What happens when you combine falling oil prices and high debt levels?
You get ugly results... and today's chart.
Over the past six months, crude oil has fallen 38.4%. This has produced a 20% decline in the price of well-run oil companies with modest debt like EOG Resources Inc. (NYSE: EOG, Stock Forum). But for oil firms who have taken on a lot of debt, the declines have been far, far worse...
For example, Goodrich Petroleum Corp. (NYSE: GDP, Stock Forum) is a small-cap oil producer with one of the highest debt-to-asset loads in the industry.
The combination of "falling oil, high debt" has obliterated Goodrich shares. They've fallen from $25 per share to less than $5 (more than 80%) in just a few months. It's a lesson worth remembering for resource investors.
