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How Short Interest Impacts Your Upstream Stocks

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Upstream stocks with high short interest

On February 17, 2017, California Resources (CRC) had the highest short interest-to-equity float ratio among the upstream stocks in the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) at ~30.1%.

California Resources’ short interest-to-equity float ratio fell 28.6% over the last three months. During this period, the stock rose 16.3%. The company’s net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio is 15.8x. We discussed California Resources’ earnings trend in Part 2 of this series.

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California Resources was among the high implied volatility stocks that we looked at in the previous part of this series. Expectations of large movements in a stock can increase its implied volatility. High short interest in a stock reflects traders’ expectations of downside. It can also cause wild swings in prices as the bulls and bears slug it out.

Sanchez Energy

Sanchez Energy’s (SN) short interest-to-equity float ratio is ~23.1%. Its net-debt-to-EBITDA ratio is 10x. The stock rose 69.9% in the past three months. Its short interest-to-equity float ratio rose 10.5% during the same period.

In the last four quarters, its revenue rose 0.3%. It incurred an operating loss of $52.3 million in 3Q16—compared to an operating loss of $488.5 million in 3Q15. Sanchez Energy’s operating profit margin is -9.1%—compared to the industry median of 4.2%. Sanchez Energy is expected to report its 4Q16 earnings results on February 22, 2017.

Sanchez Energy is also among the high implied volatility stocks that we looked at in the previous parts of this series.

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Synergy Resources

Synergy Resources’ (SYRG) short interest-to-equity float ratio is ~23.0%. Synergy Resources rose ~6.6% in the past three months. Its short interest-to-equity float ratio fell 20.8% during the same period.

In the last four quarters, its revenue rose 0.3%. It incurred an operating loss of $19.65 million in 3Q16—compared to an operating loss of $135.53 million in 3Q15. Synergy Resources’ operating profit margin is -12.6%. Synergy Resources is expected to report its 4Q16 earnings results on February 23, 2017.

Continental Resources

Continental Resources’ (CLR) short interest-to-equity float ratio is ~21.6%. Its stock fell 7.4% in the last three months. The stock’s short interest-to-equity float ratio fell 18.5% during the same period. Its net debt-to-EBITDA ratio is 4.9x.

In the last four quarters, Continental Resources’ revenue fell 19.4%. It incurred an operating loss of $93.2 million in 3Q16—compared to an operating loss of $52.4 million in 3Q15. Continental Resources’ operating profit margin is -20.3%. Continental Resouces is expected to report its 4Q16 earnings results on February 22, 2017.

Denbury Resources

Denbury Resources’ (DNR) short interest-to-equity float ratio is ~16.7%. In the past three months, the stock rose 6.7%. Its short interest-to-equity float ratio fell 18.5% during the same period. Its net-debt-to-EBITDA ratio is 12.5x.

In the last four quarters, its revenue fell 16.3%. It reported adjusted operating income of $32.1 million in 3Q16—compared to an adjusted operating loss of $5.7 million in 3Q15. Denbury Resources’ operating profit margin is -7.5%. Denbury Resources is also among the high implied volatility stocks that we looked at in the previous parts of this series. Denbury Resources is expected to report its 4Q16 earnings results on February 23, 2017.

In most cases, the upstream stocks that gained also saw a fall in their short interest.

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