Quicksilver Resources filed Chapter 11 with $2.35B of debts — its assets sold for $245M

Quicksilver Resources grew out of Fort Worth geologist Frank Darden's Mercury Exploration and became a public company under that name in 1999, controlled by the Darden family and built around a huge position in the Barnett Shale — about 85,000 acres near Fort Worth, plus acreage in western Canada. At its peak it employed about 600 people.

When natural gas prices collapsed after the shale boom, Quicksilver spent years shrinking under debt. In April 2013 it sold a 25% undivided interest in its Barnett Shale asset to TGBR for a $485 million purchase price, booking a $333.2 million pre-tax gain. In June 2013 it then borrowed $1.15 billion — a $625 million second-lien term loan, $200 million of second-lien floating-rate notes, and $325 million of 11.000% senior notes due 2021 — to repay borrowings tied to that transaction and retire nearer-term maturities.

The oil-price crash of late 2014 removed any exit. In February 2015 Quicksilver skipped a $13.6 million interest payment, and on March 17, 2015 it and its U.S. subsidiaries filed Chapter 11 in Delaware (Case 15-10585). The 8-K's debt schedule listed roughly $2.03 billion of principal across seven instruments; court documents reported $1.21 billion of assets against $2.35 billion of debts. CEO Glenn Darden admitted the company's 'strategic marketing process has not produced viable options for asset sales or other alternatives.'

The petition listed $1.21 billion of assets against $2.35 billion of debts; the U.S. assets sold at auction for $245 million, and the workforce fell by more than a third.

Concentration: nearly all of Quicksilver's value sat in one gas field, so the fall in natural gas prices hit its revenue and its collateral at the same time.

Leverage on a commodity bet: the filing listed about $2.03 billion of principal across seven instruments, including $350 million of 7.125% subordinated notes and $325 million of 11% notes.

It sold the core to buy time — the April 2013 sale of a quarter of the Barnett position — and then re-levered with costlier second-lien debt, converting a price problem into a structural one.

The diversification came too late: an industry peer's verdict was that Quicksilver had too much debt, stayed gas-focused, and was 'late to the party' in moving into oil.

Leverage against one commodity price cannot survive a downturn. Selling the core and re-borrowing at 11% turns a price problem into a structural one — creditors end up with the assets.

The Delaware court approved all of Quicksilver's first-day motions on March 20, 2015, allowing wages, benefits and royalty payments to continue. The endgame took less than a year: in January 2016 BlueStone Natural Resources II, backed by private-equity firm Natural Gas Partners, agreed to pay $245 million for the U.S. assets in a bankruptcy auction, while the Canadian assets were sold separately. Quicksilver's staff was down to about 165 people by then, cut 34% in a single year.