WEBVTT - Intel's Offer from Apollo, Energy Demand on the Rise 0:00:02.440 --> 0:00:09.119 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:09.119 --> 0:00:13.320 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:13.320 --> 0:00:15.800 Eastern on Apple card Playing and Broud Auto with the 0:00:15.800 --> 0:00:19.720 Bloomberg Business app. Listen on demand wherever you get your podcasts, 0:00:19.920 --> 0:00:21.240 or watch us live on. 0:00:21.120 --> 0:00:24.840 YouTube on Stock on the move is definitely Intel up 0:00:24.960 --> 0:00:27.960 over three percent. It had a big gap hire here 0:00:28.400 --> 0:00:31.120 on the end of close on Friday on the rumors 0:00:31.160 --> 0:00:34.720 that maybe Qualcom was looking at a possible deal for Intel. 0:00:34.800 --> 0:00:38.960 Then this morning we learn that Apollo was offered to 0:00:39.040 --> 0:00:42.839 have made a multi billion dollar investment in the company 0:00:42.880 --> 0:00:44.720 as well. Want to get more on this with Leanna Baker, 0:00:44.760 --> 0:00:47.400 Bloomberg News Managing director of the Deal team. She joins 0:00:47.440 --> 0:00:51.840 us here in studio. Leana, talk us through the Apollo part. 0:00:52.720 --> 0:00:55.520 What does that look like in your reporting? Sure, so 0:00:55.960 --> 0:00:59.360 this is a potential investment. Apollo has made this offer 0:00:59.440 --> 0:01:02.000 to Intel. It's unclear if Intel is going to take 0:01:02.040 --> 0:01:05.039 them up on this offer. Although Apollo is already a 0:01:05.080 --> 0:01:08.040 partner to Intel. They have a joint venture with them 0:01:08.560 --> 0:01:12.800 for their Irish plant, which was a really big project. 0:01:13.040 --> 0:01:18.080 So yeah, we're waiting to see how Intel decides to proceed. 0:01:18.480 --> 0:01:22.440 You mentioned there is an approach that came from Qualcomm. 0:01:22.120 --> 0:01:24.600 Late last week, so Intel has a lot to think about. 0:01:24.760 --> 0:01:27.680 Its board is meeting to decide which way to go. 0:01:28.120 --> 0:01:31.000 This Apollo investment could be an alternative potentially to the 0:01:31.080 --> 0:01:35.200 Qualcom merger, or it could be something that happens before 0:01:35.880 --> 0:01:39.520 any deal with Qualcomm would take a long time, according 0:01:39.520 --> 0:01:42.520 to analysts, just due to all the regulatory bodies around 0:01:42.520 --> 0:01:44.000 the world that would have to bless this deal. 0:01:44.560 --> 0:01:46.520 Now, was this expected and you're reporting were there any 0:01:46.560 --> 0:01:48.160 whispers about this prior to this? 0:01:48.800 --> 0:01:52.440 So we've been chasing for a long time what Intel 0:01:52.520 --> 0:01:55.200 is going to do. Since they are disastrous earnings report 0:01:55.240 --> 0:01:58.520 over the summer, they've kind of put themselves in play. 0:01:58.720 --> 0:02:00.920 At Bloomberg, we were the first to report that the 0:02:00.960 --> 0:02:03.920 company was thinking about M and A options, about a 0:02:03.920 --> 0:02:07.240 potential split, and then you might remember that late last week, 0:02:07.800 --> 0:02:10.160 you know, paq Elsinger put out a statement kind of 0:02:10.200 --> 0:02:13.760 laying out what would happen. We are watching to see 0:02:13.760 --> 0:02:15.720 what happens with the foundry business. 0:02:15.760 --> 0:02:16.079 Intel. 0:02:16.120 --> 0:02:18.480 Foundriies is something that Intel has spent a lot of 0:02:18.480 --> 0:02:20.399 money on over the years, and it's not making money. 0:02:20.440 --> 0:02:23.040 It doesn't have that many customers, and that is sort 0:02:23.040 --> 0:02:25.560 of sinking the company right now. Even though it's kind 0:02:25.600 --> 0:02:28.880 of the long term future play that the management is 0:02:28.960 --> 0:02:30.520 laid out for Intel, what is. 0:02:30.480 --> 0:02:32.960 In it for Apollo? Like, I know you said they 0:02:32.960 --> 0:02:35.760 have a doinventor, but like, why so? 0:02:36.200 --> 0:02:40.880 Apollo is a turnaround specialist. They love complicated situations, putting 0:02:40.880 --> 0:02:43.959 money to work where maybe other pockets of Wall Street 0:02:44.120 --> 0:02:48.760 doesn't go. This is a perfect example. They've already invested 0:02:48.800 --> 0:02:52.440 in Intel. Intel clearly needs some confidence capital. They need 0:02:52.560 --> 0:02:54.840 someone on Wall Street to say I believe in the 0:02:54.880 --> 0:02:58.079 future of this company under pau Elsinger. This is why, 0:02:58.440 --> 0:03:00.840 because you know, the stock slow. It has been really 0:03:00.880 --> 0:03:03.520 remarkable to even be at the point where it could 0:03:03.520 --> 0:03:06.839 be considered a takeover target for Qualcom, one of their competitors. 0:03:07.919 --> 0:03:10.080 So where does Wall Street think that they should go 0:03:10.760 --> 0:03:12.040 Qualcomm or Apollo? 0:03:12.639 --> 0:03:15.160 We don't know at this point, and there could also 0:03:15.280 --> 0:03:18.840 be other suitors or analysts are saying. We report it 0:03:18.880 --> 0:03:21.920 over the weekend that Broadcom, which some people speculate it 0:03:21.960 --> 0:03:25.800 could be interested that they're currently not evaluating an offer 0:03:25.840 --> 0:03:28.440 for Intel. So right now Broadcom's on the sidelines. Could 0:03:28.440 --> 0:03:30.520 that still change? We'll keep an eye on it, but 0:03:30.600 --> 0:03:33.440 Intel has a lot of options to consider. It's going 0:03:33.480 --> 0:03:36.280 to be an interesting few weeks to see where things go. 0:03:36.520 --> 0:03:38.400 Hey, can I answer a quick question, how does this 0:03:38.520 --> 0:03:42.720 impact the Chips Act? The investment from the Biden administration? 0:03:42.800 --> 0:03:45.480 Does that change at all in any of these scenarios. 0:03:45.600 --> 0:03:48.320 It's all related because the US government has a long 0:03:48.440 --> 0:03:51.840 term ban on Intel as a manufacturer that's in the 0:03:51.960 --> 0:03:54.520 US of chips, which are so critical. So the US 0:03:54.600 --> 0:03:57.200 government is watching this all really closely. They want Intel 0:03:57.240 --> 0:04:00.320 to survive, whether that's with Qualcomm, whether that with a 0:04:00.360 --> 0:04:03.080 capital in fusion from Apollo. So they want to be 0:04:03.200 --> 0:04:06.119 part of the solution. Since Intel it stands to gain 0:04:06.160 --> 0:04:08.280 a lot of cash from the government. 0:04:08.000 --> 0:04:10.880 They want them to combine. So they would tell Justice 0:04:10.920 --> 0:04:12.880 and the other regulators hands off this one. 0:04:13.000 --> 0:04:14.920 Huh. That would be interesting, wouldn't it right? 0:04:15.280 --> 0:04:17.800 And it sounds like a conspiracy theory, But you have 0:04:17.839 --> 0:04:20.720 to understand that any deal that Intel does would need 0:04:20.760 --> 0:04:23.440 the blessing from the government. So sure, could the US 0:04:23.520 --> 0:04:25.719 government tap qual come on the shoulder and say, hey, 0:04:26.080 --> 0:04:28.320 you know, do a solid for us and make an offer. 0:04:28.440 --> 0:04:31.600 I have no idea, but there's all these different theories 0:04:31.640 --> 0:04:34.680 that people are saying, and it's not that crazy to 0:04:34.720 --> 0:04:37.080 think people in DC might know more about this deal 0:04:37.080 --> 0:04:38.200 than we know right here. 0:04:38.200 --> 0:04:40.480 Right what's the most interesting thing that you found while 0:04:40.440 --> 0:04:41.039 you're reporting. 0:04:42.120 --> 0:04:45.640 I just love semiconductors. It's always interesting. And just to 0:04:45.680 --> 0:04:48.919 see an American icon like Intel face with these prospects 0:04:48.960 --> 0:04:52.320 and we're talking this could be the largest tech deal 0:04:52.360 --> 0:04:55.440 of all time if Intel is somehow sold. So it's 0:04:55.520 --> 0:04:59.480 just amazing to be following this situation because I've been 0:04:59.480 --> 0:05:02.120 reporting on on semis for you know, over a decade, 0:05:02.160 --> 0:05:03.800 and you just you never know how this is going 0:05:03.839 --> 0:05:04.039 to go. 0:05:04.120 --> 0:05:08.120 Well, also, just how fast this all deteriorated, Like I've 0:05:08.160 --> 0:05:10.600 read so many stories of sort of the decline and Intel 0:05:10.640 --> 0:05:12.640 and how fast it came on. And then we're talking 0:05:12.640 --> 0:05:15.279 about this moment where like Qualcom might need to step in, 0:05:15.320 --> 0:05:17.400 Apollo might need to step in, the government might need 0:05:17.440 --> 0:05:19.840 to step in in a particular fashion that to me 0:05:20.000 --> 0:05:20.800 is really striking. 0:05:21.440 --> 0:05:24.520 Is it also striking to you how quickly Nvidia kind 0:05:24.520 --> 0:05:29.600 of caught everyone's imagination. And so it's a semiconductors, it's 0:05:29.680 --> 0:05:32.200 you know, it's cyclical, it depends on trends and AI 0:05:32.320 --> 0:05:34.680 so it's so fast moving and it's just been a 0:05:34.720 --> 0:05:36.640 spectacular industry to follow. 0:05:36.760 --> 0:05:38.719 Yeah, all right, Lenna, thanks a lot, great reporting. Really 0:05:38.720 --> 0:05:41.559 appreciate Itly on a Baker Bloomberg News and managing editor 0:05:41.720 --> 0:05:43.400 for the Deal Team and joining us on that. 0:05:45.040 --> 0:05:48.960 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:05:49.040 --> 0:05:52.560 weekdays at ten am Eastern on applecard Play and Android 0:05:52.560 --> 0:05:55.359 Auto with a Bloomberg Business app. You can also listen 0:05:55.480 --> 0:05:58.560 live on Amazon Alexa from our flagship New York station. 0:05:58.920 --> 0:06:01.679 Just say Alexa play Bloomberg eleven thirty. 0:06:02.760 --> 0:06:06.039 We get a bunch of CEO interviews the next two hours, 0:06:06.080 --> 0:06:07.720 and I say a bunch because it's nice to get 0:06:07.720 --> 0:06:10.400 perspective kind of on the ground on where the growth is, 0:06:10.440 --> 0:06:13.279 where the worry spots are, how hiring is, what inflation 0:06:13.440 --> 0:06:16.400 looks like. So let's kick it off now with Signet Jewelers. 0:06:16.560 --> 0:06:19.560 So they had earnings on the twelfth, and they did 0:06:19.640 --> 0:06:22.880 really well. They reported adjusted earnings and comparable sales for 0:06:22.920 --> 0:06:25.839 the second quarter of the top analyst expectations. The stocks 0:06:25.920 --> 0:06:28.880 and sent is up over eleven percent. Management set in 0:06:28.880 --> 0:06:31.599 the earning statement that comp sales are positive so far 0:06:31.760 --> 0:06:34.279 in the third quarter, some of the analysts are also saying, look, 0:06:34.279 --> 0:06:37.400 this was a better than feared quarter, especially when you 0:06:37.400 --> 0:06:40.280 look at the reiterated annual guidance. So we wanted to 0:06:40.279 --> 0:06:44.679 get an update from the CEO. Jenna Gudrosos is CEO 0:06:44.800 --> 0:06:49.240 of Signet, joining us now from Seattle. Jenna walk us 0:06:49.240 --> 0:06:51.200 through sort of the highlights, like what you think that 0:06:51.360 --> 0:06:54.280 it really impressed investors, and then we can go from there. 0:06:55.960 --> 0:06:58.920 Sure, well, good morning, great to be with you. Our 0:06:58.960 --> 0:07:03.400 team delivered a sequential improvement in same store sales. It 0:07:03.480 --> 0:07:06.080 was the fifth quarter in a row that we've seen 0:07:06.160 --> 0:07:09.920 a sequential improvement. As you said, comp sales have been 0:07:09.960 --> 0:07:14.200 positive in Q three to date. That's encouraging because in 0:07:14.240 --> 0:07:19.440 the jewelry category and especially engagements, COVID is actually just ending. 0:07:19.840 --> 0:07:22.280 So while for a lot of businesses COVID was in 0:07:22.360 --> 0:07:27.160 twenty twenty, people tend to get engaged about three years 0:07:27.200 --> 0:07:30.600 after they meet, and people weren't meeting during lockdown in 0:07:30.640 --> 0:07:35.280 twenty twenty, so we saw a twenty five percent drop 0:07:35.320 --> 0:07:38.400 in the average number of people getting engaged in twenty 0:07:38.480 --> 0:07:41.920 twenty three, and that's been slowly coming back in twenty 0:07:41.960 --> 0:07:44.840 twenty four, but we saw that turn positive as we've 0:07:44.920 --> 0:07:46.920 entered the third quarter, so that was encouraging. 0:07:48.640 --> 0:07:50.920 I wanted to know. Of course, a lot of consumer 0:07:51.000 --> 0:07:54.520 companies have talked about house shoppers are watching their spending carefully, 0:07:54.560 --> 0:07:56.600 they're being very nitpicky. Is that something that you all 0:07:56.640 --> 0:07:58.200 have noticed at all? What is it look like for 0:07:58.240 --> 0:07:58.960 your business? 0:08:00.600 --> 0:08:04.000 Yes? I think we've seen a cautious customer for most 0:08:04.040 --> 0:08:08.520 of this calendar year. An example of that is that 0:08:08.560 --> 0:08:12.840 we see customers coming to our websites fifteen percent more 0:08:12.920 --> 0:08:15.760 often before they make a purchase than we did a 0:08:15.840 --> 0:08:18.960 year ago. So people are being careful in an environment 0:08:19.120 --> 0:08:21.680 like this, but when it comes to getting engaged, they 0:08:21.720 --> 0:08:24.679 might delay a little bit just make sure they're getting 0:08:24.680 --> 0:08:28.320 the right value, which given our scale, we feel like 0:08:28.360 --> 0:08:31.680 we can very often offer. But they're still deciding to 0:08:31.720 --> 0:08:34.240 get engaged, and we expect that to pick up as 0:08:34.240 --> 0:08:38.160 we go through peak engagement season, which is during the holidays. 0:08:38.600 --> 0:08:41.120 Hey, it's John Tucker. Can I ask a quick question. 0:08:41.400 --> 0:08:43.040 I can see the price of Goal, by the way, 0:08:43.160 --> 0:08:48.480 was a record. How do you track diamonds because that's 0:08:48.600 --> 0:08:52.800 essentially a cartel that controls the supply and I guess 0:08:52.840 --> 0:08:54.800 the pricing there right? How does that work. 0:08:56.440 --> 0:09:01.800 No, Diamonds trade just like gold does. There commodity. Many 0:09:01.840 --> 0:09:04.760 many years ago, it was more of a monopoly situation, 0:09:04.920 --> 0:09:07.120 but that hasn't been true for a couple of decades. 0:09:07.200 --> 0:09:11.800 Now there are multiple miners that mind diamonds around the world. 0:09:12.600 --> 0:09:15.560 Signet is one of only five retailers in the world 0:09:15.600 --> 0:09:19.840 that are vertically integrated and actually buy diamonds directly from 0:09:19.880 --> 0:09:23.199 the miners. We own our own cutting and polishing facility 0:09:23.200 --> 0:09:26.480 in Botswana, so we have a really good I would say, 0:09:26.480 --> 0:09:30.880 a vertically integrated I into what diamonds should cost, what 0:09:30.960 --> 0:09:33.840 metal should cost, how much it should cost to cut 0:09:33.880 --> 0:09:36.800 and polish of stone, and that's how we're able to 0:09:36.920 --> 0:09:38.520 bring great value to our customers. 0:09:38.559 --> 0:09:41.040 Now, how do you control the sourcing or nowhere where 0:09:41.040 --> 0:09:41.600 it comes from. 0:09:43.520 --> 0:09:47.040 So that's really one of the places where Signet has 0:09:47.080 --> 0:09:50.920 shined and been a leader in the industry. Responsible sourcing 0:09:51.000 --> 0:09:53.760 is very important to our customers and to our company 0:09:54.559 --> 0:09:57.800 and I you know, and to my twenty something children, 0:09:57.920 --> 0:10:03.280 I should add, So we are pristine, we can guarantee 0:10:03.760 --> 0:10:05.680 to all of our customers. We have what's called the 0:10:05.720 --> 0:10:08.840 Signet Promise that we are confident that all of the 0:10:08.840 --> 0:10:12.480 metals and all of the gemstones, including diamonds that we 0:10:12.600 --> 0:10:17.920 source our conflict free and produced in a way that 0:10:17.960 --> 0:10:21.600 they would feel good about. So we trace that back 0:10:21.640 --> 0:10:24.360 to the origin of where the diamonds are, where the 0:10:24.360 --> 0:10:26.240 metals come from, so we can be confident. 0:10:26.600 --> 0:10:30.560 There's also the lab grown diamond phenomenon. And when I 0:10:30.720 --> 0:10:33.439 was doing you know, packages on diamonds fifteen years ago, 0:10:33.600 --> 0:10:37.040 that was like really taboo. Now I hear of younger 0:10:37.080 --> 0:10:39.000 people and this is what they do. They want to 0:10:39.040 --> 0:10:41.040 save a little money, but they still wanted to look pretty. 0:10:41.559 --> 0:10:44.400 What kind of market do you know is evolving here 0:10:44.440 --> 0:10:45.840 and kind of what the pricing is and what the 0:10:45.880 --> 0:10:46.400 demand is. 0:10:48.120 --> 0:10:51.360 Yeah, so lab created diamonds have been broadly available in 0:10:51.480 --> 0:10:56.760 jewelry since twenty nineteen, so about five years now. Of course, 0:10:56.760 --> 0:10:59.680 they've been available for a long time in drill bits 0:10:59.760 --> 0:11:02.200 and you know things like that that needed a hard 0:11:02.280 --> 0:11:05.559 substance to be part of it, but in jewelry about 0:11:05.600 --> 0:11:09.080 five years. Every year since they've been in the market, 0:11:09.200 --> 0:11:13.560 the price has fallen about five about fifteen to thirty 0:11:13.600 --> 0:11:17.839 percent actually, so they haven't really maintained their value over time, 0:11:17.920 --> 0:11:21.000 and that's because they're made in a machine and you know, 0:11:21.080 --> 0:11:24.880 about three weeks, whereas a natural diamond is precious. It's 0:11:25.120 --> 0:11:27.600 you know, made in the earth over a billion years, 0:11:27.679 --> 0:11:31.200 and so they're chemically the same but quite different. And 0:11:31.240 --> 0:11:35.920 what we've seen is that consumers, if they are on 0:11:35.920 --> 0:11:38.720 a tight budget and want to get a bigger stone, 0:11:38.880 --> 0:11:41.560 lab created can be a great choice for them in 0:11:41.600 --> 0:11:44.600 an engagement ring. But it's particularly a great choice in 0:11:44.679 --> 0:11:48.880 fashion jewelry, where maybe it's not quite as sentimental a piece. 0:11:49.600 --> 0:11:52.800 That's where we really see lab Created as having a 0:11:52.840 --> 0:11:54.960 bigger potential on over the long term. 0:11:55.000 --> 0:11:58.880 So just a tootle tootle, tell John Tucker. So a 0:11:58.960 --> 0:12:01.120 fashion jewelry is like, here's my super cool ring that 0:12:01.160 --> 0:12:02.400 I'm doing with my evening gown. 0:12:02.480 --> 0:12:04.959 Everyone look at it. It's it's really big. 0:12:05.080 --> 0:12:07.480 Maybe it has a good shape. That's kind of interesting. 0:12:07.520 --> 0:12:08.920 But I didn't have to break my bang for it. 0:12:09.280 --> 0:12:11.800 Now, Is there some Is there some planned by you 0:12:11.840 --> 0:12:15.160 guys to like trying to get people to get married. 0:12:18.080 --> 0:12:18.440 No, not. 0:12:20.800 --> 0:12:24.520 That, which is a plan. When you pipe in romantic 0:12:24.640 --> 0:12:27.439 music to you, it's got to be right. 0:12:28.840 --> 0:12:31.920 No, No, we don't. We don't plan. But I will 0:12:32.000 --> 0:12:35.600 say that we have a lot of consumer insight around that. 0:12:36.120 --> 0:12:40.680 Several years ago, we started tracking the milestones that couples 0:12:40.760 --> 0:12:44.120 typically go through between when they meet and when they 0:12:44.200 --> 0:12:47.560 get engaged. So, for example, they typically go to a 0:12:47.600 --> 0:12:50.400 movie or a concert before they say I love you, 0:12:50.520 --> 0:12:53.840 or move in together, or meet the parents or things 0:12:53.880 --> 0:12:57.000 like that. And so we with our partners at Google 0:12:57.080 --> 0:13:02.680 and Meta, have identified forty five trackable signs or milestones 0:13:02.720 --> 0:13:06.719 that couple couples typically go through. Once they've crossed over 0:13:06.800 --> 0:13:11.360 twenty six, they are statistically significantly more likely to get 0:13:11.360 --> 0:13:13.000 engaged in the next twelve months. 0:13:14.000 --> 0:13:17.920 One of the things I'm learning a lot, i'd be 0:13:17.960 --> 0:13:21.320 speaking right to north right as I'm thinking about the future. 0:13:21.320 --> 0:13:24.600 It's super interesting. And that's one of the things we 0:13:24.640 --> 0:13:28.000 said in our second quarter call is that there's a 0:13:28.160 --> 0:13:32.360 nine hundred basis point increase or twenty percent more couples 0:13:32.960 --> 0:13:36.320 that crossed over that milestone in the second quarter this 0:13:36.440 --> 0:13:39.920 year versus the second quarter last year. So we really 0:13:39.960 --> 0:13:43.320 are seeing this ramp back up to a normalized level 0:13:43.360 --> 0:13:43.960 of engagement. 0:13:44.920 --> 0:13:47.880 All so happy on it ten o'clock on a Tuesday 0:13:47.880 --> 0:13:49.880 and a Monday. All right, thanks so much, didn't address us. 0:13:49.920 --> 0:13:52.040 We really appreciate CEO of Signetic. 0:13:57.520 --> 0:14:01.400 You're listening to the Bloomberg Intelligence pot Catch us live 0:14:01.480 --> 0:14:04.600 weekdays at ten am Eastern on AFO, Cardplay and enroud 0:14:04.600 --> 0:14:07.680 Oto with the Bloomberg Business app. Listen on demand wherever 0:14:07.760 --> 0:14:10.920 you get your podcasts, or watch us live on YouTube. 0:14:11.160 --> 0:14:13.440 So natural gas prices are two dollars and fifty seven 0:14:13.480 --> 0:14:16.400 cents MMBT you. It's much better than we were before. 0:14:16.440 --> 0:14:19.960 We were under two dollars MMBT you. But still considering 0:14:20.000 --> 0:14:23.080 the amount of demand globally that we need, that price 0:14:23.240 --> 0:14:25.080 is a little bit low. So we wanted to check 0:14:25.160 --> 0:14:28.480 in with the largest independent natural gas producer right here 0:14:28.640 --> 0:14:31.080 in the United States. They have world class assets and 0:14:31.120 --> 0:14:34.680 appllation basin, and that is Toby Rice, CEO of natural 0:14:34.680 --> 0:14:37.640 gas producer EQT. He joins us in studio. Hey Toby, 0:14:37.680 --> 0:14:38.200 good to see you. 0:14:38.520 --> 0:14:39.000 Good morning. 0:14:39.480 --> 0:14:41.320 So do you like prices at two fifty eight? 0:14:42.080 --> 0:14:44.560 Well, we are unique in the sense that our company 0:14:44.560 --> 0:14:47.280 actually can generate free cash flow at a price as 0:14:47.360 --> 0:14:50.440 low as two dollars, but that is not the case 0:14:50.480 --> 0:14:53.840 for the other producers in the United States. Our view 0:14:53.920 --> 0:14:56.480 is that the marginal producer in the US requires about 0:14:56.480 --> 0:14:59.880 three dollars and fifty cents to justify activity levels and 0:15:00.240 --> 0:15:01.000 rigs up in the air. 0:15:01.200 --> 0:15:03.200 So when you look at prices, say then under three 0:15:04.280 --> 0:15:06.080 or actually under two, where do you sort of like 0:15:06.520 --> 0:15:08.000 just say, we're gonna just going to drill them, not 0:15:08.040 --> 0:15:10.320 complete them, and hang tight and then when you kind 0:15:10.320 --> 0:15:12.160 of release it, and what does your inventory right now 0:15:12.200 --> 0:15:12.560 look like? 0:15:12.920 --> 0:15:17.080 So right now, short term people are looking at curtailments, uh, 0:15:17.360 --> 0:15:20.200 and you have about two bcf a day of natural 0:15:20.240 --> 0:15:21.600 gas that's currently curtailed. 0:15:22.160 --> 0:15:23.200 This is as simple as just. 0:15:23.160 --> 0:15:26.680 Operators shutting in the chokes. That production could come back 0:15:27.160 --> 0:15:30.640 and you'll see that pressuring prices up until about three 0:15:30.640 --> 0:15:34.080 dollars range. But then after that there's some some short 0:15:34.080 --> 0:15:36.840 cycle activity that would come back requires about three fifty 0:15:37.280 --> 0:15:39.880 and again that's sort of the price that you'll see 0:15:39.880 --> 0:15:43.120 with activity levels. So these shorter price these shorter prices 0:15:43.120 --> 0:15:47.000 we're seeing right now are going to ultimately influence activity 0:15:47.040 --> 0:15:49.000 levels that are set. Is part of the twenty twenty 0:15:49.000 --> 0:15:52.400 five budget planning which will influence supply in the future, 0:15:52.480 --> 0:15:54.920 and we think is going to be pretty constructive towards 0:15:54.920 --> 0:15:58.040 the second half of twenty twenty five, where more energy 0:15:58.160 --> 0:16:01.200 demand picks up at some of these activity reductions will 0:16:01.200 --> 0:16:02.240 start hitting the front lines. 0:16:02.480 --> 0:16:04.880 Well, let's talk a little bit about AI. Natural gas 0:16:04.960 --> 0:16:07.280 is not, of course at top of mind as an 0:16:07.360 --> 0:16:10.440 artificial intelligence trade, but some people are saying that rising 0:16:10.520 --> 0:16:13.800 power demand for more natural gas demand. Are you drilling 0:16:13.800 --> 0:16:15.800 to meet that demand at all? How would you all 0:16:15.800 --> 0:16:16.520 boost production? 0:16:17.360 --> 0:16:19.960 Well, natural gas, about a third of it is used 0:16:20.000 --> 0:16:23.640 for power generation, so it is a very important dynamic 0:16:23.680 --> 0:16:26.960 to study and look at. EQT has an asset called 0:16:26.960 --> 0:16:30.440 Mountain Valley Pipeline, which is a very contested pipeline. Fortunately 0:16:30.480 --> 0:16:33.160 that was put in service this summer. That's going to 0:16:33.200 --> 0:16:36.160 send about two Bcfi day of natural gas down to 0:16:36.200 --> 0:16:40.000 the Southeastern markets. And we just announced some deals, one 0:16:40.000 --> 0:16:43.400 of the largest physical supply deals with two very large 0:16:43.480 --> 0:16:46.800 utilities in that market to deliver up to one point 0:16:46.800 --> 0:16:49.840 two Bcfi day of natural gas. Now, where is that 0:16:49.960 --> 0:16:52.720 natural gas going? Sure, it's going to help keep people's 0:16:52.720 --> 0:16:55.720 homes warm in the winter time, but a large portion 0:16:55.760 --> 0:16:58.360 of that is going to power gen and it's going 0:16:58.440 --> 0:17:01.160 to be replacing cold facility. Ye, that would be enough 0:17:01.760 --> 0:17:05.000 natural gas to power about eight gigawatts of power. 0:17:05.200 --> 0:17:07.040 Now, one of the biggest problems in this whole scenario 0:17:07.200 --> 0:17:09.240 is how you move the stuff, and that's a pipeline issue, 0:17:09.240 --> 0:17:13.440 and that's an infrastructure issue. Are where are those conversations 0:17:13.480 --> 0:17:15.480 now in that we're going to have to have data 0:17:15.520 --> 0:17:19.040 centers built near where you guys pump natural gas or 0:17:19.400 --> 0:17:21.080 we're actually going to be able to get the pipelines 0:17:21.160 --> 0:17:23.160 in the ground to move it to where those data 0:17:23.160 --> 0:17:24.320 centers can be built. 0:17:24.359 --> 0:17:27.120 Well, it always makes sense if you're an energy intensive 0:17:27.160 --> 0:17:31.320 business to build your facilities close to where the energy is, 0:17:31.320 --> 0:17:33.480 and that would put Appalachia as a really great place 0:17:33.520 --> 0:17:35.439 to be. But you know, just to step back at 0:17:35.440 --> 0:17:37.440 a very high level, what's happened in the United States 0:17:37.520 --> 0:17:41.159 over the last fifteen years, and it really understands the 0:17:41.240 --> 0:17:45.000 natural gas markets. Since twenty ten, demand has grown fifty 0:17:45.000 --> 0:17:48.000 percent for natural gas, but during that period of time, 0:17:48.200 --> 0:17:52.200 natural gas infrastructure pipelines has only grown twenty five percent, 0:17:52.560 --> 0:17:56.200 and most importantly, natural gas storage infrastructure has only grown 0:17:56.320 --> 0:17:59.720 twelve percent. What does that mean? That means we haven't 0:17:59.720 --> 0:18:02.160 built enough pipelines to keep up with demand, and our 0:18:02.200 --> 0:18:05.199 current pipeline system is maxed out. You're going to continue 0:18:05.240 --> 0:18:08.560 to see big disconnects between markets, like we're going to 0:18:08.560 --> 0:18:11.240 be selling our natural gas for four dollars in Appalachia, 0:18:11.520 --> 0:18:13.280 and people in Boston and New York are could be 0:18:13.280 --> 0:18:16.760 paying ten to twenty dollars to that natural gas. But 0:18:16.800 --> 0:18:20.520 the storage infrastructure is probably the most important dynamic. Simply put, 0:18:20.640 --> 0:18:23.879 natural gas storage is no longer sufficient to bounce supply 0:18:23.920 --> 0:18:26.800 and demand. And what that means is that price is 0:18:26.880 --> 0:18:29.560 going to bounce supply and demand. And so we would 0:18:29.600 --> 0:18:34.080 describe the natural gas markets going forward as being very volatile, 0:18:34.400 --> 0:18:36.880 and we think pricing could be as low as two 0:18:36.920 --> 0:18:39.399 dollars you see now, and you see sort of a 0:18:39.480 --> 0:18:43.840 natural floor where operators will actually curtail production volumes. But 0:18:43.920 --> 0:18:46.280 we also think gas price could be significantly higher than that. 0:18:46.359 --> 0:18:49.920 And the last structural piece of the puzzle has been 0:18:49.960 --> 0:18:54.439 the massive retirement of coal has traditionally been a replacement 0:18:54.480 --> 0:18:57.679 fuel when gas prices got high and coal gas to 0:18:57.720 --> 0:18:59.960 coal switching would occur when prices would run in that 0:19:00.240 --> 0:19:03.320 call it three to five dollar range. Well, with call gone, 0:19:03.640 --> 0:19:06.800 the lid on gas prices is significantly muted, and that 0:19:06.840 --> 0:19:09.560 means prices could run up closer to the eight to 0:19:09.720 --> 0:19:12.479 nine dollars range. Those are the prices you saw in 0:19:12.520 --> 0:19:14.800 twenty twenty two. And that is the price where industrial 0:19:14.840 --> 0:19:17.200 demand will start shutting off. That's not a great place 0:19:17.240 --> 0:19:20.280 to be. The solution is get more infrastructure built in 0:19:20.320 --> 0:19:23.960 this country, both pipelines and storage infrastructure. And if you 0:19:24.000 --> 0:19:27.679 have the opportunity, build your manufacturing in Appalachia. 0:19:27.720 --> 0:19:30.000 Interesting, I mean, we're right around the corner from the 0:19:30.040 --> 0:19:32.520 winter season. That's when I cry it's going to be 0:19:32.560 --> 0:19:35.360 called is the market oversupplied this winter? 0:19:36.080 --> 0:19:39.240 Right now, we have about three hundred about three hundred 0:19:39.240 --> 0:19:42.600 bcf of extra gas in stores. It's about eight percent 0:19:42.680 --> 0:19:43.320 higher than. 0:19:43.200 --> 0:19:45.600 Normal billion keep it feed, Yeah. 0:19:45.680 --> 0:19:48.720 And for perspective, the US market is about one hundred 0:19:48.720 --> 0:19:51.240 bcf a day. That's what the current supply is today. 0:19:52.720 --> 0:19:57.040 But this can be corrected very quickly in a winter 0:19:57.080 --> 0:20:00.200 period where natural gas demand in this country goes of 0:20:00.200 --> 0:20:02.760 one hundred and twenty bcf a day. So right now 0:20:02.800 --> 0:20:05.399 storage isn't a is a little bit oversupplied, but that 0:20:05.480 --> 0:20:09.480 goes away with just a normal winter. And when you 0:20:09.520 --> 0:20:13.240 think about the fact that we don't have the necessary 0:20:13.240 --> 0:20:16.560 pipeline infrastructure to deliver natural gas in that just in 0:20:16.600 --> 0:20:20.159 time scenario, it's going to put further pressure on prices. Hence, 0:20:20.560 --> 0:20:25.119 you know a lot of volatility towards the upside here. 0:20:25.160 --> 0:20:26.600 We have don't had that that much time. But you 0:20:26.640 --> 0:20:31.280 have a Southwestern and Chesapeake maybe merging up here, where 0:20:31.280 --> 0:20:32.720 would you be looking to add M and A. Is 0:20:32.720 --> 0:20:34.159 it going to be pipelines or is it going to 0:20:34.160 --> 0:20:34.840 be producers? 0:20:35.160 --> 0:20:38.520 So we just completed our transformation at EQT. Over the 0:20:38.600 --> 0:20:43.120 last five years, Alex, since taken over, we've been very 0:20:43.160 --> 0:20:47.359