Quicksilver Resources Inc. (KWK) announced its 2010 capital expenditure (capex) plans of $540 million and expected 20% increase in 2010 production volumes. Quicksilver Resources also said it has agreed to sell its midstream gathering and treating assets associated with the Alliance project, in the northern portion of the Fort Worth Basin, to its subsidiary Quicksilver Gas Services L.P. (KGS) for about $87.1 million. Quicksilver Resources, which owns 73% of Quicksilver Gas, said the transaction is expected to close by Jan 4, 2010.
 
The capex program includes $390 million for drilling and completion activities, $92 million for gathering and processing facilities (including $80 million to be funded by Quicksilver Gas Services LP), $53 million for leasehold and $5 million for other property and equipment. On a geographic basis, the company expects to spend $465 million in Texas, $52 million in Canada and $23 million combined in other areas in the United States.
 
The program is expected to fund Quicksilver Resources’ ongoing evaluation of its high-potential exploratory acreage positions in the Horn River and Greater Green River basins. It has slated about $58 million of the capex for exploratory drilling, completion and infrastructure in the Horn River Basin of British Columbia and the Greater Green River Basin in northern Colorado. In the Fort Worth Basin, the company expects to drill and complete 100 wells with five rigs operating throughout the year. Additionally, the company expects to complete 30 wells from its inventory of drilled but uncompleted wells in the Fort Worth Basin.
 
Quicksilver Resources guided 2010 production volumes to rise more than 20%, averaging about 390 − 400 million cubic feet of gas equivalent per day. Average daily production volumes for 2010 are expected to consist of 80% natural gas and 20% natural gas liquids and crude oil.
 
Quicksilver Gas also announced a capex budget of $80 million for 2010, including approximately $44 million associated with the Alliance assets to be acquired. The capex budget includes $50 million for the construction of pipelines, gathering systems and well connections and $30 million associated with its natural gas processing and treating facilities. Separately, Quicksilver Gas said it intends to offer 4 million common units and will use the proceeds to repay debt.
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