Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of SandRidge Energy (NYSE: SD) plunged 13% today to hit a new 52-week low.
So what: Oil dropped 4.3% today to just $63 per barrel, meaning that many of SandRidge's properties may not be economical at the current price of oil. At this point there seems to be no bottom to the price of oil, which is trouble for U.S. oil explorers.
Now what: Oil can't fall forever, but it doesn't appear that oversupply in the market will ease any time soon. The challenge for Sandridge is the unknown of how long oil will stay low and whether it will return to a level that would make the company profitable. Sandridge has lost money over the past year even with high-priced oil, so I doubt they'd be anywhere near profitable at $63 per barrel.
I'd stay away from SandRidge Energy and U.S. shale in general, because that's what OPEC is trying to squeeze by keeping supply high. I'm not putting my money up against OPEC at this point.
