1 00:00:01,960 --> 00:00:05,359 Speaker 1: Global business news twenty four hours a day at Bloomberg 2 00:00:05,400 --> 00:00:08,480 Speaker 1: dot com, the Radio plus Mobile Act and on your radio. 3 00:00:08,760 --> 00:00:12,879 Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters. 4 00:00:12,920 --> 00:00:15,640 Speaker 1: I'm Charlie Pellett. Stocks lower and this update is brought 5 00:00:15,680 --> 00:00:18,480 Speaker 1: to you by e t F Exchange b n Y 6 00:00:18,600 --> 00:00:24,520 Speaker 1: Melons et F Symposium September to one in Dana Point, California. 7 00:00:24,840 --> 00:00:27,920 Speaker 1: The conference is complementary for r I A S. Space 8 00:00:28,040 --> 00:00:31,120 Speaker 1: is limited. Register at b n y melon dot com 9 00:00:31,120 --> 00:00:34,000 Speaker 1: slash e t F. Now let's head right over to 10 00:00:34,040 --> 00:00:37,360 Speaker 1: the first Word Breaking news desk for today's afternoon call. 11 00:00:37,760 --> 00:00:41,320 Speaker 1: Here he is Bill Maloney. Good afternoon, Charlie. Stocks are 12 00:00:41,479 --> 00:00:44,920 Speaker 1: under pressure today, with the Dow currently down eighty nine points, 13 00:00:45,280 --> 00:00:47,280 Speaker 1: s if he s dropped ten in NASDAC is also 14 00:00:47,400 --> 00:00:50,519 Speaker 1: lower by ten, small cap six hundreds down two points, 15 00:00:50,760 --> 00:00:53,519 Speaker 1: and the US ten yield at one point seven percent. 16 00:00:54,080 --> 00:00:57,040 Speaker 1: Over In Europe, Italy closed lower by two point four percent. 17 00:00:57,360 --> 00:01:00,840 Speaker 1: Germany fell one point five percent. In the US, nine 18 00:01:00,840 --> 00:01:03,200 Speaker 1: out of tennesse B sectors are lower, led by declines 19 00:01:03,200 --> 00:01:08,040 Speaker 1: and energy, Financials and telecom only utilities gained down. Transports 20 00:01:08,040 --> 00:01:12,280 Speaker 1: fault utilities rise three. As a Biotext climb eleven and 21 00:01:12,319 --> 00:01:15,920 Speaker 1: the vix is down by three percent, leaders to a downside. 22 00:01:15,959 --> 00:01:19,320 Speaker 1: The down included United Technology, Chevron, and Cisco, and in 23 00:01:19,400 --> 00:01:22,360 Speaker 1: deal news jan jdd by Abbott's eye surgery unit for 24 00:01:22,480 --> 00:01:25,839 Speaker 1: four point three billion in cash find the Oracle drop 25 00:01:25,880 --> 00:01:28,800 Speaker 1: four point seven percent after its earnings, while Intel jumped 26 00:01:28,800 --> 00:01:31,440 Speaker 1: as much as four point one percent to the hyacinths 27 00:01:31,440 --> 00:01:34,720 Speaker 1: two thousand one after it raised its forecast. Live on 28 00:01:34,760 --> 00:01:36,680 Speaker 1: the First Breaking News to ask on Bill Maloney, Charltte 29 00:01:36,760 --> 00:01:38,360 Speaker 1: all right, thank you very much, Bill Maloney, and to 30 00:01:38,400 --> 00:01:42,240 Speaker 1: hear live breaking news over your Bloomberg type squawk squ 31 00:01:42,400 --> 00:01:46,800 Speaker 1: a w K on your terminal. I'm Charlie Pelletan. That's 32 00:01:46,840 --> 00:01:53,360 Speaker 1: a Bloomberg business flash. This is taking stock with bim 33 00:01:53,440 --> 00:01:58,720 Speaker 1: Box and Kathleen Mays on Bloomberg Radio. Investing in oil 34 00:01:58,880 --> 00:02:00,880 Speaker 1: and energy of One of the people you want to 35 00:02:00,960 --> 00:02:03,960 Speaker 1: speak with is Kate Richard. She is the founder and 36 00:02:04,040 --> 00:02:09,440 Speaker 1: the chief executive of Warwick Energy Group based in Oklahoma City, 37 00:02:09,639 --> 00:02:13,080 Speaker 1: and they have interest in over four thousand wells across 38 00:02:13,160 --> 00:02:17,240 Speaker 1: eight US states and over a billion dollars in managed assets. 39 00:02:17,400 --> 00:02:20,320 Speaker 1: Kate Richard joins us now, Thanks very much for being 40 00:02:20,360 --> 00:02:22,960 Speaker 1: with us. Tell us a little bit about Warwick Energy 41 00:02:23,000 --> 00:02:24,760 Speaker 1: Group and what sets it apart. I know that you 42 00:02:24,800 --> 00:02:28,120 Speaker 1: began your career at Goldman Sachs, but tell us about Warwick. 43 00:02:29,520 --> 00:02:32,600 Speaker 1: No problem, Nice to talk to you this afternoon. Um 44 00:02:32,680 --> 00:02:35,959 Speaker 1: So Warwick UM was started in two thousand and ten. 45 00:02:36,480 --> 00:02:40,120 Speaker 1: We are in Oklahoma City based UM private equity entity, 46 00:02:40,600 --> 00:02:45,400 Speaker 1: and we consolidate non operated assets in the core of 47 00:02:45,480 --> 00:02:48,120 Speaker 1: the core of the lowest cost basins in the US 48 00:02:48,840 --> 00:02:52,720 Speaker 1: and UM SO what we do is we buy minority 49 00:02:52,840 --> 00:02:56,160 Speaker 1: interests in oil and gas wells and in oil and 50 00:02:56,160 --> 00:02:59,760 Speaker 1: gas leases or acreage UM right in the core of 51 00:02:59,760 --> 00:03:03,800 Speaker 1: a or so after exploration and after proof of concept 52 00:03:04,400 --> 00:03:08,720 Speaker 1: and UM non operated assets are interesting for people. They 53 00:03:08,760 --> 00:03:12,400 Speaker 1: are also a little bit confusing because the typical investor 54 00:03:12,520 --> 00:03:16,440 Speaker 1: thinks normally, if a well is operated by Chevron or Xxon, 55 00:03:16,720 --> 00:03:21,600 Speaker 1: it's owned by Chevron or Axon. In reality, UM we 56 00:03:21,680 --> 00:03:24,880 Speaker 1: have fractional interests in oil and gas wells. So you 57 00:03:24,880 --> 00:03:27,800 Speaker 1: can think of it like a pizza and UM we 58 00:03:27,960 --> 00:03:31,160 Speaker 1: buy the pieces of the pizza to buy as much 59 00:03:31,200 --> 00:03:34,000 Speaker 1: as we can in the well. Typically you have the 60 00:03:34,080 --> 00:03:38,280 Speaker 1: operator which will own fifty and UM drill the well 61 00:03:38,720 --> 00:03:40,800 Speaker 1: and then drill subsequent wells on the acreage, and then 62 00:03:40,800 --> 00:03:45,920 Speaker 1: you have multiple non operators. So are you getting those 63 00:03:45,960 --> 00:03:50,200 Speaker 1: pizza pieces at a big discount right now? Yeah? We are. 64 00:03:50,280 --> 00:03:51,920 Speaker 1: I mean, that's one of the reasons that you go 65 00:03:52,040 --> 00:03:55,240 Speaker 1: to the trouble to consolidate non operated assets because you 66 00:03:55,280 --> 00:03:59,360 Speaker 1: can buy in at interesting valuations. But the more important 67 00:03:59,400 --> 00:04:01,800 Speaker 1: reason that go to the trouble to buy non operated 68 00:04:01,840 --> 00:04:06,440 Speaker 1: assets is that once these very very high quality, low 69 00:04:06,520 --> 00:04:10,080 Speaker 1: commodity price break even plays like the Scoop which is 70 00:04:10,120 --> 00:04:13,720 Speaker 1: the south central Oklahoma oil province, or the Stack which 71 00:04:13,800 --> 00:04:17,120 Speaker 1: is the Sooner trend in the Anadarko Basin of Canadian 72 00:04:17,160 --> 00:04:21,440 Speaker 1: and Kingfisher Counties, which is a terrible acronym, or um 73 00:04:21,560 --> 00:04:25,000 Speaker 1: the Permian Basin in West Texas. So once you have 74 00:04:25,360 --> 00:04:29,000 Speaker 1: plays like the Scoop in Oklahoma, the Stack in Oklahoma, 75 00:04:29,200 --> 00:04:32,440 Speaker 1: or the Midland Basin or the Delaware Basin in West 76 00:04:32,480 --> 00:04:36,880 Speaker 1: Texas proven So once people know where the core of 77 00:04:36,920 --> 00:04:39,800 Speaker 1: the core is, which is um in real estate terms 78 00:04:39,839 --> 00:04:43,120 Speaker 1: like Fifth Avenue real estate, the once that's identified and 79 00:04:43,200 --> 00:04:45,760 Speaker 1: you really have proof of concepts from wells that have 80 00:04:45,839 --> 00:04:50,680 Speaker 1: been drilled, oftentimes at that point, the big chunky operated 81 00:04:50,760 --> 00:04:54,440 Speaker 1: positions in those plays will not exist anymore. They will 82 00:04:54,440 --> 00:04:57,359 Speaker 1: have already been leased. And so at that point, the 83 00:04:57,440 --> 00:04:59,840 Speaker 1: only way to get into the core of the core, 84 00:05:00,120 --> 00:05:02,919 Speaker 1: or to get into that Fifth Avenue real estate is 85 00:05:02,960 --> 00:05:06,040 Speaker 1: to buy the non operated interest. And there's an interesting 86 00:05:06,080 --> 00:05:10,279 Speaker 1: precedent for this in the market UM. Devon actually bought 87 00:05:10,320 --> 00:05:13,920 Speaker 1: a company called Geo Southern, which was a Blackstone backed 88 00:05:14,080 --> 00:05:17,880 Speaker 1: entity UM for six billion, and that was in the Eagleford. 89 00:05:18,320 --> 00:05:21,120 Speaker 1: Devon had kind of missed building a big operated position 90 00:05:21,160 --> 00:05:23,719 Speaker 1: in the Eagleford, and that was a non operated position. 91 00:05:24,120 --> 00:05:26,000 Speaker 1: At that point, it was the only way to really 92 00:05:26,000 --> 00:05:28,720 Speaker 1: get into the core of the core of the Eagleford, 93 00:05:28,839 --> 00:05:31,279 Speaker 1: and so they bought this non operated position and their 94 00:05:31,320 --> 00:05:34,760 Speaker 1: operator was b HP. So that actually also is a 95 00:05:34,920 --> 00:05:38,680 Speaker 1: very interesting thing about US oil and gas UM. Oftentimes 96 00:05:38,720 --> 00:05:42,360 Speaker 1: the non operated owners, or the fractional minority owners who 97 00:05:42,360 --> 00:05:45,520 Speaker 1: own pieces of the pizza, so to speak, will actually 98 00:05:45,600 --> 00:05:48,520 Speaker 1: be oil and gas companies. So you will have Devon 99 00:05:48,839 --> 00:05:53,440 Speaker 1: in BHP Bilton Wells, or you have Continental in Newfield Wells, 100 00:05:53,560 --> 00:05:57,360 Speaker 1: or Newfield in Continental Wells and UM. And so there's 101 00:05:57,360 --> 00:05:59,560 Speaker 1: a very big part of the US oil and gas 102 00:05:59,560 --> 00:06:02,960 Speaker 1: industry that is non operated even for the big operators. 103 00:06:03,480 --> 00:06:05,960 Speaker 1: So when you say non operated, obviously someone else is 104 00:06:06,000 --> 00:06:09,640 Speaker 1: doing the operation. You're taking that pass of interest in 105 00:06:09,960 --> 00:06:13,039 Speaker 1: the investment. Correct. Yeah, and so another word for non 106 00:06:13,080 --> 00:06:16,240 Speaker 1: operator is operated by other, or another term for non 107 00:06:16,240 --> 00:06:19,040 Speaker 1: operator is operated by other, which we call OBO. Right, 108 00:06:19,400 --> 00:06:21,719 Speaker 1: let me let me ask you about the price of 109 00:06:21,760 --> 00:06:23,720 Speaker 1: oil right now, back down to a level we haven't 110 00:06:23,720 --> 00:06:26,400 Speaker 1: seen since the beginning of August. You think investors pay 111 00:06:26,440 --> 00:06:30,040 Speaker 1: too much attention to the short term supply and demand factors. 112 00:06:30,080 --> 00:06:33,280 Speaker 1: What should we be looking at? Well, we look very 113 00:06:33,279 --> 00:06:35,640 Speaker 1: closely at the movement of the S and T, We 114 00:06:35,720 --> 00:06:38,840 Speaker 1: look very very closely at the euro dollar exchange rate, 115 00:06:39,120 --> 00:06:42,679 Speaker 1: and we look very closely at the cop the copper price. Um. 116 00:06:42,760 --> 00:06:45,760 Speaker 1: So what we actually see is that short term supply 117 00:06:45,920 --> 00:06:50,520 Speaker 1: demand fundamentals may drive the stock on a daily basis 118 00:06:50,640 --> 00:06:54,200 Speaker 1: or for front month contracts, but for the longer term 119 00:06:54,200 --> 00:06:58,400 Speaker 1: crude contracts, so for you know, December crude or for 120 00:06:58,440 --> 00:07:02,839 Speaker 1: the strip, we don't see those forward contracts or the 121 00:07:02,960 --> 00:07:05,560 Speaker 1: overall price of oil on a five year basis. Really 122 00:07:05,640 --> 00:07:09,039 Speaker 1: move on, you know, a Department of Energy inventory number 123 00:07:09,080 --> 00:07:12,760 Speaker 1: for crude or on an i e. A International Energy 124 00:07:12,800 --> 00:07:16,360 Speaker 1: Agency report on a short term demand for crude, and 125 00:07:16,440 --> 00:07:18,800 Speaker 1: in fact what we see is that it moves more 126 00:07:18,880 --> 00:07:22,000 Speaker 1: fundamentally in line with some of the bigger financial factors 127 00:07:22,040 --> 00:07:26,200 Speaker 1: like copper pricing, SMP pricing, or the US dollar exchange rate. 128 00:07:26,880 --> 00:07:30,080 Speaker 1: And I would tell you, in terms of um the currency, 129 00:07:30,480 --> 00:07:33,480 Speaker 1: that is probably what's most important right now. Thank you 130 00:07:33,600 --> 00:07:35,920 Speaker 1: very much for spending time with us. Kate Richard is 131 00:07:35,960 --> 00:07:40,720 Speaker 1: the chief executive of Warwick Energy Group speaking about investing 132 00:07:40,880 --> 00:07:46,800 Speaker 1: in energy assets based in Oklahoma. This this bloomberg coming 133 00:07:46,840 --> 00:07:49,120 Speaker 1: up taking stock of luxury is brought to you by 134 00:07:49,120 --> 00:07:51,920 Speaker 1: your Try State BMW centers. Visit them online of try 135 00:07:51,960 --> 00:07:55,280 Speaker 1: State BMW dot com. At BMW they only make one thing, 136 00:07:55,800 --> 00:07:57,720 Speaker 1: the ultimate driving machine.