Five Oil Stocks To Avoid At All Costs…

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Commodity Trading Research
Five Oil Stocks To Avoid At All Costs
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• Hi, My name is Justin and Im with Commodity
  Trading Research, today were reviewing our
  recently published article

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• With the price of West Texas Intermediate (WTI)
  collapsing to new 2015 lows near 42 a
  barrel,many US oil exploration companies are
  finding themselves in a living nightmare.

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• The days of strong balance sheets, positive cash
  flow, and profitable production are a becoming
  adistant memory

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• . Those good times(which remarkably, really
  werent that long ago) have been replaced with
  plunging share prices, stressed balance sheets,
  negative cash flow, and crushing debt payments.

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• I hate to say it, but the current crude oil
  downturn is starting to look worse, and
  mayultimately do more damageto the industry than
  the 2008 financial crisis.

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• As you may remember, crude and the share price of
  oil explorers crashed to incredibly low prices
  that year as fear seized investors collective
  mindset.

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• However, the industry rebounded relatively soon
  after the 2008 crash. By the middle of 2009
  crude was pushing back above 75 a barrel on its
  way to 80 by year-end.As a result, oversold oil
  producers experienced remarkable rallies in 2009.

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• In fact, names like Continental Resources CLR
  and Whiting Petroleum WLL advanced by 100 and
  250 respectively that year.
• But this time its different

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• The most recent global supply/demand data
  suggests the price of WTI may stay subdued at
  multi-year lows through late 2015, and possibly
  into 2016. So far, Middle Eastern oil producers
  are making good on their promise to keep
  production highin order to retain market share.

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• That fact, along with stubbornly high US
  production, has the potential to push crude into
  the high 30 a barrel range soon.

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• Heres the deal
• An extended bout of low oil prices could very
  well be the death knell for shale explorers with
  high costs of production and/or heavy debt loads.

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• Which oil stocks should you avoid at all costs?
• Heres a short list

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• Sandridge Energy SDThe last time I wrote
  about this company in April it was trading for
  nearly 2 a share. But thanks to the headwinds
  mentioned above, SD common stock has plummeted
  to 0.50- an eye-popping 70 downturn in a matter
  of months.

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• Goodrich Petroleum GDP This companys foray
  into the Tuscaloosa Shale of Louisiana and
  Mississippi looked highly promising in early
  2014. But now GDPs stake in this high-cost
  acreage could lead to its downfall.

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• Shares of the highly indebted producer are
  trading for a mere 0.88- a sickening 80
  downturn since April.

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• Penn Virginia PVA With a promising position
  in the Eagle Ford shale of Texas, PVA was a
  strong buyout candidate in mid-2014. But with
  oils collapse it appears any interested buyers
  would rather pick up the acreage after PVA goes
  bankrupt.

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• The cash-hemorrhaging producer has been marketing
  its Eagle Ford position for months, but no one
  seems interested.

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• Emerald Oil EOX If you really want to see
  what an obliteration of investor capital looks
  like, check a chart of EOX. This once promising
  Bakken producer has turned into a long-term
  investors nightmare.

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• Even after a 1-for-20 reverse split and a
  secondary offering in 2015, EOX is stuck near
  all-time lows around 2.

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• Halcon Resources HK Incredibly indebted HK
  has been a highly hyped turnaround story for
  years. But with shares now trading under 1- a
  50 downturn since April and an 87nosedive in
  the past year- investors are better off going to
  the casino.

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• No doubt about it, the oil names above have seen
  their brighter days.
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• Heres the deal

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• Due to their drastically reduced share pricesit
  will geteven harder for the above companies to
  raise much needed capital via secondary
  offerings. That means theyll likely be forced
  into a distressed seller of their assets, or go
  hat in handinto the debt markets- neither of
  which are good options right now.

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• Of course, theres always the potential for a
  life-saving joint venture, but even then the
  bullish effect on the share price would be
  questionable.

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• Bottom line
• All the oil exploration names above are in
  trouble- heaps of it.
• So whatever you do, dont flush youre hard
  earned cash down the toilet by investing in them

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• . Given the bearish headwinds for crude, it
  truly is a crapshoot as to whether these
  companies survive the next year or not.

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• Remember, I gave you a few simple rules for
  investing in cheap energy stocks a few months
  ago.
• Its more important than ever you heed that
  advice

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