Ross Perot Jr. from World Economic Forum in Davos. Click here for link

Even as Barnett Shale operators look far and wide for the next great shale plays, Quicksilver Resources Inc.’s $1.3 billion purchase of property in Tarrant and Denton counties shows the Metroplex’s party isn’t over yet.

The Fort Worth-based company said it will purchase 13,000 acres of producing, leasehold, royalty and midstream assets in northern Tarrant and southern Denton counties from Chief Resources LLC, Hillwood Oil & Gas LP and Collins and Young LLC. The properties currently produce about 45 million cubic feet of natural gas per day and Quicksilver estimates total reserves of 1 trillion cubic feet of natural gas resources, 350 billion of which are proved, according to a statement.

“Every once in a while an opportunity comes along that can enhance one of our existing projects and we can capitalize on our experience gained in a basin,” said President and CEO Glenn Darden in a post-announcement press conference. “This Fort Worth Basin acquisition is one of those.”

The purchase boosts the company’s Fort Worth Basin reserves by 22 percent, and area acreage

to about 263,000 acres, 173,000 of which currently are the initial focus. The company will spend

between $220 million and $230 million to develop the property, said Chief Financial Officer Phil Cook.

Energy analyst Irene O. Haas said the company saw a good chunk of land in the heart of the Barnett Shale and made a wise decision to jump in and secure it from private landowners.

“I think it’s a fantastic deal,” said Haas, an analyst in the Houston office of financial services firm Canaccord Adams. “Actually, it was a bit of an opportunistic deal on Quicksilver’s’ side,” and should give the company’s production a boost.

The only drawback to the deal is the amount of debt the company incurs will increase, but Haas said the company has a good history of raising cash and won’t suffer.

“I think in the long run the debt structure will come back down,” she said.

Wall Street reacted unenthusiastically to the announcement, and shares of Quicksilver, traded under KWK on the New York Stock Exchange, fell about 5 percent in the days following the announcement before rebounding, though most other Barnett Shale operators experienced similar drops during the same time. Shares of the company have risen more than 19 percent for the year, trading above $35, but shares have been as high as almost $45.

The company sought the property for various reasons: most of the drilling pads have been cleared; the water resource wells and saltwater injection wells have been identified; and there are opportunities for midstream subsidiary, Quicksilver Gas Services LP.

“Perhaps the most attractive aspect is the low

royalty rate, effectively at 12 percent royalty,” said Glenn Darden, statements echoed by brother and Chairman of the Board Thomas “Toby” Darden, who said that rate – about half of what present rates

tend to be – makes the property low risk and high efficiency.

The area also is comprised of few leases, said Toby Darden, making title work faster and easier.

“Most of the northern Tarrant and Denton county areas have been complex from rooftops and other complicating factors,” he said. “This was very simple and our engineers had plenty of time to pick through the details in minute detail.”

The 13,000 land grab wasn’t the biggest single purchase Quicksilver has made, but one of the biggest recent grabs, said Rick Buterbaugh, vice president for investor relations and corporate planning.

The company likens the new property to its Lake Arlington project, where Quicksilver currently is drilling on about 4,000 acres into shale between 350 feet and 500 feet thick.

Wyoming, Montana, Canada and West Texas are the company’s other areas of interest and exploration.

Quicksilver Resources Inc. agreed to acquire the assets from various parties in Texas's Barnett Shale formation for $1.31 billion in cash and stock.

In addition, the natural-gas and crude-oil producer said daily production in the second quarter averaged between 233 million and 235 million cubic feet of natural gas equivalents; Quicksilver's May forecast was 225 million to 235 million. The company also expects unit expenses to be at the low end of estimates.

The Barnett Shale area near Fort Worth is considered by some to be the nation's largest onshore natural-gas field. Drilling success there has driven companies to scour the continent for new shale resources -- though none has yet rivaled the Barnett field.

Under the agreement with private parties including Chief Resources LLC, Hillwood Oil & Gas LP and Collins and Young LLC, Quicksilver will pay $1 billion in cash and $307 million in its stock for the Barnett Shale assets. The cash portion will be funded through a $700 million 30-month loan, operating cash flow and an existing credit facility.

Quicksilver said the deal, expected to close Aug. 8, would expand its production-growth profile and inventory of low-risk, high-return development projects while keeping costs low.

Upon closing of the deal, Quicksilver expects 2008 total average daily production volumes will increase an additional 8% from prior estimates to 275 million cubic feet, with the acquisition immediately adding to earnings.

Meanwhile, total daily production volumes are projected to jump about 40% and 30% in 2009 and 2010, respectively, after adjusting for the November divestment of Quicksilver's operations in Michigan, Indiana and Kentucky.

The Barnett Shale properties being acquired produce a net 45 million cubic feet a day. Quicksilver expects they contain more than one trillion cubic feet of recoverable natural gas resources net to the company -- about 350 billion cubic feet of proved reserves, of which about 40% are developed, and more than 650 billion cubic feet of additional resource potential.

Quicksilver Resources will add significantly to its Barnett Shale holdings with the announced $1.3 billion purchase of producing assets in northern Tarrant County and southern Denton County from Hillwood Oil & Gas and two partners.

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Fort Worth-based Quicksilver Resources Inc. has purchased natural gas-producing properties in the Barnett Shale from a group of owners including Chief Resources LLC, Hillwood Oil & Gas LP and Collins and Young LLC for $1.3 billion.

The transaction represents an acceleration of production for Quicksilver in the Barnett Shale, one of the natural gas industry's largest domestic fields, and fits in with Chief's shift of focus to outside Texas.

Quicksilver said the deal could boost its output as much as 40 percent.

The Tarrant County and Denton County properties produce about 45 million cubic feet of natural gas a day, and Quicksilver estimates the properties contain more than 1 trillion cubic feet of recoverable natural gas.

Quicksilver acquired the properties for $1 billion in cash and $307 million in shares. The company said it plans to finance the cash offering partially by a $700 million 30-month second-line term loan.

Credit ratings service Standard & Poor's downgraded Quicksilver's outlook after the announcement of the deal to stable from positive, citing the large increase in debt following the acquisition. The rating agency affirmed Quicksilver's debt rating at BB-.

Houston-based Tudor, Pickering, Holt & Co. LLC vice president Stacy Nieuwoudt said she saw the transaction as favorable for Quicksilver.

"We're always fans of companies that buy assets and hedge them in the commodity market and have an accelerated drilling strategy," Ms. Nieuwoudt said.

Quicksilver stock slipped 2 percent to a closing price of $34.84 after the announcement.

Chief and Hillwood entered into a partnership to develop the land in 2003. The 29 million-square-foot residential and commercial development includes 6,800 single-family homes, 200 businesses and the Alliance Airport.

Hillwood also owns the Circle T Ranch east of U.S. Highway 377 and Hunter Ranch south of Denton. The company plans to begin drilling the sites soon, said Hillwood International Energy president Trem Smith.

In 2006, Chief sold most of its Barnett Shale production assets to Oklahoma City-based Devon Energy for $2.15 billion. Its primary focus has shifted to sites in Pennsylvania and Montana.

Spokeswoman Kristi Gittins said Chief plans to drill at another Barnett Shale site near Northlake.

DALLAS (July 7, 2008) -- Hillwood International Energy today announced that Quicksilver Resources, Inc. (NYSE: KWK) will acquire the working and royalty interests in the core area of the natural gas-rich Barnett Shale in northern Tarrant and southern Denton counties of Texas for $1.3 Billion in cash and stock. Chief Resources LP and Collins and Young are working interest partners with Hillwood and part of this transaction.

Hillwood founder and chairman Ross Perot Jr. praised the transaction: “Quicksilver is an exceptional company and we are very pleased they have acquired this high quality position in the core of the Barnett gas field.”

Hillwood has been in the energy business for more than thirty years and retains a significant position in the Barnett after the sale.

“We plan to continue the development of our Barnett position and remain in the area for a long time to come. The Barnett field development has a significant economic impact on the entire community, and having two strong local companies involved in this transaction enhances the impact for everyone,” added Mr. Perot. “We are committed to continuing to be good neighbors to our customers and residents in the area. Successfully integrating our real estate development and energy projects in a way that benefits everyone will continue to be a hallmark of the Hillwood way of doing business.”

Merrill Lynch acted as exclusive advisor for the sellers in this transaction. Kelly, Hart and Hallman served as legal counsel.

About Hillwood

Hillwood Energy (http://www.hillwoodinternationalenergy.com/), a Perot Company, is an international energy company focused in the United States , Middle East and Russia. It continues to grow through operations, acquisitions, and partnering.

Hillwood Development (www.hillwood.com), a Perot company, is ranked as one of the top commercial real estate developers in the country and the top residential developer in Dallas-Fort Worth. The company's developments currently house facilities for more than 85 companies listed on either the Fortune 500, Global 500 or Forbes List of Top Private firms. Hillwood is best known for its development of the 17,000-acre AllianceTexas project, located 15 miles northwest of DFW Airport; the $420-million American Airlines Center and Victory Park district near downtown Dallas; and the 2,000-acre AllianceCalifornia development near Los Angeles.

Quicksilver Resources Inc. has agreed to buy assets in the Barnett Shale formation in northern Tarrant and southern Denton counties for $1.31 billion in cash and stock.

The Fort Worth-based natural gas and oil exploration and production company said it entered into agreements with various private parties, including Chief Resources LLC, Hillwood Oil & Gas LP and Collins and Young LLC, to acquire producing, leasehold, royalty and midstream assets.

Under the agreement, Quicksilver (NYSE: KWK) will pay $1 billion in cash and $307 million in stock. The company plans to fund the cash portion of the transaction through a combination of a $700 million 30-month loan, operating cash flow and its existing credit facility.

The deal is scheduled to close on Aug. 8, after a federal antitrust regulation waiting period and other customary closing conditions.

"Acquisition of these properties in the Fort Worth Basin enhances our production growth profile, expands our inventory of low-risk, high-return development projects, maintains a low full-cycle cost structure, and is expected to be immediately accretive to earnings and cash flow per share," said Glenn Darden, Quicksilver president and chief executive officer, in a statement.

The properties have net production of about 45 million cubic feet per day. Quicksilver said it estimates these properties contain more than one trillion cubic feet of recoverable natural gas resources net to the company including 350 billion cubic feet of proved reserves, of which about 40 percent are proved developed, and more than 650 billion cubic feet of additional resource potential on 13,000 net acres.

Quicksilver said the assets would boost its total average daily production volumes for 2008 to 275 million cubic feet of natural gas equivalents per day, an 8 percent increase from prior estimates, reflecting just five months of production volumes from the acquired properties.

The company's total daily production volumes are projected to increase 40 percent in 2009 and 30 percent in 2010, resulting in a three-year compound annual growth rate of 50 percent, after adjusting for the November 2007 divestment of Quicksilver's operations in Michigan, Indiana and Kentucky.

Web site: http://www.qrinc.com/

Quicksilver Resources Inc. announced today that it will purchase producing, leasehold, royalty and midstream assets in the Barnett Shale for $1.307 billion. The assets are in northern Tarrant and southern Denton counties.

The transaction will include $307 million in Quicksilver Resources common stock and $1 billion in cash, the company announced.

Chief Resources LLC, Hillwood Oil & Gas LP and Collins and Young LLC, as well as other private parties, are among the companies with which Quicksilver has entered into purchase and sale agreements. According to a Quicksilver release, assets acquired, on 13,000 net acres, produce about 45 million cubic feet (MMcf) per day, and the company estimates there are more than 1 trillion cubic feet of recoverable natural gas resources net. There are about 350 billion cubic feet (Bcf) of proved reserves – about 40 percent are proved developed – and more than 650 Bcf of additional resource potential, according to the release.

“Acquisition of these properties in the Fort Worth Basin enhances our production growth profile, expands our inventory of low-risk, high-return development projects, maintains a low full-cycle cost structure, and is expected to be immediately accretive to earnings and cash flow per share,” said Glenn Darden, Quicksilver president and chief executive officer, in a release. “In addition, this transaction enables Quicksilver to lever its existing technical, operating and management efficiencies in the Fort Worth Basin. We believe these acquired properties are similar to the company’s Lake Arlington project, where last week the most recent four wells began production at a combined rate of approximately 26 MMcf per day.”

The cash will be funded “through a combination of a $700 million 30-month second-lien term loan facility, operating cash flow and its existing credit facility,” according to the press release.

Hillwood founder and chairman Ross Perot Jr. said in a statement he is pleased with the transaction and will continue development.

“We plan to continue the development of our Barnett position and remain in the area for a long time to come. The Barnett field development has a significant economic impact on the entire community, and having two strong local companies involved in this transaction enhances the impact for everyone,” Perot said. “We are committed to continuing to be good neighbors to our customers and residents in the area. Successfully integrating our real estate development and energy projects in a way that benefits everyone will continue to be a hallmark of the Hillwood way of doing business.”