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Quicksilver Deals Still In the Works

January 7, 2013
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Debt-tarnished Quicksilver Resources Inc. said Thursday it is still in talks to sell a nonoperated minority working interest in its Barnett Shale assets and is negotiating a potential joint venture (JV) in the Horn River Basin in northeast British Columbia. Investors have been awaiting deals on both fronts for some time.

"As previously announced, the company expected to close the Barnett and Horn River transactions by year-end 2012 [see NGI, Nov. 12, 2012]. Negotiations continue on both transactions and further updates will be provided in the first quarter of 2013," the Fort Worth-based producer said.

However, Quicksilver did close its previously announced acquisition and exploration agreement with Royal Dutch Shell plc unit SWEPI LP at the end of December (see NGI, Oct. 1, 2012). Quicksilver now owns a 50% interest in about 320,000 net acres in the Sand Wash Basin in northwest Colorado, which is to be jointly developed with SWEPI. The agreement also established an area of mutual interest covering more than 850,000 acres in the basin.

SWEPI paid Quicksilver an equalization payment for 50% of the acreage contributed by Quicksilver in excess of the acreage that SWEPI contributed. Further terms were not announced. The deal is "a step toward improving Quicksilver's liquidity position," said CEO Glenn Darden. "The proceeds from the closing of the agreement will be used to reduce the company's credit facility borrowings and to fund future project development."

In an operations update, Quicksilver said its Horn River Basin asset began ramping-up production in mid-December to 100 MMcf/d of raw natural gas, which is being sourced from nine wells. Four wells have been producing for more than 18 months, and five wells are being brought online in stages since the completion of a pad during the third quarter. Net sales volume after treating is expected to be about 80 MMcf/d at gross production of 100 MMcf/d.

In the Sand Wash Basin, Quicksilver completed its most recent vertical well with initial production of 400 boe/d, which was partially restricted due to surface facility limitations. The well averaged 210 boe/d (70% oil) for the first 30 days of production. With this well, the company has now found oil-productive Niobrara across a distance of 35 miles in an east-to-west band on its leasehold in Moffat and Routt counties in Colorado.

In West Texas Quicksilver recently completed a second well in its project in Upton County. The well was flowing back its load water from the 2,400-foot horizontal well bore, which targeted the Wolfcamp formation, but it has shown oil production while in flowback. The Price Ranch #1 well, Quicksilver's first short-lateral well drilled in Pecos County, has averaged 120 boe/d over its first 100 days of production from the Bone Spring formation.

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