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Today for the Energy Newsbeat podcast, today we have a really cool guest. He is the president of Mudrock Energy, David Boyer, and I’ve had the pleasure of getting to work with David on some projects. And we’re just really thrilled. We’ve got some more projects coming around the corner. And so welcome, David.
David Boyer: [00:00:27] Thanks, Stu I appreciate the invitation. [00:00:29][1.1]
Stu Turley: [00:00:29] Oh, well, I didn’t mean to say anything nice to you about all your good work. But I’ll tell you what, my team absolutely loves the data work that you do. And just as another side note on the Energy Newsbeat website, which is Energy Newsbeat Dotcom, we have Davids from Madrak Energy there in bed on our site for the rig counts. And I’m telling you, that is a good looking rig count and it’s updated all the time. I like it because I don’t have to update it. So thank you very much for having that. So thanks anyway. Where we’re at right now is we have got a heck of a report and David knows data, mud, rock, energy knows data. Let me just go ahead and set that for a year. Bar is way high, David. So when you take a look at your clients, they’re mostly upstream. And you are a it’s an AP engineer, [00:01:32][62.8]
David Boyer: [00:01:33] a geologist studying geology. Yes. [00:01:36][2.8]
Stu Turley: [00:01:36] And what prompted you to get into geology? [00:01:39][2.3]
David Boyer: [00:01:40] So are you back in high school? We actually created a class that was environmental studies. And in that class we created a stream restoration project where we were going out in the field, taking measurements with GPS units, measuring stream banks, seeing what changes over time. And we were growing greener grants to state. And we put a whole lot into this class and learn Ge’ez. And so from that, I really got into the Earth science and went into college with that. And then on the oil and gas side, I got an internship while I was in college and fell in love with all the data and just understanding of all the science and all the stuff put together to make a prospect and from there got into oil and gas and then got hired out of college and from there kept on going. [00:02:32][51.7]
Stu Turley: [00:02:33] I’ll tell you what, your work with the layers is phenomenal. And so if you ever need a recommendation from anybody, please let you know and give them my name and number, because you just Rockit doing that. And so this presentation that you did tell me a little bit about, it was a hour long presentation and you’re prepared for it. I mean, there’s some data in his bed. So tell me a little bit about the presentation. [00:02:59][26.6]
David Boyer: [00:03:00] Yeah. So the our local land group from the APL reached out to me, their president I’d worked with in the past, and he has seen a lot of my work on LinkedIn. And I was like, you know, this would be really valuable to our membership. And so, you know, so I said, yeah, I’ll be willing to do this. And so, you know, it’s a broad based coverage of everything that happened. And, you know, generally Appalachia in twenty twenty, you know, we’re covering commodity pricing. We cover it reactivity, production, oil, gas and looking at M&A and then just follow it up. A lot of the employment stuff I’m doing on LinkedIn and get a lot of traction talking to different people about it. So we put that in there, too. It was really pertinent to what was going on with the land that, [00:03:43][43.1]
Stu Turley: [00:03:45] you know, when I was going through prepping for our podcast today, I mean, when you do read off this hit list here of commodity pricing, rig activity, mergers, M&A, there were over two billion dollars in regional activity and production volumes, all that. So as we kind of go through some of these numbers, you also just told me we had a big announcement today. What was that announcement? [00:04:08][23.1]
David Boyer: [00:04:08] So AT&T, who is the largest natural gas producer in the United States, has gotten bigger again today with the purchase of all resources. So it’s a two point nine billion dollar deal, another Bcf a day. And so one interesting factor, I looked this morning and so I said, well, if it was a country, you know, how big would they be? And so, you know, they would be the 16th largest producing country based on the latest data that I had. They’d be between the UAE and you, Becky. Stan. And so, I mean, that’s the type of volumes they’re going to have following this acquisition from Ulta. So, I mean, they’re really the most active operator up there right now and they continue to build. [00:04:51][42.8]
Stu Turley: [00:04:52] Oh, that is fantastic. So let’s go get them as a client. OK, when they see this podcast, they’re going to call you right up. So, man, that is cool, that’s some big bucks, and yes, [00:05:05][12.6]
David Boyer: [00:05:05] now the market on their hand may not be as excited about it. It was down about seven 1/2, eight percent this morning. So we’ll see where it shakes out. [00:05:12][6.5]
Stu Turley: [00:05:14] It will I have not gone through their assets yet, but what do you have you been able to go through their assets or what was it? [00:05:21][7.0]
David Boyer: [00:05:21] I haven’t looked at it closely yet, but it was looking like based on their acquisition of Chevron from last year, it’s about 50 percent of the asking price is production volume. So the flowing volumes is 50 percent of that two point nine billion. And the other half is going to be the midstream and some of their hedging contracts and other things on that end. Fantastic. So it’ll be it’ll be interesting to see how it plays out here. And then of the purchase, one billion was in cash. The remainder is in new stock allocations. [00:05:51][30.3]
Stu Turley: [00:05:52] Oh, my gosh. [00:05:53][0.5]
David Boyer: [00:05:53] But there and that’s probably one of the reasons why the the market’s not so favorable about it here. [00:05:58][4.9]
Stu Turley: [00:05:59] You know, I wonder a couple of things. What’s a few billion between friends and how much of that’s going to executives in order to close that? So, you know, as a shareholder, we’re going to cover as Miyagi here and a little bit because you did cover that very well as you were digging around. So M&A and everything else was two billion. So we’re already getting ready to pass that for this year. We’re going to hit that. Do you see any more mergers coming around the corner? [00:06:26][27.3]
David Boyer: [00:06:28] I don’t know. We’ll see. [00:06:29][1.0]
Stu Turley: [00:06:31] Who knows? Right. [00:06:32][0.7]
David Boyer: [00:06:33] I mean, there’s a couple of operators up here. I think that if they get the right number, they’ll sell any day now. So it’s just how they get the number they’re looking for. [00:06:40][7.1]
Stu Turley: [00:06:41] Well, one of your topics was commodity pricing. And when you take a look at two dollars and four cents, Mcf and on the barrels was thirty nine thirty nine. We’re in that’s compared in thousand nineteen oil return to negative seventy five percent appre covid oh seventy five percent as covid was coming back on. Tell me a little bit about the increase back in there. [00:07:09][28.1]
David Boyer: [00:07:10] So what we saw there, I mean obviously everyone knows oil went negative back last spring on the stock. [00:07:16][5.6]
Stu Turley: [00:07:16] Holy smokes. Yes. [00:07:17][0.7]
David Boyer: [00:07:18] And so we had that really big decline there in the oil price. But by the end of the year, oil price had recovered back seventy five percent of the start of the year of twenty twenty. You know, now we’ve exceeded that going into twenty twenty one, the natural gas side, we can see quite the negative. And at the end of the year we did see a nice spike in Henry Price. However, as you see in my presentation there, on the basis we’re looking up in Northeast, we didn’t see that increase because of the basis pricing. You know, it’s all about capacity and we don’t have enough pipelines up here. And so our capacity is still really highly utilized. And so when that price went up, you know, Ekiti and others put more deaths in the lines and that brought that base price down even lower. And so it was a really steady price for the most part throughout the year. We didn’t see that bump up at the end of the year in Henrico. [00:08:10][51.8]
Stu Turley: [00:08:10] You know, you just mentioned a there purchase equity. The midstream and pipelines is a fantastic investment there. You’re always going to need them. And if we ever stuff in hydrogen, you can put in natural gas and hydrogen in there, that technology is getting better. But you brought up a horrible political issue and that is the XL pipeline, line three in line five going to Canada. Does the Appalachia have much effect on that? [00:08:40][29.9]
David Boyer: [00:08:41] Those no oil is really moderate as a small commodity here and flowing to those at all. The two we have that are going on really big here, our MVP, which is equities, midstream company equity, our MVP keeps out of all kinds of issues now down in North Carolina and just keeps getting delayed and delayed and delayed. And we have what’s called ACP, which was the Atlantic Coast pipeline that was coming down through here. Berkshire Hathaway has now since purchased the Dominion Line. Right. They said they agreed to not continue it. So it’ll be interesting to see if Berkshire Hathaway now puts money back in. I mean, this line’s already partially built and in the ground with threat was cleared. So hopefully the next couple of years they may get back on this and work through it. But we’ll see. [00:09:30][49.2]
Stu Turley: [00:09:31] You know, everything’s kind of funny about the Green New Deal and all the energy requirements and everything else. And pipelines and natural gas are the key. You can’t you can’t get from here to, you know, energy nirvana as people are trying to do without natural gas in the pipelines. And the Appalachian is very, very critical. Right. You know, and I loved your chart on the commodity price response. Thirty years of MP office employment data. Holy smokes. I mean, tell me a little bit about that chart, because you have it down by the Great Recession, the shale bust and how all of this goes in. And then. We’re going to get just a little history, how is this going to pan out from 2020 and a little bit, or are people going to see any relief out there? [00:10:21][49.9]
David Boyer: [00:10:23] Right, so you’re referencing where we put together I was modeling the Bureau of Labor Statistics and their employment history and compared that to oil and gas production in a body. And then so we we’re looking at, as we saw shale plays come in here, there was a big, huge boom in oil field service employment. And, you know, you got a lot more drilling rigs, a lot more frac companies and just all the related service, all the water systems, everything that’s going in. You had this really big boom. And we’re experimenting with plays all over the country. So following that first crash, we had a lot of those oilfield services, jobs disappeared. And so you see that kind of come down. And then, you know, we had a little up and down. We’ve had a couple other troughs here recently. And so what we’re seeing is a couple of things is, one, we’re seeing increasing efficiencies. We’re getting getting rid of rigs that aren’t as efficient. We’re getting frac crews that are much more efficient. But we’re also moving a place. And recently we’re we’re seeing what I call the kind of efficiency peak. We’re also completing a lot of DUCs. And so where is this efficiency being able to be continued or will it kind of go away here as we move forward? And that’s kind of the big question is can we flatten it off what we continue to grow or will we drop off? And I think there’s a lot of great companies out there trying to push the technology to keep this efficiency building and do more with less. Employees know they’re really trying to fall somewhere in the middle. I think there’s going to be continued efficiencies. It’s going to be more efficient with continuing to grow fewer operators. There’s evidence of efficiency there as well. But overall, I think the employment side, I don’t necessarily see it going up a whole lot, especially in twenty, twenty one. We keep seeing I saw another announcement today of more people being let go through with something that was called up here recently, early in the year, Repsol, what goes pretty much the entire office. So it’s not really seeing that employment pick up any time soon. Might be on the upstream side now. Well, you had a good paper showing where in the downstream sector, especially with oil prices now continuing to increase downstream, we’ll see a lot of those jobs come back upstream side. It’s going to be slow. [00:12:56][153.6]
Stu Turley: [00:13:00] I am just sitting here looking at some more of your data and stuff, and when you take it after the employment efficiency, well, we’ll jump into that here in a second. But you’d mentioned Spud’s, I mean, puddled and then the spud in taking a look at this, but in the pun the year over year, the spud is when they get the casing down in there. And has you had the Marcellus was down thirty five percent. The Utica was down forty two percent and the vertical wells was seventy three percent. Can you tell us a little bit about the spud versus Spud and how those numbers kind of impact? Is it going to mean anything for this year? [00:13:47][46.5]
David Boyer: [00:13:47] So what we saw this year? Yes, I think I think you’ll see that come up a little bit that we had the spuds were down. DUCs up here weren’t quite the same as what we’re seeing out west in the oil window. So on the dark side, I don’t we might add a little play with that in 2020, but I don’t think that was a huge driver, you know, but on the on the spud side, that big shift down will come into play a little bit here, especially early on in twenty, twenty one. And we saw that in the production a little. If you looked at the production rate, we were up three percent in 2020. Right. But this is also year end exit rates, just to be clear. OK, and then but the Utica dropped off quite a bit and so especially in the oil production side, Utica had surpassed Marcellus a while ago. But this year, the Marcellus has jumped the Utica again and got back on top of it because we’re seeing continued development of production in the Marcellus at a greater rate than we are in the Utica right now. [00:14:50][63.1]
Stu Turley: [00:14:53] You know, your your efficiencies and everything else were phenomenal. A lot of people don’t think about those efficiencies and better equipment and getting all these. I don’t think that the employees will be able I mean, if you’re a rig hand, there’s a culture, there is a culture with all the guys are the last cowboys out there. I can’t see any of them going to work on solar panels. I think all the guys have the art and everything else, all the guys I know on a bad thing going to go. So anyway, that was pretty sad on that. Never mind. That was just a moment of silliness there. [00:15:28][35.0]
David Boyer: [00:15:29] Well, it’s hard, you know, like with the offense books too. In general. I was talking to another geologist the other day. And I mean, even moving into the environmental field is really tough right now for me. Career level person, because you’re looking at is you can’t apply to those entry level positions because we’ll talk to the hiring managers. Like you have way too much experience for an entry level position. Right. But the next level up, you need experience in environmental. And he doesn’t have that specific experience, environmental. And what we really can’t hire you there either because you don’t have that specific experience we need and these companies need to get around to that. These are great employees that have a lot of industry knowledge that can go into different routes and they’ll understand and pick up what they need to do in that next level role. It’s but break into that right now. It’s still really tough. [00:16:17][48.1]
Stu Turley: [00:16:18] Do you think and I’m just gonna throw this out here, do you think the a couple of trillion dollars being thrown at this would behoove them to ear tag that for training with training make a difference? [00:16:30][12.3]
David Boyer: [00:16:32] I mean, that’s the the problem is when people want experience, training still doesn’t match that because you can I mean, for example, this person I was talking to is a professional geologist. He has a certification with the state. But he’s still in that limbo spot of No one. You know, there’s no real position for me. And so it’s you know, it’s all about connections, talking to people, networking and moving into these new industries. If you’re going to move in, you really need to start talking to people and expressing your knowledge to them and, you know, moving in that way because just sending your resume over and a quick phone call over the phone isn’t going to do it. [00:17:12][40.6]
Stu Turley: [00:17:13] No, I really like that. The difference between training and experience, how do you get experience? I mean, you know, do you want to go be an installer on a roof and a home in a home market or in consumer? And you’ve been a bigwig at an oil company? I don’t think so. I mean, anyway, Uber drivers, they’re not going to need that many. I guess I don’t. Anyway, on environment, social and governance ESG, I love your slide here as well. To one of the funny things that we’re seeing out there is that everybody is calling natural gas green or blue. And, you know, when you you go through that, could you give us a little bit of a difference on the green and blue or it’s like one of them is producing energy for green. If it’s green, it’s done by, like, getting the sauce in there. Are you [00:18:10][57.1]
David Boyer: [00:18:10] referring to hydrogen being green [00:18:11][1.3]
Stu Turley: [00:18:12] and blue? Yes, but it’s got to have natural gas in order to get to the green and blue. [00:18:16][4.7]
David Boyer: [00:18:17] So so what they’re talking about with green hydrogen, what they’re talking about there is they’re taking energy from solar panels, extra energy from solar wind panels and that electrolysis to release hydrogen from. Gray is then from, I believe, what they’re calling gray hydrogen is reformed from natural gas. Right. And it is that carbon capture under reservoir and that black is just your standard steam reformation with things going out but on. So what’s going on with the natural gas side is we’re starting to get what’s called this, you know, the the certified responsively source gas. And so this started [00:19:05][47.8]
Stu Turley: [00:19:06] responsibly sourced gas. I love it. Yes. [00:19:09][2.9]
David Boyer: [00:19:09] So the first known one was South-Western up in Northeast Bay, and they had to deal with New Jersey natural gas system, where I think it was twenty eighteen. They started this responsibly sourced gas. So they’re measuring methane emissions, water sourcing and coming up with a measurement of best practices to be responsibly sourced equity. As recently announced two really big projects on this responsibly sourced gas program down here in southwestern India. And just last week, the Northeast National Energy also moved in and is doing another project similar to the response we saw as gas. And so that’s a big push where they’re getting a bump up in their prices because some of these utilities are saying we’ll pay a little extra if you have this extra responsibly sourced tag on your gas. And then on the other side, we’ve got renewable gas, which the rice the rice team that bought that was purchased by EGD and then now the one Rice brothers back, the CEO of AT&T, well, they’re brothers and father have they have an investment firm. And with that firm, they opened a spark last year, one getting many aspects and they are announced they’re putting together their back into a renewable energy renewable natural gas company where they’re combining to landfill gas companies into one. And so on that program, you know, they’ve announced that they’re getting fifteen dollars in Mcf for the next 20 years for their gas, the renewable gas coming out of the landfills. [00:20:51][101.8]
Stu Turley: [00:20:52] I’m sorry, you cut out. Did you say I’m just getting on the cutting out 15. Yes. No way. [00:20:57][5.4]
David Boyer: [00:20:58] And now see, again, a lot of that is, you know, it’s all paper, right? Because I think a lot of those deals are coming out of Europe. And so they’re getting this money coming from Europe to replace the Russian gas, essentially. So, you know, in Europe using Russia gas, but they’ll pay the operators over here to say that they’re using green gas. You’re getting these credits across. [00:21:19][20.9]
Stu Turley: [00:21:19] Oh, my goodness. That is a huge you know, the Nord Stream two is absolutely a mess between Russia and Germany. And with the sanctions that they put on the boat and then they’re trying to get it started in Germany, who’s supposed to be the most green brand green country in the planet needs natural gas like you wouldn’t believe. So natural gas is king over there and energy independence and natural gas go hand in hand. You cannot have energy independence without natural gas. So I’m sorry for over here being the natural gas kind of kind of cheerleader there, 15. And it’s kind of like Tesla, you know, poor guy can’t make a car that’s even profitable, but he’s making all of his money off of Bitcoin and carbon tax credit, you know, renewable credit. The man’s brilliant. So, you know, that’s actually kind of funny on that. So when you do take a look at ESG, natural gas is the key. I’m I’m sorry for for, you know, shouting that one out there to you, but I think you just agreed with everything there. So as we wind up, we’re going to put all of this in the show notes. We’re going to have this with all of David’s contact information. And, David, any last words or heads up? Give us a prediction what you think is going to happen in twenty, twenty one? [00:22:43][83.3]
David Boyer: [00:22:43] Well, I think there will still be some consolidation, especially if you’re in Appalachia. Yep. And I think the hiring will pick up a little bit. But I don’t see we’re not getting anywhere near the levels we were a few years ago. Well, you know, I still think next year is going to be a tough year. Twenty twenty one may be another. I mean, oil gas is not going away. Right, right here. It’s important. You know, I think we’re a couple at least a year down here, but I think it’ll it’ll pick up. And I appreciate you asking me beer today, and [00:23:18][34.5]
Stu Turley: [00:23:18] I thank you very much. And I’ll tell you what, my rock energy dotcom, I believe that is correct. We will have all your contact information. And with these big Yazji programs coming around the corner, David, we really look forward to work. I’m with you on some of those, so thank you very much and we’ll see you next time. Thank you, David. [00:23:18][0.0]
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