Oil Price Correction Triggers Shale Meltdown

Oil Price Correction Triggers Shale Meltdown

It was a rough week for the U.S. shale industry.

A series of earnings reports came out in recent days, and while some drillers beat expectations, there were some huge misses as well.

Concho Resources, for instance, saw its share price tumble 22 percent when it disclosedseveral problems at once. Profits fell by 25 percent despite production increases. Concho conceded that it would slash spending and slow the pace of drilling in the second half of the year.

It also said that one of its projects where it tried to densely pack wells together, which it called “Dominator,” the results were not as good as they had hoped. The project had 23 wells, but production disappointed. The “30 and 60 day production rates were consistent with our other projects in that area, but the performance has declined,” Leach said. So, the company will abandon the densely packed well strategy and move forward with wider spacing.

In the second quarter the company had 26 rigs in operation, but that has since fallen to 18. At the start of the year, the company had 33 active rigs.

“We made the decision to adjust our drilling and completion schedule in the second half of the year to slow down and not chase incremental production at the expense of capital discipline,” Concho’s CEO Tim Leach told analysts on an earnings call. He said the company’s aiming for “a free cash flow inflection in 2020.”

The company reported a net loss of $792 million for the first six months of 2019. As Liam Denning put it in Bloomberg Opinion: “It’s sobering to think that Concho, valued at more than $23 billion in the spring of 2018 and having since absorbed the $7.6 billion purchase of RSP Permian Inc., now sports a market cap of less than $16 billion.”

The reason these results are important is because they may not be one-off problems for individual companies, but are more likely indicative of the problems plaguing the whole sector. “There is little doubt this is a big event for the sector and a brake of this nature will create lasting impact,” Evercore analyst Stephen Richardson wrote in a note, referring to Concho’s poor results.Related: The No.1 Reason Why Oil Isn’t Trading Over $100

“How companies still, after all these years we have wailed and gnashed our teeth, manage to over-promise and under-deliver, remains an infuriating mystery,” Paul Sankey wrote in a note for Mizuho Securities USA LLC.

Whiting Petroleum had an even worse week. Its stock melted down on Thursday, falling by 38 percent after reporting a surprise quarterly loss that badly missed estimates. The company announced that it would cut its workforce by a third.

According to the Wall Street Journal and Wood Mackenzie, a basket of 7 shale drillers posted a combined $1.58 billion in negative cash flow in the first quarter, four times worse than the same period a year earlier.

While the results, in many cases, were bad, the declines in share prices were hugely amplified by the announcement of new tariffs on China, which caused a broad selloff not just in the energy sector, but for equities of all types. Here is a sampling of how the share prices of some oil companies fared on Thursday:

  • Whiting Petroleum -38 percent
  • Concho Resources -22 percent
  • Pioneer Natural Resources -7.5 percent
  • EOG Resources -5.5 percent
  • Devon Energy -6.8 percent
  • Continental Resources -7.8 percent
  • Royal Dutch Shell -6.1 percent
  • Chevron -2 percent
  • SM Energy -9.0 percent

But the poor quarterly performances were true before President Trump took to twitter. Even with oil down and stocks perhaps looking cheap, “it’s hard to call it a contrarian opportunity right now,” Matt Maley, chief market strategist at Miller Tabak, told CNBC. “This group has really been dead money most of this year.”Related: Mexico Set To Tap $6.3B From Oil Fund To Plug Budget Shortfall

Investors are clearly souring on the sector. As Bloomberg notes, speculative positioning from traders fell to the lowest level since March 2013, a sign of “investor apathy” towards crude oil and energy stocks.

While shale E&Ps languish, the oil majors are not slowing down. Exxon said that its oil production rose by 7 percent, driven by the Permian. In fact, its production from the Permian rose 90 percent in the second quarter from a year earlier. Earnings dropped by 21 percent, however, and the company cited lower prices and poor downstream margins.

But the majors aggressive bet on U.S. shale is a sign of the times. Small and medium drillers are getting hammered and seeing their access to capital close off, which is forcing budget cutbacks and otherwise leading to steep selloffs in their share prices. The majors, on the other hand, are only in the early stages of a multi-year bet on shale. They can stomach losses on individual shale projects for years, scaling up while they earn profits elsewhere.

So, despite the widespread financial losses for the shale sector, it’s not clear that production is set to grind to a halt.

By Nick Cunningham of Oilprice.com

CIA Plans To Keep Death Squads Operating In Afghanistan After Any “Peace” Deal


–after watching it grind on for 18 active years (following the previous 22 years of tribal warfare, initiated by the 2 year Soviet/Afghan war, which we also arranged)–

we finally begin to understand what the CIA meant when they called Afghanistan…

“an Intelligence-Driven War.”

[SEE:  The Tragic Price Tag for an Intelligence-Driven War —September 9, 2009]

The CIA was given the lead in America’s alleged war of retribution, allowing the agency to secretly lead the direction of the war, using false flag direction and by supplying the new “intelligence” documents that would support the secret actions, in order to fuel succeeding phases of the war, straight into the heartland of Central Asia.  The CIA sets the pattern in this war that others must follow, even the Pentagon.   Covert spy networks supply the individual pieces of new “intelligence” that determine both the air missions and those conducted by Special Forces teams (under CIA leadership, of course).

The local informants who are recruited on the ground in Pakistan and Afghanistan determine targeting for drones and bombers without concern for collateral damage, only for the “twenty pieces of silver” that they will receive for calling-in airstrikes upon their neighbors.  If wrong actions are taken, or if there is extensive “collateral damage” in the raids, then it is the agency’s faulty target acquisition methods that are to blame.  How reliable could such amoral spies be, when they would willingly do this to their fellow man?

This is the type of scum that the agency has working for it, calling the shots for the Navy and Air Force.  It is little wonder that so many wedding parties and funerals have been hit.  In the latest bombing catastrophe, over 125 people were killed, many of them civilians, on the strength of one low-life informant, who would sell-out his neighbors for a dollar ( Sole Informant Guided Decision On Afghan Strike).

[ Clandestine operations and CIA-backed forces endanger peace in Afghanistan ; US Withdrawal Plan from Afghanistan Won’t Include SOF Strike Units ]

Stefanie Glinski


Despite reports that American troops may soon be leaving the country following a deal with the Taliban, the United States Central Intelligence Agency plans to retain a strong presence on the ground in Afghanistan. 

Reports indicate that Washington has resolved its differences with the Taliban about withdrawing American troops from Afghanistan as the Doha talks are underway.

But in an article for Foreign Policy, Stefanie Glinski points out that the CIA is not planning to leave the Central Asian country any time soon.

The American intelligence agency is known to support, arm and train several proxy forces throughout Afghanistan.

Langley plans to keep those proxy forces operating in the country for the foreseeable future, regardless of whether US troops pull out, says Glinski.

She gives the example of the Khost Protection Force (KPF), a 6,500-strong unit of Afghan soldiers who are “trained, equipped and funded by the CIA”.

The KPF is the most active and visible of an extensive network of CIA-sponsored paramilitary groups in Afghanistan.

According to the report, the KPF operates almost exclusively along the Afghan-Pakistani border and has a strong presence in Taliban strongholds like Ghazni, Paktia, and Khost.

The roots of the KPF go back to the days immediately after the attacks of September 11, 2001, which prompted the US military invasion of Afghanistan. It, therefore, precedes the Afghan National Army, Afghanistan’s state-run military apparatus, and does not operate under its command. Instead, it is solely directed by the CIA, which uses it to secure the Afghan-Pakistani border and disrupt the activities of Taliban, al-Qaeda and Islamic State fighters in the Afghan borderlands.

Members of the KPF claim that they are “better trained than the Afghan National Army”.

They are also paid much better, over $1000.00 per month, which is an enormous sum for Afghanistan.

Glinski reports that most KPF fighters joined the group for the money and the ability to eventually seek permanent resettlement in the United States.

But alongside the group’s elite image, KPF members have acquired notoriety and are often seen as trigger-happy and unaccountable.

Several reports in Western media have said that the KPF’s tactical accomplishments have come at a high price, with countless reports of civilian deaths and, some claim, even war crimes.

These risk “alienating the Afghan population”, said a New York Times report last year.

Glinski says it is possible the KPF’s aggressive tactics may be “radicalizing portions of the very population it intends to pacify or frighten into submission”.

In April of this year, a United Nations report alleged that more Afghan civilians died as a result of attacks by the Afghan government and American military attacks than at the hands of the Taliban and other guerilla groups.

The CIA did not respond to several requests for comment from Foreign Policy, says Glinski.

Afghanistan: Brutal CIA shadow militias

Photo: Emran Feroz

The West and its Afghan allies kill more civilians than the Taliban and IS do

Recently, it has become more or less official: In Afghanistan, more civilians are being killed by attacks by the US military and its Afghan allies than by the Taliban and IS. This is the conclusion of the UNAMA (United Nations Assistance Mission in Afghanistan) report .Accordingly, at least 1,773 civilians were killed or injured between January and March.

The UN reports at least 305 fatalities caused by US troops, Afghan army or CIA militias.The Taliban and other insurgent groups caused at least 227 casualties over the same period.

Overall, and compared to the previous year, the number of civilian casualties fell by 23 percent. In addition, it is a quarterly low since 2013. The reason for this is called UNAMA the decrease in suicide attacks in large cities such as Kabul. In addition, according to the organization, it is unclear whether some warring factions have become more responsible in dealing with civilians. The UN count has been taking place since 2009.

But at the same time, the number of casualties caused by government forces and the US military has risen 39 percent over the previous year.

Air strikes carried out by conventional fighter jets and drones alone killed at least 140 civilians. Nocturnal raids carried out not only by US soldiers and the Afghan army, but also by brutal CIA militias created in the course of the war play an escalating role.

Examples include the so-called 02 unit, which is mainly active in the province of Nangarhar, and the Khost Protection Force (KPF) in the province of the same name in the east of the country.

For long-time observers of the conflict, the numbers are anything but surprising. Not only in the last few months, but also in 2017 and 2018, the “responsible actors” for anti-terrorist operations increased massively, making it almost impossible to cope with the number of victims. In 2018, the US military dropped as many bombs over Afghanistan as never before .

In October, I interviewed several victims of a raid that took place in Rodat district, Nangarhar province. That night, 14 civilians, including several children, were killed in the village of Shaheedanu Meena. The government labeled all victims “IS terrorists”.

The 02 unit, the KPF and the CIA training

During the interviews, the villagers stressed that such raids were now part of everyday life.Responsible for the operations was the aforementioned 02 unit, which is commanded by the Afghan intelligence agency NDS and supported by the CIA and trained. As the center of the militia is the airport of Jalalabad, it acts mainly in the province of Nangarhar and has since gained a notorious reputation there.

One militia that may even be a lot more brutal is the Khost Protection Force (KPF), which is being trained at the Camp Chapman CIA base. At present, the KPF controls large parts of the Khost province and is an important tool of the American “anti-terrorist struggle” near the Afghan-Pakistani border. The tasks of the militia include not only those house raids, which are often carried out together with US soldiers, but also the coordination of drone attacks and the hunt for journalists and human rights activists .

In this context, the most recent UNAMA report should not overlook the fact that the organization follows a very conservative methodology. Thus, at least three different sources are needed to confirm a single civilian victim. However, this is hardly possible in many remote regions of Afghanistan.

Most sites of air and drone strikes and isolated villages targeted by CIA shadow militias are rarely visited by journalists and human rights organizations, let alone by Westerners.

Meanwhile, the exact opposite is the case in big cities like Kabul, which often become the target of suicide attacks and other assassinations. The contrarian relationship between sources is therefore a problem that is reflected in most reports. Emran Feroz )