Quicksilver cuts capital spending

Posted Tuesday, Feb. 26, 2013  comments  Print Reprints
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Fort Worth-based Quicksilver Resources slashed its 2013 spending plans to focus on repaying debt, but its shares were still hammered Monday along with other energy stocks on economic fears.

The oil and natural gas producer said it lost $1.1 billion in the fourth quarter after taking a $1.2 billion impairment charge and other write-downs. Not counting such one-time items, Quicksilver said it lost $2 million in the quarter, or a penny a share, on revenue of $179.1 million.

Wall Street's consensus estimate for adjusted net income was 1 cent a share on $169 million in revenue.

The company's shares (ticker: KWK) were up more than 4 percent after the earnings report Monday morning but then plunged along with the broader stock market at midday, closing down 13 percent at $1.74. They had reclaimed more than half that loss in after-hours trading.

Quicksilver's nearly $2.1 billion in long-term debt has been a continuing worry to investors. It addressed that by pledging to cut capital spending by 70 percent in the coming year, to $120 million.

During a conference call with analysts, company executives also said they are continuing with previously announced plans to sell a minority stake in Quicksilver's Barnett Shale holdings, which account for nearly three-fourths of its production. The value of that deal could be announced soon, they said, but will allow a "significant debt pay-down."

Quicksilver's pullback in capital spending is evident in its Barnett Shale activities. It drilled 22 wells there in 2012, including only one in the fourth quarter, and expects to drill 10 or fewer in 2013. Its Barnett production declined 6 percent from the third quarter and is expected to drop 9 percent in 2013.

Quicksilver has a focus on Hood County but also has sizable operations around Lake Arlington and in the Alliance area.

Quicksilver averaged daily production of 342 million cubic feet equivalent, with 247 million cubic feet in the Barnett. Overall, the company expects production to decline 5 percent in 2013.

The fourth-quarter noncash impairments amounted to $1.2 billion. About two-thirds of that was due to a change in the way the company accounts for its oil and gas hedges, and reserve revisions based on commodity prices and well performance accounted for the rest. Quicksilver also wrote down the value of tax-related assets by $326 million.

Jim Fuquay, 817-390-7552

Twitter: @jimfuquay

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