Daily Energy Standup Episode #116 – Is Ford EV business sustainable with $60,000 loss for each EV sold?

Peak U.S. Shale To Raise Prices At The Pump

May 3, 2023 Mariel Alumit

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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 is going on. Everybody, Welcome into another edition of the Daily Energy News Beat Stand Up here on this gorgeous Thursday, May 4th, 2023. As always, I’m your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas, joined by the executive producer of the show, the purveyor of the show and the Director and Publisher of the world’s greatest website, EnergyNewsBeat.com, Stuart Turley, my man, how we doing today? [00:00:38][24.0]

Stuart Turley: [00:00:39] It’s a beautiful day in the neighborhood the feds going crazy [00:00:42][2.7]

Michael Tanner: [00:00:42] I mean, we have an absolutely wild show. I mean, Jerome Powell set the markets off. Oil’s down to $67. I’m barely crawled myself up to the desk to record this show. But like the good host that we are, we are here delivering the news. I mean, absolutely stack Show, guys,. [00:01:00][18.5]

Michael Tanner: [00:01:01] First first of all, we’ve got on the menu is Ford loses nearly $60,000 for every electric vehicle sold this just as Stu’s cracking up it’s my sentiment I’m very interested to see what this what this look like. And trust me, they they publish some results that are not good for their internal metrics there. [00:01:20][19.6]

Michael Tanner: [00:01:21] Next up Peak U.S. shale to raise prices at the pump this is a pretty interesting mix on. Yes, we are producing more oil and gas, but that doesn’t necessarily mean that prices are going to go down, which is somewhat counterintuitive. You’d think the more oil we produce, the lower prices would go, not necessarily choose to do a break down What that means for you at the pump. [00:01:42][21.1]

Michael Tanner: [00:01:42] Next up, More and more Americans don’t want electric cars. I’m pretty sure that comes as a shock to nobody who listens to this podcast. But now we’ve got some physical data still will cover that. [00:01:52][9.8]

Michael Tanner: [00:01:52] And then finally in the news segment, Texas Wind farm affects land temperature. It’s, you know, I think the unintended consequences of wind and solar are we’re only going to find out more and more as as we go on. If this is a side effect, it’s just a little bit hotter around the wind farm. I’ll be okay. But I’m going to let Stu try to convince me otherwise. [00:02:15][22.3]

Michael Tanner: [00:02:15] I’m going to take over Guys, we have a lot to talk about in the finance section Fed Decided to raise their as expected, decided to raise their guidance from 5% to five and a quarter percentage point. That just caused a plethora of things in the market Oil tank, as I mentioned, currently trading somewhere around 67-60 as we start to show off here at about 6:15. Natural gas took a little bit of hit, even though it’s not necessarily affected. [00:02:39][23.8]

Michael Tanner: [00:02:40] Overall markets only were affected, you know, less than what you would have thought, only down about a full percentage point. But I think the key is going forward, what Jerome Powell said, we’ve also got Callon Petroleum doing a little divestiture acquisition combo move that which will cover the EIA also dropped a super drop crude oil inventories and a really interesting article around Haynesville production. [00:03:02][23.0]

Michael Tanner: [00:03:03] We will cover all that and a bag of chips coming up, guys but first, remember all of the stories you are about to hear are courtesy world’s greatest website www.EnergyNewsBeat.com the best place for all your oil and gas news does a great job of curating that website to make sure that all of the top stories are there. [00:03:21][18.0]

Michael Tanner: [00:03:21] It’s great I come down to sit to the show to start doing my research. I start paying at Stu you got the story? You got this story in every single story he’s got on the website, guys. So it’s the best place for all you oil and gas news. [00:03:32][10.1]

Michael Tanner: [00:03:32] The numbers are going crazy right now we appreciate all of our everybody who’s checking out the website. I mean Stu sends me these these numbers I honestly don’t believe him. We appreciate every one of you Dashboard.EnergyNewsBeat.com it’s our data and news combo. Get it while you still can. You never know where that might go a.k.a behind a paywall. I’m out of breath though. Stu. Where do you want to begin? [00:03:52][20.1]

Stuart Turley: [00:03:53] Hey, let’s start at Ford loses nearly $60,000 for every electric vehicles sold. Is that a good business sustainable model? [00:04:05][12.5]

Michael Tanner: [00:04:06] No, it doesn’t add up. I mean. [00:04:07][1.6]

Stuart Turley: [00:04:08] I’m I, I was like the carmaker was on a roll they at the time let’s see here it was planning on starting a production of the F-150 lightning the electric version of the iconic best selling 150. You and I have already talked about this let me get into the losses here. [00:04:29][20.8]

Stuart Turley: [00:04:30] It appears that the Ford Model E recorded a loss before interest and taxes of 700 million. This is a hundred million more than fourth quarter of 2022. The margins are also in the red the hibbett earnings before interest and taxes, which allows investors to assess the true cost of the activity, is -102.1%. [00:04:57][27.5]

Stuart Turley: [00:05:02] And this is more than twice as much as fourth quarter and 2022 in which the event margin was -40%. On the revenue side, it amounted to 700 million for the first three months of the year. It’s less than half of the 1.6 billion in revenue generated by the Ford model in the last quarter of 2022. We’re seeing some real trends there, Michael. People are not wanting to buy electric. [00:05:29][26.9]

Michael Tanner: [00:05:30] Yeah, I mean, they specifically mentioned, you know, one of the third headlines here is gas cars are fine. I mean, they’re not necessarily seeing a dip in sales across their Non-electric fleet, which I think is interesting and probably feeds into why, you know, really the other two stories you’ve got lined up. [00:05:47][17.3]

Michael Tanner: [00:05:48] Which is specifically More and more Americans don’t want electric cars, which has been a theme of this earnings season. Remember, we’ve just gone through 158 companies released their earnings. More are coming on the way. [00:06:00][12.4]

Michael Tanner: [00:06:01] We’re being able to dive in and really, you know, full year of all of these companies doing EVs, been able to sort of look behind the glass and see a little bit into their balance sheet. It’s not good. [00:06:10][9.0]

Stuart Turley: [00:06:10] No end. Siemens lost $1.7 billion in their wind farm division. [00:06:18][7.4]

[00:06:19] Yeah, Oh, okay. I think and this is just my personal opinion on this before I go to the next story, which is related to this story, and that is The Infrastructure bill, actually, I think is cause part of the problem, Michael, from the standpoint that the Biden administration goes, okay, look, tax credits, no tax credits. No, you get you get no tax credits for you. I mean, they’re just like they’re either. [00:06:46][27.0]

Michael Tanner: [00:06:46] The infrastructure bill or the Inflation Reduction Act. [00:06:50][3.3]

Stuart Turley: [00:06:50] Both of them are porkulus but it was the.. [00:06:52][1.9]

Michael Tanner: [00:06:53] Yeah, because I was going to say there was the Porkulus bill was before the Inflation Reduction Act. [00:06:57][4.4]

Stuart Turley: [00:06:57] The Inflation Reduction Act had the big tax savings in the car. [00:07:01][3.5]

Michael Tanner: [00:07:01] And wasn’t the it wasn’t the Porkulus bill is what it was. It’s dubbed now, but wasn’t it called like build back better or. Oh yeah, there was some weird phrase, but. [00:07:10][8.7]

Stuart Turley: [00:07:10] You know, you just can’t buy this kind of entertainment. Next story here, man. More and more Americans don’t want electric cars. Battery power cars seem like the next best thing, but growing Americans aren’t ready to give up internal combustion. We live in too big of an area. Michael. [00:07:27][17.1]

Stuart Turley: [00:07:29] I travel from state to state. Top line metrics on overall EV market share availability affordability have been on a long term upward trend, the market research firm said. But beneath those headline numbers, we are starting to see some consumer behaviors that suggest a possible bifurcation of the automotive marketplace. [00:07:52][23.2]

Stuart Turley: [00:07:53] Let me put it to you this way People are going to be able to have transportation in everywhere but California and New York. If you want to live and own a car, you can be anywhere in the U.S. except in those cities or even Chicago. I mean, that’s just the way that they’re planning on doing it. Michael Yeah. [00:08:12][18.6]

Michael Tanner: [00:08:12] I think there’s there’s a few hurdles specifically on like the user acceptance side that I think this article points out. One respondents in this survey were very concerned about their performance in extreme temperatures. I think that’s the first thing. Like, you know, one in Colorado is people in Colorado, yes, they have a Tesla, but they’re not taking it to the mountains. [00:08:33][20.8]

Stuart Turley: [00:08:34] No. And that’s their second car. [00:08:35][1.2]

Michael Tanner: [00:08:35] Yes, exactly. It’s like EVs or people’s second car the when the discussion shifts from second car to primary car, you may be have you might have me, but I that’s but that’s a long way away is an interesting thing. Obviously, the majority of boomers and pre boomers aren’t considering EVs. That’s clear by these stats. This is interesting. 33% of Gen Z told this survey that they were either somewhat unlikely or very unlikely to be that that’s a that’s not an insignificant portion of the population, no less. [00:09:07][31.6]

Stuart Turley: [00:09:08] I was surprised by that number but I’ll tell you what I mean. You sit back and take a look at me why? Because I can buy a $15,000 used car and be just as happy. And think about the difference between that. It buys a lot of gas, $80,000, buys a lot of gasoline. [00:09:25][17.0]

Michael Tanner: [00:09:25] Yeah, I mean, me and you have talked about this. It would be fun to get corporate podcast Teslas, but that’s a second vehicle that goes back to your original comment. It’s a second vehicle. In most applications. [00:09:36][10.9]

Michael Tanner: [00:09:37] There are very few applications, in my opinion unless you live in like a dry climate, like CalEX Southern California and you don’t necessarily have a long commute is going to probably be you could be your primary car. The vast majority of Americans, it can happen. What’s next? [00:09:51][14.0]

Stuart Turley: [00:09:52] Well, it looks like Elon’s trying to call into the show,. [00:09:54][2.8]

Michael Tanner: [00:09:57] Sweet! [00:09:57][0.0]

Stuart Turley: [00:09:57] Yeah, let’s get a car all right, let’s go to the next one then it is Peak U.S. shale to raise prices at the pump. That. Michael, you brought it up. Great. That’s more like an oxymoron. Kind of like what my wife describes me as. U.S. shale production is still growing, but at a much slower pace. A combination of cost inflation and mixed messages from the Biden administration have left some observers worried about the prospect of peak production. [00:10:29][31.6]

Stuart Turley: [00:10:30] Shale executives say that the Peak Permian production will occur this decade. There was a couple oil expert Scott Sheffield. I love Scott Sheffield, CEO of the largest pure play shale producer Pioneer Natural Resources, told the Financial Times earlier this year. Quote,. [00:10:51][21.0]

Stuart Turley: [00:10:51] I think people are that are in charge now are three countries and they will be in charge in the next 25 years. Saudi first UAE. 2md. Kuwait. 3rd. Michael, what? What do you think that they care about the U.S. oil price? [00:11:12][20.4]

Michael Tanner: [00:11:13] They don’t. And we’ll have to start quoting it in Yuan whatever the BRICS new currency is. [00:11:20][7.2]

Stuart Turley: [00:11:21] It’s right in the. The American consumer is absolutely going to get it in the drive through repeatedly. [00:11:26][5.2]

Michael Tanner: [00:11:27] Absolutely. You know, and again, I think it’s interesting to point out that, you know, higher oil prices don’t necessarily mean or excuse me, not higher oil prices. Oil prices, You know, when you go to the gas station, you generally think high oil prices, high price of gas. Well, what happens if production increases, as they’re saying? Right. Prices, the price of oil falls because now supply has increased. [00:11:56][28.4]

Michael Tanner: [00:11:56] We know oil on a macro level has traded on a supply demand. [00:12:00][3.4]

Stuart Turley: [00:12:00] Right. [00:12:00][0.0]

Michael Tanner: [00:12:01] But your price at the pump continues to climb. Why is that? What’s pointed out here is, one, inefficiencies in the marketplace. I mean, they’ve got the ConocoPhillips CEO, Ryan Lance talking about synergies that can happen. He’s talking about M&A that needed to happen due to the cost of production. [00:12:16][14.9]

Michael Tanner: [00:12:16] And also, how do you take this into a refined product and distribute this? That’s still the missing link. This Beaumont facility that ExxonMobil is working on upgrading is critical, in my opinion, to curbing what what we could see, which is gas prices stay oddly high while oil as what it’s doing now continue to flow down. [00:12:36][19.6]

Michael Tanner: [00:12:36] So be wary. You know, understand the the supply chain. Is it just high oil prices, high gas prices? It’s a matter of how that’s flowing through. And if there’s a bottleneck at the refining level, well, guess who takes it in the drive through Stu? The concern. [00:12:51][15.2]

Stuart Turley: [00:12:52] Well, but it’s also the the EMT operators in the amount of money that’s going into drilling. I’ll tell you right now, they’re still too short of the amount of money going into drilling to even replace that. [00:13:04][12.3]

Michael Tanner: [00:13:04] Nobody’s got the money. I mean, I think the point is we would oil and gas is to the point. Oil and gas people are bred to dump money into CapEx. No. One. I mean, that’s why you get in the oil business to drill. Nobody gets in the oil business. [00:13:15][10.3]

Michael Tanner: [00:13:15] I mean, there are some people that get into the oil business, I guess, to say, to buy royalties or that. But like most people in the industry, what are they? They like drilling. If somebody’s drilling, why? So if if people want to do that. So I think if if there’s room to put more CapEx, it’s because the finances aren’t there, not necessarily an unwillingness to invest. [00:13:36][21.0]

Stuart Turley: [00:13:37] Well, I agree. Okay. [00:13:38][1.3]

Michael Tanner: [00:13:39] What’s next? [00:13:39][0.3]

Stuart Turley: [00:13:40] Let’s go to the Texas this one I found intriguing, Michael. Texas Wind farm affects land temperature. Michael, your second order of effects is always coming up. Cross my mind now, after you’ve taught me how to even say that the land surface temperature around west central Texas wind farms warmed at a rate of point 72 degrees Celsius per decade during the study period relative to nearby regions without wind farms. [00:14:11][31.2]

Stuart Turley: [00:14:12] An effect most likely caused by the turbulence in the turbine wakes acting like fans to pull down warmer air from higher altitudes at night. Okay, here’s where I think that this study is on to something, Michael. And what are you laughing at now? [00:14:30][17.6]

Michael Tanner: [00:14:30] Just go. [00:14:30][0.2]

Stuart Turley: [00:14:32] This is this is actually onto something because the wind patterns have changed from the oceans coming in and the amount of vegetation. Why do you think California’s in droughts? I think the wind farms are kicking in and having some changes. People are not wanting to admit that. [00:14:51][19.4]

Michael Tanner: [00:14:52] Okay, well, let’s. Okay. Well, let’s go back to the article. I appreciate, but can I can I be brutally honest? [00:14:58][6.7]

Stuart Turley: [00:14:59] Yep. [00:14:59][0.0]

Michael Tanner: [00:15:00] I don’t care about Celsius degree increase I don’t care if this is all the externalities, and I know it’s not. But if you told me this was the only externality of wind farms, now I’m forum. I think there are huge waste of capital. But I’m not against them. [00:15:20][20.1]

Stuart Turley: [00:15:20] I’m not either, Michael but they are. Not. [00:15:22][1.7]

Michael Tanner: [00:15:23] I just when I read this, I was like, Well, we’ve got to come up with something. We better come up with a better argument than we’ve warmed at a rate of West Texas, of all places, has warmed point seven degrees Celsius per decade. Like I’m good like that does not… [00:15:39][16.1]

Stuart Turley: [00:15:39] Here’s the thing. I’m all about the lowest cost kilowatt per hour to get it to the population and you can’t do it with wind under its current format. I thouof ght this was interesting from the standpoint that all of the climate hounds are out there saying that it’s the greenhouse gases from oil and gas when actually nobody’s looking at the overall secondhand smoke. I mean, excuse me, the second hand effort or whatever you want to call it, from wind farms and the eagles and the whales and the temperature. [00:16:12][33.0]

Michael Tanner: [00:16:13] Yeah. I mean, I’ll go a step further. Like, I don’t really, really care that much about the wales. I know that sounds horrible to say, but like I really don’t like it if a few Wales. [00:16:21][8.4]

Stuart Turley: [00:16:23] IOh My Goodness. [00:16:24][1.1]

Michael Tanner: [00:16:24] I feel like there’s a level at which I’ll care if every whale in the world died because of offshore wind farms I’d be like, No, we shouldn’t do that. But what if the solution, Oh, 10% of whales so. [00:16:37][13.0]

Stuart Turley: [00:16:38] I am so Sad that I am more of a environmentalist than you are. Well, holy smokes. [00:16:47][8.9]

Michael Tanner: [00:16:48] George Soros is actually calling for you. Let me take this for you. Hey, George. Yeah Stu submit his resume right now. [00:16:55][6.2]

Stuart Turley: [00:16:56] No, George Soros could care less about the environment all he wants to do is mess with people politicals [00:17:01][4.5]

Michael Tanner: [00:17:01] I’m mostly being facetious, but if this is all we’re dealing with is a slight temperature increase. I’m good. Next. [00:17:07][6.6]

Stuart Turley: [00:17:08] I love it. It sounds like finances, but if Kerry calls, I want him on the podcast since he was looking like he was a ski slope guy. [00:17:15][7.0]

Michael Tanner: [00:17:16] We’ve got we’ve got calls out to everybody Kerry Granholm. [00:17:19][3.4]

Stuart Turley: [00:17:21] Yeah,. [00:17:21][0.0]

Michael Tanner: [00:17:21] Even the CIA director. But. [00:17:23][1.3]

Stuart Turley: [00:17:23] Oh yeah and her, her kid. Her and Fetermans kid. Federer. Federer home. [00:17:30][7.3]

Michael Tanner: [00:17:31] Okay. I mean, it was a tough day in the markets, guys. As I mentioned in the open, we saw, you know, specifically on the oil side, we saw, you know, what was a four or 5% drop yesterday, turned into a four or 5% drop today. And in the last two days, we’ve tumbled from 70 over $76 to $67. [00:17:50][18.6]

Michael Tanner: [00:17:51] So, you know, about a $9 decrease over the last two days, generally due to the macro environment, the macro finance environment that’s going on right now into the United States as sort of the talk of the finance world was today, Fed Chair Jerome Powell did come out and release its latest rate hike, bringing, which was confirming a quarter of a percentage point increase, which brought the benchmark funds rate to 5 to 5 for the range of 5 to 5.25%. All 11 Fed voting members on the governor’s board did agree to this so there was no there was no wavering it. [00:18:31][40.0]

Michael Tanner: [00:18:32] What came out of it was really up you know, obviously there’s there’s the interview that he does after, which is highly, highly listened to. And, you know, I’m scrolling through literally all of his comments right now. They’ve got it quoted here on CNBC. You know, there could be rate cuts soon. I mean, I think this is part of why the S&P, you know, oil obviously is down four, four and a half percentage points, but the S&P is only down about 7/10 of a percentage point. So, yes, not a great day for the market, but not as horrible. [00:18:59][27.1]

Michael Tanner: [00:18:59] Again, we expected a 25 basis points increase one of the interesting quotes that came out of was we on the committee have a view that inflation is going to come down, come down not so quickly. It will take some time and in that world, what if that forecast is broadly right? It would not be appropriate to cut rates and we won’t cut rates. [00:19:16][17.3]

Michael Tanner: [00:19:17] So even though the market the markets knew that, okay, yes, all of this banking stuff is happening, we may we we’re probably still going to see rate increases. Powell comes out and confirms it. So that’s sort of how it works. [00:19:34][16.9]

Michael Tanner: [00:19:34] What does the Street think the street thought? Yes, there’s going to be an increase and he’s going to come out and say we’re going to keep increasing. He came out today and said, yeah, I mean, we’re going to keep increasing, but in his next breath. [00:19:45][10.4]

Michael Tanner: [00:19:45] So he just comes up and says, you know, we have a view that inflation’s not going to come down quickly, which means they’re going to not cut rates and we won’t cut rates and in the next breath says there are no promises on this. But it seems to me that it’s possible we can continue to have cooling in the labor market, labor market without big increases in unemployment, which could lead and avoid. [00:20:05][20.4]

Michael Tanner: [00:20:06] And he goes, I think the case of avoiding a recession, in my view, is more likely than that of having a recession. So according to the Fed chair, who theoretically is the smartest man, financial man in the country, he doesn’t think we’re heading into recession. So Stu has to balance that with his own thought. [00:20:21][15.3]

Michael Tanner: [00:20:22] I don’t know whose side I’m on in this debate I don’t know where the vibe is, so I’ll make sure to keep working on that. But it is interesting that those two comments right there, Stu, were kind of bookmarked as why we saw oil drop more than we saw the overall markets because it really is two dynamically opposed views. [00:20:41][18.7]

Stuart Turley: [00:20:41] I think he’s an idiot and the only way that we can get out of inflation, I think you’ve heard me say this before, lower interest rates to almost nothing, fix the energy crisis and lower all the energy prices, get good energy policies and quit printing money thats the only wah…. [00:21:02][20.9]

Michael Tanner: [00:21:03] The problem, is 0% interest rates is printing money mean? [00:21:07][3.6]

Stuart Turley: [00:21:07] No, I said low. [00:21:08][1.0]

Michael Tanner: [00:21:09] Interesting! [00:21:09][0.0]

Stuart Turley: [00:21:09] Did you listen to what I said? I said lower the interest rates I didn’t say 0%. Money. [00:21:17][7.4]

Michael Tanner: [00:21:17] Okay. Okay. [00:21:18][0.5]

Stuart Turley: [00:21:19] We okay, Powel got us here by his stupidity. In fact,. [00:21:24][4.5]

Michael Tanner: [00:21:24] He. He took he continued the stupidity of numerous Fed chairs before we’ve had 0% interest rates since 2008. [00:21:31][7.4]

Stuart Turley: [00:21:32] I don’t really. You know, whatever. He’s got knuckles dragging. He’s got calluses on the back of his knuckles because he walks along like Mc Gilla gorilla. [00:21:41][8.7]

Michael Tanner: [00:21:42] I’m not defending Jay Powell by any stretch of the imagination. I think he’s he’s he’s been dealt a hard deck of cards and he’s played them horribly. Both things can be true. You can be doing that and you can play those cards really wrong. I agree with you should. You know, the problem is the Fed has a hammer and they see every problem is a nail. [00:22:04][22.4]

Michael Tanner: [00:22:05] The only thing they can do is increase rates to bring down wages I mean, he literally said, quote, Wage increases have been moving down. That’s a good sign down to more sustainable levels. I mean, that’s what this dude thinks. [00:22:16][11.0]

Michael Tanner: [00:22:16] I mean, this is why, again, I’m ultimately on your side. You shouldn’t like the Federal Reserve. They literally are quoted saying, we want to drive wages down. Screw you. I want my wages to go up. [00:22:27][11.0]

Stuart Turley: [00:22:28] Right. I want my politicians to quit spending money. [00:22:30][2.8]

Michael Tanner: [00:22:31] Yeah, but again, I say all that to say. I don’t think Jay Powell is a dumb guy. I think he’s in a rock and a hard place. We’re in a situation and there’s a lot of things to balance. And I’ve been in rooms where the best idea does not move forward because it’s not politically popular. [00:22:48][16.5]

Michael Tanner: [00:22:49] What happens? You know, Stu you do you think this is an independent? The Fed is an independent, nonpolitical party. You’re out of your mind for politicians you should run for Fed board. [00:22:59][9.9]

Michael Tanner: [00:23:01] Couple other things let’s quickly move over to before we leave crude oil. We did see about a three, three and a half million barrel drop from the crude oil strategic reserve, which is in line with the API or API’s estimation yesterday or on Tuesday. So that stat that didn’t didn’t do much to help buoy oil prices. [00:23:19][17.7]

Michael Tanner: [00:23:19] Another interesting note, Haynesville natural gas production reached a record in March of 2023. This is out of the EIA, but courtesy the world’s greatest website Energy News Beat dry gas production from the Haynesville shale play in northwest in northeastern Texas reached new highs in March 2022, averaging 14.5 billion cubic feet per day, 10% more than that annual average of 13.1. [00:23:41][22.0]

Michael Tanner: [00:23:42] That is so huge Stu a 10% increase of natural gas that’s what $9 natural gas does people get. Let’s keep Natty gas crazy and be interesting to see how those wells pay out specifically at these decks but Haynesville natural gas going off, not doing great for natural gas prices, currently trading $2.15. We saw about a percent and a half decline or not a percent have, but a 10th of a percent decline today from early around 220 being open. [00:24:11][28.6]

Michael Tanner: [00:24:12] As you listen to this, tomorrow we will see the EIA natural gas storage numbers estimation around 57 BCF build. So we’re back into into build season. We are a little bit it’s going to be a little bit on the higher of a range for that five year mid max but we will we will see what it comes in at. [00:24:28][16.7]

Michael Tanner: [00:24:29] I think the only other thing Stu, I’d be interested to mention is is Callon did a little acquisition divestiture combo move in one in one hand they they purchased Permian based percussion operating two in an all cash or a cash and stock transaction valued somewhere around 475 million with potential contingency payments of 62.5 million under specific price deck things,. [00:24:54][25.0]

Michael Tanner: [00:24:54] Percussion is going to get about 265 million of cash and about 6.4 million shares of common stock. The transaction is structured as the acquisition by Callon Petroleum is, so they’re basically taking over 100% of whatever this operating two is because it looks like there’s two funds they’re acquiring firm so interesting they’re. [00:25:09][15.4]

Michael Tanner: [00:25:10] In a separate agreement callon decides to exit the Eagle Ford Shale to bridge more in a re operating 655 million in cash and potential contingency payments of up to 45 million. And it both of these are going to simultaneously close here July of 2023, but will be effective January 2023. [00:25:29][18.3]

Michael Tanner: [00:25:30] Basically what it does is it shifts gallon all the way from being split between the Permian and the Eagle Ford boom. Now all of a sudden they’re streaming right now in the Permian. You know, this helps improve their margins. [00:25:41][11.2]

Michael Tanner: [00:25:42] You know, they’re going to claim their key financial metrics is always going to increase you know, this acquisition is I’m reading off the press release here. So take it for what it’s worth. Acquisition attractively priced at 2.5 next 12 months. EV EBITDA, excluding the impact of the contingency payments, there’s a three-year. [00:25:58][15.8]

Michael Tanner: [00:25:58] They’re also going to start a $300 million share buyback program over the next two years. As you know, those those are percussion operated. Bro is going to like that. They’re percussion operating company. They’re a private oil and back company this is their second go around. They’ve they’re first at their first acquisition arrived divestiture was a 2019-2018, some Lee County Delaware Basin stuff they got back in the game for percussion. Number two,. [00:26:23][25.0]

Michael Tanner: [00:26:24] They’re using Cardinal Capital, the PE firm out of Houston so Cardinal gets a little bit of return here. We’ll see what percussion, opera or percussion operating three looks like because we know they’re we know Cardinals dip it back in the box for one more rich goes ahead and gets themselves some Eagle Ford assets. You know, I don’t quite know Cowan’s position there, so I don’t want to speak on what that deal is. Mazo That’s a big old piece of money, considering that 655 million in in cash. I wonder if they pay that in Yuans they just wheel over Yuans. [00:26:56][32.4]

Stuart Turley: [00:26:58] Ones or Yuans. [00:26:58][0.2]

Michael Tanner: [00:26:59] Yuans maybe they do pick Yuan imagine that U.S. M&A deals start transacting in Yuan that they all quit? That they all just give up and go work for Saudi Aramco, who I’m still waiting for a call, by the way, to. [00:27:12][13.1]

Stuart Turley: [00:27:13] Oh, you bet. [00:27:13][0.3]

Michael Tanner: [00:27:14] Poor cheap, Very cheap only like 50 grand an episode. It’s cheap. You got anything else for the days Stu we did along one today. [00:27:19][5.4]

Stuart Turley: [00:27:20] Oh, it was long, but it was fun. [00:27:21][1.1]

Michael Tanner: [00:27:22] It was good. Guys, while we relax, the markets will come back. If I don’t show up on Monday that means the defibrillator wasn’t good. So I just. I still have my funeral but assuming we make it, guys, we’ll have our daily or weekly recap which drops tomorrow as you got here Friday when you guys listen to this at ten now, we will be back in full force on Monday to bring you the news from the weekend to get you prepped for the week. [00:27:48][26.4]

Michael Tanner: [00:27:48] So we’ll let you get out of here, guys appreciate you checking us out world’s greatest website, www.EnergyNewsBeat.com for Stuart Turley I’m Michael Tanner. We’ll see you tomorrow, guys. [00:27:48][0.0]