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Quicksilver Resources Reports 2012 Third-Quarter Results

Quicksilver Resources Reports 2012 Third-Quarter Results 
FORT WORTH, TX -- (Marketwire) -- 11/06/12 --  Quicksilver Resources
Inc. (NYSE: KWK) today announced preliminary 2012 third-quarter
results.  
Third-quarter highlights: 


 
--  Completed an eight-well pad in the Horn River Basin in British
    Columbia; the company's wells in the Horn River Basin are estimated to
    be capable of producing in excess of 150 MMcfd
--  Signed agreement with SWEPI LP, a subsidiary of Royal Dutch Shell, to
    jointly develop approximately330,000 acresin the Sand Wash Basin in
    Colorado
--  Advanced West Texas Project -- completed Price Ranch #1 horizontal
    wellin Pecos County with an initial production rate of 300 Boed;
    currently completing Vande Ranch State 1H horizontal wellin Upton
    County
--  Entered into new multi-year hedges; majority of expected 2013 and 2014
    volumes hedged at a price in excess of $5 per Mcf
--  Secured C$39 million reduction in letter of credit obligations in Horn
    River Basin and deferred pipeline completion to mid-2015
--  Secured financial covenant flexibility in Combined Credit Agreements,
    providing time to manage the balance sheet
--  Advanced negotiations on two joint ventures

  
"Quicksilver has made very good progress on reducing capital
commitments, locking in solid price protection for the majority of
the company's gas production for the next couple of years, relaxing
debt covenants with our bank group, and attracting partners in our
key development areas," said Glenn Darden, Quicksilver's President
and CEO. "We anticipate significantly reducing company debt with the
proceeds from transactions we are currently working on." 
Financial Results 
Adjusted net loss for the third quarter, a non-GAAP financial
measure, was $8 million, or $0.04 per diluted share, compared to
adjusted net income of $6 million, or $0.03 per diluted share in the
2011 period. Including the impact of non-operational items, the net
loss for the third quarter was $652 million, or $3.83 per diluted
share, compared to net income of $29 million, or $0.17 per diluted
share, in the prior-year period. Third-quarter 2012 results were
impacted by a $547 million non-cash impairment of properties
primarily due to lower average natural gas and NGL prices compared to
the 12 months ended June 30, 2012, and a $284 million non-cash
valuation allowance of U.S. deferred tax assets related to reduced
likelihood of recoverability of future tax assets. Further details of
adjusted net income are included in the tables following this
earnings release. 
Production 
Production averaged 362 million cubic feet of natural gas equivalent
per day (MMcfed) during the third quarter, which is 23 MMcfed lower
than the bottom range of previous guidance. The variance from prior
guidance results from the company restricting production in the Horn
River Basin to match its contractual commitment in an existing
third-party treating facility. The company expected the third party
to commission a second treating facility, but the facility was
delayed to an expected commissioning near year-end 2012, and may be
further delayed into 2013. Accordingly, to mitigate the effects of
this delay, the company is securing alternative treating and
transportation arrangements on an interim and interruptible basis in
the existing third party treating facility that will allow Horn River
Basin production to be increased up to an additional 50 MMcfd
beginning in December 2012. 
Third-quarter 2012 production is down from 427 MMcfed in the
prior-year quarter, but is up from 359 MMcfed compared to the second
quarter of 2012. The decline from the prior-year quarter is primarily
due to a reduction in capital activity, the natural production
decline of existing wells, and the impact of completion activities in
the Barnett Shale. The increase from the second quarter of 2012 is
due to production growth from the Horn River Basin as the new pad was
produced at elevated levels during the flowback period.  
Revenue and Expenses 
Production revenue for the third quarter of 2012 was $158 million,
down 24% from the prior-year quarter and up 5% from the second
quarter of 2012. The decrease in production revenue from the
prior-year quarter was caused by the production declines described
earlier and lower realized prices for natural gas and NGLs. The
increase in production revenue from the second quarter of 2012 was
caused by higher realized prices for natural gas and slightly higher
production volumes. 
The average realized price for the third quarter was $4.73 per Mcfe,
which excludes approximately $18 million, or $0.54 per Mcfe, of cash
proceeds from certain previously restructured commodity derivative
settlements that are not currently recognized in production revenue
due to the impact of the hedge restructuring program from the first
quarter of 2012. 
Lease operating expense for the third quarter of 2012 was $22
million, or $0.66/Mcfe, compared to $28 million, or $0.70/Mcfe in the
prior-year quarter and $22 million, or $0.66/Mcfe in the second
quarter of 2012. The Barnett Shale experienced lower water hauling,
compression and gas lift expense compared to the 2011 quarter
resulting from cost containment initiatives and as certain higher
cost wells remained shut-in during the third quarter. Lease operating
expense in Canada decreased compared to the 2011 quarter due to a
decline in well and compressor repair and maintenance expense. Lease
operating expense is flat compared to the second quarter of 2012, but
is $0.02/Mcfe higher than the upper-end of previous guidance due to
restricted volume flow in the Horn River Basin. 
Debt 
At September 30, 2012, Quicksilver's total debt was approximately
$2.2 billion. The company has approximately $552 million utilized
under its Combined Credit Agreements as of that date. 
In September 2012, Quicksilver and NOVA Gas Transmission Ltd.
("NGTL"), a subsidiary of TransCanada Pipelines Limited, entered into
an agreement to delay the targeted in-service date of the Komie North
pipeline and related facilities from May 1, 2014 to August 1, 2015
and revise NGTL's spend profile and Quicksilver's obligations to
provide related financial assurances in the form of letters of
credit. As a direct result, NGTL released C$39 million of letters of
credit that were previously posted to the project. The next scheduled
date to supplement letters of credit is April 1, 2014. 
In August 2012, Quicksilver amended its Combined Credit Agreements,
and as part of that process, accelerated the fall redetermination.
Based on reserves at June 30, 2012, the redetermined global borrowing
base was set at $850 million, the interest coverage covenant was
adjusted downward to provide increased flexibility and other
limitations were introduced, including increased interest margins and
additional financial and other covenants. 
Operational Update  
Canada - Horn River Basin 
During the third quarter, the new eight-well drilling pad began
flowback activities, and each well is now capable of production. All
eight wells significantly exceeded initial production expectations
with individual flow rates between 23 MMcfd and 34 MMcfd at very high
flowing pressures. Based on the strong initial flow tests,
Quicksilver expects to see a significant improvement in the type
curves, most notably for the Klua primary pay sections. Five Muskwa
and three Klua wells were drilled on the pad. No further wells are
planned to be drilled in the basin for the remainder of 2012 due to
the productive
 capabilities of the eight-well pad. 
The company believes the results from these wells, the continuous
nature of the pay sections as shown in 3-D seismic and the pay
mapping from the six exploration wells drilled on the northern part
of Quicksilver's acreage are indicative of the continuity of the
formation throughout the company's 130,000 net acre position. 
United States - Barnett Shale 
Quicksilver drilled 3 gross (3 net) wells and connected 9 gross (8.1
net) wells to sales in the third quarter. At September 30, 2012,
Quicksilver had a remaining uncompleted well inventory of 23 gross
operated wells that have been drilled in the Barnett Shale but await
completion or connection to sales lines. 
United States - Sand Wash Basin 
In September, Quicksilver and SWEPI LP, a subsidiary of Royal Dutch
Shell, signed an Acquisition and Exploration Agreement to jointly
develop acreage in the Sand Wash Basin and to establish an Area of
Mutual Interest covering in excess of 850,000 acres in the basin.
SWEPI will pay Quicksilver an equalization payment for the excess
acreage to be contributed. Closing is expected in the fourth quarter
of 2012, subject to customary due diligence and other closing
conditions. 
In conjunction with the closing of the agreement with SWEPI, the
company plans to participate in the drilling and completion of up to
5 gross (2.5 net) wells during the fourth quarter of 2012.  
During the third quarter, the company drilled one well, completed one
well, and re-completed one well. The two completions are currently on
flowback and are being evaluated. 
Quicksilver currently holds approximately 210,000 net acres in the
Sand Wash Basin of Northwest Colorado, which the company believes are
situated in the oil window prospective of the Niobrara formation.
Upon closing of the Acquisition and Exploration Agreement with SWEPI,
Quicksilver will hold a 50% interest in approximately 330,000 net
acres in the basin. 
United States - West Texas 
In August, the Price Ranch #1 well in Pecos County was re-completed
with a 1,500-foot lateral in the Third Bone Springs formation. The
well produced at an initial rate of 300 Boed with 80% oil and 20%
high-BTU natural gas.  
The Vande Ranch State 1H well in Upton County was re-entered during
the third quarter and is currently being completed with a 2,500-foot
lateral into the Wolfcamp formation. 
Quicksilver holds approximately 155,000 net acres across the Delaware
and Midland basins of West Texas, of which the company believes
approximately 105,000 net acres are situated in the oil window of the
Wolfcamp and Bone Springs formations. 
Canada - Horseshoe Canyon 
Production from Horseshoe Canyon was 54 MMcfd during the third
quarter. The company does not expect to drill any additional wells in
Horseshoe Canyon during the remainder of 2012. 
Capital Program  
During the third quarter of 2012, the company incurred approximately
$68 million of capital expenditures, of which approximately $48
million was associated with drilling and completion activities, $2
million for midstream activities, $7 million for acreage purchases,
and $11 million for corporate and other purposes. For the nine months
ended September 30, 2012, total capital incurred was $359 million.  
Capital incurred is projected to be approximately $389 million for
full-year 2012, or $29 million greater than previous full-year
guidance, which is due to incremental spending for drilling and
completion activities and lease renewals in the Sand Wash Basin and
West Texas, and incremental capitalized overhead related to the
company's exploratory programs. 
Hedging 
In the third quarter, Quicksilver entered into new multi-year hedges.
As of November 5, 2012, the company has 267 MMcfed of hedges in place
for 2012 at a weighted average price of $6.02 per Mcfe, which covers
approximately 80% of expected total equivalent production for the
fourth quarter of 2012. The company's post-2012 natural gas swaps are
as follows: 200 MMcfd for 2013 at $5.10 per Mcf, 170 MMcfd for 2014
at $5.08 per Mcf, 150 MMcfd for 2015 at $5.23 per Mcf, and 40 MMcfd
for 2016-2021 at $4.48 per Mcf. 
Fourth Quarter Outlook 
Fourth-quarter average daily production volume is expected to be
330-340 MMcfe per day, resulting in full-year 2012 average production
volume at 350-365 MMcfe per day.  
For the fourth-quarter 2012, average unit expenses, on a Mcfe basis,
are expected as follows: 


 
--  Lease operating expense                      $0.70 - $0.75
--  Gathering, processing & transportation         1.22 - 1.26
--  Production and ad-valorem taxes                0.20 - 0.22
--  General and administrative                     0.50 - 0.53
--  Depletion, depreciation & accretion            1.10 - 1.14

 
This guidance does not account for potential incremental volumes from
the Horn River Basin if alternative treating and transportation
options are secured. 
Conference Call  
The company will host a conference call to discuss third-quarter
operating and financial results at 10:00 a.m. central time today. 
Quicksilver invites interested parties to listen to the call via the
company's website at www.qrinc.com or by calling 1-877-313-7932,
using the conference ID number 41140586, approximately 10 minutes
before the call. A digital replay of the conference call will be
available at 2:00 p.m. central time the same day, and will remain
available for 30 days. The replay can be dialed at 1-855-859-2056
using the conference ID number 41140586. The replay will also be
archived for 30 days on the company's website. 
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"). Our non-GAAP financial measure
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 major 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. 
Forward-Looking Statements
 Certain statements contained in this
press release and other materials we file with the SEC, or in other
written or oral statements made or to be made by us, other than
statements of historical fact, are "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements give our current expectations or forecasts
of future events. Words such as "may," "assume," "forecast,"
"position," "predict," "strategy," "expect," "intend," "plan,"
"estimate," "an
ticipate," "believe," "project," "budget,"
"potential," or "continue," and similar expressions are used to
identify forward-looking statements. They can be affected by
assumptions used or by known or unknown risks or uncertainties.
Consequently, no forward-looking statements can be guaranteed. Actual
results may vary materially. You are cautioned not to place undue
reliance on any forward-looking statements. You should also
understand that it is not possible to predict or identify all such
factors and should not consider the following list to be a complete
statement of all potential risks and uncertainties. Factors that
could cause our actual results to differ materially from the results
contemplated by such forward-looking statements include: changes in
general economic conditions; fluctuations in natural gas, NGL and oil
prices; failure or delays in achieving expected production from
exploration and development projects; uncertainties inherent in
estimates of natural gas, NGL and oil reserves and predicting natural
gas, NGL and oil reservoir performance; effects of hedging natural
gas, NGL and oil prices; fluctuations in the value of certain of our
assets and liabilities; competitive conditions in our industry;
actions taken or non-performance by third parties, including
suppliers, contractors, operators, processors, transporters,
customers and counterparties; changes in the availability and cost of
capital; delays in obtaining oilfield equipment and increases in
drilling and other service costs; delays in construction of
transportation pipelines and gathering, processing and treating
facilities; operating hazards, natural disasters, weather-related
delays, casualty losses and other matters beyond our control; the
effects of existing and future laws and governmental regulations,
including environmental and climate change requirements; failure or
delay in completing strategic transactions; the effects of existing
or future litigation; failure to or delays in completing
Quicksilver's proposed initial public offering of common units
representing limited partner interests in a master limited
partnership holding portions of our Barnett Shale assets; and
additional factors described elsewhere in this press release. 
This list of factors is not exhaustive, and new factors may emerge or
changes to these factors may occur that would impact our business.
Additional information regarding these and other factors may be
contained in our filings with the SEC, especially on Forms 10-K, 10-Q
and 8-K. All such risk factors are difficult to predict, and are
subject to material uncertainties that may affect actual results and
may be beyond our control. The forward-looking statements included in
this press release are made only as of the date of this press
release, and we undertake no obligation to update any of these
forward-looking statements to reflect subsequent events or
circumstances except to the extent required by applicable law. 
All forward-looking statements are expressly qualified in their
entirety by the foregoing cautionary statements. 


 
                                                                            
                         QUICKSILVER RESOURCES INC.                         
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME                 
            In thousands, except for per share data - Unaudited             
                                                                            
                           For the Three Months       For the Nine Months   
                                   Ended                     Ended          
                               September 30,             September 30,      
                         ------------------------  ------------------------ 
                             2012         2011         2012         2011    
                         -----------  -----------  -----------  ----------- 
Revenue:                                                                    
  Production             $   157,699  $   208,064  $   480,021  $   606,070 
  Sales of purchased                                                        
   natural gas                21,313       20,130       42,842       60,116 
  Other                       (1,310)      31,699      (31,130)      54,340 
                         -----------  -----------  -----------  ----------- 
    Total revenue            177,702      259,893      491,733      720,526 
                         -----------  -----------  -----------  ----------- 
                                                                            
Operating expense:                                                          
  Lease operating             22,115       27,673       72,405       73,366 
  Gathering, processing                                                     
   and transportation         41,338       51,113      127,040      142,201 
  Production and ad                                                         
   valorem taxes               6,881        7,757       20,833       23,844 
  Costs of purchased                                                        
   natural gas                21,254       19,954       42,528       59,254 
  Depletion,                                                                
   depreciation and                                                         
   accretion                  43,209       57,686      149,590      164,861 
  Impairment                 546,835            -    1,601,502       49,063 
  General and                                                               
   administrative             17,335       27,584       54,836       61,745 
  Other operating                670          145          820          328 
                         -----------  -----------  -----------  ----------- 
    Total expense            699,637      191,912    2,069,554      574,662 
Crestwood earn-out                 -            -       41,097            - 
                         -----------  -----------  -----------  ----------- 
Operating income (loss)     (521,935)      67,981   (1,536,724)     145,864 
Loss from earnings of                                                       
 BBEP                              -       14,370            -      (32,721)
Other income - net              (395)      11,142         (237)     135,441 
Fortune Creek accretion       (4,978)           -      (14,549)           - 
Interest expense             (42,102)     (48,393)    (122,348)    (142,123)
                         -----------  -----------  -----------  ----------- 
Income (loss) before                                                        
 income taxes               (569,410)      45,100   (1,673,858)     106,461 
Income tax (expense)                                                        
 benefit                     (82,352)     (16,414)     289,631      (39,946)
                         -----------  -----------  -----------  ----------- 
Net income (loss)        $  (651,762) $    28,686  $(1,384,227) $    66,515 
                         ===========  ===========  ===========  =========== 
                                                                            
Earnings (loss) per                                                         
 common share - basic    $     (3.83) $      0.17  $     (8.14) $      0.39 
                                                                            
Earnings (loss) per                                                         
 common share - diluted  $     (3.83) $      0.17  $     (8.14) $      0.39 
                                                                            
Basic weighted average                                                      
 shares outstanding          170,179      169,031      170,054      168,963 
                                                                            
Diluted weighted average                                                    
 shares outstanding          170,179      169,736     
 170,054      169,768 
                                                                            
                                                                            
                         QUICKSILVER RESOURCES INC.                         
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                In thousands, except share data - Unaudited                 
                                                                            
                                               September 30,   December 31, 
                                                    2012           2011     
                                               -------------  ------------- 
                                                                            
                                   ASSETS                                   
Current assets                                                              
  Cash                                         $       7,436  $      13,146 
  Accounts receivable - net of allowance for                                
   doubtful accounts                                  67,951         95,282 
  Derivative assets at fair value                    126,075        162,845 
  Other current assets                                41,575         29,154 
                                               -------------  ------------- 
    Total current assets                             243,037        300,427 
                                                                            
Property, plant and equipment - net                                         
  Oil and gas properties, full cost method                                  
   (including unevaluated costs of $439,767                                 
   and $433,341, respectively)                     1,846,028      3,226,476 
  Other property and equipment                       248,021        234,043 
                                               -------------  ------------- 
Property, plant and equipment - net                2,094,049      3,460,519 
Derivative assets at fair value                      109,313        183,982 
Deferred income taxes                                      -              - 
Other assets                                          43,845         50,534 
                                               -------------  ------------- 
                                               $   2,490,244  $   3,995,462 
                                               =============  ============= 
                                                                            
                           LIABILITIES AND EQUITY                           
Current liabilities                                                         
  Current portion of long-term debt            $           -  $          18 
  Accounts payable                                    48,143        142,672 
  Accrued liabilities                                123,661        142,193 
  Derivative liabilities at fair value                     -          4,028 
  Current deferred tax liability                       3,243         45,262 
                                               -------------  ------------- 
    Total current liabilities                        175,047        334,173 
                                               -------------  ------------- 
                                                                            
Long-term debt                                     2,165,384      1,903,431 
                                                                            
Partnership Liability                                135,446        122,913 
Asset retirement obligations                          97,771         85,568 
Derivative Liabilities at fair value                  42,538                
Other liabilities                                     19,242         28,461 
Deferred income taxes                                  1,518        258,997 
Commitments and contingencies                                               
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; 178,770,278 and                                       
   176,980,483 shares issued, respectively             1,788          1,770 
  Paid in capital in excess of par value             755,080        737,015 
  Treasury stock of 5,816,293 and 5,379,702                                 
   shares, respectively                              (49,161)       (46,351)
  Accumulated other comprehensive income             175,191        214,858 
  Retained earnings                               (1,029,600)       354,627 
                                               -------------  ------------- 
    Total stockholders' equity                      (146,702)     1,261,919 
                                               -------------  ------------- 
                                               $   2,490,244  $   3,995,462 
                                               =============  ============= 
                                                                            
                                                                            
                         QUICKSILVER RESOURCES INC.                         
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS               
                          In thousands - Unaudited                          
                                                                            
                                                      For the Nine Months   
                                                      Ended September 30,   
                                                   ------------------------ 
                                                       2012         2011    
                                                   -----------  ----------- 
Operating activities:                                                       
  Net income (loss)                                $(1,384,227) $    66,515 
  Adjustments to reconcile net income (loss) to                             
   net cash provided by operating activities:                               
    Depletion, depreciation and accretion              149,590      164,861 
    Impairment expense                               1,601,502       49,063 
    Crestwood earn-out                                 (41,097)           - 
    Deferred income tax expense (benefit)             (285,204)      50,960 
    Non-cash (gain) loss from hedging and                                   
     derivative activities                              82,252      (50,550)
    Stock-based compensation                            16,983       15,475 
    Non-cash interest expense                            8,060       13,109 
    Fortune Creek accretion                             14,549            - 
    Gain on disposition of BBEP units                        -     (133,248)
    Loss from BBEP in excess of cash distributions           -       49,065 
    Other                                                  495         (897)
  Changes in assets and liabilities:                                        
    Accounts receivable                                 27,259        2,101 
    Prepaid expenses and other assets                   (4,503)     (20,791)
    Accounts payable                                   (24,329)     (29,430)
    Accrued and other liabilities                      (19,954)      (1,567)
                                                   -----------  ----------- 
Net cash provided by operating activities              141,376      174,666 
                                                   -----------  ----------- 
                                                        
                    
Investing activities:                                                       
  Purchases of property, plant and equipment          (437,172)    (550,954)
  Proceeds from Crestwood earn-out                      41,097            - 
  Proceeds from sale of BBEP units                           -      145,799 
  Proceeds from sales of property and equipment          3,843        3,719 
                                                   -----------  ----------- 
Net cash used for investing activities                (392,232)    (401,436)
                                                   -----------  ----------- 
                                                                            
Financing activities:                                                       
  Issuance of debt                                     367,646      648,819 
  Repayments of debt                                  (111,115)    (455,886)
  Debt issuance costs paid                              (3,048)     (10,276)
  Distribution of Fortune Creek Partnership funds       (6,520)           - 
  Proceeds from exercise of stock options                   11          733 
  Excess tax deductions on stock compensation            1,089            - 
  Purchase of treasury stock                            (2,810)      (4,841)
                                                   -----------  ----------- 
Net cash provided by financing activities              245,253      178,549 
                                                   -----------  ----------- 
                                                                            
Effect of exchange rate changes in cash                   (107)        (114)
                                                   -----------  ----------- 
                                                                            
Net increase (decrease) in cash                         (5,710)     (48,335)
                                                                            
Cash at beginning of period                             13,146       54,937 
                                                   -----------  ----------- 
                                                                            
Cash at end of period                              $     7,436  $     6,602 
                                                   ===========  =========== 
                                                                            
                                                                            
                         QUICKSILVER RESOURCES INC.                         
                    Unaudited Selected Operating Results                    
                                                                            
                                  Three Months Ended     Nine Months Ended  
                                       Sept 30,              Sept 30,       
                                 --------------------  -------------------- 
                                    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Average Daily Production:                                                   
Natural Gas (MMcfd)                  291.3      351.6      293.2      334.6 
NGL (Bbld)                          11,073     11,945     11,321     12,234 
Oil (Bbld)                             761        696        804        745 
  Total (MMcfed)                     362.4      427.4      366.0      412.4 
                                                                            
Average Realized Prices,                                                    
 including hedging:                                                         
Natural Gas (per Mcf)            $    4.23  $    4.96  $    4.19  $    5.02 
NGL (per Bbl)                        37.75      38.68      40.06      38.67 
Oil (per Bbl)                        83.88      82.58      88.24      89.05 
  Total (Mcfe)                        4.73       5.29       4.79       5.38 
                                                                            
Expense per Mcfe:                                                           
Lease operating expense:                                                    
  Cash expense                   $    0.65  $    0.69  $    0.71  $    0.64 
  Equity compensation                 0.01       0.01       0.01       0.01 
                                 =========  =========  =========  ========= 
Total lease operating expense:   $    0.66  $    0.70  $    0.72  $    0.65 
                                                                            
Gathering, processing and                                                   
 transportation expense          $    1.24  $    1.30  $    1.27  $    1.26 
                                                                            
Production and ad valorem taxes  $    0.21  $    0.20  $    0.20  $    0.21 
                                                                            
Depletion, depreciation and                                                 
 accretion                       $    1.30  $    1.47  $    1.49  $    1.46 
                                                                            
General and administrative                                                  
 expense:                                                                   
  Cash expense                   $    0.27  $    0.28  $    0.33  $    0.30 
  Audit and accounting fees           0.03       0.01       0.05       0.01 
  Strategic transaction costs         0.03       0.08       0.01       0.04 
  Litigation settlement                  -       0.22          -       0.08 
  Equity compensation                 0.20       0.11       0.16       0.12 
                                 ---------  ---------  ---------  --------- 
Total general and administrative                                            
 expense                         $    0.53  $    0.70  $    0.55  $    0.55 
                                                                            
Interest expense:                                                           
  Cash expense on debt                                                      
   outstanding                   $    1.32  $    1.09  $    1.28  $    1.16 
  Fees paid on letters of credit                                            
   outstanding                           -       0.01       0.00       0.01 
  Premium on senior notes                                                   
   repurchased                           -       0.05          -       0.02 
  Non-cash interest                   0.14       0.13       0.08       0.12 
  Capitalized interest               (0.20)     (0.05)     (0.14)     (0.05)
                                 ---------  ---------  ---------  --------- 
Total interest expense           $    1.26  $    1.23  $    1.22  $    1.26 
                                                                            
                                                                            
                         QUICKSILVER RESOURCES INC.                         
    Production, on a million cubic feet of natural gas equivalent (MMcfe)   
                      per day basis, by operating area                      
                                                                            
                                      Three Months Ended  Nine Months Ended 
                                        September 30,       September 30,   
                                     ------------------- -------------------
                                        2012      2011      2012      2011  
                                     --------- --------- --------- ---------
                                                                            
Barnett Shale                            261.5     350.9     284.1     336.1
Other U.S.                                 3.4       3.7  
     3.6       3.3
                                     --------- --------- --------- ---------
Total U.S.                               264.9     354.6     287.7     339.4
Horseshoe Canyon                          53.9      57.6      55.0      58.5
Horn River                                43.6      15.2      23.3      14.5
                                     --------- --------- --------- ---------
Total Canada                              97.5      72.8      78.3      73.0
                                     --------- --------- --------- ---------
  Total Company                          362.4     427.4     366.0     412.4
                                     ========= ========= ========= =========
                                                                            
                                                                            
                         QUICKSILVER RESOURCES INC.                         
            RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME             
              In thousands, except per share data - Unaudited               
                                                                            
                                       For the Three Months Ended September 
                                                     30, 2012               
                                                                  Adjusted  
                                      As Reported  Adjustments   Net Income 
                                      -----------  -----------  ----------- 
Revenue:                                                                    
  Production                          $   157,699  $         -  $   157,699 
  Sales of purchased natural gas           21,313            -       21,313 
  Other                                    (1,310)       2,831        1,521 
                                      -----------  -----------  ----------- 
    Total revenue                         177,702        2,831      180,533 
                                      -----------  -----------  ----------- 
                                                                            
Operating expense:                                                          
  Lease operating                          22,115            -       22,115 
  Gathering, processing and                                                 
   transportation                          41,338            -       41,338 
  Production and ad valorem taxes           6,881            -        6,881 
  Costs of purchased natural gas           21,254            -       21,254 
  Depletion, depreciation and                                               
   accretion                               43,209            -       43,209 
  Impairment                              546,835     (546,835)           - 
  General and administrative               17,335       (4,223)      13,112 
  Other operating                             670            -          670 
                                      -----------  -----------  ----------- 
    Total expense                         699,637     (551,058)     148,579 
Crestwood earn-out                              -            -            - 
                                      -----------  -----------  ----------- 
Operating income (loss)                  (521,935)     553,889       31,954 
Income from earnings of BBEP                    -            -            - 
Other income - net                           (395)       1,130          735 
Fortune Creek accretion                    (4,978)           -       (4,978)
Interest expense                          (42,102)       2,789      (39,313)
                                      -----------  -----------  ----------- 
Income before income taxes               (569,410)     557,808      (11,602)
Income tax (expense) benefit              (82,352)      86,413        4,061 
                                      -----------  -----------  ----------- 
Net income (loss)                     $  (651,762) $   644,221  $    (7,541)
                                      ===========  ===========  =========== 
                                                                            
                                                                            
Earnings (loss) per common share -                                          
 diluted                              $     (3.83)              $     (0.04)
Diluted weighted average shares                                             
 outstanding                              170,179                   170,179 
                                                                            
                                                                            
                         QUICKSILVER RESOURCES INC.                         
            RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME             
              In thousands, except per share data - Unaudited               
                                                                            
                                       For the Three Months Ended September 
                                                     30, 2011               
                                                                  Adjusted  
                                      As Reported  Adjustments   Net Income 
                                      -----------  -----------  ----------- 
Revenue:                                                                    
  Production                          $   208,064  $         -  $   208,064 
  Sales of purchased natural gas           20,130            -       20,130 
  Other                                    31,699      (29,737)       1,962 
                                      -----------  -----------  ----------- 
    Total revenue                         259,893      (29,737)     230,156 
                                      -----------  -----------  ----------- 
                                                                            
Operating expense:                                                          
  Lease operating                          27,673            -       27,673 
  Gathering, processing and                                                 
   transportation                          51,113            -       51,113 
  Production and ad valorem taxes           7,757            -        7,757 
  Costs of purchased natural gas           19,954            -       19,954 
  Depletion, depreciation and                                               
   accretion                               57,686            -       57,686 
  Impairment                                    -            -            - 
  General and administrative               27,584      (11,555)      16,029 
  Other operating                             145            -          145 
                                      -----------  -----------  ----------- 
    Total expense                         191,912      (11,555)     180,357 
Crestwood earn-out                              -            -            - 
                                      -----------  -----------  ----------- 
Operating income (loss)                    67,981      (18,182)      49,799 
Income (loss) from earnings of BBEP        14,370      (11,542)       2,828 
Other income (loss) - net                  11,142       (9,496)       1,646 
Interest expense                          (48,393)       3,304      (45,089)
                                      -----------  -----------  ----------- 
Income before income taxes                 45,100      (35,916)       9,184 
Income tax expense                        (16,414)      12,969       (3,445)
                                      -----------  -----------  ----------- 
Net income (loss)                     $    28,686  $   (22,947) $     5,739 
                                      ===========  ===========  =========== 
                                                            
                
                                                                            
Earnings (loss) per common share -                                          
 diluted                              $      0.17               $      0.03 
Diluted weighted average shares                                             
 outstanding                              169,736                   169,736 
                                                                            
                                                                            
                         QUICKSILVER RESOURCES INC.                         
            RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME             
              In thousands, except per share data - Unaudited               
                                                                            
                                       For the Nine Months Ended September  
                                                     30, 2012               
                                                                  Adjusted  
                                      As Reported  Adjustments   Net Income 
                                      -----------  -----------  ----------- 
Revenue:                                                                    
  Production                          $   480,021  $         -  $   480,021 
  Sales of purchased natural gas           42,842            -       42,842 
  Other                                   (31,130)      34,157        3,027 
                                      -----------  -----------  ----------- 
    Total revenue                         491,733       34,157      525,890 
                                      -----------  -----------  ----------- 
                                                                            
Operating expense:                                                          
  Lease operating                          72,405            -       72,405 
  Gathering, processing and                                                 
   transportation                         127,040            -      127,040 
  Production and ad valorem taxes          20,833            -       20,833 
  Costs of purchased natural gas           42,528            -       42,528 
  Depletion, depreciation and                                               
   accretion                              149,590            -      149,590 
  Impairment                            1,601,502   (1,601,502)           - 
  General and administrative               54,836       (7,714)      47,122 
  Other operating                             820            -          820 
                                      -----------  -----------  ----------- 
    Total expense                       2,069,554   (1,609,216)     460,338 
Crestwood earn-out                         41,097      (41,097)           - 
                                      -----------  -----------  ----------- 
Operating income (loss)                (1,536,724)   1,602,276       65,522 
Income from earnings of BBEP                    -            -            - 
Other income - net                           (237)       1,130          893 
Fortune Creek accretion                   (14,549)           -      (14,549)
Interest expense                         (122,348)       2,789     (119,559)
                                      -----------  -----------  ----------- 
Income before income taxes             (1,673,858)   1,606,195      (67,663)
Income tax (expense) benefit              289,631     (265,949)      23,682 
                                      -----------  -----------  ----------- 
Net income (loss)                     $(1,384,227) $ 1,340,246  $   (43,981)
                                      ===========  ===========  =========== 
                                                                            
                                                                            
Earnings (loss) per common share -                                          
 diluted                              $     (8.14)              $     (0.26)
Diluted weighted average shares                                             
 outstanding                              170,054                   170,054 
                                                                            
                                                                            
                         QUICKSILVER RESOURCES INC.                         
            RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME             
              In thousands, except per share data - Unaudited               
                                                                            
                                       For the Nine Months Ended September  
                                                     30, 2011               
                                                                  Adjusted  
                                      As Reported  Adjustments   Net Income 
                                      -----------  -----------  ----------- 
Revenue:                                                                    
  Production                          $   606,070  $         -  $   606,070 
  Sales of purchased natural gas           60,116            -       60,116 
  Other                                    54,340      (48,852)       5,488 
                                      -----------  -----------  ----------- 
    Total revenue                         720,526      (48,852)     671,674 
                                      -----------  -----------  ----------- 
                                                                            
Operating expense:                                                          
  Lease operating                          73,366            -       73,366 
  Gathering, processing and                                                 
   transportation                         142,201            -      142,201 
  Production and ad valorem taxes          23,844            -       23,844 
  Costs of purchased natural gas           59,254            -       59,254 
  Depletion, depreciation and                                               
   accretion                              164,861            -      164,861 
  Impairment                               49,063      (49,063)           - 
  General and administrative               61,745      (13,032)      48,713 
  Other operating                             328            -          328 
                                      -----------  -----------  ----------- 
    Total expense                         574,662      (62,095)     512,567 
                                      -----------  -----------  ----------- 
Operating income                          145,864       13,243      159,107 
Income (loss) from earnings of BBEP       (32,721)      42,553        9,832 
Other income (loss) - net                 135,441     (133,248)       2,193 
Interest expense                         (142,123)       3,960     (138,163)
                                      -----------  -----------  ----------- 
Income before income taxes                106,461      (73,492)      32,969 
Income tax expense                        (39,946)      27,576      (12,370)
                                      -----------  -----------  ----------- 
Net income (loss)                     $    66,515  $   (45,916) $    20,599 
                                      ===========  ===========  =========== 
                                                                            
                                                                            
Earnings per common share - diluted   $      0.39               $      0.12 
Diluted weighted average shares                                             
 outstanding                              169,768                   169,768 

 
KWK 12-19 
Investor Contact:
David Erdman
(817) 665-4023 
 
 
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