00:00This is not a deal.
00:02Easily, Rodriguez, the interim acting president, however you look at it,
00:06understands that her boss was taken out at gunpoint.
00:10And she can be taken out at gunpoint.
00:12And so anything they can do to accommodate the United States right now,
00:19they're going to do.
00:19They don't care.
00:20They know that Trump is a lame duck.
00:22And if they get through the next two and a half years,
00:24and they get some investment in, which Venezuela desperately needs.
00:28What's it mean for Chevron?
00:30Chevron's going to continue to operate there.
00:33They've got 200,000, 300,000 barrels a day of production.
00:38They can extend it a little bit.
00:39Keep in mind, of course, China's there.
00:41China has a concession on 4 billion barrels of so-called reserves.
00:45We don't know what those numbers are.
00:47Chevron's got a lot of issues they have to deal with here in the U.S.
00:50I mean, their purchase of Noble has brought them a huge bunch of liabilities back office
00:58with ownership issues that they really haven't dealt with yet.
01:03You know, the U.S. government just acquired a 35% stake in Betancourt's North American Blue
01:08and Energy Partners.
01:09So they're actually purchasing oil fields in Venezuela now, right?
01:13So, I mean, so this is going beyond, you know, just, you know, in word only, so to speak.
01:18So talk to us a little bit about what this means for all that Chinese debt you rightly point out
01:21is owed to them.
01:23I mean, what happens to all these barrels?
01:24I mean, when does China get paid?
01:26Where do they stand in the capital stack?
01:28I think China stands behind Exxon, who is still waiting to be paid for the second or third
01:34expropriation they had in Venezuela.
01:35Fair.
01:36So, you know, the paper is only as good as the paper it's written on.
01:41Interesting.
01:41Interesting.
01:42And then talk to us a little bit about Venezuela cargoes.
01:43I mean, are they really accelerating?
01:45I mean, are we seeing real evidence that that oil is coming online at a pace that the markets
01:50are pricing in right now?
01:51No, not at all.
01:53It's marginal.
01:54We had a bunch of oil bottled up with the sanctions.
01:57They couldn't take it to market.
01:58And a lot of the Venezuelan crude is really the heavy asphalt stuff.
02:03It's difficult to get into the market.
02:05We have a few refineries left on the Gulf Coast that can handle it.
02:08You know, you rightly point out that there just hasn't been, despite the fact that, and
02:11I think the energy sector and the S&P is up 50% year to date, despite all of that,
02:15we're
02:15not seeing deals in the energy patch.
02:17We're not seeing M&A.
02:18We're not seeing as much activity as one would have otherwise thought.
02:20Is that because yields are going up and funding costs are becoming too prohibitive, or
02:24is there something else going on there?
02:25There's some hinky stuff going on.
02:28That's an oil field term.
02:29There's what?
02:30Hinky.
02:31Hinky.
02:32Can you say that at the University of Houston without losing tenure?
02:35I can say a lot of things at the University of Houston without losing tenure.
02:39I work in the oil patch, too.
02:41And, you know, for example...
02:43He looks like a landman.
02:44Here we are.
02:44He does look a little landman now that you play.
02:46Here we are, you know, 25 years following the collapse of Enron, and this is where it
02:51was going.
02:52Yeah, EOG Resources is a crack technical team.
02:56They can pull oil out of a turnip.
02:58The problem is they're really loosey-goosey and cavalier about the ownership, not for the
03:03shareholders, but for the mineral owners.
03:05And in some of the basins where they operate, they can't tell you, and they've admitted in
03:10court, they can't tell you how much they owe the owners, mineral owners.
03:14That's the United States government.
03:16That's state government.
03:17That's ranchers.
03:18They've got a huge problem.
03:20They can't pass a due diligence.
03:22Wow.
03:22No, I mean, Ed, first of all, let me begin by saying both Tom and I think that Billy
03:25Bob Dorton is very, very handsome.
03:27But, you know, outside of that, I'd just like to focus on Russia, all the oil that's
03:30been taken offline.
03:31I mean, is it really impacting the market?
03:33Is that evident yet in not only the prices of WTI and Brent, but in, you know, products,
03:38you know, Nat Gas, you know, heating oil, you know, Arbob, all of that stuff.
03:42The Times has a piece today about the cost of diesel being up.
03:46And Bloomberg has a piece about the cost of LNG in Bangladesh, $28 per BTU.
03:53That's the equivalent of $168 a barrel for diesel, roughly.
03:57And so, you know, the cutter being offline has cost everybody a lot of money.
04:01It's a lot of pressure on the diesel market.
04:03From the University of Houston, Ed Herz with us, just encyclopedic, first quote on the
04:08Venezuela uproar we've seen the last week or so with him.
04:12She's been to Aberdeen.
04:14She's been out there on the rigs.
04:15Caroline Hepker with us from London with Professor Herz.
04:19This is a running joke, isn't it?
04:20I'm the correspondent of every different issue in the UK.
04:24She's figured out the plot.
04:26I know.
04:26She can stay.
04:28I want to question a little bit about the North Sea.
04:31I mean, the UK government's under pressure to open up more drilling in the North Sea.
04:36It's a political issue.
04:37Let's leave that aside.
04:38Does it make any difference to extract more from a kind of dying North Sea oil field?
04:44I mean, Norway is.
04:45Your view on that?
04:47Does it help with the energy crisis in the UK and Europe?
04:50It certainly can.
04:51It depends on how quickly it can come back online.
04:55As we know, the North Sea production's off, what, three to four million barrels a day over
04:59the last 15 years.
05:00Brent is just a fiction as an index.
05:05I mean, it includes WTI as part of its basis for the calculation.
05:10We know that the UK has opened up onshore drilling and is working to do that.
05:17The North Sea is an importing market now.
05:19It used to be an exporting market.
05:21Yeah.
05:21Yeah.
05:22Miata Fanbuda is the UK energy minister.
05:24It would be very interesting to see what she has to say on those signing off on more deals.
05:29Damien, get one more in here.
05:30And I'd love to bring it back stateside here.
05:34It's 2026.
05:35In 2001, Enron.
05:38And, you know, we're celebrating the 25-year anniversary of that crisis.
05:42Are there any parallels between what happened then and what you're seeing now in the financial
05:46markets?
05:46Yes.
05:47So, in 1996, Enron began these off-balance sheet transactions.
05:51Essentially, as we see in almost every corporate failure Ponzi scheme that comes apart, they
05:58began selling assets to themselves at the end of a period of time.
06:01Circular financing.
06:03Absolutely.
06:03One of the things we're seeing in the oil patch are private equity groups trading assets
06:09amongst each other.
06:10I mean, one of them, NCAP, just bought into a field that they had been part of 10 years
06:16ago, 12 years ago.
06:18How can they add value?
06:19What these guys are becoming, essentially, are leveraged, long-only commodities funds.
06:24I've got time for one more question, Professor Hurst, as simple as I can.
06:27We're nearing $6 a gallon in America on diesel.
06:32In London, it's $9 a gallon, equivalent with the taxes and all.
06:36There's a lot of gloom about that.
06:38Are you worried about the microeconomics of these high diesel prices?
06:44It's going to continue.
06:45The SPR releases are coming to an end, no matter what the president says.
06:50The IEA releases are coming to an end.
06:52If China...
Comments