NEW YORK (TheStreet) -- Shares of Quicksilver Resources Inc. (KWK) are higher by 7.16% to $3.52 on heavy trading volume after the independent oil and gas company said that it completed its semi-annual redetermination and closed an amendment to its Combined Credit Agreements on April 25.
The redetermined global borrowing base was reduced to $325 million from $350 million.
Also, certain definitions which impact the calculation of EBITDAX were amended in order to exclude certain non-recurring cash items, provide for pro forma application of the March 2014 amendment to the Fortune Creek gathering agreement, and reduce the threshold for pro forma application of a material transaction to $10 million.
As of the date of the amendment, the company had approximately $240 million utilized under its Combined Credit Agreements, which includes $43 million of outstanding letters of credit. The company has also reduced the size of the Combined Credit Agreements to $650 million.
TheStreet Ratings team rates QUICKSILVER RESOURCES INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate QUICKSILVER RESOURCES INC (KWK) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly decreased to $29.40 million or 65.94% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- QUICKSILVER RESOURCES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, QUICKSILVER RESOURCES INC turned its bottom line around by earning $0.90 versus -$13.83 in the prior year. For the next year, the market is expecting a contraction of 128.9% in earnings (-$0.26 versus $0.90).
- The revenue fell significantly faster than the industry average of 7.5%. Since the same quarter one year prior, revenues fell by 49.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- 36.67% is the gross profit margin for QUICKSILVER RESOURCES INC which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -27.81% is in-line with the industry average.
- You can view the full analysis from the report here: KWK Ratings Report