Why Centennial Resource Development Stock Dropped 13% at the Open Today
Shares of relatively small U.S. exploration and production company Centennial Resource Development (NASDAQ: CDEV) fell roughly 13% in early trading on March 16. Oil (down) and natural gas (up) prices were mixed, so the price drop was most likely precipitated by an after-the-close financing announcement made on March 15.
Centennial Resource Development is a modestly sized energy company, sporting a market cap of about $1.5 billion. It also has a notable amount of leverage, with a financial debt-to-equity ratio of 2.6 times or so. Investors were keenly focused on its balance sheet throughout much of 2020, as oil prices plunged. Small and leveraged is not a great combination in an industry downturn.
Image source: Getty Images.
Source Fool.com
