Exhibit 99.1 N e w s R e l e a s e
QUICKSILVER GAS SERVICES LP
777 West Rosedale Street
Fort Worth, TX 76104
www.kgslp.com
Quicksilver Gas Services Announces Third-Quarter 2007 Results
FORT WORTH, TEXAS, (November 6, 2007)– Quicksilver Gas Services LP (NYSE Arca: KGS) today reported net income for the third quarter of 2007 of 2.1 million ($1.6 million attributable to the limited partner’s interest from the initial public offering at August 10, 2007 through September 30, 2007 or $.07 per limited partner unit – diluted), an increase of $2.0 million versus the prior-year period. Adjusted earnings before interest, income taxes, depreciation, amortization and accretion ("EBITDA"), a non-GAAP measure, was $6.1 million for the third quarter of 2007, more than a four-fold increase as compared with $1.2 million in the third quarter of 2006.
Third-Quarter 2007 Highlights
| · | Completed initial public offering on August 10, 2007 |
| · | Doubled adjusted gross margin as a percent of revenue to 58% versus the prior-year quarter |
| · | Increased throughput 140% versus the prior-year quarter |
| · | Connected 54 new wells to the gathering system |
| · | Installed approximately 30 miles of gathering infrastructure |
“The significant increase in both operating and financial results achieved during our first quarter as a public entity indicates that our growth plan is on track,” said Toby Darden, Quicksilver Gas Services president and chief executive officer. “The utilization rate of our newest processing plant at the Cowtown facility increased to more than 87 percent at the end of the quarter, resulting in continued improvement in our adjusted gross margins. Refurbishment of the initial plant is nearly complete, which will support further growth in distributable cash flow as we meet the needs of our customers’ growing production volumes.”
On October 17, 2007 the company announced that the board of directors of its general partner declared a cash distribution for the 2007 third quarter of $.1675 per unit, which represents a pro rata portion of a $.30 quarterly distribution from the date of closing its initial public offering on August 10, 2007. This distribution will be paid November 14, 2007 on all units to holders of record as of the close of business on October 31, 2007.
Separately, Quicksilver Gas Services has signed a contract with Exterran Energy Solutions, L.P. to construct an additional natural gas processing plant, with capacity of approximately 125 million cubic feet (MMcf) per day, to serve producers in the Fort Worth Basin of north Texas. The new plant, which is expected to be on line during the
first quarter of 2009, will bring the company’s total processing capacity to approximately 325 MMcf per day.
“Our customers’ rapidly increasing production of liquids-rich natural gas from this world-class basin dictates the need to continue expansion of our processing capacity,” added Darden.
Conference Call
Quicksilver Gas Services will host a conference call for investors and analysts at 1:00 p.m. eastern time today to discuss the operating and financial results. The company invites interested parties to listen to the call via the company’s website at www.kgslp.com or by calling 1-877-313-7932, using the conference ID number 21213090, approximately 10 minutes prior to the call. A digital replay of the conference call will be available at 4:00 p.m. eastern time today and will remain available for 30 days. The replay can be dialed at 1-800-642-1687 and reference should be made to the conference ID number 21213090. The replay will also be archived for 30 days on the company’s website.
Use of Non-GAAP Financial Measures
This press release and the accompanying schedules include the non-generally accepted accounting principles ("non-GAAP") financial measures of EBITDA and Adjusted Gross Margin. The accompanying schedules provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measure calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Our non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income, operating income or any other GAAP measure of liquidity or financial performance.
About Quicksilver Gas Services
Fort Worth, Texas-based Quicksilver Gas Services is a growth-oriented limited partnership in the business of gathering and processing natural gas produced from the Barnett Shale geologic formation in the Fort Worth Basin of north Texas. The company began operation in 2004 to provide these services to Quicksilver Resources Inc., which owns our general partner. For more information about Quicksilver Gas Services, visit www.kgslp.com.
Forward-Looking Statement
The statements in this news release regarding future events, occurrences, circumstances, activities, performance, outcomes and results are forward-looking statements. Although these statements reflect the current views, assumptions and expectations of Quicksilver Gas Services LP’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 Gas Services LP’s financial condition, results of operations and cash flows include: changes in general economic conditions; fluctuations in natural gas prices; failure or delays in the Parent and third parties achieving expected production from natural gas projects; 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; construction costs or capital expenditures exceeding estimated or budgeted costs or expenditures; the effects of existing and future laws and governmental regulations; and the effects of future litigation; as well as other factors disclosed in Quicksilver Gas Services LP’s filings with the Securities and Exchange Commission. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Investor and Media Contact
Rick Buterbaugh
817-665-4835
KGS 07-05
QUICKSILVER GAS SERVICES LP
CONSOLIDATED BALANCE SHEETS
In thousands – Unaudited
| | | September 30, | | | December 31, | |
| | | 2007 | | | 2006 | |
ASSETS | | | | | | |
| Current assets | | | | | | |
| Cash and cash equivalents | | $ | 18,099 | | | $ | 2,797 | |
| Trade accounts receivable | | | 925 | | | | 67 | |
| Other current assets | | | 553 | | | | 147 | |
| Total current assets | | | 19,577 | | | | 3,011 | |
| | | | | | | | | |
| Property, plant and equipment – net | | | 227,825 | | | | 130,791 | |
| | | | | | | | | |
| Other assets | | | 959 | | | | 821 | |
| Total assets | | $ | 248,361 | | | $ | 134,623 | |
| | | | | | | | | |
LIABILITIES, REDEEMABLE PARTNERS’ CAPITAL AND PARTNERS’ CAPITAL | | | | | | | | |
| Current liabilities | | | | | | | | |
| Current portion of long-term debt | | $ | 825 | | | $ | – | |
| Accounts payable to parent | | | 10,179 | | | | – | |
| Accrued additions to property, plant and equipment | | | 7,180 | | | | 6,608 | |
| Accounts payable and other | | | 2,332 | | | | 1,294 | |
| Total current liabilities | | | 20,516 | | | | 7,902 | |
| | | | | | | | | |
| Repurchase obligations to parent | | | 64,458 | | | | − | |
| Long-term debt | | | 49,800 | | | | – | |
| Asset retirement obligations | | | 1,893 | | | | 503 | |
| Deferred income tax liabilities | | | 151 | | | | 135 | |
| Commitments and contingent liabilities | | | − | | | | − | |
| Redeemable partners’ capital | | | – | | | | 7,431 | |
| | | | | | | | | |
| Partners’ Capital | | | | | | | | |
| Common unitholders (12,263,625 units issued and outstanding | | | | | | | | |
| at September 30, 2007) | | | 110,740 | | | | – | |
| Subordinated unitholders (11,513,625 units issued and | | | | | | | | |
| outstanding at September 30, 2007) | | | 771 | | | | – | |
| General partner (469,944 units issued and outstanding | | | | | | | | |
| at September 30, 2007) | | | 32 | | | | – | |
| Net parent equity | | | – | | | | 118,652 | |
| Total partners’ capital | | | 111,543 | | | | 118,652 | |
| Total liabilities, redeemable partners’ capital and partners’ capital | | $ | 248,361 | | | $ | 134,623 | |
QUICKSILVER GAS SERVICES LP
CONSOLIDATED STATEMENTS OF INCOME
In thousands except per unit data – Unaudited
| | | For the Three Months Ended | | | For the Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Revenues: | | | | | | | | | | | | |
| Gathering and transportation revenue - parent | | $ | 4,102 | | | $ | 1,948 | | | $ | 9,612 | | | $ | 4,663 | |
| Gathering and transportation revenue | | | 500 | | | | – | | | | 838 | | | | – | |
| Gas processing revenue - parent | | | 4,892 | | | | 2,125 | | | | 11,109 | | | | 5,327 | |
| Gas processing revenue | | | 521 | | | | – | | | | 912 | | | | – | |
| Other revenue - parent | | | 267 | | | | − | | | | 300 | | | | − | |
| Total revenues | | | 10,282 | | | | 4,073 | | | | 22,771 | | | | 9,990 | |
| Expenses: | | | | | | | | | | | | | | | | |
| Operations and maintenance - parent | | | 3,072 | | | | 2,409 | | | | 8,063 | | | | 5,691 | |
| General and administrative - parent | | | 1,217 | | | | 489 | | | | 2,353 | | | | 833 | |
| Depreciation and amortization | | | 2,188 | | | | 1,032 | | | | 5,307 | | | | 2,119 | |
| Total expenses | | | 6,477 | | | | 3,930 | | | | 15,723 | | | | 8,643 | |
| | | | | | | | | | | | | | | | | |
| Operating income | | | 3,805 | | | | 143 | | | | 7,048 | | | | 1,347 | |
| | | | | | | | | | | | | | | | | |
| Other income | | | 114 | | | | − | | | | 149 | | | | − | |
| Interest expense | | | 1,728 | | | | − | | | | 1,939 | | | | − | |
| | | | | | | | | | | | | | | | | |
| Income before income taxes | | | 2,191 | | | | 143 | | | | 5,258 | | | | 1,347 | |
| Income tax provision | | | 92 | | | | − | | | | 189 | | | | − | |
| Net income | | $ | 2,099 | | | $ | 143 | | | $ | 5,069 | | | $ | 1,347 | |
| | | | | | | | | | | | | | | | | |
| Allocation of net income for the three and nine month periods ended September 30, 2007: | | | | | | | | | | | | | | | | |
| Net income attributable to the period from beginning of period to August 9, 2007 | | $ | 474 | | | | | | | $ | 3,444 | | | | | |
| Net income attributable to the period from August 10, 2007 to September 30, 2007 | | | 1,625 | | | | | | | | 1,625 | | | | | |
| Net income | | $ | 2,099 | | | | | | | $ | 5,069 | | | | | |
| | | | | | | | | | | | | | | | | |
| General partner interest in net income for the period from August 10, 2007 to September 30, 2007 | | $ | 32 | | | | | | | $ | 32 | | | | | |
| Limited partners’ interest in net income for the period from August 10, 2007 to September 30, 2007 | | $ | 1,593 | | | | | | | $ | 1,593 | | | | | |
| | | | | | | | | | | | | | | | | |
| Basic net income per limited partner unit | | $ | 0.07 | | | | | | | $ | 0.07 | | | | | |
| | | | | | | | | | | | | | | | | |
| Diluted net income per limited partner unit | | $ | 0.07 | | | | | | | $ | 0.07 | | | | | |
| | | | | | | | | | | | | | | | | |
| Basic average number of limited partners’ units outstanding | | | 23,777 | | | | | | | | 23,777 | | | | | |
| Diluted average number of limited partners’ units outstanding | | | 23,787 | | | | | | | | 23,787 | | | | | |
QUICKSILVER GAS SERVICES LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands – Unaudited
| | | For the Nine Months Ended | |
| | | September 30, | |
| | | 2007 | | | 2006 | |
| Operating activities: | | | | | | |
| Net income | | $ | 5,069 | | | $ | 1,347 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 5,253 | | | | 2,104 | |
| Accretion of asset retirement obligations | | | 54 | | | | 15 | |
| Amortization of debt issuance costs | | | 33 | | | | − | |
| Equity-based compensation | | | 45 | | | | − | |
| Deferred income tax expense | | | 16 | | | | − | |
| Non-cash interest expense on repurchase obligations | | | 1,228 | | | | − | |
| Non-cash interest expense on note payable to parent | | | 625 | | | | − | |
| Changes in assets and liabilities: | | | | | | | | |
| Accounts receivable | | | (858 | ) | | | − | |
| Other current assets | | | (229 | ) | | | − | |
| Accounts payable to parent | | | (1,095 | ) | | | − | |
| Accounts payable and other | | | 1,038 | | | | 707 | |
| Net cash provided by operating activities | | | 11,179 | | | | 4,173 | |
| | | | | | | | | |
| Investing activities: | | | | | | | | |
| Additions to property, plant and equipment | | | (55,184 | ) | | | (53,818 | ) |
| Net cash used in investing activities | | | (55,184 | ) | | | (53,818 | ) |
| | | | | | | | | |
| Financing activities: | | | | | | | | |
| Proceeds from sale of assets to parent | | | 29,508 | | | | − | |
| Debt issuance costs paid | | | (715 | ) | | | − | |
| Proceeds from initial public offering | | | 112,298 | | | | − | |
| Costs incurred in connection with initial public offering | | | (190 | ) | | | − | |
| Distribution of initial public offering proceeds to partners | | | (119,806 | ) | | | − | |
| Contributions by parent | | | 38,045 | | | | 45,139 | |
| Contributions by redeemable partners | | | 167 | | | | 4,506 | |
| Net cash provided by financing activities | | | 59,307 | | | | 49,645 | |
| | | | | | | | | |
| Net increase in cash and cash equivalents | | | 15,302 | | | | − | |
| | | | | | | | | |
| Cash and cash equivalents at beginning of period | | | 2,797 | | | | − | |
| | | | | | | | | |
| Cash and cash equivalents at end of period | | $ | 18,099 | | | $ | − | |
| | | | | | | | | |
| Non-cash transactions: | | | | | | | | |
| Changes in working capital related to the acquisition of property, plant and equipment | | $ | (12,045 | ) | | $ | (7,582 | ) |
| Prepaid insurance paid by parent | | $ | (176 | ) | | $ | – | |
| Debt issuance costs paid by parent | | $ | (277 | ) | | $ | – | |
| Cost in connection with the initial public offering paid by parent | | $ | (2,465 | ) | | $ | – | |
| Distribution of subordinated note payable to parent | | $ | 50,000 | | | $ | – | |
| Repurchase obligations to parent: | | | | | | | | |
| Acquisition of property, plant and equipment by parent | | $ | (33,722 | ) | | $ | − | |
QUICKSILVER GAS SERVICES LP
RECONCILIATION OF NET INCOME TO
ADJUSTED GROSS MARGIN AND EBITDA
In thousands – Unaudited
| | | | |
| | | | |
| | | Three months ended September 30, | |
| | | 2007 | | | 2006 | |
| | | (in thousands) | |
| Total revenues | | $ | 10,282 | | | $ | 4,073 | |
| Operations and maintenance expense | | | 3,072 | | | | 2,409 | |
| General and administrative expense | | | 1,217 | | | | 489 | |
| | | | | | | | | |
| Adjusted gross margin | | | 5,993 | | | | 1,175 | |
| | | | | | | | | |
| Other income | | | 114 | | | | – | |
| | | | | | | | | |
| EBITDA | | | 6,107 | | | | 1,175 | |
| Depreciation and amortization expense | | | 2,188 | | | | 1,032 | |
| Interest expense | | | 1,728 | | | | – | |
| Income tax provision | | | 92 | | | | – | |
| | | | | | | | | |
| Net income | | $ | 2,099 | | | $ | 143 | |
| | | | | | | | | |
Operating Data: | | | | | | | | |
| Daily throughput (MMcf) | | | 98.2 | | | | 40.9 | |
| Total throughput (Mcf) | | | 9,031,571 | | | | 3,762,661 | |
| | | | |
| | | | |
| | | Nine months ended September 30, | |
| | | 2007 | | | 2006 | |
| | | (in thousands) | |
| Total revenues | | $ | 22,771 | | | $ | 9,990 | |
| Operations and maintenance expense | | | 8,063 | | | | 5,691 | |
| General and administrative expense | | | 2,353 | | | | 833 | |
| | | | | | | | | |
| Adjusted gross margin | | | 12,355 | | | | 3,466 | |
| | | | | | | | | |
| Other income | | | 149 | | | | – | |
| | | | | | | | | |
| EBITDA | | | 12,504 | | | | 3,466 | |
| Depreciation and amortization expense | | | 5,307 | | | | 2,119 | |
| Interest expense | | | 1,939 | | | | – | |
| Income tax provision | | | 189 | | | | – | |
| | | | | | | | | |
| Net income | | $ | 5,069 | | | $ | 1,347 | |
| | | | | | | | | |
Operating Data: | | | | | | | | |
| Daily throughput (MMcf) | | | 73.3 | | | | 33.2 | |
| Total throughput (Mcf) | | | 20,014,673 | | | | 9,054,755 | |
-end-
