Quicksilver Resources Announces Filing Of 2012 Financial Report

FORT WORTH, Texas, March 22, 2013 (GLOBE NEWSWIRE) -- Quicksilver Resources Inc. (NYSE:KWK) announced today the company has filed its 2012 Form 10-K.

Net income for the fourth quarter and full-year 2012 as reported today in the company's selected financial information is higher than that reported in the press release issued February 25, 2013. During the preparation of the 2012 financial statements, the company determined that certain hedges did not qualify for hedge accounting at their designation dates. Consequently, the unrealized gains and losses on these derivatives since their designation have been recognized in earnings rather than deferred through other comprehensive income. Further, this treatment disqualifies their inclusion in the computation of the full-cost ceiling. The ceiling impairments also had an effect on the depletion rate in subsequent quarters. All of these factors caused a change in the company's results before income tax and the resulting tax provision. The company also recognized a valuation allowance for its Canadian net deferred tax assets.

The company has retroactively applied the revised accounting treatment for these derivatives, which resulted in restatements in each quarter of 2012 to revenue, impairment, and income taxes; DD&A was restated in the second, third, and fourth quarters of 2012. The restatement also affects the balance sheet for property, plant, and equipment, deferred taxes, AOCI and retained earnings. Details of these changes, including their cash flow effects, are included in the tables following this press release.

All adjustments described above are non-cash. The company is not filing amended quarterly reports on Form 10-Q for each of the interim quarters for 2012 as restated quarterly results are included within the 2012 annual report along with accompanying disclosures. A more complete explanation of the restatement is also included in the foreword to the MD&A section of the 2012 10-K filed today.

Final net loss for the fourth quarter 2012 was $548 million, or $3.22 per diluted share, and $2.4 billion, or $13.83 per diluted share for full-year 2012. Previously, the company reported a net loss for the fourth quarter 2012 of $1.1 billion, and a net loss of $2.5 billion for full-year 2012.

Final adjusted net income for the fourth quarter of 2012, a non-GAAP financial measure, was $9 million, or $0.05 per diluted share, and full-year 2012 adjusted net loss was $8 million, or $0.05 per diluted share. Revised details of adjusted net income are included in the tables following this press release.

Use of Non-GAAP Financial Measure

This news release and the accompanying schedule include the non-generally accepted accounting principles ("non-GAAP") financial measure of adjusted net income. The accompanying schedule provides reconciliations of this non-GAAP financial measure to its most directly comparable financial measure calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Non-GAAP financial measures should not be considered as an alternative to GAAP measures such as net income or operating income or any other GAAP measure of liquidity or financial performance.

About Quicksilver Resources

Fort Worth, Texas-based Quicksilver Resources is an independent oil and gas company engaged in the exploration, development and acquisition of oil and gas, primarily from unconventional reservoirs including gas from shales and coal beds in North America. The company has U.S. offices in Fort Worth, Texas; Glen Rose, Texas; Craig, Colorado; Steamboat Springs, Colorado and Cut Bank, Montana. Quicksilver's Canadian subsidiary, Quicksilver Resources Canada Inc., is headquartered in Calgary, Alberta. For more information about Quicksilver Resources, visit www.qrinc.com.

Investor & Media Contact: David Erdman (817) 665-4023

KWK 13-04
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per share data
             
  For the quarter ended December 31, 2012 For the year ended December 31, 2012
  Preliminary Unaudited Adjustments Final Preliminary Unaudited Adjustments Final
Revenue            
Production  $ 156,294  $ 1,601  $ 157,895  $ 636,316  $ (5,369)  $ 630,947
Sales of purchased natural gas  19,564    19,564  62,405    62,405
Derivative gains (losses)  —  45,345  45,345  —  11,444  11,444
Other  3,214  (2,052)  1,162  (27,916)  32,158  4,242
Total revenue  179,072  44,894  223,966  670,805  38,233  709,038
Operating expense            
Lease operating  22,927    22,927  95,333    95,333
Gathering, processing and transportation  39,277    39,277  166,316    166,316
Production and ad valorem taxes  4,562    4,562  25,395    25,395
Costs of purchased natural gas  19,513    19,513  62,041    62,041
Depletion, depreciation and accretion  35,677  (8,521)  27,156  185,266  (21,642)  163,624
Impairment  1,162,961  (605,820)  557,141  2,764,464  (138,536)  2,625,928
General and administrative  20,861    20,861  75,697    75,697
Other operating  742    742  1,562    1,562
Total expense  1,306,520  (614,341)  692,179  3,376,074  (160,178)  3,215,896
Crestwood earn-out  —    —  41,097    41,097
Operating income (loss)  (1,127,448)  659,235  (468,213)  (2,664,172)  198,411  (2,465,761)
Other income (expense) - net  1,345    1,345  1,108    1,108
Fortune Creek accretion  (4,923)    (4,923)  (19,472)    (19,472)
Interest expense  (41,703)    (41,703)  (164,051)    (164,051)
Income (loss) before income taxes  (1,172,729)  659,235  (513,494)  (2,846,587)  198,411  (2,648,176)
Income tax (expense) benefit  71,807  (106,812)  (35,005)  361,438  (65,868)  295,570
Net income (loss)  $ (1,100,922)  $ 552,423  $ (548,499)  $ (2,485,149)  $ 132,543  $ (2,352,606)
             
Earnings (loss) per common share - basic  $ (6.47)  $ 3.25  $ (3.22)  $ (14.61)  $ 0.78  $ (13.83)
Earnings (loss) per common share - diluted  $ (6.47)  $ 3.25  $ (3.22)  $ (14.61)  $ 0.78  $ (13.83)
 
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except share data
       
  As of December 31, 2012
  Preliminary Unaudited Adjustments Final
       
ASSETS
Current assets      
Cash and cash equivalents  $ 4,951    $ 4,951
Accounts receivable - net of allowance for doubtful accounts  64,149    64,149
Derivative assets at fair value  113,367    113,367
Other current assets  25,046    25,046
Total current assets  207,513    207,513
Property, plant and equipment - net      
Oil and gas properties, full cost method (including unevaluated costs of $307,267)  622,519  158,441  780,960
Other property and equipment  248,098    248,098
Property, plant and equipment - net  870,617  158,441  1,029,058
Derivative assets at fair value  105,270    105,270
Deferred income taxes  65,135  (65,135)  —
Other assets  39,947    39,947
   $ 1,288,482  $ 93,306  $ 1,381,788
       
LIABILITIES AND EQUITY
Current liabilities      
Current portion of long-term debt  $ —    $ —
Accounts payable  37,131    37,131
Accrued liabilities  130,660    130,660
Derivative liabilities at fair value  —    —
Current deferred tax liability  3,891  (3,891)  —
Total current liabilities  171,682  (3,891)  167,791
Long-term debt  2,063,206    2,063,206
Partnership liability  130,912    130,912
Asset retirement obligations  115,949    115,949
Derivative liabilities at fair value  17,485    17,485
Other liabilities  19,242    19,242
Deferred income taxes  —    —
Stockholders' equity      
Preferred stock, par value $0.01, 10,000,000 shares authorized, none outstanding  —    —
Common stock, $0.01 par value, 400,000,000 shares authorized, and 179,015,118 shares issued  1,790    1,790
Additional paid in capital  760,341  (8,947)  751,394
Treasury stock of 5,921,102 shares  (49,495)    (49,495)
Accumulated other comprehensive income  187,892  (26,399)  161,493
Retained earnings (deficit)  (2,130,522)  132,543  (1,997,979)
Total stockholders' equity  (1,229,994)  97,197  (1,132,797)
   $ 1,288,482  $ 93,306  $ 1,381,788
 
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
       
  For the year ended December 31, 2012
  Preliminary Unaudited Adjustments Final
Operating activities:      
Net income (loss)  $ (2,485,149)  $ 132,543  $ (2,352,606)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Depletion, depreciation and accretion  185,266  (21,642)  163,624
Impairment expense  2,764,464  (138,536)  2,625,928
Write-off of MLP filing fees  —  7,505  7,505
Crestwood earn-out  (41,097)    (41,097)
Deferred income tax expense (benefit)  (356,937)  65,867  (291,070)
Non-cash (gain) loss from hedging and derivative activities  96,058  (38,232)  57,826
Stock-based compensation  22,246    22,246
Non-cash interest expense  9,854    9,854
Fortune Creek accretion  19,472    19,472
Other  1,037    1,037
Changes in assets and liabilities      
Accounts receivable  30,950    30,950
Derivative assets at fair value  —    —
Prepaid expenses and other assets  3,070  (7,505)  (4,435)
Accounts payable  (13,317)  4,422  (8,895)
Income taxes payable  1,183    1,183
Accrued and other liabilities  (14,884)  1,089  (13,795)
Net cash provided by operating activities  222,216  5,511  227,727
Investing activities:      
Capital expenditures  (481,057)  (4,422)  (485,479)
Proceeds from Crestwood earn-out  41,097    41,097
Proceeds from sale of properties and equipment  72,725    72,725
Net cash provided (used) by investing activities  (367,235)  (4,422)  (371,657)
Financing activities:      
Issuance of debt  467,959    467,959
Repayments of debt  (310,430)    (310,430)
Debt issuance costs paid  (3,022)    (3,022)
Distribution of Fortune Creek Partnership funds  (14,285)    (14,285)
Proceeds from exercise of stock options  11    11
Excess tax benefits on stock compensation  1,089  (1,089)  —
Purchase of treasury stock  (3,144)    (3,144)
Net cash provided (used) by financing activities  138,178  (1,089)  137,089
Effect of exchange rate changes in cash  (1,354)    (1,354)
Net change in cash  (8,195)  —  (8,195)
Cash and cash equivalents at beginning of period  13,146  —  13,146
Cash and cash equivalents at end of period  $ 4,951  $ —  $ 4,951
 
QUICKSILVER RESOURCES INC.
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME
In thousands, except per share data
             
  Quarter Ended December 31, 2012 Twelve Months Ended December 31, 2012
  Preliminary Unaudited Adjustments Final Preliminary Unaudited Adjustments Final
             
Net income (loss)  $ (1,100,922)  $ 552,423  $ (548,499)  $ (2,485,149)  $ 132,543  $ (2,352,606)
             
Adjustments            
Unrealized (gain)/loss on commodity derivatives  —  (38,266)  (38,266)  —  17,880  17,880
Restructure of hedge contracts  200    200  14,755    14,755
Loss (gain) from hedge ineffectiveness  (2,526)  2,266  (260)  (4,594)  3,313  (1,281)
Impairment of assets  1,162,961  (605,820)  557,141  2,764,464  (138,536)  2,625,928
Crestwood earn-out  —    —  (41,097)    (41,097)
Inception loss on 10-year hedges  —    —  21,670  (21,670)  —
Interest expense related to debt restructure  —    —  2,789    2,789
Strategic transaction costs  7,505    7,505  8,503    8,503
Audit and accounting fees  —    —  3,479    3,479
Valuation allowance on deferred tax asset  325,847  (118,739)  207,108  609,477  (14,260)  595,217
Reduction of uncertain tax position liability  —    —  (9,219)    (9,219)
Acceleration of stock compensation expense  900    900  4,137    4,137
Other  —    —  1,130    1,130
Total adjustments before income tax expense  1,494,887  (760,559)  734,328  3,375,494  (153,273)  3,222,221
Income tax expense for above adjustments  (396,362)  219,455  (176,907)  (936,724)  59,339  (877,385)
Total adjustments after tax  1,098,525  (541,104)  557,421  2,438,770  (93,934)  2,344,836
       —      —
Adjusted net income  $ (2,397)  $ 11,319  $ 8,922  $ (46,379)  $ 38,609  $ (7,770)
             
Adjusted net income per common share - diluted  $ (0.01)  $ 0.06  $ 0.05  $ (0.27)  $ 0.22  $ (0.05)
             
Diluted weighted average common shares outstanding  170,260    170,260  170,106    170,106

company logo

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX