Barnett Shale

Quicksilver Resources independent director named chairman

W. Yandell Rogers, an independent director on the Quicksilver Resources board since March 1999, was elected chairman at the Fort Worth-based producers board meeting Wednesday. Rogers is CEO of Priest River Ltd., described by the company as a private holding company. He replaces Thomas "Toby" Darden, 59, who remains on the board as chairman emeritus but will retire Dec. 31, the company said today. Quicksilver said Darden "will continue as an employee of the company through the end of the year, focusing on strategic transactions including the pursuit of a joint venture in the Horn River Basin in British Columbia," and "will continue to advise the company on the Horn River Basin development and other projects." 

"We deeply appreciate Toby's leadership and his many valuable contributions to the growth of Quicksilver," Rogers said in a prepared release. "We are fortunate that we will benefit from his continued counsel as a director and a consultant." In the same release, Darden said: "It has been my pleasure to serve with so many outstanding and talented employees from Quicksilver and affiliated companies over the past 38 years. Together we have produced billions of dollars of revenues and developed trillions of cubic feet of natural gas reserves. I look forward to continuing as an active director on the Board and in my advisory role as the company moves forward in our joint venture efforts in the Horn River Basin." Quicksilver's CEO is Glenn Darden, 57. He has held the post since December 1999.

-- Jim Fuquay

 

 

Investors cheer Quicksilver's Tokyo Gas deal

Investors apparently are happy with Quicksilver Resources' $485 million deal announced Friday to sell 25 percent of its Barnett Shale assets to Tokyo Gas. The Fort Worth-based producer's shares (ticker: KWK) are up about 20 percent this morning on extremely heavy trading. (U.S. stock markets were closed for Good Friday, so Monday was the first trading day following the deal's disclosure.)

Quicksilver gets about two-thirds of its production from the Barnett. The $485 million gives TG a quarter of all Quicksilver's reserves in the field, and going forward Tokyo Gas and Quicksilver will split development costs on a 25/75 basis. Quicksilver estimated proved reserves in the field at 1.2 trillion cubic feet under Securities and Exchange Commission guidelines on its fourth-quarter report, but that used 2012 average futures price of $2.76 per 1,000 cubic feet.

-- Jim Fuquay

Quicksilver sells 25 percent of Barnett operations to Tokyo Gas

Quicksilver Resources and Tokyo Gas on Friday announced that the Japanese utility will buy 25 percent of Quicksilver's Barnett Shale operations for $485 million. The deal comes more than a year after the Fort Worth-based producer hosted a tour of the Barnett Shale for a group of Japanese energy executives. Japan is looking for new sources of natural gas in the wake of its decision to shut down most of its nuclear reactions in the wake of the tsunami-related accident at three Fukushima reactors. For more, see today's Star-Telegram report here.

-- Jim Fuquay

 

Quicksilver names private equity advisor to board

Fort Worth-based Quicksilver Resources, which has been working to find a partner on its Barnett Shale and Horn River Basin properties, said Thursday it named Michael McGovern of Cadent Energy Partners to its board effective Wednesday. McGovern, 61, is described in Quicksilver's release as "Executive
Advisor to Cadent Energy Partners, LLC, a private equity firm investing in the energy industry." No other relationship between the two organizations is disclosed in the announcement.

In the prepared release, Quicksilver Chairman Toby Darden said McGovern's "experience across multiple disciplines in the energy sector will add depth to our team." The release says McGovern has been involved in the energy industry since 1975 and served as CEO of several public companies, including Pioneer Cos., Coho Energy, Edisto Resources, Convest Energy, Ironstone Group and American National Petroleum Co.

-- Jim Fuquay

Quicksilver to restate 2012 earnings

Quicksilver Resources said late Friday in a government filing that it will restate its earnings for the first, second and third quarters of 2012 "due to non-cash related errors to our derivative accounting treatment." The Fort Worth-based producer said it expects to file amended statements next week. Quicksilver said it determined that it was not eligible for a particular form of accounting for its hedges, contrary to its previous judgments.

"In total, the estimated aggregate impact to 2012 income (loss) before income taxes was to improve that amount by $199 million and to reduce the income tax benefit by $66 million, which yield an overall increase to net income of $133 million," Quicksilver said. "None of these matters impact the previously reported totals for cash flows from operating activities, investing activities or financing activities. None of the matters impact compliance with the financial covenants associated with our senior secured credit facility," it said.

-- Jim Fuquay

Quicksilver loses $1.1 billion on big impairment charge

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

Quicksilver closes Colorado deal, negotiating on sale of minority Barnett stake

Fort Worth-based Quicksilver Resources on Thursday said it closed its previously announced agreement with SWEPI LP, a subsidiary of Royal Dutch Shell, for a 50/50 interest in about 320,000 net acres in the Sand Wash Basin in northwest Colorado. The deal also establishes an Area of Mutual Interest covering more than 850,000 acres in the basin. Quicksilver also received an undisclosed payment for chipping in more acreage than SWEPI. It said those proceeds "will be used to reduce the company's credit facility borrowings and to fund future project development."

Quicksilver also said it "is engaged in confidential negotiations with a potential buyer to sell a non-operated minority working interest in its Barnett Shale" holdings. Spokesman David Erdman said that means the company wants to sell a minority stake in all its Barnett Shale in which is 100 percent owner. That's everything except its Alliance area holdings, in which Italian oil giant Eni has a 27.5 percent stake acquired in 2009, Erdman said.

In November CEO Glenn Darden told financial analysts the company was looking for help developing Barnett assets, and the preferred option was "selling a minority stake and bringing in a partner who helps us over time." Speaking during an earnings call, Darden said  the company expected the deal to be worth "a significant amount," and the proceeds would be used to reduce debt.

Finally, the company said it continues to negotiate "a potential joint venture" in the Canada's Horn River Basin aimed at boosting downstream sales. "The company plans minimal capital spending in teh basin until this  joint venture is executed," it said. Quicksilver has struggled to deal with low natural gas prices in the face of its $2.17 billion in long-term debt as of Sept. 30

-- Jim Fuquay

Impairments hit third-quarter earnings

Natural gas producers saw their third-quarter earnings statements generally turn into loss reports, often on account of taking "impairments" -- write-offs in the value of holdings in the wake of low product prices. The Star-Telegram has an explainer on the accounting of impairments here.

-- Jim Fuquay

Quicksilver looking to sell minority stake in Barnett Shale

Fort Worth-based Quicksilver Resources told financial analysts this morning that it is nearing completion either an outright sale of a minority stake in its Barnett Shale holdings to a joint venture partner or moving assets into a master limited partnership. The preferred outcome is "selling a minority stake and bringing in a partner who helps us over time," said CEO Glenn Darden. While not discussing dollar amounts that it might generate with the move, said "it's a significant amount." He emphasized that with the proceeds "we are going to pay down debt," which stood at nearly $2.2 billion as of Sept. 30. "We could sell a working interest," he told analysts. The company also mentioned an asset disposition in the Barnett Shale during the company's second-quarter conference call, but Darden said he expects a resolution "fairly shortly."

-- Jim Fuquay

 

Quicksilver posts big loss swelled by write-off

Quicksilver Resources is the latest producer to report a big loss in the third quarter after taking an impairment on the value of properties in light of low natural gas prices. The Fort Worth-based independent said it lost $651.8 million in the quarter, or $3.83 a share, after a $547 million write-off. After excluding all one-time charges, Quicksilver said it lost $8 million, or 4 cents a share, on revenue of $177.7 million. Financial analysts' consensus estimate was for an adjusted loss of 1 cent a share, and the company's shares were down more than 10 percent in early trading. The company finished the quarter with $2.17 billion in long-term debt.

-- Jim Fuquay