Fort Worth-based Quicksilver Resources joined other producers in taking a big non-cash impairment in the fourth quarter, this on for $1.2 billion that it said was substantially due to a change in hedge accounting. Reserve revisions based on price and performance accounted for just over a third of the charge, which gave the company a $1.1 billion net loss for the quarter. The company also wrote down the value of tax-related assets by $326 million. Not counting the adjustments, Quicksilver said it had a $2 million loss, or a penny a share, for the quarter on revenue of $179.1 million. Financial analysts' consensus estimate was for adjusted net income of one cent on $169 million in revenue. The company's shares were up more than 4 percent in early trading.
Quicksilver averaged daily production of 342 million cubic feet equivalent, with 247 MMcf in the Barnett Shale. Barnett Shale production was down 6 percent from the third quarter "due to a reduction in capital activity." It drilled just 22 gross wells in the field in 2012, including only one in the fourth quarter, and it won't be completed until the year's second half. As of Dec. 31 it had 25 gross operated wells uncompleted or awaiting connection to sales lines.
As previously reported, it said it is "engaged in confidential negotiations with a potential buyer to sell a non-operated minority working interest" in the Barnett.
The company said that in mid-December it started ramping up production in Canada's Horn River Basin to 100 MMcf after it arranged alternative gas treating and transportation services when a planned treating facility by a third party was delayed.
For 2013, Quicksilver said it plans to spend $120 million, less than a third of its 2012 capital budget, mostly on lower spending in the Horn River but also elsewhere. It expects production to decline 5 percent as a result in 2013 from 2012.
-- Jim Fuquay