Quicksilver approves 2009 capital budget

By OGJ editors
HOUSTON, Dec. 3 -- Quicksilver Resources Inc., Fort Worth, approved a $600 million capital budget for 2009. It includes $400 million for drilling, $155 million for gathering and processing facilities (including $35 million funded by Quicksilver Gas Services LP), $40 million for leaseholdings, and $5 million for other property and equipment. Of the sum, $475 million will be spent in Texas, $110 million in Canada, and $15 million in other areas of the US.

Glenn Darden, Quicksilver president and chief executive officer, said that given the company's large hedge position, its 2009 capital program "can be entirely funded from internally-generated cash flow inclusive of $50 million each for expected distributions to be received from BreitBurn Energy Partners LP and federal income tax refunds....We could sustain an additional $2 reduction to NYMEX natural gas prices and should still have sufficient cash flow" to fund the capital program. He said Quicksilver has the flexibility to reduce budgeted expenditures if necessary.

Total capital expenditures include about $65 million for exploratory drilling activities, primarily associated with the company's extensive leasehold in the Horn River basin in British Columbia and the Delaware basin in West Texas.

Capital expenditures of $250 million would be required to maintain existing annual production levels, which for 2009 are projected to average 325-330 MMcfed of natural gas, up more than 20% from the projected 2008 average. Average daily production volumes for 2009 are expected to be 76% natural gas, 22% natural gas liquids, and 2% crude oil.

Quicksilver expects to fully comply with all financial covenants on its debt outstanding, none of which requires any principal repayments until 2012.

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