What: It was just an awful week for investors in EXCO Resources Inc (NYSE:XCO), Penn Virginia Corporation (NASDAQOTH:PVAHQ), and Peabody Energy Corporation (NYSE:BTU). The trio were the worst performing energy stocks in the market this week according to S&P Capital IQ data. In fact, all three stocks dove 20%, or more, in the past five trading days.
So what: Of the trio, Penn Virginia was down the least as its stock ended the week down 20%. It's plunge came after the stock surged the prior week as the result of rumors surfacing that it had received an $8 per share buyout offer from a big oil giant. Unfortunately, those rumors were based on a rejected offer from a similarly named company 13 years prior. When investors realized they'd bought into a false report they promptly sold off their shares.
Next up is Peabody Energy, which also took its investors on a wild ride over the past week before ending down 22%. In just the past five trading days the company has been downgraded by a rating agency, received good news from the Supreme Court after it threw out an EPA ruling impacting coal-fired power plants, only to then warn that its second quarter loss would be wider than expected. That warning of a wider loss sent its stock crashing down, as it reminded investors that the coal market is only growing weaker.
The worst performing energy stock over the past week is EXCO Resources as it's down 30%. What's worth noting is that the company hasn't issued any news releases, nor have there been any notable analyst downgrades. Instead, the deeply indebted company is at risk of going bankrupt and investors seem to be banking on that future by selling off the stock.
Now what: The future looks bleak for both EXCO Resources and Peabody Energy as their debt-laden balance sheets continue to weigh on their stock prices. Penn Virginia, on the other hand, has a much brighter future. Despite the fact that this week's buyout rumor turned out to be false, the company has put itself up for sale as it hopes a buyer will pay a premium for its oil-rich Eagle Ford shale acreage. Because of that, it's the only stock of the three that seems to have a chance to quickly recover this week's losses.