Quicksilver Resources Inc. has agreed to buy assets in the Barnett Shale formation in northern Tarrant and southern Denton counties for $1.31 billion in cash and stock.
The Fort Worth-based natural gas and oil exploration and production company said it entered into agreements with various private parties, including Chief Resources LLC, Hillwood Oil & Gas LP and Collins and Young LLC, to acquire producing, leasehold, royalty and midstream assets.
Under the agreement, Quicksilver (NYSE: KWK) will pay $1 billion in cash and $307 million in stock. The company plans to fund the cash portion of the transaction through a combination of a $700 million 30-month loan, operating cash flow and its existing credit facility.
The deal is scheduled to close on Aug. 8, after a federal antitrust regulation waiting period and other customary closing conditions.
“Acquisition of these properties in the Fort Worth Basin enhances our production growth profile, expands our inventory of low-risk, high-return development projects, maintains a low full-cycle cost structure, and is expected to be immediately accretive to earnings and cash flow per share,” said Glenn Darden, Quicksilver president and chief executive officer, in a statement.
The properties have net production of about 45 million cubic feet per day. Quicksilver said it estimates these properties contain more than one trillion cubic feet of recoverable natural gas resources net to the company including 350 billion cubic feet of proved reserves, of which about 40 percent are proved developed, and more than 650 billion cubic feet of additional resource potential on 13,000 net acres.
Quicksilver said the assets would boost its total average daily production volumes for 2008 to 275 million cubic feet of natural gas equivalents per day, an 8 percent increase from prior estimates, reflecting just five months of production volumes from the acquired properties.
The company’s total daily production volumes are projected to increase 40 percent in 2009 and 30 percent in 2010, resulting in a three-year compound annual growth rate of 50 percent, after adjusting for the November 2007 divestment of Quicksilver’s operations in Michigan, Indiana and Kentucky.
Web site: http://www.qrinc.com/