Recorded September 1, 2023
Episode 95 of the PetroNerds podcast is a PetroNerds special with guest Chris Atherton, CEO of EnergyNet. At the time of recording oil prices were $85.96 and a month later oil prices are below that figure after seeing $93 and change and incredible volatility in the span of a week.
Trisha Curtis asks Chris Atherton to walk listeners through the pre-Covid and post Covid periods of the industry and share what he has seen and how he views the market. He gets into private equity funds sizes and the evolution of the space and the acquisition environment. They follow by talking about the public side and the role of the generalist investor and the ability to lure the generalist investor back into the space through dividends and share buybacks.
Trisha talks about the state of the industry, the role of the generalist investor, and pushes back on share buybacks. She questions the inventory story and asks Chris to get into the impact of consolidation in the E&P space and the impact to the service sector. Trisha comments on how tight spending is within the oil and gas industry and how the industry seems to have left the intelligence space.
Trisha and Chris talk about the multiples and valuations of companies and the level of activity after the acquisition phase and discuss tiered acreage. Trisha comments about gas analysts, getting gas wrong, acreage and wells, and the difference from being in the field vs. looking at a map. Trisha gets into investor pressure, ESG, and what the public companies are “allowed” to do.
Trisha and Chris talk about the generalist investor and investor pressure and why these companies are traded well or not traded well. Trisha makes the point that the industry needs to push back on these ESG pressures. She says that oil and gas companies need to talk to the street more clearly about their business and the need to access capital and they are not explaining to the public market why people and entities should be investing in oil and gas companies.
There is a role for these companies to talk about their business and the market for oil and gas in the long term. She asks Chris to get into the constraints on access to capital and alternative funding. The ability to get money, get insurance, and get basic funding for oil and gas is a problem. Chris gives Aubrey McClendon stories and capital cost comparisons for the oil industry.
Chris talks about the reasons funding is drying up on the private side: the view that oil and gas is like tobacco and that the world will be driving EVs and not need oil and gas. He explains that this is an expensive business and needs a lot of capital. Trisha follows up by explaining how important it is for people to understand this business so the market can allocate money to properly invest.
Chris talks about that recession that never appears, rising oil demand, oil prices and the shortfall in production. Trisha and Chris talk about the rig count decline, natural gas prices and activity, and the economy. Trisha throws cold water on the idea that we are not in a recession and talks about the covid stimulus lag artificially elevating and elongating oil price height.
Trisha and Chris talk finish the podcast with bullish thinking in the oil and gas industry and the health of the economy, regional banks, and access to capital. Trisha asks Chris how the oil industry, from his perspective, feels about recession?