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 Reports First-Quarter 2008 Results
FORT WORTH, TEXAS (May 7, 2008) – Quicksilver Gas Services LP (NYSE Arca: KGS) today reported net income for the first quarter of 2008 of $2.9 million ($.12 per limited partner unit – diluted), more than a three-fold increase as compared to net income of $0.8 million in the prior-year period.
Earnings before interest, income taxes, depreciation and accretion ("EBITDA"), a non-GAAP measure, was $8.4 million for the first quarter of 2008, as compared with $2.2 million in the first quarter of 2007.
First-Quarter 2008 Highlights
· | Increased quarterly cash distribution 5% to $.315 per unit |
· | Increased average gathered volumes to nearly 160 MMcf per day; up 161% versus the prior-year quarter |
· | Increased average processed volumes to approximately 134 MMcf per day; up 149% versus the prior-year quarter |
· | Connected 34 new wells to the gathering system |
· | Connected nearly 27 miles of gathering infrastructure |
“The rapid ramp-up in total volumes gathered and processed through our system has resulted in significant increases to our net income and distributable cash flow,” said Toby Darden, Quicksilver Gas Services president and chief executive officer. “We expect to realize further growth throughout 2008 as producers in the Fort Worth Basin continue development of the Barnett Shale in this area. Through organic expansion of our gathering and processing infrastructure, Quicksilver Gas Services is preparing to meet the increasing need for midstream services in this world-class basin.”
Capital expenditures for the first quarter of 2008 totaled $32.7 million, including $0.5 million for maintenance capital and the remainder for organic growth projects. Expenditures during the quarter included the connection of approximately 27 miles of gathering lines and 34 new wells to the gathering system as well as continued construction of a new processing facility that is expected to become operational during the first quarter of 2009 and increase processing capacity by 125 million cubic feet (MMcf) per day.
For the first quarter of 2008, the unit distribution rate was increased 5% to $.315 by the company’s general partner. The first-quarter distribution will be paid May 15, 2008 on all units to holders of record as of the close of business April 30, 2008.
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Conference Call
Quicksilver Gas Services will host a conference call for investors and analysts at 10:00 a.m. eastern time today to discuss the first-quarter 2008 operating and financial results and its outlook for the future. 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 39782113, approximately 10 minutes prior to the call. A digital replay of the conference call will be available at 3:00 p.m. eastern time today and will remain available for 30 days. The replay can be accessed at 1-800-642-1687 and enter the conference ID number 39782113. 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 measure of EBITDA. The accompanying schedules provide a reconciliation of this non-GAAP financial measure to the 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 an alternative 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 Quicksilver Resources Inc. 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
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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 08-05
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QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per unit data − Unaudited
Three Months Ended March 31, | ||||||||
2008 | 2007 | |||||||
Revenues | ||||||||
Gathering and transportation revenue - parent | $ | 6,477 | $ | 2,411 | ||||
Gathering and transportation revenue | 820 | 191 | ||||||
Gas processing revenue - parent | 6,820 | 2,503 | ||||||
Gas processing revenue | 843 | 267 | ||||||
Other revenue - parent | 225 | - | ||||||
Total revenues | 15,185 | 5,372 | ||||||
Expenses | ||||||||
Operations and maintenance - parent | 4,950 | 2,717 | ||||||
General and administrative - parent | 1,817 | 496 | ||||||
Depreciation and accretion | 3,156 | 1,295 | ||||||
Total expenses | 9,923 | 4,508 | ||||||
Operating income | 5,262 | 864 | ||||||
Other income | 5 | 12 | ||||||
Interest expense | 2,418 | - | ||||||
Income before income taxes | 2,849 | 876 | ||||||
Income tax (benefit) provision | (35 | ) | 41 | |||||
Net income | $ | 2,884 | $ | 835 | ||||
General partner interest in net income | $ | 56 | ||||||
Common and subordinated unitholders’ interest in net income | $ | 2,828 | ||||||
Earnings per common and subordinated unit - basic | $ | 0.12 | ||||||
Earnings per common and subordinated unit - diluted | $ | 0.12 | ||||||
Weighted average number of common and subordinated units outstanding: | ||||||||
Basic | 23,783 | |||||||
Diluted | 23,924 |
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QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except for unit data - Unaudited
March 31, | December 31, | |||||||
2008 | 2007 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 237 | $ | 1,125 | ||||
Trade accounts receivable | 1,133 | 882 | ||||||
Accounts receivable from parent | - | 800 | ||||||
Prepaid expenses and other current assets | 579 | 690 | ||||||
Total current assets | 1,949 | 3,497 | ||||||
Property, plant and equipment, net | 321,819 | 273,948 | ||||||
Other assets | 1,198 | 965 | ||||||
$ | 324,966 | $ | 278,410 | |||||
LIABILITIES AND PARTNERS' CAPITAL | ||||||||
Current liabilities | ||||||||
Current portion of note payable to parent | $ | 1,100 | $ | 1,100 | ||||
Accounts payable to parent | 105 | - | ||||||
Accrued additions to property, plant and equipment | 18,667 | 23,624 | ||||||
Accounts payable and other | 2,690 | 2,700 | ||||||
Total current liabilities | 22,562 | 27,424 | ||||||
Long-term debt | 31,500 | 5,000 | ||||||
Note payable to parent | 51,091 | 50,569 | ||||||
Repurchase obligations to parent | 110,743 | 82,251 | ||||||
Asset retirement obligations | 2,975 | 2,793 | ||||||
Deferred income tax liability | 22 | 173 | ||||||
Partners' Capital | ||||||||
Common unitholders (12,269,714 and 12,263,625 units issued and outstanding at March 31, 2008 and December 31, 2007, respectively) | 107,872 | 109,830 | ||||||
Subordinated unitholders (11,513,625 units issued and outstanding at March 31, 2008 and December 31, 2007) | (1,729 | ) | 356 | |||||
General Partner | (70 | ) | 14 | |||||
Total partners' capital | 106,073 | 110,200 | ||||||
$ | 324,966 | $ | 278,410 |
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QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands – Unaudited
Three Months Ended March 31, | ||||||||
2008 | 2007 | |||||||
Operating activities: | ||||||||
Net income | $ | 2,884 | $ | 835 | ||||
Items included in net income not affecting cash | ||||||||
Depreciation | 3,115 | 1,287 | ||||||
Accretion of asset retirement obligation | 41 | 8 | ||||||
Deferred income taxes | (151 | ) | 41 | |||||
Equity-based compensation | 267 | - | ||||||
Amortization of debt issuance costs | 52 | - | ||||||
Amortization of other current assets | 140 | - | ||||||
Non-cash interest expense on repurchase obligations to parent | 1,434 | - | ||||||
Non-cash interest expense on note payable to parent | 797 | - | ||||||
Changes in assets and liabilities | ||||||||
Accounts receivable | (251 | ) | (204 | ) | ||||
Prepaid expenses and other current assets | (29 | ) | (326 | ) | ||||
Accounts receivable from parent | 4,557 | - | ||||||
Accounts payable and other | (10 | ) | 118 | |||||
Net cash provided by operating activities | 12,846 | 1,759 | ||||||
Investing activities: | ||||||||
Additions to property, plant and equipment | (32,681 | ) | (23,702 | ) | ||||
Net cash used in investing activities | (32,681 | ) | (23,702 | ) | ||||
Financing activities: | ||||||||
Proceeds from revolving credit facility borrowings | 26,500 | - | ||||||
Repayment of subordinated note to parent | (275 | ) | - | |||||
Issuance costs of equity units paid | (3 | ) | - | |||||
Contributions by parent | - | 21,955 | ||||||
Contributions by other partners | - | 167 | ||||||
Distributions to unitholders | (7,275 | ) | - | |||||
Net cash provided by financing activities | 18,947 | 22,122 | ||||||
Net (decrease) increase in cash | (888 | ) | 179 | |||||
Cash at beginning of period | 1,125 | 2,797 | ||||||
Cash at end of period | $ | 237 | $ | 2,976 |
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QUICKSILVER GAS SERVICES LP
OPERATING STATISTICS
Unaudited
Three Months Ended March 31, | ||||||||
2008 | 2007 | |||||||
Volume Data: | ||||||||
Volumes gathered (MMcf) | 14,551 | 5,518 | ||||||
Volumes processed (MMcf) | 12,156 | 4,830 |
QUICKSILVER GAS SERVICES LP
RECONCILIATION OF NET INCOME TO
ADJUSTED GROSS MARGIN AND EBITDA
In thousands - Unaudited
Three Months Ended March 31, | ||||||||
2008 | 2007 | |||||||
Total revenues | $ | 15,185 | $ | 5,372 | ||||
Operations and maintenance expense | 4,950 | 2,717 | ||||||
General and administrative expense | 1,817 | 496 | ||||||
Adjusted gross margin | 8,418 | 2,159 | ||||||
Other income | 5 | 12 | ||||||
EBITDA | 8,423 | 2,171 | ||||||
Depreciation and accretion expense | 3,156 | 1,295 | ||||||
Operating income | 5,267 | 876 | ||||||
Interest expense | 2,418 | - | ||||||
Income tax (benefit) provision | (35 | ) | 41 | |||||
Net income | $ | 2,884 | $ | 835 |
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