Shares of Centennial Resource Development (NASDAQ:CDEV) declined by 11.5% in July, according to data provided by S&P Global Market Intelligence. Market volatility was the sole factor as undulating oil prices tossed the oil stock around quite a bit last month.
Centennial Resource went on a wild ride in July. Shares jumped along with other oil stocks on the first of the month, thanks to higher oil prices. The stock fell sharply a few days later as it gave back some of its recent gains. It then jumped a couple more times along with other oil stocks on higher oil prices, only to give back those gains, and then some, over the final several trading days of the month as crude prices faded a bit heading into August.
One reason Centennial Resource has been so volatile is that the market has concerns about its survival if oil prices don't meaningfully improve. The company seemed to put some of those worries to rest in early August when it reported its second-quarter results, which came in better than the market expected. The oil company posted a surprise profit of $0.02 per share, which beat analysts' expectations by $0.28 per share. The primary driver was a debt exchange, which reduced its total debt by $127 million. The company also noted that it expects to operate at cash flow neutral through the remainder of the year at current oil prices. Those factors gave the market more confidence in Centennial's ability to weather this downturn, sending shares up about 9% during the first few days of August.
As a relatively small oil producer, Centennial Resource Development tends to get tossed around in a volatile oil market, which was the case last month. That's because lower oil prices have an outsized impact on its results, given its hefty debt load. While it took an important step toward addressing its balance sheet issues during the second quarter, it still has a long way to go.