Oil cools on Iran de-escalations, Talen’s $3.45B gas acquisitions

00:00 Sharin

We are watching oil stocks, Talen Energy and Bitmine Emergent Tech. Market data editor, Jared Blikre is joining me now to chat about these.

00:09 Sharin

So, first of all, we got to look at what’s going on with oil stocks, as we are watching underlying oil prices as well. Exxon Mobil, Chevron, Conoco Phillips are pulling back as Iran tensions appear to be cooling. Uh President Trump is seemingly backing away from threats of military action against Iran.

00:30 Sharin

So, again, we’ve got those underlying oil prices lower and then the oil stocks are following suit, Jared.

00:35 Jared Blikre

Yeah, let’s start with the charts here. Let’s go let’s go to the Wi-Fi Interactive where we’re taking a look at our mostly large cap energy heat map here. You see a lot of red, you mentioned the majors. A few green spots. One of them is Talen Energy. We’re going to be talking about that in a minute here. Another is Baker, uh excuse me, BKR is Baker Hughes company.

00:54 Jared Blikre

I’ll just show you the one-year chart on that real quick and you can see up about 12%. But this is uh, this is kind of a lowering of that geopolitical risk premium. and I’m going to go now to a chart of WTI crude oil, which trades pretty much in lock step with Brent. This is what’s happening today, down 4 and a half percent.

01:13 Jared Blikre

Uh biggest down draft in about two months, I was just checking. Here’s a five-year chart. and we’re pretty close to four or five-year lows right now. I’m trying to draw that line there. But if you want to see what real geopolitical risk looks like, okay, this was the original invasion of the Ukraine by, uh, Russia way back in 2022.

01:34 Jared Blikre

and that’s when oil prices shot up to $130 intraday per barrel. And so we are just at the lower end of that. And so we are in an environment now where there are a lot more bearish forces than bullish, which is good for consumers.

01:50 Jared Blikre

Um, the US Energy uh US Energy Administration expects global inventories to build 2.8 billion barrels per day in 2026. So kind of gluttish talks uh talk here and it’s going to take a lot more uh than the current uh situation in Venezuela, Iran, Black Sea, any kind of hiccups there to really shoot the price of oil higher.

02:20 Jared Blikre

You really unless something threatens the Straits of Hormuz and that’s that really narrow channel in the Middle East where all that oil flows or something big like that, another huge invasion, um, I I just don’t see the price of oil really getting above $70 per barrel.

02:40 Sharin

Yeah, I mean, you could have events in Iran affecting things on the margin eventually.

02:46 Jared Blikre

Eventually.

02:47 Sharin

But as it was, even with the rhetoric starting to heat up, there was no actual disruption to supplies at this point. And there were still a lot of questions about even if there was regime change in Iran and all of that was highly speculative,

03:00 Sharin

again, what effect would it have on the actual supply? But now President Trump seems to be backing away and saying that he’s been assured that the Iranian government is going to no longer be killing protesters. They called off an execution reportedly. So we’ll see what happens with all of that.

03:22 Sharin

Um, Talen Energy, you mentioned that one. It is continuing to expand its portfolio. The power producer is adding on natural gas generation capacity through the acquisition of natural gas assets from Energy Capital partners. Now, this is not like an energy company like a big oil company. This is more like a power company or a utility company, right? And we have seen a lot of those companies

03:49 Sharin

really fly over the past couple of years because they’ve been providing power to data centers.

03:51 Jared Blikre

Data centers. Yes.

03:53 Sharin

Yes. They’re so thirsty for that electricity, those data centers.

03:55 Jared Blikre

Um and you put that very well. So I’ll just go over some of the deal basics here. Uh two and a half billion dollars in cash plus $900 million in stock. And and that cash is going to be financed by the bond market most likely. This will add 2.6 GW in Ohio and Indiana.

04:14 Jared Blikre

There is some regulatory risk. They’re going to have to clear uh what’s called the Hart-Scott-Rodino Act. I had to look that up. That’s a federal Trade Commission rule. They’re also going to have to clear FC, that’s federal Energy regular regulatory Commission and the state of Indiana.

04:31 Jared Blikre

Um sorry if we if we let’s go back to the Wi-Fi Interactive there. I’m going to pull up Talen Energy. That that was that big green spot. I’m going to show you the last year. They’ve been flying high. You know, this was the time when all the utilities, all those boring utility companies, energy companies uh were catching a bid. And you can see it’s actually kind of flat lined over the last few months.

04:59 Jared Blikre

Uh got a bit of a bid today. that’s up 10%. So uh whenever you see a stock uh going through an M&A or kind of a deal transaction where it’s going to cost a lot of money but the stock is up anyway, that just means they’re going to benefit from a lot of synergies.

05:20 Jared Blikre

Going back to our heat map real quickly, let’s put the one year on and Talen Energy really stands out. I’m sorting these by performance and here it is in the upper left of 82%. Uh a lot more than any of the oil majors or some of the oil minors.

05:43 Sharin

Yeah, and they have a sort of diversified portfolio. so they have natural gas generation already. They have some nuclear um generation too and then a little bit of coal um and oil, I guess. So we’ll see how much this changes the balance of that generation.

06:03 Sharin

Um finally, let’s talk about Bitmine Immersion Technologies. It is betting on creator-based platforms. It’s an Ethereum Treasury company. Tom Lee is the guy who’s the chairman of that, well-known investor. Um and he’s made the company is making a $200 million equity investment into something that is most definitely not crypto. It’s Beast Industries. Mr. Beast’s company.

06:33 Jared Blikre

Mr. Beast.

06:34 Sharin

Like, could you, you know, I feel like this is the memiest story you could possibly imagine.

06:42 Jared Blikre

Tom Lee, Mr. Beast. Tom Lee, Crypto, Mr. Beast. You just put it all together.

06:50 Sharin

But the stock is not higher today.

06:53 Jared Blikre

No, it costs money. And so this is kind of the opposite of what I was just talking about with respect to that energy transaction. This is going to cost some money here and uh it’s being taken out of the stock. And a lot of these Treasury companies, whether it’s Bitcoin or Ethereum, they finance, they get the money from the capital markets through the sale of stock a lot of times, not even the bond market necessarily. And so you will see the stock take it a big hit like this, uh just because investors expect to get get diluted.

07:29 Jared Blikre

That’s an intraday chart you’re looking at on the Wi-Fi Interactive. Let’s show a max chart. You can see still up 300%, although we are well off of those initial euphoric highs. I thought it’d be interesting to uh compare Ethereum, the price of Ethereum to um Bitmine here. So let’s go over three months and you can see Bitmine is actually down 16 17% there.

07:49 Jared Blikre

Uh or excuse me, that’s Ethereum and that is higher up here. That’s down 16 17% while Bitmine is down 42%. This reminds me of Bitcoin versus uh strategy. And we have seen the premium sucked out of these treasury companies recently. But I will say, I was just noting the other day that strategy is actually almost outperforming Bitcoin over the last month.

08:14 Jared Blikre

So on these smaller time frames, it looks like there’s a bid on kind of money moving uh back into crypto and the speculative fervor that has catapulted a lot of these stocks and a lot of these coins up before is in the very beginning stages here. I don’t want to be sound too optimistic, but it looks like things are kind of coming around here.

08:42 Jared Blikre

I will also say, like why Mr. Beast? That’s a big question. I just think you it’s a meme. It’s a meme opportunity and you you kind of have a tie in to the creator economy. It gains attention. If they want to pivot at some later date, they’ve got a captive audience there. And so it’s, you know, when when you’re involved in a memish business, that’s uh seems maybe like a natural extension.

09:19 Sharin

Well, Tom Lee in the statement says, Mr. Beast and Beast Industries in our view is the leading content creator of our generation. Beast Industries, the largest and most innovative creator-based platform in the world. Our corporate and personal values are strongly aligned. Have you watched the new the new season of Beast Games yet?

09:39 Jared Blikre

I have not. I have not.

09:41 Sharin

Maybe Tom Lee can be a future contestant.

09:45 Jared Blikre

That would be amazing. I would love to talk about that on 20 tickers one day.

09:50 Sharin

That would be interesting.

09:52 Jared Blikre

See what Bitmine does. Thanks, Sharin.

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