KRP enters the week with shorts pulling back and the lending market loosening further — a meaningful shift from the bearish build that defined the prior two weeks.
The clearest development is in short interest. After climbing 58% over the past month, the short position has reversed sharply this week, falling nearly 7% to 2.05% of the free float. That's still above where it sat in early May, but the directional change matters. The ORTEX short score has dropped from 38.6 on June 3 to 34.7 today — its lowest reading in at least two weeks — suggesting the technical pressure from short-side positioning is easing. Borrow conditions remain genuinely loose: availability has widened to 1,252%, meaning more than twelve shares are available to borrow for every one currently shorted. Cost to borrow ticked up about 12% on the week to just over 1%, but that remains well within normal range for a name where the short float is this thin. The overall setup looks less contested than it did a fortnight ago.
Options positioning has also softened from the defensive extreme flagged in the prior note. The put/call ratio was running at 2.3 standard deviations above its 20-day mean at the end of May. It has since normalised to 0.60, just half a standard deviation above the mean of 0.58. That's still modestly above neutral, but the surge in downside protection has unwound. The prior divergence — analysts bullish, options traders hedging — looks less pronounced now.
The Street remains constructive. RBC Capital's May 29 initiation at Outperform with a $20 target sits about 31% above the current $15.31 close. Keybanc (Overweight, $17) and Citigroup (Buy, $19) add weight to the bull camp. The dividend factor score ranks in the 99th percentile — a signal the market still values KRP's royalty cash flows highly. EPS momentum over 30 and 90 days ranks in the 80s, though the 12-month forward earnings growth score is weak at 22, and EV/EBITDA has drifted down modestly over the past 30 days to about 7.1x. The tension between strong near-term momentum and deteriorating forward estimates is the key debate bulls and bears are running.
Correlated E&P peers had a rough week. DVN fell 4.7%, NOG dropped 5.9%, and CRGY shed 4.6%. Against that backdrop, KRP's 0.5% weekly gain is a relative outperformance, even with Tuesday's 1.4% pullback. The royalty structure insulates KRP somewhat from direct production-cost pressure — a feature that may be drawing investors away from operators during commodity-price softness.
The next earnings print is scheduled for August 6. Between now and then, the key thing to watch is whether the short-position retreat continues or stalls — and whether the options market, which moved early last time, begins rebuilding hedges as the summer strip price for crude takes shape.
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