What:It was another awful day for energy investors. Denbury Resources was just one of many oil stocks off by 10% or more today.
The sell-off in Denbury Resources stock was solely caused by another big drop in oil prices, which are down another 4.2% today. That drop is thanks to Wall Street analysts who cut their crude oil forecasts again, which sent more shock waves through the oil market.
So What: Today's sell-off in Denbury Resources is just more panic selling, as crude oil prices have yet to find a bottom. Investors are growing more worried that not only could oil prices keep going lower, but also that low oil prices are here to stay. That said, while this isn't an ideal scenario for Denbury Resources, it is well positioned to withstand almost anything the oil markets throw its way. The company already cut capital spending by 50% to keep its production roughly flat in 2015, so it should have ample cash flow to support that spending plan and its recently boosted dividend.
Now What: There's really not much investors can do in times like these. When the market panics, stocks relating to that panic are sold off. However, the sell-off in Denbury Resources is particularly surprising, given that the company has an ultra-low cost of production and a pretty solid balance sheet. The company should have no problem handling the rough days that could still lie ahead for the oil market, even if the stock continues to take its investors on a wild ride.
The article Here's Why Denbury Resources Inc.'s Stock Dropped 10% Today originally appeared on Fool.com.
Matt DiLallo owns shares of Denbury Resources. The Motley Fool owns shares of Denbury Resources. 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.
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