1 KWK : NYSE IPAA Conference April 20, 2004. 2 The Company Focus on unconventional gas reserves...
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Transcript of 1 KWK : NYSE IPAA Conference April 20, 2004. 2 The Company Focus on unconventional gas reserves...
1
KWK : NYSE
IPAA Conference
April 20, 2004
2
The Company Focus on unconventional gas reserves
(fractured shales, coal beds and tight sands)
Develop shallow low-cost and low-risk gas reserves (“Gas Farming”)
Primary focus areas are unconventional gas reservoirs in Michigan, Indiana, Texas and Canada.
During the past five years earnings, cash flow and production have all increased substantially. In addition, reserves have grown by over 235% with the gas portion increasing by more than 420%.
3
Financial Metrics 2002 - 2003
2002 2003
Avg. Dilutive Shares 20.3 22.8 (in millions of shares)
Net Income (per share) $0.68 $0.71
Adj. EBITDA (per share) $3.35 $3.51
Debt (per Mcfe of Res.) $0.31 $0.28
Debt to Capital 61% 49%
Even though the average number of dilutive shares has grown by 12% over the past year, per share metrics for income and cash flow have increased. In addition, the balance sheet has continued to improve as evidenced by various leverage measures.
4
Reserve Distribution and Growth
Proved Producing
69%
Proved Non-Producing
12%
ProvedUndeveloped
19%
2003 Reserve Distribution
881 Bcfe
193
580 552692 791
96
89 89
10990
0
200
400
600
800
1,000
12-31-99 12-31-00 12-31-01 12-31-02 12-31-03
Gas - Bcf Oil - Bcfe
Bcf
e
Reserve Growth
641669
289
801
881
5
Property OverviewCanada
Reserves: 147 Bcfe
Production: 22 Mmcfe/d
Acreage: 525,000 acres
Indiana/Kentucky
Reserves: 48 Bcfe
Production: 7 Mmcfe/d
Acreage: 195,000 acres
Texas & Other
Headquarters: Fort Worth, TX
Reserves: 2 Bcfe
Production: 1 Mmcfe/d
Acreage: 145,000 acres
Rockies
Reserves: 64 Bcfe
Production: 7 Mmcfe/d
Acreage: 238,000 acres
Michigan
Reserves: 620 Bcfe
Production: 85 Mmcfe/d
Acreage: 261,000 acres
6NORWOOD
LACHINE
SUNBURY
UPPER ANTRIM
MICHIGANMICHIGAN
Quicksilver Acreage
Quicksilver CO2 Plants
Reserves: 536 Bcf - Production: 65 Mmcf/d
Land position of almost 200,000 acres
Greater than a 17-year reserve life
Average well costs of about $175,000
Average reserves per well of 700 Mmcf
Peak production averages 175-200 Mcf/d
Production flat 1-2 years, 7%-10% decline
Average net revenue interest of 80%
Michigan - Antrim Shale
7
650
700
750
800
850
900
QUICKSILVER RESOURCES
PETRA 2/9/00 10:09:52 AM
NE
W A
LB
AN
Y
CAMP RUN
CLEGG CREEK
MORGAN TRAIL
MUSCATTAUCK
Reserves 100% Gas
48 Bcfe
Production 7 Mmcf/d
Acreage Approximately 195,000
Net Acres
Pipeline InfrastructureGTG and Cardinal Pipelines transport gas to
both regional and interstate markets
Indiana – New Albany Shale
INDIANAINDIANA
KENTUCKYKENTUCKY
Corydon Project
8
Texas - Barnett Shale
Largest gas field in Texas producing over 830 MMcf/d
Huge Resource Target - 150 Bcf per section
Company currently has about 110,000 net acres
2004 Objective – Prove shale potential on Quicksilver holdings.
QUICKSILVER RESOURCESMILES
1
42251301060000TD : 6,790
6400
6500
6600
6700
0 100
GR
100 200
GR
0.1 1000
IND
BARNETT
BARNETT
SHALE
ELLENBURGER
Viola
9
Barnett Shale Fairway
Historical producing fairway expanding due to horizontal drilling and new fracture stimulation methods
Initial 8 horizontal wells drilled outside of core area average between 300-800 Mcf/d
The 5 most recent horizontal wells are producing between 1,500-3,500 Mcf/d
10
Canada – Coal Bed Methane Quicksilver has CBM drilling
rights on approximately 525,000 net acres (95% operated).
200+ wells drilled on CBM projects to date – defining a large productive fairway
Typical CBM wells will average 140 Mcf/d with negligible water and 450 MMcf of reserves
Proved CBM reserves at 12-31-03 of 132 Bcf.
Shallow, lower rank coals (Ardley, Horseshoe Canyon and Belly River)
Deep, higher rank coals (Mannville)
ALBERTAALBERTA
EdmontonEdmonton
CalgaryCalgary
ALBERTAALBERTA
11
EdmontonEdmonton
ALBERTAALBERTA
CalgaryCalgary
Undisclosed JV
Recent Acquisition
Conoco Phillips JVEnerplus JV
NCE Petrofund JV
Burlington JV
Murphy JV
Palliser Development Areas
A
A
A
A
A
A
AA
A
A
A
A
A
A
CBM Joint Ventures
E
S
S
A
A
S
S
C
A
A
EdmontonEdmonton
CalgaryCalgary
Currently producing 22 MMcf/d with year-end target of greater than 35 MMcf/d
Plan to drill 285 net CBM wells in 2004
CBM reserves will more than double by year-end
Current projects have 1-2 TCF of reserve potential.
12
0%
20%
40%
60%
80%
100%
120%
350 Mmcf 450 Mmcf 550 Mmcf
$5 Henry Hub $4 Henry Hub $3 Henry Hub
Typical Horseshoe Canyon CBM EconomicsIn
tern
al R
ate
of
Ret
urn
Reserves Per WellReserves Per Well
13
2004 Plan Highlights
Capital Budget: $160,000,000
Drill 400 net wells(285 in Canadian CBM)
Production and reserves to grow by the drill bit in excess of 15%
14
Summary
Solid asset base of long lived natural gas reserves .
Established business model built on exploitation of unconventional gas reservoirs.
Positioned for significant growth in multiple basins.
15
This presentation contains forward looking statements that are based on assumptions and estimates that we believe to be reasonable. Any such statements are expressly qualified in their entirety by reference to risk factors discussed in the Company’s most recent SEC filing. The expectation that future drilling activity, pipeline and gathering construction, economic results, or capital expenditures will occur depends on future events that are inherently uncertain, including without limitation, commodity prices and demand for natural gas, results of exploration activities, production levels, cost and availability of capital, cost of operations, availability of equipment and personnel, and timing and outcome of projects results.
16
Executive Offices:
777 West Rosedale Street - Suite 300
Fort Worth, Texas 76104
817.665.5000