EXCO Resources has provided a review of its U.S. shale operations activity and outlook in its second quarter 2009 results.

The company spent $85 million on development and exploitation activities, drilling and completing 22 gross (13.7 net) wells in the second quarter 2009, compared with 34 gross (27.9 net) wells during the first quarter 2009. We had an overall drilling success rate of 100% for the second quarter 2009. Our total capital expenditures, including leasing, midstream and corporate activities, were $124 million in the second quarter 2009. As commodity prices declined beginning in the third quarter 2008, we reduced our drilling activities. We currently have 8 drilling rigs operating across our portfolio, which we have reduced from 32 drilling rigs late in the third quarter 2008 in response to lower commodity prices. Although we expect our third and fourth quarter 2009 leasing, drilling and completion activities in East Texas and North Louisiana area to increase, our actual corporate expenditures for 2009 will remain at approximately $500 million as a result of the effects of the sale of 50% of our interest to BG Group combined with the impact of BG Group’s funding of 75% of our interest in deep projects. We will continue to focus our capital expenditures in areas that will provide strong returns in the current commodity price environment.

The company is continuing with plans to sell certain non-strategic assets during 2009. We completed asset sales of approximately $56 million through June 2009 and expect cash proceeds from asset sales and joint ventures in excess of $1.3 billion in the third quarter 2009. Proceeds of all sales or joint ventures will be used to reduce debt and allow more capital to be focused on our shale development and other activities.

East Texas/North Louisiana East Texas/North Louisiana is our largest division in terms of production and reserves, and our primary targets across this region include the Haynesville shale, the upper and lower Cotton Valley, Travis Peak, Pettet and Hosston formations. Currently, our emphasis is exploitation of our Haynesville shale play position. In East Texas/North Louisiana, we drilled and completed 19 gross (11.7 net) wells in the second quarter 2009.

Haynesville Shale During the second quarter 2009, our horizontal Haynesville Shale development program yielded exceptional results with some of the highest production rates in the play. We also achieved significant improvements in operational efficiencies. We completed 7 gross (4.1 net) operated horizontal Haynesville wells during the second quarter 2009, and have 2 gross (0.9 net) currently in the completion phase and 6 gross (4.5 net) drilling. Our average initial production rates in DeSoto Parish were 24 Mmcf per day for wells completed during the second quarter, with a range of 21.2 – 26.4 Mmcf per day. We 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.

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