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» Quicksilver Resources' CEO Discusses Q4 2011 Results - Earnings Call Transcript
» Quicksilver Resources' CEO Discusses Horn River Basin Midstream Partnership with KKR Announcement (Transcript)
» Quicksilver Resources' CEO Discusses Q3 2011 Results - Earnings Call Transcript
During today's call, the company will be making forward-looking statements which are subject to risks and uncertainties. Actual results may differ materially from those projected in these forward-looking statements. Additional information concerning risk factors which could cause such differences is detailed in the company's filing with the SEC.Today's presentation will include information regarding adjusted net income, which is a non-GAAP financial measure. As required by SEC rules, reconciliation of adjusted net income to the most directly comparable GAAP measures are available on our website under the Investor Relations tab. I will now turn the call over to Glenn Darden to review our financial and operating activities in detail. Glenn M. Darden Thank you, John, and good morning. Quicksilver Resources reported a net loss of $60 million or $0.35 per diluted share for the first quarter of 2012. First quarter results were negatively impacted by a $63 million noncash impairment of oil and gas properties due to lower average natural gas prices compared to December 31, 2011. There were also noncash charges of $37 million related to the restructure of the hedge platform and an unrealized loss on new 10-year hedges. Earnings were improved by a $41 million earn-out payment from Crestwood Midstream Partners LP. Excluding these items, the first quarter 2012 adjusted net loss was $15 million or $0.09 per diluted share compared to adjusted net income of $3 million or $0.02 per diluted share for the 2011 period. John Regan, our Chief Financial Officer, will provide more details on the financials in his discussion. As we projected, due to reduced activity in the Barnett area, company production volumes came in at 377 million cubic feet equivalent per day for the quarter, which is roughly 9% below fourth quarter 2011 volumes. Volumes will build back in the second half of the year, and our forecast is for total annual volumes to be approximately within 5% of 2011 volumes. With the reduction of gas prices, Quicksilver has taken steps to minimize spending in dry gas areas, as well as to target the cost side.
This quarter shows higher costs on the lease operating side, which is primarily attributable to gas lift costs in certain projects. We are aggressively attacking these costs and have shut in certain production pads. These shut-ins will positively affect company EBITDA, but will have a minimal effect on company production volumes.Additionally, in the Barnett, the company is on track to launch our master limited partnership when it receives final approval from the SEC, which we expect relatively shortly. Quicksilver has certain development commitments in the Horn River Basin project in Northeast British Columbia. These commitments tie to contracts for pipeline transportation. Quicksilver's volume commitment is 75 million cubic feet per day for the rest of 2012, building to 100 million per day in May of 2013. There may be certain delays on the Spectra side on the pipeline -- and processing side, which could allow us to delay some of that ramp-up to 75 million a day. But we'll keep you abreast of that as that develops. The commitments to KKR in our midstream joint venture are contained within these volumes and are not in addition to them. We will be bringing on our first multi-well development pad in the next 30 days in order to satisfy these obligations. In anticipation of this activity and new production, Quicksilver has the majority of Canadian gas hedged. It also is important to note that Quicksilver has 2/3 of total company production hedged for the remainder of the year at an average price of $6.02 per Mcf equivalent. In addition to meeting pipeline commitments, we believe that these new Horn River wells will showcase the quality of the reservoir and production for our potential partners. We anticipate securing an upstream partner for this project later this year. Quicksilver's land team has been busy finalizing drilling permits and clearing title in both Colorado and West Texas. We have begun drilling a 6-well program in West Texas and we're roughly at total depth on our first well today, and we'll commence our second round of drilling up to another half a dozen wells or so in Colorado by the end of the month. Read the rest of this transcript for free on seekingalpha.com