EXCO Resources, Inc. (NYSE: XCO) today announced fourth quarter and full year operating and financial results for 2011.
- Adjusted net earnings, a non-GAAP measure, were $0.09 per diluted share for the fourth quarter and $0.56 per diluted share for the full year, as adjusted for non-cash derivative gains and losses, a fourth quarter 2011 non-cash ceiling test write-down of oil and natural gas properties, gains on divestitures, costs incurred in connection with a buyout proposal received from our Chairman and Chief Executive Officer and other items typically not included by securities analysts in published estimates.
- Our GAAP results were a net loss of $0.78 per diluted share for the fourth quarter and net income of $0.10 per diluted share for the full year. The fourth quarter GAAP loss reflects a pre-tax non-cash ceiling test write-down of $233 million.
- Oil and natural gas revenues for the fourth quarter were $179 million, exclusive of derivative financial instrument activities (derivatives), and $231 million inclusive of cash settlements of derivatives. Oil and natural gas revenues for the full year were $754 million, exclusive of derivatives, and $890 million inclusive of cash settlements from derivatives.
- Oil and natural gas production was 51 Bcfe for the fourth quarter 2011, or 552 Mmcfe per day, which represents a 58% increase from fourth quarter 2010 production of 32 Bcfe, or 350 Mmcfe per day. During the fourth quarter 2011, our production continued to be negatively impacted by shut-in volumes resulting from the May 2011 incident at a treating facility operated by our jointly-owned midstream entity with BG Group in East Texas and North Louisiana, TGGT Holdings, LLC (TGGT), shutting-in of volumes for an accelerated tubing program, an increased emphasis on choke management and the deferral of certain well completions. We expect the TGGT treating facility to begin treating volumes late in the first quarter of 2012.
- The increased production highlights the success of our Haynesville shale drilling program where we produced 37 Bcf of natural gas (407 Mmcf per day), representing 73% of our total production during the fourth quarter 2011 compared with 19 Bcf (206 Mmcf per day), or 59% of our total production, in the fourth quarter 2010. For the full year 2011, our Haynesville shale production was 71% of our total production compared with 49% for the full year 2010. We currently estimate our total company net production to average approximately 500 Mmcfe per day for the full year 2012.
- Our direct operating costs were $0.47 per Mcfe for the fourth quarter 2011 and $0.46 per Mcfe for the full year 2011. This represents a 25% decrease from fourth quarter 2010 and a 39% decrease from full year 2010 reflecting the low cost operations of our Haynesville shale which averaged $0.08 per Mcfe during 2011.
- Adjusted earnings before interest, taxes, depreciation, depletion and amortization and other non-cash income and expense items (adjusted EBITDA, a non-GAAP measure) for the fourth quarter was $151 million, which represents a 32% increase from fourth quarter 2010 adjusted EBITDA of $114 million. Our full year 2011 adjusted EBITDA was $605 million, which represents a 38% increase from full year 2010 adjusted EBITDA of $440 million.
- Our year end 2011 estimated proved reserves were 1.3 Tcfe. We replaced 110% of our production resulting in a three year finding and development cost of $1.35 per Mcfe through the drill bit and an “all-in” finding and development cost of $1.56 per Mcfe.
- TGGT had average throughput in excess of 1.5 Bcf per day during the fourth quarter 2011, a 50% increase from fourth quarter 2010 throughput of 1.0 Bcf per day. Our investment in TGGT is accounted for as an equity investment. We reported $33 million of equity income for the full year 2011 which is a 94% increase from $17 million for the full year 2010. In addition, our 50% interest in TGGT’s adjusted EBITDA was $56.0 million for the full year 2011, which is not reflected in our adjusted EBITDA.
Douglas H. Miller, EXCO’s Chief Executive Officer, commented, “2011 was a solid year of operational and financial achievement for EXCO as we set production records and grew our cash flow and EBITDA. Our production increased by 63% to an average rate of 501 Mmcfe per day for the year, and we exited the year at 545 Mmcfe per day. We increased our proved developed reserves by 22% to 983 Bcfe and ended the year with 74% of our proved reserves in the proved developed category. We continued to exploit our shale properties in the Haynesville, Bossier and Marcellus shales with excellent results. Despite a 10% reduction in realized prices, we grew our EBITDA by 38% as a result of our strong production growth coupled with a 29% decrease in our total cash costs on an Mcfe basis.
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