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EXCO Resources Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 31, 2012 06:04AM

EXCO Resources Inc. (XCO) filed Quarterly Report for the period ended 2012-09-30. Exco Resources, Inc. has a market cap of $1.77 billion; its shares were traded at around $8.19 with a P/E ratio of 25.6 and P/S ratio of 2.4. The dividend yield of Exco Resources, Inc. stocks is 2%.



Highlight of Business Operations:

For the three months ended September 30, 2012, oil and natural gas revenues were $141.6 million, a 31.7% decrease from the oil and natural gas revenues of $207.3 million for the three months ended September 30, 2011. The decrease in revenues was the result of declines in production, as discussed above, along with decreases in prices for natural gas and natural gas liquids. Our average sales price of oil per Bbl, excluding the impact of derivative financial instruments, increased 1.4% to $86.87 per Bbl for the three months ended September 30, 2012 from $85.69 per Bbl for the three months ended September 30, 2011. Our average sales price of natural gas liquids per Bbl decreased 35.5% to $38.64 per Bbl for the three months ended September 30, 2012 from $59.93 per Bbl for the three months ended September 30, 2011. Our average natural gas sales price, excluding the impact of derivative financial instruments, was $2.69 per Mcf for the three months ended September 30, 2012 compared with $3.82 per Mcf for the three months ended September 30, 2011, a decrease of 29.6%.

For the nine months ended September 30, 2012, oil and natural gas revenues were $394.4 million, a 31.4% decrease from the oil and natural gas revenues of $575.3 million for the nine months ended September 30, 2011. The decrease in revenues is primarily a result of significant declines in oil, natural gas and natural gas liquids prices, which were partially offset by increases in production. The average sales price of oil per Bbl, excluding the impact of derivative financial instruments, decreased 1.3% to $90.33 per Bbl for the nine months ended September 30, 2012 from $91.53 per Bbl for the nine months ended September 30, 2011. The average sales price of natural gas liquids per Bbl decreased 24.6% to $43.71 per Bbl for the nine months ended September 30, 2012 from $57.94 per Bbl for the nine months ended September 30, 2011. Our average natural gas sales price, excluding the impact of derivative financial instruments, was $2.34 per Mcf for the nine months ended

The prices we receive for the oil and natural gas we produce is largely a function of market supply and demand. Demand is impacted by general economic conditions, estimates of oil and natural gas in storage, weather and other seasonal conditions, including hurricanes and tropical storms. Market conditions involving over or under supply of natural gas can result in substantial price volatility. Historically, commodity prices have been volatile and we expect the volatility to continue in the future. Changes in oil and natural gas prices have a significant impact on our oil and natural gas revenues, cash flows, quantities of estimated Proved Reserves and related liquidity. Assuming our nine months ended September 30, 2012 average production levels remain constant for the remainder of the year, a change in the average sales price of $0.10 per Mcf of natural gas sold would result in an increase or decrease in revenues and cash flows of approximately $4.7 million, a change in the average sales price of $1.00 per Bbl of natural gas liquids would result in an increase or decrease of revenues and cash flows of approximately $0.1 million and a change in the average sales price of $1.00 per Bbl of oil sold would result in an increase or decrease in revenues and cash flow of approximately $0.2 million, without considering the effects of derivative financial instruments.

Our other operating expenses for the three and nine months ended September 30, 2012 were $1.0 million and $9.3 million, respectively, compared with $21.0 million and $25.2 million for the three and nine months ended September 30, 2011, respectively. The amount for the nine months ended September 30, 2012 was primarily related to the first quarter $2.0 million retroactive Pennsylvania impact fee discussed in Production and ad valorem taxes, a second quarter charge of $6.7 million related to resolution of title defect adjustments from a prior period divestiture and a $1.0 million third quarter charge related primarily to equipment sales and inventory write-downs. We elected to report the retroactive portion of the Pennsylvania impact fee as a component of other operating items as the retroactive amount would disproportionately impact comparative periods in future quarters. The amount for the nine months ended September 30, 2011 was primarily related to costs associated with various lawsuits, the impairment of certain assets and the former acquisition proposal that terminated in July 2011.

Our total cash settlements for the three months ended September 30, 2012 increased revenue by $50.7 million, or $1.08 per Mcfe, compared to $32.9 million, or $0.66 per Mcfe, for the same period in 2011. Our total cash settlements for the nine months ended September 30, 2012 increased revenue by $162.7 million, or $1.11 per Mcfe, compared to $83.1 million, or $0.62 per Mcfe, for the same period in 2011. The significant fluctuations between settlements of receipts on our derivative financial instruments demonstrate volatility in prices.

Read the The complete Report



Stocks Discussed: XCO,
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