Why Goodrich Petroleum (GDP) Is Higher Today

NEW YORK (TheStreet) -- Goodrich Petroleum (GDP) is moving higher on Monday after announcing it has completed its Blades 33H-1 well in Tangipahoa Parish, Louisiana.

By midmorning, shares had surged 28% to $23.56.

In a statement, the oiler said the well had achieved a peak 24-hour average production rate to date of 1,270 barrels of oil equivalent (boe) per day, 1,250 barrels of which was oil and 115 Mcf of gas.

"The well landed in the Company's lower target, was drilled and completed under budget and was fracked with 20 stages using composite plugs that were drilled out prior to flow back," the company said in a statement.

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Separately, TheStreet Ratings team rates GOODRICH PETROLEUM CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOODRICH PETROLEUM CORP (GDP) 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 weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The debt-to-equity ratio of 1.36 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, GDP maintains a poor quick ratio of 0.80, which illustrates the inability to avoid short-term cash problems.
  • Net operating cash flow has significantly decreased to $30.56 million or 59.89% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • 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, GOODRICH PETROLEUM CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for GOODRICH PETROLEUM CORP is currently very high, coming in at 77.00%. Regardless of GDP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GDP's net profit margin of -46.46% significantly underperformed when compared to the industry average.
  • GOODRICH PETROLEUM 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, GOODRICH PETROLEUM CORP reported poor results of -$2.99 versus -$2.48 in the prior year. This year, the market expects an improvement in earnings (-$1.45 versus -$2.99).
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