Why Quicksilver Resources' Shares Popped

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: Shares of oil and gas company Quicksilver Resources jumped as much as 41% in early trading today after announcing an asset sale. The stock settled in at a 15% gain later in the day.

So what: The company will sell a 25% stake in its Barnett Shale asset to Tokyo Gas Co. for $485 million. The money will be used to pay down debt, which has been strangling the company.

Now what: This is progress toward management's planned deleveraging and analysts are now looking to see if the company can do the same with its Horn River assets. I don't think this makes the stock a buy, but gross profit has been improving and a reduction in debt is a positive sign. I've just seen too many mistakes by Quicksilver over the past few years to be aggressive right now.

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The article Why Quicksilver Resources' Shares Popped originally appeared on Fool.com.

Fool contributor Travis Hoium 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.

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