Phoenix Energy - CEO Adam Ferrari

Episode Transcript

Speaker 1 (00:01):
Welcome to the nationally syndicated Energy Mix Radio Show produced
by the Energy Network Media Group. The Energy Mix Radio
Show will give you an inside look at the energy
industry and how it affects you by talking with industry leaders, experts,
and government officials on the Energy Mix Radio Show.

Speaker 2 (00:16):
And welcome to the Energy Mix Radio Show, where we
dive deep into the forces shaping the energy industry today,
from policy shifts to market trends. We bring you expert
insights and thought provoking decisions. Today, I'm thrilled to have
Adam Ferrari welcome back to the Energy Mix Radio Show.
You are the CEO of Phoenix Energy joining us.

Speaker 3 (00:37):
Thank you glad to be here.

Speaker 2 (00:40):
Well now, Adam, for our listeners who are not familiar
with you, you are a renowned oil and gas expert.
You earned a chemical engineering degree Kumasalatti from the University
of Illinois at Urbana Champagne, and your career began in
VP in the Gulf of Mexico now known as the
Gulf of America, where you honed in on your or

(01:00):
engineering expertise and you moved into rules like investment banking.
You've also been featured on MSN and the Daily Journal.
So you are here today to help us unpack the
impact of Trump's executive orders versus the terrace, specifically in
the oil and gas sector. So for our listeners, buckle

(01:21):
up as we get ready to be enlightened on the
Trump policies, the ripple effects they're going to have on pricing, production,
and bleeding trends. Adam, that was a long intro, but
I just wanted our listeners to know. You know, you've
been on the show before, welcome back. So it's pretty
interesting times right now with the Trump administration versus the
Biden administration, would you.

Speaker 3 (01:43):
Not say I would say quite interesting, yes, very much so, So.

Speaker 2 (01:47):
Give our listeners a little bit. I kind of went
over high level your background, but I want to briefly
talk about Phoenix Energy, which is what you currently what
you're running right now. A little bit of your background
before we get into how the Trump executive orders tariffs
are going to start affecting or how long will it
be Boo start seeing impacts oil and gas industry. I

(02:08):
think we already are, but what we'll we see here
in the near future. Tell us a little bit about
your background and well, thanks Energy, Thank.

Speaker 3 (02:15):
You, Kim and I do apologize. I just wanted to
make sure most of your listeners have never heard of
Urbana Champagne. It's a large college, but it's in the
middle of a cornfield in central Illinois, so that's where
I was born and raised in the Midwest. But in
terms of my journey in the oil and gas industry,
you were very kind with your words. I've been in
the business now twenty years, and I think it happens

(02:35):
to a lot of folks on this path. You wake
up one day and sort of realize I'm an expert.
Now I've been doing this my whole adult life. Phoenix
Energy started as Phoenix Capital Group in twenty nine and
we had a very unique vision in the domestic energy space.
We were unique in how we raised capital. We have
a very revolutionary approach. I would call it democratizing finance.

(02:58):
We raised directly from Ain Street investors instead of going
to Wall Street. So fast forward. We've been in business
now six years. We launched our operating arm almost two
years ago. To date, we're currently running three active drilling
rigs in the Bakin Formation of North Dakota, Montana, and
we produce somewhere in the neighborhood of twenty five to
twenty seven thousand barrels of oiled ay net. So we're

(03:19):
not one of the we're not the biggest producer in America,
but we're about to break into the top ten in
terms of baking producers. So we're very active domestically. We've
raised a lot of capital, we put it to work
over the last six years, and we're proud to produce
American oil and American soil and hire Americans.

Speaker 2 (03:36):
Is it mostly drilling what you're doing or is there
other areas that you look to also invest in?

Speaker 3 (03:42):
So we are exclusively oil and gas. I want to
be very clear about that. We're not mining for anything else.
You know, we get asked this a lot, you know,
do you do any lithium mining? And the answers no.
We acquire mineral rights leasehold and we develop some of
the leasehold. We acquire, some of it gets developed by
their operators. But we are what I would say is
a fully integrated upstream oil company. After the wellhead, we

(04:04):
don't have any involvement. We sell the barrels and the
natural gas to midstream companies and it eventually ends up
in a gas plan or refinery. But on the upstream
side of the business, we are acquiring properties every single
day that we're looking to develop those properties into additional
domestic production. That's exactly what we do. OK.

Speaker 2 (04:25):
There's a lot of discussion, of course, on the tariffs
and executive orders that are coming out, so I want
to address that specifically on the show today. Let's start
with Trump's executive orders differ from traditional tariffs pertaining to
the oil and gas industry. Now, when we look at tariffs,
it's a large, big picture. It's affecting a lot of countries.

(04:46):
Can you tell us a little bit about what you
think how the executive orders specifically are going to impact
the oil and gas industry. What are we seeing so
far and what do you see in the future.

Speaker 3 (04:57):
Yeah, so, thus far we did notice some pretty imdiate changes,
and I want to step back a little bit every
you know, I like to say this, whether you're a
Republican or Democrat, we all need energy and we should
all want affordable energy. So there certainly is there's a
reality that we see every day, and then there's the
noise that you hear in the media and I think
bolted administrations these days, there's a lot of noise. But

(05:19):
if you go back to when Biden took office, he
shut down the Keystone Pipeline, which ran through North Dakota,
which could have provided some additional takeaway capacity for the baking.
It was already under construction and he shut it down.
And if you fast forward to last week, Doug Bergham,
the Department of the Interior head who used to be
the governor in North Dakota, shut down some offshore wind
projects off of New York's or Atlantic coast. And so

(05:43):
I think there's certainly those two statements kind of tell
you what this administration is like versus the last one.
You know, we certainly feel very confident that this administration
is going to be very pro American energy, and I
think that is it's created an optimism in the industry.
I think there's some challenges with the current price environment.

(06:04):
But to get into a very specific of what we
have seen thus far, I can't quote every single executive
order because there's been a flurry of them that have
been signed. But I can tell you the BLM, who
is under the Department of the Interior, who manages federal lands,
the Bureau of Land Management, So in some of the
states that we operate in or are looking to operate in,

(06:25):
like Wyoming is probably eighty ninety percent federal ownership. North
Dakota is much less, but there's still a lot. And
we've already seen the BLM being much more responsive and
quick to get federal tracks up for auction. In the past,
it could have taken years in some cases, and we're
seeing movement in the month's time frame. So already we

(06:46):
are seeing more lands that appear to be opening up,
and so I do think that's a direct result of
the Trump administration and you know, moving things in a
different direction than we had in the previous four years.

Speaker 2 (06:59):
You know, we're seeing one part is the executive orders
that are immediately trying to take and shape the energy
picture or landscape, if you will, from the last administration.
And then now we have TIFFs, and I think this
is where some confusion is coming in because it's kind
of affecting both and some in good ways and some
potentially not so good ways. When we talk about the

(07:23):
oil and gas industry, pricing, CREWE pricing and geopolitical things,
So let's dive a little deeper in. Can you elaborate
on some of the policies that are shaping the oil
and gas price and market dynamics because they're strucking because
of the the executive orders and or the terraffs.

Speaker 3 (07:45):
So in terms of policies that are affecting the crude
markets in general, I would say this, the crude markets
are highly volatile in the short term, and it doesn't
take policy or tariff talk to make oil markets move. However,
recently we did experience a rather large move in the
short run, and I want to go back to oil

(08:05):
markets are the price of oil is determined by supplying demand.
I know everyone's going to say that, and it sounds
so simplistic, but it's so true, and that always bears
out truth. In the longer term in the oil business,
long term is six to twenty four months. You know,
these short term price movements, it could happen in a
day or two days, like we experienced a few weeks ago.

(08:27):
I think those are visceral reactions to news. And I
think what you've already seen is there some stability that's
kind of come back into the oil price over the
last week. And you know, fundamentally, from my position is
an American producer of oil, nothing has changed in the
last four weeks. We have not seen any price increases
as a result of the tariff talks. We haven't seen

(08:47):
anything change. The fundamentals still appear to be the same,
and so I think this is an emotional reaction in
the short term. So we have not seen a negative
impact from tariff discussions. And frankly, yes, is there imported
stuff that the oil and gas industry relies on, Yes,
there is, But I would also say that the oil

(09:07):
and gas industry still has a lot of domestic manufacturing.
There's a lot of local machine shops that provide parts
for equipment that we run, and so I think we're
probably going to be a little more immune from it
than some other industries could be. And the oil and
gas industry is very it's very much built on American labor.
You know, if you go to one of our well
sites and you see the majority of the cost that

(09:28):
goes into constructing a new oiler gas well, it's labor.
It's domestic labor, and so that hasn't changed, and I
frankly think that's a good thing, you know, And I've
always been a huge advocate of our industry because our
industry provides very good paying blue collar jobs. And my
talking point is Google is not hiring you know, welders

(09:48):
and pipe fitters, but the oil and gas industry is
we hire them in large numbers and we provide what
I consider to be pretty high wages for those professions. So,
you know, there's been a lot of talk from Trump
about tariffs, and you know, whether you agree with his
position on that or not, I think I happen to
think there's a lot of good points that he's making.
We should make more things in America, you know, that's
you know, we should export more than entertainment and US dollars.

(10:11):
We should actually export things that we build with our hands.
And I believe in that. I think that's good. But
it hasn't really affected us that much yet. I think
the effects that we're seeing now are based on market
moves that are much bigger than just the oil and
gas industry. You're talking about global financial markets moving in
reaction to the posturing of the Trump administration, and we're

(10:33):
sort of innocent bystanders to that. You know, we don't
set the price of oil, none of the American producers do,
and so we're all sort of postured now. Is we're
preparing for the worst and hoping for the best, and
you know so there's no policy initiative that can change that. However,
I would add this. You know, the SPR, the Strategic
Petroleum Reserve in America, is it like a thirty or

(10:54):
forty year low, and at the rate that they've proposed
filling it recently, it would take I've seen reports saying
thirty years plus. I think that's one thing that Trump
administration could do. They could refill the SPR that the
Buying Administration emptied. I think that would be a policy
initiative that would be positive for American energy and hopefully
that does.

Speaker 2 (11:12):
Happen exactly Well, Adam, we're going to take a quick break.
When we return, I want to get back on the
topic of policies that are reshaping new oil and gas
and prices versus market demands. But we're going to take
a quick break. You're listening to the Energy Mix radio
show and we'll be right back.

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Speaker 2 (13:02):
You're listening to the Energy Mix radio show. My guesterday
is Adam Ferrari, CEO of Phoenix Energy. Adam. In the
last break, we were discussing what is the meaning of
and how is this affecting oil and gas through some
of the executive orders that President Trump has been signing,
and also the terrorists, how are they going to affect
the oil and gas industry. I think there's great uncertainty.
I don't really know. I haven't interviewed anyone that's really

(13:23):
an expert, but there's a lot of hypothesis of how
you know what will be the impacts that I'm very
interested to hear. You know, you being in the energy
industry and a chemical engineer and all these different areas
you've been in and an investment banker, I'd like to
kind of you pick your brain, if you will, about
telling me a little bit about policies and how we're
going to reshape oil and gas prices. Also, if you

(13:45):
could take it with one, are the market demands as well,
because we're seeing the price of oil dropping, and some
people I've interviewed have said, we're going to if it
stays much longer, we're going to see riggs going down
because we're not going to drill if it doesn't make
financial sense. We're we're capitalists, We're going to We got
to make a profit, and the margins are so slim,
where do you go? So I don't know what the

(14:06):
price point is specifically for most operators to make a
profit to continue drilling. And then now we see the
price going down, And does any of this have anything
to do with the uncertainty and the tariff? So what's
happening on Wall Street?

Speaker 3 (14:17):
That was a very loaded question, but a lot of
good truths that were laid out in there. So let
me do my best. First, first and foremost, If anyone
tells you they can predict oil price run away, they're
not telling you the truth. And nobody knows the future.
But I think we are positioned now in a very
interesting place. The oil markets are very much a leading
indicator for what the general marketplace feels about the future

(14:38):
of the economy. So when there's a forecasted recession or
when people are a little bit tepid on the outlook
for GDP growth, oil goes down pretty quick. And I
would say it on the flip side, when there's some
bright spots in the economy coming out of a recession,
for instance, oil tends to run before anything else does.
So you can think of oil as a good predictive
leading indicator. So when all the tariff talk happened over

(14:58):
the last month and we had our little showdown, global
equity markets corrected massively and oil went with it, And
so oil had already been getting soft prior to that,
and I think you could attribute that to the oil
market once again as sort of forward looking. But as
we sit here today and it would appear that a
lot of the I guess aggressive talk from the Trump
administration was posturing to get some better deals done and

(15:22):
hopefully that comes to fruition. But nothing's actually fundamentally changed yet,
and oil has rebounded a little bit from its lows.
But you're getting to the heart of the question, at
what price is it uneconomic to drill? And really that
depends on where you're drilling, what your capital structure is
as you're overhead high. Those the answers are going to
be different for every oil and gas company. But I
would say in general, it's safe to say none of

(15:42):
the US oil and gas producers are consistently making money
at sixty dollars oil. It's very tight. Nobody is going
to continue investing large quantums of capital to maintain production
at that price. And I would step back a little
bit from the current time. If you go back four months,
this is a very different market environment than we've had
in past oil cycles. The large companies like the BPS,

(16:03):
the Chevrons, they've already been talking about cutting their future
capex at prices prior to oil going down a little bit.
So even when oil was in the seventies, some of
the largest producers of oil in the world were outwardly
saying we're not going to keep putting money in the ground,
We're going to start returning it to shareholders. And now
you can attribute that to they didn't feel like the
future was as bright at those prices, or they have
activist boards that want money return to shareholders, or they

(16:25):
want to pursue green energy. But you already saw that happening.
And so from my chair is a small private producer
in America, I see the big boys already pulling back
before price is corrected, and so I do feel like
you're going to see folks, definitely, even at this price,
they're going to start rethinking their plans. They might end
up drilling wells, not completing them, and then laying down
rigs eventually. So I do think at this price point,

(16:46):
you are not going to see the investment that's required
to meet world demand. And that's an important point, and
it goes back to supplying demand rules the day. When
prices go down, volume eventually goes down. And if demand
doesn't go down, well, and price has to go up.
And the world consumes over one hundred million barrels of
oil a day, twelve to thirteen of that comes from America.

(17:07):
America is the largest producer of oil in the world,
and if America can't meet that number, the price has
to go up. And so I think it's only a
matter of time. And so companies in my people in
my chair, and other companies in our space, they're taking
all that into consideration, and I think they're being cautiously
optimistic right now. You know, if oil price were to
drop another ten bucks from here, that's a point where

(17:29):
people definitely start pulling back. And it's a little more aggressive,
but people tend not to make knee jerk reactions over
short term price movements, and I kind of alluded to earlier.
Oil can do wild things in a short In the
short run, I think we're all sitting around looking to
the summer. Where are we going to be in June
and July? Are we going to be sixty five seventy
or are we going to be fifty to fifty five?
Those are very different outcomes for the US oil and

(17:50):
gas industry. And the US oil and gas industry struggles
mightily at fifty dollars oil, and everyone knows that that's
not a secret. I would argue some of the international
players are going to struggle too, but I don't follow
them as closely as I know the US domestic space
because that's where we operate, and I understand what the
cost structures are for US and our competitors. So you
have fifty dollars oil is a very painful point for

(18:10):
pretty much everyone. Now, some people can still make small
margins at that price, but then you have to ask
yourself this question, are these producers willing to sell their
oil at that low of a price. Why don't they
just wait? The oil's not going anywhere. It's in the ground.
So I think I just where we sit today, you're
not going to see a massive drill, baby drill campaign.
This goes kind of back to I think Trump says

(18:31):
things that are bombastic to get headlines because he's got
a very big personality. I think that's an understatement. But
the reality is there's no drill, baby drill at fifty dollars. Now,
that's just the reality of it.

Speaker 2 (18:42):
So yes, I agree with you. Let's look at long
term implications too, because again I keep talking about there's
executive orders coming out for the oil and gas industry. Well,
he's riding a lot of executive orders, so you have
to keep up, folks. There's the executive orders, and then
there's the tariffs. And the oil and gas markets are
affected by what's happening, not only in a geopolitical sense,

(19:05):
they are affected greatly. So we have now if it
was complicated enough with removing some of the regulations, opening
up some federal lands and offshore and helping in those
areas on top of that, then we had the teriffs
come in right on top of that, and that's also
caused a lot of uncertainty, and I guess for me,
I'm trying to understand long term implications. As of recently,

(19:30):
Jdvance Vice President Jade Vance went to India, came back
with a great deal. It looks like India is going
to partner with this that's going to affect China. It's
getting to be very wonky if all the different trades
that are happening, I think they're great, but I just
wonder term implications, anything on your radar that you'd like
to mention about what you're seeing for long term implications

(19:51):
that we should keep an eye on when we talk
about energy and or long term implications pertaining to the
energy markets or with these tariffs.

Speaker 3 (20:00):
I think the biggest thing that we try to focus on.
Let me step back a little bit. Oil is necessary
for human life, and so while all these things that
you're mentioning are very important, not try to be dismissive
of them. Whether we reach a favorable deal with India
or China or not. The world still need one hundred
million barrels a day, and it's got to come from somewhere,
and so were we maintain sort of a longer term view.

(20:21):
I think some of the things that Trump administration is
pursuing is admirable. You know, I grew up in a
industrial part of the Midwest where a lot of those
jobs aren't there anymore, and so I certainly have empathy
for the path that the Trump administration is on. I
think those jobs should be in America, and I think
that's important to have a manufacturing base here. But in
terms of the energy space in general, the trend that
I'm looking at most closely is America has the most

(20:42):
abundant and affordable natural gas on the planet Earth, and
we should be exporting more of that. And you saw
at the end of the Biden administration they put a
halt on new LNG construction, and that seems to be lifted.
I you know, Chris Wright is somebody that I know personally,
and he's the Secretary of Energy, and Chris is one
of the best spokesman for this industry that I've ever seen.
He's from Denver, and with him and Doug burgham leading

(21:02):
the charge on some of Trump's initiatives. I do feel
like that's a very big bright spot and if that
opens up in America, it could be the low cost
supplier of natural gas to the globe. Now that's a
very powerful attribute for the American economy going forward.

Speaker 2 (21:15):
Well, Adam, let's take a quick break. So you're listening
to the Energy Mixed Radio Show. We'll be right back.
You're listening to the Energy Mixed Radio Show. My guest
today is Adam Ferrari, CEO of Phoenix Energy. Adam. Before
the break, we were kind of discussing some of the
stuff that the energy industry has been going through due
to executive orders and tariffs. What's the price point that

(21:38):
operators are still drilling and not laying down rigs? And
I want to be clear that I see that this
wasn't created overnight. There's a lot of work that has
to be done from the Trump administration and of course
all these agencies to really correct or try to fix
and try to stabilize our energy policies here, and hopefully

(22:01):
we also start looking at some energy reforms so the
energy market isn't so up and down here in the
United States depending on who's sitting in the White House
or in Congress. But that's another show I would like
as an experienced energy expert, you know, many years, I
want to try to understand oil and gas producers. What

(22:24):
are you guys facing and adapting to these evolving policies.
I mean, you guys have spent four years adapting to
the Biden policies and I'm not sure who was going
to get elected. Now Trump's coming in. He's removing a
lot of the regulation hurdles that you guys were facing,
and so it's causing dropages in the way of crew prices,

(22:47):
which we knew that would happen. But long term evolving policies.
Is there anything that you're looking forward to with Secretary
right as you mentioned Burgham and Secretary of Interior. Thing
is that you guys, you might feel that the energy
industry really needs to look at now that you have
a favorable administration that's looking and how do we stabilize

(23:07):
our energy market since it's a matter of net.

Speaker 3 (23:12):
Yeah, it's a really good question. Ultimately, what we want
is American producers is consistency. You want to know what
the rules of the game are and you don't want
the rules to be changed after you start playing the game.
And oil and gas is a capitally intensive industry. Takes
a lot of capital to get energy out of the
ground efficiently, and it takes a lot of time, and

(23:32):
you know, Frankly, what we would like to see in
this administration is some of the stuff codified into law.
And I can give an example of things that had
been done. You know, the SEC tried to implement some
climate disclosure policies that would have been incredibly costly and
put very detrimental to us publicly traded producers. And Chris Wright,

(23:52):
in his former capacity at Liberty Energy, his company actually
challenged that and won in court. And so little things
like that tend to, to, you know, happen when there's
an administration shift, because you don't need new laws passed,
you know, certain agencies can just go out and make
rules that make it more difficult for the industry. It
could be the EPA, it could be the BLM, could
be the SEC. And all we want as producers is consistency.

(24:16):
And I think one of the things we're hopeful of
with this administration and now that Chris and Doug are
in a position to make positive changes, but we want
to see lasting change. It isn't just going to switch
back in three and a half years, because like I
said in the beginning, we're making decisions today about what
we're going to be doing in three to five years,
and if you don't know what the rules of the

(24:37):
game are going to be in five years, it's really
tough to make those decisions today. And so that's I
kind of see that as a unique opportunity but also
a challenge, and that's you know, we are very much
squarely focused on that. You know, what can we do
to ensure that we have clear, established rules for the
American energy industry long into the future that won't just change.

(24:59):
And you know, even if look at state regulations, a
lot of states are passing initiatives that require a certain
amount of their energy to be renewable or green. And
I use air quotes when I discussed that because it's
kind of a play on words. There's no such thing
as renewable or green energy. They all consume part of

(25:19):
the you know, they consume something in the production of
that energy, so it's not like it's an infinite free source.
But that also causes some challenges. You know, if you're
forcing unreliable, inefficient forms of energy onto the grid at
the state level and driving up costs for everyone and
pushing out cheaper, more high quality options like natural gas,

(25:40):
I think that's a problem for all of us and
so I think that's another issue that we would like
to see some federal oversight, you know. And the best
example I can give you is I live in California.
We have the highest electricity prices in America. I think
they're over two times what they are in Florida. And
that just doesn't make any sense. Why should a citizen
in California have to pay twice to turn a light
on somebody in Florida. And it's because we have bad

(26:02):
policy in California. And so that's one area also that
I would hope that the current federal administration, the Trump administration,
can step in and help to even the playing field there.

Speaker 2 (26:12):
Absolutely, and we're getting ready to go to break. But
I would like to tell you our listeners that our
editor in chief of Shell Magazineing Jess, recently wrote an
article that can be found on Shell mag dot com
specifically discussing why California is in this situation. And it's
not just him writing about it. It was actually a study
that was produced showing the issues and how California got here.

(26:35):
It's a great article, but it comes off of a
study that was just recently released. So if you want
to learn about California. Go to Shell mag dot com.
Robert Ray Pierce, the writer. Let's take a quick break.
You're listening to the Energy Mix radio show. We'll be
right back.

Speaker 4 (26:49):
It's the Boot and Shoot fundraiser in Midland, Texas benefiting
sky High for Kids.

Speaker 5 (26:54):
On mayy eight, join us at the Petroleum Club for
a Western banquet.

Speaker 6 (26:59):
Featuring VP, Cocktail Hour and signent auction. Then on May ninth,
hit the clay Shooting Course at Jake's Clay's for a
fun and exciting tournament. All proceeds support sky High for Kids,
a mission to end childhood cancer. Get involved today by
registering at sky High for Kids dot org.

Speaker 2 (27:22):
Welcome back to the Energy Mix radio Show. I'm your host, Kimbalato,
and today my guest is Adam Ferrari, CEO of Phoenix Energy. Adam,
we've talked a lot about Tariff's executive orders, price of crude.
When will we start seeing rigs being laid down and
really bad things happening in the oil and gas industry?

(27:42):
And I hope that does not happen, But I want
to switch gears a little bit and discuss Right before
the break, you talked about some things that would have
meaningful change for operators, people who are drilling, and some
of them were federal oversight as well as potentially looking
at reform, real reforms. Specifically. When you mentioned, you know,

(28:03):
these long projects, I think it was about a year
two years ago we did a cover on the Willow project,
uh specifically in Alaska and how that had been a
twenty year project. It kind of resembled, but not not.
It didn't resemble. Let me take that back. It reminded

(28:24):
me of the Keystone pipeline where you just got pushed
out and pushed out and pushed out until it became
too costly and they just you know, took it off.

Speaker 3 (28:34):
Death by a thousand cuts. That's what it really is, right, Yes,
there you go.

Speaker 2 (28:38):
And so the Willow projects you know started that we
covered it because we really felt like, you know, it's
an opportunity to show what you mentioned earlier is how
does how does an oil and gas operations executives management
team make decisions that are a long project, very expensive project,
raised capital and then you just you know, over there's

(29:00):
an election and all of a sudden, the new president
coming in is just changed and flip flopped through executive
orders and it kills that project. That almost reminds me
of other countries that you get a new administration, Mexico, whatever,
and everything slips upside down overnight. And this is the
United States.

Speaker 3 (29:17):
We shouldn't have that.

Speaker 2 (29:19):
And I don't know of any business that would open
their doors understanding that whatever you decide to do, you're
going to set out to do it, and somewhere along
the way the government can just come in and just
pull the rug out from underneath you. And now you're
dealing with a whole new set of games. Maybe you
won't get through permitting, it's way too costly. You've got
legal challenges. It's a lot to deal with just to

(29:41):
produce energy here in the United States. So long term investments, vulnerabilities.
When you talk about reform, what does that look like?
Does it need to go through Congress? How did we
give you, guys energy reform that you need?

Speaker 3 (29:56):
What use? This probably summarize the frustrations and the highs
and lows and all the challenges of running an energy
company in the United States. So kudos to you for that.
It is very difficult. And you know, I would just
say paying with the broad brush. The more regulations that
you have the higher the cost and the lower the

(30:16):
output is going to be for the industry as a whole,
So you'll deliver a more expensive product and less of
it to the consumer, which I think we would all
agree is bad. And it's not the producer making that decision.
It's the central authority that's imposing all the rules and
REGs on the producer. In terms of lasting change, you know,
if I had my wish list, you could codify into

(30:36):
law that CO two would not be viewed as a
toxic gas and it wouldn't be regulated. Carbon credits would
be sort of off the table. You wouldn't make domestic
producers pay into a fund for every barrel of oil
they produce or every standard keep it put in natural gas,
because I think those are items that when you start
thinking about planning for the future, if the government just
shows up one day and says, well, we're just going

(30:58):
to start collecting a feed on every barrow you produced
for the carbon credit Fund or something of that nature,
that would be very detrimental and it would once again
be changing the rules to the game. You know, we
made a decision to drill well today on the current
set of laws and the current economics. It'd be unfair
for somebody to show up in three or four years
and say, yeah, I don't really care about that decision

(31:18):
you made. Here's the new rules of the game, and
we're getting ten percent of everything you produce now or
something like that. So what I would like to see
codified in the law is just clear rules for how
the industry is going to be regulated and managed for
a long period of time that can't just be changed
on a whim depending on who wins the White House.
And I think that would be good for all Americans

(31:40):
and certainly for producers. And yeah, I could go into
some more specifics, you know, consistent access to federal lands.
I'll give you another example. There's times when you lease
attractive land from the BLM and you pay the BLM money,
and then some third party environmentalist group sues. The BLM
says you took some shortcuts and now you shouldn't issue

(32:04):
a permit on those lands, and they will literally put
it in They will put you in a holding pattern
and it could take years upon years. You've already exchanged
money with the government for a right to develop oil
and gas minerals, and now the government says we're on
hold because somebody who wasn't a party to that transaction
showed up and sued me. And that happens all the
time in our industry. I'd love to see that go away.

(32:26):
Frivolous lawsuits that just it's sort of like the example
you gave about Alaska. It's death by a thousand cuts.
And so it makes companies that are you know, in
our space, and people that are sitting in my chair
question whether they should form capital and go pursue those projects.
Even though those projects are good for America, they're good
for job growth. You have folks, and I always wonder

(32:47):
who's funding the law firm. Why is somebody giving them
money to stop me or people like me from hiring
Americans to produce American energy. I think every one of
your listeners should ask themselves that question. I mean, you
go to the ballot box, you should really think about that.
And this shouldn't be a Democrat or a Republican issue.
This should be an America first issue. We should want
to prop up fellow Americans, and in our industry, we

(33:11):
have the means to do that, in my opinion, better
than any other business in America. Because you can't outsource
jobs and oil and gas, you just can't. You have
to hire local. And we're great for our communities that
we operate in. And I could go on forever and
talk about that, but we want to see lasting change
through legislation, and when we have the House in the Senate,
I would I'm sure Trump is pushing for something like that.

Speaker 2 (33:35):
How you've all got two years, you.

Speaker 3 (33:37):
Got to do it now, and in the tax code
should reflect that too. And I know we get a
lot of there's a lot of people to put out
false talking points about all the tax breaks oil and
gas companies get. That's just not true. But if we
do go drill wells there, we can defer taxes a
little bit longer through depreciation acceleration. But it's not like
a tax credit. The government's not sending us money. We're

(33:58):
just putting the money back into the ground and hiring
more American to drill more wells, which I would think
we would all agree is a good thing. And so
we would like some clarity on that. Is it going
to stay that way? Is it going to change? And
once again, this just goes back to what are the
rules of the game going to be? And don't threaten
to change them every four years. Just give us consistent
rules and we can react absolutely.

Speaker 2 (34:18):
And I think that does have to go through Congress.
So it's rules that are lasting. Like you said, first
of all, there's no denying that population is growing globally.
Energy demands are on the rise and they will continue.
We can't even picture what's going to happen with AI
and utilities, and we're talking about globally. The demand is

(34:44):
there and it's going to rise. So how we produce this?
Should we let other countries produce this? Adam, who do
not have regular oversight at all, regulatory oversight. They don't
have EPA, they don't have Water of America, they don't
have the Endangered Species Act. They can produce and step
up to the plate like China producing, you know, bringing
on a couple of cold plants a week. Where are

(35:06):
we going with energy and climate?

Speaker 3 (35:09):
Kim? I agree with you one hundred percent, and I
think you set something that's very sinister that is happening
that if American tax dollars are being funneled through entities
that are mounting legal challenges to shut down American jobs
so that they can export those jobs to countries that
either use slave labor or have horrendous work conditions. That
is sinister criminal, and I would agree with you. I

(35:30):
hope those folks do get prosecuted to the full extent
of the law, because you really hit on a point
that's super important. We don't build refineries in America anymore,
so we send our barrels to India, where they built
the biggest refinery on the planet. They rEFInd the product
and send it back to us. So all those great
jobs are in India, and you know, I'm glad that
they have an opportunity to work. I'm not disparaging anyone

(35:51):
in India, but it's pretty inefficient to send a barrel there,
refine it, and then send the products back to America.
We should be refining the barrels here, and we should
be producing the barrels here, not in Venezuela. So I'm
with you. Out of your secondary let's take a quick break.

Speaker 2 (36:06):
You're listening to the Energy Mixed radio show. We'll be
right back, and we're back. You're listening to the Energy
Mixed Radio Show. My guest is Adam Ferrari, CEO of
Phoenix Energy. Adam. Before the break, you were I'm sorry.
I was up hard break. I was against a hard break.
But you were talking about we're refinery, how we're not producing,

(36:27):
we're not building refineries. Here, I'll tell me a little
bit more about what you were talking about.

Speaker 3 (36:33):
Yeah, I think, don't quote me. Your audience left to
check this, But I think the last refinery in the
United States is built over twenty years ago, and so
all the capacity increases were expansions of existing refineries. And
if you come to the state where I live, in California,
there's actively refiners like Valero and Phillip sixty six talking
about shutting down refineries in America because California has made

(36:53):
it almost impossible for them to function and make money.
And so I was simply saying, as a country, we
need to get back to the basic We should refine
our own barrels to supply our own refined fuels for
jet fuel, diesel, and gasoline to Americans. And right now
a lot of our refined products are being imported from
other countries because we have rules that are so onerous
that we can't build refineries in America. And that needs

(37:15):
to change, and you know that would be good for
all of us. It would lower lower costs for everyone.
It provides American jobs, both of which are good things.

Speaker 2 (37:24):
Well, you know, speaking of that, Robert and I, the
editor of Show magazine, decided to do a show. It's
one of our educational series, and we were talking about
specifically refineries. The you know, start to finish on that.
So it's a great one. If you want to learn
about refineries, go to Shell mag dot com and look
at the Energy Mixed radio show. It's clearly labeled refineries.

(37:45):
I want to talk This is the last segment, and
I want to talk about something that just recently happened
to Adam. Let me just this up and then I'll
ask you a question. So I want to tell you
about the Jones Act. Okay, it's officially was known as
the Merchant Marine Act of nineteen twenty dot To tell
you how old this act is. If it's from the
nineteen twenties, I think it's a little out of date.

(38:08):
It requires that all goods transported between US ports must
be carried on ships that are US built, US owned,
and US crewed, which sounds great. While it was intended
to protect domestic shipping industry, it also created significant challenges, specifically,
for the oil and gas sector. One major issue is

(38:30):
the lack of the Jones Act compliant vessel, particularly when
we talk about transporting liquefied natural gas and other petroleum products.
This shortage has made it prohibitively expensive to ship oil
and gas domestically by water. For example, it can cost
up to three times more to transport fuel from the

(38:53):
Gulf Coast to the East Coast on a Jones Act
compliant ship compared to using foreign flag vessels, and as
a result, instead of shipping domestically, the Gulf Coast exports
oil and gas internationally and the East Coast imports from overseas,
creating inefficiencies as you mentioned earlier, and high cost for

(39:17):
consumers and producers alike. And in some cases ADAM regions
like Puerto Rico and New England have been unable to
access US produced LERG due to the lack of compliant tankers,
forcing them to rely on imports from distant countries. Now
this has led to a call for reform and waivers

(39:38):
to address these efficiencies and better align the ACT with
modern energy needs. My question is President Trump's recent executive
order aim to revitalize the ship The US shipbuilding industry
to counter China's dominance on the global ship production because
we don't build ships here anymore. So what specific measures

(40:02):
within this order do you believe we have the most
immediate impact for strengthening America's maritime capacity, And then, of
course how many changes could influence the broader energy and
trade sectors. A lot of people don't know about the
Jones Act. It's really kind of important to know about
it because it's really prohibiting a lot of things. And
we talk about shipping in maritime.

Speaker 3 (40:23):
Very well laid out there. I would say from our perspective,
I think it depends what part of the value chain
you're in and energy. You know, if you're an on
shore producer and you have pipeline access to get your
product to market, which we do in the bock In
and most of the basins that we have exposure to
have local access, so we're not as impacted by some
of the nuance as you just laid out there. But

(40:46):
I would say that I would expect the Trump administration
to be reasonable. I think the objective is a noble
cause we should build more ships here. When I took
my first job out of college with BP, I worked
offshore on a floating vessel that was built in Korea,
and South Korea has one of the biggest shipyards on
planet Earth, and a lot of the vessels that are
producing in the Gulf Coast come from one of the

(41:08):
shipyards in South Korea. And I do think it would
be a good thing once again if we returned back
to our roots as a nation, and we should be
able to build these things in America. So I think
the spirit of what Trump's trying to do is honorable,
But as you've laid out, there's certainly a lot of
near term challenges that could certainly impact some parts of
the value chain in our industry domestically. Thankfully, this particular

(41:32):
issue is not one that has impacted Phoenix Energy or
likely any other producers in the Bakan. But I think
you laid out some of the challenges very appropriately, and
I would hope that Trump does the right thing and
finds a creative way to make sure it's minimizing the
impact to domestic energy producers and midstream companies that are
in America as well.

Speaker 2 (41:54):
I found another thing interesting when we're talking about the
tear of specifically the amount of money that it's going
to require when we look at these what it was China,
add I don't even know the number, if it was
over two hundred on terrorists versus to move those ships
with those terriffs now is It's mind boggling. One of

(42:16):
our sports that we love to write on is the
Port of Corpus Christy, and we have really a great
relationship with them. And I was asking, and I'm scheduled
to interview the Ports of America as executive to talk
about how this will impact most of the ports in
the United States, how these tariffs are going to come in.

(42:37):
So for like crew traders, Adam, you know, how are
they going to move that ship now? And it really
is mind boggling to think about the amount of money
that is going to cost now with the tariffs in
the maritime, I think we'll start seeing I think we'll
start seeing a slow down there too. What are your
thoughts on that due to the tariffs.

Speaker 3 (42:58):
I think, yeah, yea, I think that certainly could happen.
But I would just go back to something I said earlier.
I think the tariffs, I think they've gotten a lot
of buzz in the media because nobody has heard a
president speak like this probably in their lifetime. And I
would venture to go out on a limitar and say
Trump's a pretty good negotiator. I think his track record

(43:21):
is pretty strong. I think we'd all agree with that.
I think he knows what he's doing, and I think
whatever the outcome is, it's going to be a benefit
to America. And I believe that to be true. And
so even some of the challenges you're pointing out, I
think these are going to be resolved positively for American
energy producers. Trump has said this time and time again

(43:42):
he wants American energy producers to prosper and I think
he's got a lot of bright people around him, and
I believe these issues are going to be resolved in
a way that's not going to harm the American energy
industry in the long run.

Speaker 2 (43:56):
So absolutely, Yeah, I was just saying that I think
that that is something that he definitely needs to look
at because it is going to have an impact, and
I'm sure that they will do something to remove that.
But that has been a concern that's come up on
the radar. Adam, that is all the time we have
for this week's show. Thank you for coming and being
a guest with me. Talking to me a little bit

(44:16):
about what your thoughts are on tariffs and on the
executive orders. We look forward to having you back in
the future.

Speaker 3 (44:22):
It was a pleasure. Thank you so much for having me.

Speaker 1 (44:24):
The Energy Mixed Radio Show is where we explore topics
that affect us all in the oil and gas industry.
Every week, our host will interview the movers and shakers
in this fast paced industry. You'll hear from industry experts,
elected officials, and many more on the Energy Mix Radio Show.

Speaker 4 (44:39):
It's the Boot and Shoot fundraiser in Midland, Texas benefiting
sky High for Kids.

Speaker 5 (44:44):
On mayy eight, join us at the Petroleum Club for
a Western banquet.

Speaker 6 (44:49):
Featuring a VIP cocktail hour and signent auction. Then on
May ninth, hit the clay Shooting Course at Jake's Clay's
for a fun and exciting tournament.

Speaker 4 (44:59):
All proceed some sport.

Speaker 6 (45:00):
Sky High for Kids a mission to end childhood cancer.
Get involved today by registering at sky High for Kids
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