Quicksilver Resources Inc.
) reported loss per share of 9 cents in the first quarter versus
earnings per share of 2 cents in the year-ago quarter. The loss in
the reported quarter was wider than the Zacks Consensus Estimate of
a loss of 4 cents.
On a GAAP basis, the company reported a loss of 35 cents per
share compared with loss of 42 cents per share in the year-ago
quarter. The difference between GAAP and operating earnings during
the quarter was due to a non-cash impairment charge of $63 million,
a non-cash loss of $37 million associated with the hedge undertaken
by the company, partly mitigated by $41 million of earn-out payment
Crestwood Midstream Partners LP.
Total revenue at the end of the first quarter 2012 was $145.5
million, down 31.4% from $212.2 million in the year-ago quarter.
The year-over-year decline in revenue was mainly due to lower
realized gas prices and lower natural gas volumes from the Barnett
Reported quarter revenue fell short of the Zacks Consensus
Estimate of $191 million.
Quicksilver Resources achieved average daily production of 377
million cubic feet of natural gas equivalent (MMcfe) in the first
quarter 2012, down 3.8% from 392 MMcfe in the first quarter of
2011. The production volumes comprised roughly 80% natural gas and
20% natural gas liquids (NGL), crude oil and condensate.
Total realized prices during the first quarter 2012 declined
7.0% to $5.01 per Mcfe, from $5.39 per Mcfe, resulting from lower
natural gas prices realized in the year, offset by a rise in oil
and NGL prices. The average realized oil, NGL and natural gas
prices during the year were $94.61 per barrel (up 8.7%), $42.98 per
barrel (up 16.6%) and $4.34 per thousand cubic feet (Mcf) (down
Total expenses incurred by the company during the reported
quarter rose 6.5% year over year to $226.8 million. The increase in
expenses was mainly due to higher lease operating expenses and
general and admistrative expenses. Lease operating expenses
increased due to higher salt water disposal expenses and artificial
gas lift expenses on the older Barnett Shale wells.
Interest expenses during the quarter were $40 million versus $46
million in the prior-year quarter. The reduction in expenses from
the year-ago period was due to lower amortization of deferred
Cash and cash equivalents of the company as of March 31, 2012
were $13.03 million versus $13.14 million as of December 31,
Long-term debt at Quicksilver, as of March 31, 2012, was $2.01
billion versus $1.90 billion as of December 31, 2011.
Cash provided by operating activities during the first quarter
was $27.4 million versus $11.7 million a year ago.
The capital cost of the company for the first quarter of 2012
amounted to $136 million. Out of the total expenditure, $109
million was allocated for drilling to completion activities, $5.4
million for midstream activities, $8 million used for acreage
purchases and $ 13.6 million on other assets.
The company expects production volumes in the second quarter
2012 to be in the range of 375- 385 MMcfe per day.
The company estimates second quarter production taxes;
gathering, processing, and transportation expenses; and lease
operating expenses in the corresponding range of 20-22 cents per
Mcfe, $1.26-$1.30 per Mcfe and 80-84 cents per Mcfe. General &
administrative expenses and depreciation, deletion and amortization
expenses are expected to be 52-55 cents per Mcfe and $1.56-$1.58
per Mcfe, respectively.
The company continues to hedge a substantial amount of its
production to safeguard against fluctuating prices. The company has
hedged 65% of its expected total equivalent production for the
remainder of 2012 at a weighted average price of $6.02 per
The company has plans to invest $370 million in oil and gas
related activities in 2012.
A Quicksilver peer,
Chesapeake Energy Corporation
), announced operating earnings for the first quarter 2012 of 18
cents per share, missing the Zacks Consensus Estimate of 29 cents,
while falling significantly short of the year-ago earnings of 75
cents per share.
Total revenue of the company increased 50% year over year to
$2,419 million, but missed the Zacks Consensus Estimate of $2,752
Quicksilver reported weak earnings results in the first quarter,
with its performance failing to meet our expectation as well as the
The company has decided to invest and develop its existing oil
and gas acreage in 2012 but depressed gas prices remain a moot
Quicksilver Resources currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating.
Based in Fort Worth, Texas, independent exploration and
production company Quicksilver Resources is primarily engaged in
the development of long-lived, unconventional, onshore natural gas
reserves in the North American continent.
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