Rising Leverage Increases Financial RiskHigher leverage reduces financial flexibility and raises interest and covenant pressures. With a near‑2x debt/equity ratio, the firm faces greater refinancing and liquidity risk during downturns, constraining its ability to fund capex, pursue field development or absorb commodity and operational shocks.
Severe Deterioration In Cash GenerationA sharp drop in operating and free cash flow undermines internal funding for projects and debt service. Persistent weak cash conversion forces reliance on external financing, increases cost of capital, and can delay or curtail essential investments in production capacity and maintenance.
Declining Revenue And Compressing MarginsMaterial revenue decline and margin compression signal weakening commercial performance or production issues. Continued top‑line and margin erosion reduce retained earnings, limit reinvestment, and may indicate structural competitiveness problems in asset economics or contract pricing.