EXCO Resources VP & COO Hal Hickey's presentation to the LOGA Annual Meeting on Tuesday April 5th, 2011 at L'auberge Du Lac in Lake Charles, LA.
www.loga.la
www.twitter/LaOilGasAssoc
www.facebook.com/LouisianaOilGasAssociation
4. EXCO Operations Area Inventory of 9,000+ Shale Drilling LocationsHaynesville and Marcellus projects fuel 30%+ production growth strategy 1.6 Tcfe of Proved Reserves(1) with potential for significant future reserve adds 0.8 Tcfe of shale assets booked as proved Net production of 389 Mmcfe/d(2) Proved reserve life of11.3years and 57% Proved Developed Significant Unproved Upside ~300,000 gross acres in ETX/NLA (~152,000 net) 76,000net acres with Haynesville/Bossier shale potential Total resource base of 13.3 Tcfe Proved Reserves = 1.6 Tcfe3P Reserves = 2.8 Tcfe 3P+ Reserves = 13.3 Tcfe Net Production(2) = 389 Mmcfe/d Net acreage(3): 614,000 Total Employees: 996 Pennsylvania Appalachia West Virginia East Texas / North Louisiana Permian Texas Louisiana EXCO Headquarters – Dallas, TX EXCO Field Office The reserve and acreage estimates are pro forma for 50% of the Chief acquisition and other pending Appalachian acquisition, both effective as of 12/31/10 using the management price deck, adjusted for differentials and excluding hedge effects Average production for the week ended 1/5/11, pro forma for 50% of the Chief acquisition and other pending Appalachian acquisition (3) Haynesville and Marcellus acreage is net to EXCO’s interest in the JVs; assumes BG Group exercises their option to purchase 50% of recently acquired acreage
32. During 2010 total net production grew from 212 Mmcfe/d to 389 Mmcfe/d
33. Replaced 576% of productionSubject to final adjustments in 2011 Exit rates; YE 2010 and full year 2011 are pro forma for 50% of Chief acquisition and 50% of other pending Appalachia acquisition
34. Major Stakeholder in North LouisianaEconomic impact to North Louisiana ~$500 million in 2011 Haynesville development is our main activity area as a result of Performance as we are exceeding economic hurdles in core areas, even in low commodity price environment Existing infrastructure and access to multiple markets Marcellus development is progressing Technical understanding of the Marcellus shale play is rapidly improving Size and breadth of the play demands additional analysis to identify core areas Large amount of HBP acreage allows time for deliberate pace of development Permian development ongoing Superior returns driven by liquids content Good infrastructure and market access 2011 Capital Budget by Category >85% spending on shales in 2011 $976 million E&P CAPEX request does not include midstream CAPEX of $212 million net to EXCO ($119 million related to TGGT and $93 million related to Appalachia midstream). TGGT midstream projects to be internally funded by credit facility at TGGT. In addition, expect to receive $73 million of reimbursements from BG Group.
35. Current Environmental, Health and Safety Issues and Initiatives Green House Gas (GHG) EPA passed new regulation requiring recordkeeping and reporting for GHG emissions within the Oil & Gas industry; recordkeeping in 2011 and reporting in 2012 Fracture Stimulation EPA fracing study to be completed by 2012 Fracture Stimulation Chemicals Frac companies are currently sharing chemical data with the EPA EXCO supports frac companies sharing their information with the public Material Safety Data Sheets (MSDS) available at all locations Safety and Community Outreach Wild Well Control Consultants – study to implement simultaneous operations Smalley Foundation – local emergency responder training EXCO Scholarship Program Support local infrastructure improvements
39. Extension of Water Quality Study of Carrizo-Wilcox, Red River Alluvial and Other Aquifers in Bossier, Caddo and De Soto Parishes for Methane and Volatile Organic Compounds (VOCs)
40. On our wells we set an extra casing string (16” @ 450’) to protect aquifers
41.
42. 65% of EXCO’s production is from Louisiana Average production for the week ended 12/29/10
43. Third Largest Onshore Producer in LouisianaIndustry leading experiencewith ~150% increase in production in one year
63. Haynesville Shale ActivityDriven by economics and availability Haynesville leasing activity declining Minimal Louisiana core acreage available Leasing in other Haynesville Shale areas such as in Shelby and San Augustine counties in East Texas remain active Some competitors shifting from Haynesville Shale development Core acreage proven more limited than originally predicted Operators outside core acreage remain unable to attain acceptable returns in the current low price environment Following the rush to HBP shale acreage, operators are now shifting development to liquid rich plays Delineation of Haynesville shale play continues Initial estimates of the size of the play totaled approximately 6.0 million acres Current data indicates the core area encompasses less than 1 million acres Source: Oil and Gas Investor; March 2011
64. Louisiana Rig CountImpacted by low natural gas price environment Impacts of low gas price environment Haynesville Shale experienced largest absolute rig count decline since October 2010 EXCO currently operates the second largest rig fleet in the Haynesville/Bossier area Current industry average 6 to 1 well completion to rig ratio in Louisiana EXCO maintains a tighter well completion to rig ratio of 1 to 1 Source: Rig Data, Tudor Pickering Holt
65. Haynesville Well Costs and Rate of Return EXCO’s continued success in our Haynesville Shale program Requires strategic cost management in our development areas Wells remain economic Expected average 2011 well cost of $9.25 million Identified Haynesville Shale core Commenced 80 acre spacing, multi-well pad manufacturing program in Holly Acquired second core position in Shelby area; have seen strong initial results in both Haynesville and Bossier ~50% of capital for 2011 remains focused on additional shale development in Louisiana XCO Core Desoto / Shelby Asset locations Industry average of 800+ Haynesville wells
66. Haynesville Impact to Louisiana(1) Significant wealth creation for land and mineral owners through royalty checks and acreage leasing Lowered the financial impact of the national recession in Louisiana Increased tax revenue to support education, health care, and infrastructure development, among other needs Source: The Times-Picayune; “Haynesville Natural Gas Field is the Most Productive in the U.S.”; Mark Schleifstein
67. EXCO Resources, Inc. A bright future with Louisiana EXCO continues to be successful in Louisiana shale development We believe EXCO is well positioned in core areas and is a premier operator in the Haynesville Shale Pioneering new environmental initiatives Continued growth through shale development drilling and strategic acquisitions Focus on continued Hayneville/Bossier shale development Significant taxpayer and employer in the state of Louisiana