UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 23, 2008
QUICKSILVER RESOURCES INC.
(Exact Name of Registrant as Specified in Charter)
| | | | | |
| Delaware | | 001-14837 | | 75-2756163 |
| (State or Other Jurisdiction | | (Commission | | (IRS Employer |
| of Incorporation) | | File Number) | | Identification No.) |
| | | |
| 777 West Rosedale Street |
| Fort Worth, Texas76104 |
| (Address of Principal Executive Offices) (Zip Code) |
Registrant’s telephone number, including area code:(817) 665-5000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
| o | | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
| o | | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
| o | | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
| o | | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01. Other Events.
As previously reported, in November 2007, Quicksilver Resources Inc. (the “Company”) completed the divestiture (the “Divestiture”) of all of its property interests in Michigan, Indiana and Kentucky (the “Northeast Operations”) to BreitBurn Operating Partners L.P. Net cash proceeds received from the Divestiture were approximately $740.0 million, as reduced by $10.0 million of transaction costs.
Under the full cost method of accounting, the Company’s U.S. exploration and production assets are considered a single asset. The Divestiture, therefore, represents a fractional divestiture of a single asset, which precludes reporting the Northeast Operations’ financial position and results of operations as discontinued operations within the Company’s consolidated financial statements.
The following unaudited pro forma condensed consolidated statements of income of the Company for the year ended December 31, 2007 and the three months ended March 31, 2007 have been prepared based on the historical consolidated statements of income of the Company for such periods and are presented to illustrate the effects of the Divestiture on the Company’s historical operating results for the year ended December 31, 2007 and the three months ended March 31, 2007 as though the Divestiture had been completed on January 1, 2007. The Divestiture has been fully reflected in the Company’s consolidated balance sheets as of December 31, 2007 and March 31, 2008, but is reflected in the Company’s consolidated statements of income only after the date on which the Divestiture was completed. The following unaudited pro forma condensed consolidated statements of income should be read in conjunction with the Company’s 2007 Annual Report on Form 10-K and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008.
The following unaudited pro forma condensed consolidated statements of income are presented for illustrative purposes only and are not necessarily indicative of what the Company’s actual results of operations would have been had the Divestiture been completed on January 1, 2007. The preparation of the unaudited pro forma condensed consolidated statements of income required the use of estimates. Although the Company believes the estimates used provide a reasonable basis for presenting the significant effects directly attributable to the disposition, actual results could differ from the estimates used. The unaudited pro forma condensed consolidated statements of income do not give effect to the Company’s results of operations or other transactions or developments since December 31, 2007.
The foregoing matters and other factors identified in the documents that the Company files with the Securities and Exchange Commission could cause the Company’s future results of operations to differ materially from those presented in the following unaudited pro forma condensed consolidated statements of income.
QUICKSILVER RESOURCES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2007
In thousands, except for share data — Unaudited
| | | | | | | | | | | | | | |
| | | | | | | Pro Forma | | | | | |
| | | Historical | | | Adjustments | | | | Pro Forma | |
| Revenues | | | | | | | | | | | | | |
| Oil, gas and related product sales | | $ | 545,089 | | | $ | (123,927 | ) | (a) | | $ | 421,162 | |
| Other revenue | | | 16,169 | | | | (1,312 | ) | (a) | | | 14,857 | |
| | | | | | | | | | | |
| Total revenues | | | 561,258 | | | | (125,239 | ) | | | | 436,019 | |
| | | | | | | | | | | | | | |
| Operating expenses | | | | | | | | | | | | | |
| Oil and gas production costs | | | 136,831 | | | | (48,911 | ) | (a) | | | 87,920 | |
| Production and ad valorem taxes | | | 16,142 | | | | (9,442 | ) | (a) | | | 6,700 | |
| Other operating costs | | | 2,792 | | | | (290 | ) | (a) | | | 2,502 | |
| Depletion, depreciation and accretion | | | 120,697 | | | | (28,929 | ) | (b) | | | 91,768 | |
| General and administrative | | | 47,060 | | | | 3,673 | | (c) | | | 50,733 | |
| | | | | | | | | | | |
| Total expenses | | | 323,522 | | | | (83,899 | ) | | | | 239,623 | |
| | | | | | | | | | | | | | |
| Income from equity affiliates | | | 661 | | | | (661 | ) | (d) | | | — | |
| Gain on sale of oil and gas properties | | | 628,709 | | | | (628,709 | ) | (e) | | | — | |
| Loss on natural gas sales contract | | | (63,525 | ) | | | 63,525 | | (f) | | | — | |
| | | | | | | | | | | |
| Operating income | | | 803,581 | | | | (607,185 | ) | | | | 196,396 | |
| Loss from BreitBurn Energy Partners L.P. investment | | | — | | | | (4,003 | ) | (g) | | | (4,003 | ) |
| Other income-net | | | 3,887 | | | | 4,363 | | (h) | | | 8,250 | |
| Interest (expense) | | | (70,527 | ) | | | 33,949 | | (i) | | | (36,578 | ) |
| | | | | | | | | | | |
| Income before income taxes and minority interest | | | 736,941 | | | | (572,876 | ) | | | | 164,065 | |
| Income tax expense | | | 256,508 | | | | (200,507 | ) | (j) | | | 56,001 | |
| Minority interest, net of income tax | | | 1,055 | | | | — | | | | | 1,055 | |
| | | | | | | | | | | |
| Net income | | $ | 479,378 | | | $ | (372,369 | ) | | | $ | 107,009 | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Basic net income per common share | | $ | 3.08 | | | | | | | | $ | 0.69 | |
| Diluted net income per common share | | $ | 2.86 | | | | | | | | $ | 0.65 | |
| | | | | | | | | | | | | | |
| Weighted average common shares outstanding | | | | | | | | | | | | | |
| Basic | | | 155,475 | | | | | | | | | 155,475 | |
| Diluted | | | 168,029 | | | | | | | | | 168,029 | |
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.
QUICKSILVER RESOURCES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2007
In thousands, except for share data — Unaudited
| | | | | | | | | | | | | | |
| | | | | | | Pro Forma | | | | | |
| | | Historical | | | Adjustments | | | | Pro Forma | |
| Revenues | | | | | | | | | | | | | |
| Oil, gas and related product sales | | $ | 113,292 | | | $ | (34,688 | ) | (a) | | $ | 78,604 | |
| Other revenue | | | 3,288 | | | | (400 | ) | (a) | | | 2,888 | |
| | | | | | | | | | | |
| Total revenues | | | 116,580 | | | | (35,088 | ) | | | | 81,492 | |
| | | | | | | | | | | | | | |
| Operating expenses | | | | | | | | | | | | | |
| Oil and gas production costs | | | 28,569 | | | | (12,926 | ) | (a) | | | 15,643 | |
| Production and ad valorem taxes | | | 4,490 | | | | (2,729 | ) | (a) | | | 1,761 | |
| Other operating costs | | | 784 | | | | (47 | ) | (a) | | | 737 | |
| Depletion, depreciation and accretion | | | 24,594 | | | | (7,910 | ) | (b) | | | 16,684 | |
| General and administrative | | | 9,698 | | | | 1,057 | | (c) | | | 10,755 | |
| | | | | | | | | | | |
| Total expenses | | | 68,135 | | | | (22,555 | ) | | | | 45,580 | |
| | | | | | | | | | | |
| Income from equity affiliates | | | 115 | | | | (115 | ) | (d) | | | — | |
| | | | | | | | | | | |
| Operating income | | | 48,560 | | | | (12,648 | ) | | | | 35,912 | |
| Income from BreitBurn Energy Partners L.P. investment | | | — | | | | 4,038 | | (g) | | | 4,038 | |
| Other income-net | | | 601 | | | | 3,148 | | (h) | | | 3,749 | |
| Interest (expense) | | | (14,952 | ) | | | 7,945 | | (i) | | | (7,007 | ) |
| | | | | | | | | | | |
| Income before income taxes and minority interest | | | 34,209 | | | | 2,483 | | | | | 36,692 | |
| Income tax expense | | | 11,295 | | | | 869 | | (j) | | | 12,164 | |
| Minority interest, net of income tax | | | 63 | | | | — | | | | | 63 | |
| | | | | | | | | | | |
| Net income | | $ | 22,851 | | | $ | 1,614 | | | | $ | 24,465 | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Basic net income per common share | | $ | 0.15 | | | | | | | | $ | 0.16 | |
| Diluted net income per common share | | $ | 0.14 | | | | | | | | $ | 0.15 | |
| | | | | | | | | | | | | | |
| Weighted average common shares outstanding | | | | | | | | | | | | | |
| Basic | | | 154,389 | | | | | | | | | 154,389 | |
| Diluted | | | 167,659 | | | | | | | | | 167,659 | |
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.
QUICKSILVER RESOURCES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
The unaudited pro forma condensed consolidated statements of income for the year ended December 31, 2007 and the three months ended March 31, 2007 reflect the following adjustments:
(a) Adjustments to reverse the revenues and operating expenses of the divested properties.
(b) Adjustment to reverse depletion, depreciation and accretion for the divested properties.
(c) Adjustment to reverse overhead recoveries for the divested properties.
(d) Adjustment to reverse income from equity affiliates that were a component of the divested properties.
(e) Adjustment to reverse the gain from the divestiture of the properties.
(f) Adjustment to reverse the loss on a natural gas supply contract with a floor of $2.49 per Mcf.
(g) Adjustment to reflect the Company’s interest in the results of operations of BreitBurn Energy Partners L.P., whose units constituted partial consideration received for the divested properties.
(h) Adjustment to reflect interest income on additional cash balances available from the Divestiture proceeds and to reverse other income attributable to the divested properties.
(i) Adjustment to reduce interest expense associated with the utilization of cash proceeds from the Divestiture to reduce outstanding borrowings.
(j) Adjustment for the income tax consequences of the pro forma adjustments at the United States statutory tax rate.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | | | |
| | QUICKSILVER RESOURCES INC.
| |
| | By: | /s/ Philip Cook | |
| | | Philip Cook | |
| | | Senior Vice President –
Chief Financial Officer | |
| |
Date: June 23,2008
