YouSaid · the spoken record

Paul Sankey

lines on the record: 87
first: 2023-05-22
most recent: 2023-05-22
sittings or episodes: 1
sources: podcast

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“You're welcome to have a look. You sign up for free actually. And then if you read it a lot, we come and talk about money.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“There is no base, basically the big issue. The battery is the Holy Grail, actually. It's totally the holy grail, but the problem is you haven't got close, even remotely close to a baseload battery that would be, for example, the equivalent of a nuclear power plant. I mean, you're absolutely nowhere near that.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“The mega theme is super bullish. I think it is the transition fuel. I think that we've come through the Russia situation with people realizing that energy security is crucial. You can't make it idiotic mistakes like shutting down German nuclear. You have to keep the lights on. And in order to have a tremendous amount of solar and wind, obviously the sun doesn't always shine. And typically what people miss is that geographically wind tends to either be windy or not windy. I know it sounds idiotic, but it's not like you have one part of the US which is a lot less, well, the US is a bad example, but in Europe it tends to be very windy across Europe or not. And then that tends to run for several days. So basically you could get a windless cloudiness for like five or six days, at which point you have a major problem with using wind and solar for electricity. You either do nuclear or you do natural gas.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Is complicated because a lot of these companies are gas companies in disguise. So if you take a company just an example that we use, and I really think Devin management, Devon DVN is excellent. But the reality of their asset base is there are about 50% non-oil. And what you've obviously seen, and we haven't talked about, we'd need another hour, is natural gas and how much pressure there's been on natural gas prices, which is partly associated with drilling, literally associated with drilling heavily for oil and getting free natural gas. That means that natural gas and the interim product, which comes out of the ground, which is NGL's natural gas liquids, those prices have been under tremendous pressure.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Canada's interesting because there's this extraordinarily expensive pipeline being built from Calgary, essentially from Alberta, I should say, to the west coast, which is now owned by the Canadian government, Kinder, realized it was all going horribly wrong, basically, and we're going to abandon it, but managed to sell it to the Canadian government. That's a $30 billion pipeline, which is an extraordinary number. It's the most expensive pipeline in history. And if they can get that built, that will then greatly change global oil flows, actually, and allow Canada to start growth again. The smaller they are, the hairier they are. One of the problems with the individual oil stocks is they've all delevered. So where you used to have some extreme examples of leverage, I'm talking financial leverage, obviously, and across the board there was a range of financial leverages, depending on how much risk you wanted to take. Actually, all the oils have paid down debt. They're much safer investments they used to be, but there's also less juice across the board. Operational risk is...”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“And gave up the rodeo. But I think he said he's now chairman of the Rodeo Riders Association or something like that. But anyway, that's his background. But brilliant man, clearly, because he then went on to become the head of Hess, the head of upstream at Hess, which is really the most fantastic long-term story that you see today in oil. Thematically, I didn't say this, but basically we think your short US energy infrastructure. So we generally like US pipelines like MLPs. We generally like US refining because we believe that stuff is going to be difficult to build and is much needed so that the demand side of the equation is going to last longer than people think and addressing that is harder than people think. And what do you think about that?”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“So, anyway, look, you get that, and then once a week we do a similar podcasty kind of thing on a Thursday night. Often a good example is last week we actually had the head of upstream of Hess and the IRFS J. Wilson and Greg Hill. I got that the wrong way around, the head of upstream is Greg Hill, who's fascinating, by the way. Greg Hill was a former top class rodeo rider educated in Wyoming and actually got kicked in the face by a horse.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“He just made some comment about, you know, I think it was weird. It was like JP Morgan's going to be here longer than the Chinese Communist Party. I think literally that's what he said.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“The CFO stopped returning my calls. It was as bad as that. But essentially, I think they were part of the Silicon Valley Bank problem. And, you know, it was obviously it was an autonomous truck company. So it was a pre-revenue software as a... Kind of experience I wasn't going to get just you know grinding away writing earnings previews and reviews for a for a big Wall Street bank and then of course we can be rude about the Chinese Communist Party you know look at what Jamie Diamond said about the Chinese Communist Party and immediately had to sort of spend the next two days”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Or it's not covered or whatever. And then they want you to initiate and write a huge piece about coal and cover six coal stocks. We're not going to do that. We've written about copper. We've written about life cycle, battery recycling. We had a disastrous call in an autonomous truck company. You know, it's not. Which one?”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Research, it is me and my partner, Greg Bordelan. We can cover any subject that we think is interesting or relevant. And of course, it's very important I had to leave a big bank in order to do that because we're in an energy transition. You know, it's not called an energy transition for nothing. We're changing the world. And so we can suddenly start talking about Peabody Cole because it became so relevant all of a sudden. You can't do that at a Wall Street Bank. It blows up the system.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“It's a written product. So I don't do a huge amount of outgoing calls or yada yada yadda. I do try and manage for everyone that's involved in this game. So whether it's long only, long short hedge funds, you know, et cetera, et cetera, debt. It's also quite widely read and subscribed to by corporates. So what you read, I can tell you there's a lot of oil CEOs reading it too. And then, you know, depending on what kind of mood I am, I'm in last night I was watching the soccer drinking zero alcohol Heineken. So I was up at five this morning. We'll put out notes, which is called the morning sanky. And that's just whatever we think is happening that's interesting to us. You know, Wall Street Research's got a problem because it's very siloed. If I worked at a big bank, I'd have to just write about EMP. And, you know, I can't say, oh my God, I think Tesla is the best thing in the world or the worst thing in the world because there's a Tesla analysis. Whereas being literally sanky.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it is. I mean, it's independent research, right? So essentially, anyone's welcome. It's just that it's priced. It depends. If you're demonstrably an individual, we will price it differently for you. You know what I mean? If you're retired or disabled or a student, I might give it to you for free. It's all up to me. There's no specific price. But generally speaking, yes, what we're trying to do is it's not a mass product. We're selling it to very sophisticated investors. It might not be the most sophisticated product, but I can tell you my investors that we aim for are the most sophisticated in the world. And yeah, so essentially what they sign up for is you get every Sunday I write a Sunday Sanky, which you've showed some charts from. And, you know, funnily enough, what people want is maybe we should do more podcasts, but basically what people want is the email. That's how people still consume typically Sanki.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“And horribly, which is why everyone's so bearish. But of course, as soon as everyone's bearish, the market just goes higher and higher. But this latest thing, you know, this latest debt ceiling negotiation is a good example. You know, yesterday the DOE, the weekly DOE data came out, which is the best leading indicator, best high frequency data covering the global oil market. It's the best we have by far is the weekly EIA data that comes out and says, what happened last week in US oil? Data was pretty bearish. You get the announcement about the debt ceiling and oil rips. So that's just a fact of life. And it just makes life complicated over this period where essentially the government's just printing more and more dollars and driving the market higher and higher, which is obviously for any financial person, anyone who knows anything about finance is kind of scary. And I think that's why your podcast is so popular, right? Everyone's fretting desperately.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Well, as I mentioned, I mean, the original quant players loved trading oil, right? Because this is a highly traded, you could trade it electronically. And so it's risk on, risk off, right? I mean, it's simply just the market trading. And we know that the market's trading highly electronically. I don't know quite how to put it, but essentially machines trade a lot of the market. And so the same risks that are visible in the banking sector and the implications of the banking sector problems are effectively the same risks that you see in oil. And you end up with this oddly close, you know, but on the other hand, it doesn't entirely make sense that bank stocks would trade as closely. It also tells you the government's just gone way too far in terms of how much they've printed and how tangled up they are in driving all these markets. And they're in a jam and the Fed's in a jam and they're going to have to work out how to get out of it. A lot of the guys I know who are very good at this stuff on Wall Street are very, very concerned that this is all going to.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Oxy is buying back the preferred stock. So their ownership is going to go down. Yeah, I didn't mean to put you as font. And also, I don't know if I'm right. I think, yeah, he didn't see. He said he didn't want to own all of it, but”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“I thought he said he wasn't going to buy all of it. There was a previous filing. Whereby they had said they won't go over 50%, right? It's part of the filing. So we already know essentially, you know what? You've got me on the spot here because it's a while back since that filing came out. But in my head, there's something to do with a 50% cap anyway. And the steady buying, I think, can keep going on essentially just because what he's got there is something of a free cash flow machine, you know, a major position in the Permian, which is strategically hugely important. And they're selling.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Want to say on occidental, you said potential of selling put selling, put spreads. Yeah, if Berkshire continues to be an aggressive buyer at $58, $59 below $60, that strategy might have some problem with. But there's no guarantee that it would. And I think at the AGM annual general meeting or shareholders meeting that happened two weeks ago, I think Buffett indicated he did not want to buy a lot more of shares. I forget the exact quote. I thought he said”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Californian EMP that had been bought by Arm and Hammer, Oxy drilled a well in the middle of the mobile base camp where it had been located and found, I think, $6 billion barrels of light oil right next to Europe. And the rest is history. So one of those kind of classic ore stories, a similar one, modern one is Hess, I think, bought the Guyana acreage from Shell for $8 million, approximately very low number, let's say. And that's probably worth $8 billion to Hess. So yeah, these things happen in oil. That's why, as they say, you know, Jack, the secret to getting rich, John Paul Getty is you just get up early, work hard, and discover oil.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Or, you know, below 58, if you really believe the chance that we've laid out. And those charts, of course, are simply quantitative, right? I mean, that's just, you know, Berkshire filings of when they've changed position and how much they've bought in Oxy. And so it's incontrovertible what's going on, right? It's not my opinion. It's a quantitative assessment of buffet buying Oxy. There'd been debate whether he would go the whole way. I don't think either Oxy or he wants to own the whole of Oxy. You want to maintain the brand. You want to maintain the corporate. It's a magnificent history. It's mixed history. It had an initial amazing story, actually. I'll sidetrack into a little oil story for you, which is that Exxon had been drilling in Libya. No, excuse me, I'll take it back. Mobile had been drilling in Libya and couldn't find any oil in the desert. And they gave up and relinquished the acreage. And Oxy, which was a tiny...”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“And so, you know, I think they can see the long term significance of oil. He's more guarded. I don't follow everything he says, but I haven't heard him say a pie in a huge amount on the environment. But what we do know is that he's cash flow oriented. And we know that he'll probably keep Oxy CapEx very low in the way that I've described. I believe oil companies should. So they should be very, very tight with how much capital they deploy and return as much as they possibly can. And to that extent, Obviously, Uncle Warren can handle the volatility. And so it becomes quite a logical investment. And then you can see that he's clearly got a policy of buying the stock. And by the way, the other thing that we highlighted, Jack, is he doesn't care how much the daily volume he represents. So he can blow out the volume when it goes below 60. And that makes Oxy probably, you know, and I'm not qualified to give individuals investment advice, but probably selling puts below 55 might be one that you could think about here.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Investment of his career. And involved, by the way, the company with a $36 billion write-down. He then actually sold out at the bottom of Conaco Phillips. So he's had a mixed track record in this area. But I think in the case of Oxy, it's vast in the Permian, which is a great place to be. It's a huge Texas oil field. What's wrong with owning that? The latest AGM, he mentioned that Charlie had spent $1,000 in the 50s on an oil royalty that still pays him. I think he said $70,000 a year now.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Exactly, it was a preferred, it was a preferred deal that was in order to get over the line and avoid a vote, a shareholder vote for the Anadarko takeover. And obviously COVID, the whole thing was teetering right on the brink. But in that process, obviously, Vicky got to know Warren. And clearly he's decided at a given point that he wants to own more Oxy, probably because he's already long and probably because he sees the threat of high ore prices as a potential, something that he should be long. His track record has, you know, being quite mixed in oil. I remember when I covered Conoco Phillips, as was proprietor Conoco Phillips split with Phillips 66 that Buffett had described his position as the biggest shareholder in Conoco Phillips straight into the global financial crisis as the worst.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Lowered the cost of capital, Jack, to continue on that theme. Yeah, obviously originally as obviously made enormously misguided and mistimed play for Anadarko and that crushed the stock and massively raised their debt. The debt that they raised was a wall of debt, which was another mistake. And then, of course, they hit COVID. So it was a real monster mess. And in that process, in order to get the deal done, the determination of the CEO, Vicky Hollop, to get the deal for Anadako done, involved a significant loan, a $10 billion loan from Warren Buffett Cash.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“You get the most risky cost of capital, right? So basically, you know, you have a single cost of capital that's reflective of, for example, high refining volatility. Now, to an extent, some of it can work through. You have, for example, Valero doing a great job in getting into renewable diesel, partnered with Darling. And what you'll see is the stock goes up a lot because of that, effectively the market's lowering its cost of capital, even though ostensibly as a refiner, it should get a brutal cost of capital. So in that case, it's a legit business for them to pursue. But there are other guys like, for example, Dino, formerly Holly Frontier, where they're not doing a great job of pursuing renewables and the stock's going down. And you can see the markets now beginning to punish them for struggling with renewable diesel project delivery. So, you know, it gets a little bit involved for your listeners. Jack, especially in the amount of time that we have.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“That's my point. You can't mix the two businesses in terms of cost of capital, you only get one cost of capital effectively. And it's a constant mistake that you see amongst, for example, conglomerates or in the case of mixed business oil companies, it would be, I make a ton of money in the upstream, a good return in the refining with volatility, and a very steady return in midstream, I'm going to take the weighted average of those three costs of capital”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“It's not, no, because if the bond would go to part of that debt and they would have rising debt and the stock would go down. Right. So the bond, the BP bond to build a renewable within BP is just considered part of BP. Now if... PB, a different company comes along and says, I'm going to raise. So they have a very low cost of capital. That's why you'll give first solar or some good solar company an extremely low cost of capital because it's got a clean track record and it's pure solar.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“No, it's what I'm saying is its existing cost of capital is too high for it to make any money as a renewable company. So it's just going to be a value destruction machine So basically the lack of trust in BP. Means that you need 25% return for them to invest a dollar. You know what I mean? They literally need a project that's a 25% return investment for the market to approve it. If you look at.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Things are imponderables. One thing that people don't do a good job of thinking about, which has been so huge for the market over the last three years, is cost of capital. And so the problem for the oils is that the market assigns them a high cost of capital. And this is why a strategy such as BPs, where they said, okay, we're going to become an energy transition company was just a crashing error because they blatantly told you, and by the way, the report was more, the strategy is more or less designed by McKinsey, which is kind of a schoolboy era, was they didn't realize anything about the cost of capital that BP is assigned by the market, especially in the context of its history of things like.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“That's true. Yeah. I mean, that stuff has all got to be factored in. So I guess what I constantly wonder is how the U.S. economy keeps going as well as it does, seemingly. We have these data points, which are very important leading indicators. As we said, things like the trucking market. But at the same time, you go to an airport or last night I was in an expensive midtown restaurant. They're jammed. They're rammed. I mean, we had to sit at the bar. You know what I mean? They don't have a table. And so, yeah, there's your trucking data there. And you can see it's sort of flatlining along the bottom. So it's a real tough one. And I guess you think it has to be inevitable. And the manifestation of that, as you know, is that everybody's bearish, the market, more or less, right? But now people have woken up to the fact that we're in a pain trade and we probably go higher. And the other thing, as you know, is that the concentration of the market is so brutal in terms of Apple just goes up and up even though its earnings are actually declining.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“And it's not good for the economy because people who have the higher marginal propensity to consume, they're not the ones with the money. And so, you know, Bill Gates can get another billion dollars every day, but he's not going to be spending that much of it, you know.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“50% of the market. And black people own almost no stock, so it's very difficult to know the extent to which Essentially, this will be stop market just sort of keep on going regardless as wealth concentration continues. And then, of course, as you know, you have.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“You would think the big picture would be, and this is, if you remember, this was one of the origins of people getting excited about crypto or whatever, was this shouldn't kind of be rolling on in the way that it is. And, you know, you've all always got in the back of your mind great long-term investors who know naturally you should always be optimistic, you know, and you should sort of stay long. So it's just extremely tough. And I think about it a lot. I just wish I had a really good answer. I think that the US economy, the two things I say is the US economy is so enormous and we're on such a high base that it's going to be, it's a beast to slow this thing down. You know what I mean? It really is and kind of trying to corral it once it's rolling and the way it's rolling is very, very difficult. I think the other thing that's extremely tough is that the rich get richer and the poor get poorer. And, you know, in terms of the stock market, essentially, the 1% owned.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Terms of population, that you then consider whatever it is 130% your debt to GDP, which they've been at for a long time with the same population dynamics. And you saw, by the way, last year, as you know, the yen absolutely fall out of bed. And I thought, well, finally, the moments come. This is where logically we should be going.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“I was in Washington talking to a lobbyist who, by the way, was big Democratic lobbyist who was admitting that pursuing low gasoline prices in the context of trying to undertake an energy transition was nonsensical, but it's just political reality. So we've covered that. In terms of the recession, what she was saying is where is this recession? It's been so difficult. And then if you think about it, okay, look, I can't call the short term. I'll try the mega theme. You look at Japan. and it makes sort of no sense that they could have the demographic dynamics of Japan. I work for a Japanese bank, not least because of the demographic dynamics of Japan. They were trying to grow in the US. And Japanese population shrinks a million a year. And they have 0.8 children per woman. You need 2.2 just to stay flat. You know, they are so far off anything other than a mathematically defined decline now.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Sticking on the stock point, so it sounds like your long term, middle term, constructive on oil stocks for reasons you mentioned, but in the shorter term, six months, 12 months. I mean, you said that not time to buy oil stocks headed into a recession. I mean, do you think we are going into a recession? And if the price of oil goes to $60, it's hard for a lot of these stocks, particularly the middle cap, small cap ones, which are more junky, have higher break-evens, they could even start losing money. And I can't imagine their stock prices would do that well, right?”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“That's all that's it, you know, Senator Warren. Another very good example of ignorance was last year. The energy secretary Granholm announced an SPR release and some bright journalists said, by the way, how much is US daily oil demand? You know, she announced, I think it was a 60 million barrel release. And the journalists said, you know, just remind me how much daily oil demand in the US is. There was just this moment where it's like, she doesn't know. The answer is 20 million barrels a day, by the way.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Price gouging, you know, and imagine if oils had the market share of iPhone, the market share of Google, the market share of Windows, people would be losing their mind. And then they're totally idiotic because they forget that in a gas station, and you could do what Lisa Martinelli does, go and ask the guy in the gas station. For a start, it says Shell, and it's nothing, more or less nothing to do with Shell. It's just a legacy branding. They don't run the thing. Secondly, if oil prices are going up rapidly, guess who loses money first? The gas station, right? So, I mean, the idea that they're gouging is absolute nonsense. Thirdly, there's been enormous number of studies done to show that you can't gouge in a free market. And it's been illegal since basically 1908. It's just flatlyotic and it drives me nuts that they keep blaming it because it's one of those lines I have, which is if you blame price gouging for gasoline prices, you're just telling me you're ignorant about oil.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Tell you what's price gouging is I just my wife just made me clear out all my charges and I was looking at all the Apple chargers, you know.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Really do agree with you on the price gouging point is that if you have a specialty product that it's not a commodity, only you produce it. It's a special joint that goes into Boeing point and you sell it for $10,000 because no one else can make it, that's price gouging or you have some type of special yoga pan that's price gouging. But if you it's very hard to price gouging a commodity.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“The end of it, she said, you know, people think there's a conspiracy in oil, which is something to do with the CEO of Exxon, Vladimir Putin, the Venezuelan mafia and, you know, whoever, you know, you see it constantly, the politicians saying that they're gouging prices and it's just idiotically ill-informed, you know. The real conspiracy of oil is the conspiracy of ignorance on the part of the consumer. And people just don't understand how much energy density there is in oil and how much they're using. The average American uses 20 barrels of oil per head per year.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“It's super cool. And at the end of it, you know, this is approximate. I haven't read the book for 15 years, but I've talked about it for 15 years.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“There's a fundamental problem, which is the political cycle is shorter than the energy cycle by a very long way, right? So they're always going to go for low gasoline prices to win the next election. They're always going to make a load of green promises because they know it polls so well, particularly with young people. And then they're basically always not going to deliver it. And in the meantime, they're going to screw up with a whole lot of nonsensical. I mean, I'll tell you a longer story, basically. It won't take long, but it's a longer idea, which is that years ago I read this book by a lady called Lisa Marginelli called Oil on the Brain. And she was in California and she knew nothing about oil. She's a journalist. And she decided to go and just find what the story was. And so she went to a local gas station and she interviewed the guy and he told her to go and look at a refinery. So she went to a refinery and she kept going and she ended up in the Nigerian Delta.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“To use less soil. Now you've got to keep in mind things like people drive enormous. The most popular vehicle in the US is the Ford 150, which is kind of insane. It's like, how come, you know, I used to count with my kids on the highway? How many people were driving a pickup have something in the back? There's no reason for all these enormous vehicles. If you look at the average vehicles, the most popular vehicle in the Europe is the Peugeot 206, which you can pretty much fit in the back of an F-150. So that's why I think the Biden administration was so intellectually out of whack by trying to force oil prices lower when what they should have been doing is saying, look, you're going to have to live with this if you want to be more efficient, which efficiency being environmental friendliness. But, you know, that's.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“soil higher with the cycles of the demand side but with 8 billion people in the world many of them not using any kind of commercial energy you're you're you've almost got a guaranteed floor of you know hundreds of let's say 100 million barrels a day of oil demand which is actually very hard to supply so my anticipation is we have weakness here as I said and nothing much exciting in the oil price this year but as we go forward oil is going to become harder and harder to supply because it simply isn't that easy to find more oil and where the oil remains is in many cases very difficult places like Iraq you're going to push the oil price higher naturally over time just by weight of global population and ultimately have to force efficiency at some sort of price breakpoint very high so let's say we've agreed it's probably 120 or 130 oil is where you have to go to to force people”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, cash return. I mean, it could be buyback. We'll give them credit for buyback. So if you reduce your share count by 5% and pay a 4% yield with a 2% special bingo. And that's, by the way, they're paying out way more than that over the past year. The way that you manifest all that is to tend to look at free cash flow yield and then think about how much these guys can pay out. And to get to the 10%, you probably need an excess of 60% more like an excess of 70. In fact, they're struggling to be honest to make a 10% built up return this year if you X out the trailing excess profit they've got to hand back to you. But you can still basically get there in a $70 to $80 environment. The other important thing is to keep in mind that the marginal growth in oil supply essentially all comes from the US. So if the US stops drilling and stops generating excess supply, you're going to reprice.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Oil price because of presumed efficiency gains. So, you know, ultimately, what they have to do is pay you to own the stock. And the refiners did that. So the refiners essentially were not ostensibly in any way attractive. They're not environmentally attractive, you know, et cetera, et cetera. But I tell you what, if you pay someone a 12% yield every year, it's almost irresistible for a quality investor to own that.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“So essentially, people say, Oh, there's no terminal values in these companies. That says maybe. But if, let's say, for example, you pay a cash return of 10% a year, you don't grow at 10% a year, you return 10% cash to shareholders a year or in excess of that. Within eight years by math, a shareholder gets their capital fully returned to them. At that point, in eight years' time, you own an option on the oil age lasting a lot longer than the eight years during which time you've been paid out. Now, these are not short-term, long short hedge fund arguments. These are fundamental investment value warren buffett, Benjamin Graham style arguments for valuation. But what else have you got, right? You can't argue that the oil market's going to triple or that we've got the new AI. We haven't. If anything, AI is going to be a major threat to the...”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“No, they were disciplined. They did a really good job. Yeah, they just sat right there and they said, okay, look, I mean, you've got to remember that these companies were even relatively large companies were saying like a pioneer, a major EMP. We're talking about double digit growth and going to a million barrels a day of production as a kind of round number target just in terms of volumes. So they were growing, you know, and as you know, if you compound double-digit growth, it's insane in a market where a big demand growth year for oil is 1% growth, right? If global oil demand grows 2%, it's a huge number. So why are you trying to take market share from who? The Saudis? I mean, you're insane. You're not going to die on that hill. What you should do is maximize your efficiency, pay your management for return on capital employed. And also my argument was that you should embrace the end of the oil age and liquidate in an orderly manner.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“It's a narrative of capital discipline instead of drilling new wells. We're going to be spending money on saving money, putting it in our treasury, buying back shares. And if production even declines, we're not going to be plowing money back into the ground. How much of that narrative play out when the price of oil was at $120, though?”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT