Bonanza's Dark Day: Why It Fell 40%

Shares of Bonanza Creek Energy Inc BCEI fell 44 percent Tuesday after it reported a loss of $573.7 million in its fourth quarter and terminated the sale of its Rocky Mountain Infrastructure assets to Meritage Midstream.

Following the news, among others, Stifel, KeyBanc and Cantor Fitzgerald have downgraded the stock. In the after-market hours, the stock was up about 2 percent.

The Denver-based company reported a loss of $12.08 per share. Excluding items, losses came to 17 cents per share. The oil and gas company generated revenue of $57 million in the period, also missing the Street's view. Wall Street analysts, on average, expected a loss of 12 cents a share on revenue of $96 million.

Related Link: Bank Of America Downgrades Bonanza Creek Energy To Underperform

The failed sale of RMI assets heightens liquidity risk for the company, which plans to re-market the assets. The company also guided first-quarter production well below Street estimates.

KeyBanc's David Deckelbaum said he expects BCEI encountering significant liquidity risks toward the end of 2016 and violating interest coverage covenants without a cash infusion through asset sale (or other means), or a price recovery. The analyst cut the rating on the stock to Sector Weight from Overweight.

"While BCEI's Wattenberg assets have resilient returns, with BCEI likely to pursue shorter-length laterals, we believe that economics are rather underwhelming in a sub $50/bbl oil price environment," Deckelbaum wrote in a client note.

"We believe the current plan to halt D&C operations after 12 additional completions sets up for a difficult prod'n profile," Cantor Fitzgerald analyst Brad Carpenter said. Carpenter downgraded BCEI stock to Hold from Buy.

Meanwhile, Stifel analyst Michael Scialla said, "We are lowering our rating to Sell from Hold as we anticipate the stock will underperform based on heightened balance sheet risk following termination of the RMI transaction."