“Quicksilver Resources is considering seeking a partner for its Horn River Basin (HRB) acreage in northeastern British Columbia”, said Glenn Darden, President and CEO of Quicksilver, during the Q1-2011 conference call.
Source: Quicksilver May 2011- Investor Presentation
Quicksilver’s work program in HRB
Quicksilver completed its 2010/2011 winter drilling program in the Horn River Basin and has now drilled a total of eight horizontal wells into the Muskwa and Klua formations, of which four wells have commenced production (11.1 MMcfe/d for Q1, 2011). Only two additional wells are required to validate all of Quicksilver’s exploratory licenses and convert these licenses, covering approximately 130,000 net acres, into 10-year development leases. In addition, the company has drilled its first horizontal well into the shallower Exshaw oil formation and expects to begin completion activities on this well this summer.
Status of midstream development in Quicksilver’s HRB asset
Quicksilver has initiated midstream operations associated with its Horn River assets. Construction and compression related to Quicksilver’s own 20-mile, 20-inch gathering line, which will serve as the spine of Quicksilver’s transportation from its Horn River acreage, is now complete. Final tie-in of the line into the Spectra system is anticipated in late May, which will enable the company to flow gas from its four completed gas wells at unrestricted rates of more than 30 MMcf per day.
It’s vital that a company has a strong midstream system in place to ensure it can process and transport its gas at reasonable cost and sell it for acceptable prices. With the midstream facilities in place and considering 25% sale or JV, the acreage to be sold can be valued between $130-$160 million (based on $4,000-$5,000/Acre).
The following table shows the other HRB packages (total worth $1.5 billion) put up for sale.
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