Quicksilver Resources Inc. (NYSE: KWK) announced today that due to
the ongoing efforts to complete the 2011 integrated control and
financial statement audit, the filing of Form 10-K for the year
ended December 31, 2011 will be delayed beyond the Form 12b-25
extended due date of March 15, 2012. The company continues to work
diligently with its auditors to complete the audit and expects to
file its 2011 Form 10-K and issue its financial statements by the
week of April 16, 2012. The company has also furnished selected
unaudited 2011 financial information as part of this release which
will also be furnished on a Form 8-K.
Net income as reported today in our selected financial
information is less than that reported in our press release of
February 27, 2012. The difference is primarily attributable to the
following non-cash items: an adjustment to deferred taxes related
to the formation of the Fortune Creek Partnership, of which the
possibility of such change was referenced on the company's February
27, 2012 conference call by Phil Cook, Quicksilver's CFO; and minor
changes to DD&A and impairment. These adjustments had no impact
on adjusted net income per share for the quarter and year ended
December 31, 2011 as previously reported. The company is not
presenting comparative 2010 financial information because
management is evaluating a potential non-material, non-cash
revision to the previously reported gain on sale of KGS, but which
does not impact the timing of filing the Form 10-K.
Use of Non-GAAP Financial Measure
This news release and the accompanying schedules include the
non-generally accepted accounting principles ("non-GAAP") financial
measure of adjusted net income. The accompanying schedules provides
reconciliations of this non-GAAP financial measure to its 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 measure
should not be considered as an alternative to GAAP measures such as
net income or operating income or any other GAAP measure of
liquidity or financial performance.
About Quicksilver Resources
Fort Worth, Texas-based Quicksilver Resources is a natural gas
and crude oil exploration and production company engaged in the
development and acquisition of long-lived, unconventional
reservoirs, including coalbed methane and shale gas in North
America. The company has U.S. offices in Fort Worth, Texas; Glen
Rose, Texas; Steamboat Springs, Colorado and Cut Bank, Montana.
Quicksilver's Canadian subsidiary, Quicksilver Resources Canada
Inc., is headquartered in Calgary, Alberta. For more information
about Quicksilver Resources, visit www.qrinc.com.
Forward-Looking Statements
Certain statements contained in this press release and other
materials we file with the SEC, or in other written or oral
statements made or to be made by us, other than statements of
historical fact, are "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements give our current expectations or forecasts of future
events. Words such as "may," "assume," "forecast," "position,"
"predict," "strategy," "expect," "intend," "plan," "estimate,"
"anticipate," "believe," "project," "budget," "potential," or
"continue," and similar expressions are used to identify
forward-looking statements. They can be affected by assumptions
used or by known or unknown risks or uncertainties. Consequently,
no forward-looking statements can be guaranteed. Actual results may
vary materially. You are cautioned not to place undue reliance on
any forward-looking statements. You should also understand that it
is not possible to predict or identify all such factors and should
not consider the following list to be a complete statement of all
potential risks and uncertainties. Factors that could cause our
actual results to differ material from the results contemplated by
such forward-looking statements include: changes in general
economic conditions; fluctuations in natural gas, NGL and oil
prices; failure or delays in achieving expected production from
exploration and development projects; uncertainties inherent in
estimates of natural gas, NGL and oil reserves and predicting
natural gas, NGL and oil reservoir performance; effects of hedging
natural gas, NGL and oil prices; fluctuations in the value of
certain of our assets and liabilities; competitive conditions in
our industry; actions taken or non-performance by third parties,
including suppliers, contractors, operators, processors,
transporters, customers and counterparties; changes in the
availability and cost of capital; delays in obtaining oilfield
equipment and increases in drilling and other service costs; delays
in construction of transportation pipelines and gathering,
processing and treating facilities; operating hazards, natural
disasters, weather-related delays, casualty losses and other
matters beyond our control; the effects of existing and future laws
and governmental regulations including environmental and climate
change requirements; the effects of existing or future litigation;
failure to or delays in completing Quicksilver's proposed initial
public offering of common units representing limited partner
interests in a master limited partnership holding portions of our
Barnett Shale assets; and additional factors described elsewhere in
this press release.
This list of factors is not exhaustive, and new factors may
emerge or changes to these factors may occur that would impact our
business. Additional information regarding these and other factors
may be contained in our filings with the SEC, especially on Forms
10-K, 10-Q and 8-K. All such risk factors are difficult to predict,
and are subject to material uncertainties that may affect actual
results and may be beyond our control. 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.
All forward-looking statements are expressly qualified in their
entirety by the foregoing cautionary statements.
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per share data - Unaudited
For the
For the Three Twelve Months
Months Ended Ended
December 31, December 31,
2011 2011
------------- -------------
Revenue:
Production $ 194,473 $ 800,543
Sales of purchased natural gas 26,529 86,645
Other 5,095 59,435
------------- -------------
Total revenue 226,097 946,623
------------- -------------
Operating expense:
Lease operating 29,508 102,874
Gathering, processing and transportation 48,359 190,560
Production and ad valorem taxes 5,382 29,226
Costs of purchased natural gas 26,144 85,398
Other operating 229 557
Depletion, depreciation and accretion 60,902 225,763
Impairment 54,996 104,059
General and administrative 17,837 79,582
------------- -------------
Total expense 243,357 818,019
------------- -------------
Operating income (loss) (17,260) 128,604
Income (loss) from earnings of BBEP 24,282 (8,439)
Other income - net 84,327 219,768
Interest expense (43,901) (186,024)
------------- -------------
Income before income taxes 47,448 153,909
Income tax expense (20,017) (59,963)
------------- -------------
Net income $ 27,431 $ 93,946
============= =============
Earnings per common share - basic $ 0.16 $ 0.55
Earnings per common share - diluted $ 0.16 $ 0.55
Basic weighted average shares outstanding 169,081 168,993
Diluted weighted average shares outstanding 169,409 169,735
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED BALANCE SHEET
In thousands, except share data - Unaudited
December 31, 2011
-----------------
ASSETS
Current assets
Cash $ 13,146
Accounts receivable - net of allowance for doubtful
accounts 95,282
Derivative assets at fair value 162,845
Other current assets 29,154
-----------------
Total current assets 300,427
Property, plant and equipment - net
Oil and gas properties, full cost method (including
unevaluated costs of $433,341) 3,231,076
Other property and equipment 232,443
-----------------
Property, plant and equipment - net 3,463,519
Derivative assets at fair value 186,982
Other assets 50,534
-----------------
$ 4,001,462
=================
LIABILITIES AND EQUITY
Current liabilities
Current portion of long-term debt $ 18
Accounts payable 142,672
Accrued liabilities 142,193
Derivative liabilities at fair value 4,028
Current deferred tax liability 45,262
-----------------
Total current liabilities 334,173
-----------------
Long-term debt 1,903,431
Partnership liability 122,913
Asset retirement obligations 85,568
Other liabilities 28,461
Deferred income taxes 261,097
Commitments and contingencies
Equity
Preferred stock, par value $0.01, 10,000,000 shares
authorized, none outstanding -
Common stock, $0.01 par value, 400,000,000 shares
authorized; 176,980,483 shares issued 1,770
Additional paid in capital 737,015
Treasury stock of 5,379,702 shares (46,351)
Accumulated other comprehensive income 214,858
Retained earnings 358,527
-----------------
Total equity 1,265,819
-----------------
$ 4,001,462
=================
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
In thousands - Unaudited
For the Year
Ended
December 31, 2011
-----------------
Operating activities:
Net income $ 93,946
Adjustments to reconcile net income to net cash
provided by operating activities:
Depletion, depreciation and accretion 225,763
Impairment expense 104,059
Deferred income tax expense 66,592
Non-cash gain from hedging and derivative
activities (54,780)
Stock-based compensation 20,862
Non-cash interest expense 16,510
Gain on disposition of BBEP units (217,893)
Loss from BBEP in excess of cash distributions 28,269
Other 1,311
Changes in assets and liabilities:
Accounts receivable (31,803)
Prepaid expenses and other assets (6,017)
Accounts payable (11,434)
Income taxes payable (4,803)
Accrued and other liabilities 22,471
-----------------
Net cash provided by operating activities 253,053
-----------------
Investing activities:
Capital expenditures (690,607)
Proceeds from sale of BBEP units 272,965
Proceeds from sales of property and equipment 4,163
-----------------
Net cash used for investing activities (413,479)
-----------------
Financing activities:
Issuance of debt 855,822
Repayments of debt (843,108)
Debt issuance costs paid (12,506)
Partnership funds received 122,913
Proceeds from exercise of stock options 1,299
Purchase of treasury stock (4,864)
-----------------
Net cash provided by financing activities 119,556
-----------------
Effect of exchange rate changes in cash (921)
-----------------
Net decrease in cash (41,791)
Cash at beginning of period 54,937
-----------------
Cash at end of period $ 13,146
=================
QUICKSILVER RESOURCES INC.
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME
In thousands, except per share data - Unaudited
For the Three Months Ended December
31, 2011
Adjusted
As Reported Adjustments Net Income
----------- ----------- -----------
Revenue:
Production $ 194,473 $ - $ 194,473
Sales of purchased natural gas 26,529 - 26,529
Other 5,095 - 5,095
----------- ----------- -----------
Total revenue 226,097 - 226,097
----------- ----------- -----------
Operating expense:
Lease operating 29,508 (1,708) 27,800
Gathering, processing and
transportation 48,359 - 48,359
Production and ad valorem taxes 5,382 - 5,382
Costs of purchased natural gas 26,144 - 26,144
Other operating 229 - 229
Depletion, depreciation and
accretion 60,902 - 60,902
Impairment 54,996 (54,996) -
General and administrative 17,837 (446) 17,391
----------- ----------- -----------
Total expense 243,357 (57,150) 186,207
----------- ----------- -----------
Operating income (17,260) 57,150 39,890
Income (loss) from earnings of BBEP 24,282 (23,571) 711
Other income (loss) - net 84,327 (84,646) (319)
Interest expense (43,901) 1,030 (42,871)
----------- ----------- -----------
Income before income taxes 47,448 (50,037) (2,589)
Income tax expense (20,017) 22,235 2,218
----------- ----------- -----------
Net income $ 27,431 $ (27,802) $ (371)
=========== =========== ===========
Earnings per common share - diluted $ 0.16 $ 0.00
Diluted weighted average shares
outstanding 169,409 169,409
QUICKSILVER RESOURCES INC.
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME
In thousands, except per share data - Unaudited
For the Twelve Months Ended December
31, 2011
Adjusted
As Reported Adjustments Net Income
----------- ----------- -----------
Revenue:
Production $ 800,543 $ - $ 800,543
Sales of purchased natural gas 86,645 - 86,645
Other 59,435 (48,852) 10,583
----------- ----------- -----------
Total revenue 946,623 (48,852) 897,771
----------- ----------- -----------
Operating expense:
Lease operating 102,874 (1,708) 101,166
Gathering, processing and
transportation 190,560 - 190,560
Production and ad valorem taxes 29,226 - 29,226
Costs of purchased natural gas 85,398 - 85,398
Other operating 557 - 557
Depletion, depreciation and
accretion 225,763 - 225,763
Impairment 104,059 (104,059) -
General and administrative 79,582 (13,478) 66,104
----------- ----------- -----------
Total expense 818,019 (119,245) 698,774
----------- ----------- -----------
Operating income 128,604 70,393 198,997
Income (loss) from earnings of BBEP (8,439) 19,324 10,885
Other income - net 219,768 (217,893) 1,875
Interest expense (186,024) 4,990 (181,034)
----------- ----------- -----------
Income before income taxes 153,909 (123,186) 30,723
Income tax expense (59,963) 49,666 (10,297)
----------- ----------- -----------
Net income $ 93,946 $ (73,520) $ 20,426
=========== =========== ===========
Earnings per common share - diluted $ 0.55 $ 0.12
Diluted weighted average shares
outstanding 169,735 169,735
QUICKSILVER RESOURCES INC.
Unaudited Selected Operating Results
Three Months Twelve Months
Ended Ended
December 31, December 31,
2011 2011
------------- -------------
Average Daily Production:
Natural Gas (MMcfd) 336.6 335.1
NGL (Bbld) 11,892 12,147
Oil (Bbld) 759 748
Total (MMcfed) 412.5 412.5
Average Realized Prices, including hedging:
Natural Gas (per Mcf) $ 4.73 $ 4.95
NGL (per Bbl) $ 38.50 $ 38.63
Oil (per Bbl) $ 85.55 $ 88.15
Total (Mcfe) $ 5.12 $ 5.32
Expense per Mcfe:
Lease operating expense:
Cash expense $ 0.76 $ 0.67
Equity compensation 0.02 0.01
------------- -------------
Total lease operating expense: $ 0.78 $ 0.68
Gathering, processing and transportation
expense $ 1.27 $ 1.27
Production and ad valorem taxes $ 0.14 $ 0.19
Depletion, depreciation and accretion $ 1.60 $ 1.50
General and administrative expense:
Cash expense $ 0.33 $ 0.31
Strategic transactions and settlements 0.01 0.09
Equity compensation 0.13 0.13
------------- -------------
Total general and administrative expense $ 0.47 $ 0.53
Interest expense:
Cash expense on debt outstanding $ 1.13 $ 1.15
Fees and premiums - 0.02
Non-cash interest 0.09 0.12
Capitalized interest (0.06) (0.05)
------------- -------------
Total interest expense $ 1.16 $ 1.24
QUICKSILVER RESOURCES INC.
Production, on a million cubic feet of natural gas equivalent (MMcfe) per
day basis, by operating area
Three Months Twelve Months
Ended Ended
December 31, 2011 December 31, 2011
----------------- -----------------
Barnett Shale 338.0 336.6
Other U.S. 3.3 3.3
----------------- -----------------
Total U.S. 341.3 339.9
Horseshoe Canyon 58.5 58.5
Horn River 12.7 14.1
----------------- -----------------
Total Canada 71.2 72.6
----------------- -----------------
Total Company 412.5 412.5
================= =================
KWK 12-05
Investor & Media Contact: John Hinton (817)
665-4990