EXCO Resources Announces Third Quarter 2007 Operations Activity

Business Wire, Oct 29, 2007

DALLAS -- EXCO Resources, Inc. (NYSE:XCO) is providing certain operational information regarding its third quarter ended September 30, 2007.

We continue to implement our stated strategy of acquiring long-lived natural gas and oil reserves and actively drilling to develop upside opportunities.

Third quarter 2007 net production volumes totaled 375 Mmcfe per day, a 191% increase over the prior-year period production of 129 Mmcfe per day. We lost an average of 3.5 Mmcfe per day for the quarter from shut-in of a third party pipeline in our Mid-Continent area due to flooding. The pipeline is now operational and the volumes have returned to pre-shut-in levels.

Our gross productive well count has increased from approximately 8,000 gross wells at the end of the third quarter of 2006 to approximately 10,300 gross wells at the end of the third quarter of 2007. A comparison of our third quarter 2007 production volumes with those from third quarter 2006 follows:

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Our headcount has grown from 399 employees on September 30, 2006 to 631 employees on September 30, 2007, of which 371 directly support field operations.

Recent Acquisitions and Divestments

West Texas Canyon Sand Field Acquisition: We closed our second acquisition from private sellers in the Sugg Ranch, a West Texas Canyon Sand field, on October 9, 2007. We acquired an approximate 45% additional interest in 28,000 acres of leasehold and 135 producing wells for $156.6 million, subject to customary post-closing adjustments. Following the acquisition, we will take over operations of the field. We acquired our initial working interest in the field in April 2006. This acquisition brings our working interests in the field to 97%, with a 73% net revenue interest. This acquisition increases our estimated net proved reserves in the field by an estimated 60 Bcfe and increases the estimated total reserves (proved, probable and possible) by 129 Bcfe, all calculated at NYMEX strip pricing at September 1, 2007, the effective date of the transaction. We believe this field contains as many as 600 additional drilling locations, of which 187 are proved. Gross production from the field exceeds 28 Mmcfe per day, and, in addition to the primary Canyon Sand formation, productive formations include the Clearfork and Wolfcamp. While we are still preparing our 2008 capital budget, our initial plans, which are subject to Board of Directors approval, are to spend approximately $98.0 million and drill 144 wells in this field in 2008.

Cement Field, Oklahoma Divestment: On July 13, 2007, we completed the sale of our interests in the Cement Field, located in Garvin and Grady Counties, Oklahoma in our Mid-Continent area, to a field operator for $101.0 million, subject to customary post-closing adjustments. We owned only non-operated interests in the field, which we estimated contained 29.1 Bcfe of total proved reserves, based upon NYMEX strip pricing and internal engineering estimates, as of December 31, 2006. Net production volumes at the time of sale averaged approximately 8.0 Mmcfe per day.

Development and Drilling Activity

Operationally, our drilling program continues to make solid progress with 26 drilling rigs running at the end of the third quarter of 2007. This compares with 23 rigs running at the end of the second quarter of 2007.

Third quarter 2007 development expenditures totaled $134.6 million and funded the drilling and completion of 133 gross (104.0 net) new wells, as well as other capital activities. Our drilling success rate was 99%. Our revised capital budget, approved by our Board of Directors subsequent to our 2007 acquisitions, totals $502.9 million. This budget includes $402.9 million for drilling and completion, $48.6 million of midstream capital, $40.4 million for exploitation and other operations projects, and $11.0 million for information technology and miscellaneous capitalized costs. Under this budget, we currently plan to drill and complete 517 gross (428.4 net) wells. Of the wells, 170 gross (133.4 net) are in East Texas/North Louisiana, 230 (226.3 net) are in Appalachia, 37 gross (19.7 net) are in the Mid-Continent, and 79 gross (48.9 net) are in the Permian area.

A summary of our drilling and completion activity for the quarter ended September 30, 2007 follows:

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East Texas/North Louisiana: In the third quarter of 2007, we drilled and completed 40 gross (31.1 net) wells in East Texas and North Louisiana. We achieved a 100% drilling success rate. Our primary targets are the upper and lower Cotton Valley and, at times, the Travis Peak, Pettet, and Hosston formations. Currently 13 drilling rigs are running in the area. Seven rigs are running in our Holly/Caspiana Field area in North Louisiana, which we acquired in October 2006, three rigs are running in East Texas, and three rigs are running in the Vernon Field, which we acquired in March 2007. The third rig at Vernon was added in September 2007. We expect to have one non-operated rig running in East Texas in November 2007. The current 2007 forecast calls for drilling 170 gross (133.4 net) in the region. We anticipate drilling and completing 13 (12.1 net) wells at Vernon between our acquisition date of March 31, 2007 and year-end 2007. The Vernon Field net production is currently 135 Mmcfe per day, which includes 10.5 Mmcfe per day as of the end of the third quarter of 2007 of new production derived from 2007 drilling and exploitation work. At Vernon, we completed four new wells during the third quarter, and initial production per well averaged approximately 6.1 Mmcfe per day gross (4.5 Mmcfe per day net). In addition, we continue to implement a refrac program at Vernon, having completed seven projects. To date, our refracs are adding in excess of 1.0 Bcfe of incremental reserves per well. As anticipated, the incremental cash flow from the Vernon wells has allowed us to increase the activity in the entire East Texas/North Louisiana region while staying aligned with our strategy of only spending approximately half of our cash flow on capital projects.