When it comes to oil companies, there's a general sense of optimism even if they are going through a bad patch. Yet such undaunted optimism always needs the backing of fundamental numbers. The reason is pretty simple: Numbers don't lie -- especially if they have consistently shown a similar trend over the past few years.

Bad to worse
Delta Petroleum (Nasdaq: DPTR) seems to be going from bad to worse. With the company posting operating losses for the fifth consecutive year, there's cause for concern. The company -- which recently began trading on Nasdaq's Capital Market from the exchange's Global Market as share prices fell below $1.00 and has yet to recover -- is in danger of a complete delisting.

Delta posted an operating loss of more than $102 million for 2010, even though the company had cut operating and overhead costs. Its year-over-year revenues fell by 13.7% to $146 million. This is the second consecutive year that revenues have dropped. This doesn't sound good. The net loss for Delta, a trend for the third consecutive year, stood at $182 million.

Desperate measures
There have also been liquidity concerns. The company had to sell off oil and gas properties worth $132.9 million to stay afloat. This definitely does not bode well – a company can't sell assets indefinitely. The current ratio stands at a dismal 0.7, which means daily operations are hampered due to a working capital deficiency of $72 million.

The total long term debt-to-equity ratio, however, has gone down from 0.70 to 0.57 and is comparable to 0.52 for Cabot Oil & Gas (NYSE: COG) and 0.55 for Denbury Resources (NYSE: DNR) -- both being competitors engaged in natural gas exploration in the Gulf Coast and Rocky Mountains. The company has, indeed, managed to reduce its debt burden and its interest expenses, which will result in increased cash flow in the future. This will help it avoid complete shutdown in the near term, but long-term viability should remain a concern.

The writing's on the wall
Although Delta managed to bring down its long-term debt from $354 million to $294 million this year, I wouldn't like to bet on how it plans to reduce this value going forward. With estimated reserves down to 134 billion cubic feet equivalents (Bcfe) from 153 Bcfe at the end of 2009, the company has its work cut out. There is a huge possibility here that investors are actually staring down the barrel.