Unlocking Wealth: 5 Key Strategies for Oil & Gas Investing Success

Dylan Silver (00:01.452)
Hey folks, welcome back to the show. I’m your host, Dylan Silver. And today on the show, I have returning guest, James Hale out of Houston, Texas. Last episode, we talked about Airbnb. We talked a little bit about what he’s doing in the oil and gas space, but I really wanted to delve in and talk about the oil and gas base on this episode. I haven’t had this conversation with anyone else here before. James, welcome back to the show.

James (00:27.044)
Hey, how are you doing today, man? So yeah, let’s just jump into it. So I’m going explain a little bit of what I’ve invested in since about 2020, 2021, the way it’s worked for me and why I kind of fell in love with this asset space. So let’s dive in. what I purchased, what I talked about earlier is mineral rights, right? So what are the mineral rights? So if you’ve ever bought real estate, and I’m go really fast, by the way, if you’ve ever bought real estate, you’ve signed something that says, hey, I either have access or I

Dylan Silver (00:50.339)
Go ahead.

James (00:57.158)
or I do not, I recognize that I don’t own the mineral rights under this property, right? It’s come into pretty much every one of my real estate deals. And that is, that’s what we’re buying. So what it is, is like, say here’s the land and here’s your house on top of it, right?

There’s three things you’re going to know. You’re to surface right, which is typically what you do when you buy real estate. You’re going to air, and you can own all the minerals underneath it. That is what we’re purchasing. Now, why would we want to purchase that? Why would we want to have access to it? Well, there’s things like gold, silver, other rare earth minerals that have value. But the stuff that we’re looking at buying specifically is mineral rights that are rich in oil and gas. So what happens is you own this pot of land.

And I’ve got a little picture little thing for you here a little I don’t know if you remember these Capri Suns if you people are looking I love things man Oil and gas company comes over says and puts their well on and they start to extract oil and gas from it, right? That’s their business. They take it out They sell it to they sell it as it is or refines wrong You know that goes into your gas into your car into jets and all sorts of clothing all sorts of stuff The way it works

Dylan Silver (01:48.168)
Of course. Yeah.

James (02:10.404)
is for every dollar they make when they pump something out, right, you get paid a percentage of that, right? It’s either anywhere from 12.5 25%, depending on the leases and stuff like that, but…

The perk of this is, the one thing I love about it is you are, in a sense, partnering with the oil and gas company. They’re all the work. They take all the liability. If this thing burns up or falls over, you don’t have to pay anything. Nothing comes out of your pocket, right? So it’s passive, purely liability free. No one’s going to steal.

what’s a mile under down the earth and no one’s going to burn it. Nothing’s really going to happen. You’re not going to have a tenant call up and be like, hey, the toilet broke. I know it’s Sunday at like 5 PM, but we need it fixed right now. You’re not going to have any of that stuff. It’s all the responsibility of the only guest company. And they’re motivated to keep putting money in your pocket because they want to make more dollars in every piece of that dollar. You get a certain percentage and you just sit there. It’s also not one oil well to pin it because you could have like,

You could have like four five or six of them just depending on how much they can fill in the property, right? So this is what I like about it. And that is why one of reasons it’s so good, it’s passive. It’s like real estate. Who doesn’t use oil and gas type thing? And so.

That’s one of I fell in love with it, because I’m not going to have any tents break their lease. I’m not going to to roofs. My taxes insurance aren’t going to fly through the roof or anything like that. There is a bit of tax savings as well. You get like 10 or 15 % off of the revenue that you receive on it, because it’s a non-renewable resource. But I’ve fell in love with it. So I’ve got a pretty penny into it, and I’m doing quite well.

Dylan Silver (03:47.32)
Yeah

Dylan Silver (03:55.382)
Now, I don’t know how much we can dive into this James, but how does one even get into the oil and gas space?

James (04:01.846)
So that is hard. Well, let’s put this way. It’s really easy to get oil and gas if you’re okay with losing all your money.

I’ll say that. Okay. Very, very easy. Very easy. But anybody that’s been around the real estate block has known that either whether it’s a seller, whether it’s a wholesaler, whether it’s a buyer, everybody wants to take more money out of your pocket, not put any in, right? Deals are hard to come by. You get wholesalers like this, this is worth this property. You look at it you’re like, hey, if it was across the highway, it would, but it’s in the shack part of town, right? It is not worth a million dollars. In my personal experience, when I get

industry is even worse. And this is why. How did you look at real estate before the internet? Anybody know?

I’ll tell you right now, you called a realtor and they flipped through this giant book of listings, right? And they said, yeah, we got this one, this one, and when one sold, they took the page out or they marked it out or they put pending on it or something like that, right? It was this old school way of doing it. And you had to look at a realtor. You had to go through a realtor. You had to go through an appraiser to actually get it to buy it, right? Same thing you have to go through. If you want an appraiser or something, you have to go through like a landman or.

into appraisers as well in the real estate, a geologist or something like that. But the way that I have found to get in the easiest way is I, through the risking lots of capital, I have found a few wholesalers that I really like and do good work. They’re honest. They’re like, hey, this is the deal type thing. They don’t try to pull something over on anybody. And so that’s who I buy from.

James (05:46.052)
It depends which basin you’re in. I’ll tell you this right now, don’t go to any smaller basin, just go for the big three to five. I would say probably two out of the big three are the ones you want look at. And you won’t even get a seat at the table unless you have $5 million in your pocket on some of them. In some, you need $50 million. So that’s probably going to count out most average Joes like me. But through my wholesalers and stuff, we can buy bits and pieces that are like $25,000 at a time.

That’s.

Dylan Silver (06:16.494)
So let’s dive into this here. So a lot of terminology thrown at us here. Basin. You mentioned you want to stick away from certain basins. I don’t even know where we’re talking about here. Help break this down for us here.

James (06:27.148)
OK. Yeah, all right. So when I made my basin, it’s like, let me tell you where to say. You can build a house anywhere, right? You can literally build a house, put it anywhere. Why do you want to build it like in Dallas or Houston or Austin or something? Why not just build it in the Sahara? Because you’re not going have any renters, OK? You could do that. You could build it in the middle of nowhere. You can build it in podunk nowhere, put hundreds of thousands of dollars into it.

Dylan Silver (06:36.291)
Yeah.

James (06:55.62)
But if all the renters are really, they’re only making 30 or 50,000 a year max, and they can only afford $1,100 a rent, you’re not gonna, you should not, you can do whatever you want. Put like 700,000 in building a house if you can only get that much rent. The math just doesn’t work out. So my point is, there’s oil everywhere. There’s oil under your house, there’s oil under everything. But the issue is, it’s not enough oil to be profitable pullout, right? It’s not worth the risk. under your house, might be like, if you dig deep enough, there might be like,

100 barrels Maybe maybe a thousand right that’s not enough for the oil gas company to spend ten billion ten million dollars a rig again ten million dollars a rig to go one to three miles down and maybe one to three miles out to look for oil right and to pull it out to extract it so Basins are places that we have discovered that have

high concentrations to where, it’s worth it, right? So, West Texas, right? The Permian Basin, right? In Oklahoma, you’ve got the Anadarko, you’ve got some in the Baca and the North Dakota, you’ve got the Eagleford in Texas, you’ve got some plays in and around the Rockies and the California and the Colorado side. So my point is,

Stick to the, in real estate terms, stick to the real estate that has performed for the last 30, 50 years and will continue to perform for the last 30 and 50 years, right? Because what you don’t want to do is you don’t want to buy what we call buying a dry hole, right? In other words, you spend $10 million and nothing comes up, right? Or what happens is you spend $10 million mostly and it comes up and it produces really well for like a month or two.

Dylan Silver (08:28.877)
Okay.

James (08:43.722)
And then you’re making like dollars, as opposed to hundreds or thousands of dollars in six months. That’s basically what we call a dry hole in the industry. So that’s what you want to You want to stick with major. In other words, if we’re analyzing it to real estate, stick to the big city. Stick to Houston and Dallas, to New York, to LA. Don’t go trying to find oil in Podunk nowhere, if that makes sense.

West Texas, Oklahoma, northern South Dakota areas and stuff like that. That’s what I mean by Those are the bigger ones.

Dylan Silver (09:19.042)
Those are the good areas. You mentioned wholesalers. there’s oil and gas wholesalers. There’s people who are specifically mining these deals in the oil and gas space, just the paper.

James (09:31.204)
Yeah, it’s just like real estate, literally. For mineral rights, you can 1031 exchange. I’ve done several 1031 exchanges from selling my real estate and putting it into minerals. So yeah, it’s real estate. You can wholesale it just like that. Now again,

Dylan Silver (09:34.571)
huh.

Dylan Silver (09:42.668)
Wow.

James (09:47.222)
Unless you have $5 million in your pocket, typically you’re not going to get a seat at the table. A seat. Doesn’t mean you’re going to buy anything. If it makes sense, right? This is more like a commercial thing. And lending is not very lending friendly. Let’s put it that way.

Dylan Silver (09:55.554)
Right.

Dylan Silver (10:03.438)
Okay, okay. So if I’m understanding the dots correctly here, someone who’s new to the investing space and they want to go and they want to get into, I shouldn’t say new to investing, new to oil and gas investing, and they want to go and they want to break into this. The simplest, fastest way to do it, if you have a lot of money, is to get a seat at the table, start looking at these deals from these wholesalers and buy in, you mentioned the three basins, Houston, West Texas, I think you mentioned Oklahoma.

James (10:31.806)
Don’t buy that oil rig in Houston. West, the Permian, Anadarko, and the Blockin. You can Google those terms. Permian, Anadarko, and Blockin.

Dylan Silver (10:35.886)
huh.

Okay.

Dylan Silver (10:44.918)
Okay. And then so you were able to, without having that massive lump sum of capital, you were able to get in through a smaller deal that was brought to you and you were able to partner with folks on this deal. How did that deal come down?

James (11:03.352)
Yeah, so through my network, from my last story, was just looking at place to, oil place, if you will. I found a few good wholesalers and bought, not.

Dylan Silver (11:09.603)
Yeah.

James (11:14.954)
not millions of dollars, but a substantial amount at first, and saw how it played out. then after about a year and a half or so, said, OK, hey, this works. I’ve proved it. And now I’ve got a bunch of partners that are buying it with me. I manage it for them, do everything, and show them the deal type thing, and take a little off the monthly. And they just sit back and relax on the beach.

Dylan Silver (11:37.804)
Incredible. So for the I’m trying to even grasp at terms here for the expansion of this. It feels like there’s there’s levels in this this oil and gas space and they go up quickly. Like it’s not like in in and thinking in real estate terms you have wholesaling then you might do fix and flipping then you might do short term midterm commercial in oil and gas. It feels like you’re you already have to start at a high level and then from there it’s a huge jump.

Is there a way to scale in this or is it really like you have to it’s kind of like AAA in the big leagues?

James (12:11.82)
So it’s more like getting into the major leagues in baseball. Like there’s not much middle ground. There’s not much small pawns to start at, right? There is like, if you partner with me, you can start with like 25,000 or so, right? And that’s a good starting point.

But yeah, it’s it’s it goes up substantially right in the in the only gas plot There’s there’s two or three I guess plays you could do there’s mineral rights Which we’re buying now. There’s actually you can invest in oil wells, right put it on there You can do leasehold positions which are basically you buy old wells and you try to negotiate with the with the new sellers or have new oil and gas companies come in and

partner with your leasehold.

There’s all shell plays, by the way. And we’re not doing anything in the Gulf. In the Gulf, take everything you need to shell and add an extra zero to it. That’s why you only see companies. You’re not like, hey, I know Joe Smith that’s going to oil rig in the Gulf. No. Unless Joe Smith is a billionaire himself, no. It just takes so much capital to do these things. I’m partnered. I’ve got some ownership in the second largest pipeline in the Gulf.

Dylan Silver (13:24.631)
Yeah

James (13:32.401)
One of reasons we bought it is because

is kind of a real estate plan. They’re not making new pipelines in the Gulf, right? Because it’s so expensive to do. the risk is, you’re not going to see return capital of that risk in five years or less, right? If someone’s going to put a new pipeline in the Gulf. So the infrastructure that’s there is worth so much more because it’s already there, right? It’s like, think about if there’s highways, but no one can build highways because concrete is a billion dollars a cubic foot. The current highways, they have potholes. Just patch them, right?

Dylan Silver (14:02.637)
Yeah

James (14:06.502)
worth something. so my point is that the minerals plays easy. I’ve got some a little bit of drilling interest that comes in if people want, but mostly what Brian is doing right now is mineral rights. And the good part it as well.

Dylan Silver (14:21.975)
Are you from Are you familiar? there anybody doing like syndications with this so for people who are you know you mentioned starting with smaller sums of money 25,000 50,000 and they’re syndicating to get to that 5 10 million 20 million x multiplier Or is it really that that’s not a thing that happens in the oil and gas space?

James (14:43.204)
The syndications that I know of are not really with minerals, but they’re with drilling new wells, right? And this is where it can be, I…

extremely encouraged caution. Again, it’s your money, you do what you want, Because what will happen is people will say, we’re going to drill four oil wells, right? We’re going them in the permit. We’re going to go down to the Woodford Shale or whatever. They’re going to name a bunch of shale plays and stuff and throw a bunch of fancy words and stuff like that. And then we’re to raise $55 million to put these four wells in. And if you’re going to make money, you’re going to forex. tell you, I’ve heard, the first time I heard it was forex in your money.

I think they’re down to 3.2 or 3.8 now or something like that, this certain company. the issue is this, is number one, remember when I said earlier it takes an oil company an estimated $10 million to put one these in, right? Well, if they say, hey, we’re doing four and we’re raising $55 million, what starts to go off in your mind?

Dylan Silver (15:41.154)
Yeah.

Dylan Silver (15:50.616)
There’s only 15 million dollars worth of… profit.

James (15:53.22)
Well, there’s, well no, to them, to them. Because it only costs 40 million dollars for them raising 55. Well, why are you raising 55? And typically, maybe not exactly, but it goes, oh that 15 million just, oh yeah, it just goes in their back pocket, is my point. There’s a lot of companies that do that or do something similar to that, right? And what that does is it deludes down all of your gains, right, by whatever the math is, okay?

Dylan Silver (15:56.545)
Yeah, to them.

Dylan Silver (16:10.264)
Yeah.

Dylan Silver (16:20.782)
Yeah

James (16:22.436)
and then you make less as an investor, right? Because they’re owning 15 million of that automatically, and you’re getting shorted from the get go. The other thing is this, is a lot of times when they do that, they don’t really drill also in the best places. They drill in some okay places. But the thing is, they get you in when they say, you can write it off on your taxes, and it’s true, depending on the year. I think our current president might bring it back to where, when I first got into oil wells, it was 100%. So you put 100 grand into this oil well,

took $100,000 off of your taxes. So you made $250,000 that year. Your taxable income was $150,000. And by the time Trump does it again, maybe if you’re $150,000 under, you might not have to pay any tax. Who knows? I don’t know. We’ll see. But we’ll see what happens. But a lot like I exercise caution with that. So there’s not a lot of syndications I know that go for minerals. A lot of times, it’s just direct ownership.

Dylan Silver (17:06.509)
Yeah.

James (17:20.036)
I do kind of a mixed thing where I’m managing it for them and help people get into the industry that way. People, again, you’re free to do what you want, you can go anywhere you want, but I’m just saying I’ve almost gotten robbed out of hundreds, thousands of dollars because of getting in the wrong, getting in with the wrong people, I should say.

Dylan Silver (17:25.378)
Mm-hmm.

Dylan Silver (17:34.798)
done this same type of deal.

Dylan Silver (17:41.944)
Hiviting a bit here, mean, I think of oil and gas as being like the main mineral that people are going to be looking for. It’s not too often that, you know, you’re digging for gold here in the 21st century. But you do hear about like lithium, right? And so are there any other mineral spaces that, you know, are batted around, tossed around in the oil and gas space? Or is it really like pretty much heavily America’s oil and gas and that’s the mineral that we’re looking for here?

James (18:07.352)
Well, America’s got gold mines, got silver mines, coal, they got all sorts of stuff. But what you find is that you’re asking really, hey, when we buy this stuff, we own everything underneath it that’s of value. If you could sell the dirt, we would sell it.

Dylan Silver (18:12.492)
Ryan.

Dylan Silver (18:23.394)
Ryan.

James (18:24.164)
The thing that I find is that if an area is highly concentrated with oil and gas, it doesn’t have a lot of gold or silver there, or lithium to the most part. The high concentration I found with lithium, if here’s the oil and gas patch we’re buying, go about 60 miles this way and you might have it, but you’re not going to have lot of oil and gas. know what saying? And lithium is…

the things people are jumping on. I’m not convinced on it yet. I’m not buying minerals just for lithium, right? Because it’s too long in the play. I want cash right now.

As far as gold and ore or whatever, if people can find it out and find it, they’re going to pay us because we own it, our share of it. But typically when you’re buying in a spot with oil and gas, it doesn’t have a bunch of other stuff that you can mine out. It’s not like gold miners are fighting for turf on the surface of the earth from oil and gas companies. Gold is over here, oil is over here, silver is over there with gold, there’s lithium over here.

Dylan Silver (19:24.876)
Yeah, it’s different.

James (19:31.814)
and there’s water over here, so yeah. It’s just where most people go, yeah.

Dylan Silver (19:34.05)
different all different well you know that I think we covered a lot of ground here today it was a crash course for me and in oil and gas investing man it’s it’s impressive that people are like yourself are able to break into this space and really you know self teach it’s so complicated just hearing you talk about it I’m like man and it does sound like in a lot of ways

they’re still doing things that would be considered like old school by modern real estate standards, like it’s behind a lock and a door to a large degree. again, thanks for hopping on here. Congrats on your success and thanks for educating me and the audience here about this space.

James (20:15.138)
No problem, man. So again, the reason I got into it love it is it’s passive. It does have these really nice booms and nice tails to it, which I can get into later. I’ve got a bunch of videos that I made that will educate everybody on this space. If you’re interested, you can just email me at james at JTH buyer. Again, james at JTH buyer dot com. Let me…

James (20:43.204)
but it’ll be James at JTH buyer. me…

James (20:55.204)
There we go. I send this to the screen?

Dylan Silver (20:57.644)
james at jthbuyer.com I got it

James (21:01.9)
Alright. Well yeah, shoot me an email type thing. Give me a call or whatever. I’m here to help type thing. You don’t have to buy me, have partner with me or anything like that.

But I’m just here to help you because like I said, I almost lost a few hundred thousand dollars in the field and someone helped me get out of that, which I was very thankful for. so yeah, but yeah, if you curious anything again, it’s just like real estate, except there’s no liability. So I like it, especially coming into this next wave where people think energy is going to be really used and really needed. And kind of there’s the feeling of $60 a barrel for oil is new 45 or something. And that’s,

Dylan Silver (21:41.282)
Yeah.

James (21:42.31)
is going to be used extremely hugely by AI. So during the gold rush, a bunch of people went to California to mine for gold, right? You know made a lot of money during that? It might have been like 1 2 % of the gold people that made actually good money. You know who made the most money per person in that? The people that sold the shovels and the wheelbarrows.

Dylan Silver (22:02.729)
Cool.

Dylan Silver (22:06.99)
Hmm.

James (22:08.508)
So what’s shovels and wheelbarrows in the next, I think, 10, 20 years? It’s going to be energy. AI with these data centers is going to be huge for energy intake. They’re already saying there’s going to be a shortage, especially of natural gas. And so we think that’s going to be a huge, that’s the shovels and wheelbarrows of this next AI goal revolution.

Dylan Silver (22:28.14)
Yeah, I mean, I’ve spoken with two people in the last two days who their whole business is AI, another gentleman who has put in substantial investment into an AI company here today. So you’re not, you’re not wrong. There’s so much investment, specifically in the real estate space. It seems to be one of the leading adopters of AI. So yeah, thanks. Thanks for coming on. And I just

had my mind opened up to all the possibilities here once again from this conversation. So thanks for hopping on here, James.

James (23:02.978)
Yeah, no problem. Thanks. Happy to of service. And again, if you’re viewing and you’re interested, contact me and we’ll talk more. All right, guys. Have a good weekend.

Dylan Silver (23:10.818)
See you.