* Deal for $20.50/shr, a 38 pct premium
* Boone Pickens backs deal
* Stakeholders Oaktree Capital, Ares Management back deal
* Co forms special committee to evaluate offer
* CEO Miller had earlier taken co pvt in 2003 (Recasts lead, adds details, graphic, comments from Pickens' spokesman, analysts; updates share)
BANGALORE, Nov 1 (Reuters) - EXCO Resources' (XCO.N) CEO Douglas Miller has teamed up with investors, including oilman T. Boone Pickens, to bid for the gas-focused explorer for about $4.36 billion, betting on a recovery in natural gas prices.
Gas prices NGc1 -- down over 20 percent year to date -- slumped to a 13-month low last week, but interest has been rising in underground shale formations that could hold enough natural gas to sate U.S. demand for a decade.
The sector has lured a slew of investments by energy firms including from China and India and prices for natural gas are expected to rise more than 20 percent by 2011. [ID:nNYL002050]
CEO Miller, who currently has a 2.15 percent stake in the company, offered to buy the remaining shares at $20.50 apiece -- a premium of 38 percent to the company's Friday close. Miller had taken EXCO private for $18 per share in 2003. The company went public in 2006.
Oilman and natural gas proponent Pickens, the company's largest stakeholder Oaktree Capital Management LP, and Ares Management LLC, have all expressed an interest in pursuing the deal, Miller said in a letter to the company.
"Boone is limited in what he can say at this time," Pickens' spokesman Jay Rosser said in a statement. "He has agreed to participate with Doug Miller in an offer to acquire EXCO. There will be more details at a later date."
Pickens has a 5 percent stake in the company. Oaktree Capital has a 16.4 percent stake, while Ares Management holds a 6.06 percent stake in the company, according to Thomson Reuters data.
At least five of EXCO's 10 directors, including Miller and Pickens, are connected to Monday's bid.
Miller's financial advisers for the deal are J.P. Morgan Securities LLC and Goldman Sachs & Co.
In his letter, Miller said following the deal he would continue as CEO and the senior management team would likely remain in place.
Miller also said he would reinvest a "significant" portion of his equity ownership as part of the deal, with the remaining funds coming from senior management, outside investment partners and third-party debt financing.
The company, which derives almost all of its revenue from natural gas, intends to form a special committee to consider the proposal, it said.
EXCO/gas prices graphic: r.reuters.com/wam33q
Graphic on EXCO milestones: r.reuters.com/tym33q
Factbox on key shale deals since 2009 [ID:nLDE64A1DY]
Price poll graphic: r.reuters.com/pus52q
Shares of the Dallas, Texas-based EXCO touched an intra-day high of $20.36 on the New York Stock Exchange, 14 cents below the offer price.
Monday's news also lifted shares in EXCO's peers, including Southwestern Energy, Range Resources (RRC.N), Petrohawk Energy (HK.N) and Ultra Petroleum (UPL.N). The Dow Jones U.S. Oil and Gas Index .DJUSEN was up 1 percent.
Analysts, however, were divided on whether the price was justified in a weak gas price environment.
"I think it is an aggressive premium that they are paying here," RBC Capital Markets analyst Leo Mariani said.
"Obviously they think we are close to a bottom in natural gas prices, as well as EXCO stock, and clearly believe that now is the time to buy," he said.
EXCO, which also owns interest in a midstream operation, has its main oil and gas assets in East Texas, North Louisiana, Appalachia and the Permian basin.
Ray Deacon from Pritchard Capital put the company's net asset value at $29 a share, and said Miller might have to hike the bid.
"I think they will have to boost the price they pay by 5-10 percent to get the deal done."
BIG BETS ON GAS
Pickens has long advocated for natural gas-fueled vehicles and has publicly declared himself a proponent of domestically produced natural gas.
In August, his firm, Dallas-based BP Capital said it had acquired 599,788 shares of Quicksilver Resources Inc KWK.N, which also recently got a buyout offer from an investor group including its chairman and chief executive.[ID:nSGE69H0IS]
When Exxon Mobil Corp (XOM.N) agreed to buy shale gas producer XTO Energy Inc for $30 billion in stock last December, it rekindled interest in a sector that is expected to quadruple its U.S. output over the next 15 years.
EXCO itself has been involved in a string of deals. Last year, it agreed to sell more than $1.1 billion of assets in a drive to divest non-core assets.
EXCO then began revamping its portfolio of assets and its exposure to the gas-rich Haynesville shale by buying Common Resources LLC in partnership with British gas producer BG Group (BG.L).
The company also bought some shale property from Southwestern Energy (SWN.N) -- in which Boone Pickens' BP Capital has a stake -- for about $355 million. [ID:nSGE65F0JB]
However, the divestitures and joint venture hurt the company's second-quarter results. [ID:nSGE6710M3] The company is scheduled to report third-quarter results on Tuesday. (Additional reporting by Vaishnavi Bala and Savio D'Souza in BANGALORE and Mike Erman in New York; Editing by Aradhana Aravindan, Jarshad Kakkrakandy)