything in thirteen or fourteen. Yeah came up with this business. Plan like Labor arbitrage on welding tanks at three hundred ninety five feet in one thousand barrel tank that Anita Weld up inside now and so we Kinda took some off. The shelf seem technology and I had a partner in there who's really great it welding and the processes and I kind of a craftsman type guy on that and We built this this whole company from the ground up just nowhere now welding him up at like forty four four inches a minute. The quality was unheard of. I mean he's all I had to do is get a guy and look at it and you could sell that tank in fourteen. Yeah but then we had one good quarter order and But Thanksgiving Day like it was. It was a dogfight after that was in the business kinda working but I wasn't untrue employee of the managing aging partner so I started a talked to a friend of mine. We we he was on. The board of a foundation started the job for fourteen foundation. We do a lot of clean. Water wells in Uganda. Gonda and we worked together really well just just meshed great. And so he sold executive jets for flight options over in Dallas Fort Worth and he was is a pilot himself so I knew his wife From high school she She was friends with my wife and Snyder okay He moved to midland an and we just started working so he's still sell planes but he just wanted to do minoge all his clients. Were you guys in the in the space and yeah at a natural periodicity so I just kept drive over to get out of the house anyway. We'd look at some stuff to deal and we literally just. I think we put one hundred forty thousand in the business. He he had he had a A legalzoom yovany already and it was called Petra Lima and kind of named after him. He's like how how about we just split this up and use it as they come. Here at work and manages snowballed and and we even we took it on the downturn and we got deals done and founded opportunities and just just really snowballed it. He picked up a really great baking relationship Where we're able to finance a bit of it and Just grow grow grow grow out of out of nothing and I think when we were making their pitch to the private equity group. It's like well put in one forty took that out. Plus some did six million dollars deal had three million dollars worth of property property or prophets are in a in this amount of time and we weren't even full timing coming until the last maybe eight or nine months but things were starting to give more and more expensive so it was really good. Good timing you know mark Bore US yes. He was instrumental in that another. Mutual Friend It's actually kinda crazy. How we how we how we got our first AFO Josh? Best friend in high school in Saint Louis. His little brother was in oil and gas finance him. He sat next to another guy who went to to the Minnesota Private Equity Company. That everybody just knew everybody else. Let some pack this a little bit. Because you've got this private equity fund in Minnesota that's that's committed capital to you. Guys think it's extremely interested in your story because their story is very similar right so you didn't go to college straight out of high school going oilfield most people I mean. Look most people think that you can't do shit if you don't have credentials right. And so I it just super interested in this because to go into a private equity boardrooms. Hey look give us money. We're going to do it and you know they're looking at you like who the hell are. Oh you like bill. Here's who I am. I've done this this this this and this we put in this much money. We've done this many deals. That's that's all they need to hear right and I mean the the the deals they speak for themselves so superstar net and I know a lot of people listening to this will think that because I can't tell you how how many people I talked to extremely smart they have. They have bachelor's degrees but they think that they have to. I'd just had this conversation two days ago with with someone like all you you know. Maybe I'm thinking I need to go back to school for My Mba or a degree in engineering for people to take me seriously. And I was like I just don't believe that's that's the answer. I believe that you can do things that you've done. Jd where you can even build up resume and the results speak for themselves. So I think that's super cool but first how did you guys get in contact with the private equity fund in Minnesota because that's just really random ten that's very strange so pet Cohn our Our CFO set next to another guy and he was the director of their that that put the deal together. So Oh Jeffrey's together Jeffries okay. He just called him up and we didn't honestly at the time. It felt like we were trying really hard but looking back and seeing what capital capital markets are like right now like we did after. Try it all that one was kind of fell in our laps and it was Kinda Kinda interesting to we get just. We're really the entrepreneur. Really Headstrong in our business. So we did it as a JV as well. So we're not a portfolio team of we kinda thought say you're not even you're not even a portfolio company right interesting so they got a right of first refusal on any asset. We bring to them and if they don't take tickets so what's their thesis I mean is this the first oil and Gas Deal that they've done or no. They've got they've got quite a few It just various they don't have a ton of exposure. Yeah a few mineral groups Like a midstream and A non up act but I think I think after that last round we are one of their biggest jams that they funded out. You're so yeah. And we mentioned Jeffries on a lot of people may not be familiar. Jeffries big investment banks. They do a lot of oil and gas gas transaction. So you had someone on the team that had that that investment banking backgrounds. Yeah you know. He's the guy that can sit there and run models all day You had the deal guy right right here you know that that can put together the leasehold and all the all the contracts that are associated with it. So I mean it's it's clear that you guys had a good team mm-hmm behind it so when you went and got capital from this P. E. Group was it. You know a lot of people from what I hear. I've never raised capital for a a big asset like that but I hear the jets have an asset. I the today's climate. You know you can't you can't just go saying hey when hundred million dollars and we'll go find something for y'all L. Situation. Was it like that. You got a commitment I and then went and found assets. Yup GotTA commitment As we were doing the docks we found a nice little. Oh Nana opportunity in Howard County and we actually had a letter agreement to prefund that before we even had the actual extent. Yeah they knew it. It was GONNA be Not One huge deal. But a whole lot of little deals we've transacted on like a hundred and fifty deals in since the found a good deal on a non op if what constitutes a good deal on a non up for you just not on this in the civic deal but I mean on Nana Nana opposite interesting model right You know there's there's just a lot of different variables that go into it and one of the biggest ones is. You don't have control of the asset right and there's not always a clear path to WHO Selling her exiting this at. So you know what in your mind constitutes a good deal for non up so on this one we're renting the leasing strategy. Basically just your purchase price. Yeah can you be well. Below market is the key to somebody else's so we kind of call it trade bait so we're GONNA take this little one sixty and we're gonNA trade and Kanfer something that they don't need and and that was kind of our whole thesis at the beginning is yet these pieces put together these pieces and then start trading and I mean we did two way three way trades like trade these minerals Ever ever hear about the kids that do the stuff on craigslist. The light no light takes something. That's like a twenty five dollar item for something talk on craigslist. That's worth more and they just barter and they see that it's is kind of a challenge and we'll see if they can barter their way into time people talk about doing trades. Actually one of the first ones. I've ever actually talked about you. Hear a lot about transactions but you don't uh-huh trades Trader trader where. It's at for a small group like a set so you that's how you unlock a lot of value right. You take that stranded one sixty that somebody has has is not getting to not gonNA put energy to these big companies swamp. Yeah they're just trying to chase those rigs they can't they can't be too forward-looking on scholar assets like that so I think I think you know capitalism right. We've we've kind of found a place in there but once you get that stacked up to twelve eighty or two huma unit the value payday. So yeah that worked really Really good for a while. We we've got a south up to position that was kind of our first one that we put together. So that's what we're trying to raise capital on right now but Took a non up with some guys like driftwood and they came down there just like blew it out of the park. They they all these great will game of Before it was like is going to be quite a bit more. Exploratory is other results down there from other operators didn't didn't make it look like a great deal but yeah you know Kinda were out there playing on the core of the fringe Walzer eh on those areas like that but find a deal like taken out with Parsley and they drill a well on the east side of their trees ranch. Right it just came to came in great will heck What can we put together here so immediately? Go off set at that and make sure your geology. Still kind of in that fairway or at least you think it's in the fairway. Yeah hard trade those leases but those together and you gonNA. They're blocked put together for for development so just opportunistic. In that way we've done deals feels like mineral deals where we get the minerals in the surface bought the farmhouse because she was just done with West Texas and she wanted out at everything so why we bought a farm so termite infested. Yeah we did make money on it with it was ridiculous to sounds like y'all L.. Strategy is really opportunistic. You know it's it's you started off and minerals Then you get into some some not on working interest and then now you guys are going out and drilling new wells and so is is that is it the strategy evolving or he has going to pretty much. Have the same playbook if it makes sense so I think it's evolving Eh. You know we gotta get across the capital down on on any kind of drilling deal. That's come to to do right now but just go ahead and put those blocks together and really you know. It's it's it's like the Double Eagle model right you kind of grow into into that next segment of what you can do. I remember when we were all out there chasing laces leases John John and cody to lobby data. And get these What they call it? The W. Margarita was extradited to the central and But man they you know they they obviously set that template out there just getting Tons and tons of deal hunting more capital. Yeah I figured host yells capital group too. Because I think that You know it takes a lot on their part art understand. y'All strategy as well and understand hate is opportunistic but there's value to be captured there and I think when you have an operator like you guys match Natura the capital group. That understands that thesis known are John. Donovan has been on our show Donovan Ventures and why I like those guys very opportunistic flexible and they understand that you can make you can make a buck in these niche strategies. So I think that it's a you know. It's a good combination between between both the capital provider and yells obscene. Yeah Yeah No. They've been they've been great I We will probably do deals with those guys for a long time. They've if you hear the horror stories out there now teams that have won in the past him in winning and you get you kind of get a little upside down. Nobody knew that all all this capital is going to pull out of the markets all your SNP energy stocks are less than four percent of the talk of the hedge. Obviously see that. Did you see. See that graphic the other day that the apple one. Yeah Dan Pickering's. I was showing his Dan posted. Did you see it now here. It is right here here man. I wish we had our that is not right. He's rightly it's should not. It's wild so much energy guys you should go check that go to Dan. Pickering search twitter account and then he posted this info graphic in its got the logo of Apple and represents apple's market cap point four trillion. Yeah in and all the all the energy companies one trillion. Yeah so it's got Exxon Mobil contrary oxy fill sixty six hinder Morgan. Like how big apple is to. Its clash the tweet. I did a while back about Ribs evaluation and how they were viable almost every single one of the energy company. No It's absolutely insane so obviously you guys have a good relationship with this group out Minnesota but have you seen because obviously the issue of capital markets has been a big deal. Have you seen the effects of that. Yeah Yeah we've We've seen like you know at right. It's time to return capital. So how are we GONNA do that. On on the earliest the first fund second fund. We're still we're still cranking but later this year. We're probably GONNA run a process on it and see if we can get something done on there. So yeah it's it's It's it is tough. I think every group every not it wasn't as easy as it used to be which sixteen like how I was sixteen easy the price wasn't that great there. Yeah fifteen yeah. I think getting a whole conversation economics but I feel like like if you really look at it. Sixteen who's a downturn but people weren't there balance sheets weren't that distressed point now you get into the point where there's some extremely distressed companies out there. I mean throw a dart and you can hit some small cap. I mean look at Chesapeake 's market cap. It's it's Wild Wild Suhel is I think Max Market Cap was about one hundred twenty years. Six billion. Don't quote me on that with somewhere around there. It was like bigger than Chevron is being even at peak league. It's absolutely insane crazy. What does it lessen let sub two billion now? I don't could be way off but I know it's a No. It's not even a freshman what it used its low. It's surprising. Thank you just going lower so I think you know in the industry right now. Whatever angle you come in from people are are are feeling the effects of it so Jaydee I WANNA before we wrap this up really want to ask you a couple of questions just along your journey you know. We have a lot of people that listened to the podcasts that have that entrepreneurial neural spirit. You know maybe they're engineer at Chevron. Geologists could be a lamb in the courthouse. Is The bit that the number one question I actually I was laughing. I was telling John Someone at this at the party last night. But we have some of the coolest technology come on the show. Some people do an innovative stuff. In our highest performing episodes shows are still are Ian. P guys got this everyone's fascinated. How do you how do you start? EMP Like Jake. And I bought some stripper wells up in Oklahoma People's fucking. How do you do that? And that was just raised. A little bit of money went and did it But you know what. What's your your advice to the people that are looking to jump out? I'm sure you've learned a ton of lessons over the years Do you have anything that really sticks out about what you could have done. Better Etter along the journey or just something. That might be helpful for people that that are looking to take that next it. I don't know I just I knew I always wanted to do this. Offshore offshore fracking and drilling horizontal. This is what I WANNA do. Never ever think it would happen in West Texas but yeah so so you know that was. That was definitely opportunity. The and then Tenacity go after I mean. I got a big chip on my shoulder. Right that degrees still. It still drives me right you got to. You got to go after for that but I think the mentality that really helped me and I mean we we've been married three kids Providing for them and I just had this mentality like I don't work for a day great like after that I deal It was okay. I'm a junior partner like I don't need. I don't need overhead and it wasn't always easy like we've put it together and you'd have to. You'd have to stay in there so I think you gotta you gotTa have your your bills right. We didn't have insurance had two kids without insurance in prepaid. Then they're done that yet and you just like you. Just don't worry about you. Know the things that people worry about. I think that a lot of people get in their way and as far as its entrepreneurs and then just you gotta read a lot of books like the reading yet. A minimum of twenty bucks. And if you're reading fifty books and I'm not talking like Lord of the rings this needs to be heavy business material M. I'm whatever whatever just when you're going to go in you better really know about it. Yeah find some people ask a bunch of questions to yeah thank. Thank you know from hearing your your story. You always knew all along that you wanted to do something right. And it's sounds like you were always on the lookout for opportunity and our late in that I. I mean I'd be out on my rig scrubbing the rig. No one hundred ten degrees out midland Bust my ass. The regional might mental wonder what the economics are voting to wreak. How do I how do I buy a rig this you know? What are we making a day in and day rate you know? I think we're drilling footage at that time so that'd be run. The numbers run upstairs. Make a connection get back downstairs thinking about it again so always always looking for opportunity and always meeting people and always I can't cannot Express Express how important to continue your continuous learning meeting. Gill talking the others. That's what's so great about this show. Is that people get access to someone like you were. They can hear your about your experiences and I hope that it opens up. Someone's is like. Hey we this guy. He didn't go to college. He didn't have the credentials on his resume. He just went out there and pitch. It just made it having money. People will give you many. That's all you need is that I want to make money. And then I think the biggest biggest lie people tell themselves is that they they need to have something before they can do something and then they did that. And they're like oh well now I need an MBA. Now I need this or people are never going to trust me. It's always that self-doubt like feeling like they're not good enough. I think with us. I think we've been a little Sometimes it'd be a little bit overconfident. But we've learned so much from on that and and just never really haven't asked permission from anybody to do anything going out there and just getting it done you know and I think that is That in the continuing any medication. Obviously I guess just known for forty five minutes and I could tell the landman side of things and you know how to talk to people help you tell the story and I think that is probably significantly played in just your networking and stuff. Because you know it's still the people business first and foremost yup you gotta have some good bullshit. Jd if anyone wants defined you men are you on linked in Washington all right J. D. Dot Smith in our core Permian Dot Com our website in your your in Midland in Midland town. Guys ever want to hit them up be sure to reach out to him. Great Guy sure that that there's a lot that can be learned learn from Jd from having continued conversations. And sure if you want to do a deal. He's he's willing to talk so that's always never never seen one didn't want thanks for coming on the show. Yes Sir thank you all right guys. Thanks for listening to this show once again We're we're closing and really fast one hundred thousand dollars. We couldn't didn't do that without you. Guys we couldn't do that without a wonderful guest Who really make this show so if you could just take a second and share with your friends your colleagues leave us a rating review? That really helps hopes the sound. Catch you guys on the next steps the.

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