2011-02-15-2011-01-13

To buy assets primarily in Jefferson and Clarion counties, gaining 3.4 Tcfe 3P.

Dallas-based Exco Resources Inc. (NYSE: XCO) plans to purchase additional Marcellus shale properties and associated shallow production from an undisclosed private company for $95 million.

The assets are primarily in Jefferson and Clarion counties in Pennsylvania. Due to an existing area-of-mutual-interest agreement with BG Group Plc, London, (London: BG-L.l), BG has the right to participate for 50% of these acquisitions.

Total resource potential is approximately 3.4 trillion cubic feet of gas equivalent, of which 1.7 trillion would be net to Exco if BG Group elects to participate in these acquisitions.

Exco previously entered a deal to acquire 50,000 net Marcellus acres from privately held, Dallas-based Chief Oil & Gas LLC and Radler 2000 LP for approximately $459.4 million. Those assets are in Lycoming, Sullivan and Columbia counties in northeastern Pennsylvania, with 15 producing wells and 11 wells currently awaiting completion. Production is approximately 40 million gross cubic feet of gas per day (16 million net).

Pro forma the closings of its two Marcellus acquisitions and assuming BG Group elects to participate in these acquisitions, Exco will hold approximately 152,000 net acres prospective for the Marcellus shale.

The deal is expected to close in first-quarter 2011.

KeyBanc Capital Markets Inc. senior managing director Jack Aydin says the combined total resource potential for both acquisitions, net to Exco assuming BG participates in 50%, is 1.7 trillion cubic feet equivalent.

"We continue to believe Exco's ultimate goal is to take the company private at $20.50 per share, unless topped by a higher bid from a third party," he adds.