Big Digital Energy

00;00;00;03 - 00;00;27;11
Unknown
What's up? Kirk? Man. How are you doing? Mark? I'm in Nantucket. You're about to head to some baseball tournament. Tournament? Tell us more. Yeah, I'll just, kind of spending a couple of weeks post, post the end of the semester and Memphis going through and rehab, and then we're off to Charlotte. But, kind of everybody's out of town this weekend, and so, look.

00;00;27;13 - 00;00;52;27
Unknown
About four hours away, SEC tournaments going on and, plays tonight and the quarterfinals against Auburn, Texas plays this afternoon against Arkansas. So there's a a chance for a, and I am to match up on Saturday. So. Gee, you never heard that one of the former. Yeah. Hey, are you the guy that hangs out a baseball game?

00;00;52;27 - 00;01;18;18
Unknown
So it's one of those score cards, and you keep all the minutes. It's all right up here. And I'm definitely not one of those fans that that attends a game with a glove. If you're over that, if you're over the age of ten, you shouldn't be wearing glove to to a major League Baseball game or any game for that matter, on a bare hand, or anyway, I've tried to catch a barehanded just to.

00;01;18;21 - 00;01;38;05
Unknown
But coaches don't like that. They should measure exit velo at point of impact with a fan's hand. You know, ball comes off the bat at 110 miles an hour, and you see somebody pop up in the middle of the section where everybody else is ducking and sticks their hand up and catches a line drive. Never understood that. For a $5 baseball, it looks good on a highlight reel.

00;01;38;08 - 00;02;13;15
Unknown
Anyway, Venezuela, all of a sudden Jackson's back. We've got a shaming 180 by Jackson after calling it UN investable on January 9th. Remember, Maduro was captured in a wee hours raid, by U.S. special forces back on, I believe, January 3rd. And I think that struck a sour note with the president, on that day when he had all the oil executives in on January 9th at the white House, Venezuela summit, there was a lot of rah rah, around $100 billion in deals.

00;02;13;15 - 00;02;45;11
Unknown
But now, weeks on this, at least, it's risen back to the top of the headlines for energy that, an announcement on New Deal or deals is imminent, possibly before the end of this month, which is a mirror, what, nine days away? And so, you know, we'll we'll play that, that clip of Darren Woods talking and uttering the UN investable third rail term in a split screen with the president.

00;02;45;14 - 00;03;06;04
Unknown
And we we did see the aftermath, of the rhetoric after they kind of threw cold water, at least immediately, on the notion that we're going to rush right into Venezuela and start spending tens of billions in capital. We have a very long history in Venezuela. We first got into Venezuela back in 1940. We've had our assets seized there twice.

00;03;06;04 - 00;03;25;14
Unknown
And so you can imagine to reenter a third time, would require some pretty significant changes from what we've historically seen here in what is currently the state. If we look at the legal and commercial constructs and frameworks in place today in Venezuela today, it's un investable. And so significant changes have to be made to those commercial, frameworks.

00;03;25;14 - 00;03;54;14
Unknown
The legal system, there has to be durable investment protections, and there has to be a change to the hydrocarbon laws in the country. We're confident that, with this administration and President Trump working hand in hand with the Venezuelan government, that those changes can be put in place. Well, there's a little bit of background here. Mark one is Venezuela owns, owes Exxon $13 billion from exploration, which they've been pursuing since they decided to leave in 2007.

00;03;54;14 - 00;04;23;06
Unknown
And not sign up for Chavez's chaotic terms. Chevron elected to stay there, there today. I do think there's a little bit of kind of competitive, rationale, but I don't think that Exxon, you know, they one thing he did say that I don't think is on the clip, one thing Darren Woods did say is, look, we we're going to have a team, an assessment team ready to go with, you know, inside of two weeks.

00;04;23;08 - 00;04;51;21
Unknown
But there's there's a lot they have to lay eyes on. But more importantly or as importantly, what is the what is the commercial and legal framework under which all of this becomes investable? And clearly just plugging and playing into the current structure, which was completely dysfunctional. And in Exxon's mind, was a nonstarter. And that's that's what they were saying.

00;04;51;21 - 00;05;24;06
Unknown
I don't see this as a departure, despite the shockingly short time frame over which this apparent reversal took place. I mean, again, in the in the, in this business, you know, grudges are expensive. So is ceding market share. And and what we know is that Chevron announced a Venezuela field expansion last month, which puts direct competitive pressure, as you were saying earlier.

00;05;24;09 - 00;06;08;18
Unknown
You know, Exxon owns two large refineries on the Gulf Coast that, that Venezuelan oil is primed for. So, this to me is just responding to competitive pressure. The real negotiation really happens when the Exxon, engineers actually walk the fields and hit the ground. So to me, it's it is a reversal. It's funny, as I said, you know, it's it's, it's it's one of those, you know, it just looks like Darren's talking on both sides of his mouth, but I think in reality is this is just responding quickly to an opportunity.

00;06;08;21 - 00;06;43;28
Unknown
I liken it to kind of the popular reaction to the activist's apparent success back in 2021 when they, you know, when they lost, I guess, the vote on a resolution and engine one got, what, three board seats? And I remember Dan Pickering, commenting on that on the, on Twitter. And the one thing that you, that you never saw Exxon do is, you know, do something that ultimately lost the war, from a climate standpoint.

00;06;43;28 - 00;07;23;01
Unknown
And that was I know I'm going pretty far afield for an, an, an analogy, but I said at the time, you know, maybe this is a concession with no teeth. And one of the big things that Exxon did not do that every, every other, particularly the Euro majors were capitulating on was scope three emissions. So I think on this, it'd be really interesting to see what the discussions in negotiations, between the Venezuelans and maybe, the Trade mission or Business Office or the State Department, you know, Exxon probably.

00;07;23;03 - 00;07;45;16
Unknown
I'm a little biased here. They probably went out and said, look, this is this is broad conceptual framework of what the legal and commercial terms need to be. Given that there's, as you pointed out, there's going to be a lot of surprises. Once you get boots on the ground, you start laying eyes on on assets and what kind of capital and what kind of timelines going to be required.

00;07;45;18 - 00;08;12;03
Unknown
You know, question that I'm having now is, was Maduro removed before the discussion with Darren Woods of the white House or after before that was the catalyst for the meeting? Okay. Just checking because it wasn't it wasn't. And hey Trump hey, we're moves in the Darrow. We have an opportunity there. But maybe maybe that I mean, I'd like to know the real timeline here.

00;08;12;05 - 00;08;35;10
Unknown
I would too. And you know it. Well, my point is, was the what is this, the summit on January 9th, a. Oh, shit. Let's get something in the press, because we've already discussed this prior to Maduro. Now we have to pay for it to make it look like it happened after we've moved Maduro. I'm that's the that's the real discussion here.

00;08;35;12 - 00;08;58;13
Unknown
And you know why why when you've got a well oiled machine over in Stabroek and Guyana heading towards a million barrels a day, you know, are you wanting to be right next door, distracted by a lot of difficulty and complexity? But, you know, they they can they can do a lot of things in a lot of places, like all the super majors can.

00;08;58;15 - 00;09;31;03
Unknown
Yeah, they're great country builders. I mean, they're one of the best. So maybe they they still have that capability. Yeah. I happen to believe that, Nasrallah needs Exxon from just a legacy standpoint and knowing what's what, I think both Chevron and Exxon are going to be pretty helpful in bringing proviso back up the curve. But as you know, the government in Venezuela is not the opposition.

00;09;31;03 - 00;09;57;18
Unknown
It's the residuals of the regime. And so I think there's a pretty tight leash there. And we're basically dictating terms, to figurehead puppet president. Maybe it's more valuable to deal with the devil you know than guy on the devil. You don certainly more straightforward than what's going on on the other side of the world, in Iran, in the Middle East.

00;09;57;25 - 00;10;31;05
Unknown
But we won't we won't really go down that well. I can tell you, Venezuela, Venezuelan oil is a lot closer. It is. And it's also look that that's a great point. And we were saying this Russia Ukraine era. Right. We've got a vacuum building in Venezuela where the Russians and Chinese and we're saying, you know, we saw it in Cuba where we've got more security threats building in our own backyard in the Western Hemisphere.

00;10;31;05 - 00;11;03;24
Unknown
And Venezuela was a key, key part of that. So I think there's a lot going on in terms of that, strategic campaign to rectify, what was building, what I believe was a fairly tenuous or dangerous situation. So stay tuned. Maybe we'll get an announcement today or next week. So it'll be interesting to see. I heard that the, kind of the initial collection of fields that were targeted were, numbered a half dozen.

00;11;03;29 - 00;11;26;14
Unknown
Some were in Orinoco. So the heavy, heavy oil belt. But stay tuned. Stay tuned. I mean, you know, as I think about if I was in Darren shoes, I'd say the exact same thing. Like, we don't understand the rule of law, even post Maduro or free Maduro. We do know Trump removes and post Maduro. To me it's always been a huge opportunity.

00;11;26;14 - 00;12;02;11
Unknown
We know there's a lot of oil there. I know quite a few private equity funds that have talked about this opportunity. So no surprises here in my mind. And why not get your foothold in a place that you already know to operate? And again, it's on our it's on our side of the world and you're not you're dealing with a fairly blunted or defanged, political military vestige in Venezuela, which wouldn't be the case if this were, you know, we're trying to cut these types of deals with the IRGC in Iran.

00;12;02;14 - 00;12;33;06
Unknown
So, again, stay tuned. Weekly inventory numbers are kind of back in vogue. Front page news. Do check out the EIA on Wednesday. I mean, the EIA is my home page mark. Mine still Ercot. That's right. So 17.8 million barrels. Yeah, almost ten of that was from the SPR. And keep in mind that was for those were data for last week.

00;12;33;09 - 00;13;03;03
Unknown
And we still have a few more days actually today I guess Memorial Day weekend is the start of the summer driving season. I don't want to get into the tedious back and forth kind of the headline Jawboning, and a lot of the misdirection plays that are being run, and political commentary. And what we're trying to do with crude and product prices here, through headlines and commentary.

00;13;03;03 - 00;13;35;26
Unknown
But, you know, I've been paying a little bit of attention to what Jeff Currie has been saying. In various pieces over the course of the last couple of weeks. He's he's kind of a new presence on Twitter, a good follow. Ninja for a long time. But he's he's been consistently saying, look, we're we're approaching tank bottoms and and the real key issue is in the US, we we may have deficits in some pockets when those turned into actual shortages.

00;13;35;28 - 00;14;03;04
Unknown
When you get to operating minimums in gear inventory locations like Cushing, we got to begin getting within a few million barrels there. Got to take a look at to see what, Cushing's current stock level is, but it's not zero. And so I think a lot of people don't understand that we can't physically pull those storage facilities completely to the bottom.

00;14;03;07 - 00;14;31;22
Unknown
So when he says tank bottoms, that's you get to an operating minimum and then you're going to say, the physical market respond. And so I think there's been a resurgence of that. Awareness of as we get closer to the catalyzes, the high demand season you had, you know, 91% refinery utilization. Supply was I think runs were down like 80 to 80,000 barrels a day.

00;14;31;22 - 00;15;05;05
Unknown
But you do have some units offline, so utilization remains pretty high. We've had some incidents at key refineries like Port Arthur. We've talked about that. And so it feels like the system is running close to the edge. And if we do run into, you know, tank bottoms as, as Jeff Korea calls it, then, you know, we we're, we're going to see some price action because the only lever that you have left opposed to mass destruction, if we get into the markets, are the leading indicator.

00;15;05;08 - 00;15;38;13
Unknown
So when molecules run short they're rather crude. Markets are next. And I mean, we can't just call the fed and order 10 million barrels of crude. And I think what what is is shocking about this administration and the previous in many ways is you cannot print molecules for words. That's the entire energy policy policy thesis. It's a constraint that is now showing up in a lot of places.

00;15;38;16 - 00;16;02;23
Unknown
You know, first talk about the derivative products, most notably fertilizer. I saw a post by a farmer this morning saying, you know, I hadn't seen anything this bad in terms of, potash prices since the 80s were normalized, prewar implied a previous supply disruption was, I think, 70 to $90 a ton is 6 to $700 a tonne.

00;16;02;23 - 00;16;33;18
Unknown
Now. And and we know where that ultimately ends up, either in scarcity or much higher prices for commodities. I mean, my last few trips, a grocery store have just been much more aware of things you didn't even think twice about and what you know, what what, a small basket of groceries. It adds up to do you know what I, just comparing prices.

00;16;33;18 - 00;17;03;08
Unknown
Just for a sidebar. Do you know what a case of sparkling water goes for? And Houston, what brand? The cheapest brand. Let's just take generic. So 24 canned case or 24 bottle case. You know, since cans like 60 a 12 canned case apart. How much? Three, $4. You know what it is. And Nantucket 774 times $17. Wow. There you go, man.

00;17;03;11 - 00;17;52;01
Unknown
I filled up my son's car yesterday, and after I ran through Kroger here in Memphis, and I was happy to get the $0.03 per gallon discount ticket all the way down from, you know, it's below the national average, 399 to 396. Well, it looks like the I revolution's discovered the utility bill. What's happening there? Mars. Well, it wasn't directly alluded to, but, you know, again, Jeff Currie pointed out, and reposted, some news with respect to Microsoft canceling its cloud code licenses and then Uber spending its, its entire 2026 AI budget and four months.

00;17;52;04 - 00;18;23;09
Unknown
And so the, I think the one comment in there is, look, Microsoft is an AI customer of Claw that essentially has limitless cloud capacity. But, you know, the the, the addiction phase has been heavily subsidized for all the users as the sophistication of these tools has gone up. Now, you know, the subsidy is, you know, does have an endpoint.

00;18;23;09 - 00;18;52;15
Unknown
And so it's getting in some cases, I think what Microsoft was, was saying is, you know, with its announcement or cancellation is that, the value doesn't doesn't outweigh the cost to be. Literally sophomoric about it. But you know what what what, what is happening? And one of the major inputs to AI is what we're saying.

00;18;52;15 - 00;19;17;15
Unknown
And energy and power. And so there there is a direct effect on what these tools demand. And we haven't, you know, we haven't seen he does a very good job of, of comparing. I'm talking about Curry the digital and the physical. And we've seen rapid cost improvements and all the way back to, you know, dot com revolution.

00;19;17;17 - 00;19;51;00
Unknown
But we didn't have the reliance or connectivity with the physical world and the limitations that it presents until now. And so it is a bit different in that regard. And he he calls the, I think the top seven oil and gas companies in the world, the Munificent seven. And contrast that with the Mag seven and if you look at where they're trading now, the Munificent Seven, the oil and gas companies are trading at 15, 15 plus percent free cash flow yield in the Mag seven is effectively trading at zero.

00;19;51;03 - 00;20;29;12
Unknown
So the story that is that Microsoft is reportedly canceling their clod code licenses. Yes, because of energy price and because well, because of course. Yeah. Which is which is not a trivial part of computer pricing. I have to believe I'm not an expert and I've I've never, you know, beyond collide. I've never seen for a generalist AI model, what the ultimate revenue and pricing model looks like, what kind of margins they're expecting to generate, if it has a specific automation and a genetic purpose for an enterprise, that's one thing.

00;20;29;12 - 00;20;53;13
Unknown
But just kind of, you know, the Netflix model, if you will, for the the generalists, GPT tools, what is the ceiling on the price point, just given the capital intensity of all the things that have to go in? I mean, you're talking about just the data center piece alone. You're looking at, what, 14 to $15 million a megawatt?

00;20;53;15 - 00;21;22;22
Unknown
And that's before you buy the GPUs. I mean, a single AI data center can consume as much electricity as 100,000 households. Yep. You multiply that by a hyperscaler build out at $100 oil feeding gas generation, ad grid congestion in Northern Virginia. And that's what you get. You get Microsoft cutting AI subscriptions because the lights cost too much to drop.

00;21;22;24 - 00;21;55;12
Unknown
So and what's interesting is the AI industry spent the last five years telling us energy was abundant and won't be solved by renewables any day now. So I mean, welcome to physics. The difference between this and Dave and Buster, Dave and Busters outing is that these tokens cost real money. Exactly. And and if you use a lot of AI, which I do, they tell you how many tokens you're using.

00;21;55;15 - 00;22;22;03
Unknown
But exactly. Can't go ask mom for another 5 or $10 bill to put it in the machine. That we all remember as kids. Well, look, I think it all ties together with what, you know, Curry believes is looming from a physical standpoint. We're seeing it in especially, oil products like, motor oil and lubes, where some of the big retailers have been warned that there's no more coming.

00;22;22;03 - 00;22;56;08
Unknown
I think in the extreme in certain pockets. So, you know, kind of here we go. And and, close it out. I, listen to the clip that we've attached, but, you know, talking about the the recovery, if we got a June 1st all clear signal with the straight, think about the insurers of the tankers, and the crews and how different the, terrorist or military threat is.

00;22;56;08 - 00;23;19;25
Unknown
And one of the things you pointed out that I. Yeah, this is true, you know, 20 to 25 years ago, we didn't have, military drone capability. Now we do. And if you look across to the UAE side of the street, it's flat desert. But on the Iranian side, you've got all these hills and mountains where a lot of bad people can hide out and on strike.

00;23;19;25 - 00;23;44;28
Unknown
So what? What insurer? What major marine insurer is going to look at it on day one and say, okay, we're ready to go back and we're ready to go back at kind of the same pre-war risk. Risk premiums that we had been, assigning to, this particular industry. Along with, you know, nobody has a good idea of what the damage looks like and, what shut ins.

00;23;44;28 - 00;24;12;17
Unknown
Of course, I, you know, I have opinions there, but I did make a good point that when Iran got shut down post revolution, they went from 6 or 7 million barrels a day in the 1980s to, I think, for a while, effectively zero. But they've only rebuilt that capacity about 4 million barrels a day. And that was, what, 45, 47 years ago?

00;24;12;20 - 00;24;33;13
Unknown
So there's there's something in the system that is going to impede kind of flipping a switch or opening a valve. And we're we're back to normal. There's a there's a lot of physical complexity in the middle of it, just as there is with the, the, the AI dilemma we just talked about. I was Chuck was on to talk about the next one.

00;24;33;16 - 00;25;01;25
Unknown
Yeah, this is great. I'm actually really excited about this one all the way back to drill, baby. Drill. You know, we're saying okay, politically we are very actively and and explicitly saying we want oil prices to go a lot lower. And the paradox is the industry is not inclined to spend more capital on, you know, kind of a falling knife of, of a commodity outlook.

00;25;01;25 - 00;25;35;07
Unknown
And so they've remained very disciplined. And some of the things we talked to around the edges of it, what, you know, what could the federal government do or what could the administration do to incentivize? Well, we just had a BLM lease sale, a mere 33,000 acres across mostly Texas and New Mexico, and it garnered four times the previous record back in 2018 of a total of $4 billion for tracts, primarily in the Delaware Basin and southeast New Mexico, and Lee and Eddy County.

00;25;35;10 - 00;26;04;25
Unknown
2.6 billion of that 4 billion was spent by Devon. You know, I'm curious how, I was expecting not only Devon, but Cty oil exploration and cattle to be one of those big bidders. I was hoping to see them in it. And, I mean, nothing would, surprise me more than seeing, what's his name? Taylor. Who's the, who's the creator of the writer of land man?

00;26;04;27 - 00;26;29;14
Unknown
Taylor. Sheridan. Taylor. Sheridan starting an oil company. Just to prove that he can spot cty oil exploration and cattle should have been in that bid. Maybe they just picked up a plotline or a storyline for next season that we're going to see Tommy in New Mexico having to deal with all kinds of of New Mexico unique things. Yeah.

00;26;29;14 - 00;26;53;11
Unknown
The biggest regret my dad ever had in life was the fact that he was born in Hobbs, New Mexico, and he knows more about Texas history as I'm on my mom's side. You know, one of the original land grants, the Kirkconnell's. But my dad is still pissed at Ari's dad, but. So I guess maybe he's not pissed anymore, but he was past that.

00;26;53;11 - 00;27;17;17
Unknown
He was a New Mexican. Nothing wrong with it, but, Yeah, that would be awesome. So this is for time it. Look, look, if Jerry Jeff Walker can claim to be a Texan, which he. I consider him to be a Texan. He was born in Oneonta, new New York, New York, Jersey. You're. Plus, it is a state of mind, as they say.

00;27;17;20 - 00;27;45;24
Unknown
Even though I haven't spent much time in Texas over the last year and a half, it's still my driver's license. I had $100 oil. A Delaware Basin lateral producing 800 barrels a day is generating roughly $80,000 per day in gross revenue. So Devon clearly does the math. And that's why they wrote the chat. Yeah. And there was a lot of, you know, shots taken from the peanut gallery.

00;27;45;24 - 00;28;15;03
Unknown
What Twitter loves to do. And so I think the, a bit of the angst or surprise was the fact that, you know, Devon just closed the Katara merger. Here they are hauling off and spending a good chunk of capital on a bill and Malay sale. There's a lot of, you know, geometry rationale for that because it's a lot of contiguous acreage with their existing leasehold in New Mexico.

00;28;15;05 - 00;28;47;25
Unknown
And and the folks at forecasts put out commentary on it. They'd run their kind of normalized type. Well, and got very close to the value that Devon for its I think Devon spent the 2.6 billion on 16,300 acres. Figure out what the location count is. But those location values penciled out to for Devon in their press release to 6.5 million per forecast, got to 6.3.

00;28;48;02 - 00;29;22;17
Unknown
So virtual rounding error. And they looked at a ten year slice of those horizontals, over a thousand wells as they were doing their, their type. Well, development modeling. So and by the way, that 6.3 million per location value that that forecast arrived at. Now these are single well, economics and I have a lot of opinions and philosophies as it relates to an actual company level program.

00;29;22;19 - 00;29;46;22
Unknown
But that was on $50 oil flat and zero value for gas 22 month pay out. I think the IRR, the half cycle IRR was somewhere in the 45% range. And so somebody is somebody who's done a lot of work digging and trying to find, you know, really a representative. Typical. Well, what this is about now the timeline is a big deal.

00;29;46;25 - 00;30;16;05
Unknown
You know, you spend this kind of gavel on acreage, which was $133,000 an acre. The clock is ticking on your present value. And so how quickly can you get at that and fully exploit that, that acreage that you paid a pretty healthy price for? I mean, I don't I don't necessarily see this as the Iran war and $100 oil prices in perpetuity at $50 all.

00;30;16;05 - 00;30;56;26
Unknown
I think what what I think what the Iran war said and with Ukraine is that there's an unsettling period of the world and unrest, especially if you see, as these migrants are moving not only all over in the U.S. and here in Nantucket, but I think you're seeing a period of instability. Instability means higher oil prices. So, so, so I see this more as a trend and a signal that even if we're not at $100, well, there is going to be a rapid demand and increase.

00;30;56;29 - 00;31;31;24
Unknown
We've already talked about this. I mean, all the macro factors are playing out world population growth, pandemics, which of course, which you would think that would depress oil prices. But in this case, unrest has created this rapid increase in demand for for oil and higher prices. I and then you have this I raise, which you're not going to see data centers in space anytime soon, even though you keep hearing that from all peanut galleries.

00;31;31;26 - 00;32;10;23
Unknown
To me, the macro saying this is a no brainer investment, I'm not saying $50 or Stevens price tag, but that agreement between what they paid and then what forecast arrived and modeled is pretty telling in my mind. So there's there's a lot of headroom here, I guess. The other thing and, you know, I don't know, kind of the, the attribution, but you're looking at locations that have 100% working interest in an 87.5% NRI, because don't forget, the federal royalty rate is 12.5% versus.

00;32;10;25 - 00;32;39;04
Unknown
The typical kind of shale, 25%. So that helps a lot. And you know, let's let's see where associated gas and in Glasgow in the basin as we get back to growth. If we do get back to growth in the Permian, then, you know, that's lining up on top of that kind of bare bones case at a, at a pretty severe discount to, to WTI.

00;32;39;07 - 00;33;07;18
Unknown
So we'll see. You know, I know Devon was off quite a bit yesterday on, on the on the announcement or the day before losing track day is here. So keeping worth and our final item keeping with, energy and power. I had a little back and forth. You saw some of it? I think his handle is mock boa or dead government.

00;33;07;20 - 00;33;36;27
Unknown
He's he's front and center on our stuff, which is great. Talking about the, you know, the oil and gas industry needs to be more aware that they are a mining industry. Responded and said, look, in my entire time on Wall to Wall Street, particularly as a sell side analyst, it was just intuitively odd to me that there was and I get it because it was different, completely different segments of institutional investors.

00;33;37;00 - 00;34;06;28
Unknown
But fundamentally, the connection and the symbiosis between oil and gas and power and utilities always made me scratch my head. It was like we had kind of separate ecosystems, analytically. But now we're seeing quite a bit of convergence. And so if we look at our next item, which is, I don't know if you saw this one when it was announced, but next arrow is buying Dominion for a $67 billion all stock transaction.

00;34;07;01 - 00;34;32;16
Unknown
Next area's largest renewables developer. And they get they get by way of Dominion, the US's largest net gas generation portfolio. So combined entity is going to be worth $249 billion. That sounds like a lot. But when you look at the mag seven, it's a fraction. You know, this is the biggest energy deal since Exon and Mobil in 1998.

00;34;32;19 - 00;35;00;06
Unknown
Is that right? And if you look at NextEra, the biggest renewables developer in America, they just bought the utility that sits on top of the world's largest concentration of AI data centers. Yeah. So more than the renewables five gas generator paradox. But it's actually really logical. You cannot run a 200 megawatt data center 24 over seven on solar.

00;35;00;09 - 00;35;27;28
Unknown
That's because solar takes the afternoon off. I mean, it's physics once again, takes physics keeps coming back. We should have we should have studied more physics. Well, I studied fair bit. Oh, you did for sure. I've said I think congressional and presidential aspirants and office holders have to provide proof that they at least pass their high school level physics course.

00;35;28;00 - 00;35;43;18
Unknown
That's probably not a popular opinion about, amongst a bunch of mostly lawyer background politicians. But what we're learning, what we're learning is, is that there's a big.

00;35;43;21 - 00;36;11;10
Unknown
Immovable physical reality. In the middle of all we're trying to do. And you pointed out one of the most obvious ones, and it's seemingly been an absurd battle over the last 5 to 10 years that you can't get around the fact that certainly renewables without batteries and we haven't gotten there yet are are fully capable of any kind of baseload performance whatsoever.

00;36;11;12 - 00;36;34;14
Unknown
I mean, next, Sarah basically just spent $67 billion to buy an extension cord that keeps ChatGPT running in Northern Virginia. I mean, that's what this is all about. And if you think like, you know, if you think of ratepayer, of course, you know, the utility industry calls their customers ratepayers. That's what they are. They don't they don't have a choice.

00;36;34;17 - 00;37;14;16
Unknown
I mean, data centers get the electrons, homeowners get the bill. I think Meredith Angwin coined or pointed out that that important distinction, they do not at the end of the day, have choice if they have any. It's very inconsequential. But what we've seen and Secretary Wright pointed out in his wood shedding of the IEA a few months ago, is that every place where we've had aggressive buildout of grid scale renewables, we've seen massive increases in residential, retail, residential power rates.

00;37;14;19 - 00;37;19;18
Unknown
What so.

00;37;19;21 - 00;38;02;16
Unknown
I'm just living on this little island called Nantucket, which is a really good microcosm of what's happening in the United States, right now. But, you know, those of us that are property owners, we're not allowed to vote on anything locally unless we live here year round. So I'm looking at all these. They just had a big meeting and vote and oh, imagine this, all these and every single proposal to raise taxes, bills 112 to $120 million, old folks home on the island build all these new affordable housing for the illegal aliens on the island.

00;38;02;16 - 00;38;35;24
Unknown
Millions and millions of dollars. Guess who pays those taxes? I do, they manifest in property taxes. Or is there some other type of tax? Mostly it's going to be in the form of property taxes. So those are going way up and illegals aren't paying those taxes, but they somehow are voting. I don't go figure that. But that's the same thing that's happening here is these utilities that are most of some of them are continually or are still regulated.

00;38;35;26 - 00;39;08;27
Unknown
They're going to pass all these costs on to the ratepayers, you and me, who have zero vote, zero choice here. So that's what's happening in this next area. Caesar Dominion has, especially in Northern Virginia, highly regulated. And you as a ratepayer have zero control, zero vote. You can't do anything about it. So bye bye. The mere fact of this combination proforma there, I believe, will be the largest utility in the world.

00;39;08;29 - 00;39;34;29
Unknown
Right. Because most utilities are local. That's why. That's why the utility business has never been an international. It's because it's all local. And this is go ahead different different administration and different kind of political bet right now versus when Exxon went through the ringer in its merger with pioneer and the consent decree that they had to agree to for Sheffield, etc..

00;39;34;29 - 00;40;07;24
Unknown
But you look at and I don't know anything about, kind of the thresholds in the utility business about market concentration and pricing power, all the things the FTC looks at. Hart, Scott Rodino, all of those things that's going to be interesting to watch. And maybe it just gets a, you know, an easy time of it. But that I think that's something that is going to be a test case in terms of what happens in the short, intermediate and long term post these combinations.

00;40;07;24 - 00;40;38;18
Unknown
What happens to what happens to rates? Hey Mark, I doesn't run on vibes. It runs on gas turbines. Someone's got to pay the bill and that's you and me. How? I had one little somewhat tangential issue, but somebody posted on LinkedIn a couple of days ago about the fact that, Z is now running 46 temporary turbines over in South Haven to energize Colossus two.

00;40;38;18 - 00;41;13;06
Unknown
We talked about, I believe it was last week that, and throw up. I could take an all of Colossus one here in Memphis for its most sophisticated tools. And so, what's been looming over all of this since Colossus one started is the fact that, well, you're pretty much running, at least from a federal standpoint. You ran these turbines, without permits at the federal level.

00;41;13;08 - 00;41;43;05
Unknown
That was probably more true with Colossus one, where they had, I think, a peak at 35, mobile temporary mobile portable turbines, on a local level in Mississippi, which is literally right across the border from where the Whitehaven Colossus two location is. X I or space X, or whatever we call them going forward is building a permanent up to, I believe, 1.5GW.

00;41;43;07 - 00;42;25;13
Unknown
Power plant in partnership with Solaris. But right now they've got those 46 turbines running over Mississippi, and they do have a state Deca permit exemption because those turbines are supposed to be running less than 12 months and they are classified as portable, temporary, etc.. And so, I do a little more digging. The EPA in January issued a clarification, this under the Clean Air Act and said no, those at the federal level do not qualify for such an exemption.

00;42;25;15 - 00;42;57;06
Unknown
Basically saying, okay, we know they're on wheels or you can move them, but they should be treated as stationary. Stationary and akin to kind of a utility emissions standard under the Clean Air Act. As I understand it. I don't think they've been shut down, but it's going to be interesting to see what kind of consequences come out of that because it's, you know, it's going to take some time to get that, that, I believe it's a combined cycle plant that, that they're building.

00;42;57;06 - 00;43;20;11
Unknown
They're on that old Duke site, in South Haven. But it made perfect sense that they, when they decided to start up Colossus two, that they moved across the border and kind of reset the emission ceiling. Oh, we're going to be in another state, despite the fact that it's not that long over the extension cord to plug in to, a Whitehaven data center.

00;43;20;13 - 00;44;03;06
Unknown
And that building's 1,000,000ft². The one in Whitehaven. It good research man. Yeah. We we as you recall, we've been talking about it since summer of 24 when, Colossus one was eminent. And then, as you also know, I spent a lot of time in and around Memphis and picked up some of the local news. And there were, you know, there was a lot of community, public comment and pushback starting to occur because, you know, people were complaining about the fact that they weren't permitted and has a lot to do with kind of Knox particular, formaldehyde type emissions that are certain, not attainment zone, air quality, restrictions.

00;44;03;08 - 00;44;29;28
Unknown
And if you got through the loophole of saying, well, it's mobile temporary and you can do it for 12 months or less, but the EPA clearly came out in January. But, you know, here we are, kind of raising a battle between who has primacy here, between the Mississippi State, the two, and then ultimately the EPA. So we'll see.

00;44;30;00 - 00;44;53;10
Unknown
We will see, Mark, it's the consequence of speed to power. I mean, I'm just waiting for CTE, oil exploration and cattle to get into the utility business as well. Oh, I have one last question. What is your you're a Texas resident. What what is the comparative kind of property tax rate between and talking. Oh, I mean that's the dirty secret there.

00;44;53;10 - 00;45;23;23
Unknown
10% of Texas property taxes. It's amazing. So if you don't if you don't make income in Massachusetts, the secret is you own property here because the taxes are nothing. Now our taxes are about to go way up now. Still, they could be 15 to 20% of taxes, but. Yeah, that's the that's a, but we don't live here year round.

00;45;23;24 - 00;45;51;25
Unknown
And otherwise we'd be paying income tax. And the taxes are high in different ways. But again, it's a left leaning state. And there's reason people just like New York, just like California, people want to leave because taxes continue to go up. And the, you know, the reality is I don't care who you are. Liberals just seem to always want to say that they really care about people.

00;45;51;25 - 00;46;14;09
Unknown
They don't. Because when you look at what they do with their money as they leave to places where taxes are low because everyone doesn't matter who you are, you don't want to work hard and give what you worked hard for to someone that doesn't work hard for it. And we can all talk about like, oh, care. We care about people.

00;46;14;09 - 00;46;37;12
Unknown
That's who we are as humans. Yeah, let's take care of people. But there's nothing worse than someone that's entitled and doesn't work hard for something who also has the audacity to tell you how you should spend your money. And oh, by the way, you should stay. Yeah, well allowed in New York and Ken Griffin or Chicago and Ken Griffin.

00;46;37;15 - 00;47;02;01
Unknown
Right. So yeah, it's a real thing. But you know, I think Texas has gotten a lot of mileage, perception wise about no state income tax. And it's still believe it's the best state in the country to do business and do business quickly, get things done. But it's great. But it is expensive from property taxes. Property taxes are no joke.

00;47;02;03 - 00;47;25;21
Unknown
It's one thing I'm, That's one thing I'm glad I'm out from. Have been out from under for a little while now. So anyway, have a great weekend. Blessed Memorial Day. Just remember all those who made the ultimate sacrifice. It's, it's a somber weekend, and we should all take a moment to to remember.