Quicksilver Resources Inc.
NYSE : KWK

Quicksilver Resources Inc.

May 02, 2007 20:01 ET

Quicksilver Resources Reports First-Quarter 2007 Results

Organic Growth Fuels 21% Increase in Production; Net Cash From Operating Activities Grows 16%

FORT WORTH, TX--(CCNMatthews - May 02, 2007) - Quicksilver Resources Inc. (NYSE: KWK) today reported net income for the first quarter of 2007 of $22.9 million ($0.28 per diluted share) on revenues of $116.6 million as compared to $27.5 million ($0.34 per diluted share) on revenues of $99.7 million in the prior-year quarter. Net cash from operating activities for the first quarter of 2007 was $73.3 million, an increase of 16 percent from $63.3 million generated in the same period of 2006, as presented in the attached Condensed Consolidated Statements of Cash Flows.

Production

Total daily average production increased 21 percent to a record 187 million cubic feet equivalent (MMcfe) versus the prior-year period of 154 MMcfe. Daily production volumes increased five percent sequentially from the fourth quarter of 2006, marking the company's 15th consecutive quarter of production growth. Natural gas, including natural gas liquids (NGL), comprised approximately 95 percent of the company's total production in the first quarter of 2007.

"Continued success of our accelerating development activities in the Fort Worth Basin Barnett Shale is driving our organic growth," said Glenn Darden, President and Chief Executive Officer. "Production from the Barnett Shale has increased 125% in the past year. With more than 2,000 identified development locations on our acreage, we believe we are well positioned to achieve our total company production growth target of approximately 25 percent for 2007 and expect to maintain double-digit volume growth for several years to come."

Production on an MMcfe per day basis for the company's primary operating areas for the three months ended March 31 was as follows:




Area 2007 2006 Change
---- ---- ---- ------
Texas 51,195 22,718 125%
Canada 56,131 48,052 17%
Michigan 72,189 74,924 (4%)
Other 7,759 8,508 (9%)
Total Company 187,274 154,202 21%


Operations Update

Total capital expenditures for the first quarter of 2007 totaled approximately $183 million, which included approximately 68 percent for drilling and completion activities, approximately 11 percent for acreage purchases, approximately 20 percent for midstream activities and one percent for corporate.

In the Fort Worth Basin, the company drilled 46 net wells and connected 17 net wells to sales during the first quarter. To keep pace with the growing production and to maximize the value of the natural gas produced, the company completed a 125 MMcf per day expansion of its Cowtown Gas Plant during the quarter, bringing total throughput capacity to 200 MMcf per day.

In Canada, the company drilled 36 net wells and connected 41 net wells to sales during the first quarter. Canada is currently in the spring "break-up" period and drilling and completion activity has ceased temporarily. Activity is expected to resume by early summer.

Conference Call

The company will host a conference call to discuss operational and financial results for the first quarter 2007 on Thursday, May 3, 2007, at 10:00 a.m. central time.

Quicksilver invites interested parties to participate in the call via the company's website at http://www.qrinc.com or by calling 1-877-313-7932, using the conference ID number 6102596, 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 30 days. The replay can be dialed at 1-800-642-1687 and reference should be made to the conference ID number 6102596. A replay will also be archived for 30 days on the company's website.

About Quicksilver Resources

Fort Worth, Texas-based Quicksilver Resources is a natural gas and crude oil exploration and production company engaged in the development and acquisition of long-lived, unconventional natural gas reserves, including coal bed methane, shale gas, and tight sands gas in North America. The company has U.S. offices in Fort Worth, Texas; Granbury, Texas; Gaylord, Michigan; Corydon, Indiana 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 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
March 31,
---------------------
2007 2006
---------- ----------
Production:
Natural gas (MMcf) 14,165 12,512
Oil (MBbls) 150 143
NGL (MBbls) 298 85
Total (MMcfe) 16,855 13,878

United States (MMcfe) 11,803 9,553
Canada (MMcfe) 5,052 4,325
---------- ----------
Total (MMcfe) 16,855 13,878

Average Daily Production:
Natural gas (Mcfd) 157,389 139,025
Oil (Bbld) 1,665 1,590
NGL (Bbld) 3,316 939
Total (Mcfed) 187,274 154,202


Average Sales Price Per Unit (excluding effects of
hedging):
Natural gas (per Mcf) $ 5.73 $ 7.13
Oil (per Bbl) $ 50.99 $ 59.08
NGL (per Bbl) $ 33.81 $ 39.91
Total (per Mcfe) $ 5.87 $ 7.28


Average Sales Price Per Unit (including effects of
hedging):
Natural gas (per Mcf) $ 6.75 $ 6.95
Oil (per Bbl) $ 50.99 $ 58.64
NGL (per Bbl) $ 33.81 $ 39.91
Total (per Mcfe) $ 6.72 $ 7.11

Expense per Mcfe:
United States production cost $ 1.78 $ 1.70
Canada production cost $ 1.49 $ 1.20
Total production cost $ 1.69 $ 1.54

Production and ad valorem taxes $ 0.27 $ 0.30
General and administrative expenses $ 0.59 $ 0.45
Depletion, depreciation and accretion $ 1.46 $ 1.27



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


March 31, December 31,
2007 2006
-------------- --------------
ASSETS

Current assets
Cash and cash equivalents $ 5,718 $ 5,281
Accounts receivable, net of allowance
for doubtful accounts 76,180 76,521
Current derivative assets 8,037 64,086
Other current assets 27,611 25,076
-------------- --------------
Total current assets 117,546 170,964

Investments in and advances to equity
affiliates 7,396 7,434

Properties, plant and equipment - net
("full cost") 1,843,645 1,679,280

Deferred derivative assets - 3,753

Other assets 23,846 21,481
-------------- --------------
$ 1,992,433 $ 1,882,912
============== ==============


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Current portion of long-term debt $ 312 $ 400
Accounts payable 108,141 109,914
Accrued liabilities 55,710 67,697
Accrued derivative obligations 2,509 -
Current deferred income taxes 2,062 21,378
-------------- --------------
Total current liabilities 168,734 199,389

Long-term debt 1,058,604 919,117

Derivative obligations 5,252 -

Asset retirement obligations 26,987 25,058

Deferred income taxes 165,174 156,251

Minority interest 7,694 7,431

Stockholders' equity
Preferred stock, $0.01 par value,
10,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, $0.01 par value,
200,000,000 shares authorized and
80,746,547 and 80,181,593 shares issued,
respectively 807 802
Paid-in capital in excess of par value 243,933 238,063
Treasury stock of 2,592,769 and
2,579,671 shares, respectively (11,231) (10,737)
Accumulated other comprehensive income 16,534 60,099
Retained earnings 309,945 287,439
-------------- --------------
Total stockholders' equity 559,988 575,666
-------------- --------------
$ 1,992,433 $ 1,882,912
============== ==============



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


For the Three Months
Ended March 31,
--------------------
2007 2006
--------- ---------
Revenues
Oil, gas and related product sales $ 113,292 $ 98,689
Other revenue 3,288 961
--------- ---------
Total revenues 116,580 99,650
Expenses
Oil and gas production costs 28,569 21,410
Production and ad valorem taxes 4,490 4,173
Other operating costs 784 403
Depletion, depreciation and accretion 24,594 17,673
Provision for doubtful accounts (264) -
General and administrative 9,962 6,254
--------- ---------
Total expenses 68,135 49,913
--------- ---------

Income from equity affiliates 115 188
--------- ---------

Operating income 48,560 49,925

Other income - net (601) (350)
Interest expense 14,952 9,202
--------- ---------

Income from continuing operations before
income taxes and minority interest 34,209 41,073
Income tax expense 11,295 13,538
Minority interest expense 63 -
--------- ---------

Net income $ 22,851 $ 27,535
========= =========


Basic net income per common share $ 0.30 $ 0.36

Diluted net income per common share $ 0.28 $ 0.34

Weighted average common shares outstanding
Basic 77,194 76,039
Diluted 83,830 82,808



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


For the Three Months
Ended March 31,
--------------------
2007 2006
--------- ---------
Operating activities:
Net income $ 22,851 $ 27,535
Charges and credits to net income not affecting
cash
Depletion, depreciation and accretion 24,594 17,673
Deferred income taxes 11,265 13,400
Non-cash compensation 2,899 1,246
Amortization of deferred loan costs 456 735
Income from equity affiliates (115) (188)
Minority interest expense 63 -
Other 328 80
Changes in assets and liabilities
Accounts receivable 605 8,468
Inventory, prepaid expenses and other (3,528) (11,278)
Accounts payable 6,507 3,262
Accrued liabilities and other 7,330 2,406
--------- ---------
Net cash provided by operating activities 73,255 63,339
--------- ---------

Investing activities:
Development and exploration costs and other
property additions (210,175) (139,955)
Return of investment from equity affiliates 202 250
Proceeds from sale of assets - 341
--------- ---------
Net cash used for investing activities (209,973) (139,364)
--------- ---------

Financing activities:
Issuance of debt 143,446 392,182
Repayments of debt (6,868) (198,082)
Debt issuance costs (2,303) (8,283)
Proceeds from exercise of stock options 2,976 1,430
Purchase of treasury stock (494) (29)
Minority interest contributions 167 -
--------- ---------
Net cash provided by financing activities 136,924 187,218
--------- ---------

Effect of exchange rate changes in cash 231 246
--------- ---------

Net increase in cash and cash equivalents 437 111,439

Cash and cash equivalents at beginning of period 5,281 14,318
--------- ---------

Cash and cash equivalents at end of period $ 5,718 $ 125,757
========= =========



Contact Information

  • INVESTOR RELATIONS:
    or
    Quicksilver Resources Inc.
    Rick Buterbaugh
    (817) 665-4835
    or
    Diane Weaver
    (817) 665-4834