Daily Energy Standup Episode #98 Exxon eyes Pionner – EVs recommendation in Alaska – G7 to announce the importance of nuclear

According to the industry body Offshore Energies UK, investments in the North Sea have dipped significantly. This could result in much lower oil production by the end of the decade unless the government can attract […]

Highlights of the Podcast

00:00 – Intro
03:17 – Energy secretary and the second gentleman visit OU, you two discuss geothermal energy potential.
07:43 – Exxon a billion here and a billion there
11:47 – G7 nations to emphasize the importance of nuclear power in upcoming announcement
14:46 – EVs face many barriers in Alaska, but experts say the time to act is now – How would you?
16:56 – North Sea oil production could fall by 80% in 2030
18:59 – Market Updates
22:45 – Phillips 66 (NYSE:PSX) Shares Acquired by National Bank of Canada
24:16 – ExxonMobil eyes potential purchase of shell driller pioneer
27:37 – Exxon use Pioneer as a top target to put its windfall profits to use and the talks may not lead to formal negotiations and Exxon may target another company
30:48 – Talks about: The difference between Oxy and Pioneer
33:13 – Outro

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

Michael Tanner: [00:00:15] What is going on. Everybody, welcome into another edition of the Daily Energy News Beat Stand Up here on this gorgeous Monday, April 10th, 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, the director and publisher of the world’s greatest website, EnergyNewsBeat.com , Stuart Turley, my man, how we doing today? [00:00:37][22.2]

Stuart Turley: [00:00:38] It’s a beautiful day in the neighborhood and I’m on assignment here in when. [00:00:41][3.5]

Michael Tanner: [00:00:42] You are on assignment. We love that. If I would have guessed you were in London, but actually you’re in Abilene, Texas. So that’s considering the strategic artwork you have behind you we absolutely love it. It has been a little bit since I’ve been here. I’ve been a little bit on vacation last week, so I’m excited to be back at, Holy Smokes day off vacations do Absolutely Banger of a show lots of stories. [00:01:02][20.3]

Michael Tanner: [00:01:02] First one we’ve got on the menu today Energy secretary second gentleman visit OU to discuss geothermal energy potential. I mean that that headline pretty much explains itself. Next on we’ve got ExxonMobil stock a billion here a billion there Stu is going to cover a really nice overview of of where the ExxonMobil stock is, where it’s going. And it’s going to tie in nicely to story we have a coming up later. [00:01:24][21.7]

Michael Tanner: [00:01:24] Next on the menu, G7 nations to emphasize the importance of nuclear power in upcoming announcement. Next, EVs may face barriers in Alaska, but experts say now is the time to act. How would you? I don’t quite imagine people in Alaska firing up their Tesla in the middle of winter, but we’ll see what this article has to say. [00:01:43][18.4]

Michael Tanner: [00:01:43] Next one we’ve got is North Sea oil production could fall by 80% by 2030 according to new reports. This is absolutely insane. Stu is going to dive into all of that and kind of break down specifically this one this is pretty scary. If I was in Europe, I would be very, very, very scared about this. [00:01:57][14.2]

Michael Tanner: [00:01:58] He’s going to kick it over to me. I’ll quickly cover what’s going on in the oil and gas and natural gas markets, and then we will spend the last part of our show talking about the biggest news and the article that we ran here on Friday. ExxonMobil Eyes Potential Purchase of Share Driller Pioneer. This was originally published on Friday by the Wall Street Journal we will dive into all things what that means. [00:02:15][17.6]

Michael Tanner: [00:02:16] And I think there’s some interesting dynamics it’s clear there that the M&A is going to lean big, big, big, big so in terms of the companies, they’re going to be doing it, I don’t think you’re going to see smaller M&A, but I will give you all of my thoughts and a bag of chips then, guys. [00:02:28][12.2]

Michael Tanner: [00:02:28] But first, check us out online world’s greatest website, www.EnergyNewsBeat.com Dashboard.EnergyNewsBeat.com it’s our data and news combo product get it while you still can you never know where it may go. Stu does a Great job of curating that with our website to make sure all of your relevant stories are there. I’m out of breath though, Stu Where do you want to begin? [00:02:46][18.3]

Stuart Turley: [00:02:50] Okay, quick for our podcast listeners. Granholm is standing there with her hands up like this, and then the second gentleman is right next to him. And I had a double take on that picture michael, second gentleman, Douglas Anna And I’m sitting here kind of going, huh, How would you like to be known as the second gentleman that is the husband of Kamala Harris. [00:03:13][23.3]

Stuart Turley: [00:03:14] So Michael at Oklahoma University OU. Energy secretary and the second gentleman visit OU, you two discuss geothermal energy potential. Michael, this is actually very, very good. I want to give a shout out where shout out is due no matter how much I’m giggling as your job title. Michael, how would you like to be known as the second gentleman who’s a dog walker of Sandy? [00:03:40][26.3]

Michael Tanner: [00:03:41] I’m about it, I guess it’s pretty funny, but now I’m interested in your praise because you’re zagging When I thought you’d zig. [00:03:49][7.8]

Stuart Turley: [00:03:50] Well, here’s the University of Oklahoma, I went to the other one you notice my orange shirt for our podcast listeners. I went to Oklahoma State University. But the University of Oklahoma has an outstanding oil and gas program. [00:04:00][10.7]

Stuart Turley: [00:04:01] And on the campus, Granholm and Anna met with tribal leaders and O.U. Energy experts in a closed roundtable discussion that out of power, the potential of geothermal energy can be harnessed for the benefit of not only just indigenous communities, but everyone. [00:04:20][18.5]

Stuart Turley: [00:04:20] And there’s another article that we just did Day, which is on the big oil companies transitioning into geothermal. So I just want to give her, you know, how tough it is for me to give her a shout out. But I do want to give a shout-out that like this is a quote. This is really exciting conversation for us because the respect that this administration has for native nations, also the potential with the territory, tribal nations for clean energy. [00:04:47][26.4]

Stuart Turley: [00:04:47] Michael, this is based on the fact that EMP, the great United States EMP companies and drill holes cleaner and more efficiently than any other EMP group in the world, and geothermal, Matt Welch over there at the Texas Geothermal Group. Also, what a great use of all these wells. Each starting to use those for geothermal energy. I’m very impressed by that. [00:05:16][28.2]

Michael Tanner: [00:05:16] So, yeah, I mean, do you think you think the Venezuelan National Oil Company is worrying about emissions? Newsflash, they’re not. So, you know, I think your point is well taken, I also do find it funny you know, I do think it’s interesting. One of the topics they touched on was trying to convert wells that have already, you know current producing oil and gas wells into geothermal wells that’ll be interesting to see if they’ll able to do that. [00:05:40][23.7]

Michael Tanner: [00:05:40] On this article, I love how they say they’re trying to convert hydraulic fracking wells like whoever. Wrote this doesn’t even know what they’re talking about. They have. [00:05:46][5.8]

Stuart Turley: [00:05:46] No Clue [00:05:47][0.4]

Michael Tanner: [00:05:47] They’re just getting the talking point. So I don’t know if you’re going to be able to convert wells, but I do think there’s an interesting move towards the geothermal space. I’ll be the first to admit I know very little about geothermal other than people like it as a potential source. I think the same issue you’re going to have, it’s the transportation of the energy. [00:06:04][16.6]

Michael Tanner: [00:06:04] Part of the reason why oil and gas is so convenient is because you can produce it, you can store it in a take a truck and show up, grab that oil, drive it away, and then all of a sudden that can be in months as it moves down, the value chain could be turned into energy to be used it’s very stored and portable. [00:06:18][13.6]

Michael Tanner: [00:06:19] This is Powering and you can correct me if I’m wrong, so geothermal, you produce this hot water, spins a turbine which produces electricity. Well, you have to send that electricity somewhere. [00:06:28][8.9]

Stuart Turley: [00:06:28] Well, let’s take. [00:06:29][1.1]

Michael Tanner: [00:06:30] Is that correct first is that actually how geothermal works? [00:06:32][2.4]

Stuart Turley: [00:06:33] That is correct, but here’s the side note on this, though. If you have the infrastructure already built and you already have the wells, this makes a lot of sense. There’s another article that I’m working on right now, but let’s take a look at the $8 billion that Texas spent in order to put the transmission lines from West Texas to the center part of the state for ERCOT, for all them wind farms, that only half of them work at any given time. [00:07:02][28.6]

Stuart Turley: [00:07:02] So if you tap into existing technology or existing infrastructure, it makes sense if you’re looking to power things in a local environment. Absolutly! You hit on a big one in the grid. Infrastructure’s not there no matter what you do. [00:07:19][17.2]

Michael Tanner: [00:07:20] Yeah, So I think that I’m all about this. I’m with you more focus on the grid, what’s next? And with my good thoughts! [00:07:29][8.5]

Stuart Turley: [00:07:30] Here you nailed it out of the park dude. All right, let’s go to Exxon. What? Michael? One of our most favorite lines of when we started years ago was what’s a few billion between Friends and Exxon a billion here and a billion there properly spent is going to make a cost difference for the corporate break even. [00:07:50][19.0]

Stuart Turley: [00:07:50] Then there’s a billion here, low cost assets followed by a billion there, sales of non-core assets. What this article is talking about is they are selling the sale of a refinery in the Washington state. And I can understand why as they’re getting out of Washington State, because of the regulations, that they’re not bothering to put that in there. [00:08:11][21.1]

Stuart Turley: [00:08:11] But the refinery had been around since 1949 and it was no longer considered a core asset. They are actually running four regulations out of that state. So that extra money coming in is going to need to go somewhere else. [00:08:25][13.5]

Michael Tanner: [00:08:25] Yeah, I think what this article I think does a good job of breaking down the short of the strategy shift in ExxonMobil and it ties in to the story that we’ll talk about, which is the potential acquisition of Pioneer. [00:08:36][10.8]

Michael Tanner: [00:08:37] But I think when you look at where strategically ExxonMobil is moving towards, they are diving headfirst into the EMP side of their business. You have to remember these Supermajor, Shell, Exxon, BP, Chevron, we think of them as they almost have three distinct separate business units. They have their upstream exploration, they have their midstream management, which is really being divested a lot and then they have their downstream chemicals business. [00:08:59][21.7]

Michael Tanner: [00:08:59] What Exxon is doing is, you know, they’re out there getting out of the chemicals business first. They’re selling their refinery. We are they’ve already announced more sales of their chemical assets. They’re writing down their natural gas assets that they bought from XTO years ago. They brought those assets down they’re shifting and talking about buying Pioneer all towards the EMP side. [00:09:18][19.1]

Michael Tanner: [00:09:18] So I think when you look at where is their growth coming from, they at least think it’s coming from the EMP site and. Why would it. Not? At least from their opinion, they’re diving headfirst into it. I mean, one of their big, big, big discoveries is they’re a part owner in Guyana, which is really ran by Hess, which as we get in, I think there’s some interesting things to talk about there. But they’re a minority player in a non-op in that field and a lot of their growth potential they feel could come from that. You know, I was I forget who the Twitter name was, Stu, but I saw a very interesting tweet that I’ll have we’ll have it in the show notes I’ll make sure to get it to Andy. [00:09:53][34.5]

Michael Tanner: [00:09:53] But it basically. Showed that eight Guyana wells are equivalent to a hundred thousand, I don’t know it was either. It was either 12,000 or 120,000. I don’t want to say one or the other, but either one is insane 12, either 12,000. Or 120,000. Permian. Two mile lateral. Oh,. [00:10:13][19.6]

Stuart Turley: [00:10:13] Wow. [00:10:13][0.0]

Michael Tanner: [00:10:14] 8 Wells and the capital investment is similar is actually a little bit smaller on on the Permian wells versus Guyana but you can see the exact the exact amount of production that comes from these large. [00:10:25][10.7]

Michael Tanner: [00:10:25] And that’s what they’re focusing on and why they’re focusing and why the rumor is they’re thinking of buying Pioneer, why? There’s 800,000 acres in the Permian they could buy. So it’s it’s I think, you know this last part of the article, it says the strategy basically management is selling high cost, low profit production and replacing it with lower cost production. [00:10:42][17.0]

Michael Tanner: [00:10:43] I mean, that sounds simple, but it’s easier said than done. Trust me, we’re cool with that. All day right now is easier said than done. And you have to credit this management team to do it. You when everybody is going into alternative energy, they’re going back to basics. They’re going back to Standard Oil. John Rockefeller would be proud. [00:10:59][16.6]

Stuart Turley: [00:11:00] Yes. And let me throw this squirrel at you there, Michael. The reason that I like what management is doing is because of scope one, Scope two and scope three emissions controls that are coming around the corner. If you get out of where the refinery and the actual manufacturing of those things getting out of the scope three emissions barrier is huge. I would be running from refined products as soon as I possibly can. Hats off to them for doing that. [00:11:31][30.4]

Michael Tanner: [00:11:31] Yeah, absolutely. No, I think it’s yeah, you said it best. What’s next Stu? [00:11:36][5.3]

Stuart Turley: [00:11:38] That is like it when you just learned last for word you’re going, Man that was actually almost intelligence Stu. [00:11:43][5.3]

Michael Tanner: [00:11:43] That was cogent. Let’s move on before we ruin it. [00:11:46][2.3]

Stuart Turley: [00:11:47] G7 nations to emphasize the importance of nuclear power in upcoming announcement. [00:11:54][6.5]

Stuart Turley: [00:12:00] Okay, you give. [00:12:01][1.0]

Michael Tanner: [00:12:01] Me give me this. [00:12:02][0.5]

Stuart Turley: [00:12:03] I’m just I’m over here kind of going, you’re also saying it in another article that I was working on, and that is that in COP 28, they’re also now admitting that they’re all behind nuclear. So we’re seeing a paradigm shift. Michael, you’re seeing that Exxon is getting back out of the renewable, you’re seeing them going back to their basics. You’re seeing that the EU in this started years ago and it’s just now coming of age is the nuclear is now okay again. The problem is nuclear is going to take 20 years to come online unless it’s done through modular reactors. [00:12:41][37.8]

Stuart Turley: [00:12:42] In this article it says the statement seen Friday is it’s the third paragraph down. The statement seen on Friday is likely to note the G7 countries welcome Japan’s plan to release treated water from crippled Fukushima number one nuclear plant into the ocean as a transparent way and in close coordination with the atoll International Atomic Agency, according to draft. I think they’ve done a great job cleaning that up and getting that done and this goes. [00:13:10][28.4]

Michael Tanner: [00:13:11] Now they’re just going to dump that water into the ocean? [00:13:13][2.1]

Stuart Turley: [00:13:13] Oh, it’s after all the cleaning up and everything else I feel very good about it. Now. [00:13:18][4.3]

Michael Tanner: [00:13:18] Okay. [00:13:18][0.0]

Stuart Turley: [00:13:19] I would drink it. The difference is between this and Ohio is, as Dr. Chalmers pointed out on one of our other podcast, the other, the polymer poly chlorides, are tougher to clean up than atomic. The atomic can be filtered out and so I trust that and I trust Dr.Chalmers. And the Poly Chlorides can not I would be very upset if they were going to be doing that and dumping. [00:13:48][29.4]

Michael Tanner: [00:13:49] So do you think you’re so your contention is that COP 28, which is when 2024? [00:13:53][4.3]

Stuart Turley: [00:13:54] Yeah, I have to go get my notes but yes. [00:13:58][3.6]

Michael Tanner: [00:13:58] So maybe something around there. But we. So you think they’re going to go hard nuclear? [00:14:02][3.6]

Stuart Turley: [00:14:03] They already are. I mean, it’s already now it’s gone out there. I mean, let’s take the United States we have 92 reactors running. It took us 15 years to get the last one that’s just coming on line approved. [00:14:16][12.8]

Stuart Turley: [00:14:17] France has 51 nuclear reactors 25 of them are down because of maintenance dollars that they have not put any maintenance dollars in. So all of a sudden, you’re now going to have 80% of the nuclear fleet is over 24 years old that’s so normal number. We better get some more nukes up. [00:14:39][22.8]

Michael Tanner: [00:14:41] Yeah, no kidding. No kidding. So I got to hear about Alaska. Let’s let’s see this next one. [00:14:46][4.7]

Stuart Turley: [00:14:46] Okay. Michael, I am a big Alaska fan, you know, I love my time up there, love going up there. But EV is facing many barriers in Alaska. But how? But experts say the time to act is now Michael and I have to say, but how would you that son, that picture for our is my son took that picture in Anchorage. Now, Michael. What happens to batteries in the cold? [00:15:15][28.5]

Michael Tanner: [00:15:16] They don’t work as well. [00:15:17][1.1]

Stuart Turley: [00:15:17] They lose 60% of their capacity. It’s like shrinkage on steroids you know, the old Seinfeld shrinkage story, Well, your batteries lose power. So we’re going to have to come up with that whole new name for that. But how in the world, in Alaska, when it gets 16 below zero in many of the places there? I mean, your Tesla is going to poke its nose out of the garage. Not today. [00:15:46][28.9]

Michael Tanner: [00:15:47] It’s expected. [00:15:48][1.3]

Stuart Turley: [00:15:50] And I just got tickled and there’s now saying this type of charging is now great again in Alaska. We got a quote here one of the challenges we have in Alaska is the distance between communities. Really? Our holes within the grid are different there are more microgrids in in Alaska than there are anything else. And I don’t see EVs taking on up there I just thought it was kind of fun. [00:16:17][26.5]

Michael Tanner: [00:16:17] Yeah. I mean, you’re you’re an idiot if you think EVs are going to take off in Alaska to begin with. I mean, they’re going to be the lot that, you know, those cold weather environments are going to be the last place in which we see EVs ruled out unless there’s a strategic research and development program to create cold weather batteries. [00:16:32][14.6]

Michael Tanner: [00:16:32] Right now, it’s not weird to try to create batteries that work better not really designed to work in the cold. So I have nothing to add other than you’re an idiot. If you actually think people in Alaska are going to use this. [00:16:41][8.5]

Stuart Turley: [00:16:42] You’re smoking something. I think peyote I like that. Right? Yeah. Stressed out peyote on that one. Okay. North Sea. Do you get secondhand smoke from peyote? [00:16:52][10.6]

Michael Tanner: [00:16:53] I don’t know. [00:16:54][0.4]

Stuart Turley: [00:16:55] We’ll have to try that out. North Sea oil production could fall by 80% in 2030. Michael, this is frightening. And when you consider I think that number is going to go even worse sooner. And, you know, I’m always a good pessimist a lot of times. [00:17:13][18.1]

Stuart Turley: [00:17:14] Offshore energy sources in the second paragraph found that 90% of offshore firms had reduced the spending in the North Sea amounting to billions. In total. They determined the lower number of estimate that could result in a decrease in production by 80% in 2030, Equivalent to 500 million fewer barrels of oil if the government cannot attract more funding to the waters. Do you know what that’ll do to oil? [00:17:43][29.1]

Michael Tanner: [00:17:43] Send it. Well, it’s going to send it skyrocketing, But I think what it really does is the Energy Security for that region they just want to become more reliant on Russia. [00:17:52][8.3]

Stuart Turley: [00:17:53] What this is going to do is the North Sea is critical from a lot of different areas and you have Scotland providing oil to the UK, you have Norway providing out of the North Sea coming in. Norway is doing a lot of that via gas pipelines through those eight connecting points through there. That is where it’s also going to be impacting is Norway’s natural gas. [00:18:20][27.0]

Stuart Turley: [00:18:21] All of a sudden you are not going to be able to go renewable between now and 2030 enough to even think about doing this. So this article is is an eye opener, but it’s even more of an eye opener for North Sea natural gas. Oh, yes. [00:18:39][17.7]

Michael Tanner: [00:18:39] And again, it all comes back to windfall profit tax you know, I mean, it’s just a dumb idea. [00:18:46][6.8]

Stuart Turley: [00:18:47] Yeah. All right. Hey, let’s go to the next one here. That’s it for me, man. I think you’ve got the next one coming around the corner there, Michael. [00:18:54][7.0]

Michael Tanner: [00:18:54] I do. We’ll get to the we’ll get to the Exxon story here shortly. [00:18:57][2.4]

Michael Tanner: [00:18:58] I think first we’ll just cover what’s going on in the overall markets. And actually, we record this on Easter. Happy Easter, everybody. I think the interesting part is we’re going to see the markets open on the gas on on the oil side at about $80.70 where they currently settle at 8046 on Friday. Natural gas should start actually, unfortunately, a little bit down. [00:19:16][18.6]

Michael Tanner: [00:19:17] Market settled at $2.03 looks like we’ll be trading down to about $2 and one cents when those markets open here shortly. You know, obviously last week with me being on vacation, we missed a lot of the OPEC surprise announcement. I think we were able to cover it on on Sunday night a little bit, but that’s really been able to sustain prices above 80, which is, I mean, great all around the market that no one’s going to complain about $80. I like that portion. [00:19:39][22.6]

Michael Tanner: [00:19:40] The real question is how much higher will it run here? You know, I think some of the articles that Stu talked about with North Sea production, that’s going to start rolling in here. But again, I think we need to get back to the financialization of oil. What’s going to happen as we continue the economic situation in the United States if it continues to tumble? [00:19:56][16.1]

Michael Tanner: [00:19:57] OPEC can only do so much if we enter a true global recession, OPEC’s not going to just cut oil to nothing down 100 all. I mean, there’s at some point it plays. We’re like, okay, fine. We’re just if it’s 60 bucks, we’re just going to start. Turning the taps on, which is possible and quite honestly, having lower energy prices as most of the world would love. I love $80. I want to see 150 that would really help my day job out. $150 would be very helpful. Okay. [00:20:25][27.4]

Michael Tanner: [00:20:25] But the broad American doesn’t want that. What they want is they would probably like they like they really want Trump oil, gas prices they want to see $1 natural gas and, you know, $45 oil because that’s a buck 50 per gallon to fill up your tank, you go cost cross country for 200 bucks. Not everybody want but so I say all that to say OPEC can only do so much if we are entering an. [00:20:49][23.9]

Michael Tanner: [00:20:49] Actual recession, which I mean, the markets are fairly mixed right now. We’re sitting of 4141 on the S&P. NASDAQ continues to climb. Theoretically, we’ve been in a recession, but I don’t think anybody would I. I don’t know if you asked individual. Americans just straight up, Do you feel like in a recession? [00:21:03][14.2]

Stuart Turley: [00:21:04] Yes. [00:21:04][0.0]

Michael Tanner: [00:21:05] Things are more expensive. Does that mean we’re in a recession? I don’t know. But there’s also the definition of a recession, which they’ve changed. But the idea of a recession more has to do with how does the country feel? And this is just me. I mean, when I interact with people, I don’t feel like they think we’re in a recession. I don’t know. I mean, I think the data says we’re in one. [00:21:24][19.3]

Michael Tanner: [00:21:24] But I think Stu the people you I mean, I don’t think the people I just meet on a daily basis, nobody’s like the first thing they’re telling me is not, man, we’re in a recession like they were in 2008 or they were back in these times when it was clear there was something going on. [00:21:37][12.8]

Michael Tanner: [00:21:37] Everyone just asking about, oh, the bank crisis, that’s crazy. Talk about these banks and it’s almost like there’s this Game of Thrones going on where the individual person is like, Well, I’ve got cash, I’m good. [00:21:46][9.0]

Stuart Turley: [00:21:47] Well, inflation’s killing, but the number one thing is food. [00:21:50][2.8]

Michael Tanner: [00:21:51] Obviously that’s what people are talking about. Inflation is different than a recession, though. Here’s what people are worried about. Am I going to make it from day to day? I think what people are a little bit more worried about is, holy smokes, Like my like the value of everything I own is just decreasing. It’s a little bit different and again, I don’t think that and it maybe we’re saying the same thing from the I’m saying the same thing as you from the other side. I just I don’t feel like there’s just a recession vibe that’s out there. It’s a vibe as much as is. Where does that is to say? [00:22:18][26.2]

Stuart Turley: [00:22:18] In my generation there is, but I’ll leave it there. [00:22:21][2.9]

Michael Tanner: [00:22:22] In your generation, there’s a recession? [00:22:23][1.5]

Stuart Turley: [00:22:24] And they. [00:22:24][0.3]

Michael Tanner: [00:22:25] Feel like homes. [00:22:25][0.5]

Stuart Turley: [00:22:26] Do what? [00:22:26][0.2]

Michael Tanner: [00:22:27] You want on the property. [00:22:27][0.6]

Stuart Turley: [00:22:28] Well, you know, somebody has got to be a slumlord. [00:22:30][1.7]

Michael Tanner: [00:22:31] I feel. Yeah, I feel. Yeah, I, I think the biggest I think there’s one quick story I’d like to mention i actually saw this this morning while I was scrolling through our website, Catching up National Bank of Canada you think they’re getting out of oil and gas, Stu They’re not. [00:22:45][13.9]

Michael Tanner: [00:22:45] Headline Philips 66 shares acquired by National Bank O that dot dot and it I they’ve increased their shares in fill up 66 by 150% in just the fourth quarter according to the company’s most recent disclosure with the Securities and Exchange Commission. [00:23:02][17.4]

Michael Tanner: [00:23:03] I’m telling you people, I only say this because the smart money will always invest the smart way. They’re not dumb. So why are they invested? They see the value. Just you could you know, you can see the value. They’re not dumb. They don’t want to lose money for their investors. They like to make money. They like to virtue signal and say, we’re going to never invest in oil and gas. Being an opportunity to buy low on Philip, 66. And what do they do? 150% increase? Yeah, $4.2 million. [00:23:33][29.6]

Stuart Turley: [00:23:34] There is a note there.There was another article this monring. [00:23:37][2.8]

Michael Tanner: [00:23:38] People they actually and the problem is people believe them when they’re like, Yo, we’re not investing in oil and gas, but just look, just read. Go to the world’s greatest website. Check it out. [00:23:47][8.6]

Stuart Turley: [00:23:48] There was an article I put out this morning I’m trying to remember what it was. There’s a couple other public employees from their city, city firms, City investments, retirement funds are starting to invest in energy. [00:24:03][15.5]

Michael Tanner: [00:24:04] Oh, yeah. We got you, got Vanguard’s got you. Vanguard’s in on it. State Street’s in on it. I mean, everybody’s buying oil and gas. So yeah, you know, it’s it’s industry wide. Speaking of buying oil and gas ExxonMobil eyes potential purchase of shell driller pioneer. Dun dun dun. [00:24:23][18.8]

Michael Tanner: [00:24:24] This was an article that the Wall Street Journal broke on Friday ExxonMobil has held preliminary talks this is the first paragraph with Pioneer Natural Resources about a possible acquisition of the U.S. shale oil producer, according to the Wall Street Journal on Friday citing people familiar with the matter both obviously Exxon and Pioneer declined to comment. [00:24:41][16.7]

Michael Tanner: [00:24:41] The report said that, quote, Exxon views Pioneer as a top target to put its, quote, windfall profits to use that’s a strategic, quote, windfall profit. And that I love that. That gets me going because that’s a shot. [00:24:54][13.0]

Michael Tanner: [00:24:55] That’s what that’s what they want Biden’s administration to really be like and they just want to get it because there’s nothing they can really do. All it just stirs them up because they know there’s not much the Biden administration can do realistically in the short term to hurt them. So this is a shot to the heart. I love that quote, windfall profits to use, adding that the talks may not lead to formal negotiations and Exxon may target another company. Ooh. We’re going to get. Back to that stew because I think there’s a couple other interesting companies that. [00:25:22][27.0]

Stuart Turley: [00:25:23] I like the next one their 55.7 billion on sky high is what they earned last year. Wow. [00:25:29][6.3]

Michael Tanner: [00:25:30] Yeah. So and that’s really all this article talks about there’s not much more other than their consider somebody leaked. So as always what we do with with these articles is we have to sit back and think about who leaked this. [00:25:41][10.7]

Stuart Turley: [00:25:41] Right. Oh, good point. Yes. [00:25:42][1.0]

Michael Tanner: [00:25:44] Who Leaked this, because both of them declined to comment. So obviously, neither of them really want to confirm it. So obviously, there’s there’s four parties. There’s Exxon, there’s Pioneer, and then there’s the representatives for each of them. [00:25:54][10.3]

Michael Tanner: [00:25:54] I always throw out the representatives because I don’t they’re not in the business of leaking this stuff because if they start leaking this stuff, they get no business. Like, there’s these there are so many of these M&A deals that happen that never even make it to this point where if they make it to this point, there’s huge contemplation on some side because they’re not leaking to The Wall Street Journal. If they’re going to do something, if they’ve not already decided or have gotten to some comfortability with either doing it or they want to confirm one way or the other with public sentiment. [00:26:19][25.4]

Michael Tanner: [00:26:20] So let’s throw out whoever their advisors are and let’s look at Exxon and Pioneer. Well, you know, you could make a case for either if you’re on Exxon side, you could be trying to drive the price down a little bit because maybe, maybe not. Maybe there’s competition or maybe Pioneer is considering do we sell higher or do we acquire and try to become an Exxon? [00:26:39][18.8]

Michael Tanner: [00:26:40] So maybe Exxon saying, hey, we need to get this out there, that we want to do this and we want to put pressure on pioneer and pioneer shareholders to take this deal so that pioneer doesn’t go out and use its windfall profits. [00:26:51][11.0]

Michael Tanner: [00:26:51] Because think about it, Pioneer, they describe in the article the full Wall Street Journal article of night, 30 years of premium drilling inventory available, 900,000 acres of premium drilling inventory. [00:27:03][11.6]

Stuart Turley: [00:27:03] That’s a lot. [00:27:04][0.3]

Michael Tanner: [00:27:04] That’s that’s a lot of inventory. You know, they’d like to if we just talked about Exxon diving headfirst into EMP, why would it not want to go acquire some of the most prime acreage in the Permian? Very interesting you’re a pioneer do you leak this? I don’t know that one’s a little tougher for me to see. Put myself in pioneer shoes. Exxon wants to buy us or are we shopping ourselves? That’s the other question. Are we shopping ourselves? Are we trying to leverage Exxon against itself? [00:27:33][29.0]

Michael Tanner: [00:27:33] Now, I think what’s interesting about this is what was the other quote in here. Exxon use Pioneer as a top target to put its windfall profits to use and the talks may not lead to formal negotiations and Exxon may target another company. So this this would tell you that it looks like this is coming from an Exxon side so I think we can clearly say that. But I think it’s also interesting, may target another company who? [00:27:55][21.4]

Stuart Turley: [00:27:56] Right. [00:27:56][0.0]

Michael Tanner: [00:27:58] But is he okay? So this is probably a negotiation to bring the price down there. Probably this is probably negotiation excellence like the leak this and drive the price down. We want to buy you, but we’re also targeting other people. [00:28:10][12.2]

Stuart Turley: [00:28:11] Wow. So this is the advanced level of going to a car dealership and having them sit there and listen to your conversation with your spouse. I like that a little bit. [00:28:22][11.7]

Michael Tanner: [00:28:23] A little bit. The question is, do we believe there are other companies involved or not? Now, if you believe the first article that we went over, which was, remember, they’re pivoting out of high cost, low profit chemical business in exploration production. Well, they got to do something with all that money. So where are the two places that are growing? We just one of them that they mention in their development deck. They are on offshore and they’re not even a full partner in that. Okay? [00:28:48][25.1]

Stuart Turley: [00:28:48] Right. [00:28:48][0.0]

Michael Tanner: [00:28:49] What’s the next? And so that would tell you that offshore oil is probably where if you’re going to dive headfirst into if you’re a supermajor, where can you see the biggest growth? That’s probably number one. Number two, the Permian is just obvious, like it’s the acreage and the ability to easily acquire large amounts of acreage and drill wells fairly quickly no other place in the Permian to see the type of return that you’re going to get that’s just at a high level you could break down all of the different areas in it that you want to go there. [00:29:16][27.4]

Stuart Turley: [00:29:17] Right. [00:29:17][0.0]

Michael Tanner: [00:29:17] So this this move, why they like Pioneer because they’re solely based in the Permian. So if you’re going to look at who are these other companies, they’re going they’re looking at buying. I would just look at premium operators. I got Diamondback. I look at the Diamondback. [00:29:29][11.8]

Michael Tanner: [00:29:30] Now Diamondbacks only sitting here at about a $30 billion market cap, pioneers, about $50 billion market. So it’s a little bit different. You could get a discount, but Diamondback doesn’t have the infrastructure in terms of the acreage that Pioneer has Okay? [00:29:42][11.8]

Stuart Turley: [00:29:42] And and locations. [00:29:43][0.7]

Michael Tanner: [00:29:44] And locations. You could you could say, well, Hess is the lead operator in Guyana could they buy out Guyana? Maybe they’re not going to buy past they don’t want to go up and operate in the Bakken it’s not what Exxon wants to do they’re smarter than that. So they can cross off the list. [00:29:57][13.2]

Michael Tanner: [00:29:57] The real question is marathon. [00:29:58][1.0]

Stuart Turley: [00:29:59] Wow. [00:29:59][0.0]

Michael Tanner: [00:30:00] Well, not excuse me, not marathon oxy. The real question is the other company, Oxy. I mean, think about it. Oxy is a in a credibly advanced permian acreage position. They’ve been shopping Colorado for years, trying to get it off their hands. Warren Buffett is buying heavily into Oxy and would love nothing more than to see a little bit of a return on his investment. [00:30:20][20.4]

Michael Tanner: [00:30:21] When you look at the difference of market caps, I mean pioneers. 48. Oxy’s 56 that’s negligible. Negligible. So if they can buy Pioneer, they can buy oxy. I personally think if there’s another company they’re talking to, it’s oxy. And maybe there’s a deal to be made to buy oxy and immediately sell Colorado and you sell it at a discount. You can sell it for four or 5 billion versus the 89, which they really want, which I’ve heard. [00:30:46][24.6]

Stuart Turley: [00:30:46] Let me give you my $0.02. The difference between Oxy and Pioneer, I would take oxy. Two reasons Warren Buffett likes it. Number two, they are going after the multi-trillion dollar carbon capture market. That to me says you can go green without having to lose your focus. And oxy is the number one there. I think that is a smarter play than pioneer, although Pioneer has better drilling, in my opinion. I could be pioneers cheaper. [00:31:18][32.2]

Michael Tanner: [00:31:19] So maybe this this article very well could be trying to drive the price down for Pioneer. Think you’re going to have to pay a premium. Their market caps 49 billion. They’re not letting it go for 49 billion is probably a 6070 $80 billion but oxy’s probably 100 billion. So I think it’s a matter of trying to drive the price down for Pioneer. [00:31:40][20.9]

Stuart Turley: [00:31:41] What’s a few billion between friends? [00:31:42][1.3]

Michael Tanner: [00:31:44] All I know is whatever is going to happen here, if Exxon does go out and buy one of this mega large cap, it will blow out the XTO acquisition, It’ll blow out the mobile, the Exxon and mobile merger along with Texaco and what, 98? Yeah. So I mean. It’s going to be spicy. This will take a while, though. This won’t happen tomorrow this is going to happen in the summer. This will happen. Someone will drag their feet to see what continues to happen. [00:32:10][25.9]

Stuart Turley: [00:32:11] Right. That’s pretty cool, Michael. [00:32:12][1.4]

Michael Tanner: [00:32:13] Love a little spicy M&A action. And I’m not sure if this will end up happening. It’ll be very interesting. If you had a gun to my head. [00:32:19][6.0]

Michael Tanner: [00:32:19] I don’t think it happens, but I think bought by somebody a little bit smaller, I’d say they buy Diamondback if you had to. If I had to go with it, because it’s going to be cheaper. It’s going to be. [00:32:28][8.5]

Stuart Turley: [00:32:28] I love Diamondback [00:32:29][0.4]

Michael Tanner: [00:32:29] Any pioneer. [00:32:29][0.2]

Stuart Turley: [00:32:30] They are, but they don’t have the play. [00:32:32][1.6]

Michael Tanner: [00:32:32] But does Exxon need that? They just. Does Exxon really want it? They just they’re they’re clearly shifting all into EMP. They want to now bring in a whole unit. [00:32:41][8.7]

Stuart Turley: [00:32:42] I don’t know. I need to go look at their numbers against. [00:32:43][1.7]

Michael Tanner: [00:32:44] Go look at the numbers Stu you let us know. You got anything else for today? [00:32:46][2.6]

Stuart Turley: [00:32:47] Oh, I just hope everybody has a fantastic week after Easter and hope they get to hug their family. [00:32:53][6.3]

Michael Tanner: [00:32:54] Yeah, absolutely. So we appreciate you guys checking us out we are back all the this week. World’s greatest podcast EnergyNewsBeat.com. Check us out, Will let you guys get out of here, though. Thanks for checking us out have a great week, guys. See you! [00:32:54][0.0]