Douglas H. MillerDisclaimer. So, go ahead, Doug. J. Douglas Ramsey All right, thanks, Doug. I'd like to remind everyone that you can go to www.excoresources.com and click on the presentations link in the Investor Relations section at the bottom of our homepage to access today's presentation slides. The statements that may be made on this conference call regarding future financial and operational plans, projections, structure, results, business strategy, market prices and derivative activities or other plans, forecasts and 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. Forward-looking statements are based on a variety of assumptions that may change depending on future events which are difficult to predict. Actual results may differ materially from those forward-looking statements. We caution you not to place undue, if any, reliance on such statements. Please refer to Pages 24 and 25 of the slide presentation for the complete text regarding our forward-looking statements, as well as the cautionary information set forth in our most recent Form 10-K, Form 10-Q, and other SEC filings, which are available on our website at www.excoresources.com. In addition, the slide presentation contains information, including reconciliations regarding certain non-GAAP financial numbers, which will be discussed on today's call. Doug? Douglas H. Miller Okay. Welcome, everybody, to our call. We have a slide show that is on our website, that we'll be going over today. With me today, I have 10 people, lawyers, all our financial guys and our operating guys. And we're going to be going over, in some detail, our quarter and we'll be sticking with you through -- as long as you want, as far as Q&A goes. Just to get started. We have been -- with gas prices going down -- I could sometimes feel like we were driving across Kansas going 90 miles an hour, a year ago, with gas prices high and working as hard as we can. And hereabout, beginning of the year, we ran into a school zone. And so, I think we've had to figure out how to go slower and we're doing it and I think we still have guys in our industry speeding. So some of them are starting to get tickets. With that -- what we've been doing is we have been ramping down and cutting our capital budget. We do believe that you run a company, an oil and gas company inside your cash flow. We've been doing that. We've cut our capital expenditures 3 times since our November capital meeting. We'll continue to do so as gas prices stay cheap.
But with that, we report 533 million a day of production. In most times, that would be good. But it's mostly gas, so that was bad. We did have a spacing test in Shelby that was very successful. Hal will go over that a little later. Our TGGT, our treating has resumed. We did have a borrowing base redetermination, it did go down as we had forecast. It's $1.4 billion versus $1.6 billion. It was voted on and signed, I think, last Friday. Is that right?We started adding some hedges for '13 through '15. But a little bit -- I think a lot of people have criticized us for not moving fast enough into the oil side. This has been a gas company. It was set up to be a gas company. We're still looking at gas transactions, but we do have a small oil property that has been successful. We've been running 1 rig over there and we are, now, in evaluation on how to get into it on both the Wolfcamp and the Cline. There has been some recent results in our neighborhood over there. We are drilling a vertical test, doing some coring as we speak. With the idea that if we can get it figure out, we would bring another rig in there later on this year. And on top of that, we have quite a bit of -- across the Cotton Valley and even in West Texas. We do have some NGLs. We're going to start reporting them separately but we have 2 deals we're working on, in the Cotton Valley, that'll separate the NGLs. I did note -- however, I do note that we have a couple of thousand barrels a day of oil and maybe 1,300 barrels of NGLs out in West Texas. But we're going to start separating that in the Cotton Valley and expect to see that -- start reporting next quarter.
What's going on in the industry -- we've got too much gas. We've got too many independents that have been outspending their capital for the last 5 years. And the equity markets and the capital markets have allowed them to do it. So it is coming back to haunt all of us right now. We do have an abundance of gas, but I think what you're going to see -- and I've recently seen a couple of really good reports coming out, I think Joe Allman [ph] did one of them and somebody else talking about how fast the decline is occurring. I believe that you're going to see, at least in the Haynesville, maybe a 2 Bcf year-over-year decline with what's going on out there. Rigs got up to -- what, what is called? 186 down to around 50. And you can really see the declines. A lot of people have just quit over there. We're slowing down and we're willing to quit, but we're taking it at a proper pace. And if we have to quit, we will. But right now, I think we have 7 rigs, 8 rigs running. 7 as of this morning, and we're prepared to go to 4 if gas prices stay where they are. But I think you're going to see supply coming down faster than anybody expected. And I think -- the other side of that is I think you're going to see demand going up a little faster than anybody expected. We're seeing a lots of power getting turned on gas. I think we've had a lot of power companies in here looking for long-term supply. We have not made a deal and will not at these prices, of course. But I think you're starting to see some of the results coming out of the EIA and others, January, February, maybe 5 to 7 Bcf a day for power. But I think that's going to expand. I think you'll start seeing it in the second half of the year. There's just a lot of activity going on but I think, as people quit drilling dry gas, it's going to come down a lot faster.
And finally, up in the Marcellus, I saw where Anadarko's cutting a lot of rigs, Talisman's leaving. So that has been a boon for the industry. People are going a little bit too fast up there. Including us. But we're down to 3 rigs out there. We have 850,000 acres in the Appalachia, a couple of hundred thousand in the Marcellus. And we're at 3 rigs and prepared to go to fewer. We have had some interesting results here recently, on an area that I think everybody gave us 0 credit, including us. And Hal will talk about that a little later.But again, where supply and demand -- you're starting to see 15, 16 -- you're starting to see some potential export. And I think everybody thinks that gas is not going to go up until then. I'm not in that camp, I think you're going to start seeing some direction, maybe, as soon as the second half of this year. I'm hoping it stays days down because we are actively seeking some acquisitions in the gas market. Read the rest of this transcript for free on seekingalpha.com