EXCO Resources (NYSE:XCO) reported results recently and the market breathed a collective sigh of relief with the shares rallying back to the $5 level which has been a point of mean reversion. While the tone of the conference call was optimistic, we believe significant challenges remain for the company. In particular, cash flow stress shows no sign of abatement with 2015 looking to be a peak in the need for additional capital. In addition, muted expectations regarding their recently acquired Eagle Ford acreage, both in terms of IP rates and the need for artificial lifts, raises questions on the ultimate return on equity for that play. Given that leverage and other metrics remain elevated, we see no alternative...
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