'No Buffer' To Stop ENERGY From Soaring as Hormuz Choked and War Escalates

0:00The following podcast is brought to you by Can Cambria Energy. Enjoy. This is the Commodity Culture Podcast, where we interview prominent investors, fund managers, analysts and company CEOs to give you an edge when it comes to investing in the commodity space. Hello, everybody and welcome into Commodity Culture where we break down the commodities sector with the goal of making you a better investor in the space before we dive in today's standard disclaimer. Nothing here is investment advice. Do your own due diligence today is March 17th, 2026. And my guess is the CEO of Can Cambria Energy, a company aiming to commercialize their flagship asset, the 100% owned Kiscan Halas project in Southern Hungary, a significant gas condensate resource in the heart of Europe. It's Paul Clark. Great to have you on the show. Hey, Jesse.

1:00Great to be appreciate the time to share a little bit about our company and our plans in Hungary. Yes, I'm excited to dive into that before we do get there. I want to talk about, of course, some timely news, which is the oil and gas sector. The war in Iran has escalated. The straight of Hormuz remains closed. In oil refineries and infrastructure have been bombed. We're currently sitting at around a $95 barrel WTI price. What does this all mean for the energy space and how seriously do you think this could continue to affect prices? Yeah, good introduction very timely. I would say significantly. There's a huge amount of uncertainty, a very dynamic situation over in the Gulf there. We certainly didn't anticipate prices moving the way that they have as we started to explore 2026 and quite where it goes, we're watching as I'm sure most of your investors and other

2:04folks across the region are looking to see where this goes. Clearly it's going to run several weeks and months hopefully it wraps up here sooner rather than later but absolutely some very significant impacts on commodity prices. We are naturally we are focused on natural gas in Hungary in Europe so we watch natural gas prices. They popped almost immediately. There's no buffer there. There's no strategic reserves of natural gas, more of a local commodity and of course natural gas chant. In the region of 60% almost overnight once there was a realization that LNG was impacted through Qatar, Europe and we'll get into this as a huge reliance on LNG. Surely there after oil follows and we see oil in that $100 region as the straits are

3:07closed. We've looked at a number of investment reports here and there's certainly visibility into a $150 oil over the next several months if there's not a fairly significant resolution. It will take time even if there was a resolution almost immediately to unfold some of the supply side issues. It takes a couple of weeks for LNG to get back up and running. Even the petroleum reserves, the draw down there from the strategic reserves takes time to get into supply chains etc. We don't see any immediate relief in terms of prices. We've benefited as stock has moved up and most energy related stocks have moved higher year-to-date anywhere from 22 to 45% so you hate to draw positives out of a crisis like

4:09this but in the short term stocks have moved higher. We're still trying to impact or assess the impact supply chain. Certain companies cash flows will be affected in the region and not least higher prices are really counterproductive in the longer term. In Europe there's a big narrative on the renewables and you already see countries like the UK doubling down on renewables. Part of the crisis in Europe with energy is a function of the overreliance on these renewables and so that's not good for the region I don't feel and we hope that these prices come back down to more reasonable levels here pretty soon so yeah a very very dynamic very interesting period of time as I said we're following it daily. Some great points you've made there and of course I think the tailwinds behind the energy sector already very strong and equities were already on the rise here in 2026 before

5:15this whole debacle began it will be interesting and potentially terrifying to see how things advance from here but I do want to dive a little deeper into your comment about the EU because they are of course facing supply disruptions for both oil and natural gas. They are dependent on LNG to a large extent as you mentioned and they've sanctioned Russian energy although there's reports that they continue to buy Russian energy. They're trying to completely sanction it and certainly they've reduced their purchases putting themselves in a tough position. Talk to us about the state of the European energy markets at present. The challenges it's facing and why we need more projects like yours in Europe to bring domestic supply online. Sure sure yeah make no mistake the original catalyst the original investment of Cancambri into Hungary was almost a direct result of prices natural gas prices moving higher on the back of the Russia Ukraine conflict in 2022 that's when we enter the country certainly

6:16don't want prices really where they currently sit. Russia Ukraine had natural gas prices considerably higher than they are at present day but that conflict fast forward here really highlights a really big dependence on imported oil and gas into the European Union into Europe more broadly. So a little bit of Kanadeja Vu the Russia Ukraine conflict has not been resolved and I don't know if that indicates any likelihood that the the the Iranian conflict will hopefully won't run anywhere near as long but certainly prices certainly price of the Europe seem to stabilize we've run all of our economics on our project on on $10 gas on an MNB TU basis. I know European gas praise on a slightly different euros per megawatt hour but we you know we talk here on you know on US dollars per MNB TU our project is economic down to four

7:19dollar gas so we certainly don't want or need those higher prices why you know why are the prices high and it's a fairly again a fairly complicated landscape even before even before Russia Ukraine natural gas prices were moving higher a significant under investment in new projects lack of investment in existing fields as those legacy fields declined so reserve replacement was very very low new discoveries were relatively modest and then some jurisdictions in Europe moved entirely away from oil and gas and very very much embraced net zero rhetoric and decarbonization the UK being a good example the North Sea is a is a super basin with huge huge reserves that that have been through policy you know been taken really taken out of the supply side no way by contrast is is doing a really good job of bringing on oil

8:21and gas production and so yeah there's definitely the need Europe the domestic production in costing the European Union produces about 10% of consumption there's some industrials heating of homes etc so that you know there is there is natural gas as a an absolute necessity for energy transition some some other countries are doing a better job turkey is one example where you have some large scale projects in the black sea deep water exploration being successful now those those types of projects are the preserve of major major companies you know billion dollar type projects national oil and gas company so so can cambria we find ourselves in a in a pretty unique situation where we can hopefully address and help offset declines maybe even grow production in Europe so yeah there's a significant need for domestic production we want to be part of that

9:24conversation well I want to help investors wrap their heads around the natural gas market here because it's price differently in different areas of the world which certainly creates some confusion so if maybe you could lay out to us the best way to think about natural gas prices and then also the main catalysts and tailwinds currently behind the natural gas sector that you think make it an attractive investment opportunity at present yeah if we if we start out with the you know an absolutely spectacular success story in North America North America America law 48 in particular where a lot of entrepreneurial companies medium and smaller dependents got into the unconventional space good examples you know I've worked Eagle Ford and and Permian Basin extensively and and those projects either gas weighted or even the oil projects like the Permian delivered a huge amount of natural gas as a byproduct as those associated gas and so those projects are a good example of delivering you know for example

10:30$3 gas is kind of the the average in North America to the extent that now the US is the the biggest and poor exporter of natural gas probably has some impact on natural gas prices in the US for the for the consumer that may may cause some issues there's a lot of talk around data centers and natural gas helping to fuel some of this AI boom that we're observing but nevertheless a lot of natural gas moving through LNG and that really provides a flaw for gas prices in Europe where and of course into some extent Asia as well the US is probably ranked in the top 10 for natural gas production three of the other areas of course Iran Qatar and Russia come in the top three so that that starts to suggest at the problem right the political issues geopolitics around

11:31countries that have those those main reserves and and production longer term it does not seem a very sound idea to take natural gas liquefy it transport it halfway around the world and then and then regassify and that that presents some issues itself in especially if we're looking to be you know environmentally responsible etc again it's probably a good transition but what we what we tend to say when we talk to our investors is you know is energy for Europe from Europe and that's what we that's what we're trying to address for several years before Russia Ukraine kicked off Europe took I think took for granted plentiful affordable energy and that that changed that structural you know that is not going to go back futures are looking today natural gas was trade in spot pricing on a US equivalent around $17 per mmb to you futures prices through the end of the year were about 16 so there's you know there's the I think that the visibility that these

12:35prices will be higher for quite a while longer until things start to settle down I want to now discuss how can Cambria energy fits into the picture you've laid out some clues as to what you're doing there and hungry but perhaps you could give us a more focused overview of the company and what you plan to accomplish yeah I love to do that yeah we entered hungry in 2022 we had a fairly aggressive five-year plan in mind where we enter the country we we wanted to establish a land position we wanted to do all the due diligence and the technical work to demonstrate demonstrate resource and some valuation associated with that resource and then and then ultimately drill and produce oil and gas there aren't many jurisdictions in Europe where you can do that hungry specifically has very good fiscal terms we'll get into that later it also is very pro oil and gas development they they import a lot of their natural gas and some still coming through pipelines

13:41in the south through Turkey from Russia some LNG from Russia as well so you know they they recognize 2028 onwards 2028 onwards natural natural gas from Russia as policy driven is a no-go so they they need to find other sources of energy as a landlocked country they you know they are somewhat at the mercy of transportation fees too so in any case we we we recognized we recognize as a company a startup that we needed to be a low cost entry you know there are lots of places you could go operate in and around the world that you would need two to three hundred million dollars just to play the game pick up large continuous blocks of land so we we like the fiscal terms in Hungary and we we like the fact that we could put together a fairly substantial block of land we currently hold around a thousand square kilometers translates into about a quarter of a million acres we put that position together at less than seven dollars an acre it come it comes

14:45with drilling commitments but we would like to get busy and start drilling to realize shareholder value our plan and we'll get into this in more detail our plan is to drill our first well through the end of 2026 an established bring-on production in in 2027 which is again back back to that five-year plan which again is it's fairly fairly aggressive but we're on cost to on cost to deliver that can you shed some light on the team behind Cancambria and how you plan to leverage their expertise starting with your own experience of value creation for shareholders sure certainly the the people are probably you know the the entrepreneur you'll mindset the experience having drilled a number of wells in in North America probably you know the single most important factor that we can talk about at Cancambria I I'm lucky enough to have a board a management team and a technical team I think we box above our weight you know we're a small

15:48a small 70 million market cap company but we are we are staffed up industry veterans that have been around drill many many hundreds of wells all the way around the world my background I'm a petroleum geologist by training educated in the UK but spent all my time in the industry working in North America worked 15 years at a company called Pioneer Natural Resources they ended up being acquired by X on around 18 months ago pure play Permian Basin and and in that capacity I was responsible for all the subsurface evaluation and then development execution of the wells within both the Eagle Ford and the Permian Basin the Eagle Ford kind of around 2010 in we drilled in in excess of a hundred horizontal wells over a million acres we took that we took that asset

16:49over a relatively short period of time this organic growth model and the company from $40 a share to $100 a share and that was drilling these these horizontal shell wells and then and then took the expertise the knowledge the lessons learned over to the Permian Basin and let me tell you there was a lot of people that said it wouldn't work in the Permian you know it was it was a basin that had been developed for many decades with vertical wells but a basin that had recovered probably five to six percent of the original oil in place so yeah we we took that and were you know remarkably successful drilled many many thousands of wells and now that is really an industry powerhouse a powerhouse in the US so so I'm not an explorationist that's pretty important to to recognize I don't go into basins asking the question is there oil and gas present what we do what I do we go into proven basins we know the oil and gas is there and we ask ourselves what's the best application of technology and expertise to to bring those reserves

17:53commercially to the surface and and realize shareholder values that's what we're doing what we're doing in Hungary one of the one of the steps that was really I think instrumental in identifying this Kisk and Halas project I spent three years working with a company called ultra petroleum largest natural gas producer in Wyoming they have a field there which is operationally and technically very similar to what we're trying to accomplish in Hungary it's a field that is characterized by over pressure a gas condensate field vertical wells similar sort of drilled depths and what was really critical in that field was efficiencies and driving down costs once once the field had been initially commercialized it was then part of the part of the the mindset here is once you know that you have the oil and gas and you can bring it to service how can you drive down costs and there's no doubt your business expensive place to do business so with that in mind

18:58I put together a team that has direct hands-on experience of drilling wells efficiency gains and once we once we get up and running with operating the field you know my my board is is staffed up with industry veterans you can go on our website cancambria.com and check out the individuals I don't really have the really the time to go through each individual person but we have an excellent operating team we have capital markets experience and also importantly we have an office in Budapest MD has operated and run companies over in Budapest for for the better part of 25 30 years and there are you know there are some benefits have been over there with the presence we have a staff over there a lot of the the filings and the regulatory things that we do have to be in Hungarian so you know there's no way around it we employ a number of Hungarian professionals there and we're happy to do that and be part you know be part of the European

19:59energy community where part of the European energy council and so we play a I think a key part in leading leading the industry to value creation and domestic production in Europe. Over the last several months you've put out several press releases explaining the technical understanding of the Kiskunhalos project could you walk us through how this translates to strategic resource development and shareholder value. We entered when we entered the country in 2022 there were three deep wells drilled in the basin and those wells were really important for us to understand that the nature of the the variability for the field we knew there was we knew some of the key parameters so we had our arms around you know how how large could it be you know how much pace that you know there in any given wells reservoir quality so on and so forth so we we had a good insight into the field but none of those initial three wells were commercial now a couple

21:04of them were drilled in the eighties when they weren't looking for low low permeability reservoir which is understandable they tested gas to surface a more recent well drilled in 2008 in a three dollar gas environment did did test over about a sixth month period did flow gas to surface but there was some some mixed messaging between those three wells there was a fair amount of variability and we recognized early on that we would need to do some significant investment in the field to help calibrate that three well data set so over over the the holiday period 2023 into 2024 as a as a private company actually we invested around four million dollars to acquire a 3D seismic survey the technology that we leveraged then frankly a decade early was not accessible to a company like Cancambria so the the computing power a lot of the wireless

22:05digital types of technologies have really accelerated the 3D these 3D seismic surveys so we definitely benefited benefited from that interpret the data calibrate those wells and and we put in the report on SAIDR is is disclosed there we we help to calibrate the wells and then provide a really a really fairly sophisticated image of the subsurface you know when we put that study together I I talked to my board and my investors and they said look out you know we spend the four million bucks how big or how much bigger does the resource get when you acquire the 3D and I had to carry on carry the message here that the the advantage of the 3D reduces significant uncertainty and helps us move the project to drill ready a drill ready phase but in reality it focuses our efforts it made the project area you know geographically slightly smaller we elevated

23:05the resource to what we call a development pending status and so integrating the seismic with the well logs gives us around a a little over a tcf of gas in place risked risk recoverable in the region of 570 bcf and well over 50 million barrels of condensate and that type of resource can support up to 100 vertical wells now when when when you go to our website and take a look at the the investor relations that we present I would say a fairly conservative 50 well program and even that 50 well program returns an MPB 10 over a over the life of the field in excess of a billion dollars so we see we see a very sizable very sizable project you know we we feel we feel that the chances of commerciality are very very strong especially given the commodity prices the minimal government taken the fiscal terms and if we are right about these these types

24:08of productive wells we're going to be right in a big way there's significant running room that's the important part yet significant running room for drilling at scale over over several years and looking ahead what milestone should investors look out for in the coming months how does the company and also how does the company plan to fund much of that operation yeah part of the part of the the story here in kisk and halas in domestic domestic hungry gas development those gas basins are deeper they're deeper than mall mall group for example is a large billion dollar corporation in hungry very very successful drilling shallow oil shallow oil prospects we actually we actually do have we won't get into it here but a significant exposure to a large block of land with with a lot of upside for shallow oil you know it's not the focus of our conversation here today but mall have been successful bringing on

25:11you know thousand barrel a day oil wells in this general trend with a similar model of shooting 3d and identifying more more conventional accumulations but the back to the deep tight gas expensive to drill you know that is one of the impediments to the project no doubt fairly capital intensive especially for a company of our size we're looking at wealth costs of around 15 to 18 million us the the project itself we anticipate is cash flow positive within the third to fourth well molten current commodity prices by the third well but you know we we run ten dollar and sixty five dollar gas and oil prices within our within our models so we were looking to we were looking to bring in a strategic partner for the long term development of the field farm out a portion of our interest and hopefully underwrite a significant portion of that initial you know 40 50 60 million outlay of a risk capital so we have a we have a data room

26:16process which is underway that process hopefully will conclude here Q2 and we can update the market and so we have you know we have a lot of opportunity ahead of us as I said we are looking to drill our first well we've already purchased a number of long lead time items so that we you know once we announce the funding for this first series of wells we can we can get to get into the field and operate so as I said second half of the year maybe September October timeframe drilling production early early 2027 so there are a number of catalysts here you know as we step through this project opportunities for the the stock to move opportunities for us to get the you know get the story out there and and of course we are starting to educate our investors about this conventional oil project it certainly won't distract us from this more strategic deep dive tie gas play

27:17but we we picked up a concession we picked it up for the deep tie gas project but it came with some significant upside that we you know we've already had quite a lot of inbound interest on that shallow opportunity and we're working we're working diligently to try and characterize what that looks like to is there anything we haven't yet covered or anything you think it's important to emphasize the potential shareholders of can cambria energy should be focused on yeah I would just reemphasize reemphasize that the timing aspect here you know it's an aggressive five year program where when you're in the end of that hopefully first production next year you know there aren't many I would say there aren't many companies of our size with the potential upside here doing what we're doing in Europe it's actually fairly difficult to get a position within within Europe hungry is is no different a lot of legacy positions are not turned over so it's you know we're very opportunistic to pick up the position the terms are really really

28:18favorable we only pay two percent royalty for unconventional production in hungry which is a really incentive for investment so between the high commodity prices between the extremely good physical terms we keep most of our production for sales infrastructure is in place we have a very compelling near term story as we deliver production and shareholder value and most importantly we've done this before the team has at scale worked similar projects so you know we're excited by the opportunity ahead of us and we're focused on value creation at every level through the through the organization great well I'm going to put links in the description below to the Can Cambria Energy website as well as social media for people who want to dive further into the company Paul this has been a fantastic conversation thank you so much for coming on the show thanks for your time Jesse appreciate it commodity culture is a podcast that covers investing in commodities and natural resources if you'd like to hear more be sure to subscribe so you were always

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