History
EXCO Resources bought and sold shale assets with partners, then lost ground to weak gas prices and heavy debt, and filed for Chapter 11 in January 2018.
2008-2009: An acquisition spree and a retreat
EXCO set out in 2008 to grow. In February it closed a $388 million purchase of shallow gas properties from EOG Resources, entering the Appalachian Basin, and its lenders raised its credit facilities to support the move. In July it converted all its preferred stock into common shares, ending a cumulative-dividend obligation to Oaktree and Ares, and closed a $252 million East Texas acquisition funded by a $300 million JPMorgan term loan. In December it refinanced that loan with a new $300 million unsecured term loan.
Then gas prices collapsed and EXCO retrenched. In 2009 it agreed to sell East Texas and Midcontinent properties to Encore Operating. Its biggest move was a partnership with BG Group: BG paid $727 million, up from the $655 million first announced, for 50% of EXCO's core East Texas/North Louisiana Haynesville Shale assets, and the two formed TGGT Holdings, a jointly owned pipeline company. EXCO later sold all its remaining Mid-Continent assets to Sheridan Holding for $530.2 million, with proceeds paying down its credit facility, and its Ohio/Northwest Pennsylvania gas properties to EnerVest for $131.2 million.
2010-2011: Marcellus and a buyout bid
In 2010 EXCO combined its credit agreements into one and brought BG Group into its Pennsylvania/West Virginia Marcellus shale position, receiving $835.2 million in cash. It reinvested in Haynesville/Bossier acreage, agreeing to buy it from Southwestern Energy for $355 million. In September it raised $750 million of 7.5% notes due 2018 and used the money to redeem $444.7 million of 2011 notes. In December it bought Marcellus properties from Chief Oil & Gas and partners for about $459.4 million.
In November 2010 Chairman and CEO Douglas Miller proposed buying all the shares he did not already own, and the board formed a special committee. The record does not show a deal; in August 2011 the board brought forward the expiry of its shareholder rights plan, a takeover defence.
2012-2014: Falling gas prices and new capital
In November 2012 lenders cut the borrowing base, the cap on how much EXCO could borrow, from $1.4 billion to $1.3 billion, the first cut to the facility. EXCO again turned to outside capital. In February 2013 it closed a partnership with Harbinger Group's HGI Energy, contributing conventional East Texas/North Louisiana gas assets for about $573 million in cash while keeping a 25.5% stake.
In mid-2013 it bought Haynesville leases in Caddo and DeSoto Parishes from Chesapeake affiliates, then paid about $685 million to Chesapeake for Eagle Ford oil properties in South Texas, backed by a $1.6 billion credit facility and a partner under a Participation Agreement. In November, EXCO and BG sold TGGT to Azure Midstream for about $910 million, and EXCO's roughly $240 million of net proceeds paid down its credit facility.
To strengthen the balance sheet, EXCO ran a rights offering backstopped by WL Ross and Fairfax's Hamblin Watsa. It closed in January 2014, raising about $273 million through 54.6 million new shares, with the two backers taking roughly $98 million and $34 million. That explains the rise in shares on issue to about 274 million by the end of 2014. In April 2014 EXCO issued $500 million of 8.5% notes due 2022, and in November it sold its remaining Compass Production Partners stake to HGI for $118.75 million.
2015-2016: Distress deepens
After the late-2014 price crash, lenders cut the borrowing base to $725 million in February 2015 and to $600 million in July. In March EXCO signed a services and investment deal with turnaround adviser ESAS, which committed to invest up to $50 million and received warrants for 80 million shares; a registration rights agreement for those securities followed in April. In August the NYSE warned that the share price was out of compliance, and EXCO said it was considering a reverse stock split. In October it took $300 million of second-lien debt (debt with a claim on assets behind the bank loan) from Fairfax at 12.5% and let noteholders swap unsecured bonds for similar secured loans, with exchanges closing in October and November 2015.
In 2016 the NYSE warned again in March, and in May two directors left the board, which created a further listing deficiency. EXCO settled its dispute with KKR-affiliated entities over the Eagle Ford agreement in July, and in August it bought back $101.3 million of its 2022 notes. By September the borrowing base had fallen to $325 million, with drawings capped at $300 million. The share count fell to about 18.9 million by the end of 2016; the beats do not explain this drop.
2017: Last attempts
In March 2017 EXCO issued $300 million of PIK-toggle notes (which can pay interest in more debt) and exchanged about $683 million of second-lien loans into new '1.75 lien' loans, issuing warrants. In April it agreed to sell its Eagle Ford properties for $300 million. In June it paid a $27.6 million interest bill in stock, issuing 2.75 million shares. A dispute with Chesapeake over a gas contract forced wells to be shut in, and the sale collapsed in August, leading to a lawsuit. In September EXCO drew down its revolver and hired restructuring advisers. Lenders waived a covenant default in October, and the NYSE sent more notices. In December it signed forbearance agreements with holders of about 87% of its 2017 secured notes, its 1.75-lien lenders and its bank group.
2018-2019: Chapter 11
The NYSE exchange moved to delist EXCO's securities in January 2018. EXCO filed for Chapter 11 on January 15, 2018 in the Southern District of Texas, which accelerated essentially all its debt. Later that month it secured debtor-in-possession financing, with Hamblin Watsa as agent. In March it settled its long disputes with BG Group, by then part of Shell, and agreed to wind up the 2010 Marcellus partnership.
In January 2019 EXCO extended the maturity of its debtor-in-possession financing to 16 months. On February 15, 2019, it terminated the registration of a class of securities, ending its reporting obligation for them. At that date its Chapter 11 case had not ended in any plan the record shows.
Written from the 65 story beats below (2008 to 15 Feb 2019), which come from the company's own announcements and filings.