Whiting Petroleum (WLL - Get Report) shares were lower Tuesday after people familiar with the matter told Reuters that the company is exploring an all-stock acquisition of smaller rival Abraxas Petroleum  (AXAS - Get Report) .

Shares of Abraxas, San Antonio, fell 0.3% to 37 cents on Tuesday, while Whiting Petroleum was last at $6.73, down 7.2%.

The companies employ 100 and 755 people, respectively, according to Yahoo Finance.

In addition, Wolfe Research analyst Josh Silverstein cut his rating on Whiting to underperform from peer perform and his price target to $8 from $12.

Silverstein cites the Denver energy company's "increased financial risk, given Whiting's inability to generate free cash flow and growth with West Texas Intermediate at $50 a barrel and expectations for the 2020 outlook to be below Street expectations," Bloomberg reports.

Also, SunTrust analyst Neal Dingmann said Whiting would likely assume about $180 million of Abraxas's debt, along with its $1.1 billion debt due by 2021, though the company's 2020 production and cash flow would be positive.

Dingmann sees "solid" overlaps with the two companies' Bakken operations. Whiting also would gain a Permian position, which it hasn't had since late 2013. 

Baird analyst Joe Allman noted that Abraxas is a "top-quartile operator in the Bakken."

Whiting Petroleum analyst coverage shows 8 buys, 21 holds and 1 sell, according to Bloomberg.

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Please note that due to factors including low market capitalization and/or insufficient public float, we consider Abraxas a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.