Transcript of Energy Conference Call on Chevron-PDC Energy Merger’s Concentration in Colorado Midstream and Competition and ESG Indexes Likely to Drop FirstEnergy

Jun 29, 2023

On June 28, The Capitol Forum’s Teddy Downey, Sharon Kelly, Julia Arbutus, and Daniel Sherwood held a conference call to discuss the most pertinent issues impacting energy markets and policy, including Chevron’s proposed $7.6 billion merger with PDC Energy. The full transcript, which has been modified slightly for accuracy, can be found below.

TEDDY DOWNEY:  Good morning, everyone. Thanks for joining today’s Conference Call with our Energy Team. I’m Teddy Downey, Executive Editor here at The Capitol Forum. And I’m joined by Sharon Kelly, Julia Arbutus and Daniel Sherwood who make up our glorious Energy Team. And we are going to be talking mergers and ESG today. And thanks, team, for hopping on the call today.

DANIEL SHERWOOD:  Thank you for having us.

TEDDY DOWNEY:  So let’s just dive right in. We wrote our first piece on this Chevron‑PDC Energy deal. And Daniel, if you can kick us off, what makes the Colorado hydrocarbon market unique and interesting for this merger?

DANIEL SHERWOOD:  Great. Yes, thank you for having us. And welcome, everyone. Our emails are open, if you have any questions while we discuss our two main topics of discussion today. This Chevron‑PDC Energy merger, generally speaking, people had flagged thinking there’s going to be some regulatory scrutiny here, but without a lot of substantive information. So we did the easiest first step—Julia led this effort—of just getting the underlying production data and who owned what, adding it up and seeing if there’s going to be any market share concerns.

On the call, when the CEO of Chevron was discussing this deal, he received questions about, are you worried about concentration or competition issues? And he said, no, this is a pure—we’re just buying upstream. We don’t see any problems here. We’ll work with the regulators, but it’s going to be fine.

So the two things that people have kind of levied towards us in discussions about our analysis about market share are the following. One, how can you consider Colorado a market unto itself? Upstream is competitive. You can drill—there’s more drilling locations in Weld County in Colorado. There’s more drilling locations in the Permian and so on and so forth. And then the second kind of pushback discussion is about available midstream capacity. So we can take those in order.

TEDDY DOWNEY:  Can you just spell out really quickly for us, I mean, probably everyone has read the article, but just the market share, what you found with the market share data? And I also think it’s worth pointing out that we have expertise in this because of our Upstream production database, which typically, we focus on Appalachia. But we basically took that expertise and we got the granular market share data from Colorado. And then just really quickly, if you want to just lay out what it showed in terms of that.

DANIEL SHERWOOD:  That’s right. And it speaks to the broader theme of our analysis as it comes to the hydrocarbon industry. There seems to be this general impression that because of the fact that there are different basins and different operators, that just ipso facto it’s a competitive and healthy market. What we’ve demonstrated in a number of different investigations is that that’s not the case and the industry seems to speak about it in such terms. They highlight different basins for competitive advantages and disadvantages.

For instance, in Colorado, the Denver-Julesburg Basin is known for low costs. Marcellus/Utica is known for really rich gas plays. There’s all these different things that you can kind of focus on as an upstream producer. And the underlying commodities aren’t always the same either. People talk about crude oil, but there’s different types of crude oil. So in this instance, for instance, from Colorado, it’s a light crude. So that’s so specific to itself that it trades on its own index that Argus tracks through four different crude supply arteries that lead to Cushing. So that speaks to the commodity nature of it.

Let’s talk about what we found from a market share perspective. And again, this was led by Julia. Great work, Julia. The number one largest upstream producer in Colorado is PDC Energy, and Chevron is number four. If the merger was to be consummated, then Chevron would go to controlling over a quarter of that oil and gas production.

So you add up the different entities and at the bottom of the article, we have our little graphs of the top operators and their total production based on last year. We added natural gas to the oil to do an oil equivalent. And here you see Chevron and PDC taking the number one spot by a large, large margin. I mean, thousands and thousands of barrels. So behind them, Civitas, Occidental and Kinder Morgan would be the top four.

You know, Kinder Morgan is traditionally a midstream company. Here in Colorado, they’re running an upstream production business. So it again shows—before we talk about the competition issue as it relates specifically to the midstream assets here—that it’s relatively difficult to segregate these industries for obvious reasons. And though Chevron’s only buying PDC’s upstream assets, Chevron itself has midstream exposure. So that’s what we found. Those are the numbers.

TEDDY DOWNEY:  And it’s a consolidated market already, we should add, right?

DANIEL SHERWOOD:  Precisely. So yeah, I’ll just read directly from the story. “Pre-merger, the top four operators in Colorado control over 55 percent of the market. Generally speaking, antitrust experts consider any market with four players controlling over half the market as highly concentrated. Following the merger, the top four producers would control over 65 percent of the market.” So that’s what our findings showed just from a pure production output analysis.

TEDDY DOWNEY:  Okay, great. And now back to the issues, the pushback or the arguments that you were getting about why it might not be a problem.

DANIEL SHERWOOD:  Yeah. So I spoke already to how to define the market, where to define the market. And one of our claims to fame in this area is following the EQT/Tug Hill deal. And before it was delayed, that was seen as just a green-light acquisition for a very long time. The parallels in the energy industry are few and far between. There are some, though, especially with this paradigm shift. You know, the EnCap deal is one that’s very oft cited. And due to the unique paraffin nature of the crude there, that’s what led to that pipeline divestment. And there are a few others, the Questar/Berkshire Hathaway transaction.

And so I think that’s what makes people in this deal say, look, it’s just upstream. Because with EQT/Tug Hill and XcL Midstream, those are both backed by Quantum Energy, a private equity player, there’s a midstream component to that deal. And we continue to look – and whenever we talk to antitrust experts in the space, it almost always comes down, Teddy, to those contracts with the pipes, with the processors. And that’s true both here in Colorado and there in Appalachia, where it seems like a lot of control is exerted by—EQT in that example is the largest natural gas producer in North America.

And so it’s like, well, XcL/Tug Hill has a relatively small footprint on both the upstream and midstream components. But then you dig a little bit deeper and you see, oh, wow. This is not—I need to credit Sharon with this work here. And you look at the contracts on how they get that gas process and it’s like, oh. In the panhandle of West Virginia, if EQT was to own those XcL Midstream assets, they would all of the sudden have a ton of control over that midstream processing space.

I’m anticipating some of the questions that we’re going to get about pipes. So I think I’m just going to go into that and stop there for questions.

TEDDY DOWNEY:  No, that’s perfect.

DANIEL SHERWOOD:  So the biggest distinction between, say, Appalachia and the Denver-Julesburg Basin is that Appalachia is what’s called pipeline constrained. And for those of our audience members who are not as familiar with energy, let me know if I’m using too many terms. And if I’m going too slow, I can speed it up with the industry jargon.

But the pipeline constrained nature of the Appalachian Basin is what makes it so unique. That’s why people, including us, are so tuned into Mountain Valley Pipeline, so on and so forth. Because the industry needs, wants, more pipeline takeaway capacity to export markets where it’s easier to make more money, it’s higher volume transactions for the most part, broad brush.

What’s different with Denver-Julesburg is they don’t have that same type of constraint. They have pipelines. The ones that we look at the most are the crude pipelines that take the crude out of the basin to Cushing. And Cushing is kind of the center of it all. There’s a ton and a ton of storage there. And it can take you to the Gulf. It can take you to refineries. It’s the nexus of a lot of the hydrocarbon industry, a lion’s share of the North American hydrocarbon industry.

So it’s those four pipelines, the Grand Mesa is owned by NGL Energy Partners. That’s the entity we wrote about two weeks ago and their board of directors member that they share with Martin Midstream. There’s Magellan-operated Saddlehorn, Tallgrass’ Pony Express, and Energy Transfer’s White Cliffs. Now, White Cliffs is a joint venture and so is Saddlehorn. And for anybody who is questioning—for starters, it’s factually accurate that there’s some available capacity on some of these pipelines.

Both Saddlehorn and Pony Express are 80 percent and 90 percent committed based on most recent security filings, respectively. Whereas, White Cliffs and Grand Mesa seem to have more available capacity. White Cliffs has been struggling, it’s kind of the legacy pipeline there. It used to be the primary artery and has been falling out of favor for various reasons. Energy Transfer just booked an impairment on the reduced demand. And so you have people who are saying, well, there’s not a competition issue here. There’s reduced demand on this main pipeline artery. If there’s a dominant producer and number two is feeling like they’re being outcompeted, then they can drill more and ship out.

And so to that, before we even talk about the ownership structure of these midstream assets, I’d say, well, that’s not necessarily—my response is that you can, if you have that much of a dominant market share, you could very feasibly contract with the midstream company in a way that would be anti-competitive for your competitors on the upstream side, on the producing side, for instance, without even owning the pipeline.

But then if you go a little bit deeper, it turns out that there is overlapping ownership. For instance, with Chevron. And as we pointed out in our article, and as I think is widely known throughout the public, is that Chevron is a huge company, they don’t own just upstream assets. So, sure, they’re just focusing this purchase on upstream assets. But how does that fold into the rest of their portfolio?

And to that point, that pipeline, the Saddlehorn, is a minority interest in a Chevron entity. It’s called Black Diamond Gathering. It’s a joint venture between Chevron and EnCap, that Chevron acquired through its Noble Energy and Noble Midstream acquisitions. They bought Noble Midstream out after buying Noble Energy, which was a large Colorado upstream producer.

So I think that’s a very pertinent fact here. Because while Chevron wants to emphasize, hey, we’re just doing these—we’re just going after these wells, kind of like how we looked into the Infineum/Entegris deal. It’s like the core mission of this Black Diamond gathering company, they say, is to work with producers to try to figure out how they can ship to Cushing. And Sharon highlighted language where they said a part of how we compete is our relationships with producers. And that joint venture is owned by a producer and its other partner is EnCap, the private equity powerhouse. I mean, EnCap has been tied to almost every major deal in the Permian. I mean, it’s incredible, EnCap’s reach. So I think these types of things lead us to think that there is a ton for regulators to explore in this instance. And that 30 day waiting period’s coming up. And yeah, we’re going to be watching.

TEDDY DOWNEY:  I would also add that I think in the past, this is the type of deal, historically, before the Khan era, that could easily just get waved through, not get a second request. But if you look at the new HSR form that was just put out yesterday, they’re acutely interested in market structure, vertical integration. So the idea that the FTC’s going to miss what Chevron owns, what EnCap owns. Again, EnCap private equity being involved is a red flag just unto itself. You know, that ended up being part of the story on Tug Hill that we dug into in terms of the overlap, interlocking directorate issues.

So I think a lot of what you’re saying seems right in the wheelhouse of this FTC, just in terms of the types of things that they’re going to be interested in. And we can see that by reading what was in the HSR form yesterday. Before we move on, I want to reiterate, if you have questions for us, you can actually put them in the app or enter them in the app, or you can email us at

DANIEL SHERWOOD:  I want to say two things because a subscriber asked this about refinery utilization before the call. So I want to address that really quickly. And then I also just want to flag, just as an amusing point, is that Magellan is undergoing a pending merger right now with ONEOK midstream. And if those two entities form merged, then now all of a sudden we’re talking about one of the largest midstream companies in the country.

So it’s an ever-evolving space. And I think that, Teddy, you hit the nail on the head that like in the past, these acquisitions would just roll through. I mean, just look, for instance, at the Chevron/Anadarko bidding war and then Occidental taking it. And then Chevron taking Noble Energy. And then Chevron taking Noble Energy’s midstream component. There’s been rapid consolidation in every one of these basins. And that’s a part of the commodity. I mean, that’s to be expected.

But I think what’s now a little bit different is looking at some of these structures and how do they interface with their competitors? Occidental has a huge exposure to White Cliffs through Western Midstream. So it’s kind of like the Charlie Day meme from “Always Sunny in Philadelphia”, you know? Like trying to get all these red pieces of yarn to connect. But it’s not a conspiracy. It is true. And there is exposure here. And I think it’s definitely worth probing.

And then in conclusion or my last point on this – and sorry, Teddy, today, I think you might have said we are receiving questions. I haven’t looked yet. But I just wanted to hit the refinery thing. So Colorado’s in PADD 4. That’s how the EIA sorts refining. In my opinion, you don’t even really need to get so far down the supply chain to look at refining in this instance. But I love looking at a map. And so, here I have the PADD 4 for EIA map up on my computer and you’ll notice—and a very acute subscriber of ours correctly identified this in a different discussion that we had. But it appears, at least on this map, that the only refinery in Colorado here is Suncor Energy with roughly about a 100,000 barrel capacity. But here’s why I’m not really that taken by what the utilization rate there looks like and who’s selling the crude there for the following reasons.

One, the fact that it exists, I think, further galvanizes our point that this is a market unique to itself. Because here you have the four crude pipelines that are sending the oil out of Colorado to get processed and refined elsewhere, and then possibly having that option to stay in basin, stay in the state and get processed and refined there. So you’re going to be earning different margins and dealing with not Suncor, for instance, if you’re shipping it to Cushing for the most part. So I’m not as concerned about whether or not there might be a refinery issue there just because there are a number of producers, so on and so forth. But the fact that that’s an option I think makes the market even more unique.

TEDDY DOWNEY:  It’s more obviously a regional market in some respects. Because if you have access to that refinery, your costs, your economics, are going to be different than if you have to use the pipeline.

DANIEL SHERWOOD:  That’s exactly right. And so, yeah, they show Texas Panhandle can supply. Kansas can supply. It looks like Canada can get down there. So, I think this is where you have some of the dissidents being like, well, it’s a connected international market. And it’s like, yeah, well, with these nuances, right? So it’s like where are you going to buy it from? Are you going to take it off the pipe from Alberta? You know, that’s just me being generally speaking. Albertan crude is really unique. So I’m not sure what that refinery technology is like there in Denver. But that’s something that we can discover. Right now, I find it much more compelling and I’m much more keen to learn more about these midstream contracts and the relationships with their producers in principally Weld County.

TEDDY DOWNEY:  Okay, great. I think there’s clearly a lot going on in this merger. There’s a lot to dive into. They put the EQT/Tug Hill deal into a second request. It’s kind of hard to see this not getting a second request, just given the size of the companies, everything that we’ve found. So was there anything else on the deal that you wanted to touch on before we move on to our ESG topic?

DANIEL SHERWOOD:  No, nothing from me. Sharon and Julia, you all good? Okay, great.

TEDDY DOWNEY:  So we continue to write about ESG and FirstEnergy and how their ESG issues are leading them to get kicked off and then likely be kicked off certain ESG indexes. And I would love for, Daniel, you and the team, to walk us through the latest on the FirstEnergy investigation and how that’s shaping how we’re thinking about ESG and how it’s particularly problematic for FirstEnergy.

DANIEL SHERWOOD:  Great. Thank you. Yeah, I’ll do two quick notes and then I’ll turn it over to Sharon and Julia. And apologies for hogging the mike for the first one. And thank you again, Sharon and Julia, for all the help on both this file and the last. The dissidents on this one have said the following things. One, if it’s an actively managed fund, they would have already divested FirstEnergy. And that’s factually not the case. We’ve demonstrated that that’s incorrect, that there have been actively managed funds who far after the bribery scandal became public, far after the agreement between the feds and FirstEnergy, they remained exposed. So for starters, that demonstrates that there’s something to be written about here.

The second kind of pushback is like, okay, well, what about these passive funds, you know? That’s baked into it. You can’t get ahead of that. And that’s also not what we found. And that’s why we focused on these indexes. Because these indexes operate on relatively binary filters and screens, for instance. And what we found, our team, credit to Sharon and Julia, found a discrepancy in those filters. And that’s how far ahead of this we are.

And then in our most recent piece, we discussed kind of the nuance of regardless of these filters, there are other things that I think are concerning to an ESG investor when you really look at how these indexes are formed. So, Julia, if you want to walk us through what we found on the index side and the distribution side of things, that would be awesome.

JULIA ARBUTUS:  Yeah. This is a continuation of what we foregrounded on our last call, where we found Sustainalytics, an ESG ratings firm, updated one of their coal revenue numbers for FirstEnergy, which made it ineligible for a number of indexes or funds that track those indexes.

We did a broad survey of funds, and then we worked backwards. We went from the fund level to the index level and looked at funds and indexes that track FirstEnergy and found just at a baseline that there’s at least 18 indexes across S&P Global, MSCI and FTSE Russell that because of either Sustainalytics’ reevaluation of FirstEnergy’s coal revenues or because of other methodologies that these indexes hold themselves to, at their next evaluation, they should be dropping FirstEnergy. And that immediately touches about 30 funds, I believe. And they’re funds that have names like “Fossil Fuel Free” or “Excluding thermal coal,” which is really interesting because FirstEnergy does receive at least 10 percent of its total revenues from direct ownership of two coal power plants.

TEDDY DOWNEY:  Okay, great. Just placing this in terms of how we are thinking about FirstEnergy going forward, we’re going to see them increasingly get dropped off these indexes. And just to bring back that point that you were talking about, Daniel, for people not following it quite as closely, what are some of the things that, if you’re an ESG investor, you actually should be paying attention to? In addition to this, I’d say the sort of ESG funds that just invest in things that pass the screens, which can feel pretty arbitrary at times. We’ve discussed this in the past. It’s not exactly the most rigorous process. But FirstEnergy is failing that not very, I think, high bar.

So, what should we be expecting going forward? I don’t know, Sharon, if you want to chime in, but what are some of the things that we’re seeing that a really conscientious investor going above and beyond the screens might be concerned about?

DANIEL SHERWOOD:  Yeah, Sharon, I’d love it if you kind of demonstrated Signal Peak because I think that’s a perfect case study here. I think to Teddy’s question, what to expect is to continue to see funds drop FirstEnergy, to continue to realize that it’s not investable and regardless of the screen, that it’s not consistent with the UN Global Compact, for instance, a number of different reasons.

The thing that was most striking to us on that 10 percent revenue figure was how fluid these evaluations can be. You know, the fact that percentage could go from a 2.5 to a 10 percent in a year is kind of interesting, even when they’re trying to kind of make those numbers fit for those screening metrics themselves. But specifically, as that metric demonstrated to us, that doesn’t consider its distribution unit, which is its—FirstEnergy is a utility. Utilities make money by giving electrons to consumers. FirstEnergy’s footprint, and the footprint that it distributes those electrons from, rely heavily on coal, 20 to 40 percent, depending on how you want to count it and where you want to look. And the fact that more than half of this company’s primary way of making money is not counted as far as how it gets generated, whether or not it’s coal, nuclear or otherwise, is ludicrous.

And it’s, in my opinion, in complete contrast with the entire kind of implications of what it’s supposed to be doing here. Because in reality, this product is offered because the more equities that it can give its clients exposure to, the better. The problem is going to be when those investments don’t end up performing well, in the event that these are material risks to these companies, which we’ve demonstrated they are. And so generation versus distribution is one place that we like to look at. And Sharon, can you take it away on Signal Peak? And then anything else you want to say about the snowball effects?

SHARON KELLY:  So what we’re watching to see is—what we were watching in real time really, with Sustainalytics doing a revision and potentially other data providers and in-house analysts, it’s sort of the alignment of ESG data with FirstEnergy’s own disclosures. And what we see in watching that process unfold is that, if you look at FirstEnergy directly, their securities filings, you see a company that’s fundamentally deeply dependent on coal. But if you look at it from an ESG data metrics standpoint, what you see is that a lot of that involvement looks like it’s off the books, so to speak, from the viewpoint of widely used ESG data providers.

So when it comes to Signal Peak, for example, if you listen to earnings calls from FirstEnergy, what you hear is what their interim CEO described as the way that Signal Peak, which is a coal mining company, took on a higher profile for FirstEnergy over the past year, and he mentioned that they were hoping to do to reduce Signal Peak’s contribution to FirstEnergy revenues down from about 15 percent or so.

And then we’re looking at ESG indexes and funds that say they eliminate all coal mining involvement from their portfolios.

We had one data provider cite to us some of the accounting treatments that they sort of like assess those Signal Peak holdings using, and that involvement basically all but disappears under the methodologies that analysts at, for example, S&P use to assess, how involved is FirstEnergy in coal mining?

And what that does at the end of the day is it puts the funds that have relied on that data into a position where—they’re accountable to their investors, right? And you have investor expectations that are formed, created, informed by the fund’s marketing, right? And you have fund mandates that are tied to ESG. You have this marketing. And that potentially exposes the fund at the end of the day to perhaps regulatory scrutiny or even penalties. And so that’s sort of how this all sort of flows downhill.

TEDDY DOWNEY:  You know, what I think is really interesting about the Signal Peak thing is if they don’t crack down on this type of thing, if this doesn’t become something that either regulators or the index funds or, hopefully, there’s some reaction to our reporting. But if they don’t do anything, it will become a strategy for other people to sort of like, let’s come up with some JV that we can keep off the books so that we still are investing in coal and making money off of it, but we’re not getting dinged for it.

And so I think these loopholes, these strategies, are going to be super important for journalists like us to be pointing out. And, look, I mean, it’s interesting one way or another. Are you going to actually be able to get away with this or not? And I think that ultimately sends a signal to the market.

We’ve got one last question, Daniel, at the end of the call here. I think we sort of addressed this already, but I’ll ask you and you can see if you have any additional thoughts. We talked a little bit about this in the contracting discussion. But can you talk about exactly how the Chevron merger can harm other players if they are bigger? What exactly can they do when the product is ultimately a commodity with a price in Cushing that is constrained by other product mixes? How can they actually foreclose others profitably? So I know we’re going to be looking into this, obviously, the specifics. But any thoughts on hypotheticals about what they could be doing?

DANIEL SHERWOOD:  I like the use of the word exactly. Thank you for thinking so highly of us. These last couple of questions, how can they actually foreclose others’ profitability, I think is what that intended to say. And there’s a number of different ways.

So when you talk about harm to other players, I think we have to talk about, which players are we considering? So you can talk about the upstream producers being a player. You can talk about the employees of these companies being players. You can talk about midstream companies being players, whether it’s exposure to gathering, transmission or processing. And you can talk about refineries. And you can talk about consumers. So all of these different groups of people I think could be considered a player in this equation, can harm other players once if they are bigger.

So I’d say, let’s just imagine there’s three producers in a close area in Weld County. That’s the prized area right now, the Denver-Julesburg. And if those three players then just become one and two players, there’s ways that you could change your drilling plan. There’s ways you could change your acreage plan. There’s all sorts of different things that you could do that could impact possibly your competitors. Or you could keep people out of that acreage, I guess.

I feel like there’s too many listeners for me to just kind of riff on random hypotheticals, especially because they said exactly. So if you want specific companies in a very specific pipe, you know, I’d be happy to kind of whip something up like that. I think right now we’re at the stage where there’s so many different overlaps, that it’s very, very clear, based on that dominance, that whether it’s competing with fellow upstream producers on acreage or access to a pipeline or something like that, I think those would be the two most clear to me, especially that pipeline access point, given the fact that Chevron has a greater awareness of what those markets look like due to their direct ownership into those pipes.

So if you’re the largest producer in the region and you also own, in part, an important asset that will transport that commodity out of the region, that gives you a competitive advantage over your competitors, does it not?

TEDDY DOWNEY:  Yeah. I mean, are you going to give yourself better terms on that pipe is a pretty , I think, poignant question. And I think we’re going to learn a lot more about this as we keep digging. But what do the contracts look like, to your point about having access to that refinery, right? If you’re the biggest player, if all of a sudden, you’re just like way bigger than everyone else, are you going to get preferred access to the refinery? I don’t know if that ends up being an interesting question, but there are a lot of ‑‑

DANIEL SHERWOOD:  Or in Cushing. I think this point that is in the second question here is one that gets levied often in the upstream space. When ultimately a commodity with the price in Cushing is constrained by other product mixes, I think what’s meant by that is that Cushing is getting oil, like we were saying, from all sorts of different places. But I think that again demonstrates that one of those places being the Denver-Julesburg, if you ramp or decrease that output for whatever reason, it’s going to impact that overall price, you know, quite obviously. Just objectively, that’s the case.

And so does that benefit Chevron downstream because of exposure to a storage terminal? Or does it benefit Chevron’s Permian footprint? And I’m saying if. I don’t know. And I’m not accusing Chevron of anything at this stage. And I get that the question is “exactly”. And we will endeavor to demonstrate more clearly those exact pinch points. And I think the thing that’s, I think, most compelling about this is that there seems to be so many now in the supply chain. And it’s kind of all because these things all input to one another a little bit. You know, as we see all the time, especially in extreme weather events or ruptures or when there is a supply issue, when these things happen, these markets are highly volatile and you can reap an incredible reward if you’re positioned in the correct way and at the right spot of the contract. And so the more insight you have into that market, along with the control, the more likely it is that that power be leveraged in your benefit in a way that’s anti-competitive.

TEDDY DOWNEY:  What’s interesting about this also is this question is it’s really primarily about a vertical case. But the facts here, if they can reasonably define the market regionally—which I think we spent a lot of time today covering how there are regional aspects to competitive dynamics in this market—there’s a horizontal overlap. I mean, there’s just a straight up horizontal problem here from a market share standpoint. So you’ve got the horizontal overlap, if you define the market regionally.

And I guess are we going to look at—one of the things that came up in EQT/Tug Hill, the natural gas liquids market—are there any other like weird byproduct markets in this space that are kind of regional or that could be regional? I mean, that was really interesting to learn about on EQT/Tug Hill. Is that something we’re going to be looking at as well? Because that was another thing that was pretty regional. That was like really easy to define regionally, I think.

DANIEL SHERWOOD:  That’s right. And good question. And something that we got asked about. I know at least a few subscribers were looking, for instance, as it relates specifically to the NGL market in Colorado as well. So, yeah, and that’s exactly what I was thinking of too, that there’s multiple commodities things to be considered here. There’s natural gas, natural gas liquids and crude. And the White Cliffs pipe, for instance, right along the same route, runs an NGL pipe.

So yes, to your question, there’s a mixed commodity stream. I’ve been focusing on the crude part of it just because that’s more where Chevron and PDC’s business model is centered. But that doesn’t mean that they don’t profit off of natural gas and natural gas liquids. And again, it’s also a market unto itself. I mean, if you look at natural gas pricing hubs, you see one just right there in Cheyenne, just north of Denver. So, these commodities are moving all over the place. And this is a very important basin to the national market and does inform.

I guess that’s the thing that makes me kind of make me scratch my head about this notion that—because we’ve got the same thing with NGLs. It’s like, well, you know, you feed those NGLs into other markets. Thus, the Appalachian NGL market’s not regional. And I just don’t see it that way for that reason. If they’re fed into another market and they’re trading at a different price, then that demonstrates that that other market that is doing the feeding is different, right? I mean, because if conduct changes in that other market, that’s going to then impact the larger market. That’s where this international, and in this case, this hub is, you know?

TEDDY DOWNEY:  Yeah. The last point I’ll make, and we’ve got a question about labor monopsony. The analysis shows they’ll have 25 percent of the production in the area. There are studies showing that you start having monopsony issues at 20 to 30 percent, as low as 20, more typically closer to 30. So it’s kind of right in between where you start to see monopsony effects. So that could be something interesting to look into as well. I know we got a question about that. We haven’t dug into it. But based on our numbers, that could be an interesting place to look.

Again, that’s going to be particular to workers in Colorado. If you’re talking about a market, you know, again, if you’re thinking about these markets differently, like the FTC, they have regional aspects beyond just the commodity price, I think.

So I think we’ve talked about this a lot. We got all the questions. I don’t see any other questions in the queue. But, team, thank you so much for taking the time today. I’m very interested in both this deal and the ESG investigating that we’ve been doing. So I really have learned a lot. And appreciate you coming on and talking with the audience here. And thanks to everyone for joining the call today as well. Thanks again, Daniel, Julia and Sharon. All right. This concludes the call.