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Gold/Mining/Energy : ENERGY EXPLORATION & PRODUCTION -- Ignore unavailable to you. Want to Upgrade?

To: Dennis Roth who wrote (62)	5/8/2008 4:36:46 PM
From: Dennis Roth	Respond to of 111

EXCO Resources, Inc. (XCO) Energy - Goldman Sachs Note Stock rating: Neutral Coverage view: Attractive Price: US$25.00 May 7, 2008 United States EXCO Resources, Inc. (XCO): Beating guidance midpoint, potential Appalachia JV key to stock News EXCO reported adjusted EPS of $0.28 versus our estimate of $0.22 and consensus of $0.16. Operating cash flow of $212 million versus our $197 million. Production was 386 MMcfe/d higher than our 374 MMcfe/d. Higher realized natural gas prices also contributed to higher earnings. Operating costs were higher than expected. Analysis EXCO has historically disappointed on production, and essentially the 1Q 2008 production result was in line with its guidance. Production rose by 9 MMcfe/d versus 4Q 2007, though 7 MMcfe/d of this is due to the acquisition of Appalachia properties. Showing organic growth and executing on its production guidance is key for the stock. To achieve the midpoint of EXCO's FY 2008 394-402 MMcfe/d guidance, production would need to increase organically by about 4 MMcfe/d per quarter from here. While this seems to be a low bar, we nevertheless believe the stock can continue to perform well if management beats the guidance midpoint in the absence of budget increases.