Quicksilver Resources announces closing of Sand Wash Basin acquisition and exploration agreement
- Quicksilver now owns a 50% interest in approximately 320,000 net acres in the Sand Wash Basin in Northwest Colorado, which will be jointly developed with SWEPI.
- Quicksilver is engaged in confidential negotiations with a potential buyer to sell a non-operated minority working interest in its Barnett Shale Asset in North Texas.
Quicksilver Resources Inc. (NYSE:KWK) announced it closed the previously-announced Acquisition and Exploration Agreement with SWEPI LP, a subsidiary of Royal Dutch Shell plc, on December 28, 2012. Quicksilver now owns a 50% interest in approximately 320,000 net acres in the Sand Wash Basin in Northwest Colorado, which will be jointly developed with SWEPI. The Agreement also established an Area of Mutual Interest covering in excess of 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 of the transaction were not announced.
"We are pleased to have SWEPI as a partner in this important oil project. It is also a step toward improving Quicksilver's liquidity position," said Glenn Darden, Quicksilver's President and CEO. "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."
The company also provided an update on additional transaction efforts, as well as an update on Horn River volumes and recently-completed wells in the Sand Wash Basin and in the Midland Basin in West Texas.
Quicksilver is engaged in confidential negotiations with a potential buyer to sell a non-operated minority working interest in its Barnett Shale Asset in North Texas.
The company continues to negotiate a potential joint venture in the Horn River Basin in Northeast British Columbia, with the downstream marketing of the gas a top priority. The company plans minimal capital spending in the basin until this joint venture is executed.
As previously announced, the company expected to close the Barnett and Horn River transactions by year end 2012. Negotiations continue on both transactions and further updates will be provided in the first quarter of 2013.
Horn River Basin
The company's Horn River Basin Asset began ramping-up production in mid-December 2012 to 100 million cubic feet per day (MMcfd) of raw natural gas, which is being sourced from nine wells. Four wells have been producing for over 18 months, and five wells are being brought online in stages since the d-50 pad was completed in the third quarter of 2012. Net sales volume after treating is expected to be approximately 80 MMcfd at gross production of 100 MMcfd.
Sand Wash Basin
In the Sand Wash Basin, Quicksilver completed its most recent vertical well with initial production of 400 barrels of oil equivalent per day (Boed), which was partially restricted due to surface facility limitations. The well averaged 210 Boed - of which 70% is 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.
Quicksilver recently completed a second well in its West Texas Project in Upton County. The well is currently flowing back its load water from the 2,400-foot horizontal well bore which targeted the Wolfcamp formation, but 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 Boed over its first 100 days of production from the Bone Springs formation.
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