Quicksilver Resources Inc. (KWK)

KWK 
$2.08
*  
0.07
3.48%
Get KWK Alerts
*Delayed - data as of Jul. 22, 2014  -  Find a broker to begin trading KWK now
Exchange: NYSE
Industry: Energy
Community Rating:
 
 
Symbol List Views
FlashQuotes InfoQuotes
Stock Details
Summary Quote Real-Time Quote After Hours Quote Pre-market Quote Historical Quote Option Chain
CHARTS
Basic Chart Interactive Chart
COMPANY NEWS
Company Headlines Press Releases Market Stream
STOCK ANALYSIS
Analyst Research Guru Analysis Stock Report Competitors Stock Consultant Stock Comparison
FUNDAMENTALS
Call Transcripts Annual Report Income Statement Revenue/EPS SEC Filings Short Interest Dividend History
HOLDINGS
Ownership Summary Institutional Holdings Insiders
(SEC Form 4)
 Save stocks for next time

Quicksilver Resources (KWK)

Q4 2011 Earnings Call

February 27, 2012 11:00 am ET

Executives

John E. Hinton - Vice President of Finance

Glenn M. Darden - Chief Executive Officer, President and Director

Philip W. Cook - Chief Financial Officer and Senior Vice President

Thomas F. Darden - Chairman, Chairman of MSR, Chief Executive Officer of MSR and President of MSR

Analysts

Noel A. Parks - Ladenburg Thalmann & Co. Inc., Research Division

Anne Cameron - BNP Paribas, Research Division

Jason Gilbert - Goldman Sachs Group Inc., Research Division

David Heikkinen - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division

Daniel J. Morrison - Global Hunter Securities, LLC, Research Division

Gil Yang - BofA Merrill Lynch, Research Division

David Snow

Dan McSpirit - BMO Capital Markets U.S.

John C. Nelson - Macquarie Research

Maryana Kushnir

Subash Chandra - Jefferies & Company, Inc., Research Division

Alex Heidbreder

Steven Karpel

Eli Kantor - Jefferies & Company, Inc., Research Division

Kathryn O'Connor

Presentation

Operator

Good morning. My name is Lacey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter 2011 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. John Hinton, Vice President of Finance and Investor Relations. Please go ahead, sir.

John E. Hinton

Thank you, Lacey, and good morning. Joining me today are Toby Darden, Chairman; Glenn Darden, President and Chief Executive Officer; and Phil Cook, Executive Vice President and Chief Financial Officer. This morning, the company issued a press release detailing Quicksilver's results for the fourth quarter of 2011. If you do not have a copy of the release, you can retrieve a copy of it on the company's website at www.qrinc.com under the News and Updates tab.

During today's call, the company will be making forward-looking statements which are subject to risks and uncertainties. Actual results may differ materially from those projected in these forward-looking statements. Additional information concerning risk factors that could cause such differences is detailed in the company's filings with the SEC.

Today's presentation will include information regarding adjusted net income, which is a non-GAAP financial measure. As required by SEC rules, reconciliations of adjusted net income to the most directly comparable GAAP measures are available on our website under the Investor Relations tab.

I will now turn the call over to Glenn Darden to review our financial and operating activities in detail.

Glenn M. Darden

Thanks, John. Good morning. Quicksilver Resources earned $49 million or $0.28 per diluted share in the fourth quarter of 2011. Full year 2011 net income was $115 million or $0.67 per diluted share. This compares to $1.82 and $2.52 per diluted share for the respective periods in 2011. Each year was impacted by special items: in 2011, the sale of the BreitBurn units; and in 2010, the sale of our interest in Quicksilver Gas Services. Phil Cook, our CFO, will break this out in detail in his remarks.

Quicksilver grew production 16% in 2011 versus 2010 volumes and replaced 165% of production. As drilling slowed down due to lower gas prices, we allocated capital to 2 grassroots oil projects: adding acreage to our Colorado position, which I'll talk about in a moment; and building new acreage basins in the Permian and Delaware Basins. These areas look very prospective for long-term growth.

In Colorado, where we have assembled 210,000 acres in what we have now have established the oil window of the Niobrara, our initial drilling results have looked better with additional production run time. We have drilled and completed 6 wells testing the Niobrara, the last of which is a horizontal well. All of these wells are producing oil. We completed the first 3 vertical wells with oil fracs and the second 3 wells, 2 vertical and the horizontal, with a different style gas frac.

This technique has shown significantly better results. The horizontal well, which frac-ed only about 1,500 feet of a 4,500-foot lateral, has a 45-day production average of 230 barrels of oil equivalent per day, primarily oil. The 2 vertical wells completed in this manner are steady producers, with the best well averaging 120 barrels of oil equivalent per day, again mostly oil, over the same 45-day period.

Our initial drilling covered an area approximately 30 miles in an east-west direction. We begin the drilling -- we begin drilling again next month with a series of horizontal and vertical wells. This is a bit different than we had announced, but with our vertical success, we will drill a few more vertical wells to test this as well. While we anticipate mostly oil from this project, the company will also begin work on an initial gas gathering system to capture the rich gas and NGL strength.

Based on completed well costs of approximately $3.5 million per vertical well and approximately $6 million for a horizontal completed well, we believe the economics will be compelling, in excess of 40% rates of return, and we have lots of room to run. We also believe these costs will go down as we move into development. Our land team is working on multiple drilling permits currently to be prepared to accelerate this project.

In West Texas, Quicksilver has secured approximately 105,000 net acres in 3 blocks. These areas have lots of activity around them and we will begin drilling next month with a target of having several wells completed by the summer. Quicksilver's objectives are the Bone Springs and Wolfcamp formations, and we will test each of the 3 acreage blocks.

Read the rest of this transcript for free on seekingalpha.com