Big Digital Energy

0:00 Hey, everybody, Clyde, happy New Year. On January the 8th, is it within the Larry David rules rules of happy. Jacob, pull up the Larry David rules and see whether we violated him or not. Did

0:14 you know, priest Patrick after he would give the Oh, January three days. That's the absolute. So we have violated the Larry David rule Some people in that episode said you could go a week. I feel

0:27 like I feel like you can go a couple of weeks. Yeah, you know, particularly kind of like the first time you see someone. The, uh, did you know this? Uh, priest Patrick, you know, gives the,

0:44 gives the sermon. And then always does kind of the announcements of what's going on in the church. And he always said he needed walk up music for that. So the band used to play the curb your

0:55 enthusiasm theme song for him to walk up What is the name of that song? I do not know. Frolic. Frolic, yeah. There we go. Well, welcome Clyde. I think today it will be kind of year in review

1:09 scorecard.

1:11 Holy crap, what's going on in Venezuela type stuff. So Mark, where do you want to kick us off? Let's take a look at the one year chart of WTI prices. And this actually surprised me when we were

1:24 looking at this this morning. I mean, I guess I have lived this this year, but came into the year at 70. And I would have sworn we were at 60, but maybe I didn't start paying attention until

1:37 April, kind of when we were flirting around with the 50s. And so that first air pocket was on the heels of something we talked about right after the administration was inaugurated, or Trump was

1:50 inaugurated, his investment swing to the Middle East, where we conjectured that there might be some. some other off the program meetings with OPEC leadership. I still stand by that conjecture and

2:07 we had a big acceleration of the cut restoration. And then we end the year or begin this year with another move that has got at least a lot of headline pressure on crude prices. But at this point

2:21 last year, did many MPs think they were gonna be budgeting on a five handle? I don't think so The, I felt like coming into the year, there was what I will say is kind of false optimism. Just, I

2:38 mean, you heard me say it on the podcast and I think you kind of agreed with me and Kirk agreed with me that Trump's just a low oil price guy. We've been saying that for years. You know, yeah,

2:49 that, I mean, at his core, that's what he is. And I actually think we were pretty good in terms of telling the industry, He'll let us do anything we want. So go ask for it. I guess somebody

3:00 wised up and said, give us Venezuela, you know, like, but, well, and 25 and 26 for the administration politically has been next chart, Jacob, the Arbob gasoline. Nope, there you go. We now

3:15 have174 or thereabouts for,

3:26 for current wholesale gasoline prices in the US. And I've argued for a long time, despite the fact that gasoline prices are on an inflation adjusted basis, significantly reasonable, if not down

3:40 from where they were 20 years ago, this still matters because it's so evident in - It's the only real weekly scorecard that the vast - The vast majority of the electorate sees it every day. I mean,

3:56 you drive past the gas station. I did see something, I have a time to take a look at it, and it was this continuum of political pain that Rory Johnston tweeted out, commodity context guru, who's

4:11 also been in the hot seat, really digging in on this negative Canadian reaction to what the Venezuelan action implies But I do think this stuff matters in terms of leading up to the midterms, which

4:30 happened in November, in that we've got points on the scoreboard that are familiar and visible to everyone. Yeah, I'm paying closer to two bucks than I am to three, at least if you're in Texas. I

4:44 mean, I've filled up the other day for 217. You know, the Dan Pickering test on this and what we potentially ought to do.

4:56 again because when gasoline prices were peaking a few years ago, we went around and we just bought people gas. And the damn pickering test was, how often when you pull up to a gas station, are the

5:10 gas pumps on a fixed number, like15 instead of

5:17 filling up, right? And I think Dan was on to something that back when you had higher gasoline prices, you saw a lot of15, 10, 20 instead of fill-ups. And we ought to do some due diligence. And

5:33 next time you get gasoline, see how many pumps were fill-ups versus a fixed dollar amount. For a specific fixed dollar amount, yep. And so, you know, the other side of this from, you know, the

5:46 supply element that everybody focuses on. We've US. oil production. We've had, you know,

5:55 I think level of resilience. And we got one comment here a few minutes ago

6:03 talking aboutclears throat

6:07 if I can find it.

6:10 If you've got

6:15 it. So basically, we must talk about the disconnect between the EIA is reporting in the actual numbers coming out of the Texas Railroad Commission. There's no way we're producing more oil now than

6:29 ever. Granted, October 2024 was the largest month. But since then, it has been in steady decline. This needs to be exposed. Everything else is a moot point. This should be front and center.

6:43 Yeah. And if you take, if you've put up the Fraxbread graph here, this is oilpricecom. You look at the last year's trend in Fraxbreads, we've got an early surge running loaded budgets,

7:01 completing some wells that They've been drilled at the tail end of70

7:07 oil, and that's a pretty big drop over the course of the year. Yeah, we've seen a pretty significant and commensurate drop in rig count. But if you look at the EIA data in the last half of last

7:24 year, the production data, you've seen, you know, we captured kind of a 136. We're now trending for the last several months at 138. It is a head scratcher, because there's a lot of loud voices

7:42 that are much more

7:45 directly on the ground seeing what's going on And is there something in the EIA is reporting that is perhaps being influenced by the, you the administration's narrative of we're gonna, we want lower

8:03 oil prices. Is that,

8:09 I don't particularly believe that we've been able to hang in and had a last kind of push above that 135, 136 million barrels a day. All of a sudden we're kind of hanging in there at 138 million

8:23 barrels a day. How does? I will give a benefit of the doubt just 'cause, I mean, it was about 2018 where you used to be able to tell me, here's the rig count. I'll tell you what production is

8:39 gonna do in six months. You know, I can do that math in my head and it just disconnected there and it was 'cause these wells kept getting better and better. And I think you and I've talked about

8:51 this. If you actually look at well improvements, it continued in like '18 and '19, but that was actually -

8:59 Well, it was Exxon and Chevron starting to drill in the Permian 'cause they were late-comers. So they showed up at the best rock and started having best practices 'cause they'd watched everybody

9:10 else. Took 'em a few reps to get there. But, you know, and so while I saw our portfolio kind of peeking in terms of well-efficiency, the overall industry kept going up 'cause Chevron and Exxon

9:25 show up. So I haven't been able to do that math in my head ever since then. I'm willing to say a little bit in the way of improvements 'cause every time you go talk to a CEO, they will even say

9:38 over the last three to six months we've gotten better, you know? We're tweaking this, we're tweaking that. It's getting better. You know, it's four mile laterals now, it's horseshoe laterals

9:49 now. We're seeing, you know, good performance from that And

9:55 so. I'm willing to go, okay, we've dropped Bratzblades, but we're staying flat. Some of that's performance. But at some of it's timing - To your point, some of it's timing. To some of it's

10:06 timing. But at, to your point, this has got to give. At a fundamental level, it feels like it's got to give. It's got to give, yeah. And the thing that's looming out there is that, and if you

10:20 watch the

10:22 news flow over the weekend, post the capture of a Maduro, there were a lot of technical experts coming out of the social media would work. And I think in the mainstream, there's this notion that,

10:37 and good on them for playing it, it's another kind of narrative or headline lid on what Trump wants to deliver on, which is lower oil prices, lower gasoline prices. The fundamentals seemingly are

10:54 more disconnected then they've been in a while. in terms of inventories, in terms of, you know, Frank spreads and the resilience of production. And the notion that, you know, a few hundred

11:06 thousand barrels a day in Venezuela ultimately turns back into early 2000s, three million barrels a day, you know, where we were taking on the Gulf Coast in terms of imports from Venezuela,

11:20 upwards of two million barrels a day that went to zero in the mid 2010s, and we're starting to creep some of that back, but it's, it's inconsequential to the, you know, the heavies that are

11:33 coming down from Canada, we import a lot from Canada. But on a global basis, if there is a lurking fundamental supply deficit or tightness, the notion that the Permian which played that gap filler

11:50 when we had demand growth over the last 10 or 15 years, You know, I just don't think that's going to be there.

11:59 So what are we missing? Not at these prices. Right, not at these prices. Which then again, just forget about all the other, maybe this becomes a special circumstance in Venezuela, which means,

12:12 I saw some headlines this morning, US oil companies are going to need some guarantees

12:18 for Venezuela, for the types of capital and certainly the security situation, the political situation commercially So is there going to be a hard pivot in your portfolio allocation, your capital

12:33 allocation to Venezuela just because things have been cleaned up a little bit in terms of getting Maduro out? I, it just certainly just doesn't happen that fast. And day for sale and I did a deeper

12:45 dive on Venezuela yesterday. Some of it, you know, the bulk of it technical, but some of it talking about the market and geopolitics and how companies are - are ultimately going to be thinking

12:58 about this. I mean, I grew, I live in a small Texas town named Richmond and they still celebrate expropriation day down there. So when the Mexican government took over the oil fields and kicked

13:17 the Western companies out. So I do think it's a real thing. And if I were sitting on the board of Exxon or BP, or any of these big guys,

13:30 diamondback for that matter that may be, and I don't have any insider information there, I'm just guessing. But going into Venezuela, I would make sure the capital I'm risking is stuff that could

13:43 go to zero. I would not be betting my company on this. Or if you're an OFS company, it floats and some of it's on wheels. Yeah. You can get out quickly. Yeah, exactly. Yeah, and Exxon has

13:56 been nationalized or expropriated twice. And Darren Woods made some comments, I forget the forum back in November, alluding to that and thinking about kind of a third bite at the apple. It's not a

14:13 decision that a conical Phillips or an Exxon is going to make with any kind of speed There's a lot of

14:24 framework to be constructed. I think they mean it when they say some kind of unprecedented guarantee. But this provides tremendous jaw boning type of leverage to the Trump administration because

14:41 most people understand kind of the unique aspects in the timeline. It's going to take to add meaningful production and export capacity back to Venezuela I mean, the Gulf Coast refining complex is,

14:53 is. perfectly designed for it. Spent billions of dollars in capital back in the early 2000s because all of the growth going forward at that time, pre-shale was going to be heavy sour, right? And

15:06 so. And every day a refiner doesn't have to spend a dollar on CapEx, that's a good freaking day for a refiner. And now we import three

15:16 to four million barrels a day from Canada from about half that 10, 15 years ago Yeah, so yeah, it's an interesting thing.

15:28 The one thing I want to touch on this kind of year in review, Jacob. Can I do this real quick just before we leave this and get on the soapbox? 'Cause I've been spending too much time on Facebook

15:40 with high school friends and all. So I'm going to look into the camera. If you want to get on social media and say, Oh, this is all about oil. I will say the same thing to you when you tell me

15:54 that oil is destroying the planet, destroying the climate and they're evil and all that. Why don't you just fucking stop using it? All right, just don't use oil. You can put all the oil companies

16:10 out of business if you'll stop using it. And until you do that, quit populating my Facebook feeds with dumb shit messages like, Oh, it's all about the oil, sorry. Well, there's another solution

16:25 to your angst, which is just

16:30 shut down Facebook. Yeah, just don't go on Facebook. That would be way too adult. So, Jacob, put up the XOP chart, if you would.

16:41 Put it on the one-year toggle there and at the top of the graph, one day Yeah, down to one year. Yep,

16:52 this is the EP and OFS heavy, mostly EP heavy. I don't know what they're - It's been a relative - I don't know what's flatter this year than I thought. It's been a boring year for the equities.

17:04 Yeah. And I think, you know, because there has with a few exceptions been a follow through on discipline that's been promised, you know, we don't need to be aggressive with adding capital to as

17:19 opposed to taking capital back. I mean, if you think about last quarter, I think it's happened a couple of quarters. Matador has come out with a pretty aggressive message and the stock's been

17:30 punished pretty severely. So it's gonna be interesting to see coming into Q1 or Q4 reporting

17:40 and the outlooks in this upcoming earnings season starts late and it seems to just bleed into Q1 reporting.

17:49 We seem to start in late January and go almost to what feels like May, but anyway, the budgeting with, I think a

17:58 slightly to significantly different price deck planning basis for 26 is going to be something interesting to follow. But the equities were surprisingly boring if you use the XOP as a proxy. And

18:12 what's the, is the dividend maybe three percent on that? It's a little under three, I think it's like 27 Yeah, yeah. All right, I got one text. Can you say that louder for those in the back of

18:25 their room?

18:27 Nice text, love that, appreciate it. But sorry, I did drop an F-bomb. I was gonna try to be better about that this year. Haven't got me yet. There you go. Four plus years. There you go,

18:39 exactly, exactly. All right, so what is next? in our end of

18:48 the year review. We talked crude prices, talked gasoline, we talked frack spreads, we talked the stocks and it was relatively flat. All right, are we going to start grading the Trump

19:03 administration? This is a rich category

19:08 of things. We saw the flurry of executive orders, we saw the one big beautiful bill, we saw the. Let's step back to pre inauguration. We were all fired up about Chris Wright, Governor Burgum,

19:25 fired up, I mean folks that really understood energy. But if you really thought about it, using the

19:35 one guiding philosophy that trumps a low oil price guy,

19:42 was there going to be anything in drill baby drill? that was aligned with kind of the economic framework that profitability and US. willing gas companies need. Yeah. I mean, telling you that

19:59 really strongly implying I want50 crude oil and I'm sure he would want lower that the way this industry works in the US. that that was going to be well aligned and there weren't going to be some

20:12 friction points And there's no way Bergam and Wright can run a US. industry first. Right. Messaging campaign that is really counter to that. Yeah. But he got drill baby drill in my

20:30 own little estimation and he got it other places, like the OPEC arm twisting. Right With, you know, Venezuela, just from a headline and a perception standpoint.

20:44 You know, the underlying fundamentals don't, don't show this, you know, what the IEA called a four million barrel a day glut in 26 yet. Don't show anything near that. Um, but right now the

20:57 fundamentals don't matter. And I think as long as this, this headline driven, uh, dynamic in the way the commodities are trading, you know, get us to the finish line at least the intermediate

21:11 finish line defined as November of 26 and hang on to the house and the Senate, I think that's the most important thing and whatever we have to do, you know, there, there's no, there's no cycle

21:22 time that's practically doable here to actually make a meaningful difference, to pick up a bunch of rigs either in the US or open the valves back up in Venezuela. That's going to make a fundamental

21:35 difference. Well, you know, and I'm going to sound like a broken record here, but I I would go back to the drawing board. and come up with a 15 point, this is what I want. I want, you know,

21:53 on federal leases, I want royalty relief,

21:59 you know, based on sliding oil prices. I want, you know, land use permits, tick on down the list. I want transmission, line, legislation, et cetera Because, I mean,

22:17 practically speaking, when you look at the betting sites, the Republicans at least lose the house

22:26 in November.

22:30 But on the weird chance they actually win, you need to have that list of stuff we want that we want to have codified, because I think that's a fair ask of Trump is, Trump is hey man we took it in

22:42 the shorts on this 50 oil profitability wasn't great. Our stock prices didn't move any, but hey, we're all Americans. We did good for America. We need these 15 things. Please introduce the bill.

22:56 And we're just not doing that as an industry. We're just sitting around griping about a oil price. Yeah. And I think the cynical reality that I pointed out multiple times over the course of the

23:08 last 18 months is

23:12 the electoral significance of the industry relative to the general population

23:22 is not enough to

23:30 have a pivot by Trump that says, okay, we need to protect the US oil and gas industry They need better economic circumstances. We're going to address the things that we can address from a

23:41 regulatory standpoint.

23:44 But again, those are things that's

23:49 not a go-no-go kind of lever on

23:55 the

23:57 budgeting and capital allocation decisions that US. oil and gas companies make when you've got low six or five-hennel crude. That's. Yeah, I mean, the libertarian in me can't bring myself to ask

24:14 for a floor of some sort, but I do think there are a lot of things we could be asking for. All right, so let's run through the Trump administration. We came in with much pump and applause for at

24:32 least the team. And if you're a Republican, I think you were very pumped up about the cabinet and who was being appointed where it felt like this was definitely team Trump. If you were anti-Trump,

24:47 you hated the folks, but you would hate whoever he nominated. So let's start with the number one issue of the campaign that was passed fail incomplete, right at this point, when you're in? Yeah.

25:01 So the number one issue in the campaign was immigration. And just basically, we lived four years with open borders under Biden. And

25:12 how do we grade the Trump administration there? Yeah, I'd give it a pass for the semester, but this is a multi semester. Yeah, of course, because we're seeing the things with, you know,

25:25 certainly ICE and the deportations you had the killing yesterday in Minnesota. And so,

25:38 but I think the more important thing about what was the top issue. in the election and early in the year is that it has, you know, it has moved way down for as it relates to what's next on

25:55 voters' minds, which I would argue is affordability. You know, we finally started to make the distinction between rates of inflation and affordability. Right. I don't know anywhere in your

26:10 experience over the last year where you've seen a meaningful price reduction other than gasoline. And nothing, I mean, insurance is up. Insurance is up, you know, food prices. Protein staples

26:26 are up. Well, it's not that they're up. It's just, it's cumulative, right? You know, and so when you go through four years where you have an eight percent inflation rate and a nine percent

26:37 inflation rate, the cumulative, the lead, the price is high it hasn't gone negative. and that's the affordability. It's not increasing as much, but it hasn't come down. It hasn't come down.

26:51 And coming down is hard. I mean, usually, of course it is, especially where you're able to price discriminate. How many times would you like on your salary of, hey, let's drop your salary 50

27:03 grand a year. That doesn't happen. The one thing just back on immigration is this a fair point. I think what the American electorate has told us is, hey, we don't want an open border. We don't

27:19 want unvetted people coming through. That being said, people that are here and quote unquote good people,

27:30 contributors. We don't want them kicked out We're okay kicking out, we're okay kicking out kind of violent criminals, but there's some sort of there, where I think contributors are okay. I think

27:50 the hard thing is, is just in the reality of how do you actually do that? How do you go in and arrest someone that, you know, has a conviction for rape or

28:03 murder or something like that, and not grab their mother, too, who's in the house with them and has been a nanny for 25 years and by all intensive parts of a really good person. It's tricky to do

28:18 this. Here's a thesis or a concept that I've shared with a few personally. I agree with you. You've got millions who have been here and established and are contributing

28:37 fundamentally or initially the act of entering the country illegal did break a law. And in most cases where there's not, if I understand the statutes, in most cases, those, you know, or

28:52 essentially misdemeanors, but you did cut in line. Yeah. Okay, and so is there a process whereby

29:05 you get some penalty tacked on to your ability to then make the next step to citizenship? Yeah. Because you did cut in front of the line ahead of those that are going through legal immigration

29:23 channels. So that's not as disruptive. And then there are, okay, so after a certain period of time, that misdemeanor is

29:33 done with, or maybe it's not even acknowledged. And then you've got, you know, you've got some,

29:42 normalization or you've made it fair to those who have been waiting for a long time to get, which it's obviously

29:52 an inherently protracted process. I think it's a broken system. It is a broken system, but is there

30:00 some kind of reset that makes it fair for those who are attempting to and have been waiting a long time to go through the legal immigration process. Yeah, law abiding residents who've been here for

30:15 a long time and are contributing and

30:19 not scamming the system like we're seeing in some areas. I think from a practical standpoint, from a just a human being standpoint or a humanity standpoint, there is

30:33 some workable solution here that would be fair to those, like I said, in the legal immigration channels.

30:44 in terms of putting everybody kind of at the same starting point. The one little nuance that I want to point out, just to make sure we're truly saying, because I am not unsympathetic to people that

31:01 sit there and say, Oh, you're breaking up a family by deporting this family. You know, all they did was come here and they're undocumented and all that Just recognize if that's where we are. You

31:13 are telling me that Donald Trump gets to be the arbiter on which laws are enforced and which laws aren't. So be really careful if you want to go there. You know, if that's

31:27 the snarky thing I want to do on Facebook, but I don't is, Okay, just tell me which laws we have to follow. Which laws we don't have to follow. When do we have to obey the police? When do we not

31:39 obey the police? You know, and it is a very, very slippery slope type thing. 'Cause I will say this, the only party in my adulthood that's ever had a filibuster-proof majority was the Democrats.

31:56 So if the Democratic Party doesn't like the law, they're the ones that had the window where they could jam anything they wanted on us and they didn't. So all right, let's go into wars And obviously

32:12 Russia, Ukraine. I mean, is it fair to call it a fail? Yeah, I mean, it's

32:19 a - I should say failing grade. Yeah. I hate the tendency to use verbs as nouns, like the big fail, the big reveal. Yeah. That's just,

32:32 yeah, look, you said a pretty aggressive expectation. Yeah, I'd be done with it in 30 days or whatever.

32:41 I think 24 hours, and he backed away from that saying, Look, that was me being facetious, not so sure. Yeah,

32:49 no,

32:52 I do think it's fair for him to say this war wouldn't have happened if I would have been president. I think that's a fair thing to say. You just get to say it once. You don't get to say it for a

33:07 whole year, you know? It's kind of like, all right, you've said it once. Yeah, it's not been resolved, but I'll remind you that there wouldn't have been a war if had I been in power. Yeah,

33:18 that being said, I think the underappreciated thing that Putin did is he really, really kind of sanctioned proved his economy in anticipation of this, you know? And I mean, could we have done

33:34 harsher sanctions and potentially put more pressure on him. maybe, but quite frankly, the best thing you're gonna do if you're just looking at it, purely through the lens of war, 50 oil. I mean,

33:51 that's gonna be the lever that gets him. Yeah, so. All right, Israel Hamas.

34:01 I'd say incomplete. I'd say incomplete as well, but I will say more progress has been made there than in my lifetime. For sure. Yeah, this feels like I would much rather be here than not. No

34:18 question.

34:20 I do think it was a game changer to. Well, let me add this. I think one thing that we have not said enough just 'cause all we do is yay Trump or boo Trump,

34:36 I think anyone that's intellectually honest needs to look at the proficiency of our military today and go, Holy shit, wow, we're really good at this. I mean, the bunker buster bombing of Iran,

34:55 the bombing of Nigeria, even if you think it's illegal, just the military being able to go in and grab Maduro

35:05 And our operations, I mean, blowing up these drug boats, again, you may think it's illegal. Fine, I'm just saying the actual precision of

35:17 what we're doing with this feels night and day different than withdrawing from Afghanistan and leaving all the equipment and service members being killed, it feels like we're playing a different game

35:33 these days Yeah, I mean, the. The example over the past weekend was breathtaking. Yeah, stunning. Yeah, and

35:42 taking out Chavez's mausoleum is just great. I don't care, even if you think it's illegal, that's so awesome. Yeah, I miss that. And it's, I guess we could argue

35:58 the, is that something that, was it petty or not? Was it petty or not? But, you know, the communists use symbols like that Oh, sure. You know, and so, desecrating the symbol is a symbol back,

36:11 you know? So, the fact that we had perfect execution of this raid, and we still had time to do that. Yeah. Like take an extra shot. Yeah. You know, we can, we can take a shot at some of the

36:24 symbolism here. Right. Yeah. It's pretty badass. And the fact that somebody thought of it too. All right. Let's get. Oh, and I guess, Just thinking about this now, going back to Israel and

36:37 Hamas, the incomplete, I think, has a little, if not a lot, to do with ultimately, does Iran get resolved? Yeah. So does Hamas actually step down? I think if that happens, it is a resounding

36:51 pass. And I don't know if you've seen in the news feeds around, we're seeing a lot of kind of public demonstration in Tehran that suggests that maybe they're feeling a little bit more surrounded in

37:10 the regime. So we'll see what happens. But all the other wars, I think, it's been pretty impressive or at least feels like as a long-time observer of foreign policy, of simmering tensions around

37:29 the rest of the world and doing it with basically US economic pressure. Hey, you don't get to trade with us anymore. If you guys don't figure it out. So you

37:39 had Indian, Pakistan, and a couple of issues going on in Africa, where you had peace settlements signed in the Oval Office. I think I'm gonna show my bias here, but I think little Marco's been as

37:59 good as anyone

38:02 I've seen I've gotten endless amusement out of the memes that keep getting repeated, particularly the one where he's sitting there kind of slumped in his chair, but he's dressed in upland hunting

38:15 gear, and he's the new governor of Minnesota. Right. Well, I actually read an interesting article, and just the punchline to the article was, One of the reasons he's been incredibly effective

38:29 Secretary of State is because he wears multiple hats. So, you know, you've got, because he's national security advisor, he's this, he's that. And because he controls all that, a lot of

38:44 previous secretaries of states get blindsided, get undercut by competing factions, and he doesn't have it, because he is those things. He is those things. He is all the factions. He is all the

38:56 factions. And so, in a weird sort of way One of the things where we get to Venezuela, which I think is

39:05 certainly a pass for this semester scorecard, but one thing that I'm surprised I didn't put on the list, and we don't really need to get deep into it, is tariffs.

39:18 I did see something this morning that the US trade deficit is at a 16-year low.

39:26 How would you grade? So,

39:30 I'd.

39:33 don't they? So we've talked about this a little bit. But you know, Trump's whole thing is they pay the tariffs and everybody's like, no, technically we pay the tariffs. Yes, that's right. But

39:45 if you have a factory overseas, you will run that factory where your variable revenue minus your variable cost is zero. And if you, if you are tariffed such that, that, you know, will you take

40:05 an increase in your variable or will you take a decrease in your variable revenue to maintain your market share when you have a factory and stuff like that? Yes, you will. And that's why we're

40:18 seeing relatively low inflation even though we've put the tariffs in place. I wish we were a little more surgical in nature in this. It feels like we're just hitting everything with the broad hammer.

40:32 and we were a little more thoughtful about it, but maybe behind the scenes we are being more thoughtful about it, I mean, I don't know that we've had a Secretary of Treasury that's as sharp as

40:44 Scott Bassett. I mean, dudes are rockstar in terms of just being smart and thoughtful, so. But yeah, no, it hasn't been as bad. Trump's right in that we do have pressure I will tell you this,

41:02 living through a pandemic where I couldn't get toilet paper, I've become less a free trader and some protectionism is warranted so that we can produce things at home. So. Yeah, let's

41:19 jump back into Venezuela. I talked a lot about it yesterday, but I don't want to hear your thoughts, but we do have one comment. Venezuela is more about controlling Cuba and kicking out China. in

41:30 keeping the training of terrorists from Iran. And one of the things that we've talked about, at least for the last two years, as we've had geopolitical focus pretty heavily on Russia, Ukraine,

41:44 Israel, Hamas, Iran, is that we're seeing things we have, I think a much more heightened awareness of what was unfolding in Venezuela relative to the security destabilization that was potentially

42:03 going to be the result of this political vacuum or this isolation that Venezuela is. I mean, hell, they're right here in our backyard. Now you get the Chinese and the Russians and the Iranians

42:17 being opportunistic, not to mention the cartels. And so not enough attention in my mind was being paid to that security threat and maybe it's a little appreciation. in analogizing with history

42:32 about what happened in Cuba in the early 60s. If you know that history, the Cuban Missile Crisis. So that threat of having a toehold of being able to destabilize in the Western Hemisphere, I think

42:49 was underemphasized because we're distracted by a lot of really important stuff over to

42:56 the eastern part of the world And so, now that's just, you know, that's just, that was my first thought when I saw news and radar on Saturday. It's gonna sound like I'm changing the topic here,

43:10 but I'm not, 'cause I think it's all interrelated and it comes back. I think one of the underappreciated moments of 2025 was when China said, no, you can't have any more precious

43:25 I do think maybe for the first time, we have taken that seriously of holy crap. We need to do something about this. So we've got to deal with Ukraine to grab minerals out of there. And what

43:39 brought this up to me and made me think about this last night is I had a cow rentals. He and I recorded a BDE yesterday, just about current plight of landmen and compensation structures and all.

43:51 And AAPL puts on nape, right? So tell me what's going on at nape. They're actually gonna have a section of nape this year on precious earth minerals and mining 'cause lithium is being mined out of

44:05 the smack over. We've seen X on, we've talked about that on BDE. So I do think we have seen the United States take seriously, and part of that is defending our backyard. China, Russia, get the

44:20 hell out of the Western hemisphere. And I do think that's probably a really good thing. And so, I mean, this is a big time national security type stuff, and unfortunately, we kind of have to do

44:39 some of these things. Yeah, and one of the things when you went off on your Facebook rant that I thought you were, the track I thought you were on was the point you've made repeatedly is, you know,

44:51 there is a real personal drug motivation that is court of Trump's life experience and philosophy. So reiterate that for us. Yeah, no, I mean, I believe that. Yeah, no, I believe that too. And

45:08 anyone that doubts that, oh, you're just a sycophant for Trump or whatever, go watch Trump's podcast with Theo Vaughn, where Trump is legitimately asking Theob on about his drug use. and stuff.

45:25 And there is a level of humanity there and vulnerability that you just don't see with Donald Trump. But you could tell that's really striking a chord because at the end of the day, his older brother,

45:37 his hero died of alcoholism. And there were probably drugs involved too. You go back and look at videos of Donald Trump back when he's a celebrity, you know, the apprentice and stuff like that.

45:51 And interviewing him with his kids, he's always lecturing his kids about don't do drugs. And you know, claims he's never had drugs alcohol and cigarettes. Yeah, and tattoos. Yeah. And he also

46:02 says tattoos, but you know, claims he's never had a drink of alcohol, never done a drug and stuff. And I truly think that is a real thing for him. I mean, you

46:13 see some interviews with people whose children have OD'd and stuff and they've talked to the president about it. And they even if they hate. President Trump, they come away with saying he really

46:26 cares and he says he's going to do something and drug deaths are down. Yeah. Yeah. Significantly. So

46:35 I think that's a real thing. So we'll have a, we'll have the piece I alluded to earlier out talking a little bit more in depth about Venezuela, both from a technical and just a market in

46:47 geopolitical. Perfect. Jamie says tomorrow Jamie says tomorrow. He's Jamie. That's funny. They are early. Yeah, we'll throw a, we can throw out Kyle next week or something, but. So before we

47:03 get into the, the look ahead, I'm, I'm just going to read some comments that we've gotten. The efficiency aspect is a fallacy. Okay. Fair enough. The EIA is using surveys, no doubt surveys are

47:18 with companies that have to show that if not, their stocks will drop. See, I don't believe

47:27 that anymore. I don't know that production growth and rates are really mattering into stock prices these days. Same person, so this is a series of four rapid fire comments, I voted for Trump, but

47:39 I just want the truth. Oh, wow. And then he said he would do it. How could he possibly do that without manipulation of the markets? And I don't know the context there, but I assume get oil

47:55 prices down. Yeah. How do you do it without manipulating the market? I think he's doing it through a lot of narrative and headline. Narrative, well, and in pushing allies to pump more. Because

48:05 a Buck 74 wholesale gasoline translates to kind of low twos on the retail side.

48:15 One thing about low prices is we, we consume more. Yeah, no, that's right. All things being equal, absent, you know, recessionary type factors. And I don't think we're there right now. But

48:28 anyway, so all right, let's, you know, the one thing we didn't touch on that maybe we should just real quick is,

48:40 you know, kudos to Trump for getting rid of all these renewable subsidies and stuff I mean, you know, at the, at the end of the day, as much as, you know, I watch the contortions of people

48:55 saying, it's so much better. It's so much cheaper. Why do you need the subsidies?

49:01 Because we need them, you know, I mean, it's, you know, yeah. And look, the alongside that, the executive order is related to transmission, nuclear,

49:15 etc. are, I think. very constructive. Yeah. And, you know, Come on Congress, codify it. Europe is quickly followed with softening, if not rollback, of their ice band, Allah California.

49:32 Right. Right, so, and then we have, you know,

49:38 we have a number of the

49:42 leading voices really coming back to reality, and that's namely, and you knew you couldn't get away with this episode without me bringing up the IEA. Right, exactly. So it wasn't that long ago

49:53 that they were predicting peaking fossil fuels before, or by 2030. Yeah. And now it's, we need a whole bunch more reinvestment that we haven't been doing because we don't see a peak. Now they're

50:10 still below where, say, the OPEC long range forecasts are, but you haven't seen. kind of much in the way of of

50:27 of digging in to those things because reality has shown, the data have shown that those were just fantastical notions to begin with, at least in the timeframe of transitioning energy systems. I

50:41 think we've made tremendous progress in leading us back the other way

50:48 from a political standpoint, pulling out of Paris,

50:53 doing the things that we've done in subsidy rollbacks and renewables. The

50:59 reality is, if you look at

51:03 why is a grid like PJM continuing to slam up against its price caps in every auction?

51:13 They've got, you know, they've got a generation problem and there are embedded in that and Urcot's got the same problem where we've seen the unraveling of the, not unraveling. seen significant

51:25 withdrawals of gas-fired projects out of the Texas energy fund because in our COT, thermal is still

51:39 second-class citizen compared to new renewables projects. Right. And so as a risker of capital for a speculative, certainly in a pique, you're not going to see any kind of gas-fired generation

51:53 built on SPAC. I don't think anything to a meaningful degree and what has happened to the Texas energy fund in terms of it having a number of projects pulled, I think is indicative of that. Yeah.

52:06 And I still go back and I believe this in my heart of hearts, you can't tell me that energy companies are so greedy and all about profit and then tell me they would choose to do something that's less

52:19 profitable If renewables really are more profitable.

52:27 They don't give a shit. I'll go put in solar panels instead of drilling for oil or drilling for natural gas. It's like the famous, I honestly don't care. Tommy Norris monologue from season one who

52:36 is out with Rebecca around the wind turbines. Yeah. So if Exxon thought they could make money,

52:45 doing these, they'd be putting them up all over the place. Yeah, yeah. And a little more colorful and entertaining description of what Exxon would do in that case I don't think either one of us

52:54 can pull off Billy Bob. He's pretty good. So all right, we got a couple of minutes left. We're in a rapid fire predictions 'cause, you know, unfortunately with this ban on Clyde, people can

53:06 search it. Yeah.

53:10 So number one, US. production predictions. Okay, I was wrong in 2025 'cause did not call the peak

53:22 February or March or this year. I did. I called the peak and where were we there? 13, five maybe, and we're hitting 13, eight. So I was wrong. At least on paper. At least on paper. I was

53:36 wrong. So I'll go first

53:41 production this year. So if we're at 13, eight right now, we end the year at 13, three So half a million barrels a day, exit to exit. Exit to exit. Yeah, I'm directionally in line with that on.

53:59 I'm not sure I'd call it a half a million barrels a day, but the plateau will be evident either through a combination of revisions to EIA data, or just showing up in

54:13 kind of the inventory calibrations of the monthly 914 reports

54:19 I just don't think we can.

54:23 we can overcome and much less grow from here if those numbers are directionally accurate with the restricted capital and activity environment that we have now been in for certainly well over a year

54:40 going on two years. I mean, Rig Count - Well directed, Rig Count peaked in 2022. Yeah. And we've been on a bleed since then. We're now back down to levels that are equivalent to trough scene in

54:52 '21. I don't know how that compares on the frags spread side. And again, watching and listening to what the companies say about the budgeting outlook and the activity outlook for 2026, I think is

55:05 going to be telling despite the fact that the stocks continue to be boring. Yeah, it's going to be interesting to see

55:16 what kind of 5'6 annual crude does relative to 7

55:22 I'm sorry. Uh-oh, somebody actually pointed out Chuck's already blown his F-bomb New Year's resolution. At least he got the most out of it. I'd like that comment. Thank you, Jason. That's very

55:34 appreciated. All right,

55:38 so are you going to give me a number? Where do we exit the year? What's US. production? I'm at 1330

55:48 Well, I think after all the revisions and adjustments that, you know, I did more believe the 135 than the 138 as a as a peak. Okay. And so I think

56:03 on an on an absolute basis, we're going to be in the 133 to

56:09 134 areas as an exit. And we may already be there. So oil and oil and gas prices, I went first last time. So you have to go first this time. I think we're closer to a 7-handle than a 6-handle.

56:24 So as we speak, Because underlying fundamentals are,

56:29 I think, stronger than our evident. So, well, right now we're at 5706, and you're saying we're flirting around with at least high 60s. I think on an exit basis, it will be10 higher. 10 higher,

56:44 all right. I am gonna say that Trump's gonna do everything humanly possible to

56:54 keep prices low, including, you know, having, having the Saudis pump more, et cetera. I think we exit the year right about where we are now. So we're gonna have a relatively flat year. On that

57:11 natural gas, we are currently, as we speak, at 341 for Henry Hub

57:19 Where do we exit the year?

57:26 Gas always scares me, 'cause of rising joules. Yeah, I've totally missed the associating gas story early days of the shale oil boom. Yeah, I don't, it's disconnected in my mind. It used to be

57:42 like, what's the weather? No, we don't even talk about the weather anymore. Optimistically, we are where we are right now. So I think flat exit to exit. And a lot's got to go right to support

57:54 that because the gas volumes are. Yeah, if I

57:60 believe my own BS that we're down 500, 000 barrels a year and maybe instead of 13 and a half or at 13 and a half or at 13 or 138 or at

58:16 133, maybe we're at four buck gas. Although the Haynes. 400 would be nice. Man, the Haynesville can deliver us. power. Yes. Exactly. All right. So what happens in the midterms? You get to

58:32 start on this one. Yeah. I mean, we've got, I will do my predictions this way. It is a much more arduous task for the Republicans to hold on to the House and the Senate. If they do, it will be

58:50 because the stimulus of the lower tax rates because everybody over withheld for taxes this year. So they're going to be a bunch of tax rebates on April 15th. So that stimulus coming back,

59:09 I think it's going to require some sustained good luck on the international front. Venezuela doesn't melt down into a civil war, Hamas and Iran, stay at bay, et cetera. Um, and I do think, I do

59:29 think there has to be kind of one other and it's going to be unpredicted, but just good, feel good type of thing. And I don't even know what an example would be to give, but it's literally going

59:44 to take, I mean, you're, you're, you're sitting there needing, needing all the cards through the river to, to, to be able to, to win this hand if you're the Republican. So let's give it an 80

59:57 shot. The domes take the house 50, 50, the domes take the house and the Senate and the Republicans are going to have to play it perfect. And I, I just worry that they don't that, you know,

1:00:09 unless they, unless they have a cure for insurance rates and healthcare, which we haven't seen out of the Republicans, I mean, I think it's horribly unfair that the Republicans get criticized for

1:00:20 healthcare when there's literally never been a Republican vote in the Senate. that has anything to do with healthcare law. So it's totally a Democrat creation, but the Republicans can be held at

1:00:32 fault for, you haven't given me your solution. Right, yeah. So

1:00:40 yeah, I think that was not a lightning-round project. That's all right, but whatever. It's complicated. I think there's 10 months between Venezuela and midterm election day I think there's like

1:00:56 six and a half months between tax refunds and election day. And despite the fact that a strong delivery right out of the gate on immigration, I thought, well, this is going to be enough along with

1:01:14 energy prices or oil and gas prices, gasoline prices, that bow wave will carry at least to the midterms. I remember thinking last year in the first weeks and months of the administration that it's,

1:01:30 there's enough to point to on voter priorities, which have changed. Portability is now the chief issue, bring up another good one in healthcare, and the party in power is gonna get blamed. So

1:01:45 there's just kind of a pendulum swing vote that here we are with a gridlocked Congress because the House is controlled by the party out of executive power and the Senate is the obstructionist. And so

1:02:04 I don't know what that rabbit out of the hat thing is between now and midterm elections, but I would based upon so far the administration's ability to do those things, kind of shock and awe. I'd

1:02:23 put that at about 6040 in favor of the Dems taking the House in November. And a year ago, I would have said 8020, if not higher, that this momentum that got established early was going to carry a

1:02:38 story. I mean, the key element is does the

1:02:44 Trump voter show up if Trump's not on the ballot? And so being able to, if he's able, so one of the greatest things, political things, I saw in my life as it got ridiculed at the time, but Newt

1:03:01 Gingrich's contract with America, actually the Republicans always did well in the presidential elections. If you look back, Reagan won and before that, you know, you had Nixon, et cetera. But

1:03:15 they always did horribly, Democrats controlled the House for what, 50 years, something like that, straight. and the contract with America for the first time nationalized a congressional race and

1:03:28 got it out of kind of the local issues and they were able to do it. So if Trump can put himself on the ballot somehow for the midterm elections and I don't think it's powerful enough to say that,

1:03:42 Hey, all they're gonna do is impeach me. I don't think that's enough, but maybe if he's able to do that, that's the thing that kind of comes out, that one more good thing they're gonna have, the

1:03:56 Republicans are gonna have to have happen. So what could put him on the ballot in the midterms? I mean, if he decides to campaign day-to-day, go work at a McDonald's, go drive a garbage truck and

1:04:11 if things are going relatively well in the economy, you can do it. If not, you look insensitive.

1:04:19 And for as great a campaigner as he has, you can hate him, but he is a really good campaigner. I think that's his blind spot.

1:04:28 All right, the last category is global conflicts. I mean, who would have thought we'd have what happened so far this year? I mean, we've had a

1:04:40 lot of flare-ups, a lot of initiatives on our part and it feels like we're relatively more peaceful today than when Trump took over worldwide, Ukraine, Russia notwithstanding. Yeah, that was the

1:04:57 subset of that. Does Russia, Ukraine, get solved this year? Yeah, in your mind.

1:05:05 It kind of feels

1:05:08 like Zelensky's given up He's willing to cut a deal. Trump's obviously willing to cut a deal. It all comes down to Putin. And I just have no way of reading Putin. I don't think it matters for the

1:05:21 midterms. Right.

1:05:24 Kind of down the electorate. And he can say, look, we did all these other things in terms of,

1:05:32 I've kind of got, I'm a baseball player, I've got a batting average that's whole fame type number. So the stuff's hard. Yep You know, if he hadn't put it out there so aggressively in terms of

1:05:48 having a clear line of sight to a short-term resolution, then we're not even talking about it. Yeah. I don't think it's gonna be on the agenda for the midterms as far as most electors consider.

1:06:01 Iran's gonna be the big one. And is there a knock on effect in Cuba?

1:06:07 That's immediately evident between now and midterms, I think might get some air play. Yeah. And matter a little bit more than whether or not Russia, Ukraine gets solved. I don't want to be

1:06:18 insensitive of that because Trump was talking the other day. He said, look, we had, I don't know, I think the number was like 3, 000 people killed mostly combatants, the soldiers. And, you

1:06:30 know, he's just very consistently been saying, this is about, I want to deal that stops the killing of young people. Yeah. And I think that's very much like, and you can be cynic, you can call

1:06:40 me a Trump-sickman, I do believe that that is a very deeply and personally held conviction as it relates to. He's always been my way. I mean, you go back to the Donahue show in the 80s, he's

1:06:53 always been anti-war. He was against the first goal four when Bush led us in. I mean, he was very public and adamant about it, so. Okay, all righty. Well, this was fun, thanks for everybody

1:07:06 that - participated in how many of these questions? Sorry, sorry, we went on Clyde, sorry, we started late, but anyway, good to have you guys around. If you liked the show, definitely share

1:07:19 it with a friend and, oop, final comment. No, I think we covered it, there is no glut. It was the gist of the comment, so. Yeah, no, I mean, and my whole point is if prices start easing up,

1:07:35 Trump has a lot of levers he can play, at least over the short term, with more supply. Right. Didn't have gone into Venezuela on my

1:07:44 radar screen. Get it, look at that. Oh, we can just, we can pencil web another 200, 000 barrels a day out of the Permian. Exactly. In the EIA, to be totally cynical, but. There we go. All

1:07:56 right, all right, Clyde, good seeing you guys. Happy New Year.