Depressed oil prices have created an opportunity to buy this stock at discounted levels.
Goodrich Petroleum (GDP)
from Top Stocks Under $10
An opportunity in Goodrich Petroleum (GDP) lurks, especially since the magnitude of its decline (3x the average oil and gas decline) on no actual company news, and since Citibank technicians called a technical bottom in oil prices and futures have already rallied a bit.
Most U.S producers are hedging their production well into 2015 to maintain profit stability and avoid having to go back to shareholders or creditors for more money. Budgets have already been set for next year. And if you have a well that’s pumping, that well is making you money, so it doesn’t make sense to turn it off now. The bigger question, of course, is what new rigs will come on line, and we have seen some companies reducing their longer-range budgets.
Goodrich Petroleum is hedged for 3,500 barrels a day into 2015 at prices of oil above $95. The recent fall in prices could discourage spending on new production from other companies. But if you are already pumping, there’s virtually no additional capital cost to keep pulling oil.
The move down in Goodrich has been remarkable over the past couple of days. A strong upside bounce is likely in the works. Add now.
Mandeep Rai, Top Stocks under $10, published by Money and Markets, a Division of Weiss Research, Inc., www.moneyandmarkets.com/services/trading-services/top-stocks-under-10, issues@e.moneyandmarkets.com; 1-800-291-8545, December 1, 2014