SOURCE: Quicksilver Resources Inc.

November 07, 2005 19:38 ET

Quicksilver Resources Reports Third Quarter 2005 Financial Results

Earnings per Share Increase 210% -- Gas Production Up 17% Year Over Year

FORT WORTH, TX -- (MARKET WIRE) -- November 7, 2005 -- Quicksilver Resources Inc. (NYSE: KWK) today reported net income for third quarter of 2005 of $24.8 million on revenues of $83.8 million, or $0.31 per diluted share. The company's comparative third quarter of 2004 net income was $7.9 million on revenues of $45.5 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 diluted share for the third quarter of 2005 increased 210 percent compared to third quarter 2004.

Net income for the first nine months of 2005 was $52.7 million on revenues of $207.6 million, or $0.66 per diluted share. This compares to first nine months 2004 net income of $21.3 million on revenue of $127.3 million, or $0.28 per diluted share. For the nine-month period ended September 2005, net cash from operating activities, as presented in the attached Condensed Consolidated Statements of Cash Flows, was $85.4 million compared to $54.4 million for same period in 2004.

Production

Natural gas production for the third quarter of 2005 was 11.8 billion cubic feet (Bcf), or an average of 128 million cubic feet per day (MMcf/d), which is a 17 percent increase over production of 10 Bcf, or an average of 109 MMcf/d, for the same period in 2004. The price realized for the company's natural gas production in the third quarter of 2005 averaged $6.12 per thousand cubic feet (Mcf), compared to the $3.73 per Mcf realized in the same period of 2004. Natural gas, including natural gas liquids (NGL), comprised 94 percent of the company's total production in the third quarter of 2005.

Crude oil production for the third quarter of 2005 was 139,000 barrels, or 1,507 barrels per day, as compared to 188,000 barrels of production in the third quarter of 2004. Crude prices realized for the third quarter of 2005 averaged $57.31 per barrel compared to $34.67 per barrel for the prior year third quarter.

Natural gas liquids production for the third quarter of 2005 was 64,000 barrels compared to 28,000 barrels in the third quarter of 2004. The price realized for natural gas liquids averaged $35.96 per barrel in the third quarter of 2005, compared to the average of $30.29 per barrel realized in the third quarter of 2004.

Operations Update

In the Barnett Shale play in north central Texas, Quicksilver has drilled 25 net wells to date this year, with 19 of these completed and connected into sales lines. The company's current net production is 15 million cubic feet equivalent per day (MMcfe/d). The company currently has four drilling rigs operating and expects to add a fifth drilling rig within two weeks. One hundred percent of Quicksilver's operated Barnett Shale gas is connected into its Cowtown Pipeline system. The Cowtown cryogenic natural gas liquids plant should be in operation in December. The company continues to add to its lease position which now stands at more than 251,000 net acres.

Three hundred seventy-five gross wells have been drilled to date this year in Quicksilver's Canadian coal bed methane project with a target of 500 gross wells (277 net) drilled by year-end. Current net production is 45 MMcf/d with production expected to be in excess of 50 MMcf/d by year-end.

Quicksilver has also drilled 50 net wells in Michigan and Indiana in its other shale projects. The company has had positive results in a re-entry horizontal drilling program in the Michigan Antrim Shale. This success coupled with re-works in non-Antrim properties has kept Michigan production ahead of budget for the year.

President and CEO, Glenn Darden, noted, "Despite heavy rains in Alberta and delays in securing drilling rigs in Texas, Quicksilver is making strong progress in our two large development drilling areas. What is most encouraging is the consistent well performance in both Texas and Canada. Now that we have solved the rig issue, the Texas production should grow rapidly."

Conference Call

The company's conference call to discuss operating and financial results is scheduled for Tuesday, November 8, 2005 at 10:00 a.m. central time. Quicksilver invites interested persons to participate in the conference call by dialing (877) 313-7932, ID number 3380369 prior to 9:55 am. 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 3380369. 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 and will be available for one week.

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  Nine Months Ended
                                         September 30,     September 30,
                                       -------- -------- -------- --------
                                         2005     2004     2005     2004
                                       -------- -------- -------- --------
Production:
   Natural gas (MMcf)                    11,762   10,011   34,287   28,626
   Oil (MBbls)                              139      188      410      559
   NGL (MBbls)                               64       28      141       97
      Total (MMcfe)                      12,975   11,305   37,592   32,562

   United States (MMcfe)                  9,223    9,116   26,832   26,838
   Canada (MMcfe)                         3,752    2,189   10,760    5,724
                                       -------- -------- -------- --------
      Total (MMcfe)                      12,975   11,305   37,592   32,562

Average Daily Production:
   Natural gas (Mcfd)                   127,846  108,813  125,595  104,474
   Oil (Bbld)                             1,507    2,042    1,501    2,040
   NGL (Bbld)                               691      303      516      354
   Total (Mcfed)                        141,033  122,883  137,699  118,838

Average Sales Price Per Unit
 (excluding effects of hedging):
   Natural gas (per Mcf)               $   6.66 $   4.65 $   5.80 $   4.70
   Oil (per Bbl)                       $  60.52 $  38.22 $  51.86 $  34.51
   NGL (per Bbl)                       $  35.96 $  30.29 $  34.41 $  25.68
   Total (per Mcfe)                    $   6.86 $   4.83 $   5.99 $   4.80

Average Sales Price Per Unit
 (including effects of hedging):
   Natural gas (per Mcf)               $   6.12 $   3.73 $   5.24 $   3.68
   Oil (per Bbl)                       $  57.31 $  34.67 $  49.50 $  31.75
   NGL (per Bbl)                       $  35.96 $  30.29 $  34.41 $  25.68
   Total (per Mcfe)                    $   6.34 $   3.96 $   5.45 $   3.85

Expense per Mcfe:
   United States production cost       $   1.73 $   1.26 $   1.64 $   1.29
   Canada production cost              $   1.06 $   1.10 $   1.04 $   1.10
                                       -------- -------- -------- --------
      Total production cost            $   1.53 $   1.22 $   1.47 $   1.25

   Production taxes                    $   0.26 $   0.22 $   0.21 $   0.22
   General and administrative expenses $   0.41 $   0.29 $   0.35 $   0.29
   Depletion, depreciation and
    amortization                       $   1.07 $   0.88 $   1.04 $   0.88

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


                                          September 30,     December 31,
                                              2005             2004 (1)
                                          -----------       -----------
                          ASSETS
Current assets
  Cash and cash equivalents               $    29,742       $    15,947
  Accounts receivable                          70,783            38,037
  Current deferred income taxes                30,696             3,523
  Inventories and other current assets          9,046             8,689
                                          -----------       -----------
     Total current assets                     140,267            66,196

Investments in and advances to equity
 affiliates                                     7,918             8,254

Properties, plant and equipment
 - net ("full cost")                          997,075           802,610

Other assets                                    9,042            11,274
                                          -----------       -----------
                                          $ 1,154,302       $   888,334
                                          ===========       ===========



               LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Current portion of long-term debt       $       356       $       356
  Accounts payable                             35,365            28,407
  Accrued derivative obligations               85,358            12,784
  Accrued liabilities                          44,880            41,904
                                          -----------       -----------
     Total current liabilities                165,959            83,451

Long-term debt                                547,697           399,134

Derivative obligations                         11,679                 -

Asset retirement obligations                   19,939            17,967

Deferred income taxes                          98,070            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
   78,519,540 and 77,752,151 shares
   issued, respectively                           785               778
  Paid in capital in excess of par value      212,431           200,690
  Deferred compensation                        (4,200)                -
  Treasury stock of 2,568,611 shares          (10,258)          (10,258)
  Accumulated other comprehensive (loss)
   income                                     (46,780)            6,762
  Retained earnings                           158,980           106,304
                                          -----------       -----------
Total stockholders' equity                    310,958           304,276
                                          -----------       -----------
                                          $ 1,154,302       $   888,334
                                          ===========       ===========

(1) 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      For the Nine
                                          Months Ended      Months Ended
                                          September 30,     September 30,
                                       -------- -------- -------- --------
                                         2005     2004(1)  2005     2004(1)
                                       -------- -------- -------- --------
Revenues
   Oil, gas and related product sales  $ 82,204 $ 44,743 $204,887 $125,467
   Other revenue                          1,569      801    2,675    1,834
                                       -------- -------- -------- --------
      Total revenues                     83,773   45,544  207,562  127,301
Expenses
   Oil and gas production costs          23,272   16,407   63,208   48,226
   Other operating costs                    249       65    1,364      571
   Depletion, depreciation and
    accretion                            13,873    9,982   39,262   28,801
   Provision for doubtful accounts            -        -       88        -
   General and administrative             5,381    3,281   13,112    9,290
                                       -------- -------- -------- --------
      Total expenses                     42,775   29,735  117,034   86,888
                                       -------- -------- -------- --------

Income from equity affiliates               230      300      669      880
                                       -------- -------- -------- --------

Operating income                         41,228   16,109   91,197   41,293

Other income-net                           (253)     (44)    (457)    (137)
Interest expense                          5,589    4,204   15,022   11,246
                                       -------- -------- -------- --------

Income before income taxes               35,892   11,949   76,632   30,184
Income tax expense                       11,199    4,060   24,000    8,858
                                       -------- -------- -------- --------

Income before discontinued operations    24,693    7,889   52,632   21,326
Discontinued operations
   Gain from discontinued drilling
    operations, net of income tax
    of $ 34                                  62        -       62        -
                                       -------- -------- -------- --------
Net income                             $ 24,755 $  7,889 $ 52,694 $ 21,326
                                       ======== ======== ======== ========

Basic net income per share
   Continuing operations               $   0.33 $   0.11 $   0.70 $   0.29
   Discontinued operations                    -        -        -        -
                                       -------- -------- -------- --------
Net income                             $   0.33 $   0.11 $   0.70 $   0.29
                                       ======== ======== ======== ========

Diluted net income per share
   Continuing operations               $   0.31 $   0.10 $   0.66 $   0.28
   Discontinued operations                    -        -        -        -
                                       -------- -------- -------- --------
Net income                             $   0.31 $   0.10 $   0.66 $   0.28
                                       ======== ======== ======== ========
Weighted average common shares
 outstanding
   Basic                                 75,931   74,638   75,777   74,530
   Diluted                               82,668   76,288   82,403   76,037


(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 Nine Months Ended
                                                     September 30,
                                                2005              2004
                                                ----              ----
Operating activities:
  Net income                              $    52,694       $    21,326
  Charges and credits to net income
   not affecting cash
    Depletion, depreciation and accretion      39,262            28,801
    Deferred income taxes                      23,620             8,528
    Amortization of deferred loan costs         1,061               907
    Non-cash compensation                         932                 -
    Income from equity affiliates                (669)             (880)
    Non-cash gain from hedging activities        (305)             (618)
    Other                                          71               (37)
  Changes in assets and liabilities
    Accounts receivable                       (32,834)           (1,822)
    Inventory, prepaid expenses and other      (2,991)              (31)
    Accounts payable                            6,084             3,011
    Accrued liabilities and other              (1,528)           (4,824)
                                          -----------       -----------
Net cash from operating activities             85,397            54,361
                                          -----------       -----------

Investing activities:
  Development and exploration costs and
   other property additions                  (226,376)         (141,168)
  Distributions and advances from equity
   affiliates - net                             1,005             1,604
  Proceeds from sale of assets                  9,301             8,591
                                          -----------       -----------
Net cash used for investing activities       (216,070)         (130,973)
                                          -----------       -----------

Financing activities:
  Notes payable, bank proceeds                143,094           329,406
  Principal payments on long-term debt           (245)         (237,234)
  Deferred financing costs                       (223)           (2,958)
  Payment of fractional shares                    (18)                -
  Issuance of common stock, net of
   issuance costs                               1,721             1,920
                                          -----------       -----------
Net cash from financing activities            144,329            91,134
                                          -----------       -----------


Effect of exchange rate changes on cash           139              (646)
                                          -----------       -----------

Net increase in cash and cash equivalents      13,795            13,876

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

Cash and cash equivalents at end of
 period                                   $    29,742       $    17,992
                                          ===========       ===========


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) purchase of
properties and equipment in the condensed consolidated statements of cash
flow.  The prior period presented has been adjusted to conform to this
presentation.

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