Will These Beaten-Down Oil Stocks Sink or Swim?

While the oil market isn't in full rebound mode yet, it's in much better shape than it was early last year when producers were sinking into bankruptcy on a seemingly daily basis. That said, while industrywide bankruptcy risk has subsided, several companies remain in danger, including Pengrowth Energy Corporation (NYSE: PGH), Denbury Resources (NYSE: DNR), and Baytex Energy (NYSE: BTE). Here's a closer look at whether this trio might sink all the way to that bottom.

Pengrowth Energy's stock has gotten shellacked this year, plunging more than 50% since January. That pushes the Canadian oil producer's value down roughly 90% over the past three years. The primary issue weighing on the stock is the company's weak financial situation, which has it dangerously close to breaching its financial covenants. During the second quarter, for example, its debt-to-adjusted EBITDA ratio was 2.7 times versus a maximum permitted level of 3.5 times while senior debt to book capitalization was 50% against a maximum of 55%.

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Source: Fool.com