Louisiana not to celebrate the finale of true detectives last night, but to plum offshore for some terrific ideas. Were here to celebrate American Ingenuity and american knowhow. And can i also point out were down here to find out the true meaning of the word booyah. Because you know what originates in this region . The paradise. The literal translation is thanks for making me a boat loat of money. Were hear from the louisiana governor, ways to harness our nations natural gas, the president and ceo of new corp. Theres a couple of the materials needed to the make the finest steel ever needed. Well hear from jim brown, the halliburton ceo of the western hemisphere. T which brings us to where we are right now, on top of one of the most mature fields in the gulf of mexico where energy is drawing on an old Shallow Water field to reinvigorate what was once thought to be a dying process. Ht we want to show you why we think the american oil w and gas revolution is a key longterm theme that you can fall back on anytime the market goes hay ware. Or the usual slowdown in china. You see,a. We believe the rediscovery of older fields and the exploration of shales and we visit the utica in ohio will continue to pay dividends for those who have the patience to see it through. We can see how new core has a better advantage over iron and other domestic companies. Even as its biggest earnings driver has not yet snapped back in thisac country. Youre being paid well. Get away with that better than you can get from treasuries. Ri and we recognize it even though china appears to be sloan down again, as you can see from their export nkts this weekend. There is still a worldwide search for oil. Why is it so high . I cant say this is a level to start buying insco. Meanwhile, halliburton is playing a big role to make sure fields like theseak are coming back to life. It knows drilling on wall street as the company has brought back 7 of its shares on the open market last year. S energy 21, which takes older fields and exploits them as recently bought back its shares. It is a model to buy oil fields and rejuvenating them as he acquires more left for dead properties. As we look around the gulf, i bet there are a continue of fields he can snap up on the cheap drilling more oil out of their dome than anyone thought possible even a few years ago. Opportunity is knocking down here and knocking loudly and mad money is answering the call. Thats why weve come down to louisiana to flesh out one of the best investing themes of our time, the north American Oil Renaissance and the companies that aree profiting from it. Enjoy the show. Its ash great one. Mad money will be right back with more from the bayou. Announcer coming up, the revolution is here. Big oil and is getting bigger. American energy is transforming our economy, and its no longer just the big names you biknow. This rig was left behind by exxon, but tonight, cramer is getting a look at how it was transformed for shareholders. [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. With investment information, risks, fees and expenses so our business can be on at ts network for 175 a month . Yup. All 5 of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line, anytime, for 15 a month. Low dues, great terms. Lets close new at t mobile share value plans our best value plans ever for business. Booyah welcome back to the gulf of mexico. Were on the ensco 99 oil rig off the coast of grand aisle, louisiana, but were taking a closer look at one of the epicenters north American Energy revolution. This rig is run by energy xxi, or exxi a home gamer name. It runs seven of the 11 oil fields in the gulf and is always on the lookout to buy new Properties Like this one. An oil field left for dead by exxon is making big profits for energy xxi shareholders so lets look with john schiller, founder, chairman and ceo of energy xxi limited. Thanks for inviting us to your rig and welcome to mad money. Glad to be here. This is an old field, old exxon field, but you come here with new technology and you have been using the phrase to me youre just scratching the surface. Thats right, jim. Were sitting at west delta 30 which is the secondlargest oil field on the gulf of mexico shelf, made 580 Million Barrels of oil and theres been two wells drilled in the field in the last nine years and weve got a rig right here getting ready to drill our first well, a lot more oil. Exxon, presumably, big company, wouldnt just sell something unless they felt it wasnt of great value. But its not that its not a great value to them, big company, but it can be of great value to you. Thats a correct statement. Its what i call the 20 barrel. Well make a lot of money finding barrels at 20 a barrel. Exxon needs to be finding 10 a barrel, thats the game they play so they can never get capital here. They knew there was oil left but it wasnt economical in their big machine to capture capital from it. Youve been drilling in two places right here but also on wall street. You have been one of the most aggressive buyers of your own stock. Is that because you believe that there is such a differential between what youre bringing out and what you can get that its too good an opportunity for shareholders not to take advantage of . Exactly. Weve had an opportunity with price dips to step in and buy. We bought back an average price around 25, 24 a share and were finding oil for cheaper than what were selling for right now. Were looking at a rig, its very costly. We know to run it everyday costs a lot of money. How are you able to make money given the cost of what you have to pay ensco and all your crew . Because think of about it, everythings got to go right. Yeah, we have a high success rate on development wells. 95 . That helps but were paying that rig about 125, you add another 125 125,000. Yeah, so 250,000 a day total is what were spending on that rig. How much does it cost you just to talk to me . Well, lets see how long we talk. But, you know, our typical well costs between 10 and 12 million to get drilled and well bring on the low side 600,000 barrels and high side 1. 5 Million Barrels. How many more properties are left that you bought and what could be the proof reserve to what you have going . Were on the cutting edge. We have 180 barrels crude reserves. When you look at 3p its almost 300 barrels. Were going to move that oil into the crude category over time. Meaning its likely its down there . Yes, remember, it has to be in a reservoir thats already been penetrated and proven productive so more importantly with a new seismic, this field is on a chute that will be done by fairfield over the next 12 to 18 months, it will give us better data and theyre producing horizons here from 3,000 feet to 18,000 feet. Thats a lot of plays, not to mention we think we have prospects down to 24,000 at the base. One of the things thats happened clearly and i know youve been maybe able to harness it better than most. The technology, even since you bought these fields that wasnt that long ago seems to have been moving in a revolutionary pace. Not evolutionary pace. It must help you find oil where you didnt think there would be oil. Advances across the board. You talked about it yesterday with jim brown. Seismic reprocessing speeds, new acquisition methods, the abilities to do with what were doing with horizontal which is was invented here. The geosteering tools that weretodo the things that were invented in the gulf of mexico. Its so dam expensive out here that if you save a man hour or two i can justify the higher cost for the development of the new product. So horizontal drilling, the way we complete them, the way we gas lift today and all of those things lead to higher recoveries than anything weve seen before. How much oil do you expect per day from just when this is completed . We get off this platform and were going to drill several wells here were looking to get anywhere up from 5,000 to 10,000 barrels from Incremental Oil when we leave here. What do you think it was before you came down here when exxon pretty much gave it up. So this field, take west delta 73, the sister field. It was 2,000 barrels a day. Now were making 7,000 barrels a day. This field is running around 3,500 to 4,000. I think well get it up over 10,000 easily. We have a lot of opportunities identified here. And youre 13 miles offshore but you have all the pipe already in place, right . Yeah, were sitting on top of a big salt dome. This whole field is surrounded by platforms and pipelines weve already put in. We process right here, put in the our pipeline to grand isle and then we separate oil and water and gas back on shore. So were looking wells up. Yesterday we finished completing a well just yesterday, right here . It will be flowing making money tomorrow morning. Ive got to tell you, you tell a great story, john. I know stock has been depressed bud if you didnt think it was a great value youd be selling the stock not buying and youre probably one of the most aggressive buyers ive ever seen of any stock you come across. Thank you much for that. Thats john schiller, founder, chairman, ceo of energy xxi limited. Thanks. Can you show us around the rig . Yeah, lets go look at the rig. Energy xxi platform . And this was at one point exxons . This was at one point exxons. So you had this . Yes, and down below us are the producing wells. This is it . This is it. How is the difference between speed . They. Theres going to be some slower. But you cant be concerned about whether you do it by the end of march. I mean, its not a business that lends itself to what you can do for that quarter. You do whats right for the business for whatever time. Were going to maximize the efficiency around our drilling with this rig so we want to get a well down every 45 days. Thats the game plan. If we have two of them drills and completed in a quarter, great. Most likely its going to overlap a quarter. Youre just not looking at your business quartertoquarter, youre looking year by year at least. You should understand that the north American Energy revolution is about more than just more money for companies that produce oil and natural gas. The fact is, our plentiful supplies of natural gas are making the United States a much better place to do business for all sorts of industrial companies. Thats one of the reasons why nucor, the big steel company, built their new destruct reduce iron facility down here in louisiana. Yesterday i got to check in with john ferriola, the chairman and ceo of nucor, take a look. John, what does this plant behind us do and why did you build it here . It produces d. R. I. , direct reduced iron, a pure form of iron units that allows us to reduce our costs and produce a higherquality product. At tend it makes us more competitive, particularly against imported steel, steel that has to be produced in other countries that have Higher Energy costs. Is that because this is the headquarters for using natural gas and the game changer of natural gas for america . Certainly we consume a lot of natural gas in the dri process. And youre right, the natural gas revolution occurring in the United States it is truly a game changer for manufacturing, particularly Manufacturing Industries that are Energy Intensive like steel, like dri production. You know, jim, when you think about the tremendous increase thats occurred in natural gas production, its dramatically change the Energy Landscape on a global basis and its made america a lot more competitive to be able to invest in manufacturing. But lets talk about what it was like before the game change and after. Where would you be getting steel thats always been where would you be getting your raw costs and somehow this lowering your cost . Well, dri lowers our cost in a couple ways. First of all, the dri pellet itself is a high quality form of iron unit so its high quality. Its more intense and the shape of the dri pellet allows us to put in the the furnace in a way that actually reduces our Energy Consumption in the furnace while at the same time increasing the productivity of the furnace. So when were making steel in our electric furnaces we have lower energy costs, higher productivity that makes us more competitive, particularly on an international basis. Now when you speak about international basis, there are companies and countries that we believe and i know you feel very strongly dump their steel here. Dont you have to be both Higher Quality than the dumped steel and also come in lower priced in order to win . Absolutely. And the dri process you see behind me, the plant behind us, supports both of those initiatives. It makes us more competitive by lowering our cost structure, as i mentioned, and were competing against imported steel thats produced in countries where the energy costs are two to three times higher. So lets talk a little bit about the quality, because youre right, we have to be lower cost, more competitive, and we have to have a Higher Quality product that we offer to the marketplace. Dri being a more pure form of iron unit, its a Higher Quality raw material. In a furnace, when you put a Higher Quality raw material in, you get a Higher Quality product out. And that helps us in several ways number one, a higherquality product gets a premium price in the marketplace. Number two, it tends to go into more valueadded industries that have higher demand and more stable demand. Examples would be automotive. Examples would be energy in general. So having a lower cost basis, having a higherquality product helps us competitively domestically and also internationally. At one point you had actually literally been here in america when the natural gas all our costs were higher and then you shipped the whole plant to trinidad. How does this compare to your trinidad plant . Well, its larger for one factor. It produces about 2. 5 million tons of dri. Our plant in trinidad produces about two million tons. The quality produced here in such a short weve been operating about two months and in that short period the team has done such an outstanding job, as i mentioned, first of all, its the largest plant in the world. Being the largest plant in the world, it created unique challenges for our team both in production and in startup. Our team has met those challenges, theyve overcome those challenges. In just two short months we brought this plant up to a level where were operating at 95 capacity and the quality of the dri produced here is at worldclass standards. I do want to mention about why its important building it here in the United States. We have much better control of it here in the United States. First of all, it gives us security, we know whats going on, we have a stable environment. But secondly, jim, nucor has always been an advocate of American Manufacturing and the american worker. We believe there is no more productive worker in the world than the american worker. So being able to put the plant here in st. James parrish, louisiana, where we have a great team, weve been able to higher from the local area, very productive teammates. So having it here gives us better control over it, more security, better cost control and were producing a product thats very much close to our plants so we have a logistical advantage compared to bringing it all the way from trinidad. Now, you also have a novel arrangement with encana, a natural gas contract that basically gives you a level that you would not have to pay even if natural gas spikes because of this novel arrangement. That is correct. And thats important to us, jim, for two reasons. Number one, in our steel mills, being the largest producer in the United States, we consume a tremendous amount of energy both in the form of natural gas and in the form of Electrical Energy produced by natural gas. So we consume a lot of natural gas. Natural gas pricing, the cost of our natural gas is very important to our total cost structure. So thats the first issue. So making sure we have a longterm supply of reasonably priced gas at cost is very important to our steel mills. But also, as i mentioned, we consume a tremendous amount of natural gas right here at this dri facility. We consume here about 25 billion cubic feet of natural gas a year right here in louisiana. Just in this. So having that arrangement with encana provides us security on our dri investment and provides us a guaranteed cost advantage. Lets talk about the notion of security in terms of even domestic security. What are some of the countries we would have to deal with and be hostage to if it werent for plants like this . Well, dri, direct reduced iron, is a scrap substitute products. Other products would include big iron and hbi. About half of the amount of pig iron that comes in to the United States to produce a critical product that we call steel, very important to our national defense, half of our dri comes from ukraine, comes from russia, countries where theres not the greatest level of stability. Another scrap substitute product is hbi. That comes from venezuela, another country theres geopolitical risk. Two things i think people want to focus on, we want domestic security, youre giving us that. We also want clean. We dont want the old dirty way of doing which, by the way, a lot of these countries seem to be addicted to. Just take a look at this plant. Look at the plant in the background. Its a very, very clean operation, very environmentally friendly environment. In fact, one of the reasons we prefer dri to scrap is in the furnace dri is more environmentally friendly in our furnaces than scrap material because its a cleaner raw material going in. One last question, will you build the re