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The Death of the Oil Industry | The Best Investment Options - YouTube
Channel: Financial Freedom with Real Estate - Michael Blank
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As I've gotten older, I've
learned something very, very
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critical to all of us in the
syndication business. And it is,
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it's easier to get in a deal
than it is to get out of a deal.
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And so now I'm very, very, very
conservative on what we do.
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I'm curious about something
else. Bob, you've been around
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for a little while you've been
doing this since, like you said
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the early 70s. So you've been
through a whole bunch of market
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cycles. I mean, crazy. I mean,
especially in oil. I was like,
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Oh, my up down. Oh, my gosh, for
example, last year with COVID,
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the oil prices like literally
dropping through the bottom that
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must have had it somehow
negatively affected your
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business. Right? I mean, how did
you deal with that? I mean,
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wasn't that stressful in some
way? So what what were some of
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the lessons that you learn, that
allowed you to still be sitting
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here in the old business?
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I know, in 1973, we had the old
embargo. In 86, it went to $4, a
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barrel, Texaco stock with $1,
and half a share. And I'm
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sitting there raising money.
This comes back, it's a cycle.
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Every time it happens, I make
millions of dollars. There's all
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these guys, they suck up, they
can't deal with it. And I know
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where it's going, it hit 60
bucks yesterday. I mean, here,
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we're back in the game.
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That sounds like a lot of what
you're doing. I mean, it's it's
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about the people as well, right?
Like, so obviously, you guys
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have a ton of experience, you
guys have been around for
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longer, probably the most of
these companies out here. So you
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already got the advantage on
them in the in that respect. And
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then in addition, you're able to
source the team, that that helps
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you, you know, move forward with
with a better operation. How do
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you find that team? And
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why are they attracted to what
you guys got going on your
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people is the key. It has always
been the key. And it will always
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be the key and I believe in
taking care of my people. I
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don't hire people. I don't I
don't have to if a guy comes to
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work for us, and he can't
handle, I call us capitalist. I
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run my business, emotionally, as
a socialist. Everybody gets the
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same hug. Everybody gets my
attention. I don't give a damn
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it's the lowest to the highest.
They get my hug. I don't care if
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I gotta bail him out of jail at
three o'clock in the morning.
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That's not a chore. For me.
That's we're I live and I do it
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religious. We don't lose people
unless they can't fit in with
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that loving mode. I believe in
hugging and hugging again. And
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the folks know that I'm real I
don't play any bullshit can
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write down the potholes. That's
how we do it the same way with
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the boys in the field. Believe
that big Bob Burr emails on the
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road o'clock in the morning,
thank them all they did that. We
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do that. We do it every day. And
it's not the exception. It's the
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rule.
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With Joe Biden now being
president, there's a lot of talk
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about, you know, environmental
policy and you know, the death
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of fossil fuel. What is your
What is your outlook for, for
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all of that for energy over the
next, you know, next years?
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I just made you $50 million. Is
everybody do not they don't
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understand. I love Trump, by the
way. Don't take it personal, but
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he was my guy. But by the same
token, Trump was not our friend
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in the oil business. He was
trying to get it down to a
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workable deal. These guys are
printing that money and see when
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they when they shut down
fracking. That doesn't affect me
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at all. Okay, it kills everybody
else in the shale business. All
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you big horizontal plays and all
this kind of stuff. Although
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they got a frack them, they got
to refrack them. As we sit right
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there, and I have $3.50 a barrel
lifting goals we don't know
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about. So it will help us. We'll
adjust the economics of the
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business we do. So it's no it's
no no problem for us,
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whatsoever. That's why I'm not
afraid to say $20 oil, I make
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money. We make money. Now $60,
$70 I'm like a lot more. But my
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partner's aren't hurt at $25.
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Bob, so I guarantee you a bunch
of these people out here are not
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they're not as smart as you. And
in fact, they don't know enough
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about oil. Let's talk about how
this works. So you got, I'm an
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investor. And I'm coming in and
I got some cash and I want to
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invest with you. You're the
operator. Okay, what am I
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investing in?
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Okay, you're buying working
interest in oil. And I'm gonna
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give you this formula and it
probably you won't get it all.
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But
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I'm, and I say not as not as
smart as you mean myself.
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So how does this whole thing
work? So tell me tell me I want
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to
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Land owner owns 100% of the
minerals. Okay, you with me?
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Yeah, I'm with you.
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Okay, jack Smith owns 2000
acres, I will lease an he owns
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100% of the mineral rights. I'll
go to Jack and I say. I'll give
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you $200 an acre for your
mineral lease. Yep, your lease.
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And I want 75% net revenue.
Every dollar comes out of the
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ground, you get a quarter and
you pay no expenses with your
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quarter overriding royalty. I
take 75% convert it to 100%
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working interest $1,000 comes
in, he gets $250, I got $750, I
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got to pay the operational cost
of the well. I need out $600
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every 100 barrels of oil will
give us the working interest
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side or get the override they
get theirs. Will get us right at
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$100,000 a month.
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Got it? And so so if you're bad
at this business, you can't you
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either can't find well, so you
may you may lease the land and
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not be able to find the wells or
is that something that happens?
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Right
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You're out your
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Yeah. So there's that's a risk
is if you if like let's say Joe
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Joe Schmo out of nowhere, says
hey, invest with me instead I've
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been doing this for two years.
He may not know how to operate
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like you. And being may not know
where the wells are. Is that is
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that kind of
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Guess what you're right in the
e, buddy. It's not complicated.
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hat's cool. Now the thing we're
where we are though, which is s
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ecial why we're doing a fiv
week drilling program right n
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w. Uh huh. Monday, we cherry pic
five wells in the BR Dome. And
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what we'll end up doing is
a $3 million funding. I think w
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got a minute and a half book
and whatever. And at some
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oint before March, we'll be dril
ing. And I'll take the rest
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f it with our corporate money.
kay, so I'll get right in there
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with the partners. Yeah. And
then I'll get that working it
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r if we sell out, I won't. I
won't do that. But if not, I
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don't mind putting my money
where everybody else will have a
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party.
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