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Quicksilver Resources Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 10, 2010 04:19PM
Quicksilver Resources Inc. (KWK) filed Quarterly Report for the period ended 2010-03-31. Quicksilver Resources Inc. has a market cap of $2.09 billion; its shares were traded at around $12.26 with a P/E ratio of 13.18 and P/S ratio of 2.51.KWK is in the portfolios of Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, NWQ Managers of NWQ Investment Management Co, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
In April 2010, we finalized a global settlement agreement with BBEP and all other parties to our lawsuit whereby we subsequently received $18.0 million in cash. Pursuant to the agreement, we retained full voting rights for our units held in BBEP subject to the provisions of a limited standstill agreement and the ability to name two directors to the board of directors of BBEPs general partner. BBEP also agreed to the reinstitution of the BBEP quarterly distributions and other governance accommodations. The $18.0 million settlement was recognized as non-operating income in the second quarter of 2010.
Commodity prices, drilling and well completion costs and access to capital and services are the most significant drivers of our business. As of the date of this report, natural gas prices have remained depressed. We continue to focus on ways to optimize our 2010 program. We currently expect that our 2010 capital program will total approximately $510 million. Our focus remains on the continued development of our properties in the Barnett Shale and exploration in the Horn River and Greater Green River Basins. For 2010, we expect to spend approximately $440 million for exploration and development activities, $68 million for midstream facilities (including approximately $60 million to be funded directly by KGS) and approximately $2 million for other property and equipment. On a regional basis, approximately $440 million is forecasted to be spent in Texas to drill approximately 75 net wells on operated properties, to complete and tie-in approximately 112 net wells and to further develop our midstream infrastructure. Canadian spending for 2010 is forecasted to be approximately $60 million chiefly to explore the Horn River Basin and, to a lesser extent, to maintain current production levels. The remaining capital program is spread among our other operating areas. We expect the final 2010 capital program to be less than the cash inflows.
Utilization of derivatives to hedge our sales of natural gas, NGL and crude oil may result in realized prices varying from market prices that we receive from the sale our production. Our production revenue from natural gas, NGL and oil production was $40.3 million and $53.8 million higher because of our hedging activities for the 2010 quarter and the 2009 quarter, respectively.
Other revenue of $4.4 million for the 2010 quarter increased from the 2009 quarter primarily because of a $1.4 million gain from hedge ineffectiveness recognized in the 2010 quarter compared to a $1.1 million loss in the 2009 quarter.
Ad valorem and production taxes in the Fort Worth Basin increased for the 2010 quarter approximately $2.7 million and $1.0 million, respectively when compared to the 2009 quarter. Ad valorem tax increases were primarily because of the addition of wells and midstream facilities placed into service over the past twelve months and the expiration of finite-lived tax abatements. Fort Worth Basin production tax increases were due to a 34% increase in realized prices before hedge settlements and a reduction in the number of new wells that qualified for exemptions or rate r
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