EXCO Resources Inc (NYSE:XCO) Shares Riding the Wave of Crude Oil Rallies

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EXCO Resources Inc (NYSE:XCO) shares were up 9.57% to $1.26 on Monday following a wave of risk-taking and higher energy prices. The company has a market cap of $375.74 million at 282.65 million shares outstanding, with its stock trading in a 52-week range of $0.48 to $1.94. 

West Texas Intermediate crude oil rose to $49.55 per barrel on Monday while Brent crude oil is back above the $50 per barrel mark as investors priced in higher odds of the UK voting to stay in the EU. This would remove a tremendous amount of pressure on global financial markets and commodities, also allowing natural gas prices to advance. The Henry Hub spot price was up 4.7% to $2.75 on Monday. 

EXCO Resources is an oil and natural gas company that is engaged in the exploration, exploitation, acquisition, development and production of onshore United States oil and natural gas properties with a focus on shale resource plays. Its principal operations are conducted in certain United States oil and natural gas areas, including Texas, Louisiana and the Appalachia region and it holds acreage positions in approximately three shale plays in the United States, including East Texas and North Louisiana, South Texas and Appalachia. 

As such, the company’s revenues are closely tied to energy prices, which have been weighing on its quarterly earnings figures for the past couple of years. EXCO Resources has managed to trim its debt levels last year but is still on track to using up its $250 million cash position before the end of this year. 

Even so, a prolonged rally in crude oil and natural gas could provide the momentum needed by this company to recover. Keep in mind, however, that the rise in commodities recently was mostly spurred by optimism ahead of the EU referendum on expectations that the UK might vote to stay in the region and not by fundamental reasons. 

DISCLAIMER: There is a substantial risk of loss with any speculative asset, especially small cap stocks. The opinions expressed are those of the author, and do not constitute recommendations to buy or sell a stock. Do your own research before committing capital.