The Impact of the Chevron Supreme Court Decision

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China Surpasses Europe in Per Capita Energy Consumption

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Michael Tanner: [00:00:14] What’s going on, everybody? Welcome into the July 1st, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up China surpasses Europe per capita in energy consumption. Shocker their next top status of U.S. dollar as global reserve currency. Central banks diversify from USD assets to other currencies and to gold. Next up mining the planet for renewable energy. Love a good play on words there. Next up, bipartisan consensus in favor of renewable power is ending. And finally will end with Supreme Court overturns controversial Chevron decision curtailing federal agencies power in a major shift. Stu, Then toss it all to me. I will quickly cover what happened in the oil and gas markets mainly cover the the oil price dropping relative to expectations on Friday. We’ll also look at rig counts. Another big drop there. We did also on Friday see a pretty great ENP consolidation. Same energy buying XL or excl. Resources. Also a little bit of a non-pro in there with northern oil and gas. A really, really awesome transaction. To be honest with you. The stuff I’ve been reading about it recently has actually it looks pretty good, so we will cover that. We also then we’ll finish up with the Dallas Fed survey. A lot of interesting quotes in there that got released on Wednesday that we need to cover. So we will get to all of that. And a bag of chips guys. As always I am Michael Tanner, joined by Stuart Turley. What do you want to begin? [00:01:48][93.7]

Stuart Turley: [00:01:48] Hey, let’s start with everybody’s order in China. You can’t buy this kind of entertainment, Michael. China surpasses Europe in per capita energy consumption. Whoa. This is out of the article. China has changed in the energy world, but now China is changing. The International Energy Agency, the IEA, the IEA reported in their 2030 flagship World Outlook, the second largest economy in the world is saturated its own market after years of building roads and buildings and other infrastructure as fast as it possibly could. The vast Chinese domestic market is finally about tap. Here’s where it gets really, really crazy is the fact that the de-industrialization of the Europe, because they have gone to renewables, has really impacted this number. So it’s not just a oh, by the way, China is increasing the per capita of energy use. It is because Germany is industrializing because of their energy policies. Here’s again a line in here that just really will whack you upside the head. Quote we cannot we should not ignore the energy and emissions that the Europeans have effectively exported to Chinese manufacturers, Energy Institute Chief Executive officer Nick Wyeth recently told Bloomberg. If a decline in energy consumption and emissions in Europe simply boosts carbon output somewhere else, policies to tackle global climate change aren’t working well. You know what? All of the manufacturing of the pollutants for wind and solar are made in China. They’re increasing all of the profits, and then they’re using that to build their their standard of living and everything else. This is just a scam as the whole thing. [00:03:40][111.6]

Michael Tanner: [00:03:40] Well, I mean, again, as I said, shocker here, China is starting to use more energy. I mean, when you have population that’s increasing like China has, you know, obviously we know they they’ve dropped a little bit off what they were doing back when they had the one, the one child policy. But relative to what Europe Europe is flatlining when it comes to policy. So this is just a matter of population. I do think this comes down to, you know, now why China is just getting as much energy as possible, why they’re going back to coal. That’s why they’re diving headfirst into all this stuff. It’s because they know their energy demand is going to be going through the roof. [00:04:13][32.3]

Stuart Turley: [00:04:13] And they are still stockpiling oil and natural gas and natural gas, LNG, and they have new pipeline contracts and all that is a precursor to war. So let’s go. [00:04:24][11.3]

Michael Tanner: [00:04:25] On. Stop. What’s next? [00:04:26][1.0]

Stuart Turley: [00:04:26] Let’s go to the status of the U.S. global reserve currency. Central banks diversify from USD assets to other currencies into gold. I got I got to love it for Wolff richer in Wall Street. He does such a great job. Everybody run out there. We’ve got the link in the in the article there. He does a great job breaking this out. He says the U.S. dollar is still the most dominant global reserve. But there are several different charts. And if we look from 2015, we were at 66% of global reserve currencies. And they see that we’re now down to 59% ballpark in that area. Holy smokes. That’s a heck of a decline in 2020 for. Since 2015. [00:05:12][45.9]

Michael Tanner: [00:05:14] It really is. And we’ve seen all of this oil now being trading in other currencies other than the dollar. And we know oil is the main reason why the dollar has been as valuable as it is. Yes, I think these numbers are crazy. I think we’ve also seen with Russia and how the sanctions on Russia haven’t really worked. And I think people are kind of. And when I mean people, I think some of these central banks are thinking, wow, wait a second here. [00:05:40][26.8]

Stuart Turley: [00:05:41] What are we doing? [00:05:41][0.4]

Michael Tanner: [00:05:42] Why why would I. [00:05:43][0.9]

Stuart Turley: [00:05:43] Why would you want to put your money with the U.S.? I don’t know, but the there are some fantastic charts in here. And the rise of gold is a central bank reserve asset. Gold bullion is not included in the foreign exchange reserves of banks and all of the data above, but gold bullion holdings in the overall reserve asset of banks are, after spending decades on their own holdings have been rebuilding them, especially China and Russia. And it’s because that’s going to be backing BRICs. [00:06:15][31.5]

Michael Tanner: [00:06:15] So we know BRICs is coming. We know it’s the BRICs dollar. We got it. [00:06:19][3.5]

Stuart Turley: [00:06:19] Hey, let’s go to the next article. Oh, let’s go to the next article. I just thought I’d get my arm up. Your arm. Mining the planet for renewable energy. I’ll tell you. In control over energy, the lifeblood of our civilization, jobs, health and prosperity. Will America shut down coal, gas, nuclear, electrical generation before assets sufficient, reliable replacements. Will we have electricity when we need it or only when it’s available? Oh, can you imagine if you had to just sit there and think that you’re going to watch a TV show, maybe one hour a day? Yeah, I’m just saying, you think about in your fur coat there in your apartment with no AC except for 15 minutes a day. [00:07:02][43.1]

Michael Tanner: [00:07:03] It would be horrible, I would die. [00:07:04][1.5]

Stuart Turley: [00:07:05] Oh it is. And so the IEA says its projections are highly dependent on how quickly and stringently the world actually tries to reach zero greenhouse gas emissions in order to power generate all energy uses. I think net zero is dumb. I have to hand it to. I swear Fetterman had to have died, and then they rolled in a body double because that man’s brilliant now. And he said, it’s not about the Green New Deal, it’s about pollution. Arnold Schwarzenegger also said the same thing. Arnold is now on. It’s about pollution. Whoa. I about fell out of my chair. It’s about pollution, folks. It’s not about greenhouse gases. [00:07:52][46.7]

Michael Tanner: [00:07:52] No, it really is. Well, it’s about taking back control a little bit from who currently has it right now. You know, very interesting. I mean, as we get closer and closer to the election, things are going to start getting a lot more intertwined. You’re going to start seeing a lot more of these think pieces. A great article from Paul Driessen kind of overview and the whole thing. But as we get closer and closer to this election, things are, as you said, it’s going to get creepier. [00:08:15][22.3]

Stuart Turley: [00:08:15] The biggest win in energy project the U.S. will soon blanket 1600mi², 1.2 times the size size of Delaware in New Mexico to generate 3500MW about 30% of the year. Oh, what crazy. Look. Only 30% of the year. Only there. The Palo Verde Nuclear plant in Arizona generates 4200 from six square miles, 24 by seven. Holy smokes. What a waste. [00:08:47][31.6]

Michael Tanner: [00:08:48] It’s. We’ve been saying it for years. What a waste. [00:08:50][2.2]

Stuart Turley: [00:08:51] What a waste, a bipartisan consensus. Let’s go to the next story. A bipartisan consensus in favor of renewable power is ending. I think people are starting to wake up and growing. Partizan divide in support of the expanding wind, solar power. The US percent of who are in favor of wind power is not looking good. [00:09:13][22.2]

Michael Tanner: [00:09:13] No, I mean, it’s I mean, let’s just be honest here, guys. If you look at the charts, if you want to put that chart up here growing Partizan divide, you can see it. Exactly. I mean, Republicans have dropped all the way from 16 from 87% down to 64%, wind power from 80% down to 56%. But, you know, lean Democrat things are fairly flat. So if you forecast and see these trends going differently, it’s going to become one of the major issues. Exactly 2024 election cycle, the difference in what we do with energy. We saw Trump in the debate on Thursday. He said, drill, baby, drill. In no lesser terms. We didn’t hear much from Biden, though. I think we can already know kind of where he stands or where his team stands, per se. So, you know, this is going to become a choke point as we continue to move closer and closer, as I mentioned, to this 2024 election. [00:10:02][48.3]

Stuart Turley: [00:10:02] And that really ties in this whole thread ties into, together with the Supreme Court, this last article, Michael, Supreme Court overturned Chevron. In curtailing federal agencies in major power shift and the Chevron decision. This is an amazing 80 years story of overreach by our government. This is a total ability for the next administration to clean out the deep state in many ways. How the the chevron the Megan Lamb with sea freeze fisheries is going to be on David Blackman’s energy question on July 3rd, and I had the chance to interview her a little while ago as well. The Chevron decision was about the overreach of the government forcing inspectors on boats, and they were having to pay their salaries, their health insurance and everything else. And it was coming around to that $700 a day on a small boat. That’s a lot of money for a small family boat. That was overreaching. So the decision basically says if the law is poorly written, Michael, it used the the the decision was when you filed under this defense, you had to say, well, then it all defaults or all ties go to the state. I go to the federal government. And that means that you really had to go all the way to the Supreme Court every time you wanted to fight this for the government. Now, an appellate court can solve the problem. This is huge for the consumers because now the appellate courts can do it. So man, vote for your local judges. [00:11:55][112.8]

Michael Tanner: [00:11:56] Yeah, that’s that’s the big thing I was going to say. I think you guys, David Blackmon did a great, great job on the three podcasters breaking this all down. So I I’ve got really not much to add is yes, local politicians are and specifically local judges are going to be critical if you care about this type stuff because it’s that’s exactly it’s what the Supreme Court said. Kick it back down. We don’t have to rule on this stuff now. [00:12:19][22.5]

Stuart Turley: [00:12:19] Oh, absolutely. And and so we are recording this on a Sunday evening and we don’t know, you know, the fallout from that debate is still going to be seen. Because if Biden if Joe Biden still wants to him to run, is going to be, you know, is he going to be asked to step down? Is she want to even say yes? Who is going to step in? Is it going to be Michelle Obama? Is it going to be Hillary? Is it going to be Gavin Newsom? How are they going to pay off? You know, but all that, all of this is just in the in the up in the air about energy policies, Michael, this is the biggest impact of energy policies I have ever seen and then elect. [00:13:04][44.4]

Michael Tanner: [00:13:04] Well, because the problem with having government agencies create policy is every four years you get a new agency and every four years you get a new, you get a new direction, you get a new change. And it really is hard to plan it. One thing we’re going to talk about when we get to the Dallas Fed survey. But but no,. [00:13:20][15.6]

Michael Tanner: [00:13:20] Let’s go ahead and pop over and and cover oil and gas prices. Before we do that guys, we got to pay the bills. As always check us out. www.Energynewsbeat.com. The best place for all your energy and oil and gas news. 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 in the oil and gas business, hit the description for all of the links to the articles we covered. You can also check us out on Substack, the EnergyNewsbeatsubstack.com, check us out there and you can also check us out. Dashboard.energynewsbeat.com. Go ahead and give us a subscribe over at Substack we’re running as you listen to this guys on Monday morning. We actually are recording this Sunday afternoon. Meaning if you go to our Substack, you can hear tomorrow’s news today thrown right into your inbox. Go check us out there again guys. Energynewsbeatsubstack.com. [00:14:10][50.1]

Michael Tanner: [00:14:12] You know prices on Friday move week relative to what people were expecting. We saw us fuel demand drop a little bit. We did see hedge funds take a little bit of profit off the table and cut their long positions. But overall S&P 500 was down about a 4/10 of a percentage point. Nasdaq dropped about half a percentage point ten year yields up only about one percentage point. Or excuse me two year yields. We’ll have one percentage point ten year up 2.7. Percentage point dollar index down about a 10th of a percentage point. We have we see Bitcoin now trading up two percentage point $62,000. Crude oil down about a quarter of a percentage point 50 8154 a Brant down 1.5 percentage points 8527. We saw natural gas tumble about three percentage points, $2.68, mainly from a crude oil standpoint. We did see U.S. gasoline demand fall via the EIA. We did see personal consumption inflation in line with forecasts. We also did see if we can go ahead and throw this up. Miss producer rig counts. Another seven off rig count, so pennies continue to shed rigs as we get closer and closer to this election. I think a lot of people are worried about what’s going to happen. I think as we’re going to see in the Dallas Fed survey, there is there’s a very interesting subplot going on right now in the oil and gas business relative to this election. Nonetheless, though, Canada saw ten rigs up and internationally we saw 25 rigs drop. You know, the other finance piece before we get into the Dallas Fed survey is SM energy. They go ahead and announce a $2.55 billion acquisition of X Sea Resources, the Uinta Basin. Gotta love some Utah Illinois gas love. They go ahead and buy Xcel Resources, which again is a private company backed by end cap and rice investment groups and caps having a having a good year and a half with sales relative net purchase price to though was only about $2.04 billion. Because what happened at the same time was northern oil and gas comes in and swoops 20% of the acquisition for about $510 million for a even as I mentioned it, 20% XL or SM gets 80% of the assets. There’s some really interesting stuff here. I had, you know, the U. And the basin has been something I think everybody now is, you know, with this acquisition, people are saying, oh, I’ve known about this for so long and most people aren’t really paying it that much attention to the Uinta Basin. But some of the some of the numbers here are quite fascinating. We’ll get to a little bit. We’ll get to an overview of some of the reserves there in a second. But let’s just go over some highlights here. It’s 30,000 net acres, 199% operated. It’s about 43,000 barrels of oil a day, which 88% of that is crude oil, which is absolutely unbelievable and brings Sam’s net production to somewhere around 195,000 boe a day. They claim they get about 390 net locations to throw in their inventory. Might be interesting about a $50 per boe cash production margin, which is absolutely. Which is pretty interesting. And again, about 107 million boe of luminary reserves, which increase their net reserves by about 18%. I’m deal gets in at about 2.9 adjusted EBITDA. You know we see the word of creative about 45 times in this presentation. So good for them really gets them into a different different basin. So I want to throw this up here. So I mean again do you went to basin is something that’s that’s a little bit more off the radar. I don’t think many people are spending that much time, you know, analyzing what’s going on in the into the the interesting part is there has been some data that has come out in, in, you know, recently, obviously since this acquisition. And I want to throw this chart up here. This is from Ted Cross. He’s over there at Novi Labs. We love them. They do a lot of good data work over there. But basically what he’s what he’s showing here and what he says is that he has heard from people in the business, specifically with some of their clients that they have that are in the Uinta. They’re calling it a mini Delaware Basin, aka extremely overpressure. And I’m just reading from his tweet extremely over pressured stack pay. And it’s much, much in it’s deep in that window of overpressure which means you’re getting absolutely great. Hopefully production returns. Look at this right now. These excl. Wells are doing about 30% higher on a cumulative oil or foot basis. And S.M is already doing at in the core of the Delaware and Midland Basin right now. That’s interesting. All of a sudden, these new wells and these are wells that have been drilled just since 2021. So we’re looking at apples to apples here. Pretty unbelievable. And if you look these average you into wells are outperforming both Permian and Williston Basin on an average basis by a significant margin by somewhere around 20,000 overall barrels of recoverable oil, which is pretty unbelievable. Only one outlier, which is also crazy. You have an absolutely tight, tight stacked overlay of statistics there. Really, really interesting acquisition by Sam. The only downside I would say is the synergies. You notice they’re not touting synergies in this. There is none. They’re not in the you in the basin. So if you’re if you work at Excel you’ll probably keep your job. Thank goodness there because you are the synergies you’re going to have to keep producing this asset. You’re just going now be part of a bigger company. Increases. As I mentioned, you know, this represents about 11 or about where would they have it in here I don’t know what is is oh yeah. This is about I would say about 25 ish percent of increase in overall, daily oil production. So it does represent a significant chunk there. But SL but Sam energy goes ahead and dive in there. Let’s move over here to shale executive C merger squeezing U.S. oil and gas production via the Dallas Fed survey. Love this guys I want to pull out some specific quotes. So just as a reminder guys Dallas Fed survey comes out with or the Dallas Fed comes out with an energy survey every quarter. And it’s a great barometer on where companies are sitting at. Obviously it’s all anonymous. So they do actually be pretty honest with you. There’s a bunch of interesting stuff they got pointed out. One of the big quotes was. Consolidation by and ENP firms has curtailed investment in exploration. The last few years of M&A have decreased activity in the Oilpatch. About 48% expect slightly lower output and another 6% C significantly lower production. And this leads into some very interesting stuff. So I mean you can go read the link. There’s a bunch of kind of like overall statistics. What I love to do is go read the comments from the survey responders. They let you leave anonymous surveys. So super interesting stew. Here’s here’s some that here’s one. That first one that jumped out to me. Potential financial assurance bonding requirements are a concern for our business. Interesting. So now we’re talking about the whole liability side of these, you know, orphaned wells. At least somebody is worried about them. I think the problem is it’s probably not a large corporation because they’re the ones shipping it off. Permitting and bureaucratic or political roadblocks are the greatest impairments to our business. Currently, operating expenses continue to escalate in the lack of ability to explore and experience people is a real challenge. Super interesting electricity costs are increasing and will continue to increase due to the decreased field combustion and methane emissions. Very interesting overregulation of our industry by the federal government is hurting our economy. Interesting. And this is the one that I found interesting. Candidate Trump has promised lower price of oil. He may seek the help of Saudi Arabia to do this. If so, I expect a lower oil price and another recession in the US oil patch. And this brings up what I think is an interesting thread going on right now. Obviously, everybody in the oil, it doesn’t take a political genius to figure out that everybody in the oil and gas business. [00:21:43][450.4]

Stuart Turley: [00:21:43] Would prefer. [00:21:43][0.3]

Michael Tanner: [00:21:45] Former President Trump versus President Joe Biden in this next four years. But really, is that the case? We know what happened to prices during Trump. There was a downturn in a recession within the oil and gas business for the four years President Trump was in office. There’s no two ways to look about it. Yes, we had lower prices at the pump, which is great for the economy, but the oil business in general did not do well. And I think that is secretly what a lot of I think secretly, if you put a gun to the head of a lot of and that’s a bad term to me, but let’s just but if you had a choice of an oil and gas recession or higher prices and you make a lot of money, I guarantee you there’s a lot of oil and gas leaders and private equity companies in private back companies and public companies that secretly would love Joe Biden to get elected because they know that prices would continue to stay in the $80, $40 oil does nothing for the oil and gas business. It barely keeps the lights on. They’re already talking about an another one that we can’t find experience work. Well, that’s for field hands, which is a whole nother, you know, story. We’ve been driving people out of the trades for years and giving people no love for going to work out in the field. Of course, you’re not going to find new people to work out in the field that you tell them you work out in the field. You’re an idiot. I mean, it doesn’t take a sense to do that, but then you have I mean, the white collar side of the business gets absolutely crashed during an oil and gas recession. That’s who takes it in the short. So. Right. I think it’s super interesting. I think, you know, obviously people the regular regulatory environment sucks. I was mentioned multiple times in this. But I think people are secretly would it would it be secretly terribly sad if Trump lost, if only because they now know that prices are going to be high? You can’t say it’s not true. [00:23:24][99.6]

Stuart Turley: [00:23:25] Therefore, I’m not saying it’s not true. I just disagree with the fact that I think that this time will be different as far as how low the prices will go under a Trump administration, because the demand for oil around the world is going to remain strong because of the renewable energy slash change, it’s going to remain strong. So even under a Republican or Democrat this time, things are different. On a global perspective. [00:23:55][30.4]

Michael Tanner: [00:23:56] Yeah, I mean, I can understand why you I can understand that thinking. And I actually probably agree with that. But I think you have to. You mean you. [00:24:04][8.1]

Stuart Turley: [00:24:04] Oh it’s there. Well, I as so many of my friends make more money when the Democrats are in power, stripping it away from the consumers. [00:24:12][8.1]

Michael Tanner: [00:24:13] Prices were oil prices were like 45, $50 on average when Trump was in office. Ain’t nobody makes money in that time. So it’s again, I’m with you. I think oil, low oil and gas prices helps the overall economy. But there is this I and I’m more talking about the interesting thread that we’re going to see, we’re going to see coming up here because I think it’s it’s it’s Uber’s I mean Trump said it in the debate drill baby drill. And I think people want that. But it’s hard to drill when you cause you know your break even $70 true break even. No, no. Listen to these press releases. True break evens at $70 and prices are at 50. [00:24:45][31.3]

Stuart Turley: [00:24:45] Well, the supply chain has changed the drilling costs. [00:24:47][2.0]

Michael Tanner: [00:24:48] Yeah, they’ve gone way up two. [00:24:49][1.0]

Stuart Turley: [00:24:49] Absolutely. That’s absolutely I mean, you can’t go by old supply chain numbers. Oh, steel’s more expensive. Everything is more expensive. So a Biden hit the supply chain and it did. [00:25:01][11.2]

Michael Tanner: [00:25:01] All right. What what else. What should people be worried about this weekend do. [00:25:04][2.6]

Stuart Turley: [00:25:04] Well, I tell you, I just keep an eye out and your head on a swivel and let’s see, I don’t know if the Democrats if. Who? They’re going to run and they’re in a pickle. The thing that really makes me the saddest is the fact that it is now out in the open. Putin presidency rocket man. You know, the head of the North Korea. They’ve all seen that the our president is not capable of running this country. Yeah. What is going to happen in the next few months with this. [00:25:37][32.8]

Michael Tanner: [00:25:37] Yeah. Who knows guys. But with that we’re going to let you get out of here, get back to work and start your day. We appreciate you checking us out here on the World’s Greatest Energy podcast for Stuart Turley and Michael Tanner. See you tomorrow, folks. [00:25:37][0.0][1499.9]

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