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Why Are Investors Bearish on These Upstream Stocks?

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Dec. 4 2020, Updated 10:53 a.m. ET

Upstream stocks’ short interest-to-equity float ratios

On September 30, 2016, California Resources (CRC) had the highest short interest-to-equity float ratio of ~33.2% among the upstream stocks that are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). One month ago, it was ~33.2%. Three months ago, it was ~27%.

California Resources’s short interest-to-equity float ratio has been following a rising trend for the last three months. During this period, the stock has fallen 20.5%—the largest fall among the upstream stocks. The company’s net debt-to-EBITDA[1. earnings before interest, tax, depreciation, and amortization] ratio is 7.2x. Its cash and cash equivalents were ~$2 million in 2Q16.

CRC was also among the high implied volatility stocks we discussed in the previous two parts of this series.

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Continental Resources

Continental Resources’s (CLR) short interest-to-equity float ratio is ~20.6%. One month ago, it was ~24.3%. Three months ago, it was 26.2%. Its cash and cash equivalents totaled ~$16.6 million in 2Q16.

The company’s stock has returned ~6.6% in the last three months, as the short interest-to-equity float ratio has declined.

Oasis Petroleum

Currently, Oasis Petroleum’s (OAS) short interest-to-equity float ratio is ~20.6%. One month ago, it was ~20.6%. Three months ago, it was ~16.1%. In the last three months, the stock has returned approximately -9.8%.

In the last three months, OAS’s short interest-to-equity float ratio also rose. Oasis Petroleum’s net debt-to-EBITDA ratio was 5.4x in 2Q16, and its cash and cash equivalents totaled $6.5 million.

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Synergy Resources Corporation

Synergy Resources Corporation (SYRG) short interest-to-equity float ratio is ~19.5%. One month ago, it was 16.1%. Three months ago, it was ~10.9%. Its cash and cash equivalents totaled $133.9 million.

SYRG has returned approximately -13.7% in the last three months. The fall in the stock coincides with the rise in its short interest-to-equity float ratio.

Whiting Petroleum 

Whiting Petroleum’s (WLL) short interest-to-equity float ratio is ~19.1%. One month ago, it was ~18.4%. Three months ago, it was ~14.3%.

WLL’s net debt-to-EBITDA ratio is 4.6x, and its cash and cash equivalents totaled $15.3 million in 2Q16. The stock has risen 9.4% in the last three months.

Other upstream stocks

Carrizo Oil & Gas (CRZO) and Matador Resources (MTDR) have short interest-to-equity float ratios of ~6.3% and ~10.2%, respectively.

Generally, we can see a trend that the short interest in a stock and its prices are inversely related. Short interest and stock prices tend to move in opposite directions.

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