Wednesday, April 29, 2015

More on EXCO Call

I reviewed EXCO's presentation from this morning's quarterly earnings call, and have dropped in the Haynesville-related operational slides below with a few comments following yesterday's post.  Since EXCO is as close as there is to a pure play Haynesville company, I am paying even closer attention to them than usual. The downside of that observation is that the stock is currently trading at $1.90, down from $6 last year and $20 four years ago.

 Note the economics, especially a 24.8% internal rate of return (IRR).  That seems robust for this commodity price environment - although I didn't see reference to the assumed price of gas (I'll update this when I've had the chance to read the transcript of the call).  In any case, it suggests some robust potential.

Below is the discussion of the Mid-Bossier Shale.  It's interesting that the well they drilled is close to the "four corners" area of Bossier, Caddo, DeSoto and Red River, which, as I appreciate it, is near the eastern edge of what most people estimate the location of the Mid-Bossier to be.  Perhaps the test was as much about testing boundaries as it was about evaluating the formation.  Note the $3.80/Mcf breakeven price.  Not bad, but don't look for more new wells in this area until prices increase.

Below is the discussion of re-fracking.  There is more color provided here than in the earnings release.  Especially note the breakeven price of $2.35/Mcf (with cost improvement) and the 20% IRR (pre-cost improvement).  Hey, that makes money even in this low price environment.

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