Exhibit 99.1
INVESTOR RELATIONS: | MEDIA RELATIONS: | |
Quicksilver Resources Inc. | Ward Creative Communications | |
Diane Weaver | Mickey Gentry (713) 869-0707 | |
(817) 665-4834 | Shelley Eastland (713) 468-5304 |
FOR IMMEDIATE RELEASE
March 3, 2004
Quicksilver Resources Reports Year 2003 Financial Results
Company Accelerates Coalbed Methane Project Capital Spending
FORT WORTH (March 3, 2004) –Quicksilver Resources Inc. (NYSE: KWK)today reported fourth quarter 2003 net income of $5.8 million on revenues of $36.8 million, or $0.23 per diluted share. The company’s comparative fourth quarter 2002 net income was $4.3 million ($0.21 per diluted share) on revenues of $31.8 million. Net cash from operating activities for the fourth quarter 2003 was $21.4 million versus $20.2 million for the fourth quarter 2002. Quarterly results were negatively impacted by approximately $.04 per share due to a resolution of a partnership issue and an increase in the 2003 employee bonus program.
Net income for the full year 2003 was $16.2 million on revenue of $140.9 million or $0.71 per diluted share. The 2003 results include the implementation of FAS 143 during the first quarter which resulted in a non-cash charge of $2.3 million, or $0.10 per diluted share. This compares to full year 2002 net income of $13.8 million on revenue of $122.0 million or $0.68 per diluted share. For the full year 2003, net cash from operating activities, as presented in the attached Condensed Consolidated Statement of Cash Flows, was $63.1 million, as compared to $44.0 million for the full year in 2002.
Production
Natural gas production for the fourth quarter of 2003 was 9.3 billion cubic feet (Bcf), or 101.0 million cubic feet per day (MMcfd), versus 8.6 Bcf in fourth quarter 2002. The price realized for the company’s gas production in the fourth quarter of 2003 averaged $3.35 per thousand cubic feet (Mcf) compared to the $2.97 per Mcf received in the same period of 2002. Natural gas, including natural gas liquids, comprised 89 percent of the company’s total production in the fourth quarter of 2003.
Crude oil production for the 2003 fourth quarter was 188,000 barrels, or 2,048 barrels per day, as compared to 213,000 barrels of production in the fourth quarter of 2002. Oil prices realized for the fourth quarter of 2003 averaged $24.35 per barrel versus $23.71 for the prior year fourth quarter. Natural gas liquids production for the fourth quarter 2003 was 39,000 barrels versus 47,000 barrels in the fourth quarter of 2002.
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Full year 2003 natural gas production totaled 34.5 Bcf at an average price per Mcf of $3.38 as compared to 32.8 Bcf during 2002 at $2.75 per Mcf. Crude oil production for 2003 was 808,000 barrels at an average price per barrel of $24.23 versus 905,000 barrels at $21.74 per barrel in 2002. The company produced 135,000 barrels of natural gas liquids at an average price of $21.50 per barrel in 2003 as compared to 156,000 barrels in 2002 at an average price of $14.97 per barrel.
Year-end Reserves and Operations Update
Quicksilver’s total proved oil and gas reserves as of December 31, 2003 were 880.7 billion cubic feet equivalent (Bcfe), a 79.8 Bcfe increase over year-end 2002. This includes 131.3 Bcf of Canadian coal bed methane (CBM) reserves which was an increase of 258 percent in comparison to 2002 CBM reserves of 36.6 Bcfe. The pretax present value of the reserves discounted at 10 percent was $1.21 billion based on year-end spot prices of $5.965 per Mcf of natural gas and $32.55 per barrel of oil. Reserve replacement for 2003 was 299 percent of production. Natural gas accounted for 90 percent of total proved reserves as of December 31, 2003 and 81 percent of the reserves were classified as proved developed.
Through its Canadian subsidiary, MGV Energy Inc., Quicksilver continued to expand its Canadian CBM effort in 2003 drilling 184 wells. MGV began its exploration of CBM in Alberta when it entered into a joint venture with EnCana Corporation (formerly PanCanadian Petroleum Limited) in November 2000. With the EnCana asset rationalization agreement in January 2003, Quicksilver gained operational control of 95 percent of its CBM assets and subsequently conducted two successful developments in the Beiseker and Gayford areas. Additional exploration and piloting activity in 2003 has proven commercial production in several new areas covering a large geographic area resulting in five new developments planned for 2004. In January 2004, MGV acquired an additional 50 percent working interest in 76,800 acres in the Wood River area in southern Alberta and now owns 100 percent working interest in these lands. Production rates from the Horseshoe Canyon CBM wells continue to range between 50 and 250 thousand cubic feet per day with negligible water production. Production from MGV’s Canadian CBM projects averaged 5.7 MMcfd for 2003 with year-end production reaching 16 MMcfd. An $89 million capital budget for development and exploration is planned for Canada in 2004. Most of this budget will target CBM development while continuing exploration and piloting efforts in new areas. MGV presently holds leases and drilling rights on more than 525,000 net acres in Canada.
Glenn Darden, Quicksilver’s president and chief executive officer, commented on the year. “After two years of extensive testing of shallow coals over a large geographic area in Alberta, we have now moved into the development phase. It appears that we have defined a large fairway of commercial productive coals. The lack of water in these coals makes the economics of this project compelling. We also are making good progress in our fractured shale program in southern Indiana and western Kentucky, and the production volumes are beginning to ramp up. Quicksilver will continue its pursuit of unconventional natural gas production in these growing areas, and is looking forward to developing production in a new area, as the company has assembled more than 100,000 net acres in the Barnett Shale play in north central Texas.”
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Conference Call
Quicksilver has scheduled a conference call for Thursday, March 4, 2004, at 10 a.m. CST, to discuss the fourth quarter and full year 2003 results. Those wishing to participate should call the toll free number (877) 313-7932, ID number 5638045, between 9:50 and 9:55 a.m. CST. A replay of the conference call will be available at 1 p.m. CST 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 5638045. 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
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 coal bed 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; Casper, Wyoming and Cut Bank, Montana. Quicksilver also has a Canadian subsidiary, MGV Energy Inc., located in Calgary, Alberta. For more information about Quicksilver Resources, visitwww.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 December 31, | Year Ended December 31, | |||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||
Production: | ||||||||||||
Natural gas (MMcf) | 9,293 | 8,578 | 34,536 | 32,845 | ||||||||
Oil (MBbls) | 188 | 213 | 808 | 905 | ||||||||
NGL (MBbls) | 39 | 47 | 135 | 156 | ||||||||
Total (MMcfe) | 10,659 | 10,133 | 40,192 | 39,209 | ||||||||
Average Daily Production: | ||||||||||||
Natural gas (Mcf) | 101,015 | 93,235 | 94,619 | 89,988 | ||||||||
Oil (Bbl) | 2,048 | 2,311 | 2,213 | 2,479 | ||||||||
NGL (Bbl) | 426 | 507 | 369 | 426 | ||||||||
Total (Mcfe) | 115,858 | 110,140 | 110,115 | 107,421 | ||||||||
Average Sales Price Per Unit (excluding effects of hedging): | ||||||||||||
Natural gas (per Mcf) | $ | 4.07 | $ | 3.49 | $ | 4.47 | $ | 2.97 | ||||
Oil (per Bbl) | $ | 26.09 | $ | 24.04 | $ | 26.69 | $ | 21.87 | ||||
NGL (per Bbl) | $ | 20.50 | $ | 15.75 | $ | 21.50 | $ | 14.97 | ||||
Total (per Mcfe) | $ | 4.05 | $ | 3.53 | $ | 4.44 | $ | 3.05 | ||||
Average Sales Price Per Unit (including effects of hedging): | ||||||||||||
Natural gas (per Mcf) | $ | 3.35 | $ | 2.97 | $ | 3.38 | $ | 2.75 | ||||
Oil (per Bbl) | $ | 24.35 | $ | 23.71 | $ | 24.23 | $ | 21.74 | ||||
NGL (per Bbl) | $ | 20.50 | $ | 15.75 | $ | 21.50 | $ | 14.97 | ||||
Total (per Mcfe) | $ | 3.43 | $ | 3.08 | $ | 3.46 | $ | 2.86 | ||||
Expense per Mcfe: | ||||||||||||
Production cost | $ | 1.09 | $ | 0.92 | $ | 1.08 | $ | 0.94 | ||||
Production taxes | $ | 0.19 | $ | 0.17 | $ | 0.22 | $ | 0.14 | ||||
General and administrative expenses | $ | 0.20 | $ | 0.16 | $ | 0.20 | $ | 0.19 | ||||
Depletion, depreciation and accretion | $ | 0.84 | $ | 0.74 | $ | 0.80 | $ | 0.77 |
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except for share data – Unaudited
December 31, 2003 | December 31, 2002 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 4,116 | $ | 9,116 | ||||
Accounts receivable | 26,247 | 21,075 | ||||||
Current deferred income taxes | 11,760 | 9,045 | ||||||
Inventories and other current assets | 7,588 | 5,540 | ||||||
Total current assets | 49,711 | 44,776 | ||||||
Investments in and advances to equity affiliates | 9,173 | 10,219 | ||||||
Properties, plant and equipment – net (“full cost”) | 604,576 | 470,078 | ||||||
Other assets | 3,474 | 4,465 | ||||||
$ | 666,934 | $ | 529,538 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Current portion of long-term debt | $ | 339 | $ | 951 | ||||
Accounts payable | 17,954 | 14,931 | ||||||
Accrued derivative obligations | 34,577 | 26,362 | ||||||
Accrued liabilities | 27,644 | 26,210 | ||||||
Total current liabilities | 80,514 | 68,454 | ||||||
Long-term debt | 249,097 | 248,493 | ||||||
Derivative obligations | 9,662 | 26,387 | ||||||
Asset retirement obligations | 15,135 | 234 | ||||||
Deferred income taxes | 70,710 | 57,065 | ||||||
Stockholders’ equity | ||||||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized, 1 share issued and outstanding | — | — | ||||||
Common stock, $0.01 par value, 40,000,000 shares authorized, 27,312,315 and 23,663,447 shares issued, respectively | 273 | 237 | ||||||
Paid in capital in excess of par value | 194,493 | 114,113 | ||||||
Treasury stock of 2,578,904 and 2,570,502 shares, respectively | (10,299 | ) | (10,099 | ) | ||||
Accumulated other comprehensive income | (17,683 | ) | (34,170 | ) | ||||
Retained earnings | 75,032 | 58,824 | ||||||
241,816 | 128,905 | |||||||
$ | 666,934 | $ | 529,538 | |||||
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per share data – Unaudited
For the Three Months Ended December 31, | For the Year Ended December 31, | |||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||
Revenues | ||||||||||||||||
Oil, gas and related product sales | $ | 36,552 | $ | 31,218 | $ | 139,037 | $ | 112,296 | ||||||||
Other revenue | 273 | 555 | 1,912 | 9,683 | ||||||||||||
Total revenues | 36,825 | 31,773 | 140,949 | 121,979 | ||||||||||||
Expenses | ||||||||||||||||
Oil and gas production costs | 13,725 | 11,024 | 52,194 | 42,228 | ||||||||||||
Other operating costs | 299 | 488 | 1,301 | 1,538 | ||||||||||||
Depletion, depreciation and accretion | 8,973 | 7,548 | 32,067 | 30,159 | ||||||||||||
Provision for doubtful accounts | 87 | 87 | ||||||||||||||
General and administrative | 2,125 | 1,618 | 8,133 | 7,552 | ||||||||||||
Total expenses | 25,209 | 20,678 | 93,782 | 81,477 | ||||||||||||
Income from equity affiliates | 222 | 93 | 1,331 | 200 | ||||||||||||
Operating income | 11,838 | 11,188 | 48,498 | 40,702 | ||||||||||||
Other income-net | (71 | ) | (112 | ) | (186 | ) | (470 | ) | ||||||||
Interest expense | 3,489 | 4,813 | 20,182 | 19,839 | ||||||||||||
Income before income taxes and cumulative effect of change in accounting principle | 8,420 | 6,487 | 28,502 | 21,333 | ||||||||||||
Income tax expense | 2,665 | 2,154 | 9,997 | 7,498 | ||||||||||||
Net income before cumulative effect of change in accounting principle | 5,755 | 4,333 | 18,505 | 13,835 | ||||||||||||
Cumulative effect of change in accounting principle, net of tax | — | — | 2,297 | — | ||||||||||||
Net income | $ | 5,755 | $ | 4,333 | $ | 16,208 | $ | 13,835 | ||||||||
Basic net income per common share: | ||||||||||||||||
Net income before cumulative effect of accounting change | $ | 0.23 | $ | 0.21 | $ | 0.83 | $ | 0.70 | ||||||||
Cumulative effect of accounting change, net of tax | — | — | (0.11 | ) | — | |||||||||||
Net income | $ | 0.23 | $ | 0.21 | $ | 0.72 | $ | 0.70 | ||||||||
Diluted net income per common share: | ||||||||||||||||
Net income before cumulative effect of accounting change | $ | 0.23 | $ | 0.21 | $ | 0.81 | $ | 0.68 | ||||||||
Cumulative effect of accounting change, net of tax | — | — | (0.10 | ) | — | |||||||||||
Net income | $ | 0.23 | $ | 0.21 | $ | 0.71 | $ | 0.68 | ||||||||
Weighted average common shares outstanding | ||||||||||||||||
Basic | 24,724 | 20,424 | 22,394 | 19,806 | ||||||||||||
Diluted | 25,167 | 20,914 | 22,845 | 20,394 |
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands-Unaudited
For the Year Ended December 31, | ||||||||
2003 | 2002 | |||||||
Operating activities: | ||||||||
Net income | $ | 16,208 | $ | 13,835 | ||||
Charges and credits to net income not affecting cash | ||||||||
Cumulative effect of accounting change, net of tax | 2,297 | — | ||||||
Depletion, depreciation and accretion | 32,067 | 30,159 | ||||||
Deferred income taxes | 9,736 | 7,760 | ||||||
Recognition of unearned revenues | 507 | (3,678 | ) | |||||
Income from equity affiliates | (1,331 | ) | (200 | ) | ||||
Non-cash (gain) loss from hedging activities | (678 | ) | 842 | |||||
Amortization of deferred loan costs | 2,637 | 1,239 | ||||||
Other | 455 | 169 | ||||||
Changes in assets and liabilities | ||||||||
Accounts receivable | (2,606 | ) | 414 | |||||
Inventory, prepaid expenses and other | (240 | ) | (852 | ) | ||||
Accounts payable | 3,055 | 2,664 | ||||||
Accrued liabilities and other | 946 | (8,353 | ) | |||||
Net cash from operating activities | 63,053 | 43,999 | ||||||
Investing activities: | ||||||||
Development and exploration costs and other property additions | (148,488 | ) | (88,965 | ) | ||||
Purchase of Voyager Compression Services assets | (684 | ) | — | |||||
Distributions and advances from equity affiliates – net | 1,649 | 4,043 | ||||||
Proceeds from sale of assets | 101 | 1,263 | ||||||
Net cash used for investing activities | (147,422 | ) | (83,659 | ) | ||||
Financing activities: | ||||||||
Notes payable, bank proceeds | 114,000 | 16,000 | ||||||
Principal payments on long-term debt | (113,116 | ) | (14,912 | ) | ||||
Deferred financing costs | (1,441 | ) | (1,362 | ) | ||||
Issuance of common stock, net of issuance costs | 79,926 | 40,640 | ||||||
Payments to acquire common stock | — | (316 | ) | |||||
Net cash from financing activities | 79,369 | 40,050 | ||||||
Net increase in cash and cash equivalents | (5,000 | ) | 390 | |||||
Cash and cash equivalents at beginning of period | 9,116 | 8,726 | ||||||
Cash and cash equivalents at end of period | $ | 4,116 | $ | 9,116 | ||||