Zacks_Analysts' Blog : Quicksilver Seals 2 New Credit Facilities - Analyst Blog

Quicksilver Resources Inc. (KWK) said it has closed two new senior secured revolving credit facilities, one each, for its U.S. and Canadian operations. The credit facilities are secured on a stand-alone basis by respective oil and gas reserves and related assets.

Quicksilver said that the borrowing base for the new $1.25 billion U.S. credit facility is $850 million. The C$500 million ($504.5 million) Canadian facility has a current borrowing base of C$225 million ($227 million). Both the facilities have a maturity term of five years each. The U.S. facility has a bank syndicate of 22 lenders, while the Canadian facility has a bank syndicate of 15 lenders.    

Interest rates applicable to the new U.S. facility range from LIBOR plus 150 basis points (bps) to LIBOR plus 250 bps depending on borrowing base usage. Borrowing rates for the Canadian facility range from Canadian Dealer Offered Rate (CDOR) plus 175 bps to CDOR plus 275 bps depending on borrowing base usage.  Interest rates under both the facilities represent a reduction from the rates in the existing credit facilities being replaced.     

Quicksilver pointed out that each of the two facilities were oversubscribed by two times with lower pricing, which goes to show the quality of the reserve base in both countries. The company has built in the flexibility for both these facilities to grow with the reserve base, which it believes should allow operations in the U.S. and Canada to continue on their established growth trajectory.

Based in Fort Worth, Texas, independent exploration and production company Quicksilver Resources is primarily engaged in the development of long-lived, unconventional onshore natural gas reserves in the North American continent. The company primarily competes with Chesapeake Energy Corporation (CHK) and Denbury Resources Inc. (DNR).

We presently have a long-term Neutral recommendation on Quicksilver Resources. Quicksilver Resources retains a Zacks #3 Rank (Hold rating).