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EXCO Resources to Offer Senior Notes

Zacks Equity Research

Upstream energy company EXCO Resources Inc. (XCO) is set to offer senior notes worth $400.0 million. However, the offering is dependent on some market related conditions. The company added that the notes will likely mature by 2022.

Part of the offering’s net proceeds is expected to be used for repaying term loan. The remaining will be spent for lowering revolving commitment under the Amended and Restated Credit Agreement of the company.

EXCO Resources is expected to release first-quarter 2014 results on Apr 29, 2014, after the closing bell. The Zacks Consensus Estimate for the company’s first-quarter earnings is pegged at 4 cents per share.

Dallas, TX-based EXCO Resources is primarily involved in the exploration, development and production of oil and gas resources as well as the acquisition of those properties. As of Dec 31, 2013, the total estimated proved reserves came in at 1.1 trillion cubic feet equivalent.

We commend the company’s disciplined cost control measure which is reflected in the significant year-over-year reduction in total development and exploration expenses in 2013. However, substantial reduction in total production volume during 2013 from the previous year is a matter of concern.

EXCO Resources currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one may look at better-ranked players in the oil and gas exploration and production sector like Range Resources Corp. (RRC), World Point Terminals LP (WPT) and Abraxas Petroleum Corp. (AXAS). Range Resources and World Point Terminals sport a Zacks Rank #1 (Strong Buy), while Abraxas Petroleum has a Zacks Rank #2 (Buy).

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