Dahlman Rose Has Hold Rating On EXCO Resources

Dahlman Rose & Co. has a Hold rating on shares of EXCO Resources Inc (NYSE: XCO) after the company updated guidance.

In a note to clients, Dahlman Rose & Co. writes, "New production guidance for 2012 of 833 MMcfepd (another 60%+ growth y/y) is well above our estimate of 683 MMcfepd (35% growth) and will likely be the focal point of much discussion on the company's conference call. Equally surprising, the company is expecting a CAPEX spend of $911MM in 2012 (and significant free cash flow). The CAPEX guidance is well below our estimate of $1.3Bn. Although, based on the company's detailed model, it seems like on an equivalent basis to the 2011 budget (which included nearly 22% of various non "Drilling and Completion" CAPEX items), a more normalized number is likely closer to $1.1Bn. In light of this update, our recent estimates for 2012 discretionary cash flow of $842MM seems fairly conservative and leaves plenty of room to outperform as XCO is guiding to $1.1Bn, albeit with slightly higher natural gas prices."

Shares of XCO gained 53 cents yesterday to close at $15.74.