2010-05-12-2010-05-12-2010-05-12

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
$116.0MM
Description

Acquired additional 25% WI in Tarrant Co., TX, Lake Arlington project targeting Barnett shale, gaining 125 Bcf proved, 10 MMcfe/d.

Using equity held in the MLP BreitBurn Energy Partners LP, Los Angeles, (Nasdaq: BBEP) Fort Worth, Texas-based E&P Quicksilver Resources Inc. (NYSE: KWK) has acquired an additional 25% working interest in its operated Lake Arlington project in Tarrant County, Texas, targeting the Barnett shale, from an undisclosed private party for approximately $116 million in cash and units.

Quicksilver paid $62 million in cash and 3.6 million BreitBurn units. The units were consideration in a 2008 deal in which Breitburn bought long-lived, legacy Antrim shale assets from Quicksilver for some $1.45 billion in cash and units. Since then, the units have been tied up in litigation involving a dispute over partnership interests, which was recently settled.

The acquired interests include reserves of approximately 125 billion cubic feet of gas (82% proved developed), and approximately 20 billion cubic feet of additional potential resources. Net daily production is approximately 10 million cubic feet of gas equivalent. Quicksilver now holds 100% interest in the Lake Arlington project.

Quicksilver president and chief executive Glenn Darden says, "The Lake Arlington acquisition provided the company with an opportunity to use a portion of our BreitBurn unit holdings to acquire reserves in a core operating area for below our drill-bit finding and development costs. This is a very efficient transaction for the company."

As a result of the acquisition, the company now expects its 2010 capital program to total approximately $450 million, excluding acquisitions. Production in 2010 is still expected to average in the range of 360- to 370 million cubic feet per day in 2010, an increase of approximately 11% to 14% from 2009.

Following this transaction, Quicksilver now holds approximately 17.7 million units of Breitburn, representing an approximate 33% interest in Breitburn's limited partnership.