Recently, Quicksilver Gas Services L.P. (KGS) bought the Alliance midstream gathering and treating assets from Quicksilver Resources Inc. (KWK) for a total purchase price of approximately $95 million. The purchase was funded through draws on the company’s senior secured revolving credit facility.
The acquired Alliance assets consist of gathering systems and compression facilities with a total capacity of 115 million cubic feet per day (MMcfd) and a plant with amine treating capacity of 180 MMcfd and dehydration treating capacity of 200 MMcfd to the gathered gas. The acquired assets complement the partnership’s existing operations in the Fort Worth Basin and provide opportunities for even stronger organic growth in the future.
Quicksilver Gas expects gather and process greater volumes of natural gas in 2010, from expected 2009 levels, due to the Alliance acquisition. It expects to double gas gathering volumes in 2010 to 500 MMcfd, while processing volumes are expected to increase more than 10% producing in excess of 170 MMcfd.
Separately, the underwriters of the company’s recent 4 million units offering exercised their option to purchase an additional 549,200 units representing limited partner interests. The company plans to use the net proceeds from the sale to repay outstanding borrowings under the company’s credit facility. Following the sale of additional units, the company has approximately $210 million drawn on its credit facility, down from $320 million previously.
Quicksilver Gas Services L.P. is a midstream master limited partnership engaged in the business of gathering and processing natural gas produced from the Barnett Shale formation in the Fort Worth Basin in north Texas. Headquartered in Fort Worth, the company’s predecessors began operations in 2004 to provide midstream services primarily to Quicksilver Resources Inc. Quicksilver Resources owns approximately 73% of Quicksilver Gas Services.
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