Robert Bryce 0:04
Hi, everyone, welcome to the power hungry Podcast. I’m Robert Bryce. On this podcast we talk about energy, power, innovation and politics. And I’m pleased to welcome my longtime friend Art Smith art is based in Houston art, welcome to the power hungry podcast. Thanks, Robert. Now, I’m introducing you or you’re listed on the podcast notes is the author of something from nothing Joby Foster and the people who built new field exploration. But I also want you you’re gonna have to introduce yourself, so please go.

Art Smith 0:33
Okay. I made some notes because I, it’s been a long seven years and

Robert Bryce 0:38
no, you can’t read notes. You can’t read from the notes. That’s illegal. I’m serious. You can’t no notes that’s that ruins the whole thing.

Art Smith 0:44
All right. I’m a fisherman from New Orleans, Louisiana, who somehow made a wrong turn and went to Wall Street, where I spent 10 years and then I bought control of a company that became a principal in a company called jhanas. Arrow, Inc, great little company, we built it from for people to add, and we were approached, we were approached by IHS market, whatever they’re called now. And we’re sold out in 2007, which is right before the market went to heck. And then we after that, I become somewhat semi retired. I’m on the board of directors of a number of companies. And it’s been a wonderful part of my life. And three, three grown children, five grandchildren. I tell jokes, and catch fish.

Robert Bryce 1:37
Okay, but your career has been in oil and gas is in researching and investing in oil and gas. That’s, that’s the pipeline here. That is where that is the reason why you’re on the podcast today. And just to recall, we met now, roughly 21 years ago, 22 years ago when I was working on my book on Enron, and we’ve been friends since then. But I wanted to have you on because of all of obviously your long experience. You were also at at First Boston, you were at Oppenheimer, you worked for Argus. You’ve got your history in the industry goes back with some 40 years now for 40 years. So Well, let’s start with the moment today. You know, in the last few days, we’re recording this on August 2, the huge profits, I mean, just staggering numbers coming from Exxon Chevron. I don’t know if oxy has reported Conoco. I mean, these are big numbers. So I’ll ask the obvious and maybe just too obvious question. Why are these companies suddenly were out of favor just few months ago, just making boatloads of cash? Why?

Art Smith 2:38
Well, I was talking to a number of friends last week was somewhat of a unique one in that we had enormous increase in the value of oil companies. And not just the exploration production group that I know best. But the giant companies, the the super majors, super major, Exxon Mobil was 11%, in a web room was up 13%. I didn’t add it up. But it’s multiple billions of dollars went into the well into the area of market widows and orphans and all these stocks that have been suffering for a long, long time. So anyway, the both of those companies announced earnings, we can talk about that. What they had to say about their earnings in the future, is why people are stampeding back into the sector.

Robert Bryce 3:28
And what was that? What was that message? I didn’t listen to any of these calls? I just saw the headlines and saw the some of the numbers. Why what what is their outlook.

Art Smith 3:37
But what what somewhat unique is that we’re aware that this industry is goes through dramatic cycles, I mean, really, really bad cycles. And the one they hit in 2020, which was a combination of pandemic, where the bottom dropped out of the market and the bottom dropped out of margins. And that, you know, there was just no, nothing good. That was was an issue because there did take quite a while for them to recover from that. And they had to, you know, layoffs and things like that. But anyway, that the since then, the market has kind of moved away from the green greenness that came along at that same time with Biden, and his trillion dollar changes in the carbon world. And people have become to understand it. Oil is very important. Oil is what makes the world go round and what keeps the cars on the road. And so these guys, namely Exxon, Chevron, BP, Royal Dutch, are the what what grease the skids to make the world a good place today. As you’ve said, Robert, energy is poverty is terrible. Energy is needed for growth and instability. Yeah.

Robert Bryce 5:02
Well, so that’s the we’ve talked about the Super majors, but your career at Herald and elsewhere was mainly looking at the independence. So explain that if you would just when you know, the upstream, upstream, midstream downstream. This has been one of the things that to me, I’ve understood for years about the oil industry is that all the money’s traditionally has been made in the upstream that is in the drilling part of the business. Is that still true now?

Art Smith 5:25
Well, it’s, it’s, it’s an erratic business in that when it’s good, it’s really, really good. And when it’s bad, it’s so bad that everybody goes bust. We went through that,

Robert Bryce 5:38
including the midstream guys, because the midstream is, by the way, the pipe pipeline, guys, right, and you’re free

Art Smith 5:44
to hang in there. They’re, you know, they’re a little bit more, they don’t get that profitable, and they don’t get that beat up. Because they’re, there’s, you know, they’re doing a very boring part of the business

Robert Bryce 5:55
moving, moving. moving molecules.

Art Smith 5:58
Yeah, yeah, the excitement in the business, which I’ve been close to my whole career is if you are a gambler, and you like, see, you know, the fun times and the excitement, you invest in exploration production companies, the big IOCs international oil companies, well, they’re just sluggish, oh, slow moving. Creatures that don’t do anything quickly and generally are run by some very boring ol men.

Robert Bryce 6:27
Right. And they’re in and they’re integrated across multiple countries have integrated operations, pipelines, refineries, drilling, offshore, onshore, all of these things together. And that makes them Well, I wouldn’t say like banks, but I mean, but still relative to the internet, the super major shell totaal, Exxon, Chevron, oxy. They’re still relatively small or massively small compared to massively small, they’re tiny compared to Saudi Aramco, right or at knock or some of the big, big national oil companies overseas. Is that still true?

Art Smith 7:03
Not really the scale that you’re using it, but it’s been it’s proven prove reserves of oil and gas, Saudi Arabia Aramco is way out there ahead of everyone, right. But again,

Robert Bryce 7:14
and in production 10 10 million a day versus what a million or so for Exxon. More than that, but let’s just say 2 million equivalent or something like that.

Art Smith 7:25
Aramco has an enormous amount of reserves, which we think but you’re, you know, mathematically defined by reserve production ratio, number of years, you could produce that that reserve, Exxon and others have to continue to replenish reserves and may have RP ratios of nine to 1510 to 12 or so. So the issue is, the big companies have a challenge to do several things, most most importantly, make money. Right. Secondly, with the cash that comes in, figure out what are the potential uses? Well, they’re pretty they’re not that exciting. I think you’ve got to either invest, reinvest, and so called maintenance capital, you’re doing to invest more, if you want to grow growth capital, and then with what’s leftover, not just leftovers, that appreciation other gives you money to distribute money to shareholders, and pay dividends and share distributing money to shareholders. I mean, in the case, case of share repurchases,

Robert Bryce 8:28
right, and those are considers returns of capital to the equity investors, the share repurchases and dividends, those are the main those are the only ways right that you return, you return to step off. Okay. Or you could share a spin off a subsidiary that would just be a standalone company.

Art Smith 8:44
Yeah. Right. So So here’s what I think happened last week, and why these big companies got legs and started moving is that if you you know, and I would encourage you to listen to the Darren woods and the Exxon Mobil analyst presentation. But what came through loud and clear was that Exxon, even though incredibly maligned, back in 2020, remember what happened? Oh, he was from the delisted from the Dow have a bunch of activist, you know, beat them up and put some people on the board, right, are viewed as pariahs and unlikely to maintain their dividend which by the way, they did maintain their dividend. And that stock got down to let’s say, $30 a share. It’s now almost 100. Right? So you’ve had a and when it was trading at 30, it had an implied yield of 18%. I don’t know something ridiculous.

Robert Bryce 9:41
And the implied yield, you’re talking about the amount of money they were paying out on a quarterly basis in the form of dividends as a percentage of the the value of the stock?

Art Smith 9:49
Yeah, well, they actually paid 18% out that year, right, because unlike the guys, the other guys, the Royal Dutch, BP totaal Turn remember who which cut dividends, right? If they said this rough time, Chevron and Exxon rode right through the valley of death and, and survived. So

Robert Bryce 10:13
so that was remarkable was it because they had to borrow money in some cases to do that right to maintain the dividend, right, which was a big bet on long, long, long, long term value of hydrocarbons of all kinds, right, that they were betting that, that they just said, No, we think this is gonna come back and sure in sure it did. I mean, so why is that? Why is demand so high?

Art Smith 10:33
Well, demand is high, because, as you you’ve heard so often, we’ve had low reinvestment throughout the industry. We’ve gone through the cycle, we’ll get back to EMP companies, but the cycle where companies spent money irrationally to too much. And then they, you know, stopped. I mean, the market just stopped

Robert Bryce 10:53
with, with, with CO with COVID and 20, early 2020. And, and note and then an ESG, as well, right that both of those who were those the key contributors,

Art Smith 11:03
it could not have been the worst concurrence of events that had at one time, and I a man who has been around the oil business, his whole life, I got pretty depressed. And to I was looking at, I said, Well, you know, this green revolution is coming. These companies are going out of business. They don’t have any, you know, but anyway, but I don’t want you to read the report, I wrote a profit at time, because I was about as dead wrong, as I’ve ever been. And I’ve been dead wrong more than once.

Robert Bryce 11:35
Will and then so you don’t hear that much anymore about stranded assets. Right? There’s this there was this oh, there’s gonna be some stranded capital. When I was reading a report from Raymond James, it was really remarkable. It was making that point that in fact, on a permanent MMB BT you bases now, oil is underpriced relative to natural gas in Europe, the price of gas is 250 to 300. What is it? 250 to $300 per barrel of oil equivalent. And so that why wouldn’t these utilities or whatever burn oil instead of not gas if they’re making electricity? I mean, these are that’s a pretty stunning turnaround given? Well, I’m there many factors. We know Russia invaded Ukraine, but but it will I’ll ask, I’ll ask this question because it just pops in my head. You’ve been around, you’ve seen a fair amount of crazy in 40 years, it is upside down. Now, as you’ve seen it in your in your career.

Art Smith 12:26
Once again, the Ukraine issue has really muddied the waters in turn, right? What is normal? And of course, because of the German, the decision to go green and rely on Russia for gas, and the really in like, I think they shut down nuclear to just, you know, very poor portfolio of decision making by a country which we consider fairly smart industrial country. Right. So it’s that’s triggered this whole issue that, you know, we don’t have Reliance anymore on a major source of energy, gas from Russia, but also oil. So we’re, we’re, we’re in a position here where, unless something happens, dramatic decline in demand. And you know, the story price elasticity of demand. Sure, gas has got to forfeit gasoline for $5. Have people stopped driving? No, I don’t see any evidence at all. I mean, maybe maybe a little bit, maybe. But that’s good. You know, nothing wrong with that. But anyway, the big thing is that the market is really short energy, very much short new energy supply. And guess who has some growing production, Exxon Mobil, and Chevron LNG, and Exxon off Guiana, which has been a big investment area for them. And they invested in that right through the downturn. Because that’s what Exxon does. Well, Exxon spends its money wisely. It’s very, you know, it, it knows how to do it. Right.

Robert Bryce 14:07
And it Well, it’s interesting, you say that, because those are some of those discoveries in the ones offshore Africa, just, we’ll get to where I get my geography Jana, south of South America, but they’ve also made huge discoveries in gas discoveries in in Africa as well, almost almost all of it offshore. So I’ll ask this question, because it just pops in my head. I mean, we we talked into a long time ago, and I don’t know how many years ago Charlie Maxwell was the kind of the talk of the town there was this idea around peak oil. And I if I recall, now, I’m not calling out here, but you were wrong about that, too. Right? They were gonna run out and in fact, in the shale revolution happened and now not only do we have shale, but you know, some of these discoveries offshore have just been enormous. So here’s the question. How is it that today, I just looked it up, that the price of gasoline today is roughly the same as it was in 1979, in terms of real terms about $3.79 a gallon. Why is this a provocative? Why is oil stayed so cheap for so long? I mean, it’s really hasn’t changed much in 50 years in terms of the real price of the commodity. Why?

Art Smith 15:16
Well, you’re going back to my previous career at tennis, where we we mean, in the company put out a regular report on what we call oil is cheap. We would we would put gasoline over here. And then we took milk and Oh, right. Yeah, yeah, audit or whatever would be in any in almost any comparison, gasoline was certain was cheap. And particularly when you think about what it does for you, right? You don’t need Coca Cola to live, but you may need gasoline to get your job. Right. Anyway. So there. So there’s an issue that the reason oil prices, I think, over the long term have remained where they are, and I’m buying into, then you’re again, it’s technology, continued improvements in the technology over time. Shale being one of them, but what what changed my change the view on peak oil, and I’ll be the first to say, dead wrong, I met King Hubbard thought he was the most brilliant man I’ve ever met. And a lot of people that I knew, and King Hubbard’s work with you followed it was that oil production, the US peaked in 1970, and entered a decline curve then went on for 30 years, right? And what happened, but stopped going down with the shale revolution, first with gas and with oil. So and that’s, that’s what’s kind of driving the new newfound respect for the oil companies that not only can they maintain their current production and financials and things, but they can drive costs down and create enough of a wedge to pay shareholders and pay dividends and do that with a, you know, it’s like the ideal world. And it happened. You know, I have, again, you said I’m not supposed to consult my notes. But I wrote up, we wrote a whole bunch on this in 2005 2006 2007.

Robert Bryce 17:22
About about peak oil and peak and inking Oh, no,

Art Smith 17:26
that that wasn’t as much about pico that was all about the fact that the big companies were swimming in money, what to do, and therefore, they started paying it out, they started buying shares, paying dividends right now basically shrinking the capital float, and putting money in the hands of the investor. Sure. And that’s, that’s my other gripe is that this is the big thing I gripe about with the whenever administration, others, they want to teach, teach or direct the oil and history on how to invest its money. And it’s they have various things they could do to invest. Right. But yeah, one thing they can’t do, is they can’t tell them to buy, you know, solar this and Mokhtar then and, you know, whatever it may be, the companies have to make the decision as what is going to give a return. And in this case, BP ro dodge, totaal equinor. Kind of bit the green bullet, or green hook, I would call it. And then we’re the last two or three years diverted a big chunk of their cash flow away from the traditional oil and gas, Chevron and Exxon. No, we’re fine. We’re gonna roll ahead. And the guys that did that, yes, but what’s what works in oil companies is you got to spend the money wisely. If you don’t spend it wisely, you’re gonna find there no returns. And you know, you’ll you’ll be in, in the soup with high high leverage.

Robert Bryce 19:00
Well, so let’s let me follow up on that. Because leverage the shale revolution is shale revolution, as I understand it, and have as I’ve thought about it, it was just amazing for consumers. I mean, the price of gas went down from $8.08 nat gas from $8 to two, but the round numbers wasn’t about $300 billion of cash just evaporated by the excessive drilling by the shale and that is the excessive drilling that didn’t return capital to investors during the shale revolution is that approximately

Art Smith 19:29
that’s very, very apt I think. I think the.com Craziness with those 2000 Yeah, made them similar. You just threw money away you throw it out the window, you were buying this and someone else I mean, you know, I

Robert Bryce 19:44
never thought the.com Revolution was Will there put another way for Tino Rev. The shale revolution Oh the.com Revolution was repeated by the shale gas revolution I

Art Smith 19:55
think so. And it’s in the in the lasting scars is in the in the industry, the exploration production companies is there about? Well, we keep track what used to be 100 and something public companies, maybe it’s down to 40. And the 40 there there have combined all kinds of other private companies to stay afloat.

Robert Bryce 20:17
So they’ve they’ve merged mergers and acquisitions have been a big deal to consolidation of the industry with fewer is fewer small independents, and into a few, super independent. So who would that be a pioneer on the air empty on the gas side. So pioneer,

Art Smith 20:34
the top three or pioneer Evan EOG, in depth, let’s just do it. Just stay with them. If you look at those three companies, and what they have been doing and what they’re saying, they are, they beat we’re chastened by the wild characters in Boston known as the Boston mafia. And these guys came down and their jets and said, You guys are destroyed billions of dollars. We’re never going to invest in your stocks again, you got to change your ways. And they said, Well,

Robert Bryce 21:08
we’re just doing good. The Boston mafia, you’re talking about Fidelity Investments are the

Art Smith 21:13
modality Kimmeridge they’re all the guys that got a lot of press about the

Robert Bryce 21:18
fact that the big institutional the big institutional investors that are based in the Boston and there are a lot of them, right. It’s not just Boston, but anyway, but yeah. Yeah. Well,

Art Smith 21:26
they, you know, after being browbeat, and beat up and stock prices, you know, hitting lows, and, you know, everything. The pioneers, let’s say, Scott Sheffield, was on his board, brilliant guy. EOG, Devon, all of a sudden, they said, Well, maybe they’re not so crazy, maybe what we need to do is to concentrate on a pure number of things, pull in our horns, and be very good at what we do. And after we’ve maintained production, and maybe grown it a little bit, we’re going to distribute the rest of money back to shareholders back to these guys that lost their money in the previous rounds. So I think pioneers got to pay out. I don’t know, 15 $16. Maybe more. I can’t I don’t know the exact number. But anyway, yielding over 10%. And you say, Well, man, 10%, that’s pretty darn good.

Robert Bryce 22:22
It’s even higher than inflation.

Art Smith 22:25
Yeah, wow. Well, that yo, JT was just saying Devin, same. Some of the others are kind of similar.

Robert Bryce 22:35
Art with that, that makes me think well, then is so here’s the question, which is the perennial question, I guess. Is it different this time?

Art Smith 22:45
Well, no, it’s not I just gave you 1005. Honestly, I could, I could read you this. It says, This was 2007. Exactly. I’m sorry to go back to my notes, but it says cash flow management, Exxon style, steps, strategies for reinvestment of cash flows by the International integrated oil. So and I started off by a quote from Pink Floyd from a song called money and it will be quoted as money. Get back. I’m all right, Jack, keep your hands off of my stack.

Robert Bryce 23:27
And

Art Smith 23:30
now keep your hands off my stack. I’m doing a good job with it.

Robert Bryce 23:34
Right. Well, so then with you seen that sounds like you’re bullish on on the on oil and gas or on hydrocarbons more? Generally, I suppose. But are the I’ve seen comments. I think Mike Werth is the CEO of Chevron said something to the effect, we expect high prices for a while now. So are the or is there enough investment? Now? You talked about a lack of investment in 2020 2021? Is there enough money being invested in the upstream now to produce enough liquid hydrocarbons to meet global demand?

Art Smith 24:07
I don’t think so. But I not want to get well, well, again, because it’s the role that Russian oil has played and will play in the overall market. You know, we’ve been draining our strategic petroleum reserves at a million barrels a day, right. So how somehow slow down this ramp and you know, run up in wellhead prices. It’s not that’s not doing it. And then the new supply again, is going to trickle back. It’s not going to come back in a and you know, but meanwhile, I think there’s going to be a tremendous surge and in the upstream part of the oil and gas business and in some ways refining and marketing because of similar situations. That capacity was with rundown, they closed, you know, plants that weren’t successful. So it’s It’s a very bullish outlook now,

Robert Bryce 25:03
it’s bullish and bullish, because there’s not enough investment in the drilled in on drill in the drill bit that there’s not enough drilling going on. Is that what you’re saying? Yeah, well, then

Art Smith 25:10
the issue is supply demand that, you know, we’re at a point where markets in quite balanced, if anything under balanced, right under nourished, and therefore, we need every barrel that comes out to keep it going. And therefore prices, you know, the great arbiter $100 oil doesn’t seem like it’s got much downside to it and has considerable upside. And so remember, the business runs on not the price of oil, it runs on the margin between the price of oil and the cost of producing it. Right. And a big issue that came out, you know, recently you said, the big companies think not only can they, you know, produce and grow a little bit, but they can get costs can continue to drive costs down. Right, so that, you know, the oilfield services business has turned on a dime, for the same reason they was starved. I mean, again, I was, I have close experience that when the bottom dropped out of the oil business and 2020, the oilfield services business went to almost nothing. I mean, if the extent there was any work out there, you were working at that, you know, substandard or below average price. So you had few people who had no margin, you had no you know, nothing. And now Now today, call up and try and get a generator from Caterpillar, you know, backed up, don’t can’t get it can get a new get a rig can get a pumping unit can’t get a any skinny thing. And the

Robert Bryce 26:47
so when you write so when you’re talking about a certain thing, when you’re talking about services you’re talking about, well, the truckers obviously moving, you know, frac sand around but really the drill rigs, in particular AC top drives, right, which are pretty much the standard interest industry standard now, and also, we talked about pressure pumping, these are the frackers people like liberty or field services, or Halliburton, Baker, Baker Hughes, the ones who are going to come along and, and complete the well, and bring it in right and to bring it into service. So they were getting killed. And now, you know, I’ve heard that they also have, it’s not just the matter of having enough trucks and the rest of it’s having enough labor that they you know, especially, especially people who are willing to work with their hands work outside all kinds of temperature, all kinds of weather on extended, extended tours or extended, you know, work periods, and can pass a drug test all those things together, right that you get, they got to be able to pee in a bottle and you they got to pass it right that these are all constraints on the supply of labor. That’s what I’ve heard, or what are you hearing? No, no,

Art Smith 27:48
that’s that you’re getting it straight from the from the source. I, I would say that the challenge that to the oilfield services companies is having laid off, you know, 50% or more, but there are people. Now within months, they turn it around and want to go back to where they were, or more.

Robert Bryce 28:10
And they tricked them again. And they trick them again to believing it’s real this time.

Art Smith 28:15
Well, Field Services, in my mind, is the worst sector ever been employee because they throw you out. And the bad times. They don’t give you any backup. But they will they will pay you a lot of money. And when

Robert Bryce 28:30
and then and then kick you to the curb when they’re tired.

Art Smith 28:33
So there’s a man camps down around Vegas, in the middle of the kind of lower part of the

Robert Bryce 28:39
Permian, the Permian, in West West Texas.

Art Smith 28:42
These things are teeming with people that are working like crazy. making six figures or so. But you know, they’re they’re in PECOS. Right? They’re sleeping in Vegas. And they’re right. We can up in Vegas

Robert Bryce 28:55
working at 6070 hours a week and working and living in a mobile home and with a vinyl floor. Yeah,

Art Smith 29:01
yeah. Not not living the opulent life that you do on the road.

Robert Bryce 29:07
I was in the beautiful Embassy Suites in Jonesboro, which was actually pretty nice. Arkansas. I’d never been in Jonesborough it’s those towel sets Arkansas State now Embassy Suites it was upscale. I liked it. The Arkansas electric cooperatives Okay, well so since we’re talking we’ve talked about a number of names Okay, well so you’ve been investing you’re not a you’re not giving investment advice here and you make the usual disclaimer. So what companies do you like and or let me ask you this way first, what investment classes I mean, you’ve been investing and looking at research in all kinds of asset classes for 40 years. I’m not convinced on Bitcoin gold has done nothing. I’m always suspicious of the oil and gas industry because it’s so cyclical. You know, what makes you know I invest in index funds right? I finally once you know, I finally figured out against them outsmart the market. What do you think makes sense in Given where the world is these days?

Art Smith 30:04
Well, first of all, I’d like anyone else, I struggle with my own personal portfolio, and what to do with it. I do have a recent experience where the outfit that’s been managing most of my money on a very doing a very fine job had a large chunk of my portfolio in municipal bonds, which were, which were yielding two and a half percent, whatever, right? And they were down 12% or 15%. And I said, this makes no sense to me. So hold those, send me the money. And I’ve invested in what I know, integrated oils, ANP service companies, and I know and a variety of other things, too, just to write on mix it up within a video and Amazon or whatever, Home Depot, I don’t know. But anyway, the the overall thing is, if I own pioneer in they’re paying out over the web and percent in dividends, while in this very unserved market that everyone knows, well, they could get a lot worse, they could get a lot worse. My view is, well, I’m going to get 11%. So I can go down 11% I’m still okay. I’m not you put me in those bonds, two and a half percent yielding bonds and a rising inflationary and I mean, I’ve looked at the yield curve to put interest rates go up the value of the of the bonds goes

Robert Bryce 31:29
down, right? So you want to own something that pays you cash.

Art Smith 31:33
I like cash. I like cash and I think if I was going to pick up one that Warren Buffett doesn’t buy bonds he’s she’s a believer in companies that produce dividend over the long

Robert Bryce 31:45
term. And he’s been he’s been he’s got a huge pot position. And new new Amina Well, he’s the biggest holder now and Occidental Petroleum right. He’s long with super long oxy.

Art Smith 31:55
He is is which is which, by the way hasn’t been performing as well as Exxon. But anyway, but he didn’t call me up and asked for advice.

Robert Bryce 32:06
Well, I’m sure he will. I’ll tell him calling now makes I’ll tell him to call you. Yeah.

Art Smith 32:11
Oh, give me the Omaha land.

Robert Bryce 32:14
That’s right. So you like pioneers which I’ve heard you say anything else now since? I don’t know you know, your what you need to think there need disclosure rules on the podcast, you can say whatever the hell wants you to go ahead.

Art Smith 32:26
Once I mentioned to you already, Pioneer EOG is just a fabulous company in the same area. Devon is a fabulous coming in same area.

Robert Bryce 32:36
And I have we have to mention, you know, GE was Enron oil and gas. And now that is now known as EOG resources was sold off under the Ken Lay and Jeff Skilling era because they were going asset light and they didn’t want to mess around with his old fashioned drilling company that actually made money and produce the products that they moved into their pipeline. So they spun it off. And EOG is still around and Enron ain’t

Art Smith 33:00
Well, man, you know, we talked we started talking about about about Joe Foster, but EOG had a unbelievably dynamic. CEO by the name of Forrest Hoagland. Alright, and Horace Hoagland when he saw this, you know, asset light stuff, you know, got a deal to buy, sell off part of their assets, and buy back the stock and get get out of dodge when it came to Enron. Right, then and it’s developed in probably, well, my plan here become a $50 billion, maybe more.

Robert Bryce 33:33
Right? Well, let’s talk about Jodie Foster, because that’s how I’ve identified you as the author of this book, something from nothing. That book was out now, what 10 years ago or more is that 10 years I think, and who bought new field? Foster built up new field and the new field was purchased who bought them?

Art Smith 33:49
It was in Canada, which is

Robert Bryce 33:53
now ovintiv. Yes, yeah.

Art Smith 33:56
Which I’m still shaking my head, whatever the hell no Vinted is. Anyway, yeah, that was unfortunate. But Newfield, kind of ran out of steam there and the executives got tired and decided to hang them up.

Robert Bryce 34:13
Well, let me ask you about that. Because you’ve you’ve written a book about fostering this, you know, his ability to grow the company and it’s one of the things that you’re familiar with over your career and what you know, what makes will I’ll ask this, I’ll ask the question directly. So you profiled Foster and learned a lot about him and his management team and you’ve mentioned you know, Forrest Hoagland. We talked about other other CEOs. What makes a good what separates the good the good oil, oil and gas executive from one who fails? What is there some quality that they have? Is there something that they have that’s different is or is it how much is luck and how much is really skill?

Art Smith 34:51
Well, if I it would take take quite a bit of time for me to give you all the attributes of Joe foster because Joe caster had so many, I mean, but down deep, he was a good man. He enjoyed hottest days work. He had good people around him. And he generally was a problem solver. You know, they went to Texas a&m, he became a superstar engineer, petroleum engineer, then he goes to tech tenneco rises right to the very top of tenneco. And they, the chairman decides that they want to pay the dividend, and they’re going to sell the oil and gas company. So at 50, something, he’s out on the street with some money, and instead of giving up like most would do, he starts a new company with $9 million, and a whole bunch of people who cared and with their own money in the deal. Anyway, the story thereafter, is just a reinvestment that we talked about before, took $1 Put it in exploration, some but it developments in turn $1 into $2 and $2 into $4. And over that the track record was decreasing net worth of the business over time, volumes, margins, and good decisions.

Robert Bryce 36:13
And so will how much of it is so it’s that will It’s trust charisma, all those things together. I heard one headhunter, a he was I asked him about, well, when you’re looking for looking to hire somebody, what is it that you see? Or what is it you’re looking for? And he I remember what he said, he said, Well, there’s the eye of the eagle he just had that was in the line that he used about, there’s a certain attitude about knowing what one person their qualities, and that they’re going to be good leaders. Does that rhyme with you? Does that make sense to you?

Art Smith 36:46
Yeah, well, then I’ve been part of a good chunk of the book about Joe is about the people, and how he brought in and recruited and brought brought into the fold, David trice. And oh, I don’t know, wild grew up and all the guys

Robert Bryce 37:04
that they believed in Him, they believe they bought into his, the right, they trust

Art Smith 37:09
Him, they wanted to him, but they also were independent thinkers, they didn’t, they didn’t say, Joe, this is the way it ought to be, I don’t agree with you, they would have they would fight it out over an idea until they came to a view a group view that that was a good decision. And in most in those decision they get, again, it worked, because you had some people that are you know, the classic, you know, that that get on the bus, and they know where your destination is. And if they don’t like the destination on the bus, you get them off.

Robert Bryce 37:43
Right. You know, it’s interesting, what you said, just popped in my head when you were talking about this idea of criticism and so on that it was a discussion of militant militaries and whether you know which ones are successful, and that, that the US military has had this record of success, in part because there’s a sense of ability of, well, leadership has to listen to criticism, right? That you have to that this is the way you make the system better, and you your feelings might get hurt, but you can you have to be able to criticize leadership and let them and work through the process. Whereas in some militaries, and I’m not going to name them here. I don’t know that but there’s, there’s Oh, there’s a sense of humiliation, you wouldn’t dare disagree with a leader, you know, the Who’s your superior because that would cause them lose face and that there’s some there require that the requirement was I hear you’re saying it is that there has to be as a culture in which disagreement is not. It’s okay. And that their criticism and seeking that proper end is is a key part of the part of the strategy part of the culture, I guess is what I’m trying to get to is Yeah, is that fair? Yeah.

Art Smith 38:47
And I ran a company for 20 something years, and it was all about building it around good people who liked working together who saw things generally the same, but disagreements were not unusual. And you know, to dig into the cliche thing I’d say no good.

Robert Bryce 39:06
No good deed goes unpunished.

Art Smith 39:09
said good judgment comes from experience, but experience comes from bad judgment. Okay, you got to let people make mistakes. You got to make mistakes yourself. You got to take chances. I think in the case of Newfield, that’s what they did they took some pretty you know bold steps but you know, and they did very very well until the company kind of ran out of energy and

Robert Bryce 39:39
right anyway, well and that’s it that part of the remarkable story of Exxon is that and I’ve joked to don’t short Exxon, right because they just seem like this is a company not that you don’t want to bet bet bet them short because they just seem like they just keep on keepin on but there’s but that has required a tremendous amount of cultural discipline and there’s criticism about exile. But it’s kind of like, it’s not an oil company. It’s a cult. Right? You know that the people get in there and they just don’t leave and they’ll stay 30 years. And that’s it. Right. But that it’s an rather insular culture, but incredibly has been in the history of American business remarkably successful were a very long time.

Art Smith 40:15
Yeah, but they started off with, right people. There were a lot of them are in engineers, chemical engineers in particular. They know nothing. One school, the reservoir engineer, company is entirely composed of Exxon Mobil people. Is that right? You can look at their resume. Oh, apparently, if you’re an Exxon Mobil guy, and you know, predictive engineering, you might want to go over here to another one tool.

Robert Bryce 40:42
But is that a Houston based company? I don’t know that.

Art Smith 40:45
The Dallas based Dallas based?

Robert Bryce 40:47
Well, let me ask you this. I’ll interrupt here. So let me ask you about Houston. Because we met when I was, as I said, doing interviews for pipe dreams, which is my first first book to denigrate book it was well, thank you kindly. And one of six by them all. Make sure here’s the latest one question of power. You don’t have to read it. You just have to buy it. That’s the bite on your Kindle and make a better royalty. When did you go to Houston? When did what what year did you move to Houston? 1998. And so now that’s so what, 24 years ago, right? How’s it changed? Has it?

Art Smith 41:23
You said it’s a vibrant economy? You know, obviously I came when I came there I was I had left the Connecticut office with the idea being an I would help build up the presence in Texas. And it it all worked out. I met people when I’ve got a tremendous connection of friends and family and business associates. And it’s a it’s an energy town. I mean, there’s a there’s no doubt about it that even in the worst of times, it’s still got CEOs, you know, in every major restaurant and you you can’t get away from it right now, but again, you know, you’re at Austin guy, but that’s you know, that’s because you like the weird. We just like we just liked the successful

Robert Bryce 42:12
it’s funny, but New Orleans you said at the beginning I didn’t New Orleans is your hometown.

Art Smith 42:18
Love New Orleans. Get back to New Orleans.

Robert Bryce 42:21
That’s where you’re that’s where you’re from. I

Art Smith 42:22
didn’t know your family was from there. Yeah, my mom’s family. My dad’s family. All my cousins. Oh, hope I get back pretty pretty regularly. No, I love New Orleans. And I think I told Jim, we’re working with a book about excursion steamboats on the Mississippi. And it’s just a great New Orleans. New Orleans is tiny, though. It’s a little town compared to Houston is just a monster. Yeah.

Robert Bryce 42:45
No, it is not in and I was just I was just there in March, I actually spoke at American Oh, what do they call the petrochemical refiners? Is that the name of the Yeah, a huge meeting, Ian Bremmer spoke as well that at that meeting of just a huge number of people, but I didn’t realize it until I walked around. It’s also one of the poorest cities in America. I mean, major cities in America that poverty there is remarkable. I mean, I Yeah, the especially just just incredible, you know,

Art Smith 43:15
but there’s also the Mardi Gras. Yes, I have never

Robert Bryce 43:17
a night which I’ve never been to that. But let me go back to Houston. So we met talking about Enron back then. And you had gone to one of these some of these analysts meetings with Skilling and so on, would affect it in run the the collapse of Enron have on Houston and and what have there been enduring effects? And if so, how? And if so, what

Art Smith 43:39
know the answer was, other than the fact that Enron had collected a lot of very smart people who are very ambitious. And you know, these when when they went to when it came apart, a tremendous number of people split off for other areas. It’s the after the after the forest fire, the seedlings kind of come up from the bottom. And so I think that it may have been may have sparked, you know, the beginning of the revival of why why Houston came back so quickly. And Houston Euston will bounce back quicker than most. I mean, it’s just a city where you know, you don’t you don’t like your house. Yes. Well knock it down. I’ll put another one in the restaurant over here. Close that and open another one. So it tends to be a very vibrant that way.

Robert Bryce 44:37
I think that’s interesting in my you know, I love Houston. I’ve always had had just great experiences there and in writing the book, I mean, people were very friendly. There’s that old line about anybody in Houston will have lunch with you once I’m not sure that’s exactly true. But but that that, that this the dispersion of talent after Enron is you know that you can go throughout the different energy sector was in gym he uses that Jupiter power I mean, for instance, and then the E O E. O G, and then you know, I run into people that are former Enron all the time right or knew somebody or you know had family or you name it that that, that but so the effect on Houston was kind of a rebirth, recharge then be with new with other people going out and starting new businesses or joining existing rich Kinder being one of them then yeah, come the pipeline magnate would be the most obvious example, right?

Art Smith 45:29
Yeah, absolutely. My partner for a number of years gave Chavez came out of Enron trading or written Enron something rather a very bright guy. So he bounced back very well.

Robert Bryce 45:42
Or just a John Arnold the other one now the billionaire who was a former Enron guy, and now is in philanthropy, right? He was a trader and made a zillion zillion he made a very large amount of money, just short of gazillion using the skills that he learned at Enron. So the city in some ways is still not necessarily defined by Enron. But this is just one other. One of the other things, examples of how the city retrieve revitalizes itself, or just that it gets reborn with different different people and different different companies.

Art Smith 46:12
Yeah, what? Well, don’t forget. Bill Gilmer who’s now at the University of Houston was the Economist with the Federal Reserve Bank and in the Federal Reserve Bank of Dallas Houston I division. And he wrote extensively about the shift in people around the bust the booms and busts of the oil business. And, you know, it’s the classic that, you know, when things got really bad, people shut down Medwin they shut down, pegasi shut down, Amarillo. And they all came to Houston. Right. And then these companies got around. And as they got got up and got going, and private equity, played a huge role in getting these new companies going. But when they started doing better, well, they you know, what, they moved back to Finland. I mean, that’s a good example that, you know, saying that you can’t get people to move to midweek? You can’t once they’re there, you can’t get him to leave. So it’s fairly I mean, I say that because Houston will pull it all in, when things are tough. And then we’ll disperse.

Robert Bryce 47:20
With, with with with the cycle with money. Yeah. With with money with the cycle. Well, let me ask you about that private capital, because I’m glad you brought that up, because I interviewed Joe Kraft, who’s a coal guy on the podcast a few months ago. Now. He’s a Tulsa bass guy, you know, I’m from Tulsa. his company’s Alliance resource partners. They’re the second largest coal miners on the East Coast, her on the Eastern US. And seven of his 14 banks were in a revolving credit line pulled out because of ESG. And I’ve heard the same in terms of capital availability in the oil patch. And I hear I see you shaking your head. So is there or what are there? Are there real capital constraints on the drillers? This is one of the reasons why you think we’re going to see higher oil prices longer is that there’s less capital available and from the traditional banks and lenders, and now in the second part of that is, are the private capital, like the end caps? Are the other private equity firms? Are they the ones who are stepping into the breach here in the in where the banks used to be?

Art Smith 48:22
Well, but first of all, you said, is there any money available in the traditional reserve based lending area? Are you kidding me? No, there’s no no RBL. And everybody’s getting squeezed down? If you have money, just pay it back? Well,

Robert Bryce 48:38
so I just want to stop you there. Because I want to make sure I understand what you’re saying, This traditional reserve based lending. So if I’ve got five drilling rigs, and I’ve got 100 prospects, and I say, well, these these will these reserves and they’re this many barrels, and I think I can produce this many barrels and therefore give me a loan for this amount that’s gone. That was a traditional model of financing for drillers, and that option is no longer right. It no longer available, is that

Art Smith 49:03
correct? That’s correct. Heard, so burned was the last cycle, and oilfield services double that. It’s really been

Robert Bryce 49:12
so as bankers say, yeah, we’ve seen this movie, we didn’t like it the first time. So go somewhere else.

Art Smith 49:17
And we’ve been trying to use wolves. Now that the company started to make money and I happen to have an Inside Connection here. There are new bank groups coming in, there will be a new, you know, switch over. Private equity is the, you know, the best thing that the oil industry can look forward to. Because that’s where the true entrepreneurs can start to build big companies. I mean, they’re, you know, it’s just, I’ve been around for so many years, I’ve seen some phenomenal this Matador being a good example. Now. I’m sorry, what does matter matter? No resources out of Dallas. Probably invested in that 20 years ago. What a $2 stock it’s a $60 stock isn’t producing 100,000 barrels a day, good people. I mean, you know, they’re just all these read a lot of a lot of problems along the way. But you mentioned Encap, I saw Marty Phillips, one of the principals just last week. And he said, they’re gearing up to go back into the market with a new fund. And even though the last one was 7 billion, they’d be happy to get three and a half billion. Well, three and a half billion doesn’t sound too bad. But I mean, you’re there, you know, they they are, they had been one of the most, you know, productive for new companies. And then in the downturn, they had to smash them together. So so many of the companies were recapitalized or so but the cycles turnover cycle has changed.

Robert Bryce 50:49
And that capital availability, then what I hear you saying is going to constrain the amount of drilling because there’s just not as much money available, is that or is that going to? Or is or are high prices going to cure high prices? That’s always the old saw. But if there’s not enough money to do the amount of drilling needed just for replacement of crude production, does that then it will recessions Of course, and supply destruction are always possible. But is there we’re seeing longer term constraints on capital? Is that a fair way to put it?

Art Smith 51:20
Absolutely. Well, the if you’re going to, you know, if you want to put together a business model or business plan, Robert, and say, I’m gonna go in and meet the guys and say, Here, we’re, here’s what we’re going to do. We got a group of 20 people, we’ve done geologic, we’ve done geophysical, we have engineers and things like that. All right, so how much you want 100 million dollars? What are you going to do with it? Well, in the most recent past, the answer was, we’re going to make an acquisition, we’re going to acquire somebody else’s assets that aren’t working quite as well, that they’re casting off. And then we’re going to use that to build a base around which we grow or sell this time. First of all, it’s hard to have any deals that haven’t been done that were probably should have been done. And I have to think that the exploration model, which is long been under under the gun is going to be hard to to sell again, because their exploration is still like going to the roulette table or whatever you want to call it. But exploration,

Robert Bryce 52:28
but you’re talking about wild canning where is that is I keep it was my understanding is a lot of the geologic risk with shale has been taken away, right, that there’s not that much more risk. So what are what are the risks? Are they technology risks, are they equipment risk? Is it mostly capital risk? Where’s the risk in the in the in the business model, then?

Art Smith 52:45
Well, the risk is in the the change, I would say is that you have existing places where they thought they had it all figured out. Let’s say the eagle furred, let’s say the Haynesville, the Austin chalk, you know, all the way up to Denver, Julesburg. And in Powder River, you know, hey, there’s a lot of America out here drills. I don’t know what the next one is, but I am somebody else’s looking for it just the way they did when the the shale idea opened up.

Robert Bryce 53:17
So you’re saying they they’re the quest then has

Art Smith 53:19
no rather there are out there and they want your money?

Robert Bryce 53:24
So So are you saying that there needs to be another shale, they need another formation, then another friend formation is that that that nation

Art Smith 53:31
that technique, and ability to get more out of it. I mean, all the, you know, the new new oilfield services using local natural gas supplies, rather than diesel. And I mean, the technology just didn’t stop getting better.

Robert Bryce 53:53
Well, and I think that’s a key point, because we hear this over and over about particularly with renewables, oh, the solar panel is going to be this much more efficient and the oh, this wind turbine, we’re going to make it you know, even taller, so more people will be able to see it, and then therefore, they won’t want it but it’s much more efficient and Lalalalala, all forgetting the amount of momentum and capital behind the oil and gas industry. And they constraints on those capital that are forcing efficiencies to make more produce more molecules with the same drill rig, same pipe, same all of this right? They’re getting more out of the each dollar invested. The scale of what’s happened in the oil and gas industry seems to me to be or the change in overall productivity has been far greater in oil and gas and it has anything else

Art Smith 54:35
in part because they had to. I mean, it’s been my involvement with being on an exploration production company board and the production and the natural gas in the Rockies. Actually, was that when it was but in a deal it was put together by private equity Yourtown the company was acquired Unit was viewed as you know, unnecessary by the prior owner. And, and the company started, you know, fixing up 200,000 acres of this play. And the prices kept going down. And they, you know, basically the only way they stayed in business was like, driving their costs down. Right. But she was driving people cause every cost you can think of. And then in and saying, why, because of hedging, you know, about hedging, right. Yeah. So that hedges the most of it, almost other production at $2? Well, the market takes off now. And we’re selling Ark acid $2 instead

Robert Bryce 55:38
of eight, which is pretty painful thing.

Art Smith 55:42
Yeah, the the only way we can make money is to produce new gas, that it’s coming from different formations, or refractions are called. And so what I hear you saying we got eight hours, a million Btus it sure makes a difference in terms of the profitability of the business. Sure business goes from being just hanging on by a thread to being a very interesting growth business.

Robert Bryce 56:07
Right? Well, so what I’ve heard you say, and I put it there, maybe I’m paraphrasing, but the oil industry had to get more efficient if it was going to survive that that’s been the that. And I guess, we’ve talked about that in different ways, this whole hour so far, right, that this has been the story of the survival of reducing costs and increasing production throughout every part of the of the value chain, I guess, to

Art Smith 56:31
write us and that was the Joby foster model when he first started new field. He didn’t know it was a good time to do anything. But he he knew there are a lot of opportunities to be right to make things happen. Right. But but the fundamentals were dismal. Right? No, he may.

Robert Bryce 56:50
Well, so I want to return to this. And I know, you know, the risk of talking, saying, well, you’re just talking to your own book. And I’m not making that inference. But I just was, you said you invested in what you know, right? And you’ve been in the oil and gas. But I mean, it just seems today that when it comes to any asset class at all, just seems weird. I mean, you know, and maybe that’s why oil and gas suddenly is having this reach, you know, this second run or this yet another in the site, many cycles of oil and gas suddenly being good, suddenly being bad. But it just, I’ll ask you the question this way, in modernizing the last 10, or even 20 years, has the asset classes, the commodities been as volatile as they’ve been in the last three or four? I mean, because it just seems copper was going toward the moon, suddenly, copper falls, is gonna be the next thing that Bitcoin falls apart, gold doesn’t do anything. It just seems like the world the economic system as a whole is just being rocked. And there’s not much sensibility or even faith in it. I guess it would be another way to my overseeing this or overstating this.

Art Smith 57:54
No, no, you’re bringing me back to an observation that goes back to very early in my career, when I was became an oil analyst in the mid 70s. Because the oil industry was just flat, boring, nothing was happening. Oil prices had moved up from $3. And eventually, but come 7879 and the fall of Chava, ran, prices soared. And all of a sudden, oil went from being totally out of favor to being the only thing in favor. And the sector marked me if I’ve got the right numbers, the pie became 20, something 25% oil and oil service and article and blah, blah, blah, and everything else from everything else. Money was pulled out of other industries to feed the oil industry. Well, great, over capitalized and overdone, then that peaks in the early 80s. And it begins this long slide that hits, let’s say 10 years ago, oil was probably oil. So the oil sector was probably 8%. What’s a

Robert Bryce 59:02
doubt now you’re talking about? You’re talking about the Dow? The Dow Jones Industrial Index? Yeah,

Art Smith 59:08
yeah. What do we call the pie of you know, where the capital is? Right? And where did where does it hit and 2022 and a half percent. So you went from being 10% You’ve entered being something that had was meaningful to being a cast off? Well, you know what, it’s back to four and a half percent. feeling a lot better about life.

Robert Bryce 59:31
Right? Well, it reminds what you said there’s just one art Berman, who you probably are familiar with oil economist. His line is oil is the economy. He said he also says energy is the economy but is that what we’re learning now? I mean, is this a lesson that’s being relearned that these ideas around alternatives the energy transition oh, we’re gonna go to electric vehicles all this other stuff. Like you referenced earlier? I’ve been on I’ve been flying a lot. I’ve flown in flew yesterday. I’m flying again and a couple of weeks for you know, I People are in airports are crowded, the highways are crowded. The truckstop buches is booming. I was in bikinis in Madisonville, Texas. Last week, man, was it mobbed? I mean, you know, just then people everywhere by and deep beef jerky and that. So is this a lesson we’re just gonna have to keep relearning that oil is the economy, there is no replacement get over it and this is the way it’s going to be for a while.

Art Smith 1:00:26
Well, let’s listen, I’m not my career’s already gone for quite a while. I don’t know where we’re going from here. But I would say in in least five years that I kind of pay attention to going out. I think oil is going to be very important. I think there’s going to be a rebalancing view that, you know, we can have a world economy that exists that doesn’t have to immediately switch to low carbon, deep sequestration and all the way in the plant.

Robert Bryce 1:00:57
I mean, that it just can’t the physics I mean, the physics of it, there is you can’t make a switch that quickly.

Art Smith 1:01:02
Yeah, well, you you’ve written about it, and I follow all that. I mean, the issue is, is you know, the expectations of zero carbon, you know, what balance and all that? I guess so off the wall unpredict on realistic, but as far as far as where it goes from here, King Hubbard said, sower and even and I’ve got meditate, hey, who’s gonna? Who’s gonna argue with the sun?

Robert Bryce 1:01:30
Well, okay, so that’s interesting if you’re willing to make your supply chain, at least for the moment dependent on China with poly silicon and the rest of it, but the same with rare earth elements for wind turbines and EVs. But that’s that’s a whole separate discussion. We’ve been talking for roughly an hour here aren’t so I don’t want to keep you too much longer. But let’s go our Yes, well, it’s getting there. Yes. It’s five o’clock somewhere. So So what are you reading? I know you’re you’re doing a lot of fishing. You’ve got you know, family duties. You You’re incredibly busy. For a lot of the times what are you have books that you’re reading? Now? I know you’re reading some of your old your old writing. But what’s what’s got your attention on the bookshelf?

Art Smith 1:02:15
I read the bio of Benjamin Franklin. That was that was quite good.

Robert Bryce 1:02:21
Oh, the Walter Isaacson Isaacson that just came out? Yeah, that’s,

Art Smith 1:02:25
that’s a great book. It’s also taught me a lot about what I didn’t know about Franklin in the world at the

Robert Bryce 1:02:33
time. And everyday. He’s an incredibly interesting guy. Yeah. Oh, my goodness.

Art Smith 1:02:37
He was a scientist, and he was a poet, and he was everything else. Anyway, that’s probably the one that I’ve reached out from a little bit. Everything else I’ve been reading recently has, has to do with the steamboats on the Mississippi deal that I’ve been, you know, the book I’ve been working on. Oh, right. And

Robert Bryce 1:02:59
so tell us about this. Book it No, no, that’s good. Look, I’ve seen we’ve I was in Houston a while back and we looked at some of the photos and so on. Just give us the brief, brief rundown on the book that you’re now finishing, and that you’re going to be publishing here in the next few months. Give us the title and the and the jacket copy. We’ve talked about this give us the very brief pitch.

Art Smith 1:03:22
Right. Well, the working title right now is jazz. And the big smoke kinetic smoke canoe. I don’t know why. But anyway,

Robert Bryce 1:03:34
it’s your book. It’s your book. I’m gonna I’m gonna help you jazz in the Big Smoke canoe, which is about your family’s history in the steamboat business, right Mississippi River.

Art Smith 1:03:43
Yeah, a big smoke canoe was a term that the Native Americans used to define steamboat when they first came on the river. And my great grandfather was key and in implementing what was at the time called excursion steamers, when they moved from being packet steamers, which were people and goods to only people, and then the people area 1900 built the first purpose boat called the Jay is named after himself, and he made a dance floor music. And then from there, they he and his sons, you know, developed and created a business around there where they were over, all the way from New Orleans to Minneapolis, St. Paul, up to Pittsburgh, and that all these boats going including the probably the most famous one was the admiral out of St. Louis. That was a basically an ocean freighter of sorts. It was 310 feet by 90 feet. It can hold 2000 people on the dance floor, and the jazz came in when the family hired fate Marable He hired all these guys including Louis Armstrong. So the boats moved up and down to Mississippi and they introduced all the port towns and what else to jazz? Or what was emerging jazz?

Robert Bryce 1:05:12
Right? Well, that’s great. Interesting story in the your family connection there is quite intriguing as well. So I’ll definitely be on the lookout for that. So the last question aren’t you know, you’ve been on the podcast? Well, you haven’t been on the podcast, but I think you’ve listened to it before. was so what gives you hope? What makes you optimistic in a time where we’re there’s a lot of upheaval, a lot of uncertainty and a lot of different areas. What makes you optimistic?

Art Smith 1:05:35
Well, there are very many things, Robert, but I would say the most is the fact that there is such a greater feeling of transparency and change and in some of the work that that you’re doing, and others that we don’t, we know, energy is an issue for us the world. And we know that carbon and change like that are issues. But there’s, you know, tremendous amount of talent and capital and energy being directed. So I think I think we’re going to fix things. I don’t think it’s going to be just, you know, craziness as we’ve had recently. I have to say our president said that Exxon has more money than God and I’m saying I’m sorry president might you have more money thank God it just uh you don’t spend it as though it’s excellent.

Robert Bryce 1:06:34
And the mighty gotten the companies wrong Apple has more money than God What was your What did they see that that thing the other day? They were there was criticism about the oil companies doing by by x. And I think apples buybacks were I mean, leaving the oil companies.

Art Smith 1:06:48
There’s a good example. They know what they’re doing with their money and they’re not wasting it.

Robert Bryce 1:06:52
Right. Well, listen, this has been great fun to catch up our we’ve been been friends a long time and great to be able to talk about some of these things and let other people eavesdrop because we’ve had many of these conversations about the markets and Enron and Houston and so on over the last many years. So my friend Art Smith, he’s the author of something from nothing Jodie Foster and the people who built Newfield exploration. He’s also the president of triple double advisors. That’s a Houston based energy consulting and investment firm. You can look him up there on triple, triple double advisors.com advisors. Yeah. So our thanks again for being on the power hungry podcast is great fun.

Art Smith 1:07:32
Thank you, Robert. Come on down to Dallas and it looks some of the birds we have down there. We have a wonderful wildlife refuge near my house.

Robert Bryce 1:07:40
Oh, yeah. No, I that’s a good invitation. I’ll definitely take you up on it. Oh, well, thanks to all of you for that. Thanks for being on the podcast and thanks to all of you in podcast land for tuning in and make sure to tune in for the next episode of the power hungry podcast. See you