Wednesday, February 25, 2015

EXCO Reports Year End

EXCO Resources reported its year end results today (see page 7 for Haynesville highlights). We've already reported on most of the highlights, including 2015 capital plans, but I wanted to note a couple more things:

  • EXCO is the first company in a while to talk about the Mid-Bossier Shale, the shale layer above the Haynesville.  The company drilled Mid-Bossier test wells in Louisiana (1) and Texas (3) and says it is pleased with results.  I'm behind in reporting TX and LA completions, but I'll make sure to note the Mid-Bossier completions when I pick them up.  
  • The company has completed six refracs of mature wells in Louisiana.  The first one, from last July, resulted in higher flows and pressures, and the outside reserve auditor boosted the estimated reserves from this well by 2 Bcf. 
  • EXCO is also implementing a compression program, a foamer injection program and the installation of artificial lift to enhance base production and flatten decline rates.  
The company's strategy is to devote its capital to exploring areas where it can get a good return, but it seems to very much want to increase its inventory of potential wells/opportunities, i.e. Shelby (250 candidates), Mid-Bossier (300 candidates) and refracs (270 candidates) and create efficiencies that enhance recoveries, all of which increase proved reserve numbers.  These are good moves to generate cash flow in a low price environment, but are they also actions of a company looking for a suitor?

Here are a few slides from the presentation.  I did not include the capex slides since the information is unchanged from the earlier report.








2 comments:

Bobtail said...

Can Exco escape bankruptcy?

EXCO Resources Inc. (NYSE: XCO)
Founded in 1955. Headquartered in Dallas, Texas.
Industry: Independent Oil & Gas
Toxicity Ratios
Debt/EBITDA: 4.72. Debt/Equity: 362.83%. Return on equity: -23.7%. Profit margins: -11.73%. $1.55 billion in debt with only $47.95 million in cash. Negative sales growth in the last quarter. Negative EPS over the last 12 months. Suspended dividend in mid- December 2014.

Robert Hutchinson said...

Yes, at least in the short to mid-term. They just renegotiated their credit agreement (http://ir.excoresources.com/phoenix.zhtml?c=195412&p=irol-newsArticle&ID=2014654) and they don't have any debt maturities until 2018. The renegotiated debt gives the company more flexibility in terms of loan covenants that could trip up the company as its operating ratios inevitably drop. They are also selling off assets to pay down debt.

I think they have bought enough time to wait out low prices - at least this round of low prices...