EXCO Resources Management Discusses Q3 2010 Results - Earnings Call Transcript

EXCO Resources Inc.

Q3 2010 Earnings Call

November 3, 2010 09:00 am ET

Executives

Doug Miller - Chairman and CEO

Doug Ramsey - VP, CFO and Treasurer

Harold Hickey - VP and COO

Steve Smith - President and CFO

Paul Rudnicki - VP of Financial Planning and Analysis

Marcia Simpson - VP of Engineering

Analysts

Neal Dingmann - Wunderlich Securities

Sachin Shah - Capstone Global

Peter Saperstone - Fidelity Investment

Chris Guo - Shenkman Capital

Brian Cho - First Capital Alliance

Jeff Dane - Brownstone

Drew Figdor - Tiedemann

Jeff Robertson - Barclays Capital

Mitch Norden - Diamondback Capital

Garry Schaumburg - Barclays Capital

Presentation

Operator

Compare to:
Previous Statements by XCO
» EXCO Resources, Inc. Q2 2010 Earnings Conference Call Transcript
» EXCO Resources, Inc. Q1 2010 Earnings Call Transcript
» EXCO Resources, Inc. Q4 2009 Earnings Call Transcript
» EXCO Resources Q3 2009 Earnings Call Transcript

At this time, I would like to welcome everyone to the EXCO’s Third Quarter 2010 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise.

After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you, Mr. Doug Miller you may now begin your conference

Doug Miller

Thank you very much. But before we get started, I’m going to have Ramsey do our disclaimer. Please.

Doug Ramsey

I would like to remind everyone that you can go to www. EXCOresources.com and click on the Investor Relations tab on the left hand side of our home page to access today’s presentation slides.

The statements that may be made on this conference call regarding our future financial operating performance, structure, and results; business strategies; market prices; and future commodity price risk, management activities; plans and forecasts and other statements that are not historical facts are forward-looking statements as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Please refer to pages 20 and 21 of the slide presentation for the complete text regarding our forward-looking statements.

In addition, please refer to our Web site for the earnings release, which contains additional information regarding our forward-looking statements and the preparation of our financial disclosures including reconciliations and other statements regarding non-GAAP financial numbers which will be discussed on today’s call. Doug?

Doug Miller

Okay, we are going to get through this on the third quarter. The main thing is we had a very busy third quarter. The team has done a spectacular job doing exactly what we have forecast from production, from a drilling standpoint. I think we’re targeting getting at the costs in the industry and we’ve gone up with drilling and fracking and so, Hal will get into that a little later on.

But, again spectacular quarter as far as doing what we’ve said we’re going to do. Our development plan, we will announce in November, we have a board meeting coming up here, we’ve been preparing for our capital budget meetings and as soon as that yet approved we will have that announcement out.

But, pretty much right on target is everybody would expect. I think the one thing that we have probably discussed more at board than we ever have before is what should be our rig activity versus may be going after some acquisitions.

Prices have come down and as everybody know, we are kind of expecting them to stay that way for a while and I think we’ve had some preliminary discussions with our partners and with a possibility of shutting some rigs down. And that discussion would probably be at the center of our Board meeting.

We’ll continue in our appraisal program up in the Marcellus. We’ve made some additional acquisitions up there, we have a rig or two run and Hal will get into that.

We did do a bond offering during the quarter, paid off a $445 million of bonds that we’ll do early next year and we redid our borrowing base and return a $1 billion.

And as many of you may or may not know, I did submit an offer for all the company stock on Monday. The Board is now working on setting up a special committee. Soon as that is done there will be a press release and I think they said here I have got to say there is no assurance that a definitive offer will be made and probably I have got lawyers all over this room. So they are probably not going to let me talk much about it.

With that I going to turn it over to Steve and we’ll get through that and get ready for questions.

Steve Smith

Lets refer to that the third quarter of 2010 review that was posted on the website page four on the corporate highlights. We had another good quarter, we had increased revenues, income, EBITDA from the second quarter. We were right on again, so we are in good shape there. We produced 320 million cubic feet of gas a day on average, which is significant 10% increase from the second quarter and if you adjust the second quarter with some of the sales of Appalachia production is 14% increase.

So we are very pleased with where we are at this point, the 320 is a 45% increase over the Q3 of 09 on a pro forma basis. Net income was right on top of guidance LOE, and we continue that to improve in the LOE side that we were a $0.75 an Mcf for the third quarter. That was 12% decrease from Q2. That’s an are that we continue to work on and overall our costs were down. We had a number of credits that came through on our severance taxes in Louisiana. So that tax rate was down.

So overall our realizations in the quarter were better than they where in the second quarter. So, it was just a good strong quarter. Lots of activity going on, lots of drilling that we’ve get in to it little bit.

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