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
August 2, 2005
Quicksilver Resources Reports SECOND Quarter 2005 Financial Results
Earnings per Share Increase 110% - Gas Production up 21% Year over Year
FORT WORTH (August 2, 2005) --Quicksilver Resources Inc. (NYSE: KWK)today reported net income for second quarter of 2005 of $17.2 million on revenues of $68.5 million, or $0.21 per diluted share. The company's comparative second quarter of 2004 net income was $7.5 million on revenues of $42 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 share for the second quarter of 2005 increased 110 percent per diluted share compared to second quarter 2004.
Net income for the first six months of 2005 was $27.9 million on revenues of $123.8 million, or $0.34 per diluted share. This compares to first six months 2004 net income of $13.4 million on revenue of $81.8 million, or $0.18 per diluted share. For the six-month period ended June 2005, net cash from operating activities, as presented in the attached Condensed Consolidated Statements of Cash Flows, was $61.1 million compared to $38.6 million for same period in 2004.
Production
Natural gas production for the second quarter of 2005 was 11.4 billion cubic feet (Bcf), or an average of 126 million cubic feet per day (MMcf/d), which is a 21 percent increase over production of 9.4 Bcf, or an average of 103 MMcf/d, for the same period in 2004. The price realized for the company's natural gas production in the second quarter of 2005 averaged $5.24 per thousand cubic feet (Mcf), compared to the $3.71 per Mcf realized in the same period of 2004. Natural gas, including natural gas liquids (NGL), comprised 93 percent of the company's total production in the second quarter of 2005.
Crude oil production for the second quarter of 2005 was 143,000 barrels, or 1,569 barrels per day, as compared to 185,000 barrels of production in the second quarter of 2004. Crude prices realized for the second quarter of 2005 averaged $45.01 per barrel compared to $32.62 per barrel for the prior year second quarter.
Natural gas liquids production for the second quarter of 2005 was 45,000 barrels compared to 33,000 barrels in the second quarter of 2004. The price realized for natural gas liquids averaged $33.27 per barrel in the second quarter of 2005, compared to the average of $22.85 per barrel realized in the second quarter of 2004.
Operations Update
In the Barnett shale play in north central Texas, Quicksilver has drilled 27 net wells to date with 20 of these completed and tied into sales. The company's current net production is 13 million cubic feet equivalent per day.
The initial phase of the company's Cowtown Pipeline was put in service in July, and that line is currently being twinned with 20-inch pipe. Both lines are expected to be in service in the fourth quarter of 2005. The company continues to build its lease position, which now stands at approximately 230,000 acres.
Drilling and completion operations in Canada have resumed following the seasonal break-up period. Quicksilver, through its wholly owned subsidiary, MGV Energy Inc., has drilled 127 net wells (223 gross wells) of the planned 280 net wells (495 gross wells) for 2005. Sixty-three gross wells are completed and awaiting connection to sales lines. Current production is 41 MMcf/d. MGV is on track to exit the year producing 55 MMcf/d. Quicksilver has also drilled 26 net wells in Michigan and Indiana in its other shale projects, and re-works in non-Antrim properties have kept Michigan production ahead of plan for the year.
President and CEO, Glenn Darden, noted, "Consistent production rates over a large area of our Barnett acreage strengthen our confidence in this play. Our Cowtown facilities are now delivering gas and will increase the recoveries from this high BTU stream. Although we have been slowed by summer rains in Canada, the company should beat our year-end production targets. Overall, we are very pleased with our progress thus far, and we look forward to expanding our drilling projects in the coming months."
Conference Call
The company's conference call to discuss operating and financial results is scheduled for Wednesday, August 3, 2005 at 9:00 a.m. central time. Quicksilver invites interested persons to participate in the conference call by dialing (877) 313-7932, ID number 3379912 between 8:50 and 8:55 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 3379912. 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 |
| |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2005 | | 2004 | | 2005 | | 2004 |
Production: | | | | | | | |
Natural gas (MMcf) | 11,428 | | 9,392 | | 22,526 | | 18,615 |
Oil (MBbls) | 143 | | 185 | | 271 | | 371 |
NGL (MBbls) | 45 | | 33 | | 77 | | 69 |
Total (MMcfe) | 12,556 | | 10,700 | | 24,617 | | 21,256 |
| | |
United States (MMcfe) | 9,092 | | 8,864 | | 17,608 | | 17,722 |
Canada (MMcfe) | 3,464 | | 1,836 | | 7,009 | | 3,534 |
Total (MMcfe) | 12,556 | | 10,700 | | 24,617 | | 21,256 |
| | |
Average Daily Production: | | |
Natural gas (Mcfd) | 125,581 | | 103,211 | | 124,451 | | 102,281 |
Oil (Bbld) | 1,569 | | 2,032 | | 1,498 | | 2,038 |
NGL (Bbld) | 497 | | 364 | | 427 | | 380 |
Total (Mcfed) | 137,975 | | 117,586 | | 136,004 | | 116,793 |
| | |
Average Sales Price Per Unit (excluding effects of hedging): | |
Natural gas (per Mcf) | $ 5.54 | | $ 4.83 | | $ 5.35 | | $ 4.73 |
Oil (per Bbl) | $ 47.47 | | $ 35.75 | | $ 47.43 | | $ 32.63 |
NGL (per Bbl) | $ 33.27 | | $ 22.85 | | $ 33.13 | | $ 23.83 |
Total (per Mcfe) | $ 5.70 | | $ 4.93 | | $ 5.52 | | $ 4.79 |
| | |
Average Sales Price Per Unit (including effects of hedging): | |
Natural gas (per Mcf) | $ 5.24 | | $ 3.71 | | $ 4.78 | | $ 3.64 |
Oil (per Bbl) | $ 45.01 | | $ 32.62 | | $ 45.51 | | $ 30.27 |
NGL (per Bbl) | $ 33.27 | | $ 22.85 | | $ 33.13 | | $ 23.83 |
Total (per Mcfe) | $ 5.40 | | $ 3.89 | | $ 4.98 | | $ 3.80 |
| | |
Expense per Mcfe: | | |
United States production cost | $ 1.55 | | $ 1.28 | | $ 1.60 | | $ 1.30 |
Canada production cost | $ 1.07 | | $ 1.14 | | $ 1.03 | | 1.11 |
Total production cost | $ 1.42 | | $ 1.25 | | $ 1.44 | | $ 1.27 |
| | | | | | | | |
Production taxes | $ 0.20 | | $ 0.21 | | $ 0.19 | | $ 0.22 |
General and administrative expenses | $ 0.37 | | $ 0.31 | | $ 0.31 | | $ 0.28 |
Depletion, depreciation and amortization | $ 1.04 | | $ 0.91 | | $ 1.03 | | $ 0.89 |
| | | | | | | | |
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
| | June 30, | | December 31, |
| | 2005 | | 2004 (1) |
ASSETS | | | |
Current assets | | | |
Cash and cash equivalents | $ 7,208 | | $ 15,947 |
Accounts receivable | 40,793 | | 38,037 |
Current deferred income taxes | 1,115 | | 3,523 |
Inventories and other current assets | 10,481 | | 8,689 |
Total current assets | 59,597 | | 66,196 |
| | | | |
Investments in and advances to equity affiliates | 8,552 | | 8,254 |
| | | | |
Properties, plant and equipment -- net ("full cost") | 906,919 | | 802,610 |
| | | | |
Other assets | 9,065 | | 11,274 |
| | $ 984,133 | | $ 888,334 |
| | | | |
| | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
Current liabilities | | | |
Current portion of long-term debt | $ 356 | | $ 356 |
Accounts payable | 36,662 | | 28,407 |
Accrued derivative obligations | 3,628 | | 12,784 |
Accrued liabilities | 36,424 | | 41,904 |
Total current liabilities | 77,070 | | 83,451 |
| | | | |
Long-term debt | 456,160 | | 399,134 |
| | | | |
Derivative obligations | 1,569 | | - |
| | | | |
Asset retirement obligations | 18,850 | | 17,967 |
| | | | |
Deferred income taxes | 89,885 | | 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 | | | |
78,493,683 and 77,752,151 shares issued, respectively | 785 | | 778 |
Paid in capital in excess of par value | 212,474 | | 200,690 |
Deferred compensation | (4,888) | | - |
Treasury stock of 2,568,611 shares | (10,258) | | (10,258) |
Accumulated other comprehensive income | 8,261 | | 6,762 |
Retained earnings | 134,225 | | 106,304 |
Total stockholders' equity | 340,599 | | 304,276 |
| | $ 984,133 | | $ 888,334 |
(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 INCOME
In thousands, except for per share data -- Unaudited
| For the Three Months Ended | | For the Six Months Ended |
| June 30, | | June 30, |
| 2005 | | 2004 (1) | | 2005 | | 2004 (1) |
Revenues | | | | | | | |
Oil, gas and related product sales | $ 67,843 | | $ 41,600 | | $ 122,683 | | $ 80,724 |
Other revenue | 697 | | 380 | | 1,106 | | 1,033 |
Total revenues | 68,540 | | 41,980 | | 123,789 | | 81,757 |
Expenses | | | | | | | |
Oil and gas production costs | 20,352 | | 15,658 | | 40,006 | | 31,663 |
Other operating costs | 654 | | 372 | | 1,045 | | 662 |
Depletion, depreciation and accretion | 13,017 | | 9,714 | | 25,389 | | 18,819 |
Provision for doubtful accounts | 88 | | - | | 88 | | - |
General and administrative | 4,618 | | 3,353 | | 7,731 | | 6,009 |
Total expenses | 38,729 | | 29,097 | | 74,259 | | 57,153 |
| | | | | | | |
Income from equity affiliates | 215 | | 289 | | 439 | | 580 |
| | | | | | | |
Operating income | 30,026 | | 13,172 | | 49,969 | | 25,184 |
| | | | | | | |
Other income-net | (118) | | (23) | | (204) | | (93) |
Interest expense | 4,776 | | 3,630 | | 9,433 | | 7,042 |
| | | | | | | |
Income before income taxes | 25,368 | | 9,565 | | 40,740 | | 18,235 |
Income tax expense | 8,183 | | 2,065 | | 12,801 | | 4,798 |
| | | | | | | |
Net income | $ 17,185 | | $ 7,500 | | $ 27,939 | | $ 13,437 |
| | | | | | | |
| | | | | | | |
Basic net income per common share | $ 0.23 | | $ 0.10 | | $ 0.37 | | $ 0.18 |
Diluted net income per common share | $ 0.21 | | $ 0.10 | | $ 0.34 | | $ 0.18 |
| | | | | | | |
Weighted average common shares outstanding | | | | | | | |
Basic | 75,888 | | 74,550 | | 75,704 | | 74,475 |
Diluted | 82,474 | | 76,106 | | 82,268 | | 75,952 |
(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 Six Months Ended |
| | June 30, |
| | 2005 | | 2004 |
Operating activities: | | | |
Net income | $ 27,939 | | $ 13,437 |
Charges and credits to net income not affecting cash | | | |
Depletion, depreciation and accretion | 25,389 | | 18,819 |
Deferred income taxes | 12,528 | | 4,608 |
Amortization of deferred loan costs | 701 | | 616 |
Non-cash compensation | 500 | | - |
Income from equity affiliates | (439) | | (580) |
Non-cash gain from hedging activities | (287) | | (355) |
Other | 58 | | (2) |
Changes in assets and liabilities | | | |
Accounts receivable | (2,844) | | 5,308 |
Inventory, prepaid expenses and other | (3,511) | | 583 |
Accounts payable | 2,542 | | 1,204 |
Accrued liabilities and other | (1,459) | | (5,013) |
Net cash from operating activities | 61,117 | | 38,625 |
| | | | |
Investing activities: | | | |
Development and exploration costs and other property additions | (132,515) | | (85,161) |
Distributions and advances from equity affiliates -- net | 141 | | 771 |
Proceeds from sale of assets | 1,190 | | 82 |
Net cash used for investing activities | (131,184) | | (84,308) |
| | | | |
Financing activities: | | | |
Notes payable, bank proceeds | 59,823 | | 47,000 |
Principal payments on long-term debt | (161) | | (154) |
Deferred financing costs | (107) | | - |
Payment of cash dividend | (18) | | - |
Issuance of common stock, net of issuance costs | 1,508 | | 932 |
Net cash from financing activities | 61,045 | | 47,778 |
| | | | |
Effect of exchange rate changes in cash | 283 | | (265) |
| | | | |
Net increase in cash and cash equivalents | (8,739) | | 1,830 |
| | | | |
Cash and cash equivalents at beginning of period | 15,947 | | 4,116 |
| | | | |
Cash and cash equivalents at end of period | $ 7,208 | | $ 5,946 |
| | | | |
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) development and exploration costs and other property additions. The correction for the six months ended June 30, 2004 reduced net cash from operating activities and net cash used for investing activities by $ 2,172.
The results for interim periods are not necessarily indicative of annual results.
