Why Oasis Petroleum Inc.'s Stock Plunged 15.6% Today

By Markets Fool.com

What:Oasis Petroleum's stock was pummeled 15.6% today.

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OAS Price Chart

OAS Price data by YCharts

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.

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The article Why Oasis Petroleum Inc.'s Stock Plunged 15.6% Today originally appeared on Fool.com.

Matt DiLallo and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.