Big Digital Energy

0:00 and highlighting while digital wildcatters is leading the frontier of technological innovation in oil and gas, AI, software is the fact it took us an hour and 15 minutes to get online to record this.

0:17 And despite the fact that Colossus is located where I am,

0:24 we can't find good Wi-Fi. Yeah, one of the largest like facilities in the planet now and you're right next to it and bandwidth stocks. 35 gas turbines.

0:38 None of them with permits. Yeah, it's all that air pollution. Yeah,

0:46 that would be Memphis, Tennessee for to take the ambiguity out of it. So Kirk, give us a low down. You're leaving us to get to the northeast. What's this man? I mean, this is like an empty

0:59 nester. uh dream but we are we have our daughters graduating in a couple weeks we're heading in and tuck it for the rest of the year so we're excited nice nice that's awesome we will uh we will uh

1:18 definitely miss you but we hadn't seen you in the studio in a while so i'm not sure not not not sure that'll change yeah i'm like working remote you know i was remote even before it was cool before

1:31 covid

1:32 when i was working at a small company in round rock um yeah i learned i learned early on that there's only there's two things you either have to be in the office all the time to look like you're doing

1:49 good work or you're in the office none of the time to look like you're super busy and i took that route so i was never in my ever in my cubicle And even Michael Dell had his own cubicle, by the way,

2:03 but I just took the path of never being your, ever in your office, 'cause then everyone thought I was busy. And it's true, I was busy. But,

2:12 so I love being remote, guys. Very, very cool. My deal when I was at Caine was, I had to walk out of the office at 630 every day, because at 631, people just became crazy Like, people would

2:29 walk into my office and go, well, his office is like two square feet bigger than mine. I was like, At, did you measure? How do you know that? I mean, that's crazy. So, anyway, I gotta get

2:42 it. All right, where are we kicking off? Shell BP, Kirk? Yeah, let's kick off there. But before we get started, I wanna give a shout out to the Rhodes College Links baseball team who came from

2:53 third seed in the conference tournament took the title and are now in the NCAA regional round. Dude, fantastic man, let's a road time. These single greatest sporting event I think is the College

3:08 World Series. Heading up to Omaha, 18th Senate, college, it's kids. You know, the wild thing about college baseball is generally speaking, it's middle class families up there because if you're

3:25 really poor, you go to the minor leagues and play baseball so that you can get paid. There aren't a lot of scholarships for college baseball, so you have to have somewhere with all to be able to

3:37 pay for college. And, you know, the middle class of America is just what makes everything great. So you go to Omaha, everybody's pleasant, everybody, somebody you don't even know is sitting

3:51 next to you and you're like, hey, I'm gonna go to the concession stand, need a hot dog. Oh, absolutely, you know, it's just great. Well, in full disclosure, we're talking division three. So

4:03 that college world series is an East Lake Ohio. Ah, still, I'm sure - Don't even know where it is, sorry. But let's go back to even to get to college. I mean, unlike back when we were kids, we

4:16 had cleats, our glove, and maybe a bat or two. Today, kids have placed select baseball They have 17 uniforms, they've got 47 baseball bats. They probably have more than one glove, which is

4:31 crazy. They have multiple hitting gloves, and then

4:37 they travel three hitting instructors, two fielding instructors, a pitching coach. I mean, I know a pitching coach. He's won the world championship and long driving, Sean Johnson, and his day

4:49 job is actually teaching kids how to throw heaters. I guess how to pitch in general And if you're not throwing 96 or nothing, supposedly, right? to get into the majors. Even though that's not

5:00 really true, but like it keeps every year, it's like if you're not throwing a 108, you don't even consider yourself eligible. I'm like, every year it goes off. Depends from which side.

5:12 Left-handers get a little V-Lo leeway, but yeah, you're generally right. The,

5:19 by level, you know, our starter on Friday was sitting, 93, 94 late in a complete game So yeah, it's end with the scholarship limitations and rule changes at D1. You're gonna see a cascade down

5:38 of even more talented division two, division three, and AI, et cetera. So it's good baseball at all levels. You know, 'cause the academics that study sports say the hardest thing to do is to

5:53 play quarterback, read the rush, make the right, throw and all that, I still don't believe that. I still think the hardest thing in sports is to hit a curve ball. 'Cause I don't know how anybody

6:04 does that. That's what washed me out. You know, I would say that, you know, I think in all of us, we've considered those of us that didn't make it in sports. Well, I mean, I guess you could

6:15 say golf. But going trans to try to play softball, I'm not sure that, I mean, hitting those, off those girls that throw those softballs is crazy. I don't know if you see how fast they throw.

6:29 They're shorter, they're not even, I don't know how much shorter they are to the home plate. But those things are zooming. I know they're bigger at all, but still, I'm like, man, that'd be

6:38 hard to hit. 78 is equivalent to like 98 to 99. I mean, it's crazy, dude. That's phenomenal. Yeah, exactly. Exactly. All right, man, kick us off. Shell BP, is that happening? Dude, I

6:55 haven't gone. into the deep, deep caves here. But I did sit down with a shell executive last week while they were in Houston for OTC. And here's sort of what I'm, here's the rumblings that I'm

7:09 hearing. I love YL, I've told you that, but he is taking an axe to everything. So I think the internal consensus is people are not super happy with him because he's just cutting, cutting,

7:25 cutting, and he's, and this is what you hear when any company's trying to actually make money, you hear the same rumors, like all they care about is the current shareholders and the current

7:35 quarter, but I think Shell needs to trim fat. But let's talk about BP for

7:42 four per minute.

7:45 Inside of all these majors, you've got the consultants that always have these decks. The investment bankers, the management consultants that say, Hey, we need to go buy somebody. And that's

7:56 always an option when you have nothing to do, when you don't know where to put your cash, and it's a great, it could be a great accretive event, but BG was one of those investments that's been

8:07 pitched in front of the management team every few quarters, the BG merger came up, and eventually they pulled the trigger. I think when you're looking at the moves by BP and Shell, I think Shell's

8:20 putting themselves in a much better position by axing things that don't make sense so that they can preserve cash to go make a huge acquisition.

8:31 What do you think, Mark? I mean, have you dug into some of the analytics? You know, it just sparked my attention over the last week and there was, you know, maybe it was certainly didn't have a

8:44 slow Friday going into this weekend relative to everything that's going on with trade negotiations, et cetera, but, you know, BP Shell has been around for quite a while. I wouldn't look, I

8:56 forget where I saw it, but you look at the comparative head counts across all the majors, the Euro majors, US majors. And Exxon, I think, went from, in the last five years, went from 75ish to

9:10 61, 000. Shell's still kind of hanging around. It had a little bit of a dip, but it's come up to close to 100, 000 And BP is, I believe, you know, pretty much held in there. Maybe 75 to 80,

9:25 000. I mean, BP is a shell on intended of its former self. It's a75 million, well, maybe up a little bit more today, 75 million market cap. And so,

9:38 the other part of this - Million, you said billion, not million, I hope. Yeah, 75 billion. Okay. Yeah, hopefully not on its way to 75 million I do think that, you know, the. a Euro

9:52 combination makes a hell of a lot more sense than, you know, conjecturing as to whether Exxon or Chevron would be possible suitors. But, you know, at the same time, how does this from a

10:07 strategic standpoint, how does this kind of a mess of a situation with BP? How does that help the near and mid term for what Wiles trying to accomplish, which I think has, you know, has been the

10:21 right approach? I mean, I think the question is, there's a few interesting comments that I have. One is, is what does BP offer them that they don't have? It's got to be assets. It's got to be

10:34 access to territories or to fields or to something strategic that Shell doesn't have on its own. That's interesting. The second piece is, well, we all know Shell's headed to the US. We know that

10:48 So is this a strategy to take? all the euros off the table and move them, because I'm thinking Shell not only is gonna move the US, but I'm actually saying they're gonna throw a curve ball moved to

10:57 Dallas just to fuck with everybody in Houston. That would be hilarious, by the way. So I'm wondering what it strategically does Shell have to gain with the VPI for Shell? Yeah, you know, 'cause

11:11 one of the thoughts I had along the line with what you're saying is so much of Shell and BP are both trading operations. Yeah. And I'm not a trader, so I don't know if one plus one equals three,

11:28 or if one plus one equals one and a quarter on trading stuff. But who's trying to build a trading presence these days? And from what I hear, kind of had some fits and starts on it, Exxon. Yeah,

11:45 Exxon, absolutely Does this put axon into the. trading business, although BLT. is number one in the United States in gas and shells three, number three, maybe at this point, maybe they're

11:57 number two, but I think that would be, I mean, we'll regulators even allow a merger like that to go through on the US. trading side. Lena's gone by by Lena.

12:13 But I think ultimately what does that do to your multiples? Well, it hurts, trading operations always hurt your multiple anyway. Because it's sort of that black box that doesn't really get

12:25 reported separately, it puts a lot of cash, I mean, a lot of risk on the table, and it's risky because it's short-term. So,

12:36 yeah, I think it makes a lot of people uncomfortable. No wonder Exxon hasn't pulled the triggers because what does it buy Exxon? A lot of risk, and Exxon's the opposite of wanting risk I don't see

12:45 that being super successful actually.

12:49 but I can be wrong culturally. I've heard, you know, at the end of the day, you got to pay traders a lot of money and that just doesn't fit with kind of the Exxon culture of, you get paid well,

13:01 but you advance through the years and ultimately we want you returned with a lot of stock and living off your dividends. I also think European labor laws are going to make it really tough for a US

13:12 player to come in and do the type of rationalization that, you know, the combinations that we've seen here in the US have resulted in. So that's a sticky wicked. And I also think, you know, from

13:25 Chevron's perspective, they're certainly laser focused on getting through this arbitration as it relates to us. And, you know, if I got a chance as Exxon to pick up

13:37 a big chunk of that value by consolidating position in Guyana, that's probably tens of billions better spent than on AP. All right, I'll throw one other thing out there when we were emailing about

13:51 this story. One other thought, does BP go the opposite direction? Do they buy somebody to, in effect, kind of help say, we truly are focusing on hydrocarbons again. And if they're gonna buy

14:08 somebody, who are they gonna buy? I'm gonna throw it out here just so I've kind of stake the claim for this,

14:16 10, maybe 15 chance BP buys a patchy. No, I'm serious. I mean, think about

14:23 it, you know, you've got - A lot of legacy BP out of patchy, by the way. Exactly. I mean, that - Employee and leadership lives. Yeah, well, and asset-wise, I mean, that's basically what

14:35 Apache did was they put together the old BP Permian assets to some degree Plus North Sea. Yeah. Yeah, well, back to the -

14:47 kind of generic question. I'm not going to speculate on targets. I think from a cost to capital in the very difficult, if not impossible scenario in which they could do an accretive significant

15:02 deal, just given where their equity trades, because they're going to have to use equity for a significant chunk in such a scenario. They've got a significant disadvantage as a buyer that I don't

15:17 think

15:19 their activist, Elliot, is going to be very kind to. What we saw coming out of the investor day, we're pivoting, we're going to shift a whole bunch away from renewables and oil and gas again. I

15:36 don't think that that was a significant enough of an urgent change that someone like Elliot might be looking for.

15:47 The, this was interesting. UBS, the research team put out a note talking about shell possibly buying BP and one of the big factors in the no camp was it would take shells reserve life from 89 to 81

16:07 in terms

16:09 of years. So that's, that's not insignificant. Well, if we keep getting, if we keep getting rallies, that's all one of the kind of general

16:21 criteria was, you know, we need to see crude prices lower and BP stock price lower. Well, you know, today we're seeing the opposite in the last five days we've seen crude jump from 57. Last I

16:34 looked at was all the way back to 63. So, you know, we'll see. I mean, it could be just a function of if the right market conditions arise.

16:48 You know, it's being discussed at the executive level. Whether it happens is gonna be a function of oil prices, stock price, et cetera. But I think it absolutely is a discussion point. And then

17:03 you have to go to sort of management compensation itself. I mean, it got like YL, what's his legacy? How does he get the big bonus? Man, this is one way to probably, in some ways distract. I

17:15 mean, he's cutting, he's cutting, he's cutting So I'm thinking he's probably gonna hit his targets, but it's just one of those things that with a strong CEO like YL, does he sort of convince the

17:28 board that this is a good decision and it's gonna take past his CEO tenure to see if it actually plays out. While he's getting paid and can retire saying, Hey, I just did one of the bitch

17:41 acquisitionsin the history of the industry, you're welcome. So I think we have to put that into consideration as well. One of the interesting points, BP became BP because of

17:54 the acquisition with Amaco. I mean, if you really think about it, you go back to the legacy. And the whole driving force there was let's get better, let's get bigger and let's buy cheap natural

18:08 gas assets. And, you know, it made all the sense on paper but what they totally missed in that acquisition is that Amaco had been starving. It's refining and it's midstream assets for capital.

18:26 Thus, she wound up with, you know, plants blowing up and stuff that became kind of BP's legacy, unfortunately. And it was one of those deals that made sense on paper, but they actually, BP

18:39 actually had an engineering committee that studied the deal and came back and said. We want all the natural gas. We don't want anything else within Amaco. And

18:53 the BP CEO board overruled that. So caution there while when you're looking at this. Ready to move on? Yeah, what's up next, Mark? Well, I know you guys were probably paying attention to the

19:08 trade negotiation news that was coming out of Europe. Not a lot of details, at least last time I looked earlier this morning, but we've got another of these 90-day

19:22 hiatus periods, if you will, but basically the cent and a Chinese delegation met Geneva over the weekend and the bits and pieces that have come out, frame it as the reciprocal tariffs, which were

19:37 125 plus, go to 10. Those are the baseline tariffs Anything. and aside that I saw anything under800 in value to

19:48 find his e-commerce is not included in that. So yeah,

19:55 hold the phone Amazon shoppers.

20:00 My question to you guys is if we can declare at least a first round winner or loser who ultimately caved and who can credibly claim what they want. Man, I'm still trying to really digest the

20:20 strategy here. I am in favor ultimately with going back to the rest of the world and saying, look, our trade deficit's so poor. We're giving such advantages. Now, I'd love government to stay out

20:35 of

20:37 business per se But in this case, I think, I try to negotiate. and sort of write the ship. I'm in favor, ultimately. I think it's a short-term pain. It could have long-term gain influences. I

20:52 don't see anything wrong with that. The sort of the details of like this delegation, and particularly, I don't think we're really going to be able to know the - I care more about the long-term

21:05 implications here. Short-term, I don't necessarily care. So who won? I don't know I think I want to - I want to believe we're winning if this sort of rewrites the shift on our trade imbalances and

21:24 how we're getting dinged. I mean, think about us selling into China. And for us, like that to me as part of the benefit here is, hey, you guys are basically getting a free deal here And we're

21:39 not getting that same deal going back out to you. To me, that's a win, I don't convince me otherwise. So I've got three unrelated points here to bring up. Number one, for all our hysteria about

21:56 tariffs, only 14 of

22:01 GDP is imports. So if they go up 10 because of

22:07 a tariff, that basically means on the rest of GDP, you've got a lower cost, call it one and a half percent, just to stay flat in terms of pricing for America. So I think that's under appreciated.

22:23 And I think you've got levers with taxes, deregulations that make a one and a half, two percent drop on US GDP possible. So that's one thing. So I don't understand why we're getting so hysterical

22:39 about all this trade we're going back and forth. That's number one. Number two, as we learn because we're all energy guys and we've all dealt with oil field service guys, at the end of the day,

22:53 you will ultimately price your assets at your variable break even cost just to keep them working. If it is so bad out there that you're giving away a drilling rig just to keep paying your people and

23:10 keep it running, you're totally gonna do that. We've seen that in every business. So the key is not what are these tariffs gonna do to prices, it's what is this gonna do to the entities running

23:24 those factories in China? Do we think they're making a profit or not making a profit? I suspect they're still making money so you've got some power to push back there. And then the third thing that

23:37 I think's Totally been missing from this. What is one of the big defining aspects of Trump's life that is underappreciated? It's his older brother dying from basically being an alcoholic, being an

23:55 addict. So I think the fentanyl push here is truly a real thing by Trump in terms of going after China, going after Canada for letting it in, Mexico for letting it in And I get it, look, you can

24:13 hate Trump and all that. Go watch him on the Theo Vaughn podcast, asking Theo Vaughn what it's like to do drugs and how he became an addict and how he became over, how he overcame that. That was

24:28 real stuff. So that is something that a guy who knows he only has three years left and is worried about his legacy and is worried about truly people in addiction, that plays a bigger role here than

24:44 I think we're giving credit for. Good take, good take. So a couple of things. I'm just digging up a cow bass tweet that I saw yesterday

24:57 in which he states that China came begging to the US. Currently 1, 800 businesses in

25:06 Shenzhen and Jay Xing closed in a major area of China this week. So there is there is some knee jerking going on here if that's to be taken as fact. How many are state owned by the way? I don't

25:20 think anybody watches China or comments more on China the cow bass from a political standpoint. I do think that structurally though and from a timeline standpoint because of the the inertia and key

25:35 supply chain elements coming. you know, inputs and finished products coming from China and the need to

25:47 get some, some, some of the angst out of, out of consumers in the markets in the US. You know, we, we've got to, we've got to have this thing fall out a little bit and look like a win. And,

26:02 and I, and I do think this kind of this weekend leading into the president heading for Saudi Arabia today to cover things like Saudi investment. It's part of a multi-country Middle East swing. It's

26:16 the first international troops that's taking office. But

26:22 I think one of the things that hasn't been spoken at least in the news that I've read is, you know, the way I think about why is the topic in Saudi first? Well, you got five-handle crewed for a.

26:39 brief period but it's up six bucks and kind of five days and of course what's happened overnight really with with the trade negotiations you know continues to put more of a glass half full back into

26:52 the market so is there going to be a separate closed-door meeting about some maybe smart arm twisting with the Saudis and OPEC to to get his five-handle crew and you know I want to point to lower

27:05 gasoline and diesel prices to the electorate ahead of the 2026 midterms so this this from our standpoint as a very short-term objective of appearing to be more conciliatory because we want we want

27:22 prices on things to be lower not higher now in November 2026 and people don't care we're about the details of of girl, baby girl, and that, you know, this, this windfall has come from the US

27:38 domestic producer ramping up? Well, and at the end of the day, both parties have to look like they had a win or the deal doesn't get done. And so there'll be a whole host of stuff for Trump haters

27:52 to run around and say he caved and great. But at the end of the day if, both parties can't call it a win, it doesn't happen. So, you know, the fact we're talking about it and debating it,

28:07 that's a good thing. That means a deal gets done. One last thing, and I'm gonna kind of change the topic here, 'cause I like where you just went, Mark. You know, Trump's a low oil guy, low oil

28:20 price guy. He always has been. And here, I'm gonna put both of y'all in the spot real quick. What I said at NAEP when I was on the panel is, I said, look, we know that. We know Trump wants

28:32 lower oil prices He's gonna. meet us up as an industry to drill more. He's gonna bribe the Saudi somehow to pump more oil to get prices down. That's who he is. Are there two or three things that

28:45 we as an industry could ask for that makes that an okay trade? 'Cause I do think the flip side of Trump wanting low oil prices is

28:56 what do you need? You need this open, you need that open, you need permitting, whatever What could we get out of him and this administration because at the end of the day, I think that's our

29:10 opportunity and I slowly think we're blowing it 'cause all we're doing is sitting around on Twitter talking about how bad oil prices are. Short of some sweeping legislation, primarily as it relates

29:23 to emissions and permitting permitting you know, speed of permitting, there's really no rollback that is going to

29:36 put us back over the hump in terms of, okay, now all of this growth-directed activity resumes because we've had all this relief from the regulatory and permitting front. Keep in mind, the federal

29:48 government, other than things like the EPA and OSHA don't really have any say on non-BLM land. So and there wasn't a high priority. If you go look at the proportion of drilling inventories that

30:03 were making the drilling schedule, the vast majority of what's driven growth over the last 10, 15 years has not been on federal leases. So it's a bit of a red herring to say, you know, we're

30:16 limiting access to the detriment of of what could be. It's just that they don't make the they don't make the return cut in either geologic quality or all the other stuff that you got to do in certain

30:29 be element surface areas that you don't have to do on private or even, you know, state of Texas leases, for example. So there is little that can be done at the,

30:46 you know, to offset the leverage of a10 move and

30:51 TI gives you either way And so that is the overwhelming factor. I think that

31:03 the way they look at it, the way the administration is like that from a political standpoint, I've said this before, is the constituents that are the US domestic, mostly independent producer and

31:14 OFS group are an acceptable casualty of getting50

31:21 oil and some3 gasoline and being able to point to that as it went because the part of the electorate that isn't among the individual consumer in industry that is gasoline, diesel, and other

31:37 hydrocarbon and thermal commodities get a huge relief on their businesses from a margin standpoint So

31:51 we'll see who wins here, but

31:54 you did call, Chuck, you did call the USP last week, equal option. That I did. Man, Travis, guys. All right, Kirk. So Mark's being doom and gloom, there's nothing we can get out of the

32:07 administration. You got anything? No, I think, I mean, let's look at the previous administration as an example I mean, if you just look at

32:19 the Northeast, one of the biggest gas deposits in the country, and they can't even get it to the Northeast, they can't even. export it overseas, what an administration can do is slow everything

32:33 down and fuck it up. What I think most of us that are capitalists and the government's there has to protect us. So maybe there's some environmental regulations that we need to be stringent on and we

32:45 don't want things blowing up and near schools, et cetera. But ultimately the Trump administration can just get the fuck out of the way and let businesses transact I mean, that's really what

32:59 administration needs to do is make things easier to do business. And that's what encourages companies to move here. You think Shell would be a big win if they brought, if they headquartered here,

33:10 think about all the tax dollars. It would be great, make it easy to do business. So I think ultimately Trump needs to, I mean, the president doesn't need to be talking about, hey, I'm in the

33:19 middle of this. We know Trump wants to think so, but I'll make your, you know, Make your administration make it easy for everyone else to do business, which includes working with

33:33 the leases in the Gulf of Mexico, which includes working with the federal regulators to make it easy. That to me is what the goal should be, and it shouldn't be, this is not front page news, it

33:45 shouldn't be. And anyone again, yeah, that's it. We're both wrong. Let me interject. I want to rebuttal a little bit the doom and gloom characterization

33:56 Exactly, politically realistic, but I'm a glasses half full guy because if Travis and Chuck

34:05 are right, you're now putting the only available, immediately available barrels back on the market in an accelerated fashion. At the end of that, if we get the whole trade friction cleaned up and

34:21 the underlying global economy is okay,

34:25 we're at 104 million barrels a day. So one or two million barrels a day, a spare capacity is a lot less at the margin than three to five. And so get those two 2 and 12 million barrels back online

34:41 in the supply base. If we can't grow and be the gap filler to demand growth that we have that U of Shale has been,

34:53 we've got a pretty tight market. As always, watch inventories. And so that situation can change very quickly. We're dragging along below the low end of five-year averages in crude and refined

35:07 products. But demand will tell you whether or not you have a tight market here. And it can do so in three, six, nine months,

35:19 as Origin accumulated on CNBC just this past week So I think if we put a group. together. And I'll nominate Case to be part of that group,

35:31 grab some other folks, and walked into DC and demanded emergency regulatory relief and went step by step, you know, the

35:43 environmental studies needed to build an LNG facility. Come on, man, we've been building them, we get it. Let's waive those. Let's build LNG facilities all up and down the coast, starting in

35:57 Texas, all the way to your NAND tuck it. Let's do that. If we started getting FERC waivers to build pipelines across things, let's exempt the energy from the Jones Act I think there's enough,

36:16 maybe even ask for royalty relief on federal lands. maybe a waiver for some period based on oil price. I think there's probably enough there that it wouldn't be the greatest trade in oil and gases

36:32 history, but we could at least get some of this stuff. We could build for a bigger future. And unfortunately, I've never run a big company, so I don't know exactly what all those levers are

36:47 'cause I was always five guys in a rusty pickup truck and that's the world I played in. It just feels like, you know, could we get some relief on refining, et cetera? Is there enough there?

37:03 'Cause we're just gonna have to put up with50 oil. I mean, that's just who Trump is. And the president of the United States has a lot of levers and can play those levers, how they want to, at

37:15 least in the short term, long term fundamentals matter, And I was speaking specifically to the domestic upstream, mostly the independence in OFS segments. You know, there's really no, I don't

37:32 think there's any scenario where that kind of ancillary relief is going to overcome the basics of the business. And keep in mind, they're all guided by and led by

37:48 investor demands and incentives, which, you know, I don't see kind of a rotation back into those sectors or stepping up to buy if I'm, as a company saying, yeah, okay, we'll accept lower

38:02 returns at50 oil, which are inherently going to

38:05 be the case. You can't do enough on the

38:10 exogenous stuff in terms of cost and efficiency and efficiency in terms of time to overcome that hit to the top line in pricing.

38:21 And by the way, the federal government's saying we're gonna have a federal loyalty holiday is not helpful to the deficit either. Now I've always been a little Pollyanna-ish on this. Speaking of

38:35 case, why don't we jump real quick to Diamondback's

38:40 earnings release and all things around that. Mark, you wanna take that? As they usually do, they led the way And in conjunction with their updated Capital On Activity Guidance, they said we're

38:55 gonna take down three rigs or reduce drilling activity by three rigs and lay down one for X-Bred and cut 400 million from the Capital Budget, which I believe at the midpoint was about 10.

39:11 That they were the largest and quickest and it may be a function of where we are, where they stand on the earnings calendar But they also have some commentary, some luck. this is, you know, we're

39:21 approaching

39:24 a traffic light and we're not, our foot's no longer only accelerator. And what happens between here and kind of the rest of the year, if we see a red light, that's when

39:38 we start tapping on the brakes. And so others have followed suit to a lesser degree,

39:46 EOG, Matador, I think, was early talking about it. They cut less than, I think, seven and a half percent of their capital budget. What I didn't see in either

39:59 EOGs or Matador's announcement was, we're going to take Growth Capital to zero. Right? Yeah. Operationally and contractually, this is a very hard thing to pull off, particularly when you've

40:11 already,

40:13 you're already passed first quarter, so there's just that natural momentum. And it's hard to affect that equilibrium or that pivot to get to, okay, we're gonna go into maintenance mode. That

40:25 looks great on paper, I get it. My sense was just given what was going on and all the uncertainty out there and where this industry has been in the past certainly last five years,

40:38 being more aggressive right out of the gate and responding with 10 plus percent cuts, lay down a third of your drilling fleet, that creates a kind of decline management issue. I get that as well,

40:53 but

40:56 I figured after

40:58 continuing to drag along the lows of valuation and representation in the overall market that there might be more of an immediate kind of messaging thing. Because the producers in OFS have been happy

41:11 with the early signs of what this administration's about, from an energy policy standpoint.

41:19 even led by one of their own interests, right? Well, you know, basically the stock price was up one percent that day to 133 bucks. It's at 142 bucks today. I think the market

41:35 blew it off at a minimum, but maybe even more so respected it, appreciated the activity. Kirk, you got thoughts? I mean, I was just thinking about some of

41:51 the earnings announcements. What? They're cutting back till rebound. What's the rebound mark? I'm just curious, what is the rebound point? And when is that gonna happen? If you take what Travis

42:03 said, he said, look, 65 is kind of the threshold to start maybe reconsidering adding back, but it's clearly, you know, Steady state and there never has been a steady state just given the The

42:21 compressed frequency of these things and the amplitude of these up and downs has has gotten more severe over the last 10 years Given all that we've been through

42:32 You know, I also don't think the the Saudis

42:37 Are willing to do this and definitely I think yeah, I think it's part of a political trade that said yeah, I will We'll do this. It'll allow us to capture some market share again I think the

42:49 domestic producer and oilfield services group was an acceptable political casualty in this in this calculus You know50 oil really hurts the Russians too as I've as I've said before and so You know in

43:04 this 40 chess game to use a way of reuse term and one that Kirk really hates

43:12 You know, I do think that

43:16 I do think that there's some uncertainty that has moved forward on the horizon, and I don't think we're going to, until the trade issues resolve, the man's okay, let's say we do move back into the

43:30 70s, I don't think it's any time over the course of 2025 where there's a rapid return to growth levels of activity. I mean, what advice do you give your Gen Z children? Women's in debt, it's keep

43:45 your head down, work hard, save money, and when the price is low, buy something because you're going to ride that price up and that's a house or whatever. I think the market message is, of

44:00 course Trump wants low oil prices. He wants the US. economy to beat everyone, and with low oil prices, it squeezes the Russians, which plays right into our favor.

44:14 Him going to Saudi. squeezes the Chinese because if they're on our side, that forces their hand. So what do you do as a US-based independent? You put your head down, stop going into debt, pay

44:33 your bills and figure out how to be more efficient because you are gonna win in the long run. And that is something that having been in this industry, We forget we're feasting, everyone's feasting

44:46 famine. Like when100, no one cares about anything. It's not about efficiency, it's about finding more oil. And then when you go to30 oil, everyone's like, man, I can't do anything, let's be

44:58 efficient. This can't rub two pains together. I think this is just a great way to make those that have good fundamentals even stronger. And that's, you know, it's, it's, it's, it's, it's,

45:09 flight to quality, as they say in on Wall Street, So this is exactly what we're saying, and it's good news. And companies on balance are way more resilient to this go-around because the balance

45:22 sheets are in much better shape than they were five years ago. And certainly, certainly 10 years ago. And there wasn't the, you know, our kind of primary mindset is now very investor oriented as

45:35 opposed to, as Bob Simpson used to say, grown for sport, right? So I do think that there's much more resilience built in. I also have to believe to be class F full guy. I think the underlying

45:50 fundamentals are significantly, if not very favorable,

45:56 and if we are kind of, and we'll say we're running out of growth opportunities and you'll show, I think there's certainly plenty of inventory still there, but you have seen a shift to companies

46:08 talking more and more about conventional, right? That's inherently long cycle. And those come fraught with a whole set of what we used to call above ground risk, right? So I do think a harder to

46:24 grow supply base if indeed US shale has lost some of its vitality. You know, I think that's structurally positive and good enough shape to weather it. You're right, just do more to get more

46:38 resilient going forward. They're going to be fine So I think the next step that needs to happen. So good step of hey, prices are down. We're not going to drill even to your point that it's not.

46:53 The logical thing should have been hey, we're not going to drill at all instead of baby stepping down. But okay, so good first step. I think the second step that needs to happen is the C suite

47:05 needs to be educating on these calls What stock buybacks mean in the way of economics? And literally that ought to be, hey, when we hit certain points, it's economic to buy and talk about where

47:20 our share price is at, where drilling is why. I think that's the other toggle. And when you have that, then literally you're giving investors everything you can do with each dollar you have, and

47:39 it'll be interesting to see if we actually step into that. So, well, boys, this was fun. I'm glad we all got back together. Yeah, man. I'd love to see

47:51 it more often. D3 doing what? D3 doing what? All roads. Love that. Thank you. I'd like to see you chomping. I think we're playing St. Louis this weekend. Fantastic Not roads or in St. Louis.

48:05 In St. Louis, whoever the regional host is, they have the

48:10 Selection show started around 11. So I heard a little bit That it's probably St. Louis, but I don't know what the brackets or the the times look like so should be fun awesome, man cool guys