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: According to a report in the Wall Street Journal, Penn Virginia Corporation (NYSE: PVA) is exploring a sale. This revelation sent the stock soaring 15% in early morning trading on Thursday.
So what: According to the report, Penn Virginia has been working with Bank of America to find a buyer for the company. This is as the company's largest shareholder, billionaire George Soros, continues to push for a sale of the company. Soros initially pushed for a sale last summer right before the price of oil crashed. Now that the market has dramatically changed, the company appears set to take his advice.
The rumor of a sale being in the works comes just a day after the company reported its fourth-quarter results, which weren't all that great. The company lost $14.6 million and $0.35 per share, which was $0.25 worse than analysts were anticipating. That loss was largely due to the weak oil market, as Penn Virginia's realized oil price dropped from $95.19 per barrel to $69.82 per barrel. In addition to that, the company also took $667.8 million in asset impairments due to the lower value of properties in East Texas and Oklahoma as a result of the dramatic drop in the price of oil. This made its unadjusted loss far worse, as it lost $423.8 million, or $5.90 per share during the quarter.
Now what: While there will likely be a lot of rumors of oil companies exploring a sale over the next year, this one is probably the most likely to happen. Penn Virginia has prime real estate in the core of the Eagle Ford shale that many larger companies would love to have. It also has a large shareholder that's been pushing for a sale for months, and eventually he's likely to get his wish.