Ramifications from the political unrest in Libya and the Middle East have elevated oil prices to a two and a half-year high, according to FT reports. We look at investor sentiment towards some of the oil producers exposed to Libya and highlight other stocks in the sector seeing negative investor sentiment. Stocks covered include: Eni Spa (BIT:ENI), Statoil Asa (OSL:STL), Repsol SA (MCE:REP ), Total SA (EPA:FP), Celtic Exploration Ltd (TSE:CLT), Crew Energy Inc (TSE:CR), Noble Corp (NYSE:NE) and Ultra Petroleum Corp (NYSE:UPL).
Libya is Africa's third largest oil producer and has the continent's largest proven reserves, estimated at 44 billion barrels or 2% of world supply, according to Reuters. While much of the country's oil industry is controlled by Libya's National Oil Corporation (NOC) under Gaddafi, activities are run by foreign firms including Eni Spa of Italy, Repsol SA of Spain, Statoil Asa of Norway and Total SA of France. The media has reported that these companies, alongside other multinationals operating in Libya, are seeking to extract employees at risk and it is interesting to note that investors in oil do not seem concerned at the moment. Short interest is low in all these stocks and a similar trend is observed across other oil majors, such as BP and Royal Dutch Shell.
We ran a screen of 300 of the largest oil and gas producers and associated service providers to the industry. Amongst the list of companies exposed to negative investor sentiment is Celtic Exploration Ltd. The USD 1.9 billion market cap oil and gas exploration and production company is based in Calgary and listed on the Toronto Stock Exchange. Despite the price rallying in the last six months, short interest has risen since December from 16% to 20% of the total shares outstanding on loan. This represents 36% of the lendable supply available to be borrowed. Yet, long-only investors who make their stock available for lending believe in the stock and have added to their holdings, which now stand at 33.5% of total shares.
Canadian oil and natural gas producer, Crew Energy Inc has just revealed plans to raise CAD 100 million which drove the shares down almost 2.5%. The company announced that fourth-quarter production rose 11% sequentially and has seen its shares almost double over the past year. However, some investors do not seem convinced. The company is included amongst the list of companies subject to negative investor sentiment with 14.7% of total shares outstanding on loan, which represents 31% of the lendable supply. Yet long-only investors have gradually increased their holding since December to 27.5% of total shares.
Separately, oil services company Noble Corp (NYSE:NE), the world's second-largest offshore rig contractor, has been in the news recently. The company announced in late January that it will move one of its deepwater rigs out of the Gulf of Mexico and said that more would follow. The USD9.5 billion market cap company, which also recently agreed to pay USD2.5 million to resolve a Nigerian corruption investigation, saw a spike in short interest in mid January from 2% to 9.5% of total shares outstanding on loan, while the price continued its upward trajectory. This is another company where investor sentiment is divided between and long and short side of the market. Institutional investors, who make their stock available to be borrowed, remain supportive and have almost doubled their holdings since September to 27.6% of total shares.
Finally, Ultra Petroleum Corp (NYSE:UPL) posted lower-than-expected profits for the first time in eight quarters earlier this week, as lower natural gas prices offset higher output. However, the company forecasts an increase of over 15% in 2011 oil and gas production. The total shares outstanding on loan reached a high of 8.4%, up from 2% from July last year, as the share price flat-lined since November.
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