Condensed Consolidating Financial Statements

3 Months Ended

Mar. 31, 2018

Condensed Financial Statements, Captions [Line Items]

Condensed consolidating financial statements

As of March 31, 2018, the majority of EXCO’s subsidiaries were guarantors under the DIP Credit Agreement, the indenture governing the 1.5 Lien Notes, the credit agreements governing the 1.75 Lien Term Loans and Second Lien Term Loans and the indentures governing the 2018 Notes and 2022 Notes. All of our unrestricted subsidiaries under the 1.5 Lien Notes, 1.75 Lien Term Loans and the indentures governing the 2018 Notes and 2022 Notes are considered non-guarantor subsidiaries.

Set forth below are condensed consolidating financial statements of EXCO, the guarantor subsidiaries and the non-guarantor subsidiaries. The DIP Credit Agreement, 1.5 Lien Notes, 1.75 Lien Term Loans, Second Lien Term Loans, 2018 Notes and 2022 Notes, which were issued by EXCO Resources, Inc., are jointly and severally guaranteed by substantially all of our subsidiaries (referred to as Guarantor Subsidiaries). For purposes of this footnote, EXCO Resources, Inc. is referred to as Resources to distinguish it from the Guarantor Subsidiaries. Each of the Guarantor Subsidiaries is a 100% owned subsidiary of Resources and the guarantees are unconditional as they relate to the assets of the Guarantor Subsidiaries. Resources and the Guarantor Subsidiaries solely consist of entities that are Debtors in the Chapter 11 Cases, including each of the Filing Subsidiaries. The non-guarantor subsidiaries solely consist of entities that are not included in the Chapter 11 Cases, including OPCO, Appalachia Midstream, EXCO Production Company (PA) II, LLC, EXCO Production Company (WV) II, LLC and certain other entities (referred to as Non-Guarantor Subsidiaries).

The following financial information presents consolidating financial statements, which include:


•	Resources;


•	the Guarantor Subsidiaries;


•	the Non-Guarantor Subsidiaries;


•	elimination entries necessary to consolidate Resources, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries; and


•	EXCO on a consolidated basis.

Investments in subsidiaries are accounted for using the equity method of accounting for the disclosures within this footnote. The financial information for the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries is presented on a combined basis. The elimination entries primarily eliminate investments in subsidiaries and intercompany balances and transactions.

EXCO RESOURCES, INC. (DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATING BALANCE SHEET

(Unaudited)

As of March 31, 2018



(in thousands)	Resources			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	61,889		$	(11,791	)	$	15,732		$	—		$	65,830
Restricted cash	552			9,280			—			—			9,832
Other current assets	11,056			110,931			7,720			—			129,707
Total current assets	73,497			108,420			23,452			—			205,369
Equity investments	—			—			4,736			—			4,736
Oil and natural gas properties (full cost accounting method):
Unproved oil and natural gas properties and development costs not being amortized	—			115,780			33,542			—			149,322
Proved developed and undeveloped oil and natural gas properties	334,199			2,832,863			72,556			—			3,239,618
Accumulated depletion	(330,776		)	(2,438,901		)	(601		)	—			(2,770,278		)
Oil and natural gas properties, net	3,423			509,742			105,497			—			618,662
Other property and equipment, net and other non-current assets	1,013			20,285			18,047			—			39,345
Investments in and (advances to) affiliates, net	306,795			—			—			(306,795		)	—
Goodwill	13,293			149,862			—			—			163,155
Total assets	$	398,021		$	788,309		$	151,732		$	(306,795	)	$	1,031,267
Liabilities and shareholders’ equity
Current maturities of long-term debt	$	473,364		$	—		$	—		$	—		$	473,364
Other current liabilities	15,452			71,055			7,325			—			93,832
Other long-term liabilities	—			11,631			12,222			—			23,853
Liabilities subject to compromise	965,858			531,013			—			—			1,496,871
Payable to parent	—			2,458,854			(1,518		)	(2,457,336		)	—
Total shareholders’ equity	(1,056,653		)	(2,284,244		)	133,703			2,150,541			(1,056,653		)
Total liabilities and shareholders’ equity	$	398,021		$	788,309		$	151,732		$	(306,795	)	$	1,031,267

EXCO RESOURCES, INC. (DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2017



(in thousands)	Resources			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	49,170		$	(9,573	)	$	—	$	—		$	39,597
Restricted cash	—			15,271			—		—			15,271
Other current assets	22,697			90,265			—		—			112,962
Total current assets	71,867			95,963			—		—			167,830
Equity investments	—			—			14,181		—			14,181
Oil and natural gas properties (full cost accounting method):
Unproved oil and natural gas properties and development costs not being amortized	—			118,652			—		—			118,652
Proved developed and undeveloped oil and natural gas properties	333,719			2,773,847			—		—			3,107,566
Accumulated depletion	(330,777		)	(2,421,534		)	—		—			(2,752,311		)
Oil and natural gas properties, net	2,942			470,965			—		—			473,907
Other property and equipment, net and other non-current assets	892			20,382			—		—			21,274
Investments in and (advances to) affiliates, net	466,055			—			—		(466,055		)	—
Goodwill	13,293			149,862			—		—			163,155
Total assets	$	555,049		$	737,172		$	14,181	$	(466,055	)	$	840,347
Liabilities and shareholders’ equity
Current maturities of long-term debt	$	1,362,500		$	—		$	—	$	—		$	1,362,500
Other current liabilities	32,280			272,190			—		—			304,470
Derivative financial instruments - common share warrants	1,950			—			—		—			1,950
Other long-term liabilities	4,518			13,108			—		—			17,626
Payable to parent	—			2,447,586			—		(2,447,586		)	—
Total shareholders’ equity	(846,199		)	(1,995,712		)	14,181		1,981,531			(846,199		)
Total liabilities and shareholders’ equity	$	555,049		$	737,172		$	14,181	$	(466,055	)	$	840,347

EXCO RESOURCES, INC. (DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

For the Three Months Ended March 31, 2018



(in thousands)	Resources			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Revenues:
Oil and natural gas	$	—		$	83,296		$	1,850		$	—	$	85,146
Purchased natural gas and marketing	—			5,318			—			—		5,318
Total revenues	—			88,614			1,850			—		90,464
Costs and expenses:
Oil and natural gas production	—			11,447			457			—		11,904
Gathering and transportation	—			19,651			325			—		19,976
Purchased natural gas	—			4,115			—			—		4,115
Depletion, depreciation and amortization	80			17,463			663			—		18,206
Accretion of liabilities	—			229			113			—		342
General and administrative	(6,780		)	14,872			435			—		8,527
Gain on Appalachia JV Settlement	—			—			(119,477		)	—		(119,477		)
Other operating items	(34		)	9,800			(9,632		)	—		134
Total costs and expenses	(6,734		)	77,577			(127,116		)	—		(56,273		)
Operating income	6,734			11,037			128,966			—		146,737
Other expense:
Interest expense, net	(9,173		)	—			—			—		(9,173		)
Loss on derivative financial instruments - commodity derivatives	(615		)	—			—			—		(615		)
Gain on derivative financial instruments - common share warrants	183			—			—			—		183
Other income	17			5			—			—		22
Equity income	—			179			—			—		179
Reorganization items, net	(43,703		)	(309,197		)	—			—		(352,900		)
Net loss from consolidated subsidiaries	(169,010		)	—			—			169,010		—
Total other expense	(222,301		)	(309,013		)	—			169,010		(362,304		)
Income (loss) before income taxes	(215,567		)	(297,976		)	128,966			169,010		(215,567		)
Income tax benefit	(4,518		)	—			—			—		(4,518		)
Net income (loss)	$	(211,049	)	$	(297,976	)	$	128,966		$	169,010	$	(211,049	)

EXCO RESOURCES, INC. (DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

For the Three Months Ended March 31, 2017



(in thousands)	Resources			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Revenues:
Oil and natural gas	$	—		$	69,356	$	—	$	—		$	69,356
Purchased natural gas and marketing	—			7,173		—		—			7,173
Total revenues	—			76,529		—		—			76,529
Costs and expenses:
Oil and natural gas production	—			11,933		—		—			11,933
Gathering and transportation	—			27,353		—		—			27,353
Purchased natural gas	—			6,452		—		—			6,452
Depletion, depreciation and amortization	61			11,447		—		—			11,508
Accretion of liabilities	—			212		—		—			212
General and administrative	(10,667		)	15,082		—		—			4,415
Other operating items	398			671		—		—			1,069
Total costs and expenses	(10,208		)	73,150		—		—			62,942
Operating income	10,208			3,379		—		—			13,587
Other income (expense):
Interest expense, net	(19,952		)	—		—		—			(19,952		)
Gain on derivative financial instruments - commodity derivatives	15,533			—		—		—			15,533
Gain on derivative financial instruments - common share warrants	6,004			—		—		—			6,004
Loss on restructuring of debt	(6,272		)	—		—		—			(6,272		)
Other income	1			3		—		—			4
Equity income	—			—		317		—			317
Net income from consolidated subsidiaries	3,699			—		—		(3,699		)	—
Total other income (expense)	(987		)	3		317		(3,699		)	(4,366		)
Income before income taxes	9,221			3,382		317		(3,699		)	9,221
Income tax expense	1,028			—		—		—			1,028
Net income	$	8,193		$	3,382	$	317	$	(3,699	)	$	8,193

EXCO RESOURCES, INC. (DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

For the Three Months Ended March 31, 2018



(in thousands)	Resources			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations		Consolidated
Operating Activities:
Net cash provided by (used in) operating activities	$	(10,768	)	$	58,120		$	900	$	—	$	48,252
Investing Activities:
Additions to oil and natural gas properties, gathering assets and equipment and property acquisitions	(527		)	(66,329		)	14,832		—		(52,024		)
Net cash provided by (used in) investing activities	(527		)	(66,329		)	14,832		—		(52,024		)
Financing Activities:
Borrowings under DIP Credit Agreement	156,406			—			—		—		156,406
Repayments under EXCO Resources Credit Agreement	(126,401		)	—			—		—		(126,401		)
Debt financing costs and other	(5,439		)	—			—		—		(5,439		)
Net cash provided by financing activities	24,566			—			—		—		24,566
Net increase (decrease) in cash, cash equivalents and restricted cash	13,271			(8,209		)	15,732		—		20,794
Cash, cash equivalents and restricted cash at beginning of period	49,170			5,698			—		—		54,868
Cash, cash equivalents and restricted cash at end of period	$	62,441		$	(2,511	)	$	15,732	$	—	$	75,662

EXCO RESOURCES, INC. (DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

For the Three Months Ended March 31, 2017



(in thousands)	Resources			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations		Consolidated
Operating Activities:
Net cash provided by (used in) operating activities	$	(12,106	)	$	17,302		$	—	$	—	$	5,196
Investing Activities:
Additions to oil and natural gas properties, gathering assets and equipment and property acquisitions	(271		)	(11,586		)	—		—		(11,857		)
Net changes in amounts due to joint ventures	—			(3,723		)	—		—		(3,723		)
Advances/investments with affiliates	(6,998		)	6,998			—		—		—
Net cash used in investing activities	(7,269		)	(8,311		)	—		—		(15,580		)
Financing Activities:
Borrowings under EXCO Resources Credit Agreement	25,000			—			—		—		25,000
Repayments under EXCO Resources Credit Agreement	(253,592		)	—			—		—		(253,592		)
Proceeds received from issuance of 1.5 Lien Notes, net	295,530			—			—		—		295,530
Payments on Second Lien Term Loans	(10,512		)	—			—		—		(10,512		)
Debt financing costs and other	(18,636		)	—			—		—		(18,636		)
Net cash provided by financing activities	37,790			—			—		—		37,790
Net increase in cash, cash equivalents and restricted cash	18,415			8,991			—		—		27,406
Cash, cash equivalents and restricted cash at beginning of period	24,610			(4,392		)	—		—		20,218
Cash, cash equivalents and restricted cash at end of period	$	43,025		$	4,599		$	—	$	—	$	47,624

EXCO RESOURCES INC 10-Q