About a decade ago, fracking technology reached a tipping point. Tons of untapped oil became harvestable, and companies with massive swaths of money clamored to collect them. And how have those companies done for investors? Pretty terribly, unfortunately. In this week's episode of Industry Focus: Energy, host Nick Sciple and Motley Fool contributor Jason Hall explain what happened in the exploration and production industry and why investors would probably be better served focusing elsewhere.

Learn what to watch out for with management incentives, how the price of oil has played in, what the last 10 years can tell us about the future of energy, and more. And, on the off chance you're still interested in E&P stocks, stay tuned for some recommendations that mitigate some of the industry's biggest risks.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.

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This video was recorded on Aug. 22, 2019.

Nick Sciple: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. Today is Thursday, August 22nd, and we're discussing U.S. shale exploration and production companies. I'm your host, Nick Sciple, and today I'm joined by Motley Fool contributor Jason Hall via Skype. How's it going, Jason?

Jason Hall: I'm very, very good! I just want to go ahead and get a "go Dogs" out there early because we're not going to record before the season really kicks off. Listeners who don't enjoy when Nick and I go off on our college football tangents, we're going to save that for the end of the show, but we are going to talk about football a little bit.

Sciple: Yeah, I'll hit you with a little roll tide there. Playing Duke this week. Next weekend we'll be heading down there. We'll chat about that a little bit at the end. But first, today, we're going to talk about shale. We're going to talk about exploration and production companies. Shale, it's a really interesting case study when it comes to something where you had this huge technological revolution that was the shale revolution. We got access to oil and gas we hadn't been able to access ever before, which led to a massive increase in production. But there really hasn't been much dropping down to the bottom lines at these companies. And we'll explore that. 

But first off, before we dive too much into this, high level for folks that don't know, when we say exploration and production or E&P companies in the oil space, what does that mean?

Hall: I'm going to throw another piece of jargon in there to complicate it even more. This is the upstream segment. You hear all these words and all these different descriptions. The best way to describe it is, the oil and gas industry, the value chain, as they call it, is divided up into three major sections. You have the E&Ps, the guys we're going to talk about now, which are the upstream companies. They're the ones that go out there and they look for oil and gas reserves, they drill wells to tap it, and they make money by selling oil and gas. They work with the midstream companies, which are the ones that operate the pipelines; the shipping companies that move the resources from place to place, connect the wells to the markets that then buy it. And then that's where it goes to the downstream segment, which is your refiners, your marketers like your gas stations, that sell you the refined products. So, that's how it's divided up. So, when we say E&P, or if you hear the word upstream, we're talking about the companies that are the ones that truly make their money drilling and selling oil and natural gas.

Sciple: Exactly. These are the folks who are pulling this oil and gas literally out of the ground and sending it to market. As I mentioned, shale was a huge revolution in how E&P companies extract oil and gas. It opened up access to supplies that weren't there before. Shale oil is referred to as unconventional oil plays or unconventional extraction. How does shale oil and natural gas extraction differ from what they call conventional oil plays?

Hall: Once upon a time, basically the entire first century or so of the oil and gas industry, essentially, these companies would go out and they'd drill a vertical well straight into the ground and hope they hit a giant pool of oil or natural gas, and they'd pump it out the ground. That's what's considered conventional sources. You think about the Texas oil boom, and the Pennsylvania oil boom, the late 1800s, early 1900s, that's conventional oil. You think about the Middle East, you think about Saudi Arabia's Ghawar oilfield -- these are conventional resources. You go back about a decade or so ago, and there was this concept called peak oil, where highly developed markets with assets like the U.S., where we've been producing them for a century, were running out of that conventional resources. Simply, we were just going to have to start actually importing essentially all of our oil to send to our refineries and that sort of thing. That's when our refinery infrastructure really began getting shifted over to handle the Middle Eastern sour crude vs. the light sweet crude that most of the U.S. places produce. 

Anyway, the thing that happened was, we've known for 50, 60 years that there's other oil and gas in geological shale formations that we simply didn't have the technology or the capability to be able to access anything like a cost effective way. These are also called tight formations. Essentially, that means that they're trapped very tightly in these rock formations. Again, about a decade or so ago, there was a lot of effort put into developing technologies to get them out of the ground. Everybody's heard the word fracking, right? That's hydraulic fracturing, where you use a really high horsepower, super powerful pump to inject water at very high pressures, and then use a proppant like sand and some other chemicals to literally prop the fractured rock open, to hold it open so that you can get the oil and the gas out of it. That's been combined with horizontal drilling. It's not drilling a vertical well straight into the ground; these producers are also drilling a mile or two, north, south, east, and west, taking a 90-degree turn to be able to tap into a lot greater area of resources using that technology. Essentially, I guess the best way to describe it, it's pretty much saved the North American oil and gas industry by being able to tap those resources. 

Sciple: Right, exactly. This combination of horizontal drilling, as well as hydraulic fracturing, has opened up access to oil and gas we knew was there for a large number of years, but we just weren't able to get out of the ground. That's led to a huge increase in oil production in the U.S. In 2009, the U.S. averaged about 5.4 million barrels per day of crude oil in production. That was right when shale was probably beginning to ramp up. If you look at 2018, last year, the U.S. became the world's top oil producer, producing 15.3 million barrels per day of oil. So, you have a triple in oil production in the U.S. over a period of just under 10 years, which in a mature industry like oil and gas is absolutely massive.

Hall: Unheard of. 

Sciple: Between 2008 and today, 73% of the increase in oil production came out of the U.S. In 2018, 98% of global production additions came out of the U.S. So, this has really been a significant disruptor when it comes to increasing the addressable supplies of oil and natural gas that we can produce. And it produced massive boom towns across the U.S. You hear about these cities in Texas or North Dakota, where it's this small town, and you can't get an apartment for under $1,500 a month, and Walmart's having to pay people these obscenely high prices just to keep the doors open. You have this massive increase in production, massive increase in employment in the sector. However, when it comes to the profits and the bottom line, that maybe hasn't materialized as much in the E&P space. Can you talk a little bit about why that happened, and the market dynamics that contributed to that trend?

Hall: Yeah. You go back to the 2009-2010 period, you look at oil prices coming out of the Great Recession, we quickly saw oil prices shoot up and consistently stay above $100 a barrel for an extended period of time. This is the best thing that could have happened for the development of the technologies used to access shale. Those technologies, you go back a decade ago, when we saw the first ramp up of permit requests like in Pennsylvania -- that was really the first place that we saw fracking take off, and a lot of that was natural gas. But when oil's $100, $120 a barrel, that pays for a lot more E&P expense than $50 oil does. So, you go from 2011 to mid-2014, and oil consistently stayed above $100 a barrel. The "drill, baby, drill" mentality was huge. There were so many of these independents that went out and spent everything that they could, took on every dollar of debt that they could get their hands on, issued stock. There was this real rush to develop these plays. And back then, you're looking at $90 a barrel cash cost to get oil out of the ground. Think about oil selling today for around $55 or so. You could afford to do it back then. 

The problem is, the crash happened mid-2014. You ride things down to early 2016, oil prices fell like 75% on a global basis. Essentially what happened was, the U.S. producers pumped and pumped and pumped, kept driving their production up, and you had a bit of a stare down with OPEC. And OPEC eventually blinked and backed down and ceded a little bit of market share to establish some balance back to the market. But by that time, a lot of these guys got wiped out because there was no money, the lenders stopped lending. 

You fast forward to that time, and coming out of it, a lot of innovation has happened, the costs for production have fallen, the technology has gotten better. And I think this is the biggest one, this is one of the most important things that demonstrates how shale has affected the oil market and disrupted it -- the turn time on these wells. You go back a decade ago, and you're looking at a few months to develop one and bring them online. Now, these guys have gotten so good that they can start a well on a Monday, and in some cases, by Saturday or Sunday, they're pumping oil. It's just incredibly fast. Generally, a few weeks is a super-fast turnaround. It's made the U.S. the swing producer. These guys have the ability to scale up production so quickly by developing these resources and bringing them online. 

The other side of that is that it does allow them to generate cash flows from those development costs relatively quickly. But we'll talk about how that short-term benefit hasn't shown on the bottom line.

Sciple: Yeah, sure. As you said, in these first few years as shale was growing up, you always had a massive amount of cash burn out of these companies, but you had the expectation over time that as efficiencies increased and those sorts of things, maybe the switch would flip. However, as you mentioned, shale wells can start production very, very quickly; however, they also start declining the amount of oil they produce much more quickly. As much as three-quarters of a shale well's production can come in that first year or two. So, you have all this capital rush into the market as there's new supply, kind of a boomtown mentality. That really boosts production, pushes down oil prices. But, again, folks, because they're chasing growth, continue to pump some cash into production, and they continue producing more and more oil despite cash burn. 

There's been some criticism -- I know Tyler Crowe, one of our colleagues at the Fool, likes to criticize shale management teams. Do you think there was some conflict of interest between management and the bottom line motivation that shareholders would be looking for in this space?

Hall: Yeah, I think so. Historically, these independents have not necessarily made for great investments. It's funny -- you go back to the Great Recession through now, and a lot of the names... there's still some familiar names out there, but there have also been a lot of changes in who the top producers were because they ran out of money and they got put out of business. As a sector... I can't stress this enough: it's not a place that I think most individual investors should look as somewhere they want to invest for the long term. I just don't think there's a lot of value to be had here. You dug up some really interesting information for us. You look at the cash flows, the capital discipline for these guys, we go back to 2014, this was the peak. As a sector, there's a group of about 10 or so independents that are a good benchmark. You go back to 2014, they spent almost $7 billion in capex, and generated -- again, the first half of that year, oil was well over $100 a barrel -- they generated about $6.2 billion in cash from operations. They spent $600 million more on capex than they actually generated, with oil well over $100 a barrel for most of the year. The spread was even wider in 2015 when oil prices were really plummeting. They still spent about $4 billion on capex. And a lot of that, they had to. But oil prices fell, and operating cash flows fell to less than $3 billion. From 2014, over $6 billion in operating cash on average, to less than $3 billion in one year, because all prices crashed. They simply did not have the ability to bring their capital spending down anywhere quickly enough to respond to that market. You fast forward to last year, last year is the first year in a long time that these guys actually generated more cash than they spent on capital expenditures. And here we are 2019. Again, and we're still collecting data from the second quarter, but it looks like it's flipped again and we're back into those negative cash flow years for the independent E&Ps.

Sciple: Yeah, it's difficult with those decline rates and those sorts of things. You constantly have to be pumping more cash into these wells to show growth and continue growing your business. There's not really a point where you achieve operating leverage where all of a sudden, your investments are done, and you're going to continually increase cash flows without having a pump in more cash. And that makes the economics of these tough. Any extra thoughts there, Jason?

Hall: Let me just add some extra context on that that I think's really important, that we hinted around but haven't been super specific on. It's something called decline curves. The decline curve is essentially is, you drill a well today, and your first year production is at this point, and what happens to that production as time goes. Some of these shale well are seeing as much as three-quarters of its total lifetime production happen in the first couple of years. But the thing is, after that, it still declines 5% to 10% a year. It declines very, very quickly. As a comparison, you think about these more mature, the legacy conventional plays that are still out there -- their decline curves are like 1% to sometimes maybe 3% a year. They're much, much lower. So, they start at this strong level. It's not as high as you might get initially from the shale, but it starts at a strong level, and then it stays very consistent without the necessary capital investments, to try to prop up that output. You can get a certain amount of operating leverage from those traditional plays, we just don't have any in North America of any significant value. So, what these shale producers have to do is, they've got to go find the next well to drill. So, they're starting over to, again, not even just grow their volume, which most of them are trying to do, but simply to maintain the similar level of production, they have to continue to drill at a much higher rates than anyone with conventional assets.

Sciple: Yeah. One other thing to note here as well is that if you look at some of the management teams in this space, some of them have their compensation tied to increasing production rather than cash flow metrics and those sorts of things. When that happens, there can be an incentive to show increases of production despite what that may do from a cash flow point of view. You really need to be mindful of how executives are being compensated in these companies, and the extent it aligns with individual shareholder interests.

Hall: I'm going to throw Antero Resources under the bus a little bit here. I want to be clear, no accusations of any intentional bad behavior unethical behavior; just a description of a typical executive compensation plan. 2018, Antero Resources, management compensation was divided up into four different things: debt adjusted net production growth per share; net debt to adjusted EBITDAx, which is oil and gas specific, EBITDA being earnings before interest, taxes, depreciation, amortization. It's a metric that factors in pretty much all of their exploration and production costs, I guess. Free cash flow, and safety and environmental. So, Antero Resources generated $303 million in negative free cash flow in 2018. $303 million in negative free cash flow in 2018. The target performance was $20 million in positive free cash flow, and there was an accelerator for up to as much as $215 million in positive free cash flow. The minimum threshold was $170 million in negative free cash flow. They generated 70% more free cash burn than the bottom end of that free cash flow bucket for their incentive program. They still managed to get 73% on their bonus after destroying a massive -- I shouldn't say destroy -- consuming a massive amount of the company's capital. You start debt adjusting, and you have all these adjusted metrics for things like EBITDA, and you can factor out very real, very expensive production costs to hit your production metrics and to hit your adjusted EBITDA metrics. And then you have the safety and environmental. That's important. That's very important. But, do you bonus your executives for doing the right thing when it comes to safety and environment? 

I think the takeaway is that it's really important that you need to look at how management is incentivized, what are their bonuses, because this is a clear case of a management team, their incentive was, "To heck with the cash burn. We can burn through the cash, and if we hit our production growth, we're going to more than make up for it." Again, I'm not saying they did anything unethical. They acted based on how they were going to be compensated. You really need to understand that, because this is clearly the incentive that's not very shareholder aligned in terms of creating long-term value.

Sciple: Right, and this is true in the shale industry, this is true in any business you own shares in. It's an important part of your investing thesis and your research, to look and see that management's compensation plan aligns with the metrics that are important for the business and important to driving shareholder value. If you don't know where to find that, that's form 14-A. That's a proxy statement. You can scroll down to the part of the document that has executive compensation. It'll lay those sorts of things out. 

OK, Jason, we've painted a dire picture for how this industry has performed over time, partially due to the amount of cash they've had to pump in. It's been a disruptive period in the industry as lots of supply has been added to a market that is a commodity market. It's a difficult market to navigate even outside of that. How optimistic are you that this industry can get its feet under itself and be more profitable going forward? We have seen some consolidation -- recently, the Occidental-Anadarko deal is an example of that. How optimistic are you that, consolidation or otherwise, this industry can mature and start to drive profitable cash flows?

Hall: I'll believe it two years after I see it start happening and it continues to happen. I just don't have faith in, as a sector, this being something that ever gets fundamentally resolved. We see it happen again and again. Every few years, we go through these little boom-bust cycles, and investors fall into that "this time, it's different" perspective. We thought, coming out of 2016, these guys started cutting costs, we started seeing some fiscal discipline, and we'd get a good year. And then the cash burn kicks up again. So I just don't have much faith that we're going to see a change. And here's a big part of the reason why. I don't want anybody to think that I'm saying that these guys are all a bunch of crooks. It's a really, really hard business. Shale is very capital intensive. It takes a lot of capital upfront to get production, and then you have to continue rotating that capital back through the business to just maintain production. And shale is not the low-cost source of oil. The bottom line is that the conventional resources out there -- and OPEC, particularly Saudi Arabia, still control a massive amount of the global oil market. And a lot of their plays are literally $1 per barrel cash production costs. And that gives them a massive advantage that shale simply will never reach. At the same time, you've got renewables on the other end of the energy industry that are continuing to develop cost advantages, too, and drive costs down. You have technologies like energy storage that are starting to make renewables like wind and solar more competitive in terms of providing the baseload energy access, that at some point we could see even challenge natural gas for energy production costs for utility companies. There's a lot of weight from a lot of different angles that are pushing on this entire independent E&P group to consistently make money. It's just a really, really hard place to live.

Sciple: Yeah. For me, it's a "too hard" pile. As you say, it's a case where we've seen this massive increase in production, which, for the Saudi Arabias of the world, has brought down the effective top-end price they can charge because these swing productions will come online and do that sort of thing. But the folks actually pulling it out of the ground, the economics of the business, and the way you have to allocate your capital to make things work, it's just difficult to scale. This is one of those innovations that has brought prices down for just about everybody, which is great for the average folks who use oil or natural gas or any of those sorts of things; but I'm not sure if it's something that you'd want to invest in. 

However, a question I do want to ask you about, Jason, is you have all this new oil and natural gas now online. You talk about, we have 100 years of natural gas supply in the U.S. Are there any industries or companies adjacent to shale or adjacent to oil and natural gas that you think will have really benefited from this revolution and technological development that you do think are attractive investments?

Hall: I think so. There are a few. And after we do this, I've got a really good for instance I can provide to demonstrate, when it comes to these E&Ps, how people should think about them. So, you think about all the oil and gas -- and really, it's gas as much as anything that's creating massive opportunity. We're looking at a couple of hundred billion dollars that are being invested in the U.S. Gulf Coast area in the petrochemical industry based on this really low-cost resource that's going to create a lot of jobs, it already has, it's going to boost the U.S. economy because a lot of these products are going to get exported. 

But one of my favorites is Tellurian, ticker TELL. It's a really interesting liquefied natural gas export play. Tellurian's planning to build an LNG export facility -- a natural gas liquefaction and export facility -- and two pipelines to connect it to major shale resources. The company says the business is going to be able to generate like $7 a share in cash flows when it's up and running. I don't have it right in front of me, but I think it trades for somewhere around $9 a share today, so that's barely 1.2X potential cash flows for the company. You might be wondering, "Why is it trading for not much more than 1X future cash flows?" Because this company doesn't have a business today. It's really a really great business plan, a couple of approvals, and some land. The company is going to need about $27 billion to build all those facilities. It has probably about $1 billion in commitments now. In other words, basically, everything could go wrong. It's a start-up. It's fraught with all kinds of risk because it has to access capital that it doesn't have lined up yet. There's a ton of things that are completely unpredictable and uncontrollable that could happen over the next few years to prevent it from accomplishing it. There's a high level of risk there. 

But, I'm an investor, and I'm betting on Charif Souki. For those of you that don't recognize the name, this is the gentleman that founded Cheniere Energy, which is the biggest LNG exporter in the U.S. today and it's still growing. It's been a massively rewarding investment for people who bought a number of years ago and rode it out through the same cycle of basically starting with an idea, then spending billions and billions of dollars to build out this infrastructure. So, if you've got a little bucket in your portfolio of high-risk, high-reward, it's almost a binary play, this is one that I would suggest investors take a hard look at. But it's going to be 2023 before operations even commence. Again, that's assuming everything happens on the timeline that the company's laid out. I love the idea. I love the past execution of the management that's in charge. You just have to be willing to ride out a lot of uncertainty before it gets there.

Sciple: Sure, yeah. I've actually taken a look at Tellurian as well. Having a management team that's done this before, especially for a project as big and as long-term as this is, it's really reassuring to have someone with that kind of experience that says, "Hey, I've done it."

Hall: They've done it, absolutely. Another company that I think is really well-positioned, it's got a great business today, has a lot of growth potential, and it's certainly more diversified, is Chart Industries. Chart Industries manufactures cryogenic gas production, storage and transportation equipment. So, you think about liquid nitrogen, liquid oxygen, liquefied natural gas. This is a company that makes and services that kind of equipment. There's massive demand for its products all over the world, from the energy industry, which is its biggest potential market, and you also have the industrial gas industry, it does business with healthcare, think about biotechnology. Anyway, the company trades for today less than 8X what management is calling for the high end of next year's earnings that are based on these big LNG products -- so, you think about Tellurian building this big, multi-billion-dollar facility. There's like a dozen of those facilities that are in the pipeline right now in North America to be built over the next few years. And Chart is a real leader in what they make, and they're really positioned to get a massive, massive amount of that business. 

The other thing, too, you think about, $8 a share, almost $9 a share is what management's calling for to potentially earn in 2020. The CEO made it clear that they do not see 2020 as being the peak of the demand curve, either. This could be a five-year to 10-year period of really, really high profits and big cash flows for Chart. I really like this business a lot. 

Now, if you want something that's a little more predictable, but you still want to be exposed to the potential here, I think Phillips 66 is worth a look. It has a great balance sheet. It structures its long-term agreements for its midstream business. Think about the gathering of natural gas, natural gas liquids in the pipelines to move those products to market. It structures this business to support a great dividend. Yields about 3.5% right now. And here's the thing I really like, too -- it's a major refiner, and its refineries are really advanced. It has the ability to refine just about anything. That means, while the producers are getting their tails kicked when oil prices fall, Phillips 66 benefits because it buys oil. So, when oil prices are down, it's good for it in terms of that. 

It also benefits from the spread between West Texas crude and brent, which is more of the global index for oil. Brent has a bigger role in how gasoline and jet fuel and those sorts of things are priced. So, it's able to buy the cheaper input and benefit from the price spread, and makes it really, really profitable. It's been since, I don't know, the end of 2016 that West Texas crude has consistently been a good bit cheaper than Brent. So, that's good for refiners like Phillips 66. 

Trades for about 8.5X trailing earnings. Again, about a 3.5% yield. They've increased the dividend every year since it went public. I'm a big fan. You get the right exposure to shale with somebody like Phillips 66.

Sciple: Yeah, totally agree. All those, solid picks. The big thing for me is, you don't want to be looking for the folks who are taking the hydrocarbons out of the ground. You want to be looking at folks that take it to market or do some kind of value-add business, whether its refining, whether that's turning that natural gas into liquefied natural gas or exports so it can go to market. Much more attractive than the folks in that core commodity business pulling it out of the ground.

Hall: Yeah. I want to use EOG Resources as an excellent example of exactly how this works. EOG Resources has been pretty consistently cash flow positive. They have debt, but they have a ton of cash. They've managed their balance sheet really well. This is a good management team that generally does a really solid job. Let's go back to early 2016, when crude bottomed out in that high $20s, low $30s area. If you had managed to buy EOG Resources at the very bottom for oil, the very, very bottom for oil, if you were lucky enough to get that timing and you bought it right then, and you held through to roughly today, the stock is up like 17%. The S&P 500's gained like 70% over that same period. And this is one of the better independent E&Ps to own. Part of that is because you would have also rode it up to like 80% or 90% gains at one point, then rode it back down more recently. 

So, if you're interested in and these E&Ps as investments, you have to take almost the opposite of the usual Foolish approach, which is to find great businesses to own for the long term, and look for opportunities to buy when the market is obviously in some sort of a downturn. You go back to early 2016, oil prices had fallen 70% plus. That's a clear sign that the market is down. If you had bought at that period and held a little over six months to the end of 2016, you would have seen a 55% gain, which is great. So, if you even want to consider these guys, you buy them at what is a clear down point, and then you have to be willing to hold until you see a recovery and you see a nice profit that you're prepared to take, and you take that profit, and you move on. I think that's the only way to really have any way of consistently making money with these. And even with that, you have to take the risk of that the downturn is going to last longer than you're willing to hold onto the company. That's the risk.

Sciple: Easier said than done. 

Hall: [laughs] Very much so.

Sciple: Requires timing, requires wherewithal, requires the bravery to say, "Hey, the market's bottomed," to call a bottom. Very difficult to do. I will say, if folks want to learn more about the shale industry, a great book to read, a really easy read, Bethany McLean's book Saudi America. It's about 120 pages. Really walks you through this whole shale industry and where it could be headed. Definitely want to check it out. I read it about a year ago, it really taught me a lot of things.

Before we move on to talking a little bit about college football, Jason, I've got one last question for you about shale. Obviously, shale, we talked about, has been incredibly disruptive, has tripled U.S. oil production in a 10-year period. As we see shale beginning to mature, and the fossil fuel industry adjust to this new production and absorb it, what is your biggest question looking at the energy markets going forward?

Hall: Honestly, it's really just a question of oils role looking out a decade or more down the road. Shale has flooded global oil markets. The U.S. has become this swing producer. But it's not clear how much additional innovation is going to bring prices down, or even if there's room for that innovation. One of the things that's helped these producers is, you go back a few years, a lot of the suppliers, a lot of these producers, they use contractors to do a lot of the picks and shovels work. And they were able to renegotiate a lot of those deals at lower rates because a lot of these service companies were looking for any work that they could get. As supply has tightened as demand has gone up, it's brought those costs up a little bit. So, I just don't know, again, how much room there is for innovation to bring costs down. It hasn't added to the bottom line over the past five years. 

At the same time, I mentioned earlier, renewables are getting cheaper, they're getting better. Solar and wind technologies are improving, driving efficiencies up, driving their capital costs down. Energy storage is bridging the gap between the kinds of applications that renewables can fill. That's going to further cede market from natural gas particularly. Again, that factors into one more good reason for investors to not view these independents as necessarily worthy as long-term investments.

Sciple: Sure. Takeaway: we're not super hopeful about the long-term profitability, or driving a lot of investor returns from these companies going forward. However, it's really disrupted the entire global energy market, and has had ripple effects across the world. 

Thanks, Jason, for coming on the show, as always!

Hall: Absolutely! It was fun! Let's do it again soon!

Sciple: As always, people on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against the stocks discussed, so don't buy or sell anything based solely on what you hear. Thanks to Austin Morgan for his work behind the glass! For Jason Hall, I'm Nick Sciple. Thanks for listening and Fool on!