Exhibit 99.1
INVESTOR RELATIONS:
Quicksilver Resources Inc.
Diane Weaver
(817) 665-4834
FOR RELEASE AFTER MARKET CLOSE
February 21, 2007
QUICKSILVER RESOURCES ANNOUNCES
FOURTH QUARTER AND YEAR-END 2006 FINANCIAL RESULTS
2006 Production Increases 19% over Prior Year;
Year over Year Cash Flow from Operations Increases 53%
FORT WORTH (February 21, 2007) - Quicksilver Resources Inc. (NYSE: KWK) today reported net income for the fourth quarter of 2006 of $19.7 million on revenues of $102.0 million, or $0.24 per diluted share. The company’s comparative fourth quarter of 2005 net income was $34.7 million on revenues of $102.9 million, or $0.43 per diluted share. Net income for the full year 2006 was $93.7 million on revenues of $390.4 million, or $1.15 per diluted share. This compares to full year 2005 net income of $87.4 million on revenue of $310.4 million, or $1.08 per diluted share. For the full year 2006, net cash from operating activities, as presented in the attached Condensed Consolidated Statements of Cash Flows, was $220.6 million compared to $144.5 million for the full year 2005. This represents a 53 percent increase in cash flow from operations year over year.
President and CEO, Glenn Darden commented, “In 2006, production grew 19 percent in comparison to 2005, reserves grew 46 percent over the same period, solely by the drillbit, and the company continued to be among the lowest cost producers in the industry. With the Fort Worth Basin drilling program leading the way, Quicksilver is poised to grow at a faster rate in 2007. We anticipate another year of very good results for Quicksilver.”
Production
For the fourth quarter of 2006, average daily production rose to 178 million cubic feet equivalent per day (MMcfe/d) compared to 150 MMcfe/d for the same period in 2005, an increase of 18 percent. Total production for the fourth quarter of 2006 was 16.4 billion cubic feet equivalent (Bcfe), compared to 13.8 Bcfe for the fourth quarter of 2005.
Natural gas production for the fourth quarter of 2006 was 13.8 billion cubic feet (Bcf), or an average of 150 million cubic feet per day (MMcf/d), compared to production of 12.5 Bcf, or an average of 136 MMcf/d, for the same period in 2005. The price realized for the company’s natural gas production in the fourth quarter of 2006 averaged $6.05 per thousand cubic feet (Mcf), compared to the $7.19 per
Fourth Quarter and Year-end 2006 Financial Results - Page 2 of 7
Mcf realized in the same period of 2005. Natural gas, including natural gas liquids (NGL), comprised 95 percent of the company’s total production in the fourth quarter of 2006.
Crude oil production for the fourth quarter of 2006 was 143,000 barrels, or 1,549 barrels per day, as compared to 144,000 barrels of production in the fourth quarter of 2005. Crude prices realized for the fourth quarter of 2006 averaged $54.22 per barrel, compared to $53.36 per barrel for the prior year fourth quarter.
Natural gas liquids production for the fourth quarter of 2006 was 282,000 barrels, compared to 82,000 barrels in the fourth quarter of 2005. The price realized for natural gas liquids averaged $34.49 per barrel in the fourth quarter of 2006, compared to the average of $47.12 per barrel realized in the fourth quarter of 2005.
Full year 2006 average daily production for the year was 168 MMcfe/d and total production was 61.3 Bcfe, compared to 2005 average daily production of 141 MMcfe/d and 2005 total production of 51.4 Bcfe. Natural gas production totaled 53.3 Bcf for 2006 at an average realized price per Mcf of $6.05, as compared to 46.8 Bcf during 2005 at $5.76 per Mcf. Crude production for 2006 was 587,000 barrels at an average realized price per barrel of $59.99 versus 553,000 barrels at $50.50 per barrel in 2005. The company produced 746,000 barrels of natural gas liquids at an average realized price of $38.85 per barrel in 2006, as compared to 223,000 barrels in 2005 at an average of $39.08 per barrel.
Total capital costs incurred for the year 2006 were $646 million and consolidated exploration and production expenditures totaled $545 million. Quicksilver Resources had an all-in finding and development (F&D) cost of $0.94 per Mcfe in 2006. For a description of the calculation and certain other information regarding F&D costs, please see the discussion below under the heading “F&D Costs.” A reconciliation of the “2006 Finding & Development Costs” is available on the company’s website - www.qrinc.com.
Fourth Quarter and Full Year 2006 Earnings Release and Conference Call
The company’s fourth quarter and full year 2006 conference call to discuss operating and financial results is scheduled for Thursday, February 22, 2007, at 10:00 a.m. central time.
Quicksilver invites interested persons to participate in the fourth quarter and full year 2006 call by dialing (877) 313-7932, ID number 6100877 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 one week. The replay can be dialed at (800) 642-1687 and reference should be made to the conference ID number 6100877. The call will also be broadcasted 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
Fort Worth, Texas-based Quicksilver Resources is a natural gas and crude oil production company engaged in the development and production of unconventional natural gas reserves, including coal bed methane, shale gas, and tight sands gas. It has U.S. offices in Fort Worth, Texas; Granbury, Texas; Gaylord, Michigan; Corydon, Indiana and Cut Bank, Montana. Quicksilver also has a Canadian
Fourth Quarter and Year-end 2006 Financial Results - Page 3 of 7
subsidiary, Quicksilver Resources Canada Inc., located in Calgary, Alberta. For more information about Quicksilver Resources, visit www.qrinc.com.
F&D Costs
Finding and development cost, or F&D cost, is calculated by dividing (x) development, exploitation, exploration and acquisition capital expenditures for the period, plus unevaluated capital expenditures, as of the beginning of the period, less unevaluated capital expenditures as of the end of the period, by (y) reserve additions for the period. Our calculation of “all-in F&D cost” includes costs and reserve additions related to the purchase of proved reserves. The methods we use to calculate our F&D cost may differ significantly from methods used by other companies to compute similar measures. As a result, our F&D cost may not be comparable to similar measures provided by other companies. We believe that providing a measure of F&D cost is useful in evaluating the cost, on a per thousand cubic feet of natural gas equivalent basis, to add proved reserves. However, this measure is provided in addition to, and not as an alternative for, and should be read in conjunction with, the information contained in our financial statements prepared in accordance with generally accepted accounting principles. Due to various factors, including timing differences in the addition of proved reserves and the related costs to develop those reserves, F&D costs do not necessarily reflect precisely the costs associated with particular reserves. As a result of various factors that could materially affect the timing and amounts of future increases in reserves and the timing and amounts of future costs, we cannot assure you that our future F&D costs will not differ materially from those presented.
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.
Fourth Quarter and Year-end 2006 Financial Results - Page 4 of 7
QUICKSILVER RESOURCES INC. | |
Unaudited Selected Operating Results | |
| | |
| | | Three Months Ended December 31, | | Year Ended December 31, | |
| | | 2006 | | 2005 | | 2006 | | 2005 | |
Production: | | | | | | | | | | | | | |
| Natural gas (MMcf) | | | 13,836 | | | 12,482 | | | 53,265 | | | 46,769 | |
| Oil (MBbls) | | | 143 | | | 144 | | | 587 | | | 553 | |
| NGL (MBbls) | | | 282 | | | 82 | | | 746 | | | 223 | |
| Total (MMcfe) | | | 16,384 | | | 13,835 | | | 61,262 | | | 51,427 | |
| | | | |
| United States (MMcfe) | | | 11,495 | | | 9,750 | | | 42,991 | | | 36,582 | |
| Canada (MMcfe) | | | 4,889 | | | 4,085 | | | 18,271 | | | 14,845 | |
| Total (MMcfe) | | | 16,384 | | | 13,835 | | | 61,262 | | | 51,427 | |
| | | | |
Average Daily Production: | | | |
| Natural gas (Mcfd) | | | 150,389 | | | 135,670 | | | 145,933 | | | 128,135 | |
| Oil (Bbld) | | | 1,549 | | | 1,561 | | | 1,608 | | | 1,516 | |
| NGL (Bbld) | | | 3,067 | | | 891 | | | 2,043 | | | 611 | |
| Total (Mcfed) | | | 178,086 | | | 150,380 | | | 167,840 | | | 140,895 | |
| | | | |
Average Sales Price Per Unit (excluding effects of hedging): | |
| Natural gas (per Mcf) | | $ | 5.40 | | $ | 8.91 | | $ | 5.75 | | $ | 6.63 | |
| Oil (per Bbl) | | $ | 54.22 | | $ | 53.36 | | $ | 60.75 | | $ | 52.76 | |
| NGL (per Bbl) | | $ | 34.49 | | $ | 47.12 | | $ | 38.85 | | $ | 39.08 | |
| Total (per Mcfe) | | $ | 5.62 | | $ | 8.89 | | $ | 6.06 | | $ | 6.77 | |
| | | | |
Average Sales Price Per Unit (including effects of hedging): | |
| Natural gas (per Mcf) | | $ | 6.05 | | $ | 7.19 | | $ | 6.05 | | $ | 5.76 | |
| Oil (per Bbl) | | $ | 54.22 | | $ | 53.36 | | $ | 59.99 | | $ | 50.50 | |
| NGL (per Bbl) | | $ | 34.49 | | $ | 47.12 | | $ | 38.85 | | $ | 39.08 | |
| Total (per Mcfe) | | $ | 6.17 | | $ | 7.32 | | $ | 6.31 | | $ | 5.95 | |
| | | | |
Expense per Mcfe: | | | |
| United States production cost | | $ | 1.79 | | $ | 1.37 | | $ | 1.70 | | $ | 1.53 | |
| Canada production cost | | $ | 0.89 | | $ | 1.10 | | $ | 1.20 | | $ | 1.03 | |
| Total production cost | | $ | 1.52 | | $ | 1.29 | | $ | 1.55 | | $ | 1.39 | |
| | | | | | | | | | | | | | |
| Production and ad valorem taxes | | $ | 0.30 | | $ | 0.38 | | $ | 0.25 | | $ | 0.29 | |
| General and administrative expenses | | $ | 0.43 | | $ | 0.42 | | $ | 0.41 | | $ | 0.37 | |
| Depletion, depreciation and accretion | | $ | 1.42 | | $ | 1.15 | | $ | 1.29 | | $ | 1.07 | |
| | | | | | | | | | | | | | |
Fourth Quarter and Year-end 2006 Financial Results - Page 5 of 7
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except for share data - Unaudited
| | | December 31, | | December 31, | |
| | | 2006 | | 2005 | |
ASSETS | | | | | |
| Current assets | | | | | | | |
Cash and cash equivalents | | $ | 5,281 | | $ | 14,318 | |
| Accounts receivable, net of allowance for doubtful accounts | | | 76,521 | | | 76,121 | |
| Current derivative assets | | | 64,086 | | | 603 | |
| Current deferred income taxes | | | - | | | 14,614 | |
| Other current assets | | | 25,076 | | | 7,928 | |
| Total current assets | | | 170,964 | | | 113,584 | |
| | | | | | | | |
| Investments in and advances to equity affiliates | | | 7,434 | | | 8,353 | |
| | | | | | | | |
| Properties, plant and equipment - net (“full cost”) | | | 1,679,280 | | | 1,112,002 | |
| | | | | | | | |
| Deferred derivative assets | | | 3,753 | | | - | |
| | | | | | | | |
| Other assets | | | 21,481 | | | 9,155 | |
| | | $ | 1,882,912 | | $ | 1,243,094 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
| | | | | | | | |
| Current liabilities | | | | | | | |
| Current portion of long-term debt | | $ | 400 | | $ | 70,493 | |
| Accounts payable | | | 109,914 | | | 48,409 | |
| Accrued liabilities | | | 67,697 | | | 52,656 | |
| Accrued derivative obligations | | | - | | | 40,632 | |
| Current deferred income taxes | | | 21,378 | | | - | |
| Total current liabilities | | | 199,389 | | | 212,190 | |
| | | | | | | | |
| Long-term debt | | | 919,117 | | | 506,039 | |
| | | | | | | | |
| Derivative obligations | | | - | | | 4,631 | |
| | | | | | | | |
| Asset retirement obligations | | | 25,058 | | | 20,891 | |
| | | | | | | | |
| Deferred income taxes | | | 156,251 | | | 115,728 | |
| | | | | | | | |
| Minority interest | | | 7,431 | | | - | |
| | | | | | | | |
| Stockholders’ equity | | | | | | | |
| Preferred stock, $0.01 par value, 10,000,000 shares authorized, | | | | | | | |
| 0 and 1 share issued and outstanding | | | - | | | - | |
| Common stock, $0.01 par value, 200,000,000 and | | | | | | | |
| 100,000,000 shares authorized, respectively, and | | | | | | | |
| 80,181,593 and 78,650,110 shares issued, respectively | | | 802 | | | 787 | |
| Paid in capital in excess of par value | | | 238,063 | | | 211,843 | |
| Treasury stock of 2,579,671 and 2,571,069 shares, respectively | | | (10,737 | ) | | (10,353 | ) |
| Accumulated other comprehensive income (loss) | | | 60,099 | | | (12,382 | ) |
| Retained earnings | | | 287,439 | | | 193,720 | |
| Total stockholders’ equity | | | 575,666 | | | 383,615 | |
| | | $ | 1,882,912 | | $ | 1,243,094 | |
Fourth Quarter and Year-end 2006 Financial Results - Page 6 of 7
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per share data - Unaudited
| | | For the Three Months Ended | | For the Year Ended | |
| | | December 31, | | December 31, | |
| | | 2006 | | 2005 | | 2006 | | 2005 | |
| Revenues | | | | | | | | | | | | | |
| Oil, gas and related product sales | | $ | 101,165 | | $ | 101,317 | | $ | 386,540 | | $ | 306,204 | |
| Other revenue | | | 869 | | | 1,569 | | | 3,822 | | | 4,244 | |
Total revenues | | | 102,034 | | | 102,886 | | | 390,362 | | | 310,448 | |
| Expenses | | | | | | | | | | | | | |
| Oil and gas production costs | | | 24,944 | | | 17,861 | | | 95,176 | | | 71,204 | |
| Production and ad valorem taxes | | | 4,958 | | | 5,203 | | | 15,619 | | | 15,068 | |
| Other operating costs | | | 212 | | | 297 | | | 1,461 | | | 1,661 | |
| Depletion, depreciation and accretion | | | 23,240 | | | 15,951 | | | 78,800 | | | 55,213 | |
| Provision for doubtful accounts | | | 700 | | | 20 | | | 700 | | | 108 | |
| General and administrative | | | 7,000 | | | 5,867 | | | 24,936 | | | 18,979 | |
Total expenses | | | 61,054 | | | 45,199 | | | 216,692 | | | 162,233 | |
| | | | | | | | | | | | | | |
| Income from equity affiliates | | | 208 | | | 245 | | | 526 | | | 914 | |
| | | | | | | | | | | | | | |
| Operating income | | | 41,188 | | | 57,932 | | | 174,196 | | | 149,129 | |
| | | | | | | | | | | | | | |
| Other income-net | | | (810 | ) | | (128 | ) | | (1,825 | ) | | (585 | ) |
| Interest expense | | | 13,253 | | | 6,718 | | | 44,061 | | | 21,740 | |
| | | | | | | | | | | | | | |
| Income from continuing operations before | | | | | | | | | | | | | |
| income taxes and minority interest | | | 28,745 | | | 51,342 | | | 131,960 | | | 127,974 | |
| Income tax expense | | | 9,011 | | | 16,702 | | | 38,150 | | | 40,702 | |
| Minority interest expense | | | 19 | | | - | | | 91 | | | - | |
| | | | | | | | | | | | | | |
| Income from continuing operations | | | 19,715 | | | 34,640 | | | 93,719 | | | 87,272 | |
| Gain from discontinued operations, net of income tax | | | - | | | 100 | | | - | | | 162 | |
| | | | | | | | | | | | | | |
| Net income | | $ | 19,715 | | $ | 34,740 | | $ | 93,719 | | $ | 87,434 | |
| | | | | | | | | | | | | | |
| Basic net income per common share | | | | | | | | | | | | | |
| Continuing operations | | $ | 0.26 | | $ | 0.46 | | $ | 1.22 | | $ | 1.15 | |
| Discontinued operations | | | - | | | - | | | - | | | - | |
| | | $ | 0.26 | | $ | 0.46 | | $ | 1.22 | | $ | 1.15 | |
| | | | | | | | | | | | | | |
| Diluted net income per common share | | | | | | | | | | | | | |
| Continuing operations | | $ | 0.24 | | $ | 0.43 | | $ | 1.15 | | $ | 1.08 | |
| Discontinued operations | | | - | | | - | | | - | | | - | |
| | | $ | 0.24 | | $ | 0.43 | | $ | 1.15 | | $ | 1.08 | |
| | | | | | | | | | | | | | |
| Weighted average common shares outstanding | | | | | | | | | | | | | |
| Basic | | | 77,039 | | | 75,840 | | | 76,707 | | | 75,716 | |
| Diluted | | | 83,388 | | | 82,609 | | | 83,133 | | | 82,455 | |
Fourth Quarter and Year-end 2006 Financial Results - Page 7 of 7
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands-Unaudited
| | | For the Year Ended | |
| | | December 31, | |
| | | 2006 | | 2005 | |
| Operating activities: | | | | | | | |
| Net income | | $ | 93,719 | | $ | 87,434 | |
| Charges and credits to net income not affecting cash | | | | | | | |
| Depletion, depreciation and accretion | | | 78,800 | | | 55,213 | |
| Deferred income taxes | | | 37,877 | | | 40,298 | |
| Non-cash compensation | | | 6,546 | | | 1,732 | |
| Amortization of deferred loan costs | | | 2,070 | | | 1,429 | |
| Income from equity affiliates | | | (526 | ) | | (914 | ) |
| Minority interest expense | | | 91 | | | - | |
| Non-cash loss (gain) from hedging activities | | | 1 | | | (462 | ) |
| Provision for doubtful accounts | | | 700 | | | 108 | |
| Other | | | 414 | | | 157 | |
| Changes in assets and liabilities | | | | | | | |
| Accounts receivable | | | (1,100 | ) | | (38,192 | ) |
| Inventory, prepaid expenses and other | | | (26,066 | ) | | (1,919 | ) |
| Accounts payable | | | 15,193 | | | 1,963 | |
| Accrued liabilities and other | | | 12,896 | | | (2,379 | ) |
| Net cash provided by operating activities | | | 220,615 | | | 144,468 | |
| | | | | | | | |
| Investing activities: | | | | | | | |
| Development and exploration costs and other property additions | | | (597,490 | ) | | (329,495 | ) |
| Return of investment from equity affiliates | | | 1,923 | | | 533 | |
| Proceeds from sale of assets | | | 5,113 | | | 9,693 | |
| Net cash used for investing activities | | | (590,454 | ) | | (319,269 | ) |
| | | | | | | | |
| Financing activities: | | | | | | | |
| Issuance of debt | | | 694,682 | | | 183,469 | |
| Repayments of debt | | | (350,754 | ) | | (13,079 | ) |
| Debt issuance costs | | | (9,213 | ) | | (745 | ) |
| Proceeds from exercise of stock options | | | 19,689 | | | 2,894 | |
| Purchase of treasury stock | | | (384 | ) | | (95 | ) |
| Payment for fractional shares | | | - | | | (18 | ) |
| Minority interest contributions | | | 7,291 | | | - | |
| Net cash provided by financing activities | | | 361,311 | | | 172,426 | |
| | | | | | | | |
| Effect of exchange rate changes in cash | | | (509 | ) | | 746 | |
| | | | | | | | |
| Net decrease in cash and cash equivalents | | | (9,037 | ) | | (1,629 | ) |
| | | | | | | | |
| Cash and cash equivalents at beginning of period | | | 14,318 | | | 15,947 | |
| | | | | | | | |
| Cash and cash equivalents at end of period | | $ | 5,281 | | $ | 14,318 | |
| | | | | | | | |
-end-
