Exco Resources (XCO) is a small capital independent oil and gas exploration and production company. It has operations in the US and focuses on shale resource plays. Exco has a market capitalization of $500 million. It has been the top performer for the past two days in the Spider Oil and Gas (XOP).
These five stocks have a short interest ratio average of 10%. Halcon Resources has the highest short interest ratio of 17%. Energy XXI has the lowest short interest ratio of 5%. There seem to be a short squeeze happening in the market. These five companies also have a low price-to-book ratio per share. Exco has a 1.06x price-to-book ratio. Synergy has a 3.19 price-to-book ratio. All of the other companies have a price-to-book ratio that’s less than one. This means the stocks are undervalued. The average price-to-book ratio for an oil and gas exploration and production company is 1.74x.
Exco surged more than 14% in the last two trading sessions. It entered into a service agreement with Bluescape Resources—an energy-focused private equity firm. According to the agreement, Bluescape will buy common stocks worth $10 million directly from Exco. It will also buy shares for $40 million in the open market within a year of the agreement date. This is about 10% of Exco’s market capitalization. Exco already has $1.5 billion in debt. The deal will likely help Exco restructure itself and perform better.