Big Digital Energy

00;00;00;00 - 00;00;31;18
Unknown
All right. I have one podcast listener. I've grown the audience. I've worked really, really hard for this. It's my dear, sweet mom, Sally and Sally is wicked intelligent. She was valedictorian of her high school, a Rice University graduate. She can't use an iPhone to save her life. I don't get the text, is what she calls it. So could we level set for mom just real quick.

00;00;31;21 - 00;00;53;29
Unknown
What you guys are doing kind of start at that level, and then we'll really get in and dig into it. But that was kind of code for. I'm not sure I understand what y'all are doing. I didn't want to sound stupid slamming into my spellcheck at this age. Oh, yeah. Sally's a team player. She'll she'll think, oh, you know, you have a rice golfer sitting right there next to it.

00;00;54;00 - 00;01;18;24
Unknown
Oh, rice. Are they probably managerial studies major. So yeah, I had a real major policy. Yeah. It's not just Jimmy. Okay. Econ. Yeah. Exactly. So tell me what you guys are up to. Sure. So my name is Adrian Macias. By the way, I'm co-founder of Tokenized Energy with Chip Simmons. And Aaron came in or their partner couldn't make it up here today, but we're now partners with Tim as well.

00;01;18;26 - 00;01;43;06
Unknown
So thanks for having us. But I guess for for Sally, what I would say is, the blockchain or, you know, the internet has created all of these different ways to get into different kinds of opportunities. Right. And what we've are trying to do is, is find a way to make oil and gas assets or deals that are ordinarily really hard to get into, really easy to get into at the end of the day.

00;01;43;08 - 00;02;05;23
Unknown
We're using the iPhone. And she can get in there and make an account using all caps like my mom would on text. You know, if she doesn't know how to use lowercase letters either. But long story short, you can use your phone or use the website to get direct investment into oil and gas assets. At the end of the day, that's that's all we're doing is making a deal more accessible to more people.

00;02;05;23 - 00;02;23;25
Unknown
So, for example, you know, I bought a lease a year ago, from a buddy at the woodshed Smokehouse in Fort Worth, Texas. It was one acre Midland County. He owned the minerals. I bought the lease. And, you know, thankfully, I knew the guy. We go back a long ways. We did a handshake, got the deal done.

00;02;23;27 - 00;02;44;08
Unknown
You know, most people don't have connections like that to just grab a deal like that. Unless you're in the oil and gas industry. And so what we've done now is we've taken that same lease, you know, in Midland County, and we've put the asset on the blockchain. So Sally, and, you know, Chip's wife and, Tim's cousin, you can get on the phone.

00;02;44;08 - 00;03;01;08
Unknown
And when offensive public company came and drilled five wells and we got hit with AFIs, they could throw 500 bucks in or 10,000 bucks in it and have access to that deal at the ground level. And so at the end of the day, all we're trying to do is make it really easy for more people to access these deals.

00;03;01;10 - 00;03;29;29
Unknown
I gotcha because, I mean, I guess today it's we got to have a PSA that we've got, sit there and have an assignment. Someone's got to go to the courthouse, firewood, etcetera. Exactly. The barriers are multifold. It's, you know, check size barrier it you know, if you have access, access is a barrier. Underwriting it, managing it, closing it, getting it in pay status.

00;03;29;29 - 00;03;54;21
Unknown
These are all things that if there's more than one of these that you can't execute, you usually can't get a deal done right. And so what ends up happening is someone says, okay, well, I'll just throw in to a fund or a deal if someone else brings it and then it ends up being, you know, are you inside of that circle or do you not have a big enough check size to play play at that party?

00;03;54;25 - 00;04;19;10
Unknown
So that's we're trying to solve all those those barriers, traditional barriers. So one of the differentiators, Chuck, is that they if you if the only way you can access deals is to go to an online M&A marketplace, right, and bid on that deal. Well, only the winning bidder walks away happy. Everybody else's spent time doing due diligence. And with the second place or lower bid, you welcome empty handed.

00;04;19;12 - 00;04;44;04
Unknown
So we're not competing with online M&A marketplaces. In our case, we've already captured the deal. We post it. The terms are there. And if you want a piece of it and the offering is still open, you can take it. The minimums are low and so the threshold to entry is very low. And so depending on what your budget is that month, you can either put a lot or a little, in it, but it's there, it's easy to access.

00;04;44;06 - 00;05;10;20
Unknown
And if you don't like the terms, you don't have to invest. But if you like the terms, they're set. So there's no negotiation, there's no bidding, there's no auction process. It's there. And you can take a piece if you want it. And tokenization really just becomes the the delivery vehicle for getting that access, to you. So you don't even really need to understand tokenization or you don't need to understand why we're doing it that way.

00;05;10;22 - 00;05;33;05
Unknown
Doesn't really affect you, except that when you open an account with us, you have a digital wallet, and the two things you get from us are a digital token that represents your equity interest in the entity that owns those assets. And then when that asset starts producing, we take cash from the operator, we convert it into stablecoins and send those out to your digital wallet.

00;05;33;05 - 00;06;00;27
Unknown
So those are the two things you get, from us. But you don't really need to understand that, how we're doing that in order to want to invest. You just want access to the opportunity and we can deliver that. So if I'm dumb in this now just to kind of give, give an analogy, it's almost like shares in a company maybe, except the price is just flat out posted.

00;06;00;29 - 00;06;24;15
Unknown
Does that make it seem like we put the assets in an SPV that owns only those assets? Okay. And then to, to use the example that Adrian alluded to, so we had a deal that we owned already that we posted a piece of on, the platform, but we had non-operated working interests in the spyglass wells that were being drilled by, inventive.

00;06;24;17 - 00;06;50;02
Unknown
And at the time we put them on there, they were they were drilling five wells from a pad targeting the five main reservoirs in, Midland County. At the time we posted on, the wells had already been drilled, but not yet, completed. So we posted those we put those non-operated working interest in an SPV, a special purpose vehicle that owned nothing but those non-operated working interests.

00;06;50;04 - 00;07;16;09
Unknown
And then you could subscribe to the equity interests in that SPV. Gotcha. Now, when I log into the into the website, into the platform, as a buyer, what do I see? Do I see traditional stuff as if I'm, property buyer and oil and gas logs? I have these production data, what what am I looking at?

00;07;16;11 - 00;07;39;05
Unknown
There's a complete data room. You know, we provide the Avs, leases, contracts, everything for the land. Guys. There's databases, there's forecasts. You know, any data. We have type curves, is made available. A financial projection is in there as well. It's all downloadable. And, you know, the idea would be if you're an oil and gas expert, you're an engineer at Chevron or wherever, you can download everything, you can run it yourself.

00;07;39;07 - 00;08;05;28
Unknown
You know, we have folks ask us questions, you know, are you sure you see it that way? Why do you see it that way? We welcome those questions. You know, we're in fact, we're going out to sort of all of our investors this week and saying, hey, here's a live deal. You know, we're going to have our engineers and technical folks on if you want to log in and just watch this talk about this specific opportunity, we're trying to make it as absolutely transparent as possible for people who are already in the space, but also make it, you know, also provide it, provide it in a way that's easy for folks to digest if you're

00;08;05;28 - 00;08;24;01
Unknown
not an expert in the space. So, you know, what I will say is we have engineers from a lot of big companies that have gone and signed up geologists, and they love the fact that they can get into a deal, look at it, not get into a bidding war, have everything they need to evaluate the deal, and then ultimately decide, yes, this works.

00;08;24;07 - 00;08;46;12
Unknown
We may think it's 25%, they may think it's 22 or 27. But long story short, all the data is there, for everyone to make their own decision. Yeah, it's cool that the the price is there because then when you can't get there, you can just stop working. That's exactly right. It's the CarMax model. Right. So instead of going to the dealership and negotiating you're going in to CarMax and has the price set.

00;08;46;15 - 00;09;05;11
Unknown
And that that's that's the concept. That's right. And you know gold you will have minerals will have you know drilling deals. We have a non PDP deal. It's just oil running. You know four year old wells operated by ConocoPhillips. And I think will be really great is that the end user can say, you know, sort of investing it in sort of a fund where managers have discretion on where your money goes.

00;09;05;13 - 00;09;25;22
Unknown
You can cherry pick and say, hey, I want some gas over here in the Haynesville. Hey, I want you to go window under EOG. I want, you know, just a flat mineral deal, in the Permian. And so what we're doing is, is also not just giving folks access to the deals, but letting every individual, every individual user create their own portfolio, you know, over the course of time.

00;09;25;22 - 00;09;49;03
Unknown
And the hope would be as we start making distributions every month in Usdc, you know, there's five more deals up and you can say, okay, I just got my check, I got my digital mailbox money. Let's put some of that money into this new deal that's now on the platform as well. So we're trying to give folks the ability to recycle their returns and kind of diversify their own portfolios as they want to, because over time, we'll have all of those asset classes posted on there.

00;09;49;03 - 00;10;11;20
Unknown
So we we just launched in the fourth quarter of last year and the, the, the trial investment was some new, well, participations, that Slawson was drilling in the Bakken then McKenzie County, North Dakota, and then that went well. We got good feedback. 38 people participated, in that. So got really good feedback on the platform.

00;10;11;23 - 00;10;38;22
Unknown
We then put the spyglass wells on there, which were also new drills. We've got a new drill on there right now, the, the Harvey Wells that are being drilled by, Gulfport in the Utica. And then we have the PDP deal, which is the wells are called Green Beret. In, in New Mexico. And so ultimately, we haven't had minerals in royalties on there yet, but we will this is part of what we want to do is put all those asset classes on there just to see what people like.

00;10;38;22 - 00;10;56;06
Unknown
I mean, we we personally like the new drills. That's our sort of risk reward appetite. But we don't assume that everybody will feel, the same way. We had a couple of people at Nape say new drills. Nope, not for me. Show me that. Show me your PDP deal. But we've also got some people that have already started.

00;10;56;06 - 00;11;18;09
Unknown
Even among these first four deals, we can see what they're doing. They're just taking, amount that's comfortable for them and popping it into every asset. So they're building their own personal oil and gas portfolio on their own budget, you know, on their, on their iPhone. Or if you're like Sally and would prefer your, your desktop, then you can you can do it that way too.

00;11;18;09 - 00;11;41;02
Unknown
But, Sally might be pen and paper. She might write that she might be able to get she might fax in the order. I think we, Well, think about this. So we're recording this March 10th. The last four days. Oil's really gone from 60s to 115. I think it's 85. When I checked on my phone a couple months ago, there's a PDP oil deal that's on the platform right now.

00;11;41;04 - 00;12;01;26
Unknown
So the last four days that price hasn't gone up. It would in a private negotiation. But I say, hey, I want exposure to oil income right now. You know that I think that's a really interesting way to play. We're four months ago, if you had to make a single allocation, it was more of a better bet to be bullish on gas.

00;12;01;28 - 00;12;23;02
Unknown
So you can make those decision points all throughout the year. And construct your own portfolio based on your own thesis. Which I think is super interesting. So let's break this down. Let's start with the buyers. Then we'll then we'll go to the sellers. So basically if I'm a buyer, what's kind of the smallest bite size I can choose.

00;12;23;02 - 00;12;45;12
Unknown
And what's the largest bite size I can choose. And I'm sure that's going to be dynamic as the the platform develops. But just ballpark. It'll change deal by deal. But we had we set a $500 minimum on the spyglass, the one that just closed. And so the range of investors in that investment, the lowest was 500. The highest was 20,000.

00;12;45;15 - 00;13;13;20
Unknown
Okay. And so a pretty wide range. And over time, we think, you know, our deal sizes will get bigger. We think people's investment amounts will generally get bigger on average. We've already seen that, in the first three months. So I think that's a trend that's likely to to continue. But you know, if you're a guy that only has a thousand bucks, or if you have 25, 50, 100 that you want to put in the opportunities, the same, the prices the same, gotcha.

00;13;13;20 - 00;13;42;04
Unknown
The, so when I'm sitting there as the buyer, I'm log in. I'm seeing all the data. Typically, you see, when I buy oil and gas properties, I've kind of got, got can, can play at lower buy points. And really what enables that is the tokenization and the block chain because, that's in effect just cheap accounting.

00;13;42;04 - 00;14;07;20
Unknown
Is that kind of a fair way to think about it? That's right. It's a an ownership ledger is really how blockchain functions. Right. So it can track transfers. It's you're you're you're cap tables right there on the blockchain. Gotcha. So now how do I get product on to the platform. Can anyone show up and be a seller. Is it only you guys these days.

00;14;07;20 - 00;14;29;11
Unknown
How does that work. You want to. Yeah that's a big part of our business model. You know right now to prove concepts kind of what we do with the software is, you know, we built the tool for us to just put yield stuff that we've acquired. But the goal and what we call phase two, which would be kind of the back half of this year, will be to enable outside managers to post assets for sale on, you know, on the same application.

00;14;29;11 - 00;14;51;16
Unknown
So, you know, our goal would be, you know, to create a marketplace, an ecosystem that enables other managers, other investors, family offices to come in and potentially use the tool to sell, assets. You know, one of the things we've had many people reach out to us about just in the last couple months is, you know, maybe some funds who want some liquidity but don't want to sell the entire thing.

00;14;51;19 - 00;15;18;24
Unknown
We're getting approached from folks who maybe want to do a 25% sell down of a PDP field or a mineral fund, to get some liquidity right now in this environment, maybe not necessarily exit the entire asset. We're headed to a place where other managers will be able to to do that. And and I guess at the end of the day, price discovery is me, the seller, saying I'll sell up to y percent for X dollars or whatever.

00;15;18;24 - 00;15;43;20
Unknown
Is that how, the price is going to be set? Yeah. I mean, I think if you're going to if you want to auction off the whole asset, then you're hoping for that, you know, outline bidder that we all hope for in those, processes, then you're going to hire, not us, but you're going to hire a traditional investment banker or go to the one of the online M&A and then try to achieve your price discovery goals, that way.

00;15;43;22 - 00;16;02;29
Unknown
So and we're again, we're not trying to compete with those platforms. In fact, we have, you know, dialogs going with them about partnering with them. So we're not we're not competitors to those, platforms. So I think if you're going to sell the whole thing and you want to price discovery, then we're not the solution for you to call Chris Atherton.

00;16;02;29 - 00;16;24;23
Unknown
Absolutely. If if you want a, a sell down, then those are the calls we've started to get already is like, hey, how can I work with you to find some liquidity for a part of my position? And, you know, we have a bit of a licensure issue on that. If we if we're do it for ourselves and it's our asset and we manage it, then you can do that without a broker dealer license.

00;16;24;23 - 00;16;52;09
Unknown
But if you're if I'm raising capital for you, then that requires a license or requires us to partner with somebody that has one. So that's that's part of the longer term plan, but not not for today. Gotcha. And, that applies even to the real property and trust. I guess. The broker dealer. Yes. Gotcha. Okay. Interesting. So we've walked through kind of today.

00;16;52;09 - 00;17;14;02
Unknown
It sounds like you went live, in the last year. Yeah. October. So tell me what you've done so far in terms of the deals that popped up. And I know you've mentioned a few of them. Tell me what's out there now and then tell me in 18 months what's going to be on there. And then in five years.

00;17;14;04 - 00;17;33;02
Unknown
And that's I know that's crystal ball, but I'd love to hear where you want to go with this thing. Sure. I'll start off and I'll let you talk about the long term vision. But, you know, we started off with just a really small deal. It was a $40,000 raise, and we, you know, talked to friends, family, buddies and said, hey, can you guys just get in here and tell us if this sucks?

00;17;33;02 - 00;17;52;25
Unknown
Tell us what doesn't work. Tell us, you know, what. Does it make sense to you? It was really just a beta test. And, you know, what we found out was, you know, one. That software worked. Thank God. But to none of those people, I'm sure 80% of those people had never used a digital wallet. And a wallet is what you use to sort of access your assets on the platform.

00;17;52;28 - 00;18;09;07
Unknown
And also, I think it was 75% of the people had never directly owned an oil and gas asset, even though many of them worked for, which was shocking. The Chevron's the arc. Some of these big companies we all know, but they they manage. They might be running two rigs in the Permian, but they've never bought a net royalty acre.

00;18;09;10 - 00;18;24;00
Unknown
Right. Because it's a really challenging thing for most people to do. I mean, I don't think I ever have. Well, but see that I mean, I'm not shocked to see that shocks me that you would say, I can't believe that you would say, I don't think I've individually ever owned one. I, I remember one time, and that can't be true.

00;18;24;04 - 00;18;49;05
Unknown
Well, I mean, I technically I guess through flowed through entities, but never just Chuck Yates or, you know, what was wild is but say if you if you haven't if a person with your background and resume has it, think about how many others have. And we were surprised at that 70% number because we polled everybody. And when we were getting feedback and we were kind of stunned, well, I'm not I was always like, I got enough exposure.

00;18;49;06 - 00;19;07;12
Unknown
What do I need? Well, what I'm very particular about, you know, my fair. Yeah. In effect, my job, you know. Well, I'd never done it until recently because we always we were always piggybacked for the last 20 years. And so everything was going through the company. There was nothing. I wasn't doing it on the side. I sort of felt like you did.

00;19;07;14 - 00;19;35;10
Unknown
I've got enough exposure there. So mine does once were all outside of oil and gas. But what we found is that that's what people know that work in the industry. That's what they're comfortable investing in. And they want that opportunity and can't get another one. And there's something great about, you know, on the first of the month, you get home from vacation, you open the mailbox and there's 80 bucks in there, or 8000, whatever it is like that feeling of getting mailbox money is something I think everyone in the industry does want to some extent.

00;19;35;10 - 00;19;55;08
Unknown
Right? And we're all used to seeing those checks come in and we cash them and the money goes to a private equity group or whoever else. But I think there's something really gratifying about, you know, just owning a real asset like that where you don't have to do anything. And on Christmas Day, when you're eating dinner with your family or your kid's soccer game on a Saturday, those wells are still producing and you're making money doing absolutely nothing.

00;19;55;08 - 00;20;12;18
Unknown
And you kind of look at other options to do that. I have a lot of friends who buy rental houses, and I talked to them about that idea, like, should we get into rental houses? And they'll tell me no, because it's always the 4th of July. That's what it breaks, right? It's the air conditioner goes out on my kid's birthday in August, and they don't want to mess around with that stuff anymore.

00;20;12;18 - 00;20;25;25
Unknown
You know, a lot of them still have them and are trying to get out of them. And this is kind of the best of both worlds in that you have that direct, you know, exposure to the real property interest. You're getting the yield, you're getting the distributions, you're getting the mailbox money, but you don't have to fix the toilet.

00;20;25;25 - 00;20;40;23
Unknown
You don't have to go out there. You don't have to sign the contract. You don't have to read the lease if you don't want to. You don't have to understand what a few clauses like. All these things that are kind of annoying for a lot of people. You can just open the mailbox and have some money in there, which I think is really fun.

00;20;40;23 - 00;20;57;26
Unknown
And so, you know, I think the more and more oil and gas people we just talked to you, we find out they don't own anything individually. And so, you know, you go to Naples, you go to the Four Seasons, there's a thousand guys at the bar. I'm convinced 900, you know, and 50 of them don't own a single acre personally.

00;20;57;28 - 00;21;34;20
Unknown
And we're trying to make it possible for everyone there to buy into a well if they want to do it or not. And so that's exciting to us. So can I give you all a little bit of advice? Yeah, I have kind of a soapbox that I get on. I might even turn to the camera. I'll see if it wouldn't sound so pompous, but, you know, one of the things I think that happened, if you looked back, we we historically, we sold oil and gas investments as where your inflation hedge, when oil and gas race up, it tanks the economy where you're hedge.

00;21;34;20 - 00;22;00;03
Unknown
You need to own some of this. And for years we were able to raise tons of money doing that. And having that kind of position in a portfolio justified our existence. We also sold a lot of sex appeal of man, we're going to go drill and man. You see a big booming log like this. And then the shale revolution came along and made it a manufacturing operation.

00;22;00;03 - 00;22;23;20
Unknown
Also, we were so good at doing that. We deflated prices. So we all lost a ton of money for the most part. And then when we lost all that money, we went down the path of, okay, now we're going to buy production and we're going to hedge it and we're going to be low risk and all that. We totally took the sex appeal out of the business.

00;22;23;22 - 00;22;45;11
Unknown
We really did. And I think one of the things your platform ought to do is put, I've said, if we want to raise more money in our industry, we need to make it sexy again. Let's go throw a wildcat well out on the platform and have people make ten times their money on that. I mean, that is so cool.

00;22;45;14 - 00;23;04;22
Unknown
It's fun to do. We could raise a lot of money, I think in the industry if we made it sexy again. I mean, J.R. Ewing was the number one TV character on TV. We ought to get back to it so that I will get off my soapbox. But that has been kind of my thing with, raising money.

00;23;04;25 - 00;23;30;14
Unknown
Quit making it boring. Well, I know I'm going to jump in there a lot of it. I raised money for a living. What you call sex appeal is called running for the Hills for investors. You know that I don't know if they necessarily find it sexy. What I think is, is sexy is, you can deliver 20, 30% returns on something that has really a lot of downside protection, you know?

00;23;30;14 - 00;23;49;22
Unknown
So I guess you just have a higher risk appetite, than most Chuck. But, yeah. Well, you're speaking to us personally, right? I mean, that personally. That's something we we do. But the market will tell us if we put if we put some wildcat wells out on the platform and nobody buys them, then we know. But you know what?

00;23;49;24 - 00;24;07;24
Unknown
I think we can't we can't do that first. Okay. If we do that at all, Chuck, we can't do it first because fair enough. If the first experience is a goose egg, they're never going to come back. And so we we want people to come back. We want them to reinvest their distributions. We want them to stay on the all right, stay on the platform.

00;24;07;27 - 00;24;34;28
Unknown
Even you've been watching land, man two months. Yeah. Jack, he's getting off early. Do you guys remember Brock Exploration? Yeah, it was a new. It was a New Orleans based, company. And Bucky Brock ran it, and we put it out of its misery and sold it to keep production back when I was at Stevens. And, the thing I loved about Bucky Brock is he was the most honest guy on the person.

00;24;35;00 - 00;24;58;05
Unknown
Most honest guy on the planet. And when he was out raising money, he used to go get hotel ballrooms, and we get people in, and we regale them with stories of drilling these wells and how it was going to be great. He was doing that. Washington, DC one time, little lady on the front row raised her hand, said Mr. Brock, Mr. Brock, is this risky?

00;24;58;07 - 00;25;15;16
Unknown
And they said, yes, ma'am. That's why I want to do it with your money, not mine. Yeah. And she said, well, that's a fair answer. She invested and wound up being one of his longest investors that he did really well for, but, yeah. No, I, I want to bring sexy back, but I guess you're not going to be my partner on that.

00;25;15;16 - 00;25;37;11
Unknown
But. All right, maybe later, maybe, you know. Yeah. All right, so tell me this is open ended crystal ball. Take it anywhere you want to go. 18 months. Five years. What am I going to see out on the platform? What's the vision? Well, longer term, I think we're going in the opposite direction of being wildcatters. But. But here's why.

00;25;37;12 - 00;26;03;04
Unknown
And I don't know how much of your audience might be familiar with it, but in the, in the digital asset space, there are more and more stablecoins every week. And so stablecoins, to the extent your audience doesn't, doesn't know we're just one for 1 USD equivalents. They're just the digital version of a dollar, said simply. And so in the US now there's regulation around that.

00;26;03;04 - 00;26;31;23
Unknown
That historically hasn't always been the case. So you were never quite sure whether a dollar was a dollar. But now if you use Usdc, for example, that's issued by circle, which is a public, regulated, audited company that's required to have, you know, $1 reserves behind every dollar of stablecoin that it issued, so you can feel comfortable that there's a dollar behind it and that you can redeem it for a dollar and and move on and do whatever you want with it.

00;26;31;26 - 00;26;58;16
Unknown
But there is a, there's literally billions of dollars now of, of stablecoins in various forms that are online. And when people are holding that in their digital wallets, it's the same as you holding cash in your bank. And letting JPMorgan pay you half a percent. And so you'd you'd prefer not to leave it there, you know, making a point you'd like to find a yield opportunity.

00;26;58;18 - 00;27;18;26
Unknown
And so what's happening in the digital asset space? A lot of the things that that they have searched for in terms of yield are not based on what the digital asset people call real world assets. So you'll hear us use that phrase, even though we're oil and gas guys that have come to digital assets, we now have to use that lingo.

00;27;18;28 - 00;27;44;15
Unknown
And so an oil and gas assets are real world assets are always, and so what's what's happening is due to some, you know, tumultuous times in the crypto space. Like you've got bitcoin, for example, which in its natural organic state doesn't produce any yield. If if you've created a yield strategy around Bitcoin, you've put some kind of synthetic financial engineering on top of it.

00;27;44;17 - 00;28;16;14
Unknown
Ethereum on the other hand, does pay, a modest yield, but less than you can get from real world assets. So people in the digital asset space have been looking for yield. And one of the ways they found it was through these things called DeFi, which stands for decentralized finance, protocols, where you can take your stablecoins or in some cases, your other assets and, you know, borrow against them or even lend them into those protocols, depending on the nature of that, protocol.

00;28;16;17 - 00;28;38;14
Unknown
So due to a lot of volatility in the digital asset space, one of the things we think you're going to see longer term, and we think this is perfectly suited for oil and gas, is oil and gas assets produce as you know cash flow every 30 days. So in a way your your investment is de-risked every 30 days but more importantly provides yield.

00;28;38;15 - 00;29;01;11
Unknown
So when you get back to what oil and gas was, you can say that it was either meant to be a cash yielding asset or it was meant for wildcatters. And J.R. Ewing, but it but at least you'd have to say that as a yield vehicle, that was an extremely important like purpose of oil and gas and was a lot of the reasons why people invested in it.

00;29;01;14 - 00;29;24;09
Unknown
And so we think you're going to see and one of the things we plan to do, is, you know, make that possible. So I think you're going to see longer term and maybe not even through our platform, but under our umbrella, you know, taking PDP's and then putting either credit or yield tokens on top of them, to reach a bigger audience, to reach a more institutional audience.

00;29;24;11 - 00;29;53;20
Unknown
Because for us to get to where we want to go, you know, we can't do that, you know, $500 checks at a time, like we we've got to go for, the bigger target. So in effect, in effect, an ETF almost, if you will. That's right. Of PDP two I properties. And I can invest in this till I get my payout and boom, I'll park it over here and the, the the PDP ETF maybe that's right.

00;29;53;23 - 00;30;16;15
Unknown
That's right. And that's a more scalable business model. Gotcha. For us too. So something we're thinking about longer term ultimately are we all flow through and this is all 1031 exchange stuff or is that too crazy to think of. No, it's 1031 exchangeable. We had a dialog with an investor about that yesterday, that timid, Tim had introduced us to.

00;30;16;18 - 00;30;35;02
Unknown
But it's, you know, and we pass through the ADCs is the other thing I would say in that, context. So it's, we put them all in, pass through vehicles and you would get all the, the benefits that you would expect to get as an investor in a pass through vehicle. Gotcha, gotcha. Oh, that's pretty cool.

00;30;35;02 - 00;30;59;11
Unknown
The, is there something crazy or wild that happens in five years like that? Maybe we couldn't even contemplate today. And the only reason I kind of asked that question is this is going to be on the internet forever, and we're going to be able to go back and search it. So it's pretty cool. If you call a shot right now there and, right.

00;30;59;13 - 00;31;20;18
Unknown
You know, I so I always want to give the guests the chance will be saving it forever. And your your algorithms will be searching, whatever Adrian's about to say in response to that glitch. No pressure. Yeah. Man, I got gotta think about this when you go first. Chip. Yeah, yeah. I don't have a great answer for that.

00;31;20;18 - 00;31;44;04
Unknown
No. Do you mean an upside or downside scenario? Open ended question. Take it wherever you want it. So? So open it. Well, first off, I think tokenization is a trend with legs. And right now everybody's talking about it. The US is way behind the rest of the world like in Asia. This is a very common thing. Like the to to for tokenization to be the the delivery vehicle for assets.

00;31;44;04 - 00;32;01;12
Unknown
If you want to think about it that way, it's very common in other parts of the world, the US, it's one of the areas where the US is way bad. And so I think longer term, one of the things you're going to see is that it's going to become routine, and you're not even going to think about it right now.

00;32;01;12 - 00;32;18;06
Unknown
We talk about it because it's it's new and interesting and people ask questions about it, but it's really just the mechanic. It's like it's like asking somebody how their car works. I mean, 99% of the people don't know how their car works. They just know it gets them from A to B. They don't want to look under the they don't care.

00;32;18;12 - 00;32;35;29
Unknown
They don't understand what's under the hood. And tokenization and blockchain are the same. So I think five years from now people aren't going to talk about it. You're just going to accept it. And you're not even going to know it's going to be abstracted away from the customer. We're not even going to tell you that's how we're delivering the service, because you're not going to care.

00;32;36;02 - 00;33;06;19
Unknown
I mean, as a as a long time oil and gas guy, the concept of a blockchain for title on oil and gas assets just makes so much sense. And it's never going to happen at the local government level because you got county courthouses where for the county judge, you have employees that work. And it's just it's one of those things where there's so much infrastructure that it's just never going to happen.

00;33;06;19 - 00;33;28;27
Unknown
So it's going to have to happen outside of that. So I'm kind of agreeing with you that tokenization is going to have to happen on a platform like yours. When in reality what should happen is the government should do this well, and you see that, like, for example, our our technical partners are based in Dubai and they have developers in Pakistan.

00;33;28;27 - 00;33;52;17
Unknown
So we have really good friends in Karachi now that we, we never thought we'd have. But but you can see it in Dubai. So so there you've got sort of centralized decision making. And in that case you've got a benevolent person that sits on top of, the UAE. But in terms of decision making and implementation of systems, it's a centralized decision making things.

00;33;52;17 - 00;34;10;05
Unknown
So if the guy at the top decides it's a good thing, then everybody has to do it. But in the US, you've got all of these constituencies like you're talking about, whether that's the local courthouse or whether that's your title lawyer or whether that's, you know, your buyer and seller in the transaction that you're searching title for.

00;34;10;08 - 00;34;36;10
Unknown
I mean, they're unnamed for constituencies, like in a second, but in a centralized society, you can sort of dictate we will tokenize title to real estate assets. And then everybody has to adapt. And so that's one of the reasons the US is behind on adopting blockchain technology, because we are a decentralized decision making society. Yeah. No, that's that's very fair.

00;34;36;10 - 00;35;03;01
Unknown
I mean, we're we're unique out there in that I believe we're the only nation that Farmer Brown originally owned his mineral rights. And you didn't lease from the Crown or from the government. So yeah. Well, well, I'll take a stab at the, the long term. What could happen? I think if we grow this and get critical mass and scale and I don't know what that is, but you start to have a secondary market for the tokens.

00;35;03;03 - 00;35;29;27
Unknown
And I've, I've been saying when I get invited to speak and give presentations about, you know, the status quo of the mineral space, I've always said, I don't know how, I don't know when, but I do know at some point it'll happen and blockchain going to be behind it. Someone's going to say their computer and say, I would love $3,000 exposure to minerals in Martin County under you, and then you'll be able to go in and compare and then be able to hit by.

00;35;30;00 - 00;36;03;28
Unknown
And so we're the first step towards that reality. Now, the complexities of getting title on board. We're just alluding to that. But but you know tokenizing title and getting title on the blockchain is a can of worms. That's very, very difficult because of few clauses. And, you know, top leasing and just the how much it changes. But it gets there at some point right now for us, we're tokenizing investment access into entities that then privately owned and manage assets to avoid all that, complexity.

00;36;04;00 - 00;36;26;13
Unknown
But if you get enough tokens in our universe now, folks can all of a sudden kind of buy in and, and start to do really interesting things in the ecosystem. One of them being, you know, getting yield in the DeFi space through credit tokens. But you look at what's going on with continuation vehicles and funds right now and secondary offerings and funds.

00;36;26;13 - 00;36;47;23
Unknown
Well, what if now, as an individual, you had a liquid secondary market for your your tokens and we're not there yet today? That takes scale and critical mass. But if we're talking five, ten years from now when this works that that's on the table. And that's super interesting because one of the analogies of what we're doing is just this is a private partnership.

00;36;47;23 - 00;37;09;04
Unknown
This is what everyone else is doing when they're raising money and buying assets less the blind pool risk. Right. But if you're an LP in a fund, you can't turn around and be like, I, you know, something happened and I need out. And year two and a half and a seven year lockup, you just can't, unless it's a manager led secondary offering.

00;37;09;06 - 00;37;30;21
Unknown
But in this ecosystem, with scaling adoption, that could that could be there. So, what if I'm going on the record check, like, there's one other thing. And thinking about the future that I'll mention, Chuck, I'll put a plug in for our friends at it. Energy substantiation. So what energy substantiation is doing is a what they call a WTI token.

00;37;30;23 - 00;37;49;26
Unknown
And each token represents a barrel of oil. And so they just launched last month in, in a small way. You can't get that on, on an exchange yet, you know, but that is a commodity backed digital token that represents a barrel of oil. And I won't get into their structure. And how they do that.

00;37;49;26 - 00;38;17;23
Unknown
But the bottom line is, it won't be long before you can get a token that represents a barrel of oil. And so one of the things we plan to do on our side is actually very simple. But if we've paid you in Usdc stablecoins for your distribution from your wells, and you're sitting there holding that in your digital wallet, and you don't want US dollar exposure, you want oil exposure, well, we'll have a little swap feature on there which allows you to swap your Usdc for WTI token.

00;38;17;25 - 00;38;36;12
Unknown
And you can sit there and hold that WTI token and maintain your exposure to oil and gas and watch the, you know, $30 daily swings, that we've seen in the last 24 hours, if that's what you want. Like if you want that exposure and then longer term I think they plan to do a natural gas token as well.

00;38;36;12 - 00;38;53;01
Unknown
But but those are other examples of things I think you're going to see, you know, one, three and five years down the road that you'll take for granted. Then that you haven't even heard of today. Could you totally stole my thunder. Because what I mean to do what I. You're the host. I didn't mean to do that.

00;38;53;01 - 00;39;21;28
Unknown
It's fun. The, The more the guests talk, the better. I've heard that many times from my audience, but, April 3rd, April 20th, of, 2020, the most googled term or question was how do I invest in oil? You know, oil hit. I've never heard that. Fun fact before oil had hit -37. And everybody's like, well, how do I buy oil?

00;39;22;00 - 00;39;48;10
Unknown
And the second term was, how do I empty my swimming pool and store oil? And yeah, well, that was conversation. And that was the most researched thing in Midland and Oklahoma City. It's nationally US. And what popped up. So and for those of you who don't know us, so is the best that a retail investor can get in terms of a proxy for oil price.

00;39;48;10 - 00;40;21;22
Unknown
It eventually it originated. It would buy the front month contract and then roll it consistently and all horrible tracking. I mean didn't track that great and could be manipulated by us. So because in effect the the more they issued, the higher fees they got paid, etc.. And so, you know, I'd gotten fired and I was sitting around and for some reason, I thought this would be a good idea.

00;40;21;24 - 00;40;41;02
Unknown
I'm not going to drink anymore. You know, we're in the middle of this pandemic. I'm sitting here by myself. My, things were crazy then, weren't they? Just. Yeah, my my ex-wife had asthma. And maybe as nice as it would be to see her die a slow, painful death, it would be bad for my kids. And I'm a team player, and she's a wonderful mother.

00;40;41;04 - 00;41;01;05
Unknown
So I actually took Covid very similarly, ended it out. I, I actually know she's a she's a wonderful mother and I'm so grateful for that. But, so I actually had to play Covid very well because the kids were going back and forth. So I was sitting there by myself and I'm like, I just don't need to drink.

00;41;01;05 - 00;41;24;01
Unknown
And, so anyway, I didn't drink for the longest time. I was working out on the peloton every day. I was in great shape, and a buddy of mine called and said, hey man, we're having a happy hour. You want to join us on a zoom call? I go, man, I be great. And so anyway, I opened a bottle of wine and lo and behold, I did a happy hour, drank the whole bottle of wine was in la la land.

00;41;24;01 - 00;41;42;24
Unknown
I mean, because I was a cheap drunk back then, right? You know, and I was like, in la la la. And somehow I thought it'd be a good idea to open another bottle of wine. And I started calling all my friends on FaceTime in a chat with everyone, got regaled the next morning with stories of everything I was saying.

00;41;42;26 - 00;42;23;05
Unknown
But the thing I did is I went to the computer at about 930 that night, and I spent probably 8 or 9 hours, and I wrote out a, competing product to USO and I called it True Tracker. And basically what I did was, was, you know, if you're an oil and gas company and you want to hedge, you know, December of 26 production, you call Wells Fargo, J.P. Morgan, Jay Aaron over at Goldman Sachs and say, hey, quote me this 26 and and they'll give you a quote.

00;42;23;05 - 00;42;59;11
Unknown
Right. And the way they offset the other side of that is they basically take a portion of the November contract and a portion of the December contract, to, to come up with that quote for you. So basically, I replicated True Tracker to be the Aaron side of that trade. I basically was going to go by the similar amount of the November contract and the December contract, and I was going to put it in a royalty trust and then have that pay out in cash.

00;42;59;14 - 00;43;29;21
Unknown
And that way I kind of assumed that it would literally be it had to price the, basically what Jason and everybody else was quoting, because if it didn't, you could arbitrage it. You could go publicly by it and recreate it by buying the futures contracts, whatever. I thought I was the smartest guy on the planet, so I went and hired Latham Watkins and drafted an S1, and they were like, well, what banks going to take this public?

00;43;29;21 - 00;43;49;26
Unknown
I got I don't want a bank steal my idea. So we drafted the greatest S1 on the planet. And then I went and talked to all the investment banks, and I'd get to the corporate finance guys and they'd be like, oh man, this is great. Competitor are so true tracker. It'll it'll track. It won't have that problem. Men will sell so much of this.

00;43;49;28 - 00;44;17;22
Unknown
And then the old crusty person that sat on top of the real estate or the retail group of every investment was bank was sitting there going, you have a flow through entity for me in the energy business. No freaking way, because the MLPs just decimated all those advisor. So anyway, I spent a million bucks and have the world's greatest S1 as a doorstop on my second floor, my house.

00;44;17;24 - 00;44;40;22
Unknown
So I'm glad you're actually going to create it, because you could tokenize that. And the lawyers always went to the lawyers always went, yeah, they they, no. To their credit, Latham Watkins work worked with me. But, no, the the being able the thing you don't realize is so many people in this world need to have exposure one way or another to oil.

00;44;40;24 - 00;45;00;07
Unknown
I mean, if you own a taxicab company in Vegas, what is your feedstock? Gasoline. You need to be able to take the other side of that. If you're a homebuilder in Houston, you got all the oil exposure you need right there. You need to be able to take the other side of it. So I think that's actually a really cool product.

00;45;00;10 - 00;45;33;05
Unknown
Yeah, we look forward to it. Yeah, I think expand I think one of the punch lines is optionality. So optionality is investor just is attractive and it affords, you know so many things beyond just financial return. So optionality on how you build your portfolio, optionality and how much you invest when you invest optionality on I want to exposure to oil or gas versus the US dollar, optionality on, you know, what am I going to do with this interest long term if there's a secondary market optionality on what you do with that cash, do you get it into another credit product?

00;45;33;05 - 00;46;00;22
Unknown
Like we get the question a lot when we're talking to folks. They go, oh, that's super cool. It's interesting. Why are you doing this again? Like it's cool and I can get access, but why exactly are you doing it? Seems like a lot of work and the optionality in a long term what could happen is why. And it's very hard to see it today because you get caught up describing, you know, how the engine in the car works.

00;46;00;24 - 00;46;19;15
Unknown
And that that really is a big hurdle at this stage in the game. But longer term, as Chip alluded to, you're not going to have to describe that. But people are going to say, I want I want to do all these different things with my money, and you're going to be able to do that in in a tokenized blockchain world that you can't do today in the private world.

00;46;19;22 - 00;46;42;02
Unknown
Is that a fair assessment? Yeah, it was probably a third of the people. Chuck. The biggest hurdle to get over with them is that it's not some vaporware crypto token. I mean, the the digital asset you get from us is just like a digital stock certificate. And so it's evidence of your actual legal rights. It's not attenuated at all, you know, from the asset.

00;46;42;02 - 00;46;59;09
Unknown
So once people get past that and then sometimes they have to hear it from us 2 or 3 times, but then the then the light goes off and then goes, oh, I get it. And then that leads to the second question. Well, why does it need to be a token at all? We get that question a lot.

00;46;59;11 - 00;47;19;05
Unknown
And then our answer to that really is all the phase two things we described earlier, which I won't repeat, but what you'll be able to do with that token, it's easy for us to see since we're in that space and we've thought about it. But your average person has never used a DeFi protocol before. And so it's it's, that's our answer to it.

00;47;19;05 - 00;47;45;11
Unknown
Is that because of what you'll be able to to do with it in phase two? So those are the two common things we got to get by that at least half the time. Yeah. With people. No, but you're right. I mean particularly industry participants I mean, you sit there and you go, I got a concentration of risk on oil and gas, but at the same time I know so much more about that asset than I do health care or biotech.

00;47;45;11 - 00;48;13;27
Unknown
So why aren't I buying mineral interests under Exxon to worse, ification or diversification? Exactly. The age old that there's you know, diversification is tried and true as a, you know, diversifying cross portfolio. But how many people listening to this have tried to dabble in something else and they suck at it, but they're really good at their craft and say, I'm not managing hundreds of millions of dollars on behalf of, you know, a hedge fund or billions of dollars.

00;48;13;27 - 00;48;34;24
Unknown
I'm managing my own money and I feel more comfortable doing this because I know it. And I know that story to be true for myself and for a lot of others in the space. I remember I was having a talk with one guy, you know, we're both are venturing to something else. And he goes, you know, Tim, I've made a lot of money, and it is embarrassing how poorly I've done when I've gone outside of my craft.

00;48;34;26 - 00;48;54;29
Unknown
And he's like, I, I've had to swallow that pill, but now I'm just honest with myself. So that's for each person's individual journey. But it's a real thing, right? Concentration. Make sure diversification keeps you there. So yeah, I want to I want to get to the point where I need diversification. All right. We gave you plenty of time to think.

00;48;55;00 - 00;49;09;11
Unknown
You got a futuristic thing for me. Oh, wow. I didn't think I was going to let you off the hook. You didn't know you were coming back to me. Well, that's where I keep going. Back to you after this hearing. This discussion is, you know, the first time I used Zelle was five years ago. Six years ago.

00;49;09;11 - 00;49;31;25
Unknown
The first time I used Venmo was 7 or 8 years ago. The first time I bought Bitcoin was 5 or 6 years ago now. And it's just the speed at which, you know, finance and tech have kind of married to where our kids now live. In a world where they'll probably never write a check, right? They'll, you know, they live in a world where using a debit card really kind of doesn't even happen anymore.

00;49;31;26 - 00;49;53;20
Unknown
Like the way that they all communicate and the way to interact. And so I think in five years, people want access to cash flowing real world assets of all asset classes. And I think it's going to be a way for people to invest in anything from, you know, we're seeing carbon credits, Michael Jordan, Air Jordans shoe collections are now tokenized.

00;49;53;23 - 00;50;13;28
Unknown
And those things really do go up and down in value. There is a market for those things. Buying artworks, I think that people will on their phone or, you know, on the website, you know, and whatever marketplace they're on, they'll build portfolios of assets right now, that include all kinds of things, not just oil and gas.

00;50;14;00 - 00;50;34;11
Unknown
But I think we're going to be the group that's sort of first comer to say, here's your exposure to these specific opportunities. So I think our kids, this is how they're going to interact with all kinds of asset classes. I don't think it's necessarily be buying Q-Q or buying Tesla stock directly. I think they're going to be investing in specific assets, that way.

00;50;34;17 - 00;50;59;24
Unknown
So yeah. Yeah. Robinhood for oil and gas. It's exactly right now. I was brought up in a call. We had another investor this morning, the Robinhood analogy. It's exactly what it is. I mean, one of the the hook, line and sinker is for me to to join these guys. And what they're doing is you just look at the projections of just money in digital investing and where it's going and how deep that is.

00;50;59;26 - 00;51;25;18
Unknown
And I just think there's going to be money that's invest in the digital world that stays there. And then it's where does that go. So today I think for a lot of people it's I have my investment portfolio and I have my cash and maybe I want to dabble in Bitcoin. I want to dabble in this stuff. Over time there's going to be a migration of people's portfolios, whether it's 20%, 50%, some people, all their money is in the digital world.

00;51;25;20 - 00;51;45;11
Unknown
And then within that, that digital world, they're going to look to diversify into private credit, into real estate, into oil and gas, into all the things you do into sexy wild cats. I'm going to die on that hill because five years. Why isn't there a Chuck Yates meme? Coin is what I want to know that sex probably is.

00;51;45;14 - 00;52;11;15
Unknown
God knows. But but I think there's there's captive money there in that world. And they said, Tim, we're going to be the oil and gas option for that captive money. And we're talking to investors every day now. And there are hedge funds or institutional funds specifically raised to deploy money with allocation percentages in their mandate to go to was in the digital world like, that's happening to the tune of billions and billions of dollars.

00;52;11;17 - 00;52;32;06
Unknown
And that's another reason why to do this. Because if you are in outer space and you want exposure to oil and gas assets, and then you want additional exposure, everyone's trying to get exposure investors, this is going to be a pool of capital that is untapped. And we're going to tap into it and it's going to only me, an even Nasdaq jerk recently put out the press release.

00;52;32;06 - 00;52;50;13
Unknown
This is within the last two weeks that said, they're going to tokenize all the stocks trading on Nasdaq and extend trading hours. Going to the blockchain never sleeps. Yeah. There's no reason. And so that when you when you talk about the adoption I mean what other example do you need. Yeah. Than that I mean that's exactly right. All right.

00;52;50;13 - 00;53;13;27
Unknown
How do I reach the platform. Tokenized energy.com. Or you can go on the, Apple App Store, or on the Google Play Store. We've got the Android version as well. And then the sign up process is just like any other sign up process for an investment site. With one exception. At the very end, you create an attach a digital wallet.

00;53;13;29 - 00;53;34;10
Unknown
And that just tells us the address to where to send your tokens, but it's 2 or 3 clicks at the end and you're done. We've we've honestly and not had a single complaint or comment or issue with the digital wallet, which we spent a lot of time wringing hands over because we thought that would be the new thing to people, and there's been no issue whatsoever.

00;53;34;10 - 00;53;59;29
Unknown
So that's the only unique part about the sign up, about the signup process is that. And then you get access to the platform and you can peruse everything that's on there. So that's if I'm a buyer, if I want to sell, how do I get in touch with you guys? Same thing through that same web store, the contact information through the through the website and that that'll be in phase two unless we agree to buy your asset and then post it as our asset.

00;54;00;03 - 00;54;16;06
Unknown
Otherwise we'd have to if we're doing it for you, we got to wait. Yeah, I think that's a discussion. I think the answer is we're open to all ideas at this point, because we're not the smartest guys in the room. Don't pretend to be. But there's a lot of smart people in our industry, and we learn every day on on possibilities.

00;54;16;09 - 00;54;43;18
Unknown
So working together in tandem with people who are acquiring assets, you know, co investing on deals together, helping them like out of stuff, splitting assets up and they help kind of leaseback it like or warehouse it. There's a lot of conversations we're having. So I guess the the punchline is if anyone's listening to this and their brains go in a certain direction, we would love to jump on, call and pick your brain and see what's possible.

00;54;43;20 - 00;55;03;10
Unknown
Cool. Well, I appreciate you guys coming on. Thanks for this, Jim. Fascinating. The, ma'am, I hope you got all that and you can explain that to me. Is find that to me at dinner. Thursday night. It's, Well, tell tell Sally we'd welcome her on the platform. There we go.