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Welcome to Chuck Yates Got A Job with Chuck Yates. You've now found your dysfunctional life coach, the Investor Formerly known as Prominent Businessman Chuck Yates. What's not to learn from the self-proclaimed Galactic Viceroy, who was publicly canned from a prominent private equity firm, has had enough therapy to quote Brene Brown chapter and verse and spends most days embarrassing himself on Energy Finance Twitter as @Nimblephatty.
0:00 Very honored to have John Argo with us. John, I think we met five years ago, four years ago. We were fortunate enough to go to a soccer game with Brian Sheffield, and the rest of the night has
0:14 been sworn to secrecy. So it was one of those nights. But I don't think I've actually heard all of your background and how you got to continental. So kind of introduce yourself and walked me
0:28 through how you got there. Sure thing. Well, thank you for having me. First off, like, this is a cool, cool venue, cool facility you got to build up here. And I love the energy in the room
0:36 and a chance to sit in here for some of the earlier conversations. And you can just tell how forward you guys are at collide. And I've known you guys for a little bit now. So, but yeah, check
0:45 that was a fun, that was a fun night. So I'm, I'm first generation Oldfield. My parents, I got my dad's a welder. My mom's a school teacher from Norman, Oklahoma. So third generation sooner,
0:58 not probably as many in this room. I'm really proud that my son, my oldest, is a freshman at OU this year, so we got the fourth generation there today. I had no background in oil and gas, no
1:09 background in energy. And actually, you know, I've made my first, maybe, post on Collide, so calling on, I don't think any watts on that today.
1:18 There was a note that came across my email that said, you know, Who's somebody who's influenced you in your life? And so I was like, I got to, I got to highlight this. There was a gentleman
1:27 named Bill Reed that was so kind to me. My dad had done some work for him. I think he had done some different awning work and some stuff around his pool fence, et cetera. Anyways, Bill was a very
1:37 successful geologist. And my dad, whenever I was trying to get scholarships for college, didn't get as much as I was hoping on just the typical scholarships. There was this patrol and engineering
1:46 scholarship. You know, this kind of turn of the century, 25 years ago. And if you all look around at that time, this is terrible This is terrible oil and gas, right? The commodity prices suck.
1:55 This is not an encouraging environment to step into patrol engineering. But so we were looking, my dad asked, hey, who do I know that can maybe give my son some guidance should he try to go and
2:05 pursue this scholarship? And Bill was one of those gentlemen that was so kind to me that encouraged me to join the field. And anyways, so that's my post on Collide. But I'll say that that got me
2:17 into it. Scholarship dollars, the generosity of this industry and oil and gas and energy, had a great career education at University of Oklahoma Engineering, came out of college, worked for
2:28 Dominion EP for those who don't remember Dominion. In
2:30 2005, when I started Dominion, we had more rigs running in Dominion in the lower 48 than anybody else in the country. Now this is vertical days, right? It had 100 rigs running out of Oklahoma
2:39 City Office alone.
2:42 The parent company, Dominion Resources, decided to sell, they sold that company. I followed those assets to a company called Highmount EP, Lowe's Corporation, if you guys know, not the Lowe's
2:51 Home Depot Lowe's, but the Lowe's, called Small Berkshire Halfaway Lowe's. They own a number of different things, pipeline, Diamond off-shore drilling. They may have sold that at this point.
3:02 Lows hotels, have you ever seen Lows hotels? If you want to talk to a fun story at Happy Hour, how those guys became billionaires? Really cool story. And then they bought us as a Holyo City area,
3:12 high-mount EP. We're time out until that parent company decided to monetize in 2014, sold to InterVest. And then I had the chance to be a part of the sales team on that, which was really fun. I'd
3:23 been not really anything deal related to that point in my career. I had drilling, completions, production, operations, budget planning, but not reservoir, but not deal side. Got the bug for
3:34 that a little bit, was getting my MBA at the time, ended up getting coming to work for Continental Resources to run the technical side of business development back in 2014. Jose Byardo, if anyone
3:43 knows Jose, he's the leader at NOV these days, but Jose was a phenomenal leader that took me in and I learned a lot from him. And then ultimately, because he decided to go take a job at NOV, I
3:54 had the chance to kind of step into leadership and and be the early on. did that for about eight years at Continental and then the past couple of years been working on running our Wolfson Basin Asset.
4:03 That's cool. And I promise I did not prompt Sharon to bring up safety. And,
4:12 but tell us about the Lifesaver Initiative 'cause I think this is one of the coolest things I've heard of us doing as an industry. And I think this is your baby. Well mine and others. Also, yeah,
4:24 I'm glad she mentioned it and I'm glad that previous conversation was talking about if we can provide something that works, they'll use it, right? But yeah, that was a great segue to this
4:35 conversation. So I've, once again, haven't been in operations for a while, about a year and a half ago. Hadn't been in ops for about a decade. More reservoir corporate roles, had the chance to
4:46 see the Wilson, for example, at a very high level and all the different deals, but hadn't really been living it. Now I'm in my operational leadership role, I'm sure other operations teams do the
4:57 same thing. We try to take every potential incident very seriously. We use the term SIF, right? Significant injury or fatality. Whether it happened or not, the fact that it could have is what
5:06 matters, right? How do we prevent those? We review all those every month at Continental. So our four basins, a lot going on, over 50 workover rigs running. We'll talk more over a second across
5:17 the company. And every potential incident like that, we review. Unfortunately, I would tell you that almost every month, after we reviewed those conversations, review those incidents, root
5:28 cause, corrective action, what do we do different? You kind of get past the formality of it, and then the conversation kind of starts. And somebody will always say this, every meeting I've been
5:36 in, every single month, for 12 months, that same thing happened in Anadarko two years ago. You know that same thing happened in the Powder River by a different operator last month. That same
5:48 thing got somebody killed in the Permian five years ago. We're not, this isn't my words, from somebody who's got much more officers here than me. We're not inventing new ways to hurt people in our
5:57 industry, probably all industries. But that tribal knowledge you just talked about a minute ago and how much that you lose, but not even that. How many people are coming into the industry that
6:08 just have no background, have no exposure to it. They haven't done that job before, right? There's the risk. Or even maybe even worse, the individual who's done it a hundred times, now
6:17 complacency sets in. The conversation that we had earlier talking about what's specific to the well, that's part of the power of what we talk about private lifesaver. So that's the background, is
6:27 how can we do better? Data is so abundant these days, and we're better at utilizing it, as you guys know really well, and you guys are doing it already at this company. What can we do with data,
6:38 and is there a way that we can leverage that information, and someone can up this term, which I loved, instead of artificial intelligence, artificial experience, right? Can you imagine, before
6:49 we go on, we use workovers for personal lifesaver This was the thesis, this was the idea, this was the ass. Can we have before any crew shows up on that location? There's what, 20 or 30 of us,
6:59 right here? Imagine five or six of us were that crew on a workover operation. And before we show up on a location, what if that tool could take all the knowledge, all the knowledge that has ever
7:10 been documented on workover operations? Well information, weather information, rig information, preventative maintenance, lack thereof, you name it. And it could take that job we were doing
7:22 specific to that well, to that rig, to that crew, to that environment. And highlight to us you were saying Sharon was a Sharon, you were saying earlier, like what if it was just specific to that
7:34 and it could guide, these are the five things. These are whatever it is that's most critical for you to be focused on. And if you can focus on that and eliminate that risk, that's gonna save a
7:43 life, that's gonna save a presidential shift. That was the idea. And how was it done today? Um
7:53 kind of pre-AI and what are you thinking AI is possibly gonna be able to do for it? I think that today, there's still a lot of effort that goes into it, obviously, right? But the reality of today,
8:08 and we started with workovers for a reason. There's more workover rigs running than drilling rigs are fractured by far. There's more money and automation and technology poured into drilling rigs
8:17 into completion crews by far, right? Think about the millions of dollars that all of us as operators sign on any one of those invoices, right? There's a lot of potential value that goes along with
8:26 it. Workover operations is a lower margin part of our business. It's a disparate workforce. Sometimes you've got two or three languages on the crew on location. Like there's all those challenges.
8:35 So I would say like, I'm sure every company does it as best they possibly can, both those great workover operators as well as those operating, you know, EMPs that they're working on behalf. But
8:45 the reality just is the challenge is high. So I think that, you know, today everyone has their form a JSA, a pre-job safety meeting. they're trying. But I'll tell you, when I go out to a
8:56 location, very rarely do I ever hear from any of the crew members on a workover rig, that they've know anything about that well itself. They've been very versed in the job they're doing. They know
9:08 their rig, they know their crew. But what about the well itself? So think about the amount of information. The last five times that we pulled rods on this well. The last five times we pulled rods
9:18 on wells and alligators this well. The last five times that we use this, whatever it may be, that typically is not part of what they're getting access to. What if you have that? What if that is
9:29 there at their fingertips? What if that's ahead of the actual job itself? The wisdom of every 35, 40 year hand, you know that's the best on workovers is now not just maybe on that location, but
9:42 everyone that's ever done it is on that location. Yeah, it's interesting 'cause if you think through that, that's actually a great application for AI. It takes a lot of information, distills it
9:55 down, pulls that out, think through other things. I mean, what's the weather like today? Is it windy today? Is that gonna be a cause? And so
10:07 there's just a lot of stuff that needs to be integrated to make that JSA dynamic, I think And so it's a great idea, I think the time is right to do something there. The thing I'm most impressed by
10:22 is how in God's name did you get six companies? Who are they? And how did you get six companies to come together to share and all that? Very great question. I think, so I'll start with we're
10:36 competitive industry, right? There's a lot of stake, there's a lot of value in this industry and that's why we're so competitive And historically in this industry, that competitive advantage of
10:45 what makes the greats, maybe versus those that don't do as great. At Continental, we're almost 60 years old. I'm proud to have been there for 11 years now. Our core values, safety, honesty,
10:57 integrity, fierce competition, teamwork. Fierce competition, I don't know if anybody else in this room has that as part of their core values. I love that we have it as a core value. I wanna win
11:09 in all that we do. It hinders our ability to share, right? There's a reason why there's companies that make lots of money that take information from operators, and then feed it back to them for a
11:21 fee.
11:23 Fierce competition does not apply to safety. None of us are better off by not sharing best practices and safety. None of us win if somebody goes home in their less condition and they left their
11:35 family that morning to be on one of our locations or be involved in our industry. And so many things are done so well. As you guys know, we're one of the safest industries in the world, and
11:43 there's so many men and women that make that happen. this is we're not doing great things already, we are, but if we can do anything to even impact one potential future incident, future fatality,
11:56 if that's removed, it's all worth it, right? 100 worth it. So how do we get us? That was the way we were able to get everybody to work together. So we had the idea, we were actually on a plane
12:06 up to North Dakota myself and Eli Shepard, one of our HSC directors, and we're having this conversation, like how do we do this better? And there's a number of different things that had already
12:14 been building blocks of some of the collaboration on safety initiatives from large operators. Onshore safety alliance has been around for a while. We ultimately started with that, went with what we
12:24 thought was the group that could be the most collet fast moving. We didn't want to slow down because every day we waited on this, we felt like we were potentially losing the opportunity to help
12:32 eliminate a risk. So continental, inventive, BPX, cord energy, key, and rangers. So you've got two very large workover operators that have the knowledge of. all their rigs across the country.
12:47 And you've got, call it four, large-sized independence that ultimately have a lot of information and a lot of vested interest in, can we make this better? And you didn't tell the general counsel.
12:59 I mean, how did that go down? We, so great point. We knew that right up the bat. That was gonna be a potential opportunity. We had
13:09 to overcome, our challenge had to overcome. So really the groups of all six of these companies that were engaged. We had operational leadership, safety leadership, technology leadership, and
13:22 counsel. So you get those four leaders, decision makers, on every call, on every conversation. How can we do this? And I think that, you know, I've got unreasoned expectations, ask anybody
13:33 who works with me or on my team. I think things get done really fast. And I don't understand why it shouldn't be done fast. We didn't get this done as fast as I would have initially asked, but I
13:42 would say from the conversations we had to the event we had last week at the Hamastu, Peramerican Energy in Oklahoma City. Essentially, we can talk about the competition we put together, but from
13:52 that point, it was about four and a half months. So walk us through the competition, 'cause I think this was really cool. So somebody was saying earlier that inside oil and gas companies,
14:03 operators specifically, there's a lot of things we do really well. We are not AI companies, we are not technology, we are not app developers. I'm not taking any away from companies that have done
14:12 that. We've done that, we have some great individuals, very talented that do build internal applications, build internal tools, and some of these things are industry leading for sure. But in
14:22 general, that's not what we do. So the question that we asked was, can we not take all of our collective information, our collective shared mission, and then put that out to those that we are
14:32 aware of or we know of or we've been recommended towards, best technology AI companies that can do this. We did stack hands early on that we didn't think this was a fit for just somebody that's AI,
14:42 whatever, that has no bias to energy. As everyone in this room knows, there is context that matters in our industry, in our information, our data. You said earlier, someone said 95 of all
14:53 operational knowledge is not put on paper. You gotta have some tribal knowledge, some connection to the industry, and hopefully then on top of that, you're better off there, but also the passion
15:02 for the mission that you wanna help safety in this industry. So what we did was we asked all those companies, who do you recommend? And we essentially had a list. I won't go to how many there were,
15:12 but there were a lot initial screened We then had different levels of screening. We then had conversations. As you know, Chuck, with your team as one of them, and ultimately got down to a
15:22 finalist group that everybody felt really confident it could be somebody who could do this and do this well. We then had those final six AI technology companies, gave them access to, I've got BD
15:35 background, right? So we had a VDR, we had all our information. We had the QA session, whatever you want. we thought it was so critical for everyone involved to really see the actual end product,
15:47 talk to the team members, talk to the crews that will be visually utilizing this. So we hosted an event or a few days of tours up in North Dakota. So those team members, those technology companies
15:59 went up there to Dickinson, killed the area, had a chance to get out on multiple workover rigs. So thank you and thanks to CORD for helping us out in the energy range of continental. We're all
16:09 supportive of that. And then ultimately through those conversations, each one of those companies had something more tangible, had time actually talking to the crews working that, and also the
16:18 safety leadership, operational leadership from continental and from CORD as well. Brought that back and ultimately last week, once again, had a chance to present their built applications. Every
16:29 company, let's say how fast they can do this, sweep them to the test. They had, what, four weeks to put it all together, and they did, and they presented, and we were really, really pleased
16:37 and impressed. Great conversation, what's going to ham us to, what's phenomenal, hosting that. And you can speak to what you thought about it. I love your thoughts as well. Oh, that Ham
16:45 Institute was really cool. 'Cause I've gone to Oklahoma City multiple times, driven by it, I'd never been inside. Really cool building, neat thing. I thought the day was amazing. This was kind
16:59 of shark tank on steroids for me, if you will. 'Cause each group got up there and presented. If we'd have had our vote, everybody would have been able to see every presentation, but that's just a
17:11 gentle jab at you. So anyway, everybody made their presentations. And I think the cool thing though was had a happy hour afterwards, got to interact with everybody involved and hear feedback. So
17:27 I thought that was really good. You've kind of sat there. You guys are going through making a decision. I won't give a commercial for us. But what do you think the product's gonna look like? You
17:40 know, you're you're you're. What do you think kind of version one's gonna do? I think it was said earlier, someone asked like, you the US. with the Pumperbot or whatever you wrote for it, they
17:51 were like, will they use it? And was your answer? If it's useful. So the number one thing has to be, and I think they're almost every company recognize that, those specifically that we're up
18:02 there talking to the folks in North Dakota, it's got to feel a need.
18:06 A lot of conversation was we don't want more paper We don't need a more thorough PDF, more thorough printout, more pages of JSA, we don't need that. But to answer your question, Chuck, I think
18:18 what it's going to look like is an incredibly efficient way to get information that matters most, the biggest safety risks. We talked about specific to that job on that rig, on that location and
18:31 that weather environment with that crew, that frankly meets the individual Are they a Spanish-speaking individual? Are they an English-speaking or do they speak Portuguese? It'll meet them where
18:40 they are. It'll have the ability for them to talk to it and talk back if they want it. It'll have the ability for them to see via text. Sorry, via visual, via image, maybe potentially video on,
18:51 hey, this is the injuries that occurred the last five times that this job went bad. There's a, I'll tell you from me, if I was walking at the location, green hat, and I saw the risks in visual
19:04 format, like I'm focused, I'm aware. How'd that happen? How do I make sure that doesn't happen? How do I protect the brothers around me? I think it'll include all that. I also think there was a
19:13 number of different conversations around, if we think about, I'm not sure, go home, I'm gonna ask him, quiz in the audience, sir. Who here utilizes, whether it's chat GPT or others, that kind
19:22 of interaction of only voice. Who utilizes that? How awesome is that? Talk about, that's gonna save lives on the road, by the way, just being able to utilize that. Like it helps me kind of work
19:35 through things that I want to do for the day. And now imagine that is the crew driving at the location, getting all the information they need just right there in that windshield time. There was a
19:45 lot of windshield time in our industry, right? The stats you see on that. And so I don't think we're ever going to get away from that all the way. We're going to do better. But now let's make
19:53 that windshield time more effective, more efficient, right? We don't want people on their phone texting while they're driving. But if we could be interacting in a safe way, in a focused way. So
20:02 I think all of that's going to be part of it I think there's conversations and it may not be in version one, it may be in version two around cameras and the utilization of that. Now, not only are
20:11 you taking all the legacy information and feeding that into this rig, but now, hey, visually, that's a risk, right? Like I know we said, say out of the risk zone, but that's a risk, right?
20:23 Stop job authority to some extent, flagging that. You mentioned earlier, no longer just answering questions, but predicting and offering solutions. So I think that probably gets beyond
20:33 maybe the initial one, but man, it's just exciting. Sharon, you were talking about getting excited around where you think it may go. Like there was a lot of positive energy in that conversation
20:40 last week as well. Very, very cool.
20:45 What was something during this process that totally surprised you? Something you didn't expect going in?
20:58 You know, I think that
21:01 I wasn't surprised by the passion from everybody involved because once again, the ones that were involved were because they had passion.
21:09 I wasn't surprised ultimately at how awesome that all the companies were able to develop something in a short period of time. 'Cause like I said, you guys being one, y'all say you can do stuff fast.
21:21 Maybe what I was a little surprised by was some of the field interaction feedback. And some of the things, I think Colin even mentioned that, some ideas you guys had going into it and talking to
21:32 the folks in the field like, okay, if it's not something they're gonna use, it doesn't matter. So like maybe just in general, like trying to find and navigate what really is going to be a useful
21:43 tool. We all can sit in corporate offices and be like, this is fantastic. They're gonna love this. Why wouldn't they love this? But ultimately, if it's not something that makes someone's life
21:56 easier, meets them where they are, it won't matter. So I think maybe just some of the interaction of that conversation was a little surprising to me, but both in the challenging side of that, but
22:07 also in the opportunity side of that as well. Interesting.
22:12 Anybody got any questions? 'Cause I can go on questions all day about this, but definitely anyone from the audience got a question.
22:24 I'll keep y'all in then. I got some cool stuff I wanna show here too, whenever you want. Yeah, so Nick, where's Nick? Oh, right there. So Nick, can you put, oh, you got slides up here or so?
22:37 Go past that. Go past, what I wanna do real fast here, you guys know cotton and all that thought, that's not a big deal. But it's a big deal to me, but you guys know us. I just wanted to show a
22:47 few things here, 'cause I think this is so cool. Like when I think about the people in this room, you're here for a reason because you see the power, the passion, and AI, and like what it can do
22:54 for our industry, so stop real fast there. Okay, this real quick, this is when I started my career. For those who were working this industry 20-ish years ago, EIA, right, is like the foremost
23:07 authority of all the information in the US. and the globe on energy supply, energy demand. This was our current production in 2003. US, 59 million barrels of oil a day, 56 a BCF day of gas,
23:21 okay? Now look at 2024. Go to the next one if you don't mind, bud. That's what they forecasted. That was their 20-year forecast. That was going to be the production from the US in 2024. A
23:34 decline of 10 in oil, an increase of significant portion on gas, this is tight gas sands. So remember, that's what I started my career doing, was drilling tight gas wells, right? We're popping
23:43 everything up and down the column. This is the Wolfberry, Sprayberry, some of that stuff, right? This is all the tight gas sands. Now, this is what actually happened
23:53 Like, we missed it so bad. Every bright mind in the world missed it so bad. Look at that. 132 million a day versus five and a half, almost tripled versus falling by 10. And then the gas, it
24:06 increased. But the cool thing about that gas story, for those of you remember, LNG, that used to be an import story, right? Back then in '03, we were going to build all these LNG facilities,
24:17 'cause we had, even though we forecast a 74 BCF a day gas production, the demand was gonna be 90. And they got that right The demand was about 90 last year. Chineer was a multi-billion dollar
24:28 company based on import capability, right?
24:33 Yeah
24:35 Yeah, I mean it's your point it took a long time but but the reality is is that that caused so much capital to have to be reversed and restructured etc. But now we're exporting last year almost 15
24:47 bcf a day. One of the things I would make sure that everybody should know this but it's so cool to me Largest producer in the world of oil is
24:58 Country.
25:00 United States. 132 million. No country has ever produced that much. We have. Largest gas producer in the world is US. 103 bcf a day. No country in the history of the world has ever done that
25:15 before. No country has ever done both before I don't believe either. And look at this. That's 20 years Look at what changed in 20 years like if y'all don't realize that we live in a moment in the
25:24 industry
25:28 that has changed the world more than it's ever been done. This has never happened in the history of the world. One year period, the world has dynamically changed this much by one country. That to
25:34 me is so powerful and so cool. And that was technology advancements that we've all been around. And you go back before this and now we got. com and internet and so that, and we were leveraging
25:45 that throughout the way. But AI, what is that going to do? If you don't mind, I have one more thing to show and then we can - Let me cut in one point here just 'cause we talk about this a lot on
25:56 the podcast.
25:59 I always say to everyone, I meet particularly Silicon Valley folks, we are technologically more sophisticated than any other industry on the planet when it's a game changer, when it's a lottery
26:14 ticket, when you can make a fortune on something. Drilling down three miles, three miles horizontally, doing a 97 stage track, 'cause you can drill a million barrel well. We'll go figure that
26:26 out. That's tough to do. We do that really well. If it's nickels and dimes, digitize our land files, so we don't have 12 clerks running around, we don't do that. We don't do nickels and dimes.
26:41 And at least what I've seen from the industry so far when we're out talking about AI, the industry is viewing AI as that lottery ticket. And so I actually think five years from now when we're doing
26:55 this thing, we're gonna be talking about the best AI companies on the planet or utilizers of AI. It's gonna be the energy business because of this chart you just showed. Well, I
27:10 appreciate you showing this chart and showing that snapshot from 2003 to 2024. This is something I talk about often is that, you know, if you look at energy demand projections from the EIA going
27:20 off to 2015, they're flat. And that was until about, you know, a year ago with the rise of high performance computing. What I've always said is that energy demand actually has been to increase
27:33 independent. I mean, you look at electrification, high performance computing, emerging nations, space colonization, things of this nature. And so you see this that change here And what my
27:45 belief is that AI is material, step change to get us to that next level to where we have the ability to scale energy. And so my belief is just that AI is going to allow us to increase throughput and
27:56 bandwidth to meet the world's energy demand. And I think the biggest crisis of the world basis is an energy crisis. And it's everyone in this room and in this industry that's going to solve that.
28:05 But I've never really looked at it historically in a snapshot from 2003 to 2024. And so it's cool seeing it historically. And the one thing I know about EIA is that the projections are going to be
28:15 wrong. They're going forward in a swell one way or another, so thanks for throwing us that slide. Well,
28:23 you know, if the term being word country, what would number would we be in the world? Are we four?
28:32 I saw you do the four. Yes. You know, we are on gas or, you know, the Texas as a state is on gas
28:39 To work country, Texas is third in the world, just behind the US and Russia. Well, and the one other thing I'll say, and I'll be a little dramatic here, but I truly believe this, the race for
28:52 AI is existential threat type stuff. The United States has to win this. China cannot win this race. And ultimately, at the end of the day, the way we win it is the people in this room delivering
29:07 energy. I really believe that and I hate to be dramatic but I. I think that's gonna be true, so. Yeah, that's, I think that we can touch on that for a second if you guys want to, but the bottom
29:18 line is what is the limiting factor for AI? As you said gone, it's a jug, it's energy. That's the only real limiting factor. Now, building it is a limiting factor and we got challenges on trade,
29:30 trade skills and others to be able to do that, electricians, if you guys have young folks who want to do something besides college, electricians is going to be gold for the next probably 20 years
29:42 But yeah, maybe if you, one other thing here, so if this, you pass that,
29:48 Colin, you talk about being wrong. Hold on, this is fun. This is a really cool article like I said in the earlier, I don't want to. This was talking about how bad we are at predicting future
29:57 energy demand and energy supply for that matter. Peak oil, who's heard of peak oil?
30:03 Over a hundred years, the brightest minds in the United States have been calling for peak oil. This is a cool thing. In '07, They opened up a time capsule from 1957 that residents Tulsa, Oklahoma
30:15 put in. They put in a Plymouth Belvedere, and they said, You know what? We should put some gasoline in there as well, 'cause it won't be there. Like, there'll be no gas for this car in 50 years,
30:25 right? And then if you go through this, I'll go through it all. But these next few slides are based talking about articles 1909 from 1943,
30:32 , keep going. 45, all of these are basically articles highlighting, rest of mind's at the time. Peak oil in five years, it's been hit And then if you go down, like, OK, well, we're not doing
30:42 that stupid stuff today, are we? This one's talking about - there's another one from '07. But here, these quotes here, I blocked the names out. Those are energy executives of public companies
30:51 today talking about peak oil. Like, oh, it's happening next year, 18 months. So my point is, and this is kind of chat GPT saying, while US oil production has reached impressive heights, the
31:03 peak is imminent, and future growth will require substantial investment in innovation that last line, of course it will. It always has, and we always have. So I was gonna say it was really funny
31:17 when we were raising energy fund to eight, call it circa 2018.
31:24 That's kind of the height of Tesla, mania. Nobody's gonna need oil in 10 years. I gave a speech where I got up there and I said, Hey, I wanna read some quotes from the New York Times. Electric
31:37 vehicles are sexyElectric vehicles poised to take over the market. 12 other quotes like that. And then I get up and I give the speech about how many cars are on the road, how many of those cars
31:48 will still be on the road in 10 years, how much oil demand that'll lead to, et cetera. And I went through all those stats and basically said, at the end of the day, oil demand's still gonna grow.
32:01 And then I said, Thank you very much. And I get this smattering of applause and I take two steps away and then I come back to the mic I'm gonna go, oh, by the way. Those New York time headlines I
32:11 read are from
32:14 1917, 1918, 1919. This has been going on for 100 years. Yeah.
32:20 Awesome. Maybe the last thing I said is twice now. So this, I apologize there. OK.
32:28 Unless somebody knows something I'm not aware of, every energy source in the world requires mining.
32:34 OK? Whether it is our industry extracting hydrocarbons from the ground, whether it is coal, whether it is precious metals, lithium, copper for batteries, for solvateic, you name it, right?
32:48 Windmills, everything requires mining to the materials, the inputs to generate energy, electricity.
32:55 These are a list of various energy sources. And the recovery factor, essentially, when you mine that raw product or those tools needed, those components, how much do you actually get? out of the
33:09 ground, all right? Green being, get a lot of it, 95, 90, red being pretty poor, like less than 20, 15, five. Who knows where oil and gas is?
33:23 Top two oil and gas, like we get all of it
33:30 out? 15. Go to the next slide.
33:34 Natural gas and crude, all right? So we, even though we are as an industry producing more oil and more natural gas than the world has ever seen, so we're doing it better by definition than anybody
33:47 has in the history of the world. We are only getting less than 20 of the actual known quantified products out of the ground. Is that an efficient industry?
33:60 What's the opportunity? AI, I think, will have a massive opportunity for us, 'Cause this is a challenge that is hard. All right, I'm a resident of a background, and this is a hard challenge.
34:10 but the opportunity is so large. Now, one person I showed this to is like, Well, but, you know, if you're mining coal or you're getting lithium and stuff at surface, like that's easy, that's
34:20 like strip mining, you can see it, you can touch it. Copper, not on here. But the copper industry gets over 90 recovery. And that's mining. You know, the deepest copper mine in the world?
34:34 Over two miles, right? A lot of wells will do. We'll send my team, for example. It's two miles down roughly before we go out, three, four miles. But the deepest copper mine in the world is
34:42 over two miles in South Africa, and essentially they're still getting over 90 recovery, okay? So there is ways to do it. We gotta figure it out. But that is to me so powerful about how we're
34:53 gonna meet that energy demand in the future and what AI can do for us to continue to provide abundant, affordable, essentially energy that we're gonna need if we're gonna win that AI race. Can I
35:03 answer that real quick? So I'll send one to the CEO of Diamond Back by a week Okay, it's not happening. Okay, so we're talking about this as well, is you look at the recovery factors and oil and
35:16 gas, and you look at the things that we have accomplished in this industry, you know, there's a speaking of old articles and quotes, there's this high magazine article from 1943 talking about how
35:28 the Permian-based will learn the economically viable because of the capital of that stuff that we needed, and you look at those things, and it's just funny And hindsight, and you know, we always
35:39 look at technology as some abstract thing. Like technology is actually just a creation of humans, and we can solve any problem that we want. So, you look at the previous water problems that we
35:49 have, you look at the recovery factor problems that we have, and we will figure out all of these problems 'cause it's industry, it's one of the smartest people, and we'll throw capital up those
35:56 problems to figure it out, but I think that AI is that material step change that will help us figure these problems. Like, I think AI and all of the cost smaller than sheets, I think we'll help us
36:06 out in that group.
36:08 potentially cancer, things of this nature. And so, as Chuck mentioned earlier, I think that it's a lottery ticket that'll help us figure things out. We need to help people to be recovered, less
36:19 than 5 of oil from a reservoir, if they don't fucking tweet that. Like, when people start talking about wheat oil, and you start talking about how wheat wheat 95, of it in the ground, like it
36:30 blows people's minds. And so, this is actually the biggest opportunity that I see in, you know, I think they will also increase margin. And oil and gas companies, it'll make operations more
36:42 economic. You know, obviously, underlying commodity prices can be a course function of unlocking different benefits as well. And so, this is probably the most interesting macro thing to me in
36:56 energy is if we can solve that problem. We don't hear about it enough either. Like this, to me, is something we should do a better job in our industry of explaining. 'Cause then for every young
37:05 individual That's not an industry worth going into, just like I was 25 years ago. It's a dying industry. Why are you gonna do that? Do you like to travel? 'Cause all the work's gonna be overseas,
37:17 right? What language do you speak besides English? We need to make sure the story is known, the opportunity is there, and that we apply the resources towards it, because I'll frankly tell you,
37:26 you think about enhanced oil recovery technologies? We've done that for a long time in conventional reservoirs. It is so early stages in unconventionals. I think we're one of the leading companies
37:35 doing it We're doing it across three different basins, but it is early stage, it is difficult, and it's hard to justify capital allocation towards it, but frankly, it's a huge, huge opportunity.
37:45 I got a question for you on that. We're in the entity of that technology. What's your mindset? Earlier, we talked about this competitive industry, but you know what, this industry really laughs
37:55 behind the tech industry is this open source, collaborative mindset. This is actually what I appreciate what you guys are doing with a lifesaver is collaborating and sharing information You know,
38:05 it's funny, Chuck and I were sitting on a private equity fund one time and they're talking about how, uh, edited the industry is and like, oh, we can't be sharing information. And I looked at
38:15 them and I said, Hey, how much capital would you don't burn trying to figure out what's next? And they just looked at each other and all, all smart. It's like, imagine if the industry was
38:22 actually sharing information on best practices, how do you view that as of running operations at continental and admittedly in a, like, how do
38:34 you think that there's advantage, you know, do all both rise up and tied if we're helping each other and sharing information on some of these enhanced oil recovery techniques and things of this
38:43 nature and making sure, you know, one thing that I think is an interesting dynamic of this is like, look, we chewed through some of our best rock with the first versions of practice, right? And,
38:56 you know, if we had better practice lines, make efficient processes, we could have extracted more oil out of those. So there's also a, a, Kind of national security and sovereignty dynamic here
39:09 of, you know, we're stewards of making sure that we've shacked all the resources that we have
39:15 And then providing that for American citizens. So what's your thoughts on that of where the industry should be at in terms of helping each other and sharing a nation Law also relies
39:28 on the competitive business as well. Yeah, I think it's a challenge I think it's um, I think we do it and we do it in certain forms and fashions better than others I think what you highlighted
39:35 there, you know, the the beauty of capitalism is kind of what is going to lead to some of those things of Inefficiency in early stage things we do But I think that you know back to the life-sare
39:45 project. That's what we started with safety Could we took kind of take that fierce competition out of it? I think that each each opportunity is going to maybe be unique EOR so early on and the
39:56 capital dollars are significant I think you're still gonna have Depends on if you can find there's some things that are consortiums or some things that are getting involvement from, whether it be
40:06 state or federal, like those ones are gonna have more sharing because that's the definition of them, right? You're sharing resources to go fund it. So in general, maybe my answer to your question
40:14 is, if you've got vested interests in the input, then you've got collective vested input there. You're gonna have collective vested input in the outputs. If it's one company or two companies
40:25 taking the risk, then they're probably gonna have to hold that tight because what's the benefit of them taking that risk? I actually, and I may be a little Pollyanna on things. I honestly think a
40:38 lot of the things we're building, people are gonna be willing to contribute their data, let it be anonymized in effect for a discount on
40:49 the software. Joseph and I've talked a lot about this. We're gonna go build well failure bot, and it'll be interesting to see, do we turn that into collaboration? 'cause I do think the more
41:01 information in that bot. is gonna lead to better predictives, better outcomes, et cetera. And I think the mindset when you really think about it is, am I truly arbitraging and making money
41:18 because I can put Wells back online faster? Probably not. And so do I share. So I think that's gonna be a fascinating part of building all these tools because we saw it with Bill Vown-Gotten back
41:32 in the Shell Revolution. Bill took everybody's logs and he gave you an answer and he told you he had other logs. And if you contributed, he would use your logs, your URs, et cetera, but he
41:46 wouldn't disclose what he had. But wink, wink, nod, nod, you kind of knew what he had. So I do think there's models for it out there in our industry and I'm optimistic. I'm optimistic too on
41:59 the same. I think once again, it depends on you, I said I didn't mean to go on well work. If the arbitrage opportunity for incremental value creation by being an early mover isn't that large,
42:10 that's where we should start, those opportunities. If it's early days of shale technology, shale revolution, when there's tens of millions of acres to go be captured, right? And there's a lot of
42:21 upside to somebody who has a thesis center on, like those are gonna be the harder things, I think, but that's part of, once again, it's capitalism. Yeah, absolutely. My dad's best friend is a
42:31 Methodist minister, and he preached at a really small church. And so periodically, when he would go out of town, he asked my dad to give the sermon. And first time my dad did it, he was really
42:43 nervous, and he goes, Joe, I need some advice. What do I do? And he goes, Oh, hell, it's pretty easy. Just get done in time. So you beat the Baptist to the cafeteria. At the risk of
42:56 delaying cocktail hour, another five minutes, does anybody have any questions? 'cause I've got one last one.
43:07 Yes. So, John, my background is all sorted. All in this is lights on your screen, so you
43:21 can see
43:23 everything that you
43:26 need. You could mention on the top of your screen. The end can be, if it's sharp or crucial. But the other center now, what exactly is it about here that would make it sharp? Yeah. I think that,
43:45 good question. I think specifically when we talk about recovery factor, we have imperfect information underground. The pick your shale play, which the majority of our natural resources are
43:48 reserves or shales at this point. We have maybe a data point every mile, maybe every five miles, maybe every 10 miles. Not a lot of companies these days are logging wells, because they don't need
44:02 to, right? So ultimately, that imperfect information you're dealing with creates a massive challenge. Now that's just on characteristics of the rock, lithology, thickness, whatever. Now on top
44:14 of that pressure, temperature, overall conditions of that now changing in called the fourth dimension over time. So there's so much we do not know. I think I've heard before, we know more about
44:27 the surface of the moon than we do about our reservoirs, right? That's just because we sample it so infrequently So the challenge is massive from a just lack of, you know, direct measurement. We
44:39 have a lot of empirical evidence. We have a lot of things we're capturing every single day. I think the sheer challenge of that though is that just so much information, right? Pressure information,
44:48 sometimes companies are taking every second or every minute on every single well. Like, that's a lot of data. To me, what encouraged me so much about AI is now you have a tool to leverage that,
44:57 to tackle that. It was never going to be tackled or we weren't going to get to it very quickly. using even very, very bright minds and we're blessed to have some of the brightest minds in the world
45:06 in this industry. So just that sheer compute power, that opportunity to interact with it in a much, much faster, this is kind of a dumb comment, but I remember this development 10 years ago,
45:16 Continental, we used to use Excel to its fullest extent where we overloaded the capacity of Excel on a local machine, right? So now we went from having to like run models at midnight and then go
45:29 home and hope that it didn't make him error and you get back at seven, eight in the morning and be so pissed off if it had an error, right? Then we went to, well, let's run it on the cloud. All
45:38 right, before the cloud was like a series of machines and then it was cloud. And then like today with technology, just the compute power, that stuff that we were waiting 10, 12 hours to find out
45:50 there's an error, that's like in seconds. It's a decade ago. So that encourages me the most, just the compute power, opportunity to tackle these challenges with this amount of data that has been
46:01 so, so onerous. for us in the past. John, do you want to comment on, we know more about the surface of the moon than our reservoir. So I was on an offshore rig show video, and so it shows our
46:12 de-team out of the Netherlands, and one of the head scientists, we were running this new NW tour down hall, and he's a PhD in
46:21 astrophysics and aerospace engineering. I'm sitting there looking in the galley, eating with them one day, and I'll do it with them. I'll keep building on the gas. But I'm not working on space
46:29 travel and rockets And he's like, dude, space is boring. You can see what you're working on. And he's like, oh, yes, you can't keep working on it. So much more interesting. And so that was
46:39 always a really, you know, sticking my mind forever. But I don't mind if you come with a quote. So kind of the things, kind of, what you're saying on, on why is it like that and how I can help.
46:51 So I'm a reservoir engineer, my background. And, you know, in the reservoir down to miles, whatever depth you're at, you've got oil, You got gas, you got water. and it's at the source
47:06 rock and it's fractured and it's gone. And it's about what's movable, right? And so one of the most nebulous things for any reservoir engineer that's ever done a simulation is what is relative
47:13 permeability, which is what's the ability of water to flow over oil or oil to water, and it's so nothing. It's so hard to figure out. If we get to a point where we can leverage the data, it's
47:25 gonna be very specific to that particular situation in that rock with all the data you've got If we can figure out how to make the oil and gas food relative to the water with either chemicals or
47:38 fracking or whatever, we can start figuring out that relative perm issue, then you'll start making an incremental change there and that requires, 'cause anytime you've ever won a reservoir
47:46 simulation, you can make those numbers. It is a non-unique solution in a massive way. But I think that could be one way to make a little bit of change there, but
47:59 yeah I mean, it's ultimately. pattern recognition. And I think the way we think about it here at Collide is there are kind of three legs to the stool. There's big tech and all the tools they're
48:13 creating, language models, et cetera. Somebody's got to be an expert in that and know what they can do, can't do at any given moment. That's kind of our job. You got to translate it to speak
48:25 energy And you saw John earlier today talking about data and not the insignificant problem of running things through data pipelines and figuring that out. That's our job. But the subject matter
48:39 expertise is our clients. Tom, you're going to tell me, hey, go out there and find a log that has this signature on it. It's got this production profile 'cause I have figured out that they have
48:52 messed up the frack on that. And if you can find me a big enough area, we can go in and do refracts or whatever the case may be. And my job is to give you the tools to go do that. And it's gonna
49:02 show it's in the backend, on this part of the backend, it's gonna be the sector. It's a Permian, it's gonna be a totally different answer. It's gonna be a different answer. It's gonna be very
49:12 unique to that situation. So in that way, it's kind of like the lifesaver thing. It's as specific to that. It's the way to get that into the whole idea. I totally wanna drink, but I can't let
49:28 you go I need a cool Harold Ham story. This is hero boy worshiping here, so give me a cool one. Oh man, there are a lot of cool Harold stories. He's a phenomenal American. I'll say, for those
49:42 who haven't read his book, I'd highly encourage it, Game Changer. He is the most, I don't know that many billionaires. I think in our industry, we're fortunate to be around a few of them that
49:51 are very humble people. Harold is the most humble billionaire, I'm sure, by far in the globe He's the.
49:59 youngest of 13 sharecroppers. If you don't know what sharecroppers are, that is like as poor as you could be when he was more almost 80 years ago. But when you think about one store that always
50:09 stood out to me, so Harold, he
50:13 kind of grows up, gets to oil and gas, service side. He always had the passion and the vision and talks about it in his book of wanting to be an operator. He wanted to be essentially a geologist
50:24 to know where the oil is, how do you find where it is? And then, so fast forward, he's a young father, his kids, he's running a successful business, trucking business in the industry. He's
50:34 doing that however many, 18 hours a day. While his kids are asleep, he has a small office off the side of his bedroom. And he is going to the Oklahoma City log library. Who knows what a log
50:49 library is, okay? Check out, they have sounds, you check out logs, they check out books at a library. He's going to Oakland City log library to check out logs because he had an idea about a
51:00 trend in the end of Darko Basin. And so he starts mapping between the hours of whatever one, whatever Wells kids are sleeping. I don't know if he's ever sleeping. And then he puts together this
51:12 and he goes out, he gets himself the confidence of it. He doesn't go raise money by anybody. He goes out and starts buying individual wells that he believes have behind pipe pay in that zone And
51:22 then frankly, through his own mapping, his own money, his own risk, he ends up putting together a very, very successful recompletion program. He's buying these wells for X PDP, value of the
51:33 time, whatever that may be, spending the money to go out there and pop them and everyone, if they're just more confident, it's more confidence. He's buying more than he's buying more. And
51:40 frankly, that was the origin
51:43 story, if you will, of cognitive resources. That was Shelley Dean Oil Company, so his two oldest daughters, Shelley and Dina
51:52 To me, I just, I can still imagine him doing that at night. Mapping is better. That's so cool. Hey John, appreciate you coming down.