(COMTEX) B: Quicksilver Resources' Estimated Reserves Grow 42% to 2.2 Tcfe
in 2008 ( Market Wire )
B: Quicksilver Resources' Estimated Reserves Grow 42% to 2.2 Tcfe in 2008 ( Mark
et Wire )
FORT WORTH, TX, Jan 28, 2009 (MARKET WIRE via COMTEX) --
Quicksilver Resources Inc. (NYSE: KWK) announced today preliminary
operating results for year-end 2008 including:
-- 2.2 Tcfe of proved reserves - an increase of 42% from year-end 2007
-- 474% organic production replacement; 785% total production replacement
-- Record average production of 263 MMcfe per day
-- $2.14 per Mcfe Finding & Development cost; three-year average of
$1.45/Mcfe
-- $2.50 per Mcfe Finding, Development & Acquisition costs; three-year
average of $1.71/Mcfe
"Quicksilver had another outstanding year of production and reserve
growth at very attractive finding and development costs," said Glenn
Darden, Quicksilver president and chief executive officer. "Our low
cost structure coupled with our strong hedge position is serving us
well during these uncertain economic times. We are confident that
our operating team will realize additional efficiencies to maximize
our margins in 2009."
Estimated Year-end 2008 Proved Reserves
Preliminary estimates of year-end 2008 proved reserves total
approximately 2.2 trillion cubic feet of natural gas equivalents
(Tcfe), an increase of approximately 42% from year-end 2007. By
product, 2008 reserves were comprised: 74% from natural gas, 25% from
natural gas liquids and 1% from crude oil. Approximately 63% of the
reserves are classified as proved developed. Reserves in the Fort
Worth Basin Barnett Shale totaled approximately 1.9 Tcfe at year-end
2008, an increase of approximately 58% from the prior year and
reserves in Canada were approximately 333 billion cubic feet of
natural gas equivalents (Bcfe).
Preliminary 2008 production totaled a record 96.2 Bcfe or 263 million
cubic feet of natural gas equivalents (MMcfe) per day. Preliminary
net reserve additions of approximately 755 Bcfe consisted of
approximately 456 Bcfe from organic drilling activities and 299
billion cubic feet (Bcf) of acquired reserves, resulting in organic
production replacement of 474% and total production replacement of
785%. Additions to reserves from organic drilling activities were
impacted by approximately 154 Bcfe in negative revisions of prior
estimates, primarily due to lower prevailing prices for natural gas
liquids at year-end 2008 versus 2007. Excluding these revisions the
company would have organically replaced 634% of its production in
2008.
Total all-in finding and development cost (F&D) for 2008 is estimated
at $2.14 per thousand cubic feet of natural gas equivalent (Mcfe)
which would result in a three-year average of $1.45 per Mcfe.
Finding, development and acquisition cost (FD&A) is estimated at
$2.50 per Mcfe for 2008 resulting in a three-year average of $1.71
per Mcfe. Absent the negative reserve revisions due to pricing, the
2008 estimated all-in F&D and FD&A costs would have been $1.60 per
Mcfe and $2.07 per Mcfe, respectively. The all-in F&D and FD&A costs
will be finalized upon filing of the company's annual report on Form
10-K. Reconciliations of the "Preliminary 2008 F&D and FD&A Costs"
are available on the company's website -- www.qrinc.com. For a
description of the calculation of, and certain other information
regarding, F&D and FD&A costs, please see the discussion below under
the heading "F&D and FD&A Costs."
2008 Year-end Debt, Liquidity and Debt Covenants
Quicksilver's senior secured revolving credit facility has a
borrowing base of $1.2 billion, of which approximately $828 million
was drawn and $3 million in letters of credit was secured at December
31, 2008, resulting in current liquidity of approximately $369
million. The company's borrowing base is subject to redetermination
during the second quarter of 2009 based upon the final year-end 2008
reserves and includes credit for the company's hedge positions.
Based on preliminary results for 2008 and year-end reserves, the
company remains in compliance with all of its debt covenants.
2008 Impairments
Quicksilver utilizes the full cost method of accounting for its oil
and natural gas properties. Based upon commodity prices in effect as
of December 31, 2008, the company expects to record a pre-tax, noncash
impairment charge of approximately $635 million ($412 million after
tax) against its U.S. oil and gas properties. Additionally, the
company expects to record a pre-tax, noncash impairment charge of
approximately $320 million ($208 million after tax) associated with
its investment in BreitBurn Energy Partners.
Hedging Summary
For 2009 and 2010, the company has hedged approximately 75% and 65%,
respectively, of its anticipated natural gas production at a NYMEX
weighted average floor price of approximately $8.60 per million
British thermal unit (MMbtu) in both years. For 2009, the company
has basis hedges covering approximately 95% of its expected Canadian
natural gas production at $0.84 per MMbtu. In addition, Quicksilver
holds firm transportation to Henry Hub for 100 MMcf per day at
approximately $0.52 per Mcf and 260 MMcf per day priced at the
Houston Ship Channel at approximately $0.35 per Mcf, including fuel,
for production from the Fort Worth Basin. The company also holds 50
MMcf per day of firm transportation on the Mid Continent Express
pipeline, which is scheduled to be completed in the third quarter of
2009. This pipeline will take gas from the Fort Worth Basin to Transco
Station 85 in Alabama. The company has used a combination of
fixed-price swaps and collars in its hedging program to underpin its
$600 million capital budget for 2009.
A summary of these hedging contracts is available on the company's
website at
www.qrinc.com/corporate/investor_relations/financials/Outstanding-web%20as%20of%
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