Dallas-based EXCO Resources Inc., which moved to the public arena in February, is joining the move by other exploration and production (E&P) companies to form a master limited partnership (MLP). EXCO’s MLP would own a “substantial” portion of mature producing oil and natural gas properties in the Appalachian, East Texas, North Louisiana, Midcontinent and Permian Basin areas.
EXCO said an MLP would give it the opportunity to “enhance the valuation of a substantial portion” of its mature properties and allow it to acquire additional properties, “either from EXCO or from third parties.” Proceeds from the initial public offering (IPO) would be used to retire debt and provide working capital.
The E&P, which had been privately held until February, now holds about 836,114 net acres in the United States. About 42% of its reserves are in the Appalachia area, with 25% in East Texas and North Louisiana, 16% in the Midcontinent, 9% in the Permian Basin and 7% in the Rocky Mountains. At year-end 2005, EXCO had 684 Bcfe in total proved reserves, and it was producing 119 MMcfe/d.
The company expects to file an IPO for the MLP in 3Q2007 with closing in early 2008. About $1.5 billion of the MLP’s common units are expected to be offered to the public. EXCO would own the general partner of the MLP and retain a portion of the common units.
Five publicly traded E&Ps spun off MLPs in 2006, but that number is expected to be easily surpassed this year, according to analysts (see Daily GPI, June 27). Just last week, Pioneer Natural Resources Co. and a subsidiary filed an IPO to form an MLP (see Daily GPI, July 27).
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