EXCO 2016 WELLS IN NORTH LA & EAST TX

2016 Capital Budget Overview The Company continues to execute its disciplined capital allocation program to ensure the highest and best uses of capital. EXCO is focused on preserving its capital resources for future growth and, based on current natural gas prices, the Company has decided to significantly reduce its drilling activity in 2016. EXCO has reduced its total 2016 capital budget to $85 million, a reduction of $192 million, or 69%, as compared to 2015 capital expenditures of $277 million, and is deferring a significant amount of the Company’s drilling inventory until commodity prices improve. EXCO currently plans on drilling 7 gross wells and completing 15 gross wells in 2016, with development activities focused on natural gas drilling and completion activities in the Haynesville and Bossier shales in North Louisiana and East Texas. The 2016 capital budget is currently allocated among the different budget categories as follows:

Table 1: Capital Budget By Type 16; $MM Type Unit Capital Budget Drilling And Completion $MM 66 Field Operations And Non-Operated $MM 5 Land $MM 4 Capitalized Costs(1) $MM 10 Total $MM 85 (1) Includes $6MM of capitalized interest and $4MM of capitalized general and administrative expenses

Details of the development plans follow:

Table 2: Operated Development Activity And Capital Spending 16; Mixed Measures Area Wells Spud Wells Completed Drilling & Completion Capital, $MM Gross, # Net, # Gross, # Net, # East TX 1 0.3 9 3.9 24 North LA 6 5.7 6 5.7 42 Total 7 6.0 15 9.6

The tables are easier to view by using this link.  Link to release text: http://ir.excoresources.com/press-release/exco-resources-announces-...

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Permalink Reply by dbob on March 30, 2016 at 6:42

Interestingly, the tables suggest a drilling and completion cost of $7 million to $7.3 million per well, at least for their Louisiana work.  If one were interested, one could figure out which wells they were on and come up with a $/foot.  

That cost is roughly $1 million per well less than my guess for CUL.  

@ $1.90 per mcf and roughly 25% royalty with no other charges, those wells need to make roughly 4.8 BCF to payout.  

Permalink Reply by Skip Peel - Mineral Consultant on March 30, 2016 at 7:33

EXCO has very few CUL wells in NW LA.  They do have 3 HC of 9 total permits issued over 2015 and 2016 to date.  The non-CUL wells have proposed lateral lengths of ~ 4000'.  I suspect that if they were were drilling HC wells similar to others their per well cost would be similar.  I'd say the cost for long lateral wells are now running in the range of $8 to $9.25 million.  Before the decline in commodity prices those wells would have been $10 to $12.5 million per each.

Permalink Reply by Todd Bush on March 31, 2016 at 8:40

We posted a summary of Exco that compares some of the IP rates for east Texas versus northern Louisiana: 

http://energentgroup.com/exco-will-bring-18-wells-online-with-103m-...

It's troubling that the 2016 budget has been cut again - not a good sign for the company.

Permalink Reply by Skip Peel - Mineral Consultant on March 31, 2016 at 9:01

Thanks, Todd.  Interesting data. The three long lateral HC wells EXCO is currently drilling in DeSoto Parish have permits allowing for 7500' laterals.  We'll have to wait for the as-drilled plats or WH-1 forms to know how long they actually turn out to be.  That will provide a better apples-for-apples comparison for those who want to compare the E TX rock and the NW LA rock.  At this point it hardly matters considering the protracted depressed commodity price projections.  I hate to see any company go under but I don't see any other scenario that brings supply back into balance with demand.  EXCO's royalty owners have generally felt that they have been treated fairly by the company.  Not every HA operator can claim that distinction.

Permalink Reply by kittycatmama on April 1, 2016 at 4:52

Was looking at DNR pg. this morn and Exco is applying to drill a couple of CULs in north Desoto near Texas line. Actually the map that was provided wasn't clear but it looked like the CULs went north of Four Forks in Caddo Parish

Permalink Reply by Skip Peel - Mineral Consultant on April 1, 2016 at 6:19

kittycatmama, are you referencing a permit to drill or an application for alternate unit wells?

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