Chuck Yates Got A Job

00;00;00;02 - 00;00;24;19
Unknown
All right, Carl. Mom listens to the podcast, and mom adores you. Will you do this? Before we get started? And listeners of energy podcasts, you're just going to have to bear with me for mom. Explain to mom what a mineral is. Ooh. All right. For novice investors, this is actually an important question. The better question is, what's a mineral versus what's a royalty?

00;00;24;19 - 00;00;49;17
Unknown
Because they get, confused a lot. And basically, a mineral is a hydrocarbon that is underneath the Earth. It can be an oil mineral. It can be a natural gas mineral. And when it gets produced by any company, the payment stream coming from it is a royalty payments. So when people say minerals and royalties, they're basically the same thing.

00;00;49;18 - 00;01;23;02
Unknown
A mineral is just a non producing royalty. Can I go, Sally? Yeah. You know, she was, valedictorian of her class, at Lamar High School and a graduate of Rice University. So very smart, but, did not know what that is. So, minerals and royalties were unique in the United States, and that basically, a judge said years ago, farmer Brown owns the minerals underneath every other country on the planet.

00;01;23;05 - 00;01;57;12
Unknown
Basically, you got to pay the government, in effect, to extract the, minerals. Tell me about that. What? Why does that make us unique? What is the business opportunity? Everything I ever wanted to know about minerals, but were scared to ask. Well, I guess kind of starting with kind of how I came into the mineral space, which was, you know, I was working at a this is over 20 years ago, in 2003, I was working at a hedge fund out of Greenwich, and it was primarily a convertible bond.

00;01;57;13 - 00;02;19;09
Unknown
It was about a $4.5 billion fund, mostly convertible bond, some high yield debt. And we had a, you know, I think oil was just crossing 30 bucks for like the first time since the, you know, embargo of the 70s or whatever. And we were looking for a way to get our investors some exposure into oil and gas. And, you know, we've got these conservative bond investors.

00;02;19;09 - 00;02;44;22
Unknown
The public markets were a mess. We knew we weren't going to get them into drilling deals because that was far too complicated. But when you look at the mineral in royalty asset class, it behaves a lot like bonds. So, you know, you make one, initial acquisition, you get a coupon payment based on production. And we were like, okay, this is this is something interesting that we think our our current investor base, it kind of fits their risk profile.

00;02;44;24 - 00;03;14;03
Unknown
And as I learn more and more about minerals and royalties from then and then, here I am, what, almost 25 years later, I still think it's just the greatest asset class in the entire world. You're right, it is uniquely American in that if you go to, anywhere else in the world, pretty much, the sovereign owns the minerals in the royalties, the United States, individuals, corporations are actually able to own the minerals and the royalties.

00;03;14;05 - 00;03;49;06
Unknown
And I just don't know any other investment in the world where, you know, like, you write a check and it's one time check and then a group comes in that is incredibly well capitalized, very motivated, highly incentivized, and their whole goal and existence is just to make you more money. You know, it's it's just not like, like and that that's really what it is when, when you buy one of these minerals or one of these royalties, these companies, their job is to produce as much oil and as much natural gas from your minerals as possible.

00;03;49;06 - 00;04;11;29
Unknown
And you just get just after you write the first change to sit back and watch it happen. As all these technological advances and jail and fracking and God only knows what AI is going to be able to do for us. Because after all of the stuff that we've done through the shale revolution, we're slowly getting like 10% of the oil and gas out of these wells, and I'm sure we're going to be able to figure it out how to get even more out.

00;04;11;29 - 00;04;28;13
Unknown
So for the mineral owners, the perpetual nature of just owning something forever, that somebody is always going to try and be more valuable, I don't know, can you think of any I don't know any other investment like that. Everything else you got, you got to put your own money back in in order to improve it. Yeah. No, no legal business.

00;04;28;15 - 00;05;00;02
Unknown
You know. Yeah, I guess, I guess maybe protection in the Mafia might, might, might be the analogy, but. No, no, it's it's it's fascinating because the first kind of oil and gas lease actually predates us drilling the first. Well. So, you know, Titus is the first. Well, but actually there was oil seepage on some more farm in Pennsylvania.

00;05;00;04 - 00;05;19;05
Unknown
And the guy actually modeled the agreement with the company that was going to come suck the oil, in effect, off the ground, off an old mining lease that paid a royalty interest to the Crown. And so he just said, give me a share of the revenue. That's it. I'm not putting up any of the cost. I just want my share of the revenue.

00;05;19;05 - 00;05;36;08
Unknown
And so he set the precedent. So he set the precedent well. And everybody was like, man, that's not a bad idea. To your point that to me, when I go, I'll go talk to any group that ever wants to learn about minerals and royalties. What you don't realize, because we live in Houston and now being in the oil and gas industry, it's so well understood.

00;05;36;08 - 00;06;00;14
Unknown
But how completely foreign it is to, to everybody else outside of the oil and gas industry and even how these, these rights work. So when I go to, you know, the coast to give presentations, I have this real fun kind of presentation. I've put together, which basically, uses the movie Far and Away with Tom Cruise and Nicole Kidman circa 1992.

00;06;00;16 - 00;06;20;19
Unknown
Because it outlines the the land rush the land, or the 1889 land run, in Oklahoma. And it's kind of the forgotten part about that movie, which, you know, goes over to make it in America, and he's a boxer and all this. But at the end, it's when, the president makes a proclamation that, you know, you can ride out and you can you can claim your land.

00;06;20;19 - 00;06;35;15
Unknown
And if you work it for a few years, you get the land and you get your 640 acres and you get the minerals. And that's how the the movie ends. You, like, breaks his back, but he like, gets his gets his land. So I kind of take it up from there and it's like, okay, so then, you know, that's how minerals and royalties work.

00;06;35;15 - 00;06;54;14
Unknown
Tom. Tom Cruise got his land and he's living on his land. And a few years later, that's about when oil and gas was discovered in Oklahoma. So then an oil company shows up on Tom's land, and they're they're offering leases, and they go, look, we're going to come and we will drill your land and we will pay for everything.

00;06;54;16 - 00;07;15;03
Unknown
And if we find oil and gas on it, you're going to get, you know, a 25% royalty interest in it. And Tom's like, this is great. So the oil company comes, they develop the land that he's getting these royalty checks. You know, him and Nicole are traveling around the world. They decide, you know, we don't want to live in Oklahoma anymore.

00;07;15;06 - 00;07;34;14
Unknown
So there's another interesting part about minerals and royalties, which is really hard for non oil and gas people to get their, head around, which is you can own the surface, but not the minerals. So you know, they go, hey we're going to sell that ranch that we have in Oklahoma. And they, they sell my presentation. They sell it to Val Kilmer, God rest his soul.

00;07;34;17 - 00;07;52;18
Unknown
Oh, no. You know, he had built a big ranch in New Mexico. So, so anyway, so they they sell the surface, but they don't sell the minerals. So, you know, if you're ever buying a ranch in West Texas, be careful, you know, because if you don't know the mineral rights, the mineral rights are superior. So the oil and gas company can still show up on your surface.

00;07;52;23 - 00;08;11;00
Unknown
And there's rules about how close they can get to things. And, and they're generally really good about. And they build new roads and fences, but they can show up and they have the right to continue drilling the minerals underneath. So then we I have, you know, Tom and Nicole traveling the world off all this mineral income. You know, Val still living on the surface.

00;08;11;02 - 00;08;34;23
Unknown
And then one day, you know, they get divorced and they split the mineral estate in half. And then they go about their families, and it keeps getting split in half again and again and again. And that's another thing that's really unique about mineral estates. You know, it's really hard to split up a house and sell it to, six different people or leave it in your will to 15 different kids.

00;08;34;25 - 00;09;03;08
Unknown
But mineral estates are easily separated. So, you know, if you have 12 grandkids, you can give them each one twelfths of the mineral estate. So one of the things that's interesting in this space is, as you know, the baby boomers pass on, it's almost like no matter how many minerals and royalties are getting born. So we're getting more and more mineral owners, because every time one of these patriarchs or matriarchs passes away, they're splitting the estate and handing it down.

00;09;03;08 - 00;09;25;24
Unknown
And and that's another thing about the mineral owners. The sheer scale of it is hard to fathom. I mean, there are millions and millions of mineral owners around the United States, and it seems like there's more of them as older generations pass and they keep getting severed. The you know, one of the fascinating things I learned from you, because just note of full disclosure, is one of my dearest friends on the planet.

00;09;25;24 - 00;09;54;16
Unknown
And when it. Kane, I gave you how many million, million, $200 million, and actually got my money back. And she did during a horrible time. So that's a win. Yeah. Back in the day. God. 2014. God, I remember we had a PSA open. Well, we we had we were filing an IPO. I mean, we're in the middle of, S-1 filing while we're while we're closing one of the deals that's going to get us big.

00;09;54;16 - 00;10;17;28
Unknown
I have to go public. And and that's when the the oil market gets close. Over Thanksgiving, it was Thanksgiving Day. I will never forget because I'm at my sister's house in Michigan and everyone's like, why is Uncle Carl in the basement? Like, I'm like, like trying not to throw off over everything that's that's happening, right? Well, normally, normally the Cowboys losing on Thanksgiving Day ruined my Thanksgiving.

00;10;17;28 - 00;10;42;27
Unknown
That year it was OPEC. I mean, I remember standing over the deep fried turkey looking at the screen going how can oil have fallen that much. Unreal. Yeah. Yeah we have. Yeah. We've been through it. But know one of the interesting things we learned about minerals is, like you said, people pass it on to their children and stuff.

00;10;43;00 - 00;11;07;23
Unknown
A lot of times individuals don't sell based on, oh my gosh, I think oil's high. I'm going to sell or I'm going to hold on to mine because also they sell around life events. Yeah, my kids going to college. Yeah. Yeah. You know my my buddy calls it the is it's like divorce, death debt. You know it can be it can be anything.

00;11;07;23 - 00;11;36;07
Unknown
Yeah. Most of these you know I've done over 1000 mineral deals I, I don't, I don't think I can count on two hands. The amount of times that I really believed the seller was selling because they thought it was oil price related. It's always oil price related. And what their offer is. But and you see it also where they're like, well, I'm not selling unless I get $50,000.

00;11;36;09 - 00;11;55;04
Unknown
That number is the same at $20 oil as it is at $100. Right? Like that's that's what they think this or that's what's going to buy them the thing that they want to buy and that generally that generally governs that. There's not a lot of day trader mentality among some of the mineral sellers. Yeah. So so how do we invest in these things.

00;11;55;04 - 00;12;22;10
Unknown
Because it's, it's a it's a private, property interest. Right. And I mean, how historically have we invested in these things and what are we thinking today? Well, generally, I, I think today is probably the best time we've ever had to invest in these. And for, you know, other investors, whether accredited or even non-accredited via the public space to get into it.

00;12;22;10 - 00;12;44;08
Unknown
So, so let me back up a little bit to 22,004 when we put together the the mineral fund out of the hedge fund. There really we come up with this idea to buy these minerals. And relative to our investors, there is no way to do it. I mean, there is kind of like Blackstone Minerals was out there, but they were just too close partnership.

00;12;44;11 - 00;13;09;25
Unknown
Jane Woodward at Math had put that Stanford vehicle together. Scott Noble was just kind of getting started with his bigger funds at that point. I mean, other like like back then, people that bought and sold minerals were like the Midland Mafia and stuff, right? They weren't. And there wasn't much buying and selling going on. They just had them, you know, they were just, you know, it wasn't really a liquid market for them back then.

00;13;10;02 - 00;13;31;29
Unknown
Things changed a lot in 1999 when drilling info came out. And you could you could start actually looking at you know, some oil and gas assets and other areas. But, you know, primarily people were just sitting on them. So, you know, we put together a company to go out and buy from these individual owners of minerals and royalties and some of these aggregators.

00;13;31;29 - 00;14;03;02
Unknown
So which was completely, foreign concept at the time to any institutional investors. I mean, is that like literally knocking on farmer Bob store? Not at that point. There were a couple groups that were doing that on a micro level, and we would, we would buy those packages, okay. At cornerstone. Gotcha. And then it was also going to, you know, some of these public companies that had, mineral portfolios that they didn't operate.

00;14;03;05 - 00;14;26;27
Unknown
So one of the bigger deals we did at cornerstone when, Cimarex acquired Magnum Hunter, you know, if you know Nick Morelli at Cimarex, he hated that. So they took on a lot of debt. And, you know, we've been analyzing all these companies, and we say, well, you've got this big mineral portfolio that you don't operate, and we could pay you $60 million for that, and you could use it to pay off some of the debt.

00;14;26;27 - 00;14;46;21
Unknown
And that was one of the bigger deals that we did at cornerstone. So we were doing we were kind of angling for packages like that. And that's how we built, the Caritas royalty funds. And we wrapped a hedge fund structure around those. We priced it every six months so investors could come in and out. And we had an amazing run.

00;14;46;21 - 00;15;13;10
Unknown
We were fortunate enough to, to hedge in, we reset all the hedges that we had in July of 2008. So what do you think the four year average oil and four year average natural gas price was for those hedges. So for your natural gas was $9, maybe that was like the fourth year. Our average was 1351.

00;15;13;10 - 00;15;37;07
Unknown
Wow. Yeah. Okay. Yeah. And the oil is 147 I think. Oh yeah. Yeah. And have our investors called us screaming that we're idiots because I was going to 200. So Vassily and I are like great. Thanks guys. We're here. We thought we had a pretty good call. And, you know, six months later when the financial crisis hit and it was at 30, they were all pretty happy.

00;15;37;09 - 00;16;00;03
Unknown
So, Yeah. So that kind of gets me to almost a haymaker where you funded us. So we came out of that. So we go through the financial crisis and the whole rest of the hedge fund blows up. We're up 18% that year because of the hedges that we had in place. And then we've got a bunch of deals that we would love to buy at $30 oil, but the hedge fund money is all gone.

00;16;00;03 - 00;16;20;19
Unknown
So, Vaseline are like, all right, we need a we need a better different type of capital here. So we went we talked to, you know, a handful of private equity groups and probably even talked to you at that point and at that point, it was still you know, we're still kind of pre shale here. They're just they're doing it in gas a little bit and kind of a 6 or 7.

00;16;20;19 - 00;16;43;17
Unknown
So this is oh nine and it's just kind of starting to come in and they're like I don't know minerals and royalties aren't really a private equity type investment. So we're like okay, we had some friends that were doing, the remora guys that were doing some operated work in South Texas, and we're also investing in some non op stuff.

00;16;43;19 - 00;17;08;19
Unknown
And we said, okay, let's go, let's go work with those guys. So that's when we moved to Houston. Left the hedge fund stuff behind. Moved to Houston, worked with the remora guys, did some not got money from John Linker, who is, you know, John. Oh, my favorite John Linker story. He's the best serve First Reserve's oil and gas guy.

00;17;08;22 - 00;17;33;14
Unknown
One time John walked out a nap. And this was year 1351. Natural gas price time. And he walks out and I go, hey, John, how's it going in? There? He goes, man, it's great. Even the bankrupt companies have two booths at your own. So one of the cool things at the hedge fund, we had this, you know, marketing center on Fisher Island in Florida.

00;17;33;19 - 00;17;50;10
Unknown
Oh, nice. And it was like, you know, we're coming into this industry without any real experience of versus, like, like you can bring important people down, spend some time with them there. John was one of the first people I brought down there with Harrison Williams. Oh, wow. All the time. Schaefer I mean, that was the three of them.

00;17;50;15 - 00;18;11;07
Unknown
What a crew. Right? And I'll never forget, you know, John was so awesome. He gave me three rules. You guys, I'm gonna tell you three things, and I'll never forgot them. I tell them all the time. You guys, first of all, you can't go broke taking profits. I know a lot of oil and gas. Guys that used to be millionaires.

00;18;11;09 - 00;18;33;03
Unknown
And River Oaks is filled with guys who sold too soon. Nice. That sounds exactly like such good Laker isms, right? Well, another favorite Laker ism is, he was introducing me to somebody. I can't remember what the setup was, but he goes, hey, this is my friend Chuck. I want you to meet. Chuck sits on the board a 27 companies.

00;18;33;03 - 00;18;58;24
Unknown
And I asked Chuck, how do you keep up with that? And Chuck told me, I just try to remember one fact about each company and serves you well, like Lake Laker was the best at, like, distilling all this complicated stuff down into a funny, pithy sentence. So at this point, he was out of first reserve. He was doing s funds, which kind of, energy special situations funds with Tim Sullivan.

00;18;58;26 - 00;19;28;15
Unknown
So he gave us, the money to kind of recapitalize or more, the operated stuff worked really well. The Non-Obese stuff didn't work as well. It was kind of a nothing burger. A little bit of it was made. But while while I'm at Rushmore, with facilities, one of my haymaker partners and who I was at the hedge fund with, and I'm sitting there one day and I'm watching the MLPs space, which is supposed to be long life, low risk energy yield.

00;19;28;15 - 00;19;57;25
Unknown
Right? That's what it's marketed to. And it's and it's got like 30 or $40 billion invested in these companies. And it was right about when I think Linn Energy started drilling horizontals in the Granite wash, I was like, I don't think these investors borrowing money to make their distribution. Yeah, I don't think these investors really understand why the risk involved with some of that and minerals and royalties is the ultimate low risk given investor exposure to oil and gas.

00;19;57;27 - 00;20;18;16
Unknown
So that's where I kind of came up with the idea that there should be a public mineral company that provides access to this asset class. All these people have never heard about it because, as I said, I think it's the best asset class in the world. So I go around and I talk to I know what all the private equity guys are going to say.

00;20;18;16 - 00;20;35;01
Unknown
They're going to go, why isn't anybody done this before? So I went around, I talked to probably about a dozen of the biggest private mineral owners in the world, and I can tell you why it was never done before. But you can guess because all of these guys are sitting on their ranch making $10 million a month. Yes.

00;20;35;04 - 00;21;04;16
Unknown
What on earth is going to motivate them to do anything, particularly public scrutiny, particularly public markets? Yeah. And and now the you know, now we're in 2013 the the shale has become, more preeminent, more delineated operators are going into development mode. And there is a real thesis on either partnering with operators or getting ahead of their drill bit and being able to buy these minerals and build them up into a public company.

00;21;04;18 - 00;21;24;25
Unknown
So we went out, we brought on our, we got our third partner, Doug Collins, for that. And this is building the haymaker franchise. And we went out. We talked to the 12 biggest private equity companies in the energy, private companies in the world, and nine of them were still like, I still don't think private equity is ever going to get into minerals.

00;21;24;28 - 00;21;46;17
Unknown
And I don't know about this public exit. It still feels like if it was such a good idea, somebody would have done it by now. Right? You guys saw the vision. KKR kind of saw the vision. Denham kind of saw the vision. We ended up, going with you guys. And what's happened from now from just just real quick.

00;21;46;20 - 00;22;17;28
Unknown
From our point of view, I think one of the things that Mike Hynes and I figured out we really liked was early stage assets. We felt like the engineers running around Kane and being able to, in effect, applied technology from the different basins. In advance of the market. Let's go learn about a frack up in the BOC and and apply it in South Texas, you know, South Texas or the Southern Midland Basin was where we really shined.

00;22;17;28 - 00;22;43;12
Unknown
And so being able to drill the first horizontal well in a county and, you know, buy acreage cheap and then turn, turn that acreage into being worth a whole lot more for Chesapeake or Xto or whoever was really our jam. And you guys gave us the vehicle to do that with minerals, because you could go out and in effect, buy out in front of the drill bit.

00;22;43;12 - 00;23;09;05
Unknown
And so and quite frankly, you came up with that, not us. Yeah. No, we were kind of the first, you know, the pioneers of kind of that concept. So, you know, you go, then you go, okay. So that was 2013 when that started. No public companies, no private equity in. And now here we are in 2026, we have ten public companies that are actively acquiring minerals and royalties.

00;23;09;05 - 00;23;33;21
Unknown
Some exclusively. Some are you know, like gold and royalties or you know, other streams of royalties. And every single private equity company has put, you know, billions of dollars into this strategy, which is which is why it's it's such a good time to be investing in it because there's never been more liquidity or more interest.

00;23;33;21 - 00;24;01;05
Unknown
And I still think not enough people know about this. Like if because if people know about it, my thing with minerals and royalties is I think every person in the world needs to have like some of this in their own personal portfolio, if nothing else, just to mitigate their own energy usage every year. Because if you look up the stats, just like the average American right, spends about $4,200 a year, on oil and gas.

00;24;01;05 - 00;24;22;26
Unknown
So whether it's, you know, it's a few hundred bucks a month to fill their car and heat their home. So if you just took, you know, 40 or 50 grand out of your IRA or 400 and K and put it into one of the public mineral companies, which tend to distribute about 10%. And you go, okay, I'm just going to put this in there and let that run.

00;24;22;28 - 00;24;39;29
Unknown
And next time I go fill up my car and we invaded Iran. It's not going to bother me as much. And if my distributions go down, it doesn't bother me because my heating bills down or I'm paying less for oil and gas, like just as a hedge against their energy consumption. I think everybody should know what I mean.

00;24;39;29 - 00;25;03;14
Unknown
When you look at, you know, family offices or corporations with fleets of vehicles or private jets, like, I mean, you could be spending a million, 2 million, $3 million a year on energy costs. So to own, a mineral portfolio that's constantly just working in order to offset those expenses and probably also generate a pretty strong rate of return, like, I think everybody should own these.

00;25;03;14 - 00;25;26;26
Unknown
And and I love the public companies. If I have one critique of them, I just don't think they've done as good a job. Like really getting the word out to Main Street, to the point where, you know, I think everybody should at least know what this asset classes, and they don't yet. So there's, but there's so much opportunity in it now because that there's so many and buyers.

00;25;26;28 - 00;25;44;26
Unknown
And I think we're finally to the point where if you own minerals and royalties, you have a little bit of a private market. One of the hardest things is if somebody calls you and you own something. Excuse me? I mean, you don't know what it's worth, right? So someone goes, I'll give you $50,000 for this. You're like, I know, is it worth 5000?

00;25;44;26 - 00;26;08;11
Unknown
Is worth 500,000. Now, there's enough grassroots guys that you've probably got a drawer full of offers, and you kind of know exactly what you're you're value is on your minerals, which makes you more comfortable selling them. So I think there's going to be more and more, people willing to sell the minerals. And there's a really established food chain.

00;26;08;13 - 00;26;30;10
Unknown
So I think the opportunity now is, is grassroots buyers being able to acquire minerals and then kind of sell them up to up the food chain and define for me what a grassroots buyer might be is that a dollar amount. Is that who were buying from all of the above? What would you kind of put in that box?

00;26;30;12 - 00;26;58;12
Unknown
Well, you got you probably got you got four boxes of mineral buyers. So grassroots, you'll hear it called grass retail call ground game. These are the guys actually knocking on the doors okay. Yeah. They have whether it's tax roll data, whether it's, relationships in a community, whether it's the Midland Mafia, these are the guys actually sitting there at the kitchen table or on the phone buying the minerals directly from the mineral owners.

00;26;58;15 - 00;27;22;29
Unknown
So they kind of they kind of aggregate those up then. And those are generally and harvest is raising my my new company, Harvest Mineral Realty Partners. We are raising kind of a fund of funds basically to invest in these grassroots mineral buyers because, my theory is, you know, you want to own as many minerals as you can, right now.

00;27;22;29 - 00;27;49;00
Unknown
It's a great time to own them. The the end buyers are just getting bigger. So what we're doing is allocating capital to all of these different ground game buyers in different basins across the United States to get diversified grassroots mineral exposure for our investors. So that's the so that's that's the is that the there's a guy that and I'm making this up.

00;27;49;00 - 00;28;10;22
Unknown
But there's a guy that has half million dollars of his own money knocking on doors buying. And you want to give him more so that he can just buy more because he's got the opportunities. Is that kind of getting close to how to look at it? Yeah, that's that's part of it. But and that's probably what it would have been 5 or 10 years ago okay.

00;28;10;23 - 00;28;34;18
Unknown
When it started the now these the grassroots buyers, they're generally I mean some of these funds they will raise their own LP funds. So it could be as small as a couple million bucks. So your 500,000, for example. And then some of them have done private equity a couple times or have gotten bigger family offices. And, and it's kind of like they could be 100, even 200 million the bigger ones.

00;28;34;18 - 00;29;06;20
Unknown
Right? But their, their strategy is they are going door to door and they have enough opportunities. So they just do you they employ an army of people. Yeah okay I gotcha okay. So or and depending on the size. Right. So and this is the area of the market that isn't really served by private equity right now, which is where I see the opportunity today is to go in with a lot of these groups that have put together these smaller funds and be able to invest alongside them, because some of them may just be buying in like one county where they have really good relationships.

00;29;06;20 - 00;29;36;12
Unknown
Some of them maybe have a partnership with one operator and one area where they have really good information and they're really good at buying minerals. And I think I can be helpful even on the technology side or what they're what they're using, helping them find and buyers. So I really you know, I kind of got to the point, after doing a thousand of these deals and competing with all of these guys that the market used to be like when we started haymaker, you could put together groups and just go buy in every basin.

00;29;36;15 - 00;29;59;11
Unknown
The market has changed to where these regional buyers are really focused, regional buyers in every basin. And it's really hard to beat them unless you have a real focus in that area. So and when I'm looking at the space right now and talking about us, you know, I do another haymaker and go raise money to go actually buy minerals and royalties.

00;29;59;13 - 00;30;22;20
Unknown
If you want to deploy a lot of capital and you want to do it quickly and you want to do it in the best areas with the best rock and the best opportunities, I see it being giving money to the guys that are already established. They're having the conversations with the groups already very successful buyers that that I've already vetted, and I know I'm going to be able to invest capital with them, and they're going to be able to put it to work.

00;30;22;20 - 00;30;46;21
Unknown
And I'll get some exposure over here or some exposure over there, and kind of build a portfolio through these very focused regional buyers, as opposed to trying to build another huge company and develop regional expertise in every area. That's the that's the thesis behind harvest. Gotcha. And so at the end of the day, I'm one of those regional, regional buyers.

00;30;46;21 - 00;31;08;27
Unknown
Your pitch to me is, hey, I'm a cut. You check. So you've got more access to capital, which is usually always good. I've been in your shoes. I can help you. So I've actually run one of these things. I know technology kind of the story. Yeah, yeah. That's it. Yeah. I'll be, you know, I'm. I'm not going to be taking control positions.

00;31;08;27 - 00;31;28;28
Unknown
I'll just be another LP. But I can be very helpful. And oh, by the way, I still see like a thousand mineral deals all the time. So they just come to me and I'll just be kind of handing them out to my, invested companies at that point. So, yeah, the Ken Hirsch of Minerals. Yeah. They can't hurt you without it.

00;31;28;28 - 00;31;51;26
Unknown
Without control, without control. The the friendlier, kinder Ken Hirsch. Yeah. So that was love. Yeah. This is a big fan of Ken. I like Ken. Yeah. No, that's cool, that's cool. The, So what does this look like in terms of harvests? Am I buying shares in a company? Is it a traditional the type firm? What does it look like?

00;31;51;26 - 00;32;19;03
Unknown
I'm a traditional GP LP type of firm, where I'll be the general partner and we'll collect the capital handed out to probably 10 to 20 these different regional buyers and let them do their thing. You know, is it you know, one of the great things about it's funny, like before I ever invested in any of these, like long term funds, right.

00;32;19;03 - 00;32;37;09
Unknown
You know, a lot of people are like, they're used to the stock market or whatever, right? I'd always be like, how can you get an, like a ten year I lock up investment? It never made sense to me. And then you get in a couple of them and first of all, sometimes it's kind of nice to not be able to do anything based on headlines, right?

00;32;37;09 - 00;32;58;14
Unknown
You're like, but the thing is, with the minerals and royalties is it's like, you may be in it for ten years, but in most of these funds, like you've you've gotten your capital back through distributions, over that same period of time. So, you know, these assets are producing so you get quarterly distributions. So your money. Good. Usually way before the ten year period.

00;32;58;14 - 00;33;19;15
Unknown
And then on that ten year period, they're just kind of selling off the the rest of it. So ten year term, how long do you have to call the capital. What does that look. It's going to be more like a 12 year term okay. Because I'm going to have two two years to make the investment, to make the commitments to the underlying portfolio company.

00;33;19;21 - 00;33;44;28
Unknown
And every one of them has a ten year. Gotcha. Okay. So I need I need to be able to kind of outlast sure their funds. So yeah, I should have and I've already got probably 50% plus allocated in my head to these different managers, that are raising right now. I will be raising very soon. And then I've got about 30 other different companies that I'm considering where the other half is going to go.

00;33;44;28 - 00;34;05;24
Unknown
So the money will be invested, it will be committed very quickly. And some of these groups are already buying. So yeah, allocate the capital then they'll call it down. You know, their most of their terms are like over a 5 or 6 year period. I think they're going to put the money to work quicker in most cases.

00;34;05;27 - 00;34;31;17
Unknown
And then it's quarterly distributions, from then on out. Nice. And then towards towards the, the end of the life of the fund, either just sell the, the, the bucket of it or distribute out the minerals straight. Yeah, yeah. No interesting stuff. The fund of funds for minerals is anyone done this? No, no. That's the, the and again, the.

00;34;31;18 - 00;34;54;14
Unknown
Why isn't anybody done this before the market wasn't mature enough. Yeah. No. This is the first time, where the market has been mature enough, where there's, there's enough reputable companies with particular expertise to raise these funds and be able to deploy them where I would have the confidence to to give money to these different groups and be able to use it.

00;34;54;14 - 00;35;11;17
Unknown
Before it was either a lack of companies or a lack of opportunity where you're like, oh man, I don't even know if I if I give this guy the money, is he really going to be able to put it to work? So yeah. And you've got good groups with good track records that I'm confident can put the capital to work.

00;35;11;17 - 00;35;29;25
Unknown
And there there have been bad actors in the space and, you know, I know who they are. Well, I did find the companies that went, that got convicted for fraud. There were huge warning signs with both of those before they were convicted. I don't know if you're coming into the industry and you don't. You didn't know that.

00;35;29;25 - 00;35;48;28
Unknown
I could see how you know, the minerals are such a cool asset class. Sometimes people go, oh my God, I just want to get in. And the first manager that comes to, they're going to do it with because you're not going to see a lot of these guys. Right. And and the groups I'm investing with also, you know, some of these guys are, you know, the Midland groups and groups in Oklahoma.

00;35;48;28 - 00;36;06;04
Unknown
And they're not going to show up in a in a New York or a San Francisco boardroom. They generally don't need to. They can usually raise the capital without having to go over there. So I'm kind of a conduit to bring some new investors into this space. So this is going to pay me to say something nice about you.

00;36;06;05 - 00;36;33;28
Unknown
But but I will I will also say the reason this hasn't happened. And in effect, you're you're creating kind of a new level, if you will. Is there really hasn't been the team with the financial operational expertise to be able to play the role. And you are one of a handful of people that could actually do that. Yeah.

00;36;33;28 - 00;36;59;21
Unknown
Thank you. Yeah, I'm kind of my whole career has been built around minerals and royalties. You know, I host every year. I host, Mineral and Royalty Conference, which is the biggest mineral conference in the country. And that's a great way for me to continue to meet all these other different, both investors, but also all the different groups that are vying in the different areas, guys that have left this company to go start their own.

00;36;59;21 - 00;37;26;14
Unknown
And I think that harvest, you know, we sit really at the nexus of all of the mineral activity. And, you know, I have great relationships with the CEOs of every one of the mineral companies that are public. So I'm constant dialog with those guys about what they're looking for. I think I can help position some of these companies to, you know, put together good asset classes to sell off into those regions.

00;37;26;17 - 00;37;57;02
Unknown
And I have great relationships with people, and just about every energy company, in town as well. And those relationships help as well. Yeah. Because, sitting here thinking out loud, the ability to buy at the grassroots is obviously the cheapest and best way to buy. No. No question. So you're going to you're going to tap that if you can help some of those groups in effect skip a level of the buyers.

00;37;57;02 - 00;38;20;08
Unknown
Maybe we don't sell to an aggregator or a private equity backed company. We're able to sell straight into some public companies. I mean, that's another uplift potentially to yeah, we got such I was going through the floor and yeah, we stayed on. You kind of got grassroots ground game. Could be as big as up to like 200 million.

00;38;20;08 - 00;38;46;03
Unknown
But generally like I said, some of these are ten, $50 million type. And the next group is really where the private equity kind of, portfolio companies fit in. That's kind of your, your mesas, your stone hills, those guys which will be grassroots and do by grassroots, but they will also buy aggregated packages. You know, if one of the grassroots guys wants to sell up, they could sell up to that group.

00;38;46;04 - 00;39;12;19
Unknown
Right. And usually that group uses it to kind of build out the rest of their portfolio, because that group is building to sell up to the next two groups, which is, the third group is kind of the longer term private capital, whether you call that, the sixth Street or the insurance companies, the Apollos, these are guys that that are only really looking to buy really big packages.

00;39;12;22 - 00;39;51;02
Unknown
They may do some ground game around it to fill in a little bit, but they're trying to put, you know, big dollars to work, to make acquisitions. And, they'll hold it for a long time. But they're not they're not forever holders in most cases, but they're gonna hold for a long time. And then the final group are the public companies, of which you've got a number of which, which are, you know, purely dedicated to minerals and royalties, like Kimball, Viper, Blackstone, Dorchester, and then you've got some of these other companies that have a land component or a coal component or a gold component or an upstream component.

00;39;51;02 - 00;40;10;12
Unknown
And oh, I should add to the mineral ones. Congratulations to, Daniel Hertz and the White Hawk team. Yeah, yeah, that's, that's, I sent him and haiku, an email the other day. Congrats, boys. Yeah, it's awesome that we now we have one that is purely focused on natural gas. So very excited for those guys.

00;40;10;14 - 00;40;35;25
Unknown
And then you get the hybrids, like Alliance, which is coal with minerals, franco-nevada, which is gold with minerals, Crescent energy, which is upstream with minerals, TPL which is land and water and everything else in the world with minerals. But all of these, all of these different groups. If I left anybody out, I'm sorry, but all of these different groups, that are now, you know, potential end buyers for this.

00;40;35;28 - 00;40;56;07
Unknown
And the reason, the reason I say, hey, you know, why you want to come in grassroots if you can get reputable buyers and all that and avoid the pitfalls and the risks is that, you know, the grassroots guys are targeting, you know, 25% type rates return because they've got enough of this funnel to kind of sell off into.

00;40;56;13 - 00;41;16;04
Unknown
By the time it gets to the public, there's still great investments. And if if you're not an accredited investor or you don't want to do private, you you don't want to do a long lock up. I mean, these public companies, great diversified exposure typically are yielding about 10%, which is still good for the average person that needs to cover their their car and home bill.

00;41;16;04 - 00;41;38;26
Unknown
So, you know, you can kind of invest along the spectrum of minerals and royalties and again, the other good thing like it is it is absent fraud, it is extremely difficult to find a way to lose money. Right. In the asset class, you know, you're in a bunch of producing wells in theory. Eventually they should they should pay you all your money back.

00;41;38;29 - 00;41;59;24
Unknown
You know, it's unless you're stealing it or, just do something, incredibly unfortunate. It's a really hard asset class. It's not like ENP where you can get a zero. You can, you know, a lease can expire. It's just a very different risk profile, which I think is good for non oil and gas investors that want oil and gas exposure.

00;41;59;24 - 00;42;22;17
Unknown
Yeah. And I mean every old guy old guy or gal in the business will always tell you the greatest place to find oil is in the shadow of a Derrick. Yeah. And I mean imagine earning a bunch of minerals in South Texas when the Eagle Ford came through. Oh, yeah. You know, imagine owning a bunch of minerals out in West Texas.

00;42;22;20 - 00;42;47;11
Unknown
All of a sudden you start horizontal drilling Appalachia when the, Marcellus came through, I mean, wow. Yeah. Now there's some, some there's some guys trying to buy them in New York, and I'm like, I won't be there. Yeah, but I you can probably get it for five bucks an acre, right? But yeah, I mean, I don't think they're ever going to develop it in 30 years if somebody's bottom, you know, you just never know.

00;42;47;19 - 00;43;20;24
Unknown
Yeah. So is there a, is there potentially a role sitting where you're going to be sitting and having 10 to 20 of these that you're actually, you know, fund A is contemplating a sale fund B might have some associated minerals are you potentially saying, hey A and B you all talk together and, and potentially creating bigger packages? I mean, not that you could force that in any way, but yeah, I just I won't be able to force a but absolutely.

00;43;20;24 - 00;43;38;18
Unknown
Yeah. If I any way that I can as long as it's a win for both of them you know. Yeah. Yeah yeah. You never do anything to benefit A over B but yeah. To that. Yeah. To that extent big bigger usually gets better. Yeah. Yeah. Yep. Anything that I can do. You know this. These are my investments. Right.

00;43;38;18 - 00;43;58;26
Unknown
Anything I can do to increase the value of these investments for these guys? I'm going to be working to do that. Whether it's introducing them to a buyer, telling them have no buyer that wouldn't be interested in either one of you because you're too small. But together could be a really good deal. And if they're interested. Yeah, absolutely.

00;43;58;29 - 00;44;23;22
Unknown
Cool. Cool. Well, how do people reach you? Harvest LP is the site, dot com.com? Yeah. My emails KB at harvest lp.com. We yeah we had to go collide.io. Yeah. Because somebody else owns callide.com and wants $1 million for it or something. Yeah. Is that a goal. Is is the goal to get to enough revenue to buy it or.

00;44;23;24 - 00;44;46;13
Unknown
No, it's not worth just just outlast hard. No. And All right Carl, before we go, give me give me a story or two of a crazy mineral story, and then I've got one crazy story I'll throw back at you that I don't think I've told you. Okay. All right. God, you know, you buy from all kinds of mineral industries.

00;44;46;15 - 00;45;08;04
Unknown
I mean, there's there's closings that have taken place in prisons. Oh, I really. Yeah, yeah. Where an inmate having sold some minerals and you get, like a handwritten letter from him saying, you know, requesting an offer. We got some of those, you know, we got one. You know, we'd call down one crazy group that was, like, demanding to get paid in cash.

00;45;08;04 - 00;45;26;18
Unknown
And we're like, we don't. We don't do that. And then, he calls back later. He's like, I see the oil. I'm standing on top of this, and I see the oil and my land. Man's like, I don't know what you're standing on top of, sir, but I. I think you need to get off of it. There is no producing oil on this land right now.

00;45;26;21 - 00;45;41;15
Unknown
Well, we had a brother and sister come in. This was a funny one. You know, one of the things you're on and just buying minerals is, you know, like I said, they're great to own. I think they're great to own. Diversified. If you only own a little bit. Not a terrible idea to sell it and get some diversification.

00;45;41;17 - 00;45;59;01
Unknown
We got a brother and a sister in our office and, the the brother goes, I think it was a pretty big deal for them. We're I think we're offering both, like $1 million. And the sister goes, I don't know, you know, grandpa said I don't sell the minerals. And the brother goes, no, no, no, that is not what grandpa said.

00;45;59;04 - 00;46;22;12
Unknown
Grandpa said, don't sell the minerals because someday they might be worth something. That day is today. They're offering $1 million. I'm taking mine. You can do whatever. You all yours. So, those are. I mean, there's just all kinds of characters. My my favorite, Carl Minerals story of us being in business together is and and correct me where I'm wrong.

00;46;22;12 - 00;46;43;09
Unknown
But as I recall you telling the story, you're sitting in your office and this is back. You know, we were in business together, I think. When did we sell? 2018. And, you know, we got into business in like 2013, right? So this is kind of back in that day, the Astros were the single worst team on the planet.

00;46;43;14 - 00;47;09;20
Unknown
They'd lost 100 games three times a year. And some guy walks into your office and goes, I want to I want to work for you. I want to learn about oil and gas. And you were like, you don't know anything about minerals. Why? Why should I hire you? And the guy goes, I've been the number one ticket salesman for the Astros for the last three years, and if I can sell season tickets to that, I must be able to talk to people.

00;47;09;20 - 00;47;26;23
Unknown
Yeah. True story. Yeah, yeah, yeah, we had, you know, we had an ad out for a mineral buyer, and this resume comes in and we're like, this guy's selling Astros tickets. He can take a no. And that's the number one requirement. He can't be deterred when somebody says, no, I don't want to sell my minerals. And and and we hired him.

00;47;26;23 - 00;47;46;20
Unknown
And is this a true story that he got there and he just crushed it. And at one point, like your your refrigerator was full of pies that these little old ladies would cook for him because they had such good experience selling them minerals. That is 100% natural. Okay. I don't know where that came from. I know that's a hard no.

00;47;46;20 - 00;48;09;01
Unknown
I've always I've always conjured up these stories. Yeah. This guy's getting sent a pie making so much that. Oh, no, that never happened. So, so, so kind of, one last, one last minerals story that I have. Did you ever meet a guy named Toby Bean? Been? No. Toby being so he was a Lafayette. Lafayette, Louisiana guy.

00;48;09;04 - 00;48;37;17
Unknown
And Toby was a Lane guy. Went out on his own when he was really young, and there was a 640 that Texaco owned, 620 of the acres, and 20 of the acres were owned by this little lady who literally had a house out in the middle of that 20 acres. And Toby came out to her house with an apple pie because heard she liked apple pie and they ate apple pie.

00;48;37;20 - 00;49;10;24
Unknown
Toby came back the next week with another apple pie, and they did this for six months. And after six months, a little old lady, Toby, I sure do enjoy our time. When you come by each week and we eat apple pie and drink coffee, I'm pretty sure you want something. So why don't you just go ahead and ask me what you want and Toby said, well, now that you bring it up, you own 20 acres in a sack and, 640 that Chevron owns the rest.

00;49;10;27 - 00;49;37;12
Unknown
And I think if you give me your lease, I could force Chevron to buy it from us for a lot of money. And I'd split that with you. And she said, okay, Toby, you you can tell them you have my lease. Go do this. So, Toby walks in to Chevron, says, I have this 20 acres. I know you want to drill it, give me $1 million.

00;49;37;12 - 00;49;58;06
Unknown
And they laughed at him. So Toby had a buddy that had a rig company, okay? And he called and said, do you have a rig just laying around? And the guy said, yeah, I kind of do, believe it or not, we're, we're we're moving a rig. We're going to drive right by there. And Toby said, driving on Location Park here for three days did that.

00;49;58;08 - 00;50;18;17
Unknown
At the end of the third day, Chevron showed up with $1 million check. Right? He didn't have to call. They just they just saw it there. They just saw it there because he was like, I'm just going to drill it. I'm going to drain this whole thing. And anyway, got $1 million. And he went and showed the lady the million dollar check and she said, well, Toby, how are you thinking about splitting it?

00;50;18;20 - 00;50;38;14
Unknown
And Toby said, I don't know. You tell me. And she said, well, I think we should split it 5050. Didn't remember the initial conversation. Well, it was no, she totally they didn't say how they were going to split. Oh, okay. Okay. When you said it, you said he said 000. Okay. Well, I didn't mean to say that that was the punchline.

00;50;38;14 - 00;50;50;29
Unknown
I run the story, but yeah. No, the lady suggested it and yeah. So anyway, she got Toby a half million dollar check. Good for her. Yeah, and good for her. I love win wins. Yeah. No. Absolutely, absolutely. So go.