For today’s COBT, we had the pleasure of hosting our good friend and award-winning columnist Liam Denning. Liam is a Bloomberg Opinion columnist covering the energy sector and was previously with the Wall Street Journal and the Financial Times. He has nearly twenty years of experience covering energy and has experience in energy investment banking and consulting. We were thrilled to connect with Liam to discuss his recent article, “Hiding an Army at the Top of the World.” The article touches on several timely and important factors including military forces, geopolitics, the climate, the potential for greater access to Arctic trade routes, and oil and gas as well as broader resources development in the region. Liam first provides background on how he got involved with the Army and the interesting connection he formed with a war photographer interested in the Arctic. For the story, the two partnered to provide on-the-ground reporting on the Army’s activities in Alaska. We discuss the increasing accessibility of the Arctic due to warming and the related geopolitical implications, Liam’s experience visiting the US Army’s Northern Warfare Training Center in Alaska, and the challenges of operating in the harsh Arctic environment. We also cover the recent debates around oil and gas development in Alaska in light of Russia’s aggressive plans in the Arctic, the Chinese perspective and the involvement of other countries in the Arctic including Norway, Finland, and Canada. Liam shares his perspective on the changes he’s witnessed in the oil and gas industry over the past fifteen years and the importance of adapting to maintain relevance and his view on the role of major oil companies in the energy transition. It was a fascinating conversation and we want to thank Liam for joining us. To start the show, Mike Bradley highlighted that May CPI printed slightly below consensus while core CPI printed slightly above consensus. He noted traders will be focused on the Wednesday morning PPI print and afternoon FOMC Rate Decision, where odds favor the FED temporarily pausing rate hikes. He then flagged that Saudi’s announcement last week of a 1mmbpd crude oil production cut (set for July) has not been enough to stabilize crude oil. He noted several crosscurrents that are influencing this crude oil volatility, all of which are challenging whether this current weakness is physical or financial related. He wrapped by noting Shell’s Capital Markets Day on Wednesday will be a focus for investors as the first formal opportunity for Shell’s new management to lay out their end of decade vision, which could provide a roadmap to narrowing the 2-3 multiple point valuation discount to the US oil majors. Arjun Murti built on some of Mike’s themes and highlighted the difference in energy perspectives between the UK, Europe, the US, and the rest of the world. He also teed up the discussion of the role of the oil and gas industry outside of its core, prepping us for our discussion with Liam. We are eager to see what Liam writes next and hope you find this topic as interesting as we do. Thanks to you all!

Today we had the pleasure of visiting with Thomas Fox, President and Director of Innovation at Highwood Emissions Management. Thomas has an impressive academic and commercial background in emissions and from our previous interactions with him, we knew he could tackle the issues in a measured way that would help us all. While obtaining his Ph.D., Thomas invented LDAR-Sim (Leak Detection and Repair Simulator) – it is now used widely by industry, regulators, and innovators to approve new technologies and understand how to deploy them. Headquartered in Calgary, Highwood works with producers, technology solution providers, and regulators to tackle the challenge of emission management solutions. Our discussion centered around an in-depth presentation by Thomas. In the presentation, Thomas covers the multiple motivations for why oil and gas companies are paying more attention to emissions, the complexity of measuring emissions and the technology involved, how to reduce emissions and get the best value for your spend, how to prove that you’ve reduced emissions (and get the credit for it), and how to prepare for the future and the future of the emissions monitoring landscape. After Thomas’s presentation, we discuss how emissions will be factored into M&A activity, where the intensity of emissions is highest, how companies analyze opportunities to decarbonize vs. the cost of mitigation, and the competitive technology landscape. As you will hear, Thomas anticipates methane from oil and gas in North America will be largely solved in the next five years. We want to thank Thomas for joining us today and for providing such a detailed analysis. Mike Bradley kicked us off by highlighting that last week, traders were focused on two macro events, the OPEC+ meeting and the US Debt Ceiling Deal. He flagged OPEC+ agreed to cut crude production by 1mmbpd, with Saudi Arabia taking on all the cuts starting in July. Since October 2022, OPEC quota reductions total ~3mmbpd and the recent cuts primarily relate to 2H’23 demand concerns. Mike also flagged global S/D deficit estimated for 2H’23 is ~1.5mmbpd, and that these additional production cuts would ensure global inventories draw substantially in 2H’23 and should provide a crude oil floor. He then noted the US debt ceiling deal initially boosted bonds, commodities, and equities, but there hasn’t been follow through since. Mike wrapped by noting the CBOE Volatility Index (VIX) is trading at historically low levels, indicating equity markets are dialing in low risk levels, and that energy companies pursuing aggressive buybacks may want to consider retaining more cash on their balance sheets for future opportunities. Todd Scruggs joined for today’s discussion and added his thoughts around a recent Goldman Sachs report that lowers the odds of a recession, along with a Wall Street Journal article discussing ESG proposals to address scope 3 emissions and the vote outcomes. He also noted the equity market breadth remains narrow, with buying centered on a handful of AI/tech related equities.We learned a lot in our conversation with Thomas and hope you will find it as useful and informative as we did. Our best to you all!

Today we had the pleasure of visiting with Pavel Molchanov, Managing Director of Renewable Energy and Clean Technology Research at Raymond James. Pavel joined Raymond James as an Associate 20 years ago and actually first began coverage of the new energy space in 2006. His team currently covers all aspects of sustainable-themed technologies including solar, wind, biomaterials, electric vehicles, hydrogen, power storage, grid modernization, water technology, and more. We were excited to connect with Pavel and get his perspective on stocks, investors, trends, technologies and transition public policy. In the discussion, we cover the broad space that Pavel and his team observe. In our conversation, Pavel first provides a few of his big-picture observations on the energy space and how it has changed in the course of his career. We discuss the future of coal in particular and its role in the global energy system, the various energy sources and assumptions that would be required to entirely phase out coal, and the potential increase in energy costs associated with transitioning away from coal and the impact on economic development. Pavel shares his perspective on the different growth rates and dynamics between the clean tech sector and oil and gas, and the challenges clean tech companies face to drive adoption and become more cost competitive. We also discuss the large number of clean energy stocks that went public during COVID-19, ESG in the clean technology universe, investor attitudes, the Raymond James investor base, and more. The discussion ended up being a fascinating blend of the global energy system and the changes underway, and how all that shows up in individual stocks. We are grateful to Pavel for his time and insights, but are particularly appreciative of his “ask me anything” approach to the whole conversation. Thank you again, Pavel! Mike Bradley kicked us off by highlighting that commodity and equity markets didn’t respond as positively as many had hoped for given news of a tentative debt ceiling agreement over the weekend. Given current select Republican rumblings, markets are now going to wish to see solid evidence that the current tentative deal can obtain passage before the end of this week. He highlighted that the upcoming OPEC meeting on June 4th could be one of the more important meetings in quite some time given that Saudi’s Oil Minister (warning oil speculators) and Russia’s Oil Minister (saying no added production cuts) seem to be messaging differently when they should be showing unity. Todd Scruggs also joined for today’s discussion and added his insights and questions to the discussion. Thank you, as always, for your support and friendship!

As we head into Memorial Day Weekend, we are excited to share this Special Edition with Brigadier General Kevin Ryan (U.S. Army Retired). During his service with the Army, Kevin served in air and missile defense, intelligence, and political-military policy areas in Europe, Korea, and Iraq. Kevin was formerly head of the Moscow office of the POW/MIA Commission and served as Senior Regional Director for Slavic States in the Office of Secretary of Defense and as Defense Attaché to Russia. He is currently an Associate Fellow at Harvard Kennedy School’s Belfer Center for Science and International Affairs and recently wrote an article entitled “ Why Putin Will Use Nuclear Weapons in Ukraine.” With Kevin’s background and experience, we were very interested in visiting with him to discuss Russia broadly.   In our conversation, Kevin first provides background on the current dynamics between Russia and Ukraine. After a year of war, Russia currently occupies about 20% of Ukrainian territory, including Crimea. As Ukraine pushes back, Kevin suggests that if conventional escalation fails to stop Ukraine’s success, Russia may turn to other weapons, with nuclear weapons being the most likely choice. We discuss the potential methods Putin could employ, including a demonstration or the use of tactical nuclear weapons, and Putin’s efforts to convince the Russian people of the significance of the threat against Russia and the broader narrative he is constructing. While using a nuclear weapon would be unthinkable, Kevin argues that from a Russian perspective, it would be seen as a means for Putin to change the perception of Russia’s military strength and create fear in the rest of the world. You will also hear Kevin discuss Putin beginning to make the “Truman argument” for using nuclear weapons with his own people. In terms of proactive measures the United States and other nations can take, Kevin reiterates the importance of making it clear to Russia the catastrophic consequences of using nuclear weapons, preparations for addressing the medical and decontamination issues, and the possibility of providing Putin with an exit strategy to avoid the repercussions of his actions. While the use of a nuclear weapon is a hypothetical scenario, it is certainly extremely serious. We also discuss Putin’s motivations and the dynamics within the Kremlin, Putin’s platform of restoring Russian pride and the implications of his potential failure in the conflict, as well as the role of countries like China in the situation. It was a serious and thoughtful discussion.   We greatly appreciate Kevin’s time and perspective, as well as the work the Belfer Center is doing. For the extra curious, we have linked some of the best articles we have found on the Ukraine war below.   We hope you have a safe and happy Memorial Day. Like you, we are most thankful for and respectful of the brave men and women who have made the ultimate sacrifice for our freedom. God bless you and God bless them.

Today we had the pleasure of hosting Takajiro Ishikawa in our office in Houston for a sweeping discussion of the technologies and broad topics influencing the future of energy. Tak is the President and CEO of Mitsubishi Heavy Industries America (MHIA). MHIA has 10,000 employees in the US spread over 66 locations and accounts for 20% of MHI’s global business. Tak is a seasoned executive with over thirty years of experience in the industry in both Tokyo and Houston, and since April 2022 has been leading MHIA’s efforts to deliver innovative and integrated solutions to the world. We were thrilled to visit with Tak.   In our conversation, Tak first provided fascinating background on the history of MHI and its formation 150 years ago to lead Japan’s industrial revolution. MHI’s formation has everything to do with Japan’s energy, industrial and supply chain security, something that every country is increasingly concerned about today. We split our time with Tak talking about MHI and Japan as a whole. It was fascinating.   As you will hear, Japan is by far the largest importer of LNG globally, and MHI was responsible for delivering a large portion of the LNG ships and shipyards in Japan. We touch on the intricacies of Japan’s location and the geological attributes, the limited options they have for solar and wind power, as well as the sensitivities around nuclear power in the country. Tak shares his perspective on how MHI is structurally organized, given their massive footprint, and how the company is pivoting from working on technologies that emit carbon to helping those same technologies reduce carbon emissions. We touch on the differences between the US and Japan in terms of deploying renewables at scale and MHIA’s hydrogen projects in Utah. We also cover Japan’s partnerships with other countries and technologies, the IRA’s global impact, Japan’s declining population, and much more. We ended with Tak’s long-term vision for MHIA. Overall, it was a riveting discussion and we greatly appreciate Tak’s enthusiasm for the industry and the future.   Mike Bradley kicked us off by highlighting that bond, commodity, and equity markets have been directionless due to the current U.S. debt ceiling talks and will likely continue this pattern until an agreement is reached. He also highlighted two upstream deals this week (one all cash and one all stock) and last week’s large midstream deal. He highlighted these deals to drive home the point that energy consolidation will continue to be robust (especially upstream consolidation) because a key investor concern, especially as it relates to the sustainability of significant return of/on capital programs beyond the next 2-3 years, are quality and quantity of future inventory. Arjun Murti prepped us for our discussion with Tak with an overview of Japan’s energy landscape and unique approach to secure a diversity of energy commodities, further driving the idea that no one model fits all.   We want to thank Tak for sharing his time and perspective with us today. Our best to you all!

It is our honor to welcome back Governor Mike Dunleavy of Alaska for today’s session. We hosted the Governor on COBT in July of 2022 and had much to cover since our last visit. Gov. Dunleavy moved to Alaska in 1983 and quickly became a proud local serving as a teacher, principal, and superintendent in Arctic communities before his 5-year term as a State Senator from 2013 – 2018. He was elected Governor in 2018 and was re-elected last November. We were thrilled to visit with the Governor to discuss energy in Alaska and preview the Alaska Sustainable Energy Conference taking place next week in Anchorage with an exciting lineup of speakers and topics.   We begin the discussion with an update from Gov. Dunleavy on the current energy outlook in Alaska and the state’s unique conditions that allow for a plethora of energy types including oil, gas, biomass, nuclear, coal, geothermal, on and offshore wind, tidal, and solar. Gov. Dunleavy shares his perspective on the Willow project and the state’s support for energy production, including LNG and Alaska’s relationships with Asia. We then discuss the Sustainable Energy Conference and some of the keynote speakers including Dr. Dan Yergin, Vice Chairman of S&P Global, Rahm Emanuel, United States Ambassador to Japan, and David Turk, Deputy Secretary, U.S. Department of Energy to name a few. The conference will examine the future of energy in Alaska and around the world, the intersection of geopolitical upheaval with food and energy security, advancements in renewable power, transmission, storage, and more. We also touch on geopolitics and security, minerals and mining, Alaska’s nuclear adoption, labor markets, the opportunities in Alaska, and the all-in approach the state is taking. We ended with Gov. Dunleavy’s thoughts for what the world looks like in 2024 with the next US Presidential election. It was wonderful to visit with the Governor and hear the progress Alaska has made over the past ten months.   Mike Bradley kicked us off and highlighted that over the last couple of weeks, bond, commodity, and equity markets have been directionless due to the U.S. debt ceiling showdown. He further indicated that a favorable debt ceiling resolution could result in some outsized gains but should prove transitory. He also pointed out talks this week for a potential U.S. SPR crude oil purchase in August (3 million sour barrels) which is peanuts compared to the 270 million barrels that have been sold from the SPR over the last two years. Mike also highlighted the recent natural gas rally and the potential for additional Haynesville rig drops by end of summer. He concluded the conversation by highlighting ongoing midstream consolidation activity. Jeff Tillery added to Mike’s midstream comments with an observation on diversifying assets in North America as they mature. Brett Rampal also joined and peppered in his nuclear perspective in the discussion.   We want to thank the Governor for his time. If every Governor knew energy as well as Governor Dunleavy, the country would be a better place. We hope you enjoy the discussion as much as we did and consider attending the Alaska Sustainable Energy Conference!

Today it was our pleasure to host the New Jersey Economic Development Authority (NJEDA) for an offshore-wind and infrastructure focused session. With Governor Murphy’s leadership, the NJEDA is working to position New Jersey as a hub for US offshore wind and the organization is currently managing the development of a 200-acre wind port off the southern coast of the state. Joining us from the NJEDA are Tim Sullivan, CEO, Jen Becker, Vice President, Offshore Wind, and Jonathan Kennedy, Vice President, Infrastructure/NJ Wind Port. Together, they have a great amount of experience in public policy and planning: Tim is a native New Jerseyan and his background is in investment banking. He was formerly Deputy Commissioner of the Connecticut Department of Economic and Community Development and the Chief of Staff to the New York City Deputy Mayor. Jen is a public policy strategist and urban planner with 25 years of experience and Jonathan has a public infrastructure and finance focused background with US and international experience. We were thrilled to visit with the team and dive into project details.   Our conversation started with Tim’s background and journey to joining the Governor’s staff and the NJEDA, the strategic and economic opportunities the wind port will provide, and how this wind port is unique in that it will host the infrastructure for both manufacturing and deployment/instillation of offshore wind. Jonathan shares his perspective on the commercial significance of the project, the state’s role in investing in the infrastructure, and the scale of the project. We then discuss the competition for offshore wind economic benefits and how the wind port has the potential to supercharge the South Jersey economy. Jen provides key information on the workforce involved and the state’s partnerships with schools, universities and labor unions to develop a talent pipeline. The wind port will not only help add offshore wind to the state’s power mix but will be a manufacturing hub for the wind industry and support tens of thousands of jobs. Another feature of the wind port is the potential for New Jersey to significantly increase domestic wind-related manufacturing and become an exporter of such products. The location is also well positioned in that the continental shelf is relatively shallow and allows for turbines to be installed 15 – 55 miles offshore. It also happens to be next to the Salem nuclear power plant which presents its own benefits (and challenges). Nuclear currently holds 40% of the state’s power mix and we discuss what the mix will look like in the future with an increase in wind and solar power. Overall, we are greatly impressed with this innovative and unique initiative and can’t thank the NJEDA team enough for sharing their insights.   Mike Bradley kicked us off by relaying that over the last week, markets have been directionless as they await Wednesday’s April CPI & PPI results. Markets also continue to worry about additional regional banking stress and an unresolved US debt ceiling limit. He also highlighted that WTI price over the last week was stable but still trades at the lower end of its 5-month trading range due to growing recessionary concerns. He then shared notable trends from Q1 earnings season including a disconnect between the financial market and demand for US refiners, oil service call discussion dominated by rig/frac drops and current/future pricing guidance, and wrapped with key themes from E&Ps. Jeff Tillery joined today’s session and chimed in with his thoughts on the OFS sector moving past Q1 earnings season.   We’re excited to follow the wind port project’s progress and hope you enjoy the discussion as much as we did!

Today we had the exciting opportunity to host George Bilicic, Vice Chairman and Global Head of Power, Energy and Infrastructure at Lazard. George has had a long and distinguished career including his time as a Partner at Cravath, as President of Sempra, and 20 years at Lazard in the investment banking business. We were thrilled to visit with him in our office in Houston.   Our discussion centered around Lazard’s recently released 2023 Levelized Cost of Energy, Storage and Hydrogen Analyses. As you will see, we picked a handful of what we thought were the key pages from the full report and asked George to walk us through them. We kicked off the broader discussion with George by getting more background on this now very well-known annual report, hit some of the key themes and predictions, and also discussed the process involved in gathering the data. One of the items we discussed was the analysis not just of the levelized cost of energy comparison but also the same analysis with the cost of “firming” added (to adjust for intermittency). George shares some of the feedback they’ve received about the report from around the globe and how the firm uses the work as a discussion piece with everyone from governments to investors to companies to university students. We also discuss his perspective on global attitudes around the IRA, Lazard’s recent Climate and Energy Transition Conference, supply chain risks looking forward, the difficulties in calculating total value, and the potential for consolidation in the alternatives/renewables/power/utility space. Toward the end of the discussion, we touch on Lazard’s recent formation of a Geopolitical Advisory Group and the rationale for the effort. We ended with asking George what an LCOE report might look like in ten years. As you will hear, he had a fun and interesting answer. Overall, we had a great visit with George and can’t thank him enough for joining us today.   Mike Bradley started the show by relaying that commodity and equity markets are very volatile, and to the downside, given poor recent economic data and uneasiness heading into Wednesday’s FOMC meeting. He highlighted several observations including an equity market (S&P 500) that’s been directionless and stuck in a very tight trading range. He shared that unlike the S&P 500, which is trading at the upper end of its recent trading range, WTI price is testing the lower end of its 5-month trading range, mostly due to growing recessionary risk concerns. He also emphasized that this will be an extremely heavy earnings week dominated by E&Ps, Midstream and Refiners. He concluded by highlighting two main themes to expect from E&P calls, lower 2H’23 oil service cost inflation and return on capital programs leaning more heavily into share buybacks. Brett Rampal also joined today and offered his nuclear perspective in the discussion as well.   Thanks to you all. We hope you enjoy!

We had a fantastic Africa-focused session today with Andrew Kamau, Managing Director of International Programs at the Energy Opportunity Lab, an initiative of Columbia University’s Center on Global Energy Policy (CGEP). Prior to joining the Energy Opportunity Lab, Andrew was the Principal Secretary, Ministry of Petroleum and Mining with the Government of Kenya and former Principal Secretary in the State Department of Petroleum with the Government of Kenya. He has over thirty years of experience in the energy, oil and gas, and mining sectors and is working to identify ideas and projects to empower people and communities with accessible energy solutions. Andrew joined us from Nairobi and is incredibly knowledgeable of the challenges and opportunities for increasing access to energy in Africa and developing countries.   We covered a lot of territory in our conversation starting with the current priorities of the Energy Opportunity Lab and what Andrew describes as a "leapfrog issue" with those who would like to see Africa skip fossil fuels and jump to renewables. We also discuss new LPG technologies that allow customers to pay as they go, how the US can get more involved with LPG projects in Africa, and the large amount of geothermal power in Kenya. Andrew flags that the competition between the US and Europe to advance renewable technologies is welcomed as it will ultimately help get those technologies to the rest of the world at a lower price. Andrew also shares his perspective on the sources of capital that may invest in developing Africa and the potential strings attached, the steps Andrew would take to unlock more economic development, and the realities behind mining in Africa. We then touch on the work the Energy Opportunity Lab is doing to develop investable projects and the initial funding needed to move an idea from "concept" to "bankable."   We are always particularly thankful for conversations focused on developing world energy needs. We learn a lot and we always refocus on the priority of eliminating poverty. Andrew’s answer to what the energy world looks like in ten years is particularly good. It was our absolute pleasure to host him and we are thankful for his time. Mike Bradley kicked us off by indicating that markets had been laser-focused on an end to FED interest rate hikes and perceived US banking "stability" post the Silicon Valley Bank Rescue but now have quickly shifted towards Q1 results and 2023 earnings revisions which could be headed lower. He highlighted several observations from this week, previewed some to expect next week, and wrapped by observing that this will be an extremely heavy week for energy sector Q1 results (dominated by natural gas E&Ps, offshore & onshore oil service companies and European & US Oil Majors). Jeff Tillery flagged an uptick in interest around turning deepwater back on.   As always, thanks to you all for your support and friendship!

We are thrilled to be sharing this Special Edition COBT with you. The new film "Nuclear Now" is just a week away from hitting theaters and we had the opportunity to not only see it early but also to visit with the film’s acclaimed director, Oliver Stone, as well as Professor Joshua Goldstein, the co-writer of the book that inspired the film ("A Bright Future: How Some Countries Have Solved Climate Change and the Rest Can Follow"). Oliver is an Academy Award-winning director, screenwriter, producer, and author of "Chasing the Light." As you may know, some of his renowned work includes "Scarface," "Platoon," "Born on the 4th of July," "Wall Street," and "Midnight Express." Professor Goldstein is an award-winning scholar of international relations and an expert on war and society. Mike Bradley, Brett Rampal and I had the pleasure of hosting Oliver and Josh, talking about the key aspects of the movie, and delving where we could into the broader issues the movie raises.   In our discussion, Oliver describes how a review of "A Bright Future" in the New York Times sparked his interest in nuclear as part of the solution to address climate change. It took two and a half years to create the film, which covers not only the history of how the technology was developed but also its high and low moments in popular perception. We touch on Oliver’s takeaways from studying different aspects of American society and the overall misrepresentation of nuclear power that the film aims to correct. Josh provides background on how nuclear power and nuclear war became conflated, much to nuclear power’s detriment. We also discuss Admiral Hyman Rickover and his development of naval nuclear-powered submarines, the Hollywood community’s unfortunate portrayal of nuclear that’s added to the narrative over the years, and the team’s experience finding experts to interview as part of the film. Oliver also shares his perspective on international cooperation around nuclear and both he and Josh comment on the significant amount of fact checking that took place to create the film. “Nuclear Now" is technical in its approach and goes into significant detail around historical, existing, newer and future potential nuclear technology.   Nuclear Now opens to the public on May 1st in select theaters across the US and Canada. The film will also be available via streaming at a later date – you can sign up for updates on that release. If you are interested in more nuclear content, last month Veriten debuted a podcast dedicated entirely to the world of nuclear, power, and industrial heat called Gener8. We hope you can take time to dig in and learn more.   We want to thank Oliver, Josh, and the team behind Nuclear Now for improving the conversation around nuclear energy, for injecting more optimism into the energy/environment/climate discussion, and for spending an hour with us engaging on the film. We hope you all enjoy the film as much as we did!