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EXCO Resources, Inc. Reports Third Quarter 2012 Results

We drilled and completed 19 gross (7.0 net) operated horizontal Haynesville wells and participated in 2 gross (0.2 net) OBO Haynesville horizontal wells during the third quarter 2012. We utilized an average of five operated rigs and spud 10 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 no OBO rigs drilling. In total, we have 358 operated horizontal wells and 184 OBO horizontal wells flowing to sales.

The average initial production rate from our operated Haynesville horizontal wells completed in the third quarter 2012 in DeSoto Parish was 12.7 Mmcf per day with an average 7,754 psi flowing casing pressure on an average 18/64ths choke. This maximum choke size is indicative of our modified restricted choke management program in DeSoto Parish. We have completed 51 wells in eight development units in 2012 in DeSoto Parish and all of the wells have been managed with this modified choke program. Our well performance has been very consistent. The average initial production rate for all 51 wells completed in 2012 in DeSoto Parish was 12.8 Mmcf per day with an average 7,875 psi flowing casing pressure on an average 18/64ths choke.

We have a major cost reduction and efficiency program underway and are continuing to see improvements in drilling times, stimulation costs and overall capital efficiency. Our DeSoto Parish well costs in the fourth quarter 2011 averaged approximately $9.5 million per well. With the changes implemented to date, our current estimated well cost in the DeSoto Parish area is $8.2 million, approximately $1.3 million or 13.7% less than actual costs at year end 2011. The largest factors in our cost reduction efforts to date are fracture stimulation market conditions, fracture stimulation design changes, modified tubing design and changes to the installation procedure, reduced drilling times and overall improved management of all rental items. We expect to realize additional improvements in capital efficiency during the fourth quarter and are targeting $8.0 million per well by year end. We have realized significant improvements in lease operating cost efficiencies since year end 2011. From the fourth quarter 2011 to current, we have realized a 22% reduction in total direct lease operating costs. Our new restricted choke program has contributed to this reduction in operating expenses by reducing water production volumes and lowering our flowing gas temperatures. The repair and maintenance costs have been reduced by reallocating work schedules through company personnel and reducing third party services. Our operations control room in our Dallas headquarters plays a significant role in our well surveillance process. From this control room, we have the ability to continuously monitor and remotely control natural gas flow 24 hours per day, 365 days per year.

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