Daily Energy Standup Episode #294 – White House Delays, Carbon Tax Concerns, and Diversified Energy Under Scrutiny

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White House Said to Delay Decision on Enormous Natural Gas Export Terminal

Highlights of the Podcast

00:00 – Intro01:40 – White House Said to Delay Decision on Enormous Natural Gas Export Terminal03:51 – Navigating Market Sensitivities: A Deep Dive into Winter Forecast Impacts on LNG Trade05:11 – The US says it needs 22m acres for the solar energy transition – here’s what that looks like07:00 – “For Natural Gas, It’s Buckle Up and Hang On for 2024” – Steve Reese, CEO09:14 – Senate Opens Door to Massive Carbon Tax Despite Critical Economic Concerns14:07 – Markets Update15:46 – Diversified Energy Faces Short-Seller Attack From ESG-Focused Snowcap21:11 – Outro

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Michael Tanner: [00:00:14] What’s going on, everybody? Welcome in to the Thursday, January 25th, 2024 edition of the Daily Energy News Beat standup. Here are today’s top headlines. First up, white House said to delay decision on enormous natural gas export terminal. Next up on the menu navigating market sensitivities. A deep dive into winter forecast impacts on LNG trade. Next up, the U.S. says it needs 22 million acres for the solar energy transition. Here’s what that looks like. Next up for natural gas. It’s buckle up and hang on for 2024. That’s according to friend of the show, Steve Reese. And then finally, Senate opens door to massive carbon tax despite critical economic concerns. Stool. Then toss it over to me. I will quickly cover what’s going on in the oil and gas markets include covering what happened with the EIA. Crude oil storage report and a new short seller report from Snow Capped Research targeting our fave, one of our favorite companies, Diversified Energy. It’s about time we saw some short, some short interest on them. So we’ll cover all that. And a bag of chips, guys. But as always, I am Michael Tanner. Joining me is Stuart Turley. What do you got today for us? [00:01:34][79.2]

Stuart Turley: [00:01:34] I’ll tell you what. We got us an action packed discussion. Let’s start out where our buddies in the white House. White House says the delayed decision on enormous natural gas export terminal. This is about some of the dumbest things I could even imagine. Even I wouldn’t do this. They’re delaying this project until right after November. Why? Well, it’s. So they can sit back and tell the green folks. Oh, we’re putting a halt on it. Well, let me give you a quote, Senator Mitch McConnell. Is he the one they call turtle? This would move the amount to a functional ban on the new LNG export permit. That’s the only thing I think he’s even said. I’m not sure if one of his aides did that. The administration’s war on affordable domestic energy has been bad news for American workers and customers alike. I think this just as a telltale quote. He doesn’t know that LNG has to get exported because of the Jones Act, and natural gas is used domestically. So I think this is a confirmation that he’s out for lunch permanently. So this is just it’s the, Colosio, pass. [00:02:54][79.4]

Michael Tanner: [00:02:54] It’s the blind leading the blind. [00:02:55][1.3]

Stuart Turley: [00:02:56] Oh, Democrat. We we got an old folks home up there, and, we don’t even, anyway, it’s just I’m going to go buy stock in. Depends who makes the pins anyway. [00:03:09][13.4]

Michael Tanner: [00:03:10] I don’t know, but it comes from fossil fuels. But it is. It’s ironic that they’re delaying this natural gas plant until right after the election because, you know, you know, regardless if Biden wins or loses right after, they’ll go ahead and approve it. [00:03:25][14.3]

Stuart Turley: [00:03:25] Oh, what? Maybe here’s from a financial, reason you would want to approve it. Because of that, we get exports. You get a little bit of energy security to your, allies. We have not been a very good ally. All right, let’s go to the next one. I wouldn’t want to do business with the US. Navigating market sensitivities. A deep dive into winter forecast impacts on LNG trade. This is from our buddies over there at, Rbac. Going to interview them again? Cyrus on Friday with billions at play, with, talking about how Africa needs to go first. But anyway, they have a great the LNG trade. Their software allows to for folks to go out and do the deep dive on the forecast for LNG around there. It begins in December 2023 and goes through the 2023, 2024. The charts are amazing. If we can take a look at the, four charts, we can just kind of bring those up in here. I’m not going to go through the numbers right here. But I want to leave this in the show notes for people to go through and really do a deep dive on the LNG and the importance to these countries in the brevity of time for the show. We’ll just leave it that this is a great resource from the folks over there. They’re great, great peoples. Let’s go to the next story here, Michael. All right. How about the US’s need? 22 million acres of solar energy transition. Here’s what it looks like. Miss producer, can you bring forward the Bureau of Land Management graphic? Take a look at Utah. It’s three quarters of Utah. Nearby. Unbelievable. I don’t get it. You you saw. That doesn’t include the battery. The beard BLM. It’s not black lives matter. It is the Bureau of Land Management. But yet, look at how many, lizards and dinosaurs and all the hypocrisy going on. That much a true acreage covered up. [00:06:03][157.4]

Michael Tanner: [00:06:03] What I don’t understand is the difference between the 700,000 acres which they claim will be needed to reach the 100% clean electric goal by 2035 that President Biden has. But where’s this 22 million coming from? What’s that earmarked for? [00:06:18][15.1]

Stuart Turley: [00:06:19] I think it’s probably hills. Valleys. You can’t just run them up continuously. You gotta have room in between them. You know, so you may need 700,000 acres, but there’s a lot of land. There’s transmission lines. There’s all this other stuff. It is a, not very ESG friendly for something that’s supposed to be ESG. [00:06:42][23.3]

Michael Tanner: [00:06:43] I was going to say that, as you say, it sounds real environmentally friendly. It ain’t 222 million acres of solar panels. [00:06:50][6.6]

Stuart Turley: [00:06:51] Oh, where’s. All right? Hey, let’s go to the next one here. This one’s really, really cool one. It’s a really short one from our buddy over there, Steve Reese. For natural gas, it’s. Buckle up and hang on for 2024. Over at Reese Consulting. They have absolutely. Measure. They know natural gas. He is an industry thought leader. And, Michael, I have to give him a shout out. He looked at one of my podcasts and put a comment on LinkedIn. Steve Reese, I can’t wait to hug that name for this comment. He goes, you’re sporting one heck of a dome hat. For for even for our podcast listeners, I got a little bit of a flesh hairline. [00:07:41][50.3]

Michael Tanner: [00:07:44] It’s really shiny. [00:07:45][0.6]

Stuart Turley: [00:07:45] It’s really I. Yeah, I don’t waste much in my hair cutting anymore, but let me go through some of these. If market forecaster Craig this is a quote from Steve. Natural gas producer will take it on a chin in 2024 before the heavens part and gear started turning and new LNG export terminals adding capacity in 2025. So Steve is taking into consideration some of the issues that the Biden administration is working on this and that regulatory thread that we were talking about is going to be a widespread impact. Listen to this quote. In an ironic twist to a milder, winter, a week long freeze this month triggered the cancellation of five LNG, cargoes to set sail from Louisiana and Texas. Cheniere energy requires a 40 day notice for cancellations. Gas storage is up to its eyeballs. I love Steve. Anyway, so. [00:08:53][67.3]

Michael Tanner: [00:08:54] We love Steve Reese. He’s he he’s one of the smartest people and most informed people when it comes to the midstream business, because this is what he’s done for 40 years. [00:09:02][8.2]

Stuart Turley: [00:09:03] Oh, and, he he calls it like he sees it. And he is a trusted resource to CEOs all around the world. Hey, let’s go to the next one here. Senate opens door to massive carbon tax despite critical economic concerns. There are some numbers in this article on carbon tax that make me airsick. Let me just give my one little, opinion here because wind and solar are failing around the world and, and carry large as is now, pounding his head against the sand, you know, and saying, wait a minute. Everybody’s realizing they’re not sustainable because people are having to print money in order to get them rolling. Carbon tax is the next way to continue the wealth transfer of, the what the renewables was doing. That’s exactly what this is. And it let’s talk about some of this. The U.S. Treasury estimated into 2017 a carbon tax of $49 a ton, rising at 2% per year, would raise over 2.2 trillion over ten years. Such a carbon tax would raise taxes on gasoline by $0.44 per gallon, on natural gas by 260 per thousand cubic, feet, by on oil, 2150 per barrel, and on coal by 62, to one point. 26 per ton, depending on the carbon content what I just described. Michael. Right, there was a steam roller to the economy and every the poor are going to get poorer, the middle class is going to go away and the rich are going to get richer. That is exactly what that paragraph that I just read said. It is absolutely horrific. And in fact, this the Daily Signal author even says this a carbon tax would hurt the poor, raise domestic prices relative to the private prices of many imports. It would be another add on levy with exemptions for, quote, political friends and punishments for enemies. Wow. Down like Holy smokes, Batman, we can’t buy this kind of stupid. Well, we did anyway. [00:11:40][157.5]

Michael Tanner: [00:11:41] Yeah, it’s it’s here’s here’s my my my problem is that we have absolutely nobody who’s thinking if we pass a carbon tax, that’s great. The problem is second order effects. You know, we’ve talked about the SEC coming in and regulating this. Well, you got to do one or the other. You can’t do all this stuff. You can’t regulated by the SEC. You can’t go ahead and tax it. You can’t do all of this stuff. We know exactly what’s going on here. And these you know, these these unfortunately these. You know, I applaud Chris Coons for trying to get in on this Democrat. But I don’t know if I necessarily this approach if it’s going to hurt, as you said, the small businesses the most. [00:12:26][45.2]

Stuart Turley: [00:12:27] Everybody that is not the 1%, this is going to hurt. The next thing it’s going to hurt is, the what people don’t realize is that the carbon tax doesn’t change the behavior that they’re trying or thinking that they’re going to go after. This does not change anything. And then you have large erroneous forest wrecks going around the world putting out, more carbon. Let’s start taxing that son of a gun. Well, the only problem is he’s going to. Instead of having a $22 million budget for being the climate czar, he’s going to have a $30 billion budget. So he’s just going to pass it off to the rest of the world anyway. [00:13:11][44.6]

Michael Tanner: [00:13:12] Anyway, it’s it’s absolutely ridiculous. [00:13:14][1.9]

Stuart Turley: [00:13:15] We had a great that was a great show. Thank you very much for being my therapist. And I know you’re going to have a couch now installed into your office. Yep. [00:13:22][7.5]

Michael Tanner: [00:13:23] So we can sit back there. We’ll go ahead and move over to finance. But before we do that, guys will pay the bills here. As always, the news and analysis you just heard, and our continue to hear is brought to you by the world’s greatest website www.energynewsbeat.com. The best place for all your oil and gas and energy news. Doing the team do an outstanding job, staying up to speed and making sure you are at the tip of the spear when it comes to the energy business. I gave the description below for all the time stamps. Go back. Listen to one of our segments. You can also go ahead and see all of the links to the articles. dashboard.energynewsbeat.com data news combo product. You can check out the EIA numbers which we’re about to cover here. And you can also check out an email the show interact with us questions@EnergyNewsBeat.com. But again let’s move to finance. Overall market’s fairly flat today. S&P 500 only about a 10th of a percentage point. Nasdaq rising about a, about a half a percentage point, mainly off the back of some intriguing earnings that drop we saw Bitcoin up about a half a percentage point still about 40. Still trending above 40,000 right now. We saw crude oil jump mainly about 1% settling about half a percentage, 7540 as we record this here at about 6 p.m.. Brant up to, just creeping over above 80 at, about a half percentage point. Natural gas a big today, up about one and a half percentage points, $2.67. Mainly what we’re seeing is, is a large draw from the Strategic Petroleum Reserve. We saw about 9 million barrel draw, that got dropped today at about 930, which was a 3 million barrels more than what the API was recommending. We also saw that China will come out and, and, and, and basically cut the amount of cash that banks, need to hold in reserves, which is, you know, hopefully expected to pump more. They think it’s supposed to pump more money in the economy, which should continue to boost their economic stimulus, which which hopefully, will lead to higher oil prices as they continue to move. We also saw that or higher demand numbers and help support, price increases. We also saw the the rising geopolitical tensions. There’s a lot going on. In terms of, what’s going on with oil prices? Yeah. I think the only other thing I saw in the oil oil space, too, I thought was, was hilarious was, diversified energy there, one of the largest owners, of U.S. oil and natural gas wells. They’re being targeted by a short seller, claiming that the company may not have enough money to meet its obligations to plug inactive. This one you can find. Enter diversified energy phases. Short seller attack from ESG focused snow cap. What’s interesting is this snow cap research, their London based act, was a activist investor who focuses specifically on ESG government matters, went ahead and released a 39 page report. And I mean, I will have the report on the website should it’s absolutely brutal what it breaks down. So to give you guys an idea, let’s introduce Diversifies Energy’s business model. And now this is, you know, straight up off their website. So they go ahead and acquire mature, low productive oil and gas wells. They’re the largest oil and gas or owner of oil and gas wells in the country, more than Exxon, more than Chevron and more than everybody. What they do is they don’t drill new wells. They claim to extend the life of operating lives via, quote, Smarter Asset Management Hmhm next, they delay well retirement and associated plugging costs by pushing out those cost as much as 50 years. Again, they do not engage new drilling or exploration, instead must replenish any declining production with new acquisitions. And they securitize wells with amortizing debt to support higher leverage. All that means no cap. Research says these guys suck. So give you just to give you an idea what they’re claiming, what they’re claiming is a few things. They’re claiming that their self-reported discretionary cash flows, they’re being used basically they’re using not what they claim is this. I’ll wrap up the slide here. I want to make sure I sell this right because we’re about to body these people. [00:17:19][236.4]

Stuart Turley: [00:17:21] Wow. [00:17:21][0.0]

Michael Tanner: [00:17:22] Where is it. [00:17:22][0.5]

Stuart Turley: [00:17:22] Here. I it just done it. When you said that, it dawned on me what was going on. That is a that’s worse than a Ponzi. [00:17:30][7.3]

Michael Tanner: [00:17:31] So here to give you guys an idea when they are calculating. So one of the chief things that they claim Snow cap says is that, oh, the dividend that they’re giving out, they’re $150 million a year of dividends is nowhere near what they’re going to be. They’re not going to nearly be able to sustain that, because their methodology for calculating, dividends was based off adjusted EBITDA, a non-GAAP number basis, instead of basing it upon cash from operations and adds back new debt issued for acquisitions despite excluding debt repayments in in line with its declining EBITDA. That also means that instead it basically they calculate. All that being said, if you recalculate discretionary class flows based in 2022, it’s a 73% difference and not in a good way, folks. Diversified energy if you have any investment in them. I don’t give investment advice, but I’d seriously look into getting rid of absolutely incredible 39 page story. I mean, still didn’t even read the report. He sees what’s going on right now. [00:18:35][64.7]

Stuart Turley: [00:18:36] You just read the thing and it just dawned on me, this is not good. [00:18:40][3.8]

Michael Tanner: [00:18:41] No, it’s absolutely not. Shares are down as much as 20%. We’re down as much as 20% in the day, but they only are down 3%. You know, in in diversified defense, they did come out and say report contains numerous inaccuracies, ignores meeting financial and operational results, and sustainability actually is designed for the sole purpose of negatively impacting the share price for the short sellers benefit. I mean, if the 65,000 oil and gas wells is, it’s a lot. It’s more than everybody. And they’re based out of Birmingham, Alabama. Bama they don’t drill wells, which is just crazy. [00:19:13][32.3]

Stuart Turley: [00:19:16] No. You know, that goes back to what we talked to, to our clients about oil and gas. Not all oil and gas investments are the same. And do your homework. [00:19:27][11.5]

Michael Tanner: [00:19:28] I love that you were just like, no, no, I’m good. Because you know what? I’m the same way. You know I’m good. [00:19:36][7.8]

Stuart Turley: [00:19:37] Yeah. I’m just like, Holy smokes, that’s just unethical. [00:19:41][4.2]

Michael Tanner: [00:19:42] It’s extremely unethical. Well, it’s extremely unethical. Oh, so absolutely unbelievable, stew. We’ll see how it plays out. What else should people be worried about today? [00:19:53][10.5]

Stuart Turley: [00:19:54] Well, you know, Davos is only 300 more days away, 345 days away. And they are their heads are exploding. I’d like to give a shout out to the truckers that are starting in the US to protest and say, secure our borders, just like the great farmers in all through Europe. And the media is not covering this stuff. So shout out to our truckers that are trying to help the, Texas Border Guard, and, standing up, for what our, our federal government, Federals are not doing. [00:20:35][41.2]

Michael Tanner: [00:20:36] Yeah. No, we, it’s absolutely unbelievable what’s going on in the border. I will say this. If you ever hear Stu and you hear the first words out. His mouth is. I’m Stuart Turley and I’m live from the border. Just tune out. Just tune out. We’ve gone too far. [00:20:50][14.1]

Stuart Turley: [00:20:51] Hey, it’s all about. It’s all about energy. And I guarantee you all my stories are around that. Michael. It’s the border. It’s the the Chinese that are dropping in by parachutes like red dumb. Yeah. [00:21:05][14.1]

Michael Tanner: [00:21:07] It’s cool, it’s funny. So. All right, guys, well, we’ll spare you the rest of this. Let you get on out of here, finish up your day. We appreciate you guys hanging with us all week. Who do we have on the podcast? Friday. [00:21:17][9.9]

Stuart Turley: [00:21:18] We had, Sharon, mine’s just got, rolled out. And then we have coming around the corner. We have, Michael Ryan is coming out here. I’m going to wait till probably another week. We have Nick Burns. He is a way cool guy in Midland. Odessa, we have Debra Wald coming out, and we talk about home schooling. And I tell you the importance of energy and getting all of our content into a format for tests, curriculum. Kind of cool. [00:21:55][37.0]

Michael Tanner: [00:21:56] Absolutely, guys. Preciate it. We’ll see you guys, with the weekly recap then on Saturday. And we will be back in your inbox Monday. Well, until then guys, have a great weekend. [00:21:56][0.0][1268.2]

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