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 |
FOR RELEASE AFTER MARKET CLOSE
November 8, 2004
QUICKSILVER RESOURCES ANNOUNCES THIRD QUARTER 2004 RESULTS
Unconventional gas E & P company posts earnings, production increases
FORT WORTH, TEXAS (November 8, 2004) --Quicksilver Resources Inc. (NYSE: KWK)today announced net income for third quarter 2004 of $7.9 million on revenues of $45.5 million, or $0.16 per diluted share. The company's third quarter 2003 net income was $5.2 million on revenues of $33.5 million, or $0.11 per diluted share.
Net income for the first nine months of 2004 was $21.3 million on revenues of $127.3 million, or $0.42 per diluted share. This compares to first nine months 2003 net income of $10.5 million on revenues of $104.1 million or $0.24 per diluted share. First nine months 2003 net income included a charge of $2.3 million related to the cumulative effect of implementing an accounting change or $0.05 per diluted share. For the nine-month period ended September 2004, net cash from operating activities, as presented in the attached Condensed Consolidated Statement of Cash Flows, was $62.2 million, as compared to net cash from operating activities of $40.3 million for the same period in 2003.
Production
Natural gas production for the third quarter of 2004 was 10.0 billion cubic feet (Bcf), or 109 million cubic feet per day (Mmcf/d), versus production of 8.5 Bcf for the same period in 2003, with an average of 93 Mmcf/d. The price realized for the company's gas production in the third quarter of 2004 averaged $3.73 per thousand cubic feet (Mcf), compared to the $3.27 per Mcf received in the same period of 2003. Natural gas, including natural gas liquids, comprised 90 percent of the company's total production in the third quarter of 2004.
Crude oil production for the 2004 third quarter was 188,000 barrels, or 2,042 barrels per day, as compared to 192,000 barrels of production in the third quarter of 2003. Oil prices realized for the third quarter of 2004 averaged $34.67 per barrel versus $23.33 per barrel for the prior year third quarter.
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Natural gas liquids production for the third quarter 2004 was 28,000 barrels versus 34,000 barrels in the third quarter of 2003. The price realized for natural gas liquids averaged $30.29 per barrel in the third quarter of 2004, compared to the average of $18.15 per barrel realized in the third quarter of 2003.
Operations Update
With increased drilling activity and well tie-ins, production in the third quarter has increased 605 million cubic feet equivalent (Mmcfe) in comparison to the second quarter of 2004. The company has drilled 344 net wells year-to-date and is expected to exceed its original target of 400 net wells for 2004.
Canadian production continued to increase and was 2.2 Bcfe for the third quarter of 2004. Current production exceeds 32 Mmcf/d. Through its Canadian subsidiary, MGV Energy, Inc. (MGV), Quicksilver has drilled 270 net wells to date in 2004. An additional 37 net wells are planned to be drilled, and 55 net wells will be completed by year end.
Quicksilver has drilled 68 wells in its fractured shale plays in Michigan and Indiana. Two wells have been drilled and numerous workovers have been completed in the deeper Prairie du Chien wells in Michigan.
Quicksilver has started selling gas from its initial operated wells in the Barnett Shale area of north central Texas. Drilling and completion operations are ongoing with 10 wells planned for the year. The company's net acreage position has increased to 170,000 acres.
Glenn Darden, Quicksilver's president and chief executive officer, commented on the company's production.
"We have made strong progress in both our Canadian and Texas drilling programs. Our Canadian team is doing a great job of bringing on the coalbed methane production, and we are on target to hit our year-end production rate goals. In the Barnett, we are in the early stages of what now appears to be a very attractive project for Quicksilver. We continue to add to our acreage position, and our initial production results combined with surrounding offset wells are confirming the quality and large scale of this fractured shale play."
Conference Call
Quicksilver invites interested persons to participate in its third quarter conference call by dialing (877) 313-7932, ID number 1203211 between 9:50 and 9:55 a. m. central time on Tuesday, November 9, 2004. 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 accessed by dialing (800) 642-1687. Reference should be made to the conference ID number 1203211. 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.
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About Quicksilver
Fort Worth, Texas-based Quicksilver Resources is a natural gas and crude oil production company engaged in the development and acquisition of long-lived producing natural gas and crude oil properties. The company, widely recognized as a leader in the development and production of unconventional natural gas reserves, including coalbed methane, shale gas, and tight sands gas, is listed on the New York Stock Exchange (KWK). It has U.S. offices in 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.
FINANCIAL HIGHLIGHTS FOLLOW |
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The statements in this press release regarding projections of revenues or income or reserves or similar items, such as statements pertaining to future revenues, future capital expenditures, future cash flows, future operations or results, and other statements that are not historical facts, are forward looking statements. Such statements involve risks of declining oil and gas prices, competition for prospects, possible increases in lifting costs, and other factors detailed in the company's filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.
QUICKSILVER RESOURCES INC. |
Unaudited Selected Operating Results |
| |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2004 | | 2003 | | 2004 | | 2003 |
Production: | | | | | | | |
Natural gas (MMcf) | 10,011 | | 8,514 | | 28,626 | | 25,243 |
Oil (MBbls) | 188 | | 192 | | 559 | | 619 |
NGL (MBbls) | 28 | | 34 | | 97 | | 96 |
Total (MMcfe) | 11,305 | | 9,872 | | 32,562 | | 29,533 |
| | |
United States (MMcfe) | 9,116 | | 9,253 | | 26,838 | | 28,018 |
Canada (MMcfe) | 2,189 | | 619 | | 5,724 | | 1,515 |
Total (MMcfe) | 11,305 | | 9,872 | | 32,562 | | 29,533 |
| | |
Average Daily Production: | | |
Natural gas (Mcfd) | 108,813 | | 92,538 | | 104,474 | | 92,464 |
Oil (Bbld) | 2,042 | | 2,088 | | 2,040 | | 2,269 |
NGL (Bbld) | 303 | | 372 | | 354 | | 350 |
Total (Mcfed) | 122,883 | | 107,304 | | 118,838 | | 108,180 |
| | |
Average Sales Price Per Unit (excluding effects of hedging): | |
Natural gas (per Mcf) | $ 4.65 | | $ 4.21 | | $ 4.70 | | $ 4.62 |
Oil (per Bbl) | $ 38.22 | | $ 25.81 | | $ 34.51 | | $ 26.87 |
NGL (per Bbl) | $ 30.29 | | $ 18.15 | | $ 25.68 | | $ 21.91 |
Total (per Mcfe) | $ 4.83 | | $ 4.20 | | $ 4.80 | | $ 4.58 |
| | |
Average Sales Price Per Unit (including effects of hedging): | |
Natural gas (per Mcf) | $ 3.73 | | $ 3.27 | | $ 3.68 | | $ 3.38 |
Oil (per Bbl) | $ 34.67 | | $ 23.33 | | $ 31.75 | | $ 24.20 |
NGL (per Bbl) | $ 30.29 | | $ 18.15 | | $ 25.68 | | $ 21.91 |
Total (per Mcfe) | $ 3.96 | | $ 3.34 | | $ 3.85 | | $ 3.47 |
| | |
Expense per Mcfe: | | |
Production cost | $ 1.22 | | $ 1.06 | | $ 1.25 | | $ 1.08 |
Production taxes | $ 0.22 | | $ 0.19 | | $ 0.22 | | $ 0.22 |
General and administrative expenses | $ 0.29 | | $ 0.18 | | $ 0.29 | | $ 0.20 |
Depletion, depreciation and amortization | $ 0.88 | | $ 0.80 | | $ 0.88 | | $ 0.78 |
| | | | | | | | |
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except for share data -- Unaudited
| | September 30, | | December 31, |
| | 2004 (a) | | 2003 (a) |
ASSETS | | | |
Current assets | | | |
Cash and cash equivalents | $ 17,992 | | $ 4,116 |
Accounts receivable | 27,841 | | 26,247 |
Current deferred income taxes | 11,289 | | 11,760 |
Inventories and other current assets | 7,282 | | 7,588 |
Total current assets | 64,404 | | 49,711 |
| | | | |
Investments in and advances to equity affiliates | 8,449 | | 9,173 |
| | | | |
Properties, plant and equipment -- net ("full cost") | 725,639 | | 604,576 |
| | | | |
Other assets | 5,167 | | 3,474 |
| | $ 803,659 | | $ 666,934 |
| | | | |
| | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
Current liabilities | | | |
Current portion of long-term debt | $ 319 | | $ 339 |
Accounts payable | 23,956 | | 17,954 |
Accrued derivative obligations | 32,404 | | 34,577 |
Accrued liabilities | 27,551 | | 27,644 |
Total current liabilities | 84,230 | | 80,514 |
| | | | |
Long-term debt | 345,999 | | 249,097 |
| | | | |
Derivative obligations | - | | 9,662 |
| | | | |
Asset retirement obligations | 19,613 | | 15,135 |
| | | | |
Deferred income taxes | 79,785 | | 70,710 |
| | | | |
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 and 80,000,000 shares | | | |
authorized 52,531,789 and 52,045,726 shares issued, respectively | 525 | | 520 |
Paid in capital in excess of par value | 198,744 | | 194,246 |
Treasury stock of 2,568,611 and 2,578,904 shares, respectively | (10,258) | | (10,299) |
Accumulated other comprehensive income | (11,337) | | (17,683) |
Retained earnings | 96,358 | | 75,032 |
| | 274,032 | | 241,816 |
| | $ 803,659 | | $ 666,934 |
- Share and per share amounts have been adjusted to reflect a two-for-one stock split during June 2004.
Treasury shares were not affected by this split.
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per share data -- Unaudited
| For the Three Months Ended | | For the Nine Months Ended |
| September 30, | | September 30, |
| 2004 (a) | | 2003 (a) | | 2004 (a) | | 2003 (a) |
Revenues | | | | | | | |
Oil, gas and related product sales | $ 44,743 | | $ 32,941 | | $ 125,467 | | $ 102,485 |
Other revenue | 801 | | 572 | | 1,834 | | 1,639 |
Total revenues | 45,544 | | 33,513 | | 127,301 | | 104,124 |
Expenses | | | | | | | |
Oil and gas production costs | 16,288 | | 12,392 | | 47,951 | | 38,469 |
Other operating costs | 184 | | 220 | | 846 | | 1,002 |
Depletion, depreciation and accretion | 9,982 | | 7,912 | | 28,801 | | 23,094 |
General and administrative | 3,281 | | 1,802 | | 9,290 | | 6,008 |
Total expenses | 29,735 | | 22,326 | | 86,888 | | 68,573 |
| | | | | | | |
Income from equity affiliates | 300 | | 456 | | 880 | | 1,109 |
| | | | | | | |
Operating income | 16,109 | | 11,643 | | 41,293 | | 36,660 |
| | | | | | | |
Other income-net | (44) | | (81) | | (137) | | (115) |
Interest expense | 4,204 | | 3,566 | | 11,246 | | 16,693 |
| | | | | | | |
Income before income taxes and cumulative effect of change in accounting principle | 11,949 | | 8,158 | | 30,184 | | 20,082 |
Income tax expense | 4,060 | | 2,929 | | 8,858 | | 7,332 |
| | | | | | | |
Net income before cumulative effect of change in accounting principle | 7,889 | | 5,229 | | 21,326 | | 12,750 |
Cumulative effect of change in accounting principle, net of tax | - | | - | | - | | 2,297 |
| | | | | | | |
Net income | $ 7,889 | | $ 5,229 | | $ 21,326 | | $ 10,453 |
| | | | | | | |
Basic net income per common share: | | | | | | | |
Net income before cumulative effect of accounting change | $ 0.16 | | $ 0.12 | | $ 0.43 | | $ 0.30 |
Cumulative effect of accounting change, net of tax | - | | - | | - | | (0.06) |
Net income | $ 0.16 | | $ 0.12 | | $ 0.43 | | $ 0.24 |
| | | | | | | |
Diluted net income per common share: | | | | | | | |
Net income before cumulative effect of accounting change | $ 0.16 | | $ 0.11 | | $ 0.42 | | $ 0.29 |
Cumulative effect of accounting change, net of tax | - | | - | | - | | (0.05) |
Net income | $ 0.16 | | $ 0.11 | | $ 0.42 | | $ 0.24 |
| | | | | | | |
Weighted average common shares outstanding | | | | | | | |
Basic | 49,758 | | 45,094 | | 49,686 | | 43,220 |
Diluted | 50,859 | | 45,931 | | 50,691 | | 44,127 |
(a) Share and per share amounts have been adjusted to reflect a two-for-one stock split during June 2004. Treasury shares were not affected by this split.
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands-Unaudited
| | For the Nine Months Ended |
| | September 30, |
| | 2004 | | 2003 |
Operating activities: | | | |
Net income | $ 21,326 | | $ 10,453 |
Charges and credits to net income not affecting cash | | | |
Cumulative effect of accounting change, net of tax | - | | 2,297 |
Depletion, depreciation and accretion | 28,801 | | 23,094 |
Deferred income taxes | 8,528 | | 7,143 |
Recognition of unearned revenues | - | | 507 |
Income from equity affiliates | (880) | | (1,109) |
Non-cash gain from hedging activities | (618) | | (963) |
Amortization of deferred loan costs | 907 | | 2,328 |
Other | (37) | | 54 |
Changes in assets and liabilities | | | |
Accounts receivable | (1,822) | | (943) |
Inventory, prepaid expenses and other | (31) | | (1,131) |
Accounts payable | 6,002 | | 1,964 |
Accrued liabilities and other | - | | (3,412) |
Net cash from operating activities | 62,176 | | 40,282 |
| | | | |
Investing activities: | | | |
Development and exploration costs and other property additions | (148,983) | | (104,686) |
Purchase of Voyager Compression Services assets | - | | (684) |
Distributions and advances from equity affiliates -- net | 1,604 | | 378 |
Proceeds from sale of assets | 8,591 | | 105 |
Net cash used for investing activities | (138,788) | | (104,887) |
| | | | |
Financing activities: | | | |
Notes payable, bank proceeds | 329,406 | | 99,000 |
Principal payments on long-term debt | (237,234) | | (113,042) |
Deferred financing costs | (2,958) | | (1,420) |
Issuance of common stock, net of issuance costs | 1,920 | | 79,895 |
Net cash from financing activities | 91,134 | | 64,433 |
| | | | |
Effect of exchange rates on cash | (646) | | 1,415 |
| | | | |
Net increase in cash and cash equivalents | 13,876 | | 1,243 |
| | | | |
Cash and cash equivalents at beginning of period | 4,116 | | 9,116 |
| | | | |
Cash and cash equivalents at end of period | $ 17,992 | | $ 10,359 |
| | | | |
