Exco Resources Inc · OTC:EXCE
Exco Resources — Investor Presentation (October 2009)
40 slides from Exco Resources's investor presentation, Oct 6, 2009
Slide 1: Investor Presentation October 2009
Exhibit 99.1 Investor Presentation October 2009
Slide 2: Company Overview
Company Overview (1) Significant shale upside with a solid base of conventional assets • 1.2 Tcfe of Proved Reserves – 235 Mmcfe/d of current net production, reserve life of 14.3 years and 68% Proved Developed – 120 Bcfe of shale assets booked as proved with potential for significant reserve adds in
Slide 3: Keys to EXCO's Strategy
Keys to EXCO’s Strategy Right Assets Right People Right Strategy We have a significant position We have a dedicated, industry We are financially and in two of the most prolific leading technical staff and a operationally positioned resource plays in North America management team with a to effectivel
Slide 4: Shifting Our Strategy
Shifting Our Strategy Execution of our strategy provided the assets for tremendous future growth • Acquisition driven historically – Sought long-life assets with low risk drilling, strong basis, and proximity to markets – Focused on areas with follow-up acquisition opportunities – Entered East Texas
Slide 5: Delivering What We Promise
Delivering What We Promise Executing on our 2009 strategic plans Joint venture partner – Joint venture with BG Group positions EXCO for dramatic upstream and midstream growth – Aligns EXCO with a world leader in developing and marketing natural gas Asset sales – Closed ~$450 million in divestitures
Slide 6: Financial Snapshot
Financial Snapshot Significant liquidity with tremendous organic growth (dollars in millions) Current (1) Pro forma(3) Cash $ 137 $ 137 Bank debt $ 1,265 $ 580 Senior notes (7 1/4%) 445 445 Total debt $ 1,710 $ 1,025 Borrowing base $ 1,700 $ 1,300 Unused borrowing base 445 715 Unused borrowing base
Slide 7: Joint Venture With BG Group
Joint Venture With BG Group Strategic partner with shared vision • Sold 50% interest in Area of Mutual Interest (AMI) – 580 Bcfe of proved reserves and 155 Mmcfe/d within AMI • Cash flow implications – Haynesville development will be accelerated, but capital expenditures will be reduced – In additio
Slide 8: Asset Divestiture Program
Asset Divestiture Program High grading our portfolio • Initiated asset divestiture program in Q1 2009 • Identified non-strategic, low upside assets across all divisions • Made strategic decision to primarily focus capital and technical capabilities toward shale development • Closed nearly $450 milli
Slide 9: Reserve Base
Reserve Base Pro forma for BG transaction and 2009 divestiture program(1) Proved Reserves = 1.2 Tcfe Appalachia 3P Reserves = 3.0 Tcfe Proved: 0.3 Tcfe 3P: 0.5 Tcfe 3P+ Reserves = 11.6 – 17.2 Tcfe 3P+: 7.5 – 13.1 Tcfe Current Production = 235 Mmcfe/d Production: 37 Mmcfe/d Gross acreage: 714,000 Gro
Slide 10: 2010 Capital Focus
2010 Capital Focus Preliminary capital plan Haynesville capital is net of $240 million of EXCO capital carried by BG Group (dollars in millions) 2010E Haynesville Drilling $ 65 Land 25 Seismic 5 Exploration 15 Other 15 Non-shale Total Haynesville 125 31% Marcellus 63% Shale Corporate Drilling 75 6%
Slide 11: Financial Overview
Financial Overview Investor Presentation October 2009
Slide 12: Liquidity and Financial Position
Liquidity and Financial Position Pro forma for BG Group transaction and 2009 divestitures Closed BG Group Expected (1) (2)(4) (3)(4) (4) As of June 30, 2009 Actual Divestitures Joint Ventures Divestitures Pro Forma Cash $ 169 $ (38) $ (20) $ - $ 111 Bank debt (L + 175 -250bps) 2,298 (356) (696) (685
Slide 13: Derivatives Position
Derivatives Position NYMEX Contract Contract Equivalent Contract natural gas price per NYMEX oil price per Per day price per Percent (in thousands, except price) Mmbtu Mmbtu Bbls Bbl Hedged Equivalent hedged (1) Q4 2009 23,450 8.08 398 80.66 280.9 8.58 117% 2010 66,298 7.62 1,568 104.64 207.4 8.84 6
Slide 14: Development Plan
Development Plan Reflects $240 million of BG Group carry in 2010, $160 million in 2011 Average rig count assumptions 2010E 2011E 2012E 2013E 2014E Projected Average Rig Count Conventional 3 8 11 16 10 Haynesville 14 21 26 26 26 60 Marcellus 1 3 5 6 7 Total 18 32 42 48 43 50 40 30 20 Average well cos
Slide 15: Production Profile
Production Profile Projected Exit Rate • Growth profile initially driven by Haynesville development 1,400 1,200 1,000 • Marcellus contribution 800 accelerates in 2012 and beyond 600 400 • Opportunity to increase Marcellus 200 - activity through improvement in 2009E 2010E 2011E 2012E 2013E 2014E infr
Slide 16: Production Profile and Proved Reserve Growth
Production Profile and Proved Reserve Growth (1) (dollars in millions) Current 2010E 2014E Production (Mmcfe/d) 235 290 - 340 1,100+ Proved reserves (Tcfe) 1.2 1.5 - 1.6 5.2 - 5.7 (2) Capital expenditures $445 - $495 $1,100+ (2) EBITDA $645 - $695 $2,100+ Proved Reserves (Tcfe) 2010E 2011E 2012E 201
Slide 17: Projected Financial Results
Projected Financial Results Projected EBITDA • EBITDA grows in-line with $2,500 projected production growth $2,000 $1,500 – 4x in 4 years $1,000 $500 $- 2010E 2011E 2012E 2013E 2014E Projected Free Cash Flow • Free cash flow generation accelerates as Marcellus $1,000 $800 program becomes cash flow $
Slide 18: 2010 and 2011 Preliminary Upstream Guidance
2010 and 2011 Preliminary Upstream Guidance 2010 2011 Low High Low High NYMEX: Oil - Per Bbl $ 75.00 $ 75.00 $ 80.00 $ 80.00 Gas - Per Mcf $ 5.50 $ 5.50 $ 6.50 $ 6.50 Differentials: Oil $ (2.75) $ (3.25) $ (2.75) $ (3.25) Gas 94% 98% 94% 98% Production: Oil - Mbbls 542 636 609 702 Gas - Mmcf 102,598
Slide 19: Net Asset Value Summary
Net Asset Value Summary In millions, except per share and per unit Low Case High Case E&P Proved Reserves - 1.2 Tcfe at $2.00 & $2.50 per Mcfe $ 2,412 $ 3,015 Unproved Reserves(1) (Conventional) - 1.3 Tcfe at $.20 & $.40 per Mcfe 266 532 Unproved Reserves (Haynesville) - 2.2 Tcfe at $.30 & $.50 per
Slide 20: EXCO Trading Multiples Valuation Analysis
EXCO Trading Multiples (1) Valuation Analysis XCO Share $ XCO Peer Average at Peer Average Share Price (10-1-09) $ 17.51 Market Cap (10-1-09) $ 3,695 Enterprise Value (10-1-09) $ 4,590 Current Proved Reserves (Bcfe) 1,206 Current Production (Mmcfe/d) 235 (2) EBITDA 2010 $ 668 (2) Cash Flow 2010 $ 60
Slide 21: Peer Valuation Comparison
Peer Valuation Comparison Valuation Analysis Enterprise Value / Current Proved Reserves 1 Enterprise Value / Daily Production Q2 Actuals 1 $7.23 $6.75 $21,170 $19,530 $19,801 $18,642 $18,058 $4.96 $3.81 $15,539 $3.59 $2.29 XCO Avg HK SWN RRC COG XCO Avg RRC HK SWN COG 1,2 Enterprise Value / EBITDA S
Slide 22: Peer Valuation Comparison
Peer Valuation Comparison (1) Valuation Analysis 2010 Estimates XCO COG HK RRC SWN Production growth rate 35% 15% 35% 15% 30% EBITDA (2) $ 668 $ 572 $ 1,140 $ 790 $ 1,823 Interest Expense (60) (60) (210) (120) (55) Cash Flow 608 512 930 670 1,768 Capital Expenditures(2) (470) (529) (1,465) (746) (1,
Slide 23: Asset Overview
Asset Overview Investor Presentation October 2009
Slide 24: East Texas / North Louisiana
East Texas / North Louisiana Division Overview Portfolio Highlights Producing wells: 1,380 gross / 769 net Reserves Locations Bcfe Gross Net PD 551 PUD 266 378 166 Total Proved 817 Probable 309 296 158 Possible 1,261 915 255 3P 2,387 1,589 579 Potential 1,403 1,468 541 Total 3,790 3,057 1,120 Curren
Slide 25: Haynesville Shale
Haynesville Shale Asset Overview Field Highlights Producing horizontal wells: 23 gross / 6 net Average WI: ~30% Average NRI: ~23% Reserves Locations Bcfe Gross Net PD 39 PUD 81 39 11 Total Proved 120 Probable 71 43 10 Possible 1,016 677 137 3P 1,207 759 158 Potential 1,092 853 240 Total 2,299 1,612
Slide 26: Haynesville Development History
Haynesville Development History Measured ramp up to achieve excellence – Test and hold acreage Vertical – Determine best landing zone Program – Determine best completion technique Explore – Evaluate rock properties Core – Determine gas in place and reserve recovery Analysis – Optimize stimulation –
Slide 27: EXCO Operated Haynesville Shale Production
EXCO Operated Haynesville Shale Production Currently 16 operated horizontal wells producing EXCO Haynesville Production East Texas / North Louisiana 200,000 180,000 185 Mmcf/d Gross Production 160,000 140,000 3/14/08: 120,000 XCO TD’s first Haynesville vertical well 12/4/08: XCO turns first 100,000
Slide 28: Industry Best IP Rates
Industry Best IP Rates 31,000 • Initial production rates Top 25 Haynesville Shale IP’s reported on 165 wells across the Haynesville 29,000 shale play 27,000 25,000 • EXCO’s track record – 4 of the top 6 23,000 – 11 of the top 25 – 15 of the top 39 21,000 • Last 2 EXCO wells are 19,000 the 2 best wel
Slide 29: Haynesville Horizontal Production Curves
Haynesville Horizontal Production Curves Consistent results outperforming original estimate and peers INDUSTRY TYPE CURVES Horizontal Haynesville Shale - ETX/NLA 25,000 20,000 15,000 10,000 5,000 0 0 30 60 90 120 150 180 210 240 270 300 Production Day Other Haynesville Operator 1 Other Hayensville O
Slide 30: Drilling and Completion Costs
Drilling and Completion Costs Realizing significant improvements in well costs with more to come Haynesville Horizontals - Days vs Depth 1st Three Haynesville Wells • Cost reductions primarily Mid Three Haynesville Wells Last Three Haynesville Wells due to decreased drilling days, improved drilling
Slide 31: Bossier
Bossier The next frontier Top Bossier +/- 10,000’ Top Haynesville +/- 11,500’ Top Limestone +/- 11,900’ • Potential gas in place on our acreage is ~17 Tcf • Recovery factor to be determined 31
Slide 32: Midstream
Midstream East Texas/North Louisiana – Positioned for Growth 32
Slide 33: Haynesville Header System
Haynesville Header System 2009 Plans • Strategic pipeline installation program will ensure that EXCO’s produced gas is transported to gas markets • Installation of 29 mile pipeline system of 36 inch pipe operated by TGG • Pipeline will be installed south of Shreveport and traverse the Holly system •
Slide 34: Appalachia
Appalachia Division Overview Portfolio Highlights Producing wells: 6,189 gross / 5,620 net Reserves Locations Devonian Sands & Shale Bcfe Gross Net PD 237 PA PUD 96 771 762 Total Proved 333 OH Probable 88 641 604 Possible 76 713 602 3P 497 2,125 1,968 Potential 6,992 - 12,620 3,865 - 7,004 3,691-6,7
Slide 35: Focus on the Marcellus
Focus on the Marcellus • Largest areal extent of the major shale plays – EXCO has 348,000 net acres in the play • Approximately 226,000 net fairway acres • 70% of acreage is HBP Marcellus Fairway • Key PA average WI 100%, average NRI 84% PA OH • Massive reserve potential – ~6 – 11 Tcf potential on E
Slide 36: Marcellus Development Strategy
Marcellus Development Strategy Identified six distinct geologic regions Regions • Southwest – 54,000 net acres • Southeast – 18,000 net acres • Central – 69,000 net acres N NE NW • North – 42,000 net acres C • Northeast – 42,000 net acres • Northwest – minimal acreage Regional Distinctions SW SE • S
Slide 37: Current Activity
Current Activity Preparing to implement horizontal program • Drill verticals to test the play: – Obtain additional reservoir data (core, pressure data, etc.) – Test drilling, completion, and production LOPATOFSKY techniques – Identify horizontal drilling targets • Acquire seismic – Identify geologic
Slide 38: Development Issues
Development Issues Identifying solutions to potential development issues • Land – 70% HBP allows us to dictate pace of development – Holding our limited term acreage through timely drilling • Size of play – “Plays within the Play”requires regional delineation efforts – Focused on best reservoir / ec
Slide 39: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements, as defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act. These forward-looking statements relate to, among other things, the following: • our future f
Slide 40: Forward Looking Statements (continued)
PPT-115-OctInvestrNMC-1009 Forward Looking Statements (continued) We believe that it is important to communicate our expectations of future performance to our investors. However, events may occur in the future that we are unable to accurately predict, or over which we have no control. You are cautio
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