SOURCE: Quicksilver Resources Inc.

August 02, 2005 22:21 ET

Quicksilver Resources Reports Second Quarter 2005 Financial Results

Earnings per Share Increase 110% -- Gas Production up 21% Year Over Year

FORT WORTH, TX -- (MARKET WIRE) -- August 2, 2005 -- Quicksilver Resources Inc. (NYSE: KWK) today reported net income for second quarter of 2005 of $17.2 million on revenues of $68.5 million, or $0.21 per diluted share. The company's comparative second quarter of 2004 net income was $7.5 million on revenues of $42 million, or $0.10 per diluted share after adjusting for the three-for-two stock split effected in the form of a stock dividend in June 2005. Earnings per share for the second quarter of 2005 increased 110 percent per diluted share compared to second quarter 2004.

Net income for the first six months of 2005 was $27.9 million on revenues of $123.8 million, or $0.34 per diluted share. This compares to first six months 2004 net income of $13.4 million on revenue of $81.8 million, or $0.18 per diluted share. For the six-month period ended June 2005, net cash from operating activities, as presented in the attached Condensed Consolidated Statements of Cash Flows, was $61.1 million compared to $38.6 million for same period in 2004.

Production

Natural gas production for the second quarter of 2005 was 11.4 billion cubic feet (Bcf), or an average of 126 million cubic feet per day (MMcf/d), which is a 21 percent increase over production of 9.4 Bcf, or an average of 103 MMcf/d, for the same period in 2004. The price realized for the company's natural gas production in the second quarter of 2005 averaged $5.24 per thousand cubic feet (Mcf), compared to the $3.71 per Mcf realized in the same period of 2004. Natural gas, including natural gas liquids (NGL), comprised 93 percent of the company's total production in the second quarter of 2005.

Crude oil production for the second quarter of 2005 was 143,000 barrels, or 1,569 barrels per day, as compared to 185,000 barrels of production in the second quarter of 2004. Crude prices realized for the second quarter of 2005 averaged $45.01 per barrel compared to $32.62 per barrel for the prior year second quarter.

Natural gas liquids production for the second quarter of 2005 was 45,000 barrels compared to 33,000 barrels in the second quarter of 2004. The price realized for natural gas liquids averaged $33.27 per barrel in the second quarter of 2005, compared to the average of $22.85 per barrel realized in the second quarter of 2004.

Operations Update

In the Barnett shale play in north central Texas, Quicksilver has drilled 27 net wells to date with 20 of these completed and tied into sales. The company's current net production is 13 million cubic feet equivalent per day.

The initial phase of the company's Cowtown Pipeline was put in service in July, and that line is currently being twinned with 20-inch pipe. Both lines are expected to be in service in the fourth quarter of 2005. The company continues to build its lease position, which now stands at approximately 230,000 acres.

Drilling and completion operations in Canada have resumed following the seasonal break-up period. Quicksilver, through its wholly owned subsidiary, MGV Energy Inc., has drilled 127 net wells (223 gross wells) of the planned 280 net wells (495 gross wells) for 2005. Sixty-three gross wells are completed and awaiting connection to sales lines. Current production is 41 MMcf/d. MGV is on track to exit the year producing 55 MMcf/d. Quicksilver has also drilled 26 net wells in Michigan and Indiana in its other shale projects, and re-works in non-Antrim properties have kept Michigan production ahead of plan for the year.

President and CEO, Glenn Darden, noted, "Consistent production rates over a large area of our Barnett acreage strengthen our confidence in this play. Our Cowtown facilities are now delivering gas and will increase the recoveries from this high BTU stream. Although we have been slowed by summer rains in Canada, the company should beat our year-end production targets. Overall, we are very pleased with our progress thus far, and we look forward to expanding our drilling projects in the coming months."

Conference Call

The company's conference call to discuss operating and financial results is scheduled for Wednesday, August 3, 2005 at 9:00 a.m. central time. Quicksilver invites interested persons to participate in the conference call by dialing (877) 313-7932, ID number 3379912 between 8:50 and 8:55 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 3379912. The call will also be broadcast 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 Resources

Fort Worth, Texas-based Quicksilver Resources is a natural gas and crude oil production company engaged in the development and acquisition of long-lived natural gas and crude oil properties. The company, widely recognized as a leader in the development and production of unconventional natural gas reserves, including coal bed methane, shale gas, and tight sands gas, is listed on the New York Stock Exchange (KWK). 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, MGV Energy Inc., located in Calgary, Alberta. For more information about Quicksilver Resources, visit www.qrinc.com.

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's 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's 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; 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's filings with the Securities and Exchange Commission.

                     QUICKSILVER RESOURCES INC.
                 Unaudited Selected Operating Results

                                 Three Months Ended     Six Months Ended
                                       June 30,              June 30,
                                   2005       2004       2005       2004
                                ---------  ---------  ---------  ---------
Production:
  Natural gas (MMcf)               11,428      9,392     22,526     18,615
  Oil (MBbls)                         143        185        271        371
  NGL (MBbls)                          45         33         77         69
    Total (MMcfe)                  12,556     10,700     24,617     21,256

  United States (MMcfe)             9,092      8,864     17,608     17,722
  Canada (MMcfe)                    3,464      1,836      7,009      3,534
                                ---------  ---------  ---------  ---------
    Total (MMcfe)                  12,556     10,700     24,617     21,256

Average Daily Production:
  Natural gas (Mcfd)              125,581    103,211    124,451    102,281
  Oil (Bbld)                        1,569      2,032      1,498      2,038
  NGL (Bbld)                          497        364        427        380
  Total (Mcfed)                   137,975    117,586    136,004    116,793

Average Sales Price Per Unit
 (excluding effects of
 hedging):
  Natural gas (per Mcf)         $    5.54  $    4.83  $    5.35  $    4.73
  Oil (per Bbl)                 $   47.47  $   35.75  $   47.43  $   32.63
  NGL (per Bbl)                 $   33.27  $   22.85  $   33.13  $   23.83
  Total (per Mcfe)              $    5.70  $    4.93  $    5.52  $    4.79

Average Sales Price Per Unit
 (including effects of
 hedging):
  Natural gas (per Mcf)         $    5.24  $    3.71  $    4.78  $    3.64
  Oil (per Bbl)                 $   45.01  $   32.62  $   45.51  $   30.27
  NGL (per Bbl)                 $   33.27  $   22.85  $   33.13  $   23.83
  Total (per Mcfe)              $    5.40  $    3.89  $    4.98  $    3.80

Expense per Mcfe:
  United States production cost $    1.55  $    1.28  $    1.60  $    1.30
  Canada production cost        $    1.07  $    1.14  $    1.03  $    1.11
                                ---------  ---------  ---------  ---------
    Total production cost       $    1.42  $    1.25  $    1.44  $    1.27

  Production taxes              $    0.20  $    0.21  $    0.19  $    0.22
  General and administrative
   expenses                     $    0.37  $    0.31  $    0.31  $    0.28
  Depletion, depreciation and
   amortization                 $    1.04  $    0.91  $    1.03  $    0.89


The results for interim periods are not necessarily indicative of annual
results.


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



                                                   June 30,    December 31,
                                                     2005          2004(1)
                                                 --------         --------
                                    ASSETS
Current assets
     Cash and cash equivalents                     $7,208          $15,947
     Accounts receivable                           40,793           38,037
     Current deferred income taxes                  1,115            3,523
     Inventories and other current
      assets                                       10,481            8,689
                                                 --------         --------
          Total current assets                     59,597           66,196

Investments in and advances to
 equity affiliates                                  8,552            8,254

Properties, plant and equipment
 - net ("full cost")                              906,919          802,610

Other assets                                        9,065           11,274
                                                 --------         --------
                                                 $984,133         $888,334
                                                 ========         ========


         LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
     Current portion of long-term debt               $356             $356
     Accounts payable                              36,662           28,407
     Accrued derivative obligations                 3,628           12,784
     Accrued liabilities                           36,424           41,904
                                                 --------         --------
          Total current liabilities                77,070           83,451

Long-term debt                                    456,160          399,134

Derivative obligations                              1,569                -


Asset retirement obligations                       18,850           17,967

Deferred income taxes                              89,885           83,506

Stockholders' equity
      Preferred stock, $0.01 par value,
       10,000,000 shares authorized,
       1 share issued and outstanding                   -                -
      Common stock, $0.01 par value,
       100,000,000 shares authorized
       78,493,683 and 77,752,151 shares
       issued, respectively                           785              778

      Paid in capital in excess of par value      212,474          200,690
      Deferred compensation                        (4,888)               -
      Treasury stock of 2,568,611 shares          (10,258)         (10,258)
      Accumulated other comprehensive income        8,261            6,762
      Retained earnings                           134,225          106,304
                                                 --------         --------
Total stockholders' equity                        340,599          304,276
                                                 --------         --------
                                                 $984,133         $888,334
                                                 ========         ========

(1)  Share and per share amounts have been adjusted to reflect a
three-for-two stock split effected in the form of a stock dividend in
June 2005.  The split did not affect treasury shares.

The results for interim periods are not necessarily indicative of annual
results.


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


                                For the Three Months   For the Six Months
                                   Ended June 30,         Ended June 30,
                                   2005     2004 (1)     2005     2004 (1)
                                ---------  ---------  ---------  ---------
Revenues
  Oil, gas and related product
   sales                        $  67,843  $  41,600  $ 122,683  $  80,724
  Other revenue                       697        380      1,106      1,033
                                ---------  ---------  ---------  ---------
    Total revenues                 68,540     41,980    123,789     81,757
Expenses
  Oil and gas production costs     20,352     15,658     40,006     31,663
  Other operating costs               654        372      1,045        662
  Depletion, depreciation and
   accretion                       13,017      9,714     25,389     18,819
  Provision for doubtful
   accounts                            88          -         88          -
  General and administrative        4,618      3,353      7,731      6,009
                                ---------  ---------  ---------  ---------
    Total expenses                 38,729     29,097     74,259     57,153
                                ---------  ---------  ---------  ---------

Income from equity affiliates         215        289        439        580
                                ---------  ---------  ---------  ---------

Operating income                   30,026     13,172     49,969     25,184

Other income-net                     (118)       (23)      (204)       (93)
Interest expense                    4,776      3,630      9,433      7,042
                                ---------  ---------  ---------  ---------

Income before income taxes         25,368      9,565     40,740     18,235
Income tax expense                  8,183      2,065     12,801      4,798
                                ---------  ---------  ---------  ---------

Net income                      $  17,185  $   7,500  $  27,939  $  13,437
                                =========  =========  =========  =========


Basic net income per common
 share                          $    0.23  $    0.10  $    0.37  $    0.18
Diluted net income per
 common share                   $    0.21  $    0.10  $    0.34  $    0.18

Weighted average common shares
 outstanding
  Basic                            75,888     74,550     75,704     74,475
  Diluted                          82,474     76,106     82,268     75,952

(1) Share and per share amounts have been adjusted to reflect a
three-for-two stock split effected in the form of a stock dividend in June
2005.  The split did not affect treasury shares.

The results for interim periods are not necessarily indicative of annual
results.


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

                                                  For the Six Months Ended
                                                          June 30,
                                                    2005             2004
                                                 --------         --------

Operating activities:
     Net income                                  $ 27,939         $ 13,437
     Charges and credits to net
      income not affecting cash
        Depletion, depreciation and
         accretion                                 25,389           18,819
        Deferred income taxes                      12,528            4,608
        Amortization of deferred
         loan costs                                   701              616
        Non-cash compensation                         500                -
        Income from equity affiliates                (439)            (580)

        Non-cash gain from hedging
         activities                                  (287)            (355)
        Other                                          58               (2)

     Changes in assets and liabilities
        Accounts receivable                        (2,844)           5,308
        Inventory, prepaid
         expenses and other                        (3,511)             583
        Accounts payable                            2,542            1,204
        Accrued liabilities and other              (1,459)          (5,013)
                                                 --------         --------
Net cash from operating activities                 61,117           38,625
                                                 --------         --------

Investing activities:
     Development and exploration costs
      and other property additions               (132,515)         (85,161)
     Distributions and advances from
      equity affiliates - net                         141              771

     Proceeds from sale of assets                   1,190               82

Net cash used for investing activities           (131,184)         (84,308)


Financing activities:
     Notes payable, bank proceeds                  59,823           47,000
     Principal payments on long-term debt            (161)            (154)
     Deferred financing costs                        (107)               -
     Payment of cash dividend                         (18)               -
     Issuance of common stock,
      net of issuance costs                         1,508              932
                                                 --------         --------
Net cash from financing activities                 61,045           47,778
                                                 --------         --------

Effect of exchange rate changes in cash               283             (265)
                                                 --------         --------

Net increase in cash and
 cash equivalents                                  (8,739)           1,830

Cash and cash equivalents at beginning
 of period                                         15,947            4,116
                                                 --------         --------

Cash and cash equivalents at end
 of period                                         $7,208           $5,946
                                                 ========         ========

Commencing  with the second  quarter  ended June 30, 2005,  the company
changed how it accounts for plant,  property and equipment under
Statement of Financial Accounting  Standards No. 95. The
reclassification  affects (i) accounts payable, (ii) accrued  liabilities
and other,  and (iii)  development  and exploration  costs and other
property  additions.  The correction  for the six months  ended
June 30, 2004  reduced  net cash from  operating  activities  and net
cash used for investing activities by $ 2,172.

The results for interim periods are not necessarily indicative of annual
results.

Contact Information

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

    MEDIA RELATIONS:
    Ward Creative Communications, Inc.
    Deborah Ward Buks
    or Shelley Eastland
    (713) 869-0707