Advised Podcast Ep 009: Ex-NFL Player Talks Mindset & How to Win in Business

From walking-on at Penn State to being drafted by the St. Louis Rams and now turned CEO, Central Pa's Josh Hull refuses to take no for an answer. Get inspired by this humble, small town guy who continues to overcome adversity by leaning on Family, Mindset and Faith.

Listen as we discuss the dangers of attaching your identity to sports and your career. The mindset Josh used to succeed in football, that he carried into the business world, and why business owners should be looking to hire former college athletes.

I get Josh's take on the latest NCAA NIL rules and discuss his thoughts on the the NCAA's newest proposal to pay student athletes directly.

Finally we discuss Josh's current role as CEO and how his company is helping the US become more energy independent, as well as the unique investment opportunities and tax benefits that come along with US energy production.

Listen above or read the transcript below, and let us know what you think of the episode!

Rick Luchini (00:00):

I heard something else about maybe having a cup of coffee with the Patriots. Yeah. Okay.

Josh Hull (00:08):

It was a little more than a cup of coffee. I was there for six months,

Rick Luchini (00:11):

So when that ends. Yeah, right. How much of your identity was being a football player and what was that like to then lose that and transition into the business world? All of it. Yeah.

Josh Hull (00:30):

A hundred percent of my identity was as a football player, and it was a mistake, A enormous mistake.

Intro (00:40):

You're listening to Advised with Rick Luchini.

Rick Luchini (00:43):

Excited for today, we have a central pa, local legend and

Josh Hull (00:50):

Emphasis on local

Rick Luchini (00:52):

Legend. That's okay. A humble local legend, former Penn State, NFL linebacker turned, CEO, Josh Hull. Josh, thanks for coming.

Josh Hull (01:03):

Absolutely. It's a pleasure.

Rick Luchini (01:04):

Why don't you give us your three minute background and then we'll get right into it.

Josh Hull (01:09):

Yeah. I'm just a regular average Joe kid grown up. I love to hunt and fish and get into the normal trouble and mischief at any other young boy would get into. Growing up in rural Pennsylvania, I went to Penns Valley High School. I played baseball and football there and had an opportunity to walk on at Penn State to play football.

(01:35)
Earned a starting inside linebacker position in my junior year, earned a scholarship and ultimately ended up leading the team in tackles my senior year. Got invited to the NFL combine in Indianapolis and got drafted in a second to last pick in the seventh round by the St. Louis Rams, which is an amazing experience. That's awesome. Played three years in St. Louis, a year with DC with the Redskins, and then I got cut my fifth year. Never made the active roster with the New England Patriots in the Jacksonville Jaguars. The Patriots stung a little bit that year. They won the Super Bowl. I don't have, as you can see my hands, there's no Super Bowl rings in my fingers, but I got a taste of what it takes and was exposed to the caliber of people that it takes to win Super Bowls, which is really awesome. Blessed

Rick Luchini (02:20):

Fort. That's awesome. I want to go into a couple things I heard there. Okay. One is, why did you decide to walk on to Penn State when I would have to assume you were getting scholarship offers for local D two schools and things like that?

Josh Hull (02:41):

Yeah. I had two other legitimate opportunities to play football. One at William and Mary. Loved the university, loved the campus, and then two at Bucknell University. Same. I can say the same thing. I think a lot of the decision to walk on at Penn State, one had to do with the fact it's right up the street from where I grew up. I grew up in Mulheim. I can remember going to Penn State games as a boy with my dad. I can vividly remember sitting in Beaver Stadium and the pouring down rain and it raining so hard that the water was cascading down the steps. It's like a river on our feet and just how special it felt to be in a place with 110,000 people. The biggest thing I not believe I know is my personality. I had a pretty strong sense that I could go into William and Mary or Bucknell and be a contributor right out of the gate, and if I would've done that, I think I would've always looked back and say, you know what?

(03:33)
I had an opportunity to maybe prove myself at Penn State, and I never really, if I would've went to one of those smaller schools, I just really would not have forced myself to get out on the comfort level of competing with the best of the best. So the biggest reason going to Penn State is I wanted to challenge myself. I knew it wasn't a walk in the park. I knew that I had an uphill battle every single day. It was a walk on competing against five star athletes from all over the United States. But if I put myself in that environment, I knew that ultimately because I was competing with people that were smarter, faster, and stronger than me, I ultimately would be a faster, smarter, stronger guy.

Rick Luchini (04:15):

I think that proves why you ended up being successful, because you were driven from day one to be able to do something like that.

Josh Hull (04:27):

Yeah. I think a lot of it too has to do with the fact that the way that I was raised, my parents never put boundaries on my brother and i's success. They never said, oh, you can only do this or You'll never be successful doing this. It was, okay, boys, what do you guys want to accomplish in your life and how can your dad and I help you? What tools can we give you? What can we teach you to help you accomplish the goals that you guys set forth? So that's big. My wife and I are really, really big in that with raising our own kids right now, not to try to define their success and what they can and can't accomplish at such a young age. Because unfortunately, there's a lot of kids that are told from day one, you'll never be able to do this. You're not smart enough to do this. Right. And that's not, thankfully I wasn't raised that way. And

Rick Luchini (05:13):

Sometimes that can come from a good place because they're trying to protect them or they're trying to steer 'em in the right direction. But you don't know what people are able to do until they get out there and do it.

Josh Hull (05:24):

Humans are capable of some miraculous things. That's right. All humans, period.

Rick Luchini (05:30):

So I heard something else about maybe having a cup of coffee with the Patriots. Yeah. Okay.

Josh Hull (05:41):

It was a little more than a cup of coffee. I was there for six months.

Rick Luchini (05:44):

Proverbial cup of coffee, a cup of coffee. You know what I mean? Okay. So when that ends, how much of your identity was being football player and what was that like to then lose that and transition into the business world? All of it. Yeah.

Josh Hull (06:05):

A hundred percent of my identity was as a football player, and it was a mistake. Yeah, A enormous mistake.

Rick Luchini (06:17):

I would assume that by the way, is why I brought it up because I can relate to that. I know a lot of people that can relate to that, whether it's sports, whether it's your job, the business that you own or the title that you have. And yeah, why don't you just speak to that a little bit and maybe how we can do better as parents to separate your athleticism or your job or whatever it is from your identity, because it can really leave you vulnerable.

Josh Hull (06:53):

It was hard. I played football from the time I was 12 years old. It was my life, literally my life. Everything that I did evolved around football, especially as a professional. It took me a long time to understand that football wasn't who I was. It was just what I did. It's a poor analogy, but it's the only one that I know that can really resonate. It was a true grieving process. It felt like I lost somebody in my life not having football for 12 straight years. I woke up every single day and I knew what I was supposed to do. I knew where I had to be. I knew what my workout routine was going to be. I knew what I had to eat. I knew what I had to study. I knew how I knew what I had to do to be successful in the field. And you wake up in the morning and it's gone

Rick Luchini (07:37):

And how people viewed you and

Josh Hull (07:38):

How people viewed you. Right? Yeah. It was probably the hardest year of my life after not playing in the NFL. What was I supposed to do? How was I supposed to do it? What skills did I accomplish, acquire, hone over my professional athletic career that I could apply into life after football? Didn't know what they were at the time while you were playing football, but after you kind of cleanse yourself and put a different lens in front of you, you realize, man, maybe all of the skills that I've learned as a professional athlete can be applied in life afterwards.

Rick Luchini (08:20):

Absolutely. And I think that it's difficult, but for people like you myself, a lot of folks that I know we can do better at trying to teach our kids, yes, you're supporting their athletic career or that science project or whatever the thing is, but do things so that they know that's not who they are. They're not getting love because they're great at baseball. That's just another thing that they do. And the same can be said with business. I mean, don't be scared to do something else that you have a passion for. Just because you're known as the tax guy, you can be the tax guy and the garden guy. That's okay. Don't be scared about that. And I think that having your identity wrapped up in something like that, like you said, it can leave you very vulnerable. But coming out on the other side and realizing that all those things that you learned along the way makes you a great business person. What does that look like? How does that translate to business and what are some of the things that you look back and say, man, I only can do this now because I played football.

Josh Hull (09:43):

You said a couple things that made me think something. So we will get to how do my skills as an athlete translate to business? We'll, absolutely talk about that. This is a shame on me for not mentioning this earlier. I gave my life to Christ when I was in DC with the Redskins. That fact alone, excuse me, helped tremendously through this transition of life after football because prior to that, identified as a football player, you take football away, who is Josh? Post Christ, identify myself as a Christian. Football's taken away. Guess what? Christ is still there. My belief is still there. My faith is still there. It never waves. It never goes away. It doesn't change. It's everlasting. It's always there. So that was a big part of my transition post-football is placing my value in the Lord rather than into something that I do as a person. It's always going to be there. Football, sorry. If there's any young listeners out there, any other sport, baseball, basketball, you name it, it's not always going to be there. There's going to be a day that you can't play it anymore. Right? Yeah.

Rick Luchini (10:53):

Awesome.

Josh Hull (10:54):

So you asked me the question, what skills did I learn as an athlete and how do you apply those to business afterwards? We could sit here all day really and talk about that. I'll do my best to narrow at a high level, narrow down at a high level. The first thing is just performance. My entire career was based on performance. If you don't perform, I don't literally don't have a use for you on the football team, right? Man, this is not the place to talk about this. But if you take that approach into your job, if I'm not providing a tangible product

Rick Luchini (11:34):

Every, it's absolutely the place to talk about it. By the way, yes. If

Josh Hull (11:36):

I'm not providing something tangible every single day, what am I doing? So just holding myself to a high standard, knowing that I'm going to be evaluated every single day and knowing that my work product is my signature. I think that separates yourself from a lot of other people that are just coming to work, a nine to five, punching a clock and moving out. Absolutely. Leadership, the ability to work with a team. Football obviously is not an individual sport every single day. I'm blessed to work now as a CEO of Penn Production group. Blessed to work with some of the most intelligent, thoughtful people in the industry and being able to take talents from all over the place and put them together in a functioning team. Man, I use collaboration and teamwork. Things that I've had to do every single day in the NFL, just inadvertently. You apply that every single day at work. A couple other things, being able to, we talked about performance, but in high stress situations, I performed in some of the most high stress environments that you can succumb or put yourself to. So there's really multiple times in any given week, you get an easy business situation like, all right, no emotion, just calm down,

Rick Luchini (12:49):

Been battle tested,

Josh Hull (12:50):

Been battle tested, proven.

Rick Luchini (12:54):

And I think when you are in those big situations in sports and then in business and you come out on the other side, you start to learn that whatever the outcome, even if it wasn't favorable to you, it's not the end of the world and there will be another one. And so you can be a little bit more levelheaded going into the next one. Say, I already did that, especially when you did it and failed. That can a lot of times be even better. I did. It failed. I'm still standing here and I'm up at bat again. And I think athletes recognize all the things that you just said. I think it's important for the business owners to be listening to this, thinking about especially small companies that maybe only have a handful, 10 employees. Look at former college athletes. They don't have to be division one. All Americans. They don't have to have gone to the NFL. They could be third string D three, but they did it and they stuck with it, and they worked towards something that was bigger than themselves, and they've proven that they can have drive for something. And I think former athletes make great employees for all the reasons you just said, knowing that they have to come to work and perform.

Josh Hull (14:22):

How about that?

Rick Luchini (14:22):

I mean, right. What a novel concept, but it's true. Right? And there's a lot of former athletes out there that need to bring that sort of stuff. I think that they, college is over. Maybe it's a footnote on my resume, but they don't talk about it. I think that conversation that you just had right there needs to be in the interview room. These are the skills I learned playing tennis at St. Francis or whatever you were doing. And the interviewer or the business owner might connect those dots a little bit better.

Josh Hull (15:04):

No doubt. One of the other skill sets I like to mention too is just, this is an innate thing that I've always had an innate personality trait that I've had my entire life is just not ever accepting the word no. That's an answer. Hate to lose. And it's kind of not wanting to lose. And the answer no, are kind of connected in my mind here. And the reason I bring that up, I mean, you're never going to play at Penn State. Okay, check the box. I did that. You're a walk on. You're not going to start Check the box did that. You're not going to play in the NFL. Check the box. I did that. Just any challenge that I faced throughout my athletic career, regardless of what people were telling me or regardless of who I was competing against, I found a way to be successful. I never accepted no. And trust me, it was challenge after challenge after challenge, after roadblock after roadblock. And it's the old adage, you get knocked down five times, but you stand up six, it's applicable every single day to the business world. Every no that you receive just means that you're one step closer to getting a yes. Yeah. So the tenacity, the dedication, the commitment, it all transpired. It all cascades into business and life

Rick Luchini (16:15):

After football. So you mentioned Penn production, you're the CEO there. That is essential PA company. What brings you back to central pa? Raise a family here and work here. When your NFL career moved you around, you could have landed anywhere. Yeah,

Josh Hull (16:35):

You said it. It's family. We live in Spring Mills, Pennsylvania. My wife's family is just north of us in Beon. My family is in Penns Valley where we're at. Had an opportunity to live in a bunch of really cool places all over the United States and traveled all over the place playing, and the roots of the family are deeper and stronger than anything that I experienced in traveling. So it was a great place to raise kids. Both of our families, both of my parents and my wife's parents are still actively involved in raising our kids. So having the support system around the families, absolutely. It's invaluable. Priceless. Yeah. Everybody's here and that's really where we wanted to settle down. That's

Rick Luchini (17:15):

Awesome. So I have two things that I personally really want to know. Sure. One, what is it like to come out of the tunnel at Beaver Stadium with 110? You played in a lot of big games, right? What's that like

Josh Hull (17:34):

Two distinct, separate feelings that I experienced going through there. The first, maybe the people here that are going to listen aren't going to don't understand this as a walk on your first year, you don't have the ability to play, so you do every single thing that all the other players do just on Saturdays, you're not dressing up. Penn State had a thing that if every week in practice, they would honor one walk on one practice squad guy as based on how they performed in practice during the week, and you got to dress, go through and warm up with your position group, wore the full uniform, just stood on the sidelines. You didn't play right. So the first time I got to do that, it's man, you walk in the aver stadium room in the tunnel and it's eyes wide open, taking everything in. You're hearing the people yelling at you from the other team. You're feeling the drinks coming down from throwing. You feel the vibrations, you smell the grass, you smell everything. And just why, really? I got goosebumps talking about this, just taking it all in. That's experience number one and feeling number one, feeling number two is when I'm standing in the tunnel, knowing that I'm the starting inside lineback for the Penn State NI line, it's

Rick Luchini (18:41):

Different.

Josh Hull (18:42):

A walk on from Penn's Valley is I really got goosebumps right now. That feeling will never ever leave me, but it was surreal. It was not what I mentioned before. It was so tunnel vision. I was so focused on what the task in front of me was that you don't hear the 110,000 people. You don't feel it. It's just, I've spent the last six days of the week preparing for this. I know what I need to do and turn the lights on and let's execute. Let's perform and execute. Yeah,

Rick Luchini (19:12):

That's awesome. The other one is something that is going on the news right now. Most recently, the newest proposal for the NCAA to start paying players, but I think the NIL rule, what are your thoughts on that? As somebody that played at the highest level when those things were not available, did get drafted the NFL, but played with a lot of guys that did not. I'm just curious what your thoughts are on that. You experienced it on one side and now it's completely different. Yeah,

Josh Hull (19:55):

I love it. I think these players should be able to make a billion dollars a year if somebody's willing to pay 'em. I don't think I would've felt that way if I didn't play in the NFL. The NFL is a what can you do for me today? Business. It's a meat shop. There's no friends in the NFL. They're colleagues only. And if you don't perform once again, you're out. It's hard on your body. It takes a lot of time out of your life. There's a lot of sacrifices that you have to give, not physically, mentally, spiritually, emotionally, all of it. If you have an opportunity to monetize your skillset at the age of 18, by all means, I think they should be able to do it. I am not upset. I'm not jealous. I don't have any animosity, animosity at all towards the players in college that have the ability to make money. Do I wish I could have made sure in college? A hundred percent

Rick Luchini (20:48):

I do. But it's progress. It's

Josh Hull (20:49):

Progress.

Rick Luchini (20:50):

Yeah. And no, I a hundred percent agree with you. I actually have some stuff out there of me saying that, and I think that it is the NIL, especially the revenue share and all that I personally believe in. But if that doesn't develop into something as big as it honestly should, at least the NIL is, to me, that's a basic human being able to make money off of your name, image, and likeness. It's a no brainer. And it's a check mark for free market capitalism, which I believe in. And big surprise, amen. Because excuse me, here we are talking about performance and I mean, that's what capitalism is, right? So a hundred percent agree with you, and I love that it's finally moving in the right direction, not just getting shut down completely. And for a little context, because I get a lot of, I don't want to say nasty, but disagreeing comments and I welcome that.

(21:59)
I want the discussion. I think that's what breeds the progress is the discussion and people here on both sides. But for a little context, the average head coach, the average salary for a head coach and the Power five conference is 6.25 million with the ones at the top making double that. Okay, so your head coach at Michigan is making $12 million. And so for the folks that answer, but they get a scholarship, Ohio State generated over 250 million of revenue, their football team, not their college, just their football program. You can't tell me that the scholarship is enough anymore, and we can put a cap on that, but why don't you just add to that and let people know that really don't know what it's like to be, especially at that high of a level a college athlete and the time commitment and how it's different than just being a regular student at Penn State.

Josh Hull (23:13):

Yeah, I'll talk about the time commitment for sure. One question for you, I guess the people out here listening, can you name any other for-profit business and these college sports? It's a for-profit business, regardless of what you want to say, it's a for-profit business. Can you name any other for-profit business in the United States or the world for that matter, that does not pay their workers, that produces the product that they sell?

Rick Luchini (23:39):

No,

Josh Hull (23:40):

You can't.

Rick Luchini (23:40):

No. And when I say that, because I agree a percent when I say that, I get back things like, well, they're not employees. They're students. Okay, have them not play football and tell me what the business produces next year.

Josh Hull (23:59):

You took the words out

Rick Luchini (24:00):

Of my mouth, right? Well, they can't all make what the head coach makes this and blah, blah, blah. But at my business, I don't know. The intern getting coffee doesn't, okay, trust me, this is not a parallel. These are key employees. So a lot of things we're saying, well, they shouldn't get revenue share because Microsoft makes X amount of billions of dollars, but everybody that works there don't get a revenue share in that. And my response to that is, the key employees do. So if you don't think that the quarterback and the wide receiver in the middle linebacker for Alabama are key employees are essential to that business, you're out of your mind. And they do get it because the front office and the key employees at a Microsoft or Google or whatever are getting profit sharing and they're getting stock options and everything else. So a hundred percent agree with you, and I'm glad that it's moving in the right direction. The NIL is just a no-brainer, and I think the profit share is next, but I a hundred percent agree with you. I mean, there is no business, and so we can cap it there, but I'm glad that you were candid about your thoughts on that. Yeah.

Josh Hull (25:28):

You asked me about what's the day in the life of a college athlete look like? What's the time commitment there?

Rick Luchini (25:33):

That's what I wanted

Josh Hull (25:34):

To say. I'll run through just a generic cookie cutter day. I'm a morning person. My best work's done first thing after I wake up from a good night's sleep. So I always worked out the earliest time slot that I could each day. I can't remember what time. I'll say it's six, might five 30 or six o'clock in the morning. So start your day with a workout. About an hour, an hour and a half after that, we had to report to breakfast. Every single player had to be checked in, and if you missed a breakfast, there was consequences to pay. So you go to breakfast, and from then, my classes started at eight o'clock. Every athlete had the timeframe between eight o'clock and a day at two 15 in the afternoon to get your academics done. At two 15, we had to be back at the football building every day of the week, two 15, we started with if there was any stretching or anything you needed to do before practice, you'd go ahead and take care of that.

(26:24)
We had team meetings. We'd start with the entire team with Coach Paterno. Then you'd break down into offensive defensive meetings, and then you'd break down offense defense into position group, go through all of the meetings, watch film, install the plan for that week. Then you'd go out, go to practice, come back, watch film again, watch what you just did at practice, get coached, get learned, get critiqued from there. Everybody showers, take care of yourself again after practice, stretch ice massage, any of that stuff in the training room, back to the training table to eat dinner. And then from dinner, we came right back to the football building, and as a freshman, you have to have, I think it was two or three hours of study hall a night mandatory until you could hit that 2.0 grade point average, and then you were allowed to spread your wings and go fly. I got into the routine. I studied engineering at Penn State.

(27:20)
I just got into the routine of having to do that as a freshman. I went back to the building every single night throughout my entire career, because there's cubicles there. It's quiet, it's focused, there's tutors there. So I stayed in study hall by choice throughout my five years at Penn State. So your day, my day would start at 5, 5 30 in the morning, and it was just most nights, 9 30 10, 10 30 at night until you were back in your dorm room to chill out for a half hour, 45 minutes to go to sleep and get up and do it all over again. Do

Rick Luchini (27:50):

It all over again. Yeah. I'm glad you ran through that because the argument is they're athletes, student athletes, they get a, that is a job. It's a job and you want to do it. Yeah, by choice, you want to do it, but when that job also generates 200 plus million dollars, you ought get compensated for it. So we'll put a cap on that. I'm glad we went there. But you talked about engineering and that's where you're at now. So why don't you tell us what you're doing with that and what you're up to now?

Josh Hull (28:30):

So that's a funny story. So I have, my undergraduate degree is in environmental systems engineering. I'm not an engineer by practice, not an engineering by trade. This thing called the NFL got in the way of me taking all my engineering exams. So I have a degree that says I'm an engineer, but I never practiced it. I also, at the age of 18, thought that that was the quickest way to riches. I thought I was going to make a pile of money being an engineer, and it's a pretty big fallacy there as

Rick Luchini (28:58):

Well.

Josh Hull (28:59):

The thing that I learned later in life, which most of hopefully everybody else has learned, there's a lot more value in doing something that you love and care about and you're genuine about than going to work. And trying to capture is much the most amount of money, hundred percent at any time that you can.

Rick Luchini (29:15):

Yeah, and let me just stop you right there and drill down, because I'm a big believer in that at any age, if you don't realize that until you're 39, I'm raising my hand. For those that are only listening to the podcast and not watching it, do it. If you don't realize that until you're 56 and your kids graduated and now you've got a little lecture, do the thing. It's never too late. Do the thing, and money will come, by the way, because you're actually passionate about it and you actually want to do it. And on the retirement planning side, because that's what I do for a living, just so you know, less money for a longer period of time works in a retirement plan too. All of a sudden you're not scratching your eyes out trying to retire at 62 because you're miserable. You're waking up, you're going to do this, whether somebody pays you or not. Now all of a sudden you have revenue into your later years. So I'm glad you said that. Follow your passion, encourage the people around you to do it, and it can turn into something.

Josh Hull (30:22):

I was not passionate at all about being an engineer. Thankfully, after the NFLI was given a huge opportunity, a local family office in state college to come work, work for their firm. I worked directly with the president, CEO when I first started there, and he identified, I assume some personal characteristics of me that were very similar to what Coach Paterno identified in, gave me an opportunity to go back to school again. I went back to Penn State and got my master's in business, and that's really where the light switch flipped for me. Finding my new found passion after football was no longer there. The world of business is amazing. I get a very, very similar sense of adrenaline, the rush

Rick Luchini (31:07):

Competition, the competition's there, and that's why I think a lot of athletes become good employees or owners in the business world because the competition that we are searching for in our everyday lives is there.

Josh Hull (31:25):

Right. It fills that void that's missing. Yeah, there's so much to in business. It is hard. Sports is hard. To me. Things are only worth, they only have value if I struggled for 'em. If something comes easy, I don't find any value in accomplishing easy things. So the challenges that I face every single day, the adversity, the complexity of taking information all over the place and trying to put it together to make a single point of sense for strategic reasons, it's mesmerizing. I am super, super passionate about doing what I'm doing now.

Rick Luchini (32:02):

That's awesome. And what is it that you guys do there? For the folks that don't know?

Josh Hull (32:07):

Penn Production Group is an exploration and production company based in Clearfield County, Pennsylvania. We drill Marcellus and Utica Wells, so we are extracting clean, safe, reliable energy from beneath our feet every single day. And it's playing a huge part in our energy independence and energy security moving forward here in the United States.

Rick Luchini (32:30):

How does that play a role moving forward with the push for EVs? Because we're becoming more, hopefully more energy independence, and we can independent and we can lean more on things like gas, natural gas rather than oil.

Josh Hull (32:47):

Yeah. I see a place for all types of energy in today's mix. As you mentioned, there's a huge pushing out of green energy and solar and wind, et cetera. The way that I view natural gas fitting into this mix is it's the transition fuel. It's transitioning away from the heavier polluters, burning coal to the cleaner polluters of wind and solar. It's the transition that's going to get us from coal to eventually renewables in the future. It's bridging the gap.

Rick Luchini (33:21):

And there are some advantages to investing in this type of energy, is there not? Yeah,

Josh Hull (33:31):

Absolutely. So it's really, I look at it in two different facets. One, it's an opportunity to generate reliable monthly distributions from investing in wells. And two, the internal Revenue code has some really intriguing tax provisions that incentivizes private equity investment into the United States role of producing energy on the intangible drilling cost. They're eligible to be written off a hundred percent in year one. Anything intangible is stuff that you can't touch. So money that's spent on fuel, money that's spent on consulting, money that's spent on geological work, all that investment money upfront is written.

Rick Luchini (34:11):

How does that break down for the investor? Somebody that's listening right now interested in investing in gas oil or sell shale drilling, how does that look for using round numbers? What does that look like on a tax break on average for say, a hundred thousand dollars investment?

Josh Hull (34:30):

Yeah, so the first thing we need to go through is, historically, if you take a hundred percent of the cost to drill a well, 80% of it is typically intangible. 20% is typically tangible costs.

Rick Luchini (34:43):

Got it.

Josh Hull (34:44):

So if you make a hundred thousand dollars investment, 80% of that is allocated to intangible drilling costs. So you're going to get an $80,000 above line deduction off your effective gross income year one.

Rick Luchini (34:58):

In year one. Yeah.

Josh Hull (34:59):

If you assume 30% federal tax bracket, sorry, 37% and 3.07 at the state level, you're going to generate roughly 40% on 80. So what, $32,000 of?

Rick Luchini (35:13):

Yeah. I just want to double click on that for a second in case anybody missed that. What you're talking about is on average a hundred thousand dollars investment. I'm getting an $80,000 top line deduction in year one. So in addition to the longevity of the investment, the dividend rate, all that stuff, which we're not going to go into because there's too many variables there, just that alone on a planning perspective, now we can think about things like, I sold a commercial building right before I retired, and I have this massive taxable event in one year. I wanted to do a really huge Roth conversion, and I create this big taxable event, although not the only reason to do it, and this isn't advice, but it's way to offset a really big tax bill in one given year and then still have an actual legitimate investment on the backend that's going to pay us dividends and last for a long time.

Josh Hull (36:26):

And the way that this investment vehicle typically works in the industry, you can choose the type of partner you become in these limited partnerships. So if you become a general partner, you can use the investment to offset active income limited partner. It can only be used to offset passive income, not an accountant. And that varies between personal. Every individual that's listening here is going to have a different financial situation. I'm not versed to give tax advice, but no, just before we get away from the investment end here, we talked about the intangible drilling costs, which we ran through the tangible, it's the same concept. It's just on the remaining 20% of the overall budget of the well through bonus depreciation because of the fact that that's being walked back this year up to 80%, that full value cannot be written off in year one, but it'll be recoverable in the years of the amortization. And then the third portion, we talked about the tax benefits, and maybe, I don't think I mentioned it, it's depletion allowance. So essentially what occurs on depletion allowance of the distributions, that you receive it as an investor, there's a 15% safe harbor where you're only paying federal income taxes on 85% of your distributions

Rick Luchini (37:42):

Thereafter. Correct. Right. And how long does a will usually produce? So I'm going to invest my money, I'm going to get a big tax break upfront, and then assuming that everything goes well and we strike gas that well is going to produce, and I'm going to get a dividend check based on its production for the length of its production. How long on average does something like that produce

Josh Hull (38:13):

Our Marcellus wells? The economic life of around 65 years? And our Utica wells, the economic life is around 40 to 45 years. Wow. Yeah. So it's a long time.

Rick Luchini (38:24):

Right. And I can assume transfer that ownership to my estate, my wife, my kids, or something like that if I only am here for another 45

Josh Hull (38:35):

Years. Yeah, there's clearly devil's in the detail there. There's transferability provisions that you have to adhere to based on the limited partnerships that we invest through. But yes, it can be with certain limitations transferred within family members.

Rick Luchini (38:48):

Awesome. Yeah. Perfect. Okay. Yeah, I love it. Tell people how to get in touch, where to go to learn more from Penn production.

Josh Hull (38:57):

Yeah. The easiest way to learn more about us from our website is ppgoilandgas.com. And then if anybody wants to reach out to me directly, I'll throw my email address out there. Maybe you can flash it up on the screen too. I don't know how you do that. Yep, I will. It is JHull@PennProduction.com.

Rick Luchini (39:15):

Alright Josh, thanks for coming in, buddy.

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Content Disclosure: Luchini Financial LLC is a registered investment advisor. This content is provided for informational and educational purposes only and is not intended to be personalized investment advice, nor a recommendation to buy or sell any investment. Luchini Financial works closely with each client to gain a full understanding of their unique situation prior to rendering advice. The information contained herein is derived from numerous sources, which are believed to be reliable, but not formally audited by Luchini Financial. Information may include statements which are time-bound and subject to change without notice or opinions, which may not come to pass. Please consult Luchini Financial with any questions.

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