1 00:00:02,440 --> 00:00:09,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:09,119 --> 00:00:13,320 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:13,320 --> 00:00:15,800 Speaker 1: Eastern on Apple card Playing and Broud Auto with the 4 00:00:15,800 --> 00:00:19,720 Speaker 1: Bloomberg Business app. Listen on demand wherever you get your podcasts, 5 00:00:19,920 --> 00:00:21,240 Speaker 1: or watch us live on. 6 00:00:21,120 --> 00:00:24,840 Speaker 2: YouTube on Stock on the move is definitely Intel up 7 00:00:24,960 --> 00:00:27,960 Speaker 2: over three percent. It had a big gap hire here 8 00:00:28,400 --> 00:00:31,120 Speaker 2: on the end of close on Friday on the rumors 9 00:00:31,160 --> 00:00:34,720 Speaker 2: that maybe Qualcom was looking at a possible deal for Intel. 10 00:00:34,800 --> 00:00:38,960 Speaker 2: Then this morning we learn that Apollo was offered to 11 00:00:39,040 --> 00:00:42,839 Speaker 2: have made a multi billion dollar investment in the company 12 00:00:42,880 --> 00:00:44,720 Speaker 2: as well. Want to get more on this with Leanna Baker, 13 00:00:44,760 --> 00:00:47,400 Speaker 2: Bloomberg News Managing director of the Deal team. She joins 14 00:00:47,440 --> 00:00:51,840 Speaker 2: us here in studio. Leana, talk us through the Apollo part. 15 00:00:52,720 --> 00:00:55,520 Speaker 2: What does that look like in your reporting? Sure, so 16 00:00:55,960 --> 00:00:59,360 Speaker 2: this is a potential investment. Apollo has made this offer 17 00:00:59,440 --> 00:01:02,000 Speaker 2: to Intel. It's unclear if Intel is going to take 18 00:01:02,040 --> 00:01:05,039 Speaker 2: them up on this offer. Although Apollo is already a 19 00:01:05,080 --> 00:01:08,040 Speaker 2: partner to Intel. They have a joint venture with them 20 00:01:08,560 --> 00:01:12,800 Speaker 2: for their Irish plant, which was a really big project. 21 00:01:13,040 --> 00:01:18,080 Speaker 2: So yeah, we're waiting to see how Intel decides to proceed. 22 00:01:18,480 --> 00:01:22,440 Speaker 2: You mentioned there is an approach that came from Qualcomm. 23 00:01:22,120 --> 00:01:24,600 Speaker 3: Late last week, so Intel has a lot to think about. 24 00:01:24,760 --> 00:01:27,680 Speaker 3: Its board is meeting to decide which way to go. 25 00:01:28,120 --> 00:01:31,000 Speaker 3: This Apollo investment could be an alternative potentially to the 26 00:01:31,080 --> 00:01:35,200 Speaker 3: Qualcom merger, or it could be something that happens before 27 00:01:35,880 --> 00:01:39,520 Speaker 3: any deal with Qualcomm would take a long time, according 28 00:01:39,520 --> 00:01:42,520 Speaker 3: to analysts, just due to all the regulatory bodies around 29 00:01:42,520 --> 00:01:44,000 Speaker 3: the world that would have to bless this deal. 30 00:01:44,560 --> 00:01:46,520 Speaker 4: Now, was this expected and you're reporting were there any 31 00:01:46,560 --> 00:01:48,160 Speaker 4: whispers about this prior to this? 32 00:01:48,800 --> 00:01:52,440 Speaker 3: So we've been chasing for a long time what Intel 33 00:01:52,520 --> 00:01:55,200 Speaker 3: is going to do. Since they are disastrous earnings report 34 00:01:55,240 --> 00:01:58,520 Speaker 3: over the summer, they've kind of put themselves in play. 35 00:01:58,720 --> 00:02:00,920 Speaker 3: At Bloomberg, we were the first to report that the 36 00:02:00,960 --> 00:02:03,920 Speaker 3: company was thinking about M and A options, about a 37 00:02:03,920 --> 00:02:07,240 Speaker 3: potential split, and then you might remember that late last week, 38 00:02:07,800 --> 00:02:10,160 Speaker 3: you know, paq Elsinger put out a statement kind of 39 00:02:10,200 --> 00:02:13,760 Speaker 3: laying out what would happen. We are watching to see 40 00:02:13,760 --> 00:02:15,720 Speaker 3: what happens with the foundry business. 41 00:02:15,760 --> 00:02:16,079 Speaker 2: Intel. 42 00:02:16,120 --> 00:02:18,480 Speaker 3: Foundriies is something that Intel has spent a lot of 43 00:02:18,480 --> 00:02:20,399 Speaker 3: money on over the years, and it's not making money. 44 00:02:20,440 --> 00:02:23,040 Speaker 3: It doesn't have that many customers, and that is sort 45 00:02:23,040 --> 00:02:25,560 Speaker 3: of sinking the company right now. Even though it's kind 46 00:02:25,600 --> 00:02:28,880 Speaker 3: of the long term future play that the management is 47 00:02:28,960 --> 00:02:30,520 Speaker 3: laid out for Intel, what is. 48 00:02:30,480 --> 00:02:32,960 Speaker 2: In it for Apollo? Like, I know you said they 49 00:02:32,960 --> 00:02:35,760 Speaker 2: have a doinventor, but like, why so? 50 00:02:36,200 --> 00:02:40,880 Speaker 3: Apollo is a turnaround specialist. They love complicated situations, putting 51 00:02:40,880 --> 00:02:43,959 Speaker 3: money to work where maybe other pockets of Wall Street 52 00:02:44,120 --> 00:02:48,760 Speaker 3: doesn't go. This is a perfect example. They've already invested 53 00:02:48,800 --> 00:02:52,440 Speaker 3: in Intel. Intel clearly needs some confidence capital. They need 54 00:02:52,560 --> 00:02:54,840 Speaker 3: someone on Wall Street to say I believe in the 55 00:02:54,880 --> 00:02:58,079 Speaker 3: future of this company under pau Elsinger. This is why, 56 00:02:58,440 --> 00:03:00,840 Speaker 3: because you know, the stock slow. It has been really 57 00:03:00,880 --> 00:03:03,520 Speaker 3: remarkable to even be at the point where it could 58 00:03:03,520 --> 00:03:06,839 Speaker 3: be considered a takeover target for Qualcom, one of their competitors. 59 00:03:07,919 --> 00:03:10,080 Speaker 4: So where does Wall Street think that they should go 60 00:03:10,760 --> 00:03:12,040 Speaker 4: Qualcomm or Apollo? 61 00:03:12,639 --> 00:03:15,160 Speaker 3: We don't know at this point, and there could also 62 00:03:15,280 --> 00:03:18,840 Speaker 3: be other suitors or analysts are saying. We report it 63 00:03:18,880 --> 00:03:21,920 Speaker 3: over the weekend that Broadcom, which some people speculate it 64 00:03:21,960 --> 00:03:25,800 Speaker 3: could be interested that they're currently not evaluating an offer 65 00:03:25,840 --> 00:03:28,440 Speaker 3: for Intel. So right now Broadcom's on the sidelines. Could 66 00:03:28,440 --> 00:03:30,520 Speaker 3: that still change? We'll keep an eye on it, but 67 00:03:30,600 --> 00:03:33,440 Speaker 3: Intel has a lot of options to consider. It's going 68 00:03:33,480 --> 00:03:36,280 Speaker 3: to be an interesting few weeks to see where things go. 69 00:03:36,520 --> 00:03:38,400 Speaker 5: Hey, can I answer a quick question, how does this 70 00:03:38,520 --> 00:03:42,720 Speaker 5: impact the Chips Act? The investment from the Biden administration? 71 00:03:42,800 --> 00:03:45,480 Speaker 5: Does that change at all in any of these scenarios. 72 00:03:45,600 --> 00:03:48,320 Speaker 3: It's all related because the US government has a long 73 00:03:48,440 --> 00:03:51,840 Speaker 3: term ban on Intel as a manufacturer that's in the 74 00:03:51,960 --> 00:03:54,520 Speaker 3: US of chips, which are so critical. So the US 75 00:03:54,600 --> 00:03:57,200 Speaker 3: government is watching this all really closely. They want Intel 76 00:03:57,240 --> 00:04:00,320 Speaker 3: to survive, whether that's with Qualcomm, whether that with a 77 00:04:00,360 --> 00:04:03,080 Speaker 3: capital in fusion from Apollo. So they want to be 78 00:04:03,200 --> 00:04:06,119 Speaker 3: part of the solution. Since Intel it stands to gain 79 00:04:06,160 --> 00:04:08,280 Speaker 3: a lot of cash from the government. 80 00:04:08,000 --> 00:04:10,880 Speaker 5: They want them to combine. So they would tell Justice 81 00:04:10,920 --> 00:04:12,880 Speaker 5: and the other regulators hands off this one. 82 00:04:13,000 --> 00:04:14,920 Speaker 2: Huh. That would be interesting, wouldn't it right? 83 00:04:15,280 --> 00:04:17,800 Speaker 3: And it sounds like a conspiracy theory, But you have 84 00:04:17,839 --> 00:04:20,720 Speaker 3: to understand that any deal that Intel does would need 85 00:04:20,760 --> 00:04:23,440 Speaker 3: the blessing from the government. So sure, could the US 86 00:04:23,520 --> 00:04:25,719 Speaker 3: government tap qual come on the shoulder and say, hey, 87 00:04:26,080 --> 00:04:28,320 Speaker 3: you know, do a solid for us and make an offer. 88 00:04:28,440 --> 00:04:31,600 Speaker 3: I have no idea, but there's all these different theories 89 00:04:31,640 --> 00:04:34,680 Speaker 3: that people are saying, and it's not that crazy to 90 00:04:34,720 --> 00:04:37,080 Speaker 3: think people in DC might know more about this deal 91 00:04:37,080 --> 00:04:38,200 Speaker 3: than we know right here. 92 00:04:38,200 --> 00:04:40,480 Speaker 4: Right what's the most interesting thing that you found while 93 00:04:40,440 --> 00:04:41,039 Speaker 4: you're reporting. 94 00:04:42,120 --> 00:04:45,640 Speaker 3: I just love semiconductors. It's always interesting. And just to 95 00:04:45,680 --> 00:04:48,919 Speaker 3: see an American icon like Intel face with these prospects 96 00:04:48,960 --> 00:04:52,320 Speaker 3: and we're talking this could be the largest tech deal 97 00:04:52,360 --> 00:04:55,440 Speaker 3: of all time if Intel is somehow sold. So it's 98 00:04:55,520 --> 00:04:59,480 Speaker 3: just amazing to be following this situation because I've been 99 00:04:59,480 --> 00:05:02,120 Speaker 3: reporting on on semis for you know, over a decade, 100 00:05:02,160 --> 00:05:03,800 Speaker 3: and you just you never know how this is going 101 00:05:03,839 --> 00:05:04,039 Speaker 3: to go. 102 00:05:04,120 --> 00:05:08,120 Speaker 2: Well, also, just how fast this all deteriorated, Like I've 103 00:05:08,160 --> 00:05:10,600 Speaker 2: read so many stories of sort of the decline and Intel 104 00:05:10,640 --> 00:05:12,640 Speaker 2: and how fast it came on. And then we're talking 105 00:05:12,640 --> 00:05:15,279 Speaker 2: about this moment where like Qualcom might need to step in, 106 00:05:15,320 --> 00:05:17,400 Speaker 2: Apollo might need to step in, the government might need 107 00:05:17,440 --> 00:05:19,840 Speaker 2: to step in in a particular fashion that to me 108 00:05:20,000 --> 00:05:20,800 Speaker 2: is really striking. 109 00:05:21,440 --> 00:05:24,520 Speaker 3: Is it also striking to you how quickly Nvidia kind 110 00:05:24,520 --> 00:05:29,600 Speaker 3: of caught everyone's imagination. And so it's a semiconductors, it's 111 00:05:29,680 --> 00:05:32,200 Speaker 3: you know, it's cyclical, it depends on trends and AI 112 00:05:32,320 --> 00:05:34,680 Speaker 3: so it's so fast moving and it's just been a 113 00:05:34,720 --> 00:05:36,640 Speaker 3: spectacular industry to follow. 114 00:05:36,760 --> 00:05:38,719 Speaker 2: Yeah, all right, Lenna, thanks a lot, great reporting. Really 115 00:05:38,720 --> 00:05:41,559 Speaker 2: appreciate Itly on a Baker Bloomberg News and managing editor 116 00:05:41,720 --> 00:05:43,400 Speaker 2: for the Deal Team and joining us on that. 117 00:05:45,040 --> 00:05:48,960 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 118 00:05:49,040 --> 00:05:52,560 Speaker 1: weekdays at ten am Eastern on applecard Play and Android 119 00:05:52,560 --> 00:05:55,359 Speaker 1: Auto with a Bloomberg Business app. You can also listen 120 00:05:55,480 --> 00:05:58,560 Speaker 1: live on Amazon Alexa from our flagship New York station. 121 00:05:58,920 --> 00:06:01,679 Speaker 1: Just say Alexa play Bloomberg eleven thirty. 122 00:06:02,760 --> 00:06:06,039 Speaker 2: We get a bunch of CEO interviews the next two hours, 123 00:06:06,080 --> 00:06:07,720 Speaker 2: and I say a bunch because it's nice to get 124 00:06:07,720 --> 00:06:10,400 Speaker 2: perspective kind of on the ground on where the growth is, 125 00:06:10,440 --> 00:06:13,279 Speaker 2: where the worry spots are, how hiring is, what inflation 126 00:06:13,440 --> 00:06:16,400 Speaker 2: looks like. So let's kick it off now with Signet Jewelers. 127 00:06:16,560 --> 00:06:19,560 Speaker 2: So they had earnings on the twelfth, and they did 128 00:06:19,640 --> 00:06:22,880 Speaker 2: really well. They reported adjusted earnings and comparable sales for 129 00:06:22,920 --> 00:06:25,839 Speaker 2: the second quarter of the top analyst expectations. The stocks 130 00:06:25,920 --> 00:06:28,880 Speaker 2: and sent is up over eleven percent. Management set in 131 00:06:28,880 --> 00:06:31,599 Speaker 2: the earning statement that comp sales are positive so far 132 00:06:31,760 --> 00:06:34,279 Speaker 2: in the third quarter, some of the analysts are also saying, look, 133 00:06:34,279 --> 00:06:37,400 Speaker 2: this was a better than feared quarter, especially when you 134 00:06:37,400 --> 00:06:40,280 Speaker 2: look at the reiterated annual guidance. So we wanted to 135 00:06:40,279 --> 00:06:44,679 Speaker 2: get an update from the CEO. Jenna Gudrosos is CEO 136 00:06:44,800 --> 00:06:49,240 Speaker 2: of Signet, joining us now from Seattle. Jenna walk us 137 00:06:49,240 --> 00:06:51,200 Speaker 2: through sort of the highlights, like what you think that 138 00:06:51,360 --> 00:06:54,280 Speaker 2: it really impressed investors, and then we can go from there. 139 00:06:55,960 --> 00:06:58,920 Speaker 6: Sure, well, good morning, great to be with you. Our 140 00:06:58,960 --> 00:07:03,400 Speaker 6: team delivered a sequential improvement in same store sales. It 141 00:07:03,480 --> 00:07:06,080 Speaker 6: was the fifth quarter in a row that we've seen 142 00:07:06,160 --> 00:07:09,920 Speaker 6: a sequential improvement. As you said, comp sales have been 143 00:07:09,960 --> 00:07:14,200 Speaker 6: positive in Q three to date. That's encouraging because in 144 00:07:14,240 --> 00:07:19,440 Speaker 6: the jewelry category and especially engagements, COVID is actually just ending. 145 00:07:19,840 --> 00:07:22,280 Speaker 6: So while for a lot of businesses COVID was in 146 00:07:22,360 --> 00:07:27,160 Speaker 6: twenty twenty, people tend to get engaged about three years 147 00:07:27,200 --> 00:07:30,600 Speaker 6: after they meet, and people weren't meeting during lockdown in 148 00:07:30,640 --> 00:07:35,280 Speaker 6: twenty twenty, so we saw a twenty five percent drop 149 00:07:35,320 --> 00:07:38,400 Speaker 6: in the average number of people getting engaged in twenty 150 00:07:38,480 --> 00:07:41,920 Speaker 6: twenty three, and that's been slowly coming back in twenty 151 00:07:41,960 --> 00:07:44,840 Speaker 6: twenty four, but we saw that turn positive as we've 152 00:07:44,920 --> 00:07:46,920 Speaker 6: entered the third quarter, so that was encouraging. 153 00:07:48,640 --> 00:07:50,920 Speaker 4: I wanted to know. Of course, a lot of consumer 154 00:07:51,000 --> 00:07:54,520 Speaker 4: companies have talked about house shoppers are watching their spending carefully, 155 00:07:54,560 --> 00:07:56,600 Speaker 4: they're being very nitpicky. Is that something that you all 156 00:07:56,640 --> 00:07:58,200 Speaker 4: have noticed at all? What is it look like for 157 00:07:58,240 --> 00:07:58,960 Speaker 4: your business? 158 00:08:00,600 --> 00:08:04,000 Speaker 6: Yes? I think we've seen a cautious customer for most 159 00:08:04,040 --> 00:08:08,520 Speaker 6: of this calendar year. An example of that is that 160 00:08:08,560 --> 00:08:12,840 Speaker 6: we see customers coming to our websites fifteen percent more 161 00:08:12,920 --> 00:08:15,760 Speaker 6: often before they make a purchase than we did a 162 00:08:15,840 --> 00:08:18,960 Speaker 6: year ago. So people are being careful in an environment 163 00:08:19,120 --> 00:08:21,680 Speaker 6: like this, but when it comes to getting engaged, they 164 00:08:21,720 --> 00:08:24,679 Speaker 6: might delay a little bit just make sure they're getting 165 00:08:24,680 --> 00:08:28,320 Speaker 6: the right value, which given our scale, we feel like 166 00:08:28,360 --> 00:08:31,680 Speaker 6: we can very often offer. But they're still deciding to 167 00:08:31,720 --> 00:08:34,240 Speaker 6: get engaged, and we expect that to pick up as 168 00:08:34,240 --> 00:08:38,160 Speaker 6: we go through peak engagement season, which is during the holidays. 169 00:08:38,600 --> 00:08:41,120 Speaker 5: Hey, it's John Tucker. Can I ask a quick question. 170 00:08:41,400 --> 00:08:43,040 Speaker 5: I can see the price of Goal, by the way, 171 00:08:43,160 --> 00:08:48,480 Speaker 5: was a record. How do you track diamonds because that's 172 00:08:48,600 --> 00:08:52,800 Speaker 5: essentially a cartel that controls the supply and I guess 173 00:08:52,840 --> 00:08:54,800 Speaker 5: the pricing there right? How does that work. 174 00:08:56,440 --> 00:09:01,800 Speaker 6: No, Diamonds trade just like gold does. There commodity. Many 175 00:09:01,840 --> 00:09:04,760 Speaker 6: many years ago, it was more of a monopoly situation, 176 00:09:04,920 --> 00:09:07,120 Speaker 6: but that hasn't been true for a couple of decades. 177 00:09:07,200 --> 00:09:11,800 Speaker 6: Now there are multiple miners that mind diamonds around the world. 178 00:09:12,600 --> 00:09:15,560 Speaker 6: Signet is one of only five retailers in the world 179 00:09:15,600 --> 00:09:19,840 Speaker 6: that are vertically integrated and actually buy diamonds directly from 180 00:09:19,880 --> 00:09:23,199 Speaker 6: the miners. We own our own cutting and polishing facility 181 00:09:23,200 --> 00:09:26,480 Speaker 6: in Botswana, so we have a really good I would say, 182 00:09:26,480 --> 00:09:30,880 Speaker 6: a vertically integrated I into what diamonds should cost, what 183 00:09:30,960 --> 00:09:33,840 Speaker 6: metal should cost, how much it should cost to cut 184 00:09:33,880 --> 00:09:36,800 Speaker 6: and polish of stone, and that's how we're able to 185 00:09:36,920 --> 00:09:38,520 Speaker 6: bring great value to our customers. 186 00:09:38,559 --> 00:09:41,040 Speaker 5: Now, how do you control the sourcing or nowhere where 187 00:09:41,040 --> 00:09:41,600 Speaker 5: it comes from. 188 00:09:43,520 --> 00:09:47,040 Speaker 6: So that's really one of the places where Signet has 189 00:09:47,080 --> 00:09:50,920 Speaker 6: shined and been a leader in the industry. Responsible sourcing 190 00:09:51,000 --> 00:09:53,760 Speaker 6: is very important to our customers and to our company 191 00:09:54,559 --> 00:09:57,800 Speaker 6: and I you know, and to my twenty something children, 192 00:09:57,920 --> 00:10:03,280 Speaker 6: I should add, So we are pristine, we can guarantee 193 00:10:03,760 --> 00:10:05,680 Speaker 6: to all of our customers. We have what's called the 194 00:10:05,720 --> 00:10:08,840 Speaker 6: Signet Promise that we are confident that all of the 195 00:10:08,840 --> 00:10:12,480 Speaker 6: metals and all of the gemstones, including diamonds that we 196 00:10:12,600 --> 00:10:17,920 Speaker 6: source our conflict free and produced in a way that 197 00:10:17,960 --> 00:10:21,600 Speaker 6: they would feel good about. So we trace that back 198 00:10:21,640 --> 00:10:24,360 Speaker 6: to the origin of where the diamonds are, where the 199 00:10:24,360 --> 00:10:26,240 Speaker 6: metals come from, so we can be confident. 200 00:10:26,600 --> 00:10:30,560 Speaker 2: There's also the lab grown diamond phenomenon. And when I 201 00:10:30,720 --> 00:10:33,439 Speaker 2: was doing you know, packages on diamonds fifteen years ago, 202 00:10:33,600 --> 00:10:37,040 Speaker 2: that was like really taboo. Now I hear of younger 203 00:10:37,080 --> 00:10:39,000 Speaker 2: people and this is what they do. They want to 204 00:10:39,040 --> 00:10:41,040 Speaker 2: save a little money, but they still wanted to look pretty. 205 00:10:41,559 --> 00:10:44,400 Speaker 2: What kind of market do you know is evolving here 206 00:10:44,440 --> 00:10:45,840 Speaker 2: and kind of what the pricing is and what the 207 00:10:45,880 --> 00:10:46,400 Speaker 2: demand is. 208 00:10:48,120 --> 00:10:51,360 Speaker 6: Yeah, so lab created diamonds have been broadly available in 209 00:10:51,480 --> 00:10:56,760 Speaker 6: jewelry since twenty nineteen, so about five years now. Of course, 210 00:10:56,760 --> 00:10:59,680 Speaker 6: they've been available for a long time in drill bits 211 00:10:59,760 --> 00:11:02,200 Speaker 6: and you know things like that that needed a hard 212 00:11:02,280 --> 00:11:05,559 Speaker 6: substance to be part of it, but in jewelry about 213 00:11:05,600 --> 00:11:09,080 Speaker 6: five years. Every year since they've been in the market, 214 00:11:09,200 --> 00:11:13,560 Speaker 6: the price has fallen about five about fifteen to thirty 215 00:11:13,600 --> 00:11:17,839 Speaker 6: percent actually, so they haven't really maintained their value over time, 216 00:11:17,920 --> 00:11:21,000 Speaker 6: and that's because they're made in a machine and you know, 217 00:11:21,080 --> 00:11:24,880 Speaker 6: about three weeks, whereas a natural diamond is precious. It's 218 00:11:25,120 --> 00:11:27,600 Speaker 6: you know, made in the earth over a billion years, 219 00:11:27,679 --> 00:11:31,200 Speaker 6: and so they're chemically the same but quite different. And 220 00:11:31,240 --> 00:11:35,920 Speaker 6: what we've seen is that consumers, if they are on 221 00:11:35,920 --> 00:11:38,720 Speaker 6: a tight budget and want to get a bigger stone, 222 00:11:38,880 --> 00:11:41,560 Speaker 6: lab created can be a great choice for them in 223 00:11:41,600 --> 00:11:44,600 Speaker 6: an engagement ring. But it's particularly a great choice in 224 00:11:44,679 --> 00:11:48,880 Speaker 6: fashion jewelry, where maybe it's not quite as sentimental a piece. 225 00:11:49,600 --> 00:11:52,800 Speaker 6: That's where we really see lab Created as having a 226 00:11:52,840 --> 00:11:54,960 Speaker 6: bigger potential on over the long term. 227 00:11:55,000 --> 00:11:58,880 Speaker 2: So just a tootle tootle, tell John Tucker. So a 228 00:11:58,960 --> 00:12:01,120 Speaker 2: fashion jewelry is like, here's my super cool ring that 229 00:12:01,160 --> 00:12:02,400 Speaker 2: I'm doing with my evening gown. 230 00:12:02,480 --> 00:12:04,959 Speaker 4: Everyone look at it. It's it's really big. 231 00:12:05,080 --> 00:12:07,480 Speaker 2: Maybe it has a good shape. That's kind of interesting. 232 00:12:07,520 --> 00:12:08,920 Speaker 2: But I didn't have to break my bang for it. 233 00:12:09,280 --> 00:12:11,800 Speaker 5: Now, Is there some Is there some planned by you 234 00:12:11,840 --> 00:12:15,160 Speaker 5: guys to like trying to get people to get married. 235 00:12:18,080 --> 00:12:18,440 Speaker 7: No, not. 236 00:12:20,800 --> 00:12:24,520 Speaker 5: That, which is a plan. When you pipe in romantic 237 00:12:24,640 --> 00:12:27,439 Speaker 5: music to you, it's got to be right. 238 00:12:28,840 --> 00:12:31,920 Speaker 6: No, No, we don't. We don't plan. But I will 239 00:12:32,000 --> 00:12:35,600 Speaker 6: say that we have a lot of consumer insight around that. 240 00:12:36,120 --> 00:12:40,680 Speaker 6: Several years ago, we started tracking the milestones that couples 241 00:12:40,760 --> 00:12:44,120 Speaker 6: typically go through between when they meet and when they 242 00:12:44,200 --> 00:12:47,560 Speaker 6: get engaged. So, for example, they typically go to a 243 00:12:47,600 --> 00:12:50,400 Speaker 6: movie or a concert before they say I love you, 244 00:12:50,520 --> 00:12:53,840 Speaker 6: or move in together, or meet the parents or things 245 00:12:53,880 --> 00:12:57,000 Speaker 6: like that. And so we with our partners at Google 246 00:12:57,080 --> 00:13:02,680 Speaker 6: and Meta, have identified forty five trackable signs or milestones 247 00:13:02,720 --> 00:13:06,719 Speaker 6: that couple couples typically go through. Once they've crossed over 248 00:13:06,800 --> 00:13:11,360 Speaker 6: twenty six, they are statistically significantly more likely to get 249 00:13:11,360 --> 00:13:13,000 Speaker 6: engaged in the next twelve months. 250 00:13:14,000 --> 00:13:17,920 Speaker 2: One of the things I'm learning a lot, i'd be 251 00:13:17,960 --> 00:13:21,320 Speaker 2: speaking right to north right as I'm thinking about the future. 252 00:13:21,320 --> 00:13:24,600 Speaker 6: It's super interesting. And that's one of the things we 253 00:13:24,640 --> 00:13:28,000 Speaker 6: said in our second quarter call is that there's a 254 00:13:28,160 --> 00:13:32,360 Speaker 6: nine hundred basis point increase or twenty percent more couples 255 00:13:32,960 --> 00:13:36,320 Speaker 6: that crossed over that milestone in the second quarter this 256 00:13:36,440 --> 00:13:39,920 Speaker 6: year versus the second quarter last year. So we really 257 00:13:39,960 --> 00:13:43,320 Speaker 6: are seeing this ramp back up to a normalized level 258 00:13:43,360 --> 00:13:43,960 Speaker 6: of engagement. 259 00:13:44,920 --> 00:13:47,880 Speaker 2: All so happy on it ten o'clock on a Tuesday 260 00:13:47,880 --> 00:13:49,880 Speaker 2: and a Monday. All right, thanks so much, didn't address us. 261 00:13:49,920 --> 00:13:52,040 Speaker 2: We really appreciate CEO of Signetic. 262 00:13:57,520 --> 00:14:01,400 Speaker 1: You're listening to the Bloomberg Intelligence pot Catch us live 263 00:14:01,480 --> 00:14:04,600 Speaker 1: weekdays at ten am Eastern on AFO, Cardplay and enroud 264 00:14:04,600 --> 00:14:07,680 Speaker 1: Oto with the Bloomberg Business app. Listen on demand wherever 265 00:14:07,760 --> 00:14:10,920 Speaker 1: you get your podcasts, or watch us live on YouTube. 266 00:14:11,160 --> 00:14:13,440 Speaker 2: So natural gas prices are two dollars and fifty seven 267 00:14:13,480 --> 00:14:16,400 Speaker 2: cents MMBT you. It's much better than we were before. 268 00:14:16,440 --> 00:14:19,960 Speaker 2: We were under two dollars MMBT you. But still considering 269 00:14:20,000 --> 00:14:23,080 Speaker 2: the amount of demand globally that we need, that price 270 00:14:23,240 --> 00:14:25,080 Speaker 2: is a little bit low. So we wanted to check 271 00:14:25,160 --> 00:14:28,480 Speaker 2: in with the largest independent natural gas producer right here 272 00:14:28,640 --> 00:14:31,080 Speaker 2: in the United States. They have world class assets and 273 00:14:31,120 --> 00:14:34,680 Speaker 2: appllation basin, and that is Toby Rice, CEO of natural 274 00:14:34,680 --> 00:14:37,640 Speaker 2: gas producer EQT. He joins us in studio. Hey Toby, 275 00:14:37,680 --> 00:14:38,200 Speaker 2: good to see you. 276 00:14:38,520 --> 00:14:39,000 Speaker 5: Good morning. 277 00:14:39,480 --> 00:14:41,320 Speaker 2: So do you like prices at two fifty eight? 278 00:14:42,080 --> 00:14:44,560 Speaker 8: Well, we are unique in the sense that our company 279 00:14:44,560 --> 00:14:47,280 Speaker 8: actually can generate free cash flow at a price as 280 00:14:47,360 --> 00:14:50,440 Speaker 8: low as two dollars, but that is not the case 281 00:14:50,480 --> 00:14:53,840 Speaker 8: for the other producers in the United States. Our view 282 00:14:53,920 --> 00:14:56,480 Speaker 8: is that the marginal producer in the US requires about 283 00:14:56,480 --> 00:14:59,880 Speaker 8: three dollars and fifty cents to justify activity levels and 284 00:15:00,240 --> 00:15:01,000 Speaker 8: rigs up in the air. 285 00:15:01,200 --> 00:15:03,200 Speaker 2: So when you look at prices, say then under three 286 00:15:04,280 --> 00:15:06,080 Speaker 2: or actually under two, where do you sort of like 287 00:15:06,520 --> 00:15:08,000 Speaker 2: just say, we're gonna just going to drill them, not 288 00:15:08,040 --> 00:15:10,320 Speaker 2: complete them, and hang tight and then when you kind 289 00:15:10,320 --> 00:15:12,160 Speaker 2: of release it, and what does your inventory right now 290 00:15:12,200 --> 00:15:12,560 Speaker 2: look like? 291 00:15:12,920 --> 00:15:17,080 Speaker 8: So right now, short term people are looking at curtailments, uh, 292 00:15:17,360 --> 00:15:20,200 Speaker 8: and you have about two bcf a day of natural 293 00:15:20,240 --> 00:15:21,600 Speaker 8: gas that's currently curtailed. 294 00:15:22,160 --> 00:15:23,200 Speaker 9: This is as simple as just. 295 00:15:23,160 --> 00:15:26,680 Speaker 8: Operators shutting in the chokes. That production could come back 296 00:15:27,160 --> 00:15:30,640 Speaker 8: and you'll see that pressuring prices up until about three 297 00:15:30,640 --> 00:15:34,080 Speaker 8: dollars range. But then after that there's some some short 298 00:15:34,080 --> 00:15:36,840 Speaker 8: cycle activity that would come back requires about three fifty 299 00:15:37,280 --> 00:15:39,880 Speaker 8: and again that's sort of the price that you'll see 300 00:15:39,880 --> 00:15:43,120 Speaker 8: with activity levels. So these shorter price these shorter prices 301 00:15:43,120 --> 00:15:47,000 Speaker 8: we're seeing right now are going to ultimately influence activity 302 00:15:47,040 --> 00:15:49,000 Speaker 8: levels that are set. Is part of the twenty twenty 303 00:15:49,000 --> 00:15:52,400 Speaker 8: five budget planning which will influence supply in the future, 304 00:15:52,480 --> 00:15:54,920 Speaker 8: and we think is going to be pretty constructive towards 305 00:15:54,920 --> 00:15:58,040 Speaker 8: the second half of twenty twenty five, where more energy 306 00:15:58,160 --> 00:16:01,200 Speaker 8: demand picks up at some of these activity reductions will 307 00:16:01,200 --> 00:16:02,240 Speaker 8: start hitting the front lines. 308 00:16:02,480 --> 00:16:04,880 Speaker 4: Well, let's talk a little bit about AI. Natural gas 309 00:16:04,960 --> 00:16:07,280 Speaker 4: is not, of course at top of mind as an 310 00:16:07,360 --> 00:16:10,440 Speaker 4: artificial intelligence trade, but some people are saying that rising 311 00:16:10,520 --> 00:16:13,800 Speaker 4: power demand for more natural gas demand. Are you drilling 312 00:16:13,800 --> 00:16:15,800 Speaker 4: to meet that demand at all? How would you all 313 00:16:15,800 --> 00:16:16,520 Speaker 4: boost production? 314 00:16:17,360 --> 00:16:19,960 Speaker 8: Well, natural gas, about a third of it is used 315 00:16:20,000 --> 00:16:23,640 Speaker 8: for power generation, so it is a very important dynamic 316 00:16:23,680 --> 00:16:26,960 Speaker 8: to study and look at. EQT has an asset called 317 00:16:26,960 --> 00:16:30,440 Speaker 8: Mountain Valley Pipeline, which is a very contested pipeline. Fortunately 318 00:16:30,480 --> 00:16:33,160 Speaker 8: that was put in service this summer. That's going to 319 00:16:33,200 --> 00:16:36,160 Speaker 8: send about two Bcfi day of natural gas down to 320 00:16:36,200 --> 00:16:40,000 Speaker 8: the Southeastern markets. And we just announced some deals, one 321 00:16:40,000 --> 00:16:43,400 Speaker 8: of the largest physical supply deals with two very large 322 00:16:43,480 --> 00:16:46,800 Speaker 8: utilities in that market to deliver up to one point 323 00:16:46,800 --> 00:16:49,840 Speaker 8: two Bcfi day of natural gas. Now, where is that 324 00:16:49,960 --> 00:16:52,720 Speaker 8: natural gas going? Sure, it's going to help keep people's 325 00:16:52,720 --> 00:16:55,720 Speaker 8: homes warm in the winter time, but a large portion 326 00:16:55,760 --> 00:16:58,360 Speaker 8: of that is going to power gen and it's going 327 00:16:58,440 --> 00:17:01,160 Speaker 8: to be replacing cold facility. Ye, that would be enough 328 00:17:01,760 --> 00:17:05,000 Speaker 8: natural gas to power about eight gigawatts of power. 329 00:17:05,200 --> 00:17:07,040 Speaker 2: Now, one of the biggest problems in this whole scenario 330 00:17:07,200 --> 00:17:09,240 Speaker 2: is how you move the stuff, and that's a pipeline issue, 331 00:17:09,240 --> 00:17:13,440 Speaker 2: and that's an infrastructure issue. Are where are those conversations 332 00:17:13,480 --> 00:17:15,480 Speaker 2: now in that we're going to have to have data 333 00:17:15,520 --> 00:17:19,040 Speaker 2: centers built near where you guys pump natural gas or 334 00:17:19,400 --> 00:17:21,080 Speaker 2: we're actually going to be able to get the pipelines 335 00:17:21,160 --> 00:17:23,160 Speaker 2: in the ground to move it to where those data 336 00:17:23,160 --> 00:17:24,320 Speaker 2: centers can be built. 337 00:17:24,359 --> 00:17:27,120 Speaker 8: Well, it always makes sense if you're an energy intensive 338 00:17:27,160 --> 00:17:31,320 Speaker 8: business to build your facilities close to where the energy is, 339 00:17:31,320 --> 00:17:33,480 Speaker 8: and that would put Appalachia as a really great place 340 00:17:33,520 --> 00:17:35,439 Speaker 8: to be. But you know, just to step back at 341 00:17:35,440 --> 00:17:37,440 Speaker 8: a very high level, what's happened in the United States 342 00:17:37,520 --> 00:17:41,159 Speaker 8: over the last fifteen years, and it really understands the 343 00:17:41,240 --> 00:17:45,000 Speaker 8: natural gas markets. Since twenty ten, demand has grown fifty 344 00:17:45,000 --> 00:17:48,000 Speaker 8: percent for natural gas, but during that period of time, 345 00:17:48,200 --> 00:17:52,200 Speaker 8: natural gas infrastructure pipelines has only grown twenty five percent, 346 00:17:52,560 --> 00:17:56,200 Speaker 8: and most importantly, natural gas storage infrastructure has only grown 347 00:17:56,320 --> 00:17:59,720 Speaker 8: twelve percent. What does that mean? That means we haven't 348 00:17:59,720 --> 00:18:02,160 Speaker 8: built enough pipelines to keep up with demand, and our 349 00:18:02,200 --> 00:18:05,199 Speaker 8: current pipeline system is maxed out. You're going to continue 350 00:18:05,240 --> 00:18:08,560 Speaker 8: to see big disconnects between markets, like we're going to 351 00:18:08,560 --> 00:18:11,240 Speaker 8: be selling our natural gas for four dollars in Appalachia, 352 00:18:11,520 --> 00:18:13,280 Speaker 8: and people in Boston and New York are could be 353 00:18:13,280 --> 00:18:16,760 Speaker 8: paying ten to twenty dollars to that natural gas. But 354 00:18:16,800 --> 00:18:20,520 Speaker 8: the storage infrastructure is probably the most important dynamic. Simply put, 355 00:18:20,640 --> 00:18:23,879 Speaker 8: natural gas storage is no longer sufficient to bounce supply 356 00:18:23,920 --> 00:18:26,800 Speaker 8: and demand. And what that means is that price is 357 00:18:26,880 --> 00:18:29,560 Speaker 8: going to bounce supply and demand. And so we would 358 00:18:29,600 --> 00:18:34,080 Speaker 8: describe the natural gas markets going forward as being very volatile, 359 00:18:34,400 --> 00:18:36,880 Speaker 8: and we think pricing could be as low as two 360 00:18:36,920 --> 00:18:39,399 Speaker 8: dollars you see now, and you see sort of a 361 00:18:39,480 --> 00:18:43,840 Speaker 8: natural floor where operators will actually curtail production volumes. But 362 00:18:43,920 --> 00:18:46,280 Speaker 8: we also think gas price could be significantly higher than that. 363 00:18:46,359 --> 00:18:49,920 Speaker 8: And the last structural piece of the puzzle has been 364 00:18:49,960 --> 00:18:54,439 Speaker 8: the massive retirement of coal has traditionally been a replacement 365 00:18:54,480 --> 00:18:57,679 Speaker 8: fuel when gas prices got high and coal gas to 366 00:18:57,720 --> 00:18:59,960 Speaker 8: coal switching would occur when prices would run in that 367 00:19:00,240 --> 00:19:03,320 Speaker 8: call it three to five dollar range. Well, with call gone, 368 00:19:03,640 --> 00:19:06,800 Speaker 8: the lid on gas prices is significantly muted, and that 369 00:19:06,840 --> 00:19:09,560 Speaker 8: means prices could run up closer to the eight to 370 00:19:09,720 --> 00:19:12,479 Speaker 8: nine dollars range. Those are the prices you saw in 371 00:19:12,520 --> 00:19:14,800 Speaker 8: twenty twenty two. And that is the price where industrial 372 00:19:14,840 --> 00:19:17,200 Speaker 8: demand will start shutting off. That's not a great place 373 00:19:17,240 --> 00:19:20,280 Speaker 8: to be. The solution is get more infrastructure built in 374 00:19:20,320 --> 00:19:23,960 Speaker 8: this country, both pipelines and storage infrastructure. And if you 375 00:19:24,000 --> 00:19:27,679 Speaker 8: have the opportunity, build your manufacturing in Appalachia. 376 00:19:27,720 --> 00:19:30,000 Speaker 4: Interesting, I mean, we're right around the corner from the 377 00:19:30,040 --> 00:19:32,520 Speaker 4: winter season. That's when I cry it's going to be 378 00:19:32,560 --> 00:19:35,360 Speaker 4: called is the market oversupplied this winter? 379 00:19:36,080 --> 00:19:39,240 Speaker 8: Right now, we have about three hundred about three hundred 380 00:19:39,240 --> 00:19:42,600 Speaker 8: bcf of extra gas in stores. It's about eight percent 381 00:19:42,680 --> 00:19:43,320 Speaker 8: higher than. 382 00:19:43,200 --> 00:19:45,600 Speaker 4: Normal billion keep it feed, Yeah. 383 00:19:45,680 --> 00:19:48,720 Speaker 8: And for perspective, the US market is about one hundred 384 00:19:48,720 --> 00:19:51,240 Speaker 8: bcf a day. That's what the current supply is today. 385 00:19:52,720 --> 00:19:57,040 Speaker 8: But this can be corrected very quickly in a winter 386 00:19:57,080 --> 00:20:00,200 Speaker 8: period where natural gas demand in this country goes of 387 00:20:00,200 --> 00:20:02,760 Speaker 8: one hundred and twenty bcf a day. So right now 388 00:20:02,800 --> 00:20:05,399 Speaker 8: storage isn't a is a little bit oversupplied, but that 389 00:20:05,480 --> 00:20:09,480 Speaker 8: goes away with just a normal winter. And when you 390 00:20:09,520 --> 00:20:13,240 Speaker 8: think about the fact that we don't have the necessary 391 00:20:13,240 --> 00:20:16,560 Speaker 8: pipeline infrastructure to deliver natural gas in that just in 392 00:20:16,600 --> 00:20:20,159 Speaker 8: time scenario, it's going to put further pressure on prices. Hence, 393 00:20:20,560 --> 00:20:25,119 Speaker 8: you know a lot of volatility towards the upside here. 394 00:20:25,160 --> 00:20:26,600 Speaker 2: We have don't had that that much time. But you 395 00:20:26,640 --> 00:20:31,280 Speaker 2: have a Southwestern and Chesapeake maybe merging up here, where 396 00:20:31,280 --> 00:20:32,720 Speaker 2: would you be looking to add M and A. Is 397 00:20:32,720 --> 00:20:34,159 Speaker 2: it going to be pipelines or is it going to 398 00:20:34,160 --> 00:20:34,840 Speaker 2: be producers? 399 00:20:35,160 --> 00:20:38,520 Speaker 8: So we just completed our transformation at EQT. Over the 400 00:20:38,600 --> 00:20:43,120 Speaker 8: last five years, Alex, since taken over, we've been very 401 00:20:43,160 --> 00:20:47,359 Speaker 8: purpose very purposely designing this business to be the energy 402 00:20:47,400 --> 00:20:50,960 Speaker 8: company of the future for us. That means we wanted 403 00:20:50,960 --> 00:20:53,480 Speaker 8: to create a business with a low cost structure in 404 00:20:53,520 --> 00:20:56,800 Speaker 8: a commodity business that really is your only moat. We're 405 00:20:56,840 --> 00:20:59,040 Speaker 8: really excited to say that EQT over the last five 406 00:20:59,119 --> 00:21:02,080 Speaker 8: years has cut its costs by thirty percent. You now 407 00:21:02,119 --> 00:21:04,840 Speaker 8: are looking at a two dollars cost structure. We've increased 408 00:21:04,840 --> 00:21:07,920 Speaker 8: our productive capacity by fifty percent over that period of time, 409 00:21:08,000 --> 00:21:11,600 Speaker 8: and show me the money to our investors. We've increased 410 00:21:11,720 --> 00:21:15,400 Speaker 8: our free cashule per share by two times, so we've 411 00:21:15,440 --> 00:21:17,920 Speaker 8: doubled that over. So we're in a great place right now. 412 00:21:18,040 --> 00:21:21,359 Speaker 8: And you know, we're just going to continue harvesting the 413 00:21:21,400 --> 00:21:23,560 Speaker 8: success of the transaction we've done in the past, all. 414 00:21:23,520 --> 00:21:24,840 Speaker 2: Right, to be really good to catch up with you. 415 00:21:24,840 --> 00:21:28,040 Speaker 2: It's been too long. Toby Rice, a CEO of EQT 416 00:21:28,480 --> 00:21:31,719 Speaker 2: joining us. This is Bloomberg Intelligence. Happy Monday. 417 00:21:33,320 --> 00:21:37,200 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 418 00:21:37,320 --> 00:21:40,800 Speaker 1: weekdays at ten am Eastern on applecard Play and Android 419 00:21:40,840 --> 00:21:44,000 Speaker 1: Auto with the Bloomberg Business. You can also listen live 420 00:21:44,119 --> 00:21:47,280 Speaker 1: on Amazon Alexa from our flagship New York station Just 421 00:21:47,359 --> 00:21:49,960 Speaker 1: Say Alexa playing Bloomberg eleven thirty. 422 00:21:50,440 --> 00:21:52,040 Speaker 2: One of the tough stories over the last couple of 423 00:21:52,080 --> 00:21:55,720 Speaker 2: days has been that deal that energy Constellation Energy inked 424 00:21:55,760 --> 00:21:58,560 Speaker 2: with Microsoft to help restart one of its nuclear power 425 00:21:58,560 --> 00:22:01,400 Speaker 2: plans on three Mile Island, investment about one point six 426 00:22:02,000 --> 00:22:05,720 Speaker 2: billion dollars. But Constellation Energy is not the only company 427 00:22:05,880 --> 00:22:09,000 Speaker 2: doing stuff like this and talking to hyper scalers about 428 00:22:09,000 --> 00:22:12,560 Speaker 2: how to provide energy for this massive demand for data 429 00:22:12,600 --> 00:22:16,000 Speaker 2: centers and GPU chips. And one of the companies involved 430 00:22:16,040 --> 00:22:19,320 Speaker 2: is also as it does a lot of different things. 431 00:22:19,320 --> 00:22:22,320 Speaker 2: It sells renewable power to corporate customers, It deals with 432 00:22:22,440 --> 00:22:26,360 Speaker 2: LERG infrastructure, It has two fast growing utilities. It does 433 00:22:26,400 --> 00:22:29,080 Speaker 2: a lot of stuff, yet the stock has not performed. 434 00:22:29,240 --> 00:22:32,840 Speaker 2: Like Constellation Energy and like Vistra, which are sort of 435 00:22:32,840 --> 00:22:35,560 Speaker 2: the power plays on AI. So luckily the CEO of 436 00:22:35,560 --> 00:22:37,720 Speaker 2: AES is in the studio right now with us Andres 437 00:22:37,800 --> 00:22:38,760 Speaker 2: Gleski dress. 438 00:22:38,880 --> 00:22:40,720 Speaker 7: Nice to see you, very nice to see you too. 439 00:22:40,880 --> 00:22:43,119 Speaker 2: So why hasn't your stock gotten the same kind of 440 00:22:43,119 --> 00:22:45,119 Speaker 2: credit that Vista and Constellation Energy have. 441 00:22:45,960 --> 00:22:47,919 Speaker 7: Well, our stock recovered a little bit, let's say, in 442 00:22:47,920 --> 00:22:51,440 Speaker 7: the last couple of weeks, yes, but I still think, yeah, 443 00:22:51,480 --> 00:22:54,560 Speaker 7: it has long way to go. So we are the 444 00:22:54,680 --> 00:22:59,840 Speaker 7: largest provider of actually renewable energy to hyperscalers in the world. 445 00:23:00,480 --> 00:23:01,760 Speaker 9: So we have already eight. 446 00:23:01,640 --> 00:23:05,879 Speaker 7: Gigawatts signed over history. So I think that you know, 447 00:23:05,920 --> 00:23:09,000 Speaker 7: the nuclear has gotten a lot of attention. I do 448 00:23:09,040 --> 00:23:11,600 Speaker 7: think nuclear is part of the solution. But we're really 449 00:23:11,640 --> 00:23:15,000 Speaker 7: looking at a market that's short energy to really be 450 00:23:15,080 --> 00:23:18,159 Speaker 7: able to implement the AI revolution and the amount of 451 00:23:18,200 --> 00:23:19,240 Speaker 7: data centers that are needed. 452 00:23:20,280 --> 00:23:22,080 Speaker 4: I know, just last month, you're all we're saying that 453 00:23:22,080 --> 00:23:25,399 Speaker 4: you see demand at Midwest utilities rising fifty percent on 454 00:23:25,560 --> 00:23:28,760 Speaker 4: data centers. So of course that's really been the conversation 455 00:23:28,800 --> 00:23:32,040 Speaker 4: about AI. What is your expectation for how much more 456 00:23:32,119 --> 00:23:35,040 Speaker 4: power demand you'll need to produce to meet data center demand? 457 00:23:36,240 --> 00:23:38,960 Speaker 7: Well, the truth is right now, anything that you can 458 00:23:39,000 --> 00:23:42,600 Speaker 7: get built on the renewable space in the right areas 459 00:23:42,640 --> 00:23:45,480 Speaker 7: you can contract, so there's really a shortage in the 460 00:23:45,480 --> 00:23:47,359 Speaker 7: case of the utilities. This is a very nice story 461 00:23:47,440 --> 00:23:50,199 Speaker 7: because one of them is Dayton, Ohio. We call it 462 00:23:50,240 --> 00:23:53,600 Speaker 7: as Ohio, and it was really a city that had 463 00:23:53,640 --> 00:23:56,199 Speaker 7: suffered a lot, you know, with the the industrialization of 464 00:23:56,200 --> 00:24:00,360 Speaker 7: the US. And what we're seeing is we contract did 465 00:24:00,600 --> 00:24:04,440 Speaker 7: for about two gigawatts of new data centers coming into 466 00:24:04,440 --> 00:24:07,320 Speaker 7: that area. But you also have an EV plant and 467 00:24:07,359 --> 00:24:09,399 Speaker 7: a battery plant coming in. So it's great to see 468 00:24:09,640 --> 00:24:14,000 Speaker 7: this area reindustrializing and you know, growing again. So it's 469 00:24:14,040 --> 00:24:16,000 Speaker 7: an area that you know, it's population is probably half 470 00:24:16,000 --> 00:24:17,600 Speaker 7: of what it was in the seventies, so there's a 471 00:24:17,600 --> 00:24:20,000 Speaker 7: lot of you know, there's water available, there's interconnection, there's 472 00:24:20,040 --> 00:24:23,200 Speaker 7: everything else. So it's it's really it was a it's 473 00:24:23,200 --> 00:24:25,919 Speaker 7: a great spot to locate data centers. 474 00:24:26,200 --> 00:24:27,040 Speaker 9: A couple don't. 475 00:24:26,840 --> 00:24:29,520 Speaker 2: Questions for you when we talk about renewable power to 476 00:24:29,680 --> 00:24:32,119 Speaker 2: some of the data centers, for example, or the hyperscalers, 477 00:24:32,359 --> 00:24:35,320 Speaker 2: what does that actually mean for AEES and what kind 478 00:24:35,320 --> 00:24:37,280 Speaker 2: of partnerships you currently have and who are you talking 479 00:24:37,280 --> 00:24:40,479 Speaker 2: to h that's three questions, right, now. 480 00:24:40,560 --> 00:24:43,720 Speaker 7: Yeah, well, let's see. Sometimes we're not able to say, 481 00:24:43,880 --> 00:24:46,439 Speaker 7: you know how who exactly are the different partners. What 482 00:24:46,480 --> 00:24:50,200 Speaker 7: I can say is that it's you know, pretty much 483 00:24:51,080 --> 00:24:51,920 Speaker 7: all of the big ones. 484 00:24:52,040 --> 00:24:52,359 Speaker 2: Okay. 485 00:24:53,560 --> 00:24:56,760 Speaker 7: We do have the largest solar plus storage project in 486 00:24:56,800 --> 00:25:00,399 Speaker 7: the country being built right now, and that's with Amazon 487 00:25:00,440 --> 00:25:04,199 Speaker 7: Web Services AWS in California, and that's two gigawatts just 488 00:25:04,280 --> 00:25:07,919 Speaker 7: that one facility. So we have a backlog of about 489 00:25:07,960 --> 00:25:11,520 Speaker 7: twelve gigawatts that we have to build over the next 490 00:25:11,840 --> 00:25:14,720 Speaker 7: maximum three years, all of it. And we're signing of 491 00:25:14,760 --> 00:25:18,640 Speaker 7: about five gigawats a year. So to put it in perspective, 492 00:25:19,560 --> 00:25:23,360 Speaker 7: something like let's say putting the unit on three mile 493 00:25:23,400 --> 00:25:27,720 Speaker 7: aland back online, that's probably about eight hundred and fifty megawatts, 494 00:25:27,800 --> 00:25:30,600 Speaker 7: and we were talking about, you know, five gigawatts a 495 00:25:30,680 --> 00:25:34,239 Speaker 7: year that we're signing. So there's you know there. I 496 00:25:34,240 --> 00:25:36,359 Speaker 7: see nuclear as part of the solution, but it's not 497 00:25:36,400 --> 00:25:39,240 Speaker 7: going to displace renewables, certainly not in the next decade. 498 00:25:40,119 --> 00:25:43,240 Speaker 4: And when we think about Microsoft striking that contract with 499 00:25:43,320 --> 00:25:46,840 Speaker 4: Consolation Energy, do you feel like that positive sentiment has 500 00:25:46,880 --> 00:25:49,399 Speaker 4: permeated through the market in terms of thinking about renewable 501 00:25:49,480 --> 00:25:50,359 Speaker 4: energy utilities? 502 00:25:51,280 --> 00:25:53,080 Speaker 7: No, I think the market's still thinking of it a 503 00:25:53,080 --> 00:25:55,800 Speaker 7: little bit like a zero sum game, and it's not 504 00:25:55,880 --> 00:25:59,440 Speaker 7: understanding sort of energy markets because what nuclear can do 505 00:25:59,680 --> 00:26:02,879 Speaker 7: is really provide dispatchable energy, which is twenty four to seven. 506 00:26:03,359 --> 00:26:07,240 Speaker 7: Renewables are intermittent, you know, clouds passed, sun goes down 507 00:26:07,600 --> 00:26:10,840 Speaker 7: when stops blowing. So you can compliment that with batteries, 508 00:26:11,000 --> 00:26:13,560 Speaker 7: but you can certainly complement it with nuclear, and you 509 00:26:13,600 --> 00:26:16,760 Speaker 7: can complement it with gas. So rather than either or, 510 00:26:17,240 --> 00:26:21,440 Speaker 7: it's both because per megawatt hour and actually the energy 511 00:26:21,480 --> 00:26:24,879 Speaker 7: you produce, renewables are the cheapest, they just aren't twenty 512 00:26:24,920 --> 00:26:25,800 Speaker 7: four to seven. 513 00:26:26,119 --> 00:26:30,760 Speaker 2: So then to that point, the reliability one argument is 514 00:26:30,920 --> 00:26:34,080 Speaker 2: nuclear and SMR small modular reactors are quote unquote better 515 00:26:34,119 --> 00:26:36,399 Speaker 2: because they have more reliability, or natural gas has more 516 00:26:36,440 --> 00:26:39,560 Speaker 2: reliability than for wind or solar. And you're mentioned you're 517 00:26:39,560 --> 00:26:43,840 Speaker 2: building this largest solar plus storage with AWS in California. 518 00:26:43,880 --> 00:26:47,320 Speaker 2: How hard slash easy is the storage world right now? 519 00:26:47,359 --> 00:26:47,600 Speaker 4: For you? 520 00:26:49,000 --> 00:26:51,040 Speaker 7: Storage is a little bit like a hammer. It has 521 00:26:51,119 --> 00:26:54,160 Speaker 7: lots and lots of uses. Okay, the prices of batteries 522 00:26:54,200 --> 00:26:56,439 Speaker 7: are coming down a lot, So as the prices of 523 00:26:56,440 --> 00:26:58,560 Speaker 7: batteries come down, there are more uses that you can 524 00:26:58,560 --> 00:27:01,880 Speaker 7: find for it. What's interesting about batteries is it can 525 00:27:01,920 --> 00:27:04,280 Speaker 7: do stuff that for example, a gas plant or even 526 00:27:04,320 --> 00:27:06,760 Speaker 7: a nuclear plant can too. They can go positive and 527 00:27:06,760 --> 00:27:09,520 Speaker 7: they can go negative. So for example, we have found 528 00:27:09,560 --> 00:27:12,680 Speaker 7: that when you have a hurricane, having batteries is great 529 00:27:12,720 --> 00:27:16,520 Speaker 7: because as transmission lines fall down, they were able to 530 00:27:16,560 --> 00:27:20,320 Speaker 7: suck up that energy and actually allow the fossil plants 531 00:27:20,359 --> 00:27:23,320 Speaker 7: to gear down and not get damaged. So that's that's 532 00:27:23,400 --> 00:27:25,480 Speaker 7: very important. If you compare it to a gas plant, 533 00:27:25,480 --> 00:27:29,080 Speaker 7: they're online ninety nine percent of the time. A gas 534 00:27:29,080 --> 00:27:32,239 Speaker 7: plant will be online ten percent of the time. So 535 00:27:32,680 --> 00:27:35,080 Speaker 7: I think when there's a lot of excitement like SMRs, 536 00:27:35,960 --> 00:27:38,280 Speaker 7: the great use I see of SMRs is putting them 537 00:27:38,359 --> 00:27:41,760 Speaker 7: into retired coal plants because basically a big coal plant 538 00:27:41,840 --> 00:27:44,520 Speaker 7: is just like a kettle. You just change the flame 539 00:27:44,600 --> 00:27:47,960 Speaker 7: the heat, so instead of burning coal, you would be 540 00:27:48,080 --> 00:27:50,640 Speaker 7: heating up the water with a nuclear so you get 541 00:27:50,680 --> 00:27:53,919 Speaker 7: to reuse the steam, turbine's interconnection, all those things. 542 00:27:54,359 --> 00:27:55,920 Speaker 9: The issue I have, you know with. 543 00:27:56,000 --> 00:28:00,440 Speaker 7: SMRs today is tell me what they cost no one 544 00:28:00,440 --> 00:28:03,280 Speaker 7: knows yet, and tell me when they're going to be ready. 545 00:28:03,520 --> 00:28:05,640 Speaker 7: So I believe in the concept I think they'll be 546 00:28:05,680 --> 00:28:08,359 Speaker 7: you know, they could be a game changer, but we 547 00:28:08,440 --> 00:28:10,840 Speaker 7: really have to see how much they cost, how many 548 00:28:10,880 --> 00:28:13,920 Speaker 7: we can build before we're going to say that, they're 549 00:28:13,920 --> 00:28:16,920 Speaker 7: going to say significantly displaced renewals. 550 00:28:18,640 --> 00:28:21,119 Speaker 4: Transport us to one of your boardroom meetings. What types 551 00:28:21,160 --> 00:28:23,719 Speaker 4: of conversations are you all having right now, especially as 552 00:28:23,760 --> 00:28:25,040 Speaker 4: we think about power demand. 553 00:28:26,119 --> 00:28:28,440 Speaker 7: Well, I think I'm very lucky you have a great board. 554 00:28:29,640 --> 00:28:32,000 Speaker 7: We do a lot of scenario planning, and we've been 555 00:28:32,000 --> 00:28:34,880 Speaker 7: doing that for twenty five years, so we do scenario 556 00:28:34,880 --> 00:28:39,480 Speaker 7: planning for regulatory changes, for demand changes. So I think, 557 00:28:39,560 --> 00:28:42,600 Speaker 7: you know, basically they're quite pleased because about six years 558 00:28:42,640 --> 00:28:46,000 Speaker 7: ago we really said, look, if you look at people's 559 00:28:46,640 --> 00:28:49,280 Speaker 7: decarbonization goals, there's going to be a shortage of zero 560 00:28:49,320 --> 00:28:52,840 Speaker 7: carbon energy. So we built up a pipeline, we bought 561 00:28:52,960 --> 00:28:55,240 Speaker 7: rights to land, we did interconnection. So you know, we 562 00:28:55,320 --> 00:28:57,280 Speaker 7: feel a little bit on the right side of history 563 00:28:57,600 --> 00:29:00,800 Speaker 7: on these things. So I'd say generally the conversation is 564 00:29:00,880 --> 00:29:04,040 Speaker 7: very good. So honestly, nuclear is not a main theme, 565 00:29:04,160 --> 00:29:05,240 Speaker 7: for example, of my board of. 566 00:29:05,240 --> 00:29:10,280 Speaker 2: Directors talking about sort of the different projects. What's the 567 00:29:10,320 --> 00:29:13,280 Speaker 2: hardest part about building stuff right now? Is it labor 568 00:29:13,320 --> 00:29:16,960 Speaker 2: and materials, is it getting the PPAs or the off 569 00:29:16,960 --> 00:29:19,280 Speaker 2: take agreement. So basically your customer has to sign up 570 00:29:19,280 --> 00:29:21,040 Speaker 2: and say, okay, I'll pay you this much to get 571 00:29:21,080 --> 00:29:23,080 Speaker 2: this amount of solar from you. So that gives you 572 00:29:23,200 --> 00:29:26,560 Speaker 2: clarity on then what you have on your books. What's 573 00:29:26,600 --> 00:29:27,320 Speaker 2: the hardest part. 574 00:29:27,680 --> 00:29:29,400 Speaker 7: The hardest part is getting permittal end. 575 00:29:30,000 --> 00:29:31,520 Speaker 2: So none of the things I said, okay, none of 576 00:29:31,520 --> 00:29:31,800 Speaker 2: the things. 577 00:29:31,800 --> 00:29:34,560 Speaker 7: No, you know, the PPA would be simple. And look, 578 00:29:34,600 --> 00:29:39,200 Speaker 7: we haven't postponed, not even forget abandon, not even postponed 579 00:29:39,200 --> 00:29:43,960 Speaker 7: a significant project even during COVID, So I think, you know, 580 00:29:44,040 --> 00:29:48,120 Speaker 7: we have a very robust supply chain and we will 581 00:29:48,520 --> 00:29:51,840 Speaker 7: certainly move up everything that's in the US to domestic 582 00:29:52,320 --> 00:29:55,920 Speaker 7: production by twenty six so that is not worrying me. Labor, 583 00:29:55,960 --> 00:29:58,400 Speaker 7: we've also not had a problem because we've tended to 584 00:29:58,440 --> 00:30:00,920 Speaker 7: work with a strategic contray actors in the sense that 585 00:30:01,280 --> 00:30:03,640 Speaker 7: we don't give them one project, We'll give them a 586 00:30:03,680 --> 00:30:06,160 Speaker 7: series of projects so they can move the crew from 587 00:30:06,160 --> 00:30:07,040 Speaker 7: one spot to another. 588 00:30:07,240 --> 00:30:07,560 Speaker 9: I see. 589 00:30:07,560 --> 00:30:10,720 Speaker 2: And that's interesting when you think, do you think permitting 590 00:30:10,800 --> 00:30:13,240 Speaker 2: is going to get fixed no matter who's in the 591 00:30:13,240 --> 00:30:14,840 Speaker 2: White House? How do you fix it? 592 00:30:15,080 --> 00:30:18,120 Speaker 7: Look, they say, all politics is local, all permitting is local. 593 00:30:19,080 --> 00:30:22,800 Speaker 7: So you know, while they've made I say progress, let's 594 00:30:22,800 --> 00:30:25,240 Speaker 7: say in the way they do interconnections in the states 595 00:30:25,240 --> 00:30:28,040 Speaker 7: of batching it, of new ways of thinking about it. 596 00:30:28,560 --> 00:30:30,880 Speaker 7: I do think that's going to be probably the biggest bottling. 597 00:30:30,880 --> 00:30:35,280 Speaker 7: I think we have to, you know, move renewables to 598 00:30:35,320 --> 00:30:38,720 Speaker 7: some extent outside of certain areas where there's more resistance. 599 00:30:38,720 --> 00:30:40,920 Speaker 7: So there's definitely going to be a move to putting 600 00:30:40,920 --> 00:30:43,760 Speaker 7: renewables where you know, the permitting is easier. 601 00:30:43,760 --> 00:30:44,760 Speaker 9: But that's the most difficult. 602 00:30:44,880 --> 00:30:46,640 Speaker 5: Can I answer you what kind of shape the grid 603 00:30:46,720 --> 00:30:48,040 Speaker 5: is in? From your perspective? 604 00:30:48,880 --> 00:30:50,560 Speaker 4: How much time do you have? 605 00:30:51,640 --> 00:30:54,040 Speaker 7: Look, I think it's a great question, and I'll tell 606 00:30:54,040 --> 00:30:56,280 Speaker 7: you for the following reason. I think there's a lot 607 00:30:56,320 --> 00:30:58,240 Speaker 7: of talk about, you know, the shape of the grid, 608 00:30:58,280 --> 00:31:00,880 Speaker 7: but what we're not doing is fully applying the new 609 00:31:00,920 --> 00:31:05,080 Speaker 7: technologies we have. So for example, grids are probably used 610 00:31:05,120 --> 00:31:06,080 Speaker 7: at fifty percent. 611 00:31:05,840 --> 00:31:07,080 Speaker 9: Of their real capacity. 612 00:31:07,400 --> 00:31:09,160 Speaker 7: We have a lot of copper sitting around most of 613 00:31:09,200 --> 00:31:11,960 Speaker 7: the time, so we're we have the biggest what's called 614 00:31:12,040 --> 00:31:16,000 Speaker 7: dynamic line reading project in the US. It's in Indiana. 615 00:31:16,600 --> 00:31:19,160 Speaker 7: What is dynamic line ate very simply you put sensors 616 00:31:19,200 --> 00:31:22,520 Speaker 7: on the lines to say what's the actual temperature, what's 617 00:31:22,560 --> 00:31:25,520 Speaker 7: the actual sag in the lines, what's the wind, and 618 00:31:25,600 --> 00:31:27,880 Speaker 7: so in some cases you can actually transmit fifty percent 619 00:31:27,920 --> 00:31:31,440 Speaker 7: more energy over it. The second one is that the 620 00:31:31,560 --> 00:31:33,320 Speaker 7: whole grid is built out for the peak time. The 621 00:31:33,320 --> 00:31:35,480 Speaker 7: peak time could be one hour. The rest of the 622 00:31:35,480 --> 00:31:38,840 Speaker 7: time it's underutilized. So by using batteries we have projects 623 00:31:38,840 --> 00:31:44,360 Speaker 7: called grid Booster, you actually transmit the energy on the 624 00:31:44,400 --> 00:31:46,640 Speaker 7: off peak hours. So that does I'm not saying it 625 00:31:46,680 --> 00:31:49,520 Speaker 7: solves everything, but I think we have to think more 626 00:31:49,560 --> 00:31:52,720 Speaker 7: about these new technologies to make better use of existing grid. 627 00:31:53,680 --> 00:31:56,400 Speaker 2: Before I let you go, what's the one thing that 628 00:31:56,480 --> 00:31:58,960 Speaker 2: you hope is that investors take away in terms of 629 00:31:58,960 --> 00:32:01,680 Speaker 2: say your stock price, it's recovery, but for the last 630 00:32:01,760 --> 00:32:04,160 Speaker 2: year it's still flattered down by one percent. What do 631 00:32:04,160 --> 00:32:05,600 Speaker 2: you think it's going to take for you to finally 632 00:32:05,600 --> 00:32:08,000 Speaker 2: get credit like Constellation Energy? 633 00:32:08,440 --> 00:32:10,600 Speaker 7: Well, I think what people have liked very much about 634 00:32:10,600 --> 00:32:14,280 Speaker 7: the pure ipp place, they think there's a little investment, 635 00:32:14,400 --> 00:32:19,080 Speaker 7: so it's just using existing plants and just recontracting them. 636 00:32:19,480 --> 00:32:22,720 Speaker 7: In our case, I think, look, we have met or 637 00:32:22,760 --> 00:32:25,920 Speaker 7: beaten our guidance eight years in a row. We have 638 00:32:25,960 --> 00:32:28,760 Speaker 7: grown our divid in ten years in a row. So 639 00:32:28,840 --> 00:32:33,080 Speaker 7: I'm by training an economist, and I'm just kind of 640 00:32:33,440 --> 00:32:35,800 Speaker 7: really surprised at some of the correlations in our stock. 641 00:32:35,880 --> 00:32:38,880 Speaker 7: We're not sensitive to interest rates, so I think those 642 00:32:38,880 --> 00:32:42,000 Speaker 7: things tend to work themselves out over time. So look, 643 00:32:42,400 --> 00:32:45,720 Speaker 7: company's never been better. We're cripple investment grade. We have 644 00:32:45,840 --> 00:32:50,680 Speaker 7: three years of construction in our backlog today and a 645 00:32:50,680 --> 00:32:52,640 Speaker 7: lot of very cool new technologies coming on. 646 00:32:52,840 --> 00:32:55,080 Speaker 2: All right, andres really appreciate it. It's always good to 647 00:32:55,080 --> 00:32:58,880 Speaker 2: see you so thoughtful. Andris Kluski, CEO of AS joining 648 00:32:58,960 --> 00:32:59,520 Speaker 2: us there. 649 00:33:03,840 --> 00:33:07,720 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 650 00:33:07,800 --> 00:33:11,719 Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto 651 00:33:11,720 --> 00:33:14,719 Speaker 1: with the Bloomberg Business. You can also listen live on 652 00:33:14,800 --> 00:33:18,040 Speaker 1: Amazon Alexa from our flagship New York station, Just say 653 00:33:18,120 --> 00:33:20,480 Speaker 1: Alexa play Bloomberg eleven thirty. 654 00:33:21,120 --> 00:33:24,640 Speaker 2: So around this time every day. On Monday, we talked 655 00:33:24,680 --> 00:33:29,320 Speaker 2: to Bloomberg bn EF. They are the leading researchers and 656 00:33:29,400 --> 00:33:32,480 Speaker 2: everything you need to know about the energy transition. They 657 00:33:32,520 --> 00:33:36,080 Speaker 2: do work on commodities and power and transport industry ads. 658 00:33:36,680 --> 00:33:39,720 Speaker 2: They also talk about finance and governments and so everyone 659 00:33:39,720 --> 00:33:42,160 Speaker 2: can make informed decisions on this. And joining us now 660 00:33:42,200 --> 00:33:44,800 Speaker 2: in studio is David Doherty, head of Oil and Renewable 661 00:33:44,840 --> 00:33:48,120 Speaker 2: Fuels Research for Bloomberg b n EF. David, great to 662 00:33:48,120 --> 00:33:50,800 Speaker 2: see you, Thanks for joining. This is Climate Week, So 663 00:33:50,840 --> 00:33:52,320 Speaker 2: this is climate week, so it's all going to be 664 00:33:52,360 --> 00:33:55,240 Speaker 2: about climate y friendly green things. Does that include your 665 00:33:55,240 --> 00:33:56,040 Speaker 2: oil and gas? 666 00:33:56,280 --> 00:33:56,680 Speaker 9: It's us. 667 00:33:56,760 --> 00:33:59,720 Speaker 10: Yeah, you can call oil green things, I suppose if 668 00:33:59,760 --> 00:34:02,000 Speaker 10: you want, I get exciting about it. You know, we've 669 00:34:02,000 --> 00:34:04,640 Speaker 10: been talking about alcoholic free beer, so oil can feature 670 00:34:04,640 --> 00:34:07,200 Speaker 10: in the climate change. 671 00:34:08,080 --> 00:34:10,120 Speaker 2: So that was my way of kind of asking of 672 00:34:10,160 --> 00:34:12,960 Speaker 2: how does oil and gas play in the energy transition 673 00:34:13,000 --> 00:34:14,840 Speaker 2: and what are some of the trends that we've noticed 674 00:34:15,440 --> 00:34:16,279 Speaker 2: over the last year. 675 00:34:16,920 --> 00:34:17,120 Speaker 9: Yeah. 676 00:34:17,160 --> 00:34:18,719 Speaker 10: I mean, if you think of the players in the 677 00:34:18,760 --> 00:34:20,799 Speaker 10: oil market, they're the energy pros in the world, right 678 00:34:20,800 --> 00:34:24,000 Speaker 10: They've got the balance sheet, they've got the skills, they've 679 00:34:24,040 --> 00:34:26,600 Speaker 10: got the technology, and they're already established, right, so they've 680 00:34:26,640 --> 00:34:29,160 Speaker 10: got interest in seeing how this develops, how fast it goes, 681 00:34:29,200 --> 00:34:30,719 Speaker 10: how it impacts their bottom line. 682 00:34:30,719 --> 00:34:33,600 Speaker 4: Basically, what are the main hold ups in terms of 683 00:34:33,600 --> 00:34:36,040 Speaker 4: the transition. What are some of the headwinds. 684 00:34:37,160 --> 00:34:42,520 Speaker 10: I mean, capital is obviously one raising capital. Smart people 685 00:34:42,520 --> 00:34:45,359 Speaker 10: in the right jobs in the right place push back 686 00:34:45,400 --> 00:34:47,920 Speaker 10: both political and from people. 687 00:34:48,000 --> 00:34:48,160 Speaker 9: Right. 688 00:34:48,320 --> 00:34:50,600 Speaker 10: People love the idea, but as soon as it costs money, 689 00:34:50,640 --> 00:34:52,759 Speaker 10: that's quite a difficult to swallow, especially now in like 690 00:34:52,760 --> 00:34:53,640 Speaker 10: inflationary times. 691 00:34:53,719 --> 00:34:58,480 Speaker 2: Right, is the conversation that evs will eventually surplant internal 692 00:34:58,480 --> 00:35:00,799 Speaker 2: combustion engines and get rid of gas demand. Is that 693 00:35:00,840 --> 00:35:03,200 Speaker 2: still something that you guys are working with in modeling 694 00:35:03,320 --> 00:35:04,840 Speaker 2: or has that conversation evolved? 695 00:35:05,360 --> 00:35:08,040 Speaker 10: It's evolved, I mean that is kind of the trend though. Yeah, 696 00:35:08,040 --> 00:35:10,279 Speaker 10: when you look at things when they're cheaper upfront, right, 697 00:35:10,440 --> 00:35:12,160 Speaker 10: consumers tend to shift towards that. 698 00:35:12,239 --> 00:35:13,800 Speaker 9: If it's cheaper day. 699 00:35:13,600 --> 00:35:16,239 Speaker 10: One for buying an ev versus an internal combustion engine car, 700 00:35:16,280 --> 00:35:18,040 Speaker 10: and all else is equally, you're probably going to see 701 00:35:18,040 --> 00:35:18,719 Speaker 10: a shift towards that. 702 00:35:18,840 --> 00:35:19,000 Speaker 9: Right. 703 00:35:19,160 --> 00:35:21,560 Speaker 2: So we're really though US centric here and we don't 704 00:35:21,560 --> 00:35:23,960 Speaker 2: see that in the same way. But elsewhere, is that 705 00:35:24,000 --> 00:35:25,000 Speaker 2: truly what's happening? 706 00:35:25,360 --> 00:35:25,799 Speaker 9: Yeah, you are. 707 00:35:25,800 --> 00:35:28,520 Speaker 10: You're seeing a big uptick in Europe and in China 708 00:35:28,600 --> 00:35:31,320 Speaker 10: for example, and even here in the US California for example, 709 00:35:31,320 --> 00:35:33,840 Speaker 10: behave it's much more like a European economy. When we 710 00:35:33,840 --> 00:35:36,960 Speaker 10: think about the transition to evs, we've seen really high 711 00:35:37,040 --> 00:35:38,160 Speaker 10: rates of penetration there. 712 00:35:38,680 --> 00:35:40,680 Speaker 4: What are some of the main themes in market dynamics 713 00:35:40,719 --> 00:35:42,359 Speaker 4: that your team is focused on right now? 714 00:35:42,680 --> 00:35:45,200 Speaker 10: Yeah, Like, the rate of this change is interesting. What's 715 00:35:45,239 --> 00:35:46,600 Speaker 10: happening in different markets? 716 00:35:47,000 --> 00:35:47,920 Speaker 9: What the response is. 717 00:35:48,040 --> 00:35:50,359 Speaker 10: If you take the US for example, it's a it's 718 00:35:50,360 --> 00:35:52,600 Speaker 10: a mature market. So when these evs come into the market, 719 00:35:52,600 --> 00:35:55,799 Speaker 10: you're seeing a decline in gasoline sales versus saying in 720 00:35:55,880 --> 00:35:59,080 Speaker 10: China where it's like what could have been doesn't necessarily manifest, right, 721 00:35:59,640 --> 00:36:02,719 Speaker 10: So that turns into then power in your pocket. Right, 722 00:36:02,760 --> 00:36:05,359 Speaker 10: You're seeing the cost of gasoline isn't coming down even 723 00:36:05,400 --> 00:36:07,960 Speaker 10: though you're expecting it to a less gasoline being consumed. 724 00:36:08,280 --> 00:36:10,720 Speaker 10: There's so many more dynamics in just a four wheels 725 00:36:10,719 --> 00:36:11,879 Speaker 10: on the road situation, right. 726 00:36:11,800 --> 00:36:13,680 Speaker 4: And how are all these things impacting the consumer? 727 00:36:14,680 --> 00:36:14,919 Speaker 9: Yeah? 728 00:36:14,960 --> 00:36:16,960 Speaker 10: I mean, if you think about costs in your pocket 729 00:36:16,960 --> 00:36:18,799 Speaker 10: when it comes to driving your card, that's a big thing, 730 00:36:18,800 --> 00:36:20,839 Speaker 10: particularly here in the US, particularly in an election year. 731 00:36:20,920 --> 00:36:23,359 Speaker 10: You know, it trickles down into inflation. You get something 732 00:36:23,400 --> 00:36:25,960 Speaker 10: delivered to your house. The cost of diesel impacts all 733 00:36:26,040 --> 00:36:28,880 Speaker 10: of these things. So your consumers are super sensitive of 734 00:36:28,920 --> 00:36:31,120 Speaker 10: anything to a cost at the moment, and probably the 735 00:36:31,160 --> 00:36:33,520 Speaker 10: biggest development here in the US it's been interesting is 736 00:36:33,840 --> 00:36:37,040 Speaker 10: less consumption of gasoline hasn't turned into less prices at 737 00:36:37,040 --> 00:36:38,600 Speaker 10: the you know, a lower price at the pump. 738 00:36:38,760 --> 00:36:39,640 Speaker 2: Why do you think that is? 739 00:36:40,080 --> 00:36:40,759 Speaker 9: Well, this is key. 740 00:36:40,760 --> 00:36:42,120 Speaker 10: This is something we have to think about as we 741 00:36:42,200 --> 00:36:44,760 Speaker 10: go towards transition. If you pull supply in any scenario, 742 00:36:44,800 --> 00:36:46,479 Speaker 10: you're going to see a price spike. In the US, 743 00:36:46,520 --> 00:36:49,399 Speaker 10: we're seeing less refinery production than we have a few 744 00:36:49,440 --> 00:36:51,239 Speaker 10: years ago. So you're seeing over a million barrools per 745 00:36:51,320 --> 00:36:53,560 Speaker 10: day cut in the last two three years alone. And 746 00:36:53,560 --> 00:36:55,759 Speaker 10: when you have a less supply of something, even if 747 00:36:55,760 --> 00:36:57,279 Speaker 10: you have less demand, it really depends on which one 748 00:36:57,320 --> 00:36:59,560 Speaker 10: goes first, on how speedy that changes. 749 00:37:00,000 --> 00:37:01,880 Speaker 4: And so what are people thinking when will this all 750 00:37:01,920 --> 00:37:02,879 Speaker 4: shake out? 751 00:37:03,120 --> 00:37:05,640 Speaker 10: I mean it's shaking out already. It's already shaking out 752 00:37:05,680 --> 00:37:07,239 Speaker 10: in the four court when people are buying the car. 753 00:37:07,400 --> 00:37:10,160 Speaker 10: You're seeing the response from refiners. For example, some big 754 00:37:10,160 --> 00:37:12,400 Speaker 10: refineries like P sixty six are switching some of their 755 00:37:12,440 --> 00:37:15,520 Speaker 10: facilities to make things like renewable diesel or sustainable aviation 756 00:37:15,600 --> 00:37:18,640 Speaker 10: fuel so people are posturing. Companies are postering for the 757 00:37:18,640 --> 00:37:20,520 Speaker 10: next five, six, seven years, right. 758 00:37:21,400 --> 00:37:23,040 Speaker 2: Which is such a great point because I guess the 759 00:37:23,120 --> 00:37:25,799 Speaker 2: question then becomes, if we're posturing for the seven or 760 00:37:25,880 --> 00:37:29,200 Speaker 2: eight years, what does the landscape in your world look 761 00:37:29,360 --> 00:37:33,719 Speaker 2: like then? I mean everyone seems to say it's a yes, 762 00:37:33,800 --> 00:37:37,399 Speaker 2: and we need everything above all And is that how 763 00:37:37,440 --> 00:37:38,160 Speaker 2: you model it? 764 00:37:38,880 --> 00:37:40,520 Speaker 9: That is how we model it. 765 00:37:40,520 --> 00:37:42,719 Speaker 10: In our sort of standard out look twenty twenty nine, 766 00:37:42,800 --> 00:37:44,840 Speaker 10: we see peak oil consumption globally. 767 00:37:44,440 --> 00:37:46,279 Speaker 9: So that's still pretty far out. There's still a lot 768 00:37:46,280 --> 00:37:46,919 Speaker 9: of growth left. 769 00:37:47,080 --> 00:37:48,919 Speaker 2: Also, peak doesn't mean the then it goes to zero. 770 00:37:49,719 --> 00:37:51,160 Speaker 2: I feel like that's something we need to also wrap 771 00:37:51,160 --> 00:37:53,120 Speaker 2: ourmind around, Like just because it's not increasing, it doesn't 772 00:37:53,160 --> 00:37:54,440 Speaker 2: mean it's rapidly decreasing. 773 00:37:54,520 --> 00:37:55,319 Speaker 9: Yeah, you're totally right. 774 00:37:55,360 --> 00:37:57,240 Speaker 10: Even in like a net zero world, in our modeling, 775 00:37:57,280 --> 00:37:59,440 Speaker 10: you get about twenty five million boos per day of oil, 776 00:37:59,560 --> 00:38:01,600 Speaker 10: so you net zero doesn't mean zero oil. 777 00:38:02,840 --> 00:38:04,359 Speaker 4: So what does the growth outlook here? 778 00:38:05,520 --> 00:38:07,640 Speaker 10: You're looking at about four or five million barrels per 779 00:38:07,680 --> 00:38:10,239 Speaker 10: day upside in our inner base case scenario. But lots 780 00:38:10,280 --> 00:38:12,560 Speaker 10: of things can change that, right. Policies are the main 781 00:38:12,600 --> 00:38:14,839 Speaker 10: thing to look at particularly in big markets like the US. 782 00:38:14,920 --> 00:38:16,479 Speaker 9: Right, the US consumers is about one. 783 00:38:16,360 --> 00:38:19,879 Speaker 10: In every five barrels globally, so if something changes here, 784 00:38:20,000 --> 00:38:21,080 Speaker 10: the whole market can change. 785 00:38:21,120 --> 00:38:22,560 Speaker 9: The dynamic is really upended. 786 00:38:22,960 --> 00:38:24,920 Speaker 2: When we take a look at say China and India, 787 00:38:25,080 --> 00:38:28,520 Speaker 2: large consumers of energy, obviously, are they jumping from coal 788 00:38:28,600 --> 00:38:28,920 Speaker 2: to what. 789 00:38:30,080 --> 00:38:33,280 Speaker 10: You know, gases and transition fuel. We're seeing them shift 790 00:38:33,280 --> 00:38:35,880 Speaker 10: towards I was just in Beijing last weekend. There's a 791 00:38:35,960 --> 00:38:38,080 Speaker 10: very different way of looking at the oil market versus 792 00:38:38,080 --> 00:38:41,239 Speaker 10: if you're down in Texas, Right, it's what's the displacement? 793 00:38:41,280 --> 00:38:43,399 Speaker 10: Because they need more and more energy, right, they don't 794 00:38:43,440 --> 00:38:45,200 Speaker 10: want to import that energy, So what can you do 795 00:38:45,200 --> 00:38:47,960 Speaker 10: domestically In the case of power, that's coal. But we're 796 00:38:47,960 --> 00:38:50,360 Speaker 10: also seeing in the case of evs, right, LNG trucks, 797 00:38:50,520 --> 00:38:52,719 Speaker 10: even electric trucks. So we have a lot we can 798 00:38:52,800 --> 00:38:55,680 Speaker 10: learn from them. But they're just different, very different markets. 799 00:38:55,719 --> 00:38:57,960 Speaker 2: And how do they get there? How do they get there? 800 00:38:58,040 --> 00:39:00,759 Speaker 2: Is it because of subsidies? Is it because they were 801 00:39:00,760 --> 00:39:04,480 Speaker 2: so dependent on coal? Like what leads that transition there 802 00:39:04,560 --> 00:39:06,160 Speaker 2: differently than say in the US. 803 00:39:06,480 --> 00:39:09,680 Speaker 10: Yeah, I mean, I think it's dependency on imports. For 804 00:39:09,840 --> 00:39:12,680 Speaker 10: one example, they've got a lot of national champions, and 805 00:39:12,760 --> 00:39:15,200 Speaker 10: to be honest, when they say they're going to do something, 806 00:39:15,320 --> 00:39:17,719 Speaker 10: they do it in Europe and in the US you 807 00:39:17,760 --> 00:39:19,120 Speaker 10: got to get it through parliament, you got. 808 00:39:19,040 --> 00:39:21,280 Speaker 9: To get it through votes. It's a lot slow. 809 00:39:21,120 --> 00:39:24,439 Speaker 10: Over process, and there's less domestic manufacturers like Tesla's a big, 810 00:39:24,719 --> 00:39:25,560 Speaker 10: big player here. 811 00:39:25,400 --> 00:39:26,720 Speaker 9: But it's kind of it in China. 812 00:39:26,719 --> 00:39:28,279 Speaker 10: You've got a lot of big producers, a lot of 813 00:39:28,320 --> 00:39:30,719 Speaker 10: big industrial champions, right, and they're encouraged by. 814 00:39:30,680 --> 00:39:33,239 Speaker 9: The States and by the city and by incentives. 815 00:39:33,480 --> 00:39:36,000 Speaker 4: So how do we fit into the bigger international ecosystem. 816 00:39:37,120 --> 00:39:38,879 Speaker 10: Well, for the US, one of the most important things 817 00:39:39,000 --> 00:39:41,359 Speaker 10: is it's sort of gasoline production. Machines send a lot 818 00:39:41,360 --> 00:39:45,840 Speaker 10: of gasoline abroad South America, Europe, even so there's a 819 00:39:45,920 --> 00:39:48,759 Speaker 10: change coming along for your US refiners basically, and you're 820 00:39:48,760 --> 00:39:52,279 Speaker 10: starting to see how they just they're positioning in a 821 00:39:52,400 --> 00:39:53,839 Speaker 10: sort of a market leading way. 822 00:39:53,880 --> 00:39:55,600 Speaker 2: I think, all right, David, we appreciate it. 823 00:39:55,600 --> 00:39:56,200 Speaker 4: Thank you very much. 824 00:39:56,239 --> 00:39:58,840 Speaker 2: David Doherty joining US head of Oil and Renewables Fuels Research. 825 00:39:59,280 --> 00:40:01,279 Speaker 5: Before you go for you, have you ever had a 826 00:40:01,280 --> 00:40:02,279 Speaker 5: non alcoholic beer? 827 00:40:02,280 --> 00:40:04,279 Speaker 10: Oh, bring the Irish guy in. I like this and 828 00:40:04,360 --> 00:40:07,319 Speaker 10: I have yet, and I'm also not a verse exhumation. Yeah, 829 00:40:07,320 --> 00:40:10,399 Speaker 10: I think it's pretty good, especially if you're driving, you know, yeah, or. 830 00:40:10,400 --> 00:40:12,480 Speaker 2: Just like because some of them you actually can feel 831 00:40:12,480 --> 00:40:15,840 Speaker 2: the taste, like non alcoholic wine is basically like fruit juice, 832 00:40:15,840 --> 00:40:19,160 Speaker 2: but not alcoholic beer does taste somewhat like beer. 833 00:40:19,239 --> 00:40:21,040 Speaker 10: I agree, And you know what, it's stuffed people asking you, like, 834 00:40:21,040 --> 00:40:22,640 Speaker 10: why ain't you drinking today because they have no idea. 835 00:40:22,680 --> 00:40:23,520 Speaker 10: It looks exact same. 836 00:40:23,600 --> 00:40:27,000 Speaker 2: Yeah. Well and the more you know, John Tucker. 837 00:40:27,239 --> 00:40:28,640 Speaker 5: You just all disappointment. 838 00:40:29,560 --> 00:40:30,040 Speaker 4: So sorry. 839 00:40:30,160 --> 00:40:32,680 Speaker 2: The alcohol removed wine though, that's that's I try to 840 00:40:32,680 --> 00:40:33,200 Speaker 2: get into that. 841 00:40:33,239 --> 00:40:35,000 Speaker 4: And it was like, I have the hot wine. What's 842 00:40:35,000 --> 00:40:36,400 Speaker 4: the word for that? Warm wine? 843 00:40:36,960 --> 00:40:40,040 Speaker 2: But stuff? What mold stuff? But that's not wine? 844 00:40:40,520 --> 00:40:41,000 Speaker 9: What is it? 845 00:40:42,120 --> 00:40:43,240 Speaker 2: Okay, now we're going to research. 846 00:40:43,239 --> 00:40:45,440 Speaker 4: This is what I back away. 847 00:40:46,600 --> 00:40:51,120 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apples, Spotify, 848 00:40:51,320 --> 00:40:54,520 Speaker 1: and anywhere else you get your podcasts. Listen live each 849 00:40:54,560 --> 00:40:57,920 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com, 850 00:40:58,040 --> 00:41:01,439 Speaker 1: the Ihard Radio app, tune In, and the Bloomberg Business App. 851 00:41:01,560 --> 00:41:04,560 Speaker 1: You can also watch us live every weekday on YouTube 852 00:41:04,760 --> 00:41:06,600 Speaker 1: and always on the Bloomberg terminal