DALLAS--(BUSINESS WIRE)--Aug. 14, 2009--
EXCO Resources, Inc. (NYSE:XCO) (“EXCO”) today announced that it has
closed its transactions with BG Group plc (LSE:BG.L) (“BG Group”) for
the joint development and operation of EXCO’s Haynesville shale and
certain other related natural gas assets located in East Texas/North
Louisiana and the joint development and operation of EXCO’s midstream
assets in the same area.
EXCO sold BG Group a 50% interest in its producing and nonproducing
assets in a large area of mutual interest (“AMI”) which encompasses most
of EXCO’s holdings in East Texas/North Louisiana, excluding the Vernon
Field in Jackson Parish, Louisiana and the Redland Field in Bossier and
Webster Parishes, Louisiana. The parties will jointly develop the
Haynesville, Bossier and other deep horizons as well as the Cotton
Valley, Hosston and other shallow horizons. EXCO will continue serving
as operator of the joint development subject to oversight from a Joint
Development Operating Committee.
EXCO and BG Group will each own 50% of the acreage, production and
reserves within the AMI. The existing assets within the AMI include
approximately 120,000 net acres with approximately 65,000 net acres in
East Texas and 55,000 net acres in Louisiana. Approximately 84,000 net
acres are prospective for Haynesville shale development, and most of
this acreage is in the core Haynesville shale areas of DeSoto and Caddo
Parishes in Louisiana and Harrison County, Texas. Also included is net
production of approximately 93 Mmcfe/d from the Cotton Valley and other
shallower horizons and approximately 88 Mmcf/d from the Haynesville
shale. As of December 31, 2008, the Cotton Valley and other shallow
rights included approximately 414 Bcfe of net proved reserves and
approximately 445 Bcfe of net probable and possible reserves, based on
year-end SEC pricing. The Haynesville/Bossier shale acreage is under
development and EXCO estimates that its current acreage position, most
of which is held by shallow production, includes over 1,600 undrilled
Haynesville locations containing net potential reserves of 4 to 6 Tcfe,
with significant additional potential in the Bossier shale. EXCO and BG
Group plan an aggressive development program, particularly in the
Haynesville shale, for the remainder of 2009 and in future years.
EXCO received $727.0 million in cash at closing pursuant to the upstream
joint development transaction, including closing adjustments. In
addition, BG Group has agreed to fund $400 million of capital
development on EXCO’s behalf, with BG Group paying 75% of EXCO’s
drilling and completion costs on the deep rights until the $400 million
commitment is satisfied. The drilling and completion cost commitment is
expected to be satisfied in 2011 or 2012. EXCO and BG Group will share
equally in additional leasehold and asset acquisition opportunities
within the AMI.
EXCO also closed the sale to BG Group of a 50% interest in a newly
formed company that will hold the East Texas/North Louisiana midstream
assets, exclusive of the Vernon Field midstream assets. EXCO received a
special distribution of $269.2 million at closing, including closing
adjustments. In concert with the planned Haynesville shale development,
there will be an effort to develop and grow the midstream business. EXCO
currently owns in excess of 700 miles of pipeline and gathering assets
in the area and is constructing a 29 mile, 36” diameter header system to
transport its Haynesville gas production. Throughput in the midstream
business to be contributed to the joint venture is approximately 482
Mmcf/d of which 51% is EXCO gas and 49% is third party gas.
The total cash proceeds to EXCO of $996.2 million from the transactions
are being applied to repay EXCO Operating Company, LP’s $300 million
Senior Unsecured Term Loan with the remainder applied to the outstanding
balances under EXCO’s credit facilities.
Douglas H. Miller, EXCO’s Chief Executive Officer, commented, “We are
very pleased with our joint development transactions with BG Group and
expect outstanding growth in our upstream and midstream businesses in
the East Texas/North Louisiana area. BG Group will be an excellent
partner and we look forward to a long and successful relationship.”
EXCO was advised by Goldman, Sachs & Co. in these transactions.
EXCO Resources, Inc. is an oil and natural gas exploration,
exploitation, development and production company headquartered in
Dallas, Texas with principal operations in East Texas, North Louisiana,
Appalachia, West Texas and the Mid-Continent.
Additional information about EXCO Resources, Inc. may be obtained by
contacting EXCO’s Chairman, Douglas H. Miller, or its President, Stephen
F. Smith, at EXCO’s headquarters, 12377 Merit Drive, Suite 1700, Dallas,
TX 75251, telephone number (214) 368-2084, or by visiting EXCO’s website
at www.excoresources.com.
EXCO’s SEC filings and press releases can be found under the Investor
Relations tab.
This release may contain forward-looking statements relating to
future financial results, business expectations and business
transactions. Business plans may change as circumstances warrant.
Actual results may differ materially from those predicted as a result
of factors over which EXCO has no control. Such factors include,
but are not limited to: estimates of reserves, commodity price changes,
regulatory changes and general economic conditions. These risk
factors and additional information are included in EXCO’s reports on
file with the Securities and Exchange Commission. EXCO undertakes
no obligation to publicly update or revise any forward-looking
statements.
The SEC has generally permitted oil and natural gas companies, in
filings made with the SEC, to disclose only proved reserves that a
company has demonstrated by actual production or conclusive formation
tests to be economically and legally producible under existing economic
and operating conditions. We use the terms “probable,”
“possible,” “unproved,” or “potential” to describe volumes of reserves
potentially recoverable through additional drilling or recovery
techniques that the SEC’s guidelines prohibit us from including in
filings with the SEC. These estimates are by their nature more
speculative than estimates of proved reserves and accordingly are
subject to substantially greater risk of being actually realized by the
company. While we believe our calculation of unproved drillsites
and estimations of unproved reserves have been appropriately risked and
are reasonable, such calculations and estimates have not been reviewed
by third party engineers or appraisers. Investors are urged to
consider closely the disclosure in our Annual Report on Form 10-K for
the year ended December 31, 2008 available on our website at www.excoresources.com
under the Investor Relations tab or calling us at 214-368-2084.
Source: EXCO Resources, Inc.
EXCO Resources, Inc.
Douglas H. Miller, 214-368-2084
Chairman
or
Stephen
F. Smith, 214-368-2084
President