Fort Worth-based Quicksilver Resources Inc. has purchased natural gas-producing properties in the Barnett Shale from a group of owners including Chief Resources LLC, Hillwood Oil & Gas LP and Collins and Young LLC for $1.3 billion.
The transaction represents an acceleration of production for Quicksilver in the Barnett Shale, one of the natural gas industry’s largest domestic fields, and fits in with Chief’s shift of focus to outside Texas.
Quicksilver said the deal could boost its output as much as 40 percent.
The Tarrant County and Denton County properties produce about 45 million cubic feet of natural gas a day, and Quicksilver estimates the properties contain more than 1 trillion cubic feet of recoverable natural gas.
Quicksilver acquired the properties for $1 billion in cash and $307 million in shares. The company said it plans to finance the cash offering partially by a $700 million 30-month second-line term loan.
Credit ratings service Standard & Poor’s downgraded Quicksilver’s outlook after the announcement of the deal to stable from positive, citing the large increase in debt following the acquisition. The rating agency affirmed Quicksilver’s debt rating at BB-.
Houston-based Tudor, Pickering, Holt & Co. LLC vice president Stacy Nieuwoudt said she saw the transaction as favorable for Quicksilver.
“We’re always fans of companies that buy assets and hedge them in the commodity market and have an accelerated drilling strategy,” Ms. Nieuwoudt said.
Quicksilver stock slipped 2 percent to a closing price of $34.84 after the announcement.
Chief and Hillwood entered into a partnership to develop the land in 2003. The 29 million-square-foot residential and commercial development includes 6,800 single-family homes, 200 businesses and the Alliance Airport.
Hillwood also owns the Circle T Ranch east of U.S. Highway 377 and Hunter Ranch south of Denton. The company plans to begin drilling the sites soon, said Hillwood International Energy president Trem Smith.
In 2006, Chief sold most of its Barnett Shale production assets to Oklahoma City-based Devon Energy for $2.15 billion. Its primary focus has shifted to sites in Pennsylvania and Montana.
Spokeswoman Kristi Gittins said Chief plans to drill at another Barnett Shale site near Northlake.