Daily Energy Standup Episode #241 – Germany’s Investment Pledge, Egypt’s Gas Flow Halt, California’s EV Mandate Debate, and Uranium Demand Surge

Highlights of the Podcast

00:00 – Intro
03:07 – Germany’s Scholz says his country willing to invest in Nigerian gas, minerals
05:49 – Gas Flows to Egypt Stop
07:18 – Congress must take California out of the driver’s seat on electric car mandates
09:35 – Uranium Demand Hits Decade High As Nuclear Renaissance Gains Traction
12:09 – Markets Update
15:47 – Earnings continue to drip out Chevron and Exxon
19:02 – 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 is going on, everybody? Welcome to another edition of the Daily Energy News Beat standup here on this spooky Tuesday, October 31st, 2023. As always, I am 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 and publisher of the world’s greatest website, energynewsbeat.com, Stuart Turley, my man, how are we doing today? [00:00:39][25.1]

Stuart Turley: [00:00:40] Hey, it’s a beautiful day in neighborhood and tomorrow’s Halloween. Are you going to go as Chewbacca or in R? [00:00:45][5.3]

Michael Tanner: [00:00:46] I live every day as Chewbacca, so I’m probably going to go as I’ll go as Luke Skywalker. Oh, first of all, it’s my lovely hair that makes me like Chewbacca. For those of you wondering. Oh, but no, for everybody, listen to this. Happy Halloween. We hope you guys had a great moment. Mainly for a for everybody. A fun weekend by. We are here to bring you the news nonetheless on Tuesday. Stu has an excellent show lined up for us. First up, Germany. Schultz says that his country is willing to invest in Nigerian gas and minerals. Next up, gas flows stop to Egypt. Dun, dun, dun. So we’ll see what’s going on in the Middle East. Might have something a little bit to do with where prices went today. Next up will come back home. Nothing like a good Biden Newsome story. Congress must take California out of the driver’s seat on electric car mandates. This is a really great article by the Hill kind of overview on what’s really going on in the EV market and what’s about to really take California down. And then finally, Stu’s favorite uranium demand hits decade high as nuclear Renaissance gains traction. He will then toss it over to me and I’ll quickly finish with some of the oil and gas finance stuff. On Friday, we did see Chevron and Exxon drop earnings, though everyone’s really more worried about the M&A deals. But we’ve slowly been seeing some of these earnings come out. So I’ll quickly touch on some of the the news and notes in there, talk about what happened to oil and gas prices today and let you guys get on out of here and back to work before we do all that, guys, remember the stories, news and analysis you’re about to hear is brought to you all by the world’s greatest website. Energy News Beat the best place for all of your energy news. Stu, the team do a great job of curating that site, making sure it stays up to speed so that you can be on the tip of the spear. When it comes to the energy business, you can email the show [email protected]. You can follow us on Apple Podcasts,  Spotify. Wherever you get your podcasts on YouTube, you can hit us up at Energy News Beat. If I was a 16 year old YouTuber, I’d say Smash that like button, but I’m not. So I’ll refrain from saying that and just say, That’s the best place to go. Subscribe to us and stay in contact with the show again. EnergyNewsBeat.com Check us out dashboard.energynewsbeat.com That reviews become news combo that we’re working on. Give us an idea of what you want to see in the two. I’m at a Brett those do where do you want to begin. [00:03:04][138.7]

Stuart Turley: [00:03:05] I think this is going to be a great one here. Germany’s Schultz says that his country is willing to invest in Nigerian gas and my uncle and now he’s sitting there with one of the leaders from Africa. And I know he’s not saying I see nothing. I see. That’s okay. German Chancellor Olaf Scholz says on Sunday his country is willing to invest in critical minerals and natural gas. This is a quote from the Nigerian president. There is a willingness to invest, especially in critical minerals. This is actually from Schulz told reporters. If we’re successful, then better chance of exporting the produced gas on LNG as well. And I’m getting to the point where my interview, the staff is about ready to roll out the podcast with the Secretary general of the African Oil Producers organization. This one’s really chapping my chicken, Michael, because let’s put Africa first instead of having I see nothing. SCHULTZ Run down there and try to take more critical minerals from these folks without, you know, trying to say, hey, let’s put in some natural gas there. And all they’re building is the natural gas, LNG exports. That’s what bugs me. This is not a win win for Africa. [00:04:35][90.0]

Michael Tanner: [00:04:36] No, because they want to come in and exploit the resources. Now, Nigeria has all of the the willingness to want to have outside Western development come in because they’ve seen what it’s been able to do to their oil and gas business. Remember, the Nigerian oil and gas business is propped up mainly by Western influence. Not that that’s a bad thing. It seems to have worked out for Nigeria. The problem is this is not what’s going to happen around the country. What you’re going to see happen around the country is, you know, outside western nationalization of the resources that really need to be flowing back. We don’t need to be sending oil and gas and LNG away from Africa. We need to be drilling it. Producing it and consuming it in Africa by lowering by elevating the standard of living for everyone. So that’s what I agree with do The concern is hopefully Olof Schultz doesn’t pull a Sergeant Schultz on us and doesn’t see anything. Hopefully they continue down this path, but everyone’s now full. I do love this. Now they’re all focused on critical minerals. It’s almost the hand over here is, oh, minerals. Minerals. While this hand over here, they’re exploiting them on all other on the entire side. So it’s unbelievable. [00:05:39][62.9]

Stuart Turley: [00:05:40] I no, it’s despicable. And what what really bothers me is the lack of humanitarian interest that they have. All right. Let’s go to gas flows to Egypt. Stop. Michael, for our listeners that missed a single podcast of the three years that you and I have been podcasting. This is Club Med, baby. This is what you and I have been talking about for a long time. And in the Leviathan field, we were sitting there and taking a look at the Leviathan field. Israel is running that and then it’s just south of Cyprus. And the only way that Israel can get its natural gas, just as a recap here that they have to sell to Egypt, Egypt has extra LNG capacity. Chevron, which runs the gas field that Israel ordered shut down as another major field has stepped up. Power cuts have been put in place since the middle of the year, but this could impact 20% of Egypt’s power capacity and then it’s going to cost Israel a bunch of money not getting their gas demand. [00:06:51][70.9]

Michael Tanner: [00:06:51] So the cabinet has has shut it down from Egypt. Right. So and what they’re saying is the gas imports have fallen from 100 800 mk4 day to zero at a time when temperatures are above average, which means you can have an increase in electrical man. So it’s not the it’s not the right time when for it’s it’s never a good time not to have fuel but it’s not a good time now. [00:07:11][20.4]

Stuart Turley: [00:07:12] Right now. You bet. So hey, let’s flap our arms and come back around the California here. Congress must take California out of the driver’s seat on electric car mandates. It’s a pretty cool story in the first paragraph is Congress is moving forward legislation to prevent California from canceling gas powered cars and trucks. And that’s about time. Now, Michael, you and I have talked about this before on the podcast, and that’s I believe there’s 18 states that have passed laws that allow once California and oil slick Harry Newsom can go out and then once they get it into their legislative system, the other 18 can then adopt it without anything. So that’s exactly why this is such an important bill. I thought it was pretty cool. [00:08:08][56.5]

Michael Tanner: [00:08:09] Nope. I think this is this is absolutely it’s obviously, this is going to pass the House of Representatives, but it’s not necessarily going to pass the Senate. But it’s an interesting flex of the federal versus state muscle. And yes, how do I say this? I guess if the shoe is on the other foot, if Congress was trying to reign in a common sense bill that a Republican governor was doing, I just wonder where we would fall on this. So as much as I love the fact that the government is now coming in and mandating what the states can do, I’m generally of the mindset that if you want to live in California and be and subjugate yourself to California policies, good luck. Because trust me, the news me, they go in there any time soon. [00:08:50][41.1]

Stuart Turley: [00:08:51] And they’re one of our biggest listening states. But you know, dude, I think if we. [00:08:56][5.2]

Michael Tanner: [00:08:56] Until they fall into the ocean because of climate change. So. Sorry, guys. [00:09:00][3.4]

Stuart Turley: [00:09:01] All right. Okay. So let’s go ahead and go to the next one. I love this one picture, though. Biden looks like he’s just got gas and Newsom looks like he washed his hair for the first time in several years. This is a real quick note here. The Texas Public Policy Foundation released a study and it has great information. We’ll put this one in the show notes as well. We don’t need to go into any of it right now, but it has great EV stuff as well. So I’m going to head to the last story, Michael, and that is uranium demand hits decade high as nuclear renaissance gains traction. Pretty cool if we’re going to get to net zero, which is what my bank account looks like right now. You know, carbon net zero is my bank account. You sit back and kind of go, Yeah, we’re looking for sponsors out there. [00:09:55][54.9]

Michael Tanner: [00:09:56] Michael What a way to solicit. [00:09:59][3.0]

Stuart Turley: [00:09:59] Oh yeah, I’ve got a sign on my chest. Will work for sponsors Raising climate change awareness is a renewed interest in energy. I disagree with that one line in there. It’s not will work for the climate change awareness. It’s people don’t want to you know, they want to be able to heat their homes and put food on the table. Nuclear is the only stable source out there for year in a row. Renewables on the grid. Yeah, I’m using natural gas. [00:10:29][29.8]

Michael Tanner: [00:10:30] What this article clearly states is that there’s an overwhelming shift in the mindset of people to embrace nuclear. Now, is it anywhere near what we need to be in order to to achieve what you call this renaissance of carbon net zero? No, it’s nowhere close. We’re going to need to continue. We need to fix the regulatory. You know, I was I saw, you know, Bill Maher, of all people, did a he did a ten minute long exposé on his show last week, specifically talking about articles that we have brought up on news beat in terms of how much renewable and energy, specifically renewable energy is waiting in the regulatory system. You know, there is, you know, hundred you know, there’s thousands and thousands of megawatts waiting to be approved. If only we could get out of our own way. My only thing with with nuclear is that it will end up down this path. And it’s the reason why nuclear hasn’t been rolled out soon. It’s because they continue to die in the regulatory process. [00:11:20][49.8]

Stuart Turley: [00:11:20] Yep. Hey, I need to reach out to Bill. And since he was a watcher of the show, you know, you got to get a lot of it. Since he’s getting his energy tips from us. [00:11:30][10.0]

Michael Tanner: [00:11:31] He’s slowly getting red pilled you’ll see it. Give him about five years and he’ll be he’ll be he’ll he’ll switch sides completely. [00:11:37][6.3]

Stuart Turley: [00:11:38] I got to admit, Bill Maher used to be just a total squirrel. Now he’s only an ugly baby. And I mean, he’s really come a long way as far as a humanitarian goes. [00:11:46][8.9]

Michael Tanner: [00:11:47] I think what’s interesting, though, is there’s and not to get too off topic, but I think somebody like him has been fairly consistent over his entire career. It’s the landscape of politics that has clearly shifted beyond him. [00:11:57][10.0]

Stuart Turley: [00:11:58] That’s a great point. I love what he’s saying. All right. [00:12:01][3.4]

Michael Tanner: [00:12:01] Hey, thanks, fans. I say okay. Things you about done. [00:12:03][2.1]

Stuart Turley: [00:12:04] I am. Hey, I love your chart behind you there. Do it, nerds. [00:12:08][4.2]

Michael Tanner: [00:12:09] Yeah, it doesn’t show much. We got markets down today, folks. S&P was actually up about 1.2 percentage points. NASDAQ goes about 1.09 percentage points, mainly off the back of some decent tech earnings. Crude oil continues to tumble 8267. That’s down three percentage points after closing Friday, up three percentage points. So basically wiping out all of the gains we had there. And this is where I love Reuters. They got no idea what they’re talking about. Oil falls more than 3% as concerns about Middle East supply ease. So me but what’s the different gas supply was shut in we don’t know what’s going on with Turkey if anything. Tensions are more heightened in the Middle East, yet they’re trying to tell us that, oh, prices are down because we will not things won’t happen. They claim traders see signs that Israel Hamas war won’t disrupt crude flows. I don’t know what to say. Generally. The problem with what we’re working with right now is there’s a lot of geopolitical factors that happen. And any time in the next three weeks, oil and gas prices move one way or the other. The answer from places like routers, places like Oilprice.com. It’s why you don’t really want to read these. It’s why you want to come to here. Like energy news beat is because they’re just going to tell you what goes down because the sentiment is moved towards less oil or sentiment towards more oil. That’s okay. That is the case. But let’s dig down deeper and say, what are some of these prices moving? We now we see a huge drop. We ended up at 84 at the beginning of the session, traded all the way down to below $82. That has a lot to do with the way the machines decide to take. Any time you see a large restrict movement down or up, it’s because the sentiment is now being ridden upon by the computers. Remember, 80% of trading is now algorithmic. So that’s where when we look at these huge movements that happen, we see 3% on Friday, 3% today, even though they were in opposite directions. What’s causing that? It’s a little bit of market sentiment being layered in with the large amount of machine trading that when you aggregate small sentiment over a large amount of machines, well, unfortunately, you get these movements like this. So, you know be is you’re too busy suppose trading it’s going to get spicy with these geopolitical stuff again. What we saw on Friday was not necessarily a as we mentioned, yesterday was not necessarily a hey oil. We you know, we think there’s going to be no supplies. It was people covering their shorts. So they didn’t have any open positions over the weekend. The last thing you want to do is be short and then all of a sudden, you know, a nuke goes off over the weekend and oil is $300. Now new goes off. There’s we got bigger fish to fry. So that’s maybe a bad example, but that’s the point of it. So as always, we’re going to come in here and dig below the numbers and give you an idea where we think prices is going. I think tomorrow we’re going to continue to see some of the same choppiness. I don’t see you know, I don’t see oil flows necessarily being stopped. I mean, still, as we’ve talked about, the only thing that could really move prices significantly more up or down from here would be the Strait of Hormuz being blocked off. But I don’t think you’re hearing you’re not hearing anything that would suggest that’s going to happen. Ah, you. [00:15:03][174.5]

Stuart Turley: [00:15:04] Know, I’m not hearing anything, but who knows, you know. [00:15:07][3.5]

Michael Tanner: [00:15:08] Yeah, well, if, if, if, if we get a. Call. We’ll let everybody know if we get. You bet. Trust. [00:15:12][4.5]

Stuart Turley: [00:15:13] We will wait. This is Lindsey Graham. This is Lindsey Graham calling in. Hold on, Hold on. Oh, he’s. He’s wanting to bomb Iran. [00:15:20][7.8]

Michael Tanner: [00:15:22] Great. Well, I’ll tell him. I know my one on my book. We got to. We. We got of my buds ready. [00:15:27][5.0]

Stuart Turley: [00:15:30] That was a joke, by the way. [00:15:31][1.0]

Michael Tanner: [00:15:31] A huge joke. We the last thing we need to be doing is, you know, Lindsey Graham bomb Iran. [00:15:35][4.2]

Stuart Turley: [00:15:36] He said that on the news. [00:15:37][0.8]

Michael Tanner: [00:15:37] I know it’s pretty scary to think about these people. They. They want to get us in a war so bad. They want to get us into a war so bad. That’s okay. I think it’s you know, we’re having some earnings continue to drip out Chevron and Exxon, the two companies that we’ve been talking about ad nauseum on Friday dropped their earnings. I thought it was just interesting to read some of their highlights. First, for Chevron, they go ahead and see their third quarter to order decrease from 2023, mainly due to lower upstream realizations and lower margins. To give you guys an idea, they had a total earnings of about 6.5 million, 6.5 million in the quarter, 2023 comparative to 19.1 billion in quarter three excuse me in the third quarter in 2022. So they’re down about 50% or excuse me, excuse me, that’s year to date. Last quarter in third quarter 2022, they were 11.2 billion. So they’re down about basically 50%. Again, the reason why they say that is to lower upstream realizations. What’s that mean, lower prices? I mean, it’s pretty simple to say that, but and lower refining margins, which are they make a decent amount of the money on refined products sales. The big thing they did this week, this year was go ahead and scoop up PDC energy and that was went ahead and completed to kind of give them a stronger presence both in the Permian but also in the DGA. They’ve also acquired some stakes in ACS Delta, which is a carbon capture place. They’re doing a bunch of other interesting things. They’ve the 6.2 billion of stock buybacks excuse me, which is a little bit lower than the original guidance or exceed. Those were distributions of 6.2 million, 3.4 billion of share buybacks. Share buybacks, they know were a little lower than the prior quarter, mainly due to the the restrictions due to the related asset transaction of PDC Energy, which was all stocks, as you know, they just decided to purchase Hess. And so it will be very interesting to see sort of how how the how this now go ahead and merges together. Let’s go ahead and look at Exxon. They they have earnings of 9.1 billion compared with 7.9 billion of of excuse me earnings last quarter. So they do they do raise a little bit mainly due to the fact of higher commodity prices. But everybody notes specifically for Exxon and Chevron lower chemical margins and lower realized prices on product are refined products where their downstream sector makes their money and they really don’t mention anything interesting. They you know, they they’re able to keep their debt to capital ratio and a lot of their gearing ratios are fairly modest, if only because the two acquisitions, the acquisitions that they made to go get Pioneer was all in stock. And I think that’s the big thing to take away from there from this this profit or loss statements do is they didn’t have to tap into any of their cash reserves. They didn’t have to go increase their on. They were able to pick up pioneer mainly by giving up stocks. So I mean you know really strong like the and the Oxy Anadarko deal there’s very little cash exchanged which is interesting to note that this is going to look very good. You know, you want to talk about the word accretive. This is going to look very accretive to cash flow when it comes down to it. [00:18:33][175.9]

Stuart Turley: [00:18:34] Yeah, Houser beat PDP over there or their production. [00:18:38][4.2]

Michael Tanner: [00:18:39] Oh, I mean, I think they’re over. I mean, with Pioneer, they’re going to be like 2 million barrels a day. I mean, well, the problem with with valuing companies like Exxon and Chevron is there’s so much more that goes into it. It’s not just the production stream. It’s not just this you you you got to know that they’ve got this. [00:18:53][14.5]

Stuart Turley: [00:18:53] Cash flow though. [00:18:54][0.9]

Michael Tanner: [00:18:55] It’s mailbox money Mean is a little bit of. [00:18:57][1.9]

Stuart Turley: [00:18:57] It our number is the. [00:18:59][1.9]

Michael Tanner: [00:18:59] Amazing question I have to what should people be worried about. [00:19:03][3.3]

Stuart Turley: [00:19:03] Well the Fed’s going to be showing up this week. Kind of like the Grinch. [00:19:07][4.4]

Michael Tanner: [00:19:09] You know, Wednesday. They’re they’re they’re raising rates. [00:19:11][1.9]

Stuart Turley: [00:19:11] Yeah. I’m just afraid of these chatter. Has I do not know. [00:19:16][4.5]

Michael Tanner: [00:19:16] Trying to dig themselves out of a hole they created. It’s really interesting to watch. And guess what? The consumer will will unfortunately take it in the drive thru every time. Oh, yeah. [00:19:24][7.5]

Stuart Turley: [00:19:24] That’s kind of like me getting married for the second time. [00:19:26][2.1]

Michael Tanner: [00:19:27] We don’t want that to happen. Said, No, please guys, we wait it. But hi, guys. Well, I think it’s about it. You know, again, appreciate everybody who’s tuning in. Email us questions@Energy NewsBeat.com can you have Stu and I on LinkedIn? But for Stuart Turley and Michael Tanner? Guys, we’ll let you get out of here. See you tomorrow, folks. [00:19:27][0.0][1125.9]

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