Troll no more: Energy Twitter group’s big short on shale comes good

Troll no more: Energy Twitter group’s big short on shale comes good
Pump jacks at an oil extraction site in California. (Getty Images/AFP)
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Updated 15 April 2020

Troll no more: Energy Twitter group’s big short on shale comes good

Troll no more: Energy Twitter group’s big short on shale comes good

BENGALURU: Just like the street hustler turned commodities broker in the 1980s comedy “Trading Places” for which he named his twitter account, @WillRayValentin (BRV) is an outsider making waves in the world of energy stocks trading.

A petroleum engineer by background, BRV is a member of the “Energy Fintwit” (EFT) community on Twitter made up of oil industry insiders — engineers, geologists and former traders — who have gained notoriety and thousands of followers for their unabashed bearish tweets about the US shale industry.

As US crude oil prices halved in March under the weight of recession fears and a price war, many of the group’s members had a field day as their “shorts” on US shale companies — bets that their stock prices would fall — paid off.

BRV’s own trading account showed he pocketed $4 million in one week between March 9 and March 16. “I’ve made a lot more money shorting energy stocks than my entire career working 9-5. It was like picking money up off the street,” BRV said. Like many others, he will not reveal his name, citing fears of industry retribution.

With their invective-laden diatribes against oil executives, memes and cartoons, posts by the likes of BRV, @HalliBu78316368 (Halli Burton) or @EnergyCynic (Energy Cynic), have attracted greater attention last year following some prescient calls.

“If you want to know the real narrative in energy, particularly the bear arguments on investor relations, you have to be on Twitter,” said Ethan Bellamy, energy sector analyst at RW Baird, one of half a dozen analysts and investors who said that following the group is now part of their routine.

Its most prominent member is @Mr_Skilling, whose alias is an ironic tribute to Jeff Skilling, a former executive jailed for his role in the accounting scandal that brought down energy trading giant Enron nearly two decades ago.

Mr. Skilling counts journalists, analysts and politicians among his 9,000 followers, more than some well-regarded industry analysts.

Dan Pickering, founder and CIO at Pickering Energy Partners, and a 30-year energy sector veteran said that posts by “guerilla activists” such as Mr. Skilling factor in his analysis. “There are absolutely institutional investors that follow this space. I’ve gotten questions about Mr. Skilling from my investor base.”


US crude oil prices halved in March.

One of the group’s most prescient calls was an Oct. 31 report in which @EnergyCredit1, BRV and @Oil_Gonif set a $0 price target for Whiting Petroleum Corp, warning about its high leverage and underperforming wells. On April 1, the oil producer filed for bankruptcy, but at the time of the report, 30 out of 31 brokerages had a “hold” or better rating for the stock.

Skilling’s months-long battle with Tallgrass Energy LP, over guarantees of higher payouts for its management in a takeover by Blackstone last year, also helped raise his and the group’s profile.

Under fire from investors, the pipeline operator’s CEO stepped down and Blackstone ultimately offered concessions to the company’s common shareholders.

The group’s members acknowledge they could not have anticipated the coronavirus outbreak and the extent of the oil market rout, but they say the crash validates the argument they were making when oil was at $60, which is that many US shale operators were unfit to survive a shock.

“When oil was at $100 it was more difficult to identify the bad companies,” said Halli Burton, whose Twitter profile declares she is the “VP of Shale Health Investment Trust.” “We are finally at a point today where we can start recognizing good and bad companies.”

Not everyone agrees. The US shale industry is by its nature a higher-cost supplier, which meets demand low-cost producers cannot satisfy when markets are strong, so it is bound to suffer in a slump, and just to blame the managers is too simplistic, the argument goes.

Still, for over a year now, there are signs of the group’s arguments easing into the mainstream.