EXCO Resources, Inc
From Wikimarcellus
EXCO rig, 2009, Skyline Golf Course on Route 247,
Greenfield Twp in Lackawanna Co., PA
Photo credit -Robin Scala
Dallas, Texas-based EXCO Resources, Inc. (NYSE: XCO), an oil and gas exploration and production company, has an active drilling program in Pennsylvania, Ohio, and West Virginia. During 2008 and 2009 it had been shifting resources to drill in both the Marcellus and Huron shale formations. EXCO's Marcellus leasehold consists of 343,000 net acres in the Marcellus shale fairway. Approximately 186,000 acres are in the heart of the play where shale is over 100 feet thick and over-pressured. Much of its acreage is held by production, and it owns 100% of the working interest with high net revenue interest. The company also controls 130,000 acres in the Huron shale play. Much of EXCO's Appalachian drilling has been conducted through its Akron, Ohio-based subsidiary, EXCO - North Coast Energy, Inc. North Coast Energy has been a wholly-owned subsidiary of EXCO since 2004.
Latest Operational Developments
During December, 2009 EXCO - North Coast Energy was reported to have been evaluating the core from the above pictured well drilled during September-October in Greenfield Township, PA. It was named Skyline Golf Course Unit 6V and located east of State Route 247 adjacent to the golf course. This had been the first Marcellus shale well drilled in Lackawanna County, PA. The company also had a permit to drill a second well at the golf course location. The company had drilled another Marcellus well in July, 2009 in nearby Clifford Township in Susquehanna County, PA.
During 2010, EXCO designated five core areas in the Marcellus shale on which it planned to focus. It was in negotiation to add 40,000 to 50,000 additional acres in these core areas. It was also in the process of completing its first long lateral horizontal well. The lateral was to be 4,650 feet long. It was expected to be complete by late first quarter or early second quarter of the year.
The company planned to field one rig in the Marcellus during the year, and it expected to spud its first well with this rig in March.
EXCO had 70 drilling permits in hand. However, getting sufficient gathering pipeline in place still required additional time.
EXCO owned 106,000 acres in central Pennsylvania of Marcellus shale fairway. It planned to drill 9 out of 11 horizontal wells in that region during 2010. Its other core holdings included 10,000 acres in northeastern Pennsylvania, another 10,000 in southwestern Pennsylvania and northern West Virginia, and finally 26,000 acres in other parts of West Virginia that the company believed were prospective for Marcellus shale.
EXCO had also drilled five horizontal Huron shale wells in West Virginia. Production rates on these five wells had been averaging greater than 400 Mcf per day.
2008 Development Timeline
During 2008 EXCO was primarily involved in drilling Marcellus shale test wells in Pennsylvania. Several horizontal Huron shale wells were also drilled in West Virginia.
Water withdrawal misstep in the Susquehanna Basin
In September, 2008, EXCO - North Coast Energy was reported to be actively drilling in the Susquehanna Basin of Pennsylvania. It had paid a fine to the Susquehanna River Basin Commission of $20,000 for not complying with limits on water withdrawal for wells in the Basin.
Seismic testing in Centre County
An October, 2008 report found EXCO - North Coast carrying out a 3-D seismic survey on 15,000 acres in central Pennsylvania where it owned drilling rights that were mainly on state game lands in Burnside Township, Centre County. It had already drilled two horizontal wells in the Burnside area that were undergoing testing.
The Company was working with Dawson Geophysical Company to carry out the seismic survey.
First Marcellus shale wells
EXCO's first two Marcellus wells, the Litke 1H and 2H, located in Burnside Township, Centre County, Pennsylvania were producing 1 and 2.6 Mmcfe/d, respectively. Both were horizonal, hydro-fractured wells.
Snow Shoe or Burnside?
A December, 2008 report indicated EXCO had a well near Snow Shoe, Pennsylvania (near Burnside Township) that was producing 1 Mmcfe/d at the depth of 1700 feet. It may or may not be the same one mentioned in the previous paragraph.
4th Quarter Drilling Plans
According to a November, 2008 report EXCO planned to drill four additional horizontal wells in the Huron shale and five vertical ones in the Marcellus during the last quarter of 2008.
2009 Development Timeline
In 2009 EXCO continued to test its Marcellus shale acreage and to drill in West Virginia's Huron shale.
West Virginia drilling activities
In February, 2009 EXCO announced that it had two horizontal wells in West Virginia that were to be undergoing four and seven stage completions in March-April, 2009. These were probably a couple of the same ones mentioned above that were scheduled for drilling during the 4th quarter of 2008. Also, as of February the company had received four additional permits for horizontal wells in West Virginia.
Vertical drilling in central PA counties
The same report as above indicated that EXCO had several vertical wells in Indiana, Clearfield and Centre Counties in Pennsylvania. Also, an April, 2009 update from the company mentioned that EXCO had a number of drilling permits for vertical wells in Indiana County, PA as well as other counties in Pennsylvania. As of that time it had applied for three Marcellus shale permits in Indiana Co.
During the third quarter of 2009 EXCO had drilled and completed four vertical wells in the Marcellus shale and planned to spud one horizontal well late in the forth quarter of the year.
Third quarter completions
According to the previously mentioned April, 2009 update, EXCO had recently finished drilling and casing one horizontal Marcellus well, and another one was still underway. The company expected to complete both wells during the third quarter of 2009. The situation was similar for the Huron shale: drilling had recently finished on one well and was still underway for two or three additional wells. Completion was scheduled for these wells during the third quarter of 2009.
Decision on joint venture partner deferred
Further mention was made in the April, 2009 update that the investment banking firm, Goldman Sachs, had been retained to facilitate a joint venture (JV), presumably to gain greater access to capital for EXCO's capex program, but no details were then available. Another update provided by EXCO at the end of July, 2009 indicated that the company was seeking a compatible JV partner that could help develop its Marcellus shale acreage. A decision about selecting a partner had been deferred until the 4th quarter of 2009 or 1st quarter of 2010.
Shifting emphasis to the Haynesville
A May, 2009 company update indicated that EXCO was scaling back its Marcellus shale drilling as well as its pipeline infrastructure projects. Instead, it planned to favor Haynesville shale drilling. The reason given for the pull-back was the on-going collapse in natural gas prices. However, EXCO was still expecting to maintain an aggressive overall posture so far as the Marcellus shale. For the remainder of 2009, the company intended to focus on integrating its existing well data with seismic data in order to better model its still, as yet, undrilled acreage blocks and for further planning.
Golf course permits in Lackawanna Co.
A July, 2009 report had EXCO being issued the first drilling permits in Lackawanna County, PA, home of the City of Scranton. EXCO was issued two permits for drilling near the Skyline Public Golf Course in Greenfield Township. The drilling rights had been purchased as part of Greenfield Gas Group's negotiated lease for 25,000 acres. EXCO paid $2,100 per acre with an 18% royalty on production. No starting date for drilling had been set. EXCO had five other pending permits to drill in Greenfield Twp.
Management evaluates its options - sells wells
A November, 2009 EXCO update stated that the company continued to be in more or less of a holding pattern regarding the Marcellus shale. Management indicated that it was in the process of evaluating its Marcellus acreage by drilling test wells and building its staff in the region. No firm development plans for 2010 had yet been released. The company also announced that the company had sold 3,200 (presumably shallow) wells for $145 million that were in Ohio and northwestern Pennsylvania. The deal was to close in November, 2009. During the fourth quarter of 2009, EXCO moved its office from Akron (North Coast - EXCO) to Warrendale, PA (north suburban Pittsburgh area) where it leased 56,000 square feet of office space.
BG JV
Other factors affecting EXCO included a 50-50 joint venture with BG Group pertaining to acreage in the Haynesville shale play in East Texas and North Louisiana signed in June, 2009 for $1.3 billion (US).
Spotlight Issues
- The company had pursued an aggressive, yet somewhat restrained Marcellus shale drilling program in 2009. It has been negotiating for a joint venture partner, so it may have been holding back until a partner was on board. By early 2010, this strategy appeared to be shifting to a more active drilling program with 11 horizontal wells set to drill.
- Once EXCO begins drilling in earnest, it is extremely well positioned in central Pennsylvania. A January, 2010 news release mentioned that EXCO had been granted 60 drilling permits for future operations in Pennsylvania. According to a February, 2010 company update, this sum had increased to 70 drilling permits ready to go.
- The same as other E & P firms developing in the Marcellus, EXCO had begun experimenting with long lateral horizontal drilling. If successful, this could ultimately lead to some very productive Marcellus shale wells for the company.
Key Exeucutive Contacts
- Douglas H. Miller is EXCO's Chairman and CEO.
- Stephen F. Smith is Vice Chairman, President and Secretary.
- J. Douglas Ramsey is Vice President, CFO and Treasurer.
- William L. Lanny Boeing is Vice President and COO.
- Wendy L. Straatmann is Vice President of EXCO and President of EXCO - North Coast Energy, Inc.
- Paul B. Rudnicki is Vice President of Financial Planning and Analysis.
- Hal Hickey is the company's Vice President and also COO.
- Dan Kortum is Vice President of Midstream and Marketing.
- Thomas R. Moore is Chief Geoscientist, EXCO - North Coast Energy.
- David Cox is Manager of Geosciences, EXCO - North Coast Energy.
- Rita McConnell is a spokesperson for EXCO.
