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I think we ought to get started and welcome our audience and welcome our guests here too morning fuel today we've got heather pal and joke rivetti both seasoned professionals one of them a little more seasoned than the other I remember Joe as a as a logging engineer at slumber J's so we back pretty far back so yeah we'll get him to talk about his career a little bit of course both of them to talk about themselves so Heather I'm going to start out with you know kind of introduce yourself a little bit and talk about Ventana and and also just kind of some opening remarks and then we'll go from there sure I'm Heather Powell and I got started in the industry in 2004 over at Chesapeake and I started in the land department and in a very booming AMD time and in those days you got on a plane or in a car and you went to another office and usually it was dark and dusty and you dug through files and he went back to the team and they worked out a deal and then you got in your car went back to that office and loaded it up with files to bring them back so lots of hard work lots of AMD it's a little bit different today but I fell in love with the business in that time and then in 2007 I went over to Sandridge and same thing we were building a company and lots of AMD work lots of traveling around looking at files and then from there I went to RK I and stayed until we merged with wpx in Tulsa and then at that time it was 2015 and had to think about what to do next and ended up Ventana so we have been going since 2016 as an acquisition machine and growing assets one acre at a time and last February we closed a second fund with our investors and while we're doing similar things still focused in Oklahoma we're looking at bigger deals some of those may include operations and so changing our strategies a little bit but still focus on growth and investments that that work in today's prices by remember some Joe well a little older history than Heather Heather you started the same year in the patch when I actually left my first career and started Charter Oak and as they mentioned I do gave when he was out drilling these like with 1,800 footwells de down there and okay Jimmer yes sir those were 3,200 feet and then we were drilled a bunch of a shallow Permian wells and Stevens County with Schlemmer Jason lots of holes active client there I actually started out as a you know as a kid from New England who saw a movie about the oil patch in about Texas and decided I wanted to go to South Texas and working to old passion moved from Connecticut to do Pleasant in Texas and got hired on with Schlumberger as an engineer and worked all around Texas and Louisiana State in Houston so you get to walk into the offices of some of these you know ug you jewel company buildings and go how do they support all this overhead and these people in this bigger office worked in the Rockies before coming here and that was a great experience learning about really remote operations and the lack of infrastructure which even I guess still exists up there today but in the early 2000s I've started looking at charts and realized you know I think we're I think we're at the start of the next boom after a you know what a 16 18 year bust you know mid 80s to late 90s and so I was able to qualify for retirement in 2004 and left slumber jay after almost three decades and starting Charter Oak and I start you know just started out borrowing money I had a great banker to buy our first field and that God it was about 24 wells and operations and then slowly built up and so since 2004 we now operate a little over 200 wells maybe 220 wells in Oklahoma and Texas mostly Oklahoma we've drilled most of them a lot of them verticals I'm some horizontals pretty much about all we're doing now is is horizontal unless we need a pilot hole for something and along the way you know we tried to stay ahead of the started to stay ahead of the big boys and so we we accumulated about over the years about 80,000 acres and ended up doing about a dozen sales to about four different public oil companies maybe maybe five um and that oh that allowed us to for us in our particular participants to pocket about 300 million dollars and that gave us the funds to you know not have to be relying on bankers and so forth I'm writing you down right now on my charity's list so you'll get forgetting that's for sure it's all in rental frac tanks right now Dave apparently apparently I'm on everybody's charity list which is great so so I tell you why this why this I wanted it but this segment together is well most of our companies are small and we have over 1,300 companies and most of us are little guys that kind of I watched Charter Oak over the years build build up monetize build up that was always my strategy I did I did very similar things that Joe's doing over you know I think I started all I didn't stay the full 30 year I stayed 10 years with Texaco before I so I I started a little bit earlier in my career but now or 25 years later I've I've done the same thing monetized multiple times a lot of our guys our constituents have their fam family-owned kind of like all of our companies are now the three on the phone three on the zoom call and you know they're trying to look at things that they're interested in things that we can do with our power of being at large organization at the Alliance that can help them that's one of the things we would like to talk to them about some of the resources we have and can't afford a study team or hiring a bunch of consultants but you certainly can ask questions of our of our membership and if not people are asking particular questions we put together a task force and try to answer the questions we like we put a task force together to try to work on the well they were calling the purge Joe was involved in that we've got a lot of technical expertise we've there's power in our numbers from a standpoint of bargaining for insurance and all kinds of things so we were looking for more and more ideas to help help our the smaller companies which is basically the backbone of Alliance so one of the things that everybody is wanting one day and they're gonna want to know what you could to think is is you know Heather because of your set your age challenged you don't have enough you haven't seen this many of these sites cycles it's a couple of other guys on the zoom call habit but what do you see and and I'll let both of you answer this what do you when you see different about this time that's that's and particularly from this from a smaller smaller lens smaller company lens and well I don't know that there's an angle that we're not getting hit with right now right and so we've got storage issues we've got demand issues we've got price issues so we're being hit and of those we don't have a real line in sight of when it's going to get better you know I for Oklahoma City it's nice I'm sure you guys will agree I've tried to be more I'm excited about the traffic on my way to work then before you know being irritated so it's nice seeing seeing people moving around more my kids even I've been explaining to them some of the issues going on and when we're out in the backyard playing they're screaming with excitement when they see a Southwest flame so we're very excited to see planes moving now and so it it's different I think I think the industry as a whole is going to be different probably forever after this but I think they're still going to be a lot of jobs it just may may look different than it did before probably less towers with hundreds of people like like Joe mentioned but I think as as companies go through distress or bankruptcies or restructuring you're gonna see more companies opening up you know somebody's going to buy that business and then people are going to do like the three of us have done and start businesses so we're you have a team of engineers in-house maybe you rely on consultants more than you did before so that's definitely something I learned rki with Ronnie whether we used consultants to a certain point and then whenever it was time to bring him in house everybody was try before you buy so come on as a consultant to hire so I think that was a really good thing and I think we'll see more of that as well you know that's a great thought the try before you buy I like that line great thought because we have a we have a great huge amount of people that been displaced and may be you know maybe they don't land immediately with the company but but you know keep your skills home your skills come in maybe we have to be a little bit more modest about what we obviously were not a lot of people are not going to make what they made before so they're going to be you know under where they were at like underutilized probably but be willing to redevelop those skills so like for example a geologist may may have to resharpen their geotech type skills because they were working on on larger scale projects that they hadn't geotech support them after kind of rekindled the old spirit of looking for oil absolutely how would you think about that Joe well I agree completely with what both you know you Dave and Heather have said one of the differences we're probably gonna see in this downturn is yeah unlike previous downturns where we had really shallow decline wells you know that's probably why it took 1618 years to get out of the the downturn of the 80s and 90s is the wells that have come online in the last few years they have very steep declines I think I read that the there's a what a couple of million barrels a day or more in the USA wasn't even on production over a little over a year ago so with this deep of decline I think we're gonna we're gonna come out of this a lot faster than before so a point where you're saying about a lot of people that are presently displaced and maybe will go into the consulting ranks they're gonna be needed they're probably less people on payroll for a lot of companies and I think a lot of us you know Charter Oak included him learn to be able to do a lot with subcontractors and with the service and providers and vendors so I see I see a quick turnaround now quicks a relative term is that next year or maybe early 22 but it's gonna happen you know what that what price do you think you know we're we're we're actually a domme a dominant gas phase producer but well let's talk about what price of oil causes the Permian to start drilling again start being real fast Oh No maybe Heather's a little more familiar with the permian I'm not really familiar with permian but I do look at about every completion in Oklahoma and I couldn't say that from people I've talked to and what we see is even watching your P's and Q's and getting your costs in line I don't see people getting too excited until a prices get over 40 probably into that 40 to 50 range again and I'm sure we'll get to discussing capital availability later on but it's gonna be tough to attract new outside capital until you see a significant run-up in pricing and I mean significant like 60 or 80 dollars a barrel I know will yeah I mentioned Permian because they're kind of the canary in the coalmine there they're going to be first movers Heather what do you think and they make maybe answer the question more for from Oklahoma's perspective for from Oklahoma's I mean my friend Jo here was talking about some activity he's got planned here in the near term and and I've talked to other peers as well that you know I think this this forty is has happened a little quicker than some of us thought we're back up to this level which is exciting so I think you'll see some activity now are we going to have all of our rigs back up and they're probably not but at 40 plus depending on what everybody's edge program looks like and and what the storage situation looks like I think you're gonna see people start completing some wells and the steep decline is a different thing than we had the last time so we will probably see folks start bringing on production based on their different programs so I think it'll be sooner rather than later but I think it'll be a slow uptick here as as we watch prices and demand and storage well that kind of leads me to a question I definitely want to hear what you guys say is the answer so obviously with the downturn in the drilling in the in the Permian the associated gas is gonna drop off like a rock and it's going to in my actually in my opinion I think I'm a little bit more bullish on cash than I am on oil oil is just to jail geopolitically driven right now so what do you guys what do you get were your thoughts on the natural gas market I mean here at a dollar roughly a dollar eighty in the summer month but that doesn't sound all that bad to me but which we've suffered with let some dollar in the summers and recently so what do you think well Dave I'll jump in first because we actually just put out a proposal a couple weeks ago for a gas Reid completion moving up home and and well out in the Oklahoma Panhandle that we purchased because it had a pretty nice moral looking moral Gaston that's produced in the general area but not anywhere nearby here's the issue on gas and I think everybody out there is sameness is we're hammered with fees and you know they do not talked about it you know we've had conversations here we're sadly having to take one company to the occ and on a rate case so you know it's a shame to have to sell rich gas that should be like you said bringing close to two bucks and you get your net check and there's a dollar something and fees and you're getting twenty to fifty cents you know and seiect equivalent so I think that's gonna hurt the gas recovery now you know maybe you know I'm looking at it from a biased viewpoint but I think last month first time ever in my history I saw negative ethane we got one two three cents a gallon deducted from our checks for the ethane so yeah gas is going to be covered because of the oil coming down and the associated gas and we're moving to a electrified environment that we're gonna have to generate more power from natural gas so um maybe at some point will will will see the fees get in line and we'll be able to make you know that's a that's a great thought Joe and and before Heather answers the question too I have really talked been talking to the governor a lot about this he realizes that the giant market sure that was gifted away from natural gas to subsidized alternative energies and he realizes this it's real jobs and people that pay and keep their money here in the state so from a standpoint of anything that they can help us with they are that that that's different than it's been in the past so we can applaud that we have a business guy in the governor's seat there's a various other things especially you know a trend working I've actually been on the governor's task force working on the bounce-back program where we're really aimed at at industries that are verticals to use natural gas or combined cycle generated electricity from natural gas so we have made everybody that will listen aware of situation so so Heather what do you think where when do you drill a gas well yeah I I completely agree with Jo's both of your sentiments on the fees it's a it's a real killer and we're feeling that as well but on the flip side like you said there's a lot less political issues associated with the gas so for Ventana we've looked at you know we spent two years looking at zero gas deals and I think right now we probably have ten projects we're looking at that are there gas driven that we're evaluating and have a real serious interest and balancing that out and so I think with a lot of things we don't want to be all in on just oil and we don't want to be all in on just natural gas but we we do it does seem a little bit flatter and more predictable than oil is right now what gets people excited in Oklahoma yeah and it gets them fired up is the fact that we we appear to most of the in are like if we were a country we appear to be a third world country where raw our raw materials are their values added in another state cuz we shift our gas or our electricity generated by gas out of the state so attracting users here vertical users of our product that's got to be paramount and I can tell you that our lieutenant governor and
overnor or both all over it and so that that's that's that's that was my contribution that we had so many smart people on that task force I can tell you from every industry but I certainly wanted them to understand where we're kind of the guys that are paying the bills we need we need some help and especially our smaller producers we've actually talked to the it's good conversations with OG&E well and other providers those fix fees the metered fees you know you you look at your electricity you look at your bill and you have all these fixed fees and then bearable is what it is right but but the fixed fees are capital recovery in general as is how they and I'm sitting there looking at I'm looking at my window right now and seeing but I don't think it's brand-new distribution and and surely they've got their money back from that so we'd like for some help from them but have been talking to us which is better than just shutting the door in our face but that's good they realize that that bearable load goes away if they don't help us out with some of this some of these fixed costs kind of shifting a little bit and Joe alluded to it and I think probably everybody on the phone wants to hear what you think about capital capital sources I can all kind of back clean up and tell you what I've found in recent times but you just think Heather it sounds like you got a fund put together second fund put together kind of timing was has a lot to do with the successful outcome of a rain dances timing so you did rope getting your capital under under your belt it was humbling and actually for us you know the first as all of us have been through the the ropes of trying to raise money and realizing how gruesome and difficult that can be especially your first time where you don't have a big success story behind you but so so raising funds for Ventana bond was a little different than two but you know coming out the test of building a you know pretty successful first company we had that story to go off of when raising funds for number two but it was just like at the cusp of of the ESG movement and a lot of investors you know this is pre cope it pre Saudi Russia issues but there was a lot of investors pulling out because environmental concerns so it was humbling going through the ranks of raising money and we did successfully raise their second fund but it wasn't quite you know so easy a caveman could do it like we maybe went into it thinking it would be and then as as we all know with you know bank financing is also tough when we've got the price changes and things we're all experiencing now so making sure we're we're communicating with our bankers and talking about what type of assets make sense to them and make sense to us I think there is still capital available but you can't just push an easy button and it all just falls in your lap so I I think it's it's important to communicate and understand what types of investors are interested in oil and gas who aren't and don't waste your time on those type of calls and then also partnering with a good bank and having good compliance of communication and what they're willing to do and not willing to do so you have good synergies and a good fit Joe what's your thoughts on capital a day this is a tough question and this is my opinion is that this is gonna restrain our recovery you know but the big companies public companies are gonna have their own issues companies like ourselves have historically been with you know private investors and participants and what pretty much now is called family offices and a lot of these family offices now had the background from oil their fortunes were made early on in oil and now their past their third and into their fourth generation and it's you know maybe maybe ESG concerns or maybe it's just that it hasn't been very profitable the last few years but a lot of people don't seem to have concerns about putting money into oil I think drw had a podcast with Bill Bailey who threw out a number that there's 46 trillion dollars now that won't go into oil and gas right now investments so this is certainly gonna be an issue coming out however I think we can show I think it's an industry we're going to show that when it's profitable again and I think it will be very soon money will come in you know if an investor can make money drilling completing oil and gas wells they're gonna be back in and we can show that we're gonna do it in an environmentally sensitive manner well it's it's yield right so there is there's no there's no flight to anywhere that's gonna provide a yield like you know so but some of the oil and gas investments can so I I actually gonna echo that I think that the money comes back in and it actually some capitulation is starting to happen with from the seller standpoint and that is going to make some very very compelling projects for investors and I'm seeing it it's their summer I would consider everybody investing right now his early movers and steel and it's the tried to catch the falling knife question of we're trying to pick the bottom you cannot pick the bottom ever anybody that's ever been a traitor of anything especially commodity knows you know so so it's you just look fundamentally at you know some of these acquisitions I would think that and Heather probably has a real good pulse on this but but you're looking at PDP PB 20 to 25 on the current strip is pretty much you can buy almost anything for that he regardless of upside really gets it really gets discounted if it's just if you're just clipping cute and there's no upside some of our we're picking up a few questions on the on the chat line that I certainly want we have a we have folks that are prolifically submitting questions I don't wanna now one of the questions that they are asking is and I think it was from an earlier comment that about about see they wanted to know about people I got the human human costs and capital project management firms do we see that starting to thrive like hey I need somebody to come in and build this this system or these wells I can't afford the engineers to keep them on staff it's it's it's a little bit of that tribal for you by concept that Heather threw out but you see that kind of I ever every time I see a downturn in this business I see hundreds one company goes down and 50 pop up I mean the that's what I love about this industry that people are so resilient I know if that word gets used a lot but look folks we are we are no stranger to adversity no not at all and so every time we see sons it's okay well that just means we've got to work this much harder and find another way and this this industry just dies so what do you think what do you think do you see lots of little companies popping up and maybe it's family money and they have to start out with a little bit but what do we tell them now that they've got to say they've got their 10 or 15 Wells and they're working working hard and what will they do this where they get their money in family one of our famous things of the office just to teach Oh up here is what would Joe do so we say that a lot so we get some questions from investors and and I'll go look at Gregg and and we'll both just look at each other and say what would Joe do and so we called Joe and he's got some pretty great idea so I think he should kick this one off hether TWC you are way too kind you know trust me we make as many mistakes or more than we do right so it's kind of a numbers game like how many times you get at the back before you you have a hit even and then how few are actually home runs out of there but you know yes a total agreement again with you and day that you got it you've got to be out there out of keeping your face in front of everyone ahead of the herd and from the from the operator side I think there's gonna be a lot of opportunities for example Ventana charter rope buys a package of wells we don't we don't want to keep them all I mean there's some things that we want to take that we're going to do things with there's others not in an area that's a fit for us and yet there's gonna be a fit for someone and and I see the we joke we see the industry going bipolars probably the technical term is bimodal you're gonna have companies that are out there doing you know drilling these multi-million dollar laterals but you're also gonna have companies that it may have been a person who was a pumper for XYZ and he got early retired or displaced and he says hey I could take over these 20 wells and they're only a barrel or two a day but we're gonna do everything ourselves so we're gonna make this work and they'll make money at it I think there's going to be tremendous opportunities on the service side there's a lot of equipment being sold right now for pennies on the dollar and you're gonna have someone say who worked for I don't I'll throw out a water transfer company and the I know the 10 water transfer companies in the state are now down to say three or four and yet when the activity breaks up who transfers the water for a frack job well now here's an opportunity somebody gets into this business for you know probably a just a five figure a five figure number and maybe family friends a good banker loans it to him he's got laid flat pipe and a couple of trucks and pumps and he's out there help them now to provide these services so there is gonna be all types of opportunities for those people that are out there and one you know that's something we don't talk about much but it's the barrier of entry is significantly so there's a lot of people that can fit or you know I don't think there's everybody's lining up to pivot to be in the wall and gas business that there's a few smart people on you now look at the bearer of entries low much much lower I can buy in there's so many great places marketplaces like energy net and butts where you can you you can you can be in this business there's so many people we rank everything by operated production because that's kind of how the data is but there's so many people there's some pretty large oil and gas investors that you've never heard of that are have their vested in you know own anywhere from a fractional interest to an eighth of tons of wells that's I have a I have a bunch I've got the Heather as Joe Joe your more vote I consider myself more of an operator and most of my production was operated throughout my career a bit but I've had some good luck with good partners and it's about good partners agree you can get some guys that are not gonna they're not living out of the cash register and the cash registers your Copas overhead and these things escalated this unintended consequence of 1989 AAPL JOA s there's it escalated over 25 years and now every well that every well out there has fourteen or fifteen hundred dollars of Copas overhead right you know no one wants to give it up so so it's just you know it's it's that in work at working with I have drilled a lot of a lot of wells I used to take deals off the street from geologists here in town and always have kind of a line of guys that they if they if you're working on something combine show me and I think that's gonna come back the tax advantage of it as an individual to be in the wrong gas business and take those write offs in the year incurred and so that I think that's one of the one I want to ask this question because I asked this question a lot it's one of my biggest concerns is is our younger people are especially our younger technical people leaving our business frankly this is some of them it's their first significant downturn and they just it's it's it's a lot to ask of a young person that hey I could just go over here and be a chemical engineer or I can go over here and buy rent houses or whatever I can pivot away from this it's just too hard and how do we how do we keep those people involved and having what do we tell them during times like this you know I think this is I think it's a good reality check to I think as everybody on the three of us now this oil and gas is a hustle when it's good it's really good and when it's bad it's really bad so I think it's in looking at the silver lining there is good and seeing some hard times my first mentor it took me a long time to understand what he meant but he said the best thing that would ever happened to me is to go completely broke I was really irritated with that and I thought that was vice but I get it I get what he means now so I think to be hungry for your job and what you do or passionate about it is really important and I think it's really cool the things that that I've seen just in the past couple of months of what people are doing I think I have my prophet here here's an example of somebody this is a young person you know Jonathan Jordan is has revamped his whole facility to be able to produce the stuff which we love it we use it here at the office I've loved seeing energy net and pinnacle kind of have their strategic alliance it's talking you know doing the things that we've been talking about here one's amazing at engineering and one's amazing at AMD and they've joined forces instead of adding those that their particular shops it's what we do here at Ventana and we partner with am shots a local business for iti know petroleum Alliance uses them as well we partner with Crescent and for operations and I talked to those guys almost every day so I think Bank of Oklahoma we partner with those guys talked to them very frequently so I think those of us that love this and want to stay in it we're gonna find ways to do it whether it's you know making sanitizer or partnering with groups that like Joe and I he wants to do a certain thing we love you know naan up and finding ways that deals work in partnership is will be the make-or-break but I think that's what the young people have to decide are you willing to do what it takes I mean that there's times that I've gone out to the field to you know run title after having a really fancy job before in a big tower I've settled lots of surface damages and rida ways and water wells those are not clamorous jobs but guess what I met all of the landowners and you know as an engineer going out to the field I tell a lot of young guys that oh you need to you need to be out in the field for a while and sometimes people put their nose up at that stuff I don't I don't think you two would disagree that that's something it's important for all of us to be out in the field and and having real-world experiences so I think the young people will will have to learn to do some hard work during this time and will either love it or hate it and I think that's good that you'll decide you know how much you love this industry and how much of an abuse junkie that you are and you'll stay well we we've all known that adversity does you know make us tougher yeah you know there's a group of us that had worked with a mentoring program back a couple years ago is there was a lot of younger people getting displaced and it was kind of it I guess an interdisciplinary the SPE you know CGS and the Oklahoma City PL the OU CPL was was involved and we had a bunch of different speakers from all different disciplines including accounting and including you know the legal profession who worked or land gas so there is a lot of future you got to think outside of the box and one of the one of the slides that I'd like to show that I showed to the young people and there was a few people even not so young in there was that the some of the wealthiest oil people in the world went through some tremendous adversity and there there's several books to read but like the greatest gamblers which is I know you is a know you press book that you can find it online for free by route Sheldon knows I mean unbelievable adversity the big rich which was the four big Texas oil families I think I bro they went through I mean they were these guys were busted multiple times I mean and then they came back billionaires so and then another one very Oklahoma oriented of course is the story of Lloyd Noble I mean again it Majan being a drilling contractor back you know during the Depression so but he started taking interest in wells and then of course built up a production company that became world class so yes I heard everybody read those stories and a negativ
image of these times because you know you really make your money in these bad times you just don't get to cash the checks until the times get better you read that yeah that said that's a great thought Lloyd Noble and kind of a group of Ardmore well oil workers went over it's good there's a book written called the secret of Sherwood Forest and they're gonna actually making day and I'm a documentary maybe a movie about it they are attributed they actually found a iconic condensate field in the Sherwood Forest and it's attributed to having one how the Brits won the air war over Europe because of the fuel we had and they looked the Germans look for that filled the entire guitar wolf trying to destroy it so so we have lots of heroes I'm gonna wrap it up because we ran if I can these two what we want everybody to know that we have resources at the Truman Alliance this is your organization this is the organization oil and gas in Oklahoma we have far far more smaller companies than larger companies and for the people that think this isn't their place that's that's just inaccurate and so we want we want those people we want our people that are members now to reach out and to staff and to and see if we can help and with your questions and like I said we will we will immediately move if enough people are wanting particular item one of them which could be working with our midstream members on elegant solutions for the current cost structure for natural gas in our state that would be a good one one we want the people for the people that aren't members of our organization we want you to be if you're a non operated operator or the largest operator state we don't we're not differentiating this is a one company one vote alliance so we want those people and we want we want you guys to join back with us so with that I want to thank of Heather and Joe everybody this was very popular a bunch of people wanted to be on this because they wanted to hear from you two guys both very successful excited to have you thank you thanks for having us
