SOURCE: Quicksilver Resources Inc.

Quicksilver Resources Inc.

August 07, 2012 08:00 ET

Quicksilver Resources Reports 2012 Second-Quarter Results

Company Posts Stellar Horn River Results and Strengthens Financial Flexibility With Amended Credit Facility

FORT WORTH, TX--(Marketwire - Aug 7, 2012) - Quicksilver Resources Inc. (NYSE: KWK) today announced preliminary 2012 second-quarter results.

Highlights:

  • Secured financial covenant flexibility in Combined Credit Agreements, providing time to manage the balance sheet and develop emerging plays
  • Completed first multi-well pad in Horn River, with individual wells testing in excess of 20 MMcfd
  • Advanced negotiations on two joint ventures
  • Improved well performance and drill/complete costs in the Colorado Niobrara project
  • Reduced second-half 2012 capital expenditures by $50 million and deferred commitments in the Horn River Basin
  • Nearly 50 percent of expected 2013 production hedged at a weighted average price of $5.30/Mcf

"Quicksilver is aggressively attacking costs and capital expenditures in this low commodity price environment. We have proactively amended our credit facility, reduced capital spending and pushed out capital commitments in the Horn River Basin and our other operating areas. At the same time, we have made significant gains in British Columbia and Colorado," said Glenn Darden, President and CEO. "Negotiations on two joint ventures have progressed significantly. We believe these transactions will help push this company forward."

Financial Results

Adjusted net loss for the second quarter, a non-GAAP financial measure, was $21 million, or $0.13 per diluted share, compared to adjusted net income of $11 million, or $0.06 per diluted share in the 2011 period. Including the impact of one-time items, the net loss for the second quarter was $673 million, or $3.96 per diluted share, compared to net income of $109 million, or $0.61 per diluted share, in the prior-year period. Second-quarter 2012 results were impacted by a $992 million non-cash impairment of oil and gas properties due to lower average natural gas and NGL prices compared to the 12 months ended March 31, 2012 and non-cash gains of $8 million related to hedge ineffectiveness. Further details of adjusted net income are included in the tables following this earnings release.

Production

Production averaged 359 million cubic feet of natural gas equivalent (MMcfe) per day during the second quarter, down from 417 MMcfe per day in the prior-year quarter, and down from 377 MMcfe in the first quarter of 2012. The decline from both periods is primarily due to the delay in bringing Horn River volumes online, a reduction in completion activity in the Barnett Shale (45 fewer wells were connected to sales in the first half of 2012 compared to the first half of 2011), natural production decline of existing wells and temporary shut-ins to support new development activity. Shut-ins of certain uneconomic production had an immaterial impact on second-quarter volumes. The production volumes for the second quarter of 2012 were 80% natural gas and 20% natural gas liquids (NGLs), crude oil and condensate.

Revenues and Expenses

Production revenue for the second quarter of 2012 was $151 million, down 28% from the prior-year quarter and down 12% from the first quarter of 2012. The decrease in production revenue from both periods was caused by the production declines described above and lower realized prices for natural gas and NGLs.

Lease operating expense for the second quarter of 2012 was $22 million, or $0.66/Mcfe, compared to $24 million, or $0.64/Mcfe in the prior-year quarter and $29 million, or $0.84/Mcfe in the first quarter of 2012. The reduction from the first quarter is mainly due to shut-ins of uneconomic wells in the Barnett Shale resulting in lower water hauling and gas lift expense and a decline in well workover activity in both the U.S. and Canada.

Interest expense for the second quarter of 2012 was $40 million, or $1.23/Mcfe, compared to $48 million, or $1.25/Mcfe in the prior-year quarter. The decline is primarily related to lower amortization of deferred financing fees and higher capitalized interest related to expanded spending on the company's exploratory assets.

Debt

At June 30, 2012, Quicksilver's total debt was approximately $2.1 billion. In August 2012, Quicksilver amended its Combined Credit Agreements, and as part of that process, accelerated the fall redetermination. Based on reserves at June 30, 2012, the redetermined global borrowing base was set at $850 million, the interest coverage covenant was adjusted downward to provide increased flexibility, and other limitations were introduced, including increased interest margins and additional financial and other covenants. The company has approximately $410 million utilized under its Combined Credit Agreements on a pro-forma basis, reflecting the anticipated near-term reductions in Canadian letters of credit obligations.

Operational Update

Canada - Horn River Basin

Shortly after the end of the second quarter, Quicksilver finalized completion operations on its eight-well drilling pad, its first multi-well pad in the basin. With production curtailed due to the flow limitations of the test equipment, individual wells tested at rates in excess of 20 MMcfd, with the highest rate at 27 MMcfd. These wells were drilled with 6,000 to 8,500-foot laterals. The pad is estimated to have the capacity to produce in excess of 150 MMcfd of gas.

Once initial production rates are established, Quicksilver's current plan is to restrict the flow from the pad to optimize midstream commitments under various agreements, and subsequently, to increase production to meet increased throughput commitments as necessary, or if natural gas prices improve. Therefore, no additional wells are planned to be drilled in the second half of 2012 as was contemplated in the original budget.

United States - Barnett Shale

Quicksilver drilled 7 gross (7 net) wells and connected 14 gross (10.6 net) wells to sales in the second quarter. At June 30, 2012, Quicksilver had a remaining uncompleted well inventory of 24 gross operated wells that have been drilled in the Barnett Shale but await completion or connection to sales lines.

As of June 30, 2012, the company is operating one rig in the high-BTU acreage of the Barnett Shale, and is scaling back activity with plans to drill four wells, complete six wells, and connect eight wells to sales for the remainder of 2012.

United States - Sand Wash Basin

The company continues to see improvements in well performance and drilling/completion cost in its Colorado Niobrara project. In the second quarter, the company drilled two vertical wells and recompleted a third well using a different fracture stimulation method. Initial production rates for the newer vertical wells have come in at approximately 100 barrels of oil equivalent (Boe) per day, which is primarily oil, and these wells exhibit a relatively shallow production decline. Preliminary estimates of ultimate recoveries are in the range of 200,000 Boe per well. This recovery estimate is consistent with historical recoveries from producing wells in this area of the Sand Wash Basin.

The company plans to drill one well and complete two wells for the remainder of 2012 and defer construction of a planned gathering line and related facilities.

Quicksilver holds approximately 210,000 net acres in the Sand Wash Basin of Northwest Colorado, which the company believes are situated in the oil window prospective of the Niobrara formation.

United States - West Texas

Quicksilver is currently completing two wells after seeing promising shows while drilling in its West Texas project, one in Pecos County targeting the Third Bone Springs formation and one in Upton County targeting the Wolfcamp formation.

The company plans to drill and complete two wells during the remainder of 2012.

Quicksilver holds approximately 155,000 net acres across the Delaware and Midland basins of West Texas, of which the company believes approximately 105,000 net acres are situated in the oil window of the Wolfcamp and Bone Springs formations.

Canada - Horseshoe Canyon

Drilling, completion and pipeline activities were suspended for most of the second quarter due to the seasonal break-up period. The company does not expect to drill any further wells in Horseshoe Canyon during the second half of 2012.

Capital Program

During the second quarter of 2012, the company incurred approximately $155 million of capital expenditures, of which approximately $131 million was associated with drilling and completion activities, $5 million for midstream activities, $11 million for acreage purchases, and $8 million for corporate and other purposes. For the six months ended June 30, 2012, the total capital program was $291 million. The capital budget for 2012 was 70% weighted to the first half of the year to accommodate an increase in the midstream commitments in the Horn River Basin and for the additional drilling rig utilized during the first quarter in the Barnett Shale.

Capital spending is projected to be $70 million for the second half of 2012 and approximately $360 million for full-year 2012, or $50 million less than the original budget of $410 million. The reduction in capital spending is due to a reduction in drilling and related activity across the company's assets as discussed in the operational updates above.

Third Quarter Outlook

Third-quarter average daily production volume is expected to be 385-400 MMcfe per day. Full-year 2012 average production volume is expected to be 365-380 MMcfe per day with drilling activity further reduced from what was contemplated in the previous quarter's guidance.

For the third-quarter 2012, average unit expenses, on a Mcfe basis, are expected as follows:

• Lease operating expense $0.60 - $0.64
• Gathering, processing & transportation 1.16 - 1.20
• Production and ad-valorem taxes 0.21 - 0.23
• General and administrative 0.43 - 0.47
• Depletion, depreciation & accretion 1.30 - 1.35

Hedging

The company has 272 MMcfed of hedges in place for 2012 at a weighted average price of $6.02, which covers greater than 70% of expected total equivalent production for the remainder of 2012, and 160 MMcfd of hedges for 2013 at a weighted average price of $5.30.

Conference Call

The company will host a conference call to discuss second-quarter operating and financial results at 10:00 a.m. central time today.

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 41140500, approximately 10 minutes before the call. A digital replay of the conference call will be available at 2:00 p.m. central time the same day, and will remain available for 30 days. The replay can be dialed at 1-855-859-2056 using the conference ID number 41140500. The replay will also be archived for 30 days on the company's website.

Use of Non-GAAP Financial Measure

This news release and the accompanying schedule include the non-generally accepted accounting principles ("non-GAAP") financial measure of adjusted net income. The accompanying schedule provides reconciliations of this non-GAAP financial measure to its most directly comparable financial measure calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Our non-GAAP financial measure should not be considered as an alternative to GAAP measures such as net income or operating income or any other GAAP measure of liquidity or financial performance.

About Quicksilver Resources

Fort Worth, Texas-based Quicksilver Resources is an independent oil and gas company engaged in the exploration, development and acquisition of oil and gas, primarily from unconventional reservoirs including gas from shales and coal beds in North America. The company has U.S. offices in Fort Worth, Texas; Glen Rose, Texas; Craig, Colorado; Steamboat Springs, Colorado 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
Certain statements contained in this press release and other materials we file with the SEC, or in other written or oral statements made or to be made by us, other than statements of historical fact, are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements give our current expectations or forecasts of future events. Words such as "may," "assume," "forecast," "position," "predict," "strategy," "expect," "intend," "plan," "estimate," "anticipate," "believe," "project," "budget," "potential," or "continue," and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include: changes in general economic conditions; fluctuations in natural gas, NGL and oil prices; failure or delays in achieving expected production from exploration and development projects; uncertainties inherent in estimates of natural gas, NGL and oil reserves and predicting natural gas, NGL and oil reservoir performance; effects of hedging natural gas, NGL and 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; delays in construction of transportation pipelines and gathering, processing and treating facilities; 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 or delays in completing Quicksilver's proposed initial public offering of common units representing limited partner interests in a master limited partnership holding portions of our Barnett Shale assets; and additional factors described elsewhere in this press release.

This list of factors is not exhaustive, and new factors may emerge or changes to these factors may occur that would impact our business. Additional information regarding these and other factors may be contained in our filings with the SEC, especially on Forms 10-K, 10-Q and 8-K. All such risk factors are difficult to predict, and are subject to material uncertainties that may affect actual results and may be beyond our control. The forward-looking statements included in this press release are made only as of the date of this press 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.

All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements.

   
QUICKSILVER RESOURCES INC.  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
In thousands, except for per share data - Unaudited  
               
    For the Three Months Ended     For the Six Months Ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
Revenue:                                
  Production   $ 150,503     $ 207,706     $ 322,323     $ 398,006  
  Sales of purchased natural gas     9,442       19,560       21,529       39,986  
  Other     8,617       21,180       (29,820 )     22,641  
    Total revenue     168,562       248,446       314,032       460,633  
                                 
Operating expense:                                
  Lease operating     21,599       24,484       50,290       45,693  
  Gathering, processing and transportation     42,624       46,726       85,701       91,088  
  Production and ad valorem taxes     7,189       8,506       13,952       16,087  
  Costs of purchased natural gas     9,337       19,557       21,274       39,300  
  Depletion, depreciation and accretion     51,942       54,704       106,381       107,175  
  Impairment     991,921       -       1,054,668       49,063  
  General and administrative     18,405       15,770       37,501       34,161  
  Other operating     134       23       150       183  
    Total expense     1,143,151       169,770       1,369,917       382,750  
Crestwood earn-out     -       -       41,097       -  
Operating income (loss)     (974,589 )     78,676       (1,014,788 )     77,883  
Loss from earnings of BBEP     -       (26,207 )     -       (47,091 )
Other income - net     65       123,178       157       124,299  
Fortune Creek accretion     (4,830 )     -       (9,571 )     -  
Interest expense     (40,076 )     (47,552 )     (80,246 )     (93,730 )
Income (loss) before income taxes     (1,019,430 )     128,095       (1,104,448 )     61,361  
Income tax expense (benefit)     (346,889 )     19,508       (371,983 )     23,532  
Net income (loss)   $ (672,541 )   $ 108,587     $ (732,465 )   $ 37,829  
                                 
Earnings (loss) per common share - basic   $ (3.96 )   $ 0.63     $ (4.31 )   $ 0.22  
                                 
Earnings (loss) per common share - diluted   $ (3.96 )   $ 0.61     $ (4.31 )   $ 0.22  
                                 
Basic weighted average shares outstanding     170,043       168,984       169,991       168,928  
                                 
Diluted weighted average shares outstanding     170,043       179,668       169,991       169,786  
                   
                   
                   
QUICKSILVER RESOURCES INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
In thousands, except share data - Unaudited  
             
    June 30, 2012     December 31, 2011  
             
ASSETS  
Current assets                
  Cash   $ 14,003     $ 13,146  
  Accounts receivable - net of allowance for doubtful accounts     64,667       95,282  
  Derivative assets at fair value     189,536       162,845  
  Other current assets     36,690       29,154  
    Total current assets     304,896       300,427  
                 
Property, plant and equipment - net                
  Oil and gas properties, full cost method (including unevaluated costs of $481,735 and $433,341, respectively)    
2,346,209
     
3,226,476
 
  Other property and equipment     249,857       234,043  
Property, plant and equipment - net     2,596,066       3,460,519  
Derivative assets at fair value     159,189       183,982  
Deferred income taxes     134,190       -  
Other assets     50,183       50,534  
    $ 3,244,524     $ 3,995,462  
LIABILITIES AND EQUITY  
Current liabilities                
  Current portion of long-term debt   $ -     $ 18  
  Accounts payable     111,941       142,672  
  Accrued liabilities     139,257       142,193  
  Derivative liabilities at fair value     -       4,028  
  Current deferred tax liability     45,968       45,262  
    Total current liabilities     297,166       334,173  
                 
Long-term debt     2,069,726       1,903,431  
                 
Partnership Liability     130,357       122,913  
Asset retirement obligations     94,872       85,568  
Derivative Liabilities at fair value     6,538          
Other liabilities     28,461       28,461  
Deferred income taxes     38,611       258,997  
Commitments and contingencies                
Stockholders' Equity                
  Preferred stock, par value $0.01, 10,000,000 shares authorized, none outstanding             -  
  Common stock, $0.01 par value, 400,000,000 shares authorized; 178,811,191 and 176,980,483 shares issued, respectively    
1,788
     
1,770
 
  Paid in capital in excess of par value     747,029       737,015  
  Treasury stock of 5,735,074 and 5,379,702 shares, respectively     (48,715 )     (46,351 )
  Accumulated other comprehensive income     256,529       214,858  
  Retained earnings     (377,838 )     354,627  
    Total stockholders' equity     578,793       1,261,919  
    $ 3,244,524     $ 3,995,462  
                 
                 
                 
QUICKSILVER RESOURCES INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
In thousands - Unaudited  
             
    For the Six Months Ended June 30,  
    2012     2011  
Operating activities:                
  Net income (loss)   $ (732,465 )   $ 37,829  
  Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
    Depletion, depreciation and accretion     106,381       107,175  
    Impairment expense     1,054,668       49,063  
    Crestwood earn-out     (41,097 )     -  
    Deferred income tax expense (benefit)     (372,741 )     17,667  
    Non-cash gain (loss) from hedging and derivative activities     61,503       (19,933 )
    Stock-based compensation     10,021       10,386  
    Non-cash interest expense     3,469       7,872  
    Fortune Creek accretion     9,571       -  
    Gain on disposition of BBEP units     -       (123,752 )
    Loss from BBEP in excess of cash distributions     -       60,050  
    Other     328       1,111  
  Changes in assets and liabilities:                
    Accounts receivable     30,600       (8,608 )
    Prepaid expenses and other assets     (5,031 )     (4,426 )
    Accounts payable     (21,838 )     (25,859 )
    Accrued and other liabilities     (3,853 )     14,777  
Net cash provided by operating activities     99,516       123,352  
                 
Investing activities:                
  Purchases of property, plant and equipment     (307,169 )     (396,156 )
  Proceeds from Crestwood earn-out     41,097       -  
  Proceeds from sale of BBEP units     -       134,423  
  Proceeds from sales of property and equipment     3,372       3,123  
Net cash used for investing activities     (262,700 )     (258,610 )
                 
Financing activities:                
  Issuance of debt     255,775       256,445  
  Repayments of debt     (88,115 )     (170,172 )
  Debt issuance costs paid     (148 )     -  
  Distribution of Fortune Creek Partnership funds     (1,845 )     -  
  Proceeds from exercise of stock options     11       622  
  Purchase of treasury stock     (2,364 )     (4,801 )
Net cash provided by financing activities     163,314       82,094  
                 
Effect of exchange rate changes in cash     727       (1,771 )
                 
Net increase (decrease) in cash     857       (54,935 )
                 
Cash at beginning of period     13,146       54,937  
                 
Cash at end of period   $ 14,003     $ 2  
                 
                 
                 
QUICKSILVER RESOURCES INC.  
Unaudited Selected Operating Results  
                         
    Three Months Ended June 30,     Six Months Ended June 30,  
    2012     2011     2012     2011  
Average Daily Production:                
Natural Gas (MMcfd)     285.6       333.1       294.2       325.9  
NGL (Bbld)     11,365       13,191       11,449       12,381  
Oil (Bbld)     807       823       826       770  
  Total (MMcfed)     358.7       417.2       367.9       404.8  
                                 
Average Realized Prices, including hedging:                                
Natural Gas (per Mcf)   $ 3.98     $ 5.06     $ 4.16     $ 5.06  
NGL (per Bbl)     39.36       39.38       41.18       38.66  
Oil (per Bbl)     85.73       96.28       90.28       92.02  
  Total (Mcfe)     4.61       5.47       4.81       5.43  
                                 
Expense per Mcfe:                                
Lease operating expense:                                
  Cash expense   $ 0.65     $ 0.63     $ 0.74     $ 0.61  
  Equity compensation     0.01       0.01       0.01       0.01  
Total lease operating expense:   $ 0.66     $ 0.64     $ 0.75     $ 0.62  
                                 
Gathering, processing and transportation expense   $ 1.31     $ 1.23     $ 1.28     $ 1.24  
                                 
Production and ad valorem taxes   $ 0.22     $ 0.22     $ 0.21     $ 0.22  
                                 
Depletion, depreciation and accretion   $ 1.59     $ 1.44     $ 1.59     $ 1.46  
                                 
General and administrative expense:                                
  Cash expense   $ 0.36     $ 0.28     $ 0.35     $ 0.33  
  Audit and accounting fees     0.08       0.02       0.07       0.01  
  Equity compensation     0.12       0.12       0.14       0.13  
Total general and administrative expense   $ 0.56     $ 0.42     $ 0.56     $ 0.47  
                                 
Interest expense:                                
  Cash expense on debt outstanding   $ 1.32     $ 1.16     $ 1.27     $ 1.19  
  Fees paid on letters of credit outstanding     0.00       0.03       0.00       0.02  
  Premium on senior notes repurchased     -       0.01       -       0.01  
  Non-cash interest     0.04       0.10       0.04       0.11  
  Capitalized interest     (0.13 )     (0.05 )     (0.12 )     (0.04 )
Total interest expense   $ 1.23     $ 1.25     $ 1.19     $ 1.29  
                                 
                                 
                                 
QUICKSILVER RESOURCES INC.
Production, on a million cubic feet of natural gas equivalent (MMcfe)
per day basis, by operating area
                 
    Three Months Ended June 30,   Six Months Ended June 30,
    2012   2011   2012   2011
                 
Barnett Shale   287.1   338.6   295.5   328.6
Other U.S.   3.5   3.1   3.7   3.2
Total U.S.   290.6   341.7   299.2   331.8
Horseshoe Canyon   53.2   58.3   55.6   58.8
Horn River   14.9   17.2   13.1   14.2
Total Canada   68.1   75.5   68.7   73.0
  Total Company   358.7   417.2   367.9   404.8
                 
                 
                 
QUICKSILVER RESOURCES INC.  
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME  
In thousands, except per share data - Unaudited  
                   
    For the Three Months Ended June 30, 2012  
       
    As Reported     Adjustments     Adjusted Net Income  
Revenue:                        
  Production   $ 150,503     $ -     $ 150,503  
  Sales of purchased natural gas     9,442       -       9,442  
  Other     8,617       (8,100 )     517  
    Total revenue     168,562       (8,100 )     160,462  
                         
Operating expense:                        
  Lease operating     21,599       -       21,599  
  Gathering, processing and transportation     42,624       -       42,624  
  Production and ad valorem taxes     7,189       -       7,189  
  Costs of purchased natural gas     9,337       -       9,337  
  Depletion, depreciation and accretion     51,942       -       51,942  
  Impairment     991,921       (991,921 )     -  
  General and administrative     18,405       (2,691 )     15,714  
  Other operating     134       -       134  
    Total expense     1,143,151       (994,612 )     148,539  
Crestwood earn-out     -       -       -  
Operating income (loss)     (974,589 )     986,512       11,923  
Income from earnings of BBEP     -       -       -  
Other income - net     65       -       65  
Fortune Creek accretion     (4,830 )     -       (4,830 )
Interest expense     (40,076 )     -       (40,076 )
Income before income taxes     (1,019,430 )     986,512       (32,918 )
Income tax expense (benefit)     (346,889 )     (335,368 )     (11,521 )
Net income (loss)   $ (672,541 )   $ 651,144     $ (21,397 )
                         
                         
Earnings (loss) per common share - diluted   $ (3.96 )           $ (0.13 )
Diluted weighted average shares outstanding     170,043               170,043  
                         
                         
                         
QUICKSILVER RESOURCES INC.  
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME  
In thousands, except per share data - Unaudited  
                   
    For the Three Months Ended June 30, 2011  
       
    As Reported     Adjustments     Adjusted Net Income  
Revenue:                        
  Production   $ 207,706     $ -     $ 207,706  
  Sales of purchased natural gas     19,560       -       19,560  
  Other     21,180       (19,115 )     2,065  
    Total revenue     248,446       (19,115 )     229,331  
                         
Operating expense:                        
  Lease operating     24,484       -       24,484  
  Gathering, processing and transportation     46,726       -       46,726  
  Production and ad valorem taxes     8,506       -       8,506  
  Costs of purchased natural gas     19,557       -       19,557  
  Depletion, depreciation and accretion     54,704       -       54,704  
  Impairment     -       -       -  
  General and administrative     15,770       -       15,770  
  Other operating     23       -       23  
    Total expense     169,770       -       169,770  
Crestwood earn-out     -       -       -  
Operating income (loss)     78,676       (19,115 )     59,561  
Income (loss) from earnings of BBEP     (26,207 )     30,773       4,566  
Other income (loss) - net     123,178       (122,463 )     715  
Interest expense     (47,552 )     656       (46,896 )
Income before income taxes     128,095       (110,149 )     17,946  
Income tax expense     19,508       12,545       6,963  
Net income (loss)   $ 108,587     $ (97,604 )   $ 10,983  
                         
                         
Earnings (loss) per common share - diluted   $ 0.61             $ 0.06  
Diluted weighted average shares outstanding     179,668               179,668  
                         
                         
                         
QUICKSILVER RESOURCES INC.  
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME  
In thousands, except per share data - Unaudited  
                   
    For the Six Months Ended June 30, 2012  
       
    As Reported     Adjustments     Adjusted Net Income  
Revenue:                        
  Production   $ 322,323     $ -     $ 322,323  
  Sales of purchased natural gas     21,529       -       21,529  
  Other     (29,820 )     31,326       1,506  
    Total revenue     314,032       31,326       345,358  
                         
Operating expense:                        
  Lease operating     50,290       -       50,290  
  Gathering, processing and transportation     85,701       -       85,701  
  Production and ad valorem taxes     13,952       -       13,952  
  Costs of purchased natural gas     21,274       -       21,274  
  Depletion, depreciation and accretion     106,381       -       106,381  
  Impairment     1,054,668       (1,054,668 )     -  
  General and administrative     37,501       (3,491 )     34,010  
  Other operating     150       -       150  
    Total expense     1,369,917       (1,058,159 )     311,758  
Crestwood earn-out     41,097       (41,097 )     -  
Operating income (loss)     (1,014,788 )     1,048,388       33,600  
Income from earnings of BBEP     -       -       -  
Other income - net     157       -       157  
Fortune Creek accretion     (9,571 )     -       (9,571 )
Interest expense     (80,246 )     -       (80,246 )
Income before income taxes     (1,104,448 )     1,048,388       (56,060 )
Income tax expense (benefit)     (371,983 )     (352,362 )     (19,621 )
Net income (loss)   $ (732,465 )   $ 696,026     $ (36,439 )
                         
                         
Earnings (loss) per common share - diluted   $ (4.31 )           $ (0.21 )
Diluted weighted average shares outstanding     169,991               169,991  
                         
                         
                         
QUICKSILVER RESOURCES INC.  
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME  
In thousands, except per share data - Unaudited  
                   
    For the Six Months Ended June 30, 2011  
       
    As Reported     Adjustments     Adjusted Net Income  
Revenue:                        
  Production   $ 398,006     $ -     $ 398,006  
  Sales of purchased natural gas     39,986       -       39,986  
  Other     22,641       (19,115 )     3,526  
    Total revenue     460,633       (19,115 )     441,518  
                         
Operating expense:                        
  Lease operating     45,693       -       45,693  
  Gathering, processing and transportation     91,088       -       91,088  
  Production and ad valorem taxes     16,087       -       16,087  
  Costs of purchased natural gas     39,300       -       39,300  
  Depletion, depreciation and accretion     107,175       -       107,175  
  Impairment     49,063       (49,063 )     -  
  General and administrative     34,161       -       34,161  
  Other operating     183       -       183  
    Total expense     382,750       (49,063 )     333,687  
Operating income     77,883       29,948       107,831  
Income (loss) from earnings of BBEP     (47,091 )     54,095       7,004  
Other income (loss) - net     124,299       (123,752 )     547  
Interest expense     (93,730 )     656       (93,074 )
Income before income taxes     61,361       (39,053 )     22,308  
Income tax expense     23,532       14,977       8,555  
Net income (loss)   $ 37,829     $ (24,076 )   $ 13,753  
                         
                         
Earnings per common share - diluted   $ 0.22             $ 0.08  
Diluted weighted average shares outstanding     169,786               169,786  
                         

KWK 12-14

Contact Information

  • Investor Contact:
    David Erdman
    (817) 665-4023