In this episode of Energy News Beat - Conversation in Energy, host Stuart Turley sits down with Joe McClintock, CEO and co-founder of ILex Energy, live from NAPE, to discuss the evolving energy landscape, the impact of policy decisions, and the balance between economic growth and environmental responsibility. Joe shares insights into Ilex Energy’s innovative natural gas project in South Texas, highlighting its strategic vision, all-star team, and market potential. They also explore key topics like energy policy, LNG exports, the social cost of carbon, global energy markets, and the deindustrialization of Europe, offering valuable insights into the future of energy and investment opportunities.
Thank you, Joe for your time and for the great conversation at NAPE! I had an absolute blast! It will be great to get an update and a follow-up interview later.
Check out iLex Energ HERE: https://www.ilexenergycorp.com/
Highlights of the Podcast
00:07 – Introduction and Background
00:46 – Discussion on U.S. Energy Policy & Industry Trends
05:08 – Global Energy Markets & Policy Challenges
10:03 – ILex Energy’s South Texas Project
13:41 – Fundraising and Investment Strategy
16:01 – Investment Terms and Equity Opportunity
16:46 – Outlook for 2025 and Energy Industry Trends
17:39 – Closing Remarks
Stuart Turley [00:00:07] Hello everybody. Welcome to the Energy Newsbeat Podcast. My name is Stu Turley, President and CEO of the Sandstone Group. I'm here with Joe McClintock at NAPE. How are you today?
Joe McClintock [00:00:17] I'm doing very well. How are you doing?
[00:00:19] I'm absolutely having a blast. Oh, well thank you very much.
Joe McClintock [00:00:23] I never brought mine.
Stuart Turley [00:00:24] It's an old friend. I've had it for about 20 years. So tell us who you're with.
Joe McClintock [00:00:29] I Ilex Energy. We're a privately held, fairly new company, but we've got an all -star team.
Stuart Turley [00:00:36] Nice. Now, what do you do at Ilex?
Joe McClintock [00:00:38] Well, I'm the CEO and founder, or co -founder, and we've developed an incredible project in South Texas. Let me tell you more about it.
Stuart Turley [00:00:46] Okay, fantastic. Well, do you think with drill baby drill President Trump hanging around, things are gonna happen now, aren't they?
Joe McClintock [00:00:54] Well, I do, but you know, he kind of sets the tone whether drill baby drill means that exactly, or anything else. That's to be seen. I think we need a little bit of time to see how that plays out. Obviously, with the capital constraints that we have, with the discipline that we've exercised over the last several years, that's not going to go away.
Stuart Turley [00:01:16] You are dead on right, because it's more drill baby when fiscally responsible.
Joe McClintock [00:01:21] Exactly, or as I heard someone earlier say, build a baby build. I think that makes a lot sense too
Stuart Turley [00:01:31] Joe, we need build baby build pipelines. And tell you what. Oh, yes. LNG. Who would have guessed that Biden's administration, because I can't believe it was President Biden putting the ban on it, his administration banned it.
Joe McClintock [00:01:48] I don't know. I mean, he had to give the approval. And he, you know, the administration had declared war, I think, on our industry, that demonizing the industry is not the thing they should have done or the thing we should do now. We should be optimizing each other. If we can't do an all of the above kind of approach, right, you're going to be a trouble as a nation. You know, I think one of the smartest things that Trump has done, and he's done a lot, but these things he's done is put together and energy and interior that are superb.
Stuart Turley [00:02:20] Oh, you take a look at Chris Wright, Doug Burdum and Lee Zeldin. Holy smokes, Batman.
Joe McClintock [00:02:26] I called him the sons and daughters of Issaqar.
Stuart Turley [00:02:30] Oh, wow.
Joe McClintock [00:02:30] Because the old clown inquirer said that the sons of Issaqar understood the times and knew what Israel should do. Wow. I think that's the that's the sons of Issaqar. They understand the times. And, you know, one of the things I think we could have to do is not deny global warming. Right. I think we need to acknowledge global warming, but not exaggerated and certainly exaggerate the causes of it. And so.
Stuart Turley [00:02:59] You mean facts matter, Joe.
Joe McClintock [00:03:01] I think facts do matter. Just the EPA's thing that, you know, the social cost of a carbon. Of course, the concept's been around for a while. I took that up to one hundred and ninety dollars, which is incredibly.
Stuart Turley [00:03:17] It seems to me that a carbon tax is nothing more than a wealth transfer, in my opinion.
Joe McClintock [00:03:24] Well, but it doesn't make sense. Let me ask you this. If we were to apply the logic of the social cost of carbon and all of our policy decisions to prescription drugs, what prescription drug would we have today if we only looked at the social costs of the side effects?
Stuart Turley [00:03:44] We wouldn't.
Joe McClintock [00:03:45] We think we're doing with this. But do you think the social benefit of carbon is.
Stuart Turley [00:03:49] A lie, because you want to sit back and take a look at whether or not plants actually like CO2?
Joe McClintock [00:03:55] Well, then yeah. Look, we would. What about how we have the cost of living down in this country? How would we benefit from the fact that we are so competitive on the world stage?
Stuart Turley [00:04:08] Exactly.
Joe McClintock [00:04:09] At low cost energy? How do you put a cost on taking people out of poverty?
Stuart Turley [00:04:16] Well, Joe, we are about to see the converse to go from the most technologically industrial leader, Germany, and see them totally deindustrialized because they're trying to go to carbon net zero by pulling their nuclear plants offline. They're destroying their coal plants. And then they went to 100 % renewable. And then the renewable did not work. And then they cannot import Russian natural gas. So we're about to see what happens. And then they're taxing themselves with their carbon taxes.
Joe McClintock [00:04:51] It's incredible. And you know, one of the things this is going to lead to this incredible analysis and policy is that Europe is going to be left behind. And that's sad to see. We need a strong Europe. Europe is doing it to themselves.
Stuart Turley [00:05:08] I couldn't, Joe, that is an outstanding way to look at that. And I also am tired of funding the UN, NATO. I think I'm tired of funding those organizations that don't seem to take care of the United States. And I'm more interested in funding things that will help humanity and the United States.
Joe McClintock [00:05:26] I agree with you. But one of the critical things that I see is that we don't understand that it's a global problem. Global warming is a global problem by definition. And yet our scorecards are kept by company or by country. And we don't look at the whole thing. So what is the scratching benefit of company A wanting to prove their scorecard so they trade their 50 % interest in block A, to the IOC in exchange for something else so they can get rid of their flaring. And now it's flared on somebody else's ticket. How do we benefit from that? And how do they get the benefit of that kind of trade? It makes no sense. You should find that same logic across board. We're crazy with how we try to manipulate our numbers.
Stuart Turley [00:06:18] And I love the way you think because President Trump, does the Great Wall of China hold the coal fumes in? Oh,
Joe McClintock [00:06:30] not at all. Yeah. So we got a crazy administration. I'd just love to see that the social cost of carbon be the net cost of carbon because if you take the net cost of carbon, it'd be a net benefit. Right.
Stuart Turley [00:06:44] I think so. I like the way you think.
Joe McClintock [00:06:44] So let's put that into all of our calculations.
Stuart Turley [00:06:47] You know, Chris Wright, our new energy secretary, is trying to say let's not do net zero by 2050. Let's do no energy poverty by net.
Joe McClintock [00:06:58] That makes a lot of sense. And that says, sons of Issachar, that's how you get to a good policy that actually doesn't demonize any of them. Yep. I'd say even a clear wind, you don't demonize any of them, but you let them stand on its reliability, all the things that businesses rely on. Cost, reliability, and security. Take those into consideration, balance them out, and the winner wins, but you don't demonize any of them.
Stuart Turley [00:07:29] The cost of energy for businesses and the deindustrial pattern that we just mentioned in Germany is playing out in New Jersey, Connecticut, New York, California. And so we're also going to see a migration in the United States of places to people migrating to places where lower energy.
Joe McClintock [00:07:51] And people are both pulling out already. Yes.
Stuart Turley [00:07:53] So it's going to be, would you rather have a low tax from a big population or would you rather have a high tax with nobody?
Joe McClintock [00:08:04] Exactly.
Stuart Turley [00:08:04] Did I say that correct?
Joe McClintock [00:08:05] I don't know about nobody, but not very many.
Stuart Turley [00:08:08] When you take a look at the patterns of what's going on, I just saw a young lady complaining about her bill in Connecticut. She had a thousand dollar electric bill. Her part of her electric bill was $200. Joe, this is absolutely unbelievable. The rest of it, the add -ons was renewable charge, a delivery hall charge, and then $280 of that was paying for people that couldn't afford their bill. So it was more of a communistic look of a power bill and she couldn't afford that thousand dollar bill. And that was in Connecticut. Well, isn't that sad?
Joe McClintock [00:08:49] I think our policy is at good hands.
Stuart Turley [00:08:52] Yes, I am stunned. I did not have Gazelago on my bingo card when President Trump said, I'm going to take, you know, we're going to take Gaza and then we're going to make it a playground. I did not have that on there. I do laugh. I don't think he's going to do it. I think if you want to look at it, I saw somebody say today, he is saying that so they'll solve it. And I think that's his way of saying, and it's brilliant. Either you solve it or I'll solve it. And you're not going to like how I solve it. So I really think that that is Trump negotiating in the way that President Trump, only President Trump can negotiate.
Joe McClintock [00:09:33] It's easy to, it's easily to critique many of these things. But if you understand this strategy that you just read, and you look at the things he does, what he's exactly,
Stuart Turley [00:09:47] exactly. So I took this as a funny, but B, I think it is a strategy to get them to solve their own problem. I hope it does. Oh, absolutely. But Joe, we're sitting here talking, what does your deal look like? Let's get into that a little bit.
Joe McClintock [00:10:03] Yeah. So, you know, when we look at the energy landscape, you know, we come from a raw gas background. So, right. I mean, we could do renewables or something else, but we're sticking with kind of what we know. And we're naturally gas focused because we think natural gas is the allotting energy source. Right. We think there's room for everything, but we particularly like natural gas. And we've been liking natural gas for a few years. I tell you, if you look around this place today, natural gas is the theme. And air gas is the theme of this night. And as a consequence, it seems like it's come around to our point of view, but we like natural gas. So we look for that. I think the number one thing that we've done is we've established an all -star team. Our top technical geoscientist was the domain champion in Schlunderje, and he's brought in about a critical, critical thinking and innovative thinking to our business. Our second executive in our business, our chief operating officer, was also with Schlunderje for many years. He started out in wireline engineering, but they recognized his management potential. They put him on the fast track, moving all over the world with, you know, really great responsibility. He quickly became a vice president. He was an innovator, and he's spent some years after Schlunderje, but he's brought a wealth of knowledge and experience. And contacts and things of that nature. And so at least two -thirds of us were really bribed.
Stuart Turley [00:11:31] That's a great joke.
Joe McClintock [00:11:32] But as the latest team, what we've done is we have a secret sauce. And our secret sauce is essentially that we do deep dive studies. We deep dive technical as well as commercial studies. We really dig deeply and analyze critically. People that look at our deal so far are amazed at the depth of what we've done. But we're just smart. We have proprietary workflows and data that we can utilize. For example, in science, we have our own proprietary attributes. We have some cutting edge attributes. So we believe that our technologies are transformative, and we believe we're kind of ahead of the curve in what we're doing. We're a small team, but it's going to be difficult for us to go to the major resource basics. So we're going to mature areas, but we believe that if you're going to mature areas, you're going to have to win new technologies.
Stuart Turley [00:12:33] Exactly.
Joe McClintock [00:12:34] And that's what we're doing.
Stuart Turley [00:12:36] You bet.
Joe McClintock [00:12:36] So we have used that to develop a project at South Texas. It's a gas condensate project. It's low risk. It's very large.
Stuart Turley [00:12:49] So you've got wells. How many existing pumping wells already?
Joe McClintock [00:12:52] Well, we haven't drilled yet.
Stuart Turley [00:12:53] Oh, you haven't drilled yet.
Joe McClintock [00:12:55] We're pre -drilled. But we are an extension of an existing.
Stuart Turley [00:12:58] Okay. All right. And so you already know the offset locations.
Joe McClintock [00:13:05] We know the offset. We have extremely high quality.
Stuart Turley [00:13:07] Nice.
Joe McClintock [00:13:08] 200 and 170 -fold assizement, which is just extremely high. We're looking not only at structure, but we're looking at reservoir characteristics, because that's important. So we can see porosity and things of that nature. Very granularly. We've validated all of our indirect hydrocarbon indicators that we use by looking at every single data point around it, confirming. So it's essentially a 100 % validation of every marker that we use. So that gives us a lot of confidence.
Stuart Turley [00:13:41] Wow. That does. When you sit back and take a look at that, how soon are you looking to raise enough money to start drilling?
Joe McClintock [00:13:52] Well, we had actually been raising, but trying to raise equity in the form of a preferred stock. With family offices, primarily. Pivoted to a farm out, because we'd heard over and over again that we love you guys. We love what you're saying and everything. It's hard for us to value it. You're using such transformative technology. Right. It's hard for us to value it. Go drill a well and come back to us. We've got capital. We're behind you. We just still decided to do is to pivot towards selling an asset, which we did really want to do. But then we made that extremely try to track it up with our ideal terms. So it's a one plus one well. And the first well, we are not charging a penny for the incredible amount of GAG and technical engineering and it's a legal financial work. There's no big, no cost right. It's a third. So pay a hundred percent to earn a seventy five percent, but though upfront free fee, even our lease hold. Well, it's, it's, it's you get a carry on our lease hold after payout. It reversed it. 75 % of where we come in shooting. We, we come in for a deck bill for the 70 with a 25 % working edges. So it's a bird for board. And, and then, and then we have a very attractive option. The, the options available. If you an option fee. So you have 45 days after we have the production test on the first well, a $500 ,000. With that option fee, you get two options here at Naples. The first option, we have a second option. We fought that. Okay. The first option is to drill a second well. If you're choosing informed by three D in our initial block and that second well, we fully expect to be a horizontal well and the economics of that are astounding. Okay. And so if you kind of look at paying the option price and everything, the returns are great on the first well on this, by the time you did that second, well, they're off the charts. So it's extremely attractive returns.
Stuart Turley [00:16:00] That is pretty cool.
Joe McClintock [00:16:01] And there is a second option and that is for a piece of the equity in preferred stock. But importantly, the terms for that are set right now. All free drill terms. So therefore you're going to get the highest valuation for that. The drill is going to be the same for anybody else. So you get preferred terms on the equity.
Stuart Turley [00:16:23] Okay. Well, that sounds pretty good. How do people get a hold of
Joe McClintock [00:16:26] you? Okay. So we're here at NAPE. So hope you could find us here at NAPE. We're in 3452, boot 3452.
Stuart Turley [00:16:34] Okay.
Joe McClintock [00:16:34] My name again is Joe McClintock and my email address is Joe Mcclintock. That's m -c -c -l -i -n -t -o -c -k at ilex, i -l -e -x, energycockport .com.
Stuart Turley [00:16:46] All right. That is absolutely fantastic. Well, where do you see 2025 going from here? We're only in February and I see it taking off through the roof.
Joe McClintock [00:16:59] There's more energy in this place today than any time in my memory.
Stuart Turley [00:17:02] Isn't that wild?
Joe McClintock [00:17:03] It is. It suggests to me that there has been sort of an almost dormancy in our industry for the last four years. And this drill baby drill is not going to cause us to go out and start drilling everywhere. In fact, we want a drill that scores. We've raised 40 % of what we need. Trying to raise 4 .8 million. We've raised 40 % for this first well. We're interested here. Nice. Right now there's room and.
Stuart Turley [00:17:32] At this moment there is room.
Joe McClintock [00:17:35] There is room. We want to drill. It's drill ready. So we're ready to start next four
Stuart Turley [00:17:39] Isn't that great? Well, Joe, thank you so much for stopping by the podcast and we're going to share this out. My name is Stu Turley, president of the Sandstone Group, and this is a wonderful day here at NAPE. Thank you again, Joe, for stopping by. We will see you soon
Joe McClintock [00:17:55] You bet.
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