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Quicksilver Resources Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 7, 2009 07:01PM
Quicksilver Resources Inc. (KWK) filed Quarterly Report for the period ended 2009-03-31. Quicksilver Resources Inc. is an independent energy company engaged in the acquisition development exploration production and sale of natural gas crude oil and condensate and the gathering processing and transmission of natural gas. Quicksilver pursues its business through the acquisition and development of oil and gas mineral leases gas gathering systems and producing natural gas and crude oil properties. Quicksilver develops itsinventory of leases by drilling wells redrilling wells or recompletingexisting wells located on those leases for the recovery of the reserves. Quicksilver Resources Inc. has a market cap of $1.54 billion; its shares were traded at around $9.11 with a P/E ratio of 7.3 and P/S ratio of 2. Quicksilver Resources Inc. had an annual average earning growth of 46.1% over the past 5 years.
Highlight of Business Operations:
We are an independent energy company engaged primarily in exploration, development and production of unconventional natural gas onshore in North America. We own producing oil and natural gas properties in the United States, principally in Texas, and in Alberta, Canada, where we had total estimated aggregate proved reserves of approximately 2.2 Tcfe of natural gas at December 31, 2008. We also have properties in the Horn River Basin of Northeast British Columbia and the Delaware Basin of West Texas where we are exploring for additional reserves, but have recognized no proved reserves. In addition, we own approximately 73% of KGS, a publicly traded midstream master limited partnership controlled by us, and we own approximately 41% of the limited partner units of BBEP, a publicly traded oil and natural gas exploration and production master limited partnership, which we account for using the equity method.
In connection with affirming the borrowing base, Quicksilver and its bank group have amended the senior secured revolving credit facility to (i) increase the Eurodollar and specified rate margins from a range of 1.375% to 2.125% to a range of 2.25% to 3.25% (depending on the then-current borrowing base usage), (ii) increase the ABR margin from a range of 0% to 0.625% to a range of 1.375% to 2.375% (depending on the then-current borrowing base usage), (iii) add a floor to the ABR margin of one-month Libor plus 1%, and (iv) increase the unused commitment fee rate from a range of 0.25% to 0.375% to a flat rate of 0.5%. The margins across all grids will decrease by 0.25% upon full repayment of the Senior Secured Second Lien Facility.
Production expense was virtually unchanged primarily because of cost containment efforts in the Fort Worth Basin during the first quarter of 2009 when compared to the first quarter of 2008 despite higher production levels. As discussed above, our daily production from the Fort Worth Basin increased approximately 82% while production expense increased only $1.0 million when comparing the first quarter of 2009 to the 2008 first quarter. Fort Worth Basin production expense per Mcfe for the first quarter of 2009 decreased 42% from the first quarter of 2008. First quarter Fort Worth Basin production expense of $0.98 per Mcfe also reflected a 10% decrease from $1.09 per Mcfe for the fourth quarter of 2008. These decreases resulted from ongoing stringent efforts to contain costs through vendor bidding processes, bulk purchasing and additional reliance on automation.Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.
Stocks Discussed: KWK,