Chuck Yates Needs A Job

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0:49 Hey everybody, welcome to Chuck Yates needs a job the podcast. That's it. Come on. Dare I save the live cast. So just remember a train wreck. You were always glad that you were there and you saw

1:03 it. So we're going to do tonight. We're going to have a lot of fun. I think some shots will get fired. I've been talking to the to the guests tonight. I think some shots will be fired, but I've

1:14 also got four of the best energy experts on the planet up here So we're going to do some serious energy talk to before we jump into that. One thing I wanted to say just real quick and bottom of my

1:26 heart, all sincerity. Thank you guys so much. April 27th of 2020, literally a shitty day. I got the boot. I knew that the firestorm was going to happen in the press. All that. COVID happened.

1:43 I'm hanging out at my house by myself and Richmond.

1:48 not the greatest place in the world to hang out by yourself. And anyway, so the fact you guys embraced the podcast, gave me a platform, let me speak, supported it, Colin sitting there, so I'm

2:01 gonna say it, making it the number one podcast on the Digital Wildcatters Network. I really appreciate that, and I mean that a lot. So thank you guys. Thank you, thank you, seriously, I meant

2:12 that. And in fact, I'm actually glad to be here tonight I don't know if you guys know, but I've been really, really sick for the last month or so, and I'm really glad I recovered from Monkeypox.

2:31 Oh, you think that's bad? I gave the monkey the clap.

2:35 Okay, that's my one joke. I'll leave it at that. I'll leave it at that. All right, Kevin, give us the theme song.

3:01 All right guys, before we get started and I introduce these guests to you, let's give it up for Patterson and the Eco Self for sponsoring tonight's podcast. Brad, hold this just a second. I got

3:14 to show you this. I don't know if it'll work because the lights are so bright, but they actually made me a hoodie, has my face on it and it glows in the dark.

3:25 There you go If they can power a Chuck Yates hoodie, they can power the fuck out of a drilling rig. That's all I'm saying. So thank you guys. All right, my first guest. He's a UT graduate. He

3:41 joined Raymond James in 1995,

3:46 where he was a longtime research analyst known for his incredibly bullish and incredibly bearish calls on commodities He was always directionally right, maybe didn't get the timing right? but he

3:59 always to his cutie - Two years never made a difference to my clients. He's just two years off - And the only thing higher than his cholesterol was me at Coachella last year. Marshall Atkins.

4:14 Straight down from Canada, our favorite Canadian. She was a long time top rated energy research analyst in Calgary. Guys, I hate to say this. She's 10 times smarter than all of us put together.

4:29 And she's also responsible for half the global warming. Stacey McDonald

4:39 My next guest, fellow Rice graduate, co-founder and portfolio manager at recurrent investment advisors. He's also living proof that having a heart on is not personal growth. Brad Olson!

4:57 And my last guest, he's a Harvard man. He's a Rhodes Scholar. He's a longtime energy investor, a veteran of both BlackRock and Morgan Stanley. Now CEO of an energy transition company. He doesn't

5:13 like baseball very much, but he doesn't mind being high and inside. Ahmed Atuan.

5:24 All right, Marshall You're the elder statesman of this panel, the wise one. Tell us what the hell's going on in Europe. Europe's screwed. Europe is screwed. Multiple policy problems, starting

5:40 with, oh yeah, let's switch everything to wind and solar and renewables. But you also marry that with the fact that Russia - was their sole source of natural gas, not their soul, but their large

5:56 source of natural gas. When those two things don't work, you got a big problem. And industry's gonna shut down. They're going into a massive recession 'cause they do not have enough energy. And

6:07 if you don't have energy, you don't have an economy, period - Wow. So Stacey, you Canadians are the nicest people on the planet. Y'all really are Do you know why Canadians don't participate in

6:23 group sex -

6:27 That's nice to me - Whoa, whoa, whoa, whoa, whoa. My punchline of it takes too long to write all the thank you notes, pales to your punchline. But in terms of Marshall saying that about Europe,

6:41 was that Yankee arrogance? That's the Americans lecturing to Europe? Do you Canadians see it that way?

6:49 No, I think that's fair. I mean, Canada is obviously a little bit left of center of the United States and probably a little more heavy into the environmental stuff. So if we weren't exporting

6:60 energy, we would probably be facing the same problems 'cause our policymakers have a similar view as Europe. In terms of ESG, in stringency, it tends to go like Europe, Canada, and then it

7:10 filters into the US. Europe's a mess. Does it probably stop some crazy policy happening in the US? Maybe it probably stops some of that filtering down - The odd part of that is, doesn't Canada win

7:24 if the world's actually warming - If we could produce it and get it to market, yes. But I mean, if you look at what Canada produces on a resource base, it's actually very similar to Russia in

7:34 terms of agriculture and energy composition and all that. So we could be a replacement, a secure, friendly replacement for Russia, but we can't get our product to market as quickly we should and

7:45 so we can't be there to support that - And is that your government not building infrastructure, is that not - It's certainly not a reserve base. I mean, we have almost as much proven reserves of

7:56 Saudi Arabia, the oil sands. So we have the resource to back it up. We haven't been able to get it to market. We haven't been able to effectively build big things to get the resource to market.

8:07 But that I would say to investors or people watching this that's kind of an old news story now that's changed in Canada. We're gonna have LNG finally. And then when Trans Mountain comes on, we're

8:17 actually gonna be over piped So our differential should go down. So it's getting better. It's just very slow - I want it noted for the record. I am showing maturity when you said over piped. But -

8:29 I haven't yet - So Brad, you're a long only investor in energy. You're watching Europe. I'm sitting there looking at SP, percent of the SP 500 earnings that Europe's like 15. And it's even bigger

8:46 for the fang stocks if you look at Facebook. Google, all this. I mean, and they've had to make the decision, do we keep people alive or do we shut down industry? I mean, can they bring us all

9:00 down? Can this literally be global recession - Yeah, it's a good question. I think historically when we look back at, you know, call it all the recession since the Great Depression, you have

9:13 earnings declines of 20 in a recession And right now Wall Street is looking for 10 earnings growth next year and 20 earnings growth into 2024. So obviously, even if you're in the camp that says we

9:29 avoid a recession, 20 growth from here seems pretty optimistic. And so I think that that downgrade of the outlook for European companies, the downgrade of the outlook for tech companies, you know,

9:42 that's all gonna contribute to generally EPS estimates you know, frankly, to have strategists out there looking for 20 earnings growth as we're seeing kind of the world materially slow down. We're

9:55 seeing Facebook go negative growth, Google go slowing or X growth. Like it would just be nice if those strategists would cut the earnings estimates now, get the kind of puke out of the way. And

10:07 then we can go back to, you know, a more normalized market, but we haven't gotten there yet So Ahmed, I was out in Berlin this summer with my kiddos. By the way, if I ever get a second life, I

10:19 hope to come back as one of my kids. Yeah, let's go hang out in Europe. Okay, sure. So anyway, we were in Berlin. And what was interesting is we would get an attack. See, we talked to taxi

10:32 driver, you're in a restaurant, you're talking to the staff, shopkeepers. Literally no one in Germany was griping about fuel costs, talking about energy. It was like they were oblivious to it.

10:47 And I tweeted that out one day. I just, you know, hey, the answers I got back were one. Maybe the German government is subsidizing energy costs. So it's being lost on the public. And then the

11:02 other thing I heard back is, they may just be so freaking austere that they'll just pay it shut up and do their duty. Any insight on Europe of, you know, Marshall saying it was the overbuild of

11:17 renewables. Are they getting it? Is a discussion happening? Is there any chance for a change? Great question. So small world, you mentioned that. My parents actually met in Berlin. So I

11:28 wouldn't be here if it weren't for that city. My mom was doing a junior abroad from Miami of Ohio. And my dad was this random guy from the Middle East. And they hooked up and the rest is history.

11:40 So the - Romance is alive I actually have a lot of issues

11:47 But I actually, I was just in London two weeks ago and I was in Europe for a month this summer. I agree with you. It's kind of there's a disconnect between the average person and how they think

11:57 about the energy crisis and what to do and how to solve it and what the actual facts are. I mean, when you look at the stats, 90 of Poland's gas comes from Russia, 50 of Germany's. And they don't

12:13 seem to think that the solution on the ground that I've seen anyway is all of the above that I think a lot of us would advocate, it's just more renewables. So I think there's a disconnect to what I

12:24 hear that the conversation in Houston, where everyone says, oh, the Germans are now learning the lesson, they're gonna have to diversify more. I was just there and they're going the other

12:34 direction saying we need to go faster in the renewable direction. We have a short-term problem now, but it's not gonna solve like our long-term issue of dependency We don't have our own product here.

12:47 It's gonna be interesting to see how that plays out.

12:52 The economic fallout is ultimately gonna hurt a lot of the citizens of these countries, but again, there's a disconnect between that and what they think the solution is. They don't think the

13:03 solution is okay, let's build more LNG import terminals. They say we just didn't go hard enough on renewables - And I mean, I'm kind of in the camp, but I want your take on it based on physics,

13:17 what God said happens down here on Earth when it was created, can renewables actually solve their issue - I mean, I don't think even as someone only invested in renewables now, not in the shorter

13:29 medium term, you need long duration battery storage, that's a game changer, to make renewables based on source, but there no where to hear that. So they do need the natural gas imports And I

13:43 think what might break sooner than people. think is the European countries attitudes towards Russia and Russia Ukraine. Because at some point they're going to just want that gas. So I see that

13:57 breaking before the five years is going to take for us to export LNG, extra LNG and development LNG facilities to Europe. Gotcha. So this brings us to the next thing I want to talk about. Brad, I

14:11 hate to bring this up. But you came and you co-hosted the BDE show with me one day. Russia was. I was told that would be struck from the record. Any incorrect predictions or forecasts were

14:24 supposed to be edited out. No, but in fairness, what I like is you made your point and it turned out to be wrong. So Brad Kim's on the BDE show as the Russians are amassing troops on Ukraine and I

14:38 go, Brad, you lived in Russia at one point. You're a Russian studies major. What's going to happen? And Brad's answer was, Don't worry. Putin's the goth kid that likes to make fun of the

14:48 athletes. And he's not gonna do anything. He's just gonna do that. He's not gonna invade. Well, they invaded. So I saw this on Twitter the other day. Somebody ran a poll and they said, who

15:01 blew up Nord Stream? And there were four choices. It was Ukraine, Russia, the United States, and then none of the above. So I found this interesting You know who won the poll with like 5, 000

15:15 votes and granted its Twitter? Was the United States at 38. So what do you think about Nord Stream? Who blew it up? What impact is that gonna happen -

15:26 Yeah, so I put my chips down on the idea that the Russian army were assembling to do the world's largest thriller dance. That didn't work. So I'm gonna get this wrong too. I'm just not a very

15:40 conspiratorial person I think the truth usually ends up being more boring than. Kookie online conspiracy theories. And so I think it's probably Ukraine or a third party country. Generally, Putin

15:54 likes to keep his options open. He likes to have kind of the silence pistol, the poison bottle, all sorts of weapons at his disposal. And obviously a gas pipeline is one of the weapons at his

16:06 disposal. I don't see how he gains a lot by eliminating optionality from his

16:12 kind

16:17 of toolkit Whereas if you're Poland and to a mods point, if you're Poland, you're terrified that Germany is gonna get soft on Russia and enter into a new energy security deal with Russia. And if

16:26 you're Poland, you're like, You know what, I'm sick of worrying about whether Germany's gonna flip. Why don't I, to quote, Can a reaves in speed? I did that on your podcast too. Shoot the

16:37 hostage, take the hostage out of the equation. You know, blow up Nord Stream, take it out of the equation. And so I think Poland probably has the most to gain from blowing up Nord Stream - So

16:47 we've got a Poland take on it. Now, I like this. So Stacey, the Russians were sitting there blaming on not producing natural gas on a Canadian valve of some sort, right? Who do you think blew it

17:01 up - I actually thought it was something similar. Like who didn't want someone to be weak with Russia? So they just wanted to take it out So my theory was it was either Russia or not, excuse me,

17:11 it was either Poland or Ukraine, was what I was thinking. I just, I don't know, I'm not American. I'm not gonna like get into that, but it just seemed a little bit - It was Canada - It was

17:20 Canada - She did do natural - And we're gonna replace that gas in 35 years, hopefully if we get something built. So that's our long, it's been our long plan - All right, Marshall, we'll get to

17:31 the Kennedy assassination next, but where are you on Nord Stream? Any theories - I have no clue

17:38 and nobody has a clue. It could have been Sharif Suki. That's

17:44 the best guess yet. I'm actually going to jump out on the ledge with you, Brad. You're my friend. I'm not going to let you go solo on this and I've got to give credit to my friend Mark Mills

17:53 because we discuss this theory over, I believe, five and a half margaritas one night. Mark's theory is that it's the Iranians because if you think about it, who can replace the LNG? The United

18:06 States can't. We're exporting all we can. Australia is exporting all we can. Gutter is exporting all they can. But because of the sanctions, there's actually pipeline capacity from the northern

18:19 Iranian gas fields that get into Europe. Now, you kind of, we do long haul natural gas in the US. You kind of got a daisy chain in Europe to get it around. But if you think about it, Iran in

18:31 short order could actually get the gas there they could actually use it in their negotiations and what is a court competency of the Iranians, they blow shit up, right? And they do it really well.

18:43 So that's who I'm gonna take. You got a theory or you're just gonna pass on this - If I had to guess who has the capability and the most gain from it is the United States. So that's my first choice.

18:55 Second is probably China, because it just disrupts things and it creates chaos in Europe and suspicion against America, so it plays into there And so I'd say those are the top two. I think one

19:10 thing is who has the capability, the deep sea, deep water, explosive capability, do it, it's not like any, I don't think the Polish have it - It's 250 feet. I mean, I think Brad and I could go

19:22 get wetsuits tomorrow he'll fly the Polish flag, I'll fly the Iranian flag. But I actually don't think it's that complicated. Now I've never blown up a Russian pipeline before.

19:37 or have I? There we go. There is a Twitter meme out there with me blowing it up. So we've decided basically that Russians, I mean, Europe's fucked, particularly if they have a cold winter,

19:49 they're potentially going to bring us all into the Great Depression and kill earnings. One more thing on Europe, if it is cold, then the amount of increased oil demand coming out of there, people

20:01 aren't talking about, they're not paying attention, but it could be million, a million and a half per hour of the day more oil demand than certainly we've seen in the last six to nine months. And

20:11 the crazy thing about that is with them taking all the LNG, you know what we're going to be doing in Massachusetts, this winter? Burning heating oil, because we actually have very expensive

20:24 heating oil, very expensive heating oil. And we actually had a day last winter, 25 of all the heating that was happening in Massachusetts was heating. in Senator Warren State who claims we're

20:38 polluting the environment. So let's do this, let's jump over the pond and let's come to the United States now. So let's start off with the midterms. So looking at the midterm elections, I think

20:50 we're two weeks out, it feels like just listening, seeing polling, polling, we're

20:57 gonna see a red wave. I think it's a lock the Republicans take the house I think it's likely they take the Senate as well. You look at the governor's races, that's gonna happen. So we'll have

21:10 divided government. Does that matter to our business in any way, shape or form? And I'm gonna get a Stacy first, and she's the Canadian. Do you guys care - I mean, I think it matters from a

21:24 capital perspective 'cause a lot of the policy stuff that's been announced, the companies that participate, I mean, that capital can move, right? and they need stability. talk about the

21:35 Inflation Reduction Act and a bunch of things, but people will have to make plans on policy. And the flip-flopping between good and bad on things I think creates the potential for just a overall

21:46 reduction in investment capital. So you can't have people making business plans and then worried if they're going to change in a couple of years, which is - I mean, if you're looking at the perfect

21:54 example, that would be KXL, right? I mean, imagine trying to build long haul, long term, any project when you're worried about who's going to be in office in two years or four years or six years.

22:06 It's very challenging. So it'd be nice to take some of the rhetoric out and just get stability for people that have to spend long term dollars. I mean, it's actually interesting if you go back and

22:16 look at stock grid turns. Generally speaking, they do the best during divided government when they know the rules can't change. Ie, we may have crappy rules, but at least we know they're not

22:27 going to change. Marshall, what do you think about the mid-term? Feel free to take it into the inflation reduction activity. you'd like? Yeah, you know, clearly, if the Democrats stay in

22:38 control, then then you've got a huge bin to the green energy, right? I mean, you've seen that with IRA. If Republicans take both the houses and then, you know, does something get repealed? You

22:49 know, probably not with Biden there, but two years from now it may. So it's, I think it's a big deal for clean energy. I don't think it affects conventional oil and gas at all. The dye has been

22:60 cast when you when you sell off as big a chunk of their strategic reserve as we did. And you're facing the shortage that's headed our way for supply and you get any recovery in demand. You know,

23:15 oil is going to go up regardless of who's in charge. So to your point, over time, it's important for

23:21 investment. But next two years, I don't, I don't think anything happens So Ahmed Marshall's right. I mean, when you look at the SPR, we're at our lowest levels Michael Jackson's thriller was the

23:34 number one album. I jokingly said the other day to Colin, we've been sucking on the SPR like a fat kid on a water burger milkshake. Does it matter - Are you making fun of me? Was that a joke about

23:46 me -

23:47 You make a cholesterol joke and you get so sensitive, Marshall. So does it actually matter that the SPR is a slow? Does it have strategic ramifications? What are you thinking about that - I think

23:60 it does I think it's a disproportionate risk that the administration took where, if you don't do anything with the SPR, it's not gonna really move. I mean, Marshall knows this better than I do.

24:10 It's not gonna move prices anyway. So you're not really solving the problem. But if you do bring it to a dangerously low level, which it is right now, and there is some unforeseen crisis, we now

24:19 have no kind of leeway. So I think it was just a horrendous decision all along to do it the first and second and third time - It shouldn't be controversial, but it is controversial and that's that.

24:32 really the oil and gas industry, if they care about the price of the commodity, should cheer for the worst policy that they can get. The reality is that the price of oil goes down when you drill

24:44 for more of it. And so while I understand that there's obviously the services segment of the oil and gas industry who wants more activity, everybody else should really be anti-more activity.

24:57 Because prices go up when you have bad policy Frankly, when we fundraise, I tell people, I say, look, energy in your portfolio is a call option on terrible policy. You don't want good policy.

25:10 Like when you have good policy and you're drilling everything in sight, the price of a college education, college tuition triples and oil goes down 60. If that's the outcome we're cheering for,

25:21 then I guess I don't know what game we're playing. And so we have this conversation a lot where I'm like, the real closet. Biden heads out there should really be the oil and gas guys. And

25:33 obviously I make that as a joke because I read energy finance Twitter and I know that either they're going real deep cover or that is not the case. But yeah, look, I mean, the reality is today

25:46 you've got barrels that don't reflect supply and demand getting pumped out of the SPR every single day. The margin for error with supply and demand gets narrower and narrower as you pump more of

25:58 these non-economic SPR barrels out. If you sell oil, it's a good thing to have this kind of chaotic incoherent policy, right? Like, I mean, we talked about Europe. I was in Europe in May and I

26:12 was having a meeting in Germany where I said, like, hey, you guys freaked out about this? And like, you know, a guy named Gunter was like, dude, I have a gasoline card paid for by my employer.

26:24 I don't think about it at all when I fuel my BMW up.

26:29 And you think like, all right, now I'm starting to see why you guys don't really care. Like we have ESG policies, our company pays for our gas card. And like, by the way, why are our diesel

26:40 prices so high? Well, because to make road diesel with no sulfur, you need a natural gas hydrogen feed into your refinery. Oh, who would have thought? Swipe that gas card again. You know, it's

26:51 like these are all kind of the policies that separate people from, you know, the real world outcomes of their decision making. You know, they're bad and they're ugly to read in the news and say,

27:03 man, what a mess. But the reality is, if you want the price of a commodity to go up and you want energy investments to do well, you know, it always kind of cracked me up. Like a friend of mine

27:13 who worked at Anadarko was like, you could imagine when Anadarko invited Trump to give a stump speech and he was like, we're gonna unleash every ounce of coal we can find and everyone in the dark,

27:25 I was like, we wanted this guy, you know? And that's kind of always been the conundrum of the energy industry, is the energy industry cheers on more supply, but we know what happens when there's

27:36 more supply. It's, you know, the Fed prints a gazillion dollars and oil price still goes down. Maybe that's a little bit cynical, but it's definitely, it's not a, it's like Marshall said, a

27:47 lot of this stuff is already in motion, but, you know, a lot of the supply demand challenges are already in motion and a government midterm, you know, election isn't gonna change that But the

27:58 reality is if you're an energy investor and you say you get more bullish when Republicans take over all, you know, legislative and executive branch, you know, history, history is not really on

28:10 your side, right? You want a messy kind of incoherent green energy pursuit - I got a guy for you - Yeah, yeah, exactly. You know, and I've talked to guys in Texas who have kind of whispered like,

28:24 hey, Biden comes in and screws everything up. That might actually be good. Yeah, I kind of thought that would have caught on by now, but - I'm on private land - Yeah - Not that bad - That's right

28:35 - No, that's actually right. And that's kind of been the story of the business forever. It's like you can be good for activity or you can be good for price. You generally can't have both at the

28:46 same time - Yeah, and final comment I'll make is, on your podcast, a few months ago, we talked about the '70s a lot. Like '70s were the golden age of the oil and gas industry, the post-World War

28:58 II oil and gas industry, and what did you have? You had get off the gold standard, windfall taxes, price controls. Donald Rumsfeld said how much you could charge for corn flakes, like all of

29:10 these terrible policies. And it was a great time to be an oil and gas investor relatively speaking, so - Oh, and piss off Saudi Arabia. We're not doing that now - Yeah, right. Right, that's

29:20 exactly right. So, you know, look, a return to the '70s is obviously not great for people who live outside Texas, Louisiana, and Oklahoma, but. you know, for the folks who live here, it's

29:30 not a bad outcome for energy. Just promise me. Promise me we won't print the freeze at Yankee bumper stickers again. I think that's set the cause back. That's done. All right, Ahmad, you have a

29:45 unique perspective on this because you were old-school oil and gas guy. You're running an energy transition company. And here's what I'm going to do I'm going to make you energy czar the whole wide

29:58 world. So what you say goes and I'm going to bring it to the point of fuse. The whole point of fuse is we're this big happy family and energy. We've got, it's kind of like a family reunion I went

30:12 to in Velma, Oklahoma. We've got like racist, drunk, grandpa, the oil and gas people over here We've got, you know, Uncle Bob's third wife, Kathy who's way too sensitive and talks about AA too

30:26 much. She's the renewables. And anyway, how do we get that family to talk together because I truly believe if everybody would talk, everybody would share notes, everybody would focus on

30:41 technology, we could probably lower energy costs 20 if we'd do it. Am I just off base drinking too much beer? What do you think Mr. Energy's are - No, I, I, and thank you for that hyperbole,

30:56 but I completely agree with you got it So I didn't move from the traditional energy to renewable energy for ideological reasons. I just saw as Marshall would see exit multiples in one sector going

31:10 way up and the other sector going down. And so I thought there was an opportunity to capitalize on that and I also saw a ton of growth in renewables. But as, as energy is are, I guess, I would

31:22 have an all of the above policy. I think oil and gas are. are gonna be here for our lifetimes and are gonna grow, not decline, but renewables are gonna take an increasing market share, driven by

31:38 societal adoption, ESG pressure and just government subsidies, right? Which is the tax credit is basically subsidies. So for example, solar has gone down 80 costs in the last decade. Wind has

31:51 gone down 90 in the last 15 years And as I said earlier, the solution that bridges all of the renewable energy together is storage, because it allows you to take the sun that shines during the day,

32:05 the wind that blows at night and have storage in between the cells. And by the way, the fastest growing energy storage state, and I think the number one area of attractive investment, I think is

32:16 storage in Urcah, Texas. We're blessed in Texas. We have the most oil, the most gas, the most wind and the second most solar after California about to overtake California. number one in there.

32:27 So Texas can be a model on how you can actually have all of the above providing baseload power

32:37 from natural gas and from renewables as energy storage comes online and then have this huge oil resource as well and imports becoming less of a factor. To your point on the conversation, when I go

32:53 to New York, so I moved here from New York, when I told people in New York, this is like 2017, that it used to be like 2015, if I told people I worked in oil, I literally had no friends at that

33:08 party. Like my wife's in fashion, so she had all these friends and they would kind of

33:14 put me in the corner. But still natural gas I could defend. By like 2015, if you're in natural gas, you have no friends of the party anymore. So now it's 2022. I mean, you're You're not even

33:26 invited at the party if they know you're in either one of the two. So I think that's the wrong way to approach this conversation, right? I think people have to, like reasonable people, like who

33:36 are more centrist, have to lead a policy that allows us to have enough of both so that we have a diversified national energy policy that people can agree on. And I think 80 of people are probably in

33:49 those camps Like New York is a little extreme, San Frans a little extreme, certain parts of maybe Texas could be a little extreme on the other end. I think there's got to be like a realistic

33:60 conversation of meeting in the middle. I think both sources of energy are necessary for us. And we've been the world's most resilient country and greatest country largely because of our natural

34:12 resources starting with agriculture And I think we're now, it should be the world's leading like diversified energy player. There's no other country, big country that comes close to that. I mean,

34:23 China doesn't come close. Russia doesn't come close, we're it, right? We're number one, and I think we'll be number one for my lifetime and hopefully, you know, kids and grandkids lifetime -

34:34 Quick follow up. Does your wife have models that are friends? Is that what we mean by fashion -

34:42 She provides clothing and accessories to the models. It makes them, so they are her - All right, we'll talk, sorry - Exactly, exactly - Is that the end of the podcast, Ab - Yeah - All right,

34:55 thanks everybody, come on. So Marshall, anyway, we get - I don't have any model friends -

35:01 Yeah, you still think your wife married you for your looks, but

35:05 can we ever get the narrative back? Can energy, does it take all this doom and gloom for us to have a reasonable conversation - Well, it doesn't take that, but the problem is you've had so much

35:18 hyperbole over climate change and climate arguing getting that's been out there and that's translated to this. extreme views on ESG and you have to, you know, throw soup on a painting in Paris,

35:32 and glue yourself to the wall with a hydrocarbon base product to get attention to, we don't need oil. Like, no, you're gonna need a crap load of oil, and you're gonna need a crap load of gas, to

35:45 your point, you're gonna need it all. You know, developing a model that allows it all to work together, it'll be interesting if we can pull it off We didn't do so well in February of '21 on that

35:58 model where we had it all working at the same time, the shit broke pretty bad. One of the Hurcutt guys I was talking to said, Look, we used to have a rule. You couldn't sell electricity in the

36:11 system unless you could provide it uninterrupted for 72 hours. Which gets to your point, great. Build a windmill, but pair it with a battery and load all that cost in on a fair basis. The problem

36:24 is that cost of Germany where arguably the wind doesn't blow as hard as here and the sun doesn't shine. They were paying 35 cents a kilowatt hour versus a year ago we were paying 7 or 8 here in

36:36 Houston. You can't compete on a business level, an industrial level with those kind of expenses. Now, we're going up, but they're going to probably go up

37:05 a lot more. So I don't know, long way to way of answering or not answering your question I guess I would say whether you prefer traditional energy or renewables, I do think although we are kind of

37:05 like lepers for renewable people when you work in traditional energy, I actually think renewable people instead of looking at it like that should think about what we can add to their business because

37:09 frankly, I don't think there's a harder business to run than running an oil company. I mean, I know we talk a lot of smack about CEOs being entitled, but let's be real I mean, if you're losing 30

37:20 or 40 percent of your production every year before you. even wake up, I mean, show me another business that has to do that. I mean, Apple doesn't have to do that, Facebook doesn't have to do

37:29 that. And then combine that with an uncertain commodity price. I mean, this is a very hard business to run, and we have boom and bust all the time. So if I'm on the low carbon side or new energy

37:41 side of the business, I would want to talk to oil and gas people because they've been through the booms and busts of pricing and interest rates and policy changes. I mean, this is a very resilient

37:52 business So I actually think renewable people should spend more time with oil and gas and learning about that because it's not going to be easy for them forever. I know the IRA is easy for a while

38:02 for them, but it's not going to be like that forever. So they need to learn to handle those ups and downs. If I can add to that, the one other thing that renewable people can learn from oil and

38:13 gas is how to scale things. So there are a lot of funds on the coasts generally who are developing renewable technology, but they've never scaled these signals. They never take them to a level that

38:25 actually works. And the oil industry is the best in the world doing that. So working with the oil companies and some of the smart VCs are doing that

38:35 now to take things like hydrogen, carbon capture and all these things that you think are going to be future solutions but really don't work unless you scale them. I think that's something the oil

38:46 industry can really help the renewable industry do Now that's a really good point. So all right, we've got about two minutes left. I'm going to go kind of rapid fire, a couple of questions here

39:01 and I'll start with you, Marshall. Marshall, give us a trend that we're not talking about today but we may be talking about a lot in 18 months. I'd start with Iran

39:16 look at us backing away from the nuclear thing.

39:20 everything I read said in the next year, they get nuclear weapons. What does Israel, Saudi and UAE do if they get closer to getting nuclear weapons? I have not heard anyone talking about that in

39:30 the last year and a half. And if that happens, game over - Oh, holy cow, Stacy, you got a trend - This is not government related, it's more corporate related, but I know people follow me on

39:44 Twitter have heard me harping about this, but the only thing I care about for the next 18 months is inventory I mean, it's been totally missed from the discussion for the last two years, 'cause

39:53 companies have basically been drinking from a fire hose, but if you're going to a free cash flow model and you wanna pay dividends out, you better make sure you have the inventory to back that up

40:02 for a really long time, because if you don't, you're gonna go in the market and you're gonna buy stuff and you're gonna dilute your shareholders. So the biggest thing for me is, you know, people

40:11 in the industries, and you just spend a lot more time digging down driving the inventory and how actual deep it is, 'cause that's the base of your business model. Because if you get that wrong,

40:20 you're not gonna do well on an investing basis - It's return of capital and return on capital. Yeah, exactly. All right, Brad, lay the trend on us - You know, I think one thing, people focus on

40:34 Russia and they focus on, is Putin gonna get overthrown? Are the Germans gonna hug the Russians to the dismay of Ukraine - I mean, I think realistically, you have this kind of weird frozen

40:48 conflict, middle ground where, you know, when Saddam Hussein attacked Kuwait, he kind of froze himself out of, you know, out of the global trade system for the remainder of his reign. And yet,

41:01 he said, rather than point the guns at other countries, I'll just point the guns at my own people and hold on to my internal power. Well, what that meant was, you know, Iraq went from a four

41:11 million barrel a day country in 1980. and was significantly below 4 million barrels a day for certain periods of time, less than a million. And it took 30 years to get back to that 4 million barrel

41:23 a day level. And so when people talk about Russia, they focus on the big headline grabbing outcomes. But I don't think what people probably need to think about is what if there's a scenario where

41:35 Russia becomes this weird disconnected autocracy where production just slowly bleeds lower, it's enough to keep all the oligarchs well-housed internally. But you have a meaningful producer on a

41:50 global scale just missing for a decade or even more going forward. Because Putin's pretty good at surviving. And he doesn't have to die for there to be a huge kind of outsized impact on the oil

42:03 market and the gas market for that matter. So look for a loss for Russia that leads to disruption but doesn't necessarily. lead to a nice clean conclusion that people are looking for one way or

42:17 another. Got a trend we're going to be talking about? Yeah, I think we've all been talking about Russia and Putin and Ukraine and Europe and the US. I think the one that's kind of, it shouldn't

42:28 be sneaky because it's so huge, but it's China. While we're all talking about all this stuff, they're having their party Congress and it's turning from an authoritarian to a totalitarian state

42:39 where the leader can kind of do a lot more than past leaders have been able to do going back to Deng Xiaoping and Mao before that. So what does he do?

42:51 He has stated publicly that he wants Taiwan to be part of China

43:02 and not just the two China policy, one China policy that's truly finalized during his lifetime and he's in his 70s So I think you're going to see a more active China. And I'm not saying they're

43:14 necessary gonna invade Taiwan the next two or three years, but I think that's a distinct possibility while everyone else is running around doing their own thing - Y'all are all wrong. We're gonna be

43:23 talking about the reconciliation between Tom and Gazelle. That will be the big story. All right, we literally have one minute before I gotta wrap this up. In one sentence or less, where in the

43:36 energy business are you putting your money for the next 18 months? Battery storage - Oil sands - Oil sands - Crude oil contracts - And I will say this, when Marshall took me out to his fishing,

43:54 hunting camp, he had a group of us around and we were talking, we did the same similar thing, where are you gonna put it? I think oil was at what, 65? And you said it would be at 125 by the

44:06 summer. I chose Bitcoin at 60, 000. So I'm barred from ever doing this again. The last thing I'll say real quick is we as we wrap up, I wrote one joke last night and I wasn't able to use it. So

44:20 you're just going to have to hear it. I was hoping somebody would say something where I would look at you and go, man, that sound I'd rather go to temple with Kanye. Oh, come on guys. That's

44:32 funny. All right. Too soon. Too soon. All right. Hey, everybody. I really appreciate y'all coming out. And let's give a big round of applause to these guys that were brave enough to do this -

44:43 Thanks, Chuck - Thank you.