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
May 3, 2005
Quicksilver Resources Reports First Quarter 2005 Financial Results
Earnings per Share Increase 67% - Gas Production up 20% Year over Year
FORT WORTH (May 3, 2005) --Quicksilver Resources Inc. (NYSE: KWK)today reported net income for first quarter 2005 of $10.8 million on revenues of $55.2 million, or $0.20 per diluted share. The company's comparative first quarter of 2004 net income was $5.9 million on revenues of $39.8 million, or $0.12 per diluted share. Net cash from operating activities for the first quarter of 2005 was $18.8 million compared to $15.1 million for the first quarter of 2004.
Production
Natural gas production for the first quarter of 2005 was 11.1 billion cubic feet (Bcf), or an average of 123 million cubic feet per day (MMcf/d), which is a 20 percent increase over production of 9.2 Bcf, or an average of 101 MMcf/d for the same period in 2004. The price realized for the company's natural gas production in the first quarter of 2005 averaged $4.31 per thousand cubic feet (Mcf), compared to the $3.58 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 first quarter of 2005.
Crude oil production for the first quarter of 2005 was 128,000 barrels, or 1,427 barrels per day, as compared to 186,000 barrels of production in the first quarter of 2004. Crude prices realized for the first quarter of 2005 averaged $46.05 per barrel compared to $27.94 per barrel for the prior year first quarter.
Natural gas liquids production for the first quarter of 2005 was 32,000 barrels compared to 36,000 barrels in the first quarter of 2004. The price realized for natural gas liquids averaged $32.93 per barrel in the first quarter of 2005, compared to the average of $24.73 per barrel realized in the first quarter of 2004.
Operations Update
Quicksilver Resources' activity in the Barnett Shale, located in north central Texas, has continued to progress as planned. The company currently has two drilling rigs running and has drilled 16 operated wells to date in Hood and Johnson counties and one water disposal well. A third rig is scheduled to be added in June, and a fourth rig should be operational at year-end. For the last two weeks, production has averaged 10 MMcf/d gross (8 MMcf/d net) from 12 operated wells. Four wells are in various stages of completion. Quicksilver Resources' position in the Barnett Shale play is now approximately 222,000 net acres located in Hood, Johnson, Somervell, Bosque, and Hill counties.
The initial phase of Quicksilver's gathering system, the Cowtown Pipeline, is expected to be in service by mid-summer. Beginning in May, the company began processing a portion of the Barnett gas through a temporary NGL plant, with the main cryogenic plant scheduled to be operational during the 4th quarter of 2004.
The northern drilling and completion operations in both Canada and Michigan will resume shortly at the end of the seasonal break-up and frost law period. Some Canadian field operations such as fracturing and gathering system installation resumed in late April. Growth in Canada has been significant with MGV Energy Inc., Quicksilver Resources' Canadian subsidiary, more than doubling production for the first quarter of 2005 (3,545 MMcfe) compared to the first quarter of 2004 (1,698 MMcfe). With respect to drilling activity outside of Texas, Quicksilver has drilled four net wells in Michigan, 11 net wells in Indiana, and 64 net wells in Canada year to date.
President and CEO, Glenn Darden noted, "Our drilling projects are on schedule to raise production levels more than 20 percent this year. The Quicksilver team has made great progress in the Barnett Shale and the Canadian coal beds. The combination of the expiration of lower priced financial hedges at the end of last month and the addition of new gas production will result in significant increases to cash flow and earnings for the company."
Conference Call
The company's conference call to discuss operating and financial results is scheduled for Wednesday, May 4, 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 3379906 between 9:50 and 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 3379906. 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 reserv es 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 |
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|
|
| | For the Three Months Ended March 31, |
| | 2005 | | 2004 |
Production: | | | |
Natural gas (MMcf) | 11,098 | | 9,223 |
Oil (MBbls) | 128 | | 186 |
NGL (MBbls) | 32 | | 36 |
Total (MMcfe) | 12,061 | | 10,556 |
| |
United States (MMcfe) | 8,516 | | 8,858 |
Canada (MMcfe) | 3,545 | | 1,698 |
Total (MMcfe) | 12,061 | | 10,556 |
| |
Average Daily Production: | |
Natural gas (Mcf) | 123,309 | | 101,352 |
Oil (Bbl) | 1,427 | | 2,045 |
NGL (Bbl) | 356 | | 397 |
Total (Mcfe) | 134,010 | | 116,000 |
| |
Average Sales Price Per Unit (excluding effects of hedging): |
Natural gas (per Mcf) | $ 5.16 | | $ 4.62 |
Oil (per Bbl) | $ 47.38 | | $ 29.54 |
NGL (per Bbl) | $ 32.93 | | $ 24.73 |
Total (per Mcfe) | $ 5.34 | | $ 4.64 |
| |
Average Sales Price Per Unit (including effects of hedging): |
Natural gas (per Mcf) | $ 4.31 | | $ 3.58 |
Oil (per Bbl) | $ 46.05 | | $ 27.94 |
NGL (per Bbl) | $ 32.93 | | $ 24.73 |
Total (per Mcfe) | $ 4.55 | | $ 3.71 |
| |
Expense per Mcfe: | |
United States production cost | $ 1.65 | | $ 1.33 |
Canada production cost | $ 0.98 | | $ 1.09 |
Total production cost | $ 1.45 | | $ 1.29 |
| | | | |
Production taxes | $ 0.18 | | $ 0.23 |
General and administrative expenses | $ 0.26 | | $ 0.25 |
Depletion, depreciation and accretion | $ 1.03 | | $ 0.86 |
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
| | March 31, | | December 31, |
| | 2005 | | 2004 |
ASSETS | | | |
Current assets | | | |
Cash and cash equivalents | $ 7,359 | | $ 15,947 |
Accounts receivable | 41,481 | | 38,037 |
Current deferred income taxes | 5,253 | | 3,523 |
Inventories and other current assets | 7,785 | | 8,689 |
Total current assets | 61,878 | | 66,196 |
| | | | |
Investments in and advances to equity affiliates | 8,290 | | 8,254 |
| | | | |
Properties, plant and equipment -- net ("full cost") | 844,527 | | 802,610 |
| | | | |
Other assets | 9,323 | | 11,274 |
| | $ 924,018 | | $ 888,334 |
| | | | |
| | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
Current liabilities | | | |
Current portion of long-term debt | $ 356 | | $ 356 |
Accounts payable | 25,901 | | 28,407 |
Accrued derivative obligations | 14,491 | | 12,784 |
Accrued liabilities | 40,498 | | 41,904 |
Total current liabilities | 81,246 | | 83,451 |
| | | | |
Long-term debt | 425,052 | | 399,134 |
| | | | |
Deferred derivative obligations | 737 | | - |
| | | | |
Deferred asset retirement obligations | 18,391 | | 17,967 |
| | | | |
Deferred income taxes | 82,229 | | 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, | | | |
53,091,604 and 52,690,971 shares issued, respectively | 531 | | 527 |
Paid in capital in excess of par value | 208,675 | | 200,941 |
Deferred compensation | (1,666) | | - |
Treasury stock of 2,568,611 shares | (10,258) | | (10,258) |
Accumulated other comprehensive income | 2,023 | | 6,762 |
Retained earnings | 117,058 | | 106,304 |
Total stockholders' equity | 316,363 | | 304,276 |
| | $ 924,018 | | $ 888,334 |
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 Ended |
| March 31, |
| 2005 | | 2004(1) |
Revenues | | | |
Oil, gas and related product sales | $ 54,840 | | $ 39,124 |
Other revenue | 409 | | 653 |
Total revenues | 55,249 | | 39,777 |
Expenses | | | |
Oil and gas production costs | 19,654 | | 16,005 |
Other operating costs | 391 | | 290 |
Depletion, depreciation and accretion | 12,372 | | 9,105 |
General and administrative | 3,113 | | 2,656 |
Total expenses | 35,530 | | 28,056 |
| | | |
Income from equity affiliates | 224 | | 291 |
| | | |
Operating income | 19,943 | | 12,012 |
| | | |
Other income -- net | (86) | | (70) |
Interest expense | 4,657 | | 3,412 |
| | | |
Income before income taxes | 15,372 | | 8,670 |
Income tax expense | 4,618 | | 2,733 |
| | | |
Net income | $ 10,754 | | $ 5,937 |
| | | |
Basic income per common share | $ 0.21 | | $ 0.12 |
Diluted income per common share | $ 0.20 | | $ 0.12 |
| | | |
Basic weighted average shares outstanding | 50,346 | | 49,601 |
Diluted weighted average shares outstanding | 54,694 | | 50,508 |
- Share and per share amounts have been adjusted to reflect a two-for-one stock split effected in the form of a stock dividend in June 2004. 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 Three Months Ended |
| | March 31, |
| | 2005 | | 2004 |
Operating activities: | | | |
Net income | $ 10,754 | | $ 5,937 |
Charges and credits to net income not affecting cash | | | |
Depletion, depreciation and accretion | 12,372 | | 9,105 |
Deferred income taxes | 4,482 | | 2,686 |
Income from equity affiliates | (224) | | (291) |
Non-cash gain from hedging activities | (212) | | (155) |
Non-cash compensation | 80 | | - |
Amortization of deferred loan costs | 344 | | 308 |
Other | (13) | | - |
Changes in assets and liabilities | | | |
Accounts receivable | (3,444) | | 7,658 |
Inventory, prepaid expenses and other | (1,434) | | 716 |
Accounts payable | (2,506) | | 757 |
Accrued liabilities | (1,419) | | (11,588) |
Net cash from operating activities | 18,780 | | 15,133 |
| | | | |
Investing activities: | | | |
Acquisition of properties and equipment | (57,108) | | (39,917) |
Distributions and advances from equity affiliates -- net | 188 | | 205 |
Proceeds from sale of properties & equipment | 1,107 | | - |
Net cash used for investing activities | (55,813) | | (39,712) |
| | | | |
Financing activities: | | | |
Issuance of debt | 27,761 | | 25,000 |
Repayments of debt | (78) | | (75) |
Deferred financing costs | (18) | | - |
Proceeds from exercise of stock options | 1,132 | | 471 |
Net cash from financing activities | 28,797 | | 25,396 |
| | | | |
Effect of exchange rates on cash | (352) | | 42 |
| | | | |
Net increase (decrease) in cash and equivalents | (8,588) | | 859 |
| | | | |
Cash and cash equivalents at beginning of period | 15,947 | | 4,116 |
| | | | |
Cash and cash equivalents at end of period | $ 7,359 | | $ 4,975 |
The results for interim periods are not necessarily indicative of annual results.
