Talk about a “beatdown”! Delta Petroleum Corporation (DPTR) last week announced the devastating news that their  initial completion results from the Gray 31-23 well in the Columbia River Basin were very disappointing.  The market HAMMERED their stock and it dropped like a stone.

At the time of the news, the stock had been on an upswing and was trading at a high of $4.68 on September 17, 2009.  Currently, the stock is trading at $1.77 or a 58% decline from its high.  It was dropping so fast that it looked like it was going to become a penny-stock! I am thinking that DPTR might be an attractive trading opportunity.

The company is not one of those natural resource exploration companies that is HOPING to find oil or gas….they are a producing oil and gas company.  They had $22MM in revenue last quarter (down from previous quarters and, unfortunately,  no profits) and have cash in the bank and receivables.  I wouldn’t, however,  say that they have a strong balance sheet.    Their Quick Ratio is under 1 and they have $455MM in long-term debt.   But, they appear to have enough there to fund operations for the foreseeable future.

Let’s look at the chart:

The stock is sitting at a strong support level (around $1.75) and is heavily oversold.  The MACD is still bearish.  I would suggest watching the histogram to see if the angle of bearishness subsides.  The stock could continue to decline for a few more days, but I would expect a bounce.

I wouldn’t be at all surprised if it bounced.  I can’t even begin to guess the long-term prospects of DPTR, but in the near term it might afford my readers a nice trading opportunity.