S&P affirms EXCO Resources

Standard & Poor's said it affirmed its B corporate credit and B- senior unsecured debt ratings on EXCO Resources Inc.

The agency noted that the affirmation follows the company's announcement that it will be acquiring 400 billion cubic feet equivalent of proved oil and gas reserves and certain pipeline assets from Progress Energy Inc. (BBB/positive/A-2) for $1.2 billion.

The all-cash transaction will be initially funded through debt issued at a newly created, wholly owned unrestricted subsidiary, S&P said, noting that this financing structure shares similar characteristics to EXCO's 2005 acquisition of properties from Oneok Inc. (BBB/stable/A-2).

The ratings affirmation incorporates the agency's expectation that rising near-term cash flows, an extensive hedging program and liquidity are mitigants to a significantly weakened consolidated financial profile post-funding the acquisition.

The outlook is stable.

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