Drill, Baby, Drill. It’s Kind of Like Real Estate — Location, Location, Location.

U.S. Drilling Programs Are Resilient, but It Depends on the Location

November 6, 2025 Clark Savage

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

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Michael Tanner [00:00:00] Drill, baby, drill. It’s kind of like real estate. Location, location, location. Next on the Energy Newsbeat stand up.

Stuart Turley [00:00:14] U.S. Drilling programs are resilient. But it depends on the location. Location, location, and basin. In the ever volatile world of US energy markets, US oil and gas producers are demonstrating remarkable staying power amid oil prices hovering around $60 a barrel. That is uncomfortably close to many of the things. Michael, you and I have talked about this before. We’ve got the Dallas Fed chart in there, but there is some new information that I want to talk about. Permian breakeven is around that $31 range in their other US shale 34 Oklahoma scoop stack 35 Permian midland 38 you really can’t say that as break even pricing when you’re trying to drill new wells when they’re fifteen million dollars for a horizontal well So I found that kind of funny when we take a look at this and then you have big Offshore wells that are breaking even Guyana now Exxon Mobil just announced their break even is thirty dollars at break even offshore That to me was huge news as well. Location, location, location. But as we sit here, you’ve got a great story on Conoco Phillips, Conoco Phillips up in Alaska is not $30 breakeven up there in Alaska. So it’s all about the basins. And I broke it out by how much we are on track to do 13.7 million barrels.

Michael Tanner [00:01:48] Yeah, no, I, I like this chart. I think you pointed out exactly the nuance with it is that’s for existing wells. I mean, once a well is already producing, the OPEX is fairly low. You’re talking somewhere, you know, eight to $20, you know, per BOE. The question is when you include the CAPEX to drill, which is obviously very different and we’re coming across that, you mentioned that in your opening paragraph that U.S. Oil producers are demonstrating remarkable staying power. The question is, what do you mean by staying power? Do you mean that they’re just around still drilling wells? Or the question is should they be drilling some of these wells? And I think that’s the interesting steel man to the other side is, should we actually be drilling? And if you’re an oil driller, should you be wasting your top locations at this moment? Now. On the steel man, the steelman, what are we going to do as an oil company? Not drill. It’s literally what we do. So of course, when price is low, you’ve got to go take your top most economic locations and drill them. I do find it really interesting how each of these companies are playing. And we’ve kind of seen that play out in earnings. I do think you’re seeing different basins attack this a heck of a lot differently. I think you’ve seen the Powder River Basin and the Bakken really begin to take off a little bit from the standpoint of, I think, a lot of untapped economic value is being seen there. I can’t see, I can tell you how many different AFVs I’ve seen from that area, whether or not that’s a good thing is not. I think you’re seeing a lot, obviously what’s going on in the Permian, but I think what’s really hurting the Permia is lack of takeaway and our ability to actually get that gas to market. I know gas price is a spike, but, I find it really interesting. It’s an interesting overview here.

Stuart Turley [00:03:31] And one of the key things, Michael, it’s about the change in molecule demand that I’m going to cover here more in a second. The Alaska’s North Slope Conoco-Phillips is hiked from 9 billion up to 9 billion up from 7 billion. Michael, you and I have said for years, what’s a few billion between friends? That’s how much Alaska has increased. So, but it’s the change in molecule demand.

[00:03:57] Let’s go to the next one. U.S. Natural gas futures up on record LNG export demand and low storage. The U. S. Natural-gas market is experiencing a bullish run with futures Pricing, climbing, and unprecedented liquid-fashioned natural gas, that’s Michael. LNG for us OSU guys export volumes in storage injections have fallen short of expectations at Germany Michael the LNG and natural gas for Germany is really low I mean, if they have even a cold front, if Nancy Pelosi opens her freezer to get more ice cream in Germany, they’re going to have some serious problems. But you take a look at this, I think this is really bringing up a big point. Rigs have been staying steady in oil and gas, I mean in gas, and they’ve been declining in oil. So this has been a trend you and i’ve been talking about.

Michael Tanner [00:04:57] Yeah, I think part of it is just, is, is the winter season. We, we see this happen every winter. Natural gas prices spike. I think they’ve spiked far and beyond. I think what people have expected, you know, you, I like how you put this in the article, you go back and look at the, the EIA’s weekly natural gas report comes out every Thursday. So we don’t quite get a cover alive, but last week we actually only had an increase of about 33 BCF for the week that ends in October 31 with broad total working gas storage to about 3.9 BCF but to give you guys an idea that was slightly below the expectations and relative of about 34 BCF and we’re actually seasonally a little bit lower than what we would expect and so I think you’re also seeing that there’s maybe a a slight deficit when it comes to natural gas and I think people are expecting obviously all of this LNG stuff I find it interesting you know the real question is this move of natural gas prices positively you know we’re Is that mostly seasonal with a smidge of LNG export demand future built into that? Or is it reverse? Because one is an investable thesis. One, if LNG export is the reason, the 80% of the reason prices move from $3 to $4, well now all of a sudden you have a great long-term bull thesis to go drill wells. If it’s reversed, like I said originally, 80% the move is mostly seasonal, which happens every winter. We see natural gas prices like rise. And then in the summer they fall due to the injection and draw season that we happen to well, then companies might end up on the wrong side of some economic capital spends because A lot of the value is, sure, in a natural gas well, you do get a nice IP, but gas wells decline much slower than an oil well, meaning it’s much more pertinent what you use to model long-term gas prices at than you do on an oil. An oil well really matters six months from when you drill the well. That’s the majority of your cash is going to come back in that first six to 12 months. I think understanding, I don’t know what the correct answer is. I don’t think anybody knows. I think people can make theories and I think people can guess, but it’s critical to know what side of the thesis you’re on. And that’s really going to play, I think where capital begins to get deployed.

Stuart Turley [00:07:12] You bet. Hey, uh, the other day I put out an article from the EIA, EIA the lower 48th crude and natural gas production by well vintage has an X they put out an outstanding report U S crude natural gas have increased. So the volume, but they go through and do the chart. What’s the natural gas decline rate of horizontal versus vertical. And so you take a look at the natural decline curves are different. If they’re just a gas well vertical or if they are a horizontal basin so anyway that was pretty cool right there just as a side note that’s also on energynewsbeat.co.

[00:07:51] Let’s go to the next one here. UK, Japan, Germany and other countries signing declaration to support global market for natural gas with lower methane emissions. Michael, I know this is tough. Dust off your brain cells for half a second. Who mentioned years ago that this would happen, that all of a sudden the world would be accepting of natural gas as a redefinition of lower emissions. I believe that was me. And it was absolutely around this time when every time they try to get together, the folks at cop, what a waste of time, the UN cop 30 climate conference, several major nations have come together to endorse declaration promoting a cleaner future for natural gas signed and blame Brazil host city at cop 30, the agreement focuses on establishing a global Marketplace for natural gas with certified near zero emissions Michael This is the way around the UN for them to they lost their money grab scheme on the shipping that they had to postpone because Trump said we’re not going to support it. This is another scheme for them to try to get their hooks in and try to say, we’re going to demand that it’s near zero emissions so we can get a piece of the pie. They’re looking for funding sources is what this is. This This is absolutely despicable.

Michael Tanner [00:09:22] And I completely, I’m completely, completely with you on this. And I think the fact that you’re seeing Germany and these other countries come in on this, you said it right. Originally, they’re going to say, you know, we said this three years ago, they’re gonna slip in natural gas as clean. Especially with all this AI demand. I mean, people are talking are freaking out about what’s going to happen with energy demand from AI and if we can’t get either nuclear in there or natural gas, what’s gonna happen?

Stuart Turley [00:09:52] Who knows cold anyway, just thought I’d throw that out there. Hey, Michael, you know, when we’re talking about returns on investors, return on investment for oil and gas companies, you’ve heard me say this before ESG has done a great thing through governance and people have been getting great returns from either public or private investments. You get a tax benefit when you do investing in a private with tax preferred. But let’s take a look what’s happened. Orsted, you and I talked about Orsted last week where they had lost all that money.

[00:10:25] Pinegate Renewables files for bankruptcy selling solar business and project portfolio. If it’s sustainable, how come the end of life is not funded? In a stark indicator of mounting challenges for the facing renewable energy sector, Pinegate Renewable is a prominent national solar developer operating, Michael, in 32 states as filed for Chapter 11. The company founded in 2016 is putting its solar and energy storage portfolio up for sale. I don’t know about you, but I’d rather buy a tanker.

Michael Tanner [00:11:00] Absolutely. Can we have a quick moment of silence for Pine gate renewables? All right. Well, that’s enough of that.

Stuart Turley [00:11:06] That’s enough. I mean, in echoes, this is almost echoing of Orsted’s problems that you and I covered last week. I mean Orsted just had a staggering Q3 net loss of 1.7 billion Danish kroner, which is approximately 262 million. The pattern is clear. The energy sector people are going through and they’re investing in utilities because they have steady cash flow. And you can budget your money. They’re also looking at investing in oil and gas. This is huge for returns. Clean coal was coming out big, Michael. You talked about natural gas just a minute ago. There’s a limit to how much natural gas can be implemented or permanently changed over to demand because it’s a limitation of the huge turbines. The limitation is the turbines. We are on a five-year wait for turbines. Think about that.

Michael Tanner [00:12:05] No, absolutely. And we’re definitely not that on the coal side. So I completely agree with you. I think long term though, I think natural gas is going to have a much easier path to solving this problem than coal because I think the moment the Republicans aren’t in the executive branch, the moment they’re not in control of all three branches, you’re going to see coal have a really, really difficult time getting permitted. So I think you have to look at what’s the best chance to outlive any administration, not just what’s best right now.

Stuart Turley [00:12:32] Exactly. Hey, I just want to give president Trump a shout out before turning it over to you and our, and our commercial there. When president Orban from Hungary was in the white house, I got to give him a shoutout Trump grants hungry exemption from Russia’s sanctions. Orban actually tried to hire the press secretary because of how good she was doing, I gotta hand it to Orban. He is a capitalist and he’s trying to run his country to the best. He’s taking energy security at home first. Hats off to him.

Michael Tanner [00:13:05] Absolutely. And we’ll talk a little bit about prices and specifically what ConocoPhillips do and on the other side, guys. But first, we got to pay the bills. As always, guys, the news and analysis you just heard is brought to you by world’s greatest website, www.energynewspeed.com. Stu and 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 the links in the description below for all links to the timestamps, links to the articles and specifically subscribe to the show on YouTube, subscribe to this show on Apple iTunes, give us a follow there. Subscribe to our show on Spotify, please leave comments there and subscribe to our Substack, the energy newsbeat.substack.com. That’s probably the best place to support the show. Stu does a great job of releasing, you know, two to three articles a week that really encompass the big themes that are going on. We also drop all of our podcasts there, which give a little bit of a breakdown. We had a great, great podcast. So I highly, highly recommend everybody subscribe to our sub stack, the energy newsbeat dot sub stack.com. We’d also like to thank friends of the show Reese energy consulting for supporting the show guys. Reese energy. Consulting is the foremost midstream expert guys. If you at all are dealing with issues in the midstream space, whether you’re an upstream company and need help with first purchases, contract or renegotiating your gas contracts or figuring out where you’re going to tie in your next pad, because you’ve got, you’ve gotten multiple different options and you’re trying break it all down. Reese energy consulting and help if you’re in the midstream space, I need an extra pair of hands, need some permitting or regulation help, you know, or need some red team analysis on a final investment decision, guys. They have the team that can help you check out Reese energy, consulting.com. They have clients everywhere and all throughout the country from two people in a garage all the way up to the largest publicly traded companies in the world. So if you are wondering, are you a good fit for them? The answer is yes. Reese energy. And finally, guys, investinoil.energynewsbeat.com. We are coming up on the end of the year. And I promise you guys, you do not want to be paying money to Uncle Sam. You want to keep as much money in your pocket. You want diversify your portfolio a little bit and you want to get some dividends. You can do that by investing in oil and gas. Check out investin oil.energy news beat.com, fill out our portfolio survey and our tax calculator. And guess what, you guys? You guys are going to get and get a nice ebook that tells you here’s what you should look for when you invest in oil and gas and also figure out what your tax burden is and figure out how much you might save relative to your tax. If you did invest in Oil and Gas guys, we practice what we preach here guys. We do this stuff ourselves. Invest in oil.energynewsbeat.com. Don’t give your money to Uncle Sam. Figure out and find out if Oil and gas investing is for you. Depending on if you qualify, we will again send you all that information and we may or may not point you in the direction again invest in oil dot energy newsbeat dot com.

[00:15:53] All right i think when you look at Stu, you look at what’s happened. We saw oil prices dip below 60 last week. Natural gas prices have continued to rise. It’s, it’s pretty interesting. You know, I think this, this you mentioned before we went to break us hungry, this meeting, and I think actually bodes fairly well for oil prices, which I find it really interesting. We both talked about sanctions don’t work. We did see though, all around both WTI. And Brent dropped about 2% week over week. John Kilcliffe, he’s a partner over there that we quote a lot. We’re sort of watching that Trump meeting with Orban to see if some deal comes out that ease sanctions on Luke net and Rob’s net. If it does, that’s going to be slightly bearish on prices, even though I think partly what we saw in the price action may be actually be seen as positive. I think it’s interesting what we’re seeing there. You know, we also last week saw a lower demand for jet fuel, obviously with the FAA. Not paying their employees and people really cutting back on flights. You know, we, we need, you got to get the government back open here though. We did see, I don’t necessarily think the OPEC plus we haven’t really seen much. We also did see last week that Saudi Arabia cut its official selling price to Asia for the first time in a few weeks. And so I think there’s some odd steadiness in the market.

[00:17:12] We saw a rig counts jump by two, which we kind of talked a little bit about in the first segment. I don’t want to say I find it interesting. I find it a little perplexing, I guess is what I would say, because I understand keeping rig counts flat, but increasing rigs. I mean, you’re going to have a hard time showing me economics, you know, on a well-by-well basis, it’s going to make sense.

Stuart Turley [00:17:33] Explain to me why somebody would do that, is it because they’ve got to hold the lease? Because that I’ve seen less and less over the years, having to put a rig on a lease at the last moment in order to hold that lease. That’s that’s that old thing that is pretty much gone away. I would say.

Michael Tanner [00:17:51] I would say it’s, it’s a possibility. I would see the more likely possibility is corporations at the, the top level generally managed towards a metric. And there was a little, there’s a bunch of different metrics you can choose from, but there are a lot of executive leadership teams that manage towards BoE per day and BoE for day going up. And so if you want BoE, per day to go up, you have to drill more because well as a decline. So theoretically, your base. Outside of your base decline rate, you need to add production to grow that number. Now, I would tell you, I don’t necessarily know if that’s a good metric to manage to, you know, it’s like managing if you’re an employee or you’re, if you, if your, you know if, if, you’re a coffee shop, it is managing towards revenue. Okay. We like revenue coming into the business. But why should, why don’t, why not manage towards profitability? Now I’m not saying an oil and gas company should make profitability is a little bit, you can, you, can the vagaries of profitability for an oil and gas companies are a little bit different, but just managing term to BOE per day and maximizing BOE per day, like what the matadors of the world do. There are some other companies out there that that’s what they’re managing towards is increasing BoE per day, I think is managing to the wrong metric. So I think part of why you’re seeing, and maybe not as big of a pullback on rigs is there’s managing towards production growth is actually more pervasive than maybe we need. And maybe there’s a reason for that. You could argue that that is a good metric to manage too. I wouldn’t make that argument, but again, to steel man the other side of that, what are we going to do? Just put our hands underneath our chair and sit there. We’re an oil company. We drill wells. I’d probably argue that we’re in the production business just as much as we’re in the drilling business. So why not focus on optimizing and lowering our OPEX costs, increasing our margins, doing some things on the production side rather than just, well, let’s just stick our head in the ground and drill wells, even if we know they’re unprofitable. Very interesting. Now I think the other part you have to realize is frac count spreads are dropping. Okay. So what does that mean? We dropped two frac rigs last week. Companies may be realizing it’s cheap, the rig count, rig cost to drill a Well, rig prices. Have all maybe fallen to the point where this is the cheapest it might be in a few years to put pipe in the ground. So companies say, we’re just going to throw and drill and duck a lot of these wells so that when prices do rebound, we can then bring in the frack rigs and boom, go ahead and drill them out. So possibility there,.

[00:20:22] But that argument is actually countered by this next article, which is ConocoPhillips. And we’re going to dive into a little bit to earnings. They actually lifted their dividend by about 8%. And raised their 2025 output, but there was some interesting sort of caveats in that we know ConocoPhillips has gone through a pretty large trimming of their overall workforce base. They, they, they dropped about 10% of their employees in the last quarter, but they come out and actually sort of beat earnings on an adjusted basis. They posted adjusted earnings of about 2 billion or about $1.61 per share, which actually surpassed most consensus estimates, which were sitting about$ 1.40. Revenues came in at about $15 billion, which actually beat market expectations and actually is up about 14% year over year, which is pretty interesting considering where prices are at. Now, the other interesting things that they pointed out was specifically what’s going on in Alaska. They’re targeting. Alaskan, their Alaskin Willow project to achieve first production about 2029. But they also mentioned that CapEx is up big time from 7 billion to 9 billion, specifically on increased lease operating expenses and just expenses associated with it. But they blame the majority of that on inflation, which again is, is not wrong from that standpoint for, for anybody saying that inflation has gone down in the oil field, that’s just not pace at all. Every company is experiencing, I think most businesses are Bearing that. I would argue most people are experiencing the continuation of inflation, specifically with where we’re at in the cycle here. So I think once, if we can get inflation to come down as a whole, which is unfortunate, we haven’t seen it fall as fast, I would have thought with energy prices where they’re at, we would have seen inflation fall fast. I know we can go say, well, here’s what the government says inflation was. That’s like, I don’t believe the government when they say inflation’s up. I don’t believe the government when they say inflation’s down! So it’s- you- you can- I-

Stuart Turley [00:22:14] I just don’t believe the government.

Michael Tanner [00:22:16] It doesn’t matter what they say. So point of the matter is people are still in feeling inflation. We’re still seeing inflation ripple through the economy. We’re seeing that with what’s going on with the Willow project. Do I think this is going to at all stop Conoco from doing this project? No. I mean, they’re still moving it forward. They still believe the economics are great. I think that’s part of the reason why we saw Conoco stock increase here, at least in the short term. Now we are seeing Conoco on a year to date. Stock is down 12 and a half percent, but I think you did some, some interesting analysis. When you look at some of the discounted cash flows, you theoretically, they theoretically could be undervalued by somewhere between 30 and 50%, which could make an interesting price target relative to that a hundred, you know, relative at $86. You could see somewhere in the 110 to 120 range. I think there are some targets up near 131, which is fairly interesting. So I think it’s a mixed bag what’s going on here. I think there’s a lot to say that’s going well with Conoco. I think that there’s some headwinds, but I think all in all, it could be an interesting undervalued target.

Stuart Turley [00:23:17] I think so. That was the one that prompted me to write some of those other articles.

Michael Tanner [00:23:23] Absolutely. So, you know, pretty crazy week guys. We got another one coming up, you know, before we, we let you go here. I always love to ask you what, what’s got you worried about this week? What are you worried, you know, what are you looking at? Or are we going to be drafted to go invade Venezuela anytime soon?

Stuart Turley [00:23:36] I’m not worried about anything. I think the world is going to be starting to see some sense and sanity roll back in. I think that we are going to just doing fine. I think if anybody, I’m getting phone calls from folks and if you are worried about Michael, a shout out to all of our viewers in New York, New Jersey, California, Ohio, any of the Democrat high tax states follow us. I don’t, it’s one of the weirdest things I’ve ever seen. And if you are gonna pay taxes through the nose, you need to fill out the form on energynewsbeat.co forward slash invest and go take a look at that form and fill it out because that’s not what I’m worried about. It’s tax season.

Michael Tanner [00:24:25] Nope. I completely agree. You know, don’t let money take your money. Oh, put it into the gas. [00:24:30]So, all right guys, we’ll [1.1s] appreciate it. With that, we’re going to let you get out of here. Get back to work. Start your week as always. Thank you for start checking us out and starting your week with energy news beat for Stuart Turley on Michael Tanner. We’ll see you tomorrow guys.