Quicksilver Resources Inc.
), an independent exploration and production company, is
scheduled to release its third-quarter 2012 earnings result
before the market opens on November 6, 2012.
Recap, Second Quarter 2012
Quicksilver reported lackluster financial outcomes in the
second quarter of 2012 posting net adjusted loss of 13 cents per
share, as against year-ago earnings of 6 cents. Quarterly
earnings were wider than the Zacks Consensus Estimate of a loss
of 6 cents per share. Weak natural gas and natural gas liquids
(NGL) prices and decline in core production volumes hit hard the
On the revenue front, it slumped 32.1% at the end of second
quarter 2012 to $168.6 million from $248.4 million in the
prior-year period. Sluggish output from the Horn River Basin play
and slower completion activity at the Barnett Shale primarily
resulted in the top-line lag. Moreover, fall in natural gas
output from ongoing wells and temporary shutdowns of inefficient
facilities further accentuated the revenue downfall.
Reported revenue trailed the Zacks Consensus Estimate of $187
Quicksilver Resources expects average output for 2012 in the
range of 365-380 million cubic feet per day (MMcfe) as it plans
to further reduce its drilling activity in the upcoming quarters.
The company has plans to incur capital expenses of $70 million
for the second half of 2012 and expend roughly $360 million in
oil and gas related activities in 2012.
The Zacks Consensus Estimate for the third quarter 2012 stands
at a loss of a penny per share, down 143.8% from earnings of 3
cents reported in the comparable quarter, last year. At present,
the Zacks Consensus Estimate for earnings ranges from a loss of 7
cents to income of 5 cents per share.
For full year 2012, the Zacks Consensus Estimate is at a loss
of 21 cents per share, lower than the previous year-end earnings
of 12 cents per share. The current Zacks Consensus Estimate
ranges between a loss of 35 cents and 9 cents per share.
Estimate Revisions Trend
We observe considerable estimate revisions at this point. Of
the total 16 estimates, 6 estimates went up while 5 estimates
moved south in the past 30 days for the third quarter. For the
concerned quarter, none of the estimates witnessed any movement
in the last 7 days. A similar picture could be seen for 2012,
with 6 out of the 16 estimates jumping up and 5 trending down in
the past month. The last 7 days saw an upward revision of only
The Zacks Consensus Estimate for the third quarter 2012
improved marginally by a penny to a loss of 1 cent from a loss of
2 cents per share in the past 30 days. However, it remained
static for the past week. For full year 2012, the consensus
estimate narrowed by a cent to a loss of 21 cents from 22
cents in the last month while it was unchanged for the past 7
With respect to earnings surprises, Quicksilver Resources has
reported dismal performance missing all the past four quarters.
The earnings surprise miss in the last four quarters ranged from
(40%) to (125%). The average surprise over the last four quarter
remained a negative 95.4%.
Quicksilver Resources' operations at the Horn River Basin and
Niobrara will gain momentum in the upcoming quarters as gas
prices are expected to steadily improve. We believe the company's
aggressive take on maintaining a strong hedging profile will bode
well for its future growth.
However, reduction in the capital expenditure outlook for
2012, pipeline accidents and unexpected outages remain as
Quicksilver Resources operates in a highly competitive energy
market and faces stiff opposition from companies like
Denbury Resources Inc.
Currently, we are maintaining a long-term 'Neutral'
recommendation on Quicksilver Resources Inc. The company has a
Zacks #3 Rank implying a short-term Hold rating on the stock.
DENBURY RES INC (DNR): Free Stock Analysis
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QUICKSILVER RES (KWK): Free Stock Analysis
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