Scandinavian Oil-Gas Magazine

Quicksilver Resources reports preliminary operating results for year-end 2009, in which the company:

• Increased reserves 9% to a record 2.4 Tcfe; five-year compound annual growth rate of 20%;
• Increased average production 23% to a record 325 MMcfe per day; five-year compound annual growth rate of 22%;
• Increased proved developed reserves to 68% of total reserves;
• Replaced 377% of production with the drill bit; 590% excluding price Revisions; and
• Reduced Finding & Development costs of $1.27 per Mcfe on proved developed reserves; total F&D of $1.25 per Mcfe and $0.80 per Mcfe excluding price revisions.

Estimates of year-end 2009 proved reserves total approximately 2.4 trillion cubic feet of natural gas equivalents (Tcfe), an increase of 9% from year-end 2008. This growth was driven by a 15% increase in the company's Fort Worth Basin Barnett Shale reserves that totaled 2.1 Tcfe at year-end 2009.

Proved developed reserves increased to 68% of the total year-end 2009 reserves, up from 63% in the prior year. By product, reserves were comprised 75% from natural gas, 24% from natural gas liquids and 1% from crude oil.

Summary of 2009 reserves changes, in billion cubic feet of natural gas equivalents (Bcfe): Balance at December 31, 2008 - 2,208 Extensions, discoveries and performance revisions - 699 Price revisions - (252) Purchase of reserves - 0 Sale of reserves - (121) Production - (118) Balance at December 31, 2009 - 2,416

Preliminary 2009 average production increased 23% from the prior year to 325 million cubic feet of natural gas equivalents (MMcfe) per day, resulting in record total production of approximately 118 Bcfe for the year. Organic reserve additions of approximately 699 Bcfe represent nearly a six-fold replacement of production, before the impact of pricing revisions. Net of price revisions, the company replaced 377% of the year's record production.

"Once again, our entire team did an outstanding job this year - remaining focused on capital and operating costs, while growing our reserves and production, which created significant value for our shareholders," said Glenn Darden, Quicksilver president and chief executive officer. "We increased reserves 9%, even after taking into account the sale of a 27.5% interest in our Alliance property and the reduction to reserves associated with lower average natural gas pricing. We also increased the quality of our reserves and now 68% of the total is classified as proved developed. Most important, we self-funded this growth at a proved developed finding and development cost of just $1.27 per Mcfe, a metric likely to be among the lowest in the industry.

"Quicksilver is well prepared to build on these accomplishments in 2010 and beyond. We believe our undeveloped acreage in just the Fort Worth Basin still holds an additional 3 Tcfe of unbooked potential resources from more than 1,000 identified locations, which would more than double our existing reserves. In addition, we have not booked any undeveloped reserves associated with our 130,000-acre position in the Horn River Basin of British Columbia - an area that could contain more than 5 Tcfe of additional potential resources for the company."

Tags: Quicksilver Resources Inc.