EXCO Resources Inc. CEO Doug Miller said the decision by BG Group plc — its joint venture (JV) partner in the Marcellus Shale and the Haynesville/Bossier shale play in Louisiana and Texas — to participate in liquefied natural gas (LNG) exports would have little effect on EXCO’s business.
During a conference call Wednesday with financial analysts to discuss the Dallas-based company’s 3Q2011 results, Miller said BG was “the main player” in global LNG exports.
“As you know, they made more than $2 billion last year,” Miller said. “With the advent of all of these [shale plays in the United States], I believe you’ll see BG have more than one facility here because they have the relationships with China and India and Japan.”
BG Gulf Coast LNG LLC, a subsidiary of BG, signed a 20-year contract to buy 3.5 million metric tons per year of LNG from Cheniere Energy Partners LP’s Sabine Pass Liquefaction LLC for $8.2 billion (see Daily GPI, Oct. 27). Sabine Pass is planning to develop the ability to produce 9 million metric tons per year in the first phase of its project in Cameron Parish, LA.
“We don’t have the access over there [at Sabine Pass], so sharing that would probably be a long shot,” Miller said. “We’re a partner [with BG] and we get along great, [but] we’re not big enough to put up $5 billion to participate in the plant. I think there will be opportunities, and I’m sure we’ll have the discussions. But I don’t see us making $10/Mcf because we’re their partner.”
Pressed on the LNG issue again, Miller added, “Let me tell you, that is an expensive man’s game. We talk to [BG] a lot. We have not pushed to become a partner. I don’t know if they’d let us if they could. I think we’ll have some opportunities, but it may be they want to buy all the gas we have. All we do is market our gas based on Henry Hub. We’re in discussion with several utilities. We have not made a deal on any of our gas physically long-term yet, but before we do we will have a chat with BG.”
EXCO saw record net production volumes of 540 MMcfe/d during 3Q2011, a 69% increase over the 320 MMcfe/d produced during the quarter one year earlier. The company also exceeded 1.2 Bcfe/d of gross operated production in East Texas and North Louisiana.
The company predicted that about 45 MMcf/d of production would be curtailed in 4Q2011 due to the May 28 incident at the TGGT Holdings LLC amine treating facility near Coushatta, LA, that killed one EXCO employee (see Daily GPI, June 7). Curtailed volume totaled 44 MMcf/d during 3Q2011. Full treating capacity is expected to be restored in early 2012, the company said.
EXCO reported revenue of $240.2 million in 3Q2011, a 38% increase over the $174.1 million earned for the quarter one year earlier. Meanwhile, direct operating costs fell 5% to $21.1 million and cash flow increased 40% to about $151 million (70 cents/share) in 3Q2011. Adjusted net income declined 4% to $33.1 million in 3Q2011 (15 cents/share) versus $34.4 million (16 cents/share) posted in 3Q2010.
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