What: Shares of Hi-Crush Partners (NYSE:HCLP) declined more than 26% in December as the continued slump in oil and gas drilling activity has put even more pressure on the company. 

HCLP Chart

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So what: There was a brief period where frack sand stocks like Hi-Crush were the hottest thing on the market. The breakneck pace of drilling in the U.S. and the realization that greater and greater amounts of sand used per well helped improve returns for producers meant that Hi-Crush and its peers could barely ramp up production fast enough to meet demand.

Boy, did that situation turn around quickly. 

Since shale wells are so fast and relatively easy to develop after a few years of practice, producers could change their budgets within a matter of weeks. So when producers started to realize we were in for a long slog of cheap oil, they scaled back their budgets pretty fast. This left Hi-Crush with declining sales volumes and lower prices on those volumes sold.

In December, this didn't change much. Oil and gas prices continue to stay stubbornly low as supply gluts have yet to clear, and the amount of active rigs in the field are still getting scarcer by the day. These factors have already led Hi-Crush to suspend its distribution. Also, with a very low supply of cash on the books, it wouldn't take long for the company to run into debt troubles if operating profits were to fall any further. 

Now what: If there is any consolation prize for all of this, it's that there are smaller, weaker companies in worse shape than Hi-Crush Partners. As a result, it is gaining some market share despite lower sales volumes. If this low oil price environment continues for a long time, then Hi-Crush could find itself in even deeper credit issues. If we were to see a decent rebound in drilling activity relatively soon, though, it's entirely possible that shares of Hi-Crush could recover a decent portion of the 81% loss it saw in 2015.