Jack McClendon

I've seen it both ways, but that's kind of largely the way that the equity capital works.

So it is actually pretty similar to a lot of the traditional private equity firms.

On the debt side, it's largely bank capital, which is kind of 7% to 8%.

And then there are some of these alternative firms.

And so these are more kind of structured credit providers.

There are some that largely just operate in the energy space.

And, you know, you're paying 400 to 500 basis points above what you would pay a bank, but they're willing to lend a little bit more aggressively against the collateral.

Maybe give you a little bit more credit for reserves you have that are not currently being produced, currently being produced.

And they'll ask for a little bit of upside.

So whether that's in the form of an overriding royalty payment.

So just think about that as basically just a cut of the revenue.

It's similar to a royalty deal in music.

So for every barrel that gets produced, maybe they get a little bit of percentage.

And this is obviously after they've gotten their money back.

And so the way the capital works for my business is not all that dissimilar to the way capital works for larger businesses.

As I said, there's a couple of different ways to play the space.

equity investment is pretty similar to even the larger kind of private equity investments.

Those are really good questions.

I mean, obviously there's excitement, right?

Because when a price kind of jumps like this, obviously your costs don't rise in tandem.