Daily Energy Standup Episode #243 – Russia Increases Oil Exports, EU Eyes Sanctions; Norway Rethinks EV Leadership, California EV Challenges

Michael Tanner: [00:00:15] What is going on? Everybody, welcome in to another edition of the Daily Energy News Beat. Stand up here on this gorgeous Thursday, November 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 and publisher of the world’s greatest Web site, EnergyNewsBeat.com Stuart Turley, My man. We do this. [00:00:38][23.2]

Stuart Turley: [00:00:38] It’s is a beautiful day in the neighborhood. And what a great day we’ve had. And you crack me up right before the show. You’re sitting there. I got to travel. Shoot me. Oh, my goodness. [00:00:47][9.3]

Michael Tanner: [00:00:48] I do have to do some traveling this both of the next two weekends, actually. Luckily, it’s not going to impact the show. But I’ll be honest, I despise traveling and I’m now forced to do it these next two weekends. But the things you do for people you enjoy. So that’s beside the point. Regardless of my travel schedule, we have an absolutely banger of a show lined up. We’re going to fly all the way over to Russia and we’re going to start there first. Russia up to, quote, sharply increased oil exports in November. That’s according to our favorite data rig data provider, Kepler. Next up, oil exports. Russia’s oil exports climb despite its commitment to cut supply. Next up, EU looks to expand sanctions on Russia. That’s according to Bloomberg. Yikes. Next up, why Norway? The poster child for electric cars, is having second thoughts. And then after our tour of the EU, we finally come back to our favorite state. California’s The Conundrum stool. Then toss it over me will lightly touch on what happened in the markets. Considering the Fed’s decision to hold rates at current. What that means, hopefully for the energy markets. We did see oil and gas prices react to that. Natural gas holds fairly flat. We did see the EIA come out and release their crude oil storage numbers and we also had two earnings that we will slightly dive into. One of the issues favorite company north. And so, you know, we had to cover them and then we’ll dive into another earnings that I find I found very interesting and then we’ll let you guys get on out of here and and finish up your Thursday. We appreciate everybody who stuck with us. Stuck with us so far, man. I’m tongue tied today. Hopefully, hopefully this show gets better for the listener. But before we dive into all of this, guys, remember the news and analysis you’re about to hear is brought to you by the world’s greatest website www.energynewsbeat.com the best place for all of your energy news still in the team do a tremendous job keeping that up to speed with everything that you need to know to stay at the tip of the spear when it comes to the energy business. You could check us out on Apple Podcasts, Spotify, YouTube at Energy News Beat. Go give us a subscribe there. That’s really the best way to to support the show. You can email us [email protected] you can interact with the show via [email protected] Kind of our new data news combo. So check it out. Give us your feedback. You can also check out the description below, whether you’re on YouTube or podcast, see all of the links to the articles timestamps. You can jump ahead. See here about northern oil and gas is great quarter or learn what the you know the EIA crude oil numbers did or just you can’t get enough of you’re ready to hear about Russia you can do all of that by clicking on the timestamps again we appreciate our team for keeping that all up to speed. I’m going to Brett those Stu, where do you want to begin? Let’s buckle. [00:03:27][159.0]

Stuart Turley: [00:03:28] Up. Buckle up. It’s going to be a crazy flight and hopefully we don’t run into that flight lady or whatever her name. I don’t care what you send me. I mean, if you if you see that, we’ll you know, if you see that on your flight tomorrow, run. Okay. That was weird. Okay. Russia poised to sharply increase oil exports and no exports. But now you got me. Can’t talk exports in November. I’ll tell you what this is. Analysts link the move to maintenance works in several oil refineries and higher global crude prices. Russia is likely to increase all exports in November. Here’s some key numbers, Michael. 200,000 barrels per day increase in next month, reaching up to 3.7 billion barrels per day. That’s a bunch. [00:04:22][53.9]

Michael Tanner: [00:04:23] It is, but. [00:04:23][0.3]

Stuart Turley: [00:04:23] Billion barrels per day. That is a bunch. And here’s that’s even. [00:04:26][3.3]

Michael Tanner: [00:04:27] What’s interesting is this comes in the face of the fact that the next article you’re about to cover, which is or one of the articles that we’re looking at, is EU looks to expand sanctions on Russia. So I know I’m jumping ahead here, but just the sharp decrease between what’s going on on the actual ground level, which is Keppler they’re a data provider. They’re not going to just say that without having some underlying facts. Well, then why would the EU be looking to increase sanctions? It’s almost as if what you’ve been saying this whole time is absolutely true. So do sanctions don’t work? [00:04:59][31.5]

Stuart Turley: [00:05:00] Absolutely they don’t work. And all they do. Putin laughs. Eh? He laughs all the way to the bank. So anyway, let’s go ahead and go to the next article here. Russia’s oil exports climb despite commitment to cut. Supply. Here’s where I got a little tickle at this article here. A little bit. What? Politicians actually tells the truth, right? So is it Novak, their head of their oil and energy? Is he over there going, Oh, yeah, okay. He’s going to do an imitation of Putin. So this is Stewart Turley imitating Novak. Who’s imitating Burton? Hey, I will cut. Right. So if you sit back and kind of take a look, the four week average crude shipments out of Russia were slightly lower than 3.48 million in the week of October 29th, around 20,000 barrels per day compared to the four week average the week before. Here’s where it goes. Russia has pledged to reduce its oil exports by 300,000 barrels per day until the end of 2023. In a show of solidarity with its Opec+ partner, Saudi Arabia. They’re wanting to help increase the price because, Michael, if you remember our article a couple of days there. Saudi Arabia wants it at that 122 107 to 120 mark. So Russia is saying yes, but they’re doing the old is shaking their head. Yes. And your wife is saying, did you take the trash out and you’re going, Yeah. No, I didn’t. So it’s pretty interesting when you take a look at this. But what is pre this is a precursor to the other article. You gave a hint that the EU looks to expand sanctions on Russia. Why did the sanctions cross the road? It was to try to penalize somebody. And this was not what happened. I mean, so BLOCK has so far imposed 11 packages of restrictions against Moscow over the Ukraine. They are now talking about the next round, which would impact some $5.3 billion trade with Russia. This is nuts. It’s going to they’re targeting trying to skirt the bans through third countries. They can’t even, you know, manage their way out of a paper bag, let alone a crisis. [00:07:17][137.3]

Michael Tanner: [00:07:18] Yeah, I mean, I don’t want to make it seem like we’re just we’re standing up for Russia. It’s clearly what they’re doing in Ukraine is wrong, But it’s pretty funny to the level at which we will go to attempt to sanction somebody without really doing it. I mean, they’re trying to go after the loopholes in which they’re using to get around the current sanctions. But all this rules into it’s clear sanctions don’t work. And if they’re able to skirt and get access to the dark fleet, I guarantee now they’re going to have access and get around these. So it all comes back to say, you know, like you said, you can say you’re in you’ve passed sanctions on one hand without really enforcing anything on the other. [00:07:53][35.0]

Stuart Turley: [00:07:53] Oh, it’s like I’m President Biden and I use the word loosely because he doesn’t even know he’s president. And when you sit back and think he listened. Do you remember right before we were on this, right as he released these sanctions on the Nord Stream? He goes, oh, yeah, you guys go ahead, put in the Nord Stream. And then they did not enforce the sanctions on Iran in two different ways. And that went from Trump under Trump. They were doing less than 300,000. They were lucky to do the 250000 to 300000 in Iran under Trump. Now they’re up there with Russia at that 3 million barrel mark, 3.5 million. This is not. [00:08:41][47.8]

Michael Tanner: [00:08:42] So. It really is nuts. And I think it goes to show, unfortunately, you’ve been right from the beginning. Sanctions don’t work. Let’s go to Norway. [00:08:50][7.4]

Stuart Turley: [00:08:51] Let’s go around. I really want to go to Norway. I just really think this is going to be a fun one. And Michael, why Norway? The poster child for electric cars, is having second thoughts. This article is not just 100% bashing on EVs. It’s because this is their way of life. And just as t this article up a little bit, Norway has so much electric hydro that it makes sense. Everybody was all on board because their cost of energy is very low when it comes in and you’re using hydro. You know I love me some hydro. I got some right over here. Okay, let’s go through this. So he flew across the Atlantic to see what the fuss about was this. The evening TV boom has really taken a look. No Norway one really took their cities and their towns and became more like the U.S. and they people really enjoyed being able to get out and see all the beautiful sights. And then you take a look at everybody, all of the world controlling folks. They’re wanting to shut down everything. Norway does not have any public transportation. So even if you don’t want a car, people in town wanted to get to their lake houses. So. When you take a look at this now, it fizzled. Norway’s dreams of becoming a global hub of TV manufacturing fizzles when the companies ran into financial problems. Look at this. If our producer can roll this cam, this picture in Michael, scroll down in the in the thing. Do you see the little red car in the center that that. [00:10:36][104.9]

Michael Tanner: [00:10:37] Toy things you got as a kid where like you is like a Flintstone car where you have to use your feet to pedal. [00:10:41][4.8]

Stuart Turley: [00:10:42] Oh, no kidding. I’m over here going for would not want to get into that. You know, if Thor was out of Norse mythology, he would laugh that it’s about as big as his hammer is this car. So when you come down, even subsidies, fuel, car sales. But Norway’s cities wanted fewer cars and the citizens wanted more cars. They didn’t want to follow this. What are you seeing in this trend of the story? It’s the same thing that’s happening in the U.S. People aren’t going to give up their cars. So I can see that this is also going to be a resurgence in the ice engines as well, too. [00:11:25][42.6]

Michael Tanner: [00:11:25] Well, and I mean, again, you have to remember, Norway is a small country. It may slightly work. Now, again, I think the the point of this article is that something that went was intended to be good, which was a big subsidy for EVs, turned out to basically only be a subsidy for the rich because they started buying EV Porsches and the lower income people still didn’t move the needle to even give them a car. So it is interesting considering that fact. I mean, you’re talking about, you know, only the, you know, $45,000 of tax free incentives to order and buy EVs. That’s insane. Clearly, the United States can’t do that. But I think it’s an interesting it’s an interesting article, but I think there’s not much analogy that we can really compare other than what’s going on in our favorite state, California, which I think is up next. [00:12:11][45.8]

Stuart Turley: [00:12:12] Oh, it is. All right. California’s EV conundrums. You got to love a good California. And you know, I got to give a shout out to half of the state that is listening to us because we get such huge numbers out of California. We got to love it. And so I think that there is there is hope for California since half of them listen to the podcast. But so yeah, exactly. [00:12:35][23.6]

Michael Tanner: [00:12:36] So we only know that we at least know there’s four people on board. [00:12:40][4.1]

Stuart Turley: [00:12:41] All right. So, you know, California followed Germany and tried to lead the world to zero crude oil. So if we take a look at this, the conundrums around California TV is a nice list here of eight things. We’re not going to go through all of them. But due to the EV battery fire, this is number four on the list, Michael. Questionable means of transporting EVs from foreign manufacturers to the U.S. And when you and I talked about this on the other show, insurance is causing it. So they don’t want them on the transports coming across the pond. Conditions have grown so dire for the supply chain that one’s another one. And so now it’s links to the Chinese slave labor unions. So it’s one thing to have a slave labor, a labor union, it’s another to have a slave labor union. Maybe they would go on strike. That was funny, by the way. [00:13:35][54.2]

Michael Tanner: [00:13:36] Okay, I’m going I’m about to go on strike. [00:13:38][1.7]

Stuart Turley: [00:13:39] So the rate is you guys. [00:13:40][1.5]

Michael Tanner: [00:13:41] The Energy Use Me podcast is unionizing, right? [00:13:43][2.2]

Stuart Turley: [00:13:43] Except your H.R.. How in the world are you going. [00:13:46][2.3]

Michael Tanner: [00:13:46] To I mean, your hand management. So how does that work? [00:13:48][2.4]

Stuart Turley: [00:13:49] Oh, my gosh, You’re in trouble, dude. Okay. The regulatory tax landscape led the steady drop in the number of California refineries. It’s not going to happen, dude. I mean, California cannot. Absolutely. I in our story yesterday on yesterday’s podcast, natural gas, compressed natural gas, I guarantee you that’s the road for shipping. And if California wants to eat, they’re going to love natural gas or compressed natural gas coming around the corner for those engines. So. [00:14:21][32.5]

Michael Tanner: [00:14:22] Yep, absolutely. [00:14:22][0.3]

Stuart Turley: [00:14:23] After you, dude. [00:14:23][0.8]

Michael Tanner: [00:14:24] All right. Well, go ahead. Move over to the finance segment then. You know, pretty decent day for the overall markets. We saw the S&P 500 up one percentage point, NASDAQ up one and three quarters percentage points, mainly off to the back of the Federal Reserve, confirming what I think people mostly expected to happen. But it’s still you know, I think the market breathed a sigh of relief because, you know, we didn’t know what was going to happen considering all of the things that the Fed has done. But the Fed has come out and officially not raised rates. They’ve kept their their base base interest rate at five and a quarter to five and a half, which is really where it’s been since July. You know, this is the basically the second meeting where they’ve chosen to hold out of a string of 11 rate hike, which include four in 2023. You know, Jerome Powell came out was a little bit more optimistic that these higher rates are doing what they think. I love how he continued to talk about how the labor market was still tight. And, you know, if you’re if you’re I somebody who understands Fed speak, that means that they’ve got to get that unemployment rate higher because that’s going to now bring inflation down. So, you know, you got to remember, you know, they actively are raising rates to put people out of work so that inflation comes down and does what they want to do. Now, they’ll give you Fed speak for all the other junk. And Jerome Powell is probably one of the more what I would call least fed speak of all the Fed. I mean, it was hard to listen to Greenspan. It was even it was hard to listen to Ben Bernanke. I mean, that guy was that was he was probably the one that perfected the idea of Fed speak. Janet Yellen was had a little bit of that. But, you know, Jerome Powell coming from the investment banking world is actually fairly straight up and down considering the fact that you know what his predecessors are. So I think that really that decision, I think, filter both through the financial, you know, the overall financial markets, but really into energy. We saw, you know, with rates where they were, we did actually see a drop of oil down to 80, 97. That could have also been due to the fact that we saw a crude oil inventory build of about 800,000 barrels. That was a little bit less. It was less than what was expected. So you think the Street would like it? But I think the overall sentiment is that this this this war that’s going on in Israel and know we keep coming back to it, it doesn’t seem like there’s going to be any supply disruptions. And I think that’s beginning to settle in as we move forward. And that premium that we’ve been trading on due to the fact that this, you know, supposedly the heightened tension war between Israel and Gaza, it seems like it’s going to be you know, I hate to say it so long as a fear, but a conventional war, Israel’s going to invade Gaza and that’s it. Nothing. You know, it’s like nothing’s going to happen when it comes to the overall energy markets. You know, you know, not that we want that to happen, but that’s the sentiment that I think is settling in right now. STU So I don’t know how you see that conflict going from an energy standpoint, but I think the market has sort of extracted about all of that premium that was trading into it when it comes to war. I mean, we’re sitting at 80, 95 right now. [00:17:18][173.9]

Stuart Turley: [00:17:18] I know and I disagree with you. I do think there is some coming around the corner where they are kind of confused on them. But now let me go back to speak in Fed. I think that Powell actually I would understand the Coneheads better than a Fed if he’s beaten. Half the guard thought. I understand that more than what I understand from Powell. So that’s pretty sad when you say you know, naff all the Garth thought and it makes more sense. There is no way that they can fix inflation. Now let’s come back over here to the other side of this coin. I think the war is going to really dramatically impact energy prices. And there’s because several reasons, and that is the lack of investment in oil. And you’ve heard several of the big boys, Exxon, come out and say it and everything else and they must listen to the podcast as well, Michael, because they did actually say, you know, we need trillions invested in order to keep it going. Even if there is a recession, a global recession, there still is not enough production in order to lower it very long. I almost personally believe that there is somehow price manipulation going on on the oil. I don’t I have no nothing to base it on, but nothing from all the experts I’ve talked to in the last several days says that it absolutely makes sense. Yeah. [00:18:52][93.5]

Michael Tanner: [00:18:52] No, I mean, you’re you’re you’re you’re you’re absolutely right. And you know, it very well could increase. I just think what we’re seeing is the shrinking of that premium. But no, you’re absolutely right. Crazy things could happen. I want to point out, Stu, we had you know, we’re in the midst of earnings season right now. You go to energynewsbeat.com, look at our finance tags. You be able to see all of the different earnings that are rolling in to companies that I wanted to highlight to northern oil and gas your favorite. I love that you know you always say good management good numbers pretty good month for the are pretty good quarter for no other oil and gas. They get record quarterly production of about 102,000 bogey per day that’s 62% oil adjusted net income at 61,000,161 million with adjusted well at 385 million. IT technical gap net income was only 26,000,026.1 million. But that was just due to some charges. Excluding net working capital. They had some cash flow from operations about $263.9 million, which was an increase of 29% from the third quarter of 2022. It generated about $127 million of free cash flow. You got to remember, that’s a non-GAAP financial number. I always like to look at. You know, there are non-op companies do. So one of the big things you worry about is capital expenditures. Their third quarter CapEx budget was 260,000,120 182.3 million. That DOE was actually drilling a completion, drilling and completion or AFI buys. You know, there it was a little bit higher than the prior quarter due to the fact that they saw a slight increase in development activity occurred at one of their successful leases, ground game. So they went ahead and authorized, you know, two extra wells, one at 9.7 and 9 million. To give you an idea, their CapEx is spent about us is spent at about 59% of it is spent in the Permian. So you can tell they’re heavy in the Permian. They end with about 870 million of liquid eight or 879 million of liquidity. 166 of that is borrowing available under the credit facility, and they only sent about 13 million of cash. You got to love non-op business. Maybe you could just sit on a little amount of cash. It’s really nice. They got 2.2 billion of debt, but it’s sort of spread out. You know, I just say this because I got a little bit on our business do and they do it right? [00:21:10][138.1]

Stuart Turley: [00:21:11] Oh, absolutely. I’m I’m all in on non-op, especially when you got somebody that actually can understand the charts, they can understand the geological data and you can actually verify and validate drill, but verify. Oh, that’s a new one. [00:21:27][16.4]

Michael Tanner: [00:21:28] Drill bit there, but verify. [00:21:29][1.2]

Stuart Turley: [00:21:30] I like. [00:21:30][0.2]

Michael Tanner: [00:21:31] That. No fun. No, no, no. [00:21:32][1.8]

Stuart Turley: [00:21:33] Fine wildcat. There’s no wildcat. There’s no wildcats when you drill, but verify, That’s a T-shirt waiting to happen, dude. [00:21:40][7.5]

Michael Tanner: [00:21:41] Yeah. Some of the other earnings we’ve got available, guys. You know, marathon drop today, California Resources drop today. Pacific Land. We saw Apache, Silver Bow, Viper Energy Partners, Magnolia, Permian, Reese and and and bury Petroleum Earth stone or we ran those so me talking to a myriad of earnings go check those out on energy news beat you want to dive in more I mean they’re going to be good we saw commodity prices go up again. The headline really is this M&A space. So, Stu, we will continue to stay up to speed on that. Anything else, though? Well, what should we leave these folks with? [00:22:14][33.8]

Stuart Turley: [00:22:15] Buckle up. It’s going to be a lot of fun. I mean, feds big scares me. [00:22:20][4.3]

Michael Tanner: [00:22:20] Well, in so-to-speak. Buckle up, folks. So I will let you guys get out of there and get back to work. We appreciate you guys. Check this out. Have a great weekend. You’ll hear an interview from Stu. We dropping the ball on Friday. Stu, who drops interview wise? [00:22:33][13.5]

Stuart Turley: [00:22:34] We just dropped This one was a really good thank you for asking. We just dropped the secretary general of the African Petroleum Producers. They’re 18 member nations. It’s the African version of OPEC. They carry a big stick and they are phenomenal. I now have several new African leaders that are coming online that are going to be on the podcast. I’ll be able to share those names. And we also have about four others that I’m trying to work with the team on and which ones are going to send down. But we have, I think, six that are coming out very quickly though. [00:23:10][36.0]

Michael Tanner: [00:23:10] Yeah, you’ll see those on Friday and then Saturday you guys can hear the weekly recap where we cover, where we were, the suit, the team picks out some of their favorite favorite segments, slices it up and we send it out for a little Saturday news. You get a Sunday off and we will be back in your year on Monday, guys. So we appreciate it. Enjoy the rest of the week, guys. Enjoy the podcast on Friday, enjoy the weekly recap on Saturday. And Stu and I will see you on Monday, folks. [00:23:10][0.0][1352.0]

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