Shares of Fort Worth, TX-based Quicksilver Resources Inc. soared Monday on news that an investor group is seeking to take the natural gas and oil exploration and production company private.
Quicksilver shares closed up about 16% Monday after the company said it received a letter from an investor group that includes Quicksilver CEO Glenn Darden, Chairman Thomas Darden and the Darden family-controlled Quicksilver Energy LP.
"Quicksilver Energy LP and members of the Darden family (the 'Darden Family Interests') are formally expressing an interest in exploring strategic alternatives for Quicksilver Resources Inc...which could include, among other things, a possible take-private transaction of the company by the Darden Family Interests," the letter said. "In addition, we have all been made aware that another significant stockholder, SPO Partners & Co. (SPO) has expressed an interest in receiving nonpublic information and engaging in discussions with us regarding strategic alternatives for the company.
"While we are not in a position to provide the board of directors with our valuation of the company at this time, and there can be no assurance that a take private proposal by us will be forthcoming, we are fully aware and would expect that any such proposal made by us would involve a substantial premium to the current market price."
The company is focused on unconventional natural gas reserves, including coalbed methane, shale gas and tight sands gas in North America.
Quicksilver's primary growth area is the Barnett Shale formation in the Fort Worth Basin in North Texas. Proved reserves there have grown from 2 Bcfe at year-end 2003 to 2.1 Tcfe as of year-end 2009, according to the company. "We currently have approximately 163,000 net acres in our core development area of this play, and reported average production of approximately 279 MMcfe/d during the second quarter of 2010," Quicksilver said. "In the Fort Worth Basin, we have three rigs operating and expect to drill approximately 100 gross wells and complete approximately 125 gross wells during 2010."
The company is also active in the Horn River Basin in northeast British Columbia as well as emerging plays in the Greater Green River Basin of northern Colorado and southern Wyoming, and the southern Alberta Bakken Basin in northwest Montana.
Earlier this year Quicksilver had been seen as a possible acquisition target and was rumored to be in discussions with India's Reliance Industries Ltd. (see Daily GPI, July 20). Also this summer, Quicksilver agreed to sell all of its interests in midstream unit Quicksilver Gas Services to Crestwood Midstream Partners II LLC, a portfolio company of First Reserve Corp., for $701 million in cash plus up to $72 million in additional earn-out payments (see Daily GPI, July 26).
The Quicksilver board has established a committee of independent directors to consider any take-private proposals and alternatives.