Quicksilver Gas Services LP (KGS, Financial) filed Quarterly Report for the period ended 2009-09-30.
Quicksilver Gas Services LP is a midstream master limited partnership engaged in the business of gathering and processing natural gas produced from the Barnett Shale formation in the Fort Worth Basin in north Texas. Headquartered in Fort Worth, the company's predecessors began operations to provide midstream services primarily to Quicksilver Resources Inc. Quicksilver Gas Services Lp has a market cap of $235.67 million; its shares were traded at around $19.14 with a P/E ratio of 15.07 and P/S ratio of 3.02. The dividend yield of Quicksilver Gas Services Lp stocks is 8.15%.
Total Revenue and Volumes Approximately $8.0 million of the increase in revenue was due to the increases in volumes that we gathered and processed in the Fort Worth Basin. The increase in gathered volumes is due to increased well connections related to the continued development of the Fort Worth Basin, particularly in the Lake Arlington area. Additionally, $9.6 million of the increase in revenue is related to additional compression fees on the Cowtown System and the Hill County Dry System where additional compression assets were placed into service during 2009. For all of 2009, we expect daily volumes to remain relatively flat or slightly lower than we had in the 2009 period.
Cash Flows Used in Investing Activities The decrease in cash flows used in investing activities resulted from the lower capital expenditures used to expand our gathering system and processing capabilities. For the nine months ended September 30, 2009, we spent $28.0 million on gathering assets, which included $5.6 million on the purchase of the Cowtown Pipeline assets from Quicksilver and $27.7 million on processing facilities, which included $26.2 million related to the Corvette Plant. The cash flows used in investing activities during the first nine months of 2009 include the payment of $27.4 million that was incurred and accrued at December 31, 2008.
Cash Flows Provided by Financing Activities Cash flows provided by financing activities in the first nine months of 2009 consisted primarily of the net proceeds from borrowings under our credit agreement of $32.0 million used to fund the expansion of our gathering system and processing facilities, partially offset by distributions of $27.2 million to our unitholders from cash generated from operations.
During the quarter ended September 30, 2009, KGS independent directors voted to acquire certain of the Cowtown Pipeline assets subject to the repurchase obligation that had an original cost of approximately $5.6 million. KGS paid $5.6 million for these assets in September 2009. Furthermore, the independent directors elected not to acquire certain Cowtown Pipeline assets that had been included in the repurchase obligation. In doing so, KGS derecognized assets with a carrying value of $56.8 million and also derecognized liabilities associated with the repurchase of $68.6 million. The difference of $11.8 million between the assets carrying values and their repurchase obligation is reflected as an increase in equity. KGS entered into an agreement with Quicksilver to permit KGS to transport third party gas across the laterals retained by Quicksilver for a fee. Quicksilver provided notice to KGS during April 2009 that the Cowtown Pipeline assets with an original construction cost of $62.5 million were available for purchase.
During the nine months ended September 30, 2009, we decreased gross property, plant and equipment by $21.8 million, due to the $56.8 million of derecognized assets related to the election not to purchase certain Cowtown Pipeline laterals, offset by expansion capital expenditures of approximately $15.1 million, $7.5 million in maintenance capital expenditures, $3.1 million in asset retirement cost and $9.3 million in capital expenditures related to assets subject to repurchase obligations, mainly in the Hill County Dry System (HCDS). We expect remaining capital expenditures for 2009 to be approximately $7 million, excluding any expenditures to reacquire or develop assets subject to repurchase obligations.
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Quicksilver Gas Services LP is a midstream master limited partnership engaged in the business of gathering and processing natural gas produced from the Barnett Shale formation in the Fort Worth Basin in north Texas. Headquartered in Fort Worth, the company's predecessors began operations to provide midstream services primarily to Quicksilver Resources Inc. Quicksilver Gas Services Lp has a market cap of $235.67 million; its shares were traded at around $19.14 with a P/E ratio of 15.07 and P/S ratio of 3.02. The dividend yield of Quicksilver Gas Services Lp stocks is 8.15%.
Highlight of Business Operations:
Total Revenue and Volumes Approximately $3.3 million of the increase in revenue is related to additional compression fees on the Cowtown System and the Hill County Dry System where additional compression assets were placed into service during the current year. Additionally, $1.0 million of the increase in revenue was due to the increases in volumes that we gathered in the Fort Worth Basin. This increase was partially offset by lower processed volumes on the Cowtown System. The increase in gathered volumes is due to increased well connections related to the continued development of the Fort Worth Basin, particularly in the Lake Arlington area. For all of 2009, we expect daily volumes to remain relatively flat or slightly higher than we had in the 2009 quarter.Total Revenue and Volumes Approximately $8.0 million of the increase in revenue was due to the increases in volumes that we gathered and processed in the Fort Worth Basin. The increase in gathered volumes is due to increased well connections related to the continued development of the Fort Worth Basin, particularly in the Lake Arlington area. Additionally, $9.6 million of the increase in revenue is related to additional compression fees on the Cowtown System and the Hill County Dry System where additional compression assets were placed into service during 2009. For all of 2009, we expect daily volumes to remain relatively flat or slightly lower than we had in the 2009 period.
Cash Flows Used in Investing Activities The decrease in cash flows used in investing activities resulted from the lower capital expenditures used to expand our gathering system and processing capabilities. For the nine months ended September 30, 2009, we spent $28.0 million on gathering assets, which included $5.6 million on the purchase of the Cowtown Pipeline assets from Quicksilver and $27.7 million on processing facilities, which included $26.2 million related to the Corvette Plant. The cash flows used in investing activities during the first nine months of 2009 include the payment of $27.4 million that was incurred and accrued at December 31, 2008.
Cash Flows Provided by Financing Activities Cash flows provided by financing activities in the first nine months of 2009 consisted primarily of the net proceeds from borrowings under our credit agreement of $32.0 million used to fund the expansion of our gathering system and processing facilities, partially offset by distributions of $27.2 million to our unitholders from cash generated from operations.
During the quarter ended September 30, 2009, KGS independent directors voted to acquire certain of the Cowtown Pipeline assets subject to the repurchase obligation that had an original cost of approximately $5.6 million. KGS paid $5.6 million for these assets in September 2009. Furthermore, the independent directors elected not to acquire certain Cowtown Pipeline assets that had been included in the repurchase obligation. In doing so, KGS derecognized assets with a carrying value of $56.8 million and also derecognized liabilities associated with the repurchase of $68.6 million. The difference of $11.8 million between the assets carrying values and their repurchase obligation is reflected as an increase in equity. KGS entered into an agreement with Quicksilver to permit KGS to transport third party gas across the laterals retained by Quicksilver for a fee. Quicksilver provided notice to KGS during April 2009 that the Cowtown Pipeline assets with an original construction cost of $62.5 million were available for purchase.
During the nine months ended September 30, 2009, we decreased gross property, plant and equipment by $21.8 million, due to the $56.8 million of derecognized assets related to the election not to purchase certain Cowtown Pipeline laterals, offset by expansion capital expenditures of approximately $15.1 million, $7.5 million in maintenance capital expenditures, $3.1 million in asset retirement cost and $9.3 million in capital expenditures related to assets subject to repurchase obligations, mainly in the Hill County Dry System (HCDS). We expect remaining capital expenditures for 2009 to be approximately $7 million, excluding any expenditures to reacquire or develop assets subject to repurchase obligations.
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