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Quicksilver's Q3 Loss In Line with Ests - Analyst Blog

Posted: 11/6/2013 4:50:00 PM
Referenced Stocks: APC;E;KWK;NBL

Quicksilver Resources Inc. ( KWK ) posted an adjusted loss per share of 5 cents in the third quarter of 2013 as opposed to earnings of 3 cents per share in the year-ago quarter. Reported loss was in line with the Zacks Consensus Estimate.

The downswing was attributable to lower production in the company's major operational areas.

Including a gain of 19 cents per share and an 8 cent charge, the company reported GAAP earnings of 6 cents per share compared with a loss of $4.65 per share a year ago.

Total Revenue

Quicksilver Resources' total revenue was $153.1 million, beating the Zacks Consensus Estimate by $25.1 million. On a year-over-year basis, quarterly total revenue increased 29.6%.

Operational Update

Quicksilver Resources achieved overall average daily production of 274 million cubic feet of natural gas equivalent per day (MMcfed), down 24.3% year over year. The downside in production was mainly due to the sale of a 25% interest in the Barnett Shale. This was further compounded by a fall in production at the Horseshoe Canyon asset.

During the quarter, Quicksilver Resources divested its interest in the Montana asset, which impacted the production level for a month. However, production increased 8% year over year to 105 MMcfed in the Horn River Basin in Canada.

Total realized prices decreased 11.7% year over year to $4.47 per thousand cubic feet (Mcfe), resulting from a downturn in natural gas and liquids prices.

Total expenses dropped an impressive 85.5% year over year to $101.0 million, primarily due to a 15.9% and 14% plunge in lease operating and gathering, processing and transportation expenses, respectively.

Quicksilver Resources' operating income was $60.0 million versus an operating loss of $576.6 million a year ago. The company's successful cost control efforts led to the strong rebound in operating profit.


Quicksilver Resources' cash balance as of Sep 30, 2013 was $56.5 million versus $5.0 million as of Dec 31, 2012. The proceeds gained from the divestment of non-core assets boosted the cash balance.

Long-term debt as of Sep 30, 2013 was $1,926.2 million versus $2,063.2 million as of Dec 31, 2012.

During the third quarter, Quicksilver Resources invested $21.0 million under its capital spending program. Of the total expenditure, $14.0 million was allocated for drilling and completion activities, $3.0 million used for leasehold and midstream, and $4.0 million for capital costs and corporate overheads.


Quicksilver Resources expects production volumes in the fourth quarter to be 263-268 MMcfe per day. The company also tightened its full-year 2013 production volume guidance to the range of 295-297 MMcfe per day from the prior forecast of 290-300 MMcfe per day.

Lease operating expenses in the fourth quarter are expected in the range of 72-76 cents. Gathering, processing and transportation in the fourth quarter are expected in the range of $1.34-$1.38 per share.

Production ad valorem taxes in the fourth quarter are expected in the range of 18-20 cents.

Other Company Releases

Anadarko Petroleum Corp. ( APC ) posted net earnings from continuing operations of $1.13 per share for the third quarter of 2013, falling behind the Zacks Consensus Estimate by 4.2%.

Noble Energy Inc. ( NBL ) reported adjusted earnings per share of 97 cents for the third quarter 2013, edging out the Zacks Consensus Estimate by 1.04%.

Our View

We believe the company's strategy to sell non-core assets and successful cost abatement steps will lend constancy to margins in the upcoming quarters.

Moreover, a strong hedging program will cushion the business from commodity price volatilities. Quicksilver Resources' strategic agreement with Eni SpA ( E ) for the development of shale oil reservoirs in the U.S. will bode well for its future growth objectives.

The company currently has a Zacks Rank #2 (Buy).

ANADARKO PETROL (APC): Free Stock Analysis Report

ENI SPA-ADR (E): Free Stock Analysis Report

QUICKSILVER RES (KWK): Free Stock Analysis Report

NOBLE ENERGY (NBL): Free Stock Analysis Report

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