Daily Energy Standup Episode #258 – Carbon Emissions, Oil Mergers, and Finance Insights

Richest 1% emit more carbon than poorest two-thirds, says Oxfam

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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 Stand up here on this gorgeous Tuesday, November 28th, 2023. As always, I’m your humble correspondent, Mike Tanner, coming to you from an undisclosed location here in Dallas, Texas. Rocking a solo show today. I had a great week off last week, so we hope everybody had a great Thanksgiving. I was traveling late yesterday, so Stu was able to step into a solo show. He happens to be traveling today, so I’m stepping in and rocking a solo show. But don’t worry, I have two great articles lined up for us and then we’ll hop over to finance first on the menu for us. Richest 1% more carbon than the poorest two thirds, according to a new study. Absolutely unbelievable. Something I think we probably all knew happened. But it’s really super interesting. The rich get roasted in this one, so we got to love it. Next up, Senate Democrats want the FTC to investigate pending oil mergers. Senator Schumer’s 22 Senate, his colleagues looking to break up the mergers that are happening. So, I mean, it just it’s a bucket of laughs, folks. So we’ll cover what they’re trying to do in Congress. We will then kick over quickly cover what happened in oil and gas finance prices down a little bit today, mainly off the back of that OPEC delayed meeting. And we’ll kind of maybe dive into what some of the theories are around that. Nat, gas prices actually spiked a little bit here in the opening as we record this here about 530. Rig counts up a little bit and then we will quickly cover a northern oil and gas deal with actually fits in nicely to a new segment. We’re going to start doing. So that’ll wrap up the show. Then we’ll let you get on out of here and finish up your day. But before we do that, guys, remember, as always, the news and analysis you are about to hear is brought to you by the world’s greatest website, Energy News Beat. The best place for all your energy news. Doing the team Do a great job of curating that website, make sure it stays up to speed with everything you need to know to be at the tip of the spear When it comes to the energy, the oil and gas business, you can hit the description below, see all the links to the articles timestamps. If you want to go ahead and skip ahead and hear about those in order deal, boom, you can do that. You can also check out Dashboard.EnergyNewsBeat.com. That’s our data news product combo. We love that email. The show questions@energy newsbeat.com you know, just check us out. You can follow Stu and myself on LinkedIn, Twitter, check that again all out in the description below. But let’s go ahead and dive into the show. [00:02:37][143.2]

Michael Tanner: [00:02:38] First article, guys. Richest 1% emit more than the poorest two thirds says Oxfam. Absolutely hilarious. You know, we got the world’s richest percent generated as much carbon emissions as the poorest two thirds in 2019, according to a new Oxfam report that examines the Uber wealth, these lavish lifestyles and investments in heavy polluting industries. I read this next paragraph. The report paints a grave portrait as climate experts and activists scramble to curtail global warming. This month marked a long, dreaded milestone for the planet, with the scientists recorded an average global temperature that was more than two degrees Celsius above pre-industrial levels. Again, I feel that probably not true in terms of this increase. But but again, the point of this is, according to this Oxfam report, carbon emissions of the world 1% surpass the amount generated by all car and road transportation globally in 2019, while the richest 10% accounted for all half of global carbon emissions, the richest 1% are enough to cancel out nearly the work of 1 million wind turbines. So for all of those wind turbines going up in West Texas and the Midwest here, Al Gore is single handedly knocking you down. It’s you got to love it. The inconvenient truth is that Al Gore is bad for the environment. That’s all I got out of here. This is David Schwarzenberg. He’s the director of Sydney Environmental Institute at the University of Sydney. And he said, quote, None of this is surprising, but, you know, it’s crucial. It’s crucial. He also goes on to say there’s been a huge issue in climate justice. Countries don’t want to pay for what they’ve done in the past. So it’s interesting thing years. Okay, let’s not talk about historic responsibility, but current responsibility. The recommendation is hardly new, but one that climate activists continue to fight for, taxing the Uber rich and using money to invest in renewable energy. I’m all about tax and Al Gore. I think we should have an Al Gore taxed personally. Whatever he uses, let’s charge him 20% over market rate. You know, there was a proposal to tax corporate jet travel, probably shot down by our our favorite Heinz, 57 senator, a former senator, I should say, now climate evangelist John Kerry. You know, it’s not his plane. It’s his family’s plane. So he’d probably be he’d probably be out a bit. You know, I like they they make fun of Kylie Jenner. This I do find it funny. Kylie Jenner took a 14 minute flight. Man, I wish I could do that on a private jet. You have to admit, if you could take off, if you could afford to fly private on a 14 minute flight, you do it, too. Now, you should maybe be taxed on it, but I’m not going to hold Kylie Jenner because I do the same thing. But again, this is we all know if you’re rich, you use more energy. That’s kind of the point. It’s why all other countries. Want to become rich. Now, the problem is, if you get to a point, the richer you become. The more energy used. But the efficiency goes up. But there is a point when you latch on to this .01 percent is this article says that you do begin to use astronomical match. Who knew that massive mansions use more electricity than apartment complexes? Who knew? Who knew, folks? All right. [00:05:33][175.5]

Michael Tanner: [00:05:34] Next one here. Senate Democrats want FTC to investigate pending oil mergers. Got to go after big oil, folks. Senator Schumer and 22 of his Democratic colleagues penned a letter to the FTC asking them to investigate the acquisitions of Pioneer and Haas by Exxon and Chevron, respectively. You know, targeting big oil. Let’s see what they say here. U.S. Senate Majority Leader Chuck Schumer, we got to love him. 22 Senate Democrats, I’m sure they’re geniuses. I wrote to the FTC alleging that the multibillion dollar acquisitions by Exxon Chevron will lead to reduce competition and higher prices for consumers. It’s kind of scratching my head. Exxon doesn’t set prices and ask his regulators to watch antitrust probes. This letter clearly shows, however, these politicians don’t understand much about the U.S. oil market. Absolutely. The first thing I thought of, I mean, again, you got to come back to and this is what I think. You know, obviously, they don’t want to attack the merits of the deal. I mean, if they thought twice, if at all, for 10s about who sets oil prices, the last thing they would do is come to Chevron and say, your acquisition of Pioneer is going to screw. If anything, Exxon acquiring Pioneer is going to be cheaper because there’s got to be more oil because Exxon is going to now be combined with Pioneer Drill, a polar location. Is that going to happen? Probably not. But in theory, it could happen. So I guess they look at it glass half full or glass half empty. I could look at it glass half full. I just think the interesting part is, you know, you’re too far in the weeds. You’re missing the signal. It’s like when they came out today, the FTC came out and was going to investigate the takeover of Subway by private equity. Your hard earned tax dollars are going to make sure that Subway isn’t raising their prices on that subway sandwiches or some, as we would call it, scrub way sandwiches are up. So now we’ve got big sandwich and big oil are the enemy, really? It’s not you guys up in Congress. I mean, it’s just it’s hilarious. We’re spending all our time worrying about big oil and big sandwich when maybe we should be worried about the issues at large. I mean, you know, there’s a reason people hate politicians because they do stuff like this. I love this little it’s a kind of an opinion piece that we’re reading here. This sort of shows, however, that these politicians do not understand much about the oil market, its players and their contribution to the nation’s energy security. It’s hard to understand how competition would reduce of Exxon. A pioneer combined to produce only about 5% of U.S. oil, which is a fraction of the oil OPEC members control about 80% of the world’s proven oil reserves. The iCIJ says 9000 small independent producers to produce 83% of total U.S.. Again, these are facts. They could have clearly looked up or whoever wrote this. I mean, if you think Chuck Schumer sat down and wrote this memo, you’re out of your mind. He’d one of his 60 associates do that or he had lobbyists do that. He probably had, you know, someone from, you know, Greenpeace is off do this. Soros probably wrote this up. Just kidding. He probably wasn’t strong. Point being if they had done. It’s not about the you know this is a if they had done the research, they did never come to this. You could have never you didn’t put there’s no facts. They had it. This is so you know, I love it when they come out clearly showing their ignorance on it. Big oil big sandwich FTC’s come before you I mean this is it’s ridiculous folks. [00:08:43][189.0]

Michael Tanner: [00:08:43] Let’s move to finance You know we saw prices kind of are mixed. I mean, the big news coming out of this weekend was the fact that OPEC, which was supposed to meet yesterday, has now delayed their meeting by four days. The question is, why did they delay their meeting? I think that’s tensed markets a little bit. It’s really caused choppiness ever since Thanksgiving. You know, we saw on Friday when that announcement came out, we did see the market drop from about 77 to where it sits about, you know, we got all the way down to about 74, currently sits about 75, 16 as we record this right now. Again, I think the reasoning that OPEC is pushing off this meeting has more to do with them trying to figure out if more cuts are necessary. I think we’re going to agree that the million barrels is is legit. The real you know, I think people are wondering, will this will this mean more cuts? It could it could also mean that they’re inviting about maybe 2 to 2 lower cuts because countries are just wanting to take it. I mean, it’s clear that the amount of leakage coming out of Iran and Russia is making up for whatever cuts are happening on OPEC. So you could look at it one way countries in OPEC want to produce more to take advantage of the opportunity to make more money or they want to look at it as cut to raise prices because they know that regardless of what happens, the leakage from Iran and Russia, according to Stu’s favorite dark fleet, is enough to keep prices down. So I think it’s something worth were watching. We did see cash prices or cash rise a little bit. Dollar index fairly steady today. So so so that didn’t help prices. I think the only other thing that we saw drop was rig count. As of last Wednesday, they were up four, 622 from last week. So. That’s, again, a change of four rigs. And what’s interesting, rigs are always, you know, a lagging indicator for pricing. So whether this rig count is indicative of where prices were two months ago, I would agree. I would say that is true. So it’s again, interesting to see how this rig count continues to move. You know, this week I don’t expect to see an increase. I actually think, you know, I would guess we’d see a slight draw in the rig count, you know, just depending on some of the stuff. But but as that rig count against to creep up, you know, from an operator side of the interest, you can see how service prices continue to do. I know specifically some of the stuff I’m working with. You know, our natural gas fracs haven’t quite, you know, jumped in pricing yet to maybe take advantage of some of that higher nat gas pricing. I. For those listening on on podcast I use quotes because it’s not higher but you know you might be seeing a little bit better yields now though the only other interesting thing that happened today was northern oil and gas. One of our favorite non-op companies announced some bolt on acquisitions, specifically in the Northern Delaware Basin. Two different acquisitions, one in the northern Delaware Basin in Leon Eddy County, and then one small one down in in the Utica, which actually institutes their their entrance into that specific basin. That’s so, you know, for that Appalachian one, it’s pretty small. It’s only about 23,000,000 cubic feet a day. It’s about 3800 BOE at 100% gas. It’s only about 1.8 net wells, 1.7 net wells and process operators are set resources. So definitely some effective stuff there. What I think is interesting, though, is the bigger position is the agreement to purchase 23 or excuse me, 3000 net acres in Lee in Eddy County, New Mexico. And this is an interesting deal because New Northern already owns about 90% interest in these lease. Our owns interest already owns interest in 90% of these leasehold, not 90% interest. They hold interest in 90% of these leases already. So it’s more of an add on which, which means they really like what’s going on there. Curb production about 2100 BOE a day, 67% oil. I’m there on that to stream and they expect that 2024 production average about 25 BOE st. So we would love that nice slow decline asset 67% oil hops, significant growth on those assets as they continue to develop that, they see that net runway of 26.3 net undeveloped locations, which represents about 13.5 years of inventory to run through 2025 through 2030. I think is interesting is is this is in the exact region that our first deal spotlight is going to cover. It’s not this actual position. It’s another smaller non opposition, but it’s literally the exact same. It’s Eddy County, it’s those multiple benches. You got the Bone Springs one, two, three, which which are more of those carbonate plays and then you’ve got the Wolfcamp right underneath that, a lower a that kind of Wolfcamp X Y as they call it, and then the lower benches below are really interesting. So, you know, what’s interesting is we we walk you through how you get to well, what would you buy for one of these? And you know, is this going to be a good deal? No. They put a $17.1 million deposit down on it. I mean, they’re going to you know, this purchase price is 170 million in cash and 107,000 shares of common stock. I mean, it’s it’s it’s not cheap. You know, it’s about 57 million of cash flow, which represents about 2.8 to 3 times purchase price multiple. Again, you just get subjugated to really nice pricing early on in those assets. So, you know, again, I’m going to hold a little reservation on saying whether or not I think this is a good deal or not. I’d recommend checking out our deal spotlight, which is going to drop probably this week or early next week. We’ll keep you updated. You’ll able to see blasted all over social media. So you won’t miss that. But, you know, in terms of whether this deal is overpriced or not, I think I think at 2.8, you know, three multiple, it’s already a little bit high. You but you got to be pretty confident the development plans got to be pretty confident of your type curves. You know, we do like Eddy County, that strong to stream production. It’s got to be helpful. We do love that it’s weighted about 60, 67% oil, but I don’t know, it could be a little pricey. You have to tune in to the deal spotlight to check that out. But actually,. [00:14:08][324.7]

Michael Tanner: [00:14:08] All I’ve got today, folks, appreciate you checking this out. It’s nice solo show. We’ll get you out here early. Stay strong here on this Tuesday, back from Thanksgiving. Hope you’ve all recovered. I know I have. We’ll see. Stu and I back in the chair tomorrow and the kid is gone. But we appreciate it, guys. We’ll see you tomorrow, folks. [00:14:08][0.0][832.4]

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