Sad Day: EXCO Resources Files for Chapter 11 Bankruptcy

You can’t say we didn’t warn you. In early November MDN told you that a “turnaround expert” hired two years ago to help EXCO Resources dig its way out of a deep hole had resigned and left (see EXCO Resources Heading for Bankruptcy, Turnaround Expert Resigns). At that time the company itself warned it “may be forced to seek protection from creditors under the U.S. Bankruptcy Code.” And so they have. On Monday EXCO filed for Chapter 11 bankruptcy protection. EXCO has 184,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However, as we pointed out in early 2016, EXCO has abandoned new drilling the Marcellus/Utica–at this point. Based on language in their bankruptcy announcement (below), it seems likely EXCO is right now shopping their Marcellus (as well as other) assets. Amazingly, the company struck a deal for a new $250 million cash infusion from lenders to aide them through the bankruptcy/sale process. We just don’t understand high finance. Here’s news about the EXCO announcement, along with a copy of the official announcement…
Continue reading

NYSE Threatens EXCO Resources with Stock Delisting – 4th Time

EXCO Resources continues to be a company in trouble. The company flirted with bankruptcy for some time, but in the end they effectively turned over control of the company to creditors this past summer in order to stay out of bankruptcy court (see EXCO Issues 2.7M Shares of New Stock in Lieu of Paying $23M). As we pointed out in early November, the turnaround expert EXCO hired to continue keeping the company out of bankruptcy flew the coop (see EXCO Resources Heading for Bankruptcy, Turnaround Expert Resigns). EXCO is now in trouble with the New York Stock Exchange–for the fourth time! Two times in the past the New York Stock Exchange notified the company it had fallen below the NYSE’s standards for listing and trading the stock because the share price was too low (see EXCO Resources Stock Threatened Again with De-Listing by NYSE). EXCO was able to fix the low stock price by crafting a reverse stock split–combining outstanding shares into fewer shares worth more. Then in August, NYSE threatened EXCO with delisting a third time, but for a different reason: Because EXCO’s market capitalization has fallen below $50 million (see EXCO Resources Receives 3rd NYSE Notice of Delisting). EXCO pulled their bacon out of the fire with NYSE in August by cutting a deal that allows them until February 2019 (yes, 2019) to get company valuation back up over $50 million. So why the new/fourth threat from NYSE? Same reason as the first two times–the stock price is once again in the toilet–well below $1 per share. We doubt they can do another reverse stock split to save the share price this time…
Continue reading

EXCO Resources Heading for Bankruptcy, Turnaround Expert Resigns

In the end, not even turnaround expert John Wilder could turn around EXCO Resources. Wilder is the guy now Secretary of Commerce Wilbur Ross brought in two years ago to turn around the ailing company. At first it seemed like it might be working (see EXCO Resources Turnaround is Working, but Comes at a High Cost). EXCO Resources was once a sizable player in the Marcellus. They still have 184,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However the company, as we pointed out in March 2016, has abandoned the Marcellus/Utica at this point (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). The company flirted with bankruptcy for some time, but in the end they effectively turned over control of the company to its creditors this past summer (see EXCO Issues 2.7M Shares of New Stock in Lieu of Paying $23M). However, the company has continued to struggle financially. Yesterday EXCO announced Wilder has resigned from his position as a member of EXCO’s Board of Directors and from his position as Executive Chairman of the Board, effectively immediately. Translation: He’s given up on trying to save the company. In the same announcement, EXCO said Wilder’s departure “was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.” In EXCO’s third quarter 2017 update, released on Tuesday, there is a section in which management says if they can’t make the interest payments on the company’s debt, “the Company may be forced to seek protection from creditors under the U.S. Bankruptcy Code.” They go on to say debt payments and other factors, “raise substantial doubt about the Company’s ability to continue as a going concern.” Ominous language. Here’s the announcement about John Wilder and company statements about possibly seeking bankruptcy protection…
Continue reading

EXCO Resources Taps Out Remaining Line of Credit, Borrows $88M

EXCO Resources was once a sizable player in the Marcellus. They still have 184,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However the company, as we pointed out a year ago, has abandoned the Marcellus/Utica at this point (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). The company flirted with bankruptcy for some time. In the end, they effectively turned over control of the company to its creditors (see EXCO Issues 2.7M Shares of New Stock in Lieu of Paying $23M). However, the company continues to struggle. Just last month they were threatened, for a third time, with having the company’s stock delisted from the New York Stock Exchange (see EXCO Resources Receives 3rd NYSE Notice of Delisting). EXCO has a line of credit (i.e. a “Revolving Credit Facility”) of $150 million. They’ve just borrowed the last $88 million of that total, to keep the company going…
Continue reading

EXCO Resources Receives 3rd NYSE Notice of Delisting

EXCO Resources has just been threatened by the New York Stock Exchange (NYSE) with delisting their stock–for the third time. EXCO was once a sizable player in the Marcellus. They still have 184,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However the company, as we pointed out a year ago, has abandoned the Marcellus/Utica at this point (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). The company flirted with bankruptcy for some time. In the end, they effectively turned over control of the company to its creditors (see EXCO Issues 2.7M Shares of New Stock in Lieu of Paying $23M). As we pointed out just a week ago, EXCO recently expressed interest in restarting drilling in our region again–in the Utica (see EXCO Resources 2Q17: Still No M-U Drilling, but Considering It). But the company faces steep challenges–primarily financial. Two times in the past the New York Stock Exchange notified the company it had fallen below the NYSE’s standards for listing and trading the stock, the most recent notice in January (see EXCO Resources Stock Threatened Again with De-Listing by NYSE). Both times EXCO’s stock had slipped below the $1/share level. EXCO finally fixed it by doing a reverse stock split–by combining outstanding shares into fewer shares worth more. The stock price currently is (and has been) trading well above $1/share. So why the NYSE notice this third time? Because EXCO’s market capitalization has fallen below $50 million. As of today, on paper, the company is worth only $30.8 million…
Continue reading

EXCO Resources 2Q17: Still No M-U Drilling, but Considering It

EXCO Resources was once a sizable player in the Marcellus. They still have 184,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However, EXCO, as we pointed out a year ago, has abandoned the Marcellus at this point (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). The company flirted with bankruptcy for some time. In the end, they effectively turned over control of the company to its creditors (see EXCO Issues 2.7M Shares of New Stock in Lieu of Paying $23M). Earlier this week EXCO released its second quarter 2017 update. In souring the report and a transcript of the conference call, we found that EXCO continues to ignore the Marcellus/Utica. Production in our region for EXCO decreased year over year, because they haven’t drilled any new wells. Because prices have gone up somewhat, the company says they’re keeping a close eye on our region and they may decide to begin drilling again. Maybe. They also said the company is “evaluating plans to participate in appraisal wells with another operator to further evaluate the potential of the [Utica] formation.” So they may decide to fool around with the Utica. Maybe. Here’s the EXCO update…
Continue reading

EXCO Issues 2.7M Shares of New Stock in Lieu of Paying $23M

EXCO Resources was once a sizable player in the Marcellus. They still have 145,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However, EXCO, as we pointed out a year ago, has abandoned the Marcellus at this point (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). The company flirted with bankruptcy for some time. They were able to slow the bleeding in 2Q16 (see EXCO Still Hammering Midstreamers re Contracts, Bleeding Slowed). In 3Q16 EXCO finally turned a profit, going from losing $355 million in 3Q15 to making $51 million in 3Q16 (see EXCO 3Q16: Turns a Profit! Marcellus Production Continues to Fall). However, the turnaround was short-lived. In 4Q16 the company lost $35 million (see EXCO Lost $225M in ’16; Screwing Shareholders to Avoid Bankruptcy). At the same time they released 4Q16 and full year numbers, EXCO also released a game plan to avoid bankruptcy. That plan? Effectively turning over control of the company to its creditors. We spotted another interesting maneuver on the part of the company. Yesterday EXCO filed an update (called a Form 8-K) with the Securities and Exchange Commission that they have issued 2.7 million new shares of common stock in lieu of making a cash interest payment on a loan. They have plans for the cash that would have gone toward the interest payment…
Continue reading

EXCO Resources Adds Dealmaker to Board – What Does it Mean?

EXCO Resources was once a sizable player in the Marcellus. They still have 145,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However, EXCO, as we pointed out a year ago, has abandoned the Marcellus at this point (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). The company flirted with bankruptcy for some time. They were able to slow the bleeding in 2Q16 (see EXCO Still Hammering Midstreamers re Contracts, Bleeding Slowed). In 3Q16 EXCO finally turned a profit, going from losing $355 million in 3Q15 to making $51 million in 3Q16 (see EXCO 3Q16: Turns a Profit! Marcellus Production Continues to Fall). That was an astonishing turnaround for a company razor close to bankruptcy. However, the turnaround was short-lived. In 4Q16 the company lost $35 million (see EXCO Lost $225M in ’16; Screwing Shareholders to Avoid Bankruptcy). At the same time they released 4Q16 and full year numbers, EXCO also released a game plan to avoid bankruptcy. That plan? Effectively turning over control of the company to its creditors. We’re not sure if it’s the creditors, or EXCO top management, but someone wanted a new face on the board of directors, and EXCO now has it: Last week EXCO announced the appointment of Randall E. King to the board. Who is King and what does his appointment really mean?…
Continue reading

EXCO Lost $225M in ’16; Screwing Shareholders to Avoid Bankruptcy

EXCO Resources was once a sizable player in the Marcellus. They still have 145,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However, EXCO, as we pointed out a year ago, has abandoned the Marcellus at this point (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). The company flirted with bankruptcy for some time. They were able to slow the bleeding in 2Q16 (see EXCO Still Hammering Midstreamers re Contracts, Bleeding Slowed). In 3Q16 EXCO finally turned a profit, going from losing $355 million in 3Q15 to making $51 million in 3Q16 (see EXCO 3Q16: Turns a Profit! Marcellus Production Continues to Fall). That was an astonishing turnaround for a company razor close to bankruptcy. EXCO has just released its fourth quarter and full year 2016 update, along with details on a plan to keep the company out of bankruptcy court. The update shows the company lost $35 million in 4Q16. EXCO lost $225 million for all of 2016, versus losing $1.2 billion in 2015. The bleeding has slowed. In a surprise move, they added 1 Marcellus well to production in 4Q16. EXCO’s master plan to stay out of bankruptcy includes selling $300 million in bonds to a group of investors–effectively turning over control of the company to its creditors and screwing existing shareholders. Believe it or not, there is a connection between EXCO and the Trump Administration…
Continue reading

EXCO Resources Stock Threatened Again with De-Listing by NYSE

EXCO Resources still has 145,000 net acres in the Marcellus with 124 horizontal Marcellus wells drilled and in production. However, they have pretty much abandoned the Marcellus at this point. EXCO was officially warned by the New York Stock Exchange last week that their stock is in danger of becoming delisted on the NYSE. Sound familiar? It should. The NYSE warned EXCO of the same thing in March 2016 (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). Bad timing for EXCO as they have a Feb. 1 deadline looming for their borrowing base “redetermination” (see EXCO’s Day of Reckoning with Bankers: Feb 1). A company’s borrowing base is the value of its assets–in this case the value of the leases and oil/gas wells EXCO owns. Those assets are used as collateral to back up loans and IOUs. If the bankers extending credit determine a company’s assets are no longer sufficient to cover their loans, the bankers may force that company into bankruptcy as a way to protect the bank’s investment. EXCO pushed off the asset checkup to November. Then in December, the company got a reprieve, pushing the overdue checkup from Nov. 1, 2016 to Feb. 1, 2017. Time is now up and the redetermination will happen on Feb. 1. Will the NYSE warning play a role in that redetermination? EXCO says they have a plan to stay listed…
Continue reading

EXCO’s Day of Reckoning with Bankers: Feb 1

EXCO Resources was once a sizable player in the Marcellus. They still have 145,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However, EXCO, as we pointed out last March, has pretty much abandoned the Marcellus at this point (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). The company has flirted with bankruptcy for some time. They were able to slow the bleeding in 2Q16 (see EXCO Still Hammering Midstreamers re Contracts, Bleeding Slowed). In 3Q16 EXCO finally turned a profit, going from losing $355 million in 3Q15 to making $51 million in 3Q16 (see EXCO 3Q16: Turns a Profit! Marcellus Production Continues to Fall). That is an astonishing turnaround for a company razor close to bankruptcy. However, they aren’t out of the woods yet. Last fall EXCO was due to have borrowing base redetermination. A company’s borrowing base is the value of its assets–in this case the value of the leases and oil/gas wells EXCO owns. Those assets are used as collateral to back up loans and IOUs. If the bankers extending credit determine a company’s assets are no longer sufficient to cover their loans, the bankers may force that company into bankruptcy as a way to protect the bank’s investment. EXCO pushed off the asset checkup to November. Then in December, the company got a reprieve, pushing the overdue checkup from Nov. 1, 2016 to Feb. 1, 2017. It now appears time is up and the redetermination will happen on Feb. 1. What will the banks find?…
Continue reading

EXCO 3Q16: Turns a Profit! Marcellus Production Continues to Fall

EXCO.jpgEXCO Resources was once a sizable player in the Marcellus. They still have 145,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However, EXCO, as we pointed out in March, has pretty much abandoned the Marcellus at this point (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). The company was able to slow the bleeding in 2Q16 (see EXCO Still Hammering Midstreamers re Contracts, Bleeding Slowed). What about 3Q16? EXCO finally turned a profit, going from losing $355 million in 3Q15 to making $51 million in 3Q16. Really, an astonishing turnaround for a company razor close to bankruptcy. However, EXCO’s Marcellus/Utica operations are essentially nil. They still produce from their wells, but because they haven’t drilled any new wells, production is steadily declining in the northeast–just 33 million cubic feet per day (MMcf/d), down 23% from 2Q16 and down 30% from 3Q15…
Continue reading

4 Marcellus Drillers Ramp Up Production in 2016

step-on-the-gasWe can’t say enough good things about Rusty Braziel and RBN Energy. Rusty was the co-founder of Bentek Energy, sold a few years ago to Platts. Rusty is the consummate industry professional who has forgotten more about the oil and gas industry than most of us will ever know. He recently wrote and published The Domino Effect: How the Shale Revolution is Transforming Energy Markets, Industries and Economies (buy it on Amazon). Rusty has collected a group of very smart industry analysts who write about the oil and gas industry. One of those analysts is Nick Cacchione, who wrote a post on the RBN Energy website yesterday about the top 10 gas-focused drillers in the country. It’s no coincidence that all of them have operations in the Marcellus/Utica, and most of them are totally focused on the northeast. We found it to be an enlightening and helpful article. One of the main points is how four of the top 10, while reducing their spending, have significantly increased their production numbers for 2016. Here’s a deep dive into the top 10 according to RBN, featuring the four who are “stepping on the gas”…
Continue reading

EXCO Resources Turnaround is Working, but Comes at a High Cost

EXCO.jpgEXCO Resources was once a sizable player in the Marcellus. They still have 145,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However, EXCO, as we pointed out in March, has pretty much abandoned the Marcellus at this point (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). In May the company announced it was looking at “restructuring,” which is typically a code word for bankruptcy, and the company’s stock took a nosedive (see EXCO Resources Board Looks at “Restructuring” – Stock Nosedives). Not long after, EXCO announced it was firing some board members, hiring new ones, and aggressively hammering midstream companies to lower pipeline costs (see EXCO Restructuring Plan: New Board Members, Hammer Midstreamers). It looks like the plan is working. The bleeding slowed in 2Q16 (see EXCO Still Hammering Midstreamers re Contracts, Bleeding Slowed). So far the company has stayed out of bankruptcy. How did they do it, where some others in similar circumstances have failed? According to EXCO’s chairman (and major investor) Wilbur Ross, Jr., the turnaround is due to turnaround expert C. John Wilder that the company hired last year…
Continue reading

EXCO Still Hammering Midstreamers re Contracts, Bleeding Slowed

EXCO.jpgEXCO Resources, a Dallas, TX-based driller with drilling operations in Texas, North Louisiana and the Marcellus/Utica, has been inching toward bankruptcy. So far the company has stayed out of bankrutpcy and hopes they can continue to do so. Their strategy, as we reported in May, is to hire new board members and try to wiggle out of long-term pipeline contracts (see EXCO Restructuring Plan: New Board Members, Hammer Midstreamers). How’s that working out? Last week the company released its second quarter 2016 update and CEO Harold Hickey said the company is “diligently working…[on] the consensual restructuring of our gathering and transportation contracts, noting the significant negative impact these contracts have on our cash flow, borrowing base and liquidity.” What if they can’t get midstream companies to buckle to their demands? They’ll sue: “If the efforts are not successful, the Company may seek alternatives to reject the contracts consistent with recent court decisions.” On the positive side, at least the bleeding is slowing down. In 2Q15 EXCO lost $454 million. In 2Q16 they lost $111 million. Here’s the EXCO update, including details on their Marcellus/Utica program…
Continue reading

EXCO Restructuring Plan: New Board Members, Hammer Midstreamers

EXCO.jpgLast week MDN told you that the board at EXCO Resources, a company in financial trouble, is considering “restructuring”–coded language for bankruptcy (see EXCO Resources Board Looks at “Restructuring” – Stock Nosedives). Yesterday EXCO provided an update on their efforts. We learn that the board itself is getting “streamlined”–meaning some board members have been fired and some new board members appointed (from investors who hold a lot of EXCO’s outstanding debt). The company also says it will “target an aggressive restructuring of gathering and transportation contracts”–which means the company is about to threaten midstream companies who have the misfortune of providing services to EXCO, that either those companies will reduce the price of their services, or risk not getting paid at all. Such is life in the rough and tumble world of oil and gas these days…
Continue reading