We reiterated our Neutral recommendation on exploration and
Quicksilver Resources Inc.
). Quicksilver's listless financial performance continued into
the third quarter of 2012 with both the top- and the bottom-line
lagging the Zacks Consensus Estimates.
The company's initiatives like the contract with
Royal Dutch Shell plc.
) for expansion of oil and gas interests in Colorado could
provide a thrust to its near-term profitability. In addition, we
appreciate Quicksilver's plans to integrate its upstream assets
with downstream programs as it will open up export options to the
British Columbia from the West Coast.
However, regulatory pressure from the U.S. as well as Canadian
governments and commodity price sensitivities are generic risks
that will continue to hinder Quicksilver's growth goals.
Admittedly the company has in place a sound hedging profile
that is expected to ensure consistent top-line progress in the
upcoming quarters. For 2013 and 2014, the company hedged 200
million cubic feet per day (MMcf/d) and 170 MMcf/d at an average
price of $5.10 per thousand cubic feet (Mcf) and $5.08 per Mcf,
Despite these efforts, fluctuating natural gas prices and
moderate oil prices along with a slowdown in drilling activity
will act as headwinds to the company. The Zacks Consensus
Estimates for the fourth quarter and full year 2012 are presently
pegged at 2 cents per share and at a loss of 23 cents per share,
respectively. Quicksilver currently retains a short-term Zacks #3
Rank (Hold rating).
For 2012, the company expects average output in the range of
350-365 million cubic feet equivalent (MMcfe) per day.
Another Zacks #3 Ranked exploration and production operator,
Anadarko Petroleum Corporation
) is stepping up its exploration activities by recently signing a
Heads of Agreement ("HOA") with Italy's biggest oil and gas
) for the development of natural gas reservoirs in offshore
Fort Worth, Texas-based Quicksilver Resources is primarily
engaged in the development of long-lived, unconventional
reservoirs which includes fractured shales, coalbeds and tight
sands in the North American continent.
ANADARKO PETROL (APC): Free Stock Analysis
ENI SPA-ADR (E): Free Stock Analysis Report
QUICKSILVER RES (KWK): Free Stock Analysis
ROYAL DTCH SH-A (RDS.A): Free Stock Analysis
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