EXCO Resources Inc. (XCO) said Nov. 25 that the board of directors approved a $70 million operated drilling and completions capex budget for the first six months of 2016.
Under the budget, nine gross wells will be drilled and completed through June 2016, while 18 gross wells will be drilled and completed through August 2016. The budget was reduced by $101 million, or 59%, from the $171 million capex through August 2015.
Natural gas drilling and completions activities in North Louisiana and East Texas, targeting 20% to 35% rates of return.
The capex budget will be funded through cash flow from operations and borrowings under its credit agreement. During 2016, a drilling program for the year’s second half will be evaluated.
Currently, the budget allocates for North Louisiana, East and South Texas and Appalachia. In North Louisiana, drilling will resume with a modified Haynesville shale well design that includes EORs, more proppant, modified well spacing and longer laterals. These methods worked will in East Texas, the company added. During first-half 2016, two rigs will work in North Louisiana, and nine gross (5.5 net) horizontal Holly-area wells will be spudded and turned to sales.
In East Texas, nine gross (4.1 net) Shelby-area wells will be completed and turned to sales; they were drilled in 2015 and have EOR methods that are yielding strong results, the company added. Due to low oil prices, no capital will be allocated to South Texas acreage, which is about 81% HBP.
No development capital will go toward the Appalachia asset, either, the company said. When gathering lines are completed, one gross Marcellus well will be turned to sales in 2016’s first quarter. About 82% of the acreage is HBP.
EXCO Resources Inc. is based in Dallas.
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