Markets

Here's the News That Fueled Eclipse Resources Corp's 10% Surge Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Eclipse Resources Corp (NYSE: ECR) stock surged more than 10% today after the company announced its revised 2015 capital plan. Clearly, investors liked what Eclipse had to say when it announced its plan to slash its capital budget while also giving up its pursuit of a joint venture to help fund drilling in 2015.

So what: Last month Eclipse Resources announced that it was going to delay its final 2015 budget, which had already been cut to $640 million, or 20% less than it spent in 2014. It told investors that it was aggressively seeking cost reductions as well as exploring a potential drilling joint venture. At the time, investors didn't approve of the announcement, as shares were rocked by a double-digit sell-off .

With investors not taking too kindly to the joint venture idea, and the fact that it couldn't find a good partner, Eclipse Resources decided to forgo a joint venture at this time. In addition, the company also cut its 2015 spending plan all the way down to $352 million, or 57% less than it spent last year. Despite that steep drop in spending, the company will still be able to grow its production by a stunning 154% over what it produced last year since it's starting off a very low base, having just been formed in 2011 and having just gone public last year.

Now what: Given the current weak commodity price environment, Eclipse Resources' management team realized there's no need to invest as much money on new wells as it had in the past, especially when a 50% capital cut could still lead to a 150%-plus surge in production. That's why the company chose the prudent course to wait until conditions improve before pumping a lot more money into new wells.

This $19 trillion industry could destroy the Internet

One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism... The Economist is calling it "transformative"... But you'll probably just call it "how I made my millions." Don't be too late to the party -- click here for one stock to own when the Web goes dark.

The article Here's the News That Fueled Eclipse Resources Corp's 10% Surge Today originally appeared on Fool.com.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . 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 .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Stocks

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More