Exploration & Production | Drilling / Well Results | Top Story | Quarterly / Earnings Reports | First Quarter (1Q) Update

EXCO Running 10 Rigs Across Haynesville, Eagle Ford; Talks Results

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   |    Wednesday,April 30,2014

EXCO Resources has reported a first quarter 2014 update on its East Texas, Louisiana and Eagle Ford operations.

East Texas / North Louisiana

In the Haynesville shale during the first quarter 2014, we operated three drilling rigs focused on manufacturing in our core area in DeSoto Parish, Louisiana and two drilling rigs focused on appraisal, testing and delineation in the Shelby area of East Texas.

We drilled 13 gross (6.0 net) operated wells during the quarter and completed 2 gross (0.7 net) wells during the quarter. As a result of our multi-well pad drilling and completion operations, we had 10 gross (4.3 net) operated wells in the Haynesville shale that were drilled and waiting on completion at the end of the first quarter 2014 which are expected to be turned-to-sales during the second quarter 2014.

In DeSoto Parish, we have 42 developed units and 36 undeveloped units. Our plans for 2014 are to develop seven of these units which include drilling 34 gross (17.3 net) wells. We have also initiated drilling operations on our first cross-unit development in DeSoto Parish that includes drilling 5,000 to 8,000 foot laterals in 5 wells.

In the Shelby area, our plans for 2014 include an 8 gross (3.8 net) well drilling program consisting of longer laterals, a modified completion design and a more restricted flowback procedure. We will utilize the results from these wells to determine our future development plans in the Shelby area which includes 290 drilling locations.

We are encouraged by the early results of our base production initiatives which have flattened our decline since we have lowered the line pressure and installed artificial lift. In the first quarter 2014, we initiated a pipeline pressure reduction project by working with our midstream provider and lowered the gathering line pressure from 1,250 psi to 980 psi in a portion of our Holly field in DeSoto Parish.

The initial results for the set of wells included in this test show an 8-10% production uplift as a result of the reduction in line pressure, and we will continue to evaluate the long-term impact of the lower line pressure. We are currently studying interim lateral compression options and full field compression options to enhance our base production efficiency.

South Texas

In the Eagle Ford shale, we operated five drilling rigs during the first quarter 2014 focused in our core area in Zavala County, Texas. We drilled 23 gross (4.7 net) operated wells and completed 13 gross (2.4 net) wells in the Eagle Ford shale during the quarter.

Our 2014 drilling program consists of manufacturing and testing in the core area and appraisal drilling in the adjacent farmout areas. As part of a participation agreement with a joint venture partner in our core area, our working interest in the wells is approximately 17% prior to the acquisitions beginning in 2015 of our joint venture partner's working interest under the terms of the agreement.

As a result of the acquisitions, we anticipate that our working interest will increase to approximately 67%. Our lower initial working interest reduces our net capital and production volumes from these wells in the first year.

We have realized significant improvements to our drilling performance since we acquired the Eagle Ford assets in 2013. We continue to achieve improved drilling times per well and are currently averaging 13 days from spud to rig release compared to 17 days in 2013. Furthermore, we recently drilled a well in 11.3 days with a measured depth of 14,000 and a 7,100 foot lateral.

During the first quarter 2014, our shut-in volumes ranged from 1,650 to 2,500 net Bbl of oil per day due to offset drilling, completion and maintenance activities. This impacted our production during the quarter since we had a higher working interest in the wells shut-in compared to the wells being drilled under the participation agreement. We are working to optimize our drilling and completion schedules to reduce shut-in volumes.

We are also implementing initiatives to optimize and increase the efficiency of our production. We installed 24 pumping units on producing Eagle Ford wells during the first quarter 2014 and have plans to install a total of 90 pumping units for the full year 2014.

We have realized 1,600 gross (800 net) Bbl of oil per day production uplift from 39 installations during 2013 and 2014. In order to reduce transportation costs and expenses, we have contracted with a third party to design and operate oil and water gathering lines, centralized production facilities and an oil transport pipeline in our core area. We expect to have our first centralized facility operational during 2014.