The Worleyparsons Limited (ASX: WOR) share price has more than doubled from lows of $3.00 reached in mid-January this year, following a bounce in oil prices. That includes a 7.4% gain today to reach $6.36.

Worleyparsons provides contracting, consulting and engineering services to the resources and energy sectors, and has been particularly hard hit by falling commodity prices in recent years.

Five years ago, the company’s share price was heading above $30, but instead, has seen a 79% decline in value since. But all that has changed since January 18, when Brent crude oil hit US$28.55 a barrel, and has rebounded to currently trade at around US$39.25 a barrel, including a 5% jump on Friday.

Worleyparsons depends heavily on the oil and gas industry – roughly 72% of revenues comes from that sector, with 12% from resources and the remaining 16% from infrastructure projects.

And the result of that dependence has been showing up in the company’s financial results. For the six months to end of December 2015, Worleyparsons reported a 29% fall in underlying net profit, although the company was forced to take a number of one-off expenses including for redundancies, onerous lease contracts and engineering software licences.

However, given the frequency of the company’s claims of one off items, some of the above occur on a far-too-frequent basis, and some cynics might consider them to be ‘normal’ operating expenses.

But as well as facing falling revenues and earnings, Worleyparsons is also in the predicament of having far too much debt – having made multiple acquisitions over the years. While the company’s net debt sits at around $1 billion, total debt stands at $1.4 billion – nearly equal to its current market cap of $1.6 billion.

In early February, the company was even forced to issue a statement that it was not planning an equity raising – instead announcing a few weeks later that it was scrapping its dividend, target an additional $180 million of savings in the next 18 months and looking to sell some selected non-core assets.

But some analysts say the company is still at risk due to the time lag between oil prices and the effect on Worleyparsons’ revenues, and could breach its net debt to EBITDA covenants.

Foolish takeaway

There’s no doubt it has been an amazing recovery in the share price, but the company is far from being out of the fire. If oil prices turn south, Worleyparsons’ share price could sink once again. Foolish investors might want to give this one a miss.

Discover the 'new breed' of blue chips that could take your portfolio higher in 2016

Forget BHP and Woolworths. These 3 "new breed" top blue chips for 2016 pay fully franked dividends and offer the very real prospect of significant capital appreciation. Click here to learn more.

The report is free! No credit card required.

HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.