Quicksilver Resources Inc., a natural gas and oil producer, said Monday it agreed to sell for $280 million development rights for shale, coal bed methane and other gas on 13,000 acres in Texas, sending its shares soaring.
Quicksilver Resources, based in Fort Worth, Texas, said it will use the proceeds to pay down debt. It will be the operator of the Fort Worth Basin property that Eni SPA of Rome purchased for acquisition and development.
Eni will buy 27.5 percent of Quicksilver's Alliance leasehold interests for $280 million in cash.
Glenn Darden, president and CEO of Quicksilver, said the sale is an "initial step to de-lever" the company's balance sheet.
The deal, which was effective April 1 and is expected to close in mid-June, includes the sale of 131 billion cubic feet of proved reserves and 96 billion cubic feet of "probable and possible resources," Quicksilver Resources said.
The Alliance natural gas leasehold produces about 60 million cubic feet of natural gas per day, Quicksilver Resources said.
Analyst Subash Chandra of Jefferies and Co. said the agreement provides cash for Quicksilver Resources and exposure to shale for Eni.
Chandra said in a note to investors the deal represents a good value for Quicksilver Resources despite falling gas prices. Quicksilver paid $1 billion in cash and $307 million in stock for the 13,000 acres in July 2008 when gas prices were substantially higher than now, the analyst said.
However, analyst Dan McSpirit of BMO Capital Markets said he believes "Quicksilver gets very little by way of deleveraging impact from this transaction."
"We believe this transaction is not far removed from the series of equity deals we've observed of late where independents have sold future upside _ whether equity or working interest, take your pick _ at the bottom of the cycle to pay down debt incurred at the top of the cycle," he said in a note to investors.
Quicksilver shares rose $1.23, or 14.4 percent, to $9.79 in afternoon trading.
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