How To Track Oil Prices Using Ford Raptors

Show Notes

1. Industry Layoffs and Economic Pressures - Discussion of major layoffs at Exxon and ConocoPhillips (20-25%), efficiency improvements, and AI replacing back-office workflows
2. Energy Politics and Election Implications - Analysis of how energy policy will impact future elections, the pendulum swing between Republican "drill baby drill" vs. Democratic alternative energy policies, and California's energy challenges
3. AI Data Centers and Energy Demand - How artificial intelligence and data centers are creating massive new energy demands, with power generation becoming a national security issue and long-term infrastructure challenge
4. Oil & Gas Technical Education - Explaining industry acronyms (POOH = Pull Out of Hole, RIH = Run In Hole, EUR = Estimated Ultimate Recovery) and offshore vs. onshore drilling complexities
5. Public Production Data and Investment Analysis - How production data becomes public (typically after 6 months), companies like Enverus and IHS that aggregate this data, and due diligence for oil & gas investments
6. Economic Indicators and Market Tracking - Discussion of unconventional economic indicators like the "Ford Raptor Index" in Midland, Pentagon pizza tracker, and how local markets reflect industry health
7. Oil Field Culture and Superstitions - Traditional superstitions including no cherry pies, no bone-in chicken, and not cleaning hard hats on location, plus discussion of hard hat stickers

Transcript

Peter Brecht (00:00): Hey guys, welcome to Local Energy Week 36 with Wade Spear and Peter Brecht. First of all, I want to share with you that we're a family-friendly show. We really don't want to talk about politics, but there's a lot going on out there right now with layoffs and we really don't want to ignore the elephant in the room.

The second thing is we're not a financial advice show, so anything we talk about that's financially related or has to do with even figuring out projections on wells—if we don't get into the details, please take it with a grain of salt. We're here to educate, we're here to ask questions and learn from the best. So without further ado, here is this week's episode of Local Energy.

Family Time and Baseball Talk

Peter Brecht (00:39): Alright, here we are, Wade. I don't know what we're talking about today, but you're recording from a car.

Wade (00:44): Me either. Yeah, I'm at a volleyball tournament today. My oldest daughter, she's a senior in high school and they're playing in a volleyball tournament. I try not to miss those things. I really enjoy them. It's a lot of fun watching them play. So we're down in Oklahoma City today.

Peter Brecht: Well, you're like me, I think. I literally will work as early as I have to in order to make sure that I've got time to carve out for the kids. We're going this afternoon—I was like, okay, I got a bunch of stuff I gotta get done today, but we're going to a Savannah Bananas baseball game tonight.

Wade: Oh my gosh, we tried to get Banana tickets, but it's a big sellout immediately. My boy loves it. I mean, just loves it.

Peter Brecht: Yeah, we have not gone and my son is six. He's obsessed with baseball. And so I got on their raffle list because you can't really buy tickets—people that are inside kind of know when to get them and how to get them. I've heard nothing but good things, but it was weird. I went to the Air and Space Museum here in San Diego last weekend and I got a notification that there were like six tickets available and I immediately got on there and grabbed four of them. It was kind of a rash decision but we're going so it should be good.

Wade: Man, here's a little offshoot of that story. So a couple of years ago, my boy followed this guy called Coach Rack on YouTube. And he runs this baseball camp called Not Your Average Baseball Camp. It's a super fun camp. They have major leaguers come in and do it. It's a free camp—only like 200 kids can go. But he has this other guy... oh my gosh, what's his name? I can't remember his name, but they have all these guys and he gets to go out there. He worked with Coach Rack with all these pros—Bruce Bolt was there handing out free batting gloves and all this stuff. And then it turns out like a few months after that, Coach Rack joins the Bananas. And so I mean, it was awesome. He's one of the outfielders who does the flips whenever he catches and all that. But it was amazing. If your boy loves baseball, see if you can get him signed up—it's called NYABC. And I mean, it was amazing. He was just in heaven for like three days. It was awesome.

Peter Brecht: Okay, I'm gonna check that out. Yeah, he's got his first baseball game that he's playing in tomorrow. So, you know, he's all geared up and man, he's just—it's like every boy's dream, I think, to go play baseball on the field. He loves it. And we've been going to the field. There's a field like walking distance from our house. So every night, we grab a bucket of balls and just go down there and just hit balls for an hour, two hours. It just goes by so fast, but it's amazing.

Industry Layoffs and Political Landscape

Peter Brecht: Anyways, cool, well, that's the American dream. Lots going on in the news yesterday. There was kind of this feeling—I don't know, maybe I just had a bad day—but I saw there's a ton of layoffs with Exxon and ConocoPhillips. Just a lot going on right now. Huge numbers.

Wade: Yep. Those are huge numbers. 20 to 25%.

Peter Brecht: I was talking to my dad last night at dinner—we went to a family dinner and I didn't grow up in an oil and gas family, I grew up in a car family. So everything that we talked about was car industry related or mechanical and that kind of thing. And so the energy industry was never really something that we considered, but I was kind of thinking about this and I wanted to get your thoughts on it.

We have Gavin Newsom in California that's talking about running for president and he's getting insane amounts of money right now to actually launch his campaigns. On the other side of it, we have Trump that's talking about unleashing American energy. And California's policy failures for the energy industry, I think, are pretty obvious. Maybe not to the people living here, but to people outside. There's a lot going on.

I started having this conversation with my dad and it sort of dawned on me that I think the next election—and I don't want to get political, the show's not meant to be political—but if you look at it strategically, there is such a huge conversation around energy right now that I think one of the big topics going into the next election is going to be energy related. Maybe more so than past elections.

I don't know if maybe that's just a Californian's perspective, but as a whole, do you see that being a potential conversation? Because if Newsom runs, his opponents are going to say, look at California's energy policy. There's these two diametrically opposed ideas on both sides. And not only that, but whenever we elect a red president, it seems like drilling goes up, and then we have a blue president—just look at the pattern, right? So I'm trying to unpack this and understand it, but it's so confusing how it all works.

Sometimes I feel like it doesn't really matter what we say. It just goes different directions no matter what. I think energy is going to be a big part of this. And if you look at Liberty Energy's CEO coming in—it's like all of these different pieces are just because of energy. Is Trump onto something? I guess I don't know. And I can totally cut this out of the podcast if we don't want to talk about it.

Energy Demand and AI Data Centers

Wade: No, I mean, I've got no problem talking about it. I think you're hitting on all the different things that we've dealt with for decades in oil and gas. I would say one of the things that we've started seeing change is maybe what you'd call the demand, right? So a year, year and a half ago, I read this white paper called "Situational Awareness." It's about AI data centers and one of the big challenges that AI data centers face. I mean, they've got all the technical challenges of getting GPUs and doing all these different things, but a lot of those—at least what this white paper talked about—were solved and they could be solved kind of quickly. But the long-term challenge that a lot of these people faced was power generation, right? Like where are they going to get the energy to be able to run these data centers?

And so that was the number one challenge they faced because the lead time on it was so long. You can't just say hey, we're gonna stand up this huge facility and then four weeks later you've got enough power to run it. The infrastructure bill takes forever. And so I think that for me was kind of the start of this—this is a big change because also in that white paper, they talked about this being like a matter of national security. And I think as the government or people in government start to look at AGI and all of this development as a matter of national security—like we need to be first, we need to be best, we can't fall behind—that's where I think power starts really coming to the forefront because there has to be some source for it. And so I think that drives it.

Now, the other thing that you hit on too is oil and gas typically leans red, votes Republican. And the rhetoric behind it is "drill baby drill" and "embrace American energy" or "unleash American energy," all these different things. But I'll tell you what, we've woken up to it in our industry that it's just not good for our prices. The prices go down whenever we start using terms like that. But then whenever a Democratic president comes in or they start talking about alternative energy sources and going away from oil and gas, well, then prices go up. And so we're constantly in this state of flux going back and forth and dealing with that pendulum swing. We're just at the point now where we expect it and try to deal with it.

And these layoffs and things—I think what you're probably seeing as well is increased efficiency, not just through the drill bit, but also in the back office, using some of these things like AI to help and improve workflows and even replace people in some of those workflows. So oil and gas is getting squeezed from a lot of sides, and if you're going to survive, you have to be efficient. And that's where we've always been. It's just the scale is changing and the pace is changing now. It's just becoming faster and faster. And so it's just more important to be adaptable and change with the times and stay on the forefront of these things.

Peter Brecht: That's a great point. It's hard to find news sources these days that will talk about subjects with understanding that it's a pendulum, right? And so you kind of have to learn how to work between both of them.

Wade: Yeah, if your job is dependent upon who's in the White House, you're in trouble. You know what I mean? Like if the viability of your company is dependent upon who's in the White House, every four years you're gonna be in big trouble. So it's just one of those things that you have to be able to play both sides of that.

Peter Brecht: Absolutely. I mean, growing up in California in an industry myself—automotive—where that was highly reliant on the government's interaction. I mean, there's a lot going on there in terms of just think about all the electric vehicle credits and having to figure out how to chase those down 10 years ago. But at least for us, because we knew we were never going to become a Republican state overnight, it was like, okay, we have some sense of predictability with that. So it doesn't matter where you live. We're all trying to adapt and become—just continue what we're doing. That's the reality.

Economic Indicators and Market Tracking

Wade: I'll tell you too, have you seen the—I follow it, I saw somebody posted on Twitter the other day. It's kind of funny. Tying the car industry in with oil and gas. There's a guy out there—I can't remember who it is, I'll try and give him a shout out if I find it—but he has a Ford Raptor index on AutoTrader in Midland. And he's like, you can tell how oil and gas is doing by how many Raptors are for sale in Midland.

It was—whenever I worked out in the field, we all pulled fifth wheels out to location and we lived in our own fifth wheels. And I'll tell you, whenever oil and gas died in 2009, well, 2008 going into 2009, fifth wheels were as cheap as you could ever get them during that time. And it was because there's just this huge surplus of guys who were no longer working on the rigs and living out there anymore. Challenging times.

Peter Brecht: That Raptor index is funny. I think I follow the same guy or I've seen his posts. Talk about a brilliant economic indicator, right? Just from looking at it.

Wade: Well, you've seen the Pentagon pizza tracker. Have you seen that too? How they follow that? Yeah, like they're like, something's going on tonight because Domino's is going crazy at one AM and it's right next to the Pentagon.

Peter Brecht: Yes, I have seen that. Well that and—this would not be a proper podcast episode if we didn't bring up Taylor Swift. I mean come on man, there is so much Travis Kelce Taylor Swift—I mean they're watching their airplanes now, tracking where their airplanes are going all the time and it's impressive.

Wade: Oh my gosh. I mean, we listen to her music sometimes, but I don't know that the wedding announcement was earth shattering in our household.

Peter Brecht: Yeah, it wasn't in my household either, except for my wife—I'm obsessed with marketing stuff. And to me, all these people are like, "what a beautiful engagement thing." And I'm like, it was planned. They had camera crews and staff and it wasn't just Travis Kelce setting up a bunch of flowers. It was like they had so much into that.

Wade: Come on, if you had that much money, you wouldn't be setting up flowers yourself either. There's gonna be a Netflix deal in a couple years, there'll be a Netflix deal going through the whole thing, I'm sure.

Hat Discussion and New Ventures

Peter Brecht: Alright, so I gotta ask about your hat. It says "Train," but it's got some fancy font. It's a pretty cool hat, actually.

Wade: Yeah, I love it. It's pretty neat. So this is a hat for a company called D1. It's kind of focused on scholastics, like youth athletic training, trying to bring like a D1 training experience to your local area. And it's not just for kids though. It's also got an adult portion of it. And my wife and I bought a franchise that we're going to start in Tulsa here pretty soon. We've loved the team. We've met the team a couple of times and we've worked out at different gyms and we've taken our kids to different gyms and being able to go to a place—the same area together. We wouldn't necessarily work out together, but work out at the same place at the same time. Love their the way that they train and the way they approach everything. And so we're jumping into that. We'll be probably—we're in the real estate process right now. So we're going to be starting something here in a few months. Love sports, love being around kids and stuff. So for us, it was a natural fit.

But I was noticing your hat too. It looks like you've got like a cattle brand on there.

Peter Brecht: It does look like a cattle brand. It's actually—so I got this. Yeah, it's a cool—the branding geek in me just got obsessed with it and then it just goes so much deeper than that. But this is the hat I'm wearing is for Anchor Watch, so they're a Bitcoin insurance company. And man, if you look them up and you go into these rabbit holes, it's amazing. So they are a Lloyd's Coverholder and they came up with what's called the Trident Vault. And so it's a way of storing your Bitcoin, insuring your Bitcoin, insuring yourself from wrench attacks and things like that. So basically if someone were to try to get a hold of you, you couldn't unlock your Bitcoin for a certain amount of time and stuff.

So anyways, I've been listening to them on a couple of their podcasts. Rob Hamilton, just fantastic, brilliant mind. But really cool stuff and so I just love the brand and so I was able to get my hands on a hat and here I am. But no, I love their stuff. But it's a cool logo and I can't believe—anytime you can get the .com for something cool and I'm like you guys got anchorwatch.com, which is pretty cool. So anyways, if you're a Bitcoiner, check them out. If you're not, it doesn't matter. It's irrelevant, but they're doing cool stuff.

Wade: Now you're gonna make me look. I thought it was like a Western brand or something.

Peter Brecht: Yeah, well and there's this—for me there's this insurance component. There's Bitcoin—Bitcoin to me is an energy related industry as well. So it's like kind of an amalgamation of all the things that I love kind of fall into it. I didn't want to talk too much about Bitcoin, but I can't hide it anymore. It's such a cool topic.

Wade: The Bitcoiners never can, man. The Bitcoiners never can.

Peter Brecht: I know my wife's like you should just stop, no one cares and I'm like I know but I do and that's what matters.

Oil and Gas Technical Terms

Peter Brecht: Alright, so we should talk about oil and gas because that's what we're here for and we have touched on it a little bit today. But a couple of things—I was—there's this guy again, I'm going back to Twitter but he's been posting stuff about offshore and the amount—I feel like I have a pretty good understanding of onshore drilling and what goes on there. But then you look at the offshore stuff and this isn't necessarily—I know that you're not an offshore [expert] and they're so different—but I was just blown away by how much goes into drilling something offshore. Like the amount of paperwork and regulation and planning feels like it's 10-fold what it would be onshore.

But I found that there were two acronyms that I didn't know. I've never heard of them before. And I think they're drilling terms. So the first one is P-O-O-H.

Wade: Yeah, pull out of hole. It's synonymous with like trip out of hole or whatever. Yeah. So everybody did T-O-H, T-O-O-H, P-O-O-H. I hate P-O-O-H for some reason. You know how guys like—all the frac guys F-R-A-C or F-R-A-C-K and all that. Yeah. No, I'm the same way with that. T-O-O-H. I hate reading P-O-O-H on my reports. I just hate it.

[Wade gets disconnected briefly due to notifications]

Peter Brecht: Alright, so closely related to that term is R-I-H.

Wade: Okay, so that's run in hole. That's R-I-H, T-I-H, trip in hole. Same thing, I don't really—yeah, I don't feel as strongly about that one, so that's fine.

Peter Brecht: Okay, alright, there you go. All right, and then there was another one: E-U-R.

Wade: Estimated ultimate recovery. So that's a production term, right?

Peter Brecht: There you go, that's it. That's a production term, yeah. And a lot of times when they're looking at the PV10 and all that stuff, they're talking EUR is somewhere close in that vicinity at least. So trying to understand how that works.

Wade: They go in, look at their production. They'll fit a curve to it. That curve projects out ahead of you over time based on everything. And it'll give you EUR for water, oil, gas, all your stuff.

Peter Brecht: Yeah, you're three for three today. You were three for three last week. I'm just not gonna stump you. So it's all right. We're just gonna keep learning.

Wade: I'm gonna miss one that's really easy and everybody's gonna make fun of me. So keep them coming, let's do it. Bring it on.

Phoenix Energy and Public Production Data

Peter Brecht: So Phoenix Energy, there's a company out there, Phoenix Energy, and they are trying to raise a ton of money right now. And for some reason I got the ad on LinkedIn, I clicked on the link, and now this ad is following me everywhere. Like their marketing team is—they are on Instagram, they're on Facebook. They are there. They're in my inbox—I don't even know how they got my email address, but somehow I'm now targeted for Phoenix Energy.

So I was talking to Zach Copeland because he was like hey, I want to look at all the wells—if you're raising this much money and you've got this many wells, I want to see what the production is. So it's pretty interesting, like you can actually access this data, it can become publicly available and you can start to see what the production is going to be for a particular company. Has that always been the case or at what point are these wells publicly available for production? What does that look like?

Wade: Yeah, I'll tell you this—everywhere is a little bit different. A lot of that's driven by state rules and regulations. But yes, production data is public information. I think in Oklahoma, it's like six months is when you have to start releasing it. So essentially the first six months, everybody's a little bit in the dark. So that's kind of your jump time if you need to release some other stuff or if you want to get a plan started on an offset or anything like that.

And honestly, some companies will hold on to that data until that six month mark, and then they'll send it out to everybody else—the investors in the well and then the state regulatory agencies. Sometimes they'll just be sending it out from day one, sending out flowback reports and all those different things. So that's a little bit different, but at some point, the state does require that you release that data.

And then there's entire companies that are built off of getting that data, accumulating it at one spot—that's your Enverus, your IHS, all of those people. What they're really doing is just taking public data and putting it in a very accessible format. Now they do some other things with it too, and some of their higher tier services allow you to do some analysis. Essentially what Forecast is doing as well, that's another alternative—a company that does a lot of that stuff. So you're taking this public data and giving information out there, right? And so smart investors do that. You pay your fee and you get your access and like you're doing right there—that's exactly it.

So yeah, so that data is public and available. Production data, and usually the frac data is available too. That's one of the things—on the environmental side, they wanna know everything that you're pumping down hole. And so all of that has to be turned in as well.

Peter Brecht: Okay, that makes sense. I would encourage anyone that wants to get copious amounts of ads to go look at Phoenix Energy and what they're doing. Now maybe it could be a great investment, it could not be, I don't know. I'm not an investor, but I would love to—it would be really cool to talk to someone that does this stuff and analyzes financials of these deals. I think it's putting your money where your mouth is in a real way. Especially like you got to know the operator, you got to know all of these different pieces of it before you say, okay great, I'm gonna go sink a million dollars into this, right? And okay, I'm gonna get 10% return on my money—okay, that's pretty good, I'm not gonna walk away from that—but you know and then you got to look at historic stuff too.

Someone made a comment—I'll give you an example. Carvana—I saw Carvana stock back in 2020, it just skyrockets. And then it completely dumped. It was like $3.75 a share or something, I think around '22, '23, somewhere in there. And I was sitting there with my brother and I was like, man, this would be a good stock to get in on right now. And he's like, well, why do you think that? I'm like, because their business model's great. He's like, well, then why don't you do it? And I said, the reality is, the person, the guy that started it, Ernest Garcia III, was convicted of bank fraud back in the early '90s. And I said, I don't want to be associated with a company that has had someone that had—so it's like, even though something's good, if you're not vetting the entirety of the thing, it becomes disconcerting. I think oil and gas—there's a lot of people out there that can tell a great story, but the reality is, how do you ultimately figure out where that goes?

Again, not financial advice, just more of an observation.

Wade: Well, that's the deal too. I mean, anytime you're looking at those kinds of deals too, there's tons and tons of variables and some of those variables you can't control. If it's not hedged production in the future, then a lot of your revenue stream is gonna be dependent upon what prices are. And I'm sorry, no operator controls that price.

Oil Field Superstitions

Peter Brecht: All right, I got one more thing to go over with you and we'll see if you have any more to add. All right, so I'm on Collide. They've made a ton of changes to their platform and they're just trying to get a lot of engagement, which is great. And I've gone on there and I've learned a lot. But one of the topics that came up was superstitions on the oil field. And Juan Macias, friend of the show, he came up, he's like, these are the first three superstitions that came to mind for me. So I'm gonna tell you the first one. I want you to guess the second one. But the first one is cherry pies. You don't eat or bring a cherry pie on pad. If you do, something is going to go wrong. What do you think the second one is?

Wade: I've heard it. The second one's fried chicken.

Peter Brecht: Yep, chicken bones. Don't eat bone-in chicken on pad. Yep, you have to eat boneless chicken or nothing. Alright, the third one. Do you want to take a guess on the third one?

Wade: I have zero idea. I mean, there's so many, I'm sure.

Peter Brecht: Alright, don't clean your hard hat on a job.

Wade: I haven't heard that one, but nobody cleans their hard hat. So yeah, not a concern.

Peter Brecht: Okay. Yeah, exactly. Now, how do we feel about stickers on hard hats? That's the real question I got, because it seems like I see all these pictures—there's gotta be stickers, right?

Wade: Yeah, there's tons of stickers. Tons and tons of stickers. Yeah. No, I don't think anybody's got any—usually there's no problem. I don't know. Maybe a safety guy wouldn't like stickers because maybe it covers up like a crack or something in your hard hat. I don't know. But yeah, I see guys with tons of stickers and all that stuff. Even sometimes the safety guys have—I know one of the rig companies I used to go on, they had a little sticker that you had to put on your hat to show that you had been through their safety training. And then it had a little date and all that stuff on it. So you're good for like a year or something like that. So yeah, stickers on hard hats, everybody does it and there's tons of them out there.

Closing and Local Energy Merchandise

Peter Brecht: All right, cool. Well, the good news is along with stickers, I had to get another shipment of hats. So I ordered a bunch more Local Energy hats. And then I ordered some stickers along with those too. And then I'm super excited, but we actually have our own hot sauce. We're getting our hot sauce actually bottled this week. So I got to get the labels done, but "Friction Reducer" is going to be coming to a grocery store near you.

Wade: Alright, that's awesome.

Peter Brecht: All right, guys, we didn't talk a lot about oil and gas this week. I just wanted to hang out and have a good time. But anyways, catch us on TikTok, YouTube, go to localenergy.com. Email me, email Wade, we love to talk to you guys. Hopefully we'll be having a couple of great interviews coming up in the future. Have a great weekend and thank you guys for listening to Local Energy.

Wade: Thanks Peter.

This transcript has been edited for clarity and readability while maintaining the conversational tone and content of the original recording.