Troubled oil company Delta Petroleum (Nasdaq: DPTR) is now walking the proverbial tightrope after it recently began trading on Nasdaq’s Capital Market rather than the exchange’s Global Market. The company’s recent relisting at the hands of Nasdaq means that shareholders in Delta may be witnessing just the first of several punitive actions against the company. Like its name, Delta is at a clear crossroads.

In English, please
Nasdaq’s relisting means that the company’s outstanding shares have been transferred from the big swimming pool with the slides and diving boards down to the baby pool, where swimmers need to have water-wings and their mother’s undivided attention in order to dip their toes in. This is a bad thing. 

As of Feb. 1, the company received an additional 180 days from Nasdaq to regain compliance in order to requalify for play in the deep end. In the short term, this is a good thing of course. But, ultimately, one can’t argue this is anything other than yet another major set-back for the company.

Those are the rules
According to Nasdaq listing rules, the minimum price of a company’s common stock cannot be less than $1.00 per share for 30 consecutive business days. Delta’s shares are currently trading at $0.74. Of course, it wouldn’t take much for a volatile company like this one to muster a rally (especially considering the extremely volatile nature of energy prices), but for the time being, the company will have to operate per normal under the looming threat of a complete de-listing. This is something that should concern investors.

Delta’s underperformance is certainly not a recent phenomenon, either. Share prices have steadily declined from $4.67 in February 2009 to its current status well below a dollar.

A last-ditch effort
Delta had hoped to catalyze a turnaround after selling some of its working assets and being aided by a simultaneous increase in gas prices, but bad days didn’t end there. Hitting dry wells and surviving on cash tapped through the equity markets is no way to run an oil company. No doubt, they have put in a lot of effort to delve into unproven areas, but that strategy clearly continues to backfire. Without a proper asset base from which they can generate revenue, it wouldn’t make sense to keep digging with investors’ hard-earned money.

Of course, Delta had its days under the sun, and it would be nice to see a turnaround. There have been other reasonably similar success stories like Talisman Energy (NYSE: TLM), but it would be wise to take a closer look at the underlying business fundamentals of companies like Delta that are riding on such a volatile lifeline. Leaving everything to fate sounds pretty un-Foolish, especially in this sink-or-swim sector.

Isac Simon doesn’t own shares of any of the companies mentioned in the article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.