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' Third-Quarter Income Jumps 35% in 2009
FORT WORTH, TEXAS (November 9, 2009) – Quicksilver Gas Services LP (NYSE: KGS) today reported net income for the third quarter of 2009 of $8.7 million, up approximately 35% from $6.4 million reported in the prior-year period. Earnings before interest, income taxes, depreciation and accretion ("EBITDA"), a non-GAAP measure, was $16.9 million for the third quarter of 2009, an increase of 29% from the 2008 third-quarter EBITDA of $13.1 million.
Third-Quarter 2009 Highlights
| · | Increased average gathered volumes to approximately 234 MMcf per day; up 10% versus the prior-year quarter |
| · | Increased distributable cash flow to $13.4 million; up 16% year-over-year |
| · | Connected approximately three miles of gathering infrastructure |
| · | Connected five new wells to the gathering system |
“Quicksilver Gas Services continues to grow by all measures and is increasing liquidity in order to capitalize on opportunities created by the current macro-economic environment," said Toby Darden, Quicksilver Gas Services' president and chief executive officer. "We look forward to more growth in 2010, enhanced by acquisitions. Our fee-based revenue strategy and cost-efficient operating structure continue to pay dividends for both our unitholders and for our producer-customers.”
Capital Program
For the third quarter of 2009, the company incurred approximately $3.7 million of capital costs, including $2.5 million of maintenance capital. Expenditures during the quarter included the connection of approximately three miles of gathering lines and five new wells to the gathering system.
Debt and Liquidity
The company’s total borrowing capacity under its senior secured revolving credit facility was increased to $320 million in October. The company currently has approximately $203 million drawn on its senior secured credit facility resulting in approximately $117 million of available capacity.
Distributions
On October 19, 2009, the company announced a cash distribution for the 2009 third quarter of $.39 per unit, a 5.4% increase from the previous quarterly rate. For the three months ended September 30, 2009, distributable cash flow, a non-GAAP financial measure, totaled $13.4 million, which provided 1.38 times the amount required to cover the total distributions to both the limited and general partners for the period.
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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 third-quarter 2009 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 80360996, 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 using the conference ID number 80360996. 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, adjusted gross margin and distributable cash flow. The accompanying schedules on page 7 of this news release provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures 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 or 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 Statements
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 or non-performance by third parties, including suppliers, contractors, operators, processors, transporters and customers; fluctuations in the value of certain of our assets and liabilities; 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 amounts; the effects of existing and future laws and
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governmental regulations; and the effects of current and future litigation; as well as other factors disclosed in Quicksilver Gas Services LP’s filings with the Securities and Exchange Commission. The forward-looking statements included in this press release are made only as of the date of this press release, and we undertake no obligation to update any of these forward-looking statements to reflect subsequent events or circumstances except to the extent required by applicable law.
Investor and Media Contact
Rick Buterbaugh
817-665-4835
KGS 09-12
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QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per unit data - Unaudited
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Revenue | ||||||||||||||||
| Gathering and transportation revenue - Quicksilver | $ | 14,542 | $ | 8,674 | $ | 42,708 | $ | 22,350 | ||||||||
| Gathering and transportation revenue | 615 | 1,553 | 2,259 | 4,006 | ||||||||||||
| Gas processing revenue - Quicksilver | 8,155 | 7,345 | 25,541 | 21,866 | ||||||||||||
| Gas processing revenue | 295 | 1,507 | 1,344 | 3,797 | ||||||||||||
| Other revenue - Quicksilver | 691 | 225 | 1,141 | 675 | ||||||||||||
| Total revenue | 24,298 | 19,304 | 72,993 | 52,694 | ||||||||||||
| Expenses | ||||||||||||||||
| Operations and maintenance | 5,694 | 4,772 | 17,108 | 15,034 | ||||||||||||
| General and administrative | 1,733 | 1,473 | 5,463 | 4,712 | ||||||||||||
| Depreciation and accretion | 5,745 | 3,866 | 16,554 | 10,429 | ||||||||||||
| Total expenses | 13,172 | 10,111 | 39,125 | 30,175 | ||||||||||||
| Operating income | 11,126 | 9,193 | 33,868 | 22,519 | ||||||||||||
| Other income | - | 4 | 1 | 10 | ||||||||||||
| Interest expense | 2,238 | 2,703 | 7,924 | 7,542 | ||||||||||||
| Income before income taxes | 8,888 | 6,494 | 25,945 | 14,987 | ||||||||||||
| Income tax provision | 235 | 106 | 446 | 109 | ||||||||||||
| Net income | $ | 8,653 | $ | 6,388 | $ | 25,499 | $ | 14,878 | ||||||||
| General partner interest in net income | $ | 382 | $ | 137 | $ | 886 | $ | 314 | ||||||||
| Common and subordinated unitholders’ interest in net income | 8,271 | 6,251 | 24,613 | 14,564 | ||||||||||||
| Earnings per common and subordinated unit: | ||||||||||||||||
| Basic | $ | 0.35 | $ | 0.26 | $ | 1.03 | $ | 0.61 | ||||||||
| Diluted | 0.31 | 0.26 | 0.92 | 0.61 | ||||||||||||
| Weighted average number of common and subordinated units outstanding: | ||||||||||||||||
| Basic | 23,827 | 23,783 | 23,827 | 23,783 | ||||||||||||
| Diluted | 27,981 | 26,829 | 28,319 | 23,924 | ||||||||||||
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QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except for unit data - Unaudited
| September 30, | December 31, | |||||||
| 2009 | 2008 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 548 | $ | 303 | ||||
| Accounts receivable | 528 | 2,082 | ||||||
| Accounts receivable from Quicksilver | 5,066 | - | ||||||
| Prepaid expenses and other current assets | 348 | 594 | ||||||
| Total current assets | 6,490 | 2,979 | ||||||
| Property, plant and equipment, net | 455,661 | 488,120 | ||||||
| Other assets | 1,635 | 1,916 | ||||||
| $ | 463,786 | $ | 493,015 | |||||
| LIABILITIES AND PARTNERS' CAPITAL | ||||||||
| Current liabilities | ||||||||
| Current maturities of debt | $ | 2,200 | $ | 1,375 | ||||
| Accounts payable to Quicksilver | - | 10,502 | ||||||
| Accrued additions to property, plant and equipment | 3,335 | 17,433 | ||||||
| Accounts payable and other | 4,706 | 1,930 | ||||||
| Total current liabilities | 10,241 | 31,240 | ||||||
| Long-term debt | 206,900 | 174,900 | ||||||
| Note payable to Quicksilver | 52,966 | 52,271 | ||||||
| Repurchase obligations to Quicksilver | 67,236 | 123,298 | ||||||
| Asset retirement obligations | 8,639 | 5,234 | ||||||
| Deferred income tax liability | 815 | 369 | ||||||
| Partners' capital | ||||||||
Common unitholders (12,313,451 and 12,269,714 units issued and outstanding at September 30, 2009 and December 31, 2008, respectively) | 114,256 | 108,036 | ||||||
Subordinated unitholders (11,513,625 units issued and outstanding at September 30, 2009 and December 31, 2008) | 2,351 | (2,328 | ) | |||||
| General partner | 382 | (5 | ) | |||||
| Total partners' capital | 116,989 | 105,703 | ||||||
| $ | 463,786 | $ | 493,015 | |||||
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QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands - Unaudited
| Nine Months Ended September 30, | ||||||||
| 2009 | 2008 | |||||||
| Operating activities: | ||||||||
| Net income | $ | 25,499 | $ | 14,878 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 16,259 | 10,297 | ||||||
| Accretion of asset retirement obligation | 295 | 132 | ||||||
| Deferred income taxes | 446 | 52 | ||||||
| Equity-based compensation | 1,289 | 758 | ||||||
| Non-cash interest expense | 4,535 | 7,196 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 1,554 | (1,001 | ) | |||||
| Prepaid expenses and other assets | 234 | (171 | ) | |||||
| Accounts receivable and payable with Quicksilver | (2,248 | ) | 3,435 | |||||
| Accounts payable and other | 3,405 | 789 | ||||||
| Net cash provided by operating activities | 51,268 | 36,365 | ||||||
| Investing activities: | ||||||||
| Capital expenditures | (50,067 | ) | (112,200 | ) | ||||
| Assets purchased pursuant to repurchase obligations | (5,645 | ) | - | |||||
| Net cash used in investing activities | (55,712 | ) | (112,200 | ) | ||||
| Financing activities: | ||||||||
| Proceeds from revolving credit facility borrowings | 46,500 | 99,300 | ||||||
| Repayment of credit facility | (14,500 | ) | - | |||||
| Repayment for subordinated note payable to Quicksilver | - | (825 | ) | |||||
| Distributions to unitholders | (27,248 | ) | (23,423 | ) | ||||
| Other | (63 | ) | - | |||||
| Net cash provided by financing activities | 4,689 | 75,052 | ||||||
| Net cash increase (decrease) | 245 | (783 | ) | |||||
| Cash at beginning of period | 303 | 1,125 | ||||||
| Cash at end of period | $ | 548 | $ | 342 | ||||
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QUICKSILVER GAS SERVICES LP
OPERATING STATISTICS
Unaudited
| Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Volume Data: | ||||||||||||||||
| Volumes gathered (MMcf) | 21,523 | 19,591 | 65,572 | 51,269 | ||||||||||||
| Volumes processed (MMcf) | 13,197 | 14,122 | 41,958 | 40,870 | ||||||||||||
QUICKSILVER GAS SERVICES LP
RECONCILIATION OF NET INCOME TO DISTRIBUTABLE CASH FLOW
In thousands - Unaudited
| Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Net income | $ | 8,653 | $ | 6,388 | $ | 25,499 | $ | 14,878 | ||||||||
| Depreciation and accretion expense | 5,745 | 3,866 | 16,554 | 10,429 | ||||||||||||
| Income tax provision/(payments) | 235 | (226 | ) | 446 | (223 | ) | ||||||||||
| Non-cash interest expense, net of capitalized interest cost paid | 1,283 | 1,977 | 4,224 | 6,077 | ||||||||||||
| Maintenance capital expenditures | (2,500 | ) | (473 | ) | (7,500 | ) | (1,418 | ) | ||||||||
| Distributable cash flow | $ | 13,416 | $ | 11,532 | $ | 39,223 | $ | 29,743 | ||||||||
QUICKSILVER GAS SERVICES LP
RECONCILIATION OF NET INCOME TO
ADJUSTED GROSS MARGIN and EBITDA
Unaudited
(Amounts in thousands)
| Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Total revenues | $ | 24,298 | $ | 19,304 | $ | 72,993 | $ | 52,694 | ||||||||
| Operations and maintenance expense | 5,694 | 4,772 | 17,108 | 15,034 | ||||||||||||
| General and administrative expense | 1,733 | 1,473 | 5,463 | 4,712 | ||||||||||||
| Adjusted gross margin | 16,871 | 13,059 | 50,422 | 32,948 | ||||||||||||
| Other income | - | 4 | 1 | 10 | ||||||||||||
| EBITDA | 16,871 | 13,063 | 50,423 | 32,958 | ||||||||||||
| Depreciation and accretion expense | 5,745 | 3,866 | 16,554 | 10,429 | ||||||||||||
| Interest expense | 2,238 | 2,703 | 7,924 | 7,542 | ||||||||||||
| Income tax provision | 235 | 106 | 446 | 109 | ||||||||||||
| Net income | $ | 8,653 | $ | 6,388 | $ | 25,499 | $ | 14,878 | ||||||||
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