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00:00:08.160Welcome everyone to the Directed IRA podcast.
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00:00:09.199This is Mat Sorensen.
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00:00:13.039Excited to be with you today because I have a special guest, Troy Eckard, with me.
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00:00:17.120He is a pro in oil and gas investing and mineral rights.
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00:00:22.719And so I want to have him on today to talk about how your IRA can invest in the mineral rights.
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00:00:28.719I know that might sound crazy to some of you who haven't heard about self-directing, but this is something your IRA can do.
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00:00:33.840And we're not talking about buying big publicly traded oil and gas companies like Chevron or something else.
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00:00:43.439We're talking about buying actual mineral rights where you can own these assets, not a stock that otherwise owns some of this stuff, but you can directly own these ownership rights.
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00:00:47.039So, Troy, welcome to the Directed IRA podcast, and thanks for being on.
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00:00:48.079Hey, thanks for having me.
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00:00:54.560I'm always grateful to be on to educate and inform investors and see how we can maybe make them more aware of what value lies in U.S.
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00:00:56.000oil and gas mineral rights.
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00:00:56.640All right.
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00:01:04.480Well, I know you've been doing this for a while and you've helped, I don't know, hundreds of millions, billions of dollars get invested into oil and gas.
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00:01:16.560Um why don't we talk about the different types of oil and gas investing here as people are thinking that are new to this and are like, how do I invest in this asset class if I've never done it before?
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00:01:23.120Um we'll talk about the IRA component next here, but maybe let's just set this up first and into how you see people investing into this.
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00:01:33.439So the main thing that that keeps it from being complex, Matt, is that I always like to say if you look at oil and gas the same way you do real estate, traditional real estate, it makes it easier to understand.
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00:01:33.920Okay.
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00:01:54.959So if I want to go out and I'm I'm a developer and I say, hey, I would love to develop property, I'm probably gonna go buy raw land that's not entitled, probably agricultural land, and I'm gonna pay two or three thousand dollars an acre with the anticipation through entitlements and easements and right-of-ways and annexation, it's gonna have a higher, greater value.
00:01:54.959 -->
00:01:56.560Minal rights are the same way.
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00:02:02.480So you've got all these ranchers and farmers across the United States who are out there in the middle of nowhere.
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00:02:04.959It just happens that's where the oil and gas is buried.
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00:02:11.360So these ranchers and farmers they own raw land, like a real estate developer, but they don't want to give up their ranch.
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00:02:21.120Well, the United States Real Estate Department allows us, or the real estate department, real estate industry allows us to lease or sever sell the mineral rights.
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00:02:25.919So it became a really fungible asset for these ranchers and farmers to be able to sell.
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00:02:33.439Now, when you ask that question about how mineral rights and what the space is, we go to the next step, which is the development stage.
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00:02:35.599Well, I don't have $10 million to drill a well.
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00:02:38.879I'm just a rancher or farmer, and I don't have $10 million to go drill a horizontal well.
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00:02:45.120So I need somebody to lease those mineral rights from whoever owns it, and that's gonna be an Exxon or a Chevron or somebody else.
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00:02:45.919They'll go drill it.
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00:02:47.439That's kind of the development stage.
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00:02:50.560And then once they're up and producing, then you have more like what I call Reese.
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00:02:55.199Somebody who says, I just want the income and the cash flow, and I want to make money for the next 20 or 30 years.
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00:02:59.759So we do mineral rights, where the raw land developer buying the mineral rights that are gonna be drilled on.
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00:03:05.919We also participate in the in the drilling of the wells, which is the vertical integration, drilling and developing the cash flow.
00:03:05.919 -->
00:03:10.319And then we also have producing developed properties where a lot of our clients say, I just want the income.
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00:03:12.719I don't need to drill, I don't want mineral rights, I just want income.
00:03:12.719 -->
00:03:16.719So that's kind of the three phases we do mineral rights, drilling, and income.
00:03:16.719 -->
00:03:19.680And that all ends up being the space that we focus on.
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00:03:20.240Okay.
00:03:20.240 -->
00:03:23.759And there's different, I guess, risk profiles to those.
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00:03:26.159There could be different tax incentives, right?
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00:03:29.599The government puts some tax incentives in the drilling and exploration.
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00:03:30.000Sure.
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00:03:32.240But there might be more risk in that.
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00:03:36.400You don't know what it's going to be producing necessarily.
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00:03:40.719So why don't you talk about that when you just are talking to investors in general?
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00:03:50.240Um, not that one type of investing is better than the other, but um, how should they be thinking about it for their like investment portfolio?
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00:03:53.039Or what do you see some of like the smart investors doing?
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00:04:01.840Well, to be candid with you, whenever I looked at oil and gas 15 years ago before the new technology, you almost had to risk minerites the same as drilling a well.
00:04:01.840 -->
00:04:08.000Because uh we used to drill wells that were seven and a half inch hole in the ground the size of a paper plate at a picnic.
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00:04:15.840You're trying to go down one or two miles and hopefully you hit a buried river channel or a buried deposit where dead plants and animals migrate, a pond, a lake, a river, right?
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00:04:17.120So it's it was high risk.
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00:04:19.839It was shooting the dart in the uh in the dark.
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00:04:21.199Today it's not like that.
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00:04:24.399Today we're talking about trying to hit the Grand Canyon with a rock.
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00:04:30.879These things are 40, 50 million acre reservoirs that cover hundreds of thousands of miles in aggregation.
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00:04:42.399So today the difference is I can actually look at mineral rights in extremely low category of risk, meaning that I'm if I buy in the right spot, I have extremely low risk.
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00:04:54.720And on the flip side of that, if you and I were talking about drilling where there is substantial tax write-offs against your ordinary income, 15 years ago, I'd have to tell one of my partners, look, we got a 35% chance of hitting the well and 65% of a dry hole.
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00:04:56.399And they'd be like, Well, I'm not doing that.
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00:05:05.360So it really took even high net worth investors and high income investors, it separated the men from the boys quick, because like you had to be willing to lose your money six out of 10 times.
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00:05:06.800Not a lot of people play that game.
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00:05:07.040Yeah.
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00:05:08.240Today it's different.
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00:05:14.240Today, we probably are drilling, uh, we've drilled probably or participated probably 80 or 90 wells in the last five years.
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00:05:17.279We've had zero dry holes and only two wells that probably won't pay out.
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00:05:20.480So you're running 98 to 99% success rate.
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00:05:29.040So now all of a sudden I look at the risk profiles and I say, really, the risk profile is more about the capital you're going to use than the results.
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00:05:37.439If I buy mental rights, I'm targeting an 11 to 18% cash-furn cash return, 15% of my income's tax-free because of depletion.
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00:05:38.480And it's an asset.
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00:05:43.519I write one check, no expenses, no more bills, no capital, 25, 50 years of cash flow.
00:05:43.519 -->
00:05:44.480It's a no-brainer.
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00:05:46.319I call it the most boring investment on the planet.
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00:05:49.920Write a check, start receiving revenue in six months, you get a check for 25 years.
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00:05:51.600I like boring and I like checks.
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00:05:52.000Right.
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00:05:53.759But now I'm a now I'm a W-2-er.
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00:05:55.040Now I'm making a lot of money every year.
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00:05:57.759And I'm thinking, man, I do not want to give my taxes to the government.
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00:05:59.199I can invest this more smartly.
00:05:59.199 -->
00:06:05.199So now I move to the second category, which is working there, which is what we call the drilling and expiration side.
00:06:05.199 -->
00:06:17.279Now, when I put in $100,000, the IRS, because of the new one big beautiful bill, says if you invest $100,000 and you have direct ownership of it, you can write 100% of that money off your taxable income.
00:06:17.279 -->
00:06:23.360I make a million dollars, I put $100,000 in drilling, I now only report $900,000 in taxable income.
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00:06:25.199Huge upfront tax advantage.
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00:06:25.519Yeah.
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00:06:28.879I also get 15% of that income without having to pay taxes on it.
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00:06:31.920So I get a double edge, tax write-off and tax-free income.
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00:06:34.639It's higher risk because I got to drill the well.
00:06:34.639 -->
00:06:38.399The cost can vary depending on cost coming up and down, and I'm not sure the quantity.
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00:06:43.199So the quantity has a direct reflection on my payout, how soon, how fast, and how much.
00:06:43.199 -->
00:06:48.879And then, of course, the last thing is, of course, going to be midstream, which is the pipeline business, which we're also in, but that's just like owning a toll bridge.
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00:06:53.040You're just charging a tariff and you're making money because somebody's moving gas or oil through your pipeline.
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00:07:01.759But it's a fully integrated uh concept, and each one has its own attributes if you know how they work and they interlock with one another.
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00:07:08.000Yeah, and so I think a lot of people who are investing in oil and gas or that are new to it, there's some things to learn there.
00:07:08.000 -->
00:07:11.279There's a great um kind of overview of the landscape.
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00:07:31.759And I think when people think about their buckets of money, and particularly when we talk about an IRA investing in this versus some non-IRA money, and they're like, well, I want to do some of that drilling, and I like that tax write-off, the IDC intensive drilling cost write-off, where that I put $100,000 in, I get a hundred thousand dollar deduction off my W-2 or my business income.
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00:07:33.199Um, we love that.
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00:07:34.720I mean, I'm a tax lawyer, right?
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00:07:36.240I mean, that's a great tax strategy.
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00:07:39.360We don't want to chase tax write-offs, I want good investments.
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00:07:45.920But if I get if I get an incentive to do that, I'd much rather do that with my non-IRA dollars.
00:07:45.920 -->
00:07:55.680But a lot of people who are building for retirement and they're thinking of, you know, $100,000 in their IRA that's in a mutual fund right now, they couldn't even tell you the name of it, right?
00:07:55.680 -->
00:08:01.199I mean, they're not trying to get tax write-offs with their IRA money or their old 401k.
00:08:01.199 -->
00:08:03.920What they're trying to get is return, right?
00:08:03.920 -->
00:08:04.160Right.
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00:08:12.240They're trying to get income off of this, or they want this $100K to be $300K, you know, 10, 15, 20 years down the road, right?
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00:08:16.720Without having to put more money in, just the investment returns and the compounding and the gains of it.
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00:08:24.079So um so I think our income stream is more attractive to people with their IRA.
00:08:24.079 -->
00:08:28.399Um so is this the more of the mineral rights side?
00:08:28.399 -->
00:08:43.679I mean, I think just from a, you know, the typical advisor, even a tax advisor on our side is, you know, agnostic to the investment or the returns, but just from a structure and the buckets of money, if I'm thinking of my IRA, I'm going down a mineral rights pathway.
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00:08:52.320Yeah, personally, I would never invest anything that has a loss or even really, in my view, a potential loss inside my IRA because it's already money that I set aside.
00:08:52.320 -->
00:08:55.279I've already taken the tax advantage by developing the IRA.
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00:08:55.519Yeah.
00:08:55.679 -->
00:08:57.679The last thing I want to do is deteriorate the value.
00:08:57.679 -->
00:09:00.720I mean, the idea is whether I'm growing at 6% or 16%.
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00:09:04.159Every year I need that IRA value to go up.
00:09:04.159 -->
00:09:05.440I don't need to have risk.
00:09:05.440 -->
00:09:07.600I can't take losses inside my IRA.
00:09:07.600 -->
00:09:11.519So I tell my clients, never invest in working interest inside the IRA.
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00:09:12.000Never.
00:09:12.000 -->
00:09:17.679Because you want that to be literally a compounding event that grows tax free.
00:09:17.679 -->
00:09:23.200So then as you get with your tax planner, your tax strategist, they say, okay, now we're at the point of extraction.
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00:09:28.320I need that dollar to turn into $50, and I need that $50 to come out as cheaply as I can.
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00:09:34.320I've never put anybody into a working interest position inside of a retirement account or a qualified account.
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00:09:39.600I do tell them it's an unbelievable investment when it comes to mineral rights because I like what it does.
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00:09:44.480Um, the other thing I like is that when you think about the two, they somewhat complement each other.
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00:09:53.440So we have a lot of our partners will buy mineral rights in their IRA, and we happen to be drilling on the same uh leasehole that the mineral rights are on, they'll take the working interest position.
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00:10:00.639So when you look at the 100% extraction value of the oil and gas and ground, they go, I'm getting it on the minerals and I'm getting the working interest out of my own wells.
00:10:00.960 -->
00:10:01.120Yeah.
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00:10:12.879And it really, it really is a very complementary benefit factor, but it's like you said, it's the right dollar being used for the right reason to maximize gain, maximize tax advantage, and minimize loss.
00:10:13.279 -->
00:10:20.799Yeah, as people are out there investing, I mean, I know there's different structures and way people do this from different fund structures and everything.
00:10:20.799 -->
00:10:23.200Um, how do you guys structure your investments?
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00:10:30.000If someone's buying uh mineral rights, um, like what does that look like from a document and process standpoint?
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00:10:30.559Sure.
00:10:30.559 -->
00:10:40.080And then if there is a stream of income on that, like how long is that typically um where that stream of income could be being uh paid to the IRA?
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00:10:48.480Yeah, so having been in the investment business since 1985, had my own FINRA broker dealer for 22 years, I personally don't like structured ventures.
00:10:48.480 -->
00:10:51.360I don't like SPVs, I don't like LLCs and stuff I can avoid them.
00:10:51.360 -->
00:10:59.600Because you take away from the direct ownership, and now you have this whole cumbersome document, management agreements, operating agreement, you've got all these.
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00:11:03.440And the person who creates it nine times out of 10 sets everything up in their favor.
00:11:03.440 -->
00:11:09.120So when you finally have questions to ask, or you want reporting, like, well, you don't have the right to that, I don't have to give it to you.
00:11:09.120 -->
00:11:12.799So what we did at Eckert is we structured everything under a purchase sale agreement.
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00:11:23.360So when you buy mineral rights, we might go out and buy minerals in 20 different producing units with maybe 10 different oil companies, a little bit from Continental, a little bit from Exxon, a little bit from Chevron.
00:11:23.360 -->
00:11:32.159We blend that into a portfolio, five to $20 million portfolio, and then you can invest $25,000, $50,000, $100,000 and you'll get your pro rata share.
00:11:32.159 -->
00:11:37.759But it comes in a purchase sale agreement, which means it's fractional minerals, you own it, it's real estate.
00:11:37.759 -->
00:11:47.200We manage it for you for free, and that allows you the flexibility of having a piece of real estate that you own that's got a management agreement, and you can always go online and sell it.
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00:11:49.360We have an online market, you can do that, right?
00:11:49.360 -->
00:11:59.360When you get to the back half of the equation, which is the income, you say, well, what does that look in terms of return on my money, the when, the how, the now, and how long?
00:11:59.360 -->
00:12:05.919When it comes to working interest, it takes about 12 to 14 months because you got to drill the wells, turn them online, complete them, get your contract.
00:12:05.919 -->
00:12:06.559It takes a little longer.
00:12:06.559 -->
00:12:08.960It's like building a self-storage or building an office building.
00:12:08.960 -->
00:12:10.159It takes a little bit of time.
00:12:10.159 -->
00:12:15.200When you buy mineral rights, the only mineral rights we buy are already producing income the day we buy them.
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00:12:19.120So my company buys them first, then we invite our partners to participate with us.
00:12:19.120 -->
00:12:21.200But I only buy cash-flowing assets.
00:12:21.200 -->
00:12:25.840So let's say, Mat, you wrote a check today in your IRA and said, I'm gonna be 100,000 IRA.
00:12:25.840 -->
00:12:29.360180 days are roughly six months, we already have first revenue.
00:12:29.360 -->
00:12:31.120You'll get your first check.
00:12:31.120 -->
00:12:37.600The first two or three checks are large because we've got four or five months worth of compound revenue that we haven't paid out yet.
00:12:37.600 -->
00:12:38.639That's bigger checks.
00:12:38.639 -->
00:12:41.360And then it goes just to a steady 80 every single month.
00:12:41.360 -->
00:12:46.000Those wells are projected to last anywhere from 20 to 75 years of income.
00:12:46.000 -->
00:12:47.279Now, let's be realistic.
00:12:47.279 -->
00:12:48.879It's like a two-liter coke.
00:12:48.879 -->
00:12:53.200Starts out full, you shake it, it's gonna come out very heavy in the first four or five years.
00:12:53.200 -->
00:12:57.279Once it declines and levels off, now it's gonna last 25 to 70 years.
00:12:57.279 -->
00:13:02.879Well, I don't care if I've got either most, if not all, my money back in the first five or six years.
00:13:02.879 -->
00:13:07.360I hope it lasts 25 years because I can recycle my money and put it back to work.
00:13:07.360 -->
00:13:12.480Most of our partners have found minerals are really, really a great compounding asset.
00:13:12.480 -->
00:13:17.200Put the money in, take the revenue, two or three months later, you can buy some more acres and buy more acres.
00:13:17.200 -->
00:13:19.279Some partners started out with one or two portfolios.
00:13:19.279 -->
00:13:22.960They're now in 30 or 40 portfolios using their income to keep compounding it.
00:13:22.960 -->
00:13:26.159And I think that's kind of the nice thing about the uh the mineral rights.
00:13:26.159 -->
00:13:29.279I don't have to worry about capital calls or undue expenses or liability.
00:13:29.279 -->
00:13:31.200It's just money in, money out.
00:13:31.200 -->
00:13:46.159The working interest is a little more dynamic in that if I get, if in my mind, this is the way my brain has thought for 42 years, is that look, if I can write a check for 100,000 and 37,000 or 37% was going to go to the IRS, I only need 63% to be kind of even mentally.
00:13:46.159 -->
00:13:47.759I was gonna give it to them anyway, right?
00:13:47.759 -->
00:13:51.919Once I hit 64%, I'm gaining on what I would have paid the IRS.
00:13:51.919 -->
00:13:58.799If you have the kind of wells we have, we're averaging about, I don't know, 45 or 50% return first year, first 12 checks.
00:13:58.799 -->
00:14:03.919So by the 18th month, I'm pretty well at mental breakeven between what I owed in tax and money.
00:14:03.919 -->
00:14:05.840Now I'm getting more money back.
00:14:05.840 -->
00:14:09.919And if you do that each year, get my tax write-off, revenue next year.
00:14:09.919 -->
00:14:12.159I use the revenue plus next year's income.
00:14:12.159 -->
00:14:19.919We we imagine that you can almost have a two and a half to three X on investment at the end of five years, because I'm just re-compounding it.
00:14:19.919 -->
00:14:27.279I like to say to my partners, Matt, I like to say, I want to be your biggest tax bro, I want to make so much money for you that you're mad because I keep giving it back to you so quick.
00:14:27.279 -->
00:14:29.039But that's how you get wealthy and only gas.
00:14:29.039 -->
00:14:29.919That's what Exxon does.
00:14:29.919 -->
00:14:31.440They drill, they produce, they compound.
00:14:31.440 -->
00:14:32.960They drill, they produce, they compound.
00:14:32.960 -->
00:14:36.639Your clients, my clients, our participants that we're giving advice to.
00:14:36.639 -->
00:14:39.120We're teaching you how to be like major oil companies.
00:14:39.120 -->
00:14:41.679You're compounding your value by consistent investing.
00:14:42.080 -->
00:14:44.080Let me go back to the mineral rights.
00:14:44.080 -->
00:14:48.000You're talking about buying kind of, you know, some mineral rights.
00:14:48.000 -->
00:14:55.120You talked about coming like a package almost, yeah, um, where I've got an undivided interest or a fractional interest in different wells.
00:14:55.120 -->
00:14:58.480So I'm not necessarily all in on one well.
00:14:58.480 -->
00:15:01.600Is that intentional to like kind of diversify me around?
00:15:01.600 -->
00:15:03.679Or why are you structuring it that way?
00:15:04.000 -->
00:15:05.279Well, it's it's for multiple reasons.
00:15:05.279 -->
00:15:22.240You hit on the number one, which is diversification, because the bottom line is if I bought like the best mineral acreage in the middle of the Permian Basin in West Texas, and it's diamondback, and Diamondback owns a million acres, but it could all be class A, and they go, based on capital and based on drilling rates, we won't get to that for seven or eight years.
00:15:22.240 -->
00:15:25.919So we own a gold mine, but nobody's got a shovel in the ground.
00:15:25.919 -->
00:15:27.840I need that oil and gas to flow.
00:15:27.840 -->
00:15:34.720So what we try to do in addition to that comment, we also value minerals from multiple components.
00:15:34.720 -->
00:15:38.639Like, for example, we could have Exxon, Chevron, and Conico, three majors drilling.
00:15:38.639 -->
00:15:44.960We run analytics on them, we say out of all three of those companies that are all major multi-billion dollar companies, Exxon's not the best.
00:15:44.960 -->
00:15:48.159They take longer, they spend more, they produce at a smaller choke size.
00:15:48.159 -->
00:15:50.879Exxon thinks oil in 50 years is worth more than oil is today.
00:15:50.879 -->
00:15:56.080Whereas Conico Phillips says, we like oil price today, we like a return on money, so they open the spigot up.
00:15:56.080 -->
00:16:01.039So my rate of returns faster on Conco, even though Exxon is a much more larger company, right?
00:16:01.039 -->
00:16:09.200So in our analytics, we're looking at everything from price per acre, uh how many wells they're going to drill, uh, what kind of results they have.
00:16:09.200 -->
00:16:13.840It's a very sophisticated uh way to do business today, never liked this before.
00:16:13.840 -->
00:16:18.55915 years ago, we didn't have the internet, we didn't have the scraping, we didn't have the data.
00:16:18.559 -->
00:16:24.639Today I can tell you every well drilled in the United States, what they've drilled it, why it was good or bad, and then you can run analytics across it.
00:16:24.639 -->
00:16:28.720It's changed the game, lowered the risk, increased the profitability.
00:16:28.720 -->
00:16:31.519Very few companies know how to play the game.
00:16:31.519 -->
00:16:33.919We just have created a phenomenal team that does that.
00:16:33.919 -->
00:16:43.519So now when you look at a portfolio and you say there's 20 tracks with 20 different companies in there, I've got 20 horses in the race, and we have a bet on all of them.
00:16:43.519 -->
00:16:44.399They're all going to win.
00:16:44.399 -->
00:16:47.679I just don't know which one's gonna be the third, but I don't know who's gonna win the Kentucky Derby.
00:16:47.919 -->
00:16:48.639Yeah, yeah.
00:16:48.639 -->
00:16:50.240Um, okay, great.
00:16:50.240 -->
00:16:53.120Now I think uh super helpful.
00:16:53.120 -->
00:17:09.599I know you've talked a little bit about kind of some of the fraud in the space, and I know some technologies you're explaining has made it better for at least good operators to um analyze and minimize risk, but it still seems like there's fraud out in the oil and gas industry in general.
00:17:09.599 -->
00:17:14.799Uh I know you've been around, and ECRI's been around, Eccrid Enterprise has been around for decades.
00:17:14.799 -->
00:17:16.880It's been around for a while.
00:17:16.880 -->
00:17:22.400Um what how what advice do you have for investors as they're looking into an operator?
00:17:22.400 -->
00:17:24.720And this isn't investment advice today, by the way, guys.
00:17:24.720 -->
00:17:29.759We're I'm just trying to give you Troy here because he's had a significant amount of expertise in this space.
00:17:29.759 -->
00:17:33.279He spoke at our Alt Asset Summit before, he's gonna speak again.
00:17:33.279 -->
00:17:37.920Um we've seen a lot of clients' IRAs invest with them and they've had good success.
00:17:37.920 -->
00:17:46.240So I don't mean this to be any endorsement anyway, but um you seem to have done a good job and kept a clean track record.
00:17:46.240 -->
00:17:49.920Um but what should investors be looking for?
00:17:50.400 -->
00:17:51.759Well, I'm I'm very biased.
00:17:51.759 -->
00:17:58.640So when I when I think about my career, I started off with a premise why not just do it right from the beginning?
00:17:58.640 -->
00:18:02.000Why try to figure out how to you know gerrymander the results?
00:18:02.000 -->
00:18:05.519If you're honest and you tell the truth, I've been doing this for almost 42 years.
00:18:05.519 -->
00:18:08.720I've never had a single lawsuit or a single complaint in 42 years, ever.
00:18:08.720 -->
00:18:10.240Regulatory anything.
00:18:10.240 -->
00:18:15.519In addition, um, we're probably the number one sponsor in oil and gas to send out more revenue than anybody else.
00:18:15.519 -->
00:18:18.400We just crossed $200 million out the door in cash flow out.
00:18:18.400 -->
00:18:21.200So, with that being the basis, I'll tell you how I got there.
00:18:21.200 -->
00:18:22.880How I got there is simple.
00:18:22.880 -->
00:18:29.279Um, any any oil and gas sponsor, real estate sponsor, anybody else starts with the premise you got to know the who.
00:18:29.279 -->
00:18:35.920Tell me who you are, how long you've been in the space, what gives you the credibility, what gives you the expertise, what gives you the experience.
00:18:35.920 -->
00:18:40.400You're fine most of these bad actors have about a two-year resume.
00:18:40.400 -->
00:18:42.640Oh, I've been in oil and gas since 2022.
00:18:42.640 -->
00:18:43.359What'd you do before?
00:18:43.359 -->
00:18:48.240Well, I did dog houses, pet food, and I did some buying flips and mobile homes in the 1980s.
00:18:48.240 -->
00:18:52.160The who is incredibly important, just like you as a tax expert.
00:18:52.160 -->
00:18:54.720I'm coming to you because of your expertise.
00:18:54.720 -->
00:19:01.119If you said I just got out of college yesterday, I'd be like, Well, I'm glad you graduated first year class, but what do you know about practical application, right?
00:19:01.119 -->
00:19:02.880The second thing is track record.
00:19:02.880 -->
00:19:05.759And this is the biggest default that investors have.
00:19:05.759 -->
00:19:07.279You're not getting a tracker.
00:19:07.279 -->
00:19:13.839Every mutual fund, stock, REIT, every single company says, here's who we are, what we did, and how we performed.
00:19:13.839 -->
00:19:16.960Investors lose their mind when it comes to the alternative asset space.
00:19:16.960 -->
00:19:19.279It's like, show me what you've done.
00:19:19.279 -->
00:19:23.440Prove to me you've ever made the returns you're saying you can make on this investment.
00:19:23.440 -->
00:19:24.559You may be a beginner.
00:19:24.559 -->
00:19:28.079I'll give you credit for being a beginner, but I got to chalk that up as to partial risk.
00:19:28.079 -->
00:19:30.640So it's the who, it's the track record, right?
00:19:30.640 -->
00:19:32.400And then it's the transparency.
00:19:32.400 -->
00:19:33.839What are you charging me?
00:19:33.839 -->
00:19:35.119Now that may sound petty.
00:19:35.119 -->
00:19:38.240It's like getting croissants at a French bakery and going, I'm not eating the croissants.
00:19:38.240 -->
00:19:39.920You tell man what you made on profit and the croissant.
00:19:39.920 -->
00:19:42.240He's gonna say, pound sand, go outside if you don't like it, right?
00:19:42.400 -->
00:19:42.640Yeah.
00:19:42.799 -->
00:19:46.880But the truth of the matter is we are naturally thrifty as human beings.
00:19:46.880 -->
00:19:49.200We want the most for the least we have to put out.
00:19:49.200 -->
00:19:53.839I don't want somebody to work for free, but I don't want somebody to go charge me four times the price.
00:19:53.839 -->
00:19:55.279And here's the problem, Matt.
00:19:55.279 -->
00:19:56.559It's just math.
00:19:56.559 -->
00:19:59.200I can take a well I'm drilling for eight and a half million.
00:19:59.200 -->
00:20:02.400I can look at another sponsor, it looks clean, they look pretty and sharp.
00:20:02.400 -->
00:20:06.400You run the math, that guy's charging $28 million for the same well that goes for $7 million.
00:20:06.400 -->
00:20:10.640That means if I write a $100,000 check, he puts $75,000 in his pocket.
00:20:10.640 -->
00:20:11.599What's his motive?
00:20:11.599 -->
00:20:16.400He's praying for a dry hole because he's never going to be able to explain why his goodwill can't even pay out.
00:20:16.400 -->
00:20:20.559So it's the who, okay, it's the track record, and it's the terms.
00:20:20.559 -->
00:20:21.920Show me, show me the deal.
00:20:21.920 -->
00:20:24.319It goes across every alternative asset speaker.
00:20:24.319 -->
00:20:26.640I don't care what it's in, it's the same basic thing.
00:20:26.640 -->
00:20:33.119The thing is, then you have to have the courage by saying, if you won't answer my questions or show it to me in black and white, please don't contact me again.
00:20:33.119 -->
00:20:34.160The answer is no.
00:20:34.160 -->
00:20:45.680And that's the tough part is having the respect for your time and money to be able to say, I'm owed these answers, and failure to do that means you're not able to make those answers, which means I'm unable to invest with you.
00:20:45.839 -->
00:20:52.000So I yeah, we did a uh Mark and I did a uh due diligence top 10 list.
00:20:52.000 -->
00:20:53.599Sorry, kind of a tongue twister.
00:20:53.599 -->
00:20:57.119And the final one is be comfortable saying no.
00:20:57.119 -->
00:20:58.720I mean, that was number 10 on our list.
00:20:58.720 -->
00:21:02.160And a lot of investors get so excited.
00:21:02.160 -->
00:21:14.640Um I think one of the ones I see people kind of get overly excited about and they overlook things is in oil and gas, is they hear about this tax write-off and they've got this huge tax benefit, and they're like, well, they're saying I'm gonna get a tax benefit.
00:21:14.640 -->
00:21:17.200And I'm like, you still don't want to throw away money.
00:21:17.200 -->
00:21:21.519They almost feel like they're buying a lottery ticket in some ways, like, I don't need to look at it.
00:21:21.519 -->
00:21:21.920Who cares?
00:21:21.920 -->
00:21:23.519I mean, I'm getting this tax write-off.
00:21:23.519 -->
00:21:29.039I mean, it it's like uh I for some reason their just guard goes down, I feel like.
00:21:29.279 -->
00:21:30.960Well, you're you're you're the tax expert.
00:21:30.960 -->
00:21:31.759Here's what I tell them.
00:21:31.759 -->
00:21:36.160Look, what I did a big uh presence now with a bunch of uh doctors on Friday night.
00:21:36.160 -->
00:21:38.160I said, What's the downside to paying your tax?
00:21:38.160 -->
00:21:41.039And they all look around, I go, you get to keep the other 63%.
00:21:41.039 -->
00:21:41.680Right.
00:21:41.680 -->
00:21:45.359If I need to lose money, I'll go to the parking lot and set it on fire.
00:21:45.359 -->
00:21:48.799I mean, I'd rather pay, I do, I pay big taxes every year.
00:21:48.799 -->
00:21:52.079I would rather pay my taxes than drill a mediocre well.
00:21:52.079 -->
00:21:53.920And I'm in the oil business.
00:21:53.920 -->
00:21:58.640I need to make money, otherwise, if I pay my tax, I get to keep the other 63%.
00:21:58.640 -->
00:22:00.640But you're exactly right.
00:22:00.640 -->
00:22:08.480To me, the word tax, if I look at all the Ponzi schemes the last five years and all the bad actors, it was all about waiting tax deduction.
00:22:08.480 -->
00:22:10.079It's like chumming for shark.
00:22:10.079 -->
00:22:12.160The problem is they're chumming for suckers.
00:22:12.160 -->
00:22:22.079And the suckers are the investors go tax write-off all the conservation easements, ATMs, the carbon sequester, these are all fraud because the investors were told tax write-off.
00:22:22.079 -->
00:22:23.519See, I look at it differently.
00:22:23.519 -->
00:22:26.960You're the pro, but the way I look at it, I've done this for 40, going on 42 years.
00:22:26.960 -->
00:22:27.920Here's what I look at.
00:22:27.920 -->
00:22:31.279It's not a tax deduction, it's a tax deferment.
00:22:31.279 -->
00:22:35.200I deduct it this year, but by drilling a good well, I expect to make that money back.
00:22:35.200 -->
00:22:41.680So I'm just deferring what I owe today, using the IRS's share of the money to build more wealth, and I'll pay you my taxes next year.
00:22:41.680 -->
00:22:43.039I'm deferring what I owe.
00:22:43.039 -->
00:22:51.440And my job is to keep deferring that like I have for 42 years till I die, and my wife and her new boyfriend can figure out how to pay the taxes, but I'm not gonna do it.
00:22:51.440 -->
00:22:54.079That's how I view life.
00:22:54.079 -->
00:22:55.440It's not my job.
00:22:55.440 -->
00:22:58.319My job is to build well using the IRS's money legally.
00:22:58.319 -->
00:22:59.759That's what it, that's what it boils down to.
00:22:59.920 -->
00:23:06.880Yeah, and I think that's a a good point that you made at the beginning, too, which was you know, you still keep 67% of it.
00:23:06.880 -->
00:23:07.279Yeah.
00:23:07.279 -->
00:23:10.400Um, remember, this is a tax deduction, not a tax credit.
00:23:10.400 -->
00:23:16.000And when you give up 100 grand, that's only helping you for the 37% you would have put the IRS.
00:23:16.000 -->
00:23:19.039And so this is reducing your taxable income 100 grand.
00:23:19.039 -->
00:23:27.359So if you made a million that year and you invested 100 grand, you're only taxed if you made 900,000, but you had to give up that 100 grand to put it into the deal.
00:23:27.359 -->
00:23:29.039So we want to make sure we're getting good deals.
00:23:29.039 -->
00:23:32.079I kind of think of the tax as like the cherry on top.
00:23:32.079 -->
00:23:35.119It's like it's nice to have, but that's not where you start.
00:23:35.119 -->
00:23:37.359That's kind of like later in the conversation.
00:23:37.359 -->
00:23:40.319I think the first thing is is is this a good investment?
00:23:40.319 -->
00:23:41.920Is this a good operator?
00:23:41.920 -->
00:23:44.000Is it the right type of opportunity?
00:23:44.000 -->
00:23:47.680And then the other thing you mentioned was, is it priced right?
00:23:47.680 -->
00:23:48.480Right?
00:23:48.480 -->
00:23:52.480Because it could be a good operator that's a shark out there that knows what they're doing.
00:23:52.480 -->
00:23:54.000There and it could be a good thing.
00:23:54.000 -->
00:23:55.279Well, it's also putting you an IRS risk.
00:23:56.319 -->
00:23:57.680I think it's an IRS risk too.
00:23:57.680 -->
00:24:00.480So the way the IRS works now is they got algorithms, right?
00:24:00.480 -->
00:24:04.720So each oil well in the United States has an API number, like a Social Security number, right?
00:24:04.720 -->
00:24:15.279So let's say I, my partners and I bought into a $7.5 million well, API number 1, 2, 3, 4, you get in the sucker deal and you pay four times the price, same same well, API 1, 2, 3, 4.
00:24:15.279 -->
00:24:20.000IRS looks at it and says, well, Matt has a 400% write-off in the same well Troy has a write-off.
00:24:20.000 -->
00:24:22.880He paid $28 million, he paid $7 million.
00:24:22.880 -->
00:24:25.039He took a write-off that doesn't exist.
00:24:25.039 -->
00:24:30.640And so the problem is it's not just the economic differential, it subjects you to IRS audits.
00:24:30.640 -->
00:24:32.880It subjects you to sticking out like a sore thumb.
00:24:32.880 -->
00:24:45.279And so what you have to have is the confidence, not only with the sponsor, that they know their business, they can make you money, they're good at what they do, but they're gonna put you out of harm's way by filing the taxes right, giving you the transparency, giving you the information.
00:24:45.279 -->
00:24:50.000So when you do make that investment, it absolutely is one that you can stand hard on with your tax preparer.
00:24:50.000 -->
00:24:55.359Last year, Matt, from Christmas until New Year's, it was only like a three-day window because it fell on a Wednesday.
00:24:55.359 -->
00:24:59.920We were not gonna open up our last drilling program of the year, and I said, we might have a few partners that need it.
00:24:59.920 -->
00:25:01.200Let's see if we can where we go with it.
00:25:01.200 -->
00:25:04.880It was like a $47 million fund, uh five-wheel package.
00:25:04.880 -->
00:25:07.440We had the phone ring off the hook like I've never seen before.
00:25:07.440 -->
00:25:09.359It's like chumming for shark.
00:25:09.359 -->
00:25:15.279We raised like $33 million inbound calls saying, I saw you, I hired you on YouTube, I saw you and such.
00:25:15.279 -->
00:25:17.440$33 million in 72 hours.
00:25:17.440 -->
00:25:19.519And I would ask, Do you want to ask some questions?
00:25:19.519 -->
00:25:21.440Nope, saw you on YouTube, I don't want to pay my taxes.
00:25:21.440 -->
00:25:22.079Here's a million bucks.
00:25:22.079 -->
00:25:24.880I'm like, you do realize there's other questions, don't care.
00:25:24.880 -->
00:25:26.640I'm out of time, I'm sending you a million bucks.
00:25:26.640 -->
00:25:27.839Let me know how it goes.
00:25:27.839 -->
00:25:32.319Now, that is a the old adage, a fool and his money are soon parted, right?
00:25:32.319 -->
00:25:37.519Thank God they've invested with a company who legitimately is honest and does it, but do you think of how many calls did not come to Eckerd?
00:25:37.519 -->
00:25:40.319Went to other sponsors, and that money is toast, it's gone.
00:25:40.480 -->
00:25:40.720Yeah.
00:25:40.880 -->
00:25:42.559So this is a great business.
00:25:42.559 -->
00:25:49.440It's a tremendous change in how low risk it is, but it needs people like you who are experts in getting the information out.
00:25:49.440 -->
00:25:53.200You have a great company, you're a tax lawyer, you know what's going on.
00:25:53.200 -->
00:25:57.920It's almost like we feel like shepherds trying to hide the sheep because they're getting picked off one by one.
00:25:58.079 -->
00:25:58.240Yeah.
00:25:58.640 -->
00:26:01.839This is a great business, but you have to look at it as an asset class.
00:26:01.839 -->
00:26:04.480It's not a band-aid for your current year tax problem.
00:26:04.799 -->
00:26:18.640Yeah, and I think just like any good thing you might love or find attractive, whether this is real estate or crypto or stock or venture, whatever asset you love, there's good deals and bad deals, good operators, bad operators.
00:26:18.640 -->
00:26:21.519And um, oil and gas is something you can learn about.
00:26:21.519 -->
00:26:25.519And to that point, Troy's going to be speaking at our Alta Asset Summit.
00:26:25.519 -->
00:26:28.559You can learn a lot more about this, altaassetsummit.com.
00:26:28.559 -->
00:26:30.160Um, he spoke last time.
00:26:30.160 -->
00:26:38.480We had great reviews on it, has a lot of good stuff to just teach you um how they structure their stuff and how you should be thinking about oil and gas.
00:26:38.480 -->
00:26:43.440So um one final question, just in the is a big picture here.
00:26:43.440 -->
00:26:47.759Um, and I want to give some people some resources too to learn more and some ideas.
00:26:47.759 -->
00:26:51.200But um, how is drill baby drill going?
00:26:51.200 -->
00:26:52.400Um not good.
00:26:52.400 -->
00:26:53.200Not good.
00:26:53.200 -->
00:26:55.680Like, yeah, let's explain that.
00:26:55.920 -->
00:27:00.240It can't it can't be uh be a tax professional, tax professional for half price.
00:27:00.240 -->
00:27:05.839So the difference in the United States and everybody else around the world is the US oil and gas industry is owned by the private sector.
00:27:05.839 -->
00:27:10.480So President Trump said, I'm gonna fast track regulations, I'm gonna give you this mantra, drill, baby, drill.
00:27:10.480 -->
00:27:14.559And then everything he's done with his policies has been pushing the oil price down.
00:27:14.559 -->
00:27:22.240So Exxon CEO all the way down said, Oh, we hear you drill, baby, drill, but we can't make any money below $75 a barrel.
00:27:22.240 -->
00:27:24.480You know, we can squeak by at $65.
00:27:24.480 -->
00:27:31.440And so what has happened is every oil company had already been prepared since 2018 to live off our cash flow.
00:27:31.440 -->
00:27:33.200We paid off our debt and lived off our cash flow.
00:27:33.200 -->
00:27:39.039So we're only drilling enough to maintain status quo, keeping our reserves up, outrunning our decline curve.
00:27:39.039 -->
00:27:44.240But you lost about 300 drilling rates, about 40% of your drilling rates, because we said, stop working, stop drilling.
00:27:44.240 -->
00:27:47.920We're not gonna sell our best location in geology and minerals for free.
00:27:47.920 -->
00:27:50.559It's been there 100 million years, we'll wait another couple of years.
00:27:50.559 -->
00:27:58.640And I think it's gonna be a it's gonna come back and bite us in the rear end because what's happening is um the oil and gas industry is like trying to start a coal diesel tractor.
00:27:58.640 -->
00:28:01.359You got to get personnel and equipment and manpower.
00:28:01.359 -->
00:28:03.039And we've watched that decline.
00:28:03.039 -->
00:28:06.400So we're pretty much just flatlined the last 24 months.
00:28:06.400 -->
00:28:11.680With two wars going on, Russia's infrastructure being destroyed by Ukraine, you take all that's going on.
00:28:11.680 -->
00:28:15.599I would say you're gonna see a rubber band effect in about the next 24 to 36 months.
00:28:15.599 -->
00:28:20.480What that means is they're pulling the rubber band so hard against giving us value for commodities of oil and gas.
00:28:20.480 -->
00:28:26.559When they finally need that, because demand keeps going up, it's gonna pump them right in the face and say, we got to have an extra two million barrels of them.
00:28:26.559 -->
00:28:28.319We're gonna say, Well, we're gonna have to gear up.
00:28:28.319 -->
00:28:29.359What's that gonna cost you?
00:28:29.359 -->
00:28:37.279Well, it won't be 75 a barrel, it's gonna have to be 95 a barrel because we're looking down the runway saying in 36 months, President Trump's no longer president.
00:28:37.279 -->
00:28:39.599Is that a Democrat with anti-fossil fuel?
00:28:39.599 -->
00:28:42.720Is it a Republican with fossil fuel, but not the backbone?
00:28:42.720 -->
00:28:47.359So we move in very cautious cycles in that we're living on our own cash flow.
00:28:47.359 -->
00:28:51.200Drill baby drill might as well be drill sucker drill because it doesn't work.
00:28:51.200 -->
00:28:52.799And so we've all kind of moderated.
00:28:52.799 -->
00:28:59.200Now, I will tell you the good news that we found here in the last 90 days is that all these service providers are standing around with equipment in the yard.
00:28:59.200 -->
00:29:00.480They're desperate for work.
00:29:00.480 -->
00:29:12.160So the good news is we're drilling today wells that were budgeted for eight and a half million dollars last January, about nine months ago, and the company is saying, we'll actually complete your wells, it's almost a three, three, three for one.
00:29:12.160 -->
00:29:15.680We'll charge you for one well of completion, we're gonna complete three wells.
00:29:15.680 -->
00:29:23.440So our our cost per well is down between one and a half to two million per well, more than enough to offset the $63 oil price instead of $75.
00:29:23.440 -->
00:29:32.559So whoever can drill today, whoever has those clients who trust the contrarian viewpoint, will drill the best wells at the cheapest price with the best personnel.
00:29:32.559 -->
00:29:36.000Because when they laid off all these people, you only have your A-team left.
00:29:36.000 -->
00:29:37.519The B's are unemployed.
00:29:37.519 -->
00:29:42.640So we're getting great wells drilled at the cheapest price I've seen in six years, which means the best economics.
00:29:42.640 -->
00:29:44.640But it's it's drill baby drills not working.
00:29:44.960 -->
00:29:45.119Yeah.
00:29:45.119 -->
00:30:01.519So let me understand that from an investor standpoint is if I'm invested and let's say, I mean, you guys are managing the wells, just as an example here, or any operator, they might say, I'm not gonna pull all the the Oil out of this well.
00:30:01.519 -->
00:30:04.079Um, there's not a good price on the market right now.
00:30:04.079 -->
00:30:05.359This is a killer well.
00:30:05.359 -->
00:30:07.519We're gonna like let it sit for a while.
00:30:07.519 -->
00:30:09.759Yeah, they do rather than take all the production out of it.
00:30:10.000 -->
00:30:12.319They said on they're called ducts, drilled uncompleted.
00:30:12.319 -->
00:30:14.880So you might drill it, run the pipe, it's ready to go.
00:30:14.880 -->
00:30:18.720You just simply don't go perforate or make holes in the pipe and you don't frack it to open it up.
00:30:18.720 -->
00:30:19.359You just wait.
00:30:19.359 -->
00:30:21.599So they're called ducts, drilled uncompleted wells.
00:30:21.599 -->
00:30:29.359The problem is we've drilled so few wells uh the last year and a half that there's not a lot of room to be able to inventory those, right?
00:30:29.359 -->
00:30:33.759So what we did as an industry, we put pressure on all the service providers.
00:30:33.759 -->
00:30:36.640You know, we're fracking with 28 million pounds of sand per well.
00:30:36.640 -->
00:30:40.400So those guys are basically taking sand out of a quarry, cleaning it, bringing it to the site.
00:30:40.400 -->
00:30:42.079They were charging $75 a ton.
00:30:42.079 -->
00:30:43.279We said, can't do it.
00:30:43.279 -->
00:30:44.400Well, how about $50?
00:30:44.400 -->
00:30:44.799Nope.
00:30:44.799 -->
00:30:45.519How about 40?
00:30:45.519 -->
00:30:46.640Nope, go pound sand.
00:30:46.640 -->
00:30:47.920I love that analogy, right?
00:30:47.920 -->
00:30:50.319Now they're down to like $25 a ton.
00:30:50.319 -->
00:30:52.240We're getting three wells fracked for one.
00:30:52.240 -->
00:30:54.400You're never going to find that economics again.
00:30:54.400 -->
00:31:03.839So we weighted out the vendors, we've bridged that arbitrage between lower commodity and lower service cost, and now we're actually to the positive, we believe, economically.
00:31:03.839 -->
00:31:04.960But your point is right.
00:31:04.960 -->
00:31:09.359Exxon doesn't have to turn wells on, Chevron doesn't have to turn them on, we don't have to turn them on.
00:31:09.359 -->
00:31:13.119But there is an advantage to having your uh production in the market.
00:31:13.119 -->
00:31:20.640When Russia started the war back in April of 2022, we had $129 oil and we had $110 oil for six months.
00:31:20.640 -->
00:31:23.920We made as much money in six months as we would have made in the last in 24 months.
00:31:23.920 -->
00:31:26.319So it's kind of one of those, you it's like the stock market.
00:31:26.319 -->
00:31:30.000You want to be in because you don't know the few days where you get those upswings.
00:31:30.000 -->
00:31:32.960And for us, it's just all about cash flow, return, and taxes.
00:31:33.119 -->
00:31:33.680Yeah.
00:31:33.680 -->
00:31:34.400Awesome.
00:31:34.400 -->
00:31:34.720Yeah.
00:31:35.039 -->
00:31:35.680Great business.
00:31:35.680 -->
00:31:38.880It's just uh, like me, I've I've been doing this in 1985.
00:31:38.880 -->
00:31:40.480I'll be 62 this year.
00:31:40.480 -->
00:31:45.759It is the most advantageous market for you and I as high net worth investors and individuals I've ever seen.
00:31:45.759 -->
00:31:49.200We've never been able to play with the big boys, and it's probably the most transparent.
00:31:49.200 -->
00:31:52.720Any well you call me on, I could pull it up on a computer and see a report like that.
00:31:52.720 -->
00:31:54.480Never had that before in the last 10 years.
00:31:54.480 -->
00:31:56.160It's just phenomenally changed.
00:31:56.160 -->
00:32:00.720Very low risk, very transparent, and now finally wide open to high net worth investors.
00:32:01.039 -->
00:32:04.880Yeah, that's let me ask that in terms of who's it available to.
00:32:04.880 -->
00:32:10.559Um, you're talking about how you don't have a fund structure, you have actual, you know, contracted rights.
00:32:10.559 -->
00:32:12.559They have a fractional interest in a specific.
00:32:12.559 -->
00:32:16.160So does someone need to be an accredited investor to do this?
00:32:16.160 -->
00:32:20.160What is the what's the requirements in terms of the investors, at least that you're working with?
00:32:20.400 -->
00:32:22.319I'll say it the way I've looked at it for 40 years.
00:32:22.319 -->
00:32:26.960If you don't have a million-on net worth and not counting your house and furnishing, go buy Exxon stock, go buy diamondback.
00:32:26.960 -->
00:32:28.960You have no business in direct ownership.
00:32:28.960 -->
00:32:32.400You need the liquidity because your net worth is not an insult.
00:32:32.400 -->
00:32:36.079I mean, congratulations for having any money to start with, because very few Americans do.
00:32:36.079 -->
00:32:37.839But you really need to start a foundation.
00:32:37.839 -->
00:32:45.680The foundation is, I started off when I was 20 buying Exxon stock and buying energy stocks because I didn't know if I needed the money as a young entrepreneur.
00:32:45.680 -->
00:32:52.640Once you start learning and investing in stocks and energy that you like, by natural instinct, you'll start paying attention to the market.
00:32:52.640 -->
00:32:59.680When you finally get a net worth that's exceeding a million dollars, not counting your home and your couch and stuff, or you have an income over $300,000.
00:32:59.680 -->
00:33:04.000Now you really need oil and gas because it is part of the overall structure.
00:33:04.000 -->
00:33:08.880High oil and gas prices affect real estate and medical, everything else because they use our product.
00:33:08.880 -->
00:33:12.079That's why President Trump is so hard jamming on energy.
00:33:12.079 -->
00:33:16.559If energy truly were priced to 75 or 80, we'd be at a 5.5% to 6% interest rate.
00:33:16.559 -->
00:33:21.279He needs energy to stay low to make sure his plan of a low inflation rate exists.
00:33:21.279 -->
00:33:23.920If we go to 75 or 80, he's got big, big problems.
00:33:23.920 -->
00:33:26.880So for right now, to refinance the debt, we're the whipping boys.
00:33:26.880 -->
00:33:28.079It's it's whip the oil guys.
00:33:28.079 -->
00:33:33.039They already have money anyway, and just make them suffer, but they'll make their money back in 2028, which we will.
00:33:33.039 -->
00:33:35.039But uh, there's a real ploy to it.
00:33:35.039 -->
00:33:35.440Yeah.
00:33:35.440 -->
00:33:36.160Yeah.
00:33:36.400 -->
00:33:41.200Um, man, Trey, you just keep dropping such good pieces of info here.
00:33:41.200 -->
00:33:43.279I'm trying to wrap this up, but that was a great point.
00:33:43.279 -->
00:33:49.759I love your approach on that in terms of like someone's net worth and investing in this asset class and and when are you ready for it?
00:33:49.759 -->
00:33:55.039Um, you know, that million-dollar threshold is the accredited investor threshold.
00:33:55.039 -->
00:34:00.160Um, but it also is a good um, you know, marker just for someone in terms of their net worth.
00:34:00.160 -->
00:34:08.639And I think a good piece of advice for someone thinking about investing in certain assets and when am I ready to invest in anything alternative?
00:34:08.639 -->
00:34:13.599Um, there is some good rhyme and reason to that million dollar threshold of when you should be looking at it.
00:34:13.599 -->
00:34:19.199And maybe you're very high income and you're, you know, I mean, you should still set some money aside.
00:34:19.199 -->
00:34:21.760But uh, but anyways, great piece of advice there.
00:34:21.760 -->
00:34:27.039Um, and then great insight too on where we're at with interest rates and the inflation drives that.
00:34:27.039 -->
00:34:33.599And that's that was my question about Trump is like, you know, uh oil and gas is a big driver of inflation.
00:34:33.599 -->
00:34:38.159Definitely his incentive is to get interest rates down.
00:34:38.159 -->
00:34:42.000Um so you can see the dynamic there that he's uh he's dealing with.
00:34:42.480 -->
00:34:49.039Well, one thing to keep in mind that oil is a is not just a supply and demand commodity, it's also a dollar, it's a currency commodity.
00:34:49.039 -->
00:34:51.280So the dollar continues to deteriorate.
00:34:51.280 -->
00:34:55.360And historically, every single pattern, when the dollar goes down, oil prices go up.
00:34:55.360 -->
00:34:57.679So we're at what 97 and 29.
00:34:57.679 -->
00:35:01.119We were at 96 last week on the dollar, oil was up to $65 a barrel.
00:35:01.119 -->
00:35:07.679And what people don't understand is we might be uh parapisue on supply and demand and global supply and in domestic supply.
00:35:07.679 -->
00:35:18.480But in the reality is, as the dollar goes down, instead of taking $100,000 and buying $100,000 barrels of oil, we now need to bring $117,000 to buy $100,000 barrels of oil because our price our dollar goes down.
00:35:18.480 -->
00:35:24.880Blackstone and other majors are suggesting that the dollar could be down to the 80s in the next 24 to 36 months because of our debt.
00:35:24.880 -->
00:35:32.960And so one thing I would tell all of your audience, this is just far beyond oil and gas, too, is that President Trump has an ulterior motive to lowering the interest rates.
00:35:32.960 -->
00:35:36.000It's not just to get lower interest rates for paying off the national debt.
00:35:36.000 -->
00:35:38.320But the Bank of England did this back in 2008.
00:35:38.320 -->
00:35:44.320They had so many people to keep in cash in the bank, the Bank of England finally said, we're gonna charge you to keep money in our bank because we can't pay you interest rates.
00:35:44.320 -->
00:35:46.079So you're not making money, we're charging.
00:35:46.079 -->
00:35:59.440I think President Trump says the only way to stimulate this economy is I'm gonna lower interest rates to banks so low, even fixed income holders are gonna dump out of the bank and buy any investment they can because they can't live on three percent yields when you're in a five percent inflation market.
00:35:59.440 -->
00:36:11.679So I'm predicting this massive flood of liquidity coming out of banks and money margins, finding anything from bonds, mineral rights, anything because who can live on the 3% uh return when you're making 5% on inflation?
00:36:11.679 -->
00:36:14.000You're already upside down by almost three to four percent.
00:36:14.000 -->
00:36:15.599I think he's very smart.
00:36:15.599 -->
00:36:25.199I think he has a lot of smart people around him, and they said we need this five or six trillion in liquid cash into the market to support his growth uh uh projections.
00:36:25.199 -->
00:36:27.360If he doesn't do that, growth doesn't appear.
00:36:27.360 -->
00:36:30.079We have a whole lot of AI data centers and nobody working.
00:36:30.079 -->
00:36:32.559This is this is a master plan we have to be aware of.
00:36:32.880 -->
00:36:43.760Yeah, and I think a lot of people hear the drill baby drill, and they think if the that the you know purpose of that is typical Republican deregulatory type things.
00:36:43.760 -->
00:36:46.960Um, there's a much greater objective he's trying to reach there.
00:36:47.599 -->
00:36:48.079Much bigger.
00:36:48.320 -->
00:36:50.159Yeah, it's a much bigger master plan.
00:36:50.159 -->
00:37:03.280Um, and I think on that money market flow, too, that's definitely, I mean, you look at the money market flow in the last two to three years, it's insane how much money is sitting in money markets versus what was in there the last two to three years.
00:37:03.360 -->
00:37:05.039And I'll give you a good example.
00:37:05.039 -->
00:37:10.159I we we we talked to our partners right before April and said, you know, everybody's like, I'm tight, I'm not investing, everything's tight.
00:37:10.159 -->
00:37:14.159And we said, Well, we found this new project that generates 29 million a year and 11% fixed income.
00:37:14.159 -->
00:37:15.760We raised $90 million in three weeks.
00:37:15.760 -->
00:37:18.000And I joke with him, I said, I thought y'all said you were broke.
00:37:18.000 -->
00:37:21.360If your idea broke is $90 million, I want to be your kind of broke.
00:37:21.360 -->
00:37:23.280But I I was shocked.
00:37:23.280 -->
00:37:29.119And that just tells you how much is sitting liquid because they're scared, they don't know where to go or what to do.
00:37:29.119 -->
00:37:32.239But I think that's what President Trump's trying to do is get that money out of that market.
00:37:32.239 -->
00:37:35.360That 90 million was committed in three weeks, blew me away.
00:37:35.360 -->
00:37:44.400And I just was laughing saying, whenever he gets that rate down, what scares me though, Matt, is how many of these bad actors know that's coming and they're gonna catch them.
00:37:44.400 -->
00:37:46.800And I'm hearing about data center racks being sold.
00:37:46.800 -->
00:37:47.760It's a Ponzi scheme.
00:37:47.760 -->
00:37:48.960I'm hearing about all this kind of stuff.
00:37:48.960 -->
00:37:51.440So the bad actors then, the sheep are gonna be let out.
00:37:51.440 -->
00:37:53.039We are gonna have our way with them.
00:37:53.039 -->
00:37:56.559They're not gonna know what's gonna hit them because they're gonna chase five, six, eight, ten percent.
00:37:56.559 -->
00:37:59.199A Ponzi scheme doesn't have to be 15% return.
00:37:59.199 -->
00:38:02.559It could be a 9% return looking at a 3% yield in the bank.
00:38:02.559 -->
00:38:03.920It doesn't have to be this fancy number.
00:38:03.920 -->
00:38:05.599A Ponzi scheme is a Ponzi scheme.
00:38:05.599 -->
00:38:07.280Yeah, it's just fraud.
00:38:08.000 -->
00:38:22.960Yeah, so uh of course, make sure you know who you're operating with, who's behind it, what's their track record, what have they done, and uh not just the opportunity, which can be exciting, whether it's oil and gas, AI, you know, crypto, geez, who knows who knows what that might be.
00:38:22.960 -->
00:38:26.159Um so uh Troy, thanks so much for being on.
00:38:26.159 -->
00:38:32.400What any other resources you would send people to to learn more about Eckerd or just oil and gas investing in general?
00:38:32.719 -->
00:38:35.840Yeah, uh the one problem with oil and gas, Matt, is there's no central site.
00:38:35.840 -->
00:38:39.920It's so easy to find stuff out on real estate and other normal, more traditional assets.
00:38:39.920 -->
00:38:42.480We created on our site called Eckerd Insights.
00:38:42.480 -->
00:38:45.280We don't need your social security number, we don't need your net worth.
00:38:45.280 -->
00:38:53.199You can literally sign up to Eckerd Insights on our website, and it has hundreds of hours of educational information that I put together, ebooks and everything else.
00:38:53.199 -->
00:38:54.880And that's a good starting point.
00:38:54.880 -->
00:38:57.119And then, you know, ChatGPT has done a pretty good job.
00:38:57.119 -->
00:38:59.679I've been using that just to see if I were a client what I could find.
00:38:59.679 -->
00:39:02.639Yeah, it's somewhat limited, but it's pretty good fundamental stuff.
00:39:02.639 -->
00:39:10.079But we we've created ebooks which really make it easy to understand about investing with a 1031, a self-directed IRA, what working interest does.
00:39:10.079 -->
00:39:13.840And I think the other thing is that you just gotta want to.
00:39:13.840 -->
00:39:14.960Here's what I find.
00:39:14.960 -->
00:39:16.480You gotta want to, the desire.
00:39:16.480 -->
00:39:22.159Like if I want to know about raw land development, I can't just do it 2% and hope that it works out.
00:39:22.159 -->
00:39:26.159If you want to be an energy and you find the value there, it's really not that complex.
00:39:26.159 -->
00:39:31.760It's a different language, it's a different approach, but it's fundamentally the same thing across all asset class.
00:39:31.760 -->
00:39:33.599It's the who, what, where, when, why.
00:39:33.599 -->
00:39:35.760It's risk, it's money, it's capital.
00:39:35.760 -->
00:39:38.159But I'm gonna put the monkey back on investors, Matt.
00:39:38.159 -->
00:39:40.719I I've talked to thousands of investors the last three years.
00:39:40.719 -->
00:39:42.639Troy, I got burned in this, I got burned in that.
00:39:42.639 -->
00:39:43.519I said, Well, show me your document.
00:39:43.519 -->
00:39:44.800Oh, I don't know what I invested in.
00:39:44.800 -->
00:39:48.239Well, I mean, you've got to be disciplined as an investor.
00:39:48.239 -->
00:39:52.239I think this AI is gonna be so scary what it's gonna do to investors.
00:39:52.239 -->
00:39:55.280It is lightning fast and super scary.
00:39:55.280 -->
00:39:59.679There's gonna be a new employee in my office in about 30 days, a chat bot by the name of Roy.
00:39:59.679 -->
00:40:03.599It's gonna be a good-looking guy with hair, because I don't have any, and he's gonna have an Australian accent.
00:40:03.599 -->
00:40:11.199But they're gonna take everything I've done and create this chatbot, whatever you ask is gonna use what I've already put out and answer the question in my voice.
00:40:11.199 -->
00:40:12.880Now, is that not scary or what?
00:40:12.880 -->
00:40:16.800So, how are you gonna get away from these sponsors and these fraudsters if you don't know?
00:40:16.800 -->
00:40:21.760That's why coming to your event, listening to somebody like directed IRA, listening to you and I talk.
00:40:21.760 -->
00:40:26.719Okay, if I don't have credible people, I don't care what it's saying, I don't know it's real.
00:40:26.960 -->
00:40:27.679It's scary.
00:40:27.679 -->
00:40:28.400Yeah, yeah.
00:40:28.400 -->
00:40:32.480And I think it does take a little bit of work, and so you gotta be willing to put in the effort.
00:40:32.480 -->
00:40:32.960Yeah.
00:40:32.960 -->
00:40:37.360Um, you know, it it's not just about risking your money, it's about your time.
00:40:37.360 -->
00:40:40.159You got to invest your time into this too to learn.
00:40:40.159 -->
00:40:43.679And um, and when I say risk your time, also be willing to say no.
00:40:43.679 -->
00:40:54.960I think some people get so they they research something, they get so excited about it, and then they get more excited about it because they've they're so far into it, but they're not willing to like pull the ripcord and say, yeah, it's just doesn't feel right.
00:40:54.960 -->
00:41:03.840So um, you know, for some of the best investors and the biggest accounts that we have, I always tell people you'd be so they'll be like, what are they investing into?
00:41:03.840 -->
00:41:06.800I'm like, you should probably be asking, what did they not invest into?
00:41:06.800 -->
00:41:10.559Because they're looking at 10 deals for every one thing that they do.
00:41:10.559 -->
00:41:11.679If not a hundred.
00:41:11.679 -->
00:41:14.079Yeah, and these are alternative deals.
00:41:14.079 -->
00:41:21.519This is not like they're like on a computer looking at PE ratios on a publicly traded stock and you know, looking at some analyst report.
00:41:21.519 -->
00:41:24.880I mean, there's some grunt work that goes into this investing.
00:41:24.880 -->
00:41:40.400Um, but I think that's the fun part, and that's where the opportunity is for us as investors and why we can get better returns and have a better portfolio at the end of the day is um you're willing to put in the work, learn, find the good operators, um, and then go out and invest your money and try to grow it.
00:41:40.400 -->
00:41:46.480So um, all right, Troy's gonna be, like I said, at the Alt Asset Summit October 16th through the 17th.
00:41:46.480 -->
00:41:52.400Um, you get to meet him in person, and um you also can catch that virtually too if you can't make it.
00:41:52.400 -->
00:41:54.320It's gonna be in Scottsdale, Arizona.
00:41:54.320 -->
00:41:56.480Um, Troy, appreciate you being on.
00:41:56.480 -->
00:41:59.519We'll drop the link in the description to get to Troy's website.
00:41:59.519 -->
00:42:01.199We can download some of those guides.
00:42:01.199 -->
00:42:04.000And thanks everyone for being on the Directed IA podcast.
00:42:04.000 -->
00:42:04.960We'll see you next week.
00:42:04.960 -->
00:42:05.920Until then, stay calm.
00:42:05.920 -->
00:42:06.960Self-direct five.
00:42:07.519 -->
00:42:08.880And thank you everyone for listening.
00:42:08.880 -->
00:42:24.000A quick disclaimer and reminder this presentation does not constitute an attorney or CPA client relationship, and it is always in your best interest to consult competent legal and tax professionals when conducting your own personal transactions.
00:42:24.320 -->
00:42:34.880We also want to make sure you know this is not investment advice or financial advice or try to do education, ideas, and practice you can take to your professionals or conduct your own research on it.
