Texas-based energy explorer,
EXCO Resources Inc.
) reported third quarter 2013 adjusted earnings - excluding
one-time items such as gains from asset sales and other non-cash
gains - of 4 cents per share, missing the Zacks Consensus
Estimate of 10 cents and deteriorating from 13 cents earned in
the prior-year quarter. Increased capital expenditure and
impairment loss on TGGT joint venture, in addition to production
declines, were the reasons behind the weak results.
During the three-month period ended Sep 30, EXCO generated
total revenue of $165.3 million, up 16.7% year over year amid
higher natural gas realizations, but was below the Zacks
Consensus Estimate of $181.0 million.
In the third quarter, overall production decreased to 455 million
cubic feet equivalent (Mmcfe) per day from 512 Mmcfe in third
In the East Texas/North Louisiana region, production dropped to
340 Mmcfe/d from 442 Mmcfe/d in the year-ago quarter. The
decrease was due to normal field declines and conventional
properties' contribution to the EXCO-HGI partnership. However, it
was partially offset by contributions from the recently acquired
In the South Texas region, which includes the Eagle Ford assets
Chesapeake Energy Corp.
) on Jul 31, production averaged at about 6 million barrels of
oil equivalent (Mboe) per day.
In the Appalachian region, the trends were positive and
production levels increased to 64 Mmcfe/d from 46 Mmcfe/d in the
prior-year quarter owing to solid Marcellus Shale play
From the EXCO/HGI partnership, the company's share of
production was 27 Mmcfe/d for 3Q13, down from 28 Mmcfe/d in the
Natural gas, which comprised 93.8% of the total production for
EXCO, was sold at a realized price of $3.17 per thousand cubic
feet (Mcf), up 17.8% from $2.69 in the prior-year quarter. The
natural gas equivalent price realizations also increased 31.2%
year over year to $3.95 per thousand cubic feet equivalent
Drilling Statistics, Balance Sheet & Capital
Net operated wells drilled and completed during the quarter
were 7.2 and 12.9 respectively, apart from the 1 net well
operated by others.
CHESAPEAKE ENGY (CHK): Free Stock Analysis
LINN ENERGY LLC (LINE): Free Stock Analysis
MATADOR RESOURC (MTDR): Free Stock Analysis
EXCO RESOURCES (XCO): Free Stock Analysis
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As of Sep 30, 2013, EXCO had approximately $33.5 million in cash
and cash equivalents and long-term debt of $1,863.5 million,
representing a debt-to-capitalization ratio of 87%.
The company's capital expenditure (excluding spending related to
the partnership with HGI) for the quarter was $109.7 million, up
81.3% from the previous quarter's expenditure of $60.5 million.
This substantial rise is attributable to the Haynesville and
Eagle Ford assets acquisition earlier in the reported quarter.
EXCO forecasts capital expenditure of approximately $111.5
million for the fourth quarter and $350 million for the full
year. Per management, capex budget was increased to cater to the
development of the newly acquired assets.
Zacks Rank & Stock Picks
EXCO Resources currently carries a Zacks Rank #3 (Hold), implying
that it is expected to perform in line with the broader U.S.
equity market over the next one to three months.
Meanwhile, one can consider other firms in the exploration and
production industry that are expected to significantly outperform
the broader U.S. equity market over the same time frame. These
include Zacks Rank #1 (Strong Buy) stocks of
Linn Energy, LLC
Matador Resources Company