Quicksilver Resources Inc. has unanimously approved a $270 million increase to the company's 2008 capital budget. The budget increase reflects increased drilling and completion activity primarily in the company's Fort Worth Basin Barnett Shale formation, increased expenditures on inventories of tubular goods and increased exploratory activities including leasehold acquisitions. In the Fort Worth Basin in northern Texas, the company now expects to drill an additional 35 wells, including approximately 20 wells associated with the recently acquired properties in Tarrant and Denton counties.

"The acquisition of 13,000 acres in the core of the Fort Worth Basin in August has provided additional opportunities for the company to rapidly grow our production base," said Glenn Darden, Quicksilver president and chief executive officer. "As a result, we have expanded our drilling program to accelerate the development of our estimated 5.5 trillion cubic feet of recoverable natural gas equivalent resources in the basin. We have also expanded our inventory of steel tubular goods after identifying a tightening in the market for these products that allows us to more effectively execute our drilling plan."

In addition, the board of directors of Quicksilver Gas Services LP has unanimously approved a $65 million increase to its 2008 capital budget. Quicksilver Gas Services also expects to acquire the Lake Arlington dry gathering system from Quicksilver Resources for approximately $40 million by the end of the year. Quicksilver Resources owns approximately 73% of Quicksilver Gas Services and fully consolidates their results for financial reporting purposes.

Quicksilver's total consolidated 2008 capital budget is now set at approximately $1.2 billion, which includes approximately $795 million for drilling and completions, approximately $245 million for gathering and processing facilities (including approximately $145 million associated with and funded by Quicksilver Gas Service LP), approximately $130 million for leaseholds and approximately $50 million for other property and equipment (including approximately $40 million of tubular goods inventory). On a project basis, approximately $1.0 billion is anticipated to be spent in the Fort Worth Basin, approximately $85 million for the Horseshoe Canyon coalbed methane development in Alberta, Canada, approximately $5 million combined in Wyoming and Montana and approximately $125 million on exploratory leasehold, seismic and drilling activities in the U.S. and Canada, including the Delaware Basin in west Texas and the Horn River Basin in British Columbia.

Quicksilver will begin initial drilling operations in the Horn River Basin during the upcoming winter drilling season. The company also expects to evaluate four to six additional wells in the Delaware Basin of west Texas.

Production volumes for 2008 are projected to average approximately 275 million cubic feet per day of natural gas equivalents (MMcfe), up more than 80% from the 2007 average of 151 MMcfe per day adjusted for the divestment of the company's Northeast operations in Michigan, Indiana and Kentucky effective November 1, 2007, which represented average production of approximately 75 MMcfe per day. Production volumes for 2009 are projected to average approximately 390 MMcfe per day, up more than 40% from the projected 2008 average. The increase in production is primarily associated with the ongoing drilling activities in the company's Fort Worth Basin program. Quicksilver has hedges covering approximately 75% and 65% of its projected natural gas production for the second half of 2008 and full-year 2009, respectively, with a weighted-average NYMEX floor price of approximately $8.60 per thousand cubic feet and participation in price increases above these levels.

Tags: Quicksilver Resources Inc.