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 | ||