Latest / Financial Survival Network / Triple Digit Oil -- RJ Burr #5902

Transcript

Triple Digit Oil -- RJ Burr #5902 · Financial Survival Network

0:00
When you look at the US production, eighty three percent of your oil,
0:04
ninety percent of your gas, and more than ninety percent of the wells drilled
0:08
are drilled by roughly nine thousand independent companies that average twelve and boys or less.
0:14
That's the American oil industry. And so when looking well, just look
0:18
at your podcast Financial survivor well, how do you survive? During this time?
0:22
You are listening to Kerry Lotz's Financial Survival Network where you get valuable information
0:27
you just can't find anywhere else to thrive in today's trying times. You need
0:32
the Financial Survival Network now more than ever. Go to Financial Survival and Network
0:38
dot com and get your free newsletter and gift. Financial Survival Network now more
0:45
than ever. And welcome. You are listening to watching the Financial Survival Network
0:53
and I'm your host, Kerry Loves Well. Just when you thought it was
0:57
safe to plug in your EV, we're finding more lithium. Isn't it wonderful?
1:04
But oil is not yet dead. RJ. Burr, Senior VP of
1:08
his family company Panics. R J. You've put together more than four hundred
1:14
million dollars worth of the partnerships and that's over sixty deals. You put together.
1:23
You're an expert in this, your family has been in it, You're
1:25
in Louisiana, and hey, somebody told me recently that the age of fracking
1:32
is ending. You believe that? Well, no, no, I mean
1:38
there's there's arguments on all sides, and when people are dealing emotionally, it's
1:44
easy to tap into people's emotions and get him to get him to not like
1:47
the boogie boogie man. And I'm one of those guys. I love movies
1:51
and one of my favorite quotes from a movie was from the Usual Suspects when
1:55
he said the greatest trick the devil ever ould was convincing the world he didn't
1:57
exist. And honestly, I believe I like to mold that to today.
2:04
And the greatest trick environmentalist ever pulled was convincing the world that hold with back
2:08
because there's been more gang civilization wise and society wise rewaring gas than any other
2:16
product. And but what maybe, like a maybe the age of fracking is
2:23
going to go, but we're in being the age of refracking, right yeah,
2:28
Well, I mean, well, we don't even know what's on an
2:31
adic oceans. Do you really think we know how much oils in the ground
2:36
across the globe. They can give estimates, they can guess, but nobody
2:38
really knows how much. How much is in the Gulf of Mexico. It's
2:44
just stuff leaks out all the time, exactly. I mean, does it
2:46
regenerate? Is it really? Is it biotic or is it a biotic?
2:52
Does oil regenerate that gas certainly seems to right. You give it enough time,
2:59
I mean, you go give it up time you have if you have,
3:02
you know, say a formation that was empty and something happens geologically where
3:06
it attaches to another formation, Yes that could refill, but there's always an
3:10
explanation as to why it doesn't. But the main thing you really look at
3:15
when it comes to the oil is well, I had a partner send me,
3:20
send me a picture the other day. We were having a discussion on
3:23
environmental concerns. And you know what an eyesore truly was. And the picture
3:28
he set me. On the one half of it, you have this beautiful
3:30
pristine hill, sun setting in the background, trees, and yes there was
3:35
a pump jack on top of the hill and that was you know, and
3:38
that was one picture. Well, on the other side was a lithium mark,
3:43
and at the bottom of it says, now, who's destroying the environment.
3:46
And what about the windmills? What about those ugly, hideous looking windmills.
3:52
Probably that we're on the other side because down south, especially in Texas,
3:57
got wind all the time. And then what about all the wells that
4:00
are getting killed from erection of off site to the windmill farms. I mean,
4:05
we spent billions of dollars getting these guys off the endangered species list,
4:11
forcing the world not to hunt and basically kill wales, and now we're building
4:18
these windmills that offshore that are killing them all. I mean, you tell
4:24
me kill mother Nature, thence, let's kill mother nature to save mother Nature.
4:29
We got to kill the village to save it, like they said in
4:30
Vietnam. Right, Well, it just it goes back to the complete disingenuous
4:35
nature of the argument to begin with. I mean, when you look at
4:40
it, honestly, we're not talking about killing Mother Earth. We're talking about
4:45
killing the human race. When we're long gone, are still gonna be here.
4:49
She's gonna make it, and she was here long before us, She's
4:51
gonna be here long after us. We're just talking about the composition of what's
4:56
better for humans. And I look at it and say, okay, hey
4:58
they're complaining about CO two, Well what breathe? C O two? But
5:02
the building me is that more plants wouldn't there and or anything you look at
5:06
well you look at the at the data. Aren't you look at the green
5:11
growth, the coral growth. Do you look at the growth over the last
5:14
twenty five years that if you actually go out and get a verified scientifical report
5:19
that shows this growth and you post it on the social media account, they'll
5:23
flag it as false information. Well why would they do that when it's because
5:28
it's all disingenuous there, there's a different agenda to it. It's uh so
5:30
what is the jett though? What are they have to Honestly, you don't
5:34
want to jump down the rabbit hole? But I look at it this way.
5:39
If they turn every car into an electrocute, how do they stop you
5:42
from going a where they flip the electric golf? If you're during they hack
5:47
the uh the AI and it makes you run around in circles all day?
5:53
Right? Yeah, it as long as I got to take a gas,
5:55
I'm mobile. It doesn't matter what you do. I'm still mobile. Unless
5:59
you want to come to break my engine. And so I mean, it's
6:00
it's just it, it's it's distant. And then they don't do the math.
6:03
One plus one will always equal to well math. I don't want to
6:10
say the R word here, but you know what I'm saying. Math,
6:13
Math has a history. Needs that airplanes are too, and everything all our
6:21
technology based on math. You can't get away from math. And yet they
6:27
want to teach it in such a way that nobody, nobody gets it anyway.
6:31
Well, hey, well let's not go down that rabbit hole. Meantime.
6:36
Uh, if we need the oil, all right, we're gonna have
6:41
to do a massive program to drill. Right, it's going to be massive.
6:46
Once we really shortage this, we're gonna right, I mean not no,
6:50
not if we turn't loose. Yeah, that's ever. Everything that happened,
6:55
everything that's happening right now is selfing in what human nature dictates is that
7:00
humans are not going to choose to lower their living standard when that's not a
7:04
choice they have to make. And so yeah, I can force us to
7:08
do all this, but eventually it's going to end because it's not logistically it's
7:13
impossible. It is just not feasible to do to do what they're wanting to
7:16
do. And so when you take when you take the bedrock of all society,
7:23
and people will argue all that, but look, the bedrock of all
7:25
society is energy. If you if your country does not have energy, you're
7:30
a third world country. Go ask the Germans, would they rather have their
7:33
natural gas or they want to keep cutting down their force for firewood. I
7:38
believe they'd rather have their natural gas. Then you look at oil in general,
7:43
you realize fifty percent of the world production is consumed by seventeen percent of
7:47
the world's population. Eighty three percent of the world's population is just now beginning
7:54
to use oil. What do you think that's going to do to demand?
7:58
Now you look at it. In twenty fourteen, we invested worldwide roughly a
8:01
trillion dollars an upstream to about finding more one today that's about sixty percent off
8:07
of what it was. So we're not investing enough to find more oil.
8:11
So we're not producing enough to cover what our demand is. Right now,
8:13
our demands about ten fifteen million barrels a day more than we produce. They
8:18
expect that number to be over thirty million by twenty thirty. So when you
8:22
look at all these dynamics and then you say, okay, surely there's something
8:26
that they have up their sleeve to replace all because a kindergartener can predict where
8:31
this is going to go, where this train wrecks happening. Well, all
8:33
of a sudden, you go, well, is it solar? No?
8:37
To produce the amount of energy the United States consumes annually, it would take
8:41
a solar corban using the most technologically have banned solar panels on the market the
8:46
size of New Jersey, and would require the sun to shine three hundred and
8:50
sixty five days a year twenty four hours a day. It Arizona summertime intensity.
8:56
It's just it's not feasible for it to happen. And so one day
9:01
somebody, some wizard of smart, is going to come up with some invention.
9:03
He's going to come up with the greatest thing since slice bread that will
9:07
replace oil. How does that happen? Yet? And looking at human nature,
9:11
if you had made the most important discovery in the history of band which
9:15
would be the replacement to oil, well, I believe you'd tell somebody about
9:18
it. And I don't hear anybody taller than that you would think, Hey,
9:24
so a hundred years we've been doing us. Remember what we had before
9:26
we had oil. We hadn't energy, you know, and energy is like
9:33
green energy. You know, it came out of the tailpipe of all these
9:37
horses. New York City had six feet of maneuver downtown and you had disease,
9:46
you had outbreaks, not to mention the stench of the place. So
9:52
you know, they were happy to get tailpipe pollution to get rid of all
9:58
the horse pollution in New York City. They want us to go back to
10:01
horses or jay, Well that they can. They can have horses all they
10:05
wanted. I love horses. I got horses and love writing. When I
10:07
choose to ride them, I want, you know, so I don't slick
10:11
at them my horse and ride into the offices that take me all day.
10:16
Yeah. Well, it's just one of those that I look at times like
10:20
we're in and when you look back through US history, at every crisis point,
10:28
at every moment there was an economic crisis, there have been a group
10:31
of people that came out of the other side looking like geniuses. And when
10:33
you string their stories together, there's really only two common characteristics that they shared.
10:39
The first is that when the crisis happened, they had cash on hand.
10:43
They were liquid, so they could do something. Well, probably more
10:46
important or as important as being liquid, when their opportunity presented itself, they
10:52
had what my dad calls intestinal fortitude. They had the intestinal portitude to push
10:56
the chips in the middle of the table. Yeah, I can't go and
10:58
so well, we saw happening, and you know what, we've been doing
11:01
this a long time. This is not this is not. Our first rodeo
11:05
was on. I was in the first field in lil In, Texas when
11:07
I was seven years old. That was the first time my dad took me
11:09
to go a oil paction and get out of the gard. If anybody's ever
11:13
been to Louling, you'll know there's a distinct smell to Louling. And when
11:16
I get out of the car, I was like, Dad, what's that
11:18
smell? Because you know, it was like you've never smelled it. Cour
11:20
smells pretty bad. And it's like, Dad, what's that smell? He
11:22
goes, maybe that's money. And that was my introduction to oil. Well,
11:28
I've been hooked everydays. Yeah, and well, because it's the it's
11:31
the it's the engine that runs the world, I mean every world. You
11:35
look at the standard of living perse aside, the average American consumes two point
11:41
six gallons of oil a day. The average civilized society across the globe average
11:46
is one point six gallons of oil a day that they can sit you want
11:48
to traverge world. The average derb world country point three gallons. It is
11:54
a direct correlation to your society standard of living is how much oil they consume.
12:00
And most people don't realize oil is in everything from our clothes to plastics,
12:05
to our cars, everything to the medicine, everything we do. I
12:09
would be willing to bet and you could grab any American, if any city,
12:13
just reach out and grab them, and they will have at least two
12:15
whole products on them at any given time. And man, these people don't
12:18
realize that. And so when you when you see everything, because it's really
12:22
clear, when you step back and just look at it, you see that
12:24
we're not investing enough, we're not producing enough, demands too high, there's
12:30
nuh and to replace it with. Well, the final factor is the true
12:33
American oil industry. Most people have no idea of who the American oil industry
12:37
is. When you look at the crash from April twenty twenty. When that
12:41
crash happened. If you grab the average American that says, well, how's
12:45
it going to affect the American oil companies, they say, well, it's
12:48
Exxon, it's Chevrol. They'd pick one of the majors and said they're big,
12:50
it's not going to hurt them as much. Well, in all honesty,
12:54
not to no disrespect to them, they are who they are, but
12:56
they're not American companies. Just because they're based in Houston doesn't mean they have
13:01
what's for the best intent getting their printing from overseas for sixty years now exactly
13:09
exactly. And so they're beholding to their stockholders. And once again I have
13:11
no problem with that. They're their own company. They can do what they
13:15
want, but that's who they're beholding it. When you look at the US
13:18
production, eighty three percent of your oil, ninety percent of your gas,
13:22
and more than ninety percent of the wells drilled are drilled by roughly nine thousand
13:28
independent companies that average twelve em boys or less. That's the American oil industry.
13:33
And so when looking well, just look at your podcast Financial survivor,
13:37
Well, how do you survive during this time because we're all in the oil
13:41
business. RJ. It's a big excrement sandwich and they want us all to
13:48
take a bite. Yeah, but you know what, I figured out a
13:52
way to make that ship sandwich taste good and make you some money while doing
13:54
it. All right, tell us, tell us how do we well,
13:56
do you make you any money? RJA? How can you make no?
14:00
Like seven minute ago, everybody is in the whole business, whether you want
14:03
to be or not. If you live in a modern society, you always
14:07
have money going out of your pocket. Tool Well, well, we simply
14:11
put our partners in a position where they have money coming from it. This
14:16
is a great thing. Like I came up with a system where the average
14:20
household can pretty much hedge most of their commodity purchases because we're all in the
14:28
commodity business. You buy food, guess what, wheat corn, everything's a
14:35
commodity. You buy energy, You buy electricity, all of its energy.
14:39
So the key is you invest in the companies that produce that stuff because you
14:43
know that it's going to get more expensive and therefore your profits are going to
14:48
go up. So if you can get closer to the wellhead like with you,
14:52
then that could be a great thing. Right oh without it now now
14:56
look, and don't get you wrong. By nature, I don't want anybody
14:58
to think this, it is easy. But by nature, oil and gas
15:01
is speculat If anybody ever tells you different their lines, who wait, it's
15:05
much easier than it ever was. Man, you used to get two You
15:09
used to get two gushers and eight dry holes. Now you get nine gushhers
15:15
and one dry hole. Right, well, if you're in the right area,
15:18
well, if you're in the right kids, and then we're obviously going
15:20
to drill. Well that that's the key to it, because when it comes
15:24
to when it comes to being successful for your partners, because that's that's the
15:26
name of the game. Everything we do here is based on our partners,
15:30
because if we don't win for them, they don't keep investing. And all
15:33
of a sudden and I sell them. Sign goes in the front door.
15:35
And So when I was telling you a minute ago, before we before we
15:41
got on that we essentially we'd had two lives in all My first life in
15:46
all ended. When marithon my family is coming and we crank back up six
15:50
years ago, me and my dad, my brother. We knew we'd be
15:52
successful. We're good at it. We've been doing this a long time.
15:56
And when knew the path to do what we wanted to do would reveal itself.
15:58
As long as we were patient, as long as we're diligent, everything
16:00
we did and what we saw coming was really we saw Saudi Arabian Russia.
16:07
Because whether you like Trump or not, what he did was he completely changed
16:11
the power structure in the war world. When OPEC was created, they became
16:17
the center of the whole world. Well by us increasing our production as much
16:21
as we did, all of a sudden, they didn't have a say as
16:23
much. And what price per barrel was Resident Trump knew that we had to
16:27
keep the price such where it made it worth all companies going out and finding
16:32
yet, but we had to keep it down enough where it wasn't killing the
16:34
consumers. And he found that equal balance. Well, it's two bucks two
16:40
bucks a gallon, guests sleep roughly sixty dollars a barrel, Yeah, roughly
16:45
that the sixty to sevent He was roughly this this sweet spot. Well,
16:48
then all of a sudden, Russian and Saudi Arabia started increasing their production.
16:53
And what we saw was them pushing the price down, tried to get it
16:57
the wrong growth a barrel, Well it was to flow out. Yeah,
17:00
well its essentially it was. It was an economic war with the shale industry.
17:04
Yeah, they were trying to put in the show industry out of business
17:07
and so that that's really what we saw coming. And so we got started
17:11
getting our pattery drive, we started getting our cash ready because we knew once
17:14
that happened there would be some acquisition opportunities. Well, then a funny thing
17:18
happened. Then all of a sudden, Corona came. And what Corona did
17:23
while the while we were wrong on what the trigger would be. We thought
17:26
the trigger would be the Russian Saudier rape. The trigger was Corona it but
17:32
the result was the same thing. It took rough way what we thought would
17:34
take eighteen to twenty four months and crunched it down in the thirty days.
17:40
And the first thing that happened on April twenty when the prices dropped, that
17:44
was the first wave of your independence. Were locked out. Most of those
17:47
companies were either beginning companies or companies were on shaky financial ground, but all
17:52
of a sudden, when prices crashed like that, boom out of business sign
17:55
goes in there front window. Well, the next wave that got knocked out
17:57
for a couple of months later when we sent everybody home for COVID. Your
18:02
companies that could pay their employees to come back to the field, they were
18:06
the ones that survived. The companies that couldn't, all of a sudden,
18:08
they were gone too. And so once you had was you had a clearing
18:12
of a deck that hadn't happened in my life and oil and all of a
18:17
sudden, now well really for the first time that well, it's only happened
18:22
once in forty years, and that's a company becoming a major one hundred million
18:26
market cap on American production alone. It's only happened one time in forty years.
18:32
And so all of a sudden, we saw an avenue where hey,
18:34
we can acquire some significant reserves for pennies on the dollar. And that's exactly
18:40
what we started doing. We started buying up leases and in the end and
18:44
we're still in We're still in the acquisition process. We thought we thought that
18:47
window would close in twenty two. We thought grown ups would return, but
18:52
asked the grown ups, are Jay have left the building? Yeah? Will
18:56
I was at Seaback earlier this year and I had a kid from PBS come
19:00
up to me and he says, you're the wool guy, aren't chi?
19:03
I will, well, yeah, He said, well, well, who
19:06
do you want to win in twenty four as it? Well, it depends
19:08
on what me you ask? I said, what do you mean as it?
19:11
Well, if you ask the average me, the guy that lives here
19:15
just like you, I want rebulicives to win because I know prices will stabilize
19:19
and I know we'll understand the world we live in again. However, if
19:23
you ask the wool and gas guy in me, I want binding them to
19:27
win. He said, really why? I said, because they're going to
19:30
keep attacking AID, keep staring people away from and to keep running people all.
19:34
And you know what I'm gonna do while they're doing that, I'm gonna
19:37
keep buying it because what's gonna happen all of a sudden, The illusion's gonna
19:41
bust all of a sudden, the Ether's gonna wear all if people are gonna
19:45
realize, oh my god, nothing can replace oil, at least not right
19:51
now, and they're gonna be running back. And when they do, person
19:55
owns the lol is gonna be sitting in a pretty good position, aren't they.
19:57
You gotta be at And so that's what we've done. We made twenty
20:03
three different acquisitions and secured a well we believe to be over one hundred million
20:07
barrels of reserve. And really all we're doing right now is developing. Now,
20:11
what I tell partners, the best thing they could do, especially somebody
20:15
who's never looked at us before, go to our website. It's pan x
20:18
dot us slash learn Yeah out of that page was specifically designed for partners that
20:25
have never invested with us. It gives you an idea, just a general
20:27
education on the wall industry, what the uses of a wall are, how
20:32
we develop wells, how we drill wells, just kind of gives you a
20:34
basic thumb sketch of the industry, gives you a basic numb sketch of the
20:38
tax codectits. Look, you don't do all for tax panetics, don't give
20:41
me wrong. I had a partner one time. I said, well,
20:45
mister Johnson, you can write it off. He said, if we wanted
20:47
to write it off, I give it to the boys cous and so I
20:51
was young, and you know, it was one of those last call.
20:52
Okay, that made sense to and so you don't do it for the tax
20:56
benefits. However, to dismiss the tax benefits wouldn't be that'd be ridiculous.
21:02
Because when you invest in direct participation programs, when you invest in drilling wells,
21:07
Uncle Sam's roughly going to pay for a third of the investment. Now,
21:10
I'm not a CPA. Everybody varies a little bit, but going in
21:14
and year one, before I've even produced one barrel of oil, I've already
21:18
made the partners thirty three percent on their money. And then we don't pay
21:22
any taxes on it through the depletion allowance, and you keep rolling over your
21:27
investments and you never pay any taxes. Wow, I hadn't got I've got
21:33
partners right now that we'll be receiving revenue from their wells. I'd be willing
21:40
to bet for the next twenty five years. So what's our r R on
21:44
your average deal? Bar jauh? It depends on what how do you look
21:48
at the deals if it's in the drilling programs, and just where's the straight
21:52
drilling. We have some equity programs we've run also in the drilling programs.
21:56
I'd say after tax inefates we're averaging were from twenty five to forty percent from
22:00
a program we're doing well, yeah, we got we got one program that
22:06
now this is more of an equity fund, but they own a piece.
22:08
What we'll do whenever we acquire a field, the first thing we'll do is
22:12
we'll fund. We'll put together fund to cover the entire field, and we
22:15
basically kick start the field. We put the infrastructure in and we give those
22:19
partners a piece of every well we draw in the field, regardless how many
22:22
wells there are. Okay, so let me ask you. Are you buying
22:26
any producing fields now or the stood, So what's your criteria? Do you
22:33
look for a value add on a producer so that you can how we love
22:37
salt domes. We love salt domes. And the reason we love salt domes
22:42
is one, well, there's really two races. One is the lack of
22:48
competition. Most people don't want to drill and solve those. It's a working
22:52
man's field. You have to have somebody up location dealing with the well every
22:56
day. And so it's it's something that to deuce and rill salt doug fields
23:02
or did and so those companies don't have the will or the expertise, and
23:04
so they stay away from well. That's one reason, but the main reason
23:08
we love them is salt dumes were your original old fields, and salt domes
23:14
were the spendal tops. They were the fields that got the old moon going.
23:18
If a field lad your old old companies. I guess the best way
23:22
I could describe them that they're about like spoiled kids, and a spoiled kid
23:26
their favorite toys their next toy. And so what they would do is they'd
23:30
go out, they drill a well, they'd hit it, they'd all cut
23:32
back blips. Well, they drove bobrom denmore wells. Well, then all
23:34
of a sudden they drill another well five miles away and hit it. Well,
23:41
then they'd pick up everything they add right here and go over there.
23:42
Well, how much oil did they leave right here? Because they really didn't
23:45
have the technology. You know exactly what they don't know the secondary recovery.
23:49
Now, things like pollen are flooding. We've got to upgrading where you can
23:55
take heavy oil turned it into better than WTI. We don't even have to
23:59
do that. We're drilling traditional wells the same way they draw them joinal verticals,
24:04
no cards. Yeah, well, I mean it's it's it will never
24:08
be a straight line sun on a solid dome at moves, and we do
24:11
put a directional bid at one point to target. We have yeah, one
24:15
section that's kind of getting in the weed, but we we have one section
24:18
where we put a directional bit in there to toilet his own. But then
24:21
we pull it all back out and let it go naturally. But all we
24:25
really do, I'd love to I'd love to say that it takes a rocket
24:27
scientist to explain what we're doing, but it's not. All we're doing is
24:32
going in fields that weren't developed and we're developed, you know, and we
24:37
stand on the show where it's the giants and get what they left behind.
24:38
Okay, So all Jay for really appreciate you're filling us in. We're definitely
24:44
going to have you back on the show. You're going to defer one of
24:45
our regular go to guys for energy because energy is fundamental. Like you said,
24:52
oh, we basically be in the fields now pretty much with our pickaxes
24:59
at our sites cutting down wheat and uh, you know, half the world
25:03
would have starved already, maybe two thirds of it so, Hey, tell
25:08
us the website where we find you, how we connect with you panax dot
25:14
us slash larn and then my email is r J Burr at pan X I
25:18
U S P A n e X dot us. Excellent. When that will
25:22
we hope be one Well we have we have one standing standing guaranteed you ask
25:29
them ask us a question to do we don't know the answer to, we'll
25:32
find it for you. I want to make sure that every question is answered.
25:36
This is your money we're talking about, and if you're not completely comfortable
25:38
with who we are and what we're doing, we'll be the first one to
25:41
tay to keep it all right. Well, maybe you want to come down
25:44
to your neck of the woods for a show. Next time, I'll come
25:48
stop by and see you guys. Hey, show notes, make sure you
25:52
look at them on Financial Survival Network dot com. RJ's contact and is a
25:59
web site will be there. If you got a question for r J or
26:03
myself, and I'm sure you do, shoot me an email kl at kreluts
26:07
dot com. We will get you an answer. And while you're at the
26:11
site, make sure you sign up for your free newsletter. RJ really enjoyed
26:15
speaking with you. We'll talk to you again real soon. Carry yourself a
26:18
great winner. Thanks for listening to carry Lutz's Financial Survival Network, your solution
26:23
to today's trying times. For the latest, go to Financial Survival Network dot
26:29
com. Financial Survival Network now more than ever,