Glenn Parrott:
Okay. Hello everyone. This is the first Enercom oil and gas podcast. My name’s Glen Parrott, with Enercom and with me is the managing director of our consulting group, Aaron Vandeford. Hey, so thank you for that intro. So how did we get here Um, I guess that’s one of the things I wanted to do on this intro is mentioned a little bit, uh, kind of how this came about, why we’re doing this. And I would like to provide some thanks on out, uh, to those people who through various conversations, uh, encouraged us to move forward, um, and doing this podcast. You never know sometimes, but, uh, Jacob Lorens, uh, who works in the energy risk practice area at Marsh. I’m one of those guys, uh, David Ramson would with Franklin Mountain Energy, appreciate the feedback and the encouragement of course, uh, Aaron here for agreeing to go along with it as well as the partners here at Enercom.
Glenn Parrott & Aaron Vandeford:
Yeah, I think it’s going to be a lot of fun. So because of what Enercom is and what we do and where we sit really is Aaron likes to say at the intersection between the capital markets and the oil and gas industry, it made sense to kind of try and move this ball forward. We think we’ve got a lot of content and stuff to talk about. And so that’s the genesis behind why we want to do this and move forward. And I think that, um, for those people who don’t know, um, thought we’d go through an introduction to Enercom, what we do, our background, our history, you know, people who do know us, they, they tend to know us or refer to us as the conference company. But Enercom has, does so much more than that. And we’ve been around for 25 years since Nate, well at least since 1996.
Glenn Parrott:
Yeah, exactly. Um, and, and really Entercom was founded on I, well, it was founded on this notion around providing really IRR and targeting work, um, to the oil and gas industry. Um, but since then it’s morphed somewhat and really I would say submit to you. There’s three pillars now that it sits on and one is the conferences certainly. Um, we run two energy investor conferences. One of them is one of the largest in the U S it’s the oil and gas conference held typically every August, um, 80 to a hundred presenting companies. Um, and 2000 plus attendees, primarily a buy side sell side analyst, uh, industry participants. We also have our, um, our winter, winter slash spring time energy investor event and our called EnercomDallas. It’s been around for three years, but it’s a variation on what was for 14 years. The oil and services conference and San Francisco. And that was, we moved away from San Francisco after 2016 and went to Dallas. And, uh, we just wrapped up the, the Dallas event, um, a few weeks ago and we can talk about that a little bit later on. Um, the second thing that we do is consulting, which Aaron heads, ups all that. Aaron, you can introduce the consulting group.
Aaron Vandeford:
Yeah. Consulting group. Uh, we’re really, so if we’re, if Enercom is built on these three pillars, there’s kind of four, uh, components under the consulting umbrella and we think of those as targeting analytics, media and graphics. And so from a targeting perspective, we work with our clients in the energy space, uh, and we defined energy is as e&p operators, Oilfield Service, Midstream, Private Equity and other financial markets that are tied in and around, uh, the space and making sure that we’re connecting a good ideas with capitol in good ideas and products with, with buyers of services on our oil field service. And so that targeting aspect, um, at the end of the day, we’re trying to marry those up and we, we use this, that these other three components to do that. Uh, analytics. We take a very analytical approach. Uh, one of the reasons why we’re doing this podcast is we’re taking a look at the market and identifying what’s going on in the space, uh, to help better craft these messages.
Aaron Vandeford:
And so we’ve got a whole analytics team here. Uh, we have petroleum engineers on staff who are driving some of those thoughts to help us better connect those ideas. Uh, we have a media component and so we’re looking to raise visibility out there in the public space, in the PR space, whether that be on TV or national media or trade or local, um, media is that an important component. And then tying it all together is really the graphics and we have a full service graphic design team that can, uh, take these ideas and help us make it look pretty and convey pictures to, uh, to tell a story. And a, so that’s at a very high level is what we’re working on with a lot of our clients.
Glenn Parrott:
Yeah. The, I would say the conferences are actually really just an extension of that, um, consulting practice around, um, getting investors, uh, or can companies in front of the right investors just on a very big scale or a high profile or high visibility scale.
Aaron Vandeford:
And I would say on the face to face level and it’s really important to have those face to face meetings as well as, you know, in the digital era, we’re pushing out all this information. At the end of the day, we still want to make those face to face connections for, um, our, our target markets as well as our clients.
Glenn Parrott:
And then, um, the, the, the last leg of that stool is certainly publishing, uh, and again from that oilandgas360.com, um, is the, uh, industry publication. And really that came about through, through your management consulting services. Um, people ask us or we’re asking, I guess at the time, you know, what we were hearing, what we were seeing in the industry asking your opinions. And so
Aaron Vandeford:
It’s really funny. It’s kind of started out the same way as, as we’re starting this podcast. And it was, hey, what are you guys seeing and thinking in the industry. And we said, well, we better start telling people and you know, as, as podcasts or are gaining traction and people are getting their news differently. Um, you know, it’s another way for us from a consulting and analytics perspective get our information out.
Glenn Parrott:
But it’s really grown though since we first started it. I mean, it’d be fat before then. At that time it was more of a blog, uh, just purely of your guys doing write ups, is that right
Aaron Vandeford:
Yeah, that’s right. Uh, you know, when we started we were doing one or two or three pieces a week, um, and it was fairly in depth analysis, but it was, hey, we saw this one thing, let’s kind of flush that out. And now we’re into a daily new cycle.
Glenn Parrott:
Yeah, it’s, it’s really expanded again, squeak them almost more of a news aggregator as well as it has. But we also have sponsored content on there. Um, it also, um, has expanded to a daily email, which is closing bell, uh, which had grown. It’s now up to 30,000 subscribers, uh, and, uh, goes out daily. Uh, it also has our, our monthly reports, which you were mentioning a little bit earlier about some of the analytical thought up or thought ups, the analytical write-ups and thoughts that the guys have a, but it also hosts our valuation benchmarking and financial data dashboards, which is just an extension of a weekly product that we used to predict.
Aaron Vandeford:
Yeah, I’m pretty excited to have those in a digital format where we can get them out to more people. I was, that was something that we produced internally in excel spreadsheets and in our consulting team used it. Um, tell Kinda to answer the question ultimately, why are companies trading the way they’re trading And I think there’s a lot more uses for it now. Um, and I think it’s pretty exciting as we have more conversations with folks, see how they want to use it, but we knew how it was used in our own business, but we didn’t have a way to get it out there. And so now that’s out there, uh, and I’m, I’m pretty excited to see that.
Glenn Parrott:
Yeah. The, the, the, the upside on that is it’s really more from this sort of spreadsheet and wall of numbers that, that can’t do much with wherever you can. But, um, did you have to bring your ruler and bites on my desk every day But, uh, but now it’s a little more dynamic, I guess, and extensible meaning that is not just on a pdf or a spreadsheet on your computer, but you can also access it, you know, for what it’s worth via your mobile devices. So to me, that’s just sort of a natural extension as it goes from there. So that’s a, then, you know, the, the three elements, uh, uh, pillars that at Enercom and as Aaron mentioned, you know, there’s podcasts is seemingly a, an extension of that original spirit, um, or people asking us our thoughts and opinions and just sharing it, really just trying to share it and see how things go along. Um, I, I think maybe, you know, between the two of us here, my thing, my role at least initially is to sort of lead this conversation along. Um, hopefully try to ask the right questions, extract, uh, information from smarter people than myself, like you
Aaron Vandeford:
then other folks in the industry. And you know, I think as we kind of put this together where there is no shortage of ideas that we want to kind of talk about. So as we kind of get, get through and get rolling on, two are are more topics that it’s going to be pretty, pretty fun I think.
Glenn Parrott:
Yeah. And you know, and, and hopefully this won’t be just one big commercial for everyone out there listening, uh, for Enercom. You know, the goal is to, to kind of be in front of what we’re hearing and seeing. And so, uh, conceptually I think we were, you know, the structure of this podcast would have a section around things that are timely and topical sort of news of the week. We do see this as a weekly podcast, um, the, the, the section on timely and topical. I certainly think that one of the items that, that I think we should talk about, I don’t know, I’m prepared to today and that is at least what’s very important coming around very rapidly in Colorado, which is a Senate bill one 181, which is really, uh, uh, I don’t want to say an attack on the oil and gas industry in Colorado, but is certainly a, a first or potentially second volley and an effort to, uh, curb or restrain the oil and gas industry here.
Glenn Parrott:
Um, and I say the second because last November, if you didn’t know or you weren’t in Colorado, um, Colorado defeated proposition 112, which sought to increase setbacks and operations, uh, for oil and gas companies from 500 feet to 2,500. And that measure really would’ve put an end to drill. He on about 95% of non federal land in the state. And just on the heels of that election, you know, that that same election in which, um, governor Polis was elected. Um, now we’ve got Senate bill 181 is calling very rapidly and very fast. Um, and, and that’s why I’m not, I don’t, I’m not, things are happening so fast on that though. If I were to say something now, he would be out of date by, uh, by next week.
Aaron Vandeford:
But I do think it’s an important and that, you know, as we, as we kind of learn a little bit more about what’s going on, uh, as things are progressing, obviously as you said very quickly, uh, we’ll want to take a deeper dive because I think it does have implications certainly for, for Colorado operators, but other states that are looking to Colorado to potentially find something that they could implement somewhere else. Uh, it’s something that will have a ripple effect across the industry, not just here in Colorado. So I think, um, certainly will, we’ll dive into that a little bit deeper.
Glenn Parrott:
Yeah. And the other areas that, that we want to explore, um, are again, those things that we think are timely and topical. A third. And I certainly think that there are aspects around, you know, we’re involved with a lot with oil field tech and innovation and those are items that we can discuss. Hopefully we’ll have interviews with interesting guests from the industry that can provide their views and insights as well. So, um, that’s the, uh, uh, the, the, the nature of at least how we’re seeing this pan on out. And one of those things we were talking about might be a review of our conferences. And in this event I was thinking we could just kind of wrap up Dallas. So I mentioned earlier we did our EnercomDallas event. Again, it’s much smaller than our, um, large Denver event, but, uh, nonetheless coming out of it, you know, what were those themes What are the things that we heard w w what were people really talking about and what our company’s really planning for going into 2019. So I thought we might kind of maybe hit on some highlights on that. So from your perspective, what was the, some of those items that come out to you
Aaron Vandeford:
Yeah, so I think the, certainly there were some highlight presentations and we’ll, we’ll get into, you know, Chris Wright with liberty, I’m sure. Uh, but from like a, a general theme perspective, we certainly got a perspective on where oil prices are going. I think people are thinking we’re going to be more range bound here in this high fifties, low sixties. And so that is something that, that are playing into the capital budgeting process and, uh, the need for free cash flow or cash flow generation to fund those budgets. Uh, the capital markets from the equity side, there hasn’t been a whole lot of new equity raised. Uh, so companies are having to look at their own operations to fund future growth here in the near term and range bound market. So there was a lot of discussion there around, all right, where are we going from a capital spending and growth perspective and, and there’s still growth out there. Um, by no means did anyone really say, hey, we’re, we’re taking our foot off the, uh, the pedal and putting it on the brakes or just kind of lifting up a little bit on the gas pedal and a, I think that’s probably okay.
Glenn Parrott:
So, you know, what did you, what about from the investor side of things Um, you know, the certainly emphasis last year on free cash flow still there. Yup. And you know, you’re seemingly rewarding those capital plans like you mentioned that moderate growth. Yeah. Um, it generating free cash and also decreasing of spending. But, um, did you hear anything different from any of those guys are
Aaron Vandeford:
no, I think one of the interesting things that I would add to that is, is, and we saw, got, we got a flavor of this at, at our conference, uh, was an increasing or renewed interest in looking at some of the international side of the business. And so, you know, we see when we hear those stories, a lot of bang for the buck and there’s, there’s big massive reserves out there that some of these international companies are making great progress on and investors are seemingly willing to put some capital towards those types of ideas. Uh, outside of your traditional, you know, you asked moderate growth, free cash flow generation, decreased spending. There’s opportunities for some of these, uh, I would say needle movers out certainly for the companies, but needle movers in these portfolios, uh, with names like a Geo Park or, PetroTel .
Glenn Parrott:
Yeah. You know, as you mentioned that, and I was thinking about the international panel we held at Denver just in August, and that, you know, the ability of these companies recognizing the barriers that they have to overcome. So, and really in having those conversations with investors around, um, where they’ve got to some of those barriers, maybe things like regulatory, like they’re afraid to invest into this certain areas just because of the country or the region that they’re in. But if they have their ducks in a row, they know how to respond to that and answer that and get over that, then investors are seeing the real value opportunity there.
Aaron Vandeford:
No, that’s exactly right. And we spent a little bit of time trying to break down some of those perceptions because perceptions ultimately is reality. But when you think about some of these political risks, uh, we certainly have it in our backyard. We were just talking about 181 here in Colorado. There’s, there’s a, a real political risk here domestically even. And so, you know, California has had that same type of stigma in the past, but the operators that know how to deal and work within these structures and, and it is part of their DNA can really move forward. And, and I think, you know, investors are starting to see that as, as companies message and help investors bring them across the wall on that.
Glenn Parrott:
Some of the other things that we’ve heard a lot about and, or at least I feel like we saw in more presentations, uh, was, um, this dialogue around specifically the Permian and take away and real operational issues.
Aaron Vandeford:
Well, write it to that point. I think it’s, we’re, we’re at a point where we’re in a transition from this kind of ramp up a growth mode to really a development, drilling, um, operations. And so some of these other plays like the bok and in the Eagle Ford is kind of gone through this transition a little bit. But now as a, as kind of a whole us operation, we’re much more focused on this development style drilling, which also means that infrastructure needs to get built out. And certainly the Permian infrastructure was, was front and center and where we’re going to be, uh, getting that, that infrastructure and when is it coming online.
Glenn Parrott:
Yeah. And in, and certainly a lot of dialogue around again, um, the pipelines, right, that there’s going to be constrained for the remainder, not remainder for most of 2019. They’ve got what Gray Oak and that back and Cactus too. Those are all scheduled to come online at the end of the year, um, which will represent another two plus million barrels of oil per day of takeaway. So that’s, that’s good. But you know, you kind of mentioned on the international side of if we’re looking at natural gas, gas going to Mexico, the infrastructure in Mexico just isn’t there yet. So even though you’re able to get it to the border, you now you’ve got those constraints as well. So that’s another obstacle for that has to be overcome.
Aaron Vandeford:
No, that’s right. And I would pretty interesting, at least in the Permian Front, I was just talking to one of our analysts, uh, before we came in here looking at Permian differentials. And so we ended, you know, we were in the end of Q 4 , kind of 20 18 timeframe and we had $12 type of differentials to Wti that’s come back considerably as we’ve seen progress with these midstream, uh, entities getting pipelines, uh, closer to that finishing line. And now we’re under a dollar in a lot of places. And so it’s pretty crazy how just the perception and not that these things have turned on yet. Just the perception in the marketplace can move some of these, uh, prices in differentials to wti
Glenn Parrott:
that’s it. That’s even changed since, well, when I gave my presentation,
Aaron Vandeford:
I know it’s moving very fast.
Glenn Parrott:
So if a fluid, if you’ll pardon the pun, situation. I love puns. So, um, so were there any other things that came out of that conference I felt coming out of it. Um, I asked the question that I answer it, I guess. Um, but, but coming out of it in my mind, there is cautious optimism. A Q four was certainly a detrimental, um, to valuations and to, you know, people feeling, having confidence of, of, you know, what exactly happened, the speed with which the downturn occurred. Um, but then again, unlike 2014 account popped back up, uh, in the state over 45 and now we’re in the fifties. And I think that generally fanatically coming out of the conference companies are like, okay, we, we feel comfortable enough we can withstand this, um, in this and you know, with our current existing efficiencies, we’re okay there. But, you know, obviously they do want to be a better market environment but, but there wasn’t panic or anything. There was a lot of confidence.
Aaron Vandeford:
There was a lot of confidence and I think you, you saw that from everyone from the domestic, you know, Permian producers on through to somebody of your natural gas guys who are seeing, you know, some elevated pricing due to, to do a storage levels were being below five year averages. Um, everyone kind of has a handle on, all right, kind of what are this range bound life look like for the near term And I think we’re much better prepared today for a range bound, I won’t say low commodity price environment, but kind of where we are to be able to manage that through. And, and you saw that from conversations with management teams and I think, uh, you also heard it from, from investors saying, we get it now, let’s go back to work and figure out what we need to do. Because frankly, I think everyone’s tired of sitting on the sideline.
Glenn Parrott:
Yeah. Here’s that. And uh, yeah, I think the investors, I mean, they’re certainly willing to tell management what they’re looking for. Um, so, you know, the, and not to get away too much from that, but you know, in terms of the, the overall conference, uh, again, I, I if I were to pick a, an a, I didn’t want to do this necessarily was a keynote lunch address though. And I think it was really worth, uh, or is worth mentioning. Uh, if you didn’t get the chance to see Chris, Wright, develop our lunch keynote or present is lunch keynote address on the first day, uh, go on out to Entercomdallas.com and go to companies and liberty. Um, that was actually one of the best presentations I’ve seen.
Aaron Vandeford:
Yeah, we’ve got a lot of feedback off that one. And, and rightfully so. I mean, he had a receiving line at the end of his presentation, just people saying, Hey, can I use that presentation or thanks for doing that. And he was really talking about, uh, it was kind of a departure from the traditional, hey, here’s my company. He kind of took a step back and said, here’s how energy is effecting the global, uh, uh, economy and really how do we, how is energy raising people out of poverty And it was, it was well thought out, well spoken and well appreciated
Glenn Parrott:
the intimate link between hydrocarbons and health. Yeah. It, no, no, it was in that and that’s, I think that’s why it resonated with everybody in that audience. I think that people heard liberty was presenting and they’re like, oh, an oil field service group. Okay, that’s, that’s going to be cool. And then Chris comes out and just blows them away with his passion and um, and, and his story that, that really, uh, very supportive of oil and gas. Um, and I, I, I thought it was really well done. And, uh, and the feedback I’ve gotten after that, especially coming back into Colorado, is that, again, not to go back to Santa Bill 181, too much bow, one of the, the, the key talking points that the public hears at least is, has to do with safety and safety. You know, hydrocarbons are bad, or at least the way it’s being produced is not, is it’s not conducive to your health and safety. And that’s exactly 100% opposite of Chris’s message saying, look, there’s a real link, a very tangible link between health and hydrocarbon use. And yes, Chris is viewed as much more on the macro level, um, as opposed to the more what I would consider very targeted message from one, 1 81. But that’s, it was a, again, I thought of a great presentation.
Aaron Vanderford:
Yeah. Yeah, I agree with you. And I think that, that I always appreciate when someone can lay out their data points and you can follow along and, and you certainly know where he, he sits on it, but you know, he allows you to make your own decisions as you kind of walked through that process. And, and I think it’s really important as we have these really focused, you know, not in my backyard discussions, really understand the larger macro, uh, benefits or, or implications is probably a better word, uh, to our energy usage. And I think he reminded us of that. And it was, it was very well done.
Glenn Parrott:
Yeah. Yeah. And that’s not to say that, you know, we didn’t have other great presentations. I actually felt that we had a, a pretty good, varied a set of presentations. I was pretty happy with everywhere from, you know, uh, Port of Corpus Christi, which is good Haynes and Boone was there, um, Drillinginfo had two great presentations, um, that, uh, uh, I had, I’ve been asked, hey, can we get a copy of that And I’m like, oh, yeah, of course. So, um, and then, and then of course we also had the, uh, the Federal Reserve Bank of Dallas. Not to mention, you know, a bunch of good, great investor presentations.
Aaron Vandeford:
We saw investor presentations form all over. I mean, we saw the kind of, the resurgence of some Haynesville things we saw in international. We saw, uh, you know, just across the board are pretty good perspective of what’s going on in the industry as a whole.
Glenn Parrott:
So as we, as we wrap this up, I, I, I wanted to at least get this first one done to, to explain to people again who Enercom is, why we’re here and uh, uh, what we’re seeing, we’d like for you to tune in. We think we’re going to have a lot of good content for you going forward. Um, anything else from you Mr. Vanderford
Aaron Vandeford:
No, I think that’s, that I’m excited about exploring a lot of different topics and you know, I think we’ve set up an email address if there are topics that you guys want to hear from, uh, and he sent it in, what is it
Glenn Parrott:
It is Oil and Gas podcast at Enercominc. com. So, oh well, OG podcasts at enercominc.com . Um, and I guess at the end of this, uh, know, again going forward, we’re going to have again, more differentiated content for you to listen to hopefully a little bit more, um, that there’s going to be interesting for you guys. And I just would say, I’d like to wrap this one up, uh, thanking again those people who have helped make this work. Uh, not only here at Enercom, but external tests. And thank you for listening.
