- Turned-to-sales 3 gross (2.7 net) operated cross-unit Haynesville shale wells in North Louisiana in third quarter 2016. The performance of the wells exceeded expectations with average initial production rates of 21 Mmcf per day on restricted chokes and shallow pressure declines.
- Produced 288 Mmcfe per day, or 26 Bcfe, for third quarter 2016, above the high-end of guidance, primarily due to strong performance of the most recent wells turned-to-sales.
- GAAP net income was $51 million, or $0.18 per diluted share, and adjusted net loss, a non-GAAP measure, was $6 million, or $0.02 per diluted share, for third quarter 2016. GAAP net income includes a net gain on extinguishment of debt of $57 million.
- Adjusted EBITDA, a non-GAAP measure, was $25 million for third quarter 2016, 9% above adjusted EBITDA for second quarter 2016, primarily due to higher natural gas revenues from increased commodity prices.
- Lease operating expenses were below the low-end of guidance. Cost reduction efforts have resulted in a 38% decrease in lease operating expenses for year-to-date 2016 compared to the same period in 2015.
- General and administrative expenses, excluding equity-based compensation, were at the low-end of guidance. Cost reduction efforts have resulted in a 35% decrease in general and administrative expenses (excluding equity-based compensation, restructuring and severance costs) for year-to-date 2016 compared to the same period in 2015.
- Repurchased $101 million of senior unsecured notes with $40 million in cash through a tender offer process.
- Restructuring the balance sheet to enhance its capital structure and extend structural liquidity - The Company remains committed to improving its financial flexibility and enhancing long-term value for shareholders through the continued execution of its comprehensive consensual restructuring program (the "Restructuring Program"). The focus is to restructure its gathering and transportation contracts and establish a sustainable capital structure that provides the Company with the liquidity necessary to execute its business plan.EXCO continues to evaluate financing alternatives to reduce indebtedness and improve its liquidity. During third quarter 2016, EXCO completed a tender offer ("Tender Offer") which resulted in repurchases of $101 million in principal amount of its senior unsecured notes due 2022 ("2022 Notes") for $40 million in cash. EXCO is currently working with its lenders to amend its credit agreement ("Credit Agreement") and the borrowing base redetermination scheduled for November 1, 2016 is still in progress. As of September 30, 2016, EXCO had $97 million in liquidity. The Company's plans to improve its near-term liquidity primarily include the issuance of additional indebtedness and it is engaged in discussions with potential lenders. There is no assurance the Company will be able to issue additional indebtedness or amend the Credit Agreement. In addition, the Company continues to negotiate a consensual restructuring of gathering and transportation contracts to reflect market rates and actual utilizations that would mutually benefit EXCO and its counterparties.
- Transforming EXCO into the lowest cost producer - EXCO continues to exercise fiscal discipline to transform itself into the lowest cost producer. Lease operating expenses decreased by 38% for year-to-date 2016 compared to the same period in 2015 primarily due to the renegotiation of saltwater disposal contracts, modifications to chemical programs and less workover activity. In the Appalachia region, the Company divested its remaining conventional assets, which had the highest lease operating expenses per Mcfe in its portfolio, and reduced its field headcount in the region by 85% since December 31, 2015. General and administrative expenses (excluding equity-based compensation, restructuring and severance costs) decreased 35% for year-to-date 2016 compared to the same period in 2015. The Company's cost reduction efforts have resulted in a decrease in total employee headcount of approximately 40% since year end 2015 and approximately 70% since year end 2014.
- Optimizing and repositioning the portfolio - The Company continues to execute its disciplined capital allocation program to ensure the highest and best uses of capital, including the completion of a series of asset divestitures as part of its portfolio optimization initiative. In July 2016, the Company closed a sale of its interests in shallow conventional assets located in Pennsylvania and retained an overriding royalty interest. In October 2016, the Company closed the sale of its interests in shallow conventional assets located in West Virginia. EXCO retained all rights to other formations below the conventional depths in the Appalachia region including the Marcellus and Utica shales. The Company is evaluating other divestitures of assets to generate capital that can be deployed to projects with high rates of return. EXCO's ability to improve its well performance while reducing both capital and operating costs has improved well economics across its portfolio. The Company's most recent cross-unit Haynesville shale wells have exceeded expectations and are expected to generate rates of return (*) in excess of 80%. The Company is evaluating future development plans based on the availability of capital as part of its Restructuring Program. EXCO's technical team is performing an evaluation of prospective locations in its portfolio, including the dry gas window of the Utica shale in Pennsylvania and the Bossier shale in North Louisiana. The Company believes that significant upside exists to apply advanced completion techniques that have been effective in other formations based on its technical analysis and recent success of nearby operators.
|Rig counts (1)||#||—||1||(100||)||4||(100||)||1||4||(75||)||—||1|
|Net wells drilled (1)|
|Appalachia and other||#||—||—||—||—||—||—||—||—||N/A||N/A|
|Total net wells drilled||#||—||0.9||(100||)||5.2||(100||)||5.2||15.1||(66||)||—||5.2|
|Net wells turned-to-sales (1)|
|Appalachia and other||#||—||—||—||—||—||—||—||—||N/A||N/A|
|Total net wells turned-to-sales||#||2.7||2.5||8||4.6||(41||)||8.8||24.9||(65||)||2.7||8.8|
|Appalachia and other||Mmcfe/d||33||43||(23||)||47||(30||)||39||48||(19||)||N/A||N/A|
|Total daily production||Mmcfe/d||288||296||(3||)||340||(15||)||293||347||(16||)||275-285||280-300|
|(1)||Includes rigs and wells operated by EXCO and excludes rigs and wells operated by others.|
- Produced 159 Mmcfe per day, an increase of 13 Mmcfe per day, or 9%, from second quarter 2016 and a decrease of 38 Mmcfe per day, or 19%, from third quarter 2015.
- Turned-to-sales 3 gross (2.7 net) operated Haynesville shale wells during third quarter 2016. The longer laterals and increased proppant have resulted in the Company's strongest performing wells in this region.