EXCO Resources, Inc. Announces 2012 Capital Budget

The Board of Directors of EXCO Resources, Inc. has approved a capital budget of $710 million for 2012 of which $585 million is allocated to development and completion activities. This capital budget reflects a continued increase in our Marcellus shale activities and a decrease in our Haynesville shale activities to a level we believe is appropriate in light of the current natural gas price environment. The 2012 capital budget, which is net of an estimated $60 million carry by BG Group plc (LSE: BG.L - News) (“BG Group”) for certain drilling and completion spending in our Appalachian joint venture area, is allocated among our different budget categories as follows:

In addition, we plan to make $10 million of contributions to our equity investments. We expect to fund our 2012 capital budget with cash flow from operations, an estimated $50 million reduction in our restricted cash, and borrowings under our credit agreement to the extent necessary. Our 2012 operated rig count is expected to average 19, of which 13 rigs will drill in Haynesville/Bossier shales, five rigs will drill in the Marcellus shale and one rig will drill in our Permian area. Details of our plans within the various divisions are presented below:

(1) Includes $30 million of capitalized interest.

Haynesville and Bossier Shales:

We plan to spend a total of $469 million targeting the Haynesville and Bossier shales, of which $453 million will be spent for drilling and completion costs, $10 million for lease acquisitions, $6 million for operations projects and seismic data acquisition.

We are primarily drilling Haynesville shale targets, and we plan to have 13 operated drilling rigs within this area throughout the year. Although our drilling activities in this area are providing acceptable rates of return, we are reducing our level of activity to manage our cash flow in the current natural gas price environment. These rigs should allow us to drill and complete 98 gross (30.3 net) operated wells targeting the Haynesville and Bossier shales. In addition, we plan to participate in 22 gross (0.6 net) wells operated by others. We plan to complete an additional 22 gross (7.7 net) wells in 2012 related to our 2011 drilling activity. Of our 13 operated drilling rigs, eight will drill in our Holly area in DeSoto Parish and southern Caddo Parish, Louisiana. Virtually all of our drilling in this area will be full development on 80 acre spacing utilizing multi-well pads. Five rigs will drill in our Shelby Trough area which includes Nacogdoches, San Augustine and Shelby Counties, Texas. Drilling in this area will be focused on delineating our acreage and testing well spacing. In particular, we will be focusing our efforts in an area which has yielded initial production rates in excess of 30 Mmcf per day. Our 2012 plans are expected to fulfill all of our lease obligations. In addition, we will also be making investments in operating facilities, roads and water handling projects.

Marcellus Shale:

The capital budget program net to EXCO for our Marcellus shale program totals $128 million, of which $93 million will be spent to drill and complete 55 gross (13.2 net) operated horizontal Marcellus shale wells and 16 gross (6.0 net) horizontal Marcellus shale appraisal wells. The appraisal wells will be used to evaluate a number of our operating areas for future development activities. Other spending within the division includes $13 million for lease acquisitions and $22 million for operations projects and seismic data acquisition.

We currently have four rigs drilling, and plan to have five rigs drilling during 2012. Our development activities will focus in areas that have contiguous acreage positions and access to takeaway capacity. We continue to seek additional acreage in our main focus areas to aid in our development plans and expand our footprint.

Conventional Assets:

We have a capital budget totaling $58 million for our conventional assets. Within this budget, $32 million will be spent in our Permian division to drill and complete 38 gross (36.2 net) operated wells. The target zones include Clearfork, Wolfcamp and Canyon formations, which we believe contain higher oil bearing opportunities. We plan to average one rig drilling during 2012. Other spending on our conventional assets includes $6 million for lease acquisitions, $7 million on recompletions, and $13 million for operations projects.

Midstream Affiliates:

TGGT Holdings, LLC (“TGGT”) and Appalachia Midstream, LLC are the midstream joint ventures in East Texas/North Louisiana and Appalachia, respectively, in each of which we own a 50% equity interest. The primary focus of these entities’ capital programs is the building of gathering infrastructure and associated facilities in support of our upstream activities in each area. TGGT’s expected capital budget of $100 million will be funded by internally generated cash flow. Our Board of Directors has also approved capital contributions to Appalachia Midstream of up to $8 million for 2012, which are not included in the aforementioned $710 million capital budget.