C.O.B. Tuesday

For this week's session, we were thrilled to welcome back  Rob West. Rob is the lead analyst at his own firm, Thunder Said Energy. Rob had a career in research at Redburn and Sanford C. Bernstein before leaving to start Thunder Said in 2019 and first joined us for COBT on January 4, 2022. He has immersed himself in the technology details of the energy transition and brings a unique "how are we going to accomplish all of this" perspective to all of his analysis. Even though there are immense challenges, and we have dug ourselves in a hole in many ways, hang in there as you will hear Rob's optimism in particular towards the end of the discussion. Rob joined us today from his home in Tallinn, Estonia. In our conversation, we pull from Rob some thoughts on the Russia-Ukraine war and delve into the sentiment in Eastern Europe and the Baltics about Russia's aggression. Rob recently wrote a research piece entitled "Energy Shortage: Fear in a Handful of Dust?" At the heart of the paper is that the road to a better world, including a successful transformation of our energy system, goes through having energy "surplus" and not through energy "shortage." Quite the contrary, he points out the dangers of energy shortage in a number of areas including higher food prices, the negative climate effects of more wood use, diminished economic prosperity, reduced security, and the instability of democracies during periods like the one we are in. Rob reminds us of the serious bottlenecks to be solved, the second law of thermodynamics (and the implications for energy loss), that we need energy to build new energy systems, and the importance of innovation. In total, Rob points to ten key reasons why the world needs energy surplus, and why such surplus not only helps us achieve our environmental goals, but also helps us avoid a world that would ultimately be more dangerous and also more painful, especially for those who have less. To kick us off, Mike Bradley took a look back at what oil and gas prices looked like in January of 2022 when Rob last joined us and shared current bond, commodity, and equity performance. He noted that the last few days of energy equity volatility was predominately related to the direction OPEC might pursue at its December meeting and wrapped up his discussion by laying out both the failure and success coming out of COP 27. Colin Fenton noted the European Union has put a number on its proposed price cap for natural gas: €275 per MWh, as measured by the TTF month-ahead price in the Netherlands. The proposed cap would begin on January 1, 2023, last for one year, and activate only in the event of emergency conditions locally, as determined by the spread between spot prices in Europe and a basket of spot LNG prices from around the world. EU Member States would need to approve the proposal before it could take effect. Veriten's head of nuclear research and strategy, Brett Rampal, also joined the team today. As we pause and reflect about Thanksgiving, we want to wish you all the best and reiterate how grateful we are for your friendship. Be on the lookout for a special message on Thanksgiving Day!  Thank you again to Rob for joining and thanks to you all! 

We are excited to share today's episode featuring Joseph Sigelman, Chairman and CEO of Atlantic, Gulf & Pacific Company (AG&P). Joe and his team focus on downstream LNG import and distribution, engineering and construction across Southeast Asia, stretching from India to the Philippines. He joined us from Jakarta and we were thrilled to visit with him about everything he and his company have been seeing during his eleven plus years at AG&P. As you will hear, the "on the ground, energy transition trends" in this vital part of the world are fascinating. In our conversation, Joe kicked us off with key background details on the company and their main goal to bring clean energy to developing markets along with jobs and industrial growth. We then touch on the company's build-out process, their experience in India, the company's team and size, their effects on the health and welfare of local communities, the acceleration of the business from 2021 to today, future markets, developing infrastructure with regulatory frameworks in different countries, and much more. In one of the more compelling moments, we discuss with Joe "what ESG is really all about" and why bringing more natural gas to the developing world isn't more commonly part of that discussion. Joe is on the frontline of a changing and growing world where "energy transition" can have a more profound meaning - in this instance, going from polluting and not enough to clean and reliable. We hope you enjoy the discussion with Joe as much as we did. In our upfront discussion, Mike Bradley shared bond, commodity and equity performance from the past week noting that lower than expected CPI and PPI prints pushed bond yields lower and equities higher. He also discussed the many macro factors that will influence crude oil prices into year end and by highlighted several topical events including unconfirmed reports that Russian missiles had crossed into Poland, the potential fallout from a new divided Congress, the FTX crypto bankruptcy web, and the lack of real substance coming from the COP 27 conference. His slide from today's session is available linked here. Colin Fenton flagged a notable public disclosure from a just-completed secret space mission. This past weekend, the U.S. X37B spaceplane landed after a record 908 days in orbit. While aloft, it conducted experiments for the U.S. Naval Research Laboratory, in which unimpeded solar energy was collected in space, converted into microwaves, and transmitted to ground receivers. Colin also noted the human population has crossed the 8-billion-person threshold for the first time in history, and he shared some observations about how gold is catching a strong bid following the FTX debacle in the crypto space. 

Today we had a fantastic guest join us, Ted Nordhaus. Ted is the Founder and Executive Director of The Breakthrough Institute and a co-author of " An Ecomodernist Manifesto" as well as " The Death of Environmentalism." Ted has spent his career advocating for technical solutions to environmental problems and is a thought leader on energy, the environment, and global climate. We covered a lot of territory in our time together and were thrilled to visit with him! The Breakthrough Institute is a global research center that seeks innovative technological solutions to environmental and human development challenges. We enjoyed learning more about their areas of impact and in our discussion we also touched on Ted's observations on the current state of the environmental world, his recent article in Foreign Policy, the issues with denying developing countries resources and infrastructure to use fossil fuels, Ted's very talented family and its legacy in the environmental world, the geopolitical implications of which countries are funding developing nation's energy growth, nuclear as a prime example of technology that has both scale and impact, the deregulatory movement needed to fix seventies era environmental laws that are still in place, and much more. We could have continued for much longer and greatly appreciate Ted for joining. In our upfront discussion,  Mike Bradley shared bond, commodity and equity performance from the past week noting the widest inversion of two and ten-year US government bond yields since 2000, natural gas pricing's tie to demand over the next few weeks, midterm elections, and COP 27.  Colin Fenton zoned in on oil and gas prices, specifically the difference in probability for NYMEX and WTI prices over the next few weeks compared to 2023. We also had Veriten's nuclear champion  Brett Rampal join for today's session. We hope you will enjoy the session as much as we did. Thanks to you all! 

For this week's COBT, we had the pleasure of hosting Sasha Mackler, Executive Director of the Energy Program at the Bipartisan Policy Center (BPC). The BPC is a Washington, DC-based think tank that prioritizes one thing above all else: GETTING THINGS DONE. That's a mission we can all stand behind. The team at BPC work on what they've defined as critical policy issues for the US including health, immigration, and infrastructure to name a few, by bringing together all relevant stakeholders and finding areas of alignment for action. We were connected with Sasha a few weeks ago and think you will appreciate his background and perspective. We had a fantastic session! Sasha first provides key background on the BPC including their core mission, set of policy issues, and history. The Energy Program is the longest standing policy area the BPC has worked on and currently has ten staff members dedicated to the effort. In our conversation we also cover the necessity for the US to be well positioned in energy technology, why 2050 and 2030 are both important targets, where Sasha sees the possibility for progress after the midterms, Sasha's advice to COP 27 delegates including a reminder that the public sector cannot drive the energy transition alone, how to find a way to bring the oil and gas industry more fully into the policy conversation, the importance of educating the public on energy issues, and more. We wrap with Sasha's view of the world in the next ten years. Mike Bradley kicked us off with an update on commodity and equity markets, noting key themes from earnings and oil majors outperformance this quarter. He also flagged a few key events including the potential for windfall profits tax on oil companies and the release of two recent reports, OPEC World Oil Outlook 2045 and IEA World Energy Outlook. Colin Fenton expanded on the OPEC and IEA reports with a side-by-side look at both. You will hear him reference the interesting contrast of producers talking about consumers (the OPEC report) and conversely consumers talking about producers (the IEA report). Brett Rampal also joined today's session and added his power/electricity perspective to the discussion. Thank you, as always, for your support and friendship! 

Today we had the pleasure of connecting with NJ Ayuk for an Africa-focused energy discussion. NJ is the founder and CEO of Centurion Law Group, a Johannesburg-based energy-focused law firm, and the author of "Billions at Play: The Future of African Energy and Doing Deals." In this capacity, he is among the leading energy dealmakers on the African continent. He is also the Executive Chairman of the African Energy Chamber, a non-profit dedicated to promoting the continent's full potential across all energy verticals. We are always interested in learning more about energy development in the developing world and can't thank NJ enough for sharing his time, expertise, and passion, based on the unique mix of his commercial and philanthropic endeavors.  Our discussion is timely: NJ has just returned from the African Energy Week conference in Cape Town. In our conversation with NJ, we cover the intelligence he gathered at that event and the insights he took away from it. We then discuss his observations on commercial investment and “bankable projects” in Africa, and his views on energy trends over the next 3 to 5 years. He provides his pregame for COP 27 in Egypt and explains why he expects to see a “united Africa” negotiating position in favor of hydrocarbons that may surprise some observers. We somehow found the time to talk about the potential for pan-African integration of supply chains for power generation and home cooking fuels (piped gas long run vs. cannister LPG short run), the critical need for expanding education resources in Africa and how electricity advances that important social good, and NJ’s vision for energy in Africa ten years from now. In his vision of the future, NJ remarks that he hopes more people will realize that “climate change and energy poverty are two sides of the same coin." It struck us as a profound comment we should all be considering.  Mike Bradley started us off with a discussion of global markets and touched on crude oil, earnings, the next Fed rate hike, and implications of the latest power games at the highest political levels in China. Colin Fenton connected the dots on why Waha Hub gas basis prices in the United States dropped below zero today because of events in Europe and explained why "100% natural gas storage utilization" means something entirely different in France than in the United Kingdom, with important implications on why gas storage may soon not be "at 94%" in the EU or Waha basis at "subzero prices."  We hope you enjoy the conversation as much as we did! Our best to you all. 

We have had a really interesting two days in our nation's capital. With the help of Anne Bradbury (CEO) and Liz Bowman (Vice President, Communications) of the  American Exploration & Production Council (AXPC), we spent time in Washington DC on Monday and Tuesday talking to think tanks, energy specialists, Congressional and Senate staff, and other energy players here, trying to get a feel for the current sentiment and future direction around energy. We capped off the experience with a sit-down with Anne at AXPC's headquarters and as you will hear, we touched on many aspects of where things may be headed in the discussion.  Our key observations are that first and foremost, the election is hanging over the city, along with the backdrop of war and energy scarcity in Europe, the potential for recession, the ongoing climate debates, the aftermath of the IRA legislation, and in particular the retail price of gasoline. Anne is a longtime Washington veteran and expert and assumed the reigns at AXPC a little over two and a half years ago. Since then, she has seen COVID, the big climate push, and now the results from various policies (the good, the bad and ugly) and of course an unexpected and dangerous war. Through it all, Anne has continued to grow the membership and reputation of AXPC and has also been a strong voice for increasing energy education. Anne's perspective and overall "Washington-wisdom" was wonderful to get and we hope you enjoy the discussion as much as we did. Just an hour or so after we finished the discussion, the White House put out an energy press release.  The home team kicked us off today:  Mike Bradley hit on bond, commodity and equity performance from the past week, flagging recent decreases in oil and natural gas prices, and highlighted key events including oil service earnings kicking off this week.  Colin Fenton added his global market perspective and shared an important operational update from Rio Tinto. He also helped frame our discussion by sharing data on the number of crude oil barrels in-transit on the water (more than 1.1 billion barrels).We want to thank Anne and the AXPC team for a fantastic visit. For you COBT history buffs, Anne was one of our first guests over two years ago.  We are leaving Washington heading back to Houston with optimism for better policy-making days ahead. There are many smart people on both sides of the aisle increasingly determined to find better answers to the challenges of energy cost, reliability, innovation, climate, and security. Thanks, as always, for all you do! 

For today's COBT, we had the pleasure of sitting down with Liberty Energy CEO Chris Wright. Chris is a fascinating energy mind - his background includes MIT and UC Berkeley mechanical and electrical engineering degrees as well as a broad-based life-long passion for all forms of energy. He was an early shale pioneer and today is Chairman and CEO of Liberty. Chris also dedicates a significant amount of his time talking to policymakers globally about what he feels are the choices society should be making in energy. For the second year, Chris has helped drive the Liberty ESG report to be not just a report on Liberty but more broadly an analysis of energy ESG globally. It's absolutely worth your time and very digestible.  As you will hear, Chris lays out the three global challenges that he sees for energy and environmental policies including solving energy poverty globally (replacing wood and dung with clean cooking fuels could save 2 to 3 million people from death annually), pushing towards reliable and affordable energy systems with minimal environmental impact, and addressing climate change thoughtfully. As we discuss these objectives, you will hear us touch on a broad range of issues and factors. When discussing what the world of energy looks like in ten years, Chris had a really great and unique answer (and goal): "net zero poverty by 2050." It was a stimulating and exciting session with Chris today and we can't thank him enough for joining us.In our upfront discussion,  Mike Bradley summed up bond, commodity and equity performance from the past week and the loud reactions to the recent OPEC+ meeting. Colin Fenton highlighted an important update from the London Metals Exchange concerning Russian metal exports and shared his takeaways from Annie Proulx's new book, " Fen, Bog and Swamp."  Ryan Zorn, Veriten's Senior Contributor, also joined and asked for Chris’s “energy discussion forecast” beyond the elections. Thanks to you all. We hope you enjoy as much as we did! 

Today it was our pleasure to host James West, Senior Managing Director and Partner at Evercore ISI. James heads Evercore's oil service, equipment and drilling research team as well as the sustainable technologies and clean energy team and has an extensive research career covering the OFS sector. As you will hear, we had a hard time wrapping up the discussion as the scope of what James sees, analyzes and discusses daily covers a broad range within energy, across the globe, and across a broad swath of investor types. It was a fantastic discussion. In our conversation today, we touch on James's observations gained from covering traditional/classic energy as well as the clean energy space, his takeaways from recent investor meetings in Switzerland, the United Kingdom, and Italy, his latest insights on the European energy and security crisis and how it may play out, the return of investors to oil and gas, climate investors and their mandates, the revenge of the S in ESG, the meaning of just transition, offshore's role in supply and demand in the coming years, the Evercore energy research group's culture, scope, and overall organization, helpful and harmful energy policies, the appropriate size for the US SPR, and much more. We wrap with James's thoughts on the energy world ten years from now. We had great fun talking with James and hope you enjoy the conversation as much as we did. For the Veriten team's upfront discussion, Mike Bradley highlighted bond, commodity and equity performance, noting rising natural gas production and potential outcomes from the upcoming OPEC meeting. Colin Fenton continued the commodity theme with a look at the market's reactions to a potential cut in production and also shared optimistic observations from recent meetings in Midland. In today's discussion and here in this lead-in, we also want to acknowledge the recent passing of legendary energy industry veteran Steve Chazen and offer our deepest condolences to his family. Steve touched so many of our lives and he and his tremendous contributions will not be forgotten. 

Today we had the pleasure of hosting Jigar Shah, Director of the U.S. Department of Energy Loan Programs Office (LPO). Jigar is a long-time entrepreneur and founder of Generate Capital and SunEdison before leaving the private sector in 2021 to join the LPO. In his current role, Jigar is responsible for leading and directing the organization's focus on connecting low-carbon technologies that are ready to scale with commercial financing. The LPO is the largest private debt fund in the energy space with more than $40 billion in loans and loan guarantees available for innovative clean energy, advanced transportation, and tribal energy projects in the United States. We were thrilled to visit with Jigar. Our discussion covered how Jigar is planning for the long-term while also navigating current industry volatility, the types of risk LPO is willing to take, the LPO team and culture, the office's fundamental mission, color on their robust transaction flow, energy infrastructure permitting issues, the importance and excitement of American energy entrepreneurialism, bridging the gap with traditional oil majors, investor observations, and more. We wrapped with Jigar's vision for the energy world in the next ten years. The Veriten team came in full force for today's session: Mike Bradley kicked us off with an overview of equity and commodity performance from the last week, noting US dollar strength, key upcoming events, and investor topics. Colin Fenton painted the big picture with global markets, price instability, and the Fed. Brett Rampal and Jeff Tillery peppered in their thoughts throughout our visit with Jigar. As always, thank you for your support and friendship! 

We had a fantastic session today with Neil Mehta, Managing Director and Head of North American Natural Resources Research at Goldman Sachs. Neil oversees research coverage for oil and gas, utilities, midstream, metals and mining and clean technology and also leads coverage for large cap energy equities. Neil's coverage and knowledge breadth allowed for a fascinating range of topics. Our conversational tour of today's energy world included background on Goldman's energy research team, how Neil would rank the outlook for the various energy sectors, the current types of investors interested in the energy sector and how it has changed this year, the competition for talent across all industries and why it's particularly important in energy, return of capital and the importance for companies to differentiate themselves, the recently passed IRA, cost of capital and cost of supply, Neil's longer range oil demand outlook, with all of it infused by comments on affordability, reliability, and energy security. We even touched on the all-important "terminal value" issue for energy stocks. Wow... thank you again Neil! To start the show, Mike Bradley reviewed equity and commodity performance from the past week and flagged the upcoming Fed meeting (Wednesday, Sept. 21) and expected basis point rate hike. He then shared four key investor topics for the near and immediate term. Colin Fenton picked up the inflation topic and provided a backdrop of a few non-energy commodity prices, gasoline prices, and US natural gas to illustrate the full extent of what the Fed and we could be facing. Thanks to you all. It was great fun to visit with Neil and we hope you enjoy it as much as we did! Disclosures:The views stated by non-Goldman Sachs personnel do not necessarily reflect those of Goldman Sachs.Goldman Sachs owns 1% or more of a class of securities of SOUTHWESTERN ENERGY COMPANY, MEG ENERGY CORP, KOSMOS ENERGY LTD., PIONEER NATURAL RESOURCES COMPANY and CANADIAN NATURAL RESOURCES LIMITED .EXXON MOBIL CORPORATION, SCHLUMBERGER N.V., OCCIDENTAL PETROLEUM CORPORATION, APA CORP, HESS CORPORATION, MURPHY OIL CORPORATION, OVINTIV INC., PIONEER NATURAL RESOURCES COMPANY, DIAMONDBACK ENERGY, INC., MARATHON OIL CORPORATION, PARKLAND CORPORATION, SOUTHWESTERN ENERGY COMPANY, MEG ENERGY CORP, HELMERICH & PAYNE, INC., HALLIBURTON COMPANY, CENOVUS ENERGY INC., IMPERIAL OIL LIMITED, NATIONAL FUEL GAS COMPANY, LIBERTY ENERGY INC., MAGNOLIA OIL & GAS CORPORATION, NOV INC., PHILLIPS 66, HF SINCLAIR CORPORATION, CONTINENTAL RESOURCES, INC., DEVON ENERGY CORPORATION, COMSTOCK RESOURCES, INC., RANGE RESOURCES CORPORATION, MARATHON PETROLEUM CORPORATION, BAKER HUGHES COMPANY, COTERRA ENERGY INC., EOG RESOURCES, INC., QUANTA SERVICES, INC., CHEVRON CORPORATION, CONOCOPHILLIPS, CANADIAN NATURAL RESOURCES LIMITED and SUNCOR ENERGY INC. are clients of Goldman Sachs that received investment banking services in the last 12 months.EXXON MOBIL CORPORATION, SCHLUMBERGER N.V., OCCIDENTAL PETROLEUM CORPORATION, VALERO ENERGY CORPORATION, APA CORP, HESS CORPORATION, OVINTIV INC., PIONEER NATURAL RESOURCES COMPANY, DIAMONDBACK ENERGY, INC., MARATHON OIL CORPORATION, PARKLAND CORPORATION, SOUTHWESTERN ENERGY COMPANY, MEG ENERGY CORP, HELMERICH & PAYNE, INC., HALLIBURTON COMPANY, CENOVUS ENERGY INC., IMPERIAL OIL LIMITED, NATIONAL FUEL GAS COMPANY, LIBERTY ENERGY INC., PHILLIPS 66, HF SINCLAIR CORPORATION, KOSMOS ENERGY LTD., CONTINENTAL RESOURCES, INC., DEVON ENERGY CORPORATION, COMSTOCK RESOURCES, INC., RANGE RESOURCES CORPORATION, MARATHON PETROLEUM CORPORATION, BAKER HUGHES COMPANY, COTERRA ENERGY INC., EOG RESOURCES, INC., CHEVRON CORPORATION, CONOCOPHILLIPS, CANADIAN NATURAL RESOURCES LIMITED and SUNCOR ENERGY INC. are clients of Goldman Sachs that received non-investment banking securities related services within the last 12 months.EXXON MOBIL CORPORATION, SCHLUMBERGER