EXCO Resources, Inc. Files Voluntary Petitions for Chapter 11 Reorganization to Facilitate Financial Restructuring

Company to Explore Strategic Alternatives to Maximize Value

Operations to Continue as Usual During Restructuring Process

January 15, 2018 10:48 PM Eastern Standard Time

DALLAS--(BUSINESS WIRE)--EXCO Resources, Inc. (NYSE: XCO.BC) (OTC Pink: XCOO) ("EXCO" or the "Company") today announced that in order to facilitate a restructuring of its balance sheet, the Company and certain of its subsidiaries have filed voluntary petitions for a court-supervised reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas (“the Court”). EXCO intends to operate in the ordinary course of business during the restructuring process.

EXCO continues to engage in constructive discussions with its creditor constituencies regarding the terms of a financial restructuring plan. In conjunction with this process, EXCO will explore potential strategic alternatives to maximize value for the benefit of its stakeholders, including the marketing of the Company’s assets, which may result in a sale of certain or substantially all of its assets under Section 363 of the Bankruptcy Code or as part of the plan of reorganization.

EXCO has received a commitment of $250 million in debtor-in-possession (“DIP”) financing from certain of its existing lenders including Fairfax Financial Holdings Limited and its affiliates; Bluescape Resources Company LLC and its affiliates, including Cove Key Management; and JPMorgan Chase Bank, N.A., and certain of its affiliates. The DIP financing, which is subject to court approval, is expected to refinance the Company’s existing Reserve-Based Credit Agreement and support the Company’s day-to-day operations during the restructuring process. The Company intends to pay vendors in full for all goods and services provided after the filing date.

Link to full article:  https://www.businesswire.com/news/home/20180115005695/en/EXCO-Resou...

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They were in a death spiral from which they could not recover.  For some reason during this time they continued to drill wells.  I assume they had made a deal with mid stream that required them to continue to deliver gas.  


Jay, I'm unsure that "death" is a forgone conclusion.  After watching the "restructuring" of Goodrich, and others, it appears that Chapter 11 is often a means to write off debt and go back to business as usual with an improved balance sheet and other cost reductions.  I suspect that you may be right about the volume commitment to Azure but that contract could also be re-negotiated through a bankruptcy.  Goodrich touted its lower Haynesville gathering and treating costs when they emerged from bankruptcy.

I don't see them re emerging.  I think they will sell their assets based on the wording of the PR.


I've wondered what a liquidation might look like since EXCO only owns a half interest in their Haynesville assets.

So how will that affect those who are leased with Exco? Will they continue to get royalty pmts.?

As a leased RO that had 4 new CUL’s come on line last month w/ Exco & a DO received last week for an additional 4, I’m looking forward to Jay, Skip or other SME’s  replies.

Too soon to know for sure however other Chapter 11 bankruptcies by operating companies in the recent past have requested, and received permission from the bankruptcy court, to continue paying royalties.  The leases are the underlying value of Exco, and other operating companies, and to stop paying royalties would place them in default of their lease agreements.  In other words, if they stop paying royalties, they lose their lease rights. Then they would have to shut in their wells.  No one wants to go down that road.

Just hope that Tellurian doesn't buy Exco's Haynesville reserves.

If Exco sells, the likely buyers would be Indigo or Covey Park IMHO.  CHK has a lot of common ownership units, but I think they are too cash strapped.


They would make a good bolt on for either.  And preferable for multiple reasons compared to Chesapeake.

Jay you don't think GEPH would make a run for Exco?

GEPH is spread across a lot of basins not just the Haynesville, so it is less of a core property for them.  But then again they have 5 rigs running in the Haynesville right now, so who knows.



Wait, stop... in most situations, the obligation of payment of royalty to the lessor is suspended by the bankruptcy filing, and the lessor becomes an unsecured creditor.  Under a court-approved repayment plan, the debtor could make partial payments against obligations due under the lease until the bankruptcy is discharged or dismissed and not be held in breach.

You actually point to a prime reason that rights and obligations under leases are held in this manner through the bankruptcy - the oil and gas leases and operations thereon and production therefrom are usually a prime source of revenue from which the obligations of debtor are repaid.  Thus, it is usually part of the original terms of the petition and bankruptcy plan that budgeting for continuing such operations are made and permitted by the court.  By having freedom to continuing to operate, the debtor has the best chance to pay off and/or restructure its debts and emerge from bankruptcy, rather than leave a bunch of open wells with no operator in a liquidation.  Everyone would lose.


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