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EXCO Resources, Inc. Reports Second Quarter 2012 Results

We drilled and completed 15 gross (6.8 net) operated horizontal Haynesville/Bossier wells and participated in 5 gross (0.2 net) OBO Haynesville/Bossier horizontal wells during the second quarter of 2012. We utilized an average of seven operated rigs and spud 15 operated horizontal wells during the quarter. We averaged one OBO rig drilling in the play and spud one OBO well during the quarter. We currently have one OBO rig drilling. In total, we have 346 operated horizontal wells and 181 OBO horizontal wells flowing to sales.

The average initial production rate from our operated Haynesville horizontal wells completed in the second quarter 2012 in DeSoto Parish was 12.1 Mmcf per day with an average 7,500 psi flowing casing pressure on an average 18/64ths choke. This 18/64ths choke size is indicative of our new restricted choke management program we have implemented in DeSoto Parish, based on the strong results we realized in our East Texas area. Two wells were completed in the second quarter 2012 in San Augustine County, Texas. The average IP was 13.4 Mmcf per day with an average 8,925 psi flowing casing pressure on an average 18/64ths choke.

We have a major cost reduction and efficiency program underway and are beginning to see significant improvements in capital efficiency. Our DeSoto Parish well costs in the fourth quarter 2011 were approximately $9.5 million per well. With the changes implemented to date, our current estimated well cost in the DeSoto Parish area is $8.3 million, approximately $1.2 million or 13% less than actual costs at year end 2011. We expect to realize additional improvements in capital efficiency during 2012 and are targeting $8.0 million per well by year end 2012. We have realized significant improvements in lease operating cost efficiencies since year end 2011. From the fourth quarter of 2011 to current, we have realized a 21% reduction in total direct lease operating costs. Our new restricted choke program has reduced water production volumes and lowered our flowing gas temperatures, both having favorable impacts on operating expenses. The repair and maintenance costs have been reduced by reallocating work schedules through company personnel and reducing third party services.

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