BRICS vs SWIFT

Households that delay switching to heat pumps may face a £2,000 increase in energy bills. This is because the cost of maintaining the gas network’s 174,000 miles of pipes and pumps will spread to fewer […]

Vital Energy nearing a deal to buy Point Energy for $1.1 billion, sources say

Highlights of the Podcast

00:00 – Intro

01:27 – BRICS Officially Announces Financial System Similar to SWIFT

09:38 – Potential increase in gas bills for UK households

10:41 – Markets Update

13:40 – Rig Count Update

14:34 – Vital Energy nearing a deal to buy Point Energy for $1.1 billion, sources say

17:03 – Outro

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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’s going on, everybody? Welcome into the Monday, July 29th, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up, it’s officially here, folks. BRICs officially announces financial system to compete with Swift. Unbelievable. Folks, we have a lot to dive into on that one. Next up, a potential increase in gas bills for UK households. This one’s going to hurt if you’re in the United Kingdom. Will then quickly jump over and cover what went on with oil and gas prices last week. Unfortunately, we did see kind of a rough week for prices. I mean rough in a in a pejorative sense. We’re still at $75 or $77, so nothing to complain about there, but I think some interesting tidbits. We also did see rig counts, which actually up a little bit. So it’ll be interesting some context around that. And then finally Vital Energy kneeling a deal to buy Point Energy for 1.1 billion, according to sources. Not quite official yet though. As you listen to this on Monday it might be official, so I will cover all that in a bag of chips. Guys. As always, I am Michael Tanner rocking a solo show today. Stewie’s out on assignment, so we will keep up the show in his absence, but let’s go ahead and kick this off. [00:01:26][72.4]

Michael Tanner: [00:01:27] BRICs officially announces financial system similar to Swift. Unbelievable. I’ll read a few quotes here from the article. The BRICs alliance which who is in BRICs? I think it’s Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia and the United Arab Emirates. Okay, so this BRICs, which is kind of like almost like NATO, but not really. There’s no real army associated with it. But these countries they’ve created and are looking to bypass the Western Swift system and replace it with his own financial mechanism. The creation of this new financial messaging system will be similar. Swift will allow BRICs to basically settle trades and settle transactions without incorporating the US dollar. This is un unbelievable. Local currencies will be used for trade settlements, ending the reliance on the US dollar once and for all. The BRICs payment system will be similar to Swift can break the global dominance of the US dollar. We’ve talked about this at nauseum on this show. Here’s a quote from Deputy chairman of the Russian State Duma, Alexander Baba. I don’t really know how to pronounce his name, so I’m sorry about that. The financial agenda of BRICs is the main initiative for building a new economic reality. It solves both major cracks creating our own financial messaging system for BRICs countries, similar to Swift, based on state owned banks capable of clearing clearing settlements of counterparties from BRICs countries and the related role of the same bank. He also went ahead and said it is necessary to create new financial institutions. This is where it gets spooky. The new system must be technically compatible with the existing financial infrastructures of the participating countries, which includes integration of national payment system banks and other financial actors. At the same time, systems which ensure a high level of security and data protection prevent cyberattacks and unauthorized unauthorized access to the financial information. Folks, we’ve been talking about this on the podcast for over a year now. They’re coming for the dollar. And what I mean, coming for the dollar, the petrodollar is, is it may or may not be around here in a while. We’ve known that they want ever since Russia invaded Ukraine and the sanctions that the United States put on Russia specifically, basically getting them off and not giving them access to Swift, which is a payment system that allows countries to do international banking. But things are then settled on the dollar and the rely on the dollar. And why the dollar sometimes is the national or is the reserve currency of the world. It also has a little bit to do with the petrodollar, but this strikes at the heart of it. Now these BRICs countries are going to be able to do inter-country commerce without touching the dollar. This is crazy. The reserve status of the dollar is slowly dwindling in this. This is critical because this ties directly into energy again with the petrodollar right now, if you want to trade oil, generally it’s being it’s settled in dollars, but not ever since Russia invaded Ukraine. We placed a bunch of sanctions on them. They’ve been settling trades with China. They’ve been they’ve they’ve not been using the dollar with China. They’ve not been using the dollar with India. They’ve been accepting rubles in return. They’ve been doing some other interesting stuff. So this is an all out, you can call it an assault. You can call it a swift, but it’s a global realignment of the underlying financial institutions. You’re going it’s again, all of those countries I just mentioned. Let’s go ahead and read them again. Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia and the United Arab Emirates. I mean, you’re talking about Russia, India, China, UAE is huge countries involved with both the buying and selling of oil and gas. Now they can explicitly go around the US dollar. It’s not good if you are somebody who is of the mindset that we are coming into a recession here in the United States, this doesn’t bode well because this attacks the heart of. The idea that while the dollar will always be around because it’s a global reserve currency, well, are we sure about that? Are we sure about that? So huge story here. When Stu gets back, we’ll definitely have to talk about. Well, we have been following this one for a while and we’ll continue to follow Brix getting off Swift if you have any. If you have any, I wonder what it’s going to be called in the first place. It’s got to be called something cool. So feel free to leave a comment on YouTube if you if you think you know what it’s going to be called, I don’t know if I have any good comes, I guess is right now, but it’s got it’s got to have a good name. So we’ll be interesting to see what it is. [00:05:42][254.7]

Michael Tanner: [00:05:42] Let’s move over to the UK folks. This is unbelievable. Potential increase in gas bills for UK households. Households that delay switching to heat pumps may face a $2,000 increase in their energy bills. And I’m going to read now straight from the article. This is because the cost of maintaining the current gas network of 175,000 miles of pipes and pumps will spread out to fewer and fewer customers as more people switch to low carbon heat systems. Okay, so that’s that’s the top line quotes here. If you just read the first couple lines. This is hilarious though. Okay. So according to these OFDM projections these gas charges are going to it’s going to slowly happen throughout 2020 into the 2030s, but will significantly increase in 2040 and could potentially reach $2,000 per year. This is funny okay, so right now they’re saying basically, hey, got to switch to heat pumps because it’s going to be cheaper. And they’re saying, wow, it’s going to be spread out to fewer and fewer people because everybody is switching to heat pumps. But then you get deeper down in the article here. Okay. Industry statistics show that in four years between 2020 and 2024, the UK installed a paltry 250,000 heat pumps, while 25.5 million homes still use oil or gas boilers. It’s why you can’t just read the headlines, folks. You read the headline, you said, oh great, everybody switching to heat pumps real good. No no no, no one switching to heat pumps. Just like nobody’s really driving EVs even though they want you to know that. So this cost that’s going to be it’s why not keeping up with your infrastructure is critical. Because if you if you invest on a yearly basis and keeping your infrastructure, sometimes this stuff doesn’t happen because then you have to go in all at once and fix it all, according to an Ofgem’s spokesperson. He told Energy News Energy Live news decision on the future of the gas network for the government. Our role to ensure the transition away from natural gas is spare and the lowest possible cost to the current and future covers the transition away from natural gas is there. To me, that seems like an oxymoron. How can you transition away from the lowest cost fuel and expected to be fair and lowest possible cost? Very interesting final to see. Here’s another quote from them. Final decisions of the gas network. Investment expenditure for the period of 2026 to March 30th, 2031 will be taken next year following the current consultation. We know what the new pretty, pretty insane government Liberal government that got elected in the UK. You know, they’re probably going to try to make this number as high as they can, just gouge as many people. Department for Energy Security and net zero. What a day. What a Department of Energy security and net zero. Now what is that. We need that. What was that famous video of the Argentinian president where he’s just he’s just pulling all of the the departments off and firing whole departments. This is one. We’re in a Fuego. We need to get. You’re in the UK. You need to get rid of the Department for Energy Security and net zero. But this spokesperson told I mean that he just a spokesperson for this and this. Someone’s getting paid to do this by the way is is just cracks me up. We are on a mission to make Britain a clean energy superpower to cut bills, create jobs, and deliver energy security with cheaper, zero carbon electricity by 2030. Good luck. We hope you don’t freeze to death up there. Let’s go ahead and jump over into oil and gas finance guys. Before we do that, I want to just say thank you to energy newsbeat.com. The best place for all of your energy and oil and gas news is doing. The team do a tremendous job making sure that website stays up to speed. Everything you need to know to be the tip of the spear when it comes to the energy and the oil and gas business. All the news and analysis you just heard is brought to you by said website. And I also want to tell you about an awesome partnership that we’re that we’re excited to launch here. We are partnering up with our friend Ray Trevino over to Crew Truth and Pecos Country Operating help you guys get a sneak peek and help you guys get access to investing in oil and gas. I’m a big believer right now that, you know, if you’ve listened to this show at nauseam, you know that I personally love oil and gas. [00:09:37][235.4]

Michael Tanner: [00:09:38] I think the arbitrage between oil and gas and other alternative investments is absolutely incredible. Right now. There’s a big opportunity to get in. That’s why we’re partnering up with Pecos. They have an awesome oil and gas project that they have been rolling out. We’ve been working with him for, for for months now to get this thing up. It’s been up. We’ve been talking to a bunch of people, but I want to bring it specifically to you guys at the Daily Energy News. Be go ahead and hit the description below for a little sneak preview at the project. You leave your name, email, and we will get you and you will be able to download and look at the exact. Summary. If you have any questions, feel free to reach out whether it’s in the YouTube comments or connect with me on LinkedIn. But we look forward to talking to you guys about that. It’s an awesome project. We’re a part of it, and it’s none other. Sponsored by Rei Trevino and the folks over to Crew Truth and Pecos Country Operating. Love the stuff. We were out there at the drill site yesterday. We’re recording this Saturday afternoon. I was out there all day making hole. Folks. There’s nothing funner going out and drill well, so go ahead, check that out guys. Really excited about this opportunity to invest in oil and gas. Check it out. [00:10:41][63.1]

Michael Tanner: [00:10:41] Let’s go ahead. And you know speaking of oil and gas let let let’s look at prices here overall. Before we do that though let’s look at the overall markets. S&P 500 actually rebounded a little bit after a fairly rough week. It was up 1.1 percentages on Friday Nasdaq up 1.03 percentage points two and ten year yields actually fell about a percentage point with the ten year a little bit worse, about 1.2 percentage points on the downside dollar index very flat Bitcoin after you know what we heard on you know Thursday Friday strategic bitcoin reserve. All the stuff that went on that the Bitcoin Nashville conference only up about three three quarters of a year. Excuse me a quarter of a percentage point. Still $68,000 a coin. It’s going to be interesting to see what that strategic Bitcoin reserve looks like if and when President Trump does get reelected. Crude oil didn’t have a great day on Friday. Things got slashed about 1.5 percentage point settled at 7716. And as we open here shortly as we record this Sunday afternoon, it’s probably going to open a little bit less. Hopefully we see some overnight rotation. But you know, in my opinion you guys listen to this. On Monday morning we will probably be trading a little bit less than where we currently currently are. Main reasons for that. Again, a lot to do. You know, right now where I think people have priced in a little bit what’s going to happen in November? Obviously, you know, from all indications it looks like President Trump will win, even though it looks like some of the polls tend to be slipping a little bit, with Vice President Harris now coming in and replacing. And I think that’s everything settling out around kind of the craziness we saw with Joe Biden dropping out. But we did see some, some, some Chinese demand numbers that come out that both one China total fuel imports dropped about 11% in the first half of 2024, which really raises a bigger concern about the overall wider demand outlook on what’s going on in China. Again, we’re in a world of supply and demand. We you know, supply might be heading in the right direction, but we don’t if the demand numbers aren’t going to be there might be interesting. So here’s George Curry he’s head of education and research at CFR. I quote yesterday’s better than expected U.S. GDP growth figures initially supported the crude markets. However, these gains were overshadowed by concerns that declining Chinese oil demand. Bobby Yeager he’s one of our favorite guys, director of energy futures over at Mizuho in New York. The Chinese demand situation is going down the tubes here, and crude oil prices are going down with it. And that is about the worst possible scenario for a country that the largest importer of crude oil and the planet. So pretty, pretty. You know, I’m not totally doom and gloom. I, I, you know, I was talking with some friends last week. You know, you can make an argument one way or the other that as China demand goes, so do oil prices, especially if the Saudis decide to increase production. But all indication is the Saudis really need higher oil prices to continue to balance budgets and support the investment they’re making. Ironically, in trying to shift their economy away from oil and gas. So I’m not necessarily worried that Saudis all of a sudden now going to go to war with us like they did back in 2014, 2050. But you you never know. Looks like there could be a cease fire. And Gaza seems to be claiming momentum so that could drill down. [00:13:40][179.1]

Michael Tanner: [00:13:40] We also did see rig counts drop on Friday. And we’ll go ahead and throw that chart up here. Rig counts up to 589. That’s an increase of three week over week. Still down 75 year over year candidates on increase of 14. Go Canada go I mean it’s pretty funny Canada for his joke is they’re going right there 14 rigs. We got to love it. internationally we saw four rigs come up. So again you know rigs are a little yes. Rigs are tied to oil price, but they’re also a little bit. But you know, these numbers are also a little bit behind. So some of these rigs were picked up maybe back when oil was looking like it was going to maybe go above 85. So you can’t necessarily say well oil was down on Friday. Why are people increasing rigs. It’s a little bit more nuanced than that. But but I do think that it’s good to see kind of that that turnaround with with rig counts. And again, if we’re going to want to maintain whatever our supply is now, maybe because of the Chinese demand situation, the supply does maybe naturally need to come down. [00:14:34][53.8]

Michael Tanner: [00:14:34] So could be interesting there. I did see this guys. This this actually just dropped right before the show. Vital energy nearing a deal to buy Point Energy for 1.1 billion. Yeah, super interesting point Energy Partners is a is an exclusive Delaware producer. They’re owned by Fortis Investments and vital is looking at acquiring them with about 1.1 billion according to people who quote according with people familiar with the matter said and blah, blah, blah. What’s also interesting is the is I’ll read now, Steve new article, the deal for the Permian Basin, a focused producer point energy could be announced soon, possibly as early as Sunday, assuming talks do not have a last minute saga. The sources requesting anonymous nominees. This is also interesting. Some of Point Energy’s assets will also be sold to a different buyer that is participating in the transaction, alongside vital. According to sources, those assets are low growth but produce steady amounts of oil and gas. If you go look on Point Energy Partners website, they’re pretty much an exclusive Delaware producer. They’ve got about 20,000 acres in the Delaware and do about 40,000 barrels a day. So it’s going to be pretty honest. You know, it’s boe. So we I need we need to, you know, hard to know what that what that oil and gas split is. You can go check out our friends at well database. They’ll be able to tell you haven’t had necessarily an opportunity to dive in and do that. But I promise you if this thing happened, this may be a great a great another deal spotlight for us to cover. But yeah, so I think this is the wave of M&A we’re now in. And consolidation is mainly along side. And you’re not going to see these smaller companies. And I think a lot of what these private equity companies are doing are maybe they see the writing on the wall and they feel like $80, $75 oil is going to be as high as price is going. They’re trying to cash out. Maybe you know, a lot some of this stuff just falls along their traditional five year investment cycle. So they need to cash out. But this would be an all cash deal which again obviously we need. So so you know M&A still around here folks we love vital energy there. You know in my you know from what I’ve seen from them the one of the the most technology focused and and make it a point to be it and technology focused. so we love our friends over at Vital Energy. We wish them well. And, you know, again, anybody who takes technology seriously, we are a fan of but looks like vital energy going to Super Point energy partners for 1.1 billion. Man. We’ll see if it wraps up. Maybe we’ll hear about this. Hear about this as you listen this Monday morning. Maybe you’ll take a few more days. I’m interested who this other smaller player is. Obviously it’s you. You you wonder who it is to be honest with you. If if it’s it’s probably not a big it’s buying on a larger company. It’s probably a, you know, a smaller guy depending on where they’re be. [00:17:03][148.4]

Michael Tanner: [00:17:03] But you know, when this all wraps up, we will definitely come back and bring you all of the details. Guys. It’s really all I’ve got. I appreciate everybody checking us out here on the World’s Greatest website, who will be hopefully back in the chair tomorrow. So we’ll be able to to cover everything, but I’m holding it down otherwise thanks for checking us out guys. We will be back tomorrow. We’ll see you then. [00:17:03][0.0][1006.8]

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