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

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Michael Tanner: [00:00:00] Invest in oil now before it’s too late. Next on the Energy Newsbeat weekly standup. [00:00:05][5.0]

Michael Tanner: [00:00:13] Where our oil price is headed in 2025 and beyond. This is a deep dive into Goldman Sachs bearish outlook where they have basically rising supply meets rising demand. And as you would say, well, economics matter. This actually comes from our good friend Ray Trevino, his sub stack. And I love this first lines, do oil well economics matter at all times? But now it has become the difference between profitability. And incurring a loss. Goldman Sachs really doubled down on their bearish oil price forecast through 2026. You know, they’re forecasting things at $56 per barrel and then for WTI and then $52 by next year. So they’re really taking the opposite approach that you did, falling in line more mainly where I have price forecast. And you know, as you accurately point out in this article, even, you know global demand is still. Showing signs of resilience. You know, these two things seem to be in some weird paradox. You’ve got demand rising, but then you’ve got prices falling. And I think it’s going to be very interesting. I think what they’re really saying is that there’s supply overages where supply is going to up due to OPEC, the stuff that they’re adding back to the market. Also, the fact that you could see Iranian barrels come back to the market, I think they also point to tight inventories along with the fact that we’re going to see some things there. I think there’s some geopolitical headwinds that we could incur. I mean, there’s always a chance we go to war with Russia. I mean you know, who knows what happens there. Think, I mean we got to talk about Russia there. But all that means, what does this mean for oil prices? According to Goldman Sachs, they see oil prices at 56, 52. You know, you would probably say that prices are gonna be a little bit higher than that. I’ve said price is gonna be lower. I think the question that really you need to ask yourselves is, assuming the status quo, And this is if you’re If you’re in the oil and gas investment space, if you’re considering investing in oil and guests, the question you have to ask yourself as a chief investment officer, as a head funds manager, as a family office portfolio manager, where, assuming the status quo. $60 oil. We stand today at $60.89. What project works in $60 oil? You have to ask that question. Yes, oil may jump to 100. Yay, then you’re going to be able to reap the upside of oil price appreciation. The question needs to be what works in this environment. And really, the move from unconventional to conventional seems to be the thread of the needle. And it may even be the move from unconventional horizontal drilling. To conventional vertical drilling. And I say that and people might say, well, Exxon’s not gonna start drilling. Vertical wells, well, we’re not talking about Exxon. And if you’re looking at allocating capital in the energy space and you’re just buying stock, well, you’re missing out on a huge alpha relative to where the capital profits lie. I mean, you don’t, you know, when Exxson drills a good well, it’s not reported in their stock price. Right. So why, you now, so guess, if you want to invest in stocks, do that. But if you actually want to allocate to the energy businesses and investing in specific businesses, buying equity stakes in them. Outside of stocks. You have to think what works in this environment and where am I going to be able to see a profitable return? And it’s that switch from unconventional horizontal to conventional drilling where it allows you to have much, much lower breakeven prices. So that’s where. That’s where that needle needs to be thread. And then when prices go up, well, guess what? You can then begin to allocate capital back towards unconventional shale or the vertical wells that you’re drilling seem to now appreciate from the fact that you just now getting that incremental dollar on a per barrel basis. So I think there’s a lot of things to thread there, Stu. If you had to make a decision as a CEO on, we talked about this a little bit yesterday, but from an LNG standpoint, Are you even more bullish on LNG than you are crude oil prices because I mean if you if you look at this article here Goldman Sachs has it really low. It’s got a different than what you do [00:04:15][241.9]

Stuart Turley: [00:04:15] Oh, oh yeah, but you see Goldman Sachs has got a worse track record than I do. So, you know, you sit back and go, who is paying Goldman Sach’s? I want to know who their research is because you take a look at Josh young, the head guy over there at bison interest love Josh young. And he has said that as the prices stay around the 60 to $65 range, the longer they stay there, they’re going to rubber band and go up. You wrote this out, and when you talked about this on the cyclical side of oil and gas, the price goes up, everybody runs out to the oil field and they drill the supply side comes up and then everybody shuts back down again. The rubber band effect is going to hit and Josh young over there at Bison had a great point. The longer it stays here, the higher up it’s going to go. The, the fact that we still need trillions of dollars to meet. Normal decline curves has to resonate. And I’m the only one out there saying that you take a look at demand side economics. India is still high demand. China is still hi demand. Those are the two biggest indicators of demand and they’re still on track. [00:05:31][75.7]

Michael Tanner: [00:05:31] Yeah, no, absolutely, absolutely. And I think it’s just a matter of where and how you want to get in and invest in the oil and gas business. [00:05:39][7.4]

Stuart Turley: [00:05:39] Love David Blackmon. He is a true energy leader and I just appreciate him. But let me start with this one where energy is concerned. The one new big, beautiful act presents a nod to the realities of a dramatically changed political landscape and to the fact that the energy alternatives favored by the previous administration won’t do the job elections still matter in America. I got to hand it to him. That is absolutely wonderful, but there are some holes in here where I just want to say that I’m a little bit disappointed in the big, new, beautiful bill and our Republicans. Inveris’s research points out that generous tax credits from the Inflation Reduction Act and the EPA’s update to 40 CFR Part 60, which mandates additional coal retirements, have significantly boosted demand for renewable energy projects across the United States. Indeed, the surge in investment and development in the past three years has been so substantial. It’s overwhelmed interconnection cues with a record number of projects seeking grid connections. This is a huge problem, Michael. [00:06:50][71.1]

Michael Tanner: [00:06:51] Well, it’s a huge problem. And I personally think this bill was haphazardly put together. It does very little to actually cut down on the debt, which is the whole thing that was Trump ran on this whole idea of Doge and we’re going to cut the debt. We’re going We’re going to do all this. There are some things in the bill I like, but like every single bill, it’s just been absolutely inundated with, here’s a little handout for you. Here’s a hand out for you, here is a little hand out for you and sure. I mean, that’s how Washington works. I guess I shouldn’t be surprised. I just find it’s, I’m slightly disappointed. I mean we, we, you know, Republicans have the white house, the Congress and the Senate, and they’re still putting through things like this. It truly. Boggles my mind from this. I mean, I mean the fact that I do like the fact that we’re moving more into nuclear as this article does point out. [00:07:40][49.4]

Stuart Turley: [00:07:41] I was about to say that. [00:07:42][1.0]

Michael Tanner: [00:07:42] If, if Inveris is right, you know, then basically there’s only 10% of these projects that are already in the queue. Nuclear wise, they’re going to be able to meet this 2028 deadline that is contained in the house, this house bill. And I love this quote from David Blackman. The reality would essentially eliminate any hope. That projects planned to be permitted in the future years could benefit from the IRA largesse. I think what, unfortunately, what this means is if you’re looking to allocate capital now in this space, don’t look for things that are about to be permitting. You gotta look for the things that you can get into right now. And this idea of, oh, everyone’s now gonna start investing in nuclear. I mean, that’s, you’re 20, 25 year time frame away and truly what’s working right now is continuing down. The path that I think where capital’s already flowing. So I’m very disappointed in this bill. [00:08:32][50.0]

Stuart Turley: [00:08:32] Well, me too, but here’s the thing, the executive order I’m trying to work out some information on, but it has a couple of loopholes and this is where I’m going to go, I did a Scooby when I was reading this is a Scoobie, what does this mean? Because the regulatory process in nuclear engineering is a nightmare and the major reason for the costs in nuclear, but the big new executive order, the ad five new executive orders on nuclear can be built on federal lands and bypass the nuclear regulatory agency. So wait a minute. And so now those funds are available under this bill to really go after nuclear and bypass the normal procedure. You’re going to see three new reactors in the next three years. This is weird and I got to get to the bottom of it. President Trump’s dilemma is now a huge political problem. Secondary sanctions to get Putin to stop the war will drive prices to 90 or a hundred and is a win for Democrats. And I think this is really important when people understand that president Trump has not placed the secondary sanctions on Russia yet. Because it is going to be a debacle when he does. He has lost the opportunity to bring Putin to the table with a carrot and now he’s going to use a club. This is a club India’s role. India imports 88% of its oil needs with 40% of it’s 1.6 to 1.7 million barrels per day coming from Russia. That’s a lot. China’s role China’s role is the largest in crew, 1.9 million barrels of Russia, 47%. You just look at those two guys. That’s where he’s going to throw the secondary sanctions. He’s going throw them on their, their downstream or the refineries. Guess who’s going get impacted. It’s going be the diesel production, the gasoline production, and all of the other oil and gas products that are made going back to Europe, that’s going to snowball into the United States. And we’re going to see 90 to a hundred dollar oil on a global market because of this. Now it’d be short-lived till Russia can get his fleet redone and going again. But this is a dramatic problem. [00:11:05][152.1]

Michael Tanner: [00:11:05] Yeah, I’m going to push back on the idea that more sanctions are going to lead to 90 to $100 oil. I don’t disagree with the fact that I think Trump is now becoming fed up with Putin a little bit from the standpoint of, you know, what we saw happened, you know, we were recording this on Memorial Day. So what we saw last night into this morning was a massive offensive that is being put on by Russia. And it seems to be there’s like, what, 50,000 troops amassing? Along the top border there. So Trump is becoming a little bit frustrated with Putin because he probably feels like he’s negotiating in bad faith a little. Of course, Putin is negotiating in bad faith. That’s like, it’s the most obvious thing we could have said from the standpoint, of course, he’s going to tell you over the phone what you want to hear. And then he’s going to continue to do what he wants to do on the backside. So I’m not necessarily, I’m not concerned. I wouldn’t say concerned. Not too shocked that this is happening. I think I think the interesting thing is the reaction that Trump has. Is he going to sanction Russian oil? I doubt it, because he wants prices at 55. He’s made that very, very clear. He said it out loud. Good friend of the show, Chris Wright, has said the same thing. We want $50 oil. Oil industry be damned. I mean, truly, they don’t really care. We’re about to cover frat count spread and recounts. They’re falling off a cliff profits. Q2 profits are going to absolutely be throttled because of this, but they want oil at 55 bucks. So I don’t think they’re necessarily going to do anything. You know, they may sanction oil here and there, but I don’t think they’r necessarily going to go for them because I think Trump also understands that Putin’s going to figure a way to get his oil to the market regardless if they’re sanctions. India’s gonna buy it. China is going to buy it. So I think this idea that sanctions are going to drive prices to 90 or $100 is I think the bulls, the last breath of all the oil bulls grasping for something that can satisfy their need for high oil when we just need to, in my opinion, settle in for 60, $65 oil. [00:13:11][125.3]

Stuart Turley: [00:13:11] There’s a lot for me to digest and disagree with you on that boot. And when we sit back and take a look at the oil bulls, I’m an oil bull in the 70 to $80 range because that’s where it’s going to settle out. That’s where my bully is. My bull sitting in the backyard. He says, you know, he’s going, Stu, it’s gonna be around the 70 to 80 range, but that’s normally because of the, just the decline curves that are out there. Now here’s the real loser in this. President Trump is the real lose. Because he’s now backed into a corner. And if the Democrats and the rhinos have not codified any of the, the really problems that have done been found by Doge by now, they’re not going to get done. And we’ve got a rhino and Democrat problem. So president Trump is a loser. Trump administration fast tracks Utah uranium mine signals robust push for critical minerals. Michael, this is extremely critical. I’ll tell you why. The velvet wood mine is a bellwether for the Trump administration’s critical mineral strategy as the U S seeks to secure its supply chain and reduce the reliance on foreign adversaries. Michael, this is critical. Once operational, it’s expected to deliver and process 1.9% of the uranium needed for the U.S. On a national basis, Michael, that is important. 1. 9. You may sit there and go. Oh, that’s only 1.9% Stu. I’m like, hell yeah. That’s the first part of uranium mining processing in the US. This is huge. I came up with this idea to write this article today after interviewing David Blackmon, Robert Bryce, and Doug Sandridge on a live podcast that’ll be coming out on our Energy Newsbeat Substack channel on Friday. And it wasn’t very important that was some of those are three other great minds not mine there’s and they came up with a great point that is uranium mining is critical [00:15:18][126.6]

Michael Tanner: [00:15:19] It really is. And this is all part of the broader critical minerals agenda, Stu. And there was three or four things that were kind of listed as key initiatives. The first one being executive orders for nuclear and mineral development. The next one being permitting reform for critical minerals. The next, this one’s spicy, deep sea mining exploration. Wonder if it’s the same Ukrainian SEALs that got Nord Stream. They’ve got experience underwater. And finally, different trade and tariff measures, specifically to address vulnerabilities in the critical minerals supply chain. That’s going to be headed up by Commerce Secretary Howard Lutnick. But I mean, I think the implications of this, as you talked about in the article, are pun intended, critical, because we need these critical Minerals. If we are going to eventually start insourcing and if we really do want to go all solar, as Elon says, which we can argue with, you know, right, left, up, down, whether or not that’s a good idea. But even if we want to even have that conversation, we better know that we can be able to actually build these items in-house. [00:16:22][63.4]

Stuart Turley: [00:16:23] And I’ll tell you what, I learned an awful lot from Robert David Blackman and Doug Sandridge today about nuclear and where we’re going as it ties into this. So our readers are on the substack and are really enjoy that one as it comes out on Friday. But secretary Burgum is doing a fantastic jog running down the road with secretary Chris Wright on this critical issue, but Michael, the number one problem that we have for mining in the United States is regulatory holdup, oops. And so you take a look at regulatory hold up for building nuclear. It’s the same thing, but now that president Trump’s executive order allows us to be done on federal lands with a bypass to regulatory problems. That is what I’m going to be watching for Spain. The aftermath by Doug Sheridan, wind and solar are in fact more expensive. This is very critical when you sit back and take a look over 55 million people were lost power in Spain in the week since Doug Sheridan’s done a lot of research and analysis and solar is the energy source we modeled the most and argued by many of the most economic form of renewable energy. We decided to work backwards to see if solar capacity factors in 10 European countries Below are the stats. And he lists out the stats. Boom, boom, boom. Very, very nice. And he goes through and the conclusions, Michael, let me just address the conclusions. Based on a conservative set of assumptions and calculations, the relatively low solar capacity across Europe, we estimate that Portugal, Spain are the only countries in Europe that could come closely economically to justifying generating power from solar rather than gas-fired plants. Wow Only two, but let’s pretty clear that generating cost and advantages for Spain and Portugal surely disappear after accounting for the massive cost for extra transmission, inverters, and other capital investment needed for solar energy. And point number three, Michael. Furthermore, the average blended price of inlet gas would be even lower than what we’ve assumed if European countries were more willing to develop and produce domestic reserves of natural gas. Now remember, Michael, two years ago, three years ago… Is it been for three years ago norway tried to shut down their natural gas fields and then putin invaded nor russia they fired him back up not all of the u is willing to drill their own natural gas field. [00:19:08][165.1]

Michael Tanner: [00:19:08] It’s pretty incredible. I want to dive into specifically the paradigm that you’re pointing out here. So in Portugal, the cost of annual solar capacity runs about $9.91 per MMBTU. Yet the cost to the gas inlet is about $4 per MMBTU. Spain is at $10.76. Italy at $12.21. France and Hungary at $13.10. Belgium at $15.31. Netherlands, Denmark, and Germany $16.71 and the UK $18.40 all of that relative to a 4. Dollar MMBTU, a gas inlet, where if you layer then in all the other costs, you come to plant inlet in Europe at 11 MMBTUs. So as he mentioned, everybody but Portugal and Spain are lower than that $11 total full cycle loaded cost. And as you mentioned, the idea of now adding transmission, adding all the things you need is going to drop you way above that. I mean, this isn’t a shocker to me and you Stu, we already knew this. I think the real question is now for, what is this, are countries actually going to use this data? When they decide on projects, because what this is showing is that if you choose solar over gas inlet, what you’re really doing is you’re making a decision based upon politics and not economics. [00:20:43][94.4]

Stuart Turley: [00:20:44] Exactly. In fact, the Spain energy minister basically said, uh, no, see, how did he put it solo Pano goodo he’s still going down the solo Piano plan. [00:20:55][11.0]

Michael Tanner: [00:20:55] This episode, guys, is brought to you by energynewsbeat.com, the best place for all your energy and oil and gas news. Stu and the team, tremendous job making sure that website stays up to speed. Everything you need to know to be at the tip of the spear when it comes to the oil and gass business. You can also hit the description below. All links to the timestamps, links to articles. Check us out, theenergynewsbeat.substack.com. It’s a great, great resource. We’re putting a lot of custom content there and it’s really the best way to support the show. By go subscribing there. We appreciate both our free and paid subscribers. Also, thank you to Reese Energy Consulting for supporting the show, guys. ReeseEnergyConsulting.com. If you’re in the upstream space and you don’t have a marketing company, call them. They’re gonna save you buko bucks on your oil and gas contracts. If you were working with the midstream space and you’re not necessarily interested in doing one part of your business or you need help, you need a red team analysis, Reese Energy consulting is the best. And then finally, guys, if you’re interested in wondering why… And how to invest in the energy and oil and gas business, hit that link below and hit the link below or go to investinoil.energynewsbeat.com to learn how to do this. The tax benefits, the monthly distributions, the portfolio diversification, but truly the becoming Billy Bob Thornton from Land Man is something you can’t pass up. That’s investin oil.energy newsbeat. Com. We’ll see you Monday. [00:20:55][0.0][1239.3]