Oct 14, 2024 · 56m · capital-allocators
Matt Miller – Crossing the Energy Divide at Grey Rock (EP.412)
Matt Miller · 38m spoken Ted Seides · 9m spoken AI Co-host 1 (NotebookLM) · 1m spoken AI Co-host 2 (NotebookLM) · 38s spoken AI Podcast Voice · 1s spoken
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Matt Miller, Co-Founder of Grey Rock Investment Partners, joins Ted Seides to discuss navigating the energy transition through pragmatic, high-return niche strategies. Miller explains how Grey Rock shifted from non-operated oil and gas assets into point-source carbon capture, methane abatement, and industrial emissions reduction without sacrificing private equity hurdle rates.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 19.9% of the talking time here. How this is scored →
Ted as informed peer 3.6 Guest teaching 5.7 Guest disagreement 1.8 Ted pushing back 0.0
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 47:50 Critique of EV battery concentration vs OPEC
Miller forcefully dismisses conventional EV transition policies, arguing that shifting to EVs swaps dependence on OPEC for an even more concentrated supply chain where China controls 90% of refining.
Hardest push from Ted ▶ 27:20 Ted presses for simple math equations on renewablesTed directly pushes Miller to back up his broad claims about passing on popular renewables by demanding the specific mathematical equations and economics that justified the firm's choices.
Biggest teaching moment ▶ 28:40 Negative pricing and grid dislocation mechanicsMiller schools listeners and Ted on how corporate renewable credit arbitrage leads to Western Oklahoma electricity prices running negative twenty percent of the time.
Ted holds their own ▶ 23:21 Ted articulates business and asset run-off challengesTed demonstrates deep allocator expertise by identifying the core managerial tension of pivoting a private equity firm from legacy oil and gas assets into new transition verticals without forfeiting key technical talent.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Episode Overview: Matt Miller and Grey Rock | 2 | 0 | 0 | 0 | Ted introduces Matt Miller and plays an AI-generated deep-dive clip of his book. There is no conversational pushback or debate in this introductory framing segment. | |
| Matt Miller’s Early Life and Path to Finance | 3 | 2 | 0 | 0 | Ted asks foundational biographical questions about Miller's upbringing, education, and career path from McKinsey into Dallas private equity. Miller explains his path warmly and constructively without confrontation. | |
| Understanding Energy Complexity and Unintended Butterfly Effects | 4 | 6 | 2 | 0 | Ted asks what drew Miller to the sector, and Miller educates Ted on energy's counterintuitive butterfly effects. Miller explains how UK wind lulls led to Middle East natural gas imports, causing increased crude burning. | |
| The Non-Operated Working Interest Investment Strategy | 4 | 6 | 2 | 0 | Ted prompts Miller on his non-operated working interest strategy. Miller details US private mineral ownership mechanics and why operated shale was overcapitalized while non-op offered discounted upside. | |
| Navigating ESG Pressures and Shifting toward Emissions | 4 | 6 | 3 | 0 | Ted asks how ESG pressures reshaped Grey Rock. Miller challenges the mainstream renewables narrative as hyper-overcapitalized, reframing their strategic focus toward emissions abatement and carbon capture. | |
| Granite Ridge Public Listing and Upstream Macro Realities | 4 | 7 | 3 | 0 | Ted asks how Miller managed fund transitions, and Miller details creating Granite Ridge while providing macro data on sticky global oil demand and impending resource depletion in US shale. | |
| Renewable Market Distortions Versus Industrial Carbon Capture | 4 | 8 | 3 | 0 | Ted asks for the underlying math behind passing on renewables. Miller thoroughly details negative power pricing phenomena in Oklahoma and the impossible $270T battery scale required for Germany's grid. | |
| Sponsor: Ridgeline Investment Management Platform | 4 | 6 | 1 | 0 | Following the sponsor break, Ted asks what characteristics make carbon capture investable. Miller breaks down the 45Q federal tax credit mechanics and the trillion-dollar Inflation Reduction Act catalyst. | |
| Subsurface Geology and Engineering Realities of Sequestration | 3 | 7 | 1 | 0 | Ted inquires into the operational and engineering complexities of sequestration. Miller explains caprock geology, fluid dynamics under pressure, and how CO2 injection repurposes mature 50-year-old oilfield techniques. | |
| Grey Rock’s Execution Strategy and Operating Platforms | 4 | 7 | 2 | 0 | Ted asks about firm execution across niche themes. Miller explains their portfolio platforms tackling stranded flared gas for AI data centers and plugging high-potency orphan methane wells. | |
| Long-Term Energy Transition Trajectory and Energy Equity | 4 | 7 | 3 | 0 | Ted asks how the overcapitalized transition plays out. Miller advocates for baseload nuclear power while pointing out severe supply-chain risks in EV batteries dominated by Chinese rare earth refining. | |
| The Decarbonization Value of Natural Gas and Pragmatic Collaboration | 3 | 6 | 2 | 0 | Ted asks about persistent industry misperceptions. Miller explains the massive historical emissions reductions delivered by natural gas switching and stresses pragmatic, bridge-building engagement with industrial emitters. |
Statements from this episode (33)
Miller: Energy investing is like pharma; tourists get their faces ripped off
“The energy is like pharma. If you're a tourist, you're probably going to get your face ripped off. And if you don't know a component piece of the energy ecosystem, or maybe the second and third layer of the onion, you can really miss something really bad.”
Miller: Complex financial engineering in deals leads to participant misalignment
“I don't like complicated financial engineering. I don't like inserting puts and calls and preferred equity and ring fencing debt securities because maybe I'm too dumb to understand it, but I think that it just ends up with misalignment and transactions where e…”
Miller: Overcapitalized energy markets will lose money despite overall growth
“Anytime something's overcapitalized, you're likely to lose your shirt. Just because a market is growing doesn't mean you're making money. That's a really hard thing for people to grasp in energy.”
Miller: Energy investors lose money by ignoring full-cycle acquisition costs
“There's this concept of half cycle. How much does it cost to just do a project? And then there's the full cycle. What do I have to pay to get access to that project? And that's where a lot of people lose in energy.”
Miller: Endowment ESG pressure stopped new resource commitments, not existing holdings
“The ESG pressures at your typical endowment foundation, the vast majority didn't take the form of you have to divest all of your natural resources. It typically took the form of you're not allowed to invest again in natural resources.”
Miller: Overcapitalized renewables will likely destroy multiples of shale capital losses
“I see renewables as just a massively overcapitalized space. It will likely torch capital on multiples of what happened to shale.”
Miller: The global shift is an emissions transition, not energy transition
“It's not really an energy transition. It's an emissions transition. The emissions is what we're trying to get at.”
Miller: U.S. Shale Will Deplete, Forcing Reliance on Unstable Oil Regimes
“One is I think oil's off to the races. And I do say this to CIOs with a, Hey, think with your inflation hat on this thing is the input to almost every product and humanity. And the reason why is largely the world has lulled itself into a soft slumber on the ba…”
Miller: Global Oil Demand Fell Only 10% During Peak May 2020 Lockdowns
“It was in May of 2020. Not a car on the road, not an airplane in the sky, not a cruise ship on the ocean. Oil prices went to -37 dollars a barrel. What do you think global demand was down? You think it was 50% that month? 70%? It was down 10%.”
Miller: 80% of Republicans Under 35 Prioritize Climate as Top-Five Policy Issue
“Currently, Republicans under the age of 35, 80% of them say climate should be in our top five list of policy issues.”
Miller: Carbon Will Rival Oil and Gas in Commodity Scope and Scale
“Carbon will be a commodity that rivals oil and gas in scope and scale, and you need to be ready for that.”
Miller: Western Oklahoma wholesale power prices are negative 20% of the time
“Power prices in western Oklahoma are -20% of the time today. They will pay you to take the power.”
Miller: 100% battery backup for Germany's grid would cost $270T
“And the back of the envelope math says, well, in order for Germany to be a hundred percent renewables plus a hundred percent battery, the battery piece of that equation was 270 trillion dollars.”
Miller: Point-source CCS yields PE returns only in pure-CO2 industries
“Really where you want to focus in carbon capture are in industries that emit pure CO₂ as an industrial byproduct. Industrial accident is a better way to think about it. So those are really ethanol plants, ammonia, so fertilizer, and then natural gas processing…”
Miller: Section 45Q pays $85 per ton of sequestered CO2 over 12 years
“Really what that tax credit says is, hey, if Ted goes out and he takes one ton of carbon dioxide gas, and he injects it into the earth, permanently getting rid of it, we'll pay him 85 dollars per ton that he does via tax credit for a period of 12 years.”
Miller: Good carbon capture projects yield 20–30% unlevered IRR and 3–6x returns
“A good project in carbon capture might be an unlevered 20 to 30% rate of return might be somewhere around three to six times your money. These are competitive with traditional private equity economics.”
Miller: Global voluntary carbon market is $3B annually versus $1T IRA
“That global market is about three billion dollars a year. For some sense of scale of how big the IRA is about a trillion dollars.”
Miller: Only about 10 permanent carbon sequestration wells operate in US
“There's only 10 or something permanent sequestration wells operating in the United States right now.”
Miller: Carbon capture will reach coal and gas plants within a decade
“We are gonna get to coal plants and natural gas plants, a hundred percent certain in the next decade.”
Miller: The IRA made carbon valuable by putting a price on it
“Ironically, by virtue of putting a price on carbon, you've actually made carbon valuable under the IRA.”
Miller: Renewables Disrupt Grid Reliability and Cause Intraday Price Volatility
“We think there's too much capital chasing renewables, and renewables are actually disrupting our grid system. They're causing intraday price volatility. They're causing electricity to be less reliable.”
Miller: The US Has Between 100,000 and 1 Million Orphaned Wells
“But there's at least a 100,000, some people estimate up to a million orphan wells in the United States.”
Miller: Too much energy transition capital is concentrated in mega-funds
“I'd argue vehemently there's too much money in the energy transition. It's just concentrated in the hands of very large funds who can't get out of bed without writing a billion dollar equity check.”
Miller: SEC emissions reporting rules will eventually lead to carbon taxes
“When the government's asking you to measure something, I got news for you. That thing's going to be taxed. That thing is going to be taxed at some point in time, which is a whole different revenue source for the energy transition over time.”
Miller: Plant Vogtle projected at $14B cost $40B to build
“If you look at Vogel, the most recent Nuke plant to come online, I think Southern Company had said it was going to be fourteen billion, ended up being forty billion.”
Miller: Electric vehicles are not suitable for the average US consumer
“I think one that I'm bearish on is electric vehicles. There's several things about EVs that are, when you dive in, they're just not a good fit for your average customer.”
Miller: Hybridization of everything will be the US vehicle solution
“I actually think the solution set for the U.S. Is going to be hybridization of everything.”
Miller: China controls over 90% of rare earth refining capacity
“China controls over 90% of the rare earth refining capacity.”
Miller: 99.9% of global lithium reserves are in four countries
“99.9% of the world's lithium reserves are in the hands of just four countries, China, Chile, Argentina, Australia, none of which are the United States.”
Miller: US natural gas prices are 80% lower than Europe's
“The United States, by virtue of fracking, has natural gas prices that are just structurally lower than the rest of the globe. They are 80% lower than Europe.”
Miller: Coal-to-gas shift delivers 2.5x the environmental benefit of gas-to-renewables
“And when you look at the delta between, if I move from a coal plant to a natural gas plant, and a natural gas plant to a renewables plant, That first step has 2.5 times the environmental impact.”
Miller: US CO2 reductions since 2005 stem largely from fracking
“The United States has reduced its CO two emissions since 2005, largely on the back of fracking and getting that natural gas molecule out.”
Miller: Grey Rock pitches financial returns, not climate, to traditional operators
“And what we try to do is merge these worlds together, is just to say, hey, when we're in those conference rooms, realistically, we're not bringing up climate. We just aren't. We're bringing up money. And when we're in other conference rooms, we talk about how …”