Quicksilver to Shell Out $540MM for 2010 Capital Program
Quicksilver Resources has announced a $540 million capital program for 2010, which includes approximately $390 million for drilling and completion activities, $92 million for gathering and processing facilities (including approximately $80 million to be funded by Quicksilver Gas Services LP), $53 million for leasehold and $5 million for other property and equipment. On a geographic basis, approximately $465 million is anticipated to be spent in Texas, $52 million in Canada and $23 million combined in other areas in the United States.
"Quicksilver's 2010 capital program is expected to drive an increase of more than 20% in our average daily production volumes and will fund the ongoing evaluation of our high-potential exploratory acreage positions in the Horn River and Greater Green River basins," said Glenn Darden, Quicksilver president and chief executive officer. "Our attractive hedge position underpins our capital program and enables the company to continue to operate within our total cash inflows. In addition, proceeds from the drop down of the Alliance midstream assets to Quicksilver Gas Services will further reduce Quicksilver's outstanding debt."
In the Fort Worth Basin, the company expects to operate five rigs throughout the year resulting in the drilling and completion of approximately 100 wells. The company also anticipates completing at least 30 additional wells from its inventory of drilled but uncompleted wells in the Fort Worth Basin.
Total capital expenditures include approximately $58 million for exploratory drilling, completion and infrastructure, primarily associated with the company's extensive leasehold in the Horn River Basin of British Columbia and the Greater Green River Basin in northern Colorado.
Production volumes for 2010 are projected to average in the range of 390 million to 400 million cubic feet of natural gas equivalents per day, up more than 20% from the projected 2009 average. Average daily production volumes for 2010 are expected to consist of approximately 80% natural gas and 20% natural gas liquids and crude oil.
Quicksilver also announced today that it has entered into a purchase and sale agreement with Quicksilver Gas Services LP (NYSE:KGS - News) to sell the midstream gathering and treating assets associated with the Alliance project, located in the northern portion of the Fort Worth Basin, for approximately $87.1 million. The assets consist of gathering systems and related compression facilities with an aggregate current capacity of 115 million cubic feet per day (MMcfd), and a plant with amine treating capacity of 180 MMcfd and dehydration treating capacity of 200 MMcfd to the gathered gas. The acquisition is expected to close on or about January 4, 2010, subject to customary closing conditions. Quicksilver Resources owns approximately 73% of Quicksilver Gas Services.
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