S&P affirms EXCO Resources

Standard & Poor's said it affirmed EXCO Resources Inc.'s corporate credit rating at B, affirmed its $450 million senior notes at B-, assigned a recovery rating of 5 to the notes and removed the ratings from CreditWatch with negative implications.

The outlook is stable.

The agency said the affirmation reflects its view that a substantially transformed asset base, aggressively hedged production and a favorable 2008 production outlook should support stable performance at the current ratings level over the near-to-intermediate term, despite persistently high debt levels.

The ratings continue to reflect a highly leveraged financial risk profile, a historically acquisitive growth strategy and a fast-paced and transaction-oriented management team, S&P said.

Weaknesses are partially tempered by a large and well-diversified base of onshore reserves, a substantial hedging program to help smooth exposure to potential volatility in near-term commodity prices and a fairly low-risk, largely development-geared drilling program, the agency added.

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