Trump’s Gas Agenda

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Michael Tanner: [00:00:10] What’s going on, everybody? Welcome into the Wednesday, November 27th, 2024, edition of the Daily Energy News. Beat Stand up. Here are today’s top headlines. First up, Trump energy agenda will have a heavy natural gas focus. Next up, staying on the politics train. Trump and the AI power boom are putting utility climate goals at risk. Dun dun dun. Next stop, ExxonMobil. Quote, Don’t expect drill, baby, drill under Trump. Interesting. I’ve got a lot of thoughts on this one. Finally, the OPEC plus meeting is looming large over the oil markets. And then really the final article is Netherlands was a top destination for U.S. LNG supplies in September. Stuart will toss it to me, I will quickly cover what happened in the oil and gas markets and quickly talk about a little JV between EQT and Blackstone. Very interesting. We’ll talk about all of that and a bag of chips, guys, because this is our last episode before Thanksgiving. I want to say right off the bat, happy Thanksgiving to everybody. We hope you get to spend some time off with friends and family, even if you’re around the world and you don’t celebrate Thanksgiving. We hope you have a great couple days. But Stu, where do you want to begin? [00:01:23][73.7]

Stuart Turley: [00:01:24] Hey, let’s start with our buddy, Mr. Trump. President Trump energy agenda will have a heavy natural gas focus. This article is a find on Forbes. It is actually from David Blackman, The David Blackman. I mean, not just a David Blackman. He is the David Blackman. This is a great article. And it kind of folds into the energy theme that we have for today, and that is natural gas good, no energy, bad. The rationale invoked by the White House to justify the permitting interruption was to enable the Department of Energy to study and update economic environmental impact analysis associated with the LNG export business. To that end, the Doe is expected to issue a final report. And I don’t think it really matters because President Trump put out on X, I don’t care. I’m going to open it up. [00:02:19][55.1]

Michael Tanner: [00:02:19] I mean, hey, it’s what needs to happen. I mean, it’s probably part of why you’re seeing natural gas prices spike right now. Obviously, we’ve rolled over into the new contract. Some of that just has to do with us rolling out a winner. But, you know, the world needs LNG. I covered it on my solo show on Monday, Stu. It’s about to be cold in Europe. You know, they’re going to be back to burn in the shoes. [00:02:38][19.0]

Stuart Turley: [00:02:39] It’s a horrible thing that’s going on in Europe right now, Michael And I’ve talked to George Macmillan again just as we were getting ready to get on this call. Not only did you and I laugh about charging the German German guy, he Mnuchin, I think you said three calls to Putin begging for gas. Now they’re one. I mean, this is not a this is a documented thing on May I please have some gas? So if we watch Oliver and he goes up and goes, may I have some more gruel? Holy smokes. All right. So anyway, shout out to David. Natural gas is critical in this next story. Trump and the AI power boom are putting utility climate risks at goal. I disagree, Michael, with this. Big utilities and climate goals are in peril because artificial intelligence, turbo charges, electricity demand and Donald Trump’s reelection signals policy shifts that would favor fossil fuels. I agree. But Michael, let’s step back from this article a little bit and say the United States in the last two years has dropped their CO2 output by 22%. China has increased 220%. I see us needing more natural gas, which is not going to hurt the environment at all, period. And the only way we’re going to get to Texas, Ercot needs two times the amount of power in the next five years. The only way to do that is with natural gas. We can’t permit enough right now with nuclear. So I don’t see this as really being a big issue right now. The eye revolution is here and they need power. [00:04:25][105.3]

Michael Tanner: [00:04:25] Well, they do need power. It’s why we’ve seen a lot of these people talking about small modular nuclear reactors. We’ve seen venture capital get their toes into it more. It is going to be easier. I think you bring up a great point in this article does about China. You know, we can do all the cutting we want here at home and China is just going to keep ramping up their use. So it really is netting out to be a gross increase in. And, you know, I mean, we all know this, that emissions stay confined to the state. So if China pollutes, it just stays within China, right? That’s how it works. No way. It goes everywhere. That’s right. Wait a second. Then we’re in trouble according to the climate people. So it’s pretty unbelievable. I do think what you’re going to have to see is. Is from this energy council that Trump is putting together. They’re going to have to solve the grid problem. They’re going to have to attack the grid problem. And I hope they do. [00:05:17][52.2]

Stuart Turley: [00:05:18] I think you’ve got Doug Bergen, who is going to be impactful for the oil and gas. You have Lee Zeldin, who is the EPA. He can save trillions of dollars just on the EPA right there. And then you have Chris, right? Holy smokes, Batman. You’ve got the trifecta of the hit squad. I mean, that is a great team. [00:05:38][20.4]

Michael Tanner: [00:05:39] And we do. It’s true. It’s true. All right. What’s next? Let’s move to Exxon. [00:05:42][3.1]

Stuart Turley: [00:05:43] Let’s go to Exxon. Don’t expect drill, baby, drill under Trump. And I thought this was a great one. This is ExxonMobil. Upstream President Lee William Mellon said we’re not going to see anybody in drill, baby, drill mode. I said at the Energy Intelligence Forum conference in London as it was carried by Reuters, A radical change in production is unlikely because the vast majority, if not everybody, is focused on the economics of what they’re doing. Michael, this is because the ESG newspaper hit the all of the operators in the forehead all the way and went through their head and came out the back end. And they are going to be giving returns to their investors. This is this is where I see this is a good thing. [00:06:30][46.9]

Michael Tanner: [00:06:30] Yeah. I mean, again, prices will only fall as much as oil production comes online. And if producers are signaling, hey, we’re not necessarily going to be drill, baby, drill, we may even pull back a little bit in an effort to sustain prices. Well, then, you know, again, there’s not much the president can do other than signal, hey, I want to drill, baby, drill. Well, how do you incentivize companies to drill? Well, you either have to subsidize them so that they can make up the incremental revenue that they’re going to lose by bringing rigs online, lowering the oil price, or you bring on so much production that the drop in oil price, the net net of it all ends up being more. I don’t see either of those happening. Right. So what’s going to happen? I think you’re just going to see a little bit of the status quo. And I think that’s what you’ve seen in the marketplace over the last two weeks, is oil prices get down to that 65 range, spring back up. They’ve fallen a little bit today. We’ll cover mainly why a little bit of a cease fire hopefully going on in in the Israel conflict. But it’ll be very interesting what happens. I do think what Exxon is signaling is kind of the thought among at least the larger mid-caps. I know if you’re a smaller guy, you may thinking about how it might be easier to crank out a few more rigs. It’ll be very interesting to see what happens. [00:07:45][74.9]

Stuart Turley: [00:07:46] You bet. And so as we go to the next story, OPEC plus meeting is looming large over them, the oil oil markets. I’ll tell you what this is really this is everybody’s got burdens on. If prudence is a boot, that could be a new brand name boot, a work boot called Prudence. There is very limited LNG capacity increases coming this winter. Oops. So when you take a look at that article from Michael Kern at Oil Price, there’s some really pretty good stuff in there. But I don’t see I see the brakes are on just unlimited Drill, baby, drill. Let’s roll over. Just as just Netherlands was the top destination for LNG supplies in September. Netherlands really was taking it in. And also the prime destination of 588 Bcf, followed by France with 493 Bcf. The DOJ report shows that the U.S. exported 363 Bcf of LNG to 28 countries in September, up to 4.8% from the same month. I’ll tell you what I think are all of our countries around the world are thrilled that President Biden Amin is no longer going to be stumbling around the White House, canceling things. So I’m pretty excited about it. [00:09:04][78.6]

Michael Tanner: [00:09:04] Yeah, I think a lot of people are watching what OPEC is going to do. Some of the tea leaves that I’ve been seeing is that they’re actually thinking of extending these production cuts into 2025. And depending on where Brant goes, I’m going to throw out. They may cut it a little bit. I mean, if they were signaling that they don’t care where prices went in the face of a Trump victory, I think they would have continued to bring barrels back onto the market. They’re not doing that. So the real question is why? Some theories say they don’t have the spare capacity. They claim they do. Who knows? Other people obviously are saying, well, there they’re so tied up in oil revenue that the math on a higher per barrel dollar per barrel actually is more valuable than more oil production. So it’s that give and take. [00:09:46][41.3]

Stuart Turley: [00:09:47] And and, Michael, this is a side note before we go off to your section. Cop 28 has been cop 29 has AB actually been hilarious? There’s even more fallout coming out on it and I have to hand it to Saudi Arabia again for going. We’re going to keep drilling oil and their heads exploded around the world already. [00:10:07][20.0]

Michael Tanner: [00:10:08] All right. Well, we will. We’ll do some oil and gas finance guys before we do that. As always, we’ve got to pay the bills. Thank you for checking us out. Here on the world’s greatest website, theenergyNewsBeat.com All the news and analysis that you’ve just heard is brought to you by said websites. Do in the team, do a tremendous job making sure that website stays up to speed. Everything you need to know to be the tip of the spear when it comes to the energy and the oil and gas business. Go ahead and hit that description below All the links to the timestamps links to the articles. If you are interested in learning more, you can also subscribe to our substack The Energy News beat.substack.com. We thank you every who subscribe there we take you to everybody who subscribe to our YouTube channel. If you are listening on podcast and would like to do so, stop pause, go to YouTube, subscribe to us. We really appreciate it. And we also obviously put this out on video form. So if you are listening to this on audio, you are more than welcome to view this video. We like to throw in a little extra stuff there. You can see me throwing my hands around and all that. You know, I know everyone’s going off for Thanksgiving, but if you are sitting at Thanksgiving wondering what your tax burden is going to look like, I have a solution for you. You don’t need to worry about it. There is a solution. Taxes are so 2023 moving to 2024. Investing in oil and gas. The best way to lower your tax burden. Go ahead and hit our link in the description below or invest in oil dot energy news beat.com. We will get you all the information on how oil and gas investments can help lower your tax burden. You can also diversify your portfolio, give you a nice little monthly dividend and become Billy Bob Thornton from land. Matt I mean, that’s really what you want. It’s really what you want. If you want to be able to yell specifically if you’re at Thanksgiving and you want to be able to lecture your family about how renewable suck, the best way to do that is invest in oil and gas so that you can actually say,. [00:11:57][109.2]

Michael Tanner: [00:11:57] Hey, I’m an oil man. I know what I’m talking about. But truly, truly, if you have a tax board, mortgage, all the information, invest in oil, not energy has become become Billy Bob Thornton from Land Man. Let’s dive over here. Let’s go ahead and just look at, you know, top line indices, stock market above 6000, again, up three and one half percentage or up a third of a percentage point. Nasdaq up just about the same, sitting above 20,802 and ten year yield spike, ten year. The ten year yields actually up about a full percentage point, mainly off the back of these tariffs that Trump is now dropping on on Canada and Mexico. We might talk a little bit about that dollar index, up about a third of a percentage point, a Bitcoin down to $92,000 at the shedding about a percent and a half. Crude oil’s dropped about $0.13 or about 2/10 of a percentage point. Brant Oil down 1.3 percentage points. Natural gas up two percentage points, $3.46. Actual contract has fallen about one full percentage point, specifically on oil. You know, main reason we’ve seen some downward pressure is there’s an agreed ceasefire between Israel and Lebanon, which is is is superb. It is great for the region, brings down that geopolitical tension. Obviously, there’s still the stuff going on with Hezbollah and all that. We talked a little bit about OPEC plus beginning discussions. Again, the tealeaves coming out of that meeting is that they’re going to delay the output. You know, if you if you agree with our friends at routers, well, guess what? Mostly what’s going to happen is they are not they’re going to defer these production increases and just attempt to keep Brant where it’s at. Speaking of those tariffs, Stu, I want kind of your thoughts on it. Mainly why oil has moved positively. Is Canada. They’ve come out and said that this act, this tariff, that they’re going to put a 25% tariff on all products coming into the United States for Mexico and Canada. We import a lot of oil from Canada, and that would apply to the oil. So talk a little bit about these tariffs from your end, what you’re hearing, and then I’ll sort of opine on it from there. [00:13:57][120.2]

Stuart Turley: [00:13:58] Well, first off, it came out as a post on X from President Trump. And within, I believe 20 minutes after President Trump said he was going to tariff everything for Mexico and Canada, if they don’t control their borders, I believe Trudeau was on the phone going, man, Sierra a Trump President Trump, would you please not tariff me because Mexico’s border is worse than mine? [00:14:25][27.8]

Michael Tanner: [00:14:27] So I think you that’s a critical piece, is that he did not say he’s going to put tariffs on it. He’s threatening to put tariffs on it, not help control the flow of illegal aliens. And you’re right, the Mexican President Xi came out within 12 hours. I think it was basically like, okay, yeah, we’ll stop. The migrant flows is like. So it’s like when Newsom cleaned up San Francisco in 20 minutes when the Chinese president showed, it was like, so it was just that easy. [00:14:53][25.7]

Stuart Turley: [00:14:53] Exactly. So it’s just a matter of, you know, perspective and tariffs are not always bad. I think if they’re blanket and if they’re used as a club to get what you need, they’re in a good sense. [00:15:06][12.5]

Michael Tanner: [00:15:06] Yeah. No, absolutely. Absolutely. The only. The other thing, Stu, that I saw that was very interesting, this actually happened yesterday. EQT announced $3.5 billion joint midstream venture with Blackstone Credit and Insurance. Spooky stuff. Mainly what they’re doing is this is all part of a debt reduction program that equity is attempting to do in their acquisition of of Equinix. As you remember, that happened early this year. Basically what they’re doing is they’re taking their midstream assets, specifically the Mountain Valley pipeline, the Hammerhead pipeline and a few other sources, and spinning that out into a joint venture in with Blackstone. Credit and insurance will basically take a non-controlling equity stake in that in return for about 3.5 billion of cash that values this new joint venture at around 8.8 billion or about 12 times EBITDA, which is pretty intense multiple specifically for these midstream assets. I think, again, it goes to show you how midstream physical pipelines are becoming more and more valuable. It’ll be interesting to see if we look back in five years from now whether or not this was a good deal or not, because if Pipeline still struggled to get built and obviously I think regulation’s going to get rolled back with Trump, but if we can’t build more, this will look like a terrible price. But if all of a sudden pipelines become ubiquitous, if the if if Trump comes in and Doug Burgum and Chris Wray come in and just say we’re laying pipelines everywhere, and this will look a great deal because that multiple over the years is going to go down because it’s the reason why it’s so high right now because there are no pipelines. So I think they’re making a strategic move right now saying we believe that this is the highest multiple these these this joint venture will ever be. Let’s monetize it, use the high valuation to pay down debt. Now they’re partnering with Blackstone. So who knows what’s going to happen there. And again, Blackstone is not BlackRock, so we’ll cut them a little credit there. They’re not necessarily partnering with the evil empire and they’re mainly doing it again, this is on a debt side for a debt reduction. They say that basically they’re going to use this all for debt reduction and they’ll grow on a pro forma basis exit this year with about 9 billion of net debt, which is pretty good for the size of equity. So I think this is a smart move. If you look and kind of forward forecast where the valuations of these midstream pipelines would be. If your assumption is what Trump’s going to do under his energy policy is going to just flow through and approve these pipelines, they’re going to get built, then this 12 x multiple that they’re getting, is it that could be six, seven apps in four years. And guess what? You got a great deal then if you got it right now. So I think there’s a great deal from equity side and it gets Blackstone again in on some of this physical stuff. So I think it’s super cautious. But this is our last show. The weeks do we’ll will run. Who do we have in the hopper? You’ll hear Thursday and. [00:17:48][161.7]

Stuart Turley: [00:17:48] Friday in the hopper we have Matt Wheeler, managing director of Capital Markets, and we have MJ and Nurk and Robert Brooks from our VC. [00:17:57][9.2]

Michael Tanner: [00:17:58] Nice. Those will be great. We love Phenix Capital Group over there, so that will be a very interesting one there. And then we also love our good friend Robert Brooks, so that’ll be great. We’ll be then back in the chair for our weekly recap on Saturday and then we will be full blown back for a full week of production starting next week. We hope everybody has a great Thanksgiving. We hope you’re able to enjoy it with friends, family. And if you’re not, well, guess what? Go big energy news. Beat stuff all weekend and we will keep you busy. For Stuart Turley, I’m Michael Tanner. Guys, we’ll let you get out of here. See you next week. [00:17:58][0.0][1056.8]

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