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Fireside Chat: American Energy Leadership: Investing in The Future of Oil and Gas

Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Rey “R.T.” Treviño [00:00:16] Good afternoon.

Lisa Carmen Wang [00:00:18] Good afternoon, everyone. I’m Lisa Carmen Wang. I’m the founder and general partner of Bad Bitch Empire, a venture fund, a podcast, and a movement for women building unapologetic wealth, power, and influence. I’m also the author of The Bad Bitch Business Bible, 10 Commandments to Break Free of Good Girl Brainwashing and Take Charge of Your Body, Boundaries, and Bank Account, and also an executive coach and personal brand strategist for fund managers and CEOs to build influence and thought leadership. Thanks for watching! And today I’m extremely excited to be speaking with Rey R.T. Treviño III, who is the president of Pecos Valley Partners and also a third generation industry investor. And we’re going to be talking about American energy leadership and where he sees the future of oil and gas investing. So, Rey, please get us started and talk to us about the current landscape of American energy and where you see. the future of the U.S. investments.

Rey “R.T.” Treviño [00:01:17] First of all, Lisa, thank you so much for doing this. Really excited. Richard Wilson, Family Office Club. Thank you all very, very much, as always. Again, my name’s R.T. Treviño. I am the third, so that’s why I go by R.T. And we did name Duke. He’s the fourth, but we call him Duke. But we had a great opportunity to be here last year, and we had a lot of great questions like this one right here. And that’s why we definitely wanted to do the fireside chat today. And really, Thanks for watching! where we look at the U.S. energy landscape right now, it is exciting, and what we feel right now is security. And what I mean by that is that right now, we have an administration that is pro-energy, yes, oil and gas, as it says, but also just pro-energy as a whole. And we wanna make sure here in America that we are not only energy dominant, but energy secure, not only for America, but we wanna continue to hold that for the world as we continue to move forward over the next, not four years, the next 10 to 20 years. in energy security and that’s what’s really exciting right now.

Lisa Carmen Wang [00:02:23] So let’s talk about the growth opportunity within oil and gas, especially with this current administration, and how does that fit within global dynamics?

Rey “R.T.” Treviño [00:02:34] You know, from a global dynamic standpoint, right now, the United States is actually the leading leader in producing oil every day. We produce, here in America, 14 million barrels of oil a day. We are number one globally. OPEC is doing a combined nine million barrels a day, and they are talking about increasing that about 120,000 barrels each month until they get to about two million. That still means that, well, Texas did 44% in October and November alone, but that still means that America is still gonna be the number one producer of oil and natural gas in the world, and right now, that is where it’s very exciting for us to be only continuing to develop legacy leases.

Lisa Carmen Wang [00:03:22] So many investors are drawn to the high returns in oil and gas, but are also wary of volatility. So can you talk to us about how you assess and mitigate risks in this sector?

Rey “R.T.” Treviño [00:03:33] Yeah, that’s definitely why we got into it, was for the high rewards. There is a lot of high risk. I mean, we are putting our money in the dirt, literally, when we’re drilling an oil well. There’s no ins and buts about that. However, we’re looking at the legacy, as I mentioned a second ago, we like to find those legacy assets that may have been overlooked by the majors, like the Exons, who are really focusing right now on those horizontal wells where they need a real big pop. just to really see a good return. What we’re doing is staying very conventional, true to oil and gas in the sense of, let’s go drill some vertical shallow wells, maybe 10,000 feet at the deepest, in areas of proven production. That’s where the legacy comes in. And what we like to do is, maybe we are spending a little bit more money on acquiring these assets. However, we’re looking at a lot more opportunity for the returns long-term. and also the price of oil going up. When it comes to volatility, obviously in the last week, we’ve seen some fun dynamics here in the United States and across the world. However, if we really focused on the price of oil every day at Payco’s Valley Partners, we wouldn’t be doing this. We’re looking at it in the long term, and that’s one thing that we do with our conventional wells, is we’re able to have a good low price so that we don’t need to worry about the volatility of day-to-day prices of oil.

Lisa Carmen Wang [00:05:01] Can you give us a sense of the actual numbers in terms of returns and what that looks like for you in the past?

Rey “R.T.” Treviño [00:05:08] Yes, you know as a company we definitely average a little over 60 percent a year on our returns. We are a family office for those of y’all that have had a chance to meet us before and we have been doing this since the mid-80s. We have several projects that we’ve already done over the last three years. One that comes to mind has actually in the last 18 months returned dollar for dollar to our investors over 50 percent. And that doesn’t include the tax deductions. And these are active tax deductions that go against capital gains or your annual income. And that doesn’t include that. That’s a dollar for dollar net return after taxes, the ad valorem taxes, and after lease operating expenses also.

Lisa Carmen Wang [00:05:52] So talk to us about how an investor LP actually participates with you as a owner in the wells and how that’s different.

Rey “R.T.” Treviño [00:06:00] Yeah, when we have actual LPs come in and partner up with us, the way we like to do it is actually to give them the act of tax deductions. We do like to offer them to be a very low-end, low-key, general partner over the first 12 months. That way, they get not just the passive tax deductions, but these investors are going to be able to get the act of tax deductions, where at the beginning of the following they’re going to be able to write that off. at the bottom line of their tax return. And that’s something I think a lot of individuals have really enjoyed when partnering up with us on an LP side. Another benefit to working with us is that we are the operators or the boots on the ground. So you’re gonna get a straight answer from us. It’s not gonna be, you know what, let me call someone that knows someone that’s actually there doing the project. We’re the ones that are actually doing the project. And also most importantly, when we do have LPs come and invest with us. we’re putting our money right there alongside them as well.

Lisa Carmen Wang [00:07:03] So oil and gas investments have historically built generational wealth. What are the key strategies that investors should consider for long-term success in this space?

Rey “R.T.” Treviño [00:07:13] Patience, you know again when you go look at the volatility on the daily price of oil again It’s gone up and down over the last week and it always will do that However, when you’re looking at these assets and you’re actually trying to decide where to go it really It takes patience because not every deal is going to be good. You got to sift through those. And being a family office, we get those deals all the time of, hey, check this out. This is it. This is the next banger, as they like to say these days. However, what we really like to do is dive into the geology and dive into the numbers, the science, and look at what has actually happened in that area. And again, when you’re looking at a legacy area, you’re like, okay, what has it produced over time? And more importantly, what can we extract? And usually when we extract oil from the ground, you only can truly extract 50%. So if it might be an area that has 10 million barrels of reserve, we need to automatically cut that in half and go, hey, we’ve got 5 million barrels of oil here to capture. Is that financially a good investment for us to make to recapture our money. hopefully somewhere between 18 to 24 months. That’s what we look at.

Lisa Carmen Wang [00:08:31] Where do you see oil and gas investments within someone’s greater portfolio and what should they be considering if they’ve never invested in this sector before?

Rey “R.T.” Treviño [00:08:41] Well, you know, if anybody definitely, again, I’m not a financial guy, but obviously oil and gas is a risk, right? However, if you’re able to do it with a proven. operator and a proven company that actually does this for a living, that is one thing I really recommend for everyone out there is when you’re doing this and even if you’re with an LP, find out if the operator that you’re working with directly and it’s like, hey LP, are you working directly with the people that are the boots on the ground? And when you’re doing that, you’re cutting out so much cost just alone in the process. But also for all these individuals out there, you do want to look at the operator. And what I like to compare the operator to, to all of y’all out there, is a property management company. So we own the asset, or we own the land, just like somebody would that builds an apartment complex, then they hire the property management company. And that’s what an operator is in the oil and gas space. So you wanna look at their track record. How many wells have they drilled that were successful? You also want to look at costs, lease operating expenses. You want to keep that at most 13% a month. And that includes electricity, taxes, all the boots that are on the ground. And that’s also something that you really want to be looking at when you’re looking at these type of investments.

Lisa Carmen Wang [00:10:04] In terms of advancements in drilling, extraction, what has there been and what do you expect in the future?

Rey “R.T.” Treviño [00:10:11] Oh man, what I’m really excited about is AI, and also data centers. I know they’re kind of different, but they’re both technology. When it comes to AI, we are really very excited about what advances we’re gonna see. The most current advances are really the 3D seismic, where we’re able to look under the ground and get a good cube fear, look around on where the actual reservoirs are. With the advances in AI, we’re going to be able to take the old data along with the new data and come up with really great ideas and hypotheses on exactly how to extract the oil, while taking that human element out of it of that I’m just not quite sure. And then I know our geologists are very excited about this as well. So. The AI is very exciting. When it comes to data centers, I don’t know how many of y’all know this, but whenever you do a chat GPT search compared to a Google search, it uses 10 times more the energy to do that chat GPT search. And when you’re doing that, that means we gotta find that energy from somewhere. So all these data centers that are going to be built, I know in Texas, and you’re looking at all the billions of dollars that are being invested in that. We’re going to need an energy source, and that’s what makes oil and, more importantly, natural gas very exciting to us. And that’s why I’m excited for data centers, because that energy’s gotta come from somewhere, and that’ll come from oil and gas, primarily.

Lisa Carmen Wang [00:11:44] So this panel is about American energy leadership. What role do you see oil and gas playing in maintaining US energy global leadership?

Rey “R.T.” Treviño [00:11:54] You know, right now, to a lot of people out there, OPEC respects America more than they have. Saudi Arabia listens and reveals this administration as a very pro-oil administration and also no nonsense. When we have people like Harold Hamm of Continental Resources doing some advising, we have now actual people in roles in our administration that actually understand the industries that they’re a part of. Chris Wright of Liberty Oil from Colorado is now part of the Department of Energy, and he runs that. He understands the oil and gas. Doug Burgum, who’s now the Department of Interior, he now manages all the minerals underground for all the federal land across America. And with these two individuals, what we’re looking and what we’re actually expecting is some new legislation to where we can really build out long-term oil and gas developments so that the power of the pin no more is what’s going to delay any of these projects, which again, makes this really an exciting time for oil and gas industry and investors to get back into it because we know that moving forward the power of the pin isn’t going to be able to kill your deal overnight. So that’s one main reason why that we’re very excited about oil and gas and really America taking the lead. The other thing is that there’s no doubt about it. The oil and gas industry in America, we still lead the world and as long as America’s energy dominant, we will be energy secure and continue to have that strong place here in the world globally and the main seat at the table.

Lisa Carmen Wang [00:13:43] Great, with the minute that we have left, I would love you to share a actionable insight that you can leave for people who are interested in investing or capitalizing on these upcoming trends.

Rey “R.T.” Treviño [00:13:55] Yeah, you know, for everybody out there that definitely has any questions, I definitely recommend you to definitely reach out to me. We’ve got a wonderful booth here in the corner over here. I’ve got a my finance guru, Michael Tanner. He’s from the Colorado School of Mines, got a master’s in finance, along with, I’ve got Paul Graham and also Jen Hart. And we’re just really excited about being back. Again, this is our fifth event to be a part of. and last year these were a lot of questions that we got and even more so thank you very much about the oil and gas industry and so we definitely want to open it up that if y’all have questions definitely come come visit with us we’d love to tell you more about what we’re doing in 2025 and how we’re just only going to continue to build not only over the next three years but really over the next 10-20 years because guys oil and gas isn’t going away It’s really an energy addition with solar and wind. And in order to build those solar panels and those windmills, we’re going to need oil and gas and we’re gonna have to extract those critical minerals with oil and gas. So, that’s one thing I do wanna say here.

Lisa Carmen Wang [00:15:06] Great, and we met at the last Family Office Club event and I was brand new to oil and gas and we’ve had extensive conversations about it since and I can definitely say that you guys operate with integrity, that you really know your stuff and you’ve also been a great mentor and I’m excited to see you really lead this industry and be a leader in American energy.

Rey “R.T.” Treviño [00:15:28] Well, thank you so much, Lisa. And again, if you have any questions, let us know. Thank you very much. And thank you, Lisa.

Lisa Carmen Wang [00:15:32] Thank you.