Unless the context requires otherwise, references in this Annual Report on Form 10-K to “EXCO,” “EXCO Resources,” “Company,” “we,” “our,” and “us” are to EXCO Resources, Inc. and its consolidated subsidiaries.
We have filed voluntary petitions for relief under the Bankruptcy Code and are subject to the risks and uncertainties associated with bankruptcy cases.
We believe it is highly likely that our existing common shares will be canceled at the conclusion of our Chapter 11 proceedings.
Operating under Court protection for a long period of time may harm our business.
We are subject to the risks and uncertainties associated with our exclusive right to file a plan of reorganization.
We may not be able to obtain confirmation of a Chapter 11 plan of reorganization.
Any plan of reorganization that we may implement will be based in large part upon assumptions and analyses developed by us. If these assumptions and analyses prove to be incorrect, or market conditions deteriorate, our plan may be unsuccessful in its execution.
Even if a Chapter 11 plan of reorganization is consummated, we will continue to face risks.
The terms of our indebtedness include restrictions and financial covenants that may restrict our business and financing activities.
We have substantial liquidity needs and may be required to seek additional financing if we experience a prolonged bankruptcy process. If we are unable to maintain adequate liquidity, we may not be able to obtain financing on satisfactory terms.
Upon emergence from bankruptcy, the composition of our board of directors will change significantly.
In certain instances, a Chapter 11 case may be converted to a case under Chapter 7 of the Bankruptcy Code.
As a result of the Chapter 11 Cases, our historical financial information may be volatile and not be indicative of our future financial performance.
Transfers of our equity, or issuances of equity in connection with our Chapter 11 Cases, may impair our ability to utilize our federal income tax net operating loss carryforwards in future years.
We have significant exposure to fluctuations in commodity prices since none of our estimated future production is covered by commodity derivative contracts and we may not be able to enter into commodity derivative contracts covering our estimated future production on favorable terms or at all.
We have and may continue to experience increased levels of employee attrition as a result of the Chapter 11 Cases.
Oil and natural gas prices, which are subject to fluctuations, have declined substantially from historical highs. Reductions in oil and natural gas prices have, and may in the future, adversely affect our revenues as well as our ability to maintain or increase our borrowing capacity, repay current or future indebtedness and obtain additional capital on attractive terms.
Changes in the differential between NYMEX or other benchmark prices of oil and natural gas and the reference or regional index price used to price our actual oil and natural gas sales could have a material adverse effect on our results of operations and financial condition.
We may encounter obstacles to marketing our oil and natural gas, which could adversely impact our revenues.
Our oil production in the South Texas region may be curtailed if we are not able to find an operational or commercial solution for the associated natural gas production.
We may experience a financial loss if any of our significant customers fail to pay us for our oil or natural gas or reduce the volume of oil and natural gas that they purchase from us.
There are risks associated with our drilling activity that could impact our results of operations and financial condition. Our ability to develop properties in new or emerging formations may be subject to more uncertainties than drilling in areas that are more developed or have a longer history of established production.
Certain of our undeveloped leasehold assets are subject to leases that will expire over the next several years unless production is established on the acreage.
We conduct a substantial portion of our operations through joint interest and joint venture arrangements. Material disagreements with our partners could have a material adverse effect on the success of these operations, our financial condition and our results of operations. Furthermore, the actions taken by our partners could prevent or alter our development plans.
We may be unable to acquire or develop additional reserves, which would reduce our revenues and access to capital.
We may not correctly evaluate reserve data or the exploitation potential of properties as we engage in our acquisition, exploration, development and exploitation activities.
Our estimates of oil and natural gas reserves involve inherent uncertainty, which could materially affect the quantity and value of our reported reserves, our financial condition and the value of our common shares.
Impairments of our asset values could have a substantial negative effect on our results of operations and net worth.
We are exposed to operating hazards and uninsured risks that could adversely impact our results of operations and cash flow.
We are subject to complex federal, state, local and other laws and regulations that could adversely affect the cost, manner or feasibility of conducting our operations.
Our business exposes us to liability and extensive regulation on environmental matters, which could result in substantial expenditures and could negatively impact production.
The implementation of climate change regulations could result in increased operating costs and reduced demand for our oil and natural gas production.
Federal, state and local legislation and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays.
We operate in a litigious environment.
Our business could be negatively impacted by security threats, including cybersecurity threats, and other disruptions.
There are inherent limitations in all internal controls over financial reporting, and misstatements due to error or fraud may occur and not be detected.
The Consolidated Financial Statements included herein contain disclosures that express substantial doubt about our ability to continue as a going concern, indicating the possibility that we may not be able to operate in the future.
Our common shares are no longer listed on a national securities exchange and were deregistered under the Exchange Act, which may have a negative impact on our share price, volatility and Liquidity.
Our common share price may fluctuate or remain significantly depressed throughout the pendency of our bankruptcy proceedings.