uploads///Upstream SI

Are These Bearish Upstream Stocks in Your Portfolio?

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Nov. 20 2020, Updated 2:57 p.m. ET

Upstream stocks that lead in short interest

On December 5, 2016, California Resources (CRC) had the highest short interest-to-equity float ratio of ~42.5% among the upstream stocks in the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). One month ago, its ratio was ~44%. Three months ago, it was ~30.5%.

California Resources’ short interest-to-equity float ratio rose 39.4% over the last three months. During this period, the stock rose 72.4%. The company’s net-debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio is 7.2x. Its cash and cash equivalents were $10 million in 3Q16.

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California Resources was also among the high implied volatility stocks that we looked at in the previous two parts of this series. Expectations of large moves in a stock can increase a stock’s implied volatility. High short interest in a stock reflects traders’ expectations of downside. Stock prices can move wildly as bulls and bears slug it out.

Synergy Resources

Synergy Resources’ (SYRG) short interest-to-equity float ratio is ~29.1%. One month ago, it was 22.9%. Three months ago, it was ~13.4%. Its cash and cash equivalents were $80.7 million in 3Q16. Synergy Resources rose ~44.8% in the past three months. Its short interest-to-equity float ratio rose 117% during this period.

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Continental Resources

Continental Resources’ (CLR) short interest-to-equity float ratio is ~26.5%. One month ago, it was ~23.1%. Three months ago, it was 24.7%. Its stock rose ~14.2% in the last three months. The stock’s short interest-to-equity float ratio rose 7.4% during this period. Its cash and cash equivalents were ~$19.5 million in 3Q16. Its net-debt-to-EBITDA ratio was 3.7x.

Whiting Petroleum

Whiting Petroleum’s (WLL) short interest-to-equity float ratio is ~24.8%. One month ago, it was ~24.7%. Three months ago, it was ~15.8%. Its net-debt-to-EBITDA ratio is 4.6x. Its cash and cash equivalents were $18.3 million in 3Q16. The stock rose 66.2% in the past three months. Its short interest-to-equity float ratio rose 57% during the same period. Whiting Petroleum was also among the high implied volatility stocks that we looked at in the previous two parts of this series.

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Denbury Resources

Denbury Resources’ (DNR) short interest-to-equity float ratio is ~21.1%. One month ago, it was ~20.2%. Three months ago, it was ~22%. In the past three months, the stock rose 3.3%. In the past three months, Denbury Resources’ short interest-to-equity float ratio fell 4%.

Its net-debt-to-EBITDA ratio was 3.3x. Its cash and cash equivalents were $3.3 million in 3Q16. Denbury Resources is one of the high implied volatility stocks that we discussed in Part 1 of this series.

Other upstream stocks

Kosmos Energy (KOS) and Matador Resources (MTDR) have short interest-to-equity float ratios of ~9.3% and ~18.9%, respectively.

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