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 7, 2005
Quicksilver Resources Reports THIRD Quarter 2005 Financial Results
Earnings per Share Increase 210% - Gas Production up 17% Year over Year
FORT WORTH (November 7, 2005) --Quicksilver Resources Inc. (NYSE: KWK)today reported net income for third quarter of 2005 of $24.8 million on revenues of $83.8 million, or $0.31 per diluted share. The company's comparative third quarter of 2004 net income was $7.9 million on revenues of $45.5 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 diluted share for the third quarter of 2005 increased 210 percent compared to third quarter 2004.
Net income for the first nine months of 2005 was $52.7 million on revenues of $207.6 million, or $0.66 per diluted share. This compares to first nine months 2004 net income of $21.3 million on revenue of $127.3 million, or $0.28 per diluted share. For the nine-month period ended September 2005, net cash from operating activities, as presented in the attached Condensed Consolidated Statements of Cash Flows, was $85.4 million compared to $54.4 million for same period in 2004.
Production
Natural gas production for the third quarter of 2005 was 11.8 billion cubic feet (Bcf), or an average of 128 million cubic feet per day (MMcf/d), which is a 17 percent increase over production of 10 Bcf, or an average of 109 MMcf/d, for the same period in 2004. The price realized for the company's natural gas production in the third quarter of 2005 averaged $6.12 per thousand cubic feet (Mcf), compared to the $3.73 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 third quarter of 2005.
Crude oil production for the third quarter of 2005 was 139,000 barrels, or 1,507 barrels per day, as compared to 188,000 barrels of production in the third quarter of 2004. Crude prices realized for the third quarter of 2005 averaged $57.31 per barrel compared to $34.67 per barrel for the prior year third quarter.
Natural gas liquids production for the third quarter of 2005 was 64,000 barrels compared to 28,000 barrels in the third quarter of 2004. The price realized for natural gas liquids averaged $35.96 per barrel in the third quarter of 2005, compared to the average of $30.29 per barrel realized in the third quarter of 2004.
Operations Update
In the Barnett Shale play in north central Texas, Quicksilver has drilled 25 net wells to date this year, with 19 of these completed and connected into sales lines. The company's current net production is 15 million cubic feet equivalent per day (MMcfe/d). The company currently has four drilling rigs operating and expects to add a fifth drilling rig within two weeks. One hundred percent of Quicksilver's operated Barnett Shale gas is connected into its Cowtown Pipeline system. The Cowtown cryogenic natural gas liquids plant should be in operation in December. The company continues to add to its lease position which now stands at more than 251,000 net acres.
Three hundred seventy-five gross wells have been drilled to date this year in Quicksilver's Canadian coal bed methane project with a target of 500 gross wells (277 net) drilled by year-end. Current net production is 45 MMcf/d with production expected to be in excess of 50 MMcf/d by year-end.
Quicksilver has also drilled 50 net wells in Michigan and Indiana in its other shale projects. The company has had positive results in a re-entry horizontal drilling program in the Michigan Antrim Shale. This success coupled with re-works in non-Antrim properties has kept Michigan production ahead of budget for the year.
President and CEO, Glenn Darden, noted, "Despite heavy rains in Alberta and delays in securing drilling rigs in Texas, Quicksilver is making strong progress in our two large development drilling areas. What is most encouraging is the consistent well performance in both Texas and Canada. Now that we have solved the rig issue, the Texas production should grow rapidly."
Conference Call
The company's conference call to discuss operating and financial results is scheduled for Tuesday, November 8, 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 3380369 prior to 9:55 am. 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 3380369. 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 and will be available for one week.
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 September 30, | | Nine Months Ended September 30, |
| | 2005 | | 2004 | | 2005 | | 2004 |
Production: | | | | | | | |
Natural gas (MMcf) | 11,762 | | 10,011 | | 34,287 | | 28,626 |
Oil (MBbls) | 139 | | 188 | | 410 | | 559 |
NGL (MBbls) | 64 | | 28 | | 141 | | 97 |
Total (MMcfe) | 12,975 | | 11,305 | | 37,592 | | 32,562 |
| | |
United States (MMcfe) | 9,223 | | 9,116 | | 26,832 | | 26,838 |
Canada (MMcfe) | 3,752 | | 2,189 | | 10,760 | | 5,724 |
Total (MMcfe) | 12,975 | | 11,305 | | 37,592 | | 32,562 |
| | |
Average Daily Production: | | |
Natural gas (Mcfd) | 127,846 | | 108,813 | | 125,595 | | 104,474 |
Oil (Bbld) | 1,507 | | 2,042 | | 1,501 | | 2,040 |
NGL (Bbld) | 691 | | 303 | | 516 | | 354 |
Total (Mcfed) | 141,033 | | 122,883 | | 137,699 | | 118,838 |
| | |
Average Sales Price Per Unit (excluding effects of hedging): | |
Natural gas (per Mcf) | $ 6.66 | | $ 4.65 | | $ 5.80 | | $ 4.70 |
Oil (per Bbl) | $ 60.52 | | $ 38.22 | | $ 51.86 | | $ 34.51 |
NGL (per Bbl) | $ 35.96 | | $ 30.29 | | $ 34.41 | | $ 25.68 |
Total (per Mcfe) | $ 6.86 | | $ 4.83 | | $ 5.99 | | $ 4.80 |
| | |
Average Sales Price Per Unit (including effects of hedging): | |
Natural gas (per Mcf) | $ 6.12 | | $ 3.73 | | $ 5.24 | | $ 3.68 |
Oil (per Bbl) | $ 57.31 | | $ 34.67 | | $ 49.50 | | $ 31.75 |
NGL (per Bbl) | $ 35.96 | | $ 30.29 | | $ 34.41 | | $ 25.68 |
Total (per Mcfe) | $ 6.34 | | $ 3.96 | | $ 5.45 | | $ 3.85 |
| | |
Expense per Mcfe: | | |
United States production cost | $ 1.73 | | $ 1.26 | | $ 1.64 | | $ 1.29 |
Canada production cost | $ 1.06 | | $ 1.10 | | $ 1.04 | | $ 1.10 |
Total production cost | $ 1.53 | | $ 1.22 | | $ 1.47 | | $ 1.25 |
| | | | | | | | |
Production taxes | $ 0.26 | | $ 0.22 | | $ 0.21 | | $ 0.22 |
General and administrative expenses | $ 0.41 | | $ 0.29 | | $ 0.35 | | $ 0.29 |
Depletion, depreciation and amortization | $ 1.07 | | $ 0.88 | | $ 1.04 | | $ 0.88 |
| | | | | | | | |
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
| | September 30, | | December 31, |
| | 2005 | | 2004 (1) |
ASSETS | | | |
Current assets | | | |
Cash and cash equivalents | $ 29,742 | | $ 15,947 |
Accounts receivable | 70,783 | | 38,037 |
Current deferred income taxes | 30,696 | | 3,523 |
Inventories and other current assets | 9,046 | | 8,689 |
Total current assets | 140,267 | | 66,196 |
| | | | |
Investments in and advances to equity affiliates | 7,918 | | 8,254 |
| | | | |
Properties, plant and equipment -- net ("full cost") | 997,075 | | 802,610 |
| | | | |
Other assets | 9,042 | | 11,274 |
| | $ 1,154,302 | | $ 888,334 |
| | | | |
| | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
Current liabilities | | | |
Current portion of long-term debt | $ 356 | | $ 356 |
Accounts payable | 35,365 | | 28,407 |
Accrued derivative obligations | 85,358 | | 12,784 |
Accrued liabilities | 44,880 | | 41,904 |
Total current liabilities | 165,959 | | 83,451 |
| | | | |
Long-term debt | 547,697 | | 399,134 |
| | | | |
Derivative obligations | 11,679 | | - |
| | | | |
Asset retirement obligations | 19,939 | | 17,967 |
| | | | |
Deferred income taxes | 98,070 | | 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 | | | |
78,519,540 and 77,752,151 shares issued, respectively | 785 | | 778 |
Paid in capital in excess of par value | 212,431 | | 200,690 |
Deferred compensation | (4,200) | | - |
Treasury stock of 2,568,611 shares | (10,258) | | (10,258) |
Accumulated other comprehensive (loss) income | (46,780) | | 6,762 |
Retained earnings | 158,980 | | 106,304 |
Total stockholders' equity | 310,958 | | 304,276 |
| | $ 1,154,302 | | $ 888,334 |
- 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 Nine Months Ended |
| September 30, | | September 30, |
| 2005 | | 2004 (1) | | 2005 | | 2004 (1) |
Revenues | | | | | | | |
Oil, gas and related product sales | $ 82,204 | | $ 44,743 | | $ 204,887 | | $ 125,467 |
Other revenue | 1,569 | | 801 | | 2,675 | | 1,834 |
Total revenues | 83,773 | | 45,544 | | 207,562 | | 127,301 |
Expenses | | | | | | | |
Oil and gas production costs | 23,272 | | 16,407 | | 63,208 | | 48,226 |
Other operating costs | 249 | | 65 | | 1,364 | | 571 |
Depletion, depreciation and accretion | 13,873 | | 9,982 | | 39,262 | | 28,801 |
Provision for doubtful accounts | - | | - | | 88 | | - |
General and administrative | 5,381 | | 3,281 | | 13,112 | | 9,290 |
Total expenses | 42,775 | | 29,735 | | 117,034 | | 86,888 |
| | | | | | | |
Income from equity affiliates | 230 | | 300 | | 669 | | 880 |
| | | | | | | |
Operating income | 41,228 | | 16,109 | | 91,197 | | 41,293 |
| | | | | | | |
Other income-net | (253) | | (44) | | (457) | | (137) |
Interest expense | 5,589 | | 4,204 | | 15,022 | | 11,246 |
| | | | | | | |
Income before income taxes | 35,892 | | 11,949 | | 76,632 | | 30,184 |
Income tax expense | 11,199 | | 4,060 | | 24,000 | | 8,858 |
| | | | | | | |
Income before discontinued operations | 24,693 | | 7,889 | | 52,632 | | 21,326 |
Discontinued operations | | | | | | | |
Gain from discontinued drilling operations, | | | | | | | |
net of income tax of $ 34 | 62 | | - | | 62 | | - |
Net income | $24,755 | | $ 7,889 | | $ 52,694 | | $ 21,326 |
| | | | | | | |
Basic net income per share | | | | | | | |
Continuing operations | $ 0.33 | | $ 0.11 | | $ 0.70 | | $ 0.29 |
Discontinued operations | - | | - | | - | | - |
Net income | $ 0.33 | | $ 0.11 | | $ 0.70 | | $ 0.29 |
| | | | | | | |
Diluted net income per share | | | | | | | |
Continuing operations | $ 0.31 | | $ 0.10 | | $ 0.66 | | $ 0.28 |
Discontinued operations | - | | - | | - | | - |
Net income | $ 0.31 | | $ 0.10 | | $ 0.66 | | $ 0.28 |
| | | | | | | |
Weighted average common shares outstanding | | | | | | | |
Basic | 75,931 | | 74,638 | | 75,777 | | 74,530 |
Diluted | 82,668 | | 76,288 | | 82,403 | | 76,037 |
- 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 Nine Months Ended |
| | September 30, |
| | 2005 | | 2004 |
Operating activities: | | | |
Net income | $ 52,694 | | $ 21,326 |
Charges and credits to net income not affecting cash | | | |
Depletion, depreciation and accretion | 39,262 | | 28,801 |
Deferred income taxes | 23,620 | | 8,528 |
Amortization of deferred loan costs | 1,061 | | 907 |
Non-cash compensation | 932 | | - |
Income from equity affiliates | (669) | | (880) |
Non-cash gain from hedging activities | (305) | | (618) |
Other | 71 | | (37) |
Changes in assets and liabilities | | | |
Accounts receivable | (32,834) | | (1,822) |
Inventory, prepaid expenses and other | (2,991) | | (31) |
Accounts payable | 6,084 | | 3,011 |
Accrued liabilities and other | (1,528) | | (4,824) |
Net cash from operating activities | 85,397 | | 54,361 |
| | | | |
Investing activities: | | | |
Development and exploration costs and other property additions | (226,376) | | (141,168) |
Distributions and advances from equity affiliates -- net | 1,005 | | 1,604 |
Proceeds from sale of assets | 9,301 | | 8,591 |
Net cash used for investing activities | (216,070) | | (130,973) |
| | | | |
Financing activities: | | | |
Notes payable, bank proceeds | 143,094 | | 329,406 |
Principal payments on long-term debt | (245) | | (237,234) |
Deferred financing costs | (223) | | (2,958) |
Payment of fractional shares | (18) | | - |
Issuance of common stock, net of issuance costs | 1,721 | | 1,920 |
Net cash from financing activities | 144,329 | | 91,134 |
| | | | |
Effect of exchange rate changes on cash | 139 | | (646) |
| | | | |
Net increase in cash and cash equivalents | 13,795 | | 13,876 |
| | | | |
Cash and cash equivalents at beginning of period | 15,947 | | 4,116 |
| | | | |
Cash and cash equivalents at end of period | $ 29,742 | | $ 17,992 |
| | | | |
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) purchase of properties and equipment in the condensed consolidated statements of cash flow. The prior period presented has been adjusted to conform to this presentation.
The results for interim periods are not necessarily indicative of annual results.
