Exco Resources, Inc. (NYSE: XCO) reports its second quarter East Texas/North Louisiana Haynesville shall operations.

During the second quarter, Exco completed seven gross (4.1 net) operated horizontal Haynesville wells during the second quarter, and have two gross (0.9 net) currently in the completion phase and six gross (4.5 net) drilling. The average initial production rates in DeSoto Parish were 24 million cubic feet per day for wells completed during the second quarter, with a range of 21.2 – 26.4 million cubic feet per day. Exco utilized four operated drilling rigs and one operated spudder rig in the quarter and expect to add three additional drilling rigs during the third quarter 2009.

Exco also participated in three gross (0.7 net) non-operated wells in DeSoto Parish, Louisiana with initial production rates ranging from 14.4 to 24.5 million cubic feet per day and 1 gross (0.3 net) well in Caddo Parish, Louisiana with an initial production rate of 10.2 million cubic feet per day. At the end of the second quarter, the company had interests in 2 gross (0.1 net) non-operated horizontal Haynesville shale wells, 1 in the drilling phase and 1 in the completion phase.

Exco currently has 12 gross (8.4 net) operated horizontal wells and six gross (1.2 net) non-operated horizontal wells flowing to sales. Production from its Haynesville wells recently reached a combined gross rate of 174 million cubic feet per day (72 million cubic feet per day net).

The DeSoto Parish area has yielded some of the highest production rates in the entire play. The Exco-operated average initial production in DeSoto Parish is 24 million cubic feet per day, with all wells having initial production rates in excess of 21 million cubic feet per day. This high level of performance over a broad area underscores the consistency and high quality of the shale reservoir on the acreage and demonstrates the effectiveness of target selection and completion design. Initial wells were completed with 9-10 frac stages and Exco's most recent wells have been completed with 12-14 frac stages to maximize reserves and production by providing more contact with the fractured shale reservoir.

Drilling times are improving and considerable operational efficiencies have been made. Initial wells took 70 to 75 days from spud to rig release and its last five wells have taken an average of 48 days from spud to rig release. Lateral lengths are now typically 4,500 feet and are designed to maximize the length in the target interval. Completion operations are initiated immediately following rig release, and pipeline construction runs parallel to drilling operations. All operated wells have flowed to sales immediately following completion operations due to close coordination with Exco’s midstream business. The company’s midstream activity is progressing as planned with construction of a 36-inch pipeline header system and associated treating facilities. The 36-inch header system is designed to flow both Exco and third party gas.

Exco has firm transportation of 370 million cubic feet per day per day in the immediate area, including new commitments on a recently announced third-party pipeline project scheduled to be completed in late 2009. Exco is well-positioned in the play and have considerable growth potential with more than 4.5 trillion cubic feet of potential Haynesville shale reserves.

In the Cotton Valley, Exco drilled seven gross (5.2 net) Cotton Valley wells. Of the seven gross wells, one gross (1 net) was in the Vernon area and six gross (4.2 net) were in Holly Field area. With current natural gas prices at the lowest levels in several years, Exco elected to suspend most of the operated Cotton Valley drilling.

In Appalachia, Exco holds more than 1 million net leasehold acres. Major operating areas include Pennsylvania, Ohio and West Virginia, where the company historically drilled for the Clinton/Medina sandstone, stacked Devonian sandstone, Devonian shale, Berea shale and other productive horizons. Included as a subset of its extensive acreage position, Exco now controls approximately 361,000 acres in the Marcellus shale fairway, with more than 215,000 acres located in the core area of the over pressured Marcellus.

A significant percentage of this fairway acreage is held-by production by shallow producing assets. Also as a subset of the acreage position, 130,000 acres (70% held-by production) exist within the Huron shale play of West Virginia. Exco believes its present leasehold position in the Marcellus and Huron shale fairways contains between 7- to 12 trillion cubic feet of potential reserves. Throughout 2009, technical Marcellus activity is focused on integrating 2008 Marcellus well results and seismic data, delineating acreage blocks using updated geological model and drilling and completing test wells to high grade for a 2010 development program.

Exco chairman and chief executive Douglas H. Miller says, “In addition to our joint venture announcement and our asset divestitures, we continued to realize outstanding drilling results in the Haynesville shale. We have completed 11 Haynesville horizontal wells this year, of which seven were in the second quarter. Our average operated completions in DeSoto Parish, Louisiana this year have resulted in initial production rates of 24 million cubic feet of natural gas per day. We also completed a successful horizontal Haynesville well in Caddo Parish.

“For the remainder of 2009, we will continue increasing our drilling and completion activity in the Haynesville shale as we plan to drill an additional 26 operated wells. We will also continue to evaluate our strong Marcellus shale position in Appalachia by drilling test wells, building our operating staff and developing our plans for 2010 and beyond. Activities in other areas will be dependent upon a strengthening of commodity prices.”

Exco also drilled and completed two gross (1.5 net) wells in its Permian area Canyon Sand field during the second quarter resulting in a 100% success rate. One of these wells helped earn approximately 11,000 net contiguous acres under a joint venture. Exco holds approximately 77,000 net acres in the area.

The Midcontinent division production averaged approximately 63 million cubic feet of gas equivalent per day during the second quarter. Exco drilled and completed one gross (0.5 net) well. Based on current commodity prices, the company has suspended most operated drilling in The Permian and Midcontinent.

Exco Resources has oil and gas operations primarily in Texas, Louisiana, Ohio, Oklahoma, Pennsylvania and West Virginia.