The journal entries below are excerpted from recent installments of James Wicklund’s “Things I Learned…” newsletter.
It was a fun week in Dallas. The real treat [first week of October] was the Hart Energy Capital Conference in Dallas. The 400 attendees set a record for the conference. Karl Rove was the keynote so you can imagine how august a group it was. Sourcing capital is always the biggest challenge and everything having to do with capital was discussed. The real issue? How to gain significant scale while practicing capital discipline. That is the one thing that most vexes management across the energy spectrum. We now all realize that oil, natural gas, solar, wind, biomass, hydro, wave motion and nuclear will all be contributors to our energy future and scale can be accomplished in high growth areas, midstream or E&P. Oilfield Service has trouble building scale without just M&A, but the fits are never as seamless as E&P assets in a basin. But capital—access to, provision of, and cost—will be the critical component to the future of energy, regardless of which source is king that day.
There’s No Tellin’ Where the Money Went. Offshore investments are expected to peak in 2027 with continued expansion for offshore wind. The accompanying chart shows the Capital Spending by Sector.
IOU. The U.S. is the biggest debtor nation. Our current debt is $35 trillion. That is more debt than the next four countries combined: China, Japan, France, and Italy. It is increasing at $1 trillion every quarter. This is very serious.
Bitcoin is Back. Stranded gas projects in places like West Texas started attracting the attention of bitcoin miners after they got kicked out of China three years ago. The decline in bitcoin prices over the last couple of years has taken it off the front pages, but now, bitcoin is back, and data centers are hot. We would expect to see stranded gas development increase across the state. I remember being told if you keep something long enough, it’ll come back into fashion.
That Isn’t All. The California Attorney General is filing a lawsuit against Exxon, accusing the company of misleading consumers about the recyclability of plastic products and the role it plays in polluting the state. After concluding a nearly two-year investigation, the AG says that the company was deliberately misleading the public about the limitations of recycling. Exxon is accused of continuing to deceive the public through advertising that insinuates that recycling can fix the plastic pollution crisis after claiming for years that all plastic is recyclable. So, Exxon said plastic was a recyclable product but because it didn’t specify that only some plastic is recyclable, they get sued for billions of dollars. If no one bought the products, this wouldn’t happen, and shouldn’t you penalize the people who are keeping Exxon in business even after seeing this lawsuit? The ultimate example of irrational virtue signaling.
Powering the Future. The Hamm Institute for American Energy with its building, staff and mission, is impressive. “What We Do—Powering the Future. The Hamm Institute for American Energy is the nation’s premier institute for security, innovation, and growth for all forms of energy.” I was at the OKC chapter of the Energy Workforce and Technology Council (EWTC) lunch [in September]. Oklahoma has an exceptionally long history in the oil business. It just didn’t get the best rocks. But it is home to some of the best people and companies in our industry.
Gluttony. It’s that time of year again. October brought the Texas-OU football game and the Texas State Fair!! By the time this appears we’ll know the winner of the new food contest—one of these six dishes: Candied Pork Belly Bacon Bites, Caramel Macchiato Fritters, Cookie Butter Nachos, Dickel’s Triple Meat Big Back Snack, Fat Bacon Pickle Fries, and Texas Fried Burnt End Bombs. Just keep saying to yourself “moderation in all things.” [Winner revealed here next month.]
—Jim
Subscribe to Jim Wicklund’s full e-newsletter, “Things I Learned This Week at…,” distributed via email, by signing up for free at this webpage: https://www.pphb.com/newsletters. Jim is Managing Director / Client Relations and Business Development for investment banking firm PPHB. Leveraging deep industry knowledge and experience, Houston-based PPHB has advised on more than 180 transactions exceeding $11 Billion in total value. PPHB advises in mergers & acquisitions, both sell-side and buy-side, raises institutional private equity and debt, and offers and restructuring advisory services. The firm provides clients with proven investment banking partners, committed to the industry, and committed to success.