Quicksilver Resources Inc.
), on an adjusted basis, reported a loss of 1 cent per share in
the fourth quarter 2012 versus breakeven earnings posted in the
year-ago quarter. Pro forma loss lagged the Zacks Consensus
Estimate of 1 cent.
The bottom line in the reported quarter was affected by lower
production and falling prices.
On a GAAP basis, the company reported a loss of $6.47 per
share compared with earnings of 14 cents in the year-ago
Quicksilver Resources' 2012 operating loss was 27 cents
compared with earnings of 12 cents reported in 2011. 2012 loss
was slightly wider than the Zacks Consensus Estimate of a loss of
GAAP loss for 2012 was $14.61 per share versus earnings of 52
cents per share n 2011.
Total revenue at the end of fourth quarter 2012 was $179.1
million, down 19.7% from $223.1 million reported in the year-ago
Reported quarter revenue surpassed the Zacks Consensus
Estimate by 4.1%.
Quicksilver generated total revenue of $670.8 million in 2012
compared with $943.6 million in 2011.
For 2012, total revenue beat the Zacks Consensus Estimate of
The decline in top-line were due to the lower sales revenue
from natural gas as well as oil.
Quicksilver Resources achieved average daily production of
342.4 million cubic feet of natural gas equivalent (MMcfe) in the
fourth quarter 2012, a decrease of 17% from 412.5 MMcfe in the
fourth quarter of 2011.
For full-year 2012, production averaged 360.0 MMcfe per day,
reflecting a fall of 12.7% from the 2011 level.
Output from the Barnett Shale and Horseshoe Canyon dwindled
partially offset by a ramp-up in production activities at the
Horn River play.
Reserves comprised roughly 76% natural gas, 23% natural gas
liquids (NGL) and 1% crude oil and condensate.
Total realized prices excluding hedging during the quarter
declined 17.0% year over year to $3.65 per thousand cubic feet
equivalent (Mcfe), on account of weak natural gas, natural
liquids and oil prices realized. The average realized oil, NGL
and natural gas prices during the year were $77.96 per barrel
(down 9.3%), $29.85 per barrel (down 41.2%), and $3.20 per
thousand cubic feet (Mcf) (down 5.8%), respectively.
Lease operating expenses incurred by the company during the
reported quarter and the year declined 22.3% and 7.3%,
respectively. A reduction in lease operating costs at the Barnett
and Horn river plays resulted in lower costs.
Capital expenditure for fourth quarter 2012 amounted to $31.0
million. Out of the total expenditure, $10.0 million was
allocated for drilling and completion activities, $7.0 million
used for new acreage purchases and $14.0 million on capitalized
interest and overhead costs.
Long-term debt at Quicksilver, as of Dec 31, 2012, was $2.06
billion versus $1.9 billion as of Dec 31, 2011.
Operating cash flow at year-end 2012 was $222.2 million versus
$253.0 million at the end of 2011.
The company expects average daily production volumes in the
first quarter 2013 in the range of 360-365 (MMcfe) per day. For
full year 2013, Quicksilver Resources set its output volumes at
335-345 MMcfe per day.
In the first quarter, the company estimates production taxes;
gathering, processing, and transportation expenses; and lease
operating expenses in the corresponding range of 14-16 cents per
Mcfe, $1.20-$1.22 per Mcfe and 80-82 cents per Mcfe. General
& administrative expenses and Depreciation, depletion and
amortization expenses are expected to be 55-57 cents per Mcfe and
52-54 cents per Mcfe, respectively.
Additionally, the company has hedged about 200 million cubic
feet per day (MMcfd) of natural gas for 2013 at a floor price of
$5.10 per Mcf. For 2014 and 2015, the company has in place
fixed-price swaps at a price of $5.08 and $5.23 per Mcf for about
170 MMcfd and 150 MMcfd natural gas production, respectively. In
addition, Quicksilver for the period 2016 to 2021 has hedged
around 40 MMcfd of gas production at an average price of $4.48
Other Exploration and Production Company
Plains Exploration & Production Company
) posted fourth-quarter 2012 pro forma earnings per share of 41
cents, missing the Zacks Consensus Estimate of 53 cents.
Noble Energy Inc.
) reported adjusted earnings per share of $1.65 for the fourth
quarter 2012, which comfortably surpassed the Zacks Consensus
Estimate of $1.07.
Anadarko Petroleum Corporation
) posted net earnings from continuing operations of 91 cents per
share in fourth quarter 2012, beating the Zacks Consensus
Estimate of 70 cents.
We believe the company's Barnett Shale asset would be the
major return provider in the upcoming quarters. Given its
increasing focus on the natural gas business, we expect
Quicksilver to capitalize on recovering gas prices, going
forward. Moreover, the company's strong hedging program will
further help in keeping margins stable.
However, deferred construction at the Horn River Basin for the
proposed natural gas facility and continued limited activity at
the Horseshoe Canyon play could act as potential negatives.
Quicksilver Resources currently retains a Zacks Rank #3
(Hold). Based in Fort Worth, Texas, Quicksilver Resources is
primarily engaged in the development of long-lived,
unconventional onshore natural gas reserves in the North American
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