Oil and Gas Startups Podcast

0:00 All right, what's up, oil and gas startups world. I feel like I haven't done an oil and gas startups podcast in a while. So it's good to be here. I got my guy Sean with extreme performance

0:11 chemicals in the house. We're here in the studio AC's out. So if you're watching video and you see me and Sean start sweating 20 minutes in here, just know that we're here in the trenches. But

0:23 we're oil filled. I'll be used to

0:28 it. Sean, where are you from? I think that you said that you used to live in Houston, right? I used to live in Houston when I started out in the whole film back in '95. '94. Excuse me. Cool.

0:38 And where are you at now? I'm in Quero. So tell me just real quick before we dive into this. What does XPC, what do you guys do? Extreme performance chemicals is kind of a, it's my third

0:50 go-around with the chemical company in 2007. I started fingers chemical technologies. We until 2015 when everything went to hell in a hand basket. Yeah. Yeah. At that point, my then fiance and I

1:04 started another chemical company. I kind of just said, I'm tired of the service side. I can't compete with the, then, in a specs, the bakers, the NALCOs, the champions, those guys, it just

1:15 wasn't worth it. They commoditized the market to the point that it was a losing battle for a little guy. Yeah And so in

1:26 2019, I transitioned and started extreme performance chemicals. Basically, a manufacturer and wholesaler. Okay. So, you're gonna have to school me up on the chemical business. Like, let's make

1:36 this like a chemical business 101. When you say that you're the manufacturer and the wholesaler, so it sounds like in your previous businesses, in the chemical industry, where you guys,

1:49 essentially the end user where you're buying chemicals and then helping EMPs with their chemical programs. And so now you're at kind of like the. the base layer where you're actually manufacturing.

1:58 Manufacturing our own. Okay. What we ran into is in our chemical business, most of the basic chemicals come from three or four different companies. So it's not about whether the chemistry is gonna

2:09 work or not, it's an application program. Yeah. You know, you have to understand your equipment, you have to understand the down hole, you have to understand the end user's goal, and you need

2:19 to apply that correctly. Yeah. What I noticed was happening is, there was a big information drop off. You know, what we were taught, or I was taught 20 something years ago, starting out in the

2:31 chemical business, is these guys, they taught us. You had to go to a school, you went to emulsion school, you went to a former school, you learned from guys that are, you know, at that time,

2:44 I was in my early 30s. I've been in the oil field since I was 21. The older baby boomer generation would take you under their wing and they would teach you.

2:57 Now, it appears that from my experience that nobody's taught anything, they don't want you to know. You know, a lot of us guys that worked for multi-cam that went out and started our own

3:07 businesses. Now the industry has gotten to the point where they don't want you to know how to do those things. They want you to rely on somebody in the office to tell you, This is what we want.

3:19 This is the chemical you use. This is how we do it So what you think is that there is a disconnect between field and office operations where field isn't picking up on any of this tribal knowledge of

3:35 equipment, chemical programs, things of this nature. They just want people out there to essentially execute while they're getting orders from the office. Because I saw something similar on the

3:48 drilling side where company men used to make decisions I'm drilling rigs and they don't anymore it's all driven from it's just Starting out on the drilling side and then moving into the production

3:58 side, the guys in the field used to be able to make that decision. Today, they're not allowed to make that decision. I mean, case in point, in 2017, 2018, this chemistry that I've developed,

4:13 we took the BP. And they did some testing, we did some lab testing with the Shure Labs, Core Lab, things like that. They were really excited about it And so we're sitting in BP's office here in

4:26 Houston with the Procurement Department,

4:30 they were interested in it, but they wanted us to go through Baker and now go. That's who their chemical contract was at the time. My argument was, is there's a disconnect. You're telling me that

4:42 you want it, but your guys in the field are telling me that they can't, they can't make that decision because you have a chemical contract. Well, that's not the way it's supposed to work. And I

4:52 was like, I understand that's not the way supposed to work. If there's a. performance issue, then they have the authority to try something new. So well, yeah, that's the way our contracts work.

5:03 Well, what I learned is there's a disconnect between the field and the office. Cause the guy in the field may want to do that, but somebody in between there in Houston is telling them they can't.

5:13 Yeah, you know, there's a relationships that are built into it. Yeah. That the guys in the office and on the field level don't want to upset that apple cart and that, that became frustrating for

5:25 me because we've worked, or at least I have to be a solutions guy. You know, when I was working off shore for coastal chemical, Apache took over a lot of platforms that they got from BP. So they

5:38 were flying me around. Hey, can you solve this problem or we have this? And I'd get to the platform like, Hey, well, you don't need chemical. Your impellers out on your float cell or this,

5:50 your discharge pump is this Let's go fix the equipment that had been in disrepair.

5:55 The supervisor asked me, So why aren't you here to sell chemical? Well, yeah, I am here to sell chemical, but I've got 86 platforms that are responsible in the Gulf. Why don't I want to add

6:04 another chemical account? Let's fix the equipment, optimize that. Then if we need chemical, I will tell you that and you'll take it to the bank. Yeah. And that's just kind of how I've ran my

6:16 whole business ever since then. Yeah. You know, we can probably dive in on this topic of like tribal knowledge and knowledge transfer later. You brought up Kaleid before we got on the podcast and

6:29 like, this is a big problem that we're trying to solve with Kaleid is this knowledge transfer. But I think that like, if you look at how the industry you surround like,

6:38 I always like I feel fortunate because I was like part of the last, like the last leg of the old school generation and oil and gas, you know, I got in 2010, still drilling vertical wells before

6:49 horizontals came in, you know, I always tell people my second day on the rig. We're out there in flip flops, shorts, no hard hats, no shirts, 30, 30 pack of beer. Like that was like, that's

6:59 unheard of. Oh, that's right. So when I got out of the Navy in 94, I started roughnecking. I mean, I knew that's where I wanted to be. I wanted to get in the oil field. Not just in 86, when

7:10 everything went to crap, all my dad's friends, my uncles, my family members, they all lost their jobs. Yeah. And I watched from 86 to 94 When I got into it, there was nobody my age going into

7:23 the oil and gas. Yeah. And so it was like, well, if I get in now and I learn these aspects from the ground up from one corner all the way to wherever I decide to do, I'm going to be successful.

7:32 And that's super interesting because, yeah, I mean, you had this huge bimodal distribution because of the, in the age of the workforce. you've had millennials and there's not a lot of Gen X

7:45 because of the 80s. There's very few because 80s downturn. The 80s downturn ran everybody out of it. Nobody wanted to get into it. And when I was working in the chalk, when I first started

7:54 Roughneck and it was chalk business. Yeah. You know, we're drilling under balanced horizontal wells. We're flaring, we're drilling. I mean, we're rocking and rolling. Yeah. And so that I was

8:05 broken. I didn't drill any vertical wells. Yeah. They were all horizontal back then. That's crazy So UPR, Chesapeake,

8:12 you know, sown out. There was all these guys that don't exist anymore. I mean, that was a big deal. Yeah, no, it is crazy to think that y'all were drilling horizontals. Well, that's early on.

8:23 The mid '90s, UPR started drilling some exploratory wells in Lebaca County, just outside of Shiner. And we go in our vertical section, we'd take big gas kicks. Then we'd lay out in the horizontal

8:34 and be dead well. Yeah. Like, well, we're taking big gas kicks Well, now you know where it comes from. Yeah, nobody knew it was there. But nobody knew that was it. We missed it by 20 years.

8:44 Yeah. Yeah, it was kind of like, well, it was here all along. Lots of regret there. It's like, yeah, we could have been on that. So you go to the Navy. What are you doing in the Navy? I was

8:54 with fire control, man. OK, cool. Which is basically electronics tech. So in the Navy, a fire control man's job is to calculate your firing inputs. So on a battleship, you've got to - here's

9:07 your target. This is your distance. This is your radar signature You've got to do all the calculations. And about the time I was doing that, they decided to retire at the battleships. So I was

9:17 like, well, this is not going to be very much fun anymore. So then I classed up to Tomahawk cruise missiles. Oh, cool. And so by the time I was finishing a school in Chicago was

9:29 when Clinton cut the military budget. So they came to a bunch of us that were fixing to graduate. It was like, look, we don't have room for you. We're not going to be able to honor your contract.

9:38 What do you want to do?

9:40 Well, you can reclass the nuclear and I did not want to go on a sub. Yeah. I want to be on an aircraft carrier to me, people too, too big, too much. Yeah. So I was like, well, what's my

9:51 other option? I said, well, you can take an early out and get full benefits with G. I bill and everything else. Sign me up. I'm out. It doesn't sound like a bad deal. No. So I, I did one

10:01 sixth of my enlistment, got all the electronics training, came back to Texas and was like, Oh boy, now what? Yeah And so I started roughnecking on my days off, friend of mine worked for power

10:12 chokes such a, it's such a just Texas thing. It's just going to go rough. So when I did high school, it's, I'm going to go rough. Nick, it was only11 an hour. So it was like, well, it's good

10:23 money. I can get seven and seven. Then I go to work on the rig and it's eight and four. I'm like, Oh, this is not fun at all. Yeah. So on my days off, I'd help buddy mine with power chokes.

10:31 So we drive all over East Texas, South Texas, installing chokes and I got to be pretty good at that. And one day we're riding down the road and he's like, Hey. Maybe I want to go work for MD

10:41 Tatko with all the electronics training. I was like, they were like, they're the ones that have all the PBTs on the rig. You're on them. I'm like, Oh, okay. Yeah. Came into Houston, had a

10:49 meeting with a guy named Bobby Stonet. And he said, man, you just don't have enough roughness experience yet. He said, uh, I'll call you in six months, six months of the day, the phone rang.

10:58 He's like, Hey, what are you doing now? And that's the right now to notice how to call you back. I said, uh, I'm roughnecking for HP. He's where at. And I said in the chalk, you know, okay

11:08 He said, can you be here in the morning? Yeah, then that was it. So that's where I started out from a drilling hand to a service hand. That's awesome. And so, uh, did that move you up to

11:18 Houston, uh, when you did that job, it took me from college station to Houston and, uh, I lived with my aunt and sugarland. So I was drunk going off shore, East Texas, wherever they wanted to

11:29 send me. Yeah, where he just covering. I mean, I was the basins there

11:35 I wouldn't call it the B team, but I was a floater. Yeah. And you know, at the time, I'm 21 years old right out of the Navy. Yeah. And everybody was working with her late 30s. We had one guy

11:45 we called Grandpa. Well, one day I finally had gray hair, looking where it's cover all course back then, everybody wore coveralls. Yeah. And I thought, well, Mike, how old are you? He said,

11:54 I'm 36.

11:56 You call it? Why are we calling you grandpa? I'm about to turn 35 next month. You call it. But that's a back then, and that's what it was. That's where we were in the oil field I'm 21 and going

12:08 to work with these guys that are mid-30s, late 30s, and then 40s. That's actually kind of like that similar to my story, because when I got moved to Houston, I was 24, took a job as a product

12:19 manager running expandable casing for this company that's owned by Shell, other names and venture. And it was me, and I would also say I was on the B team. And then you had all these other senior

12:29 guys that, I mean, youngest guy, after me, he's probably 38 and 38 up to 60. Yeah. And so you're the guy that's still young. Yeah. And can go and do everything. Yeah. I mean, that's,

12:43 that's the way I was. And they call Sean, you know, and I'd be out 24 36 hours. I mean, and I took the job in 2014. So going into that downturn, you know, probably happened six months after I

12:55 got hired. And unfortunately, a big portion of our company was laid off. And they kept me because I was cheaper than all the other guys. And they keep calling me out And you wouldn't say no. Yeah,

13:07 I wouldn't say no. You call me out any time of the night, any day, and I was there. And so, yeah, that's interesting because that's how I felt in that position as well. You know, and that's

13:19 a, there's a good thing to it and there's a bad thing to it. The bad thing to it is, is if you always say yes, you forget what life is outside of this business. Yeah. And I did it where I'll

13:31 take these jobs. These guys got families. I don't let them go home they've paid their dues. I'll go do it. Yeah. Well, then I got so good at it that I never got, you know, I had satellite

13:42 offices. Yeah. Here's your area. You go take care of it and nobody ever came to help. Yeah. And you know, the downside of that is, is you don't get to rub elbows. Yeah. You don't get to go to

13:52 the golf tournaments. You don't get to go to the ski shoots. You don't just don't have time for them. Yeah. You're the guy that they're sending all over the place to solve the problems. Yeah.

14:01 They can't afford to pull you out of the field. Yeah. Yeah

14:05 It's crazy because, like, I don't like being away from my kids now, like more than two days. And I start missing them. And I think about, when I was a hand, I'd be gone for months and, you

14:14 know, I come back home and my kids were little back then, you know, toddlers, babies, and you spend two months away from your kids while they're under two years old. It's like they're a whole

14:23 new person. Yeah. They're not the same person. You get back home. But like, I think about this all the time is like, I didn't know any better. Like that was just like, I was just like used to

14:32 it. That was, that was life for me, right? And so now I come. I'm a fucking spoiled podcaster now, you know, like, like I spent more than two days away from my kids and I miss it, but it is

14:43 just like, I didn't know any, I didn't know any different back then. Well, you know, that's for me being in this 30 something years now, my daughter's only seven years old. So I had a surprise

14:54 in, you know, my mid 40s. Yeah. Oh, guess what?

14:59 And this is, and I tell people all the time she is the best thing that I never wanted. Yeah. You know, I didn't want kids. I think the world's too screwed up and we're all morally corrupt. It's

15:07 just all, I don't want kids. I don't want to bring a kid in this world, but she is the one thing that the man upstairs knew I needed. Yeah. And, you know, the flip side of that is I have a

15:18 brother that's four years younger than me. I've got more than that. But he's the one, he worked in the oil field. So about the time I went to work in the oil field in the mid nineties, he quit

15:25 school and that's what he started doing. Yeah. Well, he was a tool push for HP, drilling those chalk wells. I mean, not chalk wells, the Eagleford wells and all that. His kids grew up without

15:35 him. And I have my kid, he said, Man, you did it all wrong. You're 44 years old. Now you gotta worry about a kid and all this other stuff. About six, well, I'll probably a year ago. He said,

15:45 Hey, I think you did it right. He said, My kids grew up and I was gone six months out of the year. He said, You're there. And I'm kind of like you. I mean, I'm not with her mother, but man,

15:58 I get her on Thursdays and then every other weekend. And I look forward to it I don't like not seeing my kids. Isn't it crazy, not to get all personal and sentimental here, but you think you don't

16:10 want kids, and then you have one, and it unlocks a level of love and empathy that you didn't know existed, so. It completely changes you. Yeah, you think. Your whole perception changes. You

16:21 think you don't want kids, but you don't know what you don't know, right? And so, that's awesome, man. It's your brother's point. I

16:29 had my first kid and I was 19 years old. I remember it.

16:32 430 in the morning. I'm getting ready to go out to the rig. My wife texts me at five o'clock as I'm in the crew truck driving out. It's just a picture of a positive pregnancy test. I'm 19 year old

16:44 kid. Dude, I'm fucking scared shitless. Oh crap. Now what I got to do. I'm thinking I'm thinking about it all day on the rig, you know, 12 hour tower. And I remember, I was actually just

16:57 telling my wife this story. It's like, I remember my tool pusher, because you got to think about I wasn't even old enough to buy a beer. I'm just getting hazed like a motherfucker on the rig,

17:04 right? Like, these guys bully the hell out of me. And I remember my tool pusher. I heard him. He's like, call him's about to be a dad. He's like, he's gonna realize that he's a real grown ass

17:13 man. He's gonna come back out here and kill every one of you motherfuckers.

17:17 I need to reach out to him sometime because I'm like, dude, you're so right. Like I did, like I became, I became a man. But I also don't think that there is a right or wrong time to have kids

17:26 you know, like there's some benefits to me having kids is like, I'm young. It's like only be 42 and an empty nester. But like also to that point, it's like, I miss a lot of my kids, childhood,

17:35 you know, work, working and grinding it out. And so there's probably no right or wrong answer. No. And that's for me, that's the one thing I take solace in is if I'd have had a kid 20 years ago,

17:47 you know, he or she would be grown and I'd have missed most of her life. Because even if I wasn't gone, yeah, everything I did had to do with work. You know, everything's worked Work came first,

17:56 phone rings, yeah, I might still struggle with that with my kid. Yeah, dad, what who's calling? What's this? What's that? It's like, quit worrying about the phone, honey. Yeah. Well, what

18:04 are we doing all day? We're going to do whatever comes along. Yeah, I understand. Why don't we have, why don't we have a set routines? Like, because I've been in the oil field for 30 years. It

18:13 doesn't matter what you plan when that phone rings, your plans go to shit. Yeah. So let's just enjoy the moment and make the best of what we have. It's funny when I worked at adventure I mean, I

18:23 was on call 247, 365. I could have a lunch planned with you and I could get called out an hour before that lunch and I'm gone for two months. And when I quit my job at adventure, the first thing I

18:35 did is I put my phone on Do Not Disturb. I was like, and it's been like that ever since. Like I, you know, it's anyone I do not answer my phone. And so there's some liberty in that. And it's

18:44 kind of makes you feel free. Yeah, you know, I quit my job six years ago. So I think I'm starting to get over that where it's like, I'll flip my phone ring and answer it again. But man, there

18:54 was some scar tissue there for a long time where it's like, you know, and I love my job, man. And I love working on the whole field. But like every time I phone ring, like, did a matter, I'd

19:03 die inside a little bit 'cause you just knew what it was. When you went through the, you know, the Eagleford boom, the shell boom, everything changed. I mean, it was the Wild West. Dude it was.

19:15 I mean, two hours from here, there was so much, just whatever you wanted to do, you can do it. Nobody cared what the cost was, let's just go. And then it all came crashing down in 2015. But

19:28 for four years, I mean, I was the same way. My uncle was

19:32 a customer and he worked for Comstock. He did all their tie-ins and everything. And he'd call and I'd be like, Oh man, I don't want to answer his phone call. Like this cannot be good. And in

19:42 nine times out of 10, he was just calling to shoot the shit. But when that phone rang and it said Uncle Philip, it was like, Oh, you aren't having to see it. What did one of my guys do? What do

19:52 they forget to do, what chemical pump is down, or what well do they forget to hook up? And I thought, Oh, I'm gonna get an ass to it. Yeah. And most time it was just him calling to just

20:03 bullshit. No, it's funny is I've always kept my middle number. I've got a 4-3-2 area code. And so sometimes I call people, they don't have my number. They think I'm some company man or someone

20:12 to call it. That's what I want to answer my call. But yeah, I think everyone that works in the oil field

20:18 like can relate to that 100. Yeah. So, you know, with XPC, let's talk about the business for a minute. So manufacturing chemicals, you decided, hey, the industry and being a provider has

20:34 become too cutthroat, too commoditized, too hard to compete with the big companies out there that just have economies of scale. They can run at lower margin than mom and pops can. So you go a

20:45 layer under and you say, hey, we're gonna become a manufacturer. Tell me like, why was that attractive to you in many fashion chemicals? So during the whole Eagle for Boom, when it kicked off,

21:00 being in D-Wit County, being from their seventh generation Texan, got family friends and owned 8, 000s of acres, big ranches down there. So when Geo Southern started drilling, I said, hey, can

21:12 I come out and get some pole samples? So what?

21:16 kind of trying to see a crystal ball. Like, what's going to be the problem in the Eagleford? So I'd go around these different ranches on ND. with Gonzales, Carnes County pulling samples. With

21:27 one point, Colin, I had a whole wall for all samples and it looked like a gatorade. You know, it was all different, every different color in the sun that was there. But the one thing that kept

21:37 showing up when temperature got below 70 degrees was paraffin. Like, oh, these guys are going to realize they got a paraffin problem. Yeah So I started playing with different paraffin inhibitors,

21:47 building my own. I came up with three proprietary blends. Then I get introduced to this chemist. He calls me out of the blue out of Houston. He's, Hey, I got this chemical. I think you need to

21:57 try it. Okay. And I said, What's it do? And he said, Well, it'll knock out H2S. So you know what? I've got a good location in Carnes County that we can try this on. Put this chemical out

22:08 there to knock out H2S. Well, we'd be hovering around 5, 000 parts. Then they go to zero gonna go to 5, 000 and go to zero. So after a two-week trial, the gagers out there, and I was like,

22:18 Hey, you know anything differentabout this well?

22:22 He said, Oh, then you trying that new chemicalto knock out H2S? He said, No. And I was like, Well, when's the last time you hot oiled? Well, as a matter of fact, we haven't hot oiled the

22:32 whole time you've had that chemical on here. And I said, Well, let's shut it in. Let's open up the choke. We opened that thing up, and there was absolutely zero paraffin build up. And before it

22:41 had paraffined up in six, seven days. It had been clogged up. Like, Whoa, we might be onto something So I took this chemical that this chemist brought to me, started adding it to my paraffin

22:50 inhibitors. Well, Katie Barr, the door at that point. By February of 2015, Phoenix Chemical was treating 15 million barrels a month of BOE throughout all of South Texas. Nice. And we were

23:04 rocking and rolling. I mean, I had four delivery trucks. We had a second location and freer that we were taking care of Tilden area with

23:14 And treat or try to tell them like, I mean, like H2S is a huge problem out there. I mean, as well as they're - Knocked out the H2S, I mean, a BOE, when you're calculating chemical BOE, that's

23:24 your barrel oil equivalent and that's your whole chemical spend across the board. Yeah. We do core reports for all of our customers, breaking it down. We averaged about 71 cents per barrel of a

23:36 chemical program cost, you know. At 15 million barrels a month, BOE, I mean, I was doing pretty good. Yeah Maxis had did a study for Murphy at the time, and Murphy's chemical spend was4 to6 a

23:50 barrel. A lot. BOE equivalent. Yeah. And I thought, okay, well, you know, all's doing this, it's gonna slow down. We're fixing it and just really take off. Yeah. You know, we're gonna

23:58 accelerate when everybody's losing business, we're gonna grow. Right. I get a call one day and say, Hey, I hate to do this to you. But now I call them multi-camera fixing to get all your

24:10 accounts.

24:12 Well, they came in and they can sell this chemical for15 a gallon and you're 26. Like, okay, I understand that, but let's not just give them everything. That particular company went from a 15

24:24 million barrel deal at 71 cents, about 800, 000 a month chemical spend. Before they sold their field, they were at26 million a month, and they had lost 30 of their production. Three X there.

24:36 There was a, and that was across the board, and it still exists this day, but the procurement came in, and they're not looking at your total performance cost, they're looking at a per barrel cost.

24:47 So that's why I said, I can't compete with this anymore. These guys are, they can buy more raw material, they can manufacture it cheaper, and they're willing to play the merry-go-round of, we'll

24:59 sell it at this price at their operator once, and we'll keep it for a year or two, and then we'll lose it to the next guy, and then we'll get it back in a couple more years. Yeah, they have the

25:07 balance sheet to be able to play that game, and economy is a skill where they can buy product cheaper. Yeah, a little independent like me couldn't do that. So at that point, I basically was given

25:19 full control of this chemistry. And I'm like, okay, I'm using it for this. I figured out what put it in my foamers. You know, the chemistry is not just a standalone chemistry, but it can also

25:31 be an additive for conventional chemistries. So we started doing different testing. What will it do if we use it for this way? If we add it to this, how can it boost performance or increase our

25:41 margins? And I figured out how to take what he had done and make it better and apply it in different ways. And about that time is when Nissan came out with the Nanoactive HRT. What was funny is

25:56 they were in negotiations with us for us to provide the basic chemical for their product. Who'd you say it was? Nissan. Nissan. And so I'm like, wait a minute. They're Nissan, the chemical

26:08 company.

26:10 Not the Zoom Zoom, but it's like this is a weird twist in the story. Yeah, so for me at the same time, it was like, what's Nissan, Nissan, they're a car company. What are they doing asking us

26:22 for chemical samples when this is ridiculous? And turned out was Nissan chemical USA.

26:29 So they were they were they were kind of playing games with us. And I think what they were trying to do is reverse engineer what we had Yeah, and then they didn't release this HRT this flow back aid

26:39 chemistry. I went, wait a minute, mine does the same thing. And so we started doing some tests and comparisons with with Nissan. And we we just basically blew them out of the water. And that

26:50 went really well for a while right up until the whole BP deal. And all in the now co champion. And what was funny is when we sat down with now going champ, we had all the NDA's non-disclosures

27:01 confidential agreements in place.

27:04 Donna Cole, which is a mentor of mine owns Cole Chemical, she's the one that set the meetings up. We go into the office and verbatim each to both of those companies sat across the table like we're

27:14 sitting right now and said, look, if this chemistry does exactly what you say it does, it'll bastardize three or four of our revenue streams. We're not interested in this at all. And it seems

27:24 like ever since then it's gone downhill. You know, we so our focus that that point became, let's get it in the fracks. You know, if we can go from a 15 or I've seen numbers as low as 7 recovery

27:36 in Eagleford, all of our testing was done on Eagleford chips to prove that we can mobilize more oil. We were at 56 increase over the Nissan product. And the testing that we've had done through

27:51 independent labs puts us in the 65 to 75 ultimate recovery. And So at that point, this is 2019, 2020. We did us some fracks in the San Andreas up in Gaines County. Yeah. I'm not glad he was

28:07 nervous. We were working through quantum valves and services at the time they've since gone under. But they were the distributor I had. We got into four fracks out there. The first one we did it

28:18 to two GPT. The second one they did it two GPT. The third one they did it one. And the last one we did it half a gallon GPT.

28:28 I was nervous for the simple reason that we're testing the Eagleford. You know, it's 80 there, 85 oil wet. The San Andreas, it is mostly water wet. I'm like, man, we may not be pumping enough

28:42 for this to activate. The first

28:44 one did 400 better than the offset well. Second well, 300. Third well was about 100 and 120. The last well, the oil production, the one they did it half a gallon GPT. was no change versus the

28:58 offset wells, but it came in at 400 increase in gas. I mean, it was like, oh, this is great. Quantum then took that data to EOG. EOG looked at 10 days flow back data, and so we're gonna use it

29:10 in every well in Eagleford. We wanna do a three well pad first, and if it performs half as good as it did on these St. Andreas wells, we're gonna use it on everything. So I built all the chemical

29:22 got it ready to go, three weeks later, guess what happened? COVID Oh, geez. Lost it on St. Andreas, like, oh, this is gonna be a big deal, 'cause it's a monkey seat, monkey do business. If

29:33 we can increase recovery just for EOG and the Eagleford, 10 or 15 initially, I mean, they're gonna take it to West Texas. Then when everybody figures out what they're doing in West Texas, diamond

29:45 back, to see they're all gonna fall in line. At that point, I figured I won't own this business, but a couple of years and I'll be out. No, I'll have a 60 foot boat again. I'll be traveling

29:54 around the Caribbean chasing blue Marlin. Yeah, that didn't happen because of COVID. Yeah. And it's been a struggle ever since. Yeah. Yeah, the,

30:04 you know, part of building businesses in this industry, or just working in the industry at all, it's like super high pain tolerance, just getting kicked in the balls repeatedly, you know, a

30:15 laugh, like you look at someone my age, turn 35.

30:20 It's like experience three major downturns in my career. You look at someone my equivalent age that works like in Silicon Valley and tech. This last year, the two years is their first downturn ever

30:32 experiencing and it's like an oil and gas. Like, you know, it's kind of like you look over at them. It's like, Oh, it's your first time like we're pretty invested. And so, you know, it's just

30:42 like, it's painful because like, it's like, get onto something and then COVID hits and all of a sudden, the opportunity just goes away and it's something outside of your control which sucks. Well,

30:52 and that's the biggest difference that I see, especially in South Texas, after doing this since 1994,

30:59 is I used to be able to walk into the customer's office and the operator is like, you know, build a relationship with them. They'd give you the time and day. They'd open up, you know, first she

31:09 has to start talking about, you know, do you have kids? What do you like to do? Yeah. Once you built that rapport, you could walk in as like, well, what's your pain point? Yeah Can they tell

31:17 you? Well, I've got this problem over here and I've got this company taking care of it, you know, but it seems to be a continuous problem. You know, I say, well, if you'll give me an

31:27 opportunity, I'll try, you know, give me 30 days. If I can solve the problem, give me more business and you pay for what I did. If I can't no harm, no foul while I'm going down the road and

31:37 we'll just see if we can fix something somewhere else. Those opportunities don't exist anymore. You know, since the Egoford came in and all the majors came in, you're not getting through that door.

31:48 It is a corporate mindset of this is who we use. This is why we use them. And for me as a chemical guy with 31 years of oil field experience, 25 years in the chemical business now, it's

32:00 frustrating because I'm seeing the same chemistry and the same applications and the same damn problem today that I saw 20 something years ago. Yeah,

32:12 it's like a pharmaceutical business. They're not trying to fix the problem They're just trying to cycle the money around. That's why I call it a merry-go-round. Yeah. If you're not willing to

32:22 solve the problem, then why are we doing this? I mean, how can you justify spending millions of dollars on chemical that had the same problem all day every day? And then you go in and say, Well,

32:32 we only want to spend three cents a barrel. Like, well, you've got some arbitrary number picked out of the blue sky that you can't solve the problem that way. Yeah, and there's a, the whole

32:43 thing during the Eagle Fer when we had our run-up with fingers chemical. I knew that eventually it was gonna come crashing down. Not because of the market, but as those wells depleted and died off,

32:55 you could not economically do it with chemical alone. And that was, the writing was on the wall. Sooner or later, the money we were making off pumping chemical was gonna go away. Yeah. Because

33:08 it's just simple economics. Yeah. If you're making 200 barrels a day on a well where you were making 2000, and now you went for, for example, I went down to South Texas last week, and I went by

33:22 a well that we had back in 10 years ago when they drilled it. When that well came on, it was 3400 barrels a day and making 36 barrels of water.

33:31 Stopped by there the other day, that swabbing unit on it. Well, guess what? They're making 1000 barrels a day, total fluid, and only 100 barrels of oil. That's how much it's changed. So at

33:40 this point, it's not economical for anybody to put chemical down on. or treat on the surface because they're just not moving enough oil to justify that chemical program. Yeah. Do you think,

33:54 and this is gonna be a dense question for me because I'm just not familiar with chemicals and well performance, but are good chemical programs critical for longevity in wells just like that example

34:08 that you brought up where, you know, initial production of that well is 3, 000 barrels. Now it's doing 1, 000 barrels, but only 100 barrels of oil. Do you think good chemical programs help the

34:19 ultimate recovery of that well over its lifespan of the same? Ultimately, if you manage your chemical program, understand completely what's happening down hole in the chemistries that you're using

34:32 to try to combat the issues or increase recovery, those are eventually gonna cause problems. You know, it's a, the whole field is a reactive business. You know, I like to say this, The chemical

34:44 guy is your best friend when times are good, and he's the asshole when times are bad. And part of the reason I got out of the service side is as a chemical guy on the first one called, first one

34:58 blamed and the last one paid. It's kind of like, well, what's the, you know, what's the good part in this anymore? So if I go out and, you know, you've got, oh, well, and I'm treating your

35:10 wall, putting moles and breaker in there, for example, for you to be able to sell that oil. You get paid by the 25th of the following month. Why am I making 90 to 120 days to get paid on that

35:20 chemical that you use to sell it? Yeah. I mean, that's so crazy about just all oil field services, business, not even just

35:28 chemicals, but just net 90 payment terms and just like the cash flow crunches, I mean, it's hard. Well, the service companies are now the banks and, you know, if we try to increase our price to

35:41 cover that money we're losing. waiting on it for three months or longer, then we get run off. I mean, it's not what have you done for me today. Yeah. And what did you do for me today? Yeah.

35:47 Versus what have you done for me

35:53 for the last 10 years? Yeah. You know, and that's a. It's a tough business. That's what led me to number one, get out of the service side. You know, I'm running up and down the highway. The

36:03 pump goes down, these guys got gagers. Well, it's their pump, we sell them the pump. That's their asset. Why are you calling me at six o'clock in the evening and tell me, hey, the pump's down?

36:13 I mean, yeah, I don't make money if the pump's not working, but why can't these guys be taught how to work on a simple helios or tech Sam, whatever, solar powered pump, change the packing,

36:23 change the time or do whatever you got to do? It's their asset. Yeah. You know, if you want your program to be optimized, you've got to take ownership with it. I mean, you're already on the

36:32 asset, so what's the point? Yeah. So I'm sitting here fighting this business where I just don't have the bandwidth or the energy you know, when I started on my own. In 2007, I was 34 years old,

36:44 I'm 52 now. You know, I don't want to spend all day going to drive in three and a half hours in one direction. Like when I go to West Texas, it's seven and a half hours ago, take care of one

36:52 customer. Yeah. I might be there 30 minutes, I might be there three hours. Yeah, it's an eight hour drive all day long. Yeah, and so with the chemistry and the data that we've collected in the

37:03 wells that we've treated, the assets that, you know, have got friends of mine that have bought to increase production,

37:11 I was like, How do I get this ball rolling again? So that's when I went out and found this, this hydrogen peroxide steam unit that they're bringing to the game because I've got the chemistry. I

37:22 just don't have the tool to get these operators to go, Hey, this guy can do something specialand a one above just chemical. So they're like, Well, this is gonna open up some doors. Well, it

37:33 hasn't. No, not one operator in South Texas is willing to say, Hey, there's a new technology. there's a new way to do things to improve our production, chemically and physically to increase our

37:50 recovery. What was this piece of equipment that you mentioned? It's,

37:57 I wanna best describe it is it's Nazi technology. I mean, these engineers and the people that developed this, they looked at old Nazi technology, how to convert hydrogen peroxide to steam. And

38:12 it's nothing new. People have been doing it for years. They spent the money and the research to build this unit that does not allow any hydrogen peroxide to escape the catalyst chamber. You know,

38:24 one of the things we use hydrogen peroxide is an oxidizer. You get that down, down hole and it comes back and hits a heater or something, you got a bomb And so they spent these resources and the

38:37 time to develop this piece of equipment. And then once they did it, of course, COVID hit them too. So they just mothballed it. And I had a customer reach out to me about a year and a half ago and

38:47 said, Hey, you know anything about steaming whales? I was like, Yeah, I do. I worked up in Canada on the SAGDs. He said, Do you think there's any PC equipment out therethat can be mobile and

38:58 we can move aroundto some of these underperforming whales? I was like, Actually, I do know of a PC equipment. Let me reach out to the guys that have itand see what we can work out. They took

39:07 about six months They finally agreed for me to come get the equipment and get it up and running. And I really, we had 100 whales lined up the tree in Milum County. It was a little shallow, five,

39:19 600, 800 foot whales. The customer that I had, basically, just that they had an illegal operating company. Since when they first contacted me about it, I said, We took over all the legal stuff

39:36 is behind us. We get ready to go up there and I say, look, I need a mobilization fee. Just something doesn't feel right. You pay me a mobilization fee, I'll come up and I'll do the first 10

39:46 wells, halfway through, you pay me the second, third, and then I'll give you terms on the last third of money. We don't have it. Okay, well, I've been busting my balls, trying to get this

39:59 thing operational lined out, make sure everything works on it to treat your wells. That never happened And now I found out there under investigation by the FBI and SEC for securities fraud, things

40:11 like that. I'm like, well, let's check that box. I'm glad I didn't go do that work.

40:16 That was a bullet there. That's kind of the hole. The mindset is between this chemistry that I have and the steam unit is if I can go down and treat a well that we're doing, we've done countless

40:28 wells now where we just pump it and dump it, let the well sit and we're getting 200, 300, 500 increases in production. apply that chemistry, then come back with steam, chase it down hole,

40:42 expand it, and get it further back in the formation. What will it do then? Yeah, so the whole idea here is like a combination between a chemical program and a physical piece of equipment. And so

40:52 inject your chemical down hole, and then come back behind it with steam, and essentially flush it and see - Flush it, kind of like a, basically create a mobile, a SAG-D, steam-assist and gravity

41:04 drainage. I mean, you get the heat back up there All right, we can go up to 500 degrees Fahrenheit, 1500 PSI, you know, some of these big, you'll throw wells, I don't think it's the key. Yeah.

41:14 'Cause we can't get far enough out. We could probably get down to the vertical section and the heel, but we're not gonna be able to get the ladder. So this technology, you're still wanting to take

41:22 the market and get it out there? It is, and so the two in conjunction, I think, are really gonna change the ball game. you know, these older whales, kind of like the ones that you guys had

41:33 bought up in Oklahoma. Yeah, don't bring us up. That's where I'm going next week. Don't bring us up. Yeah, we're, I've got a guy in Oklahoma that's got 15 whales and we're taking the units of

41:42 Oklahoma. Nice. We're gonna steam his 15 whales. Yeah, I mean, that's a good way to wrap up this podcast is, you know, I have lots of engineers that listen to this show, lots of them in

41:55 production. And so, if someone's listening to this, like, and they wanna check it out, you know, who are the types of people or companies that you're looking to potentially partner up with and

42:07 try out this program? The best customer for this type of equipment in this program would be an independent, you know, that's got anywhere from 9, 000 foot and in shallower whales where we know we

42:20 can treat that. Yeah. You know, this trick or piece of equipment was used in Lake Pontchartrain by Chevron,

42:28 that they went out and clean the whole field in a day on a barge where they had spent countless hours of money and time trying to clean the paraphernalia lines that they couldn't get. Just recently

42:40 we were working with an MSA with Marathon to start using it on their non-pigable assets. Yeah. Well, that was the MSA was a mill of getting done. Then we get a notification now. Guess what?

42:51 We're being bought out by COP. Yeah. And that's all that stuff goes on hold until the merger is done Yeah. Yeah. So, independent operators sounds like shallow conventional assets is a really good

43:05 fit because you know, you can run a program on that.

43:10 Based independent or is it just anywhere? It could be anywhere on the Gulf Coast. It's got wheels. Yeah. It's off-shore certified. It can be lifted. Cool. You know, it's ASME stamped, it

43:22 coded, everything's, I mean, it was approved and tested by the the four majors. You know, and that's a, yeah, that's a big deal. I mean, so when Exxon says it meets our specs, Chevron meets

43:34 our sex, Oxy Shell, then you know it can go anywhere. Cool. I mean, right now it's sitting on a 40 foot goose neck. So it's mobile. Cool. No, it's super interesting. And also just love to

43:44 get to hear your background, learn more about the chemical business, you know, where the chemical kind of current status of the, the chemical industry and oil and gas And it's interesting to hear

43:56 about a new way of approaching things, both through

44:01 the chemistry, but then also a potentially a new way to inject it and distribute it. So what the operators are facing now is what's the, what's your alternative? You know, if you've got a

44:15 well-building pair of funds, stick in rods, you've got a pull it, you've got a paraffin, cut it, you've got to do this, or you've got to hodl it. Well, what are you doing on a low pressure

44:23 well? When you hunt anything, you're hot oiling or putting hot water down it. you're putting extra hydraulic pressure on that well, and now you've got to lift that, you've got to get that out of

44:32 the way for where you can get your recovery. Well, with steam, you're not adding that extra pressure. You don't have any hydraulic pressure. Yeah. Yes, someone's going to convert to water, but

44:41 you're talking minuscule amounts compared to 100 barrels of hot oil, 100 barrels of oil, you've got to put back in the ground to try to recover. Yeah. It makes perfect sense to me after doing this

44:52 30 years. Yeah. And then it's less invasive than fluids So it's just been getting the word out that the equipment's available. Yeah. And then we can do the jobs. Yeah. Well, hopefully this

45:05 podcast helps you get some people thinking and gets the word out. You know, if you're listening to this right now and you're running chemical programs or in your production, reach out to Sean and

45:17 check this out. It sounds like it's something that's really interesting. Obviously the dude has shit ton of experience and oil and gas, so if nothing else, You can talk to him and learn something.

45:27 But Sean, I appreciate you coming on the show, man. This is great. Well, Colin, I appreciate you guys having me. I mean, it's a, for me being the old school guy now, you know, a Gen Xer.

45:38 You know, I appreciate you guys looking at the opportunity to come in here and listen and ask questions and try to get the word out that there are better ways. And it's not always wrapped up into

45:48 the big names. Yeah, no, absolutely, man. I mean, this is what it's about is having a place to facilitate ideas and get new technology out there and so

45:58 it's cool getting to sit across from the table and learn from guys like you that have a ton of experience. So I appreciate you taking the time. Guys, if you're listening, guys, and girls, if

46:09 you're listening, we'll make sure to drop any links in the show notes so you can check that out and make sure to share this with a friend. If your friends are someone at an EMP or that owns some

46:20 wells that you think they'd be interested in it, make sure to share it with them and we'll catch y'all on the next episode. Thanks, Sean.