Exco Resources Inc.

NEW, Exco Resources Inc., Dallas, (NYSE: XCO) has retained Goldman, Sachs & Co. to explore a possible joint venture to enhance exploitation and development of its East Texas, northern Louisiana and Appalachia operating areas. Exco's reserves in East Texas and northern Louisiana include more than 2.7 trillion cubic feet equivalent of proved, probable and possible (3P) reserves, of which 1.1 trillion is proved. These interests also include 292,000 net acres, 255 million cubic feet equivalent per day net production, and more than 3,000 undrilled Cotton Valley, Hosston and other conventional locations. Exco acreage includes some 115,000 net acres prospective for the Bossier/Haynesville shale. Based on 80- acre spacing, this shale acreage could contain more than 1,400 drilling locations. Exco also has substantial midstream assets in East Texas and northern Louisiana which currently gather and transport 500 million cubic feet per day. Exco's 3P reserves in Appalachia exceed 1.1 trillion cubic feet equivalent of which 600 billion is proved. The Appalachia assets include 1.1 million net acres, 60 million cubic feet equivalent per day of shallow production, more than 8,100 shallow drilling locations and some 400,000 net acres of Marcellus shale potential, of which 117,000 net acres are also prospective for the Huron shale. Based on 80-acre spacing, the company estimates shale acreage could contain 6,400 drilling locations. The possible joint venture could include a sale of up to 50% of Exco's reserves, production, acreage and other interests in either or both areas, with a joint development program to be conducted with potential partners. The company is considering a separate joint venture for the East Texas and northern Louisiana midstream assets. Exco will use proceeds to reduce debt, help fund shale development and for corporate purposes. This joint-venture opportunity follows Exco's announcement that it has acquired producing properties, acreage and other assets in Gregg, Rusk and Upshur counties in Texas from undisclosed private sellers for approximately $252 million. These assets include a 94% average working interest (72% average net revenue interest) on approximately 11,000 gross acres. Net proved reserves are 109 billion cubic feet and more than 370 billion proved probable and possible excluding Bossier/Haynesville shale potential, according to Exco. Production is more than 15 million cubic feet per day net from 83 producing wells. Also included is a 50-mile gathering system with compressors, a dehydration unit and a refrigeration plant. Exco estimates more than 500 additional drilling locations exist in the Cotton Valley and Travis Peak formations, of which 92 are proved. Exco will be operater and estimates a capital budget of $20 million to drill nine wells during the remainder of 2008. The current primary productive formations in the field are the Upper Cotton Valley, Pettet and Travis Peak. A majority of the acquired leasehold covers rights to all depths, including the Bossier/Haynesville shale. In prior years, two vertical wells were drilled into the Bossier/Haynesville on this acreage and logged pay potential in these horizons. Exco plans to drill at least one vertical well in 2008 to further delineate potential of the Bossier/Haynesville, and it estimates there could be more than 100 potential shale locations. The deal will be financed with a $300- million senior, unsecured, term loan due Dec. 15. The effective date is March 1. Exco operates in Texas, Louisiana, Ohio, Oklahoma, Pennsylvania and West Virginia. Contact Douglas H. Miller, 214-368- 2084.