The U.S. Energy Renaissance: Inside Tailwater Capital

We are energy short. Nuclear has to be part of the solution. Democrat or Republican, politically agnostic, everyone agrees you got to have more nuclear.

Today's guests are Jason Downey and Edward Herring, co-founders and managing partners of Tailwater Capital, one of the most active private equity firms in energy and environmental infrastructure. Jason and Edward lead Tailwater's strategy across upstream, midstream, minerals, royalties, and emerging low-carbon solutions.

Who do you see as competition?

We created a firm that is enabling the industry to succeed as opposed to competing for our value-add.

Under their leadership, Tailwater has executed over $1.7 billion in strategic transactions in the past year. The two serve on boards across Tailwater's portfolio spanning renewables, carbon capture, environmental services, and midstream, and have built a platform positioned at the center of America's evolving energy landscape.

If you had asked us 5 years ago, would the Magnificent Seven have turned the world back to being okay with natural gas and combined cycle gas power generation and things like that, we would probably have said no, but that's exactly what's happened.

The state of energy, it feels like more than ever, the, the energy business is the place to be. With all the demands of AI, Bitcoin, blockchain, all these data centers, like what effect does that have on the energy world as a whole?

We have witnessed what it is as a sector to be out of favor. You know, there was a time not many years ago where there was a real question about the durability of conventional energy sources. And then you have a headlong crash between technology and its power demands and the reality of the energy sector. And that's kind of transpired over the last 2.5 years. And it's been, you know, quite an intersection. Lots to do, lots necessary. And the skill sets, you know, the skill sets that the energy professionals possess are going to be the solutions provisions for the likes of the AI, which is the poster child for demand at this point.

I'm glad you said that because a few weeks ago I was talking to a friend of mine in the oil and gas world, man, and I was being very like, you know, midlife crisis. I got it wrong. Why didn't I get in the oil and gas and become an oil baron? He's like, Ryan, you don't understand. When they're up, you're up. But when you're down, you are down. So I'm glad that you wouldn't have.

Heard that sentence 5 years ago.

Yeah. But I will say the exciting part about it right now is I think the world has realized how much everything requires energy to be successful. And what the difference between reliable energy is and intermittent energy, which tends to be the renewable sources of energy, and you need all of it. But reliability becomes critical when you're talking about technology infrastructure and AI and data centers that have to run at 99.9999% reliability. So it becomes en vogue again. And natural gas is probably the most— admittedly, the most clean, accepted form of conventional energy globally. So you're seeing it re-pick up in Europe, for example, never left Asia or China specifically, Japan specifically, Korea specifically. But the U.S. is a huge producer, has a huge resource. And it's a, it's a great export asset for, for the country and generates a lot of jobs, but a lot of stability because those are long-term contracts with very dependable counterparties.

What's the role of private and like institutional when it comes to energy? Because like, obviously you've got the Chevrons and the Shells and these giant conglomerates, but in Texas, and I don't know if it's anywhere else in the world, but Texas, it feels like there's You've got your energy shops. There's probably 10 in this building.

Private became a— and I'll start, you finish— way bigger piece of the picture when energy went from 7%, 8% of the S&P to under 2%. So institutional capital vacated the energy space and left a real capital shortage. And private capital has stepped in in a big way, both private equity and quite frankly, to your point, in this building, a lot of Family office, large family office capital has also invested in energy. And I think all of those parties had one perspective or another on the resiliency of conventional energy. We were probably closer to it, but it's actually been an opportunity.

And look, there's nothing like the shale revolution to change the perspective and the lens on how to invest behind problems. That need a solution. And we, you know, in our parlance, we call that finding the bottlenecks. You know, we need to find something that is not working effectively as infrastructure and go try to marry commercial contracts with the need for the product. And shale, you know, there was a strong conventional wisdom in the '80s '90s that the US was on permanent decline as it related to being relevant in the energy production business and the sourcing of hydrocarbons. And shale turned that on its head. And what you found out is in a lot of areas where we had been producing what looked to be declining reserves, there were more reserves there that could be effectively extracted with new technology that that, you know, the United States entrepreneurial community figured out, like they do in technology, how to solve. And they did that and unleashed what has been present for the last approximately 20 years in the US. And you've seen us grow rapidly volumetrically. And when you grow rapidly volumetrically, that means there's need for infrastructure. For example, we need more pipelines, we need more processing, we can do more with the hydrocarbon. That's, that's a little bit of the ride we've been on. And as Jason mentioned, during those— we have, we call a variety of these, that 20 years, you know, shale 1.0, 2.0, 3.0. There's been varying degrees of public market access for capital during that. But, you know, as, as recently as 5 years ago, like I said, there's not as much capital available to debottleneck as there was. And people perceive this sector as being on decline. Even as recently as 5 years ago. When you look at what's happening, people realize it's not only on decline, it's going to continue to grow. And so we need more resources, not less. And that, that's where we sit today.

Real quick, only because I'm ignorant on it, when you say shale, what does that mean? Is that like the level of the— in, in the, um, in the soil?

And it's, um, the— what, what we used to do is stick a straw into beach sand and it was pressured up and you stick one vertical and it just comes out. Yeah, its own pressure.

Beverly Hillbillies.

You got it.

Yeah.

And that's what we grew up thinking about is energy up, you know, oil and gas production. What they figured out in the shale revolution is they could take this table that, I mean, that limited of permeability and they knew there's hydrocarbons in it., but when you drilled through it vertically, it wouldn't produce but about a foot from the zone. I'm making up a foot, but it just wouldn't produce that much oil and gas. So it wasn't pressurized and it wasn't coming freely to the surface. And they figured out how to land a well inside of this zone all the way to the end of the table and then fracture stimulate it to create artificial, what they call permeability. And that that opened up a huge inventory of opportunity onshore US. And that is what we've been, you know, 86% of the world's net oil growth has come from the United States from that technology over the last 20 years.

Yeah, so you talked about the withdrawal or limitation of institutional capital coming into the space. One of our first guests on the podcast, we may have touched on this earlier, was Michael Levy. With the Crowe family office, Crowe Holdings, and he said that there's a political constraint on capital flowing into oil and gas development because of fossil, you know, the negative orientation towards fossil fuels, and that it actually drove their family to invest in the space because they felt like in essence there was an enhanced return available due to that limitation.

Is that something you see? And yes, that was, that was very much the case. So scarcity of capital creates opportunity to high-grade, right? So your funnel is still just as big in terms of deal flow. Less people chasing deals tends to lead to more alpha, more higher rates of return. We believe that's going to continue for some period of time because this, whatever you want to call it, ESG movement away from fossil fuels because of global warming, had some very serious consequences relative to capital flight from the industry. I will say, if you had asked us 5 years ago, would the Magnificent Seven have turned the world back to being okay with natural gas and combined cycle gas power generation and things like that, we would probably have said no. But that's exactly what's happened. And probably some of the global, you know, geopolitical issues with Germany and Russia and the amount of gas reliance that they really had for peaking moments of power demand. And that's the reality. Solar and wind, they're just not as reliable. They're not as industrial available and industrially available in terms of battery power and reserves. And so when you need power quickly, the most logical answer is what's called a peaking plant, and that's usually gas or coal. And that's what they had to do. So they hit that market hard to support their needs and they realized gas is actually pretty important. So that started turning the world and then came AI and that was sort of the linchpin of now we really do need this. And so we're seeing institutional capital come back to the space, but it's still compared to historical highs, woefully underrepresented.

Right. While there's a shift in demand. We had a real estate developer on earlier. We were talking about data centers and Bitcoin mining and all this along with the growth just in the housing market in Texas. So you have a big shift in demand and an artificial constraint on capital. It looks like— seems like a great place to be.

Feels like a good place to be. Well, there's another interesting byproduct, which is just global population growth and trying to move prosperity. If you look at Africa, for example, as a continent, you know, moving that population up the prosperity curve requires energy. Moving India and China up the prosperity curve requires energy, and the global logistical infrastructure, for better or for worse, is set up most economically for fossil fuels. So gas, crude. And so if you're going to provide energy cheaply and reliably, that's probably where you're going to get it. So you've got these interesting paradigms here with AI and maybe growth in certain markets like Texas. But you've also got this other global push, which is people wanting to improve their quality of life, and that requires energy to do it.

Right.

What was the premise on which you guys started Tailwater back in 2013? Are you in the same place? You're just continuing to, uh, yeah, right, to execute on that original premise, or tell me about how you guys formed Tailwater.

We were at a private equity firm in Dallas that was a generalist firm, and that's where we started our careers, and that's 28 years ago. So he and I have been partnered together for a long, long time.

Almost as long as we've been married.

Exactly. And so we started working at a generalist firm back in the day, and we convinced that firm to have some areas of focus. The group of leaders around the table that got more domain expertise rather than just being generalists across the board. And that just walked down the path with private equity in general. Private equity got a lot more specialized as the years went on. And so dating back to about 2003, '04, we started focusing on deployment into the energy space. So this has been a dedicated sector for us. For, you know, over two decades.

Right.

Tailwater was just a byproduct of that focus. And what we saw— we started this firm in the fall of 2012, so 13-plus years ago. And what we saw was an opportunity to be what we're calling middle market. So raising billion-dollar, you know, plus or minus billion-dollar funds, doing 8 to 10 deals inside of those funds and solving problems on the infrastructure side of the equation. With that capital. And we thought it was a great moment in time, back to the trends that we talked about on the shale revolution. We thought we needed more infrastructure across the board. So it was a very healthy period of time for us to find deals, solve problems, marry commercial contracts with capital. So that felt like an exciting challenge to us. So that's, that was the root cause of why did we want to spin out and do it on our own. And we were dedicated only to energy. And the strategy we developed or came, you know, that we wanted to embody was what we called full immersion, which to us means we want to see the entire energy value chain and find the best relative opportunities to invest in that value chain as we, you know, walk down the path. And so when we started the firm, we started up an upstream opportunity fund, which targeted a very specific part of what it is to drill oil and gas wells, largely playing on capital intensity of what was happening in shale. And then we started this midstream franchise that we've been executing, and both are alive and well as it sits today. Now, we've grown the firm not only from a capital under management funds and other offerings, we do other things than that right now, but it's been an exciting period of time. So we've stayed on course for seeing the entirety of the energy value system. That is our true north, if you will. And honestly, we find more opportunities that are interesting in this stage of where we are in the energy space than we thought we would probably 13 years ago. So it is actually— the envelope has gotten a little more diverse and more interesting. Particularly given things like the power needs of Texas. And you don't have to go far. I mean, we're focused— a lot of what we do is sitting around this state. I mean, not everything, but there is a lot of activity going on right now, structural activity. Every real estate person I'm sure you talk to are saying the same thing. This DMA has added 1.1 million in the last decade and is probably going to be more than that in the next decade. So super exciting to be located here. We have one office, consistent theme, and we're glad to be here at Old Parkland.

Yeah, you have a lot going on. I'm just looking at your press releases from the last 60 or 90 days. You announced that your Frontier Infrastructure Holdings, which is a carbon dioxide removal program, has Reached an agreement to secure the purchase of 120,000 tons of high-permanent CDR credits. You've— Tailwind Capital announced a $250 million commitment from a single limited partner. Boy, those are great partners to find, right? You announced a successful closing of a $500 million equity capital commitment.

So you've just— is that— is the.

$250 part of that $500 or is.

That— No, no, separate.

So $750 million of capital over the last 60 days that you've sourced. How are you going to use that capital?

So that's a great question. Going back to Edward's point, we have 3 core business models, your traditional blind pool fund models. One is the flagship, which is infrastructure-focused, but it's full immersion energy. So we are well head to downstream logistics in and around LNG export, for example. That is the bigger commitment. So that was part of a first close in our 5th fund. The $250 million was part of a first close in and around our, what we call energy opportunity, which is this non-op financing. So we are not operating E&P wells, but we're partnering with operators to help them finance the drilling of those wells. And then we have a third leg of the stool, which is royalties. So primarily on oil and gas minerals, but we're not restricted to just that. We could do wind or water or Solar if we, if we found a compelling opportunity. So those are the three legs of the stool. Another part of our philosophy, which you didn't ask, but it's a core part of our business. We're all about being good decision makers. So we're extremely data driven. That's both fundamental data that's proprietary coming through that system of assets or research that we do in-house. And then all we want our team to do is be good decision makers. So it's from the associate who's the beginner starter position to managing partner. We want to hear everybody's questions and perspectives, and we want to create a culture where people are rewarded for participating in that process, which means reading people's deal memos, being prepared to ask questions, and helping us fundamentally work on that proprietary research, which is all about saying no as much as it is about saying yes. Let's just be good decision makers. So yeah, that capital was scattered across 2 of our verticals.

As a private equity firm, you're raising capital from investors, you're deploying that capital, you need to make a return so that you can make the profit associated with the risk and work you're doing, and you need to reward your partners. I don't know how much you can talk about that, but can you talk about what a targeted rate of return would be for an investment?

Our rate of return from a multiple of invested capital So there's two lenses on rate of return. There's how much, what is your multiple, how do you multiply money? And then the IRR, the time it takes you to do that. So I would say the backlog that we're working on now and our track record of performance as Tailwater Capital has been 2 to 3 times is a reasonable return. So it's not infrastructure in the sense of toll roads and airports. Better than that. We call it value-add infrastructure where we're really doing deals where we're bringing a lot to the table. That is the business model. And so we're going to be in that, you know, in that 2 to 3 times MOIC range. And we want high teens to mid-20s unlevered returns.

We want that to your partners or.

To— yeah, at the gross level at a minimum. And what we don't do which other firms do in general is hyper-levered deals. So this is not, I'm not going to pick on any sector or anything else, but the application of leverage in a business like ours, we have just learned over 28 years and being present that that of course can make you look like a genius, but it can really impact negatively the return profile. So those returns are all on an unlevered basis. So that's what we're trying to deliver for investors. It's not a SOFR plus, it's not anything else. It's not what this is. And we benchmark ourselves on a variety of indices, the Allerian being one on the midstream side. And we benchmark ourselves on the S&P. Composite E&P index. And we need to, as Jason said, we need to provide alpha for that. Otherwise, what is the, what is the reason? And we feel proud over our 13-year period of time as Tailwater, there's been 4 distinct cycles and, you know, returns have been good. So we're excited about the prosecution of that. And as he said, we're, the compass is true north on decision-making. We don't, we're not a high-velocity shop. We're not coming up with new products that are Yeah, sure. You know, this is just consistent. Be there, have a perspective.

And I'm guessing if you're picking up $250 million check from a single partner, these are not individual investors.

Um, you are— that was not— no.

We have a combination of institutional and family office, um, and it kind of depends on the mix. So the flagship is more institutional, right? The non-op is kind of a hybrid, and royalties is much more more family office. Got it. And I would say our goal on returns on the non-op is very similar, but it must have a yield component. So we're trying to deliver a minimum of 15% sort of cash on cash to investors in that strategy. The infrastructure side is less yield-oriented and more traditional private equity looking.

Who do you see as competition? Is it other energy shops or is it other avenues where people can take the money? Is it other energy sources? Like, how— what is your viewpoint on competition? Or is it, hey, you have competition in all those things I just listed?

It's a really good question. You know, 5 years ago there were 70, I believe, GPs focused on energy. I think it's 11 today. So competition has narrowed quite dramatically. And if we were playing up in deal size and fund size, we would probably have more competition. So that's where the end caps and quantums of the world are. And then in some cases, a little bit more— I think it's more playing the macro, but you see sometimes you see the bigger firms like, you know, KKR and Apollo, you know, come into energy. But on the middle market level, it's gotten pretty lean. I mean, there's a group in Houston called EIV that we compete with. Here in Dallas was Energy Spectrum, was also competitor. And then there are firms like Pearl who are here in Dallas who are really more focused on the operated upstream, which is not really what we're doing. So we're more complementary.

I'd just highlight that we started the firm not trying to compete to aggregate numbers of teams, individual teams that are pursuing the operated upstream strategy. That was a very, very relevant space. In the early parts of the shale revolution where someone that is doing that portfolio would look like 20 companies leasing up acreage, delineating the acreage, and then selling it to Exxon or whomever. That was a really active place. We, when we created Tailwater, did not want to compete in that. There were plenty of parties that did that. So we designed our business model to focus on non-op, so non-operated, non-competitive sides where you could provide fuel to that activity, and then this midstream sector. So if you're a counterparty in the Permian Basin that owns 50,000 acres and you've drilled 100 wells and there's 1,000 more to go, you can come talk to our firm and they would— and as a CEO, and we will provide drilling capital that aids and abets that through our NAHOP fund, and we will do all of the midstream in contract with your pursuit of trying to drill the remaining 1,000 wells. That is a non-competitive value proposition. So what we pride ourselves on, we created a firm that is enabling the industry to succeed as opposed to competing with the industry for our value add, if that makes sense.

Can we, back up a little bit and define the different roles. Because like if I go to NAPE, obviously I know what like an Oxy is. Well, actually I don't know what they are. I just know they're giant. Then you've got all these different firms and there's 20,000 people at this giant conference and seemingly they're all in oil and gas. They all do the same thing. But what I'm hearing is there's obviously these different blocks. So So obviously, we could probably spend all day talking about each role. But is there a way to break it down to maybe 3 or 4 sectors that would be easily digestible by a layman like myself?

Yes. So you have— we'll just go through the value chain. You start at one end of the chain, which is the wellhead. And so you have drillers for oil and gas. You have counterparties move the molecule from the field to the market, which people may say is midstream. Then you have service companies. So there's a service industry that helps facilitate that—frackers, drillers, chemical providers, pumpers. The shovels. Yeah. So those are 3 major components: upstream, midstream, service. That would be full industry verticals. Then as you move downstream, you get to refining. And those guys, sometimes their supermajors are involved in all of it. They may have EMP, and most of the time, or I should say over the last 20 years, it became more fragmented. People spun off refining divisions, except for the supermajors. Most of that became separated. And, and then last but not least, you now have obviously power and utilities. It's been historically more separate. But now gas storage, crude storage, LNG export, you know, things supporting all that use of hydrocarbon are, you know, are still energy industry verticals. But we're not building power plants of scale. We are looking at building power plants that are smaller and behind-the-meter type stuff. But, but those are really your core verticals: upstream, midstream, services, refining, and power.

And then where is Tailwater in that?

Midstream. That's our core business. Then we provide capital to the upstream. Whatever we're saying is, but we're not backing teams to go do it and directly compete with the Oxy's and Conoco's of the world. We're just providing capital. So we're helping finance as opposed to compete.

So you're helping get from, hey, let's get the oil and the gas from point A to point B to the refineries. And then also, hey, you want to go drill, we can be your bank.

You want to drill 20 wells this year, but you only have the capital to drill 15. We can help you drill 20.

And are the economics of that tied to the outcome or— Sure.

Okay. That is a pure upstream value proposition.

Okay.

So upstream being got, got someplace I want to drill. I drill the well, here comes the flow and you own the flow.

Yeah.

Okay.

And you segregate the capital.

They do.

Yeah.

Because there are— so let's talk about the pools of capital and how they've morphed, because I think that's an interesting conversation. We mentioned family offices. Yeah. When we started the firm, the institutional pools of capital were largely endowments. So university endowments. There were insurance companies. There were public pension funds, and there were foundations. That's not holistically everything, but that's, that those four would make up a very large percentage of the capital put into the private market side of this. Endowments have walked back from their exposure to energy on the basis of some of the things we talked about 5 years ago, ESG, not aiding and abetting the development of more fossil fuels, as they would call it. And what has happened is family offices have entered that void. So they have overtly walked directly into that void in a very smart way. And so as you look at our investor base now, it's a combination of all of that. Our family office capital really likes the the non-operated upstream because you're getting some, in theory, some inflation protection. If you think that we're undercapitalized on the upstream globally, one might think that $60 oil is going to $90 oil. And you can make that, you can take a position on that and you can articulate that position to funds that we would be exposed to, that we would be managing. If you just like the fee-for-service business and you think volume in the United States is going to grow From a gas supply perspective, midstream is a great place. You know, our core flagship franchises would be a good place to invest. So families sometimes like the tax benefits of non-op. They sometimes want to take a position on the commodity.

So you have heavy depreciation on the equipment.

Yeah, yeah, exactly. Heavy depreciation on the drilling cost.

Yeah, yeah, it's called intangible drilling cost. It's a tax rate where you can depreciate the the CapEx is such a drill in the well.

Right.

You brought up universities and like charities like Scottish Rite Hospital. You know, they have a giant portfolio of oil wells. And it's like, well, how do they get this? It's like, well, somebody kicked the bucket, they endowed their oil wells and they thankfully kept it. Exactly. And it was just like, I'm sure A&M has a ton of oil and.

It'S just— University of Texas and A&M Systems have. Yeah. A lot of exposure.

So what is— and, and obviously none of us here are nonprofit experts, but like, how does that play? Is it just run like a regular business and then that money just gets kicked up to the, to the institutions themselves?

Yes.

Do you all know?

That's— it depends, but most of the non— most of our endowment investors, for example, or foundation investors, are non-taxable. And so they're just So they're just not looking at tax-adjusted rates of return. So when they look at investing in the commodity, that's purely based on a macro bet. Like Edward said, maybe we're biased towards inflation. So therefore, investing in commodities is a good strategic move, and oil would be one that's easy to invest in. And then you high-grade that based on risk profile. So do you want to buy royalties, which has no capital risk? But maybe they're more expensive, or do you want to put more money to work and invest in drilling a well or a series of wells?

You brought up ESG a couple times, or ESG a couple times. What was interesting several months ago was a World Affairs Council event. It was about energy. And one of the topics of conversation was Biden-era policies that are largely being ignored, mainly because nobody wants to make these efforts if the Trump administration is just going to reverse it. Is that mentality kind of a universal mentality in the energy world? With China, you know, they think in terms of long-term efforts and PE word is quarterly, you know, in our world is like this world is how do you play with policy when in 4 years it can completely change?

But our true north on that is don't play with policy to be very blunt. So let's do things that that we could have conviction are going to make money regardless of the political regime. So, that's a direct answer. I mean, that's really what we— So, those businesses that are propped up.

By.

Tax abatements and policy like that, we've— Jason mentioned in our development of our kind of white paper strategy and thought leadership strategy, we've stayed away from a lot of those businesses intending not to get into the crosshairs of certain of these regimes. I'll, I'll pick on one sector of a lot— renewable diesel. You can make drop-in diesel fuel out of soybeans. You can do that. You can manufacture it. And the world was taken aback 10, 8 years ago by small refineries not having a role against big-scale refineries for just regular way gasoline and everything else. So they were getting marginalized. Well, there was a play to convert those refineries into renewable diesel so that you could put this in the long-haul trucks that drive across the country. But that relied heavily on a variety of regimes, tax regimes and credit regimes, heavily, heavily. And it was a tough underwrite. We've looked at— I mean, we'll look at anything., you know, in, in the full-service energy value spectrum. We'll look at solar, any, any of it. We're totally agnostic personally, um, or as a firm on what we do. Let's just know that we can try to— let's have a sense that we can make money. And we stayed away from those business models because of the issues you're talking about, because you never know what's going to happen. There could be things taken away from that business. They could be So it's important to know what you're getting into. This is a really hard business to rotate into as a generalist firm. It's a very, it's a much more complex business than it appears from the.

Outside, I would say. So subsidies are really the Achilles heel. Like it's, if it requires a subsidy to be economic, we try to stay away from it. You've got to be careful. We're not as worried about policy or regime change. Saying, you know, because I think it would be incredibly inflationary and arguably maybe even recessionary, we are not going to be allowed to use oil and gas ever again. I'm just making the most dramatic example, right? So, you know, ironically, Obama was the one that approved exporting oil. Both sides of the aisle have been pretty constructive on most of the fundamentals required to drive the engine that is the United States. It's been whether or not you can do that on public lands, government-owned lands, or is it only on private lands? Can you do it off the Gulf Coast or the coast of Florida? Or— so it's been somewhat isolated to where the government controls it, but private lands, there's never been any talk by either side of saying we're not going to let a privately owned piece of property not be drilled as a regulatory perspective. But you do have to pay attention. To that stuff. The challenge that we have is most of the time the government that is mandating a certain change or policy is not necessarily thinking of the unintended consequence. And usually it's an inflation outcome. So California is the most regulated. It has the most expensive energy in the country by a lot.

How much of your capital is directed in Texas? And is that a policy that you have?

No, it is more because of the activity level in Texas. But we have Texas, New Mexico, Oklahoma, Colorado, Wyoming, Wyoming, North Dakota.

Okay.

And those are all based on core basins of activity and right in where the rock is economic.

Is there any play on energy consumption in an area or you're just, you're just investing in energy wherever it goes.

However it gets there?

That's a really good question. We acquired a business last year that was an old established last mile connection. Think Atmos-like.

Yeah.

Some of it was regulated, some of it, a lot of it was not regulated, but this is last mile into home type situations for natural gas. And we loved a lot about that. 7,700 miles of pipe. It is a legacy business, been around for 50 years. We really like the concept of what it is, extremely stable, grew during COVID you know, people didn't turn off their air conditioning, et cetera, et cetera. But one of the reasons we liked it and one of the reasons we were excited about it is just the Texas as a growth magnet for population and the desire to move in some cases out of urban areas and into the more, you know, more rural suburban, but a little more rural, and we were having tremendous— this company was having potentially tremendous success in those areas. And that was just a great dynamic. That's a super safe cash flow, high cash flow business. And then when you marry that with the AI boom and how Texas sets up for data center development from a regulatory, cheap gas, labor force, cheap land, perspective, it married extremely well. And we've owned it a year and really interesting things are happening in that company. So we're very excited about that business. But that was an articulation of a bet on Texas and a bet that Texas would win a lot of this technology meets energy boom and that we could solve some problems in that. So we were excited about that, but it's a long Texas play.

Right.

There's an answer. With the United States kind of, I don't want to say falling on the global scene, but kind of are, and then you got Russia and you got China increasing. Do you think like with the move towards the climate change, the move towards renewables, how that is heavily subsidized, do you think that there's a possibility it's like, you know what, we need to be nuclear, we need to be oil, we need to be coal, and the renewables That's great, but it costs too much. It's overly subsidized. To be competitive, we need to focus on what stands alone without the subsidies.

What I think is undeniable is that we are energy short, like, and you see it getting shorter, and therefore we need everything and we need every kilowatt that we can generate. Let's put guardrails on that. So some demographics are going to grow faster than others. Texas is going to double in population by 2055. Wyoming is not, right? So where it won't matter if it does, right? But no, but my— so, so you're going to have, you're going to have pockets of where domestically that energy demand is, is impacted more dramatically than others. But as a globe, you're going to need it all. Fastest and cheapest to market right now is, and cleanest, is natural gas. Nuclear has to be part of the solution. Again, that's another one of the opportunities that is shared in perspective, Democrat or Republican, politically agnostic, everyone agrees you got to have more nuclear. The challenge we've had in the United States that China doesn't have is the permitting and regulatory requirements to get it done and the not-in-my-backyard concepts where local communities end up protesting the permitting of a, of a new nuclear power plant. This administration just announced a $70 billion partnership with, with two public entities. One is a producer of product and one is a producer of nuclear facilities to go build more here in the US. And the reason they want to do that is because it is, once up and running, it is long duration, super reliable, and the cleanest that there is. When you, when you include the whole value chain, like making a windmill, when you look at all the cement and concrete, when you look at the real carbon footprint Nuclear is the, you know, is really the cleanest answer, and it's baseload. China didn't have to deal with that, so they're building, you know, more nuclear power plants and more coal power plants than anyone else in the world combined right now. But the advantage we have over China is from a rule of law and a trading partner perspective. I think the world woke up most recently when China announced they were going to restrict rare earth minerals to the rest of the world, and Now, that's a real pickup, right? So what we're seeing is, and what we get excited about, is kind of sticking with what we know. Natural gas is a near-term solution. We are making 20-year contracts with our allies across the globe to export it through our Gulf Coast, primarily Gulf Coast LNG facilities, which are expected to double in capacity by 2035. That is a lot of supply that needs to be met under really, you know, nice contracted structured business model. So that's, that's an easy thing for us to hit as a firm, but, but as an industry in the US. But the reality is, no matter how you stack it, you're going to need every bit of energy you can get.

If we're talking about a US policy regime that would be maximizing our success as a nation of winning in this period of time, you're going to lean heavily on natural gas. We have 100 years plus of it available, proven. We know where it is. We know how to get it out. We have a 100-year pipeline network that can allow for the transportation going wherever it needs to go. We can export it. We've grown that business over the last decade. Now we can be a stable trading partner. And all of the needs for electricity can be fueled by gas over the next 15 years to get us where we want to be from a digital perspective. So it's a huge competitive advantage and it's very cheap. China does not have that.

A recurring point that I hear in multiple places, which is we need all of it. And another thing that I don't think people realize, at least I didn't until like yesterday, was how long it does take to phase out an energy source like wood. Wood was the only energy source for thousands of years. And then you had coal in 1850. And then even in 1900, you had about 80% coal, but you still had 20% wood. And, you know, so, and even now you still have about 10% coal as the energy source. So it's just decades to phase something out. So even if we did, hey, let's just go full tilt nuclear, you're still going to have the renewables, the coal, the oil, the natural gas, all of it.

That's funny. 600 million people in the world still cook with either wood or dung. That's 2x, almost 2x the size of the United States. A whale blubber, whale oil is still in use. I don't think there is an energy source that has ever been phased out. None have ever been phased out. So your point is incredibly valid. Yeah. And then when you think about how much infrastructure we have, like everything our grandparents built runs on oil and gas. So to replace that with wind and solar is, is it's not, it's not really feasible.

So, so not to open up too much of a can of worms, but I just learned this again yesterday, but I think at Siemens headquarters, they have like a Model T car and then they have an electric car that was built at the same time. Because, and I thought the electric was like a new thing, but when they first invented the car, the choice was, do we want this to be battery-based or do we want this to be oil-based? And obviously the oil guys, their lobbying efforts, they won out. But it was just, I just thought that was a new thing. But no, we could add electric cars for over 100 years.

It's a little bit logistics too, because you could put gas stations in and fill cars up faster than charging them. Well, that's a whole other infrastructure battle.

Speaking of infrastructure, I think I understood early on that, Edward, you referenced natural gas infrastructure bottlenecks. Yes. Talk about that, because you're saying natural gas is play, what are the infrastructure challenges?

So I'll frame it in terms of two different answers. One is a supply in the area where there is copious amounts of natural gas enabling that supply to come forward. Right. So call that a kind of a supply push solution. We have always been focused on that. I mean, you need to go to where there there is no pipe and allow this gas to be flowing freely to its markets of destination. So we have a, for example, currently in our portfolio, a very large investment for us in those solutions with a company that's in our fifth fund that we're raising money around right now. It's super exciting. They did not have the infrastructure required for this area because of the nature of the gas. It had things like H2S in it, which is deadly. It needs to be stripped out, has some CO2 in it. Can't put too much CO2 in a pipeline. So you have to condition the gas. So we've built a whole business that's very relevant for us around debottlenecking that area. And it's exciting in and of itself. Now, the other side of that is what I'd call the demand pull side of infrastructure. And again, we've been hitting on artificial intelligence data centers. But these are $2 to $3 to $4 billion real estate plays, and all they do is eat electrons. Now, our contention, strong contention, is the way this is going to happen, particularly in Texas with ERCOT, we don't have just copious amounts of spare capacity for a 500-megawatt application. We just don't. And it's reflected in the interconnect, the plug-in line, you know, for the ERCOT grid. You can't just go and say, I want a $500 million one, I want to put it in Dallas and serve me. You have to solve that problem. And the way that it is going to be solved is with natural gas-powered turbines that produce their own energy for that data center. There's a lot of reasons for that. It's cheaper, it's more effective, it's readily available, et cetera. There are still bottlenecks in there, but that is a faster, more reliable, more, more executable path forward if you're Meta right now than anything. And in that regard, we found two ways that we are excited to play that demand pull: building pipelines that guarantee delivery of the gas necessary to spin the turbines. And that's just core midstream business 101. Got an exciting portfolio of that and building the behind-the-meter power generation by acquiring turbines, installing them, and being a cogenerated electricity producer for the likes of these big technology companies. So that's a demand pull play. In theory, that's going to eat a lot of electricity all the time, and that's got a whole different complexion than whether someone drills 10 wells or 30 in a given year. So both are attractive. We're in both. That's— we're seeing a lot of that now. And I would put LNG, liquefied natural gas. These are giant facilities. They look like huge refineries. They're on the Gulf Coast so that boats can come up and take that to Europe. They're built— we've built so much LNG capacity to take those molecules and they want it all day, every day. So debottlenecking that corridor is also demand pull. So both of those are exciting. Supply push stuff we've been doing for a long time. We like it, but those are the nature of the bottlenecks we're seeing currently in the market today.

Have you seen the modular data centers where, 'cause you brought it how they go to, the data centers go to the places or to the source. And I've seen this in the Bitcoin world where— Bitcoin for sure. You buy the shipping container and it's obviously not a shipping container, but it's a— it used to be, but now it's more designed specific for it, where half of it is that the generator and the half is the computers and all the ASICs and the data center side. Exactly. And it's just fascinating how quickly innovation happens when there's an economic need for it. Exactly. One thing I do want to— you said fifth fund. I want to congratulate you because I don't know what the stat is. I'm sure you would know, but how many funds never make it past the second or third?

So to be at five, that's huge.

We have three upstream funds in the non-op business. We've got two royalty funds. We've got five infrastructure funds, and then we got three SPVs.

We have 13 funds.

No.

So that means you're kicking everybody's ass.

And.

We own— That's my technical term. You heard it here first.

He was going to say that if you didn't say that.

All right. No, it's been a really good period of time. It's been a fun ride. Obviously, we've been partnered together for a long time. This has been a great manifestation of a lot of years of working side by side.

One of our first guests was Victor Vescovo. I don't know if you guys know Victor or not. He's here on this campus and he's.

Quite a, he's a private equity guy.

But he's also been to the depths, the 5 deepest points of the world's oceans, climbed Everest. He's gone to space in Blue Origin or Subspace. He's skied across both poles. So, you know, he's much more interesting.

He's the only human. He's an interesting guy. The only human to go to the.

Titanic in a solo submarine. Submersible that he had constructed for himself. And I think he took James Cameron, didn't he?

No, he's the only human to ever go to the Titanic by himself.

By himself.

Yeah. So anyway, I'm sure he's been there with him.

The point of that, though, was that you were excited about maybe launching a fund and he said, well, you got to get the first one right or there won't be a second.

Right.

And I think it kind of deflated you. And they're on number 13 now.

Right.

So they've overcome the Victor Vescovo curse.

Yeah.

Well, I wouldn't call Victor Vescovo curse. I'm just saying he stated that if you don't get the first one. Yeah, because I don't want you to be taken out of the context. He was very successful on his first.

Oh, he was very successful.

Yeah. But when you say Victor Vaisova curse.

I'm like, ah, that's not what he meant. Yeah.

Uh, yeah, let me clarify. Yeah, I don't want to get on.

The wrong side of Victor. Well, the internet, you know, they'll get you.

Yeah.

But, uh, but he made it clear that if you're going to be successful in private equity, you better get that first fund right.

Yeah.

Um, and, uh, so obviously you got the first one and maybe the second and the fourth and the fifth, uh, right.

And then, and that leads me into my, you know, fun question is like, what sets y'all apart? You know, because again, being in Dallas, we talked, there's 30,000 different firms here in this building alone. What makes you better or what sets.

You apart from everybody else? I don't want to say better because I like the way you described it. It's what sets us apart. What differentiates us? What are we proud of? We made a point, so I'm going to hit on a couple of things, but one is our culture. So it is, I mean, we're family guys. We each have 4 kids. Work-life balance is super important. We found that people get more energized and do a better job when they feel valued holistically and they feel like you're paying a respect to what is all the important points of their life. You want to coach your kids? Let's figure out how to make that happen. So we don't have to have face time, but we, we want people to be paying it back based on, you know, this mutual respect. So we set up a culture that we really were intentional about trying to, to make it to where people were.

Excited to be a part of our team. I didn't see you yell at Jill when you walked in.

No, no yelling at Jill. That's one. Number two, I think, is How— what I hope is how— and this is something we learned in our prior life, which is, you know, providing people a path to have autonomy and responsibility. And so you want to hire good people, but you've got to give them a little rope and you got to watch them, right? You got to have some judgment on what their judgment is. Like, are they coming to you when they don't know how to do something and asking for some guidance, but with a perspective on what that should be? You know, are they thinkers? But if you do that, not only do you get more out of your people, but our lowest rung on the ladder is the associate pool. And there's not always a direct promote path internally because private equity, every private equity firm, unless you're KKR or Blackstone, just has a timing issue. Sometimes you're there at the right place at the right time, sometimes you're not. We've recognized that and done things, for example, like we've created the Tailwater Leadership Program. So that helps them find a spot in a portfolio company in a senior finance role or corporate development role where they can continue to learn, but not necessarily go back to business school or stay here. So we've tried to provide and then have responsibility so that when they talk to their peer group that are at these other private equity firms and they say, what do you do every day? The answer from a Tailwater person is, wow, all I— the other guys, all I'm doing is modeling. You're doing VP-level work as an associate. I want to work there. So that's what we're trying to do to make it different and make it more interesting and fun and to try to attract the best and the brightest. And then the family aspect of it is big. We want to be a big family. We want to invest in our people. And have them feel like, you know, because you spend a lot of your time at our office and not at your house, that it's a place where you're cared about and you're going to be treated right and you're going to be rewarded. It is a meritocracy. We are all about rewarding performers, but that you have a fair shot at that. So that's my answer. You probably have some elaboration.

No, no, I mean, that is the most important answer. Is you've got to build a team. And it's— we feel like the 48 strong that we're at now is an unbelievably functional, great culture team of like-minded individuals that have their true compass look like, you know, things that are important to all of us, which are family and integrity and walking down the path the right way. And With our management teams, you have to, you have, you know, the other constituency is you partner with management to solve those problems that we talk about, those bottlenecks, find the bottlenecks. And we feel like we've been intentionally creative partners as we try to solve problems. And I think we get some credit for that with teams that want to work with us and see how 1.

Plus 1 can equal more than two. The autonomy aspect of a team is interesting to me because I think too often, at least I will only speak for myself because that's where I've failed as a business leader myself, is autonomy without structure leads to chaos. And because I'm kind of like, I'll just go do the thing. And I'm like, well, you know what, Jason, here's your lane, go for it. And one of the biggest criticisms I've gotten over the years of former employees or even current employees is a lack of structure. So how do you balance, at least on y'all's team, autonomy and structure in those guardrails?

One of the techniques that we think is very valuable in this— a lot of sports analogies coming out of us. We were both members of good timing, things like that. So We have what's called deal quarterbacks, and those quarterbacks are not us. Okay. So we have been very intentional around relationships that can be built between folks that want to get senior with us and CEOs of companies, for example. We want them to develop that relationship. We want to watch that relationship develop, and that is autonomy. That does not mean you have to call them at this point in time.

It's you.

We would strongly encourage you to develop that relationship. And we then, as a quid pro quo, do not come over the top and say you got to only listen to Jason Downey because he's the final buck. So we've got to stay out as well. So this kind of institutionalization of what we call deal quarterbacks has been something that we've found is very effective. And you can actually get a really good judgment on someone's performance relative to how they blend emotional intelligence with raw intelligence, with creativity, with attitude, with culture, with, you know, let's go solve a problem. Who wants to be in a foxhole with you? You can see it all happen right before you, and you don't need to guess about it because you're watching it. And that culture permeates. Now, we do have meetings every Monday morning and Monday afternoon where we all get together and review, you know, so we're managing it structure-wise, but it's not micromanaging.

Let's say it that way. What about the relationship between the two of y'all? Is one a visionary, the other integrator.

Or do y'all share? Let him have.

That one. Because how do y'all manage that? And is it like one's the face and one's the brain, or do you just share the roles down the line?

We're both pretty good at most things. I think, but we also have recognized the benefit. And this, I'm just going to use like the movie analogy, the good cop, bad cop, you know, and it's effective to have a missing man when you're making decisions or trying to drive a strategy. But for the most part, no, we have balanced ourselves well, and we tend to divide and conquer on geography. More than we do on who's the face or who's the brains. So I'm traveling this week, he's traveling next week, but we don't have to both be at the same meeting most of the time. We don't have to both be on the same— when we were first starting, we were on every board together. We're now essentially not on every board together. And so it's really more time management than it is. And we, we are very deliberate and intentional about getting off and getting on the same page on Everything. And I think, look, we've made mistakes together and we've had successes together. And I think because we've been full cycle on what it is to be a good investor, we don't have any ego in how we manage the business.

And the good investor part I think is important. Certainly the culture you've built makes people want to come to work with you and stay there and you have low turnover. And people rise in the organization, and that's important. The other part of that, I see this as a, you know, lower middle market, middle market M&A guy, is that founder-owner-operator businesses are scared to death of private equity.

Yeah, right.

And they're— and I have— I deal with private equity all day long as buyers of operating businesses, not what you guys are doing in a different space. And they've heard horror stories and there are bad actors in private equity. I've dealt with them where they come in and put a false offer on the table and then try to retrade it and, you know, all those things. So to have 13 funds and 12 years of success means you're good actors in the space and the people that you're doing business with are promoting you in that community. Otherwise, when you pick up the phone and call on that next deal, they're going to go, you don't want to deal with Jason and Edward.

Yeah. So, you know, you raise a really good point. It's funny, the energy industry from like a capital intensity perspective, I believe is the largest industry in the world. Maybe now that AI is going crazy. They're passing energy, but, you know, they're investing minimum $600 billion a year just to run flat on volumes. Yeah. So that's before you get to refining. So, so, but the irony in that is the circles are incredibly small. Yeah. So if you are not being a good partner, if you, if you are not doing what you say you're going to do when you say you're going to do it, it's the old adage, bad news comes before good news.

Yeah.

And And then alignment is really critical. Everything we do, and we learned that the hard way. If you're not properly aligned, you can have bad outcomes. And so, you know, we really focus on the front end when we're doing things with our counterpart. Our executive teams running companies are not executive teams. They're partners.

Yeah.

So do deals flow to you as.

A result of that? Yeah.

Yeah.

You don't have to go find everything. No.

A lot of it shows up on your doorstep by reputation.

And the longer that you operate in that manner, we have found the more self-fulfilling that cycle can be in a sector this small in terms of the number of individuals that are running around doing it. So it can be exciting. And, you know, there was a period of time where we looked around the table and looked at the headlines and you're just looking at it saying, what are people thinking? What is happening? Everybody would be crazy. And so it does test your mettle on the sector you've chosen to be competent in. But if you have conviction and a good team and everybody lives up to their end of the bargain integrity-wise, it can be self-fulfilling.

Well, it's funny. I want to come to a point that you just Yeah, we looked at a family-owned business 11 years ago and we didn't get to a deal and we, and we were very upfront about why and what they, we thought they needed to do. And that same 50-year-old family business came back to us and we just closed a deal with them 11 years later. And it's going to be a really cool opportunity and they rolled 45%. So they are They're a big partner in it and that's exciting. That's the point you're alluding to. Yeah.

There are 5 deals in our Fund 5 backlog. 3 are owned, 2 are coming, and all of them are repeat teams.

That's so great. So we had Troy Eckard on, I guess last month maybe, or month before. Eckard Enterprises. Eckard Enterprises. Don't know if you've come across Troy. And in our sit down with him, he started by saying the whole industry is crooked, right? Everybody in the industry is a crook. Paraphrasing, but I don't think I'm far.

Off the mark there.

Yeah, yeah. I mean, I mean, that would be my experience as well. Again, you go to certain, like, Nape, pulling gas upstream. Yeah, certainly go to Nape. And then you, you— I think a good indicator of, you know, maybe, maybe not a good indicator, an indicator would be like if their booth has booth babes, even in 2025. Booth babes?

Have you not heard of the term?

No.

Basically, a firm will hire attractive models.

To attract people over.

But what that tells me is, is like, well, clearly you're not able to attract people on your own merit. On your merit.

Yeah.

Or the deal itself.

So, yeah. Well, congratulations, guys, on building a great business. And 12 years in. So you have an active fund that you're still raising capital for?

We have 3 active funds.

AMQ, S&U. You're always raising money?

No, it didn't work It didn't get— usually we're not raising all 3 products at exactly the same time. It just so happens we cycle around enough that now we have all 3 in the market.

So you have 3 products that you are actively sourcing funds for? Correct.

The upstream, the royalties.

Yeah.

The NOP.

Yeah.

That has a $250 million. That's the $250 million commitment.

Okay.

All right. So we're building inventory in that so that we can top it up. Okay. And the royalties is our second fund and royalties, we're about halfway there.

Okay.

On our target. And then we had a first close on bunk 5 at $420,000.

You got a lot going on.

It's been a busy year.

Yeah, a good year. It sounds like it was a very good opportunity.

And we moved here. Yeah. And we opened the old Parkway. Okay. And when did that happen? It was 6 weeks ago, 7 weeks ago, 2 months ago. Time's flying already.

Yeah. We were stuck with back to the culture thing at our prior building with a half of a floor plate and then we had to sublease for some of our upstream technical folks. And we wanted everybody on one, you know, in one office proper.

And so this was a great, great move for us. I made a, it's not quite a mistake, but just a, I forget sometimes my mouth. Lane has called me out before where I'll talk before fully thinking it out. But I emailed Michael and I was just— Michael Levy— and I was just like, man, you know, one of my goals, one of my BHAGs, you know, audacious goals, is one day have a studio at Old Parkland. And he replies back with, well, what's your proposal? Show.

Me numbers.

I got super nervous because I'm like, literally, I'm just like talking about a deal. Like, hey, this is just an idea. I'm just planting a seed for something in the future. And then he hit me back with, you know, what's your proposal? Let's go. And I'm like, yeah. And I'm like, I scared the crap out of me. No, because I'm like, I just, I just like, uh, you know, I never responded to that email. Sorry, Michael.

Well, it's a unique place.

Yeah, yeah, it really is.

It is a community, and, uh, um, it's a, you know, I kind of pinch myself a lot of days when I'm here on campus.

Um, well, I've told the story many times, but for you guys, I have a membership that I have at Cowboys Club that's on hold. At the time, I was gonna— I was I'm fully focused on Frisco. I need to move my studio up there. I need to buy a house up there. That's where the business is. That's where the money is. I take one meeting with this guy here at Old Parkland and I forget that Frisco exists. Yeah, you know, like, I mean, I, I put the membership on pause. I'm never up there. Like, I'm here way more than anything else. You are here a lot, and it's great. Um, I have two— I know we're trying to wrap up, but I have two more thoughts I want to get to. Okay. One is the value of your partnership with each other. Like, obviously you talked about the geography. When you're here, he's there, or vice versa. What does it mean to be partners with each other? Here's your opportunity to make the other one cry. Oh, yes.

Positivity. Personally, he's like a brother to me. I do not have a brother and he does not have a brother. And so we function as family in some regards. And 28 years is a long time. To be going through what it is to do our business the right way, because there's ups and downs and we've been consistently having each other's backs. So I'm real very proud of the relationship we've formed, um, relative to, uh, not only having fun, but building a team, keeping that team together, having a concept, hitting it hard, understanding it, trying to improve, you know, as the years go by. So it's been very much a brotherly relationship. And with that goes, you know, you, you know them and you know when's the right time to— I mean, you've got a— we've got a bunch of personality cues that we're aware of with each other. And so we generally are very, very communicative about all the stuff that is entailed by, you know, showing up at the office over there. So exciting. And we're great friends off, off premise.

Well, you failed. Jason's not crying.

You're trying. No, I'm not, but he— but I almost— I'm crying on the inside. I, you know, I don't know how to say it any better than that. So 28 years, um, and we have, we have a lot of common interests and a lot of crazy cross, almost crossing of paths, correct, across our life, going back to like being 7, 8 years old. And this is crazy stuff. Literally, my wife is named after his aunt. True story. True story. We found that out at a birthday party. So if you want to know, so there's like this karma of how did you, how did you guys end up? And I, there, there's, if you believe in that kind of stuff, I think we were meant to be partners. We share a lot of common interests from, from reading to sports to hunting and fishing. We both have 3 boys and a girl bringing up the rear. They're not exactly the same age, but they're very close. And so we— my wife's from a giant family in Houston. His wife's from a giant family in Dallas. We, we have a lot of the same family issues. I mean, so we just have a lot of things in common and that has you know, that, that has endeared ourselves to each other. I think I do think of him as a brother. I think of him, quite frankly, as a best friend. And he knows everything about what's going on in my life. And we are both, you know, I don't want to say prideful, we both certainly have egos, but not with each other. And so there's no topic that's off limits. And he and I always— I mean, we over-communicate, and that's just allowed us to have a complete trust for what's going on. You— I trust that he will always have my interest at heart and my family's and vice versa and just has made for a great partnership. And I think we probably saw it, you know, 4 or 5 years in that we were, you know, we were in different spots of the office and then we ended up officing right next to each other. We worked at another firm for 14 years and for about 7 of those we were shared an assistant and we're right next door. So, so literally for The last 19 years or 20 years, we've shared an assistant and been right next door talking every day. And so, shit, it's 28. I probably shouldn't have said it. Sorry. It's 28 years. I've been married 31.

How long have you been married?

Like 15.

30.

30 years, sweetie. 30 years. 30-year anniversary coming up. So it's pretty amazing. But yeah, I'll tell you though, if you want to hear it, my wife's name, I mean, how What are the odds?

A million to one?

Pretty low. Yeah. So my wife's parents were living in New York. She was born in New York. They're both from Texas, Fort Worth and Houston. And they went to a play. And in the playbill, one of the actresses' names was Berkley Johnson. And they were like, that is the most unique name. Let's name our daughter— she was pregnant— Berkley. Flash forward, whatever it is, you know, probably 30 years. And we were at a birthday party at his house for one of his kids. I think that's right. And his mom asked my wife, how did you come up with the name Berkeley? And she tells that story and she basically drops her coffee and says, that's my sister. She's like, what?

Yeah.

And she pulls out books. You have books in your house and all that.

She was a model. She was like a Vogue model and all that. So she was in the Playbill as an advertisement.

That's extraordinary. Oh, was it an advertisement in the Playbill? It was an advertisement. Okay. Yeah. So yeah, you can't make it up.

That's extraordinary. My father had a 40-year partnership with his best friend and very much like you guys just described. And I remember my dad was sort of in ill health late in his life and he was going in and out of the hospital and I said, Dad, I want to get a durable medical power of attorney so that you know, when you go in for care, I can make medical decisions for you. And he said, well, that's fine, but I'd like for my partner to also be on that. So he has to agree.

With you. It's like, that's pretty amazing. Your son.

Yeah, it's like, yeah, he's my partner 40 years.

So we were both pretty amazing. That's good on me. I can see that happening.

Yeah.

All right.

I'll see that happening. Yeah. My, my final conversation topic and then Lane can end it or take it from there. The impact, and it's fun, the impact the show Landman on your lives or your— Wow. You know, because there's obviously— Off the rails. No, I'm just saying because obviously there's fiction, there's perception, there's reality, but there's that one monologue that gets thrown around so much about like clean energy is not clean or whatever. Like from your perspectives of being in this industry for 28 years or more, I think 28 years is y'all's relationship. But that show, what has it done for industry in a positive, negative, or.

You don't really care? So it is, it's a good watch, right? That's a good watch. That's fun to see. I would say there are parts of that that are so hyperbolic. They're not even worth talking about when the military is bombing the, like the Cartel. The cartel gets in the way and.

There'S rigs or banging on the rigs.

Yeah, like that's the silliest thing I've ever heard. But the concept of like taking risk on upstream drilling, oil and gas drilling, those concepts are real. Those are real concepts. But you're right. It's just like it's like everything that Sheridan does. You know, he brought cowboys back in the cool with Yellowstone. For sure. I mean, absolutely. Like that had been gone for a long, long time. And this is shining a light on something that he knows well, you know, having spent his summers in Stephenville. And so it's pretty neat. I mean, I don't think there's anything tangible that we get this benefit off of, but it is neat. Let me say it this way. When I went to school, undergrad on the coast and all my friends came back into town for something in the last 6 months and they all wanted to talk about it. So it is, it has done that. It is, it's a way to shine a light on like some of the things that are, that are real in the energy patch.

So are you getting any, hey, I just watched the show, I want to give you money?

No, no, nobody has said that. No, not yet. And they wanted, they were moved to Midland though.

And you You know?

Yeah. And there still are characters like, like that in the industry, right? So the fun part about that is I think everybody looks at Billy Bob Thornton's character and goes, I know that guy. Yeah, right. And I know, I know that guy. I know I have exactly someone that fits that role. But, but a lot of it is untrue. But when you look at them working the rig and you hear them talking about a farm out, which is not quite exactly how it goes, but there is some of that risk profile. And, you know, and I do happen to think that the rant that he gave to the lawyer on Wayne Energy, I thought that was pretty good.

I'll finish with a story that relates to Taylor Sheridan. I was representing a business for sale in Lubbock, Texas several years ago, 3, 4 years ago. And I'm not from here and I'd never driven there before. And I drove over to Lubbock and I took a different route, but I took a different route coming home. And I'm driving my car and I'm on like a quarter tank of gas and I'm thinking, well, that's fine. I mean, I'll stop at a— well, hell, there wasn't a gas station for a couple of hundred miles, it seems like, right? So I've left Lubbock and I'm driving and driving and driving and I get down, the light's on and I've got like 15 miles left, you know, in the tank and there's nothing and there's not even a shoulder on the side of the road. So I'm thinking, I gotta, I gotta pull over somewhere, but I don't know where to pull over. And finally there's a, a, a house. A little compound, and I pull in and park, and I get out and I knock on the doors and no one answers. And about 5 minutes later, this guy comes flying up in a pickup truck and he gets out and he says, what are you doing here? And I said, I'm sorry, I've run out of gas, you know. And he said, yeah, that happens a couple of times a week. And I was on a ranch that Taylor Sheridan had bought.

Oh, no way.

Oh, wow. They were filming Yellowstone on it. And this guy was sort of on the set, sort of running interference. And here I come, you know, up into the middle of this, although I didn't see that activity. And he'd been sent to dispatch me. And he said, that's why, you know, look, I'll— we've got gas and let me, you know, I'll get a tank and we'll run over here and I'll fill up with gas and I'll get you back on the road and So while we were doing that and he was a, he was a cowboy, he was a real cowboy. And he said, he said, you know, he said, they pay me $500 to fall off horses here. And he said, every time I fall off a horse, they pay me $500. And he said, I've made a good way to make a living. And so I thanked him for filling me up. And I, you know, went back and looked up the ranch and it's like.

3, 3-something, you know, 4 Sixes or 4 Sixes.

It was a 4 Sixes ranch.

Yeah, right. Famous ranch.

Yeah, that he bought.

Yeah.

So this guy was on the 4-6s doing something and sort of running interference.

On the— you were out in the middle of nowhere.

I was in the middle of absolutely nowhere. And I told him, I said, you know, I'm in Dallas. And I gave him my business card, which, you know, was like the stupidest thing I could do. And I said, if you're ever in Dallas and anything, you need anything, right? And he said, sir, I'll never be.

In Dallas.

All right.

What about Oak Park?

Yeah, right.

Just in case. But, you know, $500 to fall off that horse.

I mean, I'd take it. Fool of his money. Edward, Jason, thank you so much for.

Being here with us. Absolutely.

Thanks for having us.

It's been fun. Yeah. Nice to get to know you guys.

Appreciate it very much.

Thank you very much.