Quicksilver Resources Inc. said that its Barnett Shale subsidiary, Quicksilver Production Partners LP (QPP), has registered for an initial public offering (IPO) with the U.S. Securities and Exchange Commission (SEC).

The Fort Worth, TX-based company said that in addition to the IPO, it would contribute some of its Barnett Shale assets and relative derivatives to QPP. The subsidiary would then use the net proceeds from the IPO, plus borrowings under a new bank credit facility, as consideration for the contribution by the company. Proceeds generated by the IPO would retire some of Quicksilver’s debts.

Quicksilver formed QPP last October to raise more than $400 million to retire some debt (see Shale Daily, Oct. 21, 2011). At the time, Quicksilver reported about $940 million of public debt — about half of its total public debt — was callable to the end of 2012, which it calculated could be eliminated within two years. Company executives had said they hoped to pay off the remainder of the public debt in “the next few years.”

JP Morgan and Credit Suisse are underwriting the IPO. Shares of Quicksilver closed at $5.22/share on the New York Stock Exchange on Friday, a loss of 14 cents (2.61%). The stock was trading at $15.98/share in February 2011.

Quicksilver reported proved reserves of 2.6 Tcfe (74% natural gas, 26% natural gas liquids and oil) in the Fort Worth Basin at the end of 2010. Drilling in the Barnett has seen a significant decline over the last year as dry gas prices lag and the play matures. According to NGI‘s Shale Daily Unconventional Rig Count for the week ending Feb. 10, only 51 rigs were active in the Barnett, which is down two rigs, or 4%, from the previous week, and down 25 rigs, or 33%, from one year ago, when 76 rigs were in operation.

Despite the recent weakness in gas prices and the slowdown in drilling, gas output from the Barnett continues to grow, albeit at a more muted pace. Total 2011 estimated gas production was 5.53 Bcf/d through October, up from 5.16 Bcf/d in 2010, and 5.0 Bcf/d in 2009. That translates to a 4% compound annualized growth rate (CAGR) for 2010 and 2011, versus a 30% CAGR between 2003 and 2009.

Part of the growth in Barnett gas production is the result of increased drilling in the oilier “Barnett Combo” play in Montague and Cooke counties. That has helped push the percentage of casinghead gas to total produced natural gas in the Barnett from 1.5% in 2008 to 2.6% through the first 10 months of 2011.