At the close of a turbulent year, EXCO Resources Inc. ended 2013 with production decreases and a rising tide of red ink, but moves it made in the Eagle Ford Shale last year may be the light at the end of the tunnel, company officials said.
Oil, natural gas and natural gas liquids (NGL) production was 41.1 Bcfe in 4Q2013, compared with the 43.9 EXCO reported for 4Q2012. The bright spot in full year 2013 production totals was oil, which hit 1.19 million bbl in 2013, a 69% increase compared with 704,000 bbl in 2012. Gas production in 2013 was 153.3 Bcf, a 16% decline compared with 182.6 Bcf in 2012, and NGL production was 243,000 bbl, a 52% drop off from 510,000 bbl in 2013. Total production for the quarter was above the midpoint of EXCO's guidance and oil production was above the high end of the guidance, COO Harold Hickey said during a conference call with analysts Tuesday.
Production from the East Texas/North Louisiana was declining at year's end, but EXCO's Eagle Ford in South Texas was the bright spot, ramping up to 7,000 boe/d in the final three months of 2013, compared with 6,000 boe/d in the third quarter.
"The increase in production was the result of our continued development within the Eagle Ford shale, including 13 gross wells turned-to-sales and the installation of artificial lift on certain wells during the quarter," EXCO said. Production in the Appalachia region was also on the upswing at the end of 2013 (66 MMcfe/d in 4Q2013, compared with 64 MMcfe/d in 3Q2013).
EXCO made acquisitions in the Eagle Ford and Haynesville shales last year that it said were the foundation for future expansion, and predicted that its financial position would be bolstered through joint ventures (JV) with Kohlberg Kravis Roberts & Co. LP, Harbinger Group Inc. and BG Group plc (see Shale Daily, Aug. 8, 2013; July 5, 2013; Nov. 6, 2012). The company last year also sold 100% of its equity interests in midstream assets in TGGT Holdings LLC, a Haynesville Shale gathering system (see Shale Daily, Oct. 17, 2013). The proceeds -- $240 million and approximately 4% of buyer Azure Midstream Holdings LLC's total outstanding equity interests -- were used to reduce debt.
Those moves were key to EXCO "establishing our oil presence in the Eagle Ford and building on our leading position in the core area of Haynesville," Hickey said. "We diversified our portfolio through our entry into the Eagle Ford and established a platform for future growth with our drilling partner...we continue to focus on efficiently developing our asset base and we are having solid results replicating our proven Haynesville efficiencies in the Eagle Ford."
EXCO has averaged about 570 b/d on wells drilled recently in the Eagle Ford and has reduced well costs from $7.2 million to less than $7 million, Hickey said.
The company's estimated proved reserves at the end of 2013 were 1.1 Tcfe with a PV-10 of $1.3 billion.
Earlier this month, EXCO agreed to sell its non-operated interest in a JV in the Permian Basin, including its interest in producing wells and undeveloped acreage with horizontal drilling opportunities.
The balance sheet showed more red ink than in the recent past. EXCO reported a 4Q2013 loss of $123 million (minus 57 cents/share) compared with a $99 million (46 cents/share) loss in 4Q2012.
Douglas Miller in November resigned as both CEO and from the company's board of directors, which he had also chaired (see Shale Daily, Nov. 22, 2013). At the same time, the board appointed Jeffrey Benjamin, a long-time investor and an independent board member, as non-executive board chairman, and initiated a search for the company's next CEO. No new CEO has been named.
"Regarding the search for a new CEO, our board has engaged an executive search firm and that process is ongoing," Hickey said. "While exact timing of when EXCO will announce the new CEO is challenging to predict, you can be sure the management team and the company remain focused on execution." No analyst day will be scheduled until after a new CEO is in place, according to CFO Mark Mulhern.