7 Oil and Gas Stocks That Have Entered Dangerous Waters

Oil stocks, natural gas producers and other commodity-based firms stand apart from one another based on factors such as where they're located and how efficient their operations are.

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Oil stocks, natural gas producers and other commodity-based firms stand apart from one another based on factors such as where they're located and how efficient their operations are. But much of their success boils down to this simple idea: The higher the price of the commodity, the bigger the profits.

Unfortunately, the inverse is also true, which is why many energy stocks are getting pummeled right now.

Oil prices were already struggling with the fallout from the U.S.-China trade war and its effect on the global economy. But the coronavirus' economic ripple effect across the world – combined with Saudi Arabia's volley against other oil producers – has sent West Texas Intermediate (U.S. crude) oil prices to around $20 per barrel. Those are lows not seen since February 2002.

The specific issue: Oil prices (and natural gas, for that matter) are well below the cost of production for even some of the leanest companies out there. Thus, many energy producers are losing money simply by virtue of operating their businesses. Mounting losses, rising debts, cut dividends and even bankruptcies are all on the table.

Here are seven oil stocks and natural gas producers that are in considerable danger at the moment. While it's understandable that investors might want to seek out values in the beat-up energy sector, these are seven stocks to avoid.

Data is as of March 29. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.

Contributing Writer, Kiplinger.com