EXCO Resources (XCO, Financial) has approximately 31 South Texas wells that are nearing completion. The company remains on track to convert about 23 of these wells into sales in the fourth-quarter 2014. It plans to drill nearly 70 wells in 2014 in South Texas. Also, the company looks solid on its central production facilities down in South Texas. It plans to bring two facilities that are under construction at present. These facilities are installed and operated by a third-party that will certainly reduce its capital investment, minimize trucking and improve its operating efficiency.
Sampling opportunities in key areas
Moreover, the company is engaged in testing several upside opportunities across East Texas and North Louisiana. The company owns 71,000 net shale acres across these regions. The company sees 99% of these acres to yield true production. It has drilled nearly 15 wells and completed seven wells in the last reported quarter at East Texas and North Louisiana. Moreover, its core position in north Louisiana includes 30,000 net acres into Soto Parish. It expects nearly 390 wells to come online by the end of the quarter. This is undeniably a great production profile and should drive its growth in the future.
It has around 300 odd extra bossier opportunities. The company remains on track to maximize this gifted opportunity. It continues to emphasize multiple projects. At present it is busy optimizing its base production in East Texas and North Louisiana.
Simultaneously, the company is working on the completion design. This design has increased the amount of profit per lateral foot by about 50% and brought these wells into sales in the third-quarter 2014. Further, the company is applying flow back techniques to these wells. These techniques are expected to improve well performance and increase estimated ultimate recoveries. It is additionally working on cross unit developments.
The company expects the cross unit development to enable her to drill at least 10 sections where it has not booked reserves due to a presence of a major fault. In the East Texas Shelby area, it has 16,400 net acres with approximately 80 wells flowing to sales at the end of the quarter.
Conclusion
EXCO Resources look good on production profile. However, its rising debt level still remains a point of concern for investors. It has huge debt of $1.55 billion, while its total cash in hand is just $47.95 million. Moreover, the commodity prices remains threats for shareholders in the future that are expected to decline further.
