Quicksilver Resources Inc. posted an adjusted loss per share of 5 cents in the third quarter of 2013 as opposed to earnings of 3 cents per share in the year-ago quarter. Reported loss was in line with the Zacks Consensus Estimate.
The downswing was attributable to lower production in the company’s major operational areas.
Including a gain of 19 cents per share and an 8 cent charge, the company reported GAAP earnings of 6 cents per share compared with a loss of $4.65 per share a year ago.
Quicksilver Resources' total revenue was $153.1 million, beating the Zacks Consensus Estimate by $25.1 million. On a year-over-year basis, quarterly total revenue increased 29.6%.
Quicksilver Resources achieved overall average daily production of 274 million cubic feet of natural gas equivalent per day (MMcfed), down 24.3% year over year. The downside in production was mainly due to the sale of a 25% interest in the Barnett Shale. This was further compounded by a fall in production at the Horseshoe Canyon asset.
During the quarter, Quicksilver Resources divested its interest in the Montana asset, which impacted the production level for a month. However, production increased 8% year over year to 105 MMcfed in the Horn River Basin in Canada.
Total realized prices decreased 11.7% year over year to $4.47 per thousand cubic feet (Mcfe), resulting from a downturn in natural gas and liquids prices.
Total expenses dropped an impressive 85.5% year over year to $101.0 million, primarily due to a 15.9% and 14% plunge in lease operating and gathering, processing and transportation expenses, respectively.
Quicksilver Resources' operating income was $60.0 million versus an operating loss of $576.6 million a year ago. The company’s successful cost control efforts led to the strong rebound in operating profit.
Quicksilver Resources' cash balance as of Sep 30, 2013 was $56.5 million versus $5.0 million as of Dec 31, 2012. The proceeds gained from the divestment of non-core assets boosted the cash balance.
Long-term debt as of Sep 30, 2013 was $1,926.2 million versus $2,063.2 million as of Dec 31, 2012.
During the third quarter, Quicksilver Resources invested $21.0 million under its capital spending program. Of the total expenditure, $14.0 million was allocated for drilling and completion activities, $3.0 million used for leasehold and midstream, and $4.0 million for capital costs and corporate overheads.
Quicksilver Resources expects production volumes in the fourth quarter to be 263–268 MMcfe per day. The company also tightened its full-year 2013 production volume guidance to the range of 295–297 MMcfe per day from the prior forecast of 290–300 MMcfe per day.
Lease operating expenses in the fourth quarter are expected in the range of 72–76 cents. Gathering, processing and transportation in the fourth quarter are expected in the range of $1.34–$1.38 per share.
Production ad valorem taxes in the fourth quarter are expected in the range of 18–20 cents.
Other Company Releases
Anadarko Petroleum Corp. (APC - Analyst Report) posted net earnings from continuing operations of $1.13 per share for the third quarter of 2013, falling behind the Zacks Consensus Estimate by 4.2%.
Noble Energy Inc. (NBL - Analyst Report) reported adjusted earnings per share of 97 cents for the third quarter 2013, edging out the Zacks Consensus Estimate by 1.04%.
We believe the company’s strategy to sell non-core assets and successful cost abatement steps will lend constancy to margins in the upcoming quarters.
Moreover, a strong hedging program will cushion the business from commodity price volatilities. Quicksilver Resources’ strategic agreement with Eni SpA (E - Analyst Report) for the development of shale oil reservoirs in the U.S. will bode well for its future growth objectives.
The company currently has a Zacks Rank #2 (Buy).