One Of The US’s Largest Natural Gas Companies Goes Bankrupt. Here’s Why Russia Is Partially To Blame

From The Daily Caller

Energy

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Chris White Tech Reporter

April 03, 2020 11:41 AM ET

One of the largest shale drillers in the country filed for bankruptcy recently as the natural gas industry deals with a one-two punch of coronavirus fears and Russia’s continued war against U.S. energy producers.

Whiting Petroleum became the first giant natural gas company to slide into bankruptcy Wednesday as many energy producers meet debt obligations and an oil war between the world’s largest energy producers. Whiting sought chapter 11 protection in Texas amid the strife.

Prices fell into the $30s as the Saudis pushed for a cut in output to prop up prices, while Russia is working to infuse the market with hundreds of thousands of barrels of oil. Moscow is worried that the U.S. will use shale oil to take advantage if Saudi Arabia ease off production.

  • Bankruptcies are expected to increase as crude production increases while demand plummets, according to Buddy Clark, a co-chair at international corporate law firm Haynes & Boone.“It’s a dire situation for everyone,” Clark told the Wall Street Journal Thursday, noting that even bankruptcy courts are under pressure as bankruptcy cases explode. “It’s a weird dynamic, but people will want to get into bankruptcy quickly in order to beat the rush.”Other energy companies will likely experience similar problems. (RELATED: ‘This Is Masochism’: Russia Wages An Oil War Against Saudi Arabia, US Amid Coronavirus Concerns)

    U.S. President Donald Trump speaks in the press briefing room with members of the White House Coronavirus Task Force April 2, 2020 in Washington, DC. (Win McNamee/Getty Images)

    U.S. President Donald Trump speaks in the press briefing room with members of the White House Coronavirus Task Force April 2, 2020 in Washington, DC. (Win McNamee/Getty Images)

    U.S. drillers could default on $32 billion of debt throughout 2020 if the virus and Russia continue walloping the industry. The default rate is projected to come in at 17%, according to credit-ratings firm Fitch Ratings. Fitch forecasted a 7% default rate before the virus pandemic.

    Meanwhile, oil prices rallied Thursday after President Donald Trump hinted that his Russian counterpart, Vladimir Putin, and Crown Prince Mohammed bin Salman told him they might reduce crude production.

    Trump said in a tweet that day that he “spoke to my friend MBS (Crown Prince), who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels.”

    Oil prices pitched upward shortly thereafter. The Dow Jones industrial average jumped more than 500 points after Trump’s remarks. The president’s bold talk provides a reprieve to a beleaguered oil industry, which saw the price of oil fall roughly 60% over the past month.

    Natural gas production was on the incline for more than a decade before this most recent hiccup.

    The Energy Information Administration (EIA) projected in 2010 that the U.S. would be producing about six million barrels of oil a day by 2019, not the 12 million barrels of oil a day it actually produced. The EIA made other forecasts that year that did not ultimately come to fruition.

    The EIA projected oil prices would hover around $100 a barrel in 2019 instead of $60 a barrel, where oil prices are pegged. The agency was also apparently unable to see into the future and observe how hydraulic fracturing would affect gas production over the past decade.

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Rod Evans
April 4, 2020 12:06 am

Quote.
“It’s a weird dynamic, but people will want to get into bankruptcy quickly in order to beat the rush.”
That has to be one of the clearest unintended funny comments, that’s actually funny ever penned.
Only in the crazy interconnected 21st century world, could that be regarded as sane.

Greg
Reply to  Rod Evans
April 4, 2020 1:01 am

The comment is not “funny” it is pointing out the ridiculous state of affairs this kind of intervention causes. USA has always been a beacon of free market philosophy now when it is killing weaker companies it is suddenly the fault of the Russians who are allegedly using the free market to “attack” US production.

Not that the US would attack Russia with free market forces, they prefer unilateral sanctions 😉

The whole idea that the Russians are in price war with the US is deluded in the first place and only works for those with a russophobic mindset who still think of them as “commies”.

Russia wanted to maintain existing production restrictions in place. When the Saudis tried to push them around like they do with the minor players in their OPEC cartel, they found it did not work with Russia. As a result the existing agreements ran out without any new limits in place.

Russia was not the cause of the rise in production.

If the US wants more influence with Russia they should stop trying to piss them off at every turn with unfounded allegations, sweeping unilateral sanctions and military encroachment.

If Trump had been allowed to do what he was intending to do and what voters endorsed in electing him : build better relations with Russia, we would not be here. If you want to look for the cause of this problem look closer to home.

Of course it’s always easier to blame others than deal with your own internal problems.

TRM
Reply to  Greg
April 5, 2020 7:25 am

++++1000

WR2
Reply to  Greg
April 5, 2020 8:58 pm

This presumes that a price war is not in the US’s best interest, which is a wrong assumption. The economy is better off with lower energy prices. Sure, there will be losers, but all consumers as well as many other energy intensive industries are the winners. The right play is to let those countries who are completely dependent on oil exports to dig their own grave, while we should be gobbling it up at discount prices (like Trump wanted to do but the Dems blocked, and what China is currently doing as they aren’t inconveniences by an opposition party).

Greg
Reply to  Rod Evans
April 4, 2020 1:05 am

The comment is not “funny” it is pointing out the ridiculous state of affairs this kind of intervention causes. USA has always been a beacon of free market philosophy now when it is taking out weaker companies it is suddenly the fault of the Russians who are allegedly using the free market to “attack” US production.

Not that the US would attack Russia with free market forces, they prefer unilateral sanctions 😉

The whole idea that the Russians are in price war with the US is deluded in the first place and only works for those with a russophobic mindset who still think of them as “commies”.

Russia wanted to maintain existing production restrictions in place. When the Saudis tried to push them around like they do with the minor players in their OPEC cartel, they found it did not work with Russia. As a result the existing agreements ran out without any new limits in place.

Russia was not the cause of the rise in production.

If the US wants more influence with Russia they should stop trying to piss them off at every turn with unfounded allegations, sweeping unilateral sanctions and military encroachment.

If Trump had been allowed to do what he was intending to do and what voters endorsed in electing him : build better relations with Russia, we would not be here. If you want to look for the cause of this problem look closer to home.

Of course it’s always easier to blame others than deal with your own internal problems.

Phoenix44
Reply to  Greg
April 4, 2020 1:29 am

Yes that stuff in Crimea, eastern Ukraine, Georgia, and the rest is simply cuddly Russia being misunderstood by nasty, nasty Americans. Poisoning people in the UK with nerve gas (and before that with radioactive materials) was just something America forced Putin to do

Get real, Putin is a nasty ultra-nationalist authoritarian who wants to recreate his own mythical Greater Russia. He requires higher oil prices to do that.

Derg
Reply to  Phoenix44
April 4, 2020 2:53 am

No kidding, that is why I never considered the Russian Collllluuuusion narrative from Democrats. Trump was running around as a candidate saying US energy independence. With Trump I could only see lower oil prices due to more supply.

Greg
Reply to  Phoenix44
April 4, 2020 2:57 am

US fomented the coup d’etat in Ukraine which lead to cessation of Crimea. Did they really think RF would just lose their only warm water port with saying anything? Now they blame Russia because it did not work out the way they planned.

“Get real, Putin is a nasty ultra-nationalist authoritarian who wants to recreate his own mythical Greater Russia. He requires higher oil prices to do that.”

So that explains why Russia is allegedly doing the opposite and flooding the market? Your anti-russian ranting is self contradictory. It’s like climatologists have to spin a story that everything that happens is somehow caused by CO2 and AGW. Even SARS-cov2 !! Maybe you need to work on the angle the Russia made China do it.

Marc
Reply to  Greg
April 4, 2020 4:19 am

I spent time in both Kharkiv and Kiev in Ukraine back in 2010 and 11. The local population expected to join the EU soon and ultimately to join NATO. Putin realized that if this happened he would lose his main warm water port and access to the Mediterranean. He simply could not allow that to happen from a military perspective. So he did what he had to do and seized Crimea. I have always felt that if the US had been in the same position it would have taken the same actions. I’m not defending Putin because his record of either imprisoning or murdering political foes is appalling. But I do understand the genius of his actions in Crimea.

Samuel C Cogar
Reply to  Greg
April 4, 2020 7:35 am

Can anyone think of an election in Central or South America during the past 150 years that the US didn’t have “both-hands-in” trying to control the outcome of said election(s)?

Don’tja know there is a reason some places are called “Banana Republics”.

Many American citizens and most of America’s elected politicians truly loved Batista’s Dictatorship in Cuba, ….. and literally hated the thought of Fidel Castro transforming it to a Socialist country.

Bryan A
Reply to  Greg
April 4, 2020 8:12 am

Greg, in the long run, driving smaller players out WILL ULTIMATELY drive up prices by permanently cutting out supplies

MarkW
Reply to  Greg
April 4, 2020 3:58 pm

Supplies aren’t being driven out, every well that exists today, will continue to exist next month. They will just be owned by someone else.

niceguy
Reply to  Phoenix44
April 4, 2020 5:06 am

The stuff in Ukraine, you mean
– the Euro-Maidan coup supported by the EU and the US, after Ukraine received dishonest and irresponsible hints from the EU that it could become a member;
– neon@zi in Kiev gov;
– the very first law proposed and voted by the new Kiev power was a fascistic law to destroy the civil live of all non Ukrainian speaking citizens (a law that the so called liberal EU never objected to);
– after the Crimea status quo was violated by Ukraine…

Russia just did what the West did to Yugoslavia and recognized that Crimea is a part of Russia.

niceguy
Reply to  Phoenix44
April 4, 2020 9:16 pm

“Putin is a nasty ultra-nationalist authoritarian”

On a scale of AOC to Macron to Trump, how do you rate “authoritarian” Putin?

Vangel Vesovski
Reply to  Phoenix44
April 5, 2020 6:29 am

“Get real, Putin is a nasty ultra-nationalist authoritarian who wants to recreate his own mythical Greater Russia. He requires higher oil prices to do that.”

Putin did not invade other countries. Crimea was an autonomous region and 90% voted to go with Russia rather than Ukraine. Georgia was not invaded by Russia. And Russia did not invade Eastern Ukraine. Eastern Ukraine is populated mostly by Russians who were being attacked by the government in Kyiv.

Note that the US did invade Iraq, Libya, Syria, Afghanistan, and many other countries over the past few decades. It has more than 100 bases around the world and now spends more on military-related activities than comes in from personal income tax revenue. Stop with the neocon nonsense and start pushing for the liberty that used to be what the United States was all about.

Observer
Reply to  Vangel Vesovski
April 5, 2020 8:22 am

Yup, nothing more amusing then Americans accusing Putin of being a bad actor, or suggesting the sanctions the US government slaps on its own (or other nations’) citizens trading with Russia are justified because of Russia “invading” Crimea (which even WaPo admits was desired by the majority of the population there). This, after the US turned Libya into a failed state, supplied Al Qaeda with weaponry to overthrow Assad, invaded Iraq, are occupying Afghanistan, refuse to leave Irag despite the democratically-elected government there demanding they leave…

Meanwhile, Trump and co aid the Saud’s genocidal war against Yemen, the barbaric torture-killing of Khashoggi, Israel shooting protesting Palestinian kids in the back… yeah, tell us again what a bad guy Putin is.

[“What aboutism”, with inflammatory and false and misleading statements. Mod]

Samuel C Cogar
Reply to  Vangel Vesovski
April 6, 2020 7:23 am

Vangel Vesovski – April 5, 2020 at 6:29 am

Note that the US did invade (the Dictatorships) of Iraq, Libya, Syria, Afghanistan, (Viet Nam) and many other countries over the past few decades.

Right you are, ….. Vangel Vesovski, ……. but the US didn’t invade the military dictatorship of Cuban President Fulgencio Batista ….. simply because the US politicians absolutely loved all the “perks” provided to them at home, ….. but more importantly, …. what was provided for them by the Batista regime and the “millionaire” sugar plantation owners when vacationing in Cuba.

Samuel C Cogar
Reply to  Vangel Vesovski
April 6, 2020 1:34 pm

Observer – April 5, 2020 at 8:22 am

Israel shooting protesting Palestinian kids in the back… yeah,

You are correct, ….. Observer, ……no one should be shooting “suicide bombers” in the back before they can detonate their bombs, ….. ESPECIALLY “suicide bomber’ children.

GEEEUSS, ……. let those kids blow themselves up, …….along with a dozen or so bystanders, …… BUT DON’T BE SHOOTING THEM FIRST.

But iffen those kids are/were in Chicago, …… that’s a different story, ….. those kids can shoot each other anytime they want to, …. on any part of their body they want to.

Greg
Reply to  Greg
April 4, 2020 2:10 am

US is proud to be the worlds largest produce at 13 million bpd , more than the Saudis a 12 but expects other countries to cut their own production to increase the price of US products , which they have no intention of reducing.

You really have to laugh at this stuff. Don’t forget to thank Russia for the giggle, it’s all their fault you know.

AntonyIndia
Reply to  Greg
April 4, 2020 6:07 am

And no American should ever blame any $audis, not even for 9/11; keep on fighting all their wars for them as mercenaries.

Because….the US dollar floats on Arab oil since Nixon had to drop the gold standard.

So blame Russia.

Robert W. Turner
Reply to  Greg
April 4, 2020 8:11 am

Free market? Us in the American oil and gas industry would love to get a shot at that free market thing and really put the Russians and Saudis out of business. You know, not having government mandate and subsidize direct competition (ethanol) and allow us access to the global market instead of restricting our market reach through legislation, thus making WTI and other American market prices lower than the global average.

Greg
Reply to  Rod Evans
April 4, 2020 1:07 am

Oh damn. I used the K-word again
MODS, please do something about this stupid filter K-I-L-L or even S-K-I-L-L causes the moderation filter to kick in. Do you really need this? Are you being spammed by Ahmed the dead terrorist?

Please fix this this , otherwise I K-I-L-L Y-O-U !!! 😉

Rod Evans
Reply to  Greg
April 4, 2020 1:32 am

Greg,
Was Ahmed the dead terrorist, Achmed the dead terrorists brother….? 🙂

Greg
Reply to  Rod Evans
April 4, 2020 3:04 am

Well since he does not know how to spell it , why should I ?

This was a bit of comic genius when it came out but sadly he’s tried to run the same joke for about 15 years. I can’t even watch some of the stuff he’s done since.

Thanks for digging out the clip.

Snarling Dolphin
Reply to  Rod Evans
April 4, 2020 5:51 am

Same psychology as toilet paper I suppose.

April 4, 2020 12:30 am

Chapter 11 is re-organization while being relieved of debt burden. That’s where Putin and his cronies mis-calculate. They think of bankruptcy only in terms of liquidation, Chapter 7. Even if creditors force the bankruptcy filer into liquidation, someone else will buy the leases at a fire sale and once oil recovers begin drilling again. We just have to make sure its not Russia or Saudi Arabia buying the US leases.

Chaswarnertoo
Reply to  Joel O’Bryan
April 4, 2020 12:38 am

Or China.

Greg
Reply to  Joel O’Bryan
April 4, 2020 1:16 am

That’s where Putin and his cronies mis-calculate.

That is where your russophobic mindset miscalculates. Russia wanted to maintain existing production cuts, not remove them. They have a power struggle with the Saudis who though they were going to push Russia around like the do withe minor fiefdoms of their OPEC cartel. That did not work out, so existing limitations timed out without a replacement agreement.

I’m quite sure “Putin and his cronies” are aware of chapter 11 protection in the US and how markets work. In case you have not noticed they are democratic capitalist economy now.

Phoenix44
Reply to  Greg
April 4, 2020 1:32 am

Democratic? That’s where you lock up, kill and intimidate your opponents into not standing against you, right?

And crony capitalism (literally in Putin’s case) is not capitalism.

Absurd.

PETER BUCHAN
Reply to  Greg
April 4, 2020 3:42 am

Well put Greg.

Not too long ago many commenters on this site (David Middleton specifically) were rather sanguine – if not outright cock-a-hoop – about how the Russians ostensibly “shot themselves in the foot” by trying to stare down OPEC and US shale. And again, the parochial knee-jerk, chest thumping prediction was that the US would hardly blink.

I tried to make the point that many have not yet been able to bring themselves to see Russian action – and in this case INaction (i.e. refusing to cut) -against the backdrop of the larger, and now rapidly evolving, geo-strategic landscape. But the flag-wavers were having none of it.

Now it is the US that is blinking first after all and, based on this morning’s reports, we have the Saudis chiming in with raspy voice in the now well-worn “Those Evil Russians!” choir. Too funny…

But the larger point remains: in electing to label Putin and Russia’s moves as a street-mugging, the chest beaters deny themselves the stimulation of appehending the unfolding high-stakes game of geopolitical, monetary and economic chess

They are, I submit, (intellectually) the poorer for it.

What COVID-19 has mostly achieved, is to bring the future foirward in one big ugly lump.

Reply to  PETER BUCHAN
April 4, 2020 4:35 am

The Russian and Saudi economies are dependent on oil export revenue. This is the textbook definition of “shot themselves in the foot”…

Moscow’s motivations appear to be tied to the burgeoning American shale industry, which hasn’t been under any obligation to stem production but has been bolstered by OPEC+ propping up prices.

Russia’s state-owned oil producer Rosneft, led by Igor Sechin, a close Putin ally, has been especially vocal in its opposition to OPEC+.

“From the point of view of Russian interests, this deal [to cut production] is simply meaningless,” Rosneft spokesman Mikhail Leontiev told Russian media, who suggested that any OPEC+ cut would “clear a place” for American shale oil.

[…]

Russia is reliant on energy exports. “The backbone of the Russian economy,” Krutikhin said. But one safety net is the country’s substantial hard currency reserves.

Russia’s Finance Ministry said Monday that it could withstand oil prices of $25 to $30 a barrel for six to 10 years, covered by the country’s National Welfare Fund, which it says stands at more than $150 billion.

While Russia says it could survive years of low prices, it also would level a serious blow to the country’s GDP, analysts said.

That’s why Novak hasn’t ruled out the possibility of a new OPEC+ agreement in the summer. In late December, he stated his support for OPEC+, noting that it brought in more than $83 billion of additional revenue for Russia’s federal budget.

“I don’t think the ruble is going to recover,” Krutikhin said. “It’s not good for ordinary Russians who have to rely on imported goods. Russia is very much dependent on imports, and it’s going to be a big blow for Russians.”

[…]

“If the crisis continues for a long time, and its impact on the primitive Russian economy is more significant than it seems today, then in two years Putin’s popularity will significantly decrease to a critical 25 to 35 percent,” Gudkov said. “Mass illusions about his ability to maintain the status quo in the country will be eroded and noticeably weakened.”

https://www.washingtonpost.com/world/europe/moscow-got-itself-into-an-oil-price-war-with-saudi-arabia-a-major-gamble-for-russias-economy/2020/03/10/94c01bca-6226-11ea-8a8e-5c5336b32760_story.html

The Saudi’s maintain an excess production capacity of ~3 million bbl/d in order to be the OPEC+ “enforcer”. Russia was only able to build up the cash reserves needed to launch this price war because they benefited from years of price stability delivered by their participation in OPEC+. The Saudis can do this for decades, if they need to.

The US economy is not dependent on oil export revenue. The price war will bankrupt a lot of companies and put 10’s to 100’s of thousands of people out of work. US oil production will decline, it has probably already started to decline. However, most companies will emerge from bankruptcy or their assets will be picked up by other companies at fire sale prices and production growth will resume. The only lasting damage will be the fact that many of the highly skilled people, who lose their jobs, won’t return to the industry when thing recover.

Russia basically brought a dull knife to a gunfight.

PETER BUCHAN
Reply to  David Middleton
April 4, 2020 6:00 am

All worthwhile to consider and plug into the model, David. But Russia has long since ceased to be a “gas station with nuclear weapons”.

One of the lowest debt to GDP rations on the planet (that specifically includes dollar denominated debt; One of the highest forex reserves to GDP; Highest gold to GDP ratio in the world; highest level of autarky of any devloped nation, with 70% of expenditure on localy produced products (thanks to the now-guaranteed miscalculations by the US and its NATO poodles-stooges); world’s biggest producer of wheat, and virtually 100% self sufficient in food production; self sufficient in energy production.

Say what you will, but the plain fact is one’s intellectual bias has to be off the charts to reject the notion that the US blinked first here, and the likely outcomes will now be:

1. Concessions from ALL parties, including US shale
2. Or unilaterally imposed import duties in the US to protect the frackers. Which, I submit, is what Russia probably wants (geostratecially).

I’m no myopic, ideologically possessed Russophile by the way. I just like to watch me a nice game of chess from time to time.

Reply to  PETER BUCHAN
April 4, 2020 8:25 am

The US, as a nation, can’t “blink” in this price war. Our government doesn’t control oil production, or prices. Our oil production will track oil prices.

William Astley
Reply to  David Middleton
April 4, 2020 7:02 am

You guys are ignoring the big picture who wins and who loses.

There is another player.

What would you have predicted would happen if almost all world travel was stopped and every economy in the world was stopped? Demand is removed. Supply stays the same.

The covid virus is win for the Chinese. China is not an oil or a natural gas exporter. China has been very, very effective in handling the virus and they have restarted there economy and are travelling about their country.

Russia and the US lose. And of course the Saudis, US’s friend also lose.

Russia is very dependent on oil revenue.

US not so much, however, the shale oil jobs are important, particularly as there is an election coming up.

There are great deal of coincidences concerning what has happened.

This has the wrong feel. There is some deep that is not right.

Marc
Reply to  David Middleton
April 4, 2020 7:37 am

David- a couple of points. The Saudi’s can’t do this for decades. At current prices their foreign currency reserves will be gone in less than two years and they will be unable to sustain the welfare state maintained for the masses by the House of

Second, US production has been dropping since the end of November based on the EIA monthly numbers. The production drop began long before the virus arrived.

sycomputing
Reply to  David Middleton
April 4, 2020 8:20 am

Say what you will, but the plain fact is one’s intellectual bias has to be off the charts to reject the notion that the US blinked first here . . .

Sorry for eavesdropping, but I couldn’t help but overhear you mention something regarding the US “blinking” here?

Could you clarify? Did the Feds do something with regard to the Russo-Saudi wrestling match or . . . ?

KaliforniaKook
Reply to  David Middleton
April 4, 2020 3:16 pm

David – don’t take the bait. Greg and Peter clearly don’t understand a capitalist economy nor our bankruptcy laws. They may be graduates of Boston U ( think of OAC) or worse. They’re not going to get it. Read their comments again, and you’ll see they are poorly educated at best, trolls at worst.

John Endicott
Reply to  David Middleton
April 4, 2020 3:37 pm

Have we seriously encountered an anti-vax proponent on this blog?

How exactly did the US blink? Unlike the OPEC nations, the US government does not control what the individual oil and gas companies do in regards to how much they produce or what prices they charge. What actions do you think the US government did that you consider the US blinking? Hmmm.

sycomputing
Reply to  Greg
April 4, 2020 6:34 am

That is where your russophobic mindset miscalculates.

I gave one of my family members the latest Pooty calendar so he could gaze at Dear Leader bra-less on his white steed, sittin’ all cute with puppies, swimming shirtless in icy waters (look who’s pointing now!!), and all the rest of the various lusciously provocative propagandizing poses.

Would you like one too Grigorij? Or do you already have yours for this year?

🙂

Phoenix44
Reply to  Joel O’Bryan
April 4, 2020 1:37 am

Putin is from a generation of the KGB who had no understanding of the West and its economic system. Its fascinating to read various accounts if8 the end if the Cold War and how by then the system was feeding false information from every point upwards. Gorbachev was quite bewildered when he started to learn how the Politburo had been systematically provided with false information- notably about the scale of Russian military spending – for decades.

Greg
Reply to  Phoenix44
April 4, 2020 3:09 am

LOL, of course Pentagon spending is all well under control and fully accountable. All audits go perfectly and books all tally. US military in charge of Fort Knox have always fully cooperated with presidential demands for an audit of the national gold reserve.

And that is today, not 30 years ago in USSR.

sycomputing
Reply to  Greg
April 4, 2020 7:24 am

“Well – well – well – you’d better leave Pooty alone cuz, cuz, um, um, WE DO IT TOO, WE DO IT TOO!?!”

Said Idolator, while gasping for air with arms flailing, the sting of salty sweat redding his fast blinking eyes . . .

MarkW
Reply to  Greg
April 4, 2020 4:03 pm

Are you actually trying to compare the US to Russia under the Soviet system?

Is your love affair with Russia that serious?

John Endicott
Reply to  MarkW
April 6, 2020 9:50 am

The Russian Bots are out in full force in this thread, it seems.

Nelson
April 4, 2020 12:54 am

I know Whiting well. As a professional investor, I have followed them for more than a decade. First, I think most consider WLL an oil company that also produces a lot of gas. Second, no one that follows WLL closely is surprised. What drove WLL into bankruptcy is incompetent management. its a long story. The macro matters and they did a poor job in managing leverage. Putting aside the current impact of the current virus outbreak impact of oil and gas prices, US E&P management teams shot themselves in the foot. Its a very transparent story.

Hans
Reply to  Nelson
April 6, 2020 3:46 pm

Admiral Nelson, you know your facts. Whiting Petro, is mainly a Bakken Play producer. That region, produces very little natty, with a mixture of about 85% goo and the rest in natty and condensates.

At one time the firm was a class A producer and it’s stock reached $100 bucks a share around 2011. Then it purchased a fellow Bakken producer, Kodiak Oil & Gas, at the height of goo prices. The firm never recovered from dat debacle despite a 6 for 1 reverse split.

Their shareholders department returned my call, of which now I am grateful.

Nelson, you are certainly correctoe about their management – horrible to say the least. It is why I never took a position.

April 4, 2020 1:06 am

When prices rise, as they will, the infrastructure is still in place. Russia can’t afford to keep oil prices low forever, especially when demand is low. Imperialism costs money.

April 4, 2020 1:24 am

Even John Maynod Keyes , the economest who finally figured out why the fall of shares
in Wall Street in 1929 spread into the rest of the worlds economy, and almost certainly led to the second world war, would have difficult understanding today’s financial crises.

VK5ELL MJE

Rod Evans
Reply to  Michael
April 4, 2020 1:38 am

Michael
I suspect John Maynard Keynes would have no difficulty understanding the present financial crisis. Even I understand the present crisis, it is caused by the stupid herd induced, madness of crowds. The more modern description is “social media”. Too many woke folk averse to risk think destroying the world economy, will save us all from an untimely death when we reach our eighties!

MarkW
Reply to  Michael
April 4, 2020 4:05 pm

If true, that would be the only think Keynes ever got right.

Marc
April 4, 2020 1:49 am

Whiting is not one of the nations largest natural gas producers. They are primarily an oil producer primarily focused on the Bakken shale play in ND. As a Debtor in Possession they will continue to operate and to produce their wells as they proceed through a bankruptcy reorganization.

April 4, 2020 2:28 am

But I thought that the us wanted no interference from government in life. “Let the market find its own level”

This seems to be suggesting that the government interfere with a free market as far as oil goes?

surely the US should buy from the lowest bidder and let the rest go to the wall?

Darrin
Reply to  ghalfrunt
April 4, 2020 7:57 am

Ghalfrunt, the US has 340 million people in it. Populations opinion runs from no government at all to full on government control of everything and everyone. Most people fall into the category of we need government control with the argument between parties just how much. That said even small government believers start crying for mommy government when things go bad.

Personally I’m a small government believer. If I was president for a day I wouldn’t of shut down our economy to fight a virus. Yes to common sense things like travel restrictions, testing, social distancing, wear masks, extra sick time off, etc. but let the country continue on. At that point if a company goes under it goes under. Once government steps in and massively impacts the economy, market forces go out the door and we need to do something to help both impacted people and companies.

So, like your example of government interfering with oil then yes. The government shut down our economy so oil companies are now producing at a loss and shutting down. Our oil industry would of withstood a single punch (Russia dumping oil) with losses as DM stated. Can they survive the double punch of Russia dumping and government shutdown of our economy? Y but not without heavy damage, damage that will take time to repair and likely enough to suppress economic recovery once restrictions have been lifted.

MarkW
Reply to  Darrin
April 4, 2020 4:07 pm

ghalfrunt belongs to that class of people who believes that citizens should be only have opinions that have been pre-approved by government.

Sylvester Deal
April 4, 2020 5:53 am

Ya’ll understand what the article author does not, Whiting is in the oil business, bankruptcy is related to oil price, not natural gas price. It’s not known as a giant in natural gas.

Curious George
April 4, 2020 8:33 am

Why is the word “oil” used 40 times here, and the word “gas” only 20 times? Should we be discussing gas prices, not oil prices?

LdB
Reply to  Curious George
April 4, 2020 8:53 am

You are assuming logic by some of the above posters … big mistake.

Reply to  Curious George
April 4, 2020 10:07 am

Because Whiting Petroleum Corporation is not a gas company and its bankruptcy has nothing to do with gas prices. It’s an oil company, primarily focused on the Bakken oil play.

Olavi
April 4, 2020 12:15 pm

Whom is the ones that get advantage of this? Chineese

peter buchan
April 4, 2020 12:50 pm

Additional perspective

David, the “blink” is that Trump is Publicly mediating. The final tell is if the U.S. implements duties in the event a deal isn’t reached. Point is that Trump doesn’t have the cards you assert he has, and Russia has more than you credit them with. Nothing to do with who the Ultimate King of The Jungle is. Not for a while yet anyway.

//www.zerohedge.com/energy/after-record-rally-oil-faces-collapse-new-feud-erupts-between-saudis-and-russia-monday-opec

John Endicott
Reply to  peter buchan
April 4, 2020 3:44 pm

You mean Trump is acting like a world leader, attempting to deal with other world leaders to mitigate a world problem? how can that be? after all, isn’t orange man bad?

Reply to  peter buchan
April 4, 2020 4:00 pm

Politely asking Saudi Arabia to rethink the price war before banning oil imports from outside the Western Hemisphere isn’t “blinking”… It’s just good manners.

https://www.spglobal.com/platts/en/market-insights/latest-news/oil/033120-trump-considering-crude-oil-import-limits-for-us-refiners-sources

The US imports about 1 million bbl/d from Saudi Arabia and Russia (~500,000 bbl/d from each of them). We could shut those imports down in a heartbeat. The US could shut down all oil imports apart from Canada for an extended period of time. Before the ChiCom-19 panic, the US was producing about 12 million bbl/d and consuming about 20 million bbl/d.

navy bob
April 4, 2020 5:04 pm

1st two sentences are about natural gas, but the rest of the story talks mostly about oil – a different substance and different market. Why is only oil data included in a story ostensibly about gas? Where is the information on gas production and prices? Doesn’t the writer know the difference?

Reply to  navy bob
April 4, 2020 5:12 pm

Whiting Petroleum, the company that filed for bankruptcy, isn’t a “gas company”… So, the article couldn’t be about natural gas. The headline and first two sentences aren’t relevant to the article. Bad journalism? Bad editing?

navy bob
Reply to  David Middleton
April 4, 2020 6:17 pm

Probably just a dumb reporter. Most know little about the real world. Maybe he confused natural gas with the gas people pump into their cars.

Vangel Vesovski
April 5, 2020 6:23 am

As I have argued all along, shale production is NOT ECONOMIC outside of the core areas. Whiting did not fail because of Russia. It failed because its wells consumed more energy than they produced over their lifetimes.

TRM
April 5, 2020 7:22 am

“and Russia’s continued war against U.S. energy producers.” – PATHETIC

Was it Russia that unilaterally sanctioned companies working on Nord Stream 2? No it was the USA.
Was it Russia that unilaterally sanctioned Iran and Venezuela? No that was the USA.
Was it Russia that threw a hissy fit and cranked up production when they didn’t get their way? No that Saudi Arabia.
So what did Russia do? They said no to more production cuts because others not in OPEC+ would just fill the cuts. That is hardly waging war. That is just acknowledging reality.

Your analysis is PATHETIC. What are you doing? Channeling Rachel Maddow?

peter
April 5, 2020 1:11 pm

Hey Anthony,
I think you’ve been hacked by rachel maddow. She’s using alias’s; pretending she’s a ‘conservative’ to spew
her; russia….russia…..russia….russsia…russia…is causing all or our problems.
Do we really need this political junk?
Where is the science?????