Big Digital Energy

0:00 All right, what are we doing on Thursday, Colin? We got nape, napes in town. So we're gonna be a nape, we got a booth. It's funny, I posted this Twitter thread with all these badass ideas of

0:11 what I would do if I ran nape, which included a catapult outside dressing up dummies, crash dummies as oil, just stop oil protesters and launching them over the convention center. 15 bucks a

0:25 launch, good little revenue stream there. Get one of the water gun carnival games, but instead of clowns, so shooting the clown faces, you're shooting faces of Greta Thunberg. And after that,

0:34 we made a partnership.

0:37 That reminded me of Big Head's potato launcher and the Silicon Valley. I haven't seen. Who's with hooly? Nice. Well, was it? It was, if you've never seen Silicon Valley, it wouldn't. We need

0:49 Jake here. Jake's the one that's seen Silicon Valley, I haven't. He always told me about it. He's like, He's just like our lives. I'm like, Oh, the fuck would I want to watch this?

0:57 But it's high satire. We'll be

1:01 a nape on Thursday, me and Chuck, and John, and Jake will be floating in and out of there. Come join us? Yeah, we've got to boo some, come hang out with us. And I think we might also have

1:12 discount codes. If you're on the DW email list, I should seem to an email come out. So anyways, big week, we'll be there. Lots of

1:21 stuff happening in energy too. Who's got the runner show who's kicking it off today? I'll just kick off, 'cause I don't know where the runner show is Man, it's a shit show in the Middle East. I'm

1:32 gonna have some numbers wrong, but US bases, I think, have been attacked 165 different times over the last, what, three or four months. We had three Navy seals, right? Or were they military

1:48 die when a drone attacked us in Jordan? We launched airstrikes against Syria There's talk of. I ran shooting bombs into our largest military base in Syria. This is like Nostradamus World War III

2:08 type prediction stuff happening. And I think the media is reporting on it, but they don't seem to be taking it as seriously as this could be. That's kind of interesting, like, you know, all my

2:22 memories of kid being a kid like in the early 90s that the Gulf War, that's all the news was, was just war coverage and seems like, right. And also crude went up a lot. Yeah. It just seems like

2:37 this doesn't get as much attention as maybe it did back then. I don't know if there's a reason for that or not, but just doesn't seem like anyone takes conflict seriously because all of those things

2:50 are very serious things Yeah, a lot of this, and I was reading it up on it this morning.

2:57 There was a retaliatory strike on a base in Syria. I think that you mentioned for the strikes over the weekend and happened Sunday night. And these are mostly from what I understand, Iranian-backed

3:10 militia that are executing these attacks. And the raid last night killed a bunch of, I forget the affiliation, but no Americans were killed in the strike on the Syrian base. And it was, there's a

3:31 US presence there because they're doing military training in Syria. So it's

3:40 kind of from many attention standpoint, like it's a bunch of little skirmishes. Although in our raids over the weekend, we did fly a B-1 from the US to participate in the bombing that the strikes

3:54 at the US. took in Iraq and Syria. And maybe the differentiator back, you know, the Gulf War and then, you know, the taking out Saddam Hussein is, I mean, there was a buildup to a big thing,

4:11 right? I mean, we're in the UN getting permission to invade another country, basically. So there was that buildup and all, and these are little skirmishes popping up But, and I'm my worry about

4:26 this is on the humanity level of what could happen in deaths and lives. So I don't wanna trivialize it by having to talk about energy, but ultimately that's what we are as an energy show. I mean,

4:40 a drone flying right into the middle of the warfield. Now, I know the Saudis have security that probably prevents that, but you'd also think the US military base in Jordan would have security that

4:53 prevents that. Oh, it's crazy. And Jordan was where the three US servicemen were. It's crazy as the strikes. Drones are changing warfare, because, you know, we've always had, you know, these

5:05 massive drones that the United States has, but all of a sudden in the last couple of years, how just these small drones are being used as well, it's kind of changing the dynamics of war, because

5:16 now for a couple thousand bucks, you can have a pretty significant attack on someone So,

5:24 you know, you see these videos, like in Ukraine, in the Russian-Ukraine war, how they're using drones, it's pretty interesting how it's becoming cheaper to inflict damage as well. So, even like

5:37 if you have a defense, like yeah, and we have the Iron Dome and all this shit, but could the Iron Dome pick up a small drone with explosives? Probably not. I mean, it really was 911 where

5:51 Ben Lauden basically showed that for a250 airline ticket.

5:56 Yeah, for sure. You know, you can go inflict casualties and I think kind of that mindset change as well as technology. But this is something we have to watch

6:07 for because I'm sure maybe we just kind of roll right into this. You know, the worst thing a management team could ever say to me when I was sitting at Cane was this time it's different. Yeah. Or

6:17 it always go, Oh God, it's never different, blah, blah, blah. But, you know, reports coming out that US production seems to have rolled over. We're down picking number 200, 300, 000 barrels

6:29 a day over the last couple of months. Inventories are drawing to really, really low levels. The Saudis are out there talking about 13 million a day. Now we really meant 12 and claiming to do it

6:44 politically as opposed to maybe they just don't have the rock to be able to do it. Chuck's thesis. Chuck's thesis, exactly. had it since 2017, so, but my point is low inventories, US rolling

6:59 over70 oil, no real incentive to

7:03 do more of this and warfare going on in the world. It just seems like we're on the verge of, yeah, and oil keeps dropping, so. It does run. Mark makes sense of that for me, 'cause I can't -

7:18 Yeah, good luck with that Look, Josh Young was on CNBC, one of the affiliates this morning talking about, where is the market? It's tighter than

7:30 the consensus seems to believe, mainly on the result of what Exxon and Chevron reported in terms of stronger results, but also talking about, at least in their US portfolios production, expected

7:42 to be down from higher than expected levels the fourth quarter, and at least in Chevron's case. One analyst had talked about the notion that Chevron had said we basically need to build a bit more

7:57 duck inventory in the first half, so production is going to be down, but their production exit for 2024 is expected to be, I think, about 40, 000 barrels a day higher than they were in 4Q of 23.

8:09 So

8:11 all these crosswinds and trying to figure out what's going on in crude markets when the physicals start to indicate things are getting tighter, but yet we've lost ground in both Brent and TI, who

8:23 knows, and adding to the, never put it in writing that it's different this time, that was Dan Pickering's mandate when he ran research and said if you do put that in writing, you're fired,

8:35 because it's never different. Anyway I'm thinking about Desert Storm and Wars in the Gulf,

8:43 I had this trunk full of childhood items that my mom brought to me, she finally cleaned up the attic. Anyways, I opened it up the other day and forgot, but I had these in their military trading

8:55 cards, like it was top's trading cards. And it's like of all the generals and the planes and huge fucking propaganda

9:02 initiative there. But going back to like hell, like that was like a big thing then. Like everyone was like invested in the war in the Middle East, even to the point where you had kids collecting

9:12 trading cards on the generals and shit. So I knew, I knew Because there was some actual doubt when we went against Sodom Hussein in the first Gulf War. I mean, there was some talk of yeah, the

9:27 United States is number one, but Saudi I think was the third largest military or the fourth largest military. There was some talk, there was gonna be a challenge here and all this. Kim and I had

9:39 gone to Vegas, just, you know, we were young, either late in college or just had graduated And we were there. and we were at a table with a bunch of Navy pilots. And they were just like, yeah,

9:55 this is kind of our last weekend away. We're going to go over to Iraq. We're going to take down the saw, take down

10:03 Sodom Hussein and all this. And I was like, oh man, good luck. Dude gets a 19, he says, hit it. And the deal of looks at him and goes, you sure you want to hit that? And he's like, yes, he

10:13 got it too. And so I knew Sodom Hussein was fucked that way I'm like, dude, I'm not going against these guys, so. This is Desert Storm. This is Desert Storm, this was number one. Yeah, I was

10:25 gone. Those, where were you when these things happened? That was at Midland's finest seafood restaurant, otherwise known as Red Lobster. I was gonna say Long John Silvish. And there was a TV on,

10:37 and if you remember, you'll remember, I think the most famous on scene reporting was from CNN, they were about the only international cable.

10:49 our network and Bernie Shaw and John Holliman were holed up and I forget the name of the hotel and Baghdad, but I think that was the genesis of the shock and all commentary because they had that

11:03 grainy footage, but you know, the skies lit up. Yeah, skies lit up. That's what I always remember, like dark skies and just like missiles and guns shooting off. So, but it's interesting, like

11:13 just going back to this. It's like, is it because it's not one concentrated effort? It's a whole bunch of different skirmishes, who knows, but hopefully, you know, things sort out sooner than

11:23 later. There's some cynics out there commenting that look, we're trying to keep the headlines tamped down and really the risk associated with all of this really mushrooming into something much

11:36 larger and that we need to keep energy prices, crude prices low, at least until after November 5th. Yeah And so, you know, I do think there's a bit of.

11:51 different fundamentals, at least in the way investors look and traders look at the landscape. It's just more support in my thesis that fundamentals don't matter.

12:01 Seriously, it's so much speculation. Maybe over a long enough time horizon, fundamentals matter, but how many times have we been on the show or you see people talking on Twitter and they're

12:13 counting molecules and looking

12:25 at supply demand, but up oil opens up going down like it doesn't seems to never make make sense to have any rhyming. In our response, the fundamental fundamental adherence response that you're

12:28 never wrong, you're just early. Yeah,

12:32 long-lived Matt Simmons. But the reversal in plans to increase that capacity, the maximum sustainable capacity from 12 to 13 was met with a smackdown of some of the biggest OFS names. I think

12:47 Sombra J was down.

12:50 7 in the first day trading after that came out. And so, after speaking in their earnings calls, there was a lot of constructive commentary about international course that's looking out quarters and

13:01 maybe a year, but longer term. The other undercurrent here or the other sidebar is as, we've seen, the Saudis are increasingly talking about accelerating gas development. We talked about that

13:16 last week So

13:19 this is kind of a shift in portfolio allocation. And if that's the case, maybe we'd display some crude that we're otherwise using domestically, which is all part of that thesis around them going

13:23 harder after natural gas and being an

13:33 LNG player as well. Yeah, let's do this as kind of the get out question on this, give me kind of a prediction of some sort Let's just frame it before the end of the year. What kind of happens?

13:51 Maybe what kind of happens with crude prices? Maybe is there a way to play it? And Colin, I'll go to you first 'cause Mark kind of glared at me and said, Give me 30 seconds. So look into your

14:06 crystal wall. Yeah, I thought the point Mark brought up is really interesting about suppressing headlines and trying to keep prices low until November Like that actually seems valid, I didn't

14:19 thought about that. And so anyways, I wouldn't expect any significant upward price action. I could see it ending the year at90 a barrel.

14:33 I don't know if it'll go much lower either. So if we're talking about fundamentals, I think fundamentals set up for where you should have higher prices, but there's probably some things happening

14:45 behind the scenes too to keep prices artificially suppressed, so. Yeah, I'll add to that. When you follow the guys that follow crude on Twitter, like Rory Johnson and some of the others, they

14:59 can't figure out why prices are kind of bouncing around like they are. Like they'll have a big run up and then they'll just drop. Yeah. And then they'll drop one day and bounce up and people are

15:09 like, this doesn't make any sense. So you wonder if something's going on behind the scenes. I'm happy to say I wear a 10-foil hat That's what I'm saying, it's like, yep, artificial factors, too,

15:20 that can be utilized. I mean, it's somebody manipulating the SPR, for instance, and stuff like that, so. I just think we'll find a narrative somewhere in the political discourse that keeps

15:32 prices from rocketing to the upside. If rocketing is, you know, another 10 bucks from here, I'd put

15:43 a much higher probability on, you know, kind of finishing the year with the seven handle on TI.

15:49 Brent is north of 80, if we continue to see inventories indicate a tighter market. Yeah. I just, you know, we got surprised last year in 23 with everybody got surprised whose business it is to

16:05 estimate what the US. is going to do, for example, and, you know, beat it by several hundred thousand barrels a day. I mean, we almost grew production in the US. by a million barrels a day

16:13 when earlier expectations were as low as three to four hundred thousand barrels a day. And as Aubrey famously said at IPAA back in, I believe it was 2012, as we're moving into the salad days

16:31 of oil from shale and the growth coming on the heels of what happened in the preceding seven, eight, ten years in natural gas, he said, we're just too good at this stuff We're causing this problem,

16:45 and he said it's going to happen in oil as well. I don't know what's going on, but below the water line, there's still that conflict of we're running out of inventory tier one, technology can take

16:57 us only so far, but you, Colin, have talked quite a bit about, look, the price is another few percentage points in recovery factors on oil in place, most of which is going to be left in place

17:12 with current technology, so the push is continuing Yeah, below the radar in a lot of little individual actions that all add up to, I think, stronger production performance at least 20, 20 threes

17:26 in indication. And so why would we expect that to come to a screeching halt? Is there more of a bow wave effect into 2024?

17:36 Vicki did say at Davos as we also talked about that get ready for tight markets in 2025 for several years. Yeah, I mean, we've been talking about a super cycle for, Years now, it never really

17:47 came, but. All right, y'all are both wrong, and let me tell you why, but it starts with me and Amia Culpa, because when we did this on BDE about, call it, I don't know, 18 months ago, we

18:03 were talking about oil prices. And I said, before the end of the year, December 23, it would spike upwards of close to 100, but then it would moderate off and roll into the elections, November

18:17 of 24, at70 a barrel. I had it in reverse. We were able to, because of the unanticipated growth in oil prices, the SBR, the beating of the narrative in the media, et cetera, we were able to

18:37 keep it at 70 I'm going to go out and apologize to Barry Mullenix, because he was the worst offender as a CEO of saying this time is different. Barry, I'm sorry, but I'm going to say it. This

18:48 time is different. We're gonna have a shock before the election and we're gonna see at least 90. All right. Okay. Chuck's taking the last side of it. I am on the record. All right. Why aren't

19:02 you calling at some point when we did a round of forecast or predictions back in kind of COVID era levels? I'm not talking about negative pricing, but there was going to be some dislocation to the

19:15 downside. I probably did I also am on right now. You know how we could figure that out? 'Til I broke. Well, there you go, look it up. Well, oh, you know, the podcast, when I spoke at NAIP

19:27 three years ago, I actually called for12573 oil or

19:34 something ridiculous. And we got awfully close on that. I got some Twitter people pinging me going, Dude, you called it. So the greatest thing ever is my Justin Bieber call I never ever showed

19:46 you this. So Justin Bieber releases this music video and he's out in the oil field working. And I mean, this is like in the belly of downturn and

19:58 during COVID and he's got this video and he's like working on a pipeline. There's oil shooting everywhere. And so I did this react video, reaction video to it. And I tweeted it out. You can go

20:08 look up the tweet and the tweet said, Justin Bieber doing this video marks the bottom of the oil cycle I said, 200 dollar oil is coming in. And dude, it almost winds up exactly. Like that was the

20:20 bottom, then a few weeks later, oil just starts taking off. And so it's called the Justin Bieber indicator.

20:27 My favorite indicator because it involves myself. And so that's why, of course I'm gonna talk about it. Energy Sennick always likes to tweet out that peak oil was the YDC where I got roasted and

20:40 got a tattoo on my butt. Yeah. Jewel was one of my roasters And she came in and just obliterated me. Priest Patrick was one of my roasters. He came in and obliterated me as well. And energy

20:54 Seneca said, That was the glory days, guys. It's been all shit ever since. I'll down hill since then. One more longer dated story. Everybody remembers the famous drowning in oil cover from the

21:07 Economist in 1999. Matt Simmons called the Economist the Friday before, believe they went out the next week and told them, This would be a disaster if you published this thesis that we're gonna

21:24 see10 crude for a long time. And that was actually the bottom right around that time. And then he wrote Twilight in the desert, which

21:34 history is judged a bit differently, but - I don't know what Twilight in the desert is. And also as a shout out, you ought to go read that because that was what year did he publish that early?

21:46 2005. So he basically said that Saudi is peaked. Oh, okay. And he did it very well researched. He, and he did not bash Saudi. Yeah. It was not a, these guys are stupid. It was like

21:59 technically they're as good as anyone on the planet. Yeah. They just, the rocks given up. Yeah. The water cuts are getting higher, pressure is dropping, all this sort of stuff. Yeah.

22:11 He wasn't that wrong. Matt spent a bunch of his summer before the book was published when most people in Maine are enjoying the outdoors and the water. And in a Maine summer, he's sitting in his

22:24 dining room table reading journal petroleum technology. Yeah. He had stacks and stacks of those. And I, I guarantee that for someone who certainly didn't have a petroleum engineering degree, he's

22:37 read multiples more of those JPT monographs than a number of us, myself included. So it was an interesting time well, so we have happened during this week. I've been kind of out of the loop. I've

22:49 been arguing with people on Twitter about. Hard hats shit, which you know, Kirk had he's wearing his hard hat backwards on BDE last week. I don't know if anyone ever actually brought it up.

23:01 People are probably just watching it. I'll be the dude bro and admit I couldn't tell. He's like why is this dude wearing his hat backwards? Let me give a quick demonstration real quick because I

23:11 got a lady in my mentions and she's saying that you can wear your hard hat forwards or backwards and she's like oh even OSHA says that you can wear it forwards or backwards. There's a difference

23:19 between the hard hat and the suspension here. Suspension can only be worn one way. It's always got the the ratchet in the back. So that's how you know if it's backwards or forwards. Now like they

23:31 make some hats that look like kind of like baseball hats and like you can wear it backwards but your suspension is still going to be in the back. So when Joe Biden's wearing it like this, like the

23:39 hard hat is backwards. So no shell violation. So no shell violation. fucking argue with me about how to wear a hard hat. You swear 100 hours a week. And one of the most complex things, most

23:48 frustrating things ever to do is replace the suspension in a hard hat. It never goes well. It's so infuriating. I'm trying to get those little tabs to pop in and out. Yep. So anyways, there's

24:02 you. Oh, I want to make a quick hard hat comment. Willfield Rando tweeted out this week that his hard hat is just about done. He's got to get a new one Yeah. If he will put digital wildcatters

24:15 stickers on it and like an I love Nimble Fatty sticker on it or something like that, I'll pay for his hard hat. I want

24:32 to know, send him like a badass carbon fiber digital wildcatters hard hat. I love Willfield Rando, I'll do that from an RV. We'll do that in a, we'll do that. It's all my favorite dudes on the

24:35 planet. Yeah, so we're going to clip this. We're going to send it out on Twitter Yeah, on Twitter. On Twitter. Twitter. and see if he sees it and they feel take us up on it. We'll totally do

24:46 that. Sounds good. All right,

24:48 kind of one last thing. There are probably a hundred other things we could talk about this week, but we need to go get ready for NAPE and we'll bring it big time. All the investigation we do at

24:59 NAPE this week, we'll bring to the show actually. Or a poll. But the girlfriend who had suggested, hey, y'all quit calling Europe a Uniblock, investigate Europe and all its different countries

25:13 'cause they're all different about energy, had said kind of over December, you know, 2024 is the year of the election. It's estimated that two billion people are gonna vote, seven out of the 10

25:26 largest democracies are voting this year, a lot of geopolitical powers, Great Britain, et cetera, are voting this year. And so one of the things she said to us is, Why don't y'all look at each

25:40 of these elections give a little up date on them, what's going on there, but more importantly, kind of how that impacts energy, because this could be a big deal this year. Is she going to help us

25:50 with that? Because I don't know shit about my God. She's getting his notes. She's had some time on her hands. And so like, she's putting Laura on the show for that. Yeah. No, I told her to

26:01 come down and do it. And she actually has taken notes and she may wind up creating this content. So we'll do the abstract or the summary version. Yeah The first one we're going to talk about real

26:11 quick is Congo. And technically Congo had their elections in December of 2023. Yeah. So it's happened, but just to summarize a little bit, we all, we all know why Congo is so important. We've

26:25 talked about that a million times on the show. 70 of the world's cobalt production is from there. You're using that in batteries and alloys, et cetera. One thing when I started looking at this, I

26:37 didn't realize Congo is always supplier resources to the world. I mean, back in the 1880s, timber and rubber came out of Congo because of the Belgian king, King Leopold II, in

26:53 effect, kind of colonized Congo. And the British girlfriend likes to say, yeah, we were bad colonizers, but you sure as hell didn't want to be a Belgian. And then the uranium, actually, that

27:06 we did the Manhattan project with came out of a Congo. There's a there's a mine there that was unique. It was the cheapest uranium on the planet and very strategic for a while. What was the former

27:20 name of the country? I do not know this throw trivia in there. Do you know throw us an answer? Zaire. Zaire. There we go. Max full of knowledge. So real quick on on Congo, the second Congo war.

27:36 Actually, 5 million people died. It was the largest wartime losses since World War II, and kind of what arose out of the Congo, which for a long time had been a dictatorship, et cetera, is in

27:53 2006, they put in place a new constitution, and multi-parties got together so they became a democracy. They had an election. Joseph Kabila won. He had been serving as the temporary leader leading

28:10 into this. It was also the former leader's son. So, we have a democracy, but then we kind of have a democracy. So anyway, the constitution says two consecutive five-year terms. He served those

28:24 two terms. Should have been an election in 2016. He stayed an extra two years. Political pressure from the outside caused him to throw an election in which I will not pronounce this correctly Felix

28:39 G. Sakeeti?

28:42 Actually, don't look at me Philip cheese. Sorry said

28:46 Now I can't say it again. I got it right I think the first time it would be Jack. He was the leader of the Union for democracy and social progress, which was the opposition power But there are all

28:58 sorts of allegations of fraud corruption. There's talk of an unholy deal with The former leader that they kind of packaged this together remember when Putin's lieutenant took over, but Putin was

29:11 still running the show. There's a lot of talk about that so fast forward to 2023 the elections that happen She see kitty One re-election, but again all sorts of charges of fraud and corruption The

29:32 financial times actually did an analysis because the catholic church had put 40, 000 observers at polling place places based on the Catholic churches, math, 59 of the vote went to the opposition

29:47 candidate, Martin Feulou, and Felix only got just under 39 of the vote. So we kind of lay all that out to say we in effect kind of have a very corrupt democracy in Congo. And where I think that

30:04 matters when we start talking about the energy businesses, what happens when you have resource development in a corrupt country? I think we're seeing history replay replay itself here. And the last

30:18 thing I'll throw out there just because it's really interesting because we know all about cobalt, they actually have plans to build the Grand Inga Dam, which would be able to generate 40, 000

30:32 megawatts of power So that

30:34 would be 2x the largest hydroelectric facility on the planet bigger than the, uh, the, the three gourds dam in China. Yeah. And that could literally power all of Congo and they could export to

30:48 South Africa, et cetera. Yeah. So it's, it's, it's interesting from an energy point of view, because all the cobalt and potentially a game changer resource for electricity. Try getting a lot of

31:00 the world leverage. Yeah. Well, to address the past in terms of what happens when you're Trying to be a player, an international player in resources in a corrupt country, the US, the last US.

31:14 mining concern in cobalt left, I believe, in 2006. And that was a free report, Mac Moran, I believe. And so it's really hard to get, you know, navigate all of that around our special

31:29 restrictions, the, the most well known of which is the Foreign Corrupt Practices Act Yeah, and Chinese interests. control. I think there's 19 mining concerns or concessions in the cobalt golden

31:44 lane and 15 or 16 of those 19 are Chinese. And so, yeah, and further downstream, I think, I think the numbers north of 80 of sources of refined cobalt comes out of China. Yeah, China colonizing

32:03 Africa and then with their own supply and country, it'll be interesting to see how that plays out. We got to wrap this up. We only have a minute and a half got a hard deadline. Chuck needs to go

32:12 to the doctor and get his prostate checked out. Oh,

32:17 you're going to send me a sorry, you got a finger in your mouth. I don't get very many chances that the prostate joke back out at you. But real quick, want to give a shout out to one of my homies,

32:30 Lucas Lowe, It's the US. Coast Guard. uh rescued a puppy that was stuck in a shipping container and it's gone viral. It's all over CNN and doing millions of views on the internet. So like his

32:42 picture of him in uniform rescuing this puppy. He's getting all the ladies right now with uh with that. So shout out to Lucas man in a uniform hero and a puppy saving a puppy like you got all the

32:53 elements that you need uh for a good story there. So uh pretty cool to see that we will be at nape to sweet come hang out with us um we'll be at all the parties too. We'll see you at lots of parties

33:03 soon party etc. Yeah shout out to opportune. We'll be there. We'll be at the landman life happy hour be at nape after dark. So we'll be all over Houston and I'm sure we will be back next week with

33:14 some stories. I hope to see some landman fist fighting over uh overriding royalty interests. Those are always my favorites. So