C.O.B. Tuesday

In this enlightening discussion, Dr. Salvatore Mercogliano, an Associate Professor of History at Campbell University and maritime expert, dives deep into the recent dockworkers' strike and its repercussions on the energy sector. He highlights the tension between unions, the impact of COVID-19 on shipping profitability, and the looming challenges of automation. Dr. Mercogliano also paints a picture of an increasingly expensive shipping landscape in the next decade, influenced by geopolitical tensions and evolving environmental regulations.

Join Toni Stojcevski, General Manager of Project Sales & Development at Wärtsilä Marine, and David Millar, Principal of Markets at Wärtsilä Energy, as they dive into the crucial role shipping plays in the global economy. They explore Wärtsilä's innovations in alternative fuels and the complexities of transitioning from bunker fuel to cleaner energy. The urgency for the shipping industry to achieve net-zero emissions by 2050 is emphasized, along with the significant investments required and the challenges ahead in navigating effective decarbonization strategies.

Many of you have likely noticed, as we have, some of the news coming out of Delaware about certain rulings, the debate around those rulings, and the subsequent debate around actions taken by the legislature to clarify Delaware law. As we’ve read about these developments, we were intrigued and turned to the team at Wachtell, Lipton, Rosen & Katz (WLRK) for their thoughts on these matters. We were extremely pleased to have Ryan McLeod, Partner, and Dan Neff, Partner and Member of the Executive Committee, join us for a far-ranging and intriguing discussion on these issues. Ryan joined WLRK in 2013 and specializes in representing corporations and directors in litigation involving mergers and acquisitions, proxy contests, corporate governance disputes, and class and derivative actions involving allegations of breach and fiduciary duty. He also serves as a Lecturer in Law at Columbia and has extensive experience litigating corporate matters in the Delaware Court of Chancery and the Delaware Supreme Court. Dan has over four decades of experience advising major companies in high-profile transactions and served as WLRK’s Co-Chairman for 20 years through October 2023. He specializes in mergers and acquisitions, corporate governance, and securities law and has represented clients in a broad range of industries including energy, technology and telecom, chemicals, pharmaceuticals, manufacturing/industrials, retail/consumer products, gaming, and more. In our conversation, Ryan first provides perspective on Delaware’s importance to corporate law and the large percentage of companies that are incorporated there. Ryan walks us through three specific legal rulings that prompted amendments in Delaware including the Twitter stockholder litigation, the Activision merger case, and a case involving contractual governance and shareholder veto rights. We discuss the significant and unique amount of public debate surrounding these amendments, the practical impact of Delaware rulings on corporate governance, particularly in activist settlements and private equity deals, and the implications for boards and corporate lawyers. We also touch on whether these developments might lead boards to become more cautious in decision-making, the historical context of Delaware appraisal cases, and changing complexities around CEO compensation. We explore the Caremark Doctrine’s increasing relevance in corporate governance, the complexity of preparing board minutes to show transparency and thoroughness without over-disclosing, and emerging corporate governance risks. Ryan and Dan also share their insights on what sets Delaware law apart from other states, how companies manage external pressures from activism, the future of corporate governance, and much more. Thank you, Ryan and Dan, for sharing your insights and expertise with us all! We learned a tremendous amount. Mike Bradley kicked us off with a few updates. He noted that the FED’s 50-basis point rate cut was initially received well, but since then, most markets have traded sideways. On the bond market front, the 10-year U.S. bond yield actually increased as the rate cut was mostly expected. He noted consensus around additional rate cuts in 2024 and 2025. He also noted that the 2yr/10yr bond yield spread widened to ~20-basis points after being inverted for the past two-plus years. On crude oil, WTI price has traded sideways this week (~$71/bbl) and Mike discussed several positive developments which could temporarily be supporting crude oil prices including a Chinese stimulus program, continued historic “net short” length in Brent futures and growing Mideast conflict. OPEC published its annual World Oil Outlook this week (linked here) and again raised its global oil demand estimates (~113mmbpd for 2030 & ~120mmbpd for 2050) which is well above the view of many others. He then flagged that this week is Climate Week in N

Today we were delighted to welcome back our good friend Roger Pielke Jr. for an engaging discussion on the evolving climate policy and energy landscape. Roger is the author of “The Honest Broker” on Substack which reaches 30,000+ subscribers across 153 countries. He is a Nonresident Senior Fellow at the American Enterprise Institute where he focuses on science and technology policy, the politicization of science, government science advice, and energy and climate. Since 2001, Roger has served as a professor in the Environmental Studies department at the University of Colorado Boulder and will retire from academia at the end of 2024. We last hosted Roger on COBT on September 29, 2023 (episode linked here) and were excited to get him back to hear his latest insights on how the world has changed in the past year, especially in the climate community. Roger joined us from Tokyo, where he is speaking at a Symposium hosted by the University of Tokyo on Japanese energy strategy and climate policies. In our conversation, we discuss how 2023 so far has been one of the most inaccurate in seasonal hurricane forecasting history with fewer named storms than predicted, the history of hurricane forecasting, and the groups and organizations responsible for hurricane season predictions. Roger shares his perspectives on the complexity of climate modeling and its limitations, human impact on climate and the importance of focusing on risk management rather than debating the future, and Japan’s energy landscape and how it’s a serious national security issue for the country. We explore the debate within the climate science community about the accuracy and relevance of current climate scenarios, the slower pace of climate modeling with updates every 10-20 years, the importance of understanding historical climate variability to better prepare for the future, and critical population assumptions in climate models. We touch on the need for improved communication in climate science and energy policy, future trends for climate science, Roger’s diverse audience, and much more. It was a fascinating discussion and we greatly appreciate Roger helping us understand this complex field better. Mike Bradley opened the conversation by highlighting that most markets so far this week (bonds, commodities, currencies & equities) were focused on Wednesday’s FOMC Rate Decision Meeting (1pm CST). On the bond market front, the 10-year U.S. bond yield was unchanged this week (~3.65%). He noted that odds last week had favored a 25-basis point interest rate cut but that consensus had shifted this week to a 50-basis point cut. He further noted (excluding 2001 & 2007 recessions) that the S&P 500 has typically rallied a little over 10% in the 6-months following the beginning of interest rate cuts. On the crude oil front, WTI surged back above $71/bbl after recently bouncing off a strong technical trading support level of $65/bbl. Mike shared a chart that exhibited Brent Oil Managed Money Net Long Contracts vs Brent Oil Price and noted that this was the first time, in the last 10-15 years, that Managed Money was actually “net short” Brent oil future contracts. This signifies that oil traders are extremely bearish Brent oil futures for what they see as a slowing global economy, surging non-OPEC oil production growth and oversupplied global oil S/D in early 2025. He further noted that this “net short” position was larger than it was in April 2020 (Brent price ~$20/bbl) which also seems to signal that oil traders today aren’t fearful that OPEC can or will curtail additional barrels (like in previous go-arounds) to balance global crude oil markets. Brett Rampal highlighted this week’s announcement of the NRC’s issuance of a construction permit for the Natura Resources Molden Salt Reactor (Natura MSR-1) at Abilene Christian University, marking the first liquid salt fueled reactor licensed by

Today we had the pleasure of hosting the team from Cornerstone Government Affairs for an engaging discussion on energy policy and the upcoming US Presidential Election with Jack Belcher, Principal, John Sandell, Principal, and Sarah Venuto, Principal and Counsel. Cornerstone is an independent bipartisan consulting firm specializing in federal and state government relations, public affairs, political and grant consulting, and business advisory services. Jack, John and Sarah are seasoned experts in navigating the complexities of Washington DC. Jack has over 30 years of experience in energy and energy policy and previously held roles as Manager of Regulatory Affairs and Policy at Shell and Staff Director for the US House Subcommittee on Energy and Mineral Resources. John is an expert in tax policy and formerly served the members of the US House Committee on Ways and Means. Sarah previously served as Director of the Office of External Affairs at the Federal Energy Regulatory Commission, Senior Advisor and Chief Counsel to Senator Joe Manchin, and Democratic Staff Director for the Senate Energy and Natural Resources Committee. We were thrilled to connect with the Cornerstone team to explore this timely and important topic. Our conversation centered on a report Cornerstone published entitled “A Guide to Forecasting Energy Policy In The Next White House: Trump V. Harris” (linked here). Jack first provides background on Cornerstone’s history and growth into the largest independent government relations firm in DC. We touch on the implications of the Chevron Deference case on regulatory agencies, its significance for future energy policy and regulation, and how it will impact Congress and the need for additional technical expertise there. We cover the complexities of Presidential Administration changes and challenges of transitioning political appointments, the future of the Inflation Reduction Act under different administrations, and efforts to streamline permitting and infrastructure development. Jack, John and Sarah offer their insights on how a Trump or Harris administration might approach energy policy and rising energy prices for businesses and consumers. We discuss areas of bipartisan support including nuclear energy, tariffs, alternative fuels, and competition with China, how the next administration might balance state-level initiatives with national policy, the upcoming 2025 Tax Debate led by the Ways and Means Committee, and much more. It was an insightful discussion and we want to thank Jack, John and Sarah for sharing their perspectives and time with us on a busy day in DC. Mike Bradley opened the conversation by highlighting that broader equity markets were down Tuesday driven by JPMorgan Chase’s cautious comments. In the bond market, the 10-year U.S. bond yield traded at ~3.65, down 20-30bps in recent weeks. The U.S. 2yr/10yr yield bond spread flipped back to positive after two years of inversion, this type of flip after a lengthy period of backwardation tends to precede recessions. He noted the importance of this week’s economic reports with August CPI & PPI and Initial Jobless Claims reporting over the next couple of days. On crude oil, he also shared a chart of the WTI crude oil curve and noted that the curve structure had flattened out through 2035, primarily due to concerns over global/China oil demand after being in steep backwardation over the prior 3mo, 6mo & 12mo periods. He concluded by mentioning that crude oil prices were technically oversold, with traders remaining bearish but waiting for significant changes in global oil demand to unwind net short bets. Jeff Tillery built on Mike’s comments and noted the demand concerns and OPEC’s spare capacity reducing upside optionality for long-term investors. Brett Rampal highlighted a significant

We are thrilled to share this COBT episode recorded live from Plant Vogtle featuring John Williams, Senior Vice President of Technical Services and External Affairs at Southern Nuclear, John Kotek, Senior Vice President of Policy Development and Public Affairs at the Nuclear Energy Institute (NEI), and Bill Flores, Vice Chairman of ERCOT and Veriten Senior Advisor. Brett Rampal and I had the pleasure of traveling to Waynesboro, GA for an exciting tour of Vogtle to see the completed units before sitting down with John Williams, John Kotek and Bill Flores for their perspectives on Vogtle and the broader nuclear energy landscape in the US and globally. Vogtle is the largest generator of clean energy in the US and is jointly owned by Georgia Power, Oglethorpe Power Corporation, the Municipal Electric Authority of Georgia and Dalton Utilities. The plant was named after Alvin Vogtle, a past Chairman, President and CEO of Southern Company and World War II veteran. The film “The Great Escape” was based in part on Mr. Vogtle’s courageous wartime experiences (additional history linked here). In our conversation, John Williams first shares key background on Units 3 and 4 and how they’ve improved upon Units 1 and 2 in terms of technological advancements and safety features. We discuss the massive project of constructing Units 3 and 4, which involved a workforce of over 11,000 on-site employees, the economic benefits of nuclear facilities, the costs associated with building and operating nuclear plants, the US and global outlook for constructing additional AP1000 units, and the impact of nuclear energy development in the US, as well as its broader implications for global energy security. We touch on the obstacles faced during the construction of Vogtle 3 and 4 including regulatory challenges, the Fukushima incident in Japan, the bankruptcy of Westinghouse in 2017, and the impact of COVID-19 in 2020. In building the new units, Southern Company also faced the difficulty of finding an experienced workforce and re-creating a nuclear supply chain with Units 3 and 4 being the first new build nuclear plants in the US in 30 years. The scale of the project and site really struck us and John Williams put that into perspective when he pointed out that the concrete used for the expansion could lay a sidewalk from Waynesboro to Seattle and back. We also cover the safety and security of the facility, concerns over losing expertise as nuclear workers move to other industries with no other nuclear plants currently being built in the US, nuclear waste management, the growing appeal of nuclear energy careers to students, and much more. We were highly impressed with the entire experience and are excited to share our findings with you. Mike Bradley wasn’t able to join the Vogtle field trip but passed along his market observations. He noted that markets (bonds, commodities and equities) all traded lower on Tuesday. From a broader equity market standpoint, the S&P 500 (-2.2%) and Nasdaq (-3.2%) were both pressured lower on Tuesday due to a substantial pullback in the S&P Technology sector (-4.4%) and shares of NVIDIA (-9.5%). Additional pressure could befall the S&P 500 given that September is historically the “worst” performing month for the S&P 500 by far, with the average September decline (over the last five years) being just over 4%. From a crude oil standpoint, WTI price traded down ~$3.25/bbl (closing at ~$70.25/bbl) on news that Libya was looking to restart ~0.5mmbpd of crude oil exports that had been temporarily curtailed. Goldman Sachs downgraded its long-held bullish copper call (mostly due to signs of slowing Chinese copper demand), which is also one of the main culprits that has been hanging over crude oil markets slowing global oil demand concerns. Given that this week’s COBT focus was on Vogtle, he rounded

Senator Kay Bailey Hutchison, a former US Ambassador to NATO and a founding member of the KBH Energy Center, joins energy expert John Rutherford for an insightful discussion. They share details about the upcoming Symposium focused on tackling today's energy challenges. Key topics include innovative collaboration in energy education, emerging trends like LNG, and the geopolitical implications of the Ukraine conflict. The conversation emphasizes the importance of resilience and leadership in shaping the future of the energy sector.

Bill Von Gonten, Founder and CEO of W.D. Von Gonten Engineering, discusses his extensive experience in the oil and gas industry, particularly the Vaca Muerta shale play in Argentina. He compares its vast potential to the Eagle Ford formation, highlighting unique geological advantages and significant export capabilities. Bill also delves into Argentina's economic and geopolitical landscape, exploring how these factors could transform its energy market. His insights reveal a promising future for the region's oil and gas sector on the global stage.

We are thrilled to bring you this Special Edition COBT, featuring an exciting preview of the upcoming Houston Energy and Climate Startup Week taking place from September 9th – 13th. We had the pleasure of visiting with the event’s key organizers including Jane Stricker, Senior VP Energy Transition and Executive Director of the Houston Energy Transition Initiative (HETI), Brad Burke, Executive Director of the Rice Alliance for Technology and Entrepreneurship, Dale Winger, Managing Director of Halliburton Labs, and Timmeko Moore Love, Houston General Manager and Senior Vice President of Greentown Labs. Each of these leaders has played a pivotal role in fostering Houston’s energy and technology community and we were delighted to have them join us. Houston Energy and Climate Startup Week will bring together leading venture capital investors, industry leaders, and startups in the energy and climate sectors to showcase innovative companies and technologies that are shaping the future of energy. In our conversation, the group provides an overview of the event and the key players involved, the vision behind the event and collaboration among various organizations in fostering technological advancements, a detailed breakdown of the week’s activities including a block party, industry leadership gatherings, investor speed networking with the Rice Alliance, Halliburton Labs Finalist Pitch Day, and the Greentown Labs Climate Impact Awards Gala to note a few. As you will hear, multiple organizations are planning private gatherings around the week’s events. We also hear from each organization on their latest developments and discuss Houston’s energy and climate tech ecosystem broadly. A detailed schedule and registration details for the Houston Energy and Climate Week is linked here. A special thanks to Jane, Brad, Dale and Timmeko for joining. We hope to see you all in Houston in a few weeks!

Samantha Dart, Head of Global Natural Gas Research at Goldman Sachs, shares her expertise in the evolving natural gas landscape. She discusses the anticipated rise in global LNG capacity and its implications for U.S. natural gas producers. Samantha examines future price trends and the impact of energy transition challenges. She also sheds light on European industrial demand facing rising costs and the complexities of the U.S. LNG market. Dive into insights about how geopolitical factors are reshaping energy strategies and pricing dynamics.