Stifel: Financial Risk is high for Goodrich Petroleum

Stifel released a company update on Goodrich Petroleum Corporation

and downgraded the company from Hold to Sell based on a decrease in revenue projections and lower 2016 oil price forecasts. Currently, Goodrich has a price target of $0.20. Michael Scialla and Kenneth Beyer, analysts at Stifel, wrote, "While the stock has been decimated over the past 12 months and management continues to reduce debt obligations via asset sales, debt exchanges, and conversions, the financial risk does not warrant a Hold rating in our view." One of the issues with Goodrich is that many of their drilling projects require significantly higher oil prices in order to be profitable. Stifel believes that oil would have to approach $60 per barrel for projects such as the company's TMS drilling program to be worth the investment. As oil has been plagued by oversupply, the firm's prospects don't look positive in the near term until we see a reversal in oil prices. Goodrich Petroleum last closed at $0.40, down 5.23 percent.