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
February 22, 2006
QUICKSILVER RESOURCES ANNOUNCES
FOURTH QUARTER AND YEAR-END 2005 FINANCIAL RESULTS
Net Income Increases 180% Year over Year
FORT WORTH (February 22, 2006) --Quicksilver Resources Inc.(NYSE: KWK) today reported net income for the fourth quarter of 2005 of $34.7 million on revenues of $102.9 million, or $0.43 per diluted share. The company's comparative fourth quarter of 2004 net income was $9.9 million on revenues of $52.4 million, or $0.13 per diluted share after adjusting for the three-for-two stock split effected in the form of a stock dividend in June 2005.
Net income for the full year 2005 was $87.4 million on revenues of $310.4 million, or $1.08 per diluted share. This compares to full year 2004 net income of $31.3 million on revenue of $179.7 million, or $0.41 per diluted share. For the full year 2005, net cash from operating activities, as presented in the attached Condensed Consolidated Statements of Cash Flows, was $161.1 million compared to $84.8 million for same period in 2004.
Production
For the fourth quarter of 2005, average daily production was 150 million cubic feet equivalent per day (MMcfe/d) versus 127 MMcfe/d for the same period in 2004, an increase of 18 percent. Total production for the fourth quarter of 2005 was 13.8 billion cubic feet equivalent (Bcfe) as compared to 11.7 Bcfe for the fourth quarter of 2004.
Natural gas production for the fourth quarter of 2005 was 12.5 billion cubic feet (Bcf), or an average of 136 million cubic feet per day (MMcf/d), versus production of 10.7 Bcf, or an average of 117 MMcf/d, for the same period in 2004. The price realized for the company's natural gas production in the fourth quarter of 2005 averaged $7.19 per thousand cubic feet (Mcf), compared to the $4.24 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 fourth quarter of 2005.
Crude oil production for the fourth quarter of 2005 was 144,000 barrels, or 1,561 barrels per day, as compared to 130,000 barrels of production in the fourth quarter of 2004. Crude prices realized for the fourth quarter of 2005 averaged $53.36 per barrel compared to $38.75 per barrel for the prior year fourth quarter.
Natural gas liquids production for the fourth quarter of 2005 was 82,000 barrels compared to 32,000 barrels in the fourth quarter of 2004. The price realized for natural gas liquids averaged $47.12 per barrel in the fourth quarter of 2005, compared to the average of $37.21 per barrel realized in the fourth quarter of 2004.
Full year 2005 average daily production for the year was 141 MMcfe/d and total production was 51.4 Bcfe compared to 2004 average daily production of 121 MMcfe/d and 2004 total production of 44.3 Bcfe. Natural gas production totaled 46.8 Bcf for 2005 at an average price per Mcf of $5.76 as compared to 39.4 Bcf during 2004 at $3.83 per Mcf. Crude production for 2005 was 553,000 barrels at an average price per barrel of $50.50 versus 689,000 barrels at $33.07 per barrel in 2004. The company produced 223,000 barrels of natural gas liquids at an average price of $39.08 per barrel in 2005 as compared to 129,000 barrels in 2004 at an average of $28.52 per barrel.
Total capital costs incurred for the year 2005 were $361 million and consolidated exploration and production expenditures totaled $280 million. Quicksilver Resources had an overall finding and development cost of $1.24 per Mcfe in 2005.
Operations Update
In the Barnett Shale project in the Fort Worth Basin, Quicksilver Resources has six rigs operating. Ten operated wells have been drilled so far this year bringing the total of gross operated wells drilled since inception of the project to 53. Current net production is 26 MMcfe/d with 41 wells completed and tied into sales. The Cowtown natural gas cryogenic plant has been completed and is expected to be processing gas in early March.
In Alberta, Canada, the company has drilled 65 gross wells (29 net) in 2006 with three rigs that are expected to be drilling until break-up, estimated to be early to mid-March. Current net production is 50 MMcf/d.
President and CEO, Glenn Darden commented, "2005 was an excellent year for Quicksilver. Production grew 16 percent, reserves grew 20 percent, and the company moved forward on all fronts. With the Barnett Shale and Canadian coal bed drilling projects leading the way, Quicksilver is poised to grow at a faster rate this year than last. In addition to these developments, Quicksilver will be testing new shale objectives in West Texas. We anticipate another year of solid results for the company."
Fourth Quarter and Full Year 2005 Conference Call
The company's conference call to discuss operating and financial results for the fourth quarter and fiscal 2005 is scheduled for Thursday, February 23, 2006 at 10:00 a. m. central time.
Quicksilver invites interested persons to participate in the call by dialing (877) 313-7932, ID number 4073427 prior to 9:55 a. m. 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, ID number 4073427. 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 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 an d 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.
QUICKSILVER RESOURCES INC. |
Unaudited Selected Operating Results |
| |
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2005 | | 2004 | | 2005 | | 2004 |
Production: | | | | | | | |
Natural gas (MMcf) | 12,482 | | 10,725 | | 46,769 | | 39,351 |
Oil (MBbls) | 144 | | 130 | | 553 | | 689 |
NGL (MBbls) | 82 | | 32 | | 223 | | 129 |
Total (MMcfe) | 13,835 | | 11,696 | | 51,427 | | 44,257 |
| | |
United States (MMcfe) | 9,750 | | 8,709 | | 36,582 | | 35,546 |
Canada (MMcfe) | 4,085 | | 2,987 | | 14,845 | | 8,711 |
Total (MMcfe) | 13,835 | | 11,696 | | 51,427 | | 44,257 |
| | |
Average Daily Production: | | |
Natural gas (Mcfd) | 135,670 | | 116,577 | | 128,135 | | 107,516 |
Oil (Bbld) | 1,561 | | 1,413 | | 1,516 | | 1,882 |
NGL (Bbld) | 891 | | 345 | | 611 | | 352 |
Total (Mcfed) | 150,380 | | 127,128 | | 140,895 | | 120,922 |
| | |
Average Sales Price Per Unit (excluding effects of hedging): | |
Natural gas (per Mcf) | $ 8.91 | | $ 5.38 | | $ 6.63 | | $ 4.89 |
Oil (per Bbl) | $ 55.36 | | $ 45.19 | | $ 52.76 | | $ 36.53 |
NGL (per Bbl) | $ 47.12 | | $ 37.21 | | $ 39.08 | | $ 28.52 |
Total (per Mcfe) | $ 8.89 | | $ 5.54 | | $ 6.77 | | $ 5.00 |
| | |
Average Sales Price Per Unit (including effects of hedging): | |
Natural gas (per Mcf) | $ 7.19 | | $ 4.24 | | $ 5.76 | | $ 3.83 |
Oil (per Bbl) | $ 53.36 | | $ 38.75 | | $ 50.50 | | $ 33.07 |
NGL (per Bbl) | $ 47.12 | | $ 37.21 | | $ 39.08 | | $ 28.52 |
Total (per Mcfe) | $ 7.32 | | $ 4.42 | | $ 5.95 | | $ 4.00 |
| | |
Expense per Mcfe: | | |
United States production cost | $ 1.43 | | $ 1.33 | | $ 1.59 | | $ 1.30 |
Canada production cost | $ 1.12 | | $ .96 | | $ 1.06 | | $ 1.05 |
Total production cost | $ 1.34 | | $ 1.24 | | $ 1.44 | | $ 1.25 |
| | | | | | | | |
Production taxes | $ 0.33 | | $ 0.25 | | $ 0.24 | | $ 0.23 |
General and administrative expenses | $ 0.42 | | $ 0.31 | | $ 0.37 | | $ 0.29 |
Depletion, depreciation and amortization | $ 1.15 | | $ 1.02 | | $ 1.07 | | $ 0.92 |
| | | | | | | | |
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except for share data -- Unaudited
| | December 31, | | December 31, |
| | 2005 | | 2004 (1) |
ASSETS | | | |
Current assets | | | |
Cash and cash equivalents | $ 14,318 | | $ 15,947 |
Accounts receivable | 76,121 | | 38,037 |
Current deferred income taxes | 14,614 | | 3,523 |
Inventories and other current assets | 8,531 | | 8,689 |
Total current assets | 113,584 | | 66,196 |
| | | | |
Investments in and advances to equity affiliates | 8,353 | | 8,254 |
| | | | |
Properties, plant and equipment -- net ("full cost") | 1,112,002 | | 802,610 |
| | | | |
Other assets | 9,155 | | 11,274 |
| | $ 1,243,094 | | $ 888,334 |
| | | | |
| | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
Current liabilities | | | |
Current portion of long-term debt | $ 70,493 | | $ 356 |
Accounts payable | 48,409 | | 28,407 |
Accrued derivative obligations | 40,632 | | 12,784 |
Accrued liabilities | 52,656 | | 41,904 |
Total current liabilities | 212,190 | | 83,451 |
| | | | |
Long-term debt | 506,039 | | 399,134 |
| | | | |
Derivative obligations | 4,631 | | - |
| | | | |
Asset retirement obligations | 20,891 | | 17,967 |
| | | | |
Deferred income taxes | 115,728 | | 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 | | | |
78,650,110 and 77,752,151 shares issued, respectively | 787 | | 778 |
Paid in capital in excess of par value | 215,175 | | 200,690 |
Deferred compensation | (3,332) | | - |
Treasury stock of 2,571,069 and 2,568,611 shares, respectively | (10,353) | | (10,258) |
Accumulated other comprehensive income (loss) | (12,382) | | 6,762 |
Retained earnings | 193,720 | | 106,304 |
Total stockholders' equity | 383,615 | | 304,276 |
| | $ 1,243,094 | | $ 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.
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, |
| 2005 | | 2004 (1) | | 2005 | | 2004 (1) |
Revenues | | | | | | | |
Oil, gas and related product sales | $ 101,317 | | $ 51,706 | | $ 306,204 | | $ 177,173 |
Other revenue | 1,569 | | 722 | | 4,244 | | 2,556 |
Total revenues | 102,886 | | 52,428 | | 310,448 | | 179,729 |
Expenses | | | | | | | |
Oil and gas production costs | 23,064 | | 17,400 | | 86,272 | | 65,626 |
Other operating costs | 297 | | 239 | | 1,661 | | 810 |
Depletion, depreciation and accretion | 15,951 | | 11,890 | | 55,213 | | 40,691 |
Provision for doubtful accounts | 20 | | 153 | | 108 | | 153 |
General and administrative | 5,867 | | 3,644 | | 18,979 | | 12,934 |
Total expenses | 45,199 | | 33,326 | | 162,233 | | 120,214 |
| | | | | | | |
Income from equity affiliates | 245 | | 298 | | 914 | | 1,178 |
| | | | | | | |
Operating income | 57,932 | | 19,400 | | 149,129 | | 60,693 |
Other income-net | (128) | | (278) | | (585) | | (415) |
Interest expense | 6,718 | | 4,416 | | 21,740 | | 15,662 |
| | | | | | | |
Income from continuing operations before income taxes | 51,342 | | 15,262 | | 127,974 | | 45,446 |
Income tax expense | 16,702 | | 5,316 | | 40,702 | | 14,174 |
| | | | | | | |
Income from continuing operations | 34,640 | | 9,946 | | 87,272 | | 31,272 |
Discontinued operations -- gain from discontinued | | | | | | | |
drilling operations, net of income tax of $86 | 100 | | - | | 162 | | - |
Net income | $ 34,740 | | $ 9,946 | | $ 87,434 | | $ 31,272 |
| | | | | | | |
Basic net income per share | | | | | | | |
Continuing operations | $ 0.46 | | $ 0.13 | | $ 1.15 | | $ 0.42 |
Discontinued operations | - | | - | | - | | - |
Net income | $ 0.46 | | $ 0.13 | | $ 1.15 | | $ 0.42 |
| | | | | | | |
Diluted net income per share | | | | | | | |
Continuing operations | $ 0.43 | | $ 0.13 | | $ 1.08 | | $ 0.41 |
Discontinued operations | - | | - | | - | | - |
Net income | $ 0.43 | | $ 0.13 | | $ 1.08 | | $ 0.41 |
| | | | | | | |
Weighted average common shares outstanding | | | | | | | |
Basic | 75,840 | | 75,023 | | 75,716 | | 74,654 |
Diluted | 82,609 | | 79,749 | | 82,455 | | 77,015 |
- 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.
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands-Unaudited
| | For the Year Ended |
| | December 31, |
| | 2005 | | 2004 |
Operating activities: | | | |
Net income | $ 87,434 | | $ 31,272 |
Charges and credits to net income not affecting cash | | | |
Depletion, depreciation and accretion | 55,213 | | 40,691 |
Deferred income taxes | 40,298 | | 12,989 |
Amortization of deferred loan costs | 1,429 | | 1,249 |
Non-cash compensation | 1,732 | | - |
Income from equity affiliates | (914) | | (1,178) |
Non-cash gain from hedging activities | (462) | | (786) |
Other | 265 | | 91 |
Changes in assets and liabilities | | | |
Accounts receivable | (38,192) | | (11,562) |
Inventory, prepaid expenses and other | (1,919) | | 4,413 |
Accounts payable | 10,195 | | 2,220 |
Accrued liabilities and other | 6,039 | | 5,448 |
Net cash from operating activities | 161,118 | | 84,847 |
| | | | |
Investing activities: | | | |
Development and exploration costs and other property additions | (346,145) | | (215,106) |
Distributions and advances from equity affiliates -- net | 533 | | 48 |
Proceeds from sale of assets | 9,693 | | 9,160 |
Net cash used for investing activities | (335,919) | | (205,898) |
| | | | |
Financing activities: | | | |
Notes payable, bank proceeds | 183,469 | | 511,091 |
Principal payments on long-term debt | (13,079) | | (371,178) |
Debt issuance costs | (745) | | (8,023) |
Purchase of treasury stock | (95) | | - |
Payment for fractional shares | (18) | | - |
Proceeds from exercise of stock options | 2,894 | | 2,499 |
Net cash from financing activities | 172,426 | | 134,389 |
| | | | |
Effect of exchange rate changes on cash | 746 | | (1,507) |
| | | | |
Net increase (decrease) in cash and cash equivalents | (1,629) | | 11,831 |
| | | | |
Cash and cash equivalents at beginning of period | 15,947 | | 4,116 |
| | | | |
Cash and cash equivalents at end of period | $ 14,318 | | $ 15,947 |
| | | | |
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.
