Quicksilver Resources Inc.
NYSE : KWK

Quicksilver Resources Inc.

February 21, 2007 17:51 ET

Quicksilver Resources Announces Fourth Quarter and Year-End 2006 Financial Results

2006 Production Increases 19% Over Prior Year; Year Over Year Cash Flow From Operations Increases 53%

FORT WORTH, TEXAS--(CCNMatthews - Feb. 21, 2007) - Quicksilver Resources
Inc. (NYSE:KWK) today reported net income for the fourth quarter of
2006 of $19.7 million on revenues of $102.0 million, or $0.24 per
diluted share. The company's comparative fourth quarter of 2005 net
income was $34.7 million on revenues of $102.9 million, or $0.43 per
diluted share. Net income for the full year 2006 was $93.7 million
on revenues of $390.4 million, or $1.15 per diluted share. This
compares to full year 2005 net income of $87.4 million on revenue of
$310.4 million, or $1.08 per diluted share. For the full year 2006,
net cash from operating activities, as presented in the attached
Condensed Consolidated Statements of Cash Flows, was $220.6 million
compared to $144.5 million for the full year 2005. This represents a
53 percent increase in cash flow from operations year over year.

President and CEO, Glenn Darden commented, "In 2006, production grew
19 percent in comparison to 2005, reserves grew 46 percent over the
same period, solely by the drillbit, and the company continued to be
among the lowest cost producers in the industry. With the Fort Worth
Basin drilling program leading the way, Quicksilver is poised to grow
at a faster rate in 2007. We anticipate another year of very good
results for Quicksilver."

Production

For the fourth quarter of 2006, average daily production rose to 178
million cubic feet equivalent per day (MMcfe/d) compared to 150
MMcfe/d for the same period in 2005, an increase of 18 percent.
Total production for the fourth quarter of 2006 was 16.4 billion
cubic feet equivalent (Bcfe), compared to 13.8 Bcfe for the fourth
quarter of 2005.

Natural gas production for the fourth quarter of 2006 was 13.8
billion cubic feet (Bcf), or an average of 150 million cubic feet per
day (MMcf/d), compared to production of 12.5 Bcf, or an average of
136 MMcf/d, for the same period in 2005. The price realized for the
company's natural gas production in the fourth quarter of 2006
averaged $6.05 per thousand cubic feet (Mcf), compared to the $7.19
per Mcf realized in the same period of 2005. Natural gas, including
natural gas liquids (NGL), comprised 95 percent of the company's
total production in the fourth quarter of 2006.

Crude oil production for the fourth quarter of 2006 was 143,000
barrels, or 1,549 barrels per day, as compared to 144,000 barrels of
production in the fourth quarter of 2005. Crude prices realized for
the fourth quarter of 2006 averaged $54.22 per barrel, compared to
$53.36 per barrel for the prior year fourth quarter.

Natural gas liquids production for the fourth quarter of 2006 was
282,000 barrels, compared to 82,000 barrels in the fourth quarter of
2005. The price realized for natural gas liquids averaged $34.49 per
barrel in the fourth quarter of 2006, compared to the average of
$47.12 per barrel realized in the fourth quarter of 2005.

Full year 2006 average daily production for the year was 168 MMcfe/d
and total production was 61.3 Bcfe, compared to 2005 average daily
production of 141 MMcfe/d and 2005 total production of 51.4 Bcfe.
Natural gas production totaled 53.3 Bcf for 2006 at an average
realized price per Mcf of $6.05, as compared to 46.8 Bcf during 2005
at $5.76 per Mcf. Crude production for 2006 was 587,000 barrels at
an average realized price per barrel of $59.99 versus 553,000 barrels
at $50.50 per barrel in 2005. The company produced 746,000 barrels
of natural gas liquids at an average realized price of $38.85 per
barrel in 2006, as compared to 223,000 barrels in 2005 at an average
of $39.08 per barrel.

Total capital costs incurred for the year 2006 were $646 million and
consolidated exploration and production expenditures totaled $545
million. Quicksilver Resources had an all-in finding and development
(F&D) cost of $0.94 per Mcfe in 2006. For a description of the
calculation and certain other information regarding F&D costs, please
see the discussion below under the heading "F&D Costs." A
reconciliation of the "2006 Finding & Development Costs" is available
on the company's website -- www.qrinc.com.

Fourth Quarter and Full Year 2006 Earnings Release and Conference
Call

The company's fourth quarter and full year 2006 conference call to
discuss operating and financial results is scheduled for Thursday,
February 22, 2007, at 10:00 a.m. central time.

Quicksilver invites interested persons to participate in the fourth
quarter and full year 2006 call by dialing (877) 313-7932, ID number
6100877 prior to 9:55 a.m. central time. A digital replay of the
conference call will be available at 1:00 p.m. central time the same
day, and will remain available for one week. The replay can be
dialed at (800) 642-1687 and reference should be made to the
conference ID number 6100877. The call will also be broadcasted live
via Internet webcast on the company's website, www.qrinc.com, linking
through the "Investor Relations" page and the "Presentations &
Conference Calls" link.

About Quicksilver

Fort Worth, Texas-based Quicksilver Resources is a natural gas and
crude oil production company engaged in the development and production
of unconventional natural gas reserves, including coal bed methane,
shale gas, and tight sands gas. It has U.S. offices in Fort Worth,
Texas; Granbury, Texas; Gaylord, Michigan; Corydon, Indiana and Cut
Bank, Montana. Quicksilver also has a Canadian subsidiary,
Quicksilver Resources Canada Inc., located in Calgary, Alberta. For
more information about Quicksilver Resources, visit www.qrinc.com.

F&D Costs

Finding and development cost, or F&D cost, is calculated by dividing
(x) development, exploitation, exploration and acquisition capital
expenditures for the period, plus 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.
Our calculation of "all-in F&D cost" includes costs and reserve
additions related to the purchase of proved reserves. The methods we
use to calculate our F&D cost may differ significantly from methods
used by other companies to compute similar measures. As a result,
our F&D cost may not be comparable to similar measures provided by
other companies. We believe that providing a measure of F&D cost is
useful in evaluating the cost, on a per thousand cubic feet of
natural gas equivalent basis, to add proved reserves. However, this
measure is 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 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 costs will not
differ materially from those presented.

Forward-Looking Statements

The statements in this press 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 and crude
oil prices; failure or delays in achieving expected production from
natural gas and crude oil exploration and development projects;
uncertainties inherent in estimates of natural gas and crude oil
reserves and predicting natural gas and crude oil reservoir
performance; effects of hedging natural gas and crude oil prices;
competitive conditions in our industry; actions taken by third-party
operators, processors and transporters; changes in the availability
and cost of capital; 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; and the effects of existing or future litigation; as
well as, other factors disclosed in Quicksilver Resources' filings
with the Securities and Exchange Commission.



QUICKSILVER RESOURCES INC.
Unaudited Selected Operating Results

Three Months Ended Year Ended
December 31, December 31,
--------------------- ---------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Production:
Natural gas (MMcf) 13,836 12,482 53,265 46,769
Oil (MBbls) 143 144 587 553
NGL (MBbls) 282 82 746 223
Total (MMcfe) 16,384 13,835 61,262 51,427

United States (MMcfe) 11,495 9,750 42,991 36,582
Canada (MMcfe) 4,889 4,085 18,271 14,845
---------- ---------- ---------- ----------
Total (MMcfe) 16,384 13,835 61,262 51,427

Average Daily Production:
Natural gas (Mcfd) 150,389 135,670 145,933 128,135
Oil (Bbld) 1,549 1,561 1,608 1,516
NGL (Bbld) 3,067 891 2,043 611
Total (Mcfed) 178,086 150,380 167,840 140,895

Average Sales Price Per Unit
(excluding effects of
hedging):
Natural gas (per Mcf) $ 5.40 $ 8.91 $ 5.75 $ 6.63
Oil (per Bbl) $ 54.22 $ 53.36 $ 60.75 $ 52.76
NGL (per Bbl) $ 34.49 $ 47.12 $ 38.85 $ 39.08
Total (per Mcfe) $ 5.62 $ 8.89 $ 6.06 $ 6.77

Average Sales Price Per Unit
(including effects of
hedging):
Natural gas (per Mcf) $ 6.05 $ 7.19 $ 6.05 $ 5.76
Oil (per Bbl) $ 54.22 $ 53.36 $ 59.99 $ 50.50
NGL (per Bbl) $ 34.49 $ 47.12 $ 38.85 $ 39.08
Total (per Mcfe) $ 6.17 $ 7.32 $ 6.31 $ 5.95

Expense per Mcfe:
United States production cost $ 1.79 $ 1.37 $ 1.70 $ 1.53
Canada production cost $ 0.89 $ 1.10 $ 1.20 $ 1.03
Total production cost $ 1.52 $ 1.29 $ 1.55 $ 1.39

Production and ad valorem
taxes $ 0.30 $ 0.38 $ 0.25 $ 0.29
General and administrative
expenses $ 0.43 $ 0.42 $ 0.41 $ 0.37
Depletion, depreciation and
accretion $ 1.42 $ 1.15 $ 1.29 $ 1.07



QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except for share data - Unaudited

December 31, December 31,
2006 2005
------------- -------------
ASSETS
Current assets
Cash and cash equivalents $ 5,281 $ 14,318
Accounts receivable, net of allowance
for doubtful accounts 76,521 76,121
Current derivative assets 64,086 603
Current deferred income taxes - 14,614
Other current assets 25,076 7,928
------------- -------------
Total current assets 170,964 113,584

Investments in and advances to equity
affiliates 7,434 8,353

Properties, plant and equipment - net ("full
cost") 1,679,280 1,112,002

Deferred derivative assets 3,753 -

Other assets 21,481 9,155
------------- -------------
$ 1,882,912 $ 1,243,094
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 400 $ 70,493
Accounts payable 109,914 48,409
Accrued liabilities 67,697 52,656
Accrued derivative obligations - 40,632
Current deferred income taxes 21,378 -
------------- -------------
Total current liabilities 199,389 212,190

Long-term debt 919,117 506,039

Derivative obligations - 4,631

Asset retirement obligations 25,058 20,891

Deferred income taxes 156,251 115,728

Minority interest 7,431 -

Stockholders' equity
Preferred stock, $0.01 par value,
10,000,000 shares authorized, 0 and 1
share issued and outstanding - -
Common stock, $0.01 par value,
200,000,000 and 100,000,000 shares
authorized, respectively, and
80,181,593 and 78,650,110 shares
issued, respectively 802 787
Paid in capital in excess of par value 238,063 211,843
Treasury stock of 2,579,671 and
2,571,069 shares, respectively (10,737) (10,353)
Accumulated other comprehensive income
(loss) 60,099 (12,382)
Retained earnings 287,439 193,720
------------- -------------
Total stockholders' equity 575,666 383,615
------------- -------------
$ 1,882,912 $ 1,243,094
============= =============



QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per share data - Unaudited

For the
Three Months Ended For the Year Ended
December 31, December 31,
-------------------- --------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues
Oil, gas and related product
sales $ 101,165 $ 101,317 $ 386,540 $ 306,204
Other revenue 869 1,569 3,822 4,244
--------- --------- --------- ---------
Total revenues 102,034 102,886 390,362 310,448
Expenses
Oil and gas production costs 24,944 17,861 95,176 71,204
Production and ad valorem
taxes 4,958 5,203 15,619 15,068
Other operating costs 212 297 1,461 1,661
Depletion, depreciation and
accretion 23,240 15,951 78,800 55,213
Provision for doubtful
accounts 700 20 700 108
General and administrative 7,000 5,867 24,936 18,979
--------- --------- --------- ---------
Total expenses 61,054 45,199 216,692 162,233
--------- --------- --------- ---------

Income from equity affiliates 208 245 526 914
--------- --------- --------- ---------

Operating income 41,188 57,932 174,196 149,129

Other income-net (810) (128) (1,825) (585)
Interest expense 13,253 6,718 44,061 21,740
--------- --------- --------- ---------

Income from continuing
operations before income taxes
and minority interest 28,745 51,342 131,960 127,974
Income tax expense 9,011 16,702 38,150 40,702
Minority interest expense 19 - 91 -
--------- --------- --------- ---------

Income from continuing
operations 19,715 34,640 93,719 87,272
Gain from discontinued
operations, net of income tax - 100 - 162
--------- --------- --------- ---------

Net income $ 19,715 $ 34,740 $ 93,719 $ 87,434
========= ========= ========= =========

Basic net income per common
share
Continuing operations $ 0.26 $ 0.46 $ 1.22 $ 1.15
Discontinued operations - - - -
--------- --------- --------- ---------
$ 0.26 $ 0.46 $ 1.22 $ 1.15
========= ========= ========= =========

Diluted net income per common
share
Continuing operations $ 0.24 $ 0.43 $ 1.15 $ 1.08
Discontinued operations - - - -
--------- --------- --------- ---------
$ 0.24 $ 0.43 $ 1.15 $ 1.08
========= ========= ========= =========

Weighted average common shares
outstanding
Basic 77,039 75,840 76,707 75,716
Diluted 83,388 82,609 83,133 82,455



QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands-Unaudited

For the Year Ended
December 31,
------------------------
2006 2005
----------- -----------
Operating activities:
Net income $ 93,719 $ 87,434
Charges and credits to net income not
affecting cash
Depletion, depreciation and accretion 78,800 55,213
Deferred income taxes 37,877 40,298
Non-cash compensation 6,546 1,732
Amortization of deferred loan costs 2,070 1,429
Income from equity affiliates (526) (914)
Minority interest expense 91 -
Non-cash loss (gain) from hedging
activities 1 (462)
Provision for doubtful accounts 700 108
Other 414 157
Changes in assets and liabilities
Accounts receivable (1,100) (38,192)
Inventory, prepaid expenses and other (26,066) (1,919)
Accounts payable 15,193 1,963
Accrued liabilities and other 12,896 (2,379)
----------- -----------
Net cash provided by operating activities 220,615 144,468
----------- -----------

Investing activities:
Development and exploration costs and other
property additions (597,490) (329,495)
Return of investment from equity affiliates 1,923 533
Proceeds from sale of assets 5,113 9,693
----------- -----------
Net cash used for investing activities (590,454) (319,269)
----------- -----------

Financing activities:
Issuance of debt 694,682 183,469
Repayments of debt (350,754) (13,079)
Debt issuance costs (9,213) (745)
Proceeds from exercise of stock options 19,689 2,894
Purchase of treasury stock (384) (95)
Payment for fractional shares - (18)
Minority interest contributions 7,291 -
----------- -----------
Net cash provided by financing activities 361,311 172,426
----------- -----------

Effect of exchange rate changes in cash (509) 746
----------- -----------

Net decrease in cash and cash equivalents (9,037) (1,629)

Cash and cash equivalents at beginning of period 14,318 15,947
----------- -----------

Cash and cash equivalents at end of period $ 5,281 $ 14,318
=========== ===========

Contact Information

  • INVESTOR RELATIONS:
    Quicksilver Resources Inc.
    Diane Weaver
    (817) 665-4834