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Quicksilver Resources' CEO Discusses Q2 2012 Results - Earnings Transcript

The Barnett MLP has received the green light from the SEC, but we are currently on hold awaiting better marketing conditions. We remain committed to monetizing a portion of the Barnett this year in order to reduce company debt and whether that comes in the form of the MLP or perhaps an asset sale will depend on value.

Moving to Canada, the Horn River Basin is looking very, very good. It appears that we are in an excellent area of the Basin geologically with well-developed sections of both the Muskwa and Klua formations in the Devonian section which exceed 520 feet of combined thickness. Our first multi-well drilling pad alternated Muskwa and Klua wells so that no completed section was closer than 1,200 feet to the next comparable well. From previous results, we have recognized the tremendous potential of the Muskwa, and with this new pad coming on line, we see the capability of the lower Klua section to be as strong or stronger.

Shortly after the end of the second quarter, Quicksilver finalized completion operations on this eight well pad. Production has been curtailed due to flow limitations of the test equipment, but individual wells have tested at rates between 20 million and 30 million cubic feet of gas a day. These wells were drilled with 6,000 to 8,500 foot laterals, depending on the lease boundaries. At this point, these eight wells have an estimated production capacity in excess of 150 million cubic feet of gas per day. To put that in perspective, this one pad which comprises less than 1% of our acreage position in the Horn River Basin can bring on gas volumes equal to 40% of our current total company production.

We will continue to flow the wells into completion clean up and then curtail this production to levels required to meet pipeline and processing commitments over the next year. We project the prolific nature of this production will allow us to drill fewer wells to meet these obligations going forward. We have pushed out some of these commitments and John will give you more details in his remarks.

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