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Quicksilver Resources Announces Record Reserves and Production in 2010


February 22, 2011 - Fort Worth, TX

Quicksilver Resources Inc. (NYSE: KWK) announced today preliminary operating results for year-end 2010, in which the company:

  • Increased reserves 20% to a record 2.9 Tcfe -- 68% are proved developed;
  • Replaced 475% of production at an all-in Finding, Development & Acquisition cost of $1.29 per Mcfe;
  • Replaced 362% of production with the drill bit at $0.94 per Mcfe of development cost; and
  • Increased total production 9% to a record 130 Bcfe.

Estimates of year-end 2010 proved reserves total more than 2.9 trillion cubic feet of natural gas equivalents (Tcfe), an increase of more than 20% from year-end 2009. Proved developed reserves continued to make up 68% of the total. By product, reserves were comprised 76% from natural gas, 23% from natural gas liquids and 1% from crude oil. Geographically, 91% of reserves were located in the U.S., primarily in the Fort Worth Basin of North Texas, and 9% were located in Canada.

Total preliminary all-in finding, development and acquisition (FD&A) cost for 2010 is estimated at $1.29 per thousand cubic feet of natural gas equivalents (Mcfe) and preliminary FD&A on just proved developed reserves is estimated at $1.80 per Mcfe. Estimated drill-bit development cost averaged $0.94 per Mcfe in 2010.

During the five-year period ended December 31, 2010, the company has grown reserves and production at compound annual growth rates of more than 20%. The company has achieved these milestones at a preliminary five-year average all-in FD&A cost of $1.57 per Mcfe and organic growth at a preliminary five-year Finding & Development (F&D) cost of $1.31 per Mcfe. Quicksilver's all-in FD&A cost includes all acquisition, leasehold, exploration and development costs associated with the reserve additions.

Reserve growth in 2010 was driven by a 22% increase in the company's Fort Worth Basin Barnett Shale reserves that totaled more than 2.6 Tcfe at year-end 2010, representing approximately 90% of the company's total reserves. Year-end 2010 reserves include just 16 billion cubic feet of natural gas equivalents (Bcfe) of reserves from the company's four wells on its 130,000 net acres in the Horn River Basin of Northeast British Columbia. The company estimates more than 12 Tcfe of additional resource potential from future development of its remaining acreage in the Fort Worth and Horn River basins. In addition, the company has assembled 150,000 net acres in the Greater Green River Basin in northern Colorado and southern Wyoming and 175,000 net acres in the Southern Alberta Basin in western Montana, which the company believes to be prospective for crude oil from the Niobrara and Bakken formations, respectively.

"Quicksilver continued its record of consistently growing production and reserves at one of the industry's lowest all-in FD&A costs for developed reserves," said Glenn Darden, Quicksilver president and chief executive officer. "Nearly 25% of our reserves are liquids which, when coupled with our low full-cycle cost structure, enables the company to generate solid margins even in the current low-price environment for natural gas. Our ongoing hedge position and multi-year inventory of projects in the Fort Worth Basin provide a stable platform to self-fund continued growth at attractive costs. In addition, we believe our exploratory activities in the highly prospective areas of the Horn River, Greater Green River and Southern Alberta basins offer the potential to materially grow reserves beyond the Fort Worth Basin."

Preliminary 2010 average production increased 9% from the prior year to approximately 355 million cubic feet of natural gas equivalents (MMcfe) per day, resulting in record total production of approximately 130 Bcfe for the year. Organic reserve additions of 469 Bcfe represent replacement of 362% of production. From all sources, the company replaced 475% of the year's record production.

A summary of preliminary 2010 reserves changes, in Bcfe, is as follows:


Balance at December 31, 2009 2,415.9

Extensions, discoveries and revisions 469.0
Purchase of reserves 147.0
Sale of reserves 0.0
Production (129.7)
---------

Balance at December 31, 2010 2,902.2
=========

The F&D and FD&A costs will be finalized upon filing of the company's annual report on Form 10-K. Reconciliations of the "Preliminary 2010 F&D and FD&A Costs" are available on the company's website -- www.qrinc.com. For a description of the calculation of, and certain other information regarding these costs, please see the discussion below under the heading "Finding & Development Costs."

The new Securities and Exchange Commission (SEC) reporting rule, applicable for year-end 2009 and later reporting, allows proved undeveloped (PUD) reserves to be booked beyond one offset location where reliable technology exists that establishes reasonable certainty of economic production at greater distances. In accordance with the new rule, the company recorded incremental PUD locations in the Fort Worth Basin. In the Fort Worth Basin Barnett, the company had 973 proved developed and 360 proved undeveloped gas well locations at year-end 2010. The new rule also suggests that five years is a reasonable timeframe to develop existing PUDs. The company removed 22 Bcfe of PUD reserves in 2010 which had not been developed within the five-year time frame. Quicksilver's PUD reserves, which total approximately 940 Bcfe, are all scheduled to be drilled before the end of 2015. Based on current NYMEX strip prices and Quicksilver's commodity derivatives position, the company's currently forecasted cash flow during this period is expected to be more than sufficient to fund this drilling.

In addition to the above rule changes, the new SEC reporting rule requires that year-end proved reserve volumes be calculated using an average of the NYMEX spot prices for sales of gas and crude oil on the first calendar day of each month during 2010. On this basis, the prices for gas and crude oil for 2010 reserves reporting purposes were $4.38 per million British thermal units (MMBtu) and $79.43 per barrel, respectively. The prices used to calculate proved reserves for year-end 2009, when Quicksilver's proved reserves were last reported, were $3.87 per MMBtu of gas and $61.18 per barrel of crude oil. These prices represent the average of the NYMEX spot prices for sales of gas and crude oil on the first calendar day of each month during 2009 and 2010, as required by the SEC reporting rule.

Based upon the average 2010 AECO prices for natural gas in Canada, the company expects to record a non-cash impairment charge of approximately $19 million related to its Canadian full cost pool, primarily associated with activities in the Horn River Basin.

Hedging Summary

For 2011 and 2012, the company has hedged approximately 190 million cubic feet (Mmcf) and 130 Mmcf per day, respectively, of its anticipated future natural gas production at weighted-average floor prices of approximately $5.95 per thousand cubic feet (Mcf) and $5.92 per Mcf, respectively. For 2011, the company has basis hedges covering approximately 60% of its expected Canadian natural gas production at $0.39 per Mcf under NYMEX.

The company also has liquids swaps in place on 10,500 barrels per day for 2011 at an average swap price of $38.84 per barrel. The company uses its hedging program to underpin its expected $455 million capital program for 2011.

In addition, Quicksilver holds firm transportation from the Fort Worth Basin, which we believe provides sufficient takeaway capacity for all expected production for the next several years. The company's firm transportation includes 100 Mmcf per day to Henry Hub and 50 Mmcf per day of firm transportation on the Mid Continent Express pipeline. This pipeline will enable gas from the Fort Worth Basin to go to Perryville in Mississippi and Transco Station 85 in Alabama. The remaining volumes can be delivered to hubs at Katy and Carthage, Texas and would receive Houston Ship Channel pricing.

A summary of these hedging contracts is available on the company's website at http://www.qrinc.com/investor_relations/sec_financial_info/financials/Outstanding-web%20as%20of%20022211.pdf. The value of these hedge positions is not included in the company's SEC reserve report.

Fourth-Quarter and Full-Year 2010 Earnings Release

Quicksilver expects to release fourth-quarter and full-year 2010 earnings on Monday, February 28, 2011, before the market opens. The company will host a conference call the same day at 11:00 a.m. Eastern time to discuss fourth-quarter and full-year 2010 financial and operating results and expectations for the future.

Quicksilver invites interested parties to listen to the call via the company's website at www.qrinc.com or by calling 1-877-313-7932, using the conference ID number 33138903, approximately 10 minutes before the call. A digital replay of the conference call will be available at 3:00 p.m. Eastern time the same day, and will remain available for 30 days. The replay can be dialed at 1-800-642-1687 and reference should be made to the conference ID number 33138903. The replay will also be archived for 30 days on the company's website.

About Quicksilver Resources

Fort Worth, Texas-based Quicksilver Resources is an independent oil and gas company engaged in the exploration, exploitation, development and acquisition of oil and gas, primarily from unconventional reservoirs including gas from shales, coalbed methane, and tight sands gas in North America. The company has U.S. offices in Fort Worth, Texas; Glen Rose, Texas and Cut Bank, Montana. Quicksilver's Canadian subsidiary, Quicksilver Resources Canada Inc., is headquartered in Calgary, Alberta. For more information about Quicksilver Resources, visit www.qrinc.com.

Forward-Looking Statements
The statements in this news release regarding future events, occurrences, circumstances, activities, performance, outcomes and results are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although these statements reflect the current views, assumptions and expectations of Quicksilver Resources' management, the matters addressed herein are subject to numerous risks and uncertainties, which could cause actual activities, performance, outcomes and results to differ materially from those indicated. Factors that could result in such differences or otherwise materially affect Quicksilver Resources' financial condition, results of operations and cash flows include: changes in general economic conditions; fluctuations in natural gas, natural gas liquids and crude oil prices; failure or delays in achieving expected production from exploration and development projects; uncertainties inherent in estimates of natural gas, natural gas liquids and crude oil reserves and predicting natural gas, natural gas liquids and crude oil reservoir performance; effects of hedging natural gas, natural gas liquids and crude oil prices; fluctuations in the value of certain of our assets and liabilities; competitive conditions in our industry; actions taken or non-performance by third parties, including suppliers, contractors, operators, processors, transporters, customers and counterparties; changes in the availability and cost of capital; delays in obtaining oilfield equipment and increases in drilling and other service costs; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; the effects of existing and future laws and governmental regulations, including environmental and climate change requirements; the effects of existing or future litigation; failure to receive a proposal for a transaction to pursue strategic alternatives for us or that any transaction will be approved or consummated; costs and expenses associated with our consideration of potential strategic alternatives, including without limitation, any related litigation expense; as well as, other factors disclosed in Quicksilver Resources' filings with the Securities and Exchange Commission. The forward-looking statements included in this news release are made only as of the date of this news release, and we undertake no obligation to update any of these forward-looking statements to reflect subsequent events or circumstances except to the extent required by applicable law.

Finding & Development Costs
Finding and development cost, or F&D cost, is calculated by dividing (x) exploration, development and exploitation capital expenditures for the period, plus asset retirement obligation additions and unevaluated capital expenditures as of the beginning of the period, less unevaluated capital expenditures as of the end of the period, by (y) reserve additions for the period, excluding acquired reserves.

Finding, development and acquisition cost, or FD&A cost, is calculated by dividing (x) exploration, development, exploitation and acquisition capital expenditures for the period, plus asset retirement obligation additions and unevaluated capital expenditures as of the beginning of the period, less unevaluated capital expenditures as of the end of the period, by (y) reserve additions for the period, including acquired reserves.

The methods we use to calculate our F&D and FD&A costs may differ significantly from methods used by other companies to compute similar measures. As a result, our F&D and FD&A costs may not be comparable to similar measures provided by other companies. We believe that providing measures of F&D and FD&A costs are useful in evaluating the cost, on a per thousand cubic feet of natural gas equivalent basis, to add proved reserves.

However, these measures are provided in addition to, and not as an alternative for, and should be read in conjunction with, the information contained in our financial statements prepared in accordance with generally accepted accounting principles. Due to various factors, including timing differences in the addition of proved reserves and the related costs to develop those reserves, F&D and FD&A costs do not necessarily reflect precisely the costs associated with particular reserves. As a result of various factors that could materially affect the timing and amounts of future increases in reserves and the timing and amounts of future costs, we cannot assure you that our future F&D or FD&A costs will not differ materially from those presented.

QUICKSILVER RESOURCES INC.
Preliminary 2010 F&D and FD&A Costs
(Unaudited)

The following schedule reflects a reconciliation of the preliminary 2010 "Finding & Development" (F&D) and "Finding, Development and Acquisition" (FD&A) costs to the information required by Financial Accounting Standards Codification ("FASC") Topic 932 -- Extractive Activities -- Oil & Gas.

F&D cost is calculated by dividing (x) exploration, development and exploitation capital expenditures for the period, plus asset retirement obligation additions and unevaluated capital expenditures as of the beginning of the period, less unevaluated capital expenditures as of the end of the period, by (y) reserve additions for the period, excluding acquired reserves.

FD&A cost is calculated by dividing (x) exploration, development, exploitation and acquisition capital expenditures for the period, plus asset retirement obligation additions and unevaluated capital expenditures as of the beginning of the period, less unevaluated capital expenditures as of the end of the period, by (y) reserve additions for the period, including acquired reserves.

The methods we use to calculate our F&D and FD&A costs may differ significantly from methods used by other companies to compute similar measures. As a result, our F&D and FD&A costs may not be comparable to similar measures provided by other companies. We believe that providing measures of F&D and FD&A costs are useful in evaluating the cost, on a per thousand cubic feet of natural gas equivalent basis, to add proved reserves.

Preliminary 2010 FD&A Cost

Dollars in millions, reserves in billions of cubic feet equivalent---------------------------------------------------------------------------Total exploration, development and acquisition capital expenditures $ 649.5Asset retirement obligation additions 3.9Adjustments: Unevaluated costs as of December 31, 2009 458.0 Unevaluated costs as of December 31, 2010 (314.5) ---------Adjusted capital expenditures related to reserve additions $ 796.9 --------- Reserve extensions, discoveries, revisions and purchases (Bcfe) 616.0 --------- Finding, development & acquisition cost ($/Mcfe) $ 1.29 ---------

Preliminary 2010 FD&A Cost for Proved Developed Reserves Only

Dollars in millions, reserves in billions of cubic feet equivalent---------------------------------------------------------------------------Total exploration, development and acquisition capital expenditures $ 649.5Asset retirement obligation additions 3.9Adjustments: Unevaluated costs as of December 31, 2009 458.0 Unevaluated costs as of December 31, 2010 (314.5) ---------Adjusted capital expenditures related to reserve additions $ 796.9 --------- Reserve extensions, discoveries, revisions and purchases (Bcfe) 443.2 --------- Finding, development & acquisition cost ($/Mcfe) $ 1.80 ---------

Preliminary Five-Year FD&A Cost, ending 2010

Dollars in millions, reserves in billions of cubic feet equivalent---------------------------------------------------------------------------Total exploration, development and acquisition capital expenditures $ 4,790.0Asset retirement obligation additions 16.3Adjustments: Unevaluated costs as of December 31, 2005 132.1 Unevaluated costs as of December 31, 2010 (314.5) ---------Adjusted capital expenditures related to reserve additions $ 4,623.8 --------- Reserve extensions, discoveries, revisions and purchases (Bcfe) 2,940.2 --------- Finding, development & acquisition cost ($/Mcfe) $ 1.57 ---------

Preliminary Five-Year F&D Cost, ending 2010

Dollars in millions, reserves in billions of cubic feet equivalent---------------------------------------------------------------------------Total exploration, development and acquisition capital expenditures $ 3,428.3Asset retirement obligation additions 16.3Adjustments: Unevaluated costs as of December 31, 2005 132.1 Unevaluated costs as of December 31, 2010 (314.5) ---------Adjusted capital expenditures related to reserve additions $ 3,262.1 --------- Reserve extensions, discoveries and revisions (Bcfe) 2,493.3 --------- Finding & development cost ($/Mcfe) $ 1.31 ---------

Management believes that providing measures of F&D and FD&A costs are useful to assist in an evaluation of Quicksilver's costs, on a per thousand cubic feet of natural gas equivalent basis, to add proved reserves. However, The Reader is cautioned that these measures are provided in addition to, and not as an alternative for, and should be read in conjunction with, the information contained in Quicksilver's financial statements prepared in accordance with GAAP (including the notes thereto). The reader is further cautioned that, due to various factors including timing differences, F&D and FD&A costs do not necessarily reflect precisely the costs associated with particular reserves. For example, exploration costs may be recorded in periods prior to the periods in which related increases in reserves are recorded and development costs may be recorded in periods subsequent to the periods in which related increases in reserves are recorded. In addition, changes in commodity prices can affect the magnitude of recorded increases in reserves independent of the related costs of such increases.

As a result of the foregoing factors and various factors that could materially affect the timing and amounts of future increases in reserves and the timing and amounts of future costs, including factors disclosed in Quicksilver's filings with the Securities and Exchange Commission, we cannot assure you that Quicksilver's future finding costs will not differ materially from those set forth above.

The methods used by Quicksilver to calculate its finding costs may differ significantly from methods used by other companies to compute similar measures. As a result, Quicksilver's finding costs may not be comparable to similar measures provided by other companies.

Note:
"Mcfe" means thousand cubic feet of natural gas equivalents, calculated as one barrel of liquids equaling six thousand cubic feet of gas
"Bcfe" means billion cubic feet of natural gas equivalents, calculated as one barrel of liquids equaling six thousand cubic feet of gas

Media Contact:
Tom Johnson
Chuck Dohrenwend
The Abernathy MacGregor Group
(212) 371-5999

Investor Contact:
Rick Buterbaugh
(817) 665-4835

KWK 11-02

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