It is funny you should ask, and the answer is data. If you need data, look to Enverus for the solution. We sit down with Bernadette Johnson, Senior Vice President, and General Management, Enverus, and cover the energy markets.
We talk about all things energy, wind, solar, natural gas, oil, nuclear, power grid, energy storage, and even rare earth minerals. Power companies trying to deliver the lowest kWh to the energy consumers have to have data integration with all of the different types of electrical generation.
Not only are the electrical grids interrelated, but the energy markets themselves are also as well. Some of our discussion is around oil and gas. Bernadette points out that the price of oil comes down to the percentage of returns investors demand. That percentage is a major determining factor on how many rigs will be used with the E&P companies. The rigs running now are significantly lower than what we require to even replenish supply with normal decline curves. Public oil and gas companies will only want to put more capital into drilling if the investors will allow the lower returns.
Thank you Bernadett for stopping by the ENB Podcast – Stu
Please connect with Bernadette at her LinkedIn profile at:https://www.linkedin.com/in/bernadettejohnsonenergy/
For Enverus please check out their website site at https://www.enverus.com/
The following is the automated transcription, and we disavow any errors unless they make us sound smarter or funnier.
Stu Turley, Sandstone [00:00:04] Good morning, everybody. My name is Stu Turley, President and CEO of the Sanshin Group, and I’ll tell you what, we have a Valentine’s Day podcast for you today. We have Bernadotte Johnson. She is the senior V.P. of power and renewables at investors. Welcome. Bernadette, thank you very much.
Bernadette Johnson [00:00:24] Thank you. Thanks for having me.
Stu Turley, Sandstone [00:00:26] I’ll tell you what, it is so great seeing you again. It’s been fun. We’ve had several podcasts in the past and congratulations on your new promotion. I may not be new, but congratulations.
Bernadette Johnson [00:00:38] Thank you. You know, it’s interesting, I think digging in and taking leadership of our power and renewables business here to embarrass, it’s a different challenge. But it’s interesting, the market is changing so quickly that it’s where a lot of focus is. And so it’s an exciting place to be.
Stu Turley, Sandstone [00:00:53] And real quick, I heard you on another podcast in your Diversity and Inclusion podcast. It’s fabulous. Can you tell me a little bit about what board you’re on that or what you’re doing there?
Bernadette Johnson [00:01:04] Sure. So I think our company, just like many companies, have more of a focus these days on diversity, equity and inclusion and everything that that entails diverse workforce equity for the folks that you have, bringing in the right people. And really, when you look at the numbers, it’s a business mandate as much as it is just the right thing to do. And so we focus on it. A lot of companies are. I’m on the committee, the leadership committee that manages our effort. And so that means coordinating with other leaders within the company to figure out what can we do better, how do we communicate about it, what programs should we have and really how should we tackle it now and in the future?
Stu Turley, Sandstone [00:01:41] Cool. I’ll tell you what, that that is really neat because we have so many things that that means, including tell me a bit about your new department and what’s going on with the power and renewables and what you guys got going on.
Bernadette Johnson [00:01:56] Yeah, definitely. So the Power and renewables division and Enverus, it’s probably the fastest-growing part of the company at this point. And so we decided about six months ago. So we’d already had power-focused clients. So we acquired a company called Partite Pattern Recognition Technologies way back in twenty seventeen, and they were founded in nineteen ninety four and they were at the forefront of lowed prediction and renewable generation prediction prediction when that came around. And they really were the first ones to really take machine learning and start to predict what will happen with electricity demand regionally and specifically for utilities. So we’ve had that business for several years. We had several hundred companies, some of the largest utilities, government agencies, traitor’s, lots of folks within power. But some of the largest folks in the country are firms in the country. And so we’ve we have that business. We looked at the world about six months ago and we said we are an energy company. We’re the largest energy-focused software company. And we know that we need to follow market trends and we need to be ahead of market trends. And everything is indicating all signals are heading towards power in renewables. Last year, something like half a trillion dollars flooded in capital flooded into the renewable space. So when you look at energy, this is a key part that’s growing and we needed solutions to be able to tackle it. So we took our party business, we made some strategic acquisitions, marginal unit, and they’re focused on congestion analytics for transmission lines and then energy acuity. And they’re focused on project tracking. And they’re actually based here in Denver where I am. We acquired those companies in February and in May of this year. And so we’ve combined the group. We’ve got four hundred and forty five clients or so in the power space. We have a rapidly growing part of the business and we have today about 70 folks that are dedicated to it and it’s growing. We’re looking at potential acquisitions. We’re organically building new software and tools. And so it’s it’s a big focus area for us.
Stu Turley, Sandstone [00:03:58] That’s a big jump to take off their Bernarda. Well done. You know, I’ve always said if you want to go to investors and I’ll tell you, that’s really exciting, having that much information about the electricity and the renewables and in those kind of things. Right before the show, we were kind of talking about the disproportionately impacted communities and the poor and the power and getting the lowest kilowatt per hour to the clients. Can you tell us a little bit about the various solutions or data around the lowest kilowatt-hour and power solutions of those things if that makes?
Bernadette Johnson [00:04:36] Yeah, yeah, no. Good question. So I would say the biggest the first thing to know is that the world is pretty rapidly electrifying, right. Where instead of using primary fuels like oil or gas or coal, more and more, we’re turning those fuels into electricity and we’re using electricity to power vehicles or houses or whatever. And so that trend is going and that that growth of electricity and electricity markets is growing. Faster than the overall energy market within that renewables are growing or the fastest growing in percentage terms, part of that pie. But the world is still very dependent on hydrocarbons. And so renewables are still relatively small. But growing numbers, when you look at the US, it’s a similar picture. Right. And so for us, we look at all that data. We bring that data. And our big main goal is to be the best at valuing any power asset at first in North America than anybody else. So a lot of what underpins that is understanding the economics, what are the power prices? But what does it actually cost to build a wind farm? What are folks paying for energy on a kilowatt-hour basis? But what’s the total cost? There’s a lot of tax incentives. There’s what we call ITCZ, which are the tax things that impact solar and wind. You start layering that in and you get a really complex picture of investment, right? You get the price that you pay for power is not actually the price of the cost to generate that power, not always because of these government things and these policies and and all the things that we do behind the scenes. And so for us, we pull that out. We kind of dissect it, we analyze it, and we try to figure out what is the actual cost and what are these investments work and what are what will folks be paying for power in the future? And I think a lot of what you see is renewables are growing, but relatively they’re more expensive. Right. If you were going to if you if your goal was clean energy, most reliable energy, you would probably double down on nuclear generation. That’s not what we’re doing. Right? We’re doing a lot of renewables. So you layer all that nuance in it’s very different in different parts of the country. And to get back to your question, the lowest cost kilowatt-hour. It’s it’s it’s nuanced. It’s multilayered because the price that you pay is not always what it cost, but eventually it all catches up with us. So today I will say we’re building renewables. Those are a more expensive cost of energy. We’re increasing the cost of energy broadly. We’re seeing utility bills go up and that’s in the US. You think globally. It’s a big reason why when electricity first kicks off in a country or as folks are developing, they’re not using renewables. It’s not the cheapest option. It’s not the most effective or efficient option either, because you can’t control when it’s windy or or sunny. So lots going on. But it’s a complicated question and that’s a big part of it. How do you how do you provide power to these disadvantaged areas, whether it’s a neighborhood or a country or whatever it looks like?
Stu Turley, Sandstone [00:07:33] So you mentioned nuclear, but natural gas. I mean, everybody says the blue or green, you know, or the hydrogen and all that. But natural gas is really such a nice and I hate the word bridge, but it is a very, very important part of fossil fuels and it’s going to be needed for a long time. What are your thoughts on the natural gas procedures or what’s going on with natural gas?
Bernadette Johnson [00:08:00] Yeah, good question. So I think that’s spot on natural gas. We’ve used natural gas historically in the US the past 10 years, even 15 years, coal’s been losing. The market share of natural gas has been growing. Gas is relatively cleaner. It’s a big part of why emissions in the US have come down so dramatically. It’s also predictable and it’s reliable. So you can you there’s a difference between dispatchable and then interments. So renewables are intermittent resources when it’s funny that solar generation, when it’s windy, you get wind generation, but you can’t control that. The thermals, when we talk about natural gas or coal, they’re the kind of the opposite of that. You can spin them up, you can spin them down. The big ISO’s or Arktos that manage the grid are doing that constantly. They’re balancing whatever electricity demand looks like with the right resources at the lowest and most efficient cost. And gas generally tends to be at the low-cost end of the spectrum. I think the other benefit there is we use gas for peaking plants because you can beat them up and down so quickly and you can’t do that with any other resource. And so exactly what you’re saying, gas is here for the long haul. And it’s actually interesting because where we see a lot of renewable generation going in, you also see a lot more gas generation to backstop it because they’re very good partners, because you can’t always control when it’s windy or when it’s sunny.
Stu Turley, Sandstone [00:09:21] Natural gas is trading it for four. For forty-four. Forty-one right now. It’s usually and that’s pretty good. I mean, there’s some serious price going on there. And with the worldwide, like the Nord Stream two coming online and all that kind of stuff, I mean, there’s a whole mess. And then the Afghanistan issue. Are you familiar with Turkmenistan and their central play on what’s going on over there? That’s a big mess.
Bernadette Johnson [00:09:53] It’s a big mess in gas markets that are interesting globally because our gas price here is trending like you’re saying. I think problems with this 440 or 460, we moved 20 cents just today. Not very long ago, that was unheard of. Nobody thought that was even possible. Now, the price will always be this high, but why is it happening? Gas markets recovered faster and stronger from the pandemic and the demand destruction than oil markets dramatically so. So here in the US, we have we’re setting records for LNG send out and exports globally. The global LNG market, the part that moves around on ships, continues to grow double-digit percentages. And it’s been doing so for a decade or so. More and more gas is needed. More and more gas is being used in developing nations. It’s being used not just from the US, but other places like Australia, the Middle East and even Israel, if you’re familiar with Leviathan. So lots of lots of interesting things with gas this price. I think it’s interesting because nobody saw this coming couple of years ago. We wouldn’t be here unless you saw the pandemic. You saw the drilling drop dramatically. You’re not getting the same level of associated gas out of those crude directed wells because you’re not drilling them and demand is pretty strong. So here we are. So we’ll level set. The price will come back down. And I think long term gas is a key part of global energy and how we will meet the need for developing nations for our own demand here in the US and again, also to backstop renewables where we can’t control.
Stu Turley, Sandstone [00:11:24] You mentioned the Leviathan field. Michael and I used to do our podcast and I always called it Club Med because Turkey’s trying to fight with Cyprus. And all those are that is a messy, messy field. It’s a fantastic field and it provides a lot of natural gas for the area. But, boy, what a mess over in that Leviathan field area there.
Bernadette Johnson [00:11:46] So absolutely. And even gas coming out of, like, your more traditional oil-exporting countries in the Middle East as well. And it’s interesting because we’ve seen periods of time where they’re producing more oil because they need to get the gas out, because they need to be power generation needs in their own country. So these things are all tied together. And whether we see it every day or we don’t, all of the energy markets are tied together in various ways. Gas can compete for crude markets at certain levels. You look at what renewables are doing and what’s impacting gas and gas demand. I think they’re all connected. And so I know a lot of us to live in one part or the other of the energy stack. But when you step back, it’s really actually very interesting what’s going on.
Stu Turley, Sandstone [00:12:27] I’ll tell you this, this nice conversation is pretty cool. We mentioned going to electricity and I think Tesla’s kind of fun when you talk about Elon Musk, who I love, kind of watching what he’s doing half the time, but the batteries in the energy storage for electricity and all that, when you’re talking about Tesla’s power storage for the house and, you know, all the big storage facilities, when you’re talking about the total cost of ownership per kilowatt-hour, how are the rare Earth minerals figured into that? Because I don’t I don’t know how that figured in on that price.
Bernadette Johnson [00:13:12] Yeah. Good question. So they are I think it’s interesting because each one of those rare earth metals has its own market and none of these are available in a quantity today that we might need in the future. And so that’s that’s a big part of the conversation is how do we start recycling vehicle batteries? I think the other tricky part is batteries really haven’t changed much in about 40 years. So the batteries we have today are just bigger batteries when either even if it’s commercial-scale battery farms that are meant to backstop renewables. So you can charge them when you don’t necessarily need the power. They’re just really big batteries. So the problem is they’re not cost-effective today. You are seeing projects happen. You are seeing people invest in their if you also watch the battery day from Elon Musk, from Tesla, a lot of what the industry and specifically car manufacturers are banking on is a breakthrough in battery science chemistry. So being able to construct cheaper batteries, smaller scale, more efficient and more powerful so you can really power vehicles for longer periods of time or more Miles. That’s the key. And so if you watch Battery Day, you heard him talk a lot about in three years, in three years, we’re going to have a breakthrough and we’re going to have a cheaper battery and we’re going to have a car that’s available to the masses in the 20 to 30 thousand range. And that’s really what you need to make a big impact, because today, what are electric vehicles costing? Forty thousand starting price, but upwards of one hundred twenty thousand two hundred and forty thousand, depending on what it is not. A lot of folks can afford that vehicle. So they’re going to choose your combustion engine, regular vehicle until we get that cost down. And we can’t get that cost down until we have a breakthrough in that battery chemistry. Now, the hard part, I would say, if you’re a if you’re a pessimist, when you hear that battery day conversation there break. For a reason, so we don’t know if that breakthrough in battery chemistry is going to happen tomorrow in three years and five years, three years is long enough that the market, the shareholders aren’t really pricing it in. And it’s also long enough that we’re not actually expecting it yet. So my hunch is that we’re going to keep seeing that pushed out. It’s a breakthrough and lots of folks are working on it. And there’s a lot of money, a big prize out there for whoever cracks it. But we need that before those vehicles really start to take off and for scale. So we’ll see. But it’s interesting for sure.
Stu Turley, Sandstone [00:15:35] Speaking of rare earth minerals, you have to love Urca, and what happened to Texas? Fortunately, I live half the time somewhere else near Hydro. So I love hydro, but with Urca and you take a look at the power grid you guys managed, you have all of the information which is way cool on the power grid. In those things, rare earth minerals are required to the grids. Do you think that that’s part of the power that has all that her regular grid, the grid, when it’s all tied to rare earth minerals in pricing is I mean, that’s going to be tough and
Bernadette Johnson [00:16:15] I think it will be. And I think there are no easy answers here. And so whether we’re talking batteries, whether we’re talking the steel that’s required to be put in a wind, wind turbine, whatever we’re talking about, these are significant resources that have to be spun up and repeatably. And we need to figure out how to recycle a lot of this so that when you have a natural end of life for an asset, you can recycle it, you can turn it back into something productive. But I would say none of these things are easy. And so if you look at who we are, we forecast demand. We’re looking at every power generation and asset. We’re tracking all the projects that are getting done. The grid today looks very different than it looked a year ago or five years ago. And it’s going to look different five years. And so these things, when you’re managing your grid, your power supply-demand has to match perfectly all the time or you have issues. Right. And so I think we sometimes take for granted how complex and what a big task that is to manage a grid, especially when you start layering and things like storage, things like renewables are intermittent and you really can’t control them when you have a whole different mix of how your thermal generation happens. It’s only getting more complicated. It’s only getting more expensive. And like you’re saying, a lot of the things that will we’ll need to upgrade the grid and to keep pace with everything that’s changing. Are not limitless resources and there’s a cost to that, and so I think folks are just starting to wrap their heads around what that could look like.
Stu Turley, Sandstone [00:17:41] So what are you seeing from the energy policy side? Because it is a wild ride watching the energy policies going around. Are you hearing any things good about the energy policies or what are your thoughts on that?
Bernadette Johnson [00:17:59] I think it depends entirely on where you’re at, right, so if you look a lot at what’s happening at the state level, there are certain federal tax benefits and that’s continuing. And there’s a lot of conversation about extending those tax credits and continuing to make it really tax advantage to invest in these assets. And so that’s going to keep happening. The nuance, I think, is mostly at the state level. So if you look at what Virginia is doing with our clean economy plan, investing certain dollars, mandating retirement of thermals or natural gas or coal facilities by certain dates like 20, 40 or 20, 50, spending money, whether it’s offshore wind or onshore renewable resources, Virginia looks very different in the whole PJM market than other states. If you shift gears all the way to California, their policy looks very different also. And again, mandating not selling combustion engines, mandating more renewable power sources, retiring nuclear facilities look really different out there. You shift to Texas. Texas is a market-based system, but a lot of wind is going it. Texas is really. From a geographic and a weather standpoint, it’s a great place to put wind in west Texas. So you have ever seen her despite huge amounts of policy at the Texas level, you’ve seen it change dramatically. So everywhere you look, it’s a little bit different. And I would say I don’t know that anyone’s got it perfectly right yet. You have generally a mismatch today between the policy and the science. So if we just talked about batteries haven’t changed in 40 years and we’ve just been we’re seeing we’re pretty much at the efficiency peak of what we’ll see with solar and wind. So it’s really not getting any cheaper and it’s still intermittent. You bring those things in that don’t really line up with what we’re going to retire on these thermal resources in the near future. So I would say there’s certainly a mismatch. I think a lot of policies, aspirational. We’re not going to hit those targets. And again, we need breakthroughs in physical science to even make it possible.
Stu Turley, Sandstone [00:19:52] Well, when we also take a look at ESG investing and all the big boys running away from their core beliefs or core strategies as oil and gas, BP, and all those kind of guys rolling over to the green infrastructure, you said trillions of dollars going into the trillions. I’m seeing a lot of data showing that the greener we go, the more fossil fuels we are going to use and still require. I think part of that and I please correct me if I’m wrong, I have to fact check myself all the time. My wife took to me all the time that the demand for energy is going up at such a high rate that it’s kind of hard to even say we can ever get rid of fossil fuels in. Those energy giants are actually kind of hurting themselves a little bit by not putting more money into the type of stuff. Are you seeing that kind of thing as we use more and more fossils?
Bernadette Johnson [00:20:55] So I would say we believe that oil demand, for instance, is not going to peak this decade for the reasons that you’re saying, like energy use is growing, developing nations are actually driving that. So you can’t you cannot paint a picture for peak oil demand until you have a compelling story about developing nations. So the US is US oil demand growing now is our developed nations, is a growing Europe other places now, but it hasn’t been the place where it’s growing is developing nations. And a lot of it’s because oil and gas is very efficient from a cost standpoint. You can transport it more easily. And when you’re a country that’s building infrastructure, you can’t just switch to an electric grid overnight and everyone start driving electric vehicles like it doesn’t work. And so that’s happening and that’s underpinning it. I will say, though, that this push towards electrification is a thing and it is growing faster than energy demand. And so when you hear companies like BP or others shifting to be more broad energy companies and focusing on power, a lot of it does make sense. I’ll say the challenge, though, is it’s a question of timing. So we just talked about the mismatch between the science and the policy, and we know that some of these breakthroughs are going to happen. But, you know, we don’t know when. So if you’re a big oil major, super major or large energy company today, you’re basically betting on the timing of some of these things. And we don’t know when a lot of this will happen because it’s breakthroughs and you can’t time that. So. Well, BP comes out on top or will it be Chevron? They’re very different energy policies and plans for their companies. You can’t say right now it’s really a gamble. If we see breakthroughs next year, will the BP plan looks a lot more achievable and a lot more beneficial. If you don’t see it and you see oil demand continuing to grow, we get to twenty, twenty five. Now, there’s a shortage of oil globally because the prices have collapsed several times now and we’ve missed big investment cycles for big conventional projects. And you need that to keep oil production up. You get to twenty, twenty-five. We could be sure it oil well in that case the price goes up and the folks that are focusing on oil and gas production look like the smartest guys in the room. So the hard part is this is about timing. This is the hardest part of any investment. And with this in particular, we just simply don’t know when these breakthroughs will happen.
Stu Turley, Sandstone [00:23:13] Kind of interesting that I agree with you, Max, that I agree with everything you say. By the way, Bernie, did you just fact-checking all this? But here’s the the the thing on trying to get information and timing down on the next steps for investing in those things. We don’t have the cash going into empty spaces in the US. We’re not growing demand, but we’re still importing a ton of oil in. So is there going to be is our oil price going to go up based on us having to import more from OPIC and all those others? I’ve heard rumblings that it’s going to go up to one hundred by the end of the year. One hundred and fifty next year. And I’m seeing numbers on all-around people throwing two hundred around. And I think that’s a little high on that side. So what is your crystal ball on this kind of a no?
Bernadette Johnson [00:24:13] Yeah, good question. So I would say there are two questions embedded overall. What will the price of oil be and then what will the price of oil be in the US compared to other countries? If we’re if we’re pulling? I would say that since we are so directly connected to the global oil market, our price versus the Brant price and global prices will stay really close and you’ll see them trade within variable transport. So how much does it cost to move a barrel of oil from here to there? Commodities always move in the direction of higher prices. That’s how it works. So you want to take a little bit cheaper barrel here. You cover the cost of transport, you sell it here for that price are higher and that’s how you basically move commodities. So when we think about the US has been importing pretty significant barrels of oil forever, that number has gone down. As US production has come up, we’ve pushed out the light barrels because the US produces more light rail. Our refining fleet remains pretty full-on it at pretty high levels of utilization, just the mix of where it’s coming from the streets. So in the future, I think we’ll continue to pull in a lot of crudes. The crude we pull in will be the heavy crude because our. Sleep is the most complex in the world, and we are perfectly suited to deal with a very heavy, waxy, difficult barrel, lots of other refining infrastructure globally just can’t handle that. So I think the relative price dynamics, the US will stay a little bit cheaper than Brant. We’re going to need to export light barrels. That cost spread will separate Brant versus WTI, but it’s not going to be dramatic. I think the more interesting part of the question is probably what will the overall price of oil? And so I would say today, if we’re looking at sixty seven dollars, we were at seventy three, seventy four pretty recently, I think it’s pretty simple. So you if we look at it today, we’re running about five hundred and eighty-nine rigs or so and that fluctuates daily. But that’s what it is. It’s nowhere near the eight or nine hundred rigs we were running before the pandemic. So even the price at seventy-something dollars wasn’t enough to get the public companies drilling again. And there’s a lot of reason for that. Right. They had a lot of Duc Wells they drilled last year. They could work through this year. But I think they’re also they’re generating a lot of free cash flow this year. It’s actually a pretty positive year for balance sheets for ADPs because our prices are pretty high and they didn’t spend much on CapEx. But next year when the problem starts, because next year you don’t have the ducks to rely on anymore, and now you need to have a CapEx program. You need to get more rigs running. You need to drill more wells that cost more money. You’re not going to have a strong free cash flow, but the market wants it, especially from the public companies. So I would look at it and I would say if seventy-three dollars, 60 to seventy-three, which is a higher price than most people thought was not enough to get more than five hundred and eighty-nine rigs running, a higher price is necessary or it’s not going to happen. So that’s what I think. So I think are we going to be higher than we’re than we are today? Yes. Do I think there’s a potential for us to hit a potentially? And I think it’s all about what’s the risk tolerance of these public employees? Do they require a 30 percent rate of return now to decide to drill the well because their shareholders and the investors and capital providers are requiring that maybe? I think there’s a strong argument for that, which means the price goes up more than it would otherwise to get them actually moving. And so that’s what I think is probably gonna happen. I don’t think we’re going to need one hundred dollars. I at one hundred dollars. So much is in the money here and globally that we would very quickly oversupply the market again. You also have still five million barrels or so sitting on the sidelines from OK, so we’re not running out of crude today, have plenty of crude on the sidelines and many wells in the US that we could drill in less than 30 days that also represent reserves for storage. So one hundred dollars now. Two hundred dollars now. Eighty dollars, I think that’s pretty realistic. Well, you see volatility and see it move around and certainly not just hover around eighty. You’ll see that as people react to tweets or supply numbers or OPEC meetings or news about a vaccine or anything or anything that’s moving the market today, that’s going to continue. But I don’t I do think it’ll be higher. I don’t think it’ll be one hundred dollars
Stu Turley, Sandstone [00:28:26] that between 80 and 100 is really a pretty, pretty strong bet. And I think with the lack of capital investors, you nailed it. And that is investors are expecting returns. I mean, they’re saying, hey, wait a minute, instead of this, I want my return now instead of five years from now.
Bernadette Johnson [00:28:50] Yeah, yeah. The industry has gone through this fundamental shift, and it happened about five years ago now where this industry, just like every other industry, is really judged and capital is provided based on balance sheets. Right. When it’s two thousand five and you have this, the world thinks that we’re running out of oil and gas, then it makes perfect sense to value companies and reward share price based on growth, production growth alone. And that happened for a long time. And then you see a fundamental shift because now we can produce a lot more oil and gas than we actually need. We changed the game with horizontal drilling in the shale revolution. And so what that means is now we’re not in danger of running out of oil and gas, which means the companies that produce it need to be judged like every other industry, meaning you need to return value to shareholders. You need to live within your cash flow. You need to basically be solvent and a long-term sustainable business. That’s where that’s what everything else is judged by. Oil and gas are no different. Now, I think the pain period was five years ago when that shift happened and everybody’s getting used to it. But that’s I mean, that’s what it is. And it’s not going back the other way. And so we need to be able to show economic value, return dollars to shareholders, reflect levels of risk that folks are willing to invest two or three different crude price collapses in five or six years. That’s risky, right? That’s riskier than it has been. And so. All of those things just mean you need to have a higher rate of return and you probably need a higher commodity price to get there.
Stu Turley, Sandstone [00:30:21] Well, you know, I’ve heard that I cannot even begin to tell you how much I appreciate you stopping by our podcast. I just really appreciate our time together. And I want to throw the last word to you and just say anything, give us thought for energy and also give us a what’s around the corner for Bernadette.
Bernadette Johnson [00:30:43] Oh, good question. So I think for energy, I think generally gas prices are going to come down. Oil prices are going to go up. Power and specifically renewables are going to continue to draw capital. You’re going to see a lot of investment there. You’re going to see things break. You’re going to see power outages. You’re going to see the struggle to figure out how to live in this new world with these new resources that vary in terms of intermittency and reliability that’s going to happen. So I think for all of us, it’s exciting. I think there’s also kind of a mandate to get it right to figure this out because electricity and energy is so important to global quality of life. Nothing happens without energy. So we’ll figure it out. And I’m hopeful that hopefully it will be just a few bumps in the road and we’ll figure it out. For me personally, I’m focused on power and renewables. I probably will be for the foreseeable future. It’s where a lot of focus is, where a lot of money is going. And for us, it’s some of the fastest parts of our business are here in in this unit. So that’s probably this is probably where I’ll live for the foreseeable future.
Stu Turley, Sandstone [00:31:45] Well, Bernadette, again, thank you very much. And I just really appreciate our time together. And boy, if anybody needs data, they need to go to Denver. So thank you very much. And we’ll put all your contact info in the show notes. So thank you very much.
Bernadette Johnson [00:31:59] Absolutely. Thank you. Thanks for having me.