Big Digital Energy

0:00 All right, I violated the first rule of BDE the black shirt on the black. I'm the floating head. That's not the first rule. What's the first rule?

0:12 What's that? Make sure you're making sure you pee before you talk. Yeah, that's the number one rule of life. That's not a BDE specific. What? We're not starting off with oil I do. But we will

0:27 talk about it. There we go. Fair enough. Yes. I figured it would come up. So what do we got to open the thing up? All right. Peak resources filed to go public.

0:40 It's a Yorktown-backed company. Jack Vaughan leads it. Pureplay in the Powder River Basin

0:50 Let's just wander down the list. So just a

0:57 level set they've

0:59 filed on the 20th of last month, I believe, and announced that they're launching the IPO today. So that was out, War

1:10 527. Sure, that this morning, that's why it caught my attention. Got you, so it's

1:16 all-time worse valuations or certainly poor valuations. A lot of volatility out in the market, still capital availability is better, but it's certainly not where it was. And I think Wyoming kind

1:33 of fits in that bucket of western states, maybe not Colorado level, we're seeing pretty significant political and regulatory headwinds in terms of

1:46 development and expansion.

1:49 And when I think of the underwriters in the energy business, I don't necessarily think of Jenny Montgomery and I don't mean to spare Jenny investment bank.

2:00 I'm grateful for any investment bank that'll work with energy companies. But

2:07 so what's going on? I think this is one of those things where there's something going on we just don't know about it. I started to read the S1 and

2:19 kind of put me to sleep. It was

2:22 not that it's not an exciting story or anything, but just all the different funds that are in things And, you know, so you kind of have the York towns probably been in there for a long time. If

2:35 you have a S1 available, that's always your sales memo. Hey, everybody, we're for sale. Please make us an offer. You know, the other thing you can do is when you're publicly traded, you can

2:47 then take your shares and distribute it out to your investors if

2:54 you're Yorktown. And you kind of have to do that just 'cause funds get long in the tooth and people are like, Hey, where's our money? money. And there's only so many fund extensions. It's only

3:04 so many fund extensions you can get. Investors are pesky that way. They're like their money back. You know, and who knows you. I've met Jack. I had a meeting with him like 15 years ago. I think

3:16 he showed me his picture of him going to the, I think he's been to the peak of Mount Everest. And he had a little golf club. He took up there and he hit a golf ball off it. That's awesome. Yeah.

3:30 So I mean, who knows? Maybe he's always wanted to run a public company. But I think I do think I can't make a compelling case for why they're doing it. I will say it's going to be interesting to

3:41 see the feedback. I want to say that the target is a little over 86 million their fair market value. I think of as of June 30th was around 395 million.

3:58 And I saw in that. quick scan that is about 1, 800 gross locations. So,

4:09 you know, this is maybe trying to hit the ATM a little bit. Yeah. When was the last one we saw like this? So the last IPO I remember is Tam Boren, who was Brian Sheffield's beat-a-loop basin.

4:25 You had Citibank get them public. And when was that? August September? Yeah, it was recent. But again, it was a, but there you kind of had, you had a niche play. You'd had enough capital

4:41 invested that you de-risk to play. It has a possibility of being huge. That kind of felt like a unique story that even if public markets are tough, you can get unique stories done. So we'll,

4:57 we'll see what happens on peak. It'll look like peaks revenue at June 30th on a year over your basis was down something on the order of 12. So

5:08 did you see what kind of oil versus gas? I did not know. Yeah. So speaking of oil, all right, we've got to go back. Kirk's not here to save me more more of the

5:22 three, four and five dollar moves on.

5:26 I think how headlines are written So the IEA is out today talking about 2024 demand being revised down by 40, 000 barrels a day, which is

5:39 maybe not rounding on the margin, it matters, certainly the optics matter, but also and I didn't see where they took their 2025 number,

5:50 increasing that obviously off of a lower 2024 base that they adjusted here October 15th. So.

5:60 honing in on the answer for 2024 demand,

6:05 China weakness, the thing that we've heard and seen repeatedly in these headlines. Also taking the opportunity to address this looming question about whether or not Iran's oil infrastructure is at

6:24 risk

6:26 from an Israeli response, which, you know, there's back and forth headlines every day multiple times a day. And really what the IEA said, you know, we've got a billion to barrels and global

6:40 stocks in the OECD We don't expect a supply disruption, but if if it happens, you know, ensuring that they will then take action, whatever that is, to alleviate any of that supply side disruption

6:58 and potential upwards. crisis of an upward spike in prices, and also took the opportunity to remind everybody that OPEC has multiple million barrels off the market right now. So I think if you take

7:15 this as a definitive,

7:18 we don't know what Israel is going to do. As we've discussed, we've had a lot of people a lot smarter than at least I am about the real time going on in terms of what the Israeli response is going

7:30 to be and how that affects. It's just this headline yo-yo of a couple of factors and a couple of pretty high profile voices making the headlines. And I think the CBS report last week was an

7:44 anonymous source said. And that was the5 down on Friday that he was down. And with an election three weeks from a day. Yeah. You know, it is an interesting dilemma for Israel because you want to

8:04 penalize the regime, but not the people. Right. Because at the end of the day, I do think the Iranian people, if they ever had a democratically elected government would actually be pro-West. I

8:17 mean, we've talked about that a few times on here. So you

8:21 don't want to hamper their ability to have a constructive, democratically elected government. And if

8:29 you take out nuclear power plants, you take out oil and the possibility of oil revenues from Iran, that makes that really difficult. So yeah, and Mark Rassano did a good job of breaking all of

8:41 those dimensions down a few weeks ago. There's

8:48 precision and targeted have been so far and targeted have been so far the Israeli MO. So yeah, but if. If anyone has precisely the scope and magnitude of this Israeli response definitively figured

9:06 out, I'd take that with huge grain of salt, but the oil markets are reacting to. It's interesting when you have a looming response, yet you've got rhetoric about a slight cut in demand for 24,

9:23 and then, hey, we're gonna backstop it with global inventories, which are seasonally, and within the five-year average is low.

9:33 The reaction is pretty fiercely negative. I think I woke up this morning, crude was down five bucks. Firmly in the sex handled territory, it's recaptured some of that, so stay tuned for more of

9:46 the same. There we go. Which makes

9:51 any kind of sustained strength equities despite their valuation. and how compelling it is. And he kind of sustained, I think I saw him in this morning,

10:04 retail investors or, yeah, generalist investors piling in, oil and gas stocks in October. And it was like this blast through a fence, right in the face. So we'll have to find that if we can.

10:16 Yeah, but at the end of the day, we do need oil to close at 69, 69. No comment

10:25 All right, I did not have on my bingo card when we woke up this morning that we'd possibly be talking about the Nigerian grid. I will even admit, I didn't know they had a grid. I'm assuming they

10:37 did. They do. And this isn't the first time this year. In fact, it's grid collapse number six. And the way I read it, that collapse means generation goes to zero. So country went completely

10:53 dark.

10:56 I saw there were some facilities that were, generation facilities that were starting to come back online this morning.

11:07 This is kind of part of their ambient condition. There's my favorite word again.

11:15 I was just interested to kind of gee whiz some of the statistics, the profile of Nigeria It's 75, it's great a 75 thermal generation. Yet they have cited a pinch of gas availability which is

11:35 somewhat ironic in that Nigeria

11:40 is the 17th ranked global producer of natural gas and I didn't have time to do the conversion but 44 billion cubic meters per year of which they export via LNG 17 billion cubic meters per year.

11:55 Obviously, there's a lot of gas in Nigeria, right, a lot of oil too, and it, you know, it speaks to the,

12:07 just the fatal flaws in a

12:11 decrepit grid that you can't keep or you can't improve reliability, you know,

12:19 certainly based just on generation and generation potential You know, I think there's certainly enough fuel resources to keep a grid that 75 thermal online in a company, in a country that's as

12:32 resource rich as Nigeria. But you know, the other factors that come into play, you have a lot of

12:40 really sabotage through piracy and illegal taps into the electrical grids and some metropolitan areas And so as well as just pure out the uvary. Let's go steal it and we'll sell it to somebody else

12:56 in the black market. I don't know what

13:02 the

13:06 amount of diesel that's consumed. I have a former colleague who is Nigerian and he talked about,

13:15 lives in London, but he talked about

13:18 what he has to do at his house and his father have to do You have to have a tremendous amount of diesel backup generation capacity 'cause these grid failures do happen quite frequently. I mean, six

13:32 in a year, I don't know where that compares for the last few years, but it sounds like enough to be more than a hardship. But if you have the equipment and the means, it's an expensive backup

13:47 generation option and it is used quite a bit but the vast majority of folks can't afford to have that. You know, capability, you know, it's, it's, it's weird. We're going to go Charles Dickens

14:00 on it. But best times or sometimes when you look at grids, we are so spoiled. I mean, our lights go off and our air conditioning goes off and we throw a huge fit. But, you know, that's, that's

14:14 a hurricane once a year, maybe twice a year type thing is we've had, you know, the CEO of center points potentially going to get fired for, you know, being down twice this year because of the

14:28 tornado or whatever we called that. And then the hurricane, that being said, I mean, we almost had a collapse under winter storm, Yuri, the story was we were 20 minutes away from it. So even

14:44 with all the modern technology that we have, this shit's just really hard And we have, we have made

14:54 all that. grid choreography because supply has to meet demand instantaneously. On the grid, we've just made that more complex and more complicated by the addition or changing the gen stack with

15:10 solar and wind and building an ever-growing

15:16 capacity for storage. I think Texas is now

15:21 7 gigawatts of storage.

15:25 Yeah, and when I look at the Arikot real-time stats and the distribution across the gen stack, it's maybe I just catch it at the wrong time. It's usually kind of the discharging power storage

15:37 usually and mostly a non-meaningful to 1 contributor, right, to what the generation contribution is at this point in time. I don't really know where we're headed in terms of that capacity, but you

15:52 know, trying to get everything lined out while still being exposed to extreme conditions, both heat and storms and cold,

16:03 is something that's rare for us as you pointed out.

16:09 But imagine being like Nigeria and having it happen multiple times a year where there's an absolute 100 collapse. Yeah, yeah. So anyway, interesting to watch and hopefully we can learn from

16:23 lessons.

16:28 I also didn't have this on my bingo card this morning, talking about Malaysia and data centers. And then we'll close with my favorite topic, Dejora Vriesen nukes. But anyway, this is pretty

16:42 interesting 'cause I

16:45 think you knew I went and hung out with Brian Sheffield in Australia, went through the beat-a-loop basin.

16:54 I think I heard something about the trip. Yeah, exactly, and you know what, tomorrow's Chuck Yates needs a job podcast gonna be. I'm just gonna put together all the clips we've released so far

17:05 from Brian, just to kind of intro that. And then the next week we're going to, Brian had dinner with a traditional owner who's starting an oil service company in Australia. We're gonna just

17:17 release that dinner. I found, we just had the camera sitting in the corner running on dinner. I found it so fascinating I'm just gonna release that 'cause I think people like that. But so Brian

17:28 was coming from Europe. I was coming from America. And so when you go, come from Europe, you go in through Singapore to the Northern Territory. When you come from America, you go in through

17:42 Sydney. Well, I just said screw it and flew an extra four hours and went to Singapore 'cause I'd never been there. And anyway, it was cool It was cool to go see. Cleanness. city I think I've

17:53 ever been in except maybe Helsinki is cleaner. But it was

17:59 fascinating because it was modern. All

18:04 that did the food and everything else. Also, you could get the vibe that it was incredibly expensive. I mean, the Sands Hotel was through the roof. It's all of that. I spent some time there,

18:18 pretty significant time traveling through the region when I was an expat years ago. And I always recall one of the,

18:28 I guess, it's really a, was a precursor to memes, but it was a t-shirt that on the front had Singapore as a fine country. And then on the back, it was all the red circles with the red line

18:39 through it, fine for spitting, fine for chewing gum, fine for, of course, there was a pretty famous case from an American teenager who was actually cain for vandalism back in the. is the late

18:52 90s. And yes, it's an incredibly clean and certainly well-run city-state.

19:02 My favorite zoo in the world, just as an aside. Nice. Well, and I need to - Sing a 21-foot crocodile at closest and at feeding time was pretty -

19:14 Well, this was funny because Laura has a good friend that lives in Singapore and I won't say any names. But anyway, Laura's like, Hey, you know, my boyfriend's coming over. What does he need to

19:25 go see? It turns out her friend wasn't going to be in Singapore or we've gone and grabbed a drink or something. And the friend comes back with, you know, the hawker stands, you know, to go get

19:38 the food, you need to go see this, you need to go say this. It said, By the way, you got to leave the edibles and any marijuana at home because it's a capital offense. But don't worry,

19:50 prostitution's legal. And I'm like, are you sending me a email about prostitution being legal on a thread with Laura? But anyway. So our security officer was living and working in Karachi of all

20:05 places and used to tell us if we were traveling through Singapore, make sure you always had brand new currency. You don't want stuff that's been rolled up. Oh, I wouldn't have even thought of that.

20:18 They're pretty quick about it At least the cases that I remember where there was drugs found on tourists of immigration that within a few days, you go in front of a judge. And if there's a summary

20:35 judgment against you, then

20:40 the capital punishments carried out within a few days. Yeah. I don't know if that's changed, but yeah, it was a Yeah. I used to say, because of all the retail centers and around the hotels that

20:53 we would stay in for a couple of days, you know, coming from Karachi going to Singapore, which is, you know, the

21:02 alphanomaga in terms of just kind of the urban experience. I'll just leave it at that. And it was, you know, I said it, you know, it's like going to the mall. Yeah. Yeah Yeah, exactly. And

21:18 it is really expensive real estate. So getting back to the data center connection. Well, the last thing. So the Sands Hotel, which basically has the ship looking thing up on the 55th floor,

21:32 connecting the three different towers as a swimming pool. One, the swimming pool literally just has an edge and you look over the edge. What floor? Like 55. So you're up there, I'm scared of

21:45 heights I didn't go to it but but like And the edge of the pool is like at your waist. It's not super high, you know, but sitting in that pool, I saw Citibank, I saw JP Morgan, literally all the

22:02 financial powerhouses of the world, Barclays, Deutsche Bank, they were all there. And so you just know that this has as much fiber conductivity as any other place on the planet Sure, and that's,

22:18 you know, Malaysia shares a border with Singapore on the peninsula. And the, I think the Singapore legacy is for all the reasons that you've outlined, it's been a growing hub of data center

22:34 activity.

22:37 I just, it just caught my eye, you know, a little bit familiar with Malaysia lived in Kuala Lumpur for a bit. And one of my first observation, Observations was, you know, when they decided to

22:51 build something infrastructure-wise, I think the Goodwill games were coming some years ago when I was there. And there were just massive public infrastructure projects, not the least of which was

23:05 an overhead rail that just popped up within a very short period of time and was mostly completed, you know, to be a permanent part of the infrastructure of KL but was built with the catalyst of the

23:21 Goodwill Games being hosted there. And if you go to KL, you'll just be struck by, you know, there's been a lot of really recent and major spending on

23:39 infrastructure, capital infrastructure improvements. So this

23:44 angle in terms of the data center development one land is much cheaper in Malaysia than it is across the border in Singapore. And then you've got a pretty committed public support. They have

23:59 something called the Malaysia digital economy blueprint, and they want to go from, I don't know where they ranked today, from a hosting standpoint, but they want to go to, I would, I would infer

24:11 top three to five within the next five years. And so evidence by the fact that just among Google, Microsoft, Amazon, and NVIDIA, there's either proposed or committed projects of a combined15

24:27 billion. And

24:29 I thought, well, what

24:33 is Malaysia's long been known as an oil and gas, pretty heavy gas province. You remember Murphy had their big, deep water developments offshore Malaysia that really made it a boutique stock or a

24:47 really a niche story among the then integrateds. But I just looked at just their quick power statistics from the latest. That's available. They generate

25:02 82 or they they use 82 sorry, let me back up 76 terawatt hours come from coal in 68 terawatt hours from gas. And only four terawatt hours from renewables. The country now it's it's been kind of

25:21 marginally growing on the oil and gas side from a production standpoint produces about 600, 000 barrels a day at oil and about 82 billion cubic meters per day of gas. So the notion that, you know,

25:36 there's momentum and urgency accelerating to get these major data center operations cited and started built.

25:47 I think we can see those following pretty heavy along the thermal generation route. Yeah, and it's an international game, you know. Yeah, you're proximal to a major existing hub Singapore and

26:02 certainly with

26:06 good geographic proximity to China Yeah, and

26:11 so that kind of brings us to our final story. My, you know, kind of issued déjour, but Google announced they're going to buy power for their AI needs from small modular nuclear reactor company.

26:25 Is it Keros? Keros. Keros. And so again, you know, if you're in the natural gas business in United States, guys, you got to figure out how to sell electrons and you got to go straight, talk to

26:42 egg tech, because they're going to make these decisions. Yeah, it's, um, It's a total of 500 megawatts of power under this arrangement with the projection that first online SMR would be 2030.

26:59 And then they would build the rest of that out to 2035. Obviously this is in the US. Got the same things that we talked about when nuclear Navy Submariner, Bob Coons was on a few months ago, the

27:16 NRC and the permitting process for any nuclear builder is, especially for the smaller ones and the innovative entrepreneurial ones is going to face unless something meaningfully changes in terms of

27:31 the inertia that is really embedded in the NRC. And I think, for to a lesser extent, you're, I told someone this morning I would take the over on both 2030 and 2035. But it also points out that,

27:46 you know, when you You kind of compare the Malaysia story with this. There is

27:54 an urgent gap to fill between now and nuclear. And where else does that get filled from a reliability cost and scale standpoint? Things continue to point back to my number one draft pick natural gas.

28:10 There you go.

28:13 I read somewhere that there was a piece out last month that really went through the major mostly on grid providers and where they stand with their data center agreements. There was one called

28:28 Pinnacle West Capital. Not familiar with them, maybe should be. I think they've got four gigawatts of -

28:37 I don't want to call them committed projects, but those are things that they're at least working on their backlog against that four gigawatts was 10 gigawatts. and that's one out of a long list of,

28:49 you know, the AEPs of the world, this constellation, etc. And, you know, that's not focused on any particular generation source. The point is, is that what's getting penciled out here longer

29:03 term is a big, big number. And I think the expectation that something gets done between now and 2030, if we optimistically believe that nuclear is going to overwhelm natural gas, it may. It just

29:19 seems like the, you know, the

29:24 ease and clear runway for natural gas makes it certainly a stop gap. And, you know, if companies can't get things done in the US, then they're going to go do things in places like Malaysia We've

29:41 seen it in LNG with the pause. We had a couple of long-term agreements immediately on the heels of the pause that

29:56 went to, oh, South America and I think Qatar. Counterpoint for just a second. I am starting to get more and more kind of favorable about the Elon Musk Secretary of Efficiency.

30:07 Potential? Potential, exactly. I mean, it's,

30:12 you know, who knows who's gonna win in this presidential race and all that. But I mean, I do think the possibility of Musk coming in and Trump talking a lot about, 'cause the one big thing you can

30:26 say about Trump, you can disagree with it. You can say it's bad government, but he really did take a whacking to the regulatory environment when he was in for the 40. So I forgot how many pages of

30:38 rules and regulations got rid of, but it was a significant amount and so.

30:46 to the extent he gets back in and comes with that, we've got a real shot. And the tech guys have lined up. The tech guys have been way more supportive of Trump this time than they were previous

30:60 times. And so again, I think it's through it quicker. Okay. I think as this builds momentum, you know, particularly where you're directly impacting communities where these either new nuclear

31:16 kind of utility scale facilities are built, NSMRs, there's going to be, I think a resurrection. And you already see it kind of sprinkled throughout any articles

31:30 that you see about the nuclear renaissance, which is we don't have a national repository for nuclear waste And, you know, there are things like kind of fears

31:45 two very high profile incidents in the last 50 years defined as Chernobyl and Three Mile Island, more recent, actually three more recently Fukushima. So those things are going to get a lot of,

31:58 I think, ferocity and momentum as we get down to the nitty gritty of, okay, where are these things going to be? What are they? What's, you know, what, let's just say we took down the, I'm not

32:12 a nuclear engineer Don't sit on the NRC, but I think part of the issue that nuclear experts will tell you is that we have built in over time a significant amount of over design, which we see

32:27 manifest in things like how much

32:31 Bogle, which just commissioned in Georgia, how much over budget, and these aren't trivial hundreds of millions, these are multiple billions per unit. I just think getting resolved from, you know,

32:46 there's multiple layers of permitting that have to have to be successfully resolved. All the lawsuits that come with it, you know, that said though, I still keep coming back. A big tech or big

32:59 pharma wants something. They ultimately get it, you know, and, but it's just gonna be a different game than we play in energy that they play in tech I do think the market response will be very

33:14 different than if Trump wins versus Harris for what you just pointed to in terms of regulatory reform and I keep going back to the notion that the one that needs a pretty radical reforming is the NRC

33:33 and can you get that done? Yeah, that'll be interesting to see. And can you get it done if you're jumping in a four-year term? Exactly, exactly. be interesting to see what happens in the Senate

33:45 races, and the hell was Nashville? Nashville is good. The daughter is enjoying her time in college, a resurgent SEC powerhouse Vanderbilt. Exactly. Look down Kentucky this week. Exactly. Got

33:60 the most votes for the top 25 and not making the 25. So I guess they're number 26 in the country. And so anyway, that's great. Guys, if you enjoyed the show this week, share with a friend.

34:13 Leave us comments. We try to get there. I'm a little sensitive, so don't be mean.