The Everyday Millionaire Show
The Everyday Millionaire Show
Unveiling the Secrets of America's Oil Landscape with RJ Burr (Full Podcast)
Have you ever wondered what it's like to be at the heart of America's energy powerhouse? RJ Burr, an oil industry sage from Bowling Green, Kentucky, joins us to unveil the tapestry of the oil business, sharing stories woven through generations of his family's legacy. His journey from a seven-year-old's curiosity on a rig to leading his family business to a historic sale to Marathon Oil is a testament to the profound connection between personal history and the energy that powers our nation.
So, join us as RJ Burr pulls back the curtain on an industry that is as misunderstood as it is essential to our daily lives.
Oil is intertwined into everything we do. For somebody to say with a straight face they want to get off of oil. What you want to live in? The Stone Age, the modern world, began the day we started using oil.
Speaker 2:In your ideal world would you be in some sort of hybrid solution where it's some nuclear, some oil, some electric.
Speaker 1:I want whatever's best for everybody. The minute I find a product that does more for me than my truck does, I'll gladly switch to it, but the free market has to make that decision. If they turned us loose and let us create our own energy and let us just go and do what we know how to do, they can't control any of us, because they can't control the oil, because everybody would have it.
Speaker 2:Welcome to the Everyday Millionaire Show with Ryan Greenberg and Nick Kalkas. All right guys. Welcome back to another episode of the Everyday Millionaire Show. We are here with RJ Burr. That's an easy name. Sometimes we get some difficult names to say, so I appreciate you having an easy one. You know, I can blame my parents. So, RJ, where are you coming?
Speaker 1:from. I'm located in Bowling Green.
Speaker 2:Kentucky, home of the Corvette, kentucky. Okay, so I saw on the website, when we're doing a little due diligence, I guess are you guys based out of?
Speaker 1:Louisiana or no, actually it's a, it's a. It's a funny story. Uh, heck, I've. I've lived all over. Born in Beaumont, texas, grew up in Dallas, uh, lake, tahoe, southern California, and here in 1989, I was in my sophomore year in high school there was a well hit in Clinton County, kentucky, out in the middle of nowhere. It was 4,000 feet deep and this well averaged 4,000 barrels a day. It was largest oil well in North America at that point in time, and my dad loaded us up and we came out here chasing it.
Speaker 1:Now, when we got here, bowling Green's, where we set up, and our first five years in Kentucky, we didn't find enough oil to change in your car. It was horrible. You can only run into a wall so many times before you start looking for a door. You know the old saying if you're going to hunt for elephants, you go to Africa. Well, if you're going to hunt for oil and gas, you go to the Gulf Coast. We went back to where we know what we're doing. However, we love Bowling Green, kentucky. We love the little city about 100,000 people in the county. It's a great little area. It's right smack dab in between Louisville, lexington and Nashville, and so we weren't going anywhere, and so our operations are down on the Gulf Coast, but our home base is here in.
Speaker 3:Bollinger, can you give us a little background of how your family got into the oil industry?
Speaker 1:It's all I've ever known. My grandpa was in oil, my uncles were in oil, my dad's in oil, my brother's in oil this is all we do Now. How we got into it, I'm really not sure. My grandpa, all those years ago, he was a company man and got pictures of him where out in the field. You know it's, it's, it's kind of kind of funny. Now, me personally, my dad had me on my first rig when I was seven and I was hooked. You know some guys, some guys spend decades looking for their purpose. You know well, I knew mine at seven, graduated high school, made my first sale three months later and haven't looked back. It's really just. I never had to search when I saw that army of pump jacks. You know the horse that pumps up and down. When I saw the army of those over the horizon when I was seven, I knew what I wanted to do and I haven't strayed from my course.
Speaker 2:So I imagine there's all sorts of different jobs in oil. You know what I picture from somebody up north not having experiences like the. You know the greasy guys with you know big muscles that are out in the field working hard with their hands. Is that what you do? Or is that where you started and now you're doing? You know more executive type stuff?
Speaker 1:or Well, what we did back when I got in the business my dad at that point in time, wherever he had in the business and, uh, while he was very successful, we quickly realized that for an oil and gas company to to work efficiently and for them to maximize their positions, it was really too big for one person to do it all. And so we split the business up into two sides. The first side is the fundraising and the management side. The second side is the field and the geological side. And the reason we did that on the fundraising side if you cannot raise funds yourself to do your projects, you're always at the mercy of somebody who can. And so that when I got old enough to get in business, that's where I went. My first day at the office, my dad sat me down at the desk, put a phone book in front of me, handed me a script and a script and a phone said have fun. And it was time to smile and die. Now, my brother's first day in the business, he went straight to the field and that's the side of business that he took over. And our first 20 years in the business, that's what we did. We basically spent our time sharpening our tools in that side of the business.
Speaker 1:Now, our first life we have come to call it our first life in oil ended here about 13, 14 years ago, when Marathon Oil came in and bought my family's company, entered into early retirement. At that point in time I thought I was going to play on the PGA Tour Mid-30s. It took me about a month to realize that that wasn't going to happen. It took me another couple of years to finally go stir crazy and we cranked up. Oh, here we go, it'll be eight years ago in July. We cranked back up and the difference between the first life and second life is really just experience. First life it was shake and bake. We were going. I mean, we were building something. This time we really don't have to do it, I don't have to drill another well, and my family be good for the rest of our lives and so we could take our time, be a little more methodical about what we were doing.
Speaker 1:But what we saw was something that we'd never seen, in the sense that we call it the converging factors. There were six things running concurrently that we've never seen before and it created an acquisition opportunity Honestly, like I've never seen in 30 years. Because what most people don't realize is who the real American oil industry is. You know, if you, if you ask the average Joe out there, just say, hey, name me an American oil company, they're going to go to Exxon, they're going to go to one of the majors, when the fact of the matter is, 83% of your oil, 90% of your gas produced and more than 90% of the wells drilled domestically are drilled by roughly 9,000 independent companies that average 12 employees or less. That's the American oil industry.
Speaker 1:And so when that price crashed here about four years ago, on April 20th 2020, those are the companies that took the brunt of that hit. And what it did is it cleared the deck like I've never seen before. All of a sudden, everybody else was really kind of pulling in their sales to ride out the storm. Well, we kind of saw this coming. Now, we didn't anticipate it to crash. When it did, we thought it'd take a little longer to crash. However, when it crashed, we were ready. We opened our sales up and started making acquisitions, and from that point until now, we've secured what we believe is about 100 million barrels in reserves, and now all we're doing is developing. We put in eight years, we placed 32 of the 35 partnership wells we've drilled into production. And so you know, we're not trying to learn how to do it and we just oh, we saw an opportunity.
Speaker 1:You know, when you look at American history and you look at all of the crashes, in every case when there's a crash there's one or a group of people that come out of the other side looking like geniuses. And when you string their stories together, there's really only two common characteristics they share. The first is when the crash happened, they were liquid, they had cash in hand and they could make a move. Crash happened they were liquid, they had cash in hand and they could make a move. The second one is when the opportunity presented itself, they had, uh, oh, what my dad calls intestinal fortitude. They had the courage to push their chips in the middle of the tape and make that move. And so that's really that. That's what we patterned ourselves. After. We looked at the opportunity, we saw the acquisitions and uh, oh, if you're going to do something, do it full speed. Why go half-ass at it?
Speaker 3:So correct me if I'm wrong. From what I hear, you guys bought other smaller companies during that time where other companies were maybe going out of business.
Speaker 1:Yes and no. Typically, what we would do is we would go, and we didn't want to. You know, heck, we're not a vulture. We didn't want to go and put anybody out of business because some of these people, you know, some of these companies, are good companies. They just got caught in a bad position. And so you know, say company A owns, oh, a million barrels in reserve.
Speaker 1:Well, what we would do is we would come by their reserves from that company and then we gave them the opportunity over the next. If they got, if they basically paid us back plus interest within 12 months, they got 75% of their holdings back. If they paid us out within two years with it, we had certain conditions that we had set up with each company that if they could turn it around, they can have their production back. I mean, we're not, we're not trying to take it from. However, most of them could, most of them when that crash happened. It gutted them and so we ended up with a. Well, when you, when you hear them talk about this strategic petroleum reserve, that's basically our salt. We own the roughly 3000 miles or 3000 acres of land surrounding and all the mineral rights.
Speaker 3:So when you say reserve, is that oil that's still on the ground, or is that yes, okay.
Speaker 2:And how do you quantify?
Speaker 3:that.
Speaker 2:Like that's a question, like that was my next question, what he asked. But how do you count that if it's still in the ground and hasn't been pumped? Like you said, 100 million gallons or whatever how do you quantify that?
Speaker 1:Well, basically what we do, and maybe we're a little different than other companies. I'm not sure we're a little different than other companies, I'm not sure. I just know. I know what we do. We love salt domes and the reason we love and salt dome is basically exactly like it sounds. It's a big body of salt that pushes up towards the surface, hits a cap, rock, mushrooms and stuck in place, well, there's, traditionally there's a lot of oil around those salt domes. And the reason we love salt domes is, first, it was the back in the Wild West days of oil. It was the first geological formation that your older geologists could identify the spindle top. A lot of your old big wells were salt domes. The reason we love that is because a lot of them were developed by those companies. Think about it, it was 100 years ago.
Speaker 1:Those older companies, for lack of a better term. They're essentially spoiled kids and a spoiled kid's favorite toy is their next toy. So they'd go out, they'd hit a big well. Over the next couple of years they'd drill a handful of wells around it, produce all this oil, but then, all of a sudden, they'd hit a well a couple of miles away. Well, heck, we produced all this oil. They'd just all this oil. They just pick up and move over. Well, how much oil did they leave behind? And so that's what we do. I'd love to say it's more complicated than this. We go through and we look at these proven areas and then we just get what they left behind. Now, how do we quantify that the oil's there? Well, you take the chalk talk.
Speaker 1:So when you drill a well, the first thing you do when you're done drilling it is you run a log and it's a little reader. You send it down the hole. It tells you what you have, for simplicity terms, it tells you the permeability, the porosity. It gives you the readings on what you have. Well, if you run a log today, you're essentially doing the same thing as when you ran a log in 1940. You're gathering very similar data, and so if you can read a log today, you can read a log from the 40s. Now, what makes our logs today so much prettier are the computers and the printers we print them with, and so that's really the biggest technology jump when it comes to running logs.
Speaker 1:Well, all these logs that you drill, that's all public data, if you know where to look and you're willing to do the legwork and go to the courthouses and pull all this data out. You can see what all these wells did. And so in this Choctaw field there were several hundred wells that had been drilled over the last 80 years, 90 years. We went in and pulled all that data and when we're looking through these logs, what you see is you'll see multiple stack pay sands and the wells will average anywhere from half a million to a million and a half barrels each. That's just the field profile on your average.
Speaker 1:Well, so we start looking at these logs and all of a sudden we see a log has beautiful pay sands, looks just like the rest. There should be half a million to a million barrels of oil in it. Well then, when you look at the production records, you see 50,000 barrels. You go, hmm, I wonder why. And so you keep on going, keep looking through the logs. All of a sudden, you find another one, and then you find another one, and then you find another one. All of a sudden you have several dozen logs where you have beautiful logs. There should be a lot of oil here, but very little production.
Speaker 1:Well, once you go through and do the research, what you find out is these guys really had two problems One sand. Two, they were gluttonous. Think one sand two, they were gluttonous. Think of it this way If you had a big cup of crushed ice and Coke and you wanted to drink that Coke and not get any ice in your mouth, you'd have to block it with your lip. You'd have to block it with your teeth, you'd have to slowly drink that Coke where you didn't get the ice in your mouth. Well, that's how you have to produce these wells. You can't just go in and turn it wide open. That'd be like opening your mouth and just pouring the whole coke in. Well, that's how these guys produce the well, whether they were in competition with other oil companies in the field, for whatever reason, they just turned it wide open.
Speaker 1:Well, yeah, you're going to get some production right off the bat and it's going to be solid production. However, there's going to be sand coming with it, and when they keep on sucking on it, keep on pulling it hard, they turn a beautiful prospect. All of a sudden, now it's a 5,000 foot column of cement and it's over and they walk away. So essentially, what we have is we have several dozen wells that have drilled through the pay sands, we see that it's there. If it was there in 1942, it should still be there. All we do is move over and drill another one and we develop what they left behind. And so that's how we quantify when we say there could be 100 million barrels out there. That's us looking at all of these prospects and looking at all the little fault blocks around this salt dome that we want to develop. Now we think it's going to cost. Go ahead.
Speaker 3:I was going to ask who owns the land, and is it the company like your company, or is it at least? And then no, you're right.
Speaker 1:It's at least. Yeah, you have there, I think it was, 23 different acquisitions, 23 different landowners. We had to negotiate with the secure these rights, and so you know that's just that they and they get their piece right off the top, as they should at their land.
Speaker 2:So once they're, once you're done with their, you know, with producing off their land, do you? Is that land viable to be developed on after, or is it just done? That's what it is, forever, it's the oil fields.
Speaker 1:No, oh yeah. No, you could come out. I can build a subdivision now in this area where we're kind of in the swamp, so you wouldn't really want to develop that land unless you wanted to build a swamp house. But no, once they're done producing now, it'll be years.
Speaker 1:Heck, we've had some wells out here that will probably produce for the next four years, and what we do is we think it's going to cost us anywhere from $200 to $300 billion to develop the entire field. If we're right, we'll turn that $200 to $300 million into $7 to $8 billion. Well, if we're wrong, five times over, we still turn $300 million to $350 million, which is not all bad. And so that's essentially what we do. We go through and we fund our partnerships through our partners and, oh, to date we've drilled 11 partnership partnership wells in the field and we placed 10 of them into production. The partners I'd say the last seven partnerships we've had will average oh, if our projections hold true bottom side, about three to one on their money. Top side, about eight, nine to one on their money. I mean, we're sitting on it in like a.
Speaker 2:In real estate, we call it like a syndication right, where we're buying a big apartment building and we put all of our cash together. Is that kind of what? The same strategy is there.
Speaker 1:Yeah, we run partnerships. We run 506Cs and basically it'll be two, three, four, five wells, just depends on the package we put together. But partners and one of the reasons people love oil and gas is the tax benefits. They're second to none. You're looking right off the top, uncle Sam's going to pay for roughly a 30-year investment. I'm not a CPA, don't set me in stone. I can just give you a typical rule of thumb. But you put $100,000 in a deal, you're going to get roughly a $35,000 write-off right off the top and that's above line deduction At the end of the year. If you uncle Sam 150,000 in taxes, you know I'm 115,000 in taxes and so that that's a. It's a tremendous benefit. Now, it's not the reason to do it. If you're, if you're doing it just for the tax benefits, give your money to the boy Scouts. You know we're doing it to make money. However, for me not to acknowledge that benefit, well, that'd be kind of stupid of me. It is. It is a tremendous benefit.
Speaker 2:Now. So when you're when, uh, when you guys got bought out by the other company, did they I imagine they were a big, you know kind of a conglomerate company? Did they have a non-compete that you couldn't go into this industry? Or in a certain area of this industry or you could just start up shop right next to that.
Speaker 1:Yeah, they did. Well, we'd have had to go on and release the land. We'd had to go on. I mean, they already had the leases and so there really wasn't any competing with them. And basically what it was is we had partnered up with Marathon Oil and we had drilled eight or nine wells that were 6,000 feet deep, with 6,000 foot horizontal legs, and they were tremendous wells. Well, marathon wanted to come in and take those wells down to about 18,000 feet, and when we sat down and started looking at the numbers like that because we're all sitting up in the office I said, dad, hang on, it'd take us 20 years to get our partner's money back to them. They'd kill us. There's no way we can do this. And so we turned Marathon down, and when we turned them down, they godfathered us. They basically came back, just bought the entire company, and so I mean, that was the name of that tune. And now what we're doing here, that is a little different. Our goal is, I learned now you don't want to get political, that's not where you go with any of this, but COVID taught me some serious lessons, and one of the important ones that I learned is that if a country doesn't control its food, its medicine or its energy, somebody else does and you're in trouble.
Speaker 1:Well, right now we don't control any of them. I don't know anything about food, so I can't help in that category. I don't know anything about medicine, so I can't help in that category. I don't know anything about medicine, so I can't help in that category. I do know something about energy and I do know that somebody is going to come out and consolidate all this, all these oil reserves. Somebody's going to come out and do it.
Speaker 2:That's a question that I had written down here. You know, you hear, when you think about oil for us, for me anyway, you know you think about Saudi Arabia and the, you know the United Emirates, and that they have all the oil. Everybody says they have all the oil. That's why they have so much money. Is it them that has all the oil? Do we have all the oil? We're just bad at promoting that we have it, or how does that? You know? How does that work? Because we all, you know, I think of the Middle East, of having all the oil, and is it cheaper to drill it there than it is here? Like, why don't you hear about all these companies that you're talking about 9000 companies or whatever it is that's drilling here locally?
Speaker 1:You know that I was. I was at CPAC this year and I was talking with some fellows backstage and we were talking about this and I you don't want to get philosophical. However, when you look at our education system, one of the greatest untold stories, in my opinion, is the story of oil. I mean oil, the simple product of oil, has lifted more people out of poverty than any product used in the history of man. The modern world began the day we started using oil, and so when you look at a product that has done so much for humanity in general and then you realize that that product has been under assault for over 60 years now. I love movies and one of my favorites is the Usual Suspects, and one of my favorite quotes from that is the greatest trick the devil ever pulled was convincing the world he didn't exist. Well, when I think of that quote, I kind of morph it a little bit for the modern environmentalist the greatest trick environmentalist ever pulled was convincing the world that oil was bad. And that's what we're facing, because you just don't get the true, true story.
Speaker 1:Prime example you look at all the carbon emissions, let's say. You jump in and you want to believe all the global warming and everything. Well, when you look at the reduction in emissions, do you know where two-thirds of it has come from? The oil industry learning how to burn oil cleaner. It hasn't come from going out and going to solar. It hasn't come out and going to wind. No, it's learning how to utilize what we have better. Prime example you talked about where's all the oil? Let's set oil aside. The United States is basically the Saudi Arabia of natural gas. So if you were to fall into this whole green notion, so you're telling me, if I want to do what they want me to do in order to save the world, I have to first to destroy it, because that's what we would have to do. When you look at the raw minerals and the raping of earth, like we would have to get the materials to do that, it's not feasible.
Speaker 2:Yeah, so that was one thing in my head too, because you know, you hear about everybody saying you know oil is bad, the companies are bad, they're doing bad for the environment, and then you see what they have to do to make the batteries for the electric cars, lithium and all that stuff. And it's crazy and I recently saw, you know video on like a Joe Rogan podcast of just like thousands of basically slaves digging lithium and crazy terrible conditions just to go through this electric push.
Speaker 1:Well, now here's one that'll cook your noodle. So you think of what we would have. Just kind of wrap your head around building the infrastructure nationwide, everything we would have to do to make that conversion. Now we already have natural gas. Most homes already have natural gas lines run to them. Most of the infrastructure of natural gas is already there. You could put converters on every car and they could run on natural gas. You could pipe it straight to your garage. You no longer have to go to the convenience store. Or we could run everything on nuclear. You mean to tell me we can run the most advanced subs on the planet on nuclear power, yet we can't do it here. No, so when you have two solutions that are feasible, that accomplish the goals they want to accomplish and would cause as little impact on us as possible, yet they're being completely dismissed to do something that's not feasible and doesn't make any sense.
Speaker 1:Look, here's the simple solution One plus one will always equal two.
Speaker 2:In your ideal world, right? So I have a new F-150 hybrid, right. I was between a non-hybrid and the hybrid. The electric version to me is a waste of time. You get 150 miles. Whatever it's stupid my truck. I get 700 miles. To a tank. It's a great machine. The electric support engine makes it really fast. In your ideal world, would you be in some sort of hybrid solution where it's some nuclear, some oil, some electric, or are you like oil or nothing, or nuclear or nothing, or I want whatever's best for everybody, whatever's the cheapest, whatever, yeah.
Speaker 1:I'm trying to figure out what's true and what's not.
Speaker 2:That's what that's the problem.
Speaker 1:And you know, and I'll let you prime example I'm not opposed to electric vehicles. Here's what I'm opposed to you making me use one. The minute I find a product that does more for me than my truck does, I'll gladly switch to it, but the free market has to make that decision. Anytime you force people to go down a path they don't want to go down, they're going to resent it, even if it is good for them. Because you're not going to tell me what to do At least I mean, that's the typical American spirit is I'm going to find out for myself how many of us have to touch that stove at least one time on our own. You know we're a show me, and so when you look at where the future plays out, just government, get out of the way. Just get out of the way and let the brainiacs, let the wizards of smart, let the ingenuity of the people take over, because the quickest way, everybody wants to be rich, everybody in their life. Yes, there might be a small percentage that don't, but I'll tell you what when you take, I've seen a whole lot more happy, rich people than I had poor people. And if you think you have problems in life, take all your money, money away Now. You just multiplied your problems by 10. In life, take all your money away Now. You just multiplied your problems by 10. So, for the most part, if you are a sane, reasonable thinking person, you want to be rich.
Speaker 1:Well, the quickest way to get rich is to find a way to make other people's lives easier and then sell it. Well, that's what the free market does. It gives you the incentive to do it. It gives you the incentive to invent the remote control. It gives you the incentive to invent wireless headsets. You know how many years I paced around my office with a 50-foot long phone cord, because that's how I work best on my feet. And so, the minute this little button right here, that thing right there, changed my world. Minute, this little button right here, that thing right there, changed my world. Little Apple earbuds, the fact that I can now set my phone down and go. Well, that didn't just come by accident. Some wizard of smart said hmm, let's do this, this and this.
Speaker 1:Well, when it comes to solving our energy problems, one, these are all self-inflicted. Let's be real clear about this. Everything we're facing today is 100% self-inflicted. These are people that have made decisions that have no idea or don't care about the ramifications of their decisions. That's what we're facing. There is no reason anybody in this country should be hungry without energy, because we have it all. We have the ability to produce it all, and so it's really people just coming to the conclusion. It doesn't have to be like this. This doesn't have to happen. All you have to do is watch Europe. Watch Europe. Two years later, it's coming here. Go ask the Germans Would they rather have their mean old vlad's natural gas or their force that they had to clear cut for for firewood?
Speaker 2:right. So a question I asked nick if he remembers this show back in the day, the beverly hillbillies I'm sure I'm assuming you remember the show right. So is that? Um, is that like a real thing that you guys find down there in the Gulf coast, where people are like living on areas that do hold gas that they may not know about and they're living on a, you know, on a a huge pot of wealth that they didn't even know?
Speaker 1:Yeah, but it's a little harder than shooting a gun into the ground to find it. Okay, you know it's a little deeper than that. Yeah, and so you know that now. But yeah, you have. Now, in areas like this, when you're in a productive area, traditionally the landowners are pretty intelligent. They're there because they know that's money, I mean people. People know what they own, and so you can uh, you can think they're the Beverly hillbillies, at your own risk. They're probably the Beverly hillbillies, but as sharp as any razor in your door, you know. So there, there's a reason they own that land, and so you just kind of it's.
Speaker 1:Every situation is different, you know, and it's really just a matter of being in the right place at the right time, having the right people on your team and making sound, fundamental decisions. You know prime example Well, every decision we make has one foundation to it. Is it good for the partners? Because without our investing partners, we don't have a business, and so every decision we make has to be on the foundation. Is it good for them? Doesn't matter how good it is for us. If it's not good for the partners, we're not doing it, and so we try to make sure that our partners are educated on what we're doing. We can't turn them all into experts. I've been doing this 30 years and there's still things I don't know However well. Prime example panxus slash learn. We put that page together specifically for individuals who've never looked at oil and gas, never thought about investing in oil and gas. You have oil and gas 101, just gives you the basic foundation.
Speaker 1:Most people don't realize that there's more than 6,000 products made from one barrel of oil. You could randomly I would bet everything I own, you could randomly go to any city in America and just randomly grab somebody and chances are they'd have at least two products of oil on them and not even know it. From plastics to cosmetics, to pharmaceuticals, to the asphalt you're driving your car on. Oil is intertwined into everything we do, from petrochemicals to everything. And so for somebody to say with a straight face they want to get off of oil, what you want? To live in the Stone Age, because that's what would happen Now. When it comes to demand, well, when you're investing your money, what do you want to do? You want to buy it at a low price and sell it at a high price. Well, look at oil. Right now, we're down about 70% on upstream investment, investing money worldwide to find more oil to replace what we've already produced. In 2013, we invested right at a trillion dollars worldwide. Now we're going to be lucky to hit $300-400 billion this year.
Speaker 2:Well, if we're not producing that's the country.
Speaker 1:That's worldwide. That's worldwide Just to find more oil. So you're like hmm, so we're not producing as much, not looking to produce as much as we used to? Well, what does demand look like Right now? We're consuming roughly 10 to 15 million barrels a day more than we produce Now. On top of that, 83% of the world's population is just now beginning to use oil and realize the advantages and benefits oil brings to their life. What do you think they're going to do? You think they're going to get into the modern world and say oh gee, we're killing the world. Greta said so we need to go back to living in the Stone Age. Are they going to tell Greta to shove it and keep using more oil? They're going to keep using more oil.
Speaker 1:So the demand is not going anywhere and there's nothing to replace it.
Speaker 3:What's the basic cost of starting an oil company? And I know you just said that you guys were drilled down like 6,000 and the other company wanted to go 18,000. What's that cost difference to get down that extra 12,000 feet?
Speaker 1:Several million. Several million, you're looking your, your average was going to cost anywhere from, say, a million to 25 million, 30. I mean, there's it's. It's ridiculous, what's on now? Typically we stay anywhere from 5,000 to 10,000 feet. I've drilled plenty of wells deeper than 10,000. However, uh, it's not, it's not my bailiwick. I, I like the, I like shallower production and uh, well, we like salt dome, because it is difficult. Drilling that keeps a lot of the competition away. Most people don't have the, oh the intestinal fortitude to drill salt dome wells. We do, we like it, we're actually we're very good at it, and so it chases a lot of the competition away.
Speaker 3:How much does an average rig cost to drill?
Speaker 1:It just depends on where you're drilling, what you're drilling. I mean you can drill some shallow spud wells for a couple hundred thousand dollars, or you can drill oh, there's been wells drilled in our field that have cost six, seven million dollars. It just it depends on what kind of negotiation you cut with the drilling company and whether you're going to pay a day rate or a flat turnkey price. It depends on any difficulties you have in the hold you have to bring in and, do you know, do work while you're drilling. Once you're finished drilling, are you able to set everything? Do you get a good bond? Do you have to redo the cement job? I mean, there's so many stages in it where extra costs could get added on as something goes sideways, and it's a typical rule of thumb that in oil and gas it's going to go sideways at some point. Every well is going to have its own little quirks and you just have to. Now, when you get in a field, most of the problems you face are going to be the same problems. You know, if this well does this, chances are this well is probably going to do it too. However, you have a few that are just thrown in. That you know prime example we drilled a well here about a year ago where we were trying to come in from the top of it, and we hit a zone basically called a thief zone, where all of our drilling mud just kind of disappeared out into the zone.
Speaker 1:And unless you have circulation, unless you have your mud, you can't keep drilling because your drill bit will burn up. Well, we couldn't figure out how we couldn't. The zone just kept taking it, and so we, in fact we tried it twice, and it's about 1800 feet where that zone hit us. So what we did is we came out and we had a very similar prospect on the other side of the format, on the other side of the salt dome. So we went and tried a new technique on that other side of the format, on the other side of the salt.
Speaker 1:So we went and tried a new technique on that other side. Instead of coming straight down, we started away from the dome and came to it and then basically we did a backwards S under the ground. Well, it worked like a charm over here. So now we're coming back to where that thief zone is and we're going right around and doing the same thing, and so you can learn now, once again, you're going to have a little different rock from the one side of the field to the other side of the field, but you're going to have very similar. It's going to be similar because it's all the same rock, and so you learn from every well you drill.
Speaker 3:If most companies lease the land and they also sub out the drilling, what do the companies actually own? Just the contracts, essentially.
Speaker 1:What do you say? The companies own? Yeah, your company. Do you say companies own?
Speaker 2:yeah, your company you just mentioned. I guess I'll clear this up a little bit. Like you just mentioned, that you hire the drilling company, right, so that in our world we call that a subcontractor. Right, you subcontract that out and then the land is actually owned by the landowners that you're leasing them from. So what, what is your company's asset? It's? Is it just the contract with those landowners that you put together?
Speaker 1:Yeah, and then we get all the work done. Basically, put it in real estate terms you have a huge investor that owns 50 acres that he's going to own. Well, what you're doing is you're leasing the right from that man, that woman, whoever owns it, to build apartments, just say apartments. So now you hire a contractor, come in and he builds those apartments. You occupy them, you get it all running. Well, you're going to get every bit of revenue from those apartments and you're going to cut him 30% right off the top because he owns it. That remaining 70% is 100% yours. Now, within that 70%, you're going to have oh, this group, this partnership, paid for the building of these apartments, so they're going to own a certain percentage of that Boom that goes to them every time you get revenue. Well, whatever's left, that's what you keep and that's what we do. We go out, we will fund. You know.
Speaker 1:Prime example last partnership we funded was a two well partnership. One of the wells hit two pay sands, about 112 feet of pay. This well is producing 100 barrels a day right now and it will produce out of that zone for probably the next 15 years. Well, 100 barrels a day is going to generate the partner that owns that, 100 barrels a day about 20% on their money annually. The second well in that program ran through nine distinct sand packages, so it basically has nine wells in that one well. You produce these sand packages one at a time. Well, this well had 322 feet of pay and nine different sands. That well will produce probably for the next 40 years.
Speaker 1:We're now in the very first zone, not the best zone, the deepest zone. You start in the deepest and work your way up the best zones. Looking on the logs are three zones above. We'll probably hit those zones 10 years from now. What do you think oil prices will be 10 years from now? Well, right now this well is producing 130 barrels out of the deepest zone. So these partners own two wells that are producing cumulatively about 230 barrels a day. After taxes, that is generating them over 50% in. They should have their money Now. We just placed these wells into production here a couple weeks ago. If these projections stay out, they'll have cash on cash, have their money back in their pockets in less than two years and they'll have the revenue from these wells producing for the next 30, 40 years.
Speaker 2:So how much is an individual investor on average investing into your ventures?
Speaker 1:I'd say $100,000, hundred to 300,000 per.
Speaker 2:Okay so small, so relatively small investments, not nothing crazy?
Speaker 1:Yeah, well, you don't. I mean, it's one that, as we develop these, these, this field we have, we're the single largest investor in any program we do, and so we have the revenue being generated. Right now, we're producing over 600 barrels a day out of this field. Well, we have a good portion of that we own. Well, what we'll end up doing is the field will start paying for the development of the field itself and we'll start utilizing that revenue generated from the field to develop more.
Speaker 1:Now, what we do for our partners because, like I said, without our partners, we're not here we will always have a drilling program for them, because if they need tax benefits, this is their money. Their money allowed us to find this, and so we allow them to participate in any of the wells we drill. We give them a window to get involved, because my dad taught me a long time ago an oil man can get rich when he hits a wildcat. Well, however, you only develop generational wealth when you develop fields, and that's exactly what we're doing. Our brass ring is developing the whole field. We drill two 300 wells out here and produce 100 million barrels. All of a sudden, my kids, kids, kids aren't worrying where they're going to eat and are you involved in the daily operations?
Speaker 2:Like, do you have to fly down there to the Gulf Coast a lot to keep things running or do you kind of remotely no that that that is my brother.
Speaker 1:My brother is the, he is the road warrior. He when, when we got in business, I took over the management fundraising side and he took over the uh, the field operations, the geological side, and so he's down. Uh, he lives here in Bollinger. Heck, I'd say. He's down in Baton Rouge probably three out every five weeks. Okay, and so, no, we're hands-on. We have our partners come out there all the time. We love her for our partners. Like I said, this is their money. We're 24-7. If you want us come on out there, I give my guys really only two guarantees One, if you ask me a question that I don't know the answer to, I'll find it, and two, if you call me and by chance I don't answer, I will call you before I go to bed that night. Other than that, we keep our head down, our tail up and we keep plowing, because if you're in the right spot, corn will start growing so when you guys extract all that oil from the ground, does the ground start to shift at all?
Speaker 1:no, no, you're talking, we're producing from thousands of feet down yeah, it's like the whole idea is about that big. I mean, it's not a, it's not a big you're. You're talking about that big.
Speaker 2:So all the stuff that you hear, you know that you guys, the oil industry, is ruining the ecosystem, and all this stuff is is a lot of propaganda.
Speaker 1:I mean I'm sure some there have been accidents. I mean, no, industry is perfect. However, in the grand scheme of things, yeah, it's all a bunch of BS. I mean, I give people that and you mentioned it earlier, but don't take my word for it. Open up a search engine and type in oil field and then hit images. And then open up another window where you can compare them and type in lithium mine and hit images.
Speaker 2:You tell me which one's destroying the planet and type in lithium mine and hit images, you tell me which one's destroying the planet. I truly believe that the lithium thing is out of control and it's really bad for a lot of poor countries that were unfortunately, you know, raping for all their minerals and stuff.
Speaker 1:But it's not necessary, it's hard to.
Speaker 2:It's hard to, as somebody that's not in that industry. It's hard to know what's right and what's wrong, because you see all this stuff on the TV and obviously the the media is swaying in one direction and they, they want you to see a certain, you know, a certain perspective. I guess I'll say so. It's interesting to hear the other side of it, you know, coming from somebody in that, in that industry, do you think that? I would just want quite one more question.
Speaker 3:Do you think that I have one?
Speaker 2:more question Go ahead. Do you think that the propaganda, the push for the electric vehicles, for all this stuff is helping or hurting your industry?
Speaker 1:I'll answer it this way. I was at CPAC last year and this kid from PBS comes up to me. He says you're the old man, aren't you? Yeah, he said well, who do you want to win in 24? I said, well, it depends on what me you ask. He said well, who do you want to win in 24? I said, well, it depends on what me you ask. He said huh.
Speaker 1:I said, if you ask the everyday me, the guy that has to pay the same prices as you, I want Trump to win. He goes. Really why? I said because he understands something. I guess it's because he's not a politician. He understands something that all the rest of them seem to miss. He knows that oil prices have to be at a certain point that it makes it worth the oil and gas company's time and risk to go and get it. However, that price can't be so high that it kills the consumer. For some reason, he's the only one who understood that and we found a sweet spot between 60 and 80. I said so. If you ask the everyday me, that's why I want him to win. Now, if you ask the oil and gas guy in me, I want Biden to win. He goes. Why? I said simple Keep ESG scoring it, Keep scaring people out of the industry, keep trying to chase everybody away from oil.
Speaker 1:And you know what I'm going to do while he's doing it, I'm going to keep buying and I'm going to keep acquiring. And I'm going to do, while he's doing it, I'm going to keep buying and I'm going to keep acquiring and I'm going to keep locking down those reserves, because the road we're running down is an illusionary road and eventually the bubble is going to burst. I mean, you look at any city in America. If those cities had the amount of electric vehicles they wanted, it would crash every power grid in the country. The math does not work and you can't make it work. I mean, like I was saying a minute ago, one plus one will always equal two. It'll never be 1.9, never 2.1. It'll be two. Well, their math is not equaling two and they're telling us it is. And so while you do that and while you run everybody away, I'm going to keep buying, because when that bubble bursts and everybody comes running back to oil, the ones who own are going to be sitting in a position of strength, aren't they?
Speaker 1:He goes well, yeah, and so that's kind of how I look at it. I mean, don't get me wrong, I hate it. Like me, we're all in the oil business. Whether you want to be or not, you're in the oil business. From plastic I mean everything we do.
Speaker 1:You think the inflation? Do you think that's strictly because of Monarch? No, think about the transportation cost of getting everything to where it goes. Oil is a huge part of that also, and so I it. You know. You look at it, you're like none of this makes sense.
Speaker 1:Well, I once again I hate going back to CPAC, but I had a conversation with Nigel Farage and I'm sitting backstage with him and I made the same statement. I said man, just, none of this makes sense. And he said something profound to me and I don't know why I didn't think about it before. He looks at me and he says look, you cannot manage abundance, but you can control scarcity. Now think about that. Control scarcity. Now think about that. If they turned us loose and let us create our own energy and let us just go and do what we know how to do, they can't control any of us because they can't control the oil, because everybody would have it.
Speaker 1:However, if you can make it a scarce product, you can choose who gets it, can't you? I don't want Ryan and Nick to leave their house. Guess what? You're an electric car. I just flipped the switch. All of a sudden. You're stuck as long as I had my combustion engine and a tank of gas. You can't tell me where I can and can't go, and so you hate to say that it's diabolical like that.
Speaker 1:However, when you look at everything that's going on, just step back and look at everything that's going on and try to make it all make sense. None of it does, unless you put on one pair of glasses, and that glasses says you look at it from the standpoint what can I do to destroy America? That's the only route. All of this makes sense, and I hate that. Once again, I hate being. I'm not pessimistic, I mean, I'm truly optimistic. I think things are going to turn, because I think people had to see what we're actually facing. But the fact of the matter is, when you look at all that, if it walks like a duck, quacks like a duck and swims like a duck, how many times has that scenario been and it not been a duck?
Speaker 2:Yeah, you know, and so you know if, if, if, if somebody wants to get in touch with you to be a private investor, are you guys open to other investors or you guys oh?
Speaker 1:absolutely, absolutely. Probably the easiest way is email me, rj Burr at pan X dot U S. I'm an open book. Like I said, we run reg D, five, oh, six C partnerships and that basically requires that every investor being a credit investor, third-party verification. And so you either email me or go to panxus slash learn.
Speaker 1:That's probably the best place I could send you to to get a foundational knowledge of oil and gas, what we use oil and gas for, what we're looking for in prospects, what your tax benefits are. Just kind of give you a full foundation of knowledge. And then, once you sit and talk to us, the number one thing is you have to see the kind of people you want on your team who cares what I tell you I can do for you financially. If you don't see that I'm somebody you should listen to, I'm wasting your time. Now, once you see that I'm somebody you should listen to, then we'll talk about financially what we can do. And uh, oh, we have a lot, of a lot of happy partners and we've made them a lot of money and uh, heck, I don't see changing course anytime soon.
Speaker 3:Did you guys always lend money or not? I'm sorry, did you guys always raise money for the oil industry, or did that just start at a point where you knew you were growing to a point that you needed extra money to expand the business?
Speaker 1:No, we've all. I've always funded my partnerships through, through partnerships, gotcha. Yeah, it's now, don't get me wrong. We have. We have a lot of wells that we drilled on our own. However, no, you pretty much all again. That's really.
Speaker 1:That's where oil has gotten its bad name is, because the art of finding oil and producing it is difficult. It's not an easy industry. I mean, if it was easy, we'd be trillionaires because we're pretty good at it, and so it's one of those that a lot of people can sell. And when you have an industry that is as lucrative as oil is, well, you're going to bring a lot of rats to the business. And so if you're looking at oil, please kick the tires. Make sure you're dealing with who you want to deal with. Make sure you're dealing with people. That and that's not a guarantee we're going to win. If anybody ever calls you and guarantees you something, they're lying to you, especially in oil and gas. What I can guarantee is we're going to be the hardest working people you ever hired, and what it is is what it is. I'm not going to mislead you. If it's good, it's good. If it's bad, it's bad, but I'm going to. You're going to know where we're at every step of the way and if you call me, you know you're going to get me.
Speaker 1:My dad taught me. You know my dad taught me a lot of lessons, but one of credibility. See how long they've had their phone number. I've had this number for 27 years. It's the very first number I got and I'll never lose it. I don't run from anybody. You look up Jay Burr, pull me up on the internet. You're going to see.
Speaker 1:I got fined $5,000 from the NASD when I was the principal of a brokerage firm when two of my young brokers sent an email out to two guys that didn't even buy that they didn't get my approval for first. Now, if that's going to stop you and I from doing business, then we weren't going to do business anyway. And so that's what I said when I say I'm an open book. Dig into it, make sure that we are who we say we are, and then, once you see that we're the kind of people that you'd be proud to break bread with, then let me show what I can do for you financially. We're pretty darn good at it. There's a reason as many partners have invested with us as they have. I mean 32 out of the last 35. Wells, we're doing something right.
Speaker 2:Yeah, that's awesome. Well, jay, I don't want to take up your whole day here. I appreciate your time and insight on this. I learned a lot. I got all these notes about oil and gas now and interested in potentially talk about maybe some future investments, so we'll definitely be in touch.
Speaker 1:Gentlemen, if you ever have any questions or if you ever want to give me a call, I'm here. As they say, have done will travel. I'm here to help you in any way I can.
Speaker 2:Thank you. Yeah, we appreciate it. All right guys, Until next time. Yeah, we appreciate it. All right guys, until next time. Thank you, Jay, and if you're trying to get in touch with one more time, your email, just so people can get in touch if they're looking to invest.
Speaker 1:All right, it's rjburr. At panexus Awesome.
Speaker 2:All right guys, until next time.
