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Michael Tanner: [00:00:00] Why is this happening? Some potential causes of this? Well, one, a bunch of retiring fossil fuel plants, much of the retired electricity generation is in the form of fossil fuels, which, as we all know, is the most despatchable part of our grid, which means we can fire up a new coal plant or fire up a new natural gas plant if needed. Really hard to go construct a new wind farm or lay new solar panels. [00:00:23][23.1]

Michael Tanner: [00:00:31] What’s going on? Welcome into the Monday, May 12th, 2025 edition of the Daily Energy Newsbeat stand up. Here are today’s top headlines. First up, U.S. Largest grid operator is warning of summer power outages. Oh, my goodness. Hang on for a good one there. Next up, Newsom’s war on oil could send California gas prices to $9. Analyst warns we will then jump over and quickly cover what happened in the oil and gas market, specifically covering rig count and the frat count spread. We actually did see oil prices rise a little bit and then two very interesting articles. First, Aramco profits drop with weak oil. How will this impact OPEC? And that we did see a small M&A deal Whitehawk. Minerals acquires phoenix minerals for four dollars and thirty five cents a share I will cover all that and a bag of chips guys stew is on a much-needed day off So I am rocking a solo show. Let’s go ahead and kick it off. [00:01:31][60.8]

Michael Tanner: [00:01:32] First one here US Largest grid operator is warning of summer power outage this this is crazy guys So if you’re not familiar with how the grid is set up There’s six or seven key what are called interconnections, which are basically regions okay and each year they release their reports specifically upcoming in the summer when power demand goes way up and so PJM okay one of the largest of you know supplying most basically PJM is part of the eastern interconnection so you can imagine okay you can imagine easter so you’ve got new york you’ve got all this stuff okay so this is PJM as the eastern part of Okay. And every year, multiple different annual assessments come out. Okay. This year, the North American Electric Reliability Corporation, NERC, their headline was America’s Largest Grid Operator Warns of Summer Power Outages, which actually refers to PJM’s recent warning which PJM put out in their summer 2025 outlook. So I’m going to quickly read some of the key highlights and then we’ll dive into the kind of the scary part of what they put. So first, they said forecasted peak demand. PJM expected a summer peak demand of just about 154,000 megawatts which ain’t with a potential for an all-time of more than 166,000 megawatts under certain extreme heat scenarios. Historical peak loads include about 165,563 megawattes all the way back in 2026. Last year, our peak was about 152,700 megawatte. And in 2023, it was 147,000. Megawatts. About available generation capacity is sitting at approximately 179,200 megawatths of generation capacity with about 7,900 megawat of contracted demand response resources which can be activated. Demand. This is the crazy part there. For the first time ever in PJM’s annual assessment, they brought up the risk of a shortage. They said available generation capacity may fall short of required reserves in an all-time extreme planning scenario where demand could exceed 166,000 megawatts and this reflects concerns about maintaining grid reliability. Under record heat, and this goes along with the weather prediction for this summer, hotter than normal summer conditions are forecasted, especially along the Atlantic seaboard, where PJM ends up, which could exacerbate demand and strain the grid. This is unbelievable. I mean, if you know this is coming and you can’t deal with it, that’s the part that gets me. Why is happening some potential Causes of this were, one, a bunch of retiring fossil fuel plants, much of the retired electricity generation. Is in the form of fossil fuels, which as we all know, is the most despatchable part of our grid, which means we can fire up a new coal plant or fire up new natural gas plant if needed. Really hard to go construct a new wind farm or lay new solar panels. So super, super interesting there. We’ve also seen slower than expected renewables growth. It has not been keeping pace with demand. That’s what PJ Sam, you know, basically what they said was PGM plans to issue some guidance for inverter-based resource owners to adhere to certain standards, but the challenges do remain. And we’re also just again, expected to see soaring demand due to the heat. So if heads up folks, if you’re on the East coast, many of our listeners are, it’s going to be hot and you’re going to want to make sure you have a backup generator in the house because you never know when PJM is going to start, you know, throttling your It just goes to show you the poor energy planning that our grid has. I mean, Stu and I. Pound the table day after day about this. The grid is not as reliable as we might think. And it really, really goes to show, especially when the grid operator themselves are saying this. So if you’re on the East coast, stay safe. Man, this is unbelievable. [00:05:44][252.3]

Michael Tanner: [00:05:45] Let’s jump to the next one. Newsom’s war on oil could send California gas prices to $9, analysts warn. This is unbelievable, so as we all know, refineries in California are getting shut, shut down, and now all of a sudden, local news is starting to pick up. I mean, the local ABC news affiliate in Los Angeles, not the bastion of conservative thought here, OK? So the local ABC affiliate, KABC7, reported, this is straight from the article, the Phillips 66 refinery in Los Angeles could close by the end of the year, which would send skyrocketing prices above $6, according to USC Professor Michael Misch. Again, USC not known as a bastion of conservative economic thought. Even they think gas prices are going above$ 6. Misch also added that if that Valero refinery in the Bay Area closes by the end of next year, which is according to plan. That that could send gas prices soaring close to nine dollars a gallon. They know this. They know that closing these refineries are going to drive gas prices up. Why do they do this? Who knows? This is the crazy part though. In response to this, Governor Newsom, great friend of the show, one of our favorite governors, told the spokesperson at KFMB TV that the governor has directed the state to intensify collaboration with refinerries to maintain a stable and gasoline supply. What he does not point out is where those refineries are. They’re probably not in California, and that’s the funny part. They’re just outsourcing their emissions to somebody else. Well, if it doesn’t happen in California, then I guess it’s okay. Not quite how it works. I don’t think pollution just stays in the state in which it was made, or so the theory goes. It probably floats out into the atmosphere. So if you’re truly, truly worried about emissions, why would you worry about it? It’s the whole NIMBY thing. Not in my backyard. I dont care what happens over there. Those guys should be able to do it, but it shouldn’t happen in my back yard. It’s unbelievable. CalMatters.org has actually sent out a warning. Again, CalMatter.org. Again. California. Not the bastion of conservative thought. They warned in April that the closure of two refineries will actually will again, send gasoline prices sky high. And this comes days after Newsom has already signed bills that require refiners to maintain minimum gasoline supplies. I mean, we know this. Newsom and his entire stooge of political creeps, we can call them that creeps have really been demonizing the oil industry for years. They’ve sought to ban the sale of gas powered cars in the state. They’ve also accused the industry of price gouging them. Well, when, what, what are they going to do now when gas prices rise? Well, guess what? They’re going to go back to their old bag of tricks and tell us that, oh yeah, they’re, they’re price gouching again. So, I mean, the playbook is here. The playbook here. You know, again, we saw a year ago, Breitbart releasing a story that said Newsom was going to war with the oil and gas business. Humpjacks in LA for local health problems. It’s just unbelievable. You know, here’s a quote from Newsom. They’ve been gouging. They’ve be taking advantage of you. They’re lying to you. They’ve polluted. They’re the polluted heart of the climate crisis. He, and then he also claimed that oil jobs would be replaced by clean energy jobs, yeah, all that offshore wind. Himself has no idea what’s going on. So, you know, maybe, maybe on his new fresh podcast that he’s got, he Maybe bring on some energy experts to actually talk about this stuff because clearly he doesn’t know what he’s talking about He doesn’t have anybody in his office who knows what he saw gonna and all he is out there for political point. So unbelievable. I mean, to be honest, for California’s sake, I hope they do shut these refineries down. Let’s just run an experiment and see what happens to those gas prices. Unbelievable. [00:09:38][233.0]

Michael Tanner: [00:09:39] Let us jump over to oil price now, guys. But before we do that, let us quickly pay the bills. As always, thank you for checking us out here on the world’s greatest website www.energynewsbeat.com. Stu and the team do a tremendous job making sure that website stays up to speed. Everything you need to to be the tip of the spear when it comes to the energy and the oil and gas business. Go ahead and hit that description below for all links to the timestamps, links to articles. Check us out on Substack, theenergynewsbeat.substack.com. It’s the best place to not only support the show by signing up for a paid subscription, but also a free subscription gives you access to custom articles that you can’t find anywhere else that’s due. Spending a lot of time writing highly recommend you subscribing us there It’s a great way to support the show also go ahead and subscribe to us via YouTube It’s great way. To continue to support The show if you haven’t already go check our check out Stu’s latest conversation with Doomburg and David Blackman It’s it’s been going off on YouTube highly recommend going and checking that out We appreciate everybody who is taking part in the conversation there We’d also like to thank friend of the show Reese energy consulting for supporting us and our mission guys because we love everybody over at Reese Energy Consulting. If you are in the oil and gas business and you’re in the upstream space and you are not working with a marketing company, call Reese Energy Consulting, they are going to get you. Multiple, multiple orders of magnitude cash back in your account because they are going to go negotiate with your first purchases and get you a much, much better deal. If you’re in the midstream space and you have any issues whatsoever, call them up. They are experts in all this. If you are trying to source jet fuel, if you need to, you need know if it’s a good idea to maybe build a new LNG, call our friends at Reese Energy Consulting. Tell them Energy Newsbeat sent you and they will hook it up. Thank you. Thank you, thank you. That’s reeseenergyconsulting.com. And finally, guys, it’s never too early to start thinking about your 2025 tax bill as well as diversifying your portfolio. If you are trying to become Billy Bob Thornton from Landman, I highly recommend you go to investinoil.energynewsbeat.com We have a great ebook that we have written that can talk, tell you, break down all the different ways you can invest in oil and gas. And show up to parties and be like, hey, guess what? I’m Billy Bob Thornton from Landman. I know you’ve got some cool new job, but I am Billy Bob Thorton from Landmen. That’s investinoil.energynewsbeat.com to learn how to save money on taxes, diversify your portfolio a little bit, buy a little of working interest and get yourself a nice monthly distribution. Investinoils.energy newsbeat. [00:12:15][156.2]

Michael Tanner: [00:12:16] Let’s go ahead and look at indices on Friday. I mean, pretty flat, you know, SAP 500 and Nasdaq basically flat all day after, after being fairly choppy during the week. We did see the two and 10 year yields rise by about six tenths and four tenths of a percentage point individually. Dollar index up about a 10th of a percentage point Bitcoin over $104,000 per coin. Unbelievable crude oil was was actually up on Friday and as we record this pretty late on the night, Sunday, it’s actually up as well, $61.35 Brent Oil, $63.23 Natural Gas was actually up huge on Friday, has dropped a little bit in the overnight trading session, $3.73 XOP, which is our E&P securities contract, was up 1.5 percentage points to $118.84. I mean, really the weekly gains. Have a lot to do with the China trade talk optimism that is happening right now. We also did see on Friday a trade deal get announced with the UK, and these talks that are ongoing between the US and China should be good. The quote from US President Donald Trump on Friday said that China should open its market to the US and that a, quote, 80% tariff on Chinese goods, quote, seems right, and that was mainly after the day. Here’s Alex Ajiz. He’s a oil analyst at Brokerage. Stoneaxe, quote, energy markets as bearish as they’ve been are finally shaking off some of the pessimism and catching the broader market optimism that’s showing back up as progress on trade relations begins. So basically that’s what we’re seeing right there. We’re also seeing some kind of some crazy stuff happen in the geopolitical market. We’ve got some going on in Yemen. We’ve got some interesting Pakistan India stuff. I’m Stu. What can I get Stu’s thoughts? On that tomorrow. We also did see that according to a Reuters survey, OPEC oil output edged to lower in April as production declines both in Libya, Venezuela, and Iraq outweighed actually a scheduled increase in production. So that’s You know, that’s very interesting for what we’re seeing there. [00:14:23][126.3]

Michael Tanner: [00:14:23] We did see big counts. Holy smokes. Six rigs getting shedded week over week. That’s, I mean, we’re going to the, the tumble continues. I expect to continue seeing that week over a week. [00:14:34][10.9]

Michael Tanner: [00:14:34] We didn’t see the U S a frack count spread dropped by six as well. So I mean rigs and frack rigs are coming off the table. [00:14:42][7.9]

Michael Tanner: [00:14:43] I do want to quickly cover Saudi Aramco. Their profits actually dropped as they dropped earnings with weak oil. And really the question will be, is how does this impact OPEC? So let’s go ahead and run through a couple key points. You know, net income dropped to 26 billion, which was down from 27.3 billion in Q1 of 2024. The dividends include a 21.1 billion base, which is actually up 4.2 percent, but performance. Linked dividends did fall sharply, which is pretty unbelievable. So this is, you know, mainly the reason net income is down was their average received price for Brent crude was 75, 83 compared to $83 back in Q1 of 2024 and $81 in Q one of 2023. Recent production for the quarter was 12.3 million BOE per day, which was actually down from 12.9 BOE in 2024. We also did see free cashflow for Saudi Ramco fall to 19.2 billion down from 32 billion the previous year, mainly reflecting those market pressures. They didn’t see dividend growth, which is a 4.2, as I mentioned, percent increase. The performance link dividend or what they call the PLD actually did drop to basically 200 million, basically compared to 10.8 billion in 2024. So I’m here basically talking almost a hundred percent drop. Pretty unbelievable analysts are basically pointing out the fact that, you know, it’s, I mean, it is what it is when you, when, when you’re Saudi Aramco, you’re going to have the ability to print capital. The question is, where’s those dividends going back to the Saudi Arabian government coming from and the kingdom there, obviously they’re keeping their dividend high, but that PLD drops substantially. So again, it goes to show you that when prices go down, it’s a tough business. It’s only going to get harder for them. I mean they still receive $75 in Q1. For net backs on their oil. That number is going to be definitely a lot lower in in Q2. And I think everybody will be watching that. Finally, we did see a little bit of an M&A deal. [00:16:44][121.5]

Michael Tanner: [00:16:45] White Hawk Minerals acquires Phoenix Mineralls for $4.35 per share, basically adds about 1.8 million gross acres of specified natural gas royalties. This $4 and 35 cents cash per share actually reflects, reflects about a 21 point. 8% premium to Phoenix’s closing share price as of yesterday when this is announced on May 8th, you know, Phoenix’s is pretty much exclusively Haynesville and a little bit of Scoop stack. So you can imagine that the main reason this was done was because Whitehawk is bullish on the fact that natural gas is going to continue to rise. I mean, as I mentioned here in the in the In the price segment, $3.73 for natural gas that might only continue to rise and especially on the royalty side, who knows how much of these, and this is the interesting part, how much these royalties are cost-free royalties, which means you just get the pure, pure price of the commodity, not when you include netbacks on the thing. And that’s one thing to know. If you’re ever… In the business of buying minerals, there’s this concept of what’s called a cost-free royalty, which means I don’t bear any of your transportation costs. I don’ bear any your shrinkage costs. I get gross numbers that come out of the wellhead at the daily market price or whatever that agreed upon 30-day averages. So it’s very interesting to look there. I’ll read one quote here from Daniel Hertz. He’s the CEO and Chairman of Whitehawk. This acquisition of Phoenix is a significant milestone the more than doubles our gross acre footprint. And producing natural gas wells in highly established basins with some of the country’s largest natural gas producers. This Phoenix acquisition will allow us to expand our presence in core Haynesville shale and enter the scoop stack as well. Combine that with our current 1.35 million gross acres in the core of the Marcellus in Haynesvilles. We have meaningful exposure to top natural gas bases in the United States. Phoenix assets are also underpinned by 6,500 producing wells and significant undeveloped inventory that will increase and diversify our cash flows. While proving providing potential upside. This transaction reflects are starting to grow with assets that provide cash flow with no capital expenditures outside of purchasing this company. The answer is yes. So, hey, this is, uh, I think this is a good deal. If you’re bullish on natural gas, if you want to diversify, this is great way to do this. So hats off to both those guys. We’re getting an M&A deal done. You know, we may not see that many of those with where price is at. So hats to these guys. [00:19:11][146.4]

Michael Tanner: [00:19:12] It’s going to be a long week, folks. We’ve got a great. Lined up though, we’ve got out of town board members in town, which is great. Tuesday, if you’re in the Dallas Fort Worth area, where you’re going to be hosting a happy hour, free Dug kickoff. So if you were in town for Super Dug and you’re there Tuesday, hit me up, whether it’s on LinkedIn or such, I will get you the registration details and we’re supporting a great cause red M. We’ll be out in the field on Wednesday. So, you know, be a little, uh, businessman and a hard hat. We love that guys and all sorts of stuff. So we got a lot of great stuff going on. Stu and I will be back in the chair tomorrow to break everything down. We’ll have to get an idea on oil slick news from here guys, but I appreciate you guys hanging with me and starting your week with energy news. Be, I’m going to let you get out of here though for Stuart Turley. I’m Michael Tanner. We will see you guys tomorrow. [00:19:12][0.0][1138.4]