JAMES HILL | CEO of MCF Energy
JAMES HILL | CEO of MCF Energy
What is the energy sector? How have tensions with Russia impacted global energy markets, and how can Europe's energy security be strengthened amidst conflict, uncertainty and the renewable energy revolution. My guest in this episode is James Hill, CEO of MCF Energy. With over four decades of experience in the industry, James Hill provides valuable insights into the current state of the sector and the transition toward renewable resources.
While the world is moving towards renewable energy, James Hill highlights that the transition will take time. The existing infrastructure and industrial base heavily rely on oil and gas, making their continued usage necessary for the foreseeable future.
The current industrial and petrochemical base requires production of gas and oil. Oil products are found in everything we use. Everything from plastics to lipstick, these are hydrocarbon based. There are so many products that people don't realize they utilize every day. It's not just gasoline or oil in your car. A lot of the fabrics that are made and products that are being utilized are petroleum based.
James' expertise as a geologist and developer of energy production and his experience in exploration projects across Europe and North America position him well to contribute valuable insights about the energy sector and developments in Europe.
James Hill is a leader in global energy - specializing in exploration projects across Europe and North America. He holds over four decades of combined professional and technical experience and has led many successful projects, including a massive exploration campaign across six countries.
A geologist by trade, James earned his Master’s of Science in Geology from California State University and holds his P.Geo designation and is a Chartered Member of the London Geological Society. .
To date, he has led the growth of several companies and scaled energy businesses through the M&A process and the development of strong go-to-market strategies.
He has a strong track record in European exploration, and is well-known for having grown the continent’s largest heavy oil field by 40x. He is responsible for leading one of Europe’s largest exploration projects and increasing oil production by 2000%.
James served as the President of Professional Affairs for the American Association of Petroleum Geologists (AAPG). He joined MCF Energy as President and CEO in December 2022. .
James is working to drive change and through MCF Energy, a gas and oil exploration and production company, he is dedicated to strengthening Europe’s energy security in light of the Russia-Ukraine War. MCF is working to create a lasting impact in Europe by working to develop its internal resources and infrastructure. The company currently has two exploration projects underway in Austria and Germany.
Prior to MCF, James was VP of Exploration for both BNK Petroleum and Bankers Petroleum.
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The current industrial base and also petrochemical base, you know, requires production of gas and oil. I mean, oil products are found in everything we use. You know, everything from plastics to lipstick, you know, these are hydrocarbon based. You know, there are so many products that people don't realize they utilize every day. I mean, it's not just, you know, gasoline or oil in your car. You know, a lot of the fabrics that you know that, that are made and products that are being utilized are petroleum based.
Hi, and welcome back to Stocks for Beginners. I'm Phil Muscatello. What is the energy sector? How attentions with Russia impacting global energy markets, and how can Europe's energy security be strengthened amidst the Russia, Ukraine conflict? I'm pleased to be welcoming James Hill to the podcast. Hello, James.
James (1m 5s):
Hi, it's good to see you.
Phil (1m 7s):
James Hill is the EO of MCF Energy. James is a global leader in the energy industry with over four decades of combined professional and technical experience specializing in exploration projects across Europe and North America. He's also a geologist by trade and is a chartered member of the London Geological Society. So Jim, how did, can I call you Jim? Is that okay?
James (1m 28s):
Oh, yes, absolutely. Not a problem.
Phil (1m 30s):
Okay. How did you become interested in geology in the first place?
James (1m 34s):
Oh, my love of geology really started in college and it's been an absolutely wonderful career, and one that I'm very proud of. Being a geologist is similar to being a historian. We read the history of the earth in the rocks and build an understanding of how the earth evolved and its environment over geologic time, which has changed pretty dramatically.
Phil (1m 57s):
So how would you define the energy sector? And just keep in mind, this is stocks for beginners, this podcast. So I'd like to go back to first principles and discuss how the stock market works and we're, we're looking at the energy sector. So just give us a bit of an overview for beginners about this sector.
James (2m 15s):
Well, the energy sector has been dominated by oil and gas for a long time. I mean, decades and decades obviously. But it's really grown to encompass wind and solar, hydrogen and other renewable energy resources as we move towards a transition to a lower carbon environment. Its dependence on oil and gas, however, as an energy source, which, you know, started at the, you know, beginning of the 19th century almost has continued and, and will continue for really the foreseeable future as these new technologies begin to take over.
James (2m 57s):
The dependence on, on, on oil and gas and other carbon fuels will, will decrease over time. But, you know, technology has to catch up and, you know, and supply the energy that, that the world requires.
Phil (3m 12s):
And for most people, a company like Exxon would be one of the larger players in this area, wouldn't it?
James (3m 18s):
Well, they've got the money to, to throw away, so to speak. You know, whenever you're developing a new energy technology, for instance, the battery technologies, you know, lithium ion batteries and, and whatnot are fairly new invention. And, you know, energy storage itself really hasn't advanced very much over the decades. And this is something that's gonna have to be discovered, assuming you really want to bring renewable energies like wind and solar, you know, to the forefront, because let's face it, the wind doesn't always blow and the sun doesn't always shine.
James (3m 59s):
So you've got to, you've gotta find a way to store that energy.
Phil (4m 3s):
And what is the size of the energy sector, as it say, as a percentage of the s and p 500?
James (4m 10s):
Well, as a percentage of s and p 500, it's, it's a, it's a significant amount. I can't quote a number because I'm not a, not a
Phil (4m 21s):
C F O.
James (4m 22s):
Well, I'm, I'm, I'm, I'm basically, yeah, I'm not, I'm a C E O not a C F O. And really the, the energy sector itself has recorded the highest market capitalization over this last year. The energy market capitalization has grown 30% from March of 2021 to March of 2022, far outpacing any other sector with energy, a man constantly growing and, and us coming out of the covid lockdowns, it's really, really started to, to expand. And of course, the need to transition to cleaner energy sources and systems. You know, this market will only continue to grow.
Phil (5m 3s):
So what are the energy challenges facing Europe at the moment? I mean, that's pretty obvious about, that's all about the war, but from your point of view, what are these challenges?
James (5m 13s):
Well, let's face it, the, the war in Ukraine is the gorilla in the room. The new report from the International Energy Agency found that Europe could face a natural gas shortage of over 27 billion cubic meters in 2023. That's equivalent to nearly 7% of the region's annual energy consumption in assessment of the International Energy Agency found that the supply gap of over 57 billion cubic meters of natural gas to the European Union over the course of 2022. And if the conflict continues, you know, Russia could, you know, cut that off entirely.
James (5m 54s):
Now, the mild temperatures of this winter may not continue into next year, and the market for natural gas will also be shaken up as China's economy gathers speed, again, as covid restrictions are lifted. So there's, there's really some significant energy challenges to Europe. And of course, Germany just recently shut down their last nuclear power plant, which of course has, has dropped their ability to produce clean energy dramatically. Very few people realize that Germany has 63 coal-fire power plants, and of course, those have been brought online severely impacting their carbon output.
Phil (6m 35s):
And what was the impact of the Nord Stream pipeline? Some would say sabotage.
James (6m 40s):
Well, you know, the sabotage itself wasn't too significant because Russia had cut off the supplies. But, you know, the, the idea is, is that as the conflict winds down, the destruction of those two pipelines is gonna impact, you know, Russia's ability to continue to supply energy into Europe. And of course, the other major pipelines, a lot of those run through Ukraine. Hmm. So, you know, the idea is, is that, you know, this is not something that's gonna be fixed tomorrow. This is something that's gonna continue forward. You know, as you know, we struggle out of this conflict back into a, a normal, well more normal energy demand and supply situation.
Phil (7m 24s):
Hmm. So how's MCF energy approaching these challenges?
James (7m 29s):
Well, MCF Energy is aggressively pursuing projects focused on the development of natural gas resources in Europe, because Europe's been drunk on energy from Russia, the energy resources present within the borders of Europe have really been underfunded and, and primarily ignored for over 40 years. Many, many projects that even those that got drilled were found to be uneconomic because of the price that Russia kept, you know, energy resources at specifically designed to discourage energy development within Europe. Because of this, there were many high quality projects that M MCF could acquire and develop.
James (8m 12s):
Plus e the EU is finally recognizing that the safest and most secure energy resources that you know are available are those found within the European Union borders. So M C F has been a first mover in this particular area. And we're, we're, we're currently very aggressively developing projects within Europe. Yeah.
Phil (8m 37s):
Because we don't usually think of Austria and Germany as places as sources of oils. And you, you, you said that it's because Russia has provided so much, so much energy up until now, but prior to that, wasn't there development of these resources prior to this situation?
James (8m 52s):
Well, there's, there's been, there's been always energy developed within Europe. Hmm. You know, if you remember, Romania has been an oil and gas producer for a very long time, well before World War I and World War ii. Hmm. But really, all the current energy supplies within Europe are used in Europe, and those supplies do not come close to what these countries require. So from the standpoint of worldwide energy supply, the European energy really doesn't register on the global markets because they don't export. They use everything within their own borders. And it's, as I, as I said, because of the imports from Europe, you know, these supplies have only dwindled because of the fact that there hasn't been any significant development programs.
Phil (9m 48s):
Are there any different regulatory challenges in Europe as, as opposed to other jurisdictions?
James (9m 53s):
Well, they, that has been another problem. You know, of course the stampede towards renewables has discouraged the, the development over the years. I've been exploring Europe for over 10 years, and really, I, I think that I started 10 years too soon. You know, we had, we had drilled six wells in Poland and found some significant energy resources there that we just couldn't develop because of, you know, both, you know, the, the political situations at the time. That's just what happened. But for instance, our, one of our partner companies in Austria, ADX just got a well permitted and drilled within six months, which is unheard of 10 years ago.
James (10m 44s):
So, you know, they're, they're beginning to realize that, you know, hey, look, you know, we've gotta have our own energy supplies because this is the second time Russia has used energy as a weapon.
Phil (10m 56s):
And so you're seeing that now where governments are starting to change their attitude towards exploration within Europe's borderers.
James (11m 4s):
Very much so. Even in the, in, in the permitting and also in the application process for obtaining concessions to explore. You know, both of those have been greatly accelerated.
Phil (11m 17s):
Can you give listeners an overview of the process from exploration through to profitable production and how long it takes?
James (11m 24s):
Well, you know, this, this is an interesting question. Exploration prospecting for energy really begins in the mind of the Explorer. Hmm. It's a process that encompasses both innovation and research into the earth's past and processes. Once an area is defined, technology comes into the picture to make clear the geologic history and current structure of the earth before you ever select a drill site. The excitement of drilling and the results is really hard to, to describe, but it's very rewarding when you've discovered that something that Mother Earth has, has kept hidden for all geologic time.
James (12m 6s):
As an explorer, you're the first one to find it, the first one to, to find that, that hidden treasure. Of course, once it's discovered, the process of bringing that resource to market is just a matter of how close it is to market and how you're gonna get it there. And of course, the economics involved.
Phil (12m 24s):
So it's to do with pipelines and shipping. I, I assume, and the, and closeness to those kinds of, well,
James (12m 28s):
E exactly. As well, for instance, yeah. For instance, offshore development, you know, from actual discovery to actually a product reaching a household could be years. Whereas our focus, you know, which is primarily on shore, you know, we can bring product to market within months, depending on proximity to pipelines and whatnot.
Phil (12m 52s):
So is it really, like they used to show in the movies a gusher like you, you drill the well, and suddenly all this oil starts gushing out.
James (12m 58s):
Well, that's what I love about Hollywood is they like to get everybody excited. But no, that's not the way it's done.
Phil (13m 5s):
You are in, you are in California after all.
James (13m 8s):
Well, you know, it, it's not just California. It's everywhere in the world. Let's face it, if, if oil comes to the surface and blows up over the top of the rig, that's a very bad thing. That's a, that's a very bad thing. And the idea is to, is to control it and, and feed it into a pipeline, not spread it all over the ground. You can't, can't sell something to spread around on the ground.
Phil (13m 33s):
Hmm. So we've spoken about government and how they've changed their prioritization. How about the energy sector itself? How is it responding in general to the Russia, Ukraine conflict?
James (13m 44s):
Well, you know, the, the energy sector itself has responded as you would expect, as the price of energy has gone up. The activity level has gone up in, in most areas, except for areas like Romania, where they've put on a windfall, profits tax, you know, basically oil. You know, money is your lifeblood. If you, if you don't have money, you can't explore, you can't drill wells, you can't build pipelines. You can't bring, you know, bring the product to where it's needed. And, and then, you know, that's, that's a problem. I mean, a lot of people will cite the, the large profits that, that, you know, oil and gas companies are currently experiencing.
James (14m 31s):
But they also have to realize that, you know, all of that money is needed to explore for new energy and, and bring it to market. You know, you, you know, it's not something they don't just put in their pocket. They put it back into the, into, you know, development drilling and, and also into the local communities where, you know, you're hiring people to work for you. And those people go out to grocery stores and, and they buy homes and they contribute to, you know, the local communities.
Phil (15m 3s):
What's the regulatory environment like in the United States at the moment for the energy sector? Is it different to Europe?
James (15m 10s):
Well, in, in the United States, it's a lot different in that, you know, your mineral resources primarily are owned by individuals in Europe, all of the energy resources are, are owned by the governments. You know, if you're a European and you, you buy a ranch or, or a plot of ground, you don't own the energy resources underneath it, you own the surface. In the US it's not that way. You know, you own your surface and you own your minerals. And part of the process that we faced was to go out and lease those minerals before you could drill. Of course, one of my joys is to go into areas that have been, you know, relatively economically depressed and to bring wealth.
James (15m 59s):
In other words, one of the things that we do is to find wealth. And for instance, in Ardmore, Oklahoma, we made a discovery. And if you had a hundred acres of land and we found oil and gas on it, your royalties were significant and life changing.
Phil (16m 20s):
Where did those royalties go to? Is it to local government, state government, federal?
James (16m 25s):
Well, in, in Europe, of course, it, it, it goes to the federal governments, but of course, the local community, the local governments also get a, get a cut of it. It really depends on the country you're in. And, and the structure, of course in the US where the mineral holders have, have the percentage, it goes directly to the owner of the minerals, of course, with taxes and whatnot for, for the governments.
Phil (16m 52s):
Hmm. So whatever happened to peak oil?
James (16m 55s):
Well, peak oil was a concept back in the eighties, and the idea was that the, the demand for energy was going to outstrips its supply. And, you know, they had really originally projected peak oil back in the 1980s. Well, of course, they didn't really factor in technology. You know, technology has really increased our access to resources greatly. And also the increase in price has allowed us to go out and produce energy resources, which quite frankly, we're out of reach because of low price.
James (17m 35s):
So it's been a stair step where, you know, as prices went up, it allowed us to apply more technology and develop more technology. And of course, as we found more, the price would go down and, and, and kind of a flip flop, if you know what I mean. But now peak oil is different in that as renewables come into play, peak oil is actually where demand will be reduced, and the supplies will actually be more than the demand. So peak oil is now where demand will be reduced. So now it's, it's more the demand, which is gonna peak, you know, the demand for, for oil and gas will be reduced by renewables until finally that will be the peak production.
James (18m 27s):
There'll still be oil and gas available. It's just the demand for it will decrease.
Phil (18m 34s):
And how long are you projecting that kind of process to take place for?
James (18m 39s):
It'll, it'll, it'll take decades. Let's face it. The current industrial base and also petrochemical base, you know, requires production of gas and oil. I mean, oil products are found in everything we use, you know, everything from plastics to lipstick, you know, these are hydrocarbon based. You know, there are so many products that people don't realize they utilize every day. I mean, it's not just, you know, gasoline or oil in your car. You know, a lot of the fabrics that you know, that, that are made and products that are being utilized are petroleum based. People don't realize just how pervasive it is in, in our daily lives.
Phil (19m 23s):
Yeah. It just doesn't look like the stuff that gushes out of the ground, does it?
James (19m 27s):
No, no, no, no. They, they, they, they change it pretty radically.
Phil (19m 34s):
So people who might be interested to invest in the energy sector, what are the best ways to, or, or how would you advise someone to approach the energy sector that might becoming a little bit interested in it?
James (19m 48s):
Well, you know, let's face it, in, in this current economy where inflation is, is such a problem. There are few constants that, that people can point to. And the world demand for energy will continue to increase as population grows and economies recover from the pandemic lockdowns. Hmm. You know, also, the development of third world countries will accelerate this demand, you know, as people start to utilize propane instead of wood to cook. As, you know, the demand for electrical energy, which of course is, is produced by, you know, the, the burning of of fossil fuels, you know, increases, you know, the demand for energy will increase.
James (20m 35s):
And, you know, these energies, you know, will not be met by renewable technologies for many decades. And the demand for clean natural gas and oil will continue for what I think is my foreseeable future. In any case. And let's face it, inflation is a fact of life. If the current economic policies continue. So the security of any investment in in energy will continue, will for the foreseeable future,
Phil (21m 2s):
You refer to the effective supply and demand on the price of energy. And that's because it's a commodity, isn't it? Energy is a commodity Absolutely. And responds to the same forces, doesn't it?
James (21m 16s):
It does, absolutely. Well, supply and demand is, you know, the driving force with any commodity. And the more of it is out there, you know, the, the lower the price is going to be, and the higher the demand and the lower the supply, the, the higher it will be. Let's face it, lithium is, is an, is an example where, you know, before lithium ion batteries were around and they decided to put them in cars, the price of lithium was very stable. Well now it's, it's increased radically. The same thing with the, the other resources that are required. Nickel, cobalt, I mean, you know, the cobalt primarily comes from South Africa that were Africa and, you know, mined by children.
James (22m 3s):
Mm. Yeah. And, and this is, this is something that, that, that a lot of people don't realize. Demand for copper, for instance, has greatly increased due to, you know, just, you know, the electrical nature of, of cars now. So, you know, oil and gas is no different. It's, it's a commodity. And, and the more we find the cheaper it'll be. Yep.
Phil (22m 27s):
And that's where you have also referred to technology is that if a technological development takes place and then supply can be increased as well, that will reduce the price of the commodity.
James (22m 40s):
Yeah. The energy in industry continues to involve new technologies, you know, and the oil and gas industry is only, is only number two to the nsa, to the use of computer technology. The 3D technologies that we use and visualize are, are tremendously intensive in computing power. And now computer technology and ma machine learning has, has also come into play where, you know, it used to be 3D seismic was, you know, a great help to us, but everything we drilled, we we could see visually. But there's so much more information in the 3D volumes that are acquired, the, the remote sensing volumes that now machine learning is going in and, and seeing those additional data points that we can't see with our eye, but directly relate to the occurrence of, of gas in the subsurface.
James (23m 40s):
Hmm. I mean, it's, it's really revolutionary to the industry. There will be more discoveries made just because, again, the increase in technology.
Phil (23m 49s):
Are there any other developments you're looking forward to over the next decades?
James (23m 53s):
Well, you know, I, I couldn't envision machine learning 10 years ago. So, you know, when you're actually looking at where the technological advances will come from, there will be more, there's no doubt about it. You know, as we increase our ability to acquire remote sensing data and our ability to understand it and process it, there'll be more significant strides made in the understanding of the earth and, and how to explore it.
Phil (24m 24s):
So how far off are we from the, the wells in Austria and Germany producing?
James (24m 29s):
Well, we have two wells planned for the fourth quarter of this year. One of them will be in Austria and there'll be another one in Germany. These are high impact wells. If they hit, you know, they will be significant impact to the company and they will both be able to be put online pretty quickly. The pipelines are within reach in fairly easy reach and in, in, in one case. And they should come to market we would imagine in early 2024.
Phil (25m 3s):
So tell us a bit more about MCF Energy, about its history and, and also its performance.
James (25m 8s):
MCF Energy is, was founded less than a year ago. I have been involved in my career with a group investment group out of Canada. In fact, most of the companies that I've been involved with were actually Canadian in formation. And the people who built and funded those companies basically came to me and said, Hey, look, we've got a crisis in Europe and we see a change in the attitude of the European governments. For instance, the EU has now declared natural gas green and a transition fuel to renewable energy sources, which of course is, is huge.
James (25m 50s):
So these are people that I've been involved with for decades. They've built very successful companies. Bankers Petroleum that I was VP of Exploration for was, you know, reached over 2 billion in net market value, starting from basically where M C F energy is right now, with the backing of, of these individuals. I was happily retired for a number of years, and it would put it this way, only these people and their involvement was the reason why I decided to come out of retirement and help drive MCF energy forward in the short period of time that, that we've been in existence, we put together a very strong management team and a technical dream team.
James (26m 34s):
Really. I mean, I, I talked about some of the advances in remote sensing technology and, and machine learning. I've got the best, I've got the best on my team in advising us in this, in this period of time, we reviewed over 20 projects in Europe. We, we've selected two, you know, the Austrian asset of course will be drilled hopefully this September. And the German company that we've acquired called genco, we actually bought the company. So now we're an operator in Germany. We have four concessions there. We've got a well going down hopefully by the fourth quarter. And we have many, many applications in for more concessions, you know, related to our German assets.
James (27m 19s):
So we've been very aggressive moving very, very quickly to acquire and exploit these very valuable assets that have been languishing for decades.
Phil (27m 29s):
So where is MCF energy listed and and what's the, the code?
James (27m 34s):
We are listed on, of course, the tsx. We're now in the over OTC market in the US. We're also listed in Frankfurt on the European Exchange. And if people want to know more about MCF, they can go to our website, mcfenergy.com. There's a lot of information about our current projects and, and where you can find us on the market.
Phil (28m 0s):
It's fascinating. James Hill, thank you very much for joining me today.
James (28m 4s):
Thank you very much, sir. I appreciate your interest.
Chloe (28m 7s):
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