EXCO Resources Regains Control of Louisiana Well

On October 1, 2002, EXCO Resources, Inc. and its contractors were conducting workover operations to restore production in its Miami Corp. #35 well in the South Pecan Lake Field, Cameron Parish, Louisiana. A loss of well control occurred resulting in the release of approximately 20 million cubic feet per day (Mmcfd) of natural gas and 2,800 barrels per day (Bpd) of formation water. No injuries or fires resulted from the loss of control. EXCO contracted with well control specialists to assist with well control operations.

Temporary production facilities have been installed on the well and all the gas from the well is now being sold, with sales volumes currently totaling approximately 15 Mmcfd. Produced water estimated at 2,350 Bpd is being routed to EXCO disposal wells. EXCO holds a 90.0% working interest and a 74.9% net revenue interest in the well. EXCO cannot predict how long these production volumes will continue. Prior to commencement of the workover, the well had been shut-in for several years due to downhole wellbore problems. The condition of the downhole tubulars will not allow the well to be safely controlled and a relief well will be required to control the well. Mobilization and drilling of the relief well is expected to take 40-50 days. Sales of natural gas are expected to continue throughout the drilling operations as long as it is safe to do so.

Since October 1, 2002, estimated expenditures to control the well have been approximately $900,000. The preliminary cost to drill a relief well is estimated to be $3.5 million to $4.0 million. Control of well insurance is expected to cover most of the cost spent to date, as well as the cost to drill the relief well.

Due to the volumes of water being produced and the possibility that the water volumes will increase over time in these types of reservoirs, the remaining natural gas reserves from this well are uncertain and difficult to predict. EXCO's proved reserves as of January 1, 2002 for this well prior to the loss of well control were 780 Mmcf (585 Mmcf net). EXCO is unable to estimate the remaining reserves from this well at this time and the actual reserves could be higher or lower than previously estimated.