Tuesday, February 23, 2010

Exco Update

Exco Resources released its quarterly results today and will have a conference call tomorrow (Wednesday). (presentation; press release) The company, which during 2009 signed a joint venture agreement with BG Group to fund activities in the Haynesville Shale, is putting a great deal of resources and cash behind its Haynesville efforts. Here are some key points:
  • Current operated production for the JV is about 340 MMcf/day. Combined with non-operated production, the figure climbs to 427 MMcf/day.
  • The company currently operates 13 rigs in the Haynesville Shale, but that figure will increase to between 14 and 16 in 2010.
  • The 2010 capital budget for the Exco/BG JV is $741 million, which should fund 95 operated Haynesville wells, seven operated Middle Bossier Shale wells and 23 non-operated wells. The company is looking at between 20 and 30 completions a month in 2010.
  • The JV has 107,800 acres in the play. It leased around 22,800 new acres in 2009 (the press release reported 22,800 while the presentation showed 23,800) and Exco is in negotiation with various parties on 42,000 additional acres.
  • Current well costs are running at around $9.5 million per well. This is higher than many other operators, but given the strong production Exco has seen from its wells, clearly the company is doing something right.
As with other big Haynesville players, Exco will take a hard look at the Mid-Bossier Shale in 2010. As noted above, the company will drill seven test wells. The first completion in DeSoto Parish should take place in the first quarter of 2010.

Exco also talked about a couple of important water projects for source water and treatment of spent water. The project recycles and treats water from an industrial plant and pipes it to Exco sites for use in fracture stimulation. This process reduces dependence on water from already strained aquifers and reduces the amount of truck traffic on the roads. The second project is a waste water removal system where spent water is gathered from the well sites and is piped off site.

2 comments:

Anonymous said...

Robert, careful on the difference in operating a "well" and a "rig." XCO operates 35 HA wells.

Robert Hutchinson said...

Thanks for the catch. That's why one shouldn't try to read and write while watching Olympic freestyle skiing.