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Fort Worth, TX-based Quicksilver Resources Inc. announced that it finished 2005 with proved reserves of 1.1 Tcfe, an increase of 146 Bcfe over 2004 year-end reserves. The company also announced a 2006 capital expenditure budget of $566 million, which includes $359 million for drilling, $160 million for gathering and processing facilities and $47 million for leasehold acquisitions.
Of the year-end 2005 proved reserves, the company reported that 77% were classified as "proved developed" and natural gas comprised 97% of the total reserves, including natural gas liquids. The reserve replacement rate for all sources was 384%.
Total 2005 reserves for the Barnett Shale in the Fort Worth Basin reached 135 Bcf of natural gas and eight million barrels of natural gas liquids or a total of 183 Bcfe, which is an increase of 399% over 2004 reserves of 37 Bcfe. As a percentage of the company's total proved reserves, the Barnett Shale represents 16% versus 4% in 2004. For Canada, year-end 2005 reserves were 305 Bcf, which is an increase of 17% over 2004 reserves of 261 Bcf.
"Quicksilver Resources is very well positioned with infrastructure, drilling rigs, and equipment to build our production, reserves, and cash flow in 2006," said CEO Glenn Darden. "We will have both the Fort Worth Basin Barnett Shale and Canadian coal bed projects in full development for the next several years, and we look forward to testing our exciting West Texas shale project."
For 2006, the company expects to grow production volumes greater than 20% over 2005 volumes. The majority of the capital budget will focus on growth in the Barnett Shale and Canadian CBM production.
The budget for drilling in Texas in 2006 is $300 million, the majority of which will be allocated to the Barnett Shale located in the Fort Worth Basin. In this basin, the company said it plans to drill 85 net wells. Facilities capital in Texas is budgeted at $100 million and includes an expansion of the company's existing cryogenic plant as well as increases in the gathering infrastructure. Quicksilver said the additional plant capacity is anticipated to increase the company's ability to process gas from 75 MMcf/d to 200 MMcf/d. Gross wellhead production in this project is expected to reach capacity of the first plant before the end of 2006.
Updating the company's operations in the Barnett Shale play, Quicksilver Resources drilled 34 gross operated wells in 2005 and five wells thus far in 2006 for a total of 48 gross operated wells since inception. Thirty-six wells have been completed and are tied into sales. Current net production is 24 MMcfe/d, and the company's net land position is 260,000 acres. Five drilling rigs are currently running, and a sixth drilling rig is expected to arrive in March 2006. The company said rig count is expected to continue increasing gradually with a goal of having 10 rigs operating by the end of 2006. Its Cowtown natural gas cryogenic plant is currently in "start-up" phase and will be fully operational within the first quarter of 2006.
Quicksilver's Canadian team hit a new company record by bringing 102 wells on production in the month of December 2005. For the year 2005, the company drilled a total of 480 gross wells (278 net) with 117 gross wells (75 net) drilled but waiting to be tied into sales. The 2005 exit rate for Canada was 50 MMcfe/d as compared to production of 38 MMcfe/d at the beginning of 2005.
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