Big Digital Energy

0:00 All right, so I'm putting this as close as I can to the camera and maybe I'll have to send Jacob a picture of it, but I was in the store and I found Colin the caterpillar, many Colin faces.

0:13 Exactly, they misspelled Colin. They did misspelled Colin. I have no idea if these taste pretty good, but the ingredients are sugar cocoa butter, dried skim milk, butter oil, dried whole milk

0:27 cocoa, but

0:29 they didn't have any of them. Anyway, fresh from London, for the gang. Like kids, walkers, biscuits. Exactly. Thank you, Charlotte. Thank you. Yeah, very much. I try, I try. So anyway,

0:39 one quick story on this weekend, 'cause I think it particularly since what you just went through, Mark, and also I'll say this in kind of seriousness, we were sitting there at dinner Saturday

0:50 night. Is this a PSA? Kind of a PSA, yeah. We're sitting there at dinner Saturday night and I asked -

0:58 We're working on some - some like we're K2, which is an Indian restaurant and Watford, which is a suburb of London. And I asked girlfriend's father, hey, what was the best birthday present you've

1:09 ever gotten in your life? And it was kind of needy smile and said, seeing my daughter get off the plane yesterday to come have dinner with me. Very cool. So if you're lucky enough that your

1:20 parents are still alive, call them. 'Cause yeah, no, it really means something to them So anyway, Mark, you wanna start us off? Where are we gonna start? Yeah, I read a little piece on

1:34 Bloomberg's daily energy. Just a, you know, just a thought trigger on kind of what's going on with crude. And just generally we can talk about the stocks a little bit too, given really the two

1:46 major things that have happened. One is obviously what's going on in the Middle East and in Israel. And then the big deal announcement last week

1:56 if if you kind of walked this back to similar periods and more distant history, call it 20 years ago, we see this kind of conflict and upheaval. You've got a lot bigger risk premium reflected in

2:09 crude. And the piece was talking about really things that I think we all see on a daily basis is, well, there's containment

2:21 much more so diplomatically, I think, and I haven't read every piece that's come out on what

2:29 was described as the US diplomatic effort and hyperdrive over the weekend. But also remember that OPEC has taken barrels off the market in its voluntary cuts. So we've got a bit more of a spare

2:41 capacity cushion than we've operated with. And in terms of what that all means for major supply disruptions as a supply side, restrictions driving crude a lot higher, I think that's mitigated by

2:55 something that we have. experience and increasing volume over the last few months is what's going on with demand. And the IEA was the latest to come out last week and talk about seasonal demand in

3:10 the US. being weaker. And so whether that is part of their narrative around peak demand by the end of the decade, or there's actually evidence that there's a structural problem, then I just think

3:25 it's interesting that crude, just given the headlines and the highlights here is seemingly stuck in the middle. I thought we would see something north of 100 given the events of last weekend. So

3:36 I'll break that down a little and

3:40 let's go to the supply side because we talked the conflict in the Middle East last week. And I think our conclusion was unless we see structural destruction of actual assets That's it. And or maybe

3:56 I guess we didn't touch on this but a blockade of the Straits of Formal or

4:04 We're moose. Yeah, sorry. Anyway, we have lunch on the brain. Yeah, exactly. I'm sorry They do I'm still on US time, but I did go to London this weekend. So I'm a little hazy. Sorry about

4:17 that Aside from from that, we kind of

4:21 I think our takeaway was after we saw the Russian embargo ships can go anywhere they want. It's a function of price for a little bit and all that We haven't seen anything despite the escalation of

4:35 tensions in the Middle East that have gone to any sort of Hinting it destruction of assets yet, but you do hear Iran starting to savor out all and stuff So you did you'd have a you'd have a big

4:51 single day move on Friday. I think it was four or five

4:56 Yeah, I mean, you know, Iran has what to our three or four major refineries. If those got hit, that could create. And some of the politicians have been asking, you know, some of the

5:07 politicians on the US. side have been saying, Hey, why don't we just hit Tehran if Tehran gets involved? That could make a that could change the risk premium. But at this point, it seems that

5:18 there is there's very little risk premium. And I'm wondering if that's just because of where the location of the conflict being Israel and the Gaza Strip, or is it the fact that times have changed?

5:30 There's a lot more ability to move supply around the world, which I don't think there is. You know, there's something not really new. However, it'd be interesting to know your thoughts about that.

5:42 Yeah,

5:46 we've said it's a lot. It's a lot more flexible, I guess, worldwide. And we've Markets are a lot are a lot more nimble, if you will. And we have, despite the data issues that we've talked about,

6:01 we have pretty good data relative to 20 or 25 years ago. And so I think, you know, given what the market did in response to Russia's invasion of Ukraine, you know, the headlines, in that case,

6:16 at least from a supply standpoint, were a lot more shrill than I think what actually turned out to be a fairly good illustration of how the market responds about the crude and the product side. You

6:32 know, this has got a lot more diplomatic attention and I think focus on containment.

6:40 The one thing that's in the middle of it that really affects, you know, the leader of OPEC, which is Saudi is back and forth headlines over the weekend about the Saudi-Israeli accord. the

6:55 normalization of relations that the Biden administration has been working on for a while. I heard, I didn't see it, that President Biden on 60 minutes last night said it was still very much on. So,

7:08 I guess we'll see. And as Dan Pickering often reminded us, market hates uncertainty. So once we start to get clarity one way or another, then we'll get out of this seeming stuck in the middle

7:22 on the commodity I just thought it was worth revisiting because we've had a couple of other things and we've had some time to, some time in a manner of speaking, about a week to see what kind of

7:36 what next moves are. And I think the big next move, at least was reading this morning, is Israelis have not started their ground campaign yet in the Gaza. And that's potentially escalation time

7:50 It's an interesting art barman actually tweeted out. this morning, and I'm just, I'm sticking with Tweeted Out. Yeah. You can't get Xed out. Posted. You can't Xed out. You can't Xed out. You

7:58 can't Xed out. You can't get it.

8:01 So Art actually Tweeted out. Someone else owns that already. I think it's owned by Sharpie. Oh, that's true. Yeah, everyone's probably trademarked. So I clean X, you can't say clean X, unless

8:10 you're clean X. Unless you're clean X. Yeah, Coke, all the - Crushing, good luck Elon. That's a big battle. Yeah, exactly. But Art tweeted out that the market clearing price for WTI is 69 a

8:24 barrel based on comparative inventory data.

8:30 WTI spot price, so the WTI spot price of 86 was about 17 more than the marginal value of oil for the week ending October six. So he's got a chart here that we'll put up, but I don't know that I

8:48 understand it, but it's basically, you know, what you're comparable into. Inventory was in history versus price. And he's saying the market clearing price is 69. So he's saying we are seeing war

9:02 premium for that. I don't know that 30 years ago, inventory numbers really matter today to how the world looks, potentially given the amount of oil we have deliverable from US. shale. And we all

9:16 can have our opinions on whether it's deliverable in the short term or the longer term or whatever But the world is a little different. But that's a good news is everyone has an opinion on this and

9:27 no one knows who's right. So what explains the, you know, high 70s to mid 80s that we've seen well prior

9:36 to this series of events that's unfolded literally over the last 10 days, 11 days. They probably need to get an art back on the podcast. You know, I had him on Chuck Yates needs a job of the

9:47 podcast. I actually enjoyed it. Great podcast Enjoy the, enjoy the art. the, uh, that was when he was Twitter beefing with the EFT over something. The, so let's do this as kind of the, the

10:01 question on this topic. Where do we see oil prices at the end of the year and where do we see them in the middle of June next year? So Kirk, I'll put you on the hot seat first. I mean, I think

10:17 this, this, these current escalations, wars, if you will, are going to keep oil prices that are premium. I just don't see it going away, right? So you, what are you calling? You're calling

10:28 mid 90s by the end of the year 80s to 100 80 to 100, you know, that range. As we get into the next year, it will be interesting to see what's going to happen. Now you've got dynamics, you've got,

10:41 we've said pandemics, we've said like, what has been moving the needle and what's our been our three big discussion points, it's been pandemics, wars, and then sort of this wholesome. apply this

10:53 battle with like climate and sort of the switching energy transition and what that does to supply or sort of how people look at it.

11:03 I think as we get into June next year, we're going to continue to see 80s to 100. I don't see a whole lot happening and we have some interesting news that we'll discuss later on in the podcast about

11:13 why I think that. But I'll save my, you know, come back to me as I will give more details as we talk about a few other interesting stories that are happening this, uh, this week.

11:26 Mark,

11:28 I tend to think in the very near term between now and the end of the year, we're looking at more of the same mid eighties with, I would guess more upside risk than downside risk. I get a little bit

11:42 more worried as, you know, the inflationary pressures remain pretty high and interest rates have. headed the way nobody wants them. If you're someone looking for a house or trying to refinance

11:59 something,

12:01 you're not

12:04 looking to act as aggressively. So I get a little bit more worried moving into 24, given that it's an election year two, I think we've got

12:14 some risk of some outside pressure, if you will, to do some things to lower prices SPR, sleight of hand, et cetera, although we don't have the SPR lever anymore, but something on the political

12:26 front, I think, in terms of really putting some downward pressure on pricing as we move into the kind of the campaign season and overdrive next year. Once again, Mark, you have stumbled upon the

12:38 answer. I agree. I think we may even touch 110 before the end of the year, because of how Chuck says the answer is Because of the

12:50 term on the Middle East, alert and may even hit 110 before the end of the year. But middle of next year, significantly lower. We're potentially in the 70s. We may even hit the 60s. And it's

13:03 gonna be for all the reasons you just said, it's an election year. If there's anything left in the SPR, it's coming out. We just cut a deal with Venezuela that said, hey, wink, wink. If you

13:15 guys will have fair elections, then great, look at this. We'll let you produce more oil We're gonna give the

13:24 farm away to the Iranians and let them produce as much oil as we want. We're also gonna go to the Saudis and give the farm away to the Saudis to get them to produce more oil. Well, let's just like,

13:35 you know, an align from trading spaces. As we are Randolph and Mortimer, why don't we make a dollar bet? One dollar. For one dollar. Why don't we make a dollar bet? The whole thing of Colin

13:45 Minney's.

13:47 on oil price at the end of the year and oil price in June. June 30th and June 30th of 24 and December 31st of 2023. And because of DW. insights and the ability to AI search our podcast now,

14:04 shameless plug, shameless plug, we will be able to go back in time and research this. So I will say December 31st, 10831.

14:14 And then I will say June 30th, 6970 I know you're going to take 69, Chuck, of course. I'll say December 31st of 23 of

14:29 9333. All right. I like specificity. And June 30th of 2024, I'll say 7323. Okay. So I'm going to prices write your asses. So anything over means you've lost. Okay, fair enough. So December

14:46 31st, I'm going with 90 I don't even under 90. I'm in the I'm in the green and then by June. I still think it's going to be high. I'm going to go with it. I'm going to go with 82. Okay. Okay.

14:59 There you go. We have it. Mark, I think you were texting us this weekend that you actually listened to the earnings call of Exxon and Pioneer. Was there anything in there? And I'll kind of tee

15:11 this up with, I went and looked at the stock prices. So if we take Wednesday, October 4th is the

15:19 kind of pre-announced, what did they call it on the press release, the undisturbed price, stock price. Exxon was at 111 and 50 cents. It's at about

15:31 110 as of the recording we're doing right now. So slightly down, the SP index, which I believe I pulled was the XOP, was actually 5, 276. It's now at 5, 788. So let's call that up almost 10

15:49 over the same period. pioneer, straight into 215 on Wednesday the 4th and is bouncing around at about 249 right now. And that's up 16. So that's kind of how the market has looked at the deal. But

16:05 we need to go back speaking of DWN size, which now they can search using AI, all of our podcasts.

16:14 We broke this story before anyone else did. So we have to go back to the stock price when D when when BDE broke the story.

16:30 It doesn't matter which episode we broke it. It's just any episode that goes in our favor. We'll break that. You know, Mark came in and co-hosted back when Colin and I used to just do this podcast

16:43 like a year and a half ago. We probably broke the story. By the way, I got an insider too. I have two new subscribers, by the way. Over the weekend, I was playing in the golf tournament.

16:51 They're like Oh, man, you're on that thing with Chuck. And people are like, Oh, you're on a podcast, which is it? So I got one and a half. I had three subscribers, one dropped. And I think

17:00 the other one was just doing it as a favor. So at least we got two more in the hopper. There we go. I guess that puts us over the million mark or so. Perfect. For the first time. I said I don't

17:09 think Laura or the girlfriend's parents have subscribed to the podcast yet, though I was working on it this weekend too. There's some dry humor, they'd like it. There we go Very short, prepared

17:21 comments in the

17:24 conference call. I think they got to QA by five or seven minutes in. I'll have to go back and look. Doo doo doo be insights if we have that available weekend. There we go. Point the machine to

17:33 give us the right precise queue up to the 100th of a second. Now I was struck by listening to a super major CEO

17:46 an EP CEO, a Permian EP CEO, circa 2017. Or even before that. It was interesting because - No decline is the future. In the questions that were pointed at CFO, Kathy Michaels, break down the

18:02 synergies for us, which I believe are run rate a billion a year in the first year to ramping to two. And on a couple of occasions, at least, a reiteration of a vast majority of those synergies

18:18 coming in the form of improved well recoveries. In fact, over time, a doubling of well recoveries, a lot of discussion about the four mile laterals, right? And so Woods even got into

18:34 staying in zone with a lot of the drilling techniques that Exxon has experienced that Exxon has developed worldwide bringing that into the XTO. organization. And speaking of a lot of the same

18:50 potential to combine technical expertise, obviously, pioneers very deep Permian expertise with with Exxon's both Permian expertise as it more relates in modern days to having now 12 13 years with

19:10 XTO. But also importantly, things that they've learned from around the world. And then spent quite a bit of time, at least at a high level talking about completions and making sure that, you know,

19:21 the effective stimulated volume and

19:25 the flow integrity or the integrity of production from the heel and the toe, I just didn't expect there to be that much time spent on citing those those factors. But I guess it makes sense because

19:37 they are taking on

19:41 big 15 to 20 year inventory in the form of pioneer. And so what, you know, kind of what's the play here? I was a little surprised to hear a doubling of EURs going forward at some point in the

19:53 future. That has to be on an absolute basis. They didn't qualify it on a per foot or an absolute basis, but I think a lot of that comes out of the increase out to the four mile laterals. It was

20:06 just, it was just an unusual juxtaposition, having spent a number of years both covering and investing in public EPs and then having spent time in a Superman as well. Did they spend much time on

20:18 ESG type issues?

20:22 Because remember when Chevron bought in the DJ base, and I forget who they bought, I mean, they literally had dilution, anti-dilution metrics on ESG type variables They spent a little bit of time

20:36 on it, and, you know, I just remembered, you know, Exxon. I believe like Pioneer, I don't know this. I know for a fact that Exxon's committed to net zero on a scope one and scope two basis.

20:49 And so Darren Woods did say that the

20:52 combination of the two will help us in our quest for that objective. There was nothing really substantial in terms of the sidebar, the tangents and the conversation. It was more about trying to

21:07 understand really where the synergies of a couple of billion are coming from over time. And then, you know, another kind of obvious, but very lightly touched on subject was the, was the issue of

21:22 head count. And there was fairly explicit comments about this, this does not have as we see it, a meaningful head count impact were not the reduction. We're looking, I guess as a, you know, a

21:37 long ago former.

21:40 Heritage Exxon, as we used to say, professional,

21:45 seeing Exxon approach something really from an acceleration standpoint, acceleration way back in the day used to be a four-letter word, but now it's really stepping on the gas because, I forget who

22:02 on Twitter pointed out, that proforma, the combined, the proforma growth rate expected out of the out of the Permian was, I believe, 10 a year, and each standalone entity was lower than that. I

22:17 can't remember specifically what it was like eight and seven, eight, seven or five and a half and eight something like that. Mark, they used to count like people per, how many barrels per

22:28 employee? I remember we used to talk about this at Shell. Do you recall like what would this do to Exxon sort of barrel per person equivalent? If you could even estimate, if not, we'll bring it

22:41 back next week and just update. All right. Well, you know,

22:47 if you're not meaningfully reducing head count and you're bringing the barrels with the people, then it's not really, I think, going to move the needle that much. It's strange. I mean, was

22:59 Pioneer more efficient than the Permian the next song? I would say. You have to be. Yeah, look, I think just generally we've seen where the super majors that have tried in the Permian in the

23:11 modern context of unconventional over the last dozen years or so. Are they going to keep Pioneer? So that means two things. One is, I acquire a bunch of great assets and I throw all my ex on

23:26 people at it because we know how to do things better. The other way around is they know how to do things better. Let's not fuck this up Let's keep them doing what they're doing and stay out of it.

23:39 What's happening? But it's also integrating the two subject matter expertise areas or the areas in which they are expert more quickly than they did with XTO. One of the things that I think I heard,

23:55 I'll have to go back and listen to that part of the Q and A was we didn't do that quickly enough in integrating XTO. If you remember, XTO was stand alone in for a long time. Right, after the deal

24:07 closed What I heard would happen is you'd be the banker presenting the data room 'cause this was before it was all online. And the XTO team came in and there was an Exxon person and sitting in the

24:21 back of the data room that didn't speak the whole time. So it was definitely an observer and the hands were off on the XTO team. They were allowed to run. I mean, we have half of Pioneer that's

24:34 gonna listen to the show or what do I do with my career? What do you say to them at this point?

24:41 I think if you want more humidity, you're probably going to be relocating a little bit south, closer to where I live. But yeah, look, I think it's a

24:55 major leg in this three-legged stool that is now Exxon and LNG, big global projects, and then North American Unconventional or US Unconventional, primarily the Permian, it's going to get a

25:11 tremendous amount of capital and focus. And so I think given the relative shrinkage and the number of large public company independent choices that you have, sticking with the assets and having the

25:32 equity leverage which you believe to be the best assets out there. If you're a technical professional and operating professional, it's probably gonna be a pretty good choice. So, unless there's

25:44 private equity out there, seeking the 10 to 15 year engineering geologist team that is looking for backing, but I don't sense that that's going to be - And I don't sense that - As much the case.

25:57 Yeah, I agree with you. I don't think there's that much money. And I don't know that the opportunity set is so incredibly different and potentially lucrative over on the private equity side because

26:09 you're morphing into longer hold periods. And so I think you're talking salaries that are in range with industry average, with stock compensation being your private company instead of Exxon or a

26:21 pioneer - But if you're private - And there's only a handful I think today even of professionals in these public companies on the technical side that have the risk tolerance. to do that,

26:36 particularly after

26:39 what we've been through. Right, but you get to wear the zip up vest if you're in the private equity side. Yeah, let me kind of touch on another point. We talked about it last week with Shell,

26:48 and I just saw, congratulations by the way, Shell reached an all-time high today in early trading, but we talked about the growing gap between the Euro domicile super majors and the US super majors

27:04 and this is obviously a big strategic statement in doubling down on the Permian, literally doubling down, or more than doubling down on the Permian 4X on. What's in light of that and what YL has

27:22 continued to face in terms of pressure, but he is, what did he say, he's ruthlessly committed to improved returns and financial performance?

27:34 Is there another path then? So does this even change his thought process? Does he sit near staring at this? Any influence or - I

27:44 mean, I can't, okay, I'm gonna be me. I can't disclose any recent conversation. I love that. But I can say when I was there, 'cause people know I was there, it's a public, so forth. I think

27:56 Permian was a loss. Couldn't figure out how to make money there It wasn't, like, Shell was great, deep water. We're great at these big things where we make a lot of money. It's hard doing things

28:09 where we don't make a lot of money per well. Let's make a big investment of well that's gonna produce

28:16 a lot of oil. I don't know. Does it make them rethink? Sure. I mean, you always have guys in the back, the FPA guys that are running spreadsheets saying, we could do this, but when it comes to

28:27 the operators, I just don't see that they don't have the operational appetite to do it, it's my view.

28:34 And now that you have pure options, as we were just discussing to go, I'll just wear a great shell offsite where we had some McKinsey and, or I think it was

28:46 who were the Boston Consulting Group. BCG. And they did this analogy. They did all this research that said, almost every acquisition is a loss. Like, you almost never make your money on any

28:60 acquisition. So with that said, a lot of management teams make acquisitions 'cause they don't know what to do. And it's a way to, you know, get guys like Goss and Wall Street to talk about it.

29:11 This to me seems like a really good buy, but let's go back in 10 years and say, Did they actually, was it a creative or was it actually value destroying? So be interesting to see. I haven't run

29:20 this arithmetic. Somebody was,

29:25 I guess because it was on Twitter, also known as X, it was a bit of a pop off they'd paid something on the order of 43 million per PXD location. Yeah. A PUD location. Right. Yeah. So, wow.

29:41 And then we have all my PUDs for 43 million. Yeah. And the meme was, can you, can you do that for me, please? Yeah. Right. Yeah. So, um, that's this kind of competitive response is going to

29:54 be the more, more interesting aspect of, of this for me and, you know, we'll see. I know we're always talking about industry stuff, but I want to talk as a consumer for a moment because I, you

30:09 know, I converted back from electric to, to petrol, as they say, over in your neck of the woods this weekend. Is that, is that the word that the Norwegians took out of the official name of their

30:22 energy ministry? I call it gas and that means a lot of things to, to different people, But I am now insanely focused on gas prices. and I enjoy it. It's a fun game to figure out because my car

30:35 eats a lot of gas, it eats it. It doesn't manage it, it just eats it. So I'm like, where do I get good gas? You know, I found this great gas station and I've never joined, I've never been a

30:45 member, it's called Costco. And Costco is always at least 20 cents cheaper per gallon than anybody else. And I have an app that tells me every gas price, you know, it's kind of fun to do. But

30:58 people stay in line, they'll wait 10 minutes in line just to, you know, I mean, give me six, seven, 12 cars deep waiting for your gas. But what's interesting is when's the last time you've seen

31:09 a big line for gas?

31:12 That's true. Did you see a line? There always is a line at Costco because people are willing to wait for 20 cents a gallon because you know what, right now, based on inflation and we talked about

31:22 this, it's a big deal. So they'd wait for a charger. Oh shit. You don't have a choice in that order

31:31 It's funny that you should mention that. I was down to fumes, my son's home for a quick break and doesn't have his car, so he's driving my truck. But I had to fill it up on the way over here,

31:43 which is no short distance. And I started to drive with 51 miles of range. Shit. So that's about as on fumes as I'll let it get. Of course, he would have run out somewhere. You're using gas too,

31:55 I've seen it. Yeah, 132, so it was 118 fill up I was, I stopped at a shell, thank you, just off of Kirkendall and Grand Parkway, and as it was on Autofill, I just, I was kind of hoping it was

32:12 one of those stations that was capped at 100, but it kept going. You know what, so back when I was an investment banker with Stevens, before I was at Caine, we would always make the pilgrimage to

32:25 El Dorado, Arkansas, where Murphy was headquartered back in the day. And right about, so this was gosh 25, 25-ish years ago, right? Made the pilgrimage down there, and they had just started,

32:40 you know, maybe it was a couple years old, their joint venture with Walmart, where they were putting gasoline on station. And basically, they lay it out. We show up into town, we underprice the

32:53 market, we run them all out of all the convenience stores out of business Boom, we raise prices. And they were talking, you know, 18-month paybacks on that, in terms of, you know, underpricing

33:07 the market, and then superior returns. And it took about 18 months. We could charge a nickel or 10 cents more for the next 18 months than convenience stores would open back up. And that's just the

33:20 cycle they played. They had studied it to the nth degree. It was fascinating. It also felt kind of illegal illegal statute of limitations. I'm sure is passed on that. but I don't know what you're

33:31 talking about. So I covered Murphy for a while, and it was the first and only time I had to cover anything retail related to an upstream company. I mean, they were primarily an upstream company in

33:41 Deepwater and Malaysia and the Gulf of Mexico, but learning that over 50 of their retail revenue or profitability came from the sale of cigarettes. Yeah, okay, yeah, yeah. At Murphy's station.

33:54 Gas stations, I mean, you lose money on the gasoline, he's tried to get them into the store, bro And another fascinating insight, this was from along the go consulting project with a company that

34:03 is no longer with us because they got acquired by BP, ARCO, famous for their presence in the Los Angeles area. They were cash only up until very recently. And they did twice the volume, this was

34:22 a project a number of years ago, but they did twice the volume per station of any of their major competitors. in the region and you're having to go inside and do a cash transaction and the

34:36 transactions are usually for I think about half the normal credit card transactions of their competitors. I just thought that was fascinating but it was a price sensitivity in those areas of a few

34:49 pennies a gallon that would really drive demand. That would actually do. And so it's pretty fascinating part of

35:00 the business So one last question on Exxon and Pioneer. I'm gonna show this to y'all and we'll get Jacob to edit this in. This is actually the acreage map that Exxon put in the press release. And

35:13 as you can tell, green is the Pioneer acreage, red is Exxon. So great fit there. I mean, that's to your point. We can get drill four mile laterals. I'm sure if we got more granular on it I

35:24 think I feel I'm very interesting about the Exon press release. this is the picture from it. They included all their acreage over here in the Delaware Basin. Doesn't that scream, Who are we buying

35:37 next? I mean, aren't they sending the signal? It sounds like it. It sounds like it basically tells the other bigs your hands off. Keep your hands off. We're coming to get Concho

35:47 or whoever. I mean, right? That's the. Conoco, but Concho a while ago.

35:53 I meant to say Conoco Conoco at that. I'm just off my game. Sorry there, but. Conoch, Conoch, Conoch, or Matador, whoever the case may be. But anyway, I thought that was really interesting

36:05 that they showed that. Maybe they're telling their competitors back. Well, you can't drill four-mile laterals with any degree of scale without a position like that, of contiguous sections That's

36:06 what you're talking about. I

36:22 would. You're talking about what two-thirds of a township?

36:29 Yeah, it's a long way. That is a long way. That is a long way. I can't run for my own. It makes me tired of driving that front. It's pretty impressive. It's actually. All right. What happened

36:41 with the Germans in the French? Well, I mean, they're going to war, but a different war. Interesting story

36:50 this week about this little town in France. It's right on the Rhine River. It's just right across from Germany And they have a three-year-old, or they have a nuclear power plant that's gone dormant,

37:04 but they're talking about striking it back up. So there's been this sort of battle between the Germans and the French on, what do we do

37:14 in Fessenheim? What do we do with this dormant nuclear power station? And I was trying to come up with an analogy. It's like, I always use bad ones. Like, you know,

37:25 they're playing chess while there's a playing checkers, but I was. trying to think of analogies. And one analogy I've heard before is you're playing tic-tac-toe while they're solving a Rubik's Cube.

37:36 And that sounds like the guy solving a Rubik's Cube is the smarter of the tube. However, if you guys remember, you might be too young for this, but I remember. Do you remember Joshua? Yeah.

37:50 Ciao, we play a game. Yeah, we play a game. How did Joshua learn how to play a thermo nuclear war, tic-tac-toe, it was never a winner. There's never a winner. Good pull. So, and we didn't

38:05 even plot that. I had no idea. Dude, I knew, I was a war game player. I thought that, I'm gonna go back and watch that. But Joshua learned how to play tic-tac-toe, but what's interesting is

38:15 French are playing tic-tac-toe, and I'm gonna bring in Cutter for a second as well. The French are saying two thirds of their power derived from nuclear. And they're thinking about

38:29 powering it back up because they need that power. At the same time, there's a story about Qatar has, which is also interesting. They've,

38:38 they're, they're seeking buyers for two thirds of their LNG expansion projects. So Qatar has recently boosted its, or it's by 2027, it plans to boost its LNG production by 64. So it's interesting.

38:54 Well, everyone else is talking climate and the Germans shut out the coal. The French are like, we're going to turn on nuclear. But guess what the French just did? France just did a 27 year deal.

39:05 Total did with Qatar, R LNG. So France is going long term. Now, what's interesting is France is looking for low energy prices, while Germany is saying, wait a minute, that you guys are behind

39:21 on your commitments to the climate. And so Germans are mad. So who do you think is going to win this war? It's super interesting because there were guys playing tic-tac-toe while others are playing,

39:35 I don't know what the game is below that, but tic-tac-toe now is the number one game in the world because Joshua played it and we all know it. We all know what Joshua can do. What do you guys think

39:43 about this? So the two stories are, France and Germany fighting over this one nuclear plant, but ultimately France is saying we're doubling down, we're going more nuclear again 'cause it's key,

39:53 it's low cost. And secondly, we're also committing almost 30 years to buying LNG from a very low producer. And I'd say, hey Germany, why don't we look at the trajectory of your emissions? I mean,

40:07 since they've gotten rid of nuclear, they've turned a lot more coal back online. Absolutely, you know. And so the thing I still worry about, and we talked about this for over a year, and this is

40:21 one of those things that could wake you up at night is just, we have a really cold winter.

40:28 pulling on all the electricity to make sure grandmothers warm so that people aren't suffering. And they make the choice of people comfort over economic activity. And the Germans kind of having what

40:42 I'll call the most fragile energy ecosystem absolutely out there. And they've been very lucky in weather. And they're the biggest economy in Europe and boom This is the

40:55 start of the recession slash depression

41:00 that Mark kind of hinted at early because they could lead us into it. And it seems like history continues to repeat itself. What's interesting is the Germans went anti-nuclear in the 70s because

41:11 there was this whole movement. And then it was one scientist who actually came up with the waste disposal as the issue. We gave him finger of the week. We'll have to look that up. Let's go look it

41:24 up DWN. so I'm gonna bring it up next time. But France actually built. 56 reactors and leading to two-thirds of its power because of the 1973 oil crisis. So it's interesting that France is

41:37 thinking long-term, I don't know what the Germans are going to do. Well, the Germans are

41:44 culturally, I think, oriented toward thinking about the highest profile disasters, I read something in the article where there's still radioactive contamination in some of the mushrooms and in

42:01 ultimately the wild boar meat from Chernobyl.

42:06 In Germany? Yeah, in Germany. And so

42:10 the other aspect of this is that's a sensitivity that I think has been used politically, the most recent example of that is Angela Merkel reversing course and recommitting to the

42:24 shutdown of the nukes, which happened, of the German nukes, which happened. at the end of March. And we talked about that as well. And a big influence on her decision to do that was what

42:35 happened at Fukushima. And I found an exchange between then-president, Nicholas Sarkozy, who's on the conservative side, and Merkel really asking, you know, why? Because she saw that there was

42:49 a risk of an accident,

42:53 an outlier risk, but a risk nonetheless, of an accident that could happen in Germany She was a trained, or is a trained physicist, but Sarkozy's retort was, how can this be? He's talking about

43:06 this anecdote at a recent parliamentary hearing. Sarkozy said, have you not seen Fukushima? It was her response, and Sarkozy said to her, but where's the tsunami going to come from in Bavaria?

43:21 I mean, interesting as we are seeing the world sort of almost bifurcate.

43:28 on energy policy, and that also is interesting in terms of what's going to happen economically. We haven't seen a very tough one or yet, but we know the Chinese are deep coal, we know the French

43:40 are going nuclear and buying long-term LNG. Staying nuclear. Staying nuclear. Let's call it that way. Staying nuclear. Buying long-term LNG. And don't forget, Finland just commissioned the

43:52 biggest nuclear facility in Europe. There you go Yeah. And

43:58 they've committed to LNG. We were talking about the Irish. And the Irish saying no to LNG imports, it'll be, I mean, like, if you're a betting man, bet long-term, I'm betting against some of

44:10 these countries that are going anti. I just don't see, we know renewables can't, can't meet demand. We know that's intermittency. It's me interesting as politics is sort of leading policy, and

44:22 you have two layers here to deal with you're projecting or trying striving for this unity. Right. Right. From a policy standpoint across the EU and its member nations, but then you have the on the

44:35 ground reality of national and self-interest and political stability, which is fleeting in times of inflation and unreliable power among the

44:49 electorate. So I think, and in another part of the article, there's, I think, a conspiracy belief that somehow the French are running a campaign with some of Germany's industrial giants and

45:04 talking about relocation to France, where clearly structurally power is going to be, if we continue down this path, structurally power is going to be, theoretically, that would be doing that much

45:15 cheaper in France. I'd be doing that like a Texas governor going to California. Absolutely. You know that's happening. Absolutely. The But we spend a lot of time arguing, or they have spent a

45:26 lot of time arguing over things like taxonomy and what to call stuff, and whether it's included in green or not, nuclear being really the lightning rod, if you will, of what's in and out of the

45:38 so-called green or renewable EU designation, at some point the physical reality on the ground is going to, I think, overwhelm all this, and it really, I think, bodes for a lot more political

45:49 friction within the EU, and, you know, do we see another Brexit over time, you know, who knows, but these are the types of fundamental issues that impact everyday people and the well-being of

46:02 companies that I think, you know, pushing them beyond the tolerance level over a long period of time is going to have some, some pretty unfortunate political consequences for bullder. I'm dealing

46:14 with some really serious shit here. Okay. So this was my favorite I was at Heathrow and they have the sign up. and I'll get this to Jacob to cut it in. We use local renewable wood chips to heat.

46:31 Terminal two, the queen's terminal. Who's gonna tell them? Renewable wood chips. Exactly, it's a lot of that in the Northeast. Anyway, well, our Astros are down one to nothing, but

46:44 not worried, not worried.

46:48 What did Verlander say? Been there to overcome that? That needs to be a T-shirt Well, that's a good one. Particularly if we actually win. So anyway, folks, thanks for joining us. If you

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