EXCO Resources announced last night that it is forming a special committee of the board of directors to among "other things, assess the Company’s operating and financial situation and to evaluate, develop and recommend one or more strategic alternatives."
Often, the market reacts positively to the phrase "exploring strategic alternatives" because it is usually code that the company is putting itself up for sale. Or, as in this case, the market barfs because it means that the company is in worse shape than previously believed. So far this morning, the stock has dropped more than 35%. But XCO had been on a good run this week, so it's really just going down to the price where it had been for the past couple of months. In any case, the news was jarring and will take a little while to be "priced into" the stock.
What's next is anyone's guess, but no gas-centric E&P company can stay in business with natural gas holding at $2/MMBtu. The new chairman is a deal maker and the board is stocked with investors, so I suspect EXCO's days as a surviving independent are numbered. Coming up, there will be pain. The question will be who will bear most of it.