I was thinking for shorting DVN, based on market direction (sell off) and the fact that oil prices were pretty much stagnant despite potential war with Iran and also economic war with China and the rest of the world.
It seems that the company is loosing money based on Yahoo Finance Stats.Here the biggest difference was the revenue. But it was hard to consolidate that with the financial statement of DVN, DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION.
The Devon Energy Reports First-Quarter 2019 Results was a bit easier to understand but did not offer much insight. The one thing that was very clear is the 5 billion dollar stock buy back plan with is almost done by Q1 of 2019. It is kind of surprising to see that despite the buy backs the stock took a large hit last December, down to $22. Reuters has an article (Devon Energy raises U.S. oil output forecast, beats profit estimates) that is basically saying the same thing in the above pdf. To understand either, one has to read the Investor Presentation of April 2019 from DVN.
And in order to understand the latter, one must have a good understanding of the oil fields locations and names. Here is an article giving STACK & SCOOP Overview.
The ambiguity of this company reporting comes from multiple resources. But once we are talking about BOE rather than revenue from crude oil, it becomes extremely hard to assess the claim that the company can make money with WTI is $46 or $47.
This means that if I short this company I am relying on the chart. The one thing that is clear in the chart is that a very aggressive buy back plan was not able to push the stock price substantially higher. Also, as WEI prices drop, we are going to see bunch of Shale players struggle. Finally DVN has $1.3 billion in cash, $6.2 billion in debt, but no significant debt maturities until mid-2021.
And when I cannot get a straight answer, I always try to bound the problem. In this case, I wanted to look at some insider action. As shown below, there was some selling at $25 and at $30 meaning these people where thinking the stock is not worth that much.
So that encourages me to short it at $30 or so and keep a very tight stop order on it. Also, I am going to sell a put option on it as well.