Quicksilver Resources Inc. has acquired 19 licenses covering approximately 127,000 net contiguous acres in the Horn River Basin in northeast British Columbia. The company has identified more than 500 feet of gross thickness from the Upper Devonian Muskwa and Klua shale formations at depths ranging from 7,800 to 9,000 feet on the licenses.
"Our new ventures team in Canada has done an excellent job of applying the company's extensive knowledge of unconventional gas reservoirs to identify and acquire these licenses in one of the most exciting emerging basins in North America," said Glenn Darden, Quicksilver president and chief executive officer. "The Muskwa and Klua shales have the right characteristics which we believe can provide a significant resource opportunity for Quicksilver."
Quicksilver acquired the licenses during Crown lease sales held in November 2007 and March 2008 at a total average cost of approximately C$655 per acre. The company plans to drill up to four wells on this acreage during the upcoming 2008-2009 winter drilling season.
Quicksilver's first-quarter 2008 production volumes are now expected to average approximately 211 MMcfe per day. Increased expected revenues, due to higher commodity prices for natural gas and related natural gas liquids, are expected to be partially offset by increased price-related operating costs. As a result, unit operating costs for the first quarter of 2008 for production, gathering and processing and transportation are now projected in the range of $1.80 to $1.90 per Mcfe.
In Quicksilver's first-quarter 2008 earnings, the company will include approximately $6.2 million of pre-tax earnings from an equity affiliate. The earnings are attributable to the company's approximate 32% ownership in BreitBurn Energy Partners L.P.'s (BBEP) fourth-quarter 2007 results from the date of acquisition of the BBEP units on November 1, 2007. Quicksilver received approximately $9.7 million of cash distributions from the BBEP units during the first quarter of 2008.
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