Big Digital Energy

00;00;00;02 - 00;00;32;16
Unknown
Hey everybody, welcome to BDD. Oh my God. Kirk has new toys. Yeah. Oh, man, it's so good. Oh, wow. I read this cool podcasting toys. So we're going to be playing it during the, during the live feed. So let's go. The single greatest toy I ever got on my Tesla was the fart noises for the seat. And you could push the button and a tormented poor daughter, Kelly.

00;00;32;16 - 00;01;01;01
Unknown
Daddy, that wasn't me, I promise. But anyway. Okay. All right, I'm going to kick it off the, Man, old man coffee. My blog is actually guest written this week by jazz. Me a Henry. I engineer from around here because she and I went on a little adventure this weekend. We decided to go to Los Angeles to see My Chemical Romance at the holiday.

00;01;01;04 - 00;01;33;24
Unknown
Hollywood Bowl, which is arguably the coolest venue in America, certainly ranks up there with like Red rocks. And definitely top five. There we are. And we just had the best time seeing the show. We ate at the Ivy, we ate at Roscoe's Chicken and Wings, and it's a fascinating article she wrote about the dichotomy of the old white guy and the young, hip black woman running to LA, and what the implications are for AI.

00;01;33;25 - 00;01;59;27
Unknown
So definitely check out, old Man Coffee this week, because you don't have to suffer through my narcissistic writing. Thank you Chuck, thanks for the promo. And by the way, Jacob wanted me to throw him in to this number one to show off his mustache. But for two, I think we have some announcements. Is that true? Jacob, are you coming in?

00;02;00;02 - 00;02;18;01
Unknown
You hear? Jacob? Craig. It. I guess he is not coming in. All right. What do we got going on, dad? Oh, there he is. Oh, sweet. I can barely read that. Barely.

00;02;18;03 - 00;02;32;25
Unknown
This is fantastic. Whole show streaming live. Is this live, real time to.

00;02;32;27 - 00;03;00;19
Unknown
Awesome. This is great. All right, keep it up during the show, we have computers. We have an undisputed natural gas champion. What do we got? Kick us off. Let's get to energy quick. Well, we're flailing for a resumption of merger mania. Monday, we had two deals announced. But let's talk about equity taking out range. All stock transaction range.

00;03;00;19 - 00;03;39;02
Unknown
Shareholders get almost 4.99 shares of EC 2.987 and the post-merger split is 73% range 27%. Excuse me, 73% equity. Sorry Toby and 27% range legacy. So immediately moves them into the top position on a lot of fronts and natural gas, not the least of which is production, but also inventory life. I saw something yesterday in one write up that it's now over 30 years.

00;03;39;04 - 00;04;13;02
Unknown
Future inventory and from a break even looking at free cash flow breakeven at under $2 per MMBtu. Henry hub is. I haven't looked at it this morning, but it was down in the 260 range. I think at the time of this deal there is a breakup fee. It's actually a pretty stiff one and 1.15 billion if they walk and if, if range walks, it's 423 million.

00;04;13;02 - 00;04;43;28
Unknown
So check you're kind of that's in there. That's a big, big gap Mark. I mean 2.7 x gap which tells you the buyers penalty is nearly three x. The sellers. So x is the one that is worried about this deal falling part. What do you think about that. Well, it's interesting given oil and gas is relationship historically with the FTC.

00;04;43;28 - 00;05;16;29
Unknown
And now that that's under new management, maybe it's not going to be an issue. I would at least, I would least hope it would not. Yeah. And we're talking about the only hydrocarbon commodity that is not participating in search pricing these last several months, although we've seen a little rough relief come to places like Waha. But, you know, here we are in, in a tight hydrocarbon market, and Henry hopes below three bucks.

00;05;17;01 - 00;05;49;19
Unknown
So what do you the. I mean, the free cash flow breakeven is below $2 and mv2 with Henry Hub at 260. That's $0.60 a margin on every MMBtu to on today's price in the market where everyone else is. And we're going to talk about this later in the show. But as demand for gas keeps going up and by the way, we're going from a, you know, a seller seller, you know, if you build it, they will come there.

00;05;49;19 - 00;06;05;13
Unknown
Now here, if gas goes to 4 or 5 bucks on datacenter demand, space acts sending a rocket up, what, three times a day? That's a lot of money.

00;06;05;15 - 00;06;34;08
Unknown
Yeah. No. And, The thing that kind of, gets me, you know, we talked, previously about merger mania, and I think one of us said the line, you're either at the table or you're on the menu, and so looks like Toby's at the table and range was was on the, menu. Thank God we finally took them out of their misery.

00;06;34;10 - 00;07;02;22
Unknown
If you'd have bought ranges stock in April of 2014 and held it to today, you would have only lost 40% of your money. So guys got kind of kind of glad to get this. But you know, this has this has big ramifications. We're going to talk this whole show about the anthropic S-1, etc., that gas behind the meter is the the future.

00;07;02;22 - 00;07;29;01
Unknown
And Toby Rice just set him up to be one stop shopping. Right. Come see me. I got it all. Good for him, good for him. Yeah. And they're already doing things to a significant scale on power. It's just a question of, you know, how much more in base and, Island wanted power data centers do we see within the combined footprint?

00;07;29;02 - 00;08;04;06
Unknown
If you look at them, you know, the the geographic overlap, the asset overlap tells us tells a really good story is, you know, consolidation was long overdue. And Chuck, as you point out, range has been struggling from a shareholder returns perspective. And so, you know, they got to believe it was a 21% premium. And I don't know what the, the benchmark, trading level was, but, on the open yesterday, I think, it was down close to 10%.

00;08;04;09 - 00;08;31;08
Unknown
Range was up, pretty significantly. I don't know the precise numbers there. And so, you know, it kind of begs the question, are we going to start to see because of the, the shifting profile and the and the acceleration of apparent demand going into the next decade? A lot of it driven by high growth, businesses like LNG and compute.

00;08;31;11 - 00;09;03;02
Unknown
Or are we going to see kind of a reranking of gas levered names that have longer inventory lives? And going back to what I originally said, I think it's now something on the order at that, at that break even of, of, 30 years of drilling inventory for the combined companies. Well, I'm curious, I mean, we we also have the event of announcement, which I think is the best corporate identity crisis in the oil patch.

00;09;03;04 - 00;09;43;16
Unknown
And I, I've been on these calls with a bunch of Canadian, so I, I, I'm, I'm particularly interested steel. But then we'll wrap up on what both of these announcements mean. But first Mark, tell us more about what's happening with the former Canadian, now Denver based who what's happening there? Well, they're blocking up in the montney. And so what Logan is and was and so, you know, pretty I don't know you look at on a flowing boe multiple around 45,000 not, you know, terribly off the mark.

00;09;43;16 - 00;10;12;00
Unknown
I think, you know, we're looking at, you know, are we going to move some of this, this gas development, this gas demand north when, you know, the Permian and the Marcellus start to get a bit overcrowded or hyper competitive for all the input cost. To spot these data centers or, you know, ship gas to the coast to the next port, it is LNG.

00;10;12;03 - 00;10;38;11
Unknown
So I think Canada will be increasingly in play and an increasingly attractive. It's funny how things come full circle because in Conneaut was a proud Canadian gas company and then they moved to Denver, changed their name, got mocked for it, and then they spent two years buying their way back into money. Paramount, new Vista now Logan $890 million to go home.

00;10;38;13 - 00;11;20;17
Unknown
The prodigal driller returns the original ask inventive ask your doctor of event of is right for you naming convention and merge D and PS. It sounds like a relapse right? Which Hollywood star? Yeah. Which Hollywood stars? And back to rehab. Let's. Hey. Driftwood kayak. Oh good name there. Let's. We need to go deeper into how you came up with driftwood underscore kayak is asking does Montney gas reach LNG Canada faster than Permian gas clears Gulf coast pipeline bottlenecks good question.

00;11;20;17 - 00;11;52;00
Unknown
That's actually a really interesting question. Was this a play just to get interesting reaction, I say no, but. Tell me what happens next week. Yeah. I mean, still building a, a pipeline across Texas without needing Ferc approval is still got to be easier than building anything in Canada and God forbid, Canada. And then it touches any of the United States above the Mason-Dixon line.

00;11;52;00 - 00;12;39;09
Unknown
You know. Yeah. Kinder just announced last week what another almost 5 billion of a couple of new pipes and five BCF a day. Ultimately. Yeah. So it's it's it's got to be got to be easier to do that. But you know, so I for the you know, I think of all this gas consolidation and I think way back to when Aubry got challenged that IP day or he he posited that, you know, since we did our job so well in the gas era of shale and basically wrecked the business, he predicted that it was going to happen on the oil side, and it more or less did for a lot of reasons, not the least

00;12;39;09 - 00;13;14;02
Unknown
of which was unbridled growth and spending. 128 130%, discretionary cash flow and levering the hell out of the the balance sheet. But, you know, the industry has proven it can grow. And I think, you know, the hope and the expectation for long term range shareholders was betting on a kind of tighter structural gas market than I think technology and technically is, you know, a good kind of bias or bet to how this, this all plays out.

00;13;14;02 - 00;13;41;08
Unknown
There's a lot of gas in North America and what, what echt is telling you. And what I think a vent of is telling you is we understand, we've got to scale, we've got to consolidate, we've got to cut costs. We've got to take organizational, and G&A and other types of cost out of the system because like everything else, and particularly in natural gas, low, low cost producer ones, I mean, I, I agree with you, Mark.

00;13;41;08 - 00;14;04;01
Unknown
Also say, I mean, gas is cheap. I think the bet on both of these deals is gas is going to get less cheap. And if you can buy acreage and production at the bottom of the cycle, the math works. When the demand catches up. My question, Chuck, is equity buying the bottom of gas or the top of the data center high?

00;14;04;04 - 00;14;32;21
Unknown
Because if the I build out slows down nine BCF a day at $2.60, gas is very expensive. Portfolio. What say you, Chuck? The, the snark line I wrote last night? Although I don't actually believe the some of the back track from it is natural gas champion at 260 is like winning the heavyweight belt in a division that nobody watches.

00;14;32;23 - 00;15;04;01
Unknown
Bantamweight or whatever it is. Seattle K K.J. on TikTok says if ECT breaks even under $2, who pockets the spread when Henry Hub hits for shareholders or households? Oh, the I actually I actually think the shareholders going to wind up benefiting there. I, I like what Toby's doing here. I'm going to have all the natural gas. You can come see me.

00;15;04;04 - 00;15;28;21
Unknown
I'll be one stop shopping because, you know, Bernie Sanders can sit there and object and throw his hands up. We've got to win the AI race. I think the way we win the AI race is with power behind the meter, fueled by natural gas. Let's go build it. Maybe a lawn wins out and all these data centers happen up in space, but I don't see that happening any time soon.

00;15;28;21 - 00;15;53;14
Unknown
So I like the play of course, I've been sitting there since 2007 saying that gas is going back to ten and it hasn't. So. Well, maybe that's why you got fired, Chuck. Not to be. That's a low blow. Who did that? That's okay. I can take it. That's terrible. But sorry, Chuck. It's all good. What is going on here?

00;15;53;18 - 00;16;15;05
Unknown
They the Wall Street Journal, baby. I got that going for me. Dude, gas is going to $10. You heard it. Here, Chuck. Well, I mean, I see you all right. Once you said $10, we'll just. Let's just keep holding our breath. What had happened? But in segment three, I'm going to talk about another entrepreneur who is kind of related.

00;16;15;05 - 00;16;38;26
Unknown
I mean, it's my wife's cousin's husband. Do that really quick in your head. He built an electric frack fleet. We're going to talk about gas people betting big on on gas. So, we're going to bring that up. But, but but in transition, let's I want to head across the ocean to the Middle East unless, Mark, you have another comment, but I want to talk about what's happened.

00;16;38;27 - 00;17;04;06
Unknown
Why would we switch it up a little bit and stay on gas. And then we'll close with, the Middle East. Okay. You want to go? You want to go check? Let's let's, let's let's touch on the highlights of, anthropic says one. Yeah. So, yeah. So I was, I was, looking around acts this morning and they showed that the anthropic risk factors.

00;17;04;06 - 00;17;36;07
Unknown
I haven't read the full S-1 yet. But basically said in there that, hey, a lot of these data centers are going to be powered by natural gas. So we've got exposure to natural gas commodities because it's going to be behind the meter. Gas fired power on a lot of this stuff. And then it rolled into oh, and by the way, if we're burning a bunch of natural gas, we're probably going to set the world on fire with climate change, and our costs are going to go through the roof as we destroy the planet.

00;17;36;10 - 00;18;03;28
Unknown
So that's, that that was, kind of interesting to see that they had to, the lawyers made them say you're you're going to cause climate change. Yeah. I mean, I think every s one written in Northern California has a boilerplate that includes climate change. And by the way, as many of us know, Silicon Valley executives, they don't believe in anything but the greenback.

00;18;03;28 - 00;18;31;07
Unknown
They don't care. It's cool to drive a Tesla or a well, what's cool to drive a Rivian? Probably now it they don't understand it. They don't care about it. They talk about it at parties because that's the point. You know, that's the conversation leverage there. But I've seen the same boilerplate in almost every Silicon Valley. One. Well we've we've seen speeding tickets get issued.

00;18;31;10 - 00;19;00;03
Unknown
Most recently there was a Microsoft related fine, I think in new Jersey, a nebulous and it was it it had to do with unpermitted temporary generation. We've seen that in Memphis and Shelby County, Tennessee with Colossus and that has that. One has more to do with, you know, real EPA Clean Air Act regulated pollutants like NOx and Sox and particulates.

00;19;00;05 - 00;19;55;24
Unknown
But think back to when this was really just getting started, meaning the push to build competed. Everybody had announcements about making their facilities net zero, mitigated power, wind and solar batteries. And behind the scenes, what you're saying is, and we knew this. It's tech is is leading really the cover to make this all acceptable to the Greens because they know that to avoid or to get the type of uptime and reliability and redundancy and response that they need and, power systems that run these, these massive data centers, they've got to have, dispatchable sources of energy and natural gas with its abundance of, you know, cost advantage, its location advantages.

00;19;55;26 - 00;20;29;24
Unknown
And as we saw in the energy draft years ago, it's still number one. And I find it interesting that anthropic is or what's been focus on here. And maybe it's a function that I picked it up on. F kind of you have two threads is that they're pointing out what the inherent risks are associated with natural gas and that, you know, the rest of the same, whether you're on grid or off grid and you you're indirectly tied to thermal generation, those natural gas fired, you know, we saw it in your area was we see it in other upsets.

00;20;29;27 - 00;20;58;03
Unknown
And when there are gas price blowouts, everybody kind of absorbs that in their own in their own cost and own pricing. So by the way, guys, this is a good time to talk about. We take your questions. This is live. We're going to have a few questions right now. Come on guys. So my my favorite take on the anthropic s one including global warming.

00;20;58;03 - 00;21;22;27
Unknown
And in fairness I think they were including it is global warming. And the concerns around it may hamper their ability to get power. So I don't know that they were actually saying the world's on fire. Space-X did not include that in their disclosures. So I guess who's more afraid of Larry? Thank. All right. To cool. Let's get to Ben Richie.

00;21;22;29 - 00;21;58;06
Unknown
Give me data centers in Pennsylvania instead of low Earth orbit. Now, Ben's betting against C line of gas. And Brennan in Texas says isn't behind the meter gas just a way to skip the grid? Q and Dodge utility rates. I think it's, I think it's almost becoming just the requirement. I still think, data centers building baseload power is going to ultimately be good for the grid and good for the consumer.

00;21;58;08 - 00;22;27;07
Unknown
So long as you're not pushing it on to the rate base and the client leaves and they're going to need to negotiate through those type type issues, I still think the more generation we build, I mean, economics, pretty simple. Yeah. More of something. Guess what? It gets cheaper. So I think it's going to be good. But I think the political realities are you're just going to have to build this, behind the meter and then interconnect later to sell your extra.

00;22;27;09 - 00;22;51;18
Unknown
So that's the path forward. It kind of feels. I mean, yeah, you're still you're still on the hook. You still have to have a great team that's managing your risk and hedging. You know, whether you're you're you're whether you're in the queue or not. And so all this does is just put gives you absolutely a void the interconnection queue and the utility rates.

00;22;51;21 - 00;23;22;16
Unknown
They keep adding these other charges. If you haven't been noticing it doesn't matter where you live. They keep adding these other charges, which is for the infrastructure which you know, as it's in the business model of building pulls and lines, company to can can continue to increase their CapEx. So I'm all for it. And the grid and the grid operators and the PUC know it too, because it it was an explicit in Governor Abbott stop on it back in August.

00;23;22;21 - 00;23;59;00
Unknown
And it's come up several other places that we're basically going to expect developers and and data center operators to shoulder more of the very expensive part of this, which is transmission and distribution. Yeah. It's fine to talk about solar as being, you know, lowest level as cost of energy. But to make it operational, you've you've got to bring in tremendous amounts of transmission and distribution capital in particular.

00;23;59;02 - 00;24;31;02
Unknown
And that either goes in the right base or it goes in to a data center, investor and operator thinks about recovering returns on their additional CapEx that they're not now burdened with, because it's a certainly a political hot potato. But this rate creep we've seen across all the different, all the different grids is in operating system operators is, I think, largely due to kind of a catch up on.

00;24;31;02 - 00;24;59;03
Unknown
Yeah, we built a bunch of generation like we did in Ercot, particularly when in solar, but we've got billions and billions of dollars of transmission and distribution upgrades that we've got to, that we've got to pay for. Dude, no doubt, Mark, that's actually a great point. We don't talk enough about sort of the baseload and grid frequency in the fact that intermittent power sources like wind and solar creates a nightmare for the grid operator.

00;24;59;05 - 00;25;26;17
Unknown
Wild star 61. Europe's gas blowout landed on regular people's power bills. What stops data centers from passing that on to us here? Great question. I mean, it's political season. It's a political question as well. That's a good point. It's called the Haynesville. There's just a shit ton of gas out there. It's called Washington says there's a shit ton of gas out there.

00;25;26;17 - 00;25;47;24
Unknown
We got a long way to go before where it's called dry Gas Eagle for it. It's called Wilcox. It's called, you know, Norfleet, it's called Cotton Valley. You name it, it's called the Fayetteville. So, yeah, my $10 prediction. I hope we, stored that and I because I don't think that's coming anytime soon, but.

00;25;47;26 - 00;26;08;06
Unknown
Well, you could have gone to $0.10 and said you meant in Waha, and that would have been accurate. That was. Yeah. That's a that's a good day. And wow, sometimes that's actually that's they're making way too much money in LA. It's mad we didn't get over to watch a while. CBS one is behind the meter. Still an option in Texas.

00;26;08;06 - 00;26;31;02
Unknown
Is current admin was trying to legislate that as well. Yes, it's still an option. And yes, they're trying to regulate it. Yeah. I mean, they're using the, the admissions permits to shut that down right now. The, all the talk though, is day after the election, Abbott's going to lift all this, and it's going to be, you know, instead of, I guess we need to speed ahead for.

00;26;31;03 - 00;27;08;26
Unknown
Yeah, instead of drill, baby. Drill. Maybe it's digit. Baby digit. I don't know. Yeah. I, I think the, you know, the question about what the TCU and the legislature look like from a regulatory and policy perspective is going to be very interesting, but I think it's going is it going to be business as usual? Now, if you applied for a permit, even a standard emissions permit at TCU, you're not going to be able to get it issued until the till the moratorium is over.

00;27;08;28 - 00;27;44;06
Unknown
But you know, it, it's an I think the state and the counties that are in the cities that are part of this to find ways to move forward, because with the right type of, tax base structure and, you know, the, the, the advice of the locals is not just bend over and give, you know, give all these tax abatements away unless there's, you know, a real threat that, the developer can go somewhere else, which is not always the case.

00;27;44;08 - 00;28;21;04
Unknown
And so, doing the right thing, you know, license to operate and all of those things, I think is being a good citizen with respect to, you know, doing well by the the local residents who are and the citizens that are around these facilities. But I do think from an economic growth and development standpoint, Texas, will probably get back on the path post, post November 3rd, I think December 19th is when the, when the August audit demand is supposed to be concluded.

00;28;21;06 - 00;28;47;26
Unknown
So, Mark, do you want to head to Tehran or East La Blanca Park in South Texas? What storage check mentioned it earlier? Or are you to let let's, let's let's stay on gas and talk about, I like the header of this past on the show. Rocket fuel is just gas with ambition. So wood Mackenzie, wood Mackenzie was out with a report recently that said.

00;28;47;28 - 00;29;30;18
Unknown
And I've seen this number somewhere before. Each starship burns, each starship launch burns about a thousand tons of LNG. Let's, let's let's put it in units that are consistent with the industry. That's about 48,000,000 cubic feet of gas per launch. And if you look at some of the aspirations that have been tossed about in terms of the launch frequency, you know, we're talking about, well, if we go back to what, Elon was talking about on the cheeky Pi podcast several months ago, getting to ultimately 10,000 launches in a year.

00;29;30;18 - 00;29;49;23
Unknown
I think that's something on the order of launch an hour. Some absurd number per day. But 30 a day? That's 30 a day. Yeah. So it's more than the 1.4 BCF a day is what that equates into, Mark. Which which then.

00;29;49;26 - 00;30;07;23
Unknown
Constitutes a non-trivial part of, you know, current U.S. demand, which is almost 2%. And that's just for putting, rockets and satellites in space and other things.

00;30;07;25 - 00;30;49;12
Unknown
Well, gravel road Dave. Nice name. 10,000 Starship launches a year. Sounds wild. Who's actually going to sell SpaceX? All that LNG at the Cape? Good question. South Texas. And they're going to have to happen down in Texas. I'm I'm assuming maybe, venture global becomes part of space X. Yes. No doubt you heard it here first. Well and you know, you look at what they're doing, they SpaceX X, Tesla, etc. there's much more vertical integration bias now on things like manufacturing their own solar PV panels.

00;30;49;15 - 00;31;19;06
Unknown
A lot of the electrical components, blades for turbines, etc.. They're building pipelines, right now. They've got a 32 mile line into, what is whatever the FGS is at the Cape they're building and owning it. A second for Texas, which is their starbase operation down, near the border near Brownsville and Harlingen.

00;31;19;09 - 00;32;02;22
Unknown
Plus, they're hiring a gas trader, so it's all coming together, you know, should the user be worried or homesick? They should go put rocket logos on them, and then they'll trade it. Start, space type multiples. So something that, you know, has been bandied about in this whole, thinking about the anthropic, one and the risk of finding liquid points and being able to ensure a gas supply at certain prices, does it make sense for those that are, you know, ultimately building out to multiple gigawatts to actually own the molecules in the ground?

00;32;02;24 - 00;32;30;19
Unknown
I mean, I think that's what what I found would max point is bigger than Elon. I mean, when you think about Elon in in space, they're a gas buyer that happens to build rockets. And the entire market is flipped. And this is where wood Max, I thought was one of the more interesting points is that the market's flip from a supply push to a demand pool and buyers are locking up molecules.

00;32;30;25 - 00;33;00;20
Unknown
And space is just the most dramatic example with with the permitting for two gas pipelines, one in South Texas, one in Florida. It when we go back to the first story of the day, equity just paid 50 billion enterprise value to be the undisputed natural gas champion at nine BCF a day, space is rocking demand alone at full cadence, which is 30 launches a day, which I can't even imagine.

00;33;00;20 - 00;33;32;17
Unknown
Not happening is 1.4 BCF a day. That's 15% of the entire output. So I'm sure Toby and I'm sure Toby has Elon on on a speed dial, but but the real story here is that the market's flipped from a supply push to demand pull. And for 15 years when Chuck was saying gas is going to go to $10 promoting deals, you know, these these guys were the drillers were producing it and just praying somebody would buy it.

00;33;32;17 - 00;34;03;18
Unknown
I mean, I was invested into these companies that were trying to figure out how to use flare gas. Now, now SpaceX is using their own pipeline and data centers are reserving turbine slots through 2034 or, so the gas molecule finally has more suitors and supply. That's the story. Chuck would say you the yeah, the the whole thing I missed during the gas story was the associated gas.

00;34;03;18 - 00;34;31;11
Unknown
I mean with oil, being able to produce all the oil out of the shales and getting 100 bucks for oil along the way and gas being the the unwanted stepchild, if you will, of the. Well, I don't think so, even though I knew it. I mean, I don't think most people appreciate that on average, an oil well, a third of the volumes that makes are associated natural gas.

00;34;31;11 - 00;34;58;07
Unknown
So just flooding the market with that. That said, lab tests to rebuild all our infrastructure so we can export LNG. You're welcome. Europe will save you this summer or this winter when you start freezing. But yeah, we've we've turned the, the whole tide on that. So, you're right, we've got we've got a lot of demand for natural gas.

00;34;58;07 - 00;35;26;16
Unknown
That being said, I still think the basins in the US can keep up. Hey, real quick guys, if you're watching and you haven't joined collide yet, it's a free online community for oil and gas professionals. Apply at Clyde WYO Ford slash community. When applying, it'll ask how you heard about us. Pick other and type BD 26 and we'll send you enough.

00;35;26;16 - 00;35;59;02
Unknown
What's for a free t shirt? What? What are they? They're Clyde's in-house currency. You can't buy them. You can earn them. And you can spend them in the doghouse on merch and gear. Again, that's code BD 26 and something that's truly free. Chuck, there's no trial period. You sign up, it's free. You get your sign up Watts, and you can buy a t shirt and it's absolutely free.

00;35;59;02 - 00;36;25;08
Unknown
So there's none of this, it's kind of free, but we're going to hit you with auto pay. And and here's where this gets personal, because we're talking back to gas. My wife's cousin's husband. I can say that three times. Quickly, Jared Bennett, he formed a company called Amped Energy Solutions. Yeah. Hey, guys. I'm sorry. I'm being kicked out.

00;36;25;08 - 00;36;48;28
Unknown
Jacob messed up and put me in the wrong spot, so this was delightful. It was so good to see you. I will close with. But this rockets are the one LNG export that doesn't need a Jones Act waiver. So we've got that going. As always, gents, it was good to see you. I'm. Wait, wait. We're still. We're still broadcasting.

00;36;48;29 - 00;36;57;12
Unknown
You're getting kicked out. Y'all get. Y'all keep rocking. I'm getting kicked out. Sorry.

00;36;57;15 - 00;37;26;20
Unknown
I mean whatever, Chuck. Okay, back to the show. I'm going to talk about amps next week also. But here's what I found interesting. So Jared Bennett, they formed a company called Amped Energy Solutions last July, spent a year building a fleet and deployed their first all electric frac fleet in August of this year. They're now in their third month of pumping for a well known, well known Permian operator.

00;37;26;22 - 00;37;53;04
Unknown
Jared tells me they expect to finish October at roughly 600 pump hours. Fleet two is already in the works, but here's what makes Afton interesting to this conversation. Everyone in the oil field service business watched years of oversupply, crushed frack pricing, service providers, deferred growth CapEx, deferred maintenance CapEx. The conventional wisdom was do not build new iron right now.

00;37;53;06 - 00;38;19;11
Unknown
Now, Jared took a look at the same market and and felt the opposite, which I love about entrepreneurs. The existing assets were becoming obsolete. Operators wanted natural gas burning fleets for bigger and bigger jobs. And he bet that the right type of frack asset, one that delivers more horsepower and burns a 100% cheap natural gas, would be valued by clients regardless of the cycle.

00;38;19;14 - 00;38;47;06
Unknown
And people thought he was crazy. Three months in, he tells me that they're running roughly 600 pump hours a month for a top tier operator, so their pump is 3000 hydraulic horsepower, electrically driven through a heavy duty transmission, not a variable frequency drive, not a direct drive set up with throttling issues. Just simple, reliable, easy to operate in a harsh environment.

00;38;47;08 - 00;39;13;11
Unknown
So that's amazing. And what I think is interesting, the thread and why I wanted to talk about an end to this entire segment, is you need gas to power the electric frack fleet. You need gas to to launch the rocket. You need gas to burn the data centers. Every path leads back to the same molecule. And Jared did the same thing he did.

00;39;13;13 - 00;39;42;10
Unknown
He built during the downturn, bet on the right asset class, and now the demand is showing up. So I'm doing a shout out to Amped Energy Solutions. Go check them out. Mark, everyone's betting long gas. What's, what do you think about it? That's why I've long called it the magic molecule. Yeah. About time. Right. You know, I think the real, real interesting question to be answered over the horizon.

00;39;42;13 - 00;40;05;07
Unknown
And someone's going to be really wrong, and someone's going to be really right is, you know, does demand ultimately overcome our ability to grow into enough supply? I'm betting that, you know, natural gas on the supply side means remains structurally advantaged in terms of being able to grow. And let's just not confine it to the US.

00;40;05;07 - 00;40;51;25
Unknown
Let's take North America in general. You know, we talked a little bit about inventive in it's bulking up in the money. Well, there's a there's a long term reason for the montney as a prolific gas producing reservoir instead of formation. So, we, we, we used to say, you know, oil is harder, gas is easier. And it's just based on simplicity of and mobility of the molecules and tighter and tighter rock gases, you know, just preferential and from a fluid flow and, and mechanics standpoint in the reservoir and that's I'll talk about it every week of the Permian where, you know, gas is don't necessarily like to call it a byproduct.

00;40;51;25 - 00;41;15;11
Unknown
But associated gas comes with the primary objective of oil. You're seeing the ratios go up and pretty significantly. And I think we're going to see an acceleration in the growth of dollars coming out of the Permian because we're targeting gas here and gas your horizons beyond core and tier one, Wolfe Camp and Bone Spring, you're going deeper, you're going Woodford, Barnett, etc..

00;41;15;14 - 00;41;37;22
Unknown
And you know, 4000 a year goes, I think, much higher from over the next 5 to 10 years from where it is today. Yeah. Good point. Mark. You know that I want to transition to the next segment because I'm I'm frustrated. I'm a surfer. I've been known to even travel back from the Northeast to Texas to surf the hurricane swells.

00;41;37;24 - 00;42;05;15
Unknown
Let's play the clip. This. So again Jacobs got a clip for us on this. Yeah Jacob roll it if you're if you're ready, man. Let's let's, let's get it all. See, one of our gubernatorial candidates has to say Elon Musk has given Greg Abbott a half $1 million for his campaign. Shortly after that, he received $1.7 billion in property tax breaks for one of his companies.

00;42;05;17 - 00;42;44;22
Unknown
He also this summer received a $100 million broadband contract after the governor's office intervened, it was revealed at a Senate hearing and the whole broadband program was shut down because even Texas Republicans said this stunk. And we just learned in breaking news Friday night that Greg Abbott's Parks agency has planned, two days after the election, to sell our beach, Boca Chica State Park, to Elon Musk, because this governor is selling off Texas for part, he is the most corrupt governor in Texas history.

00;42;44;24 - 00;43;08;16
Unknown
Yeah. So I mean, I'm not an a host of fan, but but the story is that Texas Monthly reported that the Texas Parks and Wildlife Commission has been discussing a sale. The Boca Chica State Park to space acts. Now, many Texans have no idea where Boca Chica is, but it's at the very tip, very tip of Texas and South Padre Island.

00;43;08;18 - 00;43;47;20
Unknown
It is the best surf spot in the entire state of Texas. So when there's a hurricane and Boca Chica is firing, it is unbelievable. So I'm like, this is kind of bullshit. And I understand that that as a as a state, it's okay to give tax breaks. There's Chuck again. But but the fact is is that Texas not the reported that the text person wildlife said that they're considering a sale but they're not considering a sale in November, which means that they're open to a purchase by a private citizen.

00;43;47;20 - 00;44;10;10
Unknown
And I'm like, oh, this is this is not cool. I'm not in favor of it. We need to watch this because SpaceX is down there. Starbase is right across the channel. This is dangerous data. Yeah. No, you're totally wrong on this, Kirk. Nobody on that watching this show could have found this park on a map.

00;44;10;12 - 00;44;37;11
Unknown
I'm only pissed off Abbott didn't get an override. I got Chuck, I was mad Chuck's running from Rosenberg. Chuck's ready to pay off the entire, Gulf Coast shoreline with refineries. Oh, I'm ready to do that. And I'm ready to pave over West Texas to put all data centers out there where the natural gas is. Have you guys ever looked at the satellite?

00;44;37;11 - 00;45;02;12
Unknown
I've never been down there, although I am. I grew up in South Texas, not that far south. But, if you guys looked at at the layout of Starbase itself, the now official city of Starbase or town of Starbase, no, I haven't no, you describe it. Do you know the name of Main Street? Is. I was just that meme Abbott Alley.

00;45;02;14 - 00;45;31;13
Unknown
Meme street. No, I really yeah, that's funny. I mean, but it is your little sliver. (754) 472-2911 on TikTok says Boca Chica belongs to Texas. If if Parks and Wildlife can sell State park to Space X, which parks is next? Amen, Amen, Amen. Now let's split. I don't hang out in Boca Chica that often, but when there's a swell, I will go down there.

00;45;31;13 - 00;45;53;24
Unknown
So I'm kind of like, come on dudes, there's a limit. And I know, I know, Abbott doesn't like to go to the beach because you can't roll through the sand. Well, as wheels. Wow. Oh, I did it. I did say it. You didn't say it. I, I think there's a whole lot of land in, College Station we could just sell them to.

00;45;53;26 - 00;46;20;08
Unknown
Oh, I'm up for that. Yeah, exactly. Well, they've already done. They've already done that right next door. That was a private transaction, I think. Yeah, it was the old all reclaim poll facility in Grimes County where they're going to put Terra Fab. But I'm kind of with you, Kirk. I'm, I'm a bit of a Teddy Roosevelt fan, boy, because of what he did in establishing parks and monuments, among other things.

00;46;20;10 - 00;46;43;20
Unknown
I, I just think it's a slippery slope. Yeah. I mean, and by the way, Abbott is like, Abbott is a, you know, one of these kind of like, I don't even, let me just hold off on saying anything negative there. But guess who pays more taxes to protecting the environment than any other class? And this is true for the state of Texas.

00;46;43;20 - 00;47;12;23
Unknown
So you want to guess, sir? Class of Noel servers are not even close because they're mostly poor hunters and fishermen. Yeah, the license revenue that the state of Texas gets from people like myself and others is the largest contributor to these state parks. So the fact that Abbott and Maine, most hundred and fishermen are conservatives. Anyway, I just think this is a bad idea.

00;47;12;25 - 00;47;38;13
Unknown
Great. We love space revenue. Come. It's already cheap, but we're not going to sell state park. Yeah. And in all fairness and all seriousness, there's got to be a workaround on this. I mean, they're they're buying something like a right away or something like that. Just let's, let's figure out what the workaround is and just get it approved and move on.

00;47;38;13 - 00;47;53;29
Unknown
They clearly they clearly need more surface to be able to launch at the frequency that they aspire. I mean, can you imagine 30 launches a day, 30 launches.

00;47;54;01 - 00;48;18;18
Unknown
That's impressive. If they can get to that, I'm impressed. There's a joke about 13 year old Chuck discovering something, but I'm not going to make it because we're we're going there. Chuck. Well, good for you. All right. Before, but let's let's go across to the Middle East because, you know, because we have to start from the beginning. Mark.

00;48;18;20 - 00;48;53;13
Unknown
Yeah, there was quite a bit dinosaurs. There was kind of a bit of, quite a bit of Earth air traffic tracking over the weekend of apparent mediation, representatives going from places like Qatar, Saudi, Pakistan and Turkey to Tehran in the face of, you know, an imminent escalation, or at least apparently, that's consensus about what happens the day after the US midterms.

00;48;53;15 - 00;49;19;05
Unknown
You know, I saw something before we came on the air. I think it was one of Jacob's clips that he had pulled. Apparently, there was, An Israeli exercise with a bunch of refueling and and fighter and bombers that were skirting pretty close to Iranian airspace. They flew over Iraq and Syria and got really close to Iranian airspace.

00;49;19;05 - 00;49;43;01
Unknown
And the, the theory was that they were trying to draw fire as, as, from the Iranians, to then have a, you know, a green light to go ahead and and relaunch, I guess. What would that be? Phase three of military action or stage three of military action in this in this ongoing saga?

00;49;43;03 - 00;50;14;21
Unknown
I don't know why the screen's gone to me. I'm not sure I've got much to add. Kirk. Well, is it Chuck? Is it is it you know, is it a sign that Iran is losing its grip or, you know, should we be concerned that, you know, the next round of this for the US and Israel to get what they want is going to be much more intensive and much more aggressive and potentially, you know, leading to some type of a ground campaign?

00;50;14;24 - 00;50;36;00
Unknown
Yeah, I ran for the show. I read numeric Piece that was out this morning, and they were drawing a lot of parallels with, the Ukraine, Russian war and what's going on and what could go on, with the Iran war. And it's really hard to do that remotely from the air, kind of lobbing missiles back and forth is their point.

00;50;36;00 - 00;51;02;24
Unknown
I mean, they they haven't moved the, kind of the Russian incursion very much over a long period of time. And now we're and it's really hard one. And one of the things that was embedded in that article is, I think, Iran's largest power generation facility, only, supplies like less than 4% of the country's total, power demand.

00;51;02;24 - 00;51;33;26
Unknown
And it's very, very distributed. So it's really hard to kind of knock out those, those, those crippling, or deliver those crippling blows where you take out infrastructure. I mean, it it is a, I think over 5000 substations, the number of generation facilities, the flexibility of the grid that they built in Iran, plus just a natural fortress that they're in with the mountains to the west and along the, along the coast as well.

00;51;33;28 - 00;52;16;17
Unknown
So, yeah, clearly, Mark, you haven't seen, Maverick Top Gun to because you, Joe. Hey, user 6807 whatever, blah blah blah on TikTok. Why would Iran take the bait before Israel's vote when Tehran would rather just watch Netanyahu lose it? That's a that's a good point. But maybe maybe that's why they didn't fire. Yeah. And then Tumbleweed Ops says, so if Iran's a grid is to spread out to knocked out is Kharg Island the only real pressure point left?

00;52;16;20 - 00;52;48;18
Unknown
I mean, I still to this day don't know why we haven't landed the Marines there and just taken that. I mean, that that almost sounded like something we should have done at the beginning of the war. But then again, I'm not a geo political strategist slash military guy, and I don't know the the true realities of doing that, but it seemed like if we grabbed that, shut down, all the oil, took control there, then that is your big pressure point and we haven't done it yet for some reason.

00;52;48;18 - 00;52;54;18
Unknown
It's not that it wasn't thought of.

00;52;54;20 - 00;53;18;25
Unknown
This is a classic Trump thing, but the and the ambassador says a strike is absolutely possible this weekend. Trump says nothing before November 3rd. And those two it is. Ambassador Barak. Let's just say this can't both be true. So either the ambassador's freelancing or Trump is keeping his options open while telling the public what they want to hear.

00;53;18;28 - 00;53;48;13
Unknown
I mean, I've got, you know, one of my college buddies is, a top Democratic political strategist, and he's been texting me about what he thinks is going to happen. But November 3rd is going to be an interesting because and, you know, it's a it's about diesel, stupid. It'll be interesting to see, this whole war, the Hormuz, Russia, Ukraine.

00;53;48;13 - 00;54;15;13
Unknown
It's interesting that the Republicans have just really, I think, played this so poorly. But I'm also confused how the Democrats have done a really interesting job of not exploiting the economy. Stupid. I'm really curious of what's going to happen. The next few weeks. Well, the you know, the interesting thing for me is there's politics and then there's what actually needs to happen.

00;54;15;13 - 00;54;39;07
Unknown
And so, Iran came out and said they were 60% enriched, which means they were a month or two away from having a nuclear bomb. And, we all know how that would have ended. So I don't know how we're ever going to get clarity. Maybe history will do it for us of how truly close they were to this.

00;54;39;07 - 00;55;11;10
Unknown
And Trump had to do this or was this driven, you know, by Israel? I don't know, but I think that's going to be the key question that history needs to, to answer for us. Did we just save the world from a nuclear disaster or did we get baited into something? I have a tendency when, dictators say they're at 60% enriched, I have a tendency to take them seriously, particularly when there is evil, as the Iranians.

00;55;11;10 - 00;55;38;28
Unknown
But. Yeah. Hey, Mark, just a quick shout out from Duke Thaddeus on X. Finally, the Jones act to make an appearance after a long hiatus. Well done. So she knew she would now go to the IAEA. Yeah, but, Jeanne, being 707, says if Diesel's the midterm issue, why aren't Democrats hammering Trump's? We're making so much money line every day.

00;55;39;00 - 00;56;11;08
Unknown
Great question. I mean, it's really been so I mean, again, you know, there's kind of three primary voting issues. There's there's economic policy that funds everything. There's foreign policy and there's domestic policy. A lot of these races have gotten caught up in domestic policy and social issues when they should have just hammered economy. I mean, I was in a class with one of the sort of leading professors in the United States, the office of the presidency, the guy named Professor Buchanan.

00;56;11;08 - 00;56;43;05
Unknown
I took him in college in 1992. Our final was all about economic policy because Bill Clinton won the race. This is before Clinton, actually. This is before the election. But Bill Clinton won on running economic policy because back in 1991 and 92, it was terrible. So I don't know why the Democrats aren't hammering the fact that diesel prices and that we're in a recession because of the, these wars.

00;56;43;07 - 00;57;04;15
Unknown
I'm, I'm, I'm surprised, but yeah, you know why they can't? It's the same reason Jack Nicholson and A Few Good Men finally faces up to your. God damn right I ordered the code red. Because in their heart, in their heart of heart, they want high energy prices because they want to end hydrocarbons. I mean, it's just at the core of them.

00;57;04;15 - 00;57;30;14
Unknown
That's why they can't bring themselves to do it more than they've done. Right? Yeah, that's fair point. There's there's more fodder being loaded into the cannon on Friday because Exxon and Chevron report. So stay tuned. Maybe we'll see some ads spun up over the weekend. But just give you an idea of what Q3, the Q3, comps look like for Chevron.

00;57;30;16 - 00;58;02;25
Unknown
Consensus is at $4.70 a share versus a buck 85 a year ago. I mean, that's 170% or so increase. It's a buy. This is four days before the midterms. And with Brant at $115 and the EA already talking windfall taxes, I mean, it's again, you think this would just be a layup. And I've seen some estimates that it's going to be, a bloodbath, for the Republicans.

00;58;02;25 - 00;58;29;29
Unknown
But we'll see. The diesel crisis is over valero's down below 400 again. And no, I didn't sell, All right, guys, sorry I had to take a little break, but the, flipping the barrel, our guests here that use our podcast came and kicked me out. So, as I was saying, before I was so rudely interrupted, I'm just writing, quite chivalrous of you, Chuck.

00;58;30;06 - 00;58;57;06
Unknown
Yeah, I, I, I was just kidding. I was, you can tell I have three daughters. Yes, ma'am. Okay. I'll leave. Anyway, it's always fun. So next week, we'll talk election and maybe make our predictions on how the night's going to turn out. Other big things this week. Truly humbled. The Energy Council is giving me a lifetime achievement award Thursday night.

00;58;57;08 - 00;59;39;28
Unknown
So thank you. Some major award. It's a major award for a genie. Exactly, exactly. So, we're doing that, and then, Thursday, November 12th, we have upcoming the roast of Scott Sheffield for DC. So that's my calendar for the next two weeks. My own super Sky point to close it out. In memoriam John Anderson, one of the most distinctive and a member of the Country Music Hall of Fame, passed away suddenly and unexpectedly, just mere nights after he was at the medallion ceremony where Tim McGraw, among others, was inducted to Country Music Hall of Fame.

00;59;39;28 - 01;00;04;00
Unknown
So. Ride the wind, Seminole Wind. Godspeed, boys. It's been fun today. It's great seeing both of you. And we'll be back next week. We want to remember everybody. We take a little take it live. We want your questions. And, vote wisely and go sign up on Collider if you haven't.