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David Blackmon [00:00:00]  Hi. Welcome to the energy Question with David Blackmon. I’m your host, David Blackmon. Obviously a very special guest today is a man I’ve known for a long time and worked for for about a decade during my career in Burlington. Resources. One of the most visionary leaders I ever worked for Bobby Shackouls, a former CEO, Burlington Resources. Are you Bobby?

Bobby Shackouls [00:00:28] I’m doing great, David. Thank you for having me.

David Blackmon [00:00:31] Well, thank you. Thank you for joining in. I really appreciate this. It’s it’s first of all, it’s just great to catch up with you and see your face again. And after after 15 years, I guess. And I know I’ve seen you periodically during that time span, but Burlington was bought out by ConocoPhillips in what was that December of 2005 when it was announced.

Bobby Shackouls [00:00:51] And that’s when I realized, yes, it actually March 30th 1st to 2006.

David Blackmon [00:00:56] Yeah, yeah. And sold at the height of the natural gas market. I mean, the very high I thank you pretty much. Did that deal for about the maximum value that would have been possible for that asset base. Do you agree with that?

Bobby Shackouls [00:01:10] Yeah, I tell people all the time, I’d rather be lucky than smart any time. And we were very lucky. I’ll tell you a quick story about that. When we were selling to ConocoPhillips, Walter Scott, who was our defacto lead director at the time, told me to go back and ask for more money. But whatever we did, don’t let the thing get away from you.

David Blackmon [00:01:28] Yeah, yeah. Well, I think that was pretty solid advice. Yeah. Oh, yeah. I mean, I hated to see that company go. I tell you, I’m so bitter about it still, because I just loved I love that company. You love the people there. You and Gavin Smith, who was my boss there, and all the great work we did over the years. It was really a special, special kind of organization that I think is pretty rare. And in the any industry, I just it just felt to me like the culture there was was something that is really hard to replicate.

Bobby Shackouls [00:01:58] Yeah, it was a it was a really great place to work. And, and all of you were great employees to lead. I think we had the best workforce in the industry, the best that’s ever been seen, in fact. And it it showed in the way that we operated in the way that our stock performed over time.

David Blackmon [00:02:15] Yeah. One of the things that that is so special about that place is what do we have about 20, 20, 400 employees, I think, on a $32 billion asset base? Yeah. Is that about right? Yeah, yeah. And so I went to work that deal closed on a Friday, as you said on March 31st. I went to work the next Monday for shell and where you couldn’t make a decision in that organization with about 18 levels of approval across three different countries. And I tell you, I was so frustrated. Six months into that job, I got a call from Brant Small at El Paso Corporation about six months into that job, asking me if I’d be interested in working there or not. That was like the happiest day of my whole career, and it shows a great company, and I don’t want to be overly critical of them. It’s just a different kind of thing. And I know you’re aware, of course, that so many of the people that ended up at ConocoPhillips from Burlington had a pretty similar experience, right? You it just with the bureaucracy and the inability to to make decisions that, you know, are the right decision. And it’s just just such a you had pushed decision making authority so far down in that organization. When, when I think y’all as a management team, we’re confident we knew what in the world we were doing that that just doesn’t probably exist much anymore anywhere in companies of any size now. And I think, you know, you had one of the special things about that management team was that, what is it, a dozen or maybe more than a dozen people on your management team at the end of Burlington Resources ended up becoming CEOs of public companies. Is 12 is the number of sticks in my mind?

Bobby Shackouls [00:03:53] Yeah, that’s that’s an accurate statement. I could name them all for you. And I’ve been given a lot of credit for that, which I don’t deserve. But I’ve learned to take credit when you can get it.

David Blackmon [00:04:03] No, I Think you totally deserve that.

Bobby Shackouls [00:04:05] No, I really inherited a extremely strong operating team at Burlington, and they all went on to do great things in the industry and still are doing great things. The ones that are are still active. So I’m very happy to hear you say the things that you said about.

David Blackmon [00:04:21] Well, I think you’re a little modest there, because I remember that we had, as a company, gone through some pretty tough years before you came in, typically the two years before you came in. We’re pretty rough financially for Burlington, and you had a really interesting progression to that point in your career. And I wanted to give you a chance to just take a few minutes to talk about your progression through the industry to that point where you became a CEO at Burlington, because it’s really interesting story.

Bobby Shackouls [00:04:50] Well, I graduated from Mississippi State with a degree in chemical engineering, and I never knew anything about the energy business until I was hired by Exxon to be a reservoir engineer in New Orleans and as one of the instructors at Exxon’s Reservoir Engineering School in Houston. He told me that an all the gas reservoir in the ground is nothing more than a huge underground, fractionated column that’s been in equilibrium for 300 million years. And that turned out to be absolutely true. So my background was reservoir engineering. And then I came and got one of the very first breaks of my career when I went to work for a very small little company in Houston called Houston Oil and Minerals. It was founded by a guy named Joe Walter, who was very, very visionary. And four months into that job, I was selected to develop the first offshore discovery that Houston Oil and Minerals had made. It was called shipwreck. And that taught me a lot about managing people and and managing businesses. From there I went to work for Plain Resources, which now becomes it’s actually part of Freeport-McMoRan by Richard Akerson. But then that led me to Burlington, and there I inherited an unbelievably talented group of individuals, including yourself, that were really, really good at what they did. And it was a very easy thing to do to transition into being the leader of that group of people, because as I put in some of the writings I’ve done, I never had to worry about operational excellence because they were always on top of everything. And I learned a lot from a lot of people over the years, including geologists and accountants. But Burlington was a very, very special place to work.

David Blackmon [00:06:36] One of the one of the things that Burlington with, with the assets we have that made life a little difficult was we were one of the very biggest producers of natural gas on federal lands and, and later federal waters in the United States. And that led to a lot of controversies over, you know, audits and lawsuits and all kinds of stuff that you and I both were involved in. And, you know, I look back at that and, and, you know, as difficult as that was the operational environment on those federal lands, it’s exponentially more complex and difficult now with with all the new regulations from BLM and, and the EPA and in the offshore, it’s, it’s would you say that the operating environment for this industry in the United States had become, you know, quite a bit more difficult than the one we had 25 years ago?

Bobby Shackouls [00:07:28] Yeah, absolutely. It has. And the current administration has just waged all out war on this industry. You know, and I think the result of all that is that it’s made us a lot less nimble and less effective in being able to, to run the business in this environment.

David Blackmon [00:07:46] Yeah, I think it really is. I, you know, we we’ve got a rig count now. I was just looking at it today. We actually went up a little bit last week for the first time in a while. But it’s it’s really low by historic standards. Do you feel like the industry is slowing down in the United States? Just you know, I don’t want to attribute it all to the to the regulatory burden, but also just to kind of a change in management philosophy that these big shell companies.

Bobby Shackouls [00:08:14] Now, I think that it has changed dramatically. And it’s not all due to the regulatory environment. It’s it’s that’s plays a part in it. But capital discipline has become much, much more of the mantra that this industry operates by than it used to be. And I know we at Burlington were one of the first and leaders in developing that type of mentality and that our I guess you want to call it the the way we ran our business was that we had a goal of generating modest production growth, but with sector leading returns. Yeah. And I think that what happened over time is that most of the industry, including the big guys, have adopted that policy and that most of the investment community has allowed us to have that policy without sacrificing returns for the for the benefit of growth. And so consequently, the growth that occurs has to be profitable. So what that means is that people go through their investment opportunities in a way that they prioritize and, and only invest in those that make the most money. And the ones that make less money get dropped out at the end of the funnel, so to speak, and they don’t get accomplished. Therefore, the returns go up. So I think the regulatory environment, combined with the capital discipline imposed by most operators in the business today, have caused what you’re seeing in the form of the recount.

David Blackmon [00:09:41] Yeah. It’s been so interesting to see that evolve over the years since Burlington was acquired by Conoco Phillips. Because you yeah, I mean, I think you’re absolutely right. I think that focus on capital discipline was was really one of the driving factors that that caused these, these other companies to reach out and look for talent that had been at Burlington Resources and had that management philosophy. And it’s probably helps explain part of the reason why so many of those guys and. Up running different corporations because. Yeah, I mean, it’s it’s just really the dominant paradigm in the industry now. And I think it’s actually I feel like it’s been good for the industry just in terms of conservation of the resource, if nothing else.

Bobby Shackouls [00:10:22] Yeah, absolutely. I think it’s it’s been a breath of fresh air that that didn’t exist many, many years ago in this business. It was, you know, it was growth at all costs. At one point in time here, you would just go out and drill this, re complete that, do whatever you could to increase production without regard for the financial result. And I think that has been adopted by most people in this business today, that that growth is not worth it if it comes at the expense of financial returns.

David Blackmon [00:10:52] Yeah. Good friend of mine named Obi O’Brien, who was my counterpart at Apache Corporation, would always say anytime all prices got strong and the industry was doing well, he’d always say, well, you know, we can always count on this industry to drill it out itself out of a state of prosperity. And, you know, because the rig count would shoot up and, you know, we just overwhelm the market, flood the market with more oil. And but this time it’s not doing that. We’re seeing that discipline now, you know that. You know, I mean companies can’t conspire to to all behave the same way because of antitrust laws. But it’s just because I think that that’s a philosophy that makes so much sense now in this regulatory and financial environment that these, these management teams find themselves in.

Bobby Shackouls [00:11:37] Yeah, it’s just good business. That’s I think that’s not in any way collaborating with one another is just doing business the right way. And yeah, it doesn’t matter if you’re in the oil and gas business or you’re manufacturing cars, you you have to do it profitably. And I think that’s just been an, an attitude that’s been adopted by the whole business.

David Blackmon [00:11:57] Yeah. It’s, it’s a and in the, in the industry. And of course I have different editors of different publications. I talk to them from time to time. And I was talking with one of them the other day, and he was, you know, he was looking at the rig count and thinking, well, there’s the industry kind of falling apart there in the United States. And I said, no, it’s probably as healthy as it’s ever been, really, you know, just because of the discipline that these companies display and in spending their money investing their money in the right assets, the right resources, and develop them, developing them in a more orderly process, we’re just not going through one of these big boom periods. And I don’t know, I it’s it’s you can never say in this industry the boom and bust cycle has been broken, but it’s certainly been and erupted over the past several years.

Bobby Shackouls [00:12:44] Yeah, surely feels that way.

David Blackmon [00:12:47] Yeah. Well, Bobby, I also wanted to talk to you. We got about ten minutes left here. You’ve done a lot of advocacy. I know you’re very concerned, like I am with the hysteria over climate change and the stuff that’s being put out into the space. Now that we refer to this climate, climate science and blaming it all on carbon dioxide and which is, you know, almost a trace element in the atmosphere, just wanted to talk to you about your concerns that you see with with what’s happening in terms of, of climate change and all the regulations coming down from Washington related to emissions and how that, you know, can impact not just the oil and gas industry, but our whole standard of living really in this country.

Bobby Shackouls [00:13:30] Well, number one, there is no science behind all this climate alarmism. Number two, carbon dioxide is a naturally occurring substance that’s been in our atmosphere ever since this Earth was formed 4.5 billion years ago. And the idea of eliminating carbon dioxide or going to net zero, as I call it, is just absurd. So we are spending billions and trillions of dollars to try to eliminate, as you put it, a trace element from the atmosphere that will have absolutely no impact on our planet’s climate. Yeah. And I think the saddest thing out of all of this is that the seven plus billion people on this earth that don’t enjoy the same quality of life that the other billion do, like us, they’re the ones that are going to be harmed by all this, if in fact, they’re starved of energy. I read all the time about most people in the world live on less than $20 a day, and they use less electricity than the average American refrigerator. That’s really, really sad to me. And I’ve I’ve actually written to our current Secretary of Energy that I really worry about not only my grandchildren, but all those poor people around the world that don’t have access to energy that we have. And most of that energy comes from fossil fuels. 80% or more comes from the burning of fossil fuels, which has no impact on the planet’s climate. Yeah.

David Blackmon [00:14:57] Yeah. I you know, the 7 billion you talked about, I we it’s so interesting to me the, you know, BP for years put put out this statistical statistic. Go review of world energy every year, which, you know, we always have have paid a lot of attention to when it comes out every year. It’s been really great source of good data. And of course, it just came out again last, last week. And, and those countries you’re talking about led and of course by China and India, but all throughout the Pacific Rim and South America and Africa, really where the growth sector is, they’re not buying into fossil fuels. I mean, they’re not buying into this, this philosophy that’s that’s being pronounced from on high from these globalist organizations and the cop meetings every year and World Economic Forum, and they’re continuing to to use a lot, I mean, record amounts of oil and gas and coal every year. So I just I feel like I don’t want to overstate things, but it feels to me over the last year or so that things have been kind of turning and we see it. We’re starting to see it now. And election results in the EU elections last month, and the polls that you’re seeing coming out of France and the UK now and the United States. Does it feel to you as if the momentum behind all of that is kind of starting to lose traction among the public?

Bobby Shackouls [00:16:20] It feels to me like the public is finally starting to wake up to these facts, and that the pendulum is swinging in our direction. I don’t want to be overly optimistic about that, but it feels that way that the facts are finally coming out and that if you read all this stuff about electric vehicles and all the mining of rare minerals, this required to produce them all in an effort to reduce carbon dioxide emissions, when in fact, as you put it, carbon dioxide is really plant food. And I think the Earth today is greener than it’s ever been, at least in human history. So consequently, I think people are starting to realize that, and they’re starting to understand that to spend money buying things like electric vehicles to try to accomplish this net zero fantasy is not a reality. And it’s I think people are just coming around to that, to that position, and I hope they get there, I certainly do.

David Blackmon [00:17:18] So you’re not a Tesla owner?

Bobby Shackouls [00:17:19] Absolutely not. In fact, I’m encouraging my grandchildren are all getting to the age that they’re either at or approaching driving age to buy an internal combustion engine vehicle while you still can and hold on as you can.

David Blackmon [00:17:34] That’s exactly right. Yeah. You know, my wife and I had to buy a new car last year, and we actually looked at a couple of hybrids. I think hybrid technology makes good sense, particularly for us, because most of our driving just in town driving. And so if I, if we owned a hybrid, you know, virtually all our driving would be on the small battery that’s in there. But but the price differential was just so huge. You know, it just didn’t make any sense for us. And so we just, you know, bought another Infiniti Qx60 and went on about our business. And those cars are such, such great cars. I mean they don’t ever break down. And most cars are like that now. So we’re hopeful we may be able to keep that one for ten years. If I live that long, I’m hoping to live another ten years, first of all. Or if I do, maybe I’ll have that same car. So. Oh man, I went off on a tangent. Forgot my next question. When you write to Jennifer Granholm and you know who who ought to have a great deal respect to you and in your viewpoint, do you ever get, you know, as she responded in any way, do you do you do you feel like there was any any response at all?

Bobby Shackouls [00:18:38] Absolutely not. And Jennifer Granholm is just like all of her predecessors. She knows absolutely nothing about energy. Yeah. And I served as the chairman of the National Petroleum Council for two years. And yeah, I was just astonished at how little the people in our government know about energy. And so consequently, I just don’t have a lot of respect for them.

David Blackmon [00:19:00] Yeah. You know, I and I understand, you know, that they’re busy, of course. And they, they’re having to deal with a dozen different issues at the same time. But at least you would hope they’d have. Most of them would have someone on their staff who understood something about these issues that they’re making all these decisions about for the rest of. And I just it feels to me like, and I’ve said it many times, I mean, in fact, that I had one of my editors get mad at me for writing it, but I just feel like we have the very worst possible class of individuals in our society, these these politicians and regulators making all these energy decisions for the rest of my view is we could take the first 200 names out of the phonebook and get better results than we get from these politicians in Washington. I mean, there are some. In fact, I was I had a deal with Ted Cruz the other day. Ted Cruz understands a lot about this stuff. He really does. He has a background in his father was in the energy business, and I got to talk with him after the meeting for a little while. So there’s one, at least in the Senate, who has some fundamental understanding of what. They’re doing that? Yeah, I own that. I have a hard time recalling anyone I’ve met in the political realm who really had a good understanding of things.

Bobby Shackouls [00:20:15] The possible who were the possible exception to that is Rick Perry.

David Blackmon [00:20:19] Rick Perry, there you go. Yes. Rick Perry

Bobby Shackouls [00:20:21]  and Rick Perry is an Aggie. And I have a great deal of respect for him. And the only reason that he knew anything about energy is because he lived in Texas, and we beat it in doing. Yeah.

David Blackmon [00:20:31] I interviewed him last September for this podcast, and I have to admit, I didn’t wear my Texas cap when he was on a different cap. Governor Perry’s a great, great guy. I dealt with him a lot in Austin, and he just he was a terrific governor and, you know, a really fine energy secretary as well. When you look back over the list of folks who have been energy secretaries other than Rick Perry, and I’d have a hard time identifying someone who actually, I guess Ernest Moniz probably knew a lot about it. But other than those two, it’s hard to remember another one that really understood much about what what it was they were supposedly over anyway.

Bobby Shackouls [00:21:08] Energy in its history, which was created in 1976 by Jimmy Carter. They’ve been mostly about the disposal of nuclear waste, more than 50. So consequently, all of these regulations and and edicts that come out of them don’t they’re not based on any kind of facts whatsoever. They’re just political. That’s all it is.

David Blackmon [00:21:28] And in this administration, they’re doing a lot of damage, because the other thing they do is establish efficiency standards for appliances like gas stoves. And that that actually has been the tactic this administration used to try to ban, you know, make gas appliances of all kinds too expensive for most consumers to buy.

Bobby Shackouls [00:21:48] Well, it does. And internal combustion engines mandates that they put out are in effect a mandate to purchase electric vehicles. Yeah. And now I’m saying that certain people and companies are objecting to that. And it filed a lawsuit to try to eliminate that, which I think is a good thing if it if it comes to fruition. But we’ll see where it goes.

David Blackmon [00:22:09] Yeah. You know, I mean, that’s been encouraging. But the problem we’ve got is that, you know, there’s 27 states where Republican with Republican attorneys general. And and so when those losses gets filed, it’s it’s all the Republican states that get behind them. There’s not a single Democratic state that will support any of that kind of litigation, which is just kind of a sad reflection of the polarization in our society in general on this stuff. You know, it’d be nice to have a little bipartisanship on these energy issues. Energy, it’s feels like should be important to everyone and making sure everyone has adequate energy.

Bobby Shackouls [00:22:48] You asked me about the climate change argument. I mean, one of the most positive things I think that I am seeing right now is that young people are starting to ask questions about what is all this based on? And I don’t think that’s been the case in the past. Yeah. And my oldest son just turned 50 yesterday, and some of his friends are calling me and asking me questions about it. And they have been in the past. They bought in hook, line and sinker to all of this stuff. And they’re now going, well, wait a minute. What? What’s the real reason for all this? What are we going to accomplish? And I find that to be incredibly encouraging.

David Blackmon [00:23:25] Yeah, I do too, at any rate. And I think you’re absolutely right. And I think that that is actually reflected in some recent polls, an increased interest among younger folks in these issues and wanting to know more than the propaganda they get fed at school, which is pretty much all they get for at school about energy, which is really, really distressing. Well, we are running up on time. We’ll get 30 minute interviews. Go too fast. I appreciate you taking the time to do this. It’s just wonderful to catch up with you and get your views on this stuff. And I want to. I’d be remiss if I didn’t acknowledge the fact that you’ve been one of my biggest supporters on my Substack, and I really appreciate that and can’t thank you enough for helping me make, you know, make that into an enterprise that’s, hopefully will last for a while.

Bobby Shackouls [00:24:13] Well, it’s it’s been very enjoyable. David and I look forward to reading your stuff every day.

David Blackmon [00:24:19] Yeah, sometimes I send too much of it out, I think. I feel I try to limit the number of emails you guys get in your inboxes, but most people seem to tolerate it. Okay, I’ve had a couple, actually. I’ve had a couple of people unsubscribe from my Substack with a with a nasty email saying, I’m getting too many of these things. I don’t want I don’t want to be on your email list.

Bobby Shackouls [00:24:39] That you wrote on a few weeks ago that was talking about Darren Woods and somebody the people in Washington don’t like him. And I said, if they don’t like him, they want to shoot me. And he said.

David Blackmon [00:24:49] Well, only because it’s true and I know it’s true. Well, thank you so much. I wish you, Judy, and your family all the best and hope to talk to you again soon.

Bobby Shackouls [00:24:57] Same here. David. Thank you for having me.

David Blackmon [00:25:00] All right. And thank you all, everyone, for watching. And our extraordinary producer, Eric parel and the Sandstone Group for hosting the. That’s all for now

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