Organization And Basis Of Presentation

3 Months Ended

Mar. 31, 2012

Organization And Basis Of Presentation [Abstract]

Organization And Basis Of Presentation

1. Organization and basis of presentation

Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to "EXCO," "EXCO Resources," "Company," "we," "us," and "our" are to EXCO Resources, Inc. and its consolidated subsidiaries.

We are an independent oil and natural gas company engaged in the exploration, exploitation, development and production of onshore U.S. oil and natural gas properties. Our principal operations are conducted in certain key U.S. oil and natural gas areas including East Texas, North Louisiana, Appalachia and the Permian Basin in West Texas. In addition to our oil and natural gas producing operations, we own 50% interests in two midstream joint ventures located in East Texas/North Louisiana and Appalachia. Our midstream joint ventures are treated as a separate business segment.

Our strategy is to appraise, develop and exploit our Haynesville, Bossier and Marcellus shale resources, primarily through horizontal drilling, and to leverage our complementary midstream gathering facilities to promptly transport our production to multiple market outlets. We continue to develop vertical drilling opportunities in our Permian Basin area as this region has high oil reserves and natural gas with a high liquid content. Our shale resource plays and midstream operations are conducted through four joint ventures with affiliates of BG Group, plc, or BG Group. A brief description of each joint venture follows:

• East Texas/North Louisiana JV

A joint venture with BG Group covering an undivided 50% interest in a substantial portion of our assets in the East Texas/North Louisiana area including the Haynesville/Bossier shale and conventional shallow producing assets, or the East Texas/North Louisiana JV. The East Texas/North Louisiana JV is governed by a joint development agreement with our subsidiary, EXCO Operating Company, LP, or EXCO Operating, serving as operator. We report the operating results and financial position of the East Texas/North Louisiana JV using proportional consolidation.

• TGGT

A joint venture with BG Group in which we each own a 50% interest in TGGT Holdings, LLC, or TGGT, which holds most of our East Texas/North Louisiana midstream assets. We use the equity method to account for our 50% investment in TGGT.

• Appalachia JV

A joint venture with BG Group covering our shallow producing assets and Marcellus shale acreage in the Appalachia region, or the Appalachia JV. EXCO and BG Group each own an undivided 50% interest in the JV and a 49.75% working interest in the joint venture properties. The remaining 0.5% working interest is owned by a jointly owned operating entity, or OPCO, that manages the Appalachia JV operations. Under the terms of the agreement, BG Group agreed to fund 75% of our share of deep drilling and completion costs within our joint venture area up to a total of $150.0 million, or the Appalachia Carry. As of March 31, 2012, the remaining balance of the Appalachia Carry was approximately $29.7 million. We use the equity method to account for our investment in OPCO and proportionally consolidate our 49.75% interest in the Appalachia area oil and natural gas exploration, development and production.

• Appalachia Midstream JV

A joint venture with BG Group in which we each own a 50% interest in a midstream company, or the Appalachia Midstream JV, which will develop infrastructure and provide take-away capacity in the Marcellus shale. We use the equity method to account for our 50% investment in the Appalachia Midstream JV.

Our acquisition strategy for the past several years has been focused on the shale resources and consisted primarily of undeveloped acreage acquisitions. Our operations in the DeSoto Parish area of the Haynesville shale, or DeSoto Parish, are in the manufacturing phase and we have substantially completed our drilling activities to hold our acreage positions in Shelby, Nacogdoches and San Augustine Counties in East Texas, or the Shelby Area. Our Marcellus shale areas of interest have been identified and we have begun a development program in Northeast Pennsylvania. While we expect to continue to evaluate acquisition opportunities in our Haynesville/Bossier and Marcellus shale areas, we have deployed our business development and technical staff to evaluate opportunities in new areas.

The accompanying Condensed Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011, Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Cash Flows and Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2012 and 2011 are for EXCO and its subsidiaries. The condensed consolidated financial statements and related footnotes are presented in accordance with generally accepted accounting principles in the United States, or GAAP.

We have prepared the accompanying unaudited interim financial statements pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC, and in the opinion of management, such financial statements reflect all adjustments necessary to present fairly the consolidated financial position of EXCO at March 31, 2012 and its results of operations and cash flows for the periods presented. We have omitted certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP pursuant to those rules and regulations, although we believe that the disclosures we have made are adequate to make the information presented not misleading. These unaudited interim financial statements should be read in conjunction with our audited consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on February 27, 2012.

In preparing the accompanying financial statements, management has made certain estimates and assumptions that affect reported amounts in the financial statements and disclosures. The results of operations for the interim periods are not necessarily indicative of the results we expect for the full year. Certain prior quarter amounts have been reclassified to conform to current quarter reporting.