Exhibit 99.1 ![](https://capedge.com/proxy/8-K/0001060990-08-000031/kgs_logo.jpg)
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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 Second-Quarter 2008 Results
FORT WORTH, TEXAS (August 6, 2008) – Quicksilver Gas Services LP (NYSE Arca: KGS) today reported net income for the second quarter of 2008 of $5.6 million ($.23 per limited partner unit – diluted), an increase of more than 160% as compared to net income of $2.1 million in the prior-year period. For the six months ended June 30, 2008, net income totaled $8.5 million ($.35 per limited partner unit – diluted), up more than 180% from the $3.0 million reported in the 2007 period.
Distributable cash flow for the 2008 second quarter increased 150% to $10.5 million ($.43 per limited partner unit) from $4.2 million in the 2007 quarter. For the six months ended June 30, 2008, distributable cash flow totaled $18.2 million ($.75 per limited partner unit) compared to $6.4 million in the 2007 period.
Second-Quarter 2008 Highlights
· | Increased quarterly cash distribution to limited partners 11% to $.35 per unit |
· | Increased average gathered volumes to 188 MMcf per day; up 159% versus the prior-year quarter |
· | Increased average processed volumes to 160 MMcf per day; up 137% versus the prior-year quarter |
· | Connected 57 new wells to the gathering system from Quicksilver Resources Inc. |
· | Connected nearly 32 miles of gathering infrastructure |
“Revenues grew more than 150%, as anticipated, due to increased gathering and processing volumes from Quicksilver Resources and third-party producers,” said Toby Darden, Quicksilver Gas Services president and chief executive officer. “Our continued focus on stringent cost control enabled us to fully realize the value from the higher throughput volumes resulting in an increase of more than 160% in net income. As a result, our distributable cash flow increased to support an additional 11% increase in our quarterly distribution.”
Gathered volumes increased to 17,127 million cubic feet (MMcf) in the second quarter of 2008, up 159% from 6,613 MMcf in the prior-year quarter. Processed volumes increased 137% to 14,593 MMcf in the second quarter of 2008 from 6,154 MMcf in the 2007 quarter. Volumes from third parties made up 21% and 20% of the total gathered and processed volumes for the second quarter of 2008, respectively. For the second quarter of 2008 the company realized an average of $.516 per thousand cubic feet (Mcf) gathered and $.627 per Mcf processed.
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Capital expenditures for the second quarter of 2008 totaled $26.8 million, including $.5 million for maintenance capital and the remainder for organic growth projects. In addition, the company accrued $19.7 million of capital associated with the repurchase obligation to Quicksilver Resources Inc. Expenditures during the quarter included the connection of approximately 32 miles of gathering lines and 57 new wells to the gathering system from Quicksilver Resources, as well as the ongoing construction of a new processing facility that is expected to become operational during the first quarter of 2009, increasing processing capacity 62.5% to a total of 325 MMcf per day.
For the second quarter of 2008, the unit distribution rate for limited partners was increased 11% to $.35 by the company’s general partner. The second-quarter distribution will be paid August 14, 2008 on all units to holders of record as of the close of business July 31, 2008.
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 39787132, 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 by entering the conference ID number 39787132. 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 distributable cash flow. 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
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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 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 08-07
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QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per unit data − Unaudited
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Revenues | ||||||||||||||||
Gathering and transportation revenue - parent | $ | 7,199 | $ | 3,100 | $ | 13,676 | $ | 5,510 | ||||||||
Gathering and transportation revenue | 1,633 | 147 | 2,453 | 338 | ||||||||||||
Gas processing revenue - parent | 7,701 | 3,714 | 14,521 | 6,217 | ||||||||||||
Gas processing revenue | 1,447 | 124 | 2,290 | 391 | ||||||||||||
Other revenue - parent | 225 | 33 | 450 | 33 | ||||||||||||
Total revenues | 18,205 | 7,118 | 33,390 | 12,489 | ||||||||||||
Expenses | ||||||||||||||||
Operations and maintenance - parent | 5,312 | 2,228 | 10,262 | 4,945 | ||||||||||||
General and administrative - parent | 1,422 | 686 | 3,239 | 1,182 | ||||||||||||
Depreciation and accretion | 3,407 | 1,824 | 6,563 | 3,119 | ||||||||||||
Total expenses | 10,141 | 4,738 | 20,064 | 9,246 | ||||||||||||
Operating income | 8,064 | 2,380 | 13,326 | 3,243 | ||||||||||||
Other income | 1 | 23 | 6 | 35 | ||||||||||||
Interest expense | 2,421 | 211 | 4,839 | 211 | ||||||||||||
Income before income taxes | 5,644 | 2,192 | 8,493 | �� | 3,067 | |||||||||||
Income tax provision | 38 | 57 | 3 | 97 | ||||||||||||
Net income | $ | 5,606 | $ | 2,135 | $ | 8,490 | $ | 2,970 | ||||||||
General partner interest in net income | $ | 126 | $ | 182 | ||||||||||||
Common and subordinated unitholders’ interest in net income | $ | 5,480 | $ | 8,308 | ||||||||||||
Earnings per common and subordinated unit - basic | $ | 0.23 | $ | 0.35 | ||||||||||||
Earnings per common and subordinated unit - diluted | $ | 0.23 | $ | 0.35 | ||||||||||||
Weighted average number of common and subordinated units outstanding: | ||||||||||||||||
Basic | 23,783 | 23,783 | ||||||||||||||
Diluted | 23,924 | 23,924 |
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QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except for unit data - Unaudited
June 30, | December 31, | |||||||
2008 | 2007 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 607 | $ | 1,125 | ||||
Trade accounts receivable | 2,317 | 882 | ||||||
Accounts receivable from parent | - | 800 | ||||||
Prepaid expenses and other current assets | 972 | 690 | ||||||
Total current assets | 3,896 | 3,497 | ||||||
Property, plant and equipment, net | 372,633 | 273,948 | ||||||
Other assets | 1,140 | 965 | ||||||
$ | 377,669 | $ | 278,410 | |||||
LIABILITIES AND PARTNERS' CAPITAL | ||||||||
Current liabilities | ||||||||
Current maturities of debt | $ | 1,100 | $ | 1,100 | ||||
Accounts payable to parent | 4,446 | - | ||||||
Accrued additions to property, plant and equipment | 22,236 | 23,624 | ||||||
Accounts payable and other | 3,586 | 2,700 | ||||||
Total current liabilities | 31,368 | 27,424 | ||||||
Long-term debt | 55,300 | 5,000 | ||||||
Note payable to parent | 51,508 | 50,569 | ||||||
Repurchase obligations to parent | 131,911 | 82,251 | ||||||
Asset retirement obligations | 3,187 | 2,793 | ||||||
Deferred income tax liability | 118 | 173 | ||||||
Partners' Capital | ||||||||
Common unitholders (12,269,714 and 12,263,625 units issued and outstanding at June 30, 2008 and December 31, 2007, respectively) | 107,072 | 109,830 | ||||||
Subordinated unitholders (11,513,625 units issued and outstanding at June 30, 2008 and December 31, 2007) | (2,703 | ) | 356 | |||||
General Partner | (92 | ) | 14 | |||||
Total partners' capital | 104,277 | 110,200 | ||||||
$ | 377,669 | $ | 278,410 |
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QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands – Unaudited
Six Months Ended June 30, | ||||||||
2008 | 2007 | |||||||
Operating activities: | ||||||||
Net income | $ | 8,490 | $ | 2,970 | ||||
Items included in net income not affecting cash | ||||||||
Depreciation | 6,478 | 3,088 | ||||||
Accretion of asset retirement obligation | 85 | 31 | ||||||
Deferred income taxes | (55 | ) | - | |||||
Equity-based compensation | 501 | - | ||||||
Amortization of debt issuance costs | 105 | - | ||||||
Non-cash interest expense on repurchase obligations to parent | 2,928 | 211 | ||||||
Non-cash interest expense on note payable to parent | 1,489 | - | ||||||
Changes in assets and liabilities | ||||||||
Accounts receivable | (1,435 | ) | (104 | ) | ||||
Prepaid expenses and other assets | (562 | ) | (246 | ) | ||||
Accounts receivable from parent | 5,170 | - | ||||||
Accounts payable and other | 886 | 108 | ||||||
Net cash provided by operating activities | 24,080 | 6,058 | ||||||
Investing activities: | ||||||||
Capital expenditures | (59,434 | ) | (45,040 | ) | ||||
Net cash used in investing activities | (59,434 | ) | (45,040 | ) | ||||
Financing activities: | ||||||||
Proceeds from revolving credit facility borrowings | 50,300 | - | ||||||
Repayment of subordinated note to parent | (550 | ) | - | |||||
Contributions by parent | - | 39,017 | ||||||
Contributions by other partners | - | 167 | ||||||
Distributions to unitholders | (14,914 | ) | - | |||||
Net cash provided by financing activities | 34,836 | 39,184 | ||||||
Net (decrease) increase in cash | (518 | ) | 202 | |||||
Cash at beginning of period | 1,125 | 2,797 | ||||||
Cash at end of period | $ | 607 | $ | 2,999 |
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QUICKSILVER GAS SERVICES LP
OPERATING STATISTICS
Unaudited
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Volume Data: | ||||||||||||||||
Volumes gathered (MMcf) | 17,127 | 6,613 | 31,678 | 12,130 | ||||||||||||
Volumes processed (MMcf) | 14,593 | 6,154 | 26,749 | 10,983 |
QUICKSILVER GAS SERVICES LP
RECONCILIATION OF NET INCOME TO
DISTRIBUTABLE CASH FLOW
In thousands - Unaudited
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Net income | $ | 5,606 | $ | 2,135 | $ | 8,490 | $ | 2,970 | ||||||||
Depreciation and accretion expense | 3,407 | 1,824 | 6,563 | 3,119 | ||||||||||||
Income tax provision | 38 | 57 | 3 | 97 | ||||||||||||
Non-cash interest expense | 1,947 | 211 | 4,100 | 211 | ||||||||||||
Maintenance capital expenditures | (473 | ) | - | (945 | ) | - | ||||||||||
Distributable cash flow | $ | 10,525 | $ | 4,227 | $ | 18,211 | $ | 6,397 |
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