C.O.B. Tuesday

We are pleased to share with you a unique and special COBT episode. Late last week, The KBH Energy Center in partnership with Vinson & Elkins and Veriten, hosted a discussion in Houston featuring Senator Kay Bailey Hutchison and Secretary Dan Brouillette. Senator Hutchison is a Founding Member of The KBH Energy Center and most recently served as the US Ambassador to NATO following a distinguished career spanning both the public and private sectors. Secretary Brouillette is an Executive Council Member for The KBH Energy Center, the President and CEO of Edison Electric Institute (EEI) and former president of Sempra Infrastructure. He is a respected leader in the energy, finance and automotive sectors and also served as the Secretary of Energy. The combined extensive experience of Senator Hutchison and Secretary Brouillette in geopolitics and energy laid the groundwork for a wide-ranging and fascinating discussion. We were thrilled to moderate this unique COBT discussion in front of a live audience at Vinson & Elkins’s offices. Senator Hutchison first shares the unique features of the KBH Energy Center including its focus on traditional oil and gas as well as emerging technologies and its multidisciplinary nature with involvement from the business, law and engineering departments at the University of Texas. We discuss the paramount importance of energy security for America, the state of energy policy, geopolitical considerations with Ukraine and Israel, and the importance of American leadership, especially in organizations like NATO. As you’ll hear, Senator Hutchison recently wrote an article for the Atlantic Council that focused on the immediate need for stronger and more deliberate American leadership (linked here). Secretary Brouillette touches on the complexities of the energy transition, advancements in drilling technology and battery storage, the role of natural gas, power demand considerations, and economic challenges the US faces, including its stunning national debt. In our conversation, we also touch on future plans for The KBH Energy Center, the importance of involving young people in discussions about energy and the exciting opportunities they’ll have to shape the industry. In this unique COBT, the fundamental importance of energy to everything we care about as a society was a driving theme. Senator Hutchison and Secretary Brouillette have both made significant contributions to energy policy and the industry and it was both an honor and super thought-provoking to get their perspectives on today’s world. There are some serious issues for us all to be considering. We want to thank our friends at the KBH Energy Center and V&E for including us in the discussion and hope you find it as interesting as we did!

We have been paying a lot of attention to and thinking a lot about power, power costs, power reliability, power systems, access to power, etc., and have focused a number of episodes on these issues. Earlier this June, we had a great conversation with John Bear, CEO of MISO (episode linked here) and in that discussion, we asked John what the country could be doing to better understand the system and reliability issues as a whole. John informed us that there was indeed such an organization dedicated to those issues and that we needed to connect with Jim Robb, President and CEO of the North American Electric Reliability Corporation (NERC). At John’s suggestion, we reached out and are thrilled to host Jim for today’s COBT episode.   Jim joined NERC in 2018 and has over 35 years of experience in the power and energy sectors across engineering, consulting, and senior leadership roles at Western Electricity Coordinating Council, Northeast Utilities, Reliant Energy, and McKinsey. NERC is a non-profit regulatory authority whose mission is to assure the reliability and security of the North American bulk power system including the continental United States, Canada, and the northern portion of Baja California, Mexico. A detailed overview of NERC’s history is linked here. We were excited to visit with Jim and hear his valuable insights into the evolving and complex nature of the power grid.   Jim first provides background on the structure and mission of NERC and the growth in electricity usage driven by economic and technological developments and changing consumer habits. We then delve into the need for improved infrastructure development, supply chain issues, especially in securing transformers, and the importance of prioritizing transmission development as a vital part of the energy transition. Jim further describes the interaction between NERC and various entities including ISOs, market designers, and PUCs, as well as NERC’s oversight of grid operation entities and their collaborative approach in setting and enforcing standards. We also discuss NERC’s standards, and as you’ll hear, Jim describes them as guidelines for preserving the collective performance of the entire system. In our conversation, we also touch on the challenges and opportunities with new battery technologies, the integration of renewables into the grid, the importance of natural gas for maintaining stability, implications of increasing demand and the need for long-duration energy storage technologies, the likelihood that the cost of electricity increases in the coming years due to the transformation of the grid, and much more. We walked away with a greater appreciation for the work Jim and the team at NERC are doing and appreciate Jim sharing his time and perspective with us today.   Mike Bradley kicked us off by highlighting that equity markets have had a substantial rally over the last week, attributed to lower bond yields and interest rates. He pointed out the significant drop in WTI crude price this week to $77.50/bbl. and emphasized the importance of WTI maintaining this technical trading level, or risk downside to trading support levels of $72-$73/bbl. He highlighted the plunge in crude oil time spreads due to recent weak Chinese economic data and Mideast turmoil that still seems to be contained. Additionally, he emphasized the significance of the upcoming OPEC meeting on November 26 for crude oil. He highlighted recent datapoints from electric utility Q3 conference calls and noted that a leading Southeastern electric utility was going to be increasing their electricity sales growth over the next five years from prior levels of 0-1% up to mid-high single digits. He further noted that this type of electricity sales uplift is unprecedented and that several other utilities are al

Today we were thrilled to be joined by Dr. Alexis Crow, Partner and Global Head of the Geopolitical Investing Practice at PwC. Alexis is a Council Member of the World Economic Forum, a Member of the Council on Foreign Relations, a Senior Fellow at Columbia Law School, and a Former Senior Fellow of the Atlantic Council. Her research is focused on financial stability, the future of trade and globalization, global energy markets, and investing in real assets, technology, and the future of the consumer. Alexis joined PwC in 2015 and her team helps companies and investors globally think about portfolio risk and portfolio strategy, investment data analytics and also frequently engages with boards as part of their practice. It was our pleasure to host Alexis and we learned a great deal on our global macroeconomics “magic carpet ride.”   In our discussion, Alexis shares background on her team and the main questions clients are facing across various industries. We discuss PwC’s differentiation with their global macroeconomics expertise, how Alexis divides her time globally and domestically, and PwC’s diverse client base in corporates, energy, media, private markets, and real estate. Alexis shares her perspective on the geopolitical landscape in the more complex world we face today in comparison to when she joined PwC in 2015, including the shifting dynamics between the US and China, the recurring concern of the direction of interest rates and the underlying sources of inflation, the interconnectedness of energy costs and inflation, the implications of the upcoming Presidential election, in particular for energy and immigration, and strategies for international expansion for smaller companies. We also discuss the challenging geopolitical landscape in the Middle East and Latin America and their respective complex dynamics, the US budget deficit and concerns about its impact, how other countries have successfully utilized productive debt for growth, the skills needed in energy companies for future economic growth, the implications of AI advancement over the next 20-30 years, and the emergence of new geopolitical standards. Alexis was gracious with her time and we ended with asking for her thoughts on governmental intervention in free markets over the next decade. We covered a great deal of territory and appreciate Alexis sharing her unique insights with us all.   Mike Bradley kicked us off by emphasizing the anticipation around tomorrow’s FOMC meeting, with consensus suggesting the FED will temporarily pause interest rate hikes. He highlighted that WTI crude oil price has recently dropped in the last few weeks and is now trading below levels prior to the October 7th Hamas attack on Israel. He noted the market’s seemingly unwarranted confidence in the stability of the Mideast and further highlighted a handful of key energy transition events over the past week that have set back transition expectations. He wrapped by noting that the Panamanian Government (an investor friendly business regime) recently caved into protestors’ demands for a referendum on the recently approved Cobre Panama copper mine deal, and that this move highlights that governmental risks for the backbone of energy transition (mining) are real. Arjun Murti chimed in with his thoughts on the need for energy companies to consider global expansion with the maturation of the shale industry, the associated challenges faced by companies operating internationally, and the inherent difficulty of the energy business. He also discusses the role of European supermajors in meeting global energy demands and raises the question of how smaller domestic companies can successfully venture into international markets, with the challenges they may encounter without the resources and scale of larger corporations.   We greatly enjoyed our global discussion with Alexis today and hope you find it as interesting as we did. Tha

We were honored this past week to welcome back renowned author Walter Isaacson for a Special Edition COBT episode. Walter is a Professor of History at Tulane University and a Distinguished Fellow at the Aspen Institute. He is also a good friend and someone with whom we are always thrilled to visit.   In his wide-ranging career, Walter has served as the Editor of TIME magazine, Chairman and CEO at CNN, and CEO of the Aspen Institute. As you may know, Walter has previously written on other fascinating people including Leonardo da Vinci, Steve Jobs and Henry Kissinger. Most recently, he has published his latest work entitled "Elon Musk." Mike Bradley, Todd Scruggs and I were so excited to visit with Walter and hear his unique insights on his time spent with Elon, discuss the overall process of researching and writing the book, and dig in to unique anecdotes about Tesla, SpaceX, and Twitter (X). We three read the book in preparation for the discussion and can absolutely recommend it. We learned a ton!   Walter begins our conversation by sharing his personal interest in writing Elon’s biography as the next feature in his series of books highlighting individuals ushering in a new era. Walter shares the course of events that sparked the book, starting with a two-hour phone call followed by a tweet from Elon that confirmed his appointment as his biographer. Elon’s tweet put Walter on the roller coaster of being by Elon’s side for two years, witnessing everything from business meetings and interactions with his family to rocket launches and late night factory line visits. We discuss the internal purpose and sense of mission that drives Elon, the urgency he expects from everyone around him, and his unique appetite for risk. Walter and the book take us on a journey from Elon’s childhood days in South Africa to emigrating to Penn to PayPal to SpaceX and up to and including his experience buying Twitter. With a lot of stops along the way! Walter shares the risks Elon took with building and launching the first at-scale private rocket company and the complicated situation he found himself in with Starlink satellites, especially in Ukraine. For those of you who are interested, we previously had the opportunity to visit with Trey Mendez, Mayor of Brownsville and tour SpaceX and found the SpaceX stories particularly interesting (episode linked here). When we weren’t talking SpaceX and everything that came with it, we of course discussed Tesla, Elon’s plunge into AI, what Elon refers to as "the algorithm," and many other aspects of one of the world’s most impactful people. We want to thank Walter profusely for sharing his time and thoughts with us. He clearly had a fascinating firsthand experience pulling together what is an absolutely gripping read.   For those of you in Houston, Brazos Bookstore in partnership with Halliburton Labs and Veriten is hosting a live open-to-the-public discussion with Walter on Sunday, November 12th the Ballroom at Bayou Place at 5:00 PM CT. Tickets must be purchased in advance and are available linked here.   We look forward to seeing Walter in Houston and hope you enjoy the book and discussion as much as we did! Our best to you all.

Chris Birdsall, Director of Economics and Energy at Exxon Mobil, discusses long-term energy demand, forecasts vs. scenarios, emissions outlook compared to Paris-aligned goals, global energy demand growth, renewables and natural gas generation, and challenges in balancing human development with emissions reduction efforts.

We have a Special Edition COBT episode to start the week focused on recent events in Israel. Mike Bradley and I were pleased to be joined by Mark Medin, Executive Vice President of the UJA-Federation of New York, to discuss the organization’s efforts in aiding Israel, providing assistance to the Jewish community broadly, and sharing the UJA’s informational resources with all of us. Through good friends, we first learned about the UJA a couple of years ago and have been subscribed to their mailing list ever since. Just after the attacks on October 7th, through their communications we became instantly aware of how connected they are to the situation as the CEO of the UJA was on the ground in Israel (his first message after the attacks is linked here). Like many of you, we’ve wondered how we can be helpful and get involved with humanitarian support. We immediately thought of the UJA as a resource and are so pleased they joined us on COBT to share their knowledge of the situation. The UJA-Federation’s work has a massive footprint and their reach spans 70 countries to care for people in need, promote justice and inclusion, respond to antisemitism and global crises, and strengthen Jewish life. In response to the Hamas terrorist attacks on October 7th, the UJA-Federation has remarkably already raised $100 million for the pressing needs of the people of Israel. In our discussion, we first ask Mark for his perspective on what it’s like on the ground in Israel and how the UJA-Federation is supporting humanitarian efforts with trauma care, relocation assistance, travel, food, housing, clothing, and more. We discuss the organization’s swift response in sending financial support (they have allocated $29 million to various charities already), the impact of false media claims on public opinion, understanding the West Bank, the bad actors versus the majority of peace-seeking citizens in Palestine, concern with global markets’ calmness since the attack, other countries’ involvement and history, the coming together of Jewish communities globally to stand up for the people of Israel, and more. The continuing humanitarian needs remain immense and dire. We greatly appreciate Mark and the UJA-Federation for their work and for sharing their important perspective. The UJA-Federation has several resources available on their website (linked here) to find information on recent developments, community events and local resources, along with the organization’s emergency fund for Israel (linked here). Veriten has made a donation. We hope you find the discussion informative and also helpful in understanding the tragic events of the last two plus weeks. Our best to you all.

We are pleased to share with you a very unique and special COBT episode that provides a glimpse into America’s proud energy past and highlights some of the great life lessons the American West and the oil patch can impart. Today we had the great pleasure of visiting with Hank True and Dave True of the True Companies. The True family is celebrating the 75th anniversary of True Companies, which was founded by Dave and Hank’s father, Dave True, Jr. in 1948. True Companies includes the following businesses: True Oil, True Drilling, True Ranches, Toolpushers Supply Company, Black Hills Trucking, Measurement Services LLC, Bridger Pipeline LLC, Eighty-Eight Oil LLC, Equitable Oil Purchasing Company, Hilltop Bank, Flowstate, and Brick and Bond, in addition to numerous other ranches and properties. The 75th anniversary celebrations are being held in Houston, Oklahoma City, and the Company’s headquarters city of Casper, Wyoming. The significance of the Company to the state of Wyoming and to energy can clearly be seen in the description of the Company’s anniversary from this summer’s Congressional Record, linked here.   You’ll hear many interesting points in our discussion. True Companies is an extremely large and complex organization, with approximately 1,150 employees in eleven states. Their business includes several aspects of energy including pipelines, oil and gas, oilfield services, technology, as well as agriculture and banking. What drew us to the Trues was not just the 75th anniversary but their reputation for leadership, involvement in the community, and their extensive and rich history. Large family-owned companies are becoming more rare in today’s modern world and it is refreshing to see the mindset of a private enterprise as they face challenges and take advantage of opportunities. Hank and Dave’s brotherhood/partnership is fascinating to watch as they reflect on the love and respect they have for their parents, how their parents raised them, lessons from summers spent in a modest cabin, and as they share wisdom learned from now three generations of an energy company and the ruggedness and toughness that was instilled in them. Their family’s story is a reminder of the American dream, building something from nothing, and of the energy industry’s grit and determination. It was a fantastic conversation and we are most honored the True brothers would share their reflections with us.   Mike Bradley kicked us off by sharing concern over global markets as they remain remarkably calm despite the Israeli-Hamas war. He highlighted that 10-year bond yields have surged from Friday’s close of 4.6% due to strong retail sales stats and are pushing towards trading highs of 4.9%. While bond traders expect the FED will pause rate hikes at the upcoming November 1st FOMC meeting, hotter than expected economic stats could change their calculus. He noted WTI crude oil prices have seen a modest increase over the past five trading days, reaching around $87/bbl., and that crude oil price volatility seems to be influenced weekly by demand or supply concerns, with this week’s supply concerns dominating including Cushing and SPR crude oil storage levels. He flagged the Biden Administration surprised the market by announcing an easing of Venezuelan oil sanctions and further noted crude oil traders are much more concerned with what direction the Biden Administration might take on Iranian crude oil sanctions. He wrapped by highlighting Oil Services Q3 reporting begins this week with Liberty Energy and Schlumberger reporting this week. Jeff Tillery also joined and added his perspective and questions in our discussion.   We were delighted and very thankful to visit with Hank and Dave. As we shared at the end, everyone we’ve come across that knows the True family holds them in high re

Today we had the pleasure of hosting Christopher Mohajer for a discussion centered around batteries and battery technology. Chris serves as the Director of Battery Technology Equity Research at U.S. Capital Advisors (USCA) and has a background in technical sales, having previously worked with Digatron Power Electronics, a supplier of battery test and formation equipment. Before that, he held several roles at the California Clean Energy Fund. Last year, Chris and the USCA team published a comprehensive report highlighting batteries as a pivotal component for decarbonization. We were thrilled to visit with Chris and discuss the latest developments and trends in the world of batteries. Our discussion today started with Chris’s background and what drew him to batteries originally. It was here that he made his light-hearted comment around being the “accidental battery guy.” At the heart of today’s discussion, Chris walked us through about 15 slides pulled from his and his team’s work on batteries. The presentation slides are linked here. In the presentation, Chris covers battery history from lead acid to today, the different battery chemistries, the metrics for measuring battery performance, the tradeoffs between performance, cost, and safety, cathode and anode technology developments, and the surprisingly lengthy duration to bring new technology to market. Chris also shares insights on battery production, the battery supply chain, and the importance of permitting and potential for the US to develop its own battery supply chain if the right conditions are met. Whether you are new to batteries or well-versed, Chris’s overview is very likely to be interesting to you. Today’s other discussion topics included mining challenges, battery market growth, battery innovations, proposed US battery factories, utility-scale storage, the role of batteries on the grid, public equity investor sentiment, and more. We ended with asking Chris what he thinks the future of batteries will look like in ten years. He is definitely bullish on their role in our future energy systems. We want to thank Chris for joining us today and for providing a great and detailed overview. We learned a lot and look forward to continuing to follow Chris and his team’s insights. Mike Bradley kicked us off by pointing out the remarkable stability in global markets since the breakout of the Israeli war with Hamas. He observed that both US bond and equity markets have traded higher, and that equity market volatility has actually fallen. He flagged that 10-year bond yields have pulled back from Friday’s close of 4.8%, are trading at ~4.65%, for what looks to be a temporary rush to safety. Mike also noted that this week’s CPI & PPI prints will be important in determining whether the FED will pause/raise rates at their November FOMC meeting. He highlighted the modest increase in WTI crude oil price this week (~$3.00/bbl.) and also indicated that it had underperformed most trader’s expectations. He noted that crude oil traders will be very focused on Cushing weekly inventory levels, with consensus looking for a slight build, but that an unexpected draw could push WTI price/time spreads much higher. He rounded out the conversation by flagging that Q3 reporting is set to begin mid-next week with a handful of oil service companies. Todd Scruggs also joined today’s discussion and shared a few observations upfront, including both positive developments as well as potential challenges in battery technology and manufacturing. We greatly enjoyed the conversation with Chris and hope you enjoy it as much as we did. Our best to you all!

It was our honor today to welcome General David Petraeus (US Army Retired), Partner at KKR and Chairman of the KKR Global Institute. General Petraeus’ distinguished military career spans over 37 years of service, marked by six consecutive commands as a general officer including leadership of the US-led coalitions in both Iraq during the surge and Afghanistan. Following his military service, General Petraeus served as Director of the CIA during a period of significant achievements in the global war on terror before joining KKR in 2013. In addition to his roles at KKR, General Petraeus serves as a board member, strategic advisor, and lecturer. He has earned numerous honors, awards, and decorations for his outstanding service to our country. General Petraeus has also recently co-authored a new book with British historian Andrew Roberts entitled “Conflict: The Evolution of Warfare from 1945 to Ukraine.” We are thrilled to have had the opportunity to visit with General Petraeus about the book, which is set to be officially published on October 17th. Our team read advanced copies and found it to be thoroughly insightful. As you will hear in today’s episode, we covered a broad range of topics. General Petraeus first shares the inspiration behind his book and the critical role of strategic leadership in both military and business contexts. As the title suggests, “Conflict” explores the evolution of conflict and General Petraeus draws on his own experiences including his studies of Vietnam and his direct involvement in Iraq and Afghanistan. As you will hear, General Petraeus refers to a strategic leadership model developed for the Belfer Center at Harvard, which can be found linked here. We touch on the changes the Army made following Vietnam and the lessons learned there, the importance of leadership during key inflection points whether it’s in the oil patch or in combat, and how to create a culture that offers what General Petraeus refers to as “reasonable feedback.” We also discuss KKR’s investing strategies as well as the General’s experience stepping out of the normal military path to attend graduate school and the insights he was able to apply back in the military. The General walks us through geopolitical dynamics with Saudi Arabia, China, Russia, and the US, how modern technology has transformed elements of the battlefield, and the outlook for the US military today. We greatly appreciated General Petraeus’ thoughtful responses and are immensely grateful to him for sharing his time with us and for his service to our country. Mike Bradley kicked us off by highlighting that 10-year bond yields have surged to 4.8% (a 16-year high) due to worries that the FOMC will be holding interest rates higher and for longer. He flagged WTI crude oil price seems to have temporarily settled in at roughly $90/bbl., and that traders will be closely monitoring the October 4th OPEC meeting and Cushing oil inventory levels. He wrapped by noting two seminal events that occurred early last week that could have a huge and lasting impact on global energy transition goals, including NextEra Energy Partners (NEP) stock price plunge and the IEA’s updated Net Zero Roadmap report. Arjun Murti built on Mike’s comments on recent corrections in the new energy sector by flagging the risk associated with organizations like GFANZ pushing financial institutions, capital markets, and insurance companies to make decisions based on emissions metrics, potentially leading to unfavorable loans and policies in the new energy sector and insufficient investment in traditional energy. We hope you all enjoy the discussion as much as we did and consider adding “Conflict” to your reading list. Our best to you all! 

On Wednesday in Denver, we had the pleasure of joining Dr. Roger Pielke Jr. (UC Boulder) and Chris Wright, CEO and Chairman of Liberty Energy for a live discussion as part of Liberty Energy’s “Liberty and Energy” Presentation Series. Roger is a Professor in the Environmental Studies department at the University of Colorado Boulder and the author of “The Honest Broker” substack (linked here). Roger’s work focuses on the intersection of policy and governance issues related to science, technology, environment, innovation, and sports. It was exciting to bring the Denver area community together and have a live, studio audience to discuss the current state of climate, energy and the environment broadly. To kick off the discussion, Roger walked us through a presentation with key background on the current state of science around energy and climate (slides linked here). We then dove into how the broader population might get better data and discussion around energy and climate, issues with the IPCC’s summary for policy makers, how priorities in the environmental world have shifted to focusing primarily on climate, the impact of climate alarmism on children and young adults, and how Roger approaches teaching his students to appreciate the scale and complexity of energy and electricity in the world. Roger shares examples of the “scenario wars” that are taking place, his experience being investigated by Congress, and the overwhelming need for solid data on climate from a trusted, authoritative organization that allows for open discussion. We also discuss the role of oil and gas companies in the energy world of tomorrow, the math of getting to net zero 2050, the desperate need for more energy in the developing world, the glaring opportunity for America to help power the world, and conclude with some inside scoop on Roger’s chances of joining the team with Coach Prime. As you will hear, Roger is a great explainer and wonderful thinker. We can’t thank the Liberty team enough for allowing us to be a part of it. The world needs more “Liberty and Energy” town hall gatherings! As you will hear, Roger very positively mentions a podcast with Michael Liebreich and Jim Skea (the new head) of the IPCC. The episode is linked here. As we head into the weekend, we wish you well and hope your team wins! If you do get out for a walk or otherwise have some time, we hope very much you can tune in to this Special Edition COBT. We learned a lot!