Name: The Capital Allocators Compass | Navigating the Next Energy Cycle
Uploaded: 2026-02-25T17:16:07.540Z
Duration: 1 h 12 s
Description: The Capital Allocators Compass | Navigating the Next Energy Cycle

Transcript for "The Capital Allocators Compass | Navigating the Next Energy Cycle": Hello, and welcome to what will be, as Brian mentioned, my, last official morning energy lives. I'm your host, Andrew Gillick. And, today, I have the distinct pleasure of sitting down with, Will Van Loe, founder of Quantum, one of the most successful energy focused private equity franchises of the last generation. K. Will founded Quantum in 1998 and leads its investment strategy and capital allocation process, serving as chair of the firm's executive and investment committees. Before launching Quantum, he cofounded Windrock Capital. And earlier worked in energy investment banking at Kitter Peabody and Nations Bank. He earned his BA in finance from TCU and has served in charitable roles, including boards associated with Baylor College of Medicine and MD Anderson Cancer Center. Will, welcome to the show. Great to be here. Alright. Also so before we start, just have a little fun, ask you a couple questions so the audience can get to know you a little better. Alright? Perfect. Alright. So, Will, what was the first concert you ever went to? Before I answer that, I do want to just say thank you to Enbridge. You guys are amazing partners. Most of in the room, I'm sure, know that. But Andrew, guys, you work for a great firm or did work for a great firm, I guess. But you guys are great partners. So really excited to be up here. I appreciate that. First concert, Jimmy Buffett. Oh, that's a good one. Yeah. A lot of parrot heads here? No? Definitely not. And I was in college. I didn't go to a concert till I was in college. So I was my parents were with me when I was a kid. I I understand that. I have similar parents. All right. What is the what's the best advice you ever got from a grandparent if appropriate? I actually never got great advice from grandparents because I didn't really know my grandparents growing up, but, I think the best advice I ever got was probably from my high school youth pastor, odd place to get advice for a business guy, but actually a good place. And he gave me two pieces of advice. He said, you know, always treat other people like you want to be treated, like you want to be treated. And number two, if you want to be understood, you know, seek first to listen before you're understood. So understand somebody else before you seek to be understood. So he used to always tell me, God gave you two ears and one mouth and use them in that proportion. Pretty good, pretty good advice. I agree. Listening is hard sometimes. It is very hard. All right. Next, have you been to more states or more countries? More, more states. I raised capital for part of my job and, I think I've been to 48 states. And maybe we need to maybe 2026 is the year for don't think there's much money in the other two. So I Sorry, probably haven't been to North Dakota. South Dakota actually. What what is the most interesting object in your office? That's a tough one. I've got a lot of objects in my office, but think the probably the most interesting one that gets a lot of like, why do you have that is I have an eight foot tall longboard, surfboard in my office, and it was a gift that a chairman of an investment bank gave me for we get lots of stock back when we do a lot of these sales in public companies. We did a really big block trade. I think it was their biggest block trade they ever did, And he's a big avid surfer. So he had this surfboard custom made for me. And the only reason it's sitting there I mean, it is kinda cool. It's a I guess it's a deal toy, but I have no clue how to get it out. So it just it sits there. I feel like that's a much better question when, like, we can see the surf board. There you go. It's a, it's quite bad. For the future. All right. And now the last question, to really get to know you, what what's the best sandwich? Gosh, I'm more of a salad guy, but I'm going to say it's a hamburger in Chileno Bay in Cabo, Mexico, which you wouldn't necessarily think about hamburgers in Mexico being great, but they did really really We'll have to try it out. We'll write that down. Thank you very much, Will. This is good. Alright. So now let's let's hop into it, but maybe we'll we'll start with, you know, what's what's the Will Van Loe origin story? You started Quantum in 1998. Why energy? Why then? And really what I want to know is why is there only one L in Will? Was there a typo at the hospital or? You can blame my German and Dutch heritage, Wilbert, not William. So if I would have had English great, great, great grandparents would probably have been two Ls, but Mystery solved. So that's that. Okay. But yeah, no, Quantum's really kind of just a cool story how it came about. You know, was in my early career was an investment banker on Wall Street, did a few years of that, and actually started my own boutique bank in 1994 and got to know all six of the private equity firms that did energy private equity back in the early '90s, And one of the things I realized was is pretty much most people thought about oil and gas is underground real estate, just buying PDP, levering up, cutting costs, paying down debt. And there was one group, it was a group part of Enron Capital and Trade, part of Enron, and they had a bunch of geologists and engineers in their group. And they were the only group that would really look at development projects and infill drilling or water floods or three d seismic. And I realized quickly taking companies around to these six groups that on a risk adjusted basis, actually you could earn a lot better returns doing some of that than just supposed to buy an asset. So there was not very much capital doing that, and the industry needs it. And so we set about starting a new private equity firm that was going be much more focused on developing and actually even exploring for oil and gas as opposed to clearly buy PVPs. That's a great business. But that was really the genesis of it. It just saw a need, saw an opportunity, was a very young entrepreneur and had built a successful investment bank and got to know the competition, know what they were really good at and what maybe they weren't as good at and found a niche or an opening to start a firm. It's been a run as energy's gone through its cycles and here we are today. You guys, quantum, you sit right at the intersection of electrons and molecules. That's obviously more than we have time to talk about in one session here, but maybe considering your most recent high profile exit Cogentrix to Vistra, why don't we start there? I feel like fifteen months is a little short for a holding period in PE these days, but that IR probably looks pretty good right now. Can you tell us a little bit about the deal? Sure. And it was actually twelve months. So we closed it in January '5 and then we announced the sale here on 01/05/2026. So I think, know, one of the things we've always been very big in is understanding the entire kind of value chain, right? So all the way from, you know, call it the wellhead to the burner tip. And so, we started, obviously started the firm in 'ninety eight doing just oil and gas and midstream, but over time evolved into oilfield services and power, initially thermal power back in 2010, got into renewables in 2017. So really have kind of done almost everything imaginable in energy, not refining, actually, we've not done a refining deal. And I would say we've also kind of been on the front end and actually in partnership with you guys on a lot of things with AI and machine learning using data analytics in the oil and gas space. And I think because of that, and we were, you know, as we were kind of building out a lot of our AI infrastructure and tools, we realized that this AI thing is going to be really big, right? And the other thing we realized was is this LNG wave is going to be really big. We had a market that had been basically flat. Electrical demand had been flat in The U. S. For a very long time. And just given what we were doing with LNG at the time with data science, I think we maybe saw just a little bit earlier than some this pending demand growth in electricity. And when we looked at the current stock of assets out there, we realized that power plants, thermal power plants, were trading at a massive, massive discount to replacement value for good reason, we felt like that reason was about to change. And so we saw deep value, the ability to go out and buy something significantly below its intrinsic value, its replacement cost, very strong cash flow. And if we were right, in three to five years, we could make a lot of money. We just, it happened to happen in twelve months, little faster, three to five years. So, I mean, is this the fastest repricing of power that you've ever seen in your career? It's the only repricing of power I've seen in my career. It tells you a lot of me, if you look at the stock of private power plant, if you look at, you know, who owns the private equity that owns thermal power in this country, almost every one of them other than I think ArcLight has sold, right? And so there's been over $50,000,000,000 of power plants get sold in the last twelve months. And so I think everybody that's been in this space, one, it's been a tough space, and two, they did reprice and everybody wanted to it's kind like the old saying in in the exploration business guy, just give me one more boom and I promise I won't screw it up. And I think this was the only boom that most of the people in power had ever seen. So they had to go for it. They had to go for it. Yep. Exit. And so, yeah, I guess, you know, we're gonna continue to see how it plays out over, you know, the next few years and if if all that power demand really materializes that people are expecting from AI. And so, you know, as as we continue to discuss this power demand and we're we're seeing hyperscalers rushing to build a lot of the behind the meter solutions. And and so do you think as you think about the hyperscaler strategy, that they're gonna go further back down the value chain, past just building power behind the meter to actually owning gas in the ground or is it the PPA gonna be just fine? Well, I think you're just gonna start with these hyperscalers, The service they're providing basically is compute power, right? And they know that they're not energy experts. They don't really even want to mess with that if they don't have to, but they're having to. And so, you know, because really literally power is the lifeblood of these data centers. Without it, they don't work. You can go put tens of billions of dollars of investment in ground. If you don't have power, it's idle. Can't get any value out of it. So I think they'll do as little as they have to do. I don't actually think you'll see them go on reserves. That's like, would be pretty idiotic. It's a very complicated industry and it's one thing that could put some reciprocating engines out there for backup or maybe even build a on prem behind the meter power plant or tying this some solar power with batteries, but don't think they want to own reserves. So I'm not going to go that far upstream. That said, I do think you could see more long term contracting where they maybe tie up with a large creditworthy counterparty, a 20 supply of gas or Feet to make sure they can get that gas to their power plant to run their data centers. They want assurance of service. They want make sure that there is electrons available, you know, 99.9999% of time. Yeah. I mean, it seems like over the last eighteen months we started hearing about, why is, why is Amazon trying to trade gas? Are some of the hyper sellers trying to figure out like what's going on in this marketplace? And I think your observation of it's a little more complicated for them to get all the way owning the reserves makes sense. But, but yes, securing all the places along the value chain they can, like with a long term gas agreement that I guess that kind of makes sense. And not having, mean, like, you know, we, in this latest winter storm y'all are having up here, it's very cold, but like our power plants in ISO New England, I mean, you know, we were buying gas at, you know, triple digits. And I think they look at that and say, well, I mean, overall energy is a pretty small component of the overall cost of these data centers. But if you start talking about a $100 gas and you can't even get it, then that's a whole different issue, right? The real cost becomes much bigger. So if AI and data center load is driving the power narrative today, like what's the sober version of a narrative? Like what's real, what's hype? Like where's the timeline mismatch? I mean, you know, power demand going to continue to grow at this rate that we haven't seen in a long time or AI going to sort of train itself to not use as much power? How do you, how do you see the next couple of years? You know, I would say it's hard to tell what's hype and what's real today. There's clearly hype, right? Anytime you have an industry mobilizing hundreds of billions of dollars of capital on an annual basis getting invested, I mean, there's going to be hypesters come into the space. And so, you know, I personally believe that AI is certainly in the top three technologies humankind has ever invented, maybe the most important technology, the most important invention of mankind. So I do think it's, I don't think AI is a hype. I think AI is so real. And if you don't get that, you need to get that. But I do think that how much power we're actually going need, how much energy we're actually going to need, we really don't know. I mean, last week, had an opportunity to spend some time with one of the founders of one of the largest tech companies in the world, and he basically said, we need an infinite amount of power. I said, well, infinite's a lot. And he said, we need an infinite amount of power. We can consume whatever can be produced. And his point was is the more power, the more compute we have, the more use cases we create and people will use it as long as it's somewhat affordable. And so, but I think what we have to really think about, Andrew, is we do have to be careful in extrapolating kind of a hockey stick, which is what we kind of have now because the chip technology will get a lot more efficient. Mean, if you just look at the latest chips that have been announced from NVIDIA, the Vera Rubin chips, I mean, are, depending on how you want to look at somewhere between five and ten times more energy efficient per token or compute, whatever you want to measure it by, than just the chips that came out last year, the Grace Blackwell chips. And if you go back ten years, they're like 2,000 to a 100,000 times more energy. So these chips are gonna and by the way, AI is going to be the biggest tool yet to get chip architecture better. So chips are gonna get much more efficient and the algorithms are gonna get much more efficient. And so I just think probably if you just said with the use cases we currently know of and expect to have, we're overestimating energy demand. But I also wouldn't bet against some of these tech guys that say there's more use cases than you can ever imagine. And I believe that too. I don't know what they are, but I guess we've just seen so many, you know, booms and busts in the commodity cycle. And you look back to, you know, when quantum first started early in the late nineties, early two thousands and all the power demand that people were expecting from the internet, right? My favorite article to quote was for like from Forbes in 1999. It said, it was like the headline was like dig more coal, the PCs are coming, right? They thought that the internet would take like 50% of the grid and it didn't. Well, and I'll you this. I mean, another thing in in some of y'all probably read about this recently, know, one the things that Elon Musk is talking about is putting data centers in space with massive solar arrays up there where you have the sun literally shines twenty four hours a day. Every day, there's no clouds. There's no storms. There's a little space to breathe. It might mess them up, but but but the the efficiency is magnitudinally larger. You have to cool things. Usually enough, that's what I said to, I was talking with another tech founder last week about this and I made that comment. He said, actually, it's harder than you think to cool, even though it's absolute zero. Like, okay, but you're right. You do have to cool things. But I do think it's interesting because there's, you know, all of a sudden you start thinking if you could really do that, you know, my argument is obviously, well, my gosh, moving all that payload to space, that's a lot. These data centers are very large. Probably need some rocket fuel, right? Well, do it. It's natural gas is what they But if anybody can do it, Elon can, right? He's got SpaceX and he's a guy I would not bet against. So I think there's also some really disruptive technologies potentially coming. And I think that's probably the most interesting one I've heard of that could meaningfully change the game in terms of the need for terrestrial power. Yeah, that makes sense. I mean, and then as you see The US also pushing for a nuclear program, we'll see how quickly that advances and, you know, it's not retiring all of our thermal plants at the pace that we had been before trying to keep pace. So we'll see. I'm in your camp though. Think, I think, and I think the team thinks the same thing, overestimates certainly in the near term for how much power we're gonna need. And, and then yeah, time, time will tell. All right. Let's switch gears a little bit. Quantum has made its name in shale. Today, some today some may say we're in the twilight of shale. I may say that, and that all the good rocks have been picked over and it's no longer a wildcatters game. So do you agree with that? Where does where does PE play a role in the shale upstream business in this next phase of of oil and gas? I think it's fair to say it's no longer a wildcatters game in The US in the sense of we've discovered most likely we've discovered all the major shale plays we're going to discover. But that doesn't mean I think like the sun is setting on shales and it definitely doesn't mean I think the sun's setting for private equity in shales. You know, as we've learned many times over the years is never underestimate technology, right? And even in the best shale plays, your recovery factors are still pretty low. So there's still a lot of gas and even more oil left in those formations. But I also think it's not so much today about taking the technology we applied to shale and reapplying it to new shale plays. I think it's actually taking that technology and applying it, going back to the conventional plays and especially the tighter part. Those fields didn't just end, they just got uneconomic, many of these large, large massive fields, right? And so I think the ability to go back and utilize that technology, I mean, we're doing that, for example, in many areas in the Rockies right now, in the Pions and the Uinta, and we're getting extraordinary results using multistage frac technology on vertical wells, but where you got 4,000 to 6,000 foot of vertical column, right? So I think there's those opportunities. I think technology will continue to reinvent opportunities, whether it be for refracs or redrills. It's also a price game. You give me a high enough price, we'll go infill every shale well in America. But the other thing I think the opportunity is, is shale is not just distributed in The United States Of America and Canada. I mean, it's distributed throughout the world. I mean, there's a lot of source rock that I think a lot of these foreign countries are now looking to US technology expertise know how on how to help them develop those resources in their country. So I think there's an incredibly bright future for both private companies, private capital, both domestically in North America, but I think even more so increasingly so, guess I should say internationally over the next five, ten, fifteen years. So sort of US tech or North American technology being adopted internationally. We're seeing it some places. We're hearing about some public operators moving. Are they in areas where you feel like the regime or the governance is suitable for private capital investment? You know, I used to ask that question a lot and I finally realized that I'm not so sure that The United States is a safe place to invest capital. I mean, seriously, you have a regime change every four years here. And you know, you saw somewhere like, I would have never thought The UK was a dangerous place to invest capital, but they just woke up one morning and decided to tax away windfall profits, tax away all the the profits of the North Sea UK company. So I think it's clearly there's everything in investing is a trade off between risk and return. And geopolitical risk is a risk. It's a risk that oftentimes you can actually reasonably quantify. You can even insure to some degree in certain places. And typically, well, what I will say is the resources in these other countries is the underground risk is obviously almost always much less in a lot of these places. And so it's just a balance. It's finding that right place where you're getting compensated for the risk you're taking. We did a deal recently in The Republic Of Congo, put over $1,000,000,000 in Republic Of Congo. Now if you had asked me, like, when my team came to me and said we wanna do this deal, I said, you're crazy. Congo? And they said, well, there's a difference between the Democratic Republic Of Congo and Republic Of Congo. So I'm not sure about that, but but it's a great example, right? I mean, and it's a great deal. Are there direct flights? I have no clue. I forbid our team actually going on the ground there. So, but So that, sort of brings up an interesting point about how Quantum has been looking internationally. And I, and I think you actually have a couple of companies that are, offshore focused. Do you, as, as you think about the, the offshore opportunity versus onshore conventional, shale, as you're sort of looking past North America, what's most appealing, to you today? Or is it it depends? I mean, I think the world is an amazing, I mean, there's so many opportunities. And I assume by offshore, you mean like Gulf Of America and places like that, not necessarily foreign countries or both. Both. Both. Yeah. So, I mean, clearly we've got a huge business in Gulf Of America that we actually, we have this company we just brought on. I think they're four of the most prolific wells ever drilled in The Gulf. And we're going to fact check that. Four wells. We're pleased that came from your data. So I hope it's right. Then I'm sure it's correct. Nevermind. But we got, know, we brought on four wells to produce a 100,000 barrels a day, you know. And so I still think there's a lot of opportunity left in The Gulf. I think Alaska is an incredibly opportunistic rich place. You know, if we can ever figure out how to do things, Mexico's got so much resources, not even funny. And then you get into things like, you know, is Venezuela really going to open up? I don't know. Not sure I want to be the first guy in there, but Fast follower. But a fast follower for sure. But Andrew, I think one of the things is we've been really focused about the last five years thinking about how we evolve and grow our business international. Because you know, really twenty years ago, everything was going international, right? Mean, the domestic industry was dead before shales came along. And you know, we've kind of now gone back to the future, if you will, in a way, because the shales, as you said, are maturing, not sunsetting, but there's tremendous opportunity all around the world. One of the other sort of themes or topics that came through in last earnings and starting to again here is the secondary or tertiary recovery of shale wells, whether it's Oxy doing it with CO2 or Exxon using the proppant from the refiners and Chevron with some magic pixie dust they're dumping down. Do you see any of these technologies or processes helping go from, you know, 9% recoveries to 10%, 12%, 15%? Or is that not the focus of private capital? That's more of like a big business kind of Clearly the pioneers have to be the biggest companies because there's a lot of risk involved in that. It's going to be costly. Do I think it's technically feasible? Absolutely. And so I do think, know, it's people generally, you know, always say that necessity is another invention, right? And I think as the shale start to plateau, especially oil starts to plateau in our country, I think these companies are going to have to figure out how do we unlock more resource and the best place to look for oil and gas is in an oil and gas field. Or the Permian. Yeah. Yeah. So we all know the capital availability has shrunk for oil and gas, especially over the last few years. We've watched, you know, fundraisers go out and be successful, but not as many folks are able to do that or willing to do it in this environment. So, is less private capital availability good for you or not so good for you? Like more competition or just aren't the right deals? Or how do you think about that change? Well, it's both because from just a pure Quantum standpoint, clearly having less competitors is a good thing. Means we get more opportunity to pick and choose the deals we want to do or don't want to do. But just like there's less private capital available from groups like Quantum for you all, there's less institutional limited partners that want to put capital in. So I spend a lot more time in an airplane on the road than I'd prefer to trying to find that capital to aggregate it so that we can invest in the sector. So that's not a good thing. But I do think the overall, the lack of capital is a very bad thing for humanity. You know, there was a narrative that developed, you know, back in the latter part of the twenty teens that, you know, hydrocarbons are bad, evil, blah, blah, And I think, fortunately that narrative is much more balanced today. I think we do realize that progress that humanity has been able to make because of access to hydrocarbon energy is really what propelled most of human advancement over the last one hundred and fifty years. But I do think that it's bad for humanity and yes, capital is in short supply. I mean, the availability of capital in the private sector is down probably 75% of what it was pre COVID. And in the public sector, same thing. I mean, there's so many people left for good reasons that the returns were so bad. But I still think there's a lot of skepticism, right? Is this time really different? Are you really going to maintain the discipline? Are you really going to maintain the focus on making money as opposed to growing resources and reserves and production? So far so good. Yes. Making, making progress. But do you think that as, as a owner of private assets, you know, with private capital, as you, as you look to exit, are there also less buyers that you like, are the exits harder in this environment or as you put companies together, the demand there for what you've created is so it doesn't matter? So if you just look at just the number of buyers out there, sheer, I mean, like the number of public companies in the last six or seven years has dropped roughly in half, right? A lot of industry consolidation. So I think the way I'd answer that question is kind of a two part answer. If you have quality assets, no, not at all, because that's something that is in very short supply. And so I think it's, you you gotta have that focus on quality. It's something we've always talked about is, you know, we want to be, everybody says I want be in the top quartile assets or top decile, but by definition, top quartile means 75% of the assets don't fit that. Right? And so I think if you're really disciplined and are good, you know, a lot of times we'll go buy things that on the surface, like when we buy them, they're not top quartile. They may only be top 50 percentile, But we know because of our vast experience in the sector that there's a lot we can do. We can bring technology from other basins that we've been involved in to really unlock that rock. And so I think as long as you're really focused on developing sticks that are going to compete competitively for the universe, we've never not been able to sell oil gas assets ever. Know, I remember a few years ago I had our investors were saying, well, what happens if during the life cycle, the ten year life cycle of your fund, if there's no longer a bid for oil and gas assets? I mean, there would always be a bid, you know? You might not like the bid. Exactly. That's exactly right. Jeffrey Harris, one of my partners says that he's like, you you can always sell, you just mean I like the price. And, but I think, you know, we've proven, mean, gosh, I think just in the last five years, I think we've been involved in over 25,000,000,000 of exits. We've sent 17, over 17,000,000,000 of cash on LPs. We've just announced another 9,000,000,000 of exits here in the last, you know, thirty five, forty days. You can absolutely, it's a very good market if you've got quality stuff. So that's never been an issue. That makes sense. And by the way, it's one of those industries that if you have to, you just blow it down, you cash flow it. And that's the nice thing about it. You can actually, even if the market did go away, I mean, the fail safe is that's great. We'll just, we'll produce it out. Or you do a continuation fund. I heard those They're are a little very popular. If you can get it done. All right, so you've also launched some credit funds, not just the equity funds. So is the best risk adjusted return right now drilling the well or lending to the guy drilling the well? So we launched our credit platform about six years ago and it was really the initial, it was really two tiered focus. One was to do what we call structured capital. The other was to do actually senior lending, and the senior lending was to do, you know, the banks really were pulling back in COVID in a massive way. Now they're since back in, So I'd say that's really not that interesting to us anymore. The banks are very competitive there again, and so we don't want to provide that. The return they make is pretty de minimis, but the other part of our credit platform is really done, just kind of exploded, and it's really more structured capital. We go in and we partner with mainly public companies, some private companies, but because of the massive focus today on returning capital to shareholders through buybacks and dividends, there's a lot of projects that these public companies can't actually invest. Most of them are reinvesting maybe 50% to 60% of their cash flow, but most of them are sitting on 40% to 50% of cash flow. And so they've got these projects that fall lower on their tiering or maybe it's their non op, so it's lumpy and they can't really budget for lumpiness. So we found a real sweet spot partnering with public companies in our structured capital business. Is it better or worse? Capital is very efficient in how it prices. And so we clearly get lower rates of return on that, but we're taking less risk. We're not having to buy land. We don't have to put any infrastructure. We don't have pay G and A. So we're very happy to go put capital in great assets that are it's just a different risk adjusted return. Got it. That makes sense. So you're partnering with the public companies. They want the production. They don't have time to get to these assets. Is that it? Is it It's really just the budgets. I mean, because shareholders are demanding big buybacks and big dividends. And so they got to be very intentional about where they got to force rank every project every year. Just a lot of stuff that doesn't make the cut, but we can come in and provide them capital to do that. And it's really, for a lot of them, it's the only way they can really grow because it's really off balance sheet financing. It's not that What could go wrong? Well, I mean, actually nothing has gone wrong yet because it's truly like going into the big shale plays and drilling great wells. They're all relatively great. Maybe it's a 40% rate of return well in the Permian instead of 140% rate of return. Still good for us. Covers your, so yeah, I mean, it's, it's just, it's all relative. Now that makes sense. So you've seen the shale boom and bust a couple of times here in the last, twenty years. What do you think, And now we're seeing this AI power boom, right? These energy cycles. What do you think one thing investors in the room are currently underestimating about the energy markets for the next five years? I think geopolitical risk is probably being mispriced a little bit. Like, I mean, if you look around the world at kind of the craziness in The Middle East, you know, you got a war raging in Continental Europe, you got a war raging in The Middle East, you've got, you know, China may go into Taiwan soon. I mean, if you just look at look at that, I think I think I think we're mispricing geopolitical risk today. But maybe the biggest thing the world's missing is I think it's it's gotten, you know, in a sense lulled to sleep by the success of the US Shell Revolution. And it does not fully appreciate that, especially on oil, that the ability of The US to basically, essentially over the last fifteen years, The US has met almost 100% of the world's growth, right? The demand growth has been almost met entirely from The US. Now some countries are up, some countries are down. Net net, they're about zero growth. And The US is, you know, we've we've we've tripled, more than tripled our liquids production. And so I I do think when I go around, especially when I talk to people outside of The US, even in The US, but I think people just like, well, The US will keep providing that growth. And if you think about it, Andrew, the only major expenditure for the average person in the world, if you go look at housing's always number one in most countries. Numbers three through five in various orders are energy, food, education, and healthcare. Four of the five of those, all of them except for energy over the last fifteen or twenty years have roughly doubled in price and what the consumer pays. Energy's fallen roughly in half. I think the world totally misappreciates, under appreciates the fact, one, what energy, the gift that it's given to the world in terms of keeping energy prices low, but also they're just assuming that's going to continue into the future. Meaning still go lower or just The production, The U. Can just keep growing production. Right, right. So the fact that we were able to do what we did, I mean, back to the pre oil shale. I mean, yes, oil in 'eight popped up like close to 150, But let's just say it was a $100 commodity at the time. Today it's a $60, $50 commodity. We've had some inflation since then. And that's on inflation. That's not adjusted for inflation. So the point being, I think if you say what I think the biggest thing the world's missing is just how incredibly powerful The US shale revolution was in terms of keeping the global economies tamed, in terms of inflation tamed and things just working to offset significant inflation everywhere else, that's not going to happen anymore. And we're going to have a period energy's got to catch up. Energy is mispriced. Geopolitical risk is mispriced and energy is mispriced. So when you say geopolitical, like the markets are too comfortable with everything that's going on in the world. Yes. And that The US is just going to keep on, you know, being the engine of growth that it's been. I mean, I feel like prices, crude prices would have to be in the eighties or nineties to see growth again in The United States. I agree with that. Does that sound right? And by the way, your OPEC plus countries need prices up in that range to balance their budgets. I mean, there's a couple that can make it work in the 50s or even the 40s, but not very many. And most of them need a much higher price for oil. The US shale revolution, and that's one reason why in November 14, Saudi decided to drop the hammer on The US shale business. They wanted to kill it, and they realized they couldn't. They did not succeed. They didn't. They didn't. But I mean, they're waiting for that day where The US oil shale revolution runs out of steam, and they know it's coming. Right. But like you said, never short an oil and gas engineer because they'll figure out a way to keep moving along. All right. So I've heard you and you mentioned earlier today, you've talked about the energy transition a lot, both when energy trends, just saying energy transition was controversial. And as you alluded to now where it's a little, little more balanced. What's the most honest way for you to describe what the energy transition is to someone who doesn't live in it every day? Is that not the right framework? No, no, it's a perfect framework. I actually start by saying there's never been an energy transition in the history of mankind. I start there. The word transition implies we're moving away from something to something else, okay? And the facts are that every year you get a few anomalies in there for wars or massive COVID or something like that. But every decade the amount of energy consumed in the world not only goes up materially, but every form of energy usage goes up. So all we've done over time, coal was a real big kind of that really enabled the industrial revolution happened back in the 1840s, right? And then oil in the early 1900s with the invention of the automobile, natural gas in the forties with the invention of the gas or the gas turbine, electricity, nuclear in the sixties, and then most recently, renewables starting maybe fifteen years ago in earnest. But so we've had a series of energy additions, but we never had an energy transition. And so I start there and then I just say, you know, once you understand that, look, at some point, do I think we're actually gonna crack the code on fusion? Probably. I'm not sure when, but I think you have to understand that it's an increasing higher probability with AI than it's ever been. Sure. Okay? So don't underestimate that. But until we crack the code for fusion, we're gonna need more of all of the above every year because you've got global population is gonna continue growing. We're gonna have another 2,000,000,000 people by 2050. You're gonna have one and a half to 2,000,000,000 people. Did I say billion? Billion. 2,000,000,000 people added. Another, you know, one and a half to 2,000,000,000 people are gonna move into the middle class. They're gonna consume more than double, maybe triple the amount of energy they consumed before they moved in the middle class. So, and we've got these crazy things like AI that are unbelievable energy hogs that are gonna keep driving. So humanity is going to keep needing more and more energy. It's the only thing that makes progress possible. So we still need that rebranding of energy transition to whether it's energy evolution or addition or whatever the case may be, growth in energy demand and cleaner energy, I guess is better for all of us. Right? But in the end, it's just we want the energy. Cleaner energy at the right price. Right. Right? Because there's a trade off. I mean, you know, if you say the clean energy is five times more expensive, well, I'm not sure that's better for us. Maybe we put two fifths of that extra in making the, you know, if you say, well, climate change is going to cause this or cause that, great. Just make our cities more resilient to climate change. You know, adaptation. Yeah. That's something I've been hearing Yeah. The And that's the problem is I think both camps, the right and the left, tend to polarize the issue, and neither one can really see the other. They both have really good points, and they both had a bunch of stupid points. And the truth is they need to come together in the middle and we need all the above. We need to be smart about it. In some areas, absolutely solar is the right answer or wind. Other areas, cold's the right answer. Hate to say it. It is. Right? And so, In space, solar is definitely the right answer. For sure. Nuclear. Know? Or nuclear. Yeah. Problem with solar and space is you're talking about these gigantic rays. There's a bunch of space junk out there, not to mention asteroids and everything else, but there's lots of too many movies. Asteroids. Come on. Nothing's gonna It's real. Yeah. Alright. So here's here's a fun one we we thought about. What was the first big mistake you learned the most from and what did it permanently change in your process, in your investing process? I'd start by saying I make mistakes every day. And as investors, I think that the most important thing you have to be able to do is have the intellectual honesty to admit when you made a mistake. Like so many times as investors, they try to cover that up, and whether it's investors or capital allocators in companies, it's the worst thing to do. So first of all, a mistake is just nothing more than an opportunity to learn on how to do something better. You got to kind of frame it as that. In terms of like colossal mistakes though, we started at Cuomo at a really good time. I mean, 1998, '8 prices, I think bottomed in March '9 at like $10 a barrel and a dollar and change for natural gas. And then over the next decade, you know, prices basically oil went up 15 fold, gas went up 10 fold. So pretty good time to be in the business, right? Not bad. You could do a whole bunch of things wrong and still make a lot of money. So it was very forgiving. And as the industry, as shale started to come in in 'six, we raised our fourth fund. And up until then, we'd never had a deal we'd lost money on. And I think our track record was something like 130% compounded IRR and like five times multiple of money on our average deal, right? Solid. It was crazy actually, but a lot of that extra outperformance was due to those commodity prices going up. And I think, you know, a lot of things we kind of knew, we got lax on, you know, and I think there's three big lessons that we learned in 'eight when the whole GFC happened, the world came unglued. It's like, you know, Buffett used to talk about, you know, when the tide goes out, you see who's kind of swimming with no swim trunks on. We had gotten more aggressive in using leverage, not uber aggressive, but more aggressive. We've gotten less intentional about hedging, and we started to believe that we were pretty smart about assets and that although we founded our firm that it's all about the people, not about the assets, we started taking some risk with assets and the shales were coming in. Oh, we can do this. And we woke up one morning when we were doing our 'eight year end valuations and had never lost money on a deal before. The largest investment we made was in a shell company. It was a great bet. I mean, the guy that was running the largest unconventional company in The United States, we pulled out of Encana to come go start this company. And we wrote that deal down. It was by far the largest by probably a factor of two investment we'd ever made. We wrote it down to about $0.30 on a dollar. And it was really for us that existential moment where we're like, okay, quit thinking and this team was a great team. So we didn't violate that. But we started, we were getting a little sloppy with, you know, starting to pick assets over teams, not hedging as much and using a little too much leverage. And so for us, that was that probably turning point where we just said fundamental care how good things are, how smart we think we are. We're always going to pick people over assets. We're always going to hedge. I don't care if oil is $30 a barrel or $100 a barrel when we buy something. We're going to hedge. We're going to hedge systematically, and we're going to maintain very low leverage. Because if you look at the people that got wiped out in every boom bust cycle, it's the people that aren't hedged, that are over levered, and they've got mediocre assets and mediocre people running those assets. And so super high quality assets, great people, hedge, low leverage. And that formula has worked masterfully for us for the last seventeen years. Sounds good. Good advice. I like it. All right. One more. What still feels the most misunderstood about energy investing by people outside the sector, right? Like we've had less and less, we've had more and more folks leave energy investing, whether it's on the public side or the private side. You know, you have a generalist trying to make a decision on where to deploy capital, whether it's in the public markets or the private markets. You know, is there one thing that you could help people? What will you tell people to help them understand why or what they don't appreciate about what's going on as we go into this next cycle? Well, there's two camps of people right now, two camps of institutions. There's the camp that energy is horrible, it's broken, it's the worst industry in the world. I want to ever look at it again. To those people, I would say the fact that you and many people think that is the reason it may be the most compelling investment opportunity in the world today, okay, at scale. And then there's the ones that have been in it and have stayed in it and maybe made some decent money for good reason or bad reason, but did okay. And they're now kind of saying, okay, let's go direct, right? Let's just go direct to these management teams. Let's not go through a quantum or an NCAP or an NGP or something And like what I would say there is, I'm not saying that we're so good or my peers are so good that have survived, but what I will tell them is this is a really hard business. There's a lot of ways you can make money and there's a lot of ways you can lose money. We've got a whole army of people that tries to help us not lose money and make money. You institutional investor have no clue what you're doing. And accountability in any industry or in any business or any relationship is so important. And there's no way you can hold those management teams accountable. And so I would just say to those investors that are kind of, I'll say, getting greedy today is be careful what you ask for because you may have some big winners there, but you're also going to get it's going to hurt. You're going to unfortunately make some of the big I mean, had really proven energy managers, funds that have been in business a long time that couldn't navigate all these, the decisions that had to be made because they're so technical. They're so operationally driven today. I mean, and so I think it's just depending on which camp you're in, it'll have different answers I for I do like the idea that so many people don't want to invest in it means now's the time. Yeah, no, it's for sure. All right. I'm a little nervous about asking this next question because we didn't really talk about it beforehand. What's one question you have for me? I think we're at no, it's good. No, okay. One question I have for you. Okay, so you have an interesting position. You're in a company that is, I'd say on the forefront of information, okay? Both just, I mean, the research people you guys have, from the technical people, from the digital, you guys probably have better access to information than anybody else out there your peer group. Sure. And your job, you get to have a lot of conversations with guys like myself and many others. And so I'm curious, maybe I'm gonna ask you two questions. Not the only one. The most, because you're going to be leaving What's here maybe your most memorable moment on all of these kind of deals like we're doing today? And what's maybe, I'm going to say more of it, like what's the most important insight you feel like you've gained from all these conversations that is not broadly recognized amongst your customers or the industry more broadly speaking? I'm going to go with the second one first because I'm not really sure on the first question. I mean, I think as I've thought about the last ten, fifteen, twenty years of my career, and where I was as a recent grad, as a recent business school grad, and how I thought about the world then versus how I see the world now is that you sort of can't race your career. You can't race like, you know, to to the top or where you think you're supposed to be. Everything sort of takes time. Developing relationships takes time. Learning an industry takes a lot of time, especially when you're a history major and not an engineer. And you have to be intentional about the way you go and meet with folks and understand what they do versus what the peers and competitors do. And, you got to remember, you know, what, what makes each person tick a little bit. And there's, I feel like there's a much more of a personal element or a human element to what I do, what we do, then people get credit for it. It's not all numbers on a screen. It's not all, you know, how the type curve's drawn. I mean, that's important and you need all of that kind of stuff. But I mean, I'm sure you find the same thing. It's about the relationships in the industry and how how else else would I be able to know the things that I know? Why, how would I be able to get Will Van Loe up on the stage with me, you know, to, to have this conversation if you didn't take the time to, to, to build that relationship? And I think that that to me is one of the things that I've learned and, you know, been supported by, by, you know, this team here and like all the great work that everyone's done. I couldn't have done it without them. As for most memorable, I mean, many memorable moments. I'm not sure I can share all of them here on the stage or should share any of them on the stage. But I think writing Morning Energy took different forms and it evolved over time and it was very antagonistic in the beginning. I think that's one of the things that sort of maybe put me on the radar. People liked that I called it, like I saw it. It may have not always gone over well with all of our clients, especially if I was writing about them. But almost all of the time, the criticism was based in some kind of reality that we talked about and, you know, helped them get better at where it built a stronger relationship over time. Not every time. There's some folks who are still a little won't talk to me. But that's okay. That's okay. So, so I think that, you know, that engagement has always been my favorite part. Well, and one of things I always liked about your morning notes and stuff where you did it with some humor, a little bit of, you lightened it up. You had a punchy message, but you softened a little bit through your wit and humor. So that's a real skill and totally second you on the whole relationship thing. I mean, the whole industry runs on relationships and man, you got to invest in people and build great relationships. Well, appreciate it and I appreciate our relationship. Absolutely. Thank you very much. Honored to be up here with you today. Thanks. On your last On my last one. Yeah. Thank you. I thought you gonna say that was your most memorable moment, but Well, we're on, we're not done yet. We're not done yet. Okay. No, We are done actually. Thanks everyone for coming out Will. Thank you Thank very you.