NEW YORK (TheStreet) -- There are several companies that are deeply affected by the recent decline in energy prices. While the 10% decline in crude oil month-to-date is capturing most of the headlines, natural gas prices have also fallen 8% so far in October.
As evidenced by the recent decline in stock prices, this pain has been especially concentrated in energy stocks trading under $10. This group contains some of the more highly levered names that had made big bets on the continued growth of domestic exploration and production.
With that in mind, we're going to take a look at four names today and help readers gauge which of these could be oversold and due for a bounce, compared with which ones might not survive an extended period of low energy prices.
First up is Halcon Resources (HK) , which is down about 20% year-to-date and currently changing hands around $3.07. About 85% of the company's production is leveraged to oil, where management has hedged more than 70% of its exposure for 2015.
Halcon is scheduled to report third-quarter results on Nov. 10. In the meantime, the company has piled up a lot of debt on its balance sheet. At the end of the latest quarter, the company's net debt stood at a sizable 2.3x of total equity.
Despite management's hedging strategy Halcon has above-average risk because of its hefty debt load. In a period of sustained lower energy prices, the company's financial health would be considerably stressed and we would avoid the shares at current levels.