UPDATE: KeyBanc Capital Markets Downgrades EXCO Resources to Hold, Reiterates $10 PT

In a report published Wednesday, KeyBanc Capital Markets downgraded its rating on EXCO Resources (NYSE: XCO) from Buy to Hold, and reiterated its $10.00 price target.

KeyBanc Capital Markets noted, “With the Company's MLP of its Conventional assets expected to close in January, XCO's last remaining monetization of size we expect in the near term is the Company's TGGT midstream asset, which it owns in a 50/50 JV with BG Group. While the asset is now being marketed for sale, the delay likely cost TGGT the ability to sell at the premium valuations midstream assets were commanding earlier in 2012. Further, we think TGGT's location in the Haynesville will impact valuation, as production volumes are expected to continue to decline with uncompetitive drilling economics relative to oil plays at current natural gas prices. Thus, we are now much more conservative in our expectations for the net proceeds the Company will ultimately recover.”

EXCO Resources closed on Tuesday at $7.00.

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