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7/29/25 Capitalist Times Live Chat
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AvatarRoger Conrad
1:59
Hello everyone and thank you for joining for this month’s Capitalist Times live webchat.
 
As always, there is no audio. Just type in your questions and we’ll get to them as soon as we can concisely and comprehensively. We will be sending you a link to a transcript of the complete Q&A tomorrow morning. And it will also be posted on the Energy and Income Advisor and Conrad’s Utility Investor websites. We will continue the chat so long as there are questions left in the queue and from emails we received prior to the chat.
 
 
We appreciate your business and are looking forward to your questions today.
 
Let’s start as always with some questions received prior to the chat.
 
 
Q. Hi Roger:
Is DMLP an MLP which provides favorable tax treatment with its distributions (similar to what ARLP provided to us)?
Thanks.
Barry J.
 
A. Hi Barry
 
Yes. Dorchester Minerals (NYSE: DMLP) is a tax advantaged master limited partnership.
2:00
The big differences with Alliance Resource Partners (NYSE: ARLP) are (1) the focus is on oil and gas with no coal exposure and (2) the distribution is truly variable from quarter to quarter, following cash flow. So there is never overage that requires taking on debt, as is the case now with ARLP.
 
Alliance by the way has reduced its quarterly distribution to 60 cents from 72 cents per share previously. Dorchester has also reduced as has Black Stone Minerals (NYSE: BSM). That follows commodity price weakness, which reduced cash flows at all three of these royalty companies.
 
 
Q. What's your latest take on AES (seems like at a low point with excellent dividend return - buy more?) and XIFR (average down?)
 
Mr G
 
A. Hi Michael

I think AES is a very cheap stock with a low risk growth pipeline,
great assets and an improving balance sheet that already has
investment grade credit ratings. That's why several private capital
firms are reportedly interested in taking AES private--which I believe
will have to be in the upper teens to be successful.

The company has a big earnings release and guidance update coming up,
probably in early August. And all eyes are going to be on if
management makes any changes to earnings growth guidance, based on
Trump Administration tariffs and the rapid phase out of wind and solar
tax credits that could affect its project pipeline in the US. I think
the surprise for many will be that the US projects are all or mostly
all safe harbored on tax credits. And the company has multiple
opportunities to deploy capital even without tax credits going
forward.

XPLR is basically a bet on its recovery plan working out. And at this
point, there appears to be little risk from tax credit changes,
tariffs or capital markets--since with the dividend elimination CAPEX
and debt reduction
plans (CEPFs) are basically self funded. Q2 results
are August 7 and I don't expect any meaningful surprises. I don't,
however, ever recommend "averaging down" in any stock. If you have
money to invest, it's always best to spread your bets. And XPLR isn't
going to pay a dividend for several years, even if its recovery plan
stays on track.
 
 
Q. My avg. cost is around $60 as I bought near NE's last trough. Although NE took a horrible pounding this week, a whole lotta companies tied to "renewable energy" got pounded this week as well. As if we investors didn't already have enough to deal with in analyzing possible ute investments, now we have the added factor of politics to consider as the current admin. seems to be more fossil fuel oriented than the previous administration. But, when we have an administrative culture of throwing out the previous admin's exec orders and as much legislation as possible (Barack dashed Bush, Trump dashed Obama, Biden trashed Trump and Trump is certainly trashing Biden), it means
2:01
that we have to stick our fingers up tn the air to see which way the wind is blowing-especially when evaluating capex plans. The entire industry depends on capex going forward and if the political wind changes, what effect(s) will this have on multi-year capex plans?  I for one will be buying more NE if it falls into the $60s. The regulatory climate in FL is mostly sanguine (I live down there 3 months per year) and the growth opportunities abound AS LONG AS THE FEDERAL ADMIN STAYS OUT OF THE PICTURE. It appears that the new tax act will leave some sacred ute cows in place, but gore a couple credits that utes (especially renewables) now enjoy. 
I am going to focus on the capex plans of utes going forward-and in some cases, I'll need a crystal ball due to capex plans extending toward 2030. This may be a touch off base, but I believe capex is just as important as other financial metrics because capex supports future revenues, profits and
ultimately growth. (You can add this to the mailbox if you wish.)—James G.
 
A. Hi James
 
Yes, CAPEX is the driver of utility earnings, dividend growth and investment returns. And for that spending to become earnings, companies' strategies have to be on board with regulators. 
 
Historically, the important decisions in electricity, gas and water have been left to the states. And the country has tangibly benefitted in my view over the 40 years or so I've been advising investors on utility stocks. For example, 35 states avoided electricity deregulation that continues to disrupt investment and holds rates high in the majority of states that did adopt it. More recently, many states' refusal to enact what were generally arbitrary mandates to force utilities to use more renewable energy--how ridiculous does 20% by 2020 sound now?--has actually speeded up the adoption of wind and solar. Florida and Texas, for example, are expanding renewable energy usage at the fastest rate in the country--with zero renewable
2:02
energy mandate. Companies instead have had the flexibility to do what's most economic. And right now that's adding a lot of wind, solar and storage to the grid as component prices plunge and other sources like nuclear and even natural gas take 5 to 10 times longer to build at potentially several times the price.
 
It's a formula that's benefitted all stakeholders: Utilities have assurance they can add generation at the least available cost and earn a fair return, so their cost of capital is lower. Lower costs mean lower rates for residential customers, while attracting new industry--data centers but also "re-shored" manufacturing. And investors win from reliable and robust returns.
 
Unfortunately, you're absolutely right that every federal administration lately has attempted to gain more power over the process--as if high cost countries like Germany and the UK are a model! So far they've failed thankfully--Trump 1 tried to derail renewables before they got off the ground. Biden put major new restrictions on
oil and gas, and left office with both at record levels of output in the US. And now Trump 2, the most aggressive to date, is trying to end a renewables boom not just by rolling back tax credits but shutting down permitting, jacking up taxes on imported parts and forcing utilities to keep rapidly aging and increasingly expensive coal plants runnings. And I think they've basically written a new playbook for when the other side inevitably takes power--which will be used even more aggressively against oil and gas. 
 
Of course, the reality here is the power system needs new capacity additions, grid hardening and improved efficiency--which AI may be able to deliver. And if intrusive federal intervention means investors can't count on a fair return on investment--including projects an incoming federal administration may not like--all of these things will become that much more expensive. That's a decent argument that what we're really going to wind up with here over time is scarcity. And that's not a bad reason to
stick with our utilities like NextEra. They may not be able to build all they want. But what they do will be all the more valuable. And smaller rivals will fall by the wayside-in a best case by selling out to them.
 
At this point, I'm looking very closely at utilities' guidance now that we know what the tax credit situation will be. NextEra appears to be staying the course, which is significant. So is Centerpoint Energy--though its spending is all T&D. We'll have to see what the rest say. But I am still comfortable with all of them ahead of their reporting.
 
 
Q. Is "O" aggressive (see "First Rate REITS" table) or ... conservative (see "REITSheet" table), both in July issue. From the A- credit rating in that first table, I'll guess conservative.—Paul N.
 
A. Thanks for pointing that out Paul.
Realty Income (NYSE: O) is supposed to be rated Conservative. I'll
correct that for the next issue of REIT Sheet.
 
 
Q.. Roger.
 
BSM announced a waker quarter and a reduction in dividends from $.375 to $ .30.
 
REason for the poorer performance was a lack of production and some significant one time expenses.
 
The reduction in the dividend seems to be a very large reaction unless the condition of lack of production persists for a period of time.
 
What are your current thoughts on BSM
2:03
 
Thanks--Ralph B.
 
Hi Ralph

Yes Black Stone Minerals (NYSE: BSM) has reduced its quarterly
distribution to 30 cents from the previous 37.5 cents. That was a
possibility we pointed out in the current issue of Energy and Income
Advisor feature article discussion of variable rate dividends.

Black Stone like Dorchester Minerals (NYSE: DMLP)--which we just added
to the High Yield Energy List--pays dividends based on two factors.
One is the volumes pumped from its lands by third parties, which are
going to vary with those companies' outlook for oil and especially
natural gas prices in BSM's case. The other is the realized selling
price of what is produced from its lands, which again is weighted
toward gas. Neither Black Stone nor Dorchester hold meaningful debt
because they have minimal capital spending needs and will not maintain
a dividend that can't be sustained out of cash flow. Therefore, both
should be considered to essentially pay variable dividends, though
Dorchester's more closely match actual cash
flow from quarter to
quarter and are therefore more variable.

We're comfortable holding both BSM and DMLP--not because we don't
believe they won't reduce dividends from time to time--but because
we're bullish on oil and gas prices from these levels going forward.
And as they do head up, so will the ability of both BSM and DMLP to
pay dividends.

DMLP is expected to post Q2 results until early August. BSM won't
until August 4. What Black Stone did report was that output from its
lands did not increase as fast as management had expected earlier in
the year. That's largely because companies on its lands are being
cautious with natural gas prices weakening recently and have delayed
planned production increases.
All parties still expect those to go
ahead. But with the timing less certain, BSM is trimming its dividend
to achieve a targeted coverage ratio of 1.18X for Q2, which means it
will have cash to complete various enhancements on its lands to
increase future production--and avoid using debt.

In short, I think BSM's moves are prudent given current commodity
price levels. And I continue to expect dividend increases ahead in
light of our expectation for higher gas and oil prices. Note that DMLP
will pay 62 cents on August 14 for shareholders of record August 4.
That's still an attractive yield but it's less than the 72.6 cents for
the previous quarter, with the cut due to the same prudent reasons BSM
reduced its payout.
2:04
A.  
These are stocks that pay dividends that will rise and fall with
commodity prices. That's why their yields are higher and why we rate
them riskier than say a midstream company like MLPX LP (NYSE: MPLX),
that earns its money from fees and is not directly impacted by
commodity prices to a meaningful extent.
 
Q. I think you've talked about EXE buying back shares, but it doesn't looking like it on the Financial tab of Seeking Alpha, can you help explain?—Eric F.
 
A. Hi Eric

We use other sources than Seeking Alpha for that kind of information,
so I can't really comment on what their sources are.
. Most services
will use some sort of link to EDGAR, the site where the SEC posts
required filings when corporate directors, management and major
shareholders buy or sell a company's stock.

The actual form is a "Form 4." I really like the way the Koyfin
service I use breaks down SEC filings into a separate "Ownership"
category, so you don't have to sort them out from the 10-Qs etc.

The most recent insider trade I'm showing for EXE is from last
month--it's Michael Wichterich picking up 3,157 shares at a price of
$110.89 per share. And there are nine other insider purchases filed at
roughly the same time.
 
 
Q. I bought ET under your advice back when it was $7, I've made huge gains in dividends and appreciation over that time. Even huge gains with options along the way. 
Now my yield on cost is about 20%, seeing these big dividend payments come in, coupled with potential capital gains, makes me never want to sell it. Yes its an oversized position now, but its paying oversized gains now too.
 
A. Hi Eric

If you didn't sell Energy Transfer LP in the previous decade's energy
down cycle--when ET was dealing with a big debt load that eventually
forced a dividend cut--there's absolutely no reason to do so now,
especially from that price. Kudos for buying at that level when so
many were getting out instead!

 I think both the stock price and dividend are going quite a bit
higher in the coming years. That's in large part because of superior
operating performance, a strengthening balance sheet and more
acquisitions. But it's also because of because of scarcity--those
pipes and systems it owns are only going to become more valuable as it
becomes more difficult to build them with big tariffs on materials and
2:05
decreasing continuity of regulation with the rise of fiercely partisan
energy politics.
 
 
Q. Almost 2 years ago I fell for the dividend trap of IEP when it dropped from 52 to 29, the next day during the live chat you explained the risk that was still there, so i sold it breaking even around the $30 mark. Thank you sooooo much for keeping me on track. Well now its happening again, 3 dividend drops, $9.50 price, and a 21% dividend, all making the dividend lure strong. Does there come a time where you feel this company is ever investable, or does the whim of Icahn make it always a big risk?—Eric F.
 
A. Hello again Eric

To say Icahn Enterprises marches to its own tune would be the
understatement of the year. With the yield creeping up on 22% this
week, it's safe to say the stock market is betting pretty heavily on a
big distribution cut in the near future.

My main problem with betting either on or against that assumption is
entities like IEP are basically black boxes. You really can only guess
what's inside.
And in this case, it's a quite complex mix of various
businesses the fund had interest in.

Your success as an investor of course depends on the acumen of the
managers. That's really no different than with a regular mutual fund.
Mr. Icahn has certainly had more than his share of successes
throughout his career. And you're basically betting he'll find the
magic again if you buy IEP now, which has some merit. This investment
company, however, has never been run the same way as for example
Berkshire Hathaway. So if you buy it, take note that there is quite a
bit of leverage here with debt at 10X EBITDA and debt/equity at 158%
plus. I suspect it's that hefty debt leverage at a time when interest
rates have remained higher for longer than has derailed profitability
at this time. And that's a dangerous place to be, given the
uncertainty on where rates are going from here.
We could see more
selling of assets and again a dividend cut is a strong risk--not
something to buy unless you can stomach a drop to 5 or so.
 
 
Q. Hi Elliott & Roger,
 
 I like the concept of both these stocks, but I'm not sure I understand what is unique about each, and if you would advise investing in both . Do you see one as superior? Thanks--Michael L.
 
A. Hi Michael

There are two main differences between Black Stone Minerals (NYSE:
BSM) and Dorchester Minerals (NYSE: DMLP)

First, BSM's lands are much for gassy, which means the royalty it
receives is primarily based on the amount of natural gas produced on
its lands and the realized selling price of that gas, which also
affects output decisions of the third parties drilling on its lands.
Dorchester's lands are more oily, so oil prices play a larger role
determining cash flow for those same reasons.
2:06
Second, BSM tries to pay a more consistent quarterly dividend.
Dorchester's payout varies directly with quarterly cash flow and
therefore changes from quarter to quarter. If I had my way, Black
Stone would adjust its dividend to pay the same way, as it would
probably avoid confusion in the market place that can create
unwarranted stock volatility. We saw some of that when BSM reduced its
payout to 30 cents this quarter, while DMLP held its own after making
a similar sized cut for the same reasons--lower commodity prices
depressing realized selling prices and drilling activity on its lands.

I don't really have an answer for you on which is "superior." I would
say if you want to buy only one and want to bet more heavily on gas,
choose BSM. If you want to bet oil, DMLP is a better bet.

We're comfortable holding both BSM and DMLP--not because we don't
believe they won't reduce dividends from time to time--but because
we're bullish on oil and gas prices from these levels going forward
And as they do head up, so will the ability of both BSM and DMLP to
pay dividends.
 
 
Q. Hello Roger and Elliott,
 
3 questions: Are these stocks worth sticking with or should the money be put into stronger companies – CLPHY, CQP and ET? They are either up a bit (CLPHY 2%) or down (ET -6%, CQP -9%) since I bought them.
 
Thanks for you great services and wisdom,
Larry W.
 
A. Hi Larry

Thanks for those kind words. We continue to like all three as long
term, dividend paying investments.

We chose Venture Global (NYSE: VG) recently as a play on expansion of
LNG exports in the US. But Cheniere (NYSE: CQP) is still the largest
player with a solid expansion pipeline and a dividend yield of nearly
6% that will grow with the business. The stock has returned about 8%
year to date and we think it will strengthen. The same is true for
Energy Transfer (NYSE: ET), though it's actually in the red about -6%
year to date. I look for another high impact acquisition and another
solid result and guidance update on August 6.
And the 7% dividend is
tax advantaged, growing and safe. CLP Holdings is a great way to bet
on China's resilience with relatively little risk and is up around 8%
year to date--I expect a much better result in Australia to remove
what's been an anchor to the stock, which has growing operations on
the Chinese mainland, in India and a secure utility franchise in Hong
Kong.

As for whether to add to them, I would say that depends on the
individual's portfolio. I always advise maintaining balance and
diversification and not really loading up on any one stock. But these
are not companies I'm worried about producing solid returns at this
point.
 
 
Q. Hi Roger,
 
70 million shares traded in AES on 7/9/25 and then the story this past weekend about a possible takeover/buyout.
 
From a purely hypothetical POV, what do you think the company might fetch - and more importantly, do you believe management wants to sell?
Thanks in advance.—Frank L.
 
A. Hey Frank
 
Thanks for the note. As you know, my view for a while on AES is that people continue to treat the company as though we're still circa 2002--when it narrowly avoided filing Chapter 11 before aggressively focusing operations and cutting debt. That's made it very hard for them to raise outside capital by conventional means the past couple years--i.e. selling stock and issuing bonds. Fortunately, most of their debt is at the project level where it's amortized over the life of contracts, or it's at the unit level. So they haven't had to do the kind of refinancing that really meaningfully impacts parent level earnings with higher interest expense. But they have had to live within their means and turn to alternative financing when possible, such as the sale of ownership takes in operations in certain Caribbean countries to TotalEnergies--which is now a partner in these projects. Also the sale of 30% ownership in the Ohio and Indiana utilities does the same thing.
2:07
AES is expected to announce Q2 results and update guidance in early August. But based on what they said in early May following Q1 results, their plan to "harvest" free cash flow by completing the current pipeline of projects--much of the demand to AI--is still on track. And they reaffirmed growth and earnings targets, while highlighting the protection of their project pipeline against worst case outcomes for tariffs and wind and solar tax credits.
 
We now know what the tax credits look like. And it looks like what the company is building is safe harbored against the more rapid phaseout in the federal budget bill now passed. The tariffs are anyone's guess but again based on what they said in the Q1 call, it looks like sources are procured--even for storage. And the demand from Big Tech customers if anything looks likely to accelerate.
 
Bottom line is we'll know more with the Q2 results. But at this point, it doesn't look like anything that's happened on the policy front will require a change in guidance or
strategy at AES. Where a takeover/merger/partial investment in the parent etc could be attractive to AES is from a financing standpoint. In fact, with the right partner, I could see this company re-accelerating investment plans pretty quickly for contracted generation.
 
As far as a price, given where this stock has traded recently, a cash price in the mid-to-upper teens is probably all we could reasonably hope for. The roughly $10 bil market cap is about 1/16th that of sector leader NextEra Energy--which would be an interesting partner given the complementary businesses in the US. TotalEnergies has already partnered with AES as I mentioned and has an appetite for renewables, though a deal between them would probably require selling the Ohio and Indiana utilities, possibly to current private capital partners.
 
A private capital offer seems to be what the current rumor is. And that's the one sector of the financial industry that appears to be flush with capital. There would still be regulatory approvals to
win--whether the buyer kept or sold the Ohio and Indiana utilities. And as a result, it would probably take at least a year to close anything--Indiana has the reputation of being a cooperative regulatory environment, Ohio is anything but. 
 
Any way to slice it, AES has a lot of moving parts, including extensive operations and partnerships with governments in places like Vietnam. So any takeover deal for the company is going to be complex. And that may doom any deal at the end of the day. There is a fair amount of short interest against AES (6.74%) that's in play now--people betting against the company at a time of anti-renewable US government policy mainly I suspect. I think they're bandwagoners and are likely to get burned. But they will keep things volatile. My view is if we're willing to live with that, there's not a lot of risk to just holding onto our AES and seeing what happens with the takeover talk.
 
Q. I took your advice and sold my 1,000 shs of KHC. So I now have $28,000 to invest and would like
2:08
to achieve the same or better dividend of KHC's $1.60.
Do you have any suggestions?—Brian O.
 
A. Hi Brian

From the standpoint of the model portfolio, I'm really not in a hurry
to reinvest the proceeds from the sale of KHC, though I am happy to be
out ahead of their Q2 earnings and added color on the strategic review
later this week.

At this point in the cycle--with interest rates in flux and the S&P
500 so heavily overweighted in extremely high valuation Big Tech
stocks--I like having the 15% cash position in Vanguard Federal Money
Market, which yields a little over 4% with no risk. That's actually
about what KHC would yield on just a 25% dividend cut.

If you're looking for stocks to buy, I would take a look at the other
stocks in the model portfolio you might be underweighted in. My intent
right now is to eventually have a stock to replace KHC with. But we've
also added a number of new positions this year. So again, my view is
we should all be patient with our KHC sales cash at this time.
Thanks for your question. I'm sure others are wondering the same.
 
 
Q. Roger,
 
Read with great interest your comments on Edison International' exposure with respect to the wildfires earlier this year.
 
It is unclear to me however whether they have cleared up their liabilities from the wildfires from around a decade ago, such as the 2017 Thomas Fire and 2018 Woolsey Fire. - or are all of those concerns fully reserved by now? Are the older liabilities covered by the insurance scheme currently in place?
 
Thank you,--John A.
 
Q. Hi John

Edison is still slogging along with the potential liability from this
past winter's wildfires. I do see they've established a recovery fund
for the Eaton Fire damages ahead of the still ongoing investigation of
what ignited the blazes. I would view that positively, though there is
so much still uncertain here. My view is the utility will reach a deal
with the state that will keep both it and the state utility Wildfire
Insurance Fund whole. And that it will not require a
dividend cut. But
until there's clarity, it will be tough for the stock to make any real
headway.

As for previous fires, however, they did settle the last of those
earlier this year--and received an amicable amount of compensation for
those costs from the state as well. So that's one less thing to worry
about. We'll find out a lot more when Edison releases Q2 results and
updates guidance, possibly later this week.
 
 
A. Roger/Elliott:

Can you discuss in general terms the recently passed BBB legislation and
its benefits to retired and elderly citizens as opposed to the changes
that would have gone into effect at the end of 2025 had there not been
such new legislation?
2:09
Thanks much for all your recommendations over the years.

Jimmy C,
 
A. Hi Jim. Thank you for those kind words.

In brief, the 2018 tax legislation (TCJA) that was scheduled to expire
this year lowered tax rates pretty much across the board from previous
levels--though most of the benefit accrued to higher income brackets.
Specifics included an increase in the standard deduction available to
all taxpayers, a doubling of the child tax credit, a cap on
deductibility of state and local taxes at $10,000, limits on the
mortgage tax deduction and a higher threshold for the Alternative
Minimum Tax. The act also included a 20% pass through deduction for
qualified businesses and a phase out of bonus depreciation.

The so-called "One Big Beautiful Bill" extended TCJA tax rates for
individuals/families and businesses. The pass through deduction was
made permanent and phase-in limitations were increased to shelter more
income for sole proprietorships, partnerships and S-Corps. And the
SALT tax deduction limit was
raised from $10,000 to $40,000. There was
also a special tax benefit added for seniors over age 65, as well as
"Trump Accounts" to incentivize having children

No doubt I'm leaving something out, as the OBBB was one of the longest
bills in memory. And the word was that most Congresspeople voted on it
without reading all 900 or so pages. Suffice to say there are also
numerous carve outs for specific businesses, $1 trillion in cuts to
the Medicaid program and a general rollback of tax credits for new
wind and solar construction, rooftop solar and EVs--though major
extensions in credits for hydro, geothermal, nuclear and energy
storage.

As a general note, I will state the obvious: This bill will affect
different seniors in wildly different ways. If you're a higher income
taxpayer with property in an expensive urban market, you're going to
get a huge benefit from the higher SALT tax deduction. if you live in
a rural area and depend on Medicare, you might find yourself driving
much further to reach a hospital.
As is always the case when the federal government does something this
aggressive, there are also going to be multiple unintended
consequences and we're just going to see how they play out. But as
investors, the same things are going to affect our returns--and
financially strong and growing companies are still the best bets
across sectors.
2:10
That's it for what we have in the email queue. Now let's get to some live questions!
Mike
2:20
Roger:  any updated thoughts on LYB? Please let us know your thoughts.    thx
AvatarRoger Conrad
2:20
LyondellBassell like the rest of the refining/chemicals (downstream) sector has faced some business headwinds this year that carried over from last. And we would expect to see them show up again in Q2 results that will be announced August 1. Those basically include softer margins on key profits. But the company's investment plans appear on track, including expansion of propylene production capacity in Texas and the successful sale of several business lines deemed by management as "non-core"--including certain olefins and polyolefins assets in Europe.

Importantly, however, LYB continues to generate large amounts of free cash flow, the result of successful cost management--the "cash improvement plan" is on track to lift cash flow $500 mil this year. That enabled the company to boost its already high dividend by 2.2% in June. And it backs the BBB (stable outlook) credit rating.

I don't expect breakout results in Q2, given what we've seen from earlier reporters with downstream operations. But I'm comfortable
AvatarRoger Conrad
2:21
with the dividend heading into the earnings report later this week. And that's enough to stick with LYB in anticipation of a price recovery over the next 12 months as conditions improve.
Gary
2:22
Hi Elliot,Permian gas offtake is about to jump +2 bcf/d within the next two years, with new pipeline construction alone, significant excess gas is already being produced and flared or pumped back into the ground. This has to affect the nat gas price negatively, for everyone else, once these pipelines go into production. (Note: this is good for Permian nat gas producers with access to pipeline transport, but negative for everyone else selling natural gas.) Plus, if you look at the drill rig count - oil rigs are going down but gas rigs have just moved up sharply the last three weeks?
> >
> > I am wondering if nat gas is not aready (or soon to be) available from the Permian to meet a BIG chunk of the surging LNG export demand. Certainly, looks like nat gas producers outside the Permian are at least starting to ramp up drilling activity and eventual production in anticipation of the surging demand and higher strip prices?
> >
> > I am still a nat gas bull, and heavily invested in nat gas producers and pipeline co
AvatarElliott Gue
2:22
I covered this issue at some depth in today's long alert. There's a lot more than 2 bcf/day of new Permian gas offtake capacity coming in -- Blackcomb is more like 2.5 bcf/day and then we have Apex next year at 2 bcf/day as well. And of course, late last year we had Matterhorn come on at 2.5 bcf/day. First thing to understand is that Matterhorn volumes have been fully absorbed -- West Texas (Waha hub) gas prices initially jumped and now have fallen off again to a large discount to Henry Hub.  Devon, which has the largest capacity on the pipe has guided to a steadily lower gas price relative to NYMEX Henry Hub through 2025 as there's still a big Permian glut of gas. Second, most of this new capacity won't come on until late next year or early 2027, so it won't have an impact on gas pricing through this coming winter season. Third, the numbers we're talking about are likely to be dwarfed by the growth in LNG exports and demand over the same period.  Plaquemines, Venture Global's export facility in Louisiana,
AvatarElliott Gue
2:22
reportedly started exports in the middle of July. Recall that this is the second phase of the project and the first phase started up last December. Venture's modular LNG construction process allows the company to start exporting in phases during construction rather than waiting for final plant commissioning (in 2027). In fact, that's great for Venture as they can sell the gas at premium spot prices until the start of their long-term contracts. We also have long-delayed Golden Pass (XOM/QATAR Petroleum) starting up at the end of this year or in early 2027. Combined, those two projects add 2 bcf/day of new gas demand by early next year and more like 2.75bcf/day by the end of 2026. Then we have Golden Pass Phase 3 (0.68 b/day in 2027), Port Arthur (1.58 b/day in 2027) Phase 1 and Rio Grande LNG (upwards of 2 bcf/day in 2027-28). On top of that we have the in-basin demand story that's gaining steam -- 1.4 to 1.5 bcf/day supply deal by EQT to supply new dedicated data center plants in Pennsylvania, FANG working on
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