According to a KeyBanc Capital Markets report on Fort Worth, Texas-based Quicksilver Resources Inc., the company has re-entered Price Ranch #1 in Pecos County, Texas. Quicksilver plans to drill a 1,500-foot lateral into 3rd Bone Spring in the Delaware Basin and complete the well with six stages of fracture stimulation.

The well had an initial production rate of 300 barrels of oil equivalent per day and averaged 200 barrels of oil equivalent per day during 10 days of production. The Price Ranch #1 has a projected depth of 9,500 feet and is in Section 16 Block 131, T&STL RR CO Survey, A-6020.

According to the report, “Given the short lateral and small number of fracture stages, the initial result is encouraging and, with the company planning to drill future wells with 6,000-7,500 foot fracture stages, well results should continue to improve. While we view the results as a positive step, it is still early in the play and there is very limited offset data from industry peers. Still, the well likely provides a positive data point during potential joint venture discussions.”

IHS Inc. reports that Quicksilver holds approximately 155,000 net acres across the Delaware and Midland basins of West Texas, of which the company believes 105,000 net acres are prospective for oil from the Bone Spring and Wolfcamp. The company plans to drill six wells in this area during 2012.

“During the first quarter, the company retained an investment bank to help evaluate the opportunities for a joint venture partner to acquire an interest in and participate in the development of the West Texas acreage. Quicksilver anticipates completing the process this summer.”

The KeyBanc report also provided a Horn River Basin update on Quicksilver’s eight-well pad operations in Canada. According to the report, “Clean-up activities are now complete and all wells on the pad are capable of production. Yet only three wells are currently producing 73 million cubic feet per day with the rest shut in as Quicksilver intends to open up only the wells necessary to meet its midstream commitments, as previously communicated. While there were not many new developments from the company’s comments when it reported its second quarter earnings a few weeks ago, the company did raise the range of initial flow rates on the eight-well pad from 20-27 million cubic feet per day to 23-34 million cubic feet per day and expects the results to improve type curves for the play vs. current assumptions of 16 billion cubic feet.”

According to information on Quicksilver’s website, they are developing the Horn River Basin of northeast British Columbia with 130,000 net acres under lease and have booked approximately 100 billion cubic feet equivalent related to this acreage. As of December 2011, the company had four wells connected to sales and expects to complete seven to eight wells in 2012.

The KeyBanc report analyzed the balance sheet and wondered whether the company could monetize its assets through joint ventures (JVs).

“While the initial well result in the Delaware Basin and continuing improvement in the Horn River Basin well results and type curves were encouraging, ultimately, achieving favorable JVs on their assets will likely dictate near-term momentum for shares, particularly as the next set of Permian wells become more expensive.

“During the second quarter of 2012, management indicated that JV talks for Horn River Basin and West Texas were taking a bit longer than expected (year-end vs. summer close), but that the company is in advanced stages of negotiations on both. It remains to be seen if potential suitors need to see more well data before committing, though the first result should at least partially validate the play's horizontal potential. Longer laterals with greater fracture stages will ultimately answer this question.”