Quicksilver Resources to sell gas company to Crestwood Midstream for $701 million
23 Jul 2010
Quicksilver Resources, a US-based exploration and production company in which, Reliance Industries (RIL) is reportedly in talks to acquire it, yesterday agreed to sell its Quicksilver Gas Services LP to Crestwood Midstream Partners II LLC for $701 million in cash, in order to repay debt.
Quicksilver controls midstream gas operations through its Canadian subsidiary, Quicksilver Resources Canada Inc., and is headquartered in Calgary, Alberta.
Texas-based Quicksilver Resources is a natural gas and crude oil exploration and production company engaged in the development and acquisition of unconventional natural gas reserves, including coalbed methane, shale gas, and tight sands gas in North America.
Quicksilver said that Crestwood will pay $701million in cash at closing plus up to $72 million in additional earn-out payments, which will result in eliminating $228 million of consolidated debt of Quicksilver Gas Services.
Post closing, Quicksilver expects to repay all outstanding borrowings under its $1 billion senior secured credit facility, of which approximately $528 million is currently outstanding, resulting in total liquidity of more than $1 billion.
The sale comes after Indian media this week reported that RIL was in talks with Quicksilver for either buying the whole company or a stake or a joint venture partnership in its Horn River Basin shale gas project in British Columbia, Canada.
The company owns producing oil and natural gas properties in Texas, Colorado, Wyoming, and Montana in the US as well as in Alberta and British Columbia, Canada, which has an estimated enterprise value of $4.6 billion.
As of 31 December 2009, its estimated total proved reserves were approximately 2.4 trillion cubic feet of natural gas equivalents and year over year, the company has seen its bottom line shrink from a loss of $378.3 million in 2008 to an even larger loss of $557.5 million in 2009 despite an increase in revenues from $780.8 million to $820.4 million for the same period.
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