Daily Energy Standup Episode #220 – CEOs, Policy, and Global Markets – A Conversation on Current Developments

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Michael Tanner: [00:00:14] What is going on. Everybody, welcome into another edition of the Daily Energy News Beat Standup here on this gorgeous Monday, October 2nd, 2023. As always, I’m your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas, joined by the executive producer of the show, the purveyor of the show and the director, publisher of the world’s greatest Website, EnergyNewsBeat.com Stuart Turley, my man, How are we doing today? [00:00:37][23.3]

Stuart Turley: [00:00:38] Hey, it’s a beautiful day in West Texas. Hey, Michael. I was driving down West Texas, got up early. Sunrise is beautiful. See all these wind farms all across west Texas? None of them were producing electricity. [00:00:54][16.6]

Michael Tanner: [00:00:57] You don’t get it when the wind blows. [00:00:58][0.8]

Stuart Turley: [00:00:59] Well. [00:00:59][0.0]

Michael Tanner: [00:01:00] They weren’t offshore and they were not out killing the whales. Oh. [00:01:03][3.0]

Stuart Turley: [00:01:04] You’re killing me, dude. Oh, no. You’re killing the. [00:01:06][2.0]

Michael Tanner: [00:01:06] Whales. Good. We’re glad you got up early, though, and got out there. But nonetheless, you have still lined us up with an excellent, excellent show. First up on the menu, guys, no energy transition unless tech can make it cost competitive. That’s according to BlackRock. So, Stuart, dive into what Larry Fink said there on Friday. Next up, our favorite random guy on Substack, an opinion piece from David Blackmon How energy Policy is Fueling Congress Budget Wars. Next up, German energy giant admits it’s probably still buying Russian gas in a move everybody saw coming. If you listen to the podcast, newsflash, Germany is still buying Russian gas. Next up, we’ll go over across the pond to the UK. Sunak’s family firm signed $1,000,000,000 deal with BP before Prime Minister opened its new North Sea licenses. Hmm. Interesting to do a dive into. Like all of BP right now. We have another one of those stories coming up a little bit later. Stuart Then kick it over to me. I’ll quickly cover what happened in the oil and gas markets on Friday. We did see rig counts come in, so I’ll cover what happened there. And then to go back to BP specifically, another executive departs within their U.S. head resigning. U.S. President David Lawler, he’s out. We will dive into that spicy news which dropped on Friday along with everything else. But before we do that, guys, remember all of the news and analysis you are about to hear is brought to you by the world’s greatest website, Energy News Beat.com. The best place for all your energy and oil and gas news. Doing the team do a great job of curating that site, making sure it is up to speed with everything you need to know about the business. You can get in contact with the show. Email us [email protected]. You can subscribe to the show, which is probably the best way to support us. Apple Podcasts, Spotify or on YouTube at Energy News Beat you can check out our data News product [email protected]. Let us know what you think. You can hit the description below, all the timestamps, all the links, and another way to get in contact with the show. I’m ready. Fire! I’m fired up for this show. Stu, Where do we want to begin? [00:03:12][126.1]

Stuart Turley: [00:03:13] Okay, let’s start with my buddy Frank. I’ll tell you, I’m not a BlackRock fan. And let’s start here. No energy transition unless tech can make it cost competitive. Black Rock. Michael, I’m going to get into this story here, but let’s set the stage for folks that have never heard of BlackRock, BlackRock, biggest fund manager in the world. Last year for first half of the year, they lost $1.7 trillion because of their energy investing, their ESG investing into renewables, and they’ve lost it. Now toward the end of 2022. We’ve seen the ESG investors. Michael, you have hit on this financially hard, and that is the fact that investors are wanting their money back. So we’re seeing an end to the ESG investment because they’re tired of not getting their money. [00:04:10][56.7]

Michael Tanner: [00:04:10] All right. It’s become just a huge capital expense, much like the shale revolution. For all the good that it did, it lit a lot of money on fire. It’s right. It’s been the same thing. [00:04:22][11.3]

Stuart Turley: [00:04:22] That’s right. And so Larry Fink stood up there and made me airsick a lot espousing non-humanitarian things. Okay. Here’s what he just talked about. Let’s dive into this article, quote unquote, from Mr. Larry Fink. He told Bloomberg’s Danny Berger, we are not going to have an energy transition unless we can find technologies to bring down the competitive cost of renewables. We cannot do that, Think said, adding that BlackRock conducted a survey showing 57% of their global investors are planning to put more money into decarbonization technologies. Here’s another one quote We saw what happened with elevated energy prices just two years ago. So in Germany and Europe you can’t have a transition, he said, arguing that when energy prices go up, emerging nations use more coal because life is more important in the future. Wow. [00:05:23][61.1]

Michael Tanner: [00:05:24] I agree with all of that. Then his next quote quote, We need to re-imagine finance. We’ll do that just in a shimmy down my spine because Larry Fink is no friend of ours. Remember, this guy sits on the board of directors of the World Economic Forum’s. Like you. So you should talk to him about the next board meeting and say you were right up until you said we need to re-imagine finance. Because you know what that sounds like They want more. Just give it all to me. [00:05:51][26.9]

Stuart Turley: [00:05:52] Oh, yeah. See there? They’re now doing a little bit of a lean back in here. And this is going to tie into a couple of our other stories. And that is he’s got a I’m going to give you investors. You know, he’s hanging out with Putin, too. I’m going to give you investors a little bit of food crumbs. I’m going to invest in energy and oil and gas. And my head’s exploding with this hypocrisy that this knucklehead has got going on. [00:06:19][26.8]

Michael Tanner: [00:06:19] Well, no, I think he’s I think he’s he’s he’s clearly understands that. Oh, my goodness. [00:06:24][5.0]

Stuart Turley: [00:06:25] If he’s understood energy well. [00:06:27][2.1]

Michael Tanner: [00:06:28] Let’s just say let’s give them the benefit of the doubt. At least now they’re recognizing and they’re not just pouring more. I mean, it only took them two years to figure. It took it took shell companies ten years to figure it out. It’s kind of funny. So, you know, it only took them about two years of bad returns. Let’s course correct here. So all I’m saying is I’m a little spooked out when I hear guys like Larry Fink telling me we need to re-imagine finance. We just maybe need to get a little bit of give you a little bit less control so that the actual competitive markets can go about bringing down the cost of renewables, which is exactly right. We have to encourage the competitive environment in order to make things. I mean, there’s a reason why, as he said, when energy prices go up, emerging nations use more coal. Well, why? Because it’s cheaper right up until the point where he creeps me out with his reimagining finance. [00:07:18][50.8]

Stuart Turley: [00:07:19] Okay. Germany. Germany, I guess, is an emerging nation now because they’ve been losing all of their business since they’ve gotten rid of all of their nuclear reactors and they have no reliable when they are now an emerging nation because they’re using more coal. [00:07:36][17.3]

Michael Tanner: [00:07:37] Yeah, no kidding. Speaking of Germany, we got to let’s go to the German one. Okay. Speaking of that one, not buying Russian gas. [00:07:44][6.4]

Stuart Turley: [00:07:44] This is just out. German energy giant admits it’s probably still buying Russian gas. You know, what’s that Mike Myers movie When the villain stands there and he’s putting his pinky through his mouth? What’s the name of that villain? [00:08:00][15.5]

Michael Tanner: [00:08:00] I asked him. Powers. [00:08:02][1.4]

Stuart Turley: [00:08:03] I said Powers. Okay. Anyway, participants in global wholesale training cannot track the origin of fuels they purchased. CEO points out. [00:08:12][9.3]

Michael Tanner: [00:08:12] Oh, you don’t say don’t say one minute. [00:08:15][2.8]

Stuart Turley: [00:08:15] Molecular structure change is Russia keep selling LNG to the world market, he said on Saturday in an interview with Germany’s I forgive me Right. Net shag. Yeah. Yeah. Bless you. Yeah I post-nuclear the wholesalers, including a uniper who do not always know the origin of their purchased gas. Here’s another quote down in here. If it gets very cold or there are problems with the LNG purchases, then this winter could be tight. The executive said if China’s economy grows and the need for LNG increases, Europe will face a shortage of the fuel as well as the price spikes. Michael, we just talked about, you kind of alluded that Germany is becoming a new or a third world country, if you would, because all the businesses are shutting down and leaving. They’re using more coal, they’re taking down wind farms in order to put in more coal. This is huge. And guess who else is using Russian LNG right now? US, the East Coast, and then on the West Coast. [00:09:25][69.4]

Michael Tanner: [00:09:26] Our two favorite states, New York and California. [00:09:28][1.7]

Stuart Turley: [00:09:29] Our two biggest listening groups. Dude. [00:09:31][1.9]

Michael Tanner: [00:09:32] I don’t get it, guys, but we appreciate everybody out there. I do think we’d be remiss to point out in this article still right before the the final quote, we do say Germany is better prepared for an upcoming winter than a year ago. There they are sitting at about 95% storage. Last year, they were at about 85% this time. So, you know, they’ve got more people because they’re buying Russian gas. So but if you’re worried about having to burn your shoes, as we saw last year, remember the articles, burn your shoes, burn the books to stay warm. You won’t have to do that this year. And that’s probably, you know, luckily because of Putin so well, it’s funny how the world works. [00:10:07][34.9]

Stuart Turley: [00:10:07] And let me throw this at it just from a technical sense. Standpoint. They’ve had so many LNG import facilities come online. I believe Germany had to come online last year for them. I think it’s great they needed it. The U.S. sold a bunch and so did I believe either Cutter, Qatar or the UAE has really stepped up as well. All right. Let’s go to our favorite guy on subs. Random dude on Substack, David Blackmon. How Energy Policy is Fueling Congress Budget Wars. I’ll tell you what, I had a just a shout out to David and Congressman Andy Ogles. I got to say that I put this out on LinkedIn. I got to sit down and be front line support. Well, you know, we had a production had to rush production this podcast. And I was over there just jamming away barefoot, as you aptly pointed out, on my LinkedIn doing this podcast. And let me give you this quote. We are fighting for the budget. I believe that we can pass 12 appropriations bills, and that’s what we should do. Republican Congressman Andy Ogles, who represents Tennessee’s fifth Congressional District, is passionate about efforts by seeing a minority of the House Republicans caucus to bring back normal order to the federal government’s budgeting process. He made that crystal clear in an interview with David Blackmon on Thursday. [00:11:38][90.7]

Michael Tanner: [00:11:39] That’s sandstone media breaking news right there, folk, sandstone media breaking news. [00:11:43][4.6]

Stuart Turley: [00:11:44] Here’s a quote from him. And I wish you could have seen me. I should add the whole film on me because I’m over there. This is cool. This is cool. All right. Keep in mind, all 50 states have a budget. They have passed, he says. This is Andy Ogle. Congressman Ogle, when you go back in, that’s what’s called regular order when you’re passing a single subject appropriations bill. The last time Congress did that was 1997. Since then, an increasingly divided and contentious Congress has kept the government funding, either in part or in whole with unanimous multitrillion dollar continuing resolutions that have served the Democratic Party’s goals to grossly inflate the scope and scale of the federal budget over time. This is despicable anyway, and it just makes you sick that our political machine is not looking at the bills. They just force everybody. They whip them and they say, Oh, by the way, everybody vote this way. And they don’t even look at the bills independently. They look at it, Oh, yeah, we’re going to do it. [00:12:54][70.2]

Michael Tanner: [00:12:54] So in the. [00:12:56][1.3]

Stuart Turley: [00:12:56] Time of this recording, it’s already passed and they didn’t shut the government down. [00:12:59][3.2]

Michael Tanner: [00:12:59] Yeah. And I think I think this interview and I highly recommend people when it comes out to go read this article, articles, articles, interview. If you go listen to the energy question by David Blackmon. Got to love it. You can listen to it on our YouTube channel or via the Energy Question podcast. I think he does a really good job of of tying in to again what we’re really the core of the interview was about was how this this current government looming shutdown which you know depending on how things shake out, may or may not happen. It really comes down to our ability to differ over what’s going on with not just U.S. energy policy, but U.S. energy security. And he and I love it. Towards the end of the interview, Stu, he didn’t shout out you, but specifically one of his quotes. You have a lot of agencies. What is the FCC or the EPA or others that create these rules that directly impact the industry? What is happening by making a new rule, reinterpreting it All rule is they’re essentially legislating. That’s not their job. That’s Congress job. It’s our job legislation through regulation, even they know it. [00:13:56][56.9]

Stuart Turley: [00:13:57] Oh, absolutely. And I got to hand it out. Here’s one other quote out of the article that David brings out. When you have $33 trillion worth of debt and we can’t cut our way out of this mess, Ogles points out you do that by growing the economy and the number way to grow the economy’s become energy independent again. To acknowledge the fact that the future of energy in this country is coal and oil and gas and even nuclear. I mean, the man is sharp. Shout out to David Blackmon and Congressman Ogles. Oh, by the way, a little inside baseball. I’m interviewing Congressman Ogles on Wednesday of this week. [00:14:39][42.0]

Michael Tanner: [00:14:40] Oh, oh, oh, You heard it here first, folks. All right, let’s go to England. This is a spooky deal. What we’ve got going on here. [00:14:47][7.1]

Stuart Turley: [00:14:47] We’ve got a couple other things here. Okay. So. [00:14:50][2.6]

Michael Tanner: [00:14:51] Rob, you know, I think. [00:14:52][1.0]

Stuart Turley: [00:14:52] It is Sunak’s family firm signed $1,000,000,000 deal with BP before PM opened a new North Sea licenses. Okay, I’m going to set this article up, and then we’re going to do a deep dive into the article. Prime Minister Rishi Sunak last week. Michael, this was huge news. He stood up and then the rest of the world had dominoes going. He stood up and said, We’re going to delay the TV, the cars, the TV, the net zero by five years. And then, Michael, you and I laughed about it on our podcast last week. Boom, boom, boom. Snap, snap, snap, snap, snap. All the green heads just popping. Pop, pop, pop, pop around the world. Right? And then you had Shell come out and say, well, you know, we’re going to back off and we’re going to start drilling oil. And then everybody I mean, it was a snowball around the world. Then this article came out this morning and it says In May, The Times of India reported that Infosys bagged a huge deal from the global energy company, which thought to be the second largest in the history. The Indian IT company is owned by the Prime Minister’s wife, the family, although Sunil insisted the matter is of no legitimate public interest. Okay, you write. [00:16:13][80.9]

Michael Tanner: [00:16:15] Ee ee ee ee ee ee. I mean, you know, it’s also come to light that they’ve been involved with that. That same I.T. giant has been involved with a £172 million pounds worth of public sector contracts in the UK. EE ee. [00:16:33][18.1]

Stuart Turley: [00:16:35] Okay, here’s this here’s a quote down in there for him. You know, even though the prime minister did great things and he’s trying to do what’s right. Graft is graft. And it’s you know, we don’t have anybody in politics anymore. The PM said even the UK would still need oil and gas for 25% of its energy needs, with the PM saying that power to Britain from Britain rather than the UK relying on foreign dictators for its energy supplies. I applaud the Prime Minister for that and he goes on to further say in another quote, If we’re going to need it, far better to have it here at home than shipping it from halfway around the world with two, three, four times the amount of carbon emissions versus the oil and gas we have here at home. Way to go, Prime Minister. I applaud him for that and at least he needs to learn from the Biden administration, said Amy. Hang on. [00:17:34][58.3]

Michael Tanner: [00:17:34] You go talk to Hunter. [00:17:35][1.1]

Stuart Turley: [00:17:36] Go talk to Hunter, man. Set up 30 or 40 shell companies from your wife to you. Or you can learn from Kerry when they said your plane is emitting carbon emissions for cars. And he goes, I don’t have no plane. My wife own plane, not me. My wife on clean yak plane. [00:17:59][22.9]

Michael Tanner: [00:18:00] Don’t leave your laptop and any random store. Make sure to take that with you. [00:18:06][6.1]

Stuart Turley: [00:18:07] Okay. Oh, what a show. I had about six others and you had to boom them out because we just proved one. [00:18:13][5.v9]

Michael Tanner: [00:18:13] Let’s move on to finance here, guys. I interesting trading day on Friday. S&P was down about a quarter of a percentage point. Nasdaq was fairly flat, only up 8/10 or excuse me, less than a 10th of a percentage point. Crude oil actually dropped now mainly on what is considered, quote unquote, profit taking. Again, Fridays, you usually see a little more weakness in the market, especially depending, I suppose through the week. We had steel where we saw prices go to from 88 all the way to 95. Current settle was 90, 77 looks to open somewhere about 9079, so fairly flat on that front month. November Brant contract was down $0.07 9531. To give you an idea, we ended really that quarter three, we’re now in that final quarter here. We had about 30% price increase still looking back on the entire quarter. So good news for the energy market. I think it’s going to be interesting to see how oil and gas companies react to this. I mean, that’s a sustained trend. And I think, you know, now sitting here on, you know, as we record this year on October 1st, I mean, prices, you know, if you if you told me prices were up another 15% all the way to 110 by the end of the quarter, that wouldn’t really surprise me considering some of the stuff that we’ve been seeing out there now. And, you know, but despite that, rig counts again, down by seven week over week, courtesy of Baker Hughes and our friends over at in various the week ending September 29th, that’s how they count at 623 rigs. That’s down seven. Something’s not adding up here, Stu. And I think I mean, the answer is, you know, I don’t think is a shocker anybody. It’s that companies are more interested in returning money to shareholders in order to curry favor with capital, institutional capital, than they are dumping into capital projects. I mean, it’s clear they think giving out dividends is going to be better for their investors than it is by drilling new wells. That’s fascinating. They’d rather just return. They they don’t you know, what about those thousand locations do what about those thousand? Well, premium locations everybody talks about. [00:20:12][119.1]

Stuart Turley: [00:20:12] Michael, do you think I need to ask because I did go to Oklahoma State University. Did it, do you think? Nice, nice mug. Do you think that the $80 eight I mean, $90 oil, $94 oil is making some of that determination to give money back rather than drill? Because they think they see, in my opinion, that high oil prices will be here for a little while. Do you think that’s the case? [00:20:41][28.7]

Michael Tanner: [00:20:41] No, I think they’re making a calculation in mind. I think they I think every company, whether they admits it or not, knows the actual well, economics of their and portfolio economics of their individual projects. And the reason, in my opinion, why breakouts are dropping is because they’re making an evaluation that we’re better off returning money to shareholders, taking the $12 million that we would dump into, say, a two mile lateral somewhere down in west down there in the Permian. Right. We would rather take that 12 million, dump that back into shareholders into either share buybacks or dividends, helping increase our dividend because we feel like the returns from an overall company standpoint are going to be better doing that. And that could because that makes the road we then get access to maybe a little bit. You know, maybe we get access to an institution that wants to have a debt deal with us that’s a little bit more structured because they’re also willing you know, we’re there are things that, you know, if you’re trying to curry favor with institutional investors or the more sophisticated markets, share buybacks and dividends are the easiest way to do it. Not dumping capital into subpar projects that maybe only on an aggregate level, maybe only can return 15, 20%. I mean, again, there’s a reason why I don’t buy the thousand premium locations every M&A transaction talks about because people then don’t put their money where their mouth is. Speaking of another company that’s having some hard times, do BP, another BP executive departs with the U.S. head resigning. Now, this is interesting, Stew. BP’s of Americas U.S. President David Lawler. Mine’s guy we love him, is leaving the British oil giant becoming the second top executive to quit this month after CEO Bernard Looney abruptly resigned over some improper communications and relationships with his compadres. Lawler, who is also the president and head of the CEO of what’s called BP, their shale production division. He’s been with BP for nine years. He’s, quote, notified of his intent to pursue new career opportunities outside of BP, According to a memo confirmed by the company, he’s going to be replaced by the gas trip by Orlando Alvarez, who’s the head of the U.S. gas trading wing and president of BP America. Kyle Kunz will become the CEO of BP. This is interesting, Stu. This is very interesting because this comes at a time, remember? Remember now CEO Brian Looney just resigned for obviously, they didn’t want him to quit, but he had some improper non disclosures that he was hanging out with his employees maybe after work. Okay. So he goes, I wonder and this is again, now we’re just going to purely speculate. But I find this interesting if if to pursue it, you know, Lawler resigns to pursue other career opportunities. Did he know he wasn’t getting the top job? Was that maybe why he was there? Finds out now. I’m not getting the top job. He sees how the interview and the and the search process is shaking out and says he’s I’m out. I don’t know. Very interesting. [00:23:46][184.4]

Stuart Turley: [00:23:46] What’s a good question? I think it’s a great question. And that also brings up the point that if you ever tell anybody not to go to the Christmas party, don’t go to the Christmas party. Since you were waved at learning that one time when you’re producing that one podcast to say. [00:24:02][15.9]

Michael Tanner: [00:24:03] Hey, I’m not the one that I’m not the one that needs to disclose anything. [00:24:05][2.2]

Stuart Turley: [00:24:06] You know, you gave him a heads up, Hey, dude, don’t go to the net again. [00:24:11][4.8]

Michael Tanner: [00:24:11] Net zero really meant net zero profit for him. But really interesting lot going on over at BP right now. A lot going on in BP right now, which is interesting. You know, you wonder and this is why you don’t resign for being head of of BP. It’s one of probably the largest capital spenders of money in the oil and gas business right now. What’s he going to go do? Well, we know what he’s doing, Stu. [00:24:35][23.2]

Stuart Turley: [00:24:35] What is he doing? [00:24:36][0.7]

Michael Tanner: [00:24:37] Podcast Energy News Beat We can officially announce now David Lawler signing on, leading a podcast for us. [00:24:42][5.8]

Stuart Turley: [00:24:43] I think it would be fantastic. Hang on. This is him calling a perfect, perfect. [00:24:46][3.6]

Michael Tanner: [00:24:49] We wish. But yet the invitation is out there. Oh, yeah. The real question is what’s he go do now? Whose job does he go take? [00:24:55][6.2]

Stuart Turley: [00:24:55] How about Secretary Granholm? [00:24:56][0.9]

Michael Tanner: [00:24:57] Oh, good call. Good call. I like that. [00:25:01][4.3]

Stuart Turley: [00:25:02] Or maybe. Or even Fetterman. Oh, great. [00:25:05][3.0]

Michael Tanner: [00:25:06] Okay, well, at least. At least he’ll be better dressed. At least your outfit. Would make it on the U.S. Senate floor now. [00:25:11][4.8]

Stuart Turley: [00:25:12] I like Rand Paul’s red robe that he wore as a joke. [00:25:16][4.7]

Michael Tanner: [00:25:17] Spotty. So. All right. Anything else do? What should people be worried about this week? [00:25:21][3.5]

Stuart Turley: [00:25:21] Well, since the budget passed, I’m going to be visiting with some folks. I do hear some rumblings that I’m not at liberty to say yet. They could be ugly. [00:25:30][9.5]

Michael Tanner: [00:25:31] Oh, you’re not at liberty, so I can wait. [00:25:33][2.1]

Stuart Turley: [00:25:34] I’ve been right a lot. That’s the frightening part. [00:25:36][2.3]

Michael Tanner: [00:25:37] It is. It’s that’s the absolutely the frightening part, guys. But we’ll go ahead and let you guys get out of here. Thanks for sticking with this year. Hope you had a great weekend. We’ll be here with you all the way through Friday. Appreciate it, guys. For Stuart Turley and Michael Tanner. We’ll see you tomorrow, guys. [00:25:37][0.0][1475.5]

 

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