The Future of Energy Panel – Key Insights from the Mauldin Strategic Investors Conference

The Future Of Energy - Maudlin SIC Conference
Source: Maudlin

There are some things that are just fun. Watching my daughter play volleyball and getting to speak at John Mauldin’s SIC2022 conference yesterday.  The title of SIC2022 is “Goodbye Normal, the most important SIC we’ve ever held.” And looking at the all-star lineup, I could understand, but checking out the content it really became apparent.

There is no new “norm” in the investment markets, and the title describes what investors are facing. The panel that I participated in really dealt with the future of energy with several key points: getting to carbon-neutral while providing the lowest cost kWh to consumers with the lowest impact on the environment. All of those sound-like great goals, and as we take a look at each one, they become more complicated.

It is fun to see the success of the Mauldin Economics conferences and thought leadership in the investment and markets area over the years.

Carbon Neutral Coalition

Charles McConnell, Executive Director for Carbon Management and Energy Sustainability at the University of Houston and representing the Carbon Neutral Coalition brought years of experience, energy subject matter experience, and key points listed below. The coalition is striving to educate the market on the most critical issue, becoming carbon neutral. If we do that while keeping the cost down and having minimal impact on the environment, they will have achieved their goals. Most importantly the consumers will have a chance of exiting the energy crisis with at least some money in their pockets.

Chuck set the tone for a great overall look at the real target, and that is stated above by moving to carbon-neutral with the other goals in mind. His leadership and the Coalition’s impact will have a national impact on what needs to be done. Chuck did stress that while they are doing what is best for Texas, it may not work in other parts of the country.

Each part of the country needs to tailor the solutions specific to its needs and capabilities.

The Future of Energy Panel – Key Insights from the Mauldin Strategic Investors Conference
Source: Carbon Neutral Coalition

Sandstone Group

Stu Turley, President, and CEO of the Sandstone Group had some insights into the new pricing matrices that are in play. While supply and demand are the cornerstones of any pricing matrix, the new oil and gas pricing structure has gotten a whole lot more complicated. There are several key components making up a complex formula with geopolitical, self-serving countries’ policies and interests, financial, regulatory, and consumer opinions.

In the geopolitical space, Russia has been dominating the news and will have a significant long-term impact on the price of energy and oil and gas. We are in the first world financial war and are on the front line witnessing the damage to all countries involved in trade with Russia. After Covid and printing money around the world, inflation has taken off and the energy crisis has only exacerbated the financial crisis.

Stu mentioned sanctions don’t work. Iran has built a system and has been shipping oil for years outside the OPEC and OPEC + production quotas and pricing models to places like California. They successfully insulated themselves from the cash flow crunching sanctions cause, but their citizens were harmed by the availability of consumer goods and food. The government kept running and enriching uranium.

Russia has learned from the Iran playbook and has insulated itself to a certain degree and will be able to sell oil to India, California, and other countries.

Also, John asked a great question about all of the oilfield service companies leaving Russa wiping out the labor and brain trust in the oil field. That will have a huge impact on Russian production, but with Europe starting to impose sanctions, Russia will still have customers outside normal oil pricing matrices and thus cash flow. The new pricing model is based upon the critical minerals (or rare earth minerals) commodities pricing tool Sandstone has in production and is in the process of validating.

The Future of Energy Panel – Key Insights from the Mauldin Strategic Investors Conference - Sandstone Group
Source: Sandstone Group

King Operating Corporation

I was on deck next and brought up some key issues in the United States production area. With the move to “Greener” energy as I call it, there has been a drain on available capital. This has been seen in the movement in the board room in the public companies to return investments rather than re-invest into drilling programs and fun the migration of oil companies to green energy companies. Exxon this past quarter is giving back $30 billion in stock buy-back program while taking a $4 billion write-off on exiting Russia as John had brought up about the brain trust leaving Russia.

Chevron announced on its earnings call that they were going to modestly increase CapEx spending by 10%. Well, we talked about on the panel the drilling costs almost doubling, so a 10% increase in CapEx does not keep up with inflation, let alone the drilling required for replacing regular decline curves.

We need over $1.2 trillion in the next 8 years to drill in the world just to meet current levels of demand and decline curves. So, with the oil and gas companies not committing to drilling programs we are not going to see relief in the energy crisis soon.

Take a look at the last 10 years of oil and gas as a percentage of forms of energy for electrical generation and it has remained at 78% to 77%. Renewables had grown from 4% to 11%. Why was oil and gas flat, and renewable energy grown? We needed more power.

The Future of Energy Panel – Key Insights from the Mauldin Strategic Investors Conference - king operating
Source: King Operating

The Bottom Line

We are not in a short-term fix to get energy and inflation under control. It will take years and a comprehensive plan to get the right steps moving. Having Chuck on the panel to talk about the Carbon Neutral Coalition was fabulous. It really set the tone of the panel that we are not just oil and gas, but rather need to reduce the carbon footprint by using any power source that finically makes sense.

While this conversation seemed like an ESG session, it was more than that. It helped me see that I am on the right path to deliver low-cost energy to the United States market with the least amount of impact on the environment and give maximum returns to my stakeholders along the way.

Peter, thanks for moderating, and John, thank you for your leadership and for setting the stage for a communication platform for investors.

As always check with your CPA if alternative investments are good for your portfolio

Take the assessment and see if it is right for you HERE.

‍Please reach out to our team at any time for answers to your questions.

Jay R. Young, CEO, King Operating

ForbesBooks Author of “The Upside of Investing in Oil and Gas”

Meet the Panel:

Charles McConnell
EXECUTIVE DIRECTOR, CENTER FOR CARBON MANAGEMENT IN ENERGY, UNIVERSITY OF HOUSTON
Jay R. Young - founder and president - king operating corporation
Source: King Operation

King Operating Information

Stu Turley - Sandstone Group
Source: Sandstone Group
About Stu Turley 3230 Articles
Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor.   He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage, and is the Co-Host of the energy news video and Podcast Energy News Beat. Energy should be used to elevate humanity out of poverty. Let's use all forms of energy with the least impact on the environment while being sustainable without printing money. Stu is also a co-host on the 3 Podcasters Walk into A Bar podcast with David Blackmon, and Rey Trevino. Stuart is guided by over 30 years of business management experience, having successfully built and help sell multiple small and medium businesses while consulting for numerous Fortune 500 companies. He holds a B.A in Business Administration from Oklahoma State and an MBA from Oklahoma City University.