EXCO Resources, Inc. ("EXCO") announced second quarter results for 2012.

-- Oil, natural gas and natural gas liquids (NGLs) production was 50 Bcfe, or 550 Mmcfe per day, for the second quarter 2012 compared with 537 Mmcfe per day in the first quarter 2012 and 504 Mmcfe per day in the second quarter 2011. Effective with the second quarter 2012, we began reporting NGL volumes separately and have recast prior period volumes to conform to current period reporting. While our production increases from 2011 are primarily attributable to volumes from the Haynesville shale, we have reduced drilling activity in the Haynesville shale in 2012 and future quarterly production volumes are expected to decline as a result. Due to increased drilling in the Marcellus shale, year over year production increased 31% in our Appalachia region. Our Permian production was relatively flat with the prior quarter and prior year.

Haynesville/Bossier Shale

Our horizontal Haynesville shale development program continues to be a significant asset for EXCO and continues to yield strong results. As of July 17, 2012, our Haynesville/Bossier shale operated production was 1,178 Mmcf per day gross (350.6 Mmcf per day net) and with the addition of net production from our OBO wells, we had 381.8 Mmcf per day of total Haynesville/Bossier shale net production. In response to low natural gas prices, we have significantly reduced our drilling program. In 2011, we averaged 22 operated rigs in the Haynesville/Bossier shale throughout the year. We began to reduce our rig count in late 2011 and have further reduced the rig count in the first half of 2012. We currently have five active operated rigs drilling in the play. During 2012, we plan to drill approximately 60 gross (22.2 net) operated wells in the Haynesville/Bossier shale play.

We drilled and completed 15 gross (6.8 net) operated horizontal Haynesville/Bossier wells and participated in 5 gross (0.2 net) OBO Haynesville/Bossier horizontal wells during the second quarter of 2012. We utilized an average of seven operated rigs and spud 15 operated horizontal wells during the quarter. We averaged one OBO rig drilling in the play and spud one OBO well during the quarter. We currently have one OBO rig drilling. In total, we have 346 operated horizontal wells and 181 OBO horizontal wells flowing to sales.

Marcellus Shale

Our current gross Marcellus shale production as of July 18, 2012, is approximately 146 Mmcf per day (30.1 Mmcf per day net), which represents an increase of more than 28% since the end of 2011. We have more than 32 Mmcf per day (6.6 Mmcf per day net) of production shut in due primarily to offset drilling and completion activities. We have implemented a development program within our acreage in Northeast Pennsylvania and are concluding an appraisal program in Central Pennsylvania. Our budget, as revised in February 2012, was to drill 49 gross (12.4 net) operated wells in the Marcellus shale play in our Appalachia region. Of the 49 wells, 46 gross (11.5 net) are development wells and 3 gross (0.9 net) are appraisal wells. Most of our drilling activity will be in Lycoming County, Pennsylvania where we are realizing our best returns in the Marcellus shale. However, our last four wells in Central Pennsylvania realized average IPs of 7.2 Mmcf per day from average lateral lengths of approximately 4,700 feet, exceeding our forecasts.

During the second quarter 2012, we spud 9 new operated wells and drilled and completed 12 gross (4.0 net) operated wells in the Marcellus shale. These 12 completed wells included eight wells in Northeast Pennsylvania and four wells in Central Pennsylvania. We are also focused on building our field infrastructure, particularly water handling lines, storage and disposal facilities, in support of our expected levels of activity. These infrastructure investments are expected to be the primary drivers to reduce our average development well costs.

Permian

We drilled and completed 9 gross (8.8 net) wells in our Sugg Ranch area during the second quarter 2012 with 100% drilling success. We are currently running two operated rigs and plan to drill and complete 36 gross (34.9 net) wells in 2012. Economics for this drilling activity typically have rates-of-return in excess of 50%. In the second quarter, our production averaged approximately 4,200 barrels per day of net oil equivalents which was a 5% increase over the second quarter of 2011. This average production rate consisted of 1,600 net barrels of oil, 7.0 net Mmcf of natural gas, and 1,400 net barrels of natural gas liquids per day.