Quicksilver Gas Services Reports First-Quarter 2010 Results
FORT WORTH, TX -- (Marketwire) -- 05/10/10 -- Quicksilver Gas Services LP (NYSE: KGS)
today reported net income for the first quarter of 2010 of $6.2 million and
earnings before interest, income taxes, depreciation and accretion
('EBITDA'), a non-GAAP measure, of $14.3 million. Comparable first-quarter
2009 net income was $9.4 million and EBITDA was $16.8 million.
The company's total gathered volumes for the 2010 first quarter averaged
286.6 million cubic feet (MMcf) per day, an increase of 3% from the
prior-year period. Continued development of the Alliance and Lake
Arlington properties is expected to result in average gathered volumes for
Quicksilver Gas Services increasing to a range of approximately 340 MMcf to
350 MMcf per day for all of 2010. In January, the company purchased the
Alliance midstream assets from Quicksilver Resources Inc. (NYSE: KWK).
'Low natural gas prices have contributed to an overall reduction in
activity in the Fort Worth Basin,' said Toby Darden, Quicksilver Gas
Services president and chief executive officer. 'However, we are seeing
continued activity around our Lake Arlington system and our newly acquired
Alliance system, and are seeing increased interest by third-party producers
in bringing additional volumes to those systems.'
For the first quarter of 2010, the company incurred approximately $24
million of capital costs excluding acquisitions but including $1.7 million
of maintenance capital. Expenditures during the quarter included the
connection of approximately four miles of gathering lines and 21 new wells
to the gathering system.
At March 31, 2010, the company had $226 million drawn on its $320 million
credit facility.
On April 19, 2010, the company announced a cash distribution for the 2010
first quarter of $.39 per common unit. For the three months ended March
31, 2010, distributable cash flow, a non-GAAP financial measure, totaled
$11.4 million.
Conference Call
Quicksilver Gas Services will host a conference call for investors and
analysts at 10:00 a.m. eastern time today to discuss the first-quarter 2010
operating and financial results and its outlook for the future. The
company invites interested parties to listen to the call via the company's
website at www.kgslp.com or by calling 1-877-313-7932, using the conference
ID number 44422035, approximately 10 minutes prior to the call. A digital
replay of the conference call will be available at 3:00 p.m. eastern time
today and will remain available for 30 days. The replay can be accessed at
1-800-642-1687 using the conference ID number 44422035. The replay will
also be archived for 30 days on the company's website.
Use of Non-GAAP Financial Measures
This news release and the accompanying schedules include the non-generally
accepted accounting principles ('non-GAAP') financial measures of EBITDA,
adjusted gross margin and distributable cash flow. The accompanying
schedules on page 7 of this news release provide reconciliations of these
non-GAAP financial measures to their most directly comparable financial
measures calculated and presented in accordance with accounting principles
generally accepted in the United States of America ('GAAP'). Our non-GAAP
financial measures should not be considered as alternatives to GAAP
measures such as net income or operating income or any other GAAP measure
of liquidity or financial performance.
About Quicksilver Gas Services
Fort Worth, Texas-based Quicksilver Gas Services is a growth-oriented
limited partnership in the business of gathering and processing natural gas
produced from the Barnett Shale geologic formation in the Fort Worth Basin
of north Texas. The company began operation in 2004 to provide these
services to Quicksilver Resources Inc., which owns our general partner.
For more information about Quicksilver Gas Services, visit www.kgslp.com.
Forward-Looking Statements
The statements in this news release regarding future events, occurrences,
circumstances, activities, performance, outcomes and results are
forward-looking statements. Although these statements reflect the current
views, assumptions and expectations of Quicksilver Gas Services LP's
management, the matters addressed herein are subject to numerous risks and
uncertainties, which could cause actual activities, performance, outcomes
and results to differ materially from those indicated. Factors that could
result in such differences or otherwise materially affect Quicksilver Gas
Services LP's financial condition, results of operations and cash flows
include: changes in general economic conditions; fluctuations in natural
gas prices; failure or delays in Quicksilver Resources Inc. and third
parties achieving expected production from natural gas projects;
competitive conditions in our industry; actions taken or non-performance by
third parties, including suppliers, contractors, operators, processors,
transporters and customers; fluctuations in the value of certain of our
assets and liabilities; changes in the availability and cost of capital;
operating hazards, natural disasters, weather-related delays, casualty
losses and other matters beyond our control; construction costs or capital
expenditures exceeding estimated or budgeted amounts; the effects of
existing and future laws and governmental regulations, including
environmental and climate change requirements; and the effects of existing
and future litigation; as well as other factors disclosed in Quicksilver
Gas Services LP's filings with the Securities and Exchange Commission. The
forward-looking statements included in this news release are made only as
of the date of this news 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.
KGS 10-06
QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per unit data - Unaudited
Three Months Ended
March 31,
-----------------------
2010 2009
----------- ----------
Revenue
Gathering revenue - Quicksilver $ 16,389 $ 13,528
Gathering revenue 1,115 771
Processing revenue - Quicksilver 6,479 8,702
Processing revenue 756 738
Other revenue - Quicksilver - 225
----------- ----------
Total revenue 24,739 23,964
----------- ----------
Expenses
Operations and maintenance 8,013 5,221
General and administrative 2,441 1,992
Depreciation and accretion 5,365 4,524
----------- ----------
Total expenses 15,819 11,737
----------- ----------
Operating income 8,920 12,227
Interest expense 2,678 2,235
----------- ----------
Income from continuing operations before income
taxes 6,242 9,992
Income tax provision (benefit) 53 (37)
----------- ----------
Net income from continuing operations 6,189 10,029
Loss from discontinued operations - (635)
----------- ----------
Net income $ 6,189 $ 9,394
=========== ==========
General partner interest in net income $ 357 $ 272
Common and subordinated unitholders' interest
in net income $ 5,832 $ 9,122
Basic earnings per limited partner unit:
From continuing operations per common and
subordinated unit $ 0.20 $ 0.41
From discontinued operations per common and
subordinated unit $ - $ (0.03)
Net earnings per common and subordinated unit $ 0.20 $ 0.38
Diluted earnings per limited partner unit:
From continuing operations per common and
subordinated unit $ 0.20 $ 0.36
From discontinued operations per common and
subordinated unit $ - $ (0.02)
Net earnings per common and subordinated unit $ 0.20 $ 0.34
Weighted average number of common and subordinated
units outstanding:
Basic 28,502 23,827
Diluted 29,019 28,550
QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except for unit data - Unaudited
March 31, December 31,
2010 2009
----------- -----------
ASSETS
Current assets
Cash and cash equivalents $ 592 $ 746
Accounts receivable 1,110 1,342
Accounts receivable from Quicksilver 11,167 -
Prepaid expenses and other 397 180
----------- -----------
Total current assets 13,266 2,268
Property, plant and equipment, net 500,870 482,497
Other assets 2,638 2,859
----------- -----------
Total assets $ 516,774 $ 487,624
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Current maturities of debt $ 2,750 $ 2,475
Accounts payable to Quicksilver - 1,727
Accrued additions to property, plant and
equipment 10,801 8,015
Accounts payable and other 4,109 2,240
----------- -----------
Total current liabilities 17,660 14,457
Long-term debt 225,800 125,400
Note payable to Quicksilver 53,565 53,243
Asset retirement obligations 9,169 8,919
Deferred income taxes 821 768
Partners' capital
Common unitholders (16,988,429 and 16,313,451
units issued and outstanding at March 31, 2010
and December 31, 2009, respectively) 208,386 281,239
Subordinated unitholders (11,513,625 units issued
and outstanding at March 31, 2010 and
December 31, 2009) 906 3,040
General partner 467 558
----------- -----------
Total partners' capital 209,759 284,837
----------- -----------
$ 516,774 $ 487,624
=========== ===========
QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands - Unaudited
Three Months Ended
March 31,
----------------------
2010 2009
---------- ----------
Operating activities:
Net income $ 6,189 $ 9,394
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 5,250 5,097
Accretion of asset retirement obligations 115 67
Deferred income taxes 53 (37)
Equity-based compensation 667 479
Non-cash interest expense 1,464 1,247
Changes in assets and liabilities:
Accounts receivable 232 1,363
Prepaid expenses and other (274) 313
Accounts receivable and payable with
Quicksilver (16,367) (8,971)
Accounts payable and other 1,214 1,277
---------- ----------
Net cash provided by (used in) operating activities (1,457) 10,229
---------- ----------
Investing activities:
Capital expenditures (17,163) (22,952)
Distribution to Quicksilver (80,276) -
---------- ----------
Net cash used in investing activities (97,439) (22,952)
---------- ----------
Financing activities:
Proceeds from revolving credit facility
borrowings 112,000 22,000
Repayments of credit facility (11,600) -
Proceeds from issuance of equity 11,088 -
Issuance costs of equity units paid (38) -
Contributions by Quicksilver - (83)
Distributions to unitholders (11,564) (9,083)
Taxes paid for equity-based compensation vesting (1,144) (63)
---------- ----------
Net cash provided by financing activities 98,742 12,771
---------- ----------
Net cash increase (decrease) (154) 48
Cash at beginning of period 746 303
---------- ----------
Cash at end of period $ 592 $ 351
========== ==========
QUICKSILVER GAS SERVICES LP
OPERATING STATISTICS
Unaudited
Three Months Ended
March 31,
----------------------
2010 2009
---------- ----------
Volume Data:
Volumes gathered (MMcf) 25,797 24,970
Volumes processed (MMcf) 11,244 14,653
QUICKSILVER GAS SERVICES LP
RECONCILIATION OF DISTRIBUTABLE CASH FLOW
TO NET INCOME
In thousands - Unaudited
Three Months Ended
March 31,
----------------------
2010 2009
---------- ----------
Net income from continuing operations $ 6,189 $ 10,029
Depreciation and accretion expense 5,365 4,524
Income tax provision (benefit) 53 (37)
Non-cash interest expense, net of capitalized
interest cost paid 1,464 610
Maintenance capital expenditures (1,650) (2,500)
---------- ----------
Distributable cash flow $ 11,421 $ 12,626
========== ==========
QUICKSILVER GAS SERVICES LP
RECONCILIATION OF ADJUSTED GROSS MARGIN
AND EBITDA TO NET INCOME
In thousands - Unaudited
Three Months Ended
March 31,
----------------------
2010 2009
---------- ----------
Total revenues $ 24,739 $ 23,964
Operations and maintenance expense 8,013 5,221
General and administrative expense 2,441 1,992
---------- ----------
Adjusted gross margin 14,285 16,751
Other income - -
---------- ----------
EBITDA 14,285 16,751
Depreciation and accretion expense 5,365 4,524
Interest expense 2,678 2,235
Income tax provision (benefit) 53 (37)
---------- ----------
Net income from continuing operations $ 6,189 $ 10,029
========== ==========
Investor and Media Contact
Rick Buterbaugh
817-665-4835
