NEW YORK (TheStreet) -- Shares of Halcon Resources (HK) fell almost 5% to a 52-week low of $1.42, before recovering slightly to $1.51, as oil prices slid more than 5% on Monday after Goldman Sachs cut its forecasts and Gulf producers showed no sign of being willing to curb output, Reuters reports.
Last week, the Houston-based oil and gas producer said it would further reduce its drilling and completion budget for 2015 to between $375 million to $425 million, down from its earlier forecast of $750 million to $800 million.
Brent was down 5.57% to $47.32 at 2:43 p.m. in New York after falling to $47.18, its lowest bid since April 2009. WTI oil was down 4.96% to $45.96 after earlier falling to $45.90, also near a six-year low.
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Analysts at Goldman Sachs decreased their three-month forecasts for Brent to $42 a barrel from $80 and for the U.S. West Texas Intermediate contract to $41 from $70 a barrel. The firm also cut its 2015 Brent forecast to $50.40 a barrel from $83.75 and WTI to $47.15 a barrel from $73.75.
"We now expect a 30% cut in U.S. E&P capex and 15% globally. We expect 700 rigs to be released in the coming 12 months for a year-over-year cut of 29%," Goldman said.
Separately, TheStreet Ratings team rates HALCON RESOURCES CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate HALCON RESOURCES CORP (HK) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 2.33 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, HK has a quick ratio of 0.59, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- HK's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 53.10%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, HALCON RESOURCES CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- HALCON RESOURCES CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HALCON RESOURCES CORP reported poor results of -$3.11 versus -$1.24 in the prior year. This year, the market expects an improvement in earnings ($0.13 versus -$3.11).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 123.1% when compared to the same quarter one year prior, rising from -$854.83 million to $197.64 million.
- You can view the full analysis from the report here: HK Ratings Report