EXCO Resources (
), an oil and gas company, has attracted large investments from a
number of noted investors, including Oaktree's
) and Fairfax Financial (TSX:FFH)'s Prem Watsa (Trades, Portfolio).
Last week, according to GuruFocus Real Time Picks, Invesco Private
Capital (Trades, Portfolio)'s Wilbur Ross (Trades, Portfolio) also
made a dramatic increase in his holding of the company.
Ross built up his EXCO Resources position by 62.21%, or 19,603,723
shares, giving him 23.49% ownership of the company. He started the
position in third quarter 2010, adding to it over subsequent
quarters at a price averaging $15.85. This gives him an approximate
69% loss on the holding, based on its Monday trading price of
$4.88. He had not purchased more shares since second quarter 2012.
As his third-largest position, EXCO encompasses 22.5% of Ross'
concentrated portfolio, behind BankUnited Inc. (
) at 27.1%, and Assured Guaranty Ltd. (
) at 29.5%.
Ross' recent EXCO purchases were part of a rights offering EXCO
held on Jan. 17, in which it issued 54.5 million total shares of
common stock, worth $273 million.
"Of the approximately 54.5 million total shares of common stock
expected to be issued, EXCO believes that approximately 28.2
million shares will be issued in the rights offering and
approximately 19.6 million shares and 6.7 million shares will be
issued to affiliates of [Wilbur Ross (Trades, Portfolio)' company]
WL Ross & Co. LLC and affiliates of Hamblin Watsa Investment
Counsel Ltd., respectively, under their respective Investment
Agreements," the company said in a statement.
At the end of third quarter 2013, EXCO had cash holdings of $33.5
million, down from $45.64 million the previous year, with long-term
debt of $1.86 billion.
Last week, Howard Marks (Trades, Portfolio) announced that he had
increased his EXCO position by 23% after the transaction owned
16.6% of the company in total.
The Dallas-based company explores for, develops and produces oil
and natural gas primarily in Texas, North Louisiana and Appalachia.
Its stock is near a 10-year low after its stock suffered due to low
natural gas prices last year. It has been increasing its exposure
to crude oil according to its 2014 capital budget.
For third quarter 2013, EXCO reported a $99 million net loss, or
$0.46 per diluted share, compared with net loss of $346 million, or
$1.62 per diluted share, for third quarter 2013, which included a
$318 million pre-tax non-cash ceiling test write-down of oil and
natural gas properties.
Third quarter 2013 net loss was primarily due to impairment of an
investment in TGGT due to the excess of the carrying value over its
share of the expected proceeds from the anticipated sale, and costs
of acquisitions of Haynesville and Eagle Ford assets in July 2013.
The company will already be selling TGGT for $910 million, however,
and using the proceeds to reduce debt related to its $1 billion of
acquisitions of Haynesville and Eagle Ford in July 2013.
"From 2015 forward, incorporating anticipated acquisitions, we
expect to return to a more predictable pattern of annual production
growth of approximately 7% to 10% per year and corresponding
Adjusted EBITDA growth of approximately 10% to 15% per year, based
on forward NYMEX pricing," the company said in a statement.
EXCO's 10-year revenue and earnings history:
EXCO also announced changes to its senior management in November.
The company's CEO and board chairman, Donald H. Miller, resigned,
and Jeffrey D. Benjamin was brought in as non-executive chairman of
the board of directors. Miller had led EXCO since 1997. The board
has not yet found a replacement CEO. Benjamin has served on the
company's board since October 2005, and from 1998 through 2003, and
is also a director of Caesars Entertainment Corp. (
) and others.
See Wilbur Ross' portfolio here.
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