What: Oasis Petroleum's (OAS) stock was pummeled 15.6% today.
Today's downdraft was mostly caused by another big drop in oil prices, which were off by 4.2% on the day. More bearish sentiment from analysts, who continue to cut price forecasts, caused another downdraft in oil prices today. However, if that wasn't enough, Oasis Petroleum's stock was downgraded by an analyst at SunTrust today over concerns about the company's large debt load.
So What: Today's sell-off in Oasis Petroleum is just a continuation of the panic-selling, as crude oil prices have yet to find a bottom. That sell-off has now taken the stock down 79% from its 52-week high. It's being sold off because investors are worried that oil prices could continue to head lower and stay there for a long time. That's a potential big issue for Oasis Petroleum, as its debt would become a problem under that scenario.
Now What: While Oasis Petroleum has its share of debt, it isn't the weakest link in the oil patch. The company has solid oil assets in the Bakken shale that it can access at fairly low costs, so the company could one day become a compelling acquisition target, as companies with larger scale and more geographic diversity are in a much better position to weather any future storm in the oil markets than a pure-play Bakken shale driller than Oasis Petroleum.
