Falcon & Desert Peak Minerals Combine to Form Sitio Royalties Corp.
From time to time we highlight deals by companies that purchase landowners’ (or rights owners’) royalty payments–giving them a lump sum payment upfront in return for signing over all future royalty payments to the company buying the rights. Buying future royalty payments is not unlike companies that approach and pay lottery winners who receive payouts over a long period (for life, or for a period of years), with the lottery winner selling his or her future payments for a single lump sum now. Two companies of the larger companies in this space are about to merge.
Read More “Falcon & Desert Peak Minerals Combine to Form Sitio Royalties Corp.”
Energy Transfer (ET) has signed a fifth customer to accept shipments of LNG produced by ET’s yet-to-be-constructed LNG export facility in Lake Charles, Louisiana, located on the Calcasieu ship channel. Yesterday (yes, on a Sunday), ET issued a press release to announce a 25-year deal with China Gas to purchase 0.7 million tonnes (MT) of LNG per year on a free-on-board (FOB) basis. Added with the other deals, ET has now pre-sold 5.8 MT per year of the site’s planned capacity to produce 16.45 MT per year, meaning 35% of the capacity is now spoken for. More than a third of the way there!
In April the New York State Assembly passed Assembly Bill A7389C. Early Friday morning the New York State Senate, on the last day of the current session, passed the same bill, sending it to Gov. Kathy Hochul’s desk for a signature. A7389C (full copy below) slaps a two-year moratorium on cryptocurrency mining (i.e. bitcoin mining) powered by electricity generated from burning fossil fuels. Here’s how it works in New York (we’ve seen this multiple times): First comes a moratorium that lasts a year or two, then the moratorium gets extended, and eventually the moratorium turns into an outright, permanent ban. That’s how it worked with fracking, and that’s how it will work with bitcoin mining in New York, a state that has become extremely hostile to business.
Last week Congressional Republicans from the House of Representatives, led by the man who will become the Speaker of the House after November’s coming tsunami election, Kevin McCarthy, introduced a road map describing how they will mitigate rising gasoline prices and address so-called climate change if the party wins control of the House in November’s midterm elections (which they will). The Republican plan arises from the task force established last year by McCarthy, called the Energy, Climate, and Conservation (ECC) Task Force. The task force rolled out a six-part “plan” (more like a framework than a fleshed-out plan) to tackle the ongoing energy crisis and the challenge of “global climate change.”
Last Friday the Federal Reserve Bank of Dallas issued a monthly update on energy indicators. This latest report tackles the popping price of natural gas and strong growth in the production of U.S. chemicals, including plastics (which largely come from oil and natural gas). We found the Fed’s analysis of where we are now, and where things are likely headed this year, of interest and value. We think you will too.
The International Energy Forum (IEF), based in Saudi Arabia, is leading a research initiative examining the elements required to create a hydrogen market. Currently, hydrogen accounts for a piddly 1% of the energy mix worldwide, but is expected to scale up in the coming years and decades as countries strive to reduce carbon emissions (reducing CO2 is a futile effort, but it is what it is). Current research and discussions on hydrogen focus primarily on the various production cost outlooks for different “colors” of hydrogen (gray for hydrogen that comes from natural gas with no carbon capture, blue if there is carbon capture, green for using water and renewables to create hydrogen, etc.). There has been, according to IEF, little discussion around the possible trajectories of the “hydrogen business model.” Scaling up hydrogen production, regardless of color, will require new types of contracts, financialization (price discovery), and/or commoditization. The IEF has just issued a new report called “Scaling-Up the Hydrogen Market” (full copy below).
The Enverus rig count, as of Wednesday, stood at 821, up by three from the week before. We are only 17 rigs away from the pre-pandemic high of 838 rigs. Last week the Marcellus operated 41 rigs (down by two), while the Utica operated 11 rigs (down by one), for a total of 52 active rigs in the M-U, lower than in previous weeks. According to S&P’s read of the situation, rig count additions appear to be slowing down. Despite high oil prices, drillers are still unwilling to drill, drill, drill.
Last year the Bidenistas initiated a massive power grab of transferring the right of individual states to regulate local natural gas gathering pipelines to the federal government (see 
In April 2019, President Trump signed an Executive Order (EO) instructing the Environmental Protection Agency to review Section 401 of the Clean Water Act–the section that grants states (and tribes) the right to have a say in pipeline projects (see 
Follow This is a group of 8,000 far-left, radical investors who want to shut down the oil and gas industry by using big money invested in O&G companies to force board changes and new policies aimed at forcing “Big Oil” to self-harm. Follow This’ twisted vision of the future is forcing humanity back to Medieval Times when no oil and gas and plastics existed. Back to the time when humans lived to be about 35-40 years old and then died from disease or famine. Follow This and their ilk were having some success in forcing oil and gas companies to engage in self-harming activities (selling off assets, reduced drilling, investing in unreliable renewables, etc.). But since the pandemic and (now) since the war in Ukraine, many of the “advances” made by Follow This have evaporated.
Yesterday MDN brought you the news that Ohio Congressman Troy Balderson, Republican representing Ohio’s 12th Congressional District, recently introduced a resolution that officially recognizes American natural gas as a “green and clean” energy source (see 
According to Reuters analyst John Kemp, if the U.S. wants to keep growing its LNG exports, the amount of natural gas we produce will also have to grow. If natgas production falls behind, as it is now, prices will continue to skyrocket. LNG exports were up an astonishing 87% for the first three months of this year compared with 2019 (three years ago). Domestic consumption of natgas is pretty much the same year after year. The thing increasing year after year is exports–both LNG and pipeline exports to Mexico.
A new industry has popped up to buy and sell so-called carbon credits, allowing companies that reduce carbon dioxide from the atmosphere to offer credits for sale, and companies that “pollute” the atmosphere with CO2 to buy those credits, offsetting their evil ways. We think the Catholic practice of buying and selling indulgences for sins in the 1300s and 1400s is an accurate comparison. One such company offers a blockchain platform for buying and selling carbon credits (carbon indulgences). The company has just raised $70 million in its first round of funding.