Quicksilver Resources Inc. (KWK) came out with its preliminary operating results as of December 31, 2010. The company’s proved reserves for 2010 increased more than 20% to a record of over 2.9 trillion cubic feet of natural gas equivalent (Tcfe).
Quicksilver attributes majority of the 2010 reserve growth to the increase in its Fort Worth Basin Barnett Shale reserves that grew over 2.6 Tcfe at year-end 2010, recording a 22% growth in 2010. These reserves represent about 90% of the company’s total reserves.
Quicksilver’s year-end reserves also had about 16 billion cubic feet of natural gas equivalents (Bcfe) of reserves from the four wells on its 130,000 net acres in the Horn River Basin of Northeast British Columbia.
Going forward, the company expects more than 12 Tcfe of additional resource potential from the development of its remaining acreage in the Fort Worth and Horn River basins. Moreover, the company has crude oil drilling prospects in the Niobrara and the Bakken formations.
In Niobrara, the company has assembled 150,000 net acres in the Greater Green River Basin in northern Colorado and southern Wyoming. In the Bakken, it has 175,000 net acres in the Southern Alberta Basin in western Montana.
Of Quicksilver’s total 2010 reserves about 68% were categorized as proved developed. The company’s year-end reserves are made up of 76% natural gas, 23% natural gas liquids and 1% crude oil. On the geographic front, the company’s reserves for the year were spread 91% in the U.S., mainly in the Fort Worth Basin of North Texas, and 9% in Canada.
Quicksilver said its preliminary average production in 2010 was up 9% year over year to roughly 355 million cubic feet of natural gas equivalents per day (MMcfe/d), totaling a record production of 130 Bcfe. In 2010, the company’s organic reserve additions were 469 Bcfe, representing a replacement of 362% of production.
During 2010, the company replaced total production of nearly 475% at an all-in finding, development and acquisition (FD&A) cost of $1.29 per thousand cubic feet of natural gas equivalents (Mcfe). The company’s preliminary FD&A cost for the estimated proved developed reserves alone were at $1.80 per Mcfe. The company’s estimated drill-bit development cost for the year averaged $0.94 per Mcfe.
Quicksilver expects to release fourth-quarter and full-year 2010 results on Monday, February 28, 2011. The Zacks Consensus earnings estimate for the fourth quarter and full-year are 15 cents and 68 cents, respectively.
Quicksilver Resources currently has a Zacks #3 Rank (short-term Hold rating), in line with the company’s closest peers Chesapeake Energy Corporation (CHK) and Denbury Resources Inc. (DNR).
CHESAPEAKE ENGY (CHK): Free Stock Analysis Report
DENBURY RES INC (DNR): Free Stock Analysis Report
QUICKSILVER RES (KWK): Free Stock Analysis Report
Zacks Investment Research
