EXCO Resources Inc. (NYSE: XCO) has provided information regarding its spring borrowing base redetermination and full year 2016 capital program, both of which have been reduced.
Lenders under EXCO’s amended and restated credit agreement completed their regular semi-annual redetermination resulting in a borrowing base of $325 million, a 13% decline from the previous $375 million borrowing base. Over the same period, forward 12-month natural gas strip prices declined by approximately 23%. EXCO has approximately $133 million currently outstanding on the credit agreement and liquidity of approximately $240 million.
Harold L. Hickey, EXCO’s CEO and president, commented, “EXCO appreciates our bank group’s continued support of the company as we execute on our Strategic Plan under the current commodity price macro environment. We remain focused on improving our capital structure and providing structural liquidity. We have significantly reduced the principal amounts outstanding under our 2018 and 2022 senior unsecured notes to $144 million and $183 million, respectively. As we work through this cycle, we have focused on preserving liquidity and minimizing capital expenditures, as evidenced by our 2016 capital program.”
The company continues to execute its disciplined capital allocation program to ensure the highest and best uses of capital. EXCO is focused on preserving its capital resources for future growth and, based on current natural gas prices, the company has decided to reduce its drilling activity in 2016. EXCO has reduced its total 2016 capital budget to $85 million, a reduction of $192 million, or 69%, as compared to 2015 capital expenditures of $277 million, and is deferring a significant amount of the company’s drilling inventory until commodity prices improve.
EXCO currently plans on drilling seven gross wells and completing 15 gross wells in 2016, with development activities focused on natural gas drilling and completion activities in the Haynesville and Bossier shales in North Louisiana and East Texas.