Exco Resources Sets 2008 Budget at $625.2 Million

EXCO Resources has approved a capital spending budget of $625.2 million for 2008. This budget amount is approximately 24% more than the approved 2007 budget of $502.9 million and is the largest in EXCO’s history. The 2008 capital budget provides funding for activities including the drilling of more than 600 wells, implementation of exploitation and operations projects, and enhancements to our information technology systems. Our exploitation projects involve working on existing wellbores to enhance reserves and production. Our operations projects include land leasing, seismic, facilities, and artificial lift projects, among others. The budget will be fully funded through cash flow from operations. Consistent with EXCO’s stated strategy, we will retain a significant amount of our cash flow to either provide funding for acquisitions or for payment of debt.

East Texas/North Louisiana - We are drilling primarily Cotton Valley formation targets at depths averaging between 10,000 and 11,000 feet in most of our properties except the Vernon Field, where depths can reach 15,000 feet. In this region, we have budgeted $338.4 million on activities including drilling 139 wells (80 wells in Holly/Caspiana located in DeSoto Parish, Louisiana, 24 wells at Vernon located in Jackson Parish, Louisiana, and 35 wells across East Texas) and implementing various exploitation and operations projects.

Permian - We plan to spend $124.5 million, which will fund drilling 165 wells primarily targeting Canyon formation sands at depths of approximately 7,500 feet. Of these 165 wells, 148 are in our Sugg Ranch area where we recently acquired additional working interests for approximately $156.6 million. At Sugg Ranch, we have production from the Wolfcamp and Clearfork formations in addition to the primary Canyon Sand formation. Our net production at Sugg Ranch now totals approximately 22 Mmcfe/d of natural gas.

Appalachia - We are planning to spend $68.6 million to drill 248 wells, primarily targeting shallow Appalachian formations on our fields in Pennsylvania, West Virginia, Ohio and Kentucky at depths typically between 3,000 and 6,000 feet, and to carry out 22 exploitation projects. We are also evaluating our Marcellus shale opportunities. We have approximately 350,000 acres of Marcellus shale, much of which is held by shallow production. We have begun testing the play by drilling vertical wells. Initial results are encouraging.

Mid-Continent - We plan to spend $56.8 million and drill 57 wells, primarily in our Mocane Laverne and Golden Trend areas, where we have stacked pays at depths ranging from 7,000 to 17,000 feet. Several of these drill wells will be in the areas acquired from Anadarko Petroleum Corporation in mid 2007. We will also carry out various exploitation projects in this region.

Midstream: We plan to spend $19.4 million on our midstream operations. On our TGG intrastate pipeline, we are continuing expansion to increase volume throughput by as much as 100 Mmcf/d, and on our TALCO gathering system we are expanding the system to gather additional equity and third party production.

IT and Other: We plan to spend $17.5 million on other activities, including $6.5 million to continue enhancements to our information technology systems which support our accounting, production and general business activities, and capitalized costs associated with our acquisition and capital development efforts.

We currently have 27 rigs drilling across our portfolio, and more than 50 wells are in various stages of completion. The capital will be allocated primarily among the following regions:

                         Total       Drilling     Wells     Exploitation      Number of     Operations
                        Capital      Capital      to be       Capital       Exploitation      Capital
                      $ Millions   $ Millions    Drilled    $ Millions        Projects      $ Millions
East Texas/North LA      $338.4      $244.6        139         $25.8             25            $68.0
Permian                   124.5       109.4        165           1.2              5             13.9
Appalachia                68.6         60.0        248           0.7             22              7.9
Mid-Continent             56.8         47.8         57           4.2             30              4.8
Midstream                 19.4        -             -           -                -               -
IT & Other Capital        17.5        -             -           -                -               -
Total                   $625.2       $461.8        609         $31.9             82            $94.6