Oil and Gas Startups Podcast

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1:12 What's going on, Wildcats? Welcome back to another episode of the Willing S for us podcast. Yeah, my buddy Scott Brinkman here today with royalty guardian Scott. What's going on, man?

1:21 Glad to be here. Beautiful day in Houston. Beautiful day in Houston There ain't many of them. You gotta find the grease and dry. We gotta take advantage of it. You're in from Austin. Right.

1:32 Short shot. Nah, not too bad. Into the west side of Houston. Two and a half hours. Yeah, not too bad, man. What is it that you guys do at royalty guardian? Short story is we help mineral

1:44 owners. And so my background is in investment management. And I put that investment management lens on somebody's oil and gas mineral. And not to get too deep, but the short story is you got to

1:59 know what you own.

2:02 You got to know that verify that you're getting paid, right? And you got to have a system stay on top of it. And until now,

2:12 everything's dominated in Excel. You get all the data from Excel and it's just overwhelming.

2:19 We did a suspense verification. We had a client that got a suspense payment. We were expecting 8, 000 lines of data. We got 80, 000 lines of data from the operator that we we had to parse through

2:35 to see if they were getting paid, right? So a lot of times, you know, royalty owners are, you know, the people who own the minerals. Sometimes it's been passed down for generations. That's

2:45 kind of the, I think that's, that's one whole category, right? And so they're not necessarily equipped to handle this kind of information, particularly if you have interest in a lot of different

2:53 wells. Um, there's not really anybody who's looking out for them necessarily, right? And so it's kind of just like on the trust system of like, Oh, we, we own X percentage of, um, you know,

3:05 this well or these many wells. And we're just kind of expecting to kind of get paid, uh, you know, properly. And then you have the whole another category of the investor side, right? Who's

3:15 going out and buying a whole lot of, um, you know, kind of not outworking interests or overriding royalties. Uh, and then how do they, how do they manage that? And who's looking out for them?

3:25 And so I think that this is, uh, it's interesting because I haven't seen anybody else do what you guys are doing. You're kind of like the, I don't know, the, the protector of the mineral owner,

3:35 right? Yeah. So there's a lot of, there's a lot of, there's like a lot of from software out there, like kind of managed different things, but walk me through where exactly in the market, you

3:43 guys play.

3:46 Our strong suit is, is twofold One, I would call them new mineral owners,

3:53 we got started. first three clients came to us with bankers boxes of paper and said, Guess what? I just inherited this. What is it? They didn't know the land side and they're like, I'm getting

4:04 these 500 page check steps. What does it mean?

4:10 That's our forte and then

4:13 we also are talking to a couple mineral managers, mineral buyers because they haven't built the accounting systems and all everything on the back end.

4:24 They just don't have that infrastructure. They call it having a limited bandwidth and it's taking us three, four years to build this out and it's probably

4:38 250, 300, 000 dollars a capital invested. It's not easily done. There aren't any off-the-shelf solutions. I want to dive into the, what are the other solutions out there? Do you guys you guys

4:50 can be with anybody. You've mentioned the investment-making kind of background, right, and kind of applying that lens to the whole mineral owner space way. What's your story? What's your

5:02 background? And how do you guys kind of stumble across this idea? Okay.

5:08 So my background went to undergrad at Austin College, so I was used to small towns in Texas and I went to graduate school at Carnegie Mellon and was in data intensive This was back in the mid-80s

5:23 where you would meet somebody on campus, you would meet a girl and you could do aware and start sending them emails. That was 1985, that was State of the Yard. State of the Yard before you slide

5:34 in the DMs on Instagram. Yeah. Exactly. So I went from there to work for a train council in Austin and we wrote credit reports on all municipalities, so we had to travel to all of these

5:47 municipalities and then condense all that into what was a paper form. And it was just a paper denominated or dominated business. We transitioned it from paper into, gosh, I don't even think Excel

6:03 was right back then. So

6:07 that's kind of been my mantra or my experience going from very data-rich environments to paper-based environments, trying to automate that and then bring that automation to the individual. As you

6:24 mentioned, investors,

6:29 big funds, big minerals, they've got all this stuff wired. They have the resources, they have the accounting expertise, and it's worth their while to stay on top of this. They've got all that

6:39 wired. Smaller guys, they don't. Yeah.

6:44 'Cause they don't have the bandwidth, as they say 'Cause it takes four years and 200, 000, 300, 000. this. Yeah. So they sub it out. So how did you guys come with the idea?

7:00 You know, we got started or the idea came to us in 2015 when a very colorful lady in South Texas called a friend of mine that was a land man, he signed her to the NPRI in, he called me, he said,

7:16 this lady's pissed. You want her to help? You want to get in on this? I'm like, yeah, sure. She said, you know what? Chesapeake put me in suspense. I used to be a bookkeeper and I know them

7:29 sons of bitches are cheating me. Can you boys help me figure it out? And it's like, yes, man. I mean, it's like helping your 80 year old mother, 80 year old grandmother.

7:45 So she had a title issue. We did the title work and started and got her. She hired a lawyer to litigate the title park. And then I started looking at her check stubs and the inner banker took off

8:02 with me and

8:05 she wasn't getting paid right. And by inner banker, I managed municipal bonds in the trust department at Chase for 12

8:15 years, three and a half billion. And I had my name on

8:21 the first, when chemical first started attacking that money market fund, I had my name on the portfolio. So the SEC knew about it. And I bring that up, not to really impress people, but I come

8:36 from big numbers. You would add value in a portfolio by finding anomalies. You would find value in big sets of data and you go buy the value, right?

8:49 so we could use a lot of quantitative techniques. do that. But on the other side, um, there was the SEC and my boss is impressed upon me real early. They said, you know, imagine your worst

9:04 client

9:06 on your shoulder talking into your ear when you're talking to brokers. And back then, those clients were guys like JoJo Mail and former chairman's of the bank and hedge funds managers and they were

9:20 big, big guys. So I joked that my head was kind of hollow so I could translate what they were saying through my head into what, what I needed from the broker. And that trans, that perspective

9:36 stayed with me a long time. So, you know, most landmen, way back then, when you would go in

9:47 the field, you would look up something and a lot of guys worked for afterwards. You used to be an old saying of you worked for seven hours for the broker and one hour for yourself. That just didn't

10:01 rub me the wrong way. It's a big conflict

10:05 of interest. So I'm bringing a very high trust CFA backed mentality into

10:14 the relationship we have with clients So you see, you met this old lady, right? And so she's not getting paid right.

10:23 You have to go in like rerun title, which by the way, it's mind blowing to me that in 2023, every time that assets change hands, we go and repeat the exact same work whenever you have something

10:36 like blockchain, you could have an immutable ledger that is like, we run all of the title once You know, we deploy kind of a gig economy strategy, you could do bounties for landmen, and then once

10:49 it's done, it's done. And I know that that's. It doesn't completely eliminate landmen, but

10:56 it is ridiculous to keep repeating running title. It is. Gears and years and years on the exact same properties. It makes absolutely like no sense. Why can't we just have one massive, immutable

11:07 database where title is now verified and we can all kind of move forward? I just feel like it's a massive wasted effort and a massive - You've had actually Gilmore at tracksco. Yeah, yeah They're

11:20 innovative, very innovative. Yep. They block chain it together so that the demo that I saw, Mark, he could tell what the interest was. You know, in five minutes, he did a real time up on the

11:35 stage. Yeah, yeah. They're making it innovative. Where the landman comes in is you still got to read the documents and interpret what they say

11:48 But would Chad GPT, if you were to teach it everything that a landman knows, do you even need a landman then?

11:54 I don't know, have you paid attention to the whole chat GPT? Yeah. I'm kind of curious. I don't know, my familiar with chat GPs on the writing, it's not necessarily on the reading end, but

12:06 there is AI that you can teach to through OCR, you can read the leases. Yeah. And I think Ashley's program does a lot of that. They get you like 95 of the way there, and then

12:22 you still got to put a set of human eyes on it Yeah. At this stage. And I think, you know, isn't that kind of the best way to use AI as, let it do all the time consuming chores and use people to

12:37 add value, to tell you what it means. Yeah. Yeah. I think to, you know, especially to go ahead and just verify that things are what they are. Well, the other important thing is, this business

12:50 is an information hoarding business.

12:54 So everybody thinks the title is a way that they is their advantage and they don't want to give it away. They don't want to share it.

13:04 You know, on my side, we try and get electronic copies of the client's division orders. And when we send the request to the operator, we ask for excerpts from the title opinion to show how that

13:16 was, how that was calculated. Some of them say, no, our title opinions, our private property, we paid for them We don't divulge this information. So why would they see the title opinions as

13:28 like some sort of secretive competitive advantage? 'Cause they paid for it. I wonder if that's just them being lazy rather than being. Well, you hit on another important point. I don't know that

13:43 they're lazy, they just do what's easiest for them. So lazy, easy, I don't know. I mean, well, if you think from an EP perspective, right? If you have, I don't know, 10, 000 mineral owners

14:00 and only a small percentage, even a couple of hundred are constantly asking you for data and stuff. That can be an absolute nightmare to deal with. So yeah. I mean, the EP companies have a huge,

14:12 huge challenge.

14:15 Yeah And you know, and they make money after it comes out of the ground on their part of the royalties. If you got a 20 royalty, they make money by paying attention to the 80. They don't make a

14:29 lot of money by paying attention to the 20. Yeah. So for the out of the 20, they do, it's easy. And a lot of it is antiquated systems. Yeah. Like I've maybe talking too far out of school, but

14:46 one of the operators we pursued in South Texas. They didn't have the robust enough accounting systems until 2017.

14:56 These wells were started in 2012, so we went through mediation and I sat across a table from seven lawyers and compared my numbers to theirs and after six of them, it was pretty clear that they

15:11 didn't have the accounting

15:14 systems One of me wonders if, and this is coming from a place of I just, I don't know and I don't think that we've talked to a whole lot of companies that do or build accounting systems for EMPs. I

15:28 know there's a handful out there that I played with about a decade ago or worked with, but I don't really know what that market looks like today and I definitely don't think there's anybody new that

15:41 has been popping up in

15:47 the space, building more, cutting edge, innovative, accounting software like you would see normal B2B stuff. You know, obviously it has to be specifically built for this use case. You can't

15:55 just go and yes, effectively use QuickBooks without massive amounts of customization and probably consulting and stuff like that, just due to the way that, you know, interest is split up and due

16:09 to routing of certain things, the jibs, division orders, all that kind of stuff. Like that's very, it has to be purpose built, you know, for kind of for like upstream boiling gas So if you guys

16:21 know of any really new, innovative accounting software that I haven't heard of, or if you work for a company that does some really innovative stuff, reach out because I would love to have you guys

16:31 on the show. Wolfpack's good. So they were branded to pack energy now, right? Yeah. So pack energy. We'd love to catch up with you guys. It's been a while since I've done stuff with you guys

16:46 But stay on this point for just a second, you.

16:51 you captured the

16:55 essence of why Inverus started Inverus. Because these systems are complicated and it's even more complicated conveying that information out to the mineral owner. And what's the, for people who are

17:05 not familiar, what's the energy link component of Inverus?

17:10 So when it's basically an owner relations port. Okay. So

17:15 you can, when you can log on to energy link and see all your check stubs from the operators that participate all in one place. So if you have four different operators, you can see all those check

17:27 stubs. Before you had to log on to each owner's investor portal or owner relations portal.

17:37 Now it's all centralized. The catch is, and you gotta take your hats off to Inverus 'cause they've really cornered a market here you can get the information in PDF. but it's copyrighted. So people

17:52 are very, very hesitant to use OCR on top of it. But if you wanted in Excel or a CSV file, guess what? You gotta pay.

18:04 So they give you like 75 lines free, but

18:09 the other lines in your check stub, you gotta pay for it. So is that a product that is built specific for individual mineral owners? Yes and no, it's, or

18:21 is it more so for the EMPs that you're doing, JV and the NPS, 'cause the EMPs pay for it. Yeah. They offload all that invest, owner relations function to energy. And it's huge, huge time saving.

18:36 So do you feel like you guys compete with energy link or not at all? No, no. So we take data,

18:43 So

18:46 the operator posts check stubs to energy length. and we actually use mineral wear because they have an API feed into EnergyLink and they can pull down all the check stubs from our owners every month

19:01 from every operator. It makes it easy peasy and mineral wear is also very good at consolidating the data into a standard format. Now there's other firms out there. I've heard Whitley Penn does the

19:16 same thing for some firms.

19:21 So our kind of workflow is or the data flow is the operator produces a check stub. It goes into energy link. Energy link takes it into mineral wear and then we pull it out of mineral.

19:39 Because mineral wear is good at giving you a big picture on an operator or field, But they're still working on some of the stuff that we do.

19:50 So as a client, do I have to have subscriptions to energy link, mineral wear, and you guys for this to work? Or is it just to you guys? Energy link's free. Okay. You need a mineral wear

20:02 subscription or you have to have the checks to update it in a CSV format to get it to us.

20:10 But you touched on another interesting point. We want all our clients to own their own data and all their own relationships We don't want them to have to be dependent on us to get their data, 'cause

20:22 what if we go away? We don't want them to have to go down our rabbit hole, right? Yeah. So in our case, we ask them, they subscribe to, they have their own mineral wear relationship, mineral

20:36 wear

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21:40 So what is the relationship with you in mineralware? Like where does, like where does mineralware stop? And we'll see Guardian, big one. Um,

21:52 mineralware stops. They can't give you granular data, meaning they can't look at every well. We can't look at every product every month. They, they can give you the data in Excel, but then you

22:04 got to digest it and analyze And unless you're an Excel savant and numbers jump off the page at you, you can't see the problems. So we've taken it to the next level and built these visualization

22:16 dashboards. It's a stoplight system where you paid for every operator every month. Yes or no, where you paid on every product,

22:27 every month, oil, gas at gels We found a recent example,

22:35 a client gets paid on 13 different wells from the same operator. three different products. What caught our eye was they were getting paid on oil, but not no natural gas or NGLs, which is really

22:50 odd because when that comes out of the production screen, it all goes into a pipeline, right? It's hard to produce oil without the gas and NGLs. Well, they were reporting zero on the check stub.

23:05 They were reporting zeros on the railroad commission website. You wouldn't see it, but they reported sales to the Comptroller's Office of Gas and NGLs. Bing, Bing, Bing, clients should be

23:18 getting paid for that. So our stoplights, we had three red lights over like six months. They pop up. We start saying, You know, does this make sense? And then we go to the client and say, We

23:33 think you have an issue. You tell us if you want to how you want to pursue it and so then what are they what are the options for it on? Pursuing an issue you got a couple red lights with one

23:44 operator. What do you do? Well first each client kind of sets threshold for those red lights, okay, if it's a 5, 000 problem The client I'm thinking of he doesn't He wants to watch it if it's

23:59 more than 30, 000. He wants to bring it to the operator's attention And there's two paths you can go and he's using both One is if it's simple

24:13 We put together a packet that Tells the operator what they want to see. Here's the revenue. Here's their deeds. Here's their lease. Here's here's their unit decoration and Here's our numbers

24:26 Explain why they're different That's one path is we present the claim to the operator. We write heard on them. They come back to us and hopefully they pay a client In the best case scenario, we did

24:39 that. for another similar situation, client got a check in six weeks. Is that average turnaround? No, that is fast. Okay. What's average turnaround for pursuing something like that? It depends

24:53 on the operator, how cooperative they are. There's no legal requirements on having to - Yes, they have to get back to you within 60 days. Okay. In terms of just a response. Just a response.

24:59 Saying, Hey, we'll look into this. And then you start the ping-pong match with the operator, we had one recently, it took, start to finish two months before she got a check, but to the

24:59 operators credit, they want to do the right thing. They want to keep the mineral owners happy and they know they're overwhelmed. Yeah. I think more to than they

25:35 make, that's the case. Yeah, it's just, it's just, It's complicated, we're talking about like, it's just very easy to fat finger things when you're entering it or overlook things when you have

25:45 tens of thousands, maybe hundreds of thousands. It is, the other complication is when

25:52 an operator takes over wells. They're taking over somebody else's accounting system and in pay decks and they know there's problems. So if

26:05 Devin took over WPX as well, Devin took over WPX as well. And they've been more than cooperative. WPX made had some clerical problems and ended up owing our clients some money. We present the case

26:18 to Devin and much to their credit, they recognize it, pay attention to it, and cut checks. So I don't think there's, people always ask, you know, is there malice? Is there fraud involved in

26:31 this? Is it intentional? I don't think so No. I don't think it's very late. I'm not even going to say ever. but most of the time, I don't think he's any malicious intent whatsoever. I mean,

26:41 there have been cases,

26:44 like stat oil got sued, badly, because they were shaving production volumes.

26:50 But nine times out of 10, they're doing the best they can with what they have, but they simply don't have all the data and they know they've made mistakes before. I mean, cynically, some, I have

27:04 friends that work for smaller operators and they say, you know, we get audited all the time and it's almost to the point where we look to the mineral owner to tell us what the problems are so we can

27:16 fix.

27:18 Because it's like the 8020 rule. If you set up this pay deck and you've got five different owners to make it simple and two of those owners have real unique leases,

27:33 their accounting systems set it up for the same for all five. Some operators say, you know, we'll take the high road and lease two and three is more restrictive. So we pay everybody on that more

27:45 restrict. Others say, now we're gonna pay two and three on the lesser terms and

27:52 catch us.

27:55 Depends on the operator. So if I was going out and, you know, say I'm just gonna, I don't know, go acquire over time interest and 20 different wells what advice would you have for me? What are

28:09 the things that I need to watch out for so I don't completely lose my ass? It's not necessarily that you lose your ass, it's just there's so many things that you don't know. Yeah. You don't know

28:20 what you don't know. And so the three things you need to do, one, get digital copies of your title, the D, the lease, and the unit declarations. Get digital copies of your division orders.

28:36 those division order decimals to your pay stubs. Sometimes they don't match.

28:42 Match those, match all your wells to your tax rolls. You may be paying taxes on wells, you're not getting paid.

28:52 And then third, put a system in place so that you can see every month, every well, that there aren't any problems

29:03 Because they might not make a mistake now, but two months later, they make mistakes.

29:11 The other thing is, so we see

29:16 mistakes made kind of in two instances. One, when there's a change of a change in title. Most of our clients are new mineral owners. Their grandparents bought this. I mean, it's a core part of

29:30 their family identity, but they don't have any background in oil and gas. fallen told by their family that you get to head this.

29:43 But the point of this story is sometimes the title is still in the grandparent's state. It's not flowed through the estate and it's not flowed all the way through to the new entity. That's huge. I

29:57 mean,

29:58 knock on wood

30:02 for new mineral owners like that

30:06 There's a real good chance you've got a problem.

30:09 Like how much? 20 of your royalties?

30:14 Could be meaningful. Very. We have one client that

30:20 has tens of millions in income and we found 10 of their income

30:28 in problems. So at least a million.

30:36 Oh, wow, it's insane. So the other path is, you know, we take the easy path. The other path is they got a good lawyer. And sometimes depending on the operator, depending on the issue, you got

30:50 to get a lawyer. And good ones are worth their weight in gold.

30:55 'Cause they know their stuff

30:58 and there's some gravitas to them I mean, I call John McFarland the EF. Hut and the boiling gas. When people get calls from John, the operators, they know they're dealing with somebody that's

31:10 been around the block. Not to exclusive John. There's some really, really good law firms, Houston, San Antonio, a couple in Austin, that are great and really know their stuff, and they're well

31:25 worth the money So this problem isn't just exclusive to. You know, the mom and pops or the grandkids or the grandmalls, you know, who have some sort of like a mineral interest. But, you know,

31:38 you could have, let's just say, you know, pioneer natural resources has participated in a whole bunch of, I don't know, I'm just going to say, Acme, oil and gas as well, right? And say they

31:49 own 30 percent, right? They need to make sure that they're getting paid out correctly too. So are you guys going to pursue that as also part of the business or are you guys already doing that? You

31:59 know, you're talking about where they would have a JOA, just like, yes, not on working interest. No, we're looking at the, we look to the payer.

32:07 So it would probably be pioneer in that case. But where problems come up is when pioneer

32:15 would acquire all the interest of three different operators and then they got to get it into their system, but those three operators may have made mistakes in pioneer, I know they pull their hair

32:28 out trying to make all that right. But they don't have to disclose it to the mineral owners. The laws in Texas put the burden of discovery on the mineral owners shoulders. So you mineral owner have

32:45 to approach the operator to get it fixed. So is that something that you could notify the mineral owner of of like, hey, the operator has now switched hands for these wells? Yeah Maybe we're going

32:58 to watch extra closely or something. Yes, yes, yes.

33:02 Chevron just bought an operator. Some of our clients have significant holdings from that operator and we're going to watch it pretty close. You know, Chevron's pretty good about things.

33:16 I'm also dating myself.

33:20 I am. I was a big fan of, I love Lucy, right? And you remember when and Ricky would say, Lucy, you got some splaining to do.

33:30 informally call the operators that are bad, they're on our Lucy list. We know

33:37 who has who does this right and who historically has had problems. Yeah. We actually try and for our clients, you know, they've got a dozen operators and we'll give them a scorecard to say this

33:52 operator's green. You don't have any problems. You have any problems for three months and we didn't find any this month, but this one's yellow. They made some problems. This one's red. The

34:04 problems are big. Is this a new problem or do we already know about it? Not we're working. And he mentioned a Brigham. So are you guys working mineral buyers too or no? Yeah. Okay. Yep.

34:18 You know, the other issue mineral buyers have is

34:24 They have to make sure all their wells, they're paying taxes on all their wells on the tax rolls. their worst nightmare is something gets sold out from underneath them because they're not paying

34:35 their taxes on them. Again, big clerical, clerical issues. But we've standardized that process, know how to get ahold of the operators and have a very standardized process to stay on top of them

34:50 So it's, my wife calls it hound, hound and pound. So you keep hounding on them, pounding on, and it works. How do you, how do you, I think it's easy to find from, from your, your perspective,

35:06 right, from a business to development perspective, to go out and find the breaker minerals and the haymakers and stuff, it's easy to find those. In terms of like the individual mineral owners,

35:15 how are you guys able to find them? Because I feel like a lot of times they feel so

35:21 lost in the sauce, right, and they're not from oil and gas and they're not like, like, I'm just kind of thinking of like. if I was in your shoes, like how am I marketing this to these kinds of

35:32 people to say that you're there to help?

35:37 Two sources, one, we

35:40 found a lot of people on energy freelance, a lot of people get told, Oh, you just need a land man. They really need to hold a

35:48 lot more. Yeah. So we're pretty interactive with people on energy freelance. The other one is their lawyers

35:58 Just a good network of lawyers. Yeah, because honestly, people get bombed with offers to buy their minerals and it all goes into the circular file. They don't know who to trust. Yeah. So they

36:10 always have a trusted advisor, be it their lawyer or their financial advisor. We talk to their lawyers and financial advisors and say, Hey, you got people with problems, we can help. 'Cause

36:23 there's a vetting process I mean, if you had.

36:30 If you bought those 20 interests over time, you know you've got gold sitting there. And I can't imagine the number of

36:39 letters and solicitations you get to buy your minerals, buy your minerals, buy your minerals. You just get bombed with them.

36:46 And there's an information chasm because those mineral buyers know more than you do. My mother-in-law has some stuff in West Virginia and

37:01 she calls those letters, pat myself on the back. You take them and pat yourself on the back because you own something bad, and somebody else knows more than you and wants to buy it. And the price

37:15 they're usually gonna pay because they know so much more, you don't get paid the price that you ship. So we try and level up that playing field So you know what's going on around. So it talks to me

37:30 about that, right? So if I'm a landowner, right? And I'm getting, I'm just getting bombarded with offers

37:38 to buy minerals, right? Say I've got five offers in front of me. How are you guys able to help in that process of figuring out who I should sell to? We don't. Okay, you don't. We

37:48 don't. We're not in that market every day. My biggest advice for those people is talk to a lawyer because they know the terms, they know they're negotiating leases in these areas all the time and

38:02 they know the prices.

38:05 Where we can help them is you can see on a map, you can see your holdings and you can see on a map what's going on around you.

38:15 Like if you have the one holding in the center and somebody has a big drilling program going on, you know what's going on I

38:26 actually was the story for it. one of our first clients,

38:33 five years ago, John got involved and told he's the head of the family minerals, and he came to me with five bankers' boxes of paper. Said, I don't know what this is. So I helped him figure it

38:45 out. We got the lands, safe, figured it out, and we got the revenue figured out and set up a nice spreadsheet. He did 50 wells

38:56 His interest is also right in the heart of the Permian Basin. And three years later, a major operator came in with a major drilling program and his well count exploded to 50.

39:09 And now it's twice that. And he's like, We found problems when there was 50 help.

39:19 We need to know what's going on here

39:23 That is the one exception. That is the one client that we set everything up. with, we helped them cure a lot of issues. And then we ended it off. They do the monthly monitoring themselves because

39:38 they have their own mineral wear subscription. And the guy's sister had pretty deep Excel skills. That's the one client that we've handed it off to because she could do it herself. Most people want

39:53 to don't have the bandwidth. If you're a new owner, you got a day job. And the last thing you want to do is get in the tedious weeds with

40:06 and look at boring accounting statements.

40:11 The cost is, you know, if you don't, you could be losing 10 of your revenue. Yeah. What is the business power for you guys? Is it SaaS, is it a percentage of what you find? We work on flat

40:25 fees. Okay Usually there's a setup. because there's a big heavy lift in getting all the data right and doing the initial that analysis. That's a flat feed. Then we go into what I call a curative

40:39 phase. That can be on a flat feed or an hourly basis. And during that curative phase, we set up monthly monitoring and that's flat fees. Is there like a threshold for, I don't know if it's a

40:53 threshold or maybe if I'm asking, the average dollar amount

40:59 that a working interest owner or an owner could, in terms of how much they're getting paid a month, that it makes sense to get you guys involved. Is it 5, 000 a month? Is it 50, 000 a month? We

41:11 always get asked that question. Country people call it as a juice worth of squeeze. And our sense is you got to be, your annual revenue needs to be north of

41:26 200, 000 Mm-hmm, 200, 250. Yeah. really to make sense because

41:33 the way we're set up now, the initial set up fees

41:40 they could equal maybe a month's worth of interest

41:44 to get it set up. So people say, oh, I gotta pay you the equivalent of a month's worth of interest. What am I gonna get?

41:54 We don't make guarantees that we'll find something, but I tell people all the time, and he said, I can't guarantee that we'll find anything.

42:03 But if we don't, you'll be the first. Yeah, it's also a good hedge. I mean, Gic kind of gives you the peace of mind of doing your getting paid with you. Exactly. Or owed, right? Exactly. And

42:14 just because it's not happening now, it doesn't mean it's not gonna happen later. Right. And that's the bandwidth issue. You've got other things to do. Unless this is your hobby and your vocation

42:26 to do all this in Excel and. and sort through all the details, you've got better things to do. So we set it up so that it runs on autopilot. Once a month, you got to somebody. We send you

42:40 reports.

42:42 Takes a couple hours and it all runs in the back. Do you ever, and this is totally off the wall question, but assuming you guys are building up this large clientele base of all these various

42:54 mineral owners, one of them's like, Hey, I'm looking to sell this. I mean, if you've got a huge base of other mineral owners who could potentially buy it, is there like a brokerage thing you

43:10 guys could have going on? I wouldn't, 'cause it's a conflict of interest. Yeah. Who you gonna work for? Can't work for both sides. Yeah.

43:20 So we'll give them resources of here's a great auction house or here's some lawyers for you to consider choosing.

43:30 to help you through the process. But, you know, when I was managing investments, we'd call that cross in positions. One buyer, you cross from one buyer to a seller. But in the investment

43:42 business, there's a registered broker dealer

43:47 in the company. It's because you have to either represent the buyer or the seller. We don't want to get in that.

43:55 He has a message, especially getting a broker dealer license, right? I have, well, I have received a designation which translates to a Series 65 with the state. I've had Series 7 and 63. I've

44:10 been licensed broker dealer.

44:13 And I know

44:17 the guys that spun off of mineral ware

44:23 have our registered broker dealers. The energy amengas? Yeah. Yeah

44:29 Because it's. You know, you want to take the higher up. These aren't registered instruments. It's an unregistered industry, but you want to take the higher up and have your licenses in place and

44:41 be very aware of the conflicts of interest before you start crossing that

44:46 stuff. Otherwise, I mean, you got it. A guy could do it out of his pickup truck.

44:54 I call you, you got your buddy, we flip. That used to be the old way So what's

45:01 next for you guys? What's the next kind of like the big milestone that you guys are aiming for?

45:09 Currently, we got about three clients. Next milestone is

45:16 expanding that, obviously.

45:19 The big possibility are mineral fox. Okay. We're talking to two or three of them that have holdings, they know they might have. problems. So it's our biggest hurdle is trying to get our work,

45:35 trying to get the word out there on what we do into the network of people that these people trust. Because this is oil and gas is still a relationship based business.

45:49 So people will work off recommendations. You got to know the guy to talk that they trust to help them. You know, the other big milestone is we're trying to integrate it into a couple platforms.

46:05 There's data, two data providers out there that already provide the back end and can do a lot of analysis on what your revenue could be. We can plug our system into theirs so that we can find the

46:19 problems. And it's a nice compliment.

46:25 The other thing you were saying is about

46:29 The real appeal to how our business models set up and our referrals are, we don't pay referral fees, we don't give referral fees, there's no conflict of interest. So we're not putting money in

46:44 anybody's pocket, but more importantly, we're not trying to take it out. Some mineral managers, they have attorneys on staff So they take it completely over, but if you're a private practice

46:47 lawyer, it's very hard to send a client over to a mineral manager that's going to take your business. Yeah, 100. So if anybody's listening and they want to reach out with it, whether

47:15 they're with a fund, whether they personally own some minerals, is the website RoyaltyGuardiancom? It is The roots here are in the sky. royalty guardian. There you go. Reach out to Scott to

47:27 write. So if you get a question there, you're also in LinkedIn, right? Yeah. So if you want to reach out to Scott, connect with him there. Scott, this has been great. Oh, also, I think you

47:35 did a, you did a demo for DWA Insight, right? Not yet. All right. Well, we'll have to get you on there. So we got Scott on there. So you can check out a full demo of royalty guardian on DWA

47:45 Insight. Scott, thanks for making the trip, man. Appreciate it. Great, great conversation This has been an honor. This is high praise being on this because when I told people about being on

47:56 this podcast, they're like, really? Digital wildcatters is doing some great things. Well, I appreciate that. I appreciate that. Great things. Thank you. Thank you so much. If you guys liked

48:04 the episode, take two seconds. Send them to all your friends, your colleagues, and we'll catch you guys on the next episode.