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EXCO Resources, Inc. Reports Fourth Quarter And Full Year 2012 Results

Stocks in this article: XCO

During 2013, we plan to drill 26 gross (15.5 net) operated wells with a three rig program. We plan to complete and turn to sales 42 gross wells (22.1 net), including completions carried into 2013 from wells drilled in late 2012.

The average initial production rate from our operated Haynesville horizontal wells completed in the fourth quarter 2012 in DeSoto Parish was 12.7 Mmcf per day with an average 7,550 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 69 wells in 11 development units in 2012 in DeSoto Parish and all of the wells were managed with this modified choke program. Our well performance has been very consistent. The average initial production rate for all 71 wells completed in 2012 in DeSoto Parish was 12.7 Mmcf per day with an average 7,784 psi flowing casing pressure on an average 18/64ths choke.

Our cost reduction and efficiency program is delivering positive results. We continue to see improvements in drilling times, stimulation costs and overall capital efficiency. Our DeSoto Parish well costs in the fourth quarter 2011 averaged $9.5 million per well. With the changes implemented to date, our current estimated well cost in the DeSoto Parish area is $8.0 million, approximately $1.5 million or 16% 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 have realized significant improvements in lease operating cost efficiencies since year end 2011. From the fourth quarter 2011 to current, we have realized a 32% 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. We have reduced our overall production downtime to approximately 4% through better coordination and scheduling of all aspects of our field activities. 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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