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Quicksilver Resources Inc. ( KWK ) posted a loss per
share of 4 cents in the first quarter of 2013 versus a loss of 9
cents in the year-ago quarter. The reported loss was wider than the
Zacks Consensus Estimate of a loss of 2 cents. Earnings
underperformed on account of decline in drilling activities,
diminished output volume and fall in natural gas liquids (NGL)
On a GAAP basis, the company reported a loss of 35 cents per share
compared with a loss of $1.24 per share in the year-ago quarter.
The difference between GAAP and operating loss during the quarter
was due to a 39 cent charge associated with inventory adjustment,
unrealized derivative losses, valuation allowance on deferred tax
and other offset by an 8 cent gain from income tax expense
Quicksilver Resources overall revenue at the end of first-quarter
2013 was $118.7 million, down 31.3% from the year-ago quarter. The
year-over-year decline in revenue was mainly due to lower
production and weak crude oil and natural gas liquids prices.
Reported quarter revenues fell short of the Zacks Consensus
Estimate by 22.7%.
Quicksilver Resources achieved overall average daily production of
357.5 million cubic feet of natural gas equivalent (MMcfe) in the
first quarter, down 5.2% from the prior-year period. This was due
to a drop in production activities in the U.S., partially offset by
rise in output levels from the Canadian operations.
Total realized prices during the quarter declined 11.8% year over
year to $4.42 per thousand cubic feet (Mcfe), resulting from 36.2%,
7.4%, 2.1% downswings in NGL, oil and natural gas prices,
Total expenses incurred by Quicksilver Resources during the
reported quarter plunged 74.6% year over year to $122.6 million. A
38%, 14% and 8% decrease in the cost of natural gas purchase, lease
operating expense and gathering, processing as well as
transportation costs, respectively, led to the cost
The operating loss in the first quarter narrowed substantially
from the prior-year period owing to greater costs savings relative
to revenue decline.
Interest expenses of Quicksilver Resources during the quarter were
$43.9 million versus $40.2 million in the prior-year quarter.
Cash and cash equivalents as of Mar 31, 2013 were $9.9 million
versus $5.0 million as of Dec 31, 2012.
Long-term debt climbed 2.2% as of Mar 31, 2013, to $2,108.3
million from $2,063.2 million as of Dec 31, 2012.
Cash provided by operating activities during the first quarter was
$14.4 million versus $27.4 million a year ago.
The capital cost Quicksilver Resources for the first quarter
amounted to $24 million. Out of the total expenditure, $11 million
was allocated for drilling and completion activities, $7 million
used for acreage purchases and $6 million for interest on capital
as well as overhead costs.
Quicksilver Resources expects production volumes in the second
quarter of 2013 to be 282-288 MMcfe per day. For 2013, Quicksilver
Resources expects production volume in the range of 290-300 MMcfe
The company estimates second-quarter production taxes; gathering,
processing, and transportation expenses; and lease operating
expenses in the corresponding range of 18-21 cents per Mcfe,
$1.32-$1.36 per Mcfe and 88-92 cents per Mcfe. General &
administrative expenses and depreciation, depletion and
amortization expenses are expected to be 50-54 cents per Mcfe and
56-60 cents per Mcfe, respectively.
It continues to hedge a substantial amount of production to
cushion against fluctuating prices. The company has hedged 200
MMcfd for the remainder of 2013 at a weighted average price of
$5.10 per Mcfe, 170 MMcfd at a weighted average price of $5.08 for
2014 and 150 MMcfd at a weighted average price of $5.23 for
Quicksilver Resources will witness a slight reduction in its 2013
capital outlay due to the addition of $485.0 million as proceeds
from the 25% Barnett stake sale.
Other Oil & Gas Operator Releases
Noble Energy Inc. ( NBL ) recorded earnings
per share of $1.48, exceeding the Zacks Consensus Estimate by
Anadarko Petroleum Corporation ( APC ) posted net
earnings from continuing operations of $1.08 per share for the
first quarter of 2013, breezing past the Zacks Consensus Estimate
Quicksilver Resources failed to recuperate from the negative
earnings surprise trend seen in the six of the last seven quarters.
The company's first-quarter 2013 earnings also lagged our
The company's high-end interest acquisition deal with
Royal Dutch Shell plc. ( RDS.A ) in the Sand
Wash basin is anticipated to be a key growth driver, going forward.
Moreover, its encouraging cost management efforts might help ease
the negative margin pressure.
On the flip side, reduction in drilling activities across the
major operational plays of Barnett and West Texas as well as
challenging NGL prices would undermine Quicksilver Resources'