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EXCO Resources Announces Revenues, Earnings and Production for the Year Ended December 31, 2005

Posted on: Friday, 31 March 2006, 18:00 CST

DALLAS, March 31 /PRNewswire-FirstCall/ -- EXCO Resources, Inc. today announced financial and operating results for the year ended December 31, 2005. For the year, EXCO reported net income of $0.9 million on oil and natural gas revenues of $202.9 million and net cash used in operating activities of $73.3 million. As noted below, EXCO sold its Canadian subsidiary, Addison Energy Inc. (Addison), for $443.3 million and recognized income from discontinued operations of $122.0 million as a result. Accordingly, all of our financial and operating data contained in this press release exclude Addison. All full year or full fourth quarter 2005 information contained in this press release is non-GAAP since this information combines two separate accounting periods as a result of our equity buyout (the Equity Buyout) on October 3, 2005, as more fully described below. We believe the non-GAAP presentation provides a more meaningful comparison of our historical operating results related to production, revenues, and operating expenses, except for depreciation, depletion and amortization expenses, which were impacted by purchase accounting in connection with the Equity Buyout. Also, the results for 2005 do not include the $634.8 million acquisition of producing oil and natural gas properties from ONEOK Energy completed by an affiliate of EXCO on September 27, 2005 and subsequently acquired by EXCO in February 2006. See below for additional information regarding this acquisition. For the year ended December 31, 2004, EXCO had net income of $6.2 million on oil and natural gas revenues of $142.0 million, and net cash provided by operating activities of $118.6 million.

The 2005 results were impacted by a hedge termination charge of $52.6 million, $92.5 million of non-cash pre-tax mark to market expense resulting from changes in the fair value of our derivative financial instruments, $46.3 million in non-cash stock compensation expense and options and other settlements of $29.6 million attributed to the Equity Buyout. In 2004, a $24.3 million non-cash pre-tax mark to market expense resulting from changes in the fair value of our derivative financial instruments impacted results.

Adjusted EBITDA from continuing operations for the year ended December 31, 2005 was $129.1 million, adjusted for the items in the preceding paragraph. For the year ended December 31, 2004, Adjusted EBITDA was $73.5 million. EBITDA and Adjusted EBITDA are financial measures that are calculated on a basis other than in accordance with GAAP. For a detailed summary and reconciliation of each of these non-GAAP measures to its most comparable GAAP measure, please refer to the schedule entitled "Condensed consolidated EBITDA and adjusted EBITDA reconciliations and statement of cash flows data" included at the end of this press release.

EXCO's total proved reserves from continuing operations grew 10% to 444.6 Bcfe at year-end 2005 from 405.8 Bcfe at year-end 2004. Natural gas reserves increased 12% to 403.6 Bcf from 361.1 Bcf at year end 2004. Oil reserves decreased 6% to 6.8 Mmbbls from 7.2 Mmbbls during the same period due to sales of non-core oil properties in 2004 and 2005.

At December 31, 2005, the pre-tax, discounted present value of the future cash flows from our oil and natural gas properties at 10% per annum (PV-10) was $1.4 billion and the Standardized Measure, after tax, was $0.9 billion. The year-end 2005 oil price used is based on a NYMEX price of $61.04 per Bbl, a 40% increase from the 2004 NYMEX price of $43.45 per Bbl, and the natural gas price used is based on a NYMEX price of $11.23, an 83% increase from the 2004 NYMEX price of $6.15 per Mcf.

EXCO completed 7 acquisitions during the past year spending approximately $103.2 million. EXCO also sold 7 properties, not including the sale of Addison, during 2005 with proceeds of $45.3 million.

Production for the year ended December 31, 2005, was approximately 491 Mbbls of oil and 20.5 Bcf of natural gas as compared to production for the year ended 2004 of approximately 638 Mbbls of oil and 18.9 Bcf of natural gas. Overall, for the year ended December 31, 2005, compared to 2004, natural gas production increased by 9% and oil production decreased by 23% primarily due to sales of non-core, high operating cost oil properties in 2004 and 2005.

The average oil price per Bbl, before cash settlements of derivative financial instruments, received during the year ended December 31, 2005, was $53.35 versus $38.71 for the year ended December 31, 2004, a $14.64 per Bbl or 38% increase. The average natural gas price per Mcf, before cash settlements of derivative financial instruments, received during the current year was $8.59 versus $6.12 for the prior year, a $2.47 per Mcf or 40% increase.

For the three months ended December 31, 2005, EXCO reported a net loss of $47.3 million, including $22.0 million in income resulting from changes in the fair value of our derivative financial instruments, on oil and natural gas revenues of $71.4 million. The three months ended December 31, 2005 also included $44.1 million of stock compensation charges and $29.6 million of stock option buyout and other settlement costs associated with the Equity Buyout. These non-recurring charges of $73.7 million are the primary reason for the loss during the quarter. For the three months ended December 31, 2005, cash settlement expense on derivative financial instruments was $22.2 million, and net cash provided by operating activities was $7.5 million. For the three months ended December 31, 2004, EXCO had net income of $23.6 million on oil and natural gas revenues of $41.9 million, and net cash provided by operating activities of $30.2 million.

Adjusted EBITDA for the three months ended December 31, 2005 was $37.2 million. For the three months ended December 31, 2004, Adjusted EBITDA was $22.9 million.

Production for the three months ended December 31, 2005, was approximately 118 Mbbls of oil, and 5.3 Bcf of natural gas as compared to 2004 production for the same period of approximately 123 Mbbls of oil and 5.0 Bcf of natural gas. Overall, for the three months ended December 31, 2005, compared to 2004, natural gas production increased by 5% and oil production decreased by 4%.

The average oil price per Bbl, before cash settlements of derivative financial instruments, received during the three months ended December 31, 2005, was $57.18 versus $46.68 for the three months ended December 31, 2004, a $10.50 per Bbl or 22% increase. The average natural gas price per Mcf, before cash settlements of derivative financial instruments, received during the current three months was $12.22 versus $7.11 for the corresponding three months of the prior year, a $5.11 per Mcf or 72% increase.

On October 3, 2005, EXCO Holdings Inc., or EXCO Holdings, our former parent company was acquired by and merged with EXCO Holdings II, Inc., with EXCO Holdings remaining as the survivor. On February 14, 2006, in conjunction with our initial public offering (IPO), EXCO Holdings merged with and into EXCO Resources, Inc. In the IPO we sold 53,615,200 shares of our common stock for aggregate net proceeds to EXCO Resources of $662.2 million after underwriters' discount.

The net proceeds from the IPO, together with cash on hand and additional borrowings under EXCO's credit agreement, were used to repay debt issued in connection with the Equity Buyout and debt and preferred stock issued by an affiliate to purchase oil and gas properties from ONEOK Energy. The redemption of the preferred stock resulted in the affiliate becoming a wholly owned subsidiary of EXCO.

The ONEOK acquisition was a $634.8 million acquisition which added approximately 223 Bcfe of proved reserves to EXCO. Daily net production in December 2005, attributable to these properties, was approximately 51 Mmcfe per day, a substantial increase over EXCO's current production.

The PV-10 of the oil and gas properties acquired from ONEOK was $0.9 billion at December 31, 2005 and the Standardized Measure at that date was $0.7 billion.

Financial information presented in this press release includes two separate periods of accounting. Information related to the year ended December 31, 2004 and the period beginning January 1, 2005 to October 2, 2005 is referred to as the private predecessor. The private predecessor period represents the accounting period following the going private transaction on July 29, 2003 up to the Equity Buyout on October 3, 2005. The period beginning October 3, 2005 and ending December 31, 2005 is referred to as successor.

EXCO will host a conference call on Monday, April 3, 2006 at 8:00 a.m. (CDT) to discuss the contents of this release and respond to questions. Please call (800) 309-5788 if you wish to participate, and ask for the EXCO conference call ID#7468246. A digital recording will be available starting two hours after the completion of the conference call until Monday, April 10, 2006. Please call (800) 642-1687 and enter conference ID# 7468246 to hear the recording.

EXCO Resources, Inc. is a public oil and natural gas acquisition, exploitation, development and production company headquartered in Dallas, Texas with principal operations in Texas, Colorado, Ohio, Oklahoma, Pennsylvania, and West Virginia.

Additional information about EXCO Resources, Inc. may be obtained by contacting EXCO's President, Stephen F. Smith, at EXCO's headquarters, 12377 Merit Drive, Suite 1700, Dallas, TX 75251, telephone number (214) 368-2084.

This release may contain forward-looking statements relating to future financial results or business expectations. Business plans may change as circumstances warrant. Actual results may differ materially from those predicted as a result of factors over which EXCO has no control. Such factors include, but are not limited to: acquisitions, recruiting and new business solicitation efforts, commodity price changes, the extent to which EXCO is successful in integrating recently acquired businesses, regulatory changes and general economic conditions. These risk factors and additional information are included in EXCO's reports on file with the Securities and Exchange Commission.

EXCO Resources, Inc. Consolidated balance sheets December 31, 2004 2005 Private (in thousands) predecessor Successor Assets Current assets: Cash and cash equivalents $16,007 $224,991 Accounts receivable: Oil and natural gas sales 18,130 36,895 Joint interest 2,213 1,081 Canadian income tax receivable - 18,483 Interest and other 418 12,189 Related party - 2,621 Deferred income taxes - 29,968 Deferred initial public offering costs - 3,380 Oil and natural gas derivatives 242 - Marketable securities 69 - Other 3,962 10,898 Current assets of discontinued operations 34,807 - Total current assets 75,848 340,506 Oil and natural gas properties (full cost accounting method): Unproved oil and natural gas properties 18,829 53,121 Proved developed and undeveloped oil and natural gas properties 454,328 873,595 Accumulated depreciation, depletion and amortization (31,707) (13,281) Oil and natural gas properties, net 441,450 913,435 Gas gathering, office and field equipment, net 27,014 33,271 Assets of discontinued operations 346,926 - Deferred financing costs, net 10,779 - Goodwill 19,984 220,006 Other assets 22 419 Total assets $922,023 $1,507,637 EXCO Resources, Inc. Consolidated balance sheets December 31, 2004 2005 Private (in thousands, except share data) predecessor Successor Liabilities and Shareholder's Equity Current liabilities: Interim bank loan $- $350,000 Accounts payable and accrued liabilities 21,919 24,781 Related party payable - 6,056 Accrued interest payable 14,877 23,779 Revenues and royalties payable 7,249 11,266 Income taxes payable 1,460 901 Deferred income taxes 710 - Current portion of asset retirement obligations 2,418 1,408 Oil and natural gas derivatives 22,458 53,189 Current liabilities of discontinued operations 34,604 - Total current liabilities 105,695 471,380 Long-term debt 34,500 1 71/4% senior notes due 2011 452,953 461,801 Asset retirement obligations and other long-term liabilities 11,534 15,766 Deferred income taxes 15,794 134,602 Oil and natural gas derivatives 25,961 81,406 Liabilities from discontinued operations 71,835 - Commitments and contingencies - - Shareholder's equity: Common stock, $.01 par value: Authorized shares-100,000; Issued and outstanding shares-1,000 at December 31, 2004 and 2005 1 1 Additional paid-in capital 172,045 326,716 Retained earnings 10,338 15,964 Accumulated other comprehensive income: Foreign currency translation adjustments 21,384 - Unrealized loss on equity investments (17) - Total shareholder's equity 203,751 342,681 Total liabilities and shareholder's equity $922,023 $1,507,637 EXCO Resources, Inc. Consolidated statements of operations Private predecessor Successor For the 275 day For the 90 day period from period from Year ended January 1, 2005 October 3, 2005 Non-GAAP December 31, to October 2, to December 31, combined (in thousands) 2004 2005 2005 2005 Revenues and other income: Oil and natural gas $141,993 $132,821 $70,061 $202,882 Commodity price risk management activities (50,343) (177,253) (256) (177,509) Other income 1,141 7,075 2,365 9,440 Total revenues and other income 92,791 (37,357) 72,170 34,813 Cost and expenses: Oil and natural gas production 28,256 22,157 8,949 31,106 Depreciation, depletion and amortization 28,519 24,687 14,071 38,758 Accretion of discount on asset retirement obligations 800 617 226 843 General and administrative (includes $44.1 million and $2.2 million of non-cash compensation expense for the period from January 1, 2005 to October 2, 2005 and the period from October 3, 2005 to December 31, 2005, respectively) 15,275 89,344 6,225 95,569 Interest 34,570 26,675 19,414 46,089 Total cost and expenses 107,420 163,480 48,885 212,365 Income (loss) before income taxes (14,629) (200,837) 23,285 (177,552) Income tax expense (benefit) 5,126 (63,698) 7,321 (56,377) Income (loss) before discontinued operations (19,755) (137,139) 15,964 (121,175) Discontinued operations: Income (loss) from operations 36,274 (4,403) - (4,403) Gain on disposition of Addison Energy Inc - 175,717 - 175,717 Income tax expense (benefit) 10,358 49,282 - 49,282 Income from discontinued operations 25,916 122,032 - 122,032 Net income (loss) $6,161 $(15,107) $15,964 $857 Private predecessor Successor For the 2 day For the 90 day Fourth period from period from quarter Quarter ended October 1, 2005 October 3, 2005 2005 December 31, to October 2, to December 31, non-GAAP (in thousands) 2004 2005 2005 combined Revenues and other income: Oil and natural gas $41,873 $1,354 $70,061 $71,415 Commodity price risk management activities 18,852 - (256) (256) Other income 254 49 2,365 2,414 Total revenues and other income 60,979 1,403 72,170 73,573 Cost and expenses: Oil and natural gas production 7,135 179 8,949 9,128 Depreciation, depletion and amortization 7,559 198 14,071 14,269 Accretion of discount on asset retirement obligations 193 5 226 231 General and administrative (includes $44.1 million and $2.2 million of non-cash compensation expense for the period from January 1, 2005 to October 2, 2005 and the period from October 3, 2005 to December 31, 2005, respectively) 4,000 73,774 6,225 79,999 Interest 9,083 174 19,414 19,588 Total cost and expenses 27,970 74,330 48,885 123,215 Income (loss) before income taxes 33,009 (72,927) 23,285 (49,642) Income tax expense (benefit) 17,944 (9,689) 7,321 (2,368) Income (loss) before discontinued operations 15,065 (63,238) 15,964 (47,274) Discontinued operations: Income (loss) from operations 11,392 - - - Gain on disposition of Addison Energy Inc - - - - Income tax expense (benefit) 2,896 - - - Income from discontinued operations 8,496 - - - Net income (loss) $23,561 $(63,238) $15,964 $(47,274) EXCO Resources, Inc. Consolidated statement of cash flows Private predecessor Successor For the 275 day For the 90 day period from period from Year ended January 1, 2005 October 3, 2005 Non-GAAP December 31, to October 2, to December 31, combined (in thousands) 2004 2005 2005 2005 Operating Activities: Net income (loss) $6,161 $(15,107) $15,964 $857 Income from discontinued operations (25,916) (122,032) - (122,032) Adjustments to reconcile net income (loss) to net cash Gain on sale of other assets - (373) - (373) Depreciation, depletion and amortization 28,519 24,688 14,071 38,759 Stock option compensation expense - 44,092 2,207 46,299 Accretion of discount on asset retirement obligations 800 617 226 843 Non-cash change in fair value of derivatives 24,260 114,410 (21,954) 92,456 Deferred income taxes 3,681 (59,467) 15,654 (43,813) Amortization of deferred financing costs 3,859 1,320 2,381 3,701 Proceeds from sale of Enron claim 4,750 - - - (Gains) losses from sales of marketable securities (14) 3 - 3 Effect of changes in: Accounts receivable (2,487) (24,512) (2,533) (27,045) Other current assets (1,350) (343) 1,097 754 Accounts payable and other current liabilities 21,599 25,456 (19,373) 6,083 Net cash provided by (used in) operating activities of discontinued operations 54,771 (69,772) - (69,772) Net cash provided by (used in) operating activities 118,633 (81,020) 7,740 (73,280) Investing Activities: Acquisition of North Coast Energy, Inc., less cash acquired (215,133) - - - Additions to oil and natural gas properties, gathering systems and equipment (139,521) (151,144) (13,207) (164,351) Proceeds from disposition of property and equipment 51,865 46,010 (393) 45,617 Advances/investments with affiliates 151 - - - Proceeds from sales of marketable securities 1,296 59 - 59 Other investing activities - 209 - 209 Proceeds from sale of Addison Energy Inc., net of cash sold of $1,415 (discontinued operations) - 443,397 - 443,397 Net cash (provided by) used in investing activities of discontinued operations (79,983) (442) - (442) Net cash provided by (used in) investing activities (381,325) 338,089 (13,600) 324,489 Financing Activities: Proceeds from long-term debt 546,350 41,300 9,999 51,299 Payments on long-term debt (158,070) (148,247) (15,279) (163,526) Deferred financing costs (13,431) - - - Net cash provided by (used in) financing activities of discontinued operations (91,397) 59,601 - 59,601 Net cash provided by (used in) financing activities 283,452 (47,346) (5,280) (52,626) Net increase (decrease) in cash 20,760 209,723 (11,140) 198,583 Effect of exchange rates on cash and cash equivalents (1,685) - - - Cash at beginning of period 7,333 26,408 236,131 26,408 Cash at end of period including cash of discontinued operations 26,408 236,131 224,991 224,991 Cash of discontinued operations at end of period 10,401 - - - Cash at end of period $16,007 $236,131 $224,991 $224,991 Supplemental Cash Flow Information: Interest paid $17,102 $33,099 $124 $33,223 Income taxes paid $- $38,213 $15,500 $53,713 Supplemental non- cash investing: Capitalized stock option compensation $- $- $1,034 $1,034 Private predecessor Successor For the 2 day For the 90 day Fourth period from period from quarter Quarter ended October 1, 2005 October 3, 2005 2005 December 31, to October 2, to December 31, non-GAAP (in thousands) 2004 2005 2005 combined Operating Activities: Net income (loss) $23,561 $(63,238) $15,964 $(47,274) Income from discontinued operations (8,496) - - - Adjustments to reconcile net income (loss) to net cash Gain on sale of Addison Energy Inc - - - - Gain on sale of other assets - - - - Depreciation, depletion and amortization 7,559 198 14,071 14,269 Stock option compensation expense - 44,092 2,207 46,299 Accretion of discount on asset retirement obligations 193 5 226 231 Non-cash change in fair value of derivatives (26,935) - (21,954) (21,954) Deferred income taxes 16,502 - 15,654 15,654 Amortization of deferred financing costs 463 9 2,381 2,390 Proceeds from sale of Enron claim - - - - (Gains) losses from sales of marketable securities - - - - Effect of changes in: Accounts receivable (4,926) (1,054) (2,533) (3,587) Other current assets (703) (38) 1,097 1,059 Accounts payable and other current liabilities 11,623 19,748 (19,373) 375 Net cash provided by (used in) operating activities of discontinued operations 11,380 - - - Net cash provided by (used in) operating activities 30,221 (278) 7,740 7,462 Investing Activities: Acquisition of North Coast Energy, Inc., less cash acquired - - - - Additions to oil and natural gas properties, gathering systems and equipment (65,962) 38 (13,207) (13,169) Proceeds from disposition of property and equipment 28,447 - (393) (393) Advances/investments with affiliates 71 - - - Proceeds from sales of marketable securities - - - - Other investing activities - - - - Proceeds from sale of Addison Energy Inc., net of cash sold of $1,415 (discontinued operations) - - - - Net cash (provided by) used in investing activities of discontinued operations (9,821) - - - Net cash provided by (used in) investing activities (47,265) 38 (13,600) (13,562) Financing Activities: Proceeds from long-term debt 51,500 - 9,999 9,999 Payments on long-term debt (34,000) - (15,279) (15,279) Deferred financing costs (201) - - - Net cash provided by (used in) financing activities of discontinued operations (112) - - - Net cash provided by (used in) financing activities 17,187 - (5,280) (5,280) Net increase (decrease) in cash 143 (240) (11,140) (11,380) Effect of exchange rates on cash and cash equivalents 561 - - - Cash at beginning of period 17,381 236,371 236,131 236,371 Cash at end of period including cash of discontinued operations 18,085 236,131 224,991 224,991 Cash of discontinued operations at end of period 2,078 - - - Cash at end of period $16,007 $236,131 $224,991 $224,991 Supplemental Cash Flow Information: Interest paid $112 $124 $124 $124 Income taxes paid $(436) $15,500 $15,500 $15,500 Supplemental non- cash investing: Capitalized stock option compensation $- $- $1,034 $1,034 EXCO Resources, Inc. Reconciliation of consolidated cash flow from operating activities Private predecessor Successor For the 275 day For the 90 day period from period from Year ended January 1, 2005 October 3, 2005 Non-GAAP December 31, to October 2, to December 31, combined (in thousands) 2004 2005 2005 2005 Net cash provided by (used in) operations $118,633 $(81,020) $7,740 $(73,280) Net change in working capital (17,762) (602) 20,809 20,207 Cash flow from operations before changes in working capital, non-GAAP measure $100,871 $(81,622) $28,549 $(53,073) Private predecessor Successor For the 2 day For the 90 day Fourth period from period from quarter Quarter ended October 1, 2005 October 3, 2005 2005 December 31, to October 2, to December 31, non-GAAP (in thousands) 2004 2005 2005 combined Net cash provided by (used in) operations $30,221 $(278) $7,740 $7,462 Net change in working capital (5,994) (18,656) 20,809 2,153 Cash flow from operations before changes in working capital, non-GAAP measure $24,227 $(18,934) $28,549 $9,615 EXCO Resources, Inc. Condensed consolidated EBITDA and adjusted EBITDA reconciliations and statement of cash flow data Private predecessor Successor For the 275 For the 90 day day period from period from Year ended January 1, 2005 October 3, 2005 Non-GAAP December 31, to October 2, to December 31, combined (in thousands) 2004 2005 2005 2005 Net income (loss) $6,161 $(15,107) $15,964 $857 Interest expense 34,570 26,675 19,414 46,089 Income tax expense (benefit) 5,126 (63,698) 7,321 (56,377) Depreciation, depletion and amortization 28,519 24,687 14,071 38,758 EBITDA(1) 74,376 (27,443) 56,770 29,327 Accretion of discount on asset retirement obligations 800 617 226 843 Non-cash change in fair value of derivative financial instruments 24,260 114,410 (21,954) 92,456 Commodity price risk management contacts termination expense - 52,603 - 52,603 Stock based compensation expense - 44,092 2,207 46,299 Non-recurring Equity Buyout options and other settlements - 29,624 - 29,624 (Income) loss from discontinued operations (25,916) (122,032) - (122,032) Adjusted EBITDA (1) $73,520 $91,871 $37,249 $129,120 Income (loss) from discontinued operations 25,916 122,032 - 122,032 Interest expense (34,570) (26,675) (19,414) (46,089) Income tax expense (benefit) (5,126) 63,698 (7,321) 56,377 Amortization of deferred financing costs 3,859 1,320 2,381 3,701 Deferred income taxes 3,681 (59,467) 15,654 (43,813) Loss (gain) on disposition of property, equipment, and other assets (14) (176,087) - (176,087) Net change in working capital 17,762 602 (20,809) (20,207) Proceeds from sale of Enron claim 4,750 - - - Commodity price risk management contacts termination expense - (52,603) - (52,603) Non-recurring Equity Buyout options and other settlements - (29,624) - (29,624) Net cash provided by (used in) operating activities of discontinued operations 28,855 (16,087) - (16,087) Net cash provided by (used in) operating activities $118,633 $(81,020) $7,740 $(73,280) Private predecessor Successor For the 2 day For the 90 day Fourth period from period from quarter Quarter ended October 1, 2005 October 3, 2005 2005 December 31, to October 2, to December 31, non-GAAP (in thousands) 2004 2005 2005 combined Net income (loss) $23,561 $(63,238) $15,964 $(47,274) Interest expense 9,083 174 19,414 19,588 Income tax expense (benefit) 17,944 (9,689) 7,321 (2,368) Depreciation, depletion and amortization 7,559 198 14,071 14,269 EBITDA(1) 58,147 (72,555) 56,770 (15,785) Accretion of discount on asset retirement obligations 193 5 226 231 Non-cash change in fair value of derivative financial instruments (26,935) - (21,954) (21,954) Commodity price risk management contacts termination expense - - - - Stock based compensation expense - 44,092 2,207 46,299 Non-recurring Equity Buyout options and other settlements - 29,624 - 29,624 (Income) loss from discontinued operations (8,496) - - - Adjusted EBITDA(1) $22,909 $1,166 $37,249 $38,415 Income (loss) from discontinued operations 8,496 - - - Interest expense (9,083) (174) (19,414) (19,588) Income tax expense (benefit) (17,944) 9,689 (7,321) 2,368 Amortization of deferred financing costs 463 9 2,381 2,390 Deferred income taxes 16,502 - 15,654 15,654 Loss (gain) on disposition of property, equipment, and other assets - - - - Changes in operating assets and liabilities 5,994 18,656 (20,809) (2,153) Proceeds from sale of Enron claim - - - - Commodity price risk management contacts termination expense - - - - Non-recurring Equity Buyout options and other settlements - (29,624) - (29,624) Net cash provided by (used in) operating activities of discontinued operations 2,884 - - - Net cash provided by (used in) operating activities $30,221 $(278) $7,740 $7,462 EXCO Resources, Inc. Condensed consolidated EBITDA and adjusted EBITDA reconciliations and statement of cash flow data (continued) Private predecessor Successor For the For the 275 day 90 day period period from from Jan. 1, Oct. 3, Year ended 2005 to 2005 to Non-GAAP Dec. 31, Oct. 2, Dec. 31, combined (in thousands) 2004 2005 2005 2005 Statement of Cash Flow Data: Cash flow provided by (used in): Operating activities(2) $118,633 $(81,020) $7,740 $(73,280) Investing activities (381,325) 338,089 (13,600) 324,489 Financing activities 283,452 (47,346) (5,280) (52,626) Other Financial and Operating Data: EBITDA(1) 74,376 (27,443) 56,770 29,327 Adjusted EBITDA(1) 73,520 91,871 37,249 129,120 Private predecessor Successor For the For the 2 day 90 day period period from from Fourth Oct. 1, Oct. 3, quarter Quarter 2005 to 2005 to 2005 Dec. 31, Oct. 2, Dec. 31, non-GAAP (in thousands) 2004 2005 2005 combined Statement of Cash Flow Data: Cash flow provided by (used in): Operating activities(2) $30,221 $(278) $7,740 $7,462 Investing activities (47,265) 38 (13,600) (13,562) Financing activities 17,187 - (5,280) (5,280) Other Financial and Operating Data: EBITDA(1) 58,147 (72,555) 56,770 (15,785) Adjusted EBITDA(1) 22,909 1,166 37,249 38,415 (1) Earnings before interest, taxes, depreciation, depletion and amortization, or "EBITDA," represents net income adjusted to exclude interest expense, income taxes, depreciation, depletion and amortization. "Adjusted EBITDA" represents EBITDA adjusted to exclude accretion of discount on asset retirement obligations, non- cash changes in the fair value of derivative financial instruments, commodity price risk management contracts termination expense, stock based compensation expense and non-recurring cash-out of options in Equity Buyout and other settlements. We have presented Adjusted EBITDA because it is the financial measure that is used in covenant calculations required under our credit agreement and compliance with the liquidity and debt incurrence covenants included in this agreement is considered material to us. Our computations of EBITDA and Adjusted EBITDA may differ from computations of similarly titled measures of other companies due to differences in the inclusion or exclusion of items in our computations as compared to those of others. EBITDA and Adjusted EBITDA are measures that are not prescribed by generally accepted accounting principles, or GAAP. EBITDA and Adjusted EBITDA specifically exclude changes in working capital, capital expenditures and other items that are set forth on a cash flow statement presentation of a company's operating, investing and financing activities. As such, we encourage investors not to use these measures as substitutes for the determination of net income, net cash provided by operating activities or other similar GAAP measures. (2) Cash flow used in operating activities for the twelve months ended December 31, 2005 includes $67.6 million related to the termination of commodity price risk management contracts and $49.3 million for income taxes related to the sale of Addison. EXCO Resources, Inc. Summary operating data Non-GAAP Non-GAAP combined combined Year Year Quarter Quarter ended ended ended ended Dec. 31, Dec. 31, % Dec. 31, Dec. 31, % 2004 2005 Change 2004 2005 Change Production: Oil (Mbbls) 638 491 -23% 123 118 -4% Natural gas liquids (Mbbls) 60 20 -67% 11 2 -82% Gas (Mmcf) 18,860 20,482 9% 5,024 5,280 5% Oil and natural gas (Mmcfe) 23,048 23,548 2% 5,828 6,000 3% Average sales prices (before commodity price risk management activities): Oil (per Bbl) $38.71 $53.35 38% $46.68 $57.18 22% Natural gas liquids (per Bbl) (1) 30.73 32.70 6% 36.55 n/a n/a Gas (per Mcf) 6.12 8.59 40% 7.11 12.22 72% Total production (per Mcfe) 6.16 8.62 40% 7.18 11.89 66% Average costs (per Mcfe): Oil, natural gas liquids and natural gas operating costs $0.86 $0.85 -1% $0.78 $0.93 19% Production and ad valorem taxes 0.37 0.47 27% 0.44 0.59 34% General and administrative (2) 0.66 4.06 515% 0.69 13.33 n/a Depletion, depreciation and amortization 1.24 1.65 33% 1.30 2.38 83% (1) Not material - During the quarter ended December 31, 2005 we discontinued the tracking of NGLs as a separate component of revenue. These revenues are now recorded as a component of natural gas sales. (2) General and administrative expenses for the non-GAAP combined year ended December 31, 2005 and the non-GAAP combined quarter ended December 31, 2005 include $44.1 million of non-cash stock compensation and $29.6 million of costs from the cash out of stock options in the Equity Buyout transaction. Excluding these non- recurring costs, the general and administrative average cost would have been $0.93 per Mcfe for the non-GAAP combined year ended December 31, 2005 and $1.05 per Mcfe for the non-GAAP combined quarter ended December 31, 2005.

EXCO Resources, Inc.

CONTACT: EXCO Resources, Inc., +1-214-368-2084, or fax, +1-214-368-2087

Source: PRNewswire-FirstCall

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