|West Texas||East Texas / North Louisiana||Total|
|Gross Producing Wells||423||997||1,420|
|Natural Gas (Mcf/d)||7,038||74,182||81,220|
|Total Daily Production (Mcfe/d)||24,432||75,682||100,114|
|Proved Reserves (Mmcfe) (1)||113,339||415,348||528,687|
Substantially all acreage is held by production. Included in the West Texas area are 145 undrilled locations which are heavily weighted toward oil and natural gas liquids and are economic to drill at current prices. There are numerous undrilled locations and exploitation projects in East Texas and North Louisiana which, at improved gas prices, can also be developed.Pro Forma Capitalization and Liquidity After the contribution of the properties to the Partnership and use of the proceeds from the transaction, EXCO’s credit agreement, which presently has a $1.3 billion borrowing base, will be reduced to $900 million and the borrowing base under the Partnership’s new revolving credit facility is expected to be $400 million. The unaudited pro forma effect on EXCO’s liquidity after the contribution of the properties to the Partnership is as follows:
|As of September 30, 2012|
|(Unaudited, in thousands)||Historical EXCO||Pro Forma EXCO||Pro Forma Partnership||Pro Forma Consolidated EXCO (1)|
|Cash and restricted cash||$||140,859||$||140,859||$||5,000||$||142,134|
|EXCO Bank Debt||1,107,500||510,000||-||510,000|
|Partnership Bank Debt||-||-||230,000||58,650|
(2) Net of $7.1 million outstanding letters of credit.(3) EXCO will not be a guarantor of the Partnership’s revolving credit facility, nor will EXCO’s liquidity be impacted by available borrowing capacity under the Partnership’s revolving credit facility. Selected Pro Forma Partnership Data Following are selected operating and financial data for the nine months ended September 30, 2012 reflecting the pro forma impacts to EXCO after the contribution of the properties to the Partnership.
|Pro Forma Adjustments|
|(Unaudited, dollars in thousands, except per Mcfe)||Historical EXCO||Total Partnership||EXCO's 25.5% Share||Consolidated Pro Forma EXCO|
|Total production (Mmcfe)||146,040||(27,986||)||7,136||125,190|
|Average production (Mmcfe/d)||533||(102||)||26||457|
|Revenues, excluding derivatives||$||394,447||$||(118,538||)||$||30,227||$||306,136|
|Average realized price ($/Mcfe)||2.70||4.24||4.24||2.45|
|Direct operating costs||59,084||(34,138||)||8,705||33,651|
|Production and ad valorem taxes||20,671||(14,303||)||3,647||10,015|
|Gathering and transportation||78,183||(9,352||)||2,385||71,216|
|Excess of revenues over direct operating expenses||236,509||(60,745||)||15,490||191,254|
It is expected that the Partnership will make quarterly distributions of available free cash flow after capital expenditures and debt service. Distributable cash, after 30-50% dedication to debt service, will be distributed 2% to the general partner and 98% to the limited partners until a certain threshold is met, at which time the distributions above the threshold will be 25% to the general partner and 75% to the limited partners.The Unit Purchase and Contribution Agreement signed today is subject to customary pre and post-closing adjustments, including the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, customary title and environmental reviews, closing conditions and regulatory approvals, and is expected to close in early 2013. As noted above, the cash proceeds to EXCO will be used to repay a portion of EXCO’s revolving credit facility. Douglas H. Miller, EXCO’s Chief Executive Officer, commented, “We are very pleased to enter into a conventional asset partnership with Harbinger Group. The venture will operate and develop the existing oil and natural gas assets and pursue acquisitions of long-life natural gas and oil properties with a significant proved producing component with undeveloped upside. This transaction allows EXCO to monetize certain of its assets and maintain a significant interest in the assets and future development upside.” EXCO Resources, Inc. is an oil and natural gas acquisition, exploitation, development and production company headquartered in Dallas, Texas with principal operations in East Texas, North Louisiana, Appalachia and West Texas. Harbinger Group Inc. (HGI) is a diversified holding company. HGI’s principal operations are conducted through subsidiaries that offer life insurance and annuity products, and branded consumer products such as batteries, personal care products, small household appliances, pet supplies, and home and garden pest control products. HGI is principally focused on acquiring controlling and other equity stakes in businesses across a diversified range of industries and growing its existing businesses.
Additional information about EXCO Resources, Inc. may be obtained by contacting EXCO’s Chairman, Douglas H. Miller, or its President, Stephen F. Smith, at EXCO’s headquarters, 12377 Merit Drive, Suite 1700, Dallas, TX 75251, telephone number (214) 368-2084, or by visiting our website at www.excoresources.com. Our SEC filings and press releases can be found under the Investor Relations tab.This release may contain forward-looking statements relating to future financial results, business expectations and business transactions. Business plans may change as circumstances warrant. In addition, the conditions to closing the transactions contemplated by the Unit Purchase and Contribution Agreement may not be met or the anticipated benefits from the proposed transaction may not be fully realized. Actual results may differ materially from those predicted as a result of factors over which EXCO has no control. Such factors include, but are not limited to: estimates of reserves, commodity price changes, regulatory changes and general economic conditions. These risk factors and additional information are included in EXCO’s reports on file with the Securities and Exchange Commission ("SEC"). EXCO undertakes no obligation to publicly update or revise any forward-looking statements. The SEC has generally permitted oil and natural gas companies, in filings made with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use the terms “probable,” “possible,” or “unproved” to describe volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC’s guidelines prohibit us from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being actually realized by the company. While we believe our calculation of unproved drillsites and estimations of unproved reserves have been appropriately risked and are reasonable, such calculations and estimates have not been reviewed by third party engineers or appraisers. Investors are urged to consider closely the disclosures in our Annual Report on Form 10-K for the year ended December 31, 2011, which is available on our website at www.excoresources.com under the Investor Relations tab.