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Short Interest: Where to Look in the Upstream Energy Sector

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Upstream stocks with high short interest

On March 3, 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 ~28.8%.

California Resources’ short interest-to-equity float ratio fell 22.3% over the last three months. During this period, the stock rose 0.7%. 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. California Resources was among the high implied volatility stocks that we looked at in the previous parts 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.

Synergy Resources

Synergy Resources’ (SYRG) short interest-to-equity float ratio is ~23.2%. Synergy Resources fell 13% in the past three months. Its short interest-to-equity float ratio fell 20.6% during the same period.

In the last four quarters, its revenue rose 48.5%. It reported an adjusted operating income of $9.37 million in 4Q16—compared to an adjusted operating loss of $10.3 million in 4Q15. Synergy Resources’ operating profit margin is -12.6%—compared to the industry median of 4.3%.

Continental Resources

Continental Resources’ (CLR) short interest-to-equity float ratio is ~22.5%. Its stock fell 20.6% in the last three months. The stock’s short interest-to-equity float ratio fell 3.7% during the same period. Its net debt-to-EBITDA ratio is 4.9x.

In the last four quarters, Continental Resources’ revenue fell 4.5%. It incurred an operating loss of $13.3 million in 4Q16—compared to an operating loss of $62 million in 3Q15. Continental Resources’ operating profit margin is -18.1%.

Denbury Resources

Denbury Resources’ (DNR) short interest-to-equity float ratio is ~16.6%. In the past three months, the stock fell 28.8%. Its short interest-to-equity float ratio fell 11.7% during the same period. Its net debt-to-EBITDA ratio is 12.5x.

In the last four quarters, its revenue rose 0.7%. It reported an adjusted operating loss of $547 million in 4Q16—compared to an adjusted operating loss of $48.8 million in 4Q15. 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.

Murphy Oil

Murphy Oil’s (MUR) short interest-to-equity float ratio is ~16.5%. Its net-debt-to-EBITDA ratio is 2.2x. The stock fell 14.5% in the past three months. Its short interest-to-equity float ratio rose 15.2% during the same period.

In the last four quarters, its revenue fell 4.8%. It reported an adjusted operating income of $49.5 million in 4Q16—compared to an operating loss of $212.2 million in 4Q15. Murphy Oil’s operating profit margin is -7.1%.

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