EX-99.1 2 ex99_1.htm EXHIBIT 99.1 QUICKSILVER RESOURCES INC. PRESS RELEASE DATED FEBRUARY 21, 2007 Exhibit 99.1 Quicksilver Resources Inc. Press release dated February 21, 2007
Exhibit 99.1

 
INVESTOR RELATIONS:
Quicksilver Resources Inc.
Diane Weaver
(817) 665-4834  

FOR RELEASE AFTER MARKET CLOSE
February 21, 2007

QUICKSILVER RESOURCES ANNOUNCES
FOURTH QUARTER AND YEAR-END 2006 FINANCIAL RESULTS

2006 Production Increases 19% over Prior Year;
Year over Year Cash Flow from Operations Increases 53%

FORT WORTH (February 21, 2007) - Quicksilver Resources Inc. (NYSE: KWK) today reported net income for the fourth quarter of 2006 of $19.7 million on revenues of $102.0 million, or $0.24 per diluted share. The company’s comparative fourth quarter of 2005 net income was $34.7 million on revenues of $102.9 million, or $0.43 per diluted share. Net income for the full year 2006 was $93.7 million on revenues of $390.4 million, or $1.15 per diluted share. This compares to full year 2005 net income of $87.4 million on revenue of $310.4 million, or $1.08 per diluted share. For the full year 2006, net cash from operating activities, as presented in the attached Condensed Consolidated Statements of Cash Flows, was $220.6 million compared to $144.5 million for the full year 2005. This represents a 53 percent increase in cash flow from operations year over year.

President and CEO, Glenn Darden commented, “In 2006, production grew 19 percent in comparison to 2005, reserves grew 46 percent over the same period, solely by the drillbit, and the company continued to be among the lowest cost producers in the industry. With the Fort Worth Basin drilling program leading the way, Quicksilver is poised to grow at a faster rate in 2007. We anticipate another year of very good results for Quicksilver.”

Production

For the fourth quarter of 2006, average daily production rose to 178 million cubic feet equivalent per day (MMcfe/d) compared to 150 MMcfe/d for the same period in 2005, an increase of 18 percent. Total production for the fourth quarter of 2006 was 16.4 billion cubic feet equivalent (Bcfe), compared to 13.8 Bcfe for the fourth quarter of 2005.

Natural gas production for the fourth quarter of 2006 was 13.8 billion cubic feet (Bcf), or an average of 150 million cubic feet per day (MMcf/d), compared to production of 12.5 Bcf, or an average of 136 MMcf/d, for the same period in 2005. The price realized for the company’s natural gas production in the fourth quarter of 2006 averaged $6.05 per thousand cubic feet (Mcf), compared to the $7.19 per
 
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Fourth Quarter and Year-end 2006 Financial Results - Page 2 of 7
 
Mcf realized in the same period of 2005. Natural gas, including natural gas liquids (NGL), comprised 95 percent of the company’s total production in the fourth quarter of 2006.

Crude oil production for the fourth quarter of 2006 was 143,000 barrels, or 1,549 barrels per day, as compared to 144,000 barrels of production in the fourth quarter of 2005. Crude prices realized for the fourth quarter of 2006 averaged $54.22 per barrel, compared to $53.36 per barrel for the prior year fourth quarter.

Natural gas liquids production for the fourth quarter of 2006 was 282,000 barrels, compared to 82,000 barrels in the fourth quarter of 2005. The price realized for natural gas liquids averaged $34.49 per barrel in the fourth quarter of 2006, compared to the average of $47.12 per barrel realized in the fourth quarter of 2005.

Full year 2006 average daily production for the year was 168 MMcfe/d and total production was 61.3 Bcfe, compared to 2005 average daily production of 141 MMcfe/d and 2005 total production of 51.4 Bcfe. Natural gas production totaled 53.3 Bcf for 2006 at an average realized price per Mcf of $6.05, as compared to 46.8 Bcf during 2005 at $5.76 per Mcf. Crude production for 2006 was 587,000 barrels at an average realized price per barrel of $59.99 versus 553,000 barrels at $50.50 per barrel in 2005. The company produced 746,000 barrels of natural gas liquids at an average realized price of $38.85 per barrel in 2006, as compared to 223,000 barrels in 2005 at an average of $39.08 per barrel.

Total capital costs incurred for the year 2006 were $646 million and consolidated exploration and production expenditures totaled $545 million. Quicksilver Resources had an all-in finding and development (F&D) cost of $0.94 per Mcfe in 2006. For a description of the calculation and certain other information regarding F&D costs, please see the discussion below under the heading “F&D Costs.” A reconciliation of the “2006 Finding & Development Costs” is available on the company’s website - www.qrinc.com.

Fourth Quarter and Full Year 2006 Earnings Release and Conference Call

The company’s fourth quarter and full year 2006 conference call to discuss operating and financial results is scheduled for Thursday, February 22, 2007, at 10:00 a.m. central time.

Quicksilver invites interested persons to participate in the fourth quarter and full year 2006 call by dialing (877) 313-7932, ID number 6100877 prior to 9:55 a.m. central time. A digital replay of the conference call will be available at 1:00 p.m. central time the same day, and will remain available for one week. The replay can be dialed at (800) 642-1687 and reference should be made to the conference ID number 6100877. The call will also be broadcasted live via Internet webcast on the company’s website, www.qrinc.com, linking through the “Investor Relations” page and the “Presentations & Conference Calls” link.

About Quicksilver

Fort Worth, Texas-based Quicksilver Resources is a natural gas and crude oil production company engaged in the development and production of unconventional natural gas reserves, including coal bed methane, shale gas, and tight sands gas. It has U.S. offices in Fort Worth, Texas; Granbury, Texas; Gaylord, Michigan; Corydon, Indiana and Cut Bank, Montana. Quicksilver also has a Canadian
 
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Fourth Quarter and Year-end 2006 Financial Results - Page 3 of 7
 
subsidiary, Quicksilver Resources Canada Inc., located in Calgary, Alberta. For more information about Quicksilver Resources, visit www.qrinc.com.

F&D Costs
Finding and development cost, or F&D cost, is calculated by dividing (x) development, exploitation, exploration and acquisition capital expenditures for the period, plus unevaluated capital expenditures, as of the beginning of the period, less unevaluated capital expenditures as of the end of the period, by (y) reserve additions for the period. Our calculation of “all-in F&D cost” includes costs and reserve additions related to the purchase of proved reserves. The methods we use to calculate our F&D cost may differ significantly from methods used by other companies to compute similar measures. As a result, our F&D cost may not be comparable to similar measures provided by other companies. We believe that providing a measure of F&D cost is useful in evaluating the cost, on a per thousand cubic feet of natural gas equivalent basis, to add proved reserves. However, this measure is provided in addition to, and not as an alternative for, and should be read in conjunction with, the information contained in our financial statements prepared in accordance with generally accepted accounting principles. Due to various factors, including timing differences in the addition of proved reserves and the related costs to develop those reserves, F&D costs do not necessarily reflect precisely the costs associated with particular reserves. As a result of various factors that could materially affect the timing and amounts of future increases in reserves and the timing and amounts of future costs, we cannot assure you that our future F&D costs will not differ materially from those presented.

Forward-Looking Statements
The statements in this press release regarding future events, occurrences, circumstances, activities, performance, outcomes and results are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although these statements reflect the current views, assumptions and expectations of Quicksilver Resources’ management, the matters addressed herein are subject to numerous risks and uncertainties, which could cause actual activities, performance, outcomes and results to differ materially from those indicated. Factors that could result in such differences or otherwise materially affect Quicksilver Resources’ financial condition, results of operations and cash flows include: changes in general economic conditions; fluctuations in natural gas and crude oil prices; failure or delays in achieving expected production from natural gas and crude oil exploration and development projects; uncertainties inherent in estimates of natural gas and crude oil reserves and predicting natural gas and crude oil reservoir performance; effects of hedging natural gas and crude oil prices; competitive conditions in our industry; actions taken by third-party operators, processors and transporters; changes in the availability and cost of capital; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; the effects of existing and future laws and governmental regulations; and the effects of existing or future litigation; as well as, other factors disclosed in Quicksilver Resources’ filings with the Securities and Exchange Commission.
 
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Fourth Quarter and Year-end 2006 Financial Results - Page 4 of 7
 
QUICKSILVER RESOURCES INC.
  
Unaudited Selected Operating Results
  
   
   
Three Months Ended
December 31,
 
Year Ended
December 31,
  
   
2006
  
2005
  
2006
  
2005
  
Production:
                          
Natural gas (MMcf)
    
13,836
    
12,482
    
53,265
    
46,769
  
Oil (MBbls)
    
143
    
144
    
587
    
553
  
NGL (MBbls)
    
282
    
82
    
746
   
223
  
Total (MMcfe)
    
16,384
   
13,835
   
61,262
    
51,427
  
       
United States (MMcfe)
    
11,495
    
9,750
    
42,991
    
36,582
  
Canada (MMcfe)
    
4,889
    
4,085
    
18,271
    
14,845
  
Total (MMcfe)
    
16,384
    
13,835
   
61,262
    
51,427
  
       
Average Daily Production:
      
Natural gas (Mcfd)
    
150,389
    
135,670
    
145,933
    
128,135
  
Oil (Bbld)
    
1,549
    
1,561
    
1,608
    
1,516
  
NGL (Bbld)
    
3,067
    
891
    
2,043
    
611
  
Total (Mcfed)
    
178,086
    
150,380
    
167,840
    
140,895
  
       
Average Sales Price Per Unit (excluding effects of hedging):
  
Natural gas (per Mcf)
  
$
5.40
  
$
8.91
  
$
5.75
  
$
6.63
  
Oil (per Bbl)
  
$
54.22
  
$
53.36
  
$
60.75
  
$
52.76
  
NGL (per Bbl)
  
$
34.49
  
$
47.12
  
$
38.85
  
$
39.08
  
Total (per Mcfe)
  
$
5.62
  
$
8.89
  
$
6.06
  
$
6.77
  
       
Average Sales Price Per Unit (including effects of hedging):
  
Natural gas (per Mcf)
  
$
6.05
  
$
7.19
  
$
6.05
  
$
5.76
  
Oil (per Bbl)
  
$
54.22
  
$
53.36
  
$
59.99
  
$
50.50
  
NGL (per Bbl)
  
$
34.49
  
$
47.12
  
$
38.85
  
$
39.08
  
Total (per Mcfe)
  
$
6.17
  
$
7.32
  
$
6.31
  
$
5.95
  
       
Expense per Mcfe:
      
United States production cost
  
$
1.79
  
$
1.37
  
$
1.70
  
$
1.53
  
Canada production cost
 
$
0.89
  
$
1.10
  
$
1.20
  
$
1.03
  
Total production cost
  
$
1.52
  
$
1.29
  
$
1.55
  
$
1.39
  
                           
Production and ad valorem taxes
  
$
0.30
  
$
0.38
  
$
0.25
  
$
0.29
  
General and administrative expenses
  
$
0.43
  
$
0.42
  
$
0.41
  
$
0.37
  
Depletion, depreciation and accretion
  
$
1.42
  
$
1.15
  
$
1.29
  
$
1.07
  
                           

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Fourth Quarter and Year-end 2006 Financial Results - Page 5 of 7

QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except for share data - Unaudited
 
   
December 31,
  
December 31,
  
   
2006
  
2005
  
ASSETS
          
Current assets
              
 Cash and cash equivalents
  
$
5,281
  
$
14,318
  
Accounts receivable, net of allowance for doubtful accounts
    
76,521
    
76,121
  
Current derivative assets
    
64,086
    
603
  
Current deferred income taxes
    
-
    
14,614
  
Other current assets
    
25,076
    
7,928
  
Total current assets
    
170,964
   
113,584
  
               
Investments in and advances to equity affiliates
    
7,434
    
8,353
  
               
Properties, plant and equipment - net (“full cost”)
    
1,679,280
    
1,112,002
  
               
Deferred derivative assets
    
3,753
    
-
  
               
Other assets
    
21,481
    
9,155
  
   
$
1,882,912
  
$
1,243,094
  
               
 LIABILITIES AND STOCKHOLDERS’ EQUITY
              
 
              
Current liabilities
              
Current portion of long-term debt
  
$
400
  
$
70,493
  
Accounts payable
    
109,914
    
48,409
  
Accrued liabilities
    
67,697
    
52,656
  
Accrued derivative obligations
    
-
    
40,632
 
Current deferred income taxes
    
21,378
    
-
  
Total current liabilities
    
199,389
   
212,190
  
               
Long-term debt
    
919,117
    
506,039
  
               
Derivative obligations
    
-
    
4,631
  
               
Asset retirement obligations
    
25,058
    
20,891
  
               
Deferred income taxes
    
156,251
    
115,728
  
               
Minority interest
    
7,431
    
-
  
               
Stockholders’ equity
              
Preferred stock, $0.01 par value, 10,000,000 shares authorized,
              
0 and 1 share issued and outstanding
   
-
    
-
  
Common stock, $0.01 par value, 200,000,000 and
              
100,000,000 shares authorized, respectively, and
             
80,181,593 and 78,650,110 shares issued, respectively
    
802
    
787
  
Paid in capital in excess of par value
    
238,063
    
211,843
  
Treasury stock of 2,579,671 and 2,571,069 shares, respectively
    
(10,737
)
  
(10,353
)
Accumulated other comprehensive income (loss)
    
60,099
    
(12,382
)
Retained earnings
    
287,439
    
193,720
  
Total stockholders’ equity
    
575,666
    
383,615
  
   
$
1,882,912
  
$
1,243,094
  
 
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Fourth Quarter and Year-end 2006 Financial Results - Page 6 of 7
 
QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per share data - Unaudited
 
   
For the Three Months Ended
  
For the Year Ended
  
   
December 31,
  
December 31,
  
   
2006
  
2005
  
2006
 
2005
 
Revenues
                          
Oil, gas and related product sales
  
$
101,165
  
$
101,317
  
$
386,540
  
$
306,204
  
Other revenue
    
869
   
1,569
   
3,822
    
4,244
  
Total revenues
    
102,034
    
102,886
    
390,362
    
310,448
  
Expenses
                          
Oil and gas production costs
    
24,944
    
17,861
    
95,176
    
71,204
  
Production and ad valorem taxes
    
4,958
    
5,203
    
15,619
    
15,068
  
Other operating costs
    
212
    
297
    
1,461
    
1,661
  
Depletion, depreciation and accretion
    
23,240
    
15,951
    
78,800
    
55,213
  
Provision for doubtful accounts
    
700
    
20
    
700
    
108
  
General and administrative
    
7,000
    
5,867
    
24,936
    
18,979
  
Total expenses
    
61,054
    
45,199
    
216,692
    
162,233
  
                           
Income from equity affiliates
    
208
    
245
    
526
    
914
  
                           
Operating income
    
41,188
   
57,932
   
174,196
    
149,129
  
                           
Other income-net
   
(810
)
  
(128
)
  
(1,825
)
  
(585
)
Interest expense
    
13,253
    
6,718
    
44,061
    
21,740
  
                           
Income from continuing operations before
                          
income taxes and minority interest
    
28,745
   
51,342
   
131,960
    
127,974
  
Income tax expense
    
9,011
    
16,702
    
38,150
    
40,702
  
Minority interest expense
    
19
    
-
    
91
    
-
  
                           
Income from continuing operations
    
19,715
    
34,640
    
93,719
    
87,272
  
Gain from discontinued operations, net of income tax
    
-
    
100
    
-
    
162
  
                           
Net income
  
$
19,715
  
$
34,740
  
$
93,719
  
$
87,434
  
                           
Basic net income per common share
                          
Continuing operations
  
$
0.26
  
$
0.46
  
$
1.22
  
$
1.15
  
Discontinued operations
    
-
    
-
    
-
    
-
  
   
$
0.26
  
$
0.46
  
$
1.22
  
$
1.15
  
                           
Diluted net income per common share
                          
Continuing operations
  
$
0.24
  
$
0.43
  
$
1.15
  
$
1.08
  
Discontinued operations
    
-
    
-
    
-
    
-
  
   
$
0.24
  
$
0.43
  
$
1.15
  
$
1.08
  
                           
Weighted average common shares outstanding
                          
Basic
    
77,039
    
75,840
    
76,707
    
75,716
  
Diluted
    
83,388
    
82,609
    
83,133
    
82,455
  

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Fourth Quarter and Year-end 2006 Financial Results - Page 7 of 7

QUICKSILVER RESOURCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands-Unaudited
   
For the Year Ended
  
   
December 31,
  
   
2006
  
2005
  
Operating activities:
              
Net income
  
$
93,719
  
$
87,434
  
Charges and credits to net income not affecting cash
              
Depletion, depreciation and accretion
    
78,800
    
55,213
  
Deferred income taxes
    
37,877
    
40,298
  
Non-cash compensation
    
6,546
    
1,732
  
Amortization of deferred loan costs
    
2,070
    
1,429
 
Income from equity affiliates
    
(526
)
  
(914
)
Minority interest expense
    
91
    
-
  
Non-cash loss (gain) from hedging activities
    
1
   
(462
)
Provision for doubtful accounts
    
700
    
108
  
Other
    
414
    
157
 
Changes in assets and liabilities
              
Accounts receivable
    
(1,100
)
  
(38,192
)
Inventory, prepaid expenses and other
    
(26,066
)
  
(1,919
)
Accounts payable
    
15,193
    
1,963
 
Accrued liabilities and other
    
12,896
    
(2,379
)
Net cash provided by operating activities
    
220,615
    
144,468
 
               
Investing activities:
              
Development and exploration costs and other property additions
    
(597,490
)
  
(329,495
)
Return of investment from equity affiliates
    
1,923
    
533
 
Proceeds from sale of assets
    
5,113
    
9,693
  
Net cash used for investing activities
    
(590,454
)
  
(319,269
)
               
Financing activities:
              
Issuance of debt
    
694,682
    
183,469
 
Repayments of debt
    
(350,754
)
  
(13,079
)
Debt issuance costs
    
(9,213
)
  
(745
)
Proceeds from exercise of stock options
    
19,689
    
2,894
 
Purchase of treasury stock
    
(384
)
  
(95
)
Payment for fractional shares
    
-
    
(18
)
Minority interest contributions
    
7,291
    
-
  
Net cash provided by financing activities
    
361,311
    
172,426
 
             
Effect of exchange rate changes in cash
    
(509
)
  
746
 
               
Net decrease in cash and cash equivalents
    
(9,037
)
  
(1,629
)
               
Cash and cash equivalents at beginning of period
    
14,318
    
15,947
  
               
Cash and cash equivalents at end of period
  
$
5,281
  
$
14,318
  
               
 
 
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