America's Energy Future with Jay R. Young

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1:30Hello, I'm Anthony Scaramucci, and this is Open Book, where I talk to some of the brightest minds about everything surrounding the written word. That's everything. That's from authors and historians to figures in entertainment, political activists, and of course, Wall Street. Before we dive in, make sure to follow or subscribe wherever you get your podcasts. And don't forget to leave a review. Good or bad, I want to hear from you. I want to hear whether you're enjoying it or where we can improve. And I can take the hits, so let me know. If you don't like something, say it straight. Now let's get into it.

2:14Hi, and welcome to Open Book. I am your host, Anthony Scaramucci, and joining us today is J.R. Young. young. J.R. is a entrepreneur podcast host. I've done his show. Thank you for having me on. He's a philanthropist. He's an author. And the title of the book is The Upside of Oil and Gas Investing, which I think is a very topical book for where we are right now and where we're going to be for the next 50 years, Jay. So we'll talk about that as well. It's great to have you on. Before we get into the book, regale us a little bit with your background, your upbringing, how you got into this space and how you started your show yeah i'm great thanks thanks and thanks for having me on i appreciate that um well i love reciprocating people on each show i think that's that's well we're doing a home and away you put me on your show i want to bring you on i want people to learn about what you do and your book i appreciate that yeah i appreciate it yeah because i'm a i'm fourth generation oil and gas guy so my great-grandfather you know my great-grandfather and great-grandmother a.k.a.

3:13turner and grandma birdie they had 12 kids you know back then there's no tv i guess so they had 12 had 12 kids if you're a man you're in the old business and if you're a woman you're married to somebody in the old business so man i mean it was just all in our family all our reunions everything all we talked about was the old business thing he grew up he came landed his last uh 30 years of the business was in uh west texas permian basin you know back in the day when there wasn't all the big fracking going on or just there were shallow oil and gas Wells, but he grew up there. I spent a lot of time with my grandfather.

3:51My grandfather growing up was also in the business, and I spent a lot of weekends with him out in the oil field. You know, as soon as he let me drive his pickup, which is the old three-speed on the column pickup, as soon as he let me drive his pickup, you know, I was with him, and I would go, and he would, every time we would go by one of those oil wells, he would tell me to slow down, and he'd roll his window down. the old-fashioned way with the crank, and he would listen to that oil well to see if there was anything going on with it or any noises that weren't normal. So I spent a lot of time there.

4:27And then after school, I went into the stock business at first because when I was going through school in the early 80s and the mid-80s, man, oil and gas was not very favorable, and prices have gone from— $10 a barrel, man. Oh, yeah, absolutely. And we could not make money. and my dad, who'd spent some time in the business, got out and told me to stay out. So I did for the first five years, and then in 1990, I decided to get into it. I'd been in the stock business. I thought real estate or oil and gas. I decided at that point, oh, let's go into oil and gas, and I did, and it's been incredible.

5:04I don't know where I'd be if I'd been in the real estate business, but, hey, I'm in the oil business, and I love it, And we raised money for funds and we're drilling. We're drilling. We're drill baby drill right now. Well, listen, I think it's important for people, even environmentalists, non-environmentalists, whatever stripe you are, we use energy. And our industrial society has been set up to be reliant on fossil fuels. And it's going to be a part of our lives, whether we like them or not. And by the way, I want to get your reaction to this because I have a lot of friends that own Teslas. Again, I am a fan of Elon Musk's.

5:49I'm also a proud owner, a private owner of SpaceX. But an electric vehicle is generating energy, and the energy is being produced by an electrical generation plant. Most of those plants are either coal-fired, natural gas-fired entities. Am I right or wrong? So the energy is coming from oil and gas, whether you're using it at an electric outlet or not. And so tell us a little bit about that situation. You're from Texas. So, you know, make the case for oil and gas. Yeah, well, true. I appreciate that, Anthony. I'll tell you, you know, the big thing is what I look at and what I think a lot of other economists look at is your demand for oil.

6:33And when's the demand for oil going to start going down? and you know people say five years ten years goldman sachs whatever they your old your old company you worked with they say yeah i ate 10 years from now 15 years from now the demand for oil is going to go down but not until then because teslas do use a lot of natural gas they use a lot of oil there's there's there's tires on those you know we don't want those tires to be fifty thousand dollars a tire if if we don't have oil and gas so we definitely do and i know that that George W. Bush in his 2006 State Union address, he said, we have an addiction to oil.

7:09And I don't, I want to, hey, I'm sober 30 years, so I don't like the word addiction, but it's a necessary evil. There is a word called addiction. We have an addiction to oil. Matter of fact, we produce only about 13 million barrels of oil a day in the United States, and we need over 20. You know, so we do need a lot of oil and our refineries in the United States can't even handle all the oil that we produce here. So we've got a big need. I don't really feel like that with population. I do know there's there's you know, we talk about the four the four T's, you know, with Trump tariffs, taxes, Teslas.

7:50What's going to happen on on demand and what's going to happen with all the other great four T's that's going on. I know that's probably a 12-episode podcast by itself. Talk about that. But when we just talk about the need for oil, we're going to need it for a long time, especially for my lifetime. So put your investor hat on for us for a moment. Yeah. And let's talk about our dollars and cents. The book is called The Upside of Oil and Gas Investing. Why should we have a piece of our portfolio in oil and gas investments? Yeah, that's a great question. And then again, and then how do you do it?

8:26Is it through syndication? Is it buying the majors? Is it buying stocks or bonds? How best to do it? Yeah. And the reason why I wrote the book is because I had a lot of my friends that wanted to invest in oil and gas. And they'd come to me and I'd go, I got a hundred grand, 200, whatever. And I'd say, oh, hey, yeah, great. Let's do it. And I said, I really do feel good about this project. And if we do this and this, we're going to make money, you know, and I didn't know this. you know, I did. And then I kept trying to do better, better, better. And I'm like, you know what, this doesn't work. This, this philosophy of just drilling a couple of wells and letting it go, is it really going to work?

9:05And they may or may not get their money back, but it may take three to five years. So, you know, a lot of investors are, are, they like the tax benefits. You know, we have a hundred percent tax write-off with our funds and our projects. So they like the write-off, but then they also like to make money. So what I did is I thought through this after decades of being in the business and I'm like, okay, I'll kind of walk you through our$35 million project that we have. It's a five-well project. We're going to bring in$35 million and we're going to go drill five wells. And then after we do that, we'll send out monthly revenue checks.

9:44clients get 100 % write-off, probably 80 % write-off the first year. They get monthly income off that investment. And then after that, we'll take that asset after we've drilled those five wells, and we'll take that to a bank, and we'll say, hey, we've got PDP, which is a producing property of X. And they'll say, okay, here's some money to go drill some more wells. So my goal is to turn$35 million into$100 million. How do you do that? Well, you do it by using leverage in a way that you're not hurting the investor. You're sending out monthly revenue checks to them, so they'll get their money back in a few years just by the monthly income.

10:28but you also want to create value and explode that value. Maybe not explodes the right word, but just to increase the value of that asset so you can sell it. So you have to have leverage. You need income, monthly income, but you also have to divest it. We talk about at King operating. We talk about ADD, which is not necessarily the Adderall, you know, attention deficit disorder, which a lot of us entrepreneurs definitely have Anthony. We can talk about that. I confess to that. That's for sure. But it's called ADD because we acquire, develop, and divest, right? We acquire the asset. But it's got to be a great asset in a great area, and you have to develop it.

11:12How do you do that? Well, you do it with first equity, 100 % equity. We go in and drill five good wells. Right now, we're drilling in the middle of 2 billion barrels of oil that's already been produced. It's not like we're going out and looking off the shore of, you know, wherever and trying to make a huge discovery. You can't make money there. I mean, you can, but it's like a one out of 10 shot. I mean, the, you know, the batters in the Major League Baseball, you know, they bat better than 100. So, and that's not what oil and gas is. Oil and gas is going into an area that's developed and by drilling wells and using that as leverage.

11:53You don't use it for leverage first. They won't let you. But clients like 100 % income. They like tax write-offs. So you take the money in first. You drill the wells. Use that as collateral. Do that two, three, four times, and your money turns into – your dollars can turn from$35 million to$100 million. What are the tax benefits going on? You write a lot about that in your book. Tell us – take us through. You've made the case for the investment. You made the case for the cash flow thesis, but tell us a little bit about the tax benefits. Yeah. Well, like last year, I was talking to my CPA and he says, you need to make sure you invest in oil and gas.

12:35And I said, well, or invest in something because you got a tax problem. I said, okay, hey, what if I lowered my taxes by three or 400 ,000? He said, oh, that'd be great. You know, how do you do that? And I said, well, obviously he knows because he's been around me a while. But what I did is I invested$500 ,000 in our fund at the end of last year. Okay, so I'll get a write-off of$400 ,000 because it's about 80 % of a$500 ,000 investment. And I'll take$400 ,000 write-off. So if I made a million dollars last year, let's say I don't pay taxes on the million dollars, I'll pay taxes on$600 ,000 last year.

13:15So that'll save me considerably in my tax bill come on April 15th. Well, we don't pay tax on April 15th, but you get what I'm saying. So I'm trying to decrease my adjusted gross income down to a good dollar amount. And so that's kind of a roundabout way on how we look at it, because we do know we're going to pay taxes and we just want to lower that tax bill. Yeah, no, listen, but it's also, there is an incentive as it relates to the way the tax system is set up to get into the industry. What would you avoid? What are some of the things you would avoid in this industry? And who's the ideal investor?

13:57Yeah, good question. Very good question. Matter of fact, that's the exact reason why I wrote the book. I wanted to get our name out there and just tell people, hey, man, those guys that call you on the phone, all they're looking for is one thing and they're looking for your money and they're not going to they don't care if you make money or not maybe i shouldn't say it like that because i come from that industry i learned that i know it i i've been on that side of the phone where i'm calling people up and i want them to make money i do i really want them to because i want them to come back over and over and over again but the chances are really good on any retail oil and gas deal they're not going to make money they're just not going to make money that's why we restructured a retail project that you could get in and increase the value over a short amount of time by using leverage, going into a fund and doing that.

14:46That's the reason why I wrote the book, because I wanted people to know, hey, Forbes, you know, I got a Forbes book and I wanted people to know, hey, you know what? I've got people that want to increase their tax dollars, but don't do it just for the taxes. I know I write about that, but people, that's the catch. Because people in New York or California, we don't have a state income tax here in Texas, but still a lot of people in Texas, they make money. They want to decrease their adjusted gross income. So we have fund of funds that are participating in the projects now. We have high net worth individuals, anybody with a tax situation that, like I said, don't do it for the taxes.

15:31but hey if you're going to do oil and gas and if you want to diversify find somebody like us and i don't know anybody else like us but if there is you know god bless them i'm glad i'm just glad that they are because i stood up in front of you know a few hundred people the other day in a conference and there was some oil and gas promoters out there and i said hey don't invest with all these oil and gas promoters out there unless they know what the hell they're doing because you can you can just and you do it and you hope you hope you make money and you see your check because the wells that you produce or participate in, they decline.

16:04Those wells decline. You may be producing 20 % of a barrel of oil of what you did the first day. In one year, it may decline 80 % the first year. Well, good luck on getting your money back. And I'm not saying it's a bad deal, but you have to use leverage in that, and you also have to divest.

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17:07See a Lowe's Red Vest Associate or visit Lowe's.com slash holiday install to get started. Lowe's. We help you save. Basic install only. Date restrictions apply. Subject to availability. Install by independent contractors. See associate for details. Contiguous U.S. only. you know i i uh i think it makes great i make it i think it makes great sense i want to go to renewables for a second because there's an angle to renewables coincident to oil and gas you write about that as well and so tell us a little bit about that what what are some of your expectations there yeah and what a lot of companies just came out and said hey okay we're not going to really spend a lot of money on that because it's hard to make money on that so even though it makes sense for the economy and biden was really 100 i mean he was like yes let's do this and let's do this and let's cut off oil and gas oil and gas production and all it it's it's tough to make money on renewables it's tough to have alternative types of energy other than what we already know we already have the infrastructure set up we already have a lot of you know it's a four trillion dollar industry.

18:17It is right on, you know, like number seventh industry in oil and gas. So we're not going to go away anytime soon, but also renewables. It's hard to catch up and it's hard to become profitable, but I was on routers or something the other day or somebody asked me questions about this and I said, well, hey, two reasons. Number one, politics. You know, people love to hear about the politics of renewables and not using as much oil and gas, but number one uh then then number two is you know does it does it make sense financially or can you make money you know yeah no it makes sense you you you have a great show jay you know i've been uh plugged into it now one of my friends introduced me to you um virtually actually before i met you i met you because i was tuned into your show tell us about your show the jay young show which of course I was a recent guest on.

19:11How'd you get it started? How do you think about curating your guests? What are the topics that you like discussing? Yeah. As you know, wealthy, healthy, wealthy, and wise, I guess, you know, Hey, we talk about, we may talk about the Bible. We may talk about your success. We may talk about what's going on with you. We do have a Wednesday or Monday, three o 'clock central. We may talk about only oil and gas and what's going on. I may have my land man on, which isn't Billy Bob Thornton. Billy Bob, if you're out there, you're welcome to come on the show anytime. We'd love to have you. Do you watch that show?

19:46Is that show accurate depiction of the industry? Yeah, that's good. You can also watch me on TikTok. I'm doing the true false land man questions on it, like Jerry Jones. I mean, you mentioned on my show, you mentioned that the New York Mets, they need – Cohen needs to let some of the decision-making go. Well, I'm a Dallas Cowboy fan, unfortunately, and Jerry Jones doesn't do that, but he was on the show. And he mentioned, like, I drilled four wells in Northern California near outside Palo Alto, and I made enough money to buy the Dallas Cowboys. That was false. There's a Boobs and Babes coffee shop outside that you drive through that full field workers starting at 5, 530 in the morning, they stopped and that's true there are places like that in odessa uh with women in bikinis handing out coffee first thing in the morning that would have been a great entrepreneurial uh deal and there's just i think it's a lot of hollywood but it's like 30 40 percent of it's true and then everything else is kind of compounded you know like like wells blowing up wells don't blow up like that you know um a lot a lot of there's a lot of good stuff on it but it it was really good in the industry to, to see the oil and gas industry.

21:05And we're using a lot of that material and, uh, you know, to help, help, uh, you know, tell more people about what's going on in the industry and, and how, how can you invest in oil and gas? Hey, I'm not telling you you should, I'm not, I think you should invest in oil and gas, but I'm not telling you to invest in oil and gas, but if you do, you know, I think you should really look at our product very, very hard. But, uh, yes, I think it's really a great, great show. So, so let's go to, let, let, let, let, let, let's go to Jerry for a second. If you don't mind me asking, cause I love him. He's been at my conference.

21:39You and I talked about the salt conference. Yeah. And I thought his depiction on the show and the story that he told, which he told at our conference, by the way. So I know what Jerry said to John Hamm and land man is true, you know, and it was, and it wasn't acting. Cause that was Jerry telling the story. And I'm sure he's told it many, many times. And so the question I have, though, is controversial. I got to ask it, though, okay? Because I love the Cowboys from a distance. I'm a Roger Staubach fan. I remember Drew Pearson. I grew up with all these people watching them in the games, Tom Landry, et cetera.

22:15And Jerry won twice without being involved in the football operations. He won twice. He's been involved with the football operations for 31 or two years since he won the Super Bowl twice. What is the stubbornness there? What is the definition of insanity is you repeat the same thing over and over again without, you know, you're expecting a different result, but you're not going to get one. Okay, so what, what, what, go ahead. Give me the, give me the brain chemistry there. You're a student of people. Yeah. You know, I think it's more about family. and and he says in the show and he is tearing his eye and he is very emotional and it is true if you go up to the star here here in frisco up north of where we are today but if you go up north you'll see you'll see jerry jr there you'll see steven you'll see charlotte you'll see them they're at the they he does talk about family and he is 100 engrossed in family he and every time you see him out he's with his family I mean it's like there's there's no question about that but it's like um it's like um um Magic Johnson you know after the after the Redskins or I'm sorry not the Redskins the Com the Commanders yeah Commanders when they won one of those playoff games he says you know what we gave we gave the ownership we got new ownership which gave the coach which gave the GM but Jerry just loves getting his hands right in the middle of everything and he won't he won't let go and it's like he'd much rather he'd much rather deal with his family or and and he's done extremely well financially you know 10 15 billion whatever he's worth but he he just won't let it go family wise he wants his family to be there and and it's all about you know is this for business or pleasure or family or whatever and he just won't won't let go all right i get it i just I have to ask.

24:11Okay. So, so Jay, how do people find you? What's your Instagram? What's your, your, you know, social media? Yeah. If you Google Anthony Scaramucci's best friend, new, new best friend, that's Jay Young. No, but on Twitter, you're at Jay Young. jr young text yeah jr young tx on twitter all right we're on uh we're on linkedin we're on instagram facebook all the other all the other if you look under king operating.com uh that's where we are as well um i did have jr young.com um but uh you can find us find me there and write in. I'd love to reply back to readers to find out what they think. What can we be doing better?

25:04How can we help you? All right, good stuff. I end my podcast every week with five words. We go through your book. We went through a little bit of your show. I'm going to list the five words. You're going to give me a reaction to the word. It's almost like a raw shot test. You can give me a statins. You can give me a word, whatever comes to your mind. I say the word risk. You say what? Oil and gas. Mitigating risk. Mitigating risk. Okay, so when you hear the word risk, you think risk mitigation, and you think oil and gas. Yeah. What about reward? Yeah, oil and gas. The new way, the new model. Okay, and that's really the central tenets of your book.

25:44Okay, so let's go over these. Then you're going to be able to predict the last three. I say oil. You say what? I should say it's definitely a needed product. controversial, you know, but, but also a very needed demand. I think about the peak demand, what's going on and how long are we going to, we're going to need, we're going to need oil. We're going to need oil for a long period of time. And I just think it's, it's not going to wait anytime soon. So it's funny because when you, when you say the word oil, I think the most important commodity in the world, that's what it is to me. You know, I mean, we, everybody needs it.

26:23Oh, you and I couldn't be talking to each other right now. We didn't have it. we wouldn't have the electricity on. Yeah. I say the word gas a little different from oil. So what do you say when I say the word gas? Yeah. I, I think about natural gas instead of a tank of or a gallon of gas for your car, but I think about natural gas and I think that it's a great product and we're starting to LNG export a lot of natural gas here. So it's a clean burning fuel. It's something that, um, definitely needed. And there's going to be a lot more demand for it because of the, you know, that's liquefying it.

26:53And there's a lot of, you know, Trump's opening up some of the some of the ports uh in the down so we can export it so i think there's a good good need for it and um i i love drilling for natural gas because they're so much easier than oil because there's not as many moving parts but that's just on on my side of of would you drill an oil well or a gas well i grew up with oil wells and pumping units but gas wells are very very easy to drill and there's there is also a big need uh need for that as well in the united states okay and and more energy efficient than oil or no uh you mean uh yeah cost wise yeah yeah yeah because it there's like i said there's not as many moving parts and there's not you know pumping units and and downhole motors there's rods there's tubing there's there's all these different products and you have to you know uh and gas as you can imagine gas coming out of the ground and how fast it comes out of the ground is a lot better more efficient to come out and just go right down the pipeline into um you know and goes right straight down the pipeline instead of oil which comes out in a you know liquid and it has to go up and has to go into a barrel and then you have to transport it out of a barrel and your pumper has to you have to have a pumper that goes by there every day and measures how much oil is in the tanks.

28:21Well, not today as much. Most of our wells are by Skylink. But a lot of them are. But natural gas is so much easier. It's so much easier to drill and operate than oil. All right. Investing. I say the word investing. You say what? I say I want to put together the best investment, oil and gas investment product available for investors to come in. I mean, for people that want to put in less than$100 million, we have a$100 million fund right now. We have a$35 million fund, but I want to put together the best oil and gas investment vehicle that I can for investors. That's my legacy. all right and what's next for you jay you know i think after this after being on your show man who knows right i mean sky's sky's the limit no sky my kids to grow up i need to read the bible every day i should do um and and uh i want to be a better person i want people i don't it's not about respecting me i want people just to listen to me because i want to give plenty of knowledge out for for not only the jay young show was originally for the 16 to 22 year old so i could tell them stories about people like you how did you get to where you are i mean man you've been extremely successful there's a lot of yeah a lot of things they're learning yeah how can we how can we fall on our face and get back up, which we talked about on, on, on the show, which I really love.

30:06How can we do that? That's what I want to do is I want more people. My wife says, you know, what, what are you, what are you doing? This Jay Young show? What do you, you know, what, what? And I said, you know, I wanted, I want, I want people to have learning experiences. You know, I want to know that, Hey, you know what, if, if somebody ever, ever said, Hey, I wanted to go into real estate, or if I want to go into whatever the case may be, you know, they could listen, they could listen on the Jay Young show and, and, and be resourceful, be thoughtful, be, be, you know, something that they, they would appreciate.