(Mark One) | |
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2012 | |
or | |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
Delaware | 75-2756163 | |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) | |
incorporation or organization) | ||
801 Cherry Street, Suite 3700, Unit 19, Fort Worth, Texas | 76102 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ | |||
(Do not check if a smaller reporting company) |
Title of Class | Outstanding as of October 31, 2012 | |
Common Stock, $0.01 par value | 172,948,474 shares |
• | 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 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 Asset; and |
• | additional factors described elsewhere in this Quarterly Report. |
ITEM 1. | Condensed Consolidated Interim Financial Statements (Unaudited) |
For the Three Months Ended September 30, | For the Nine Months Ended 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 | |||||||||
Income (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 | |||||
Reclassification adjustments related to settlements of derivative contracts - net of income tax | (35,182 | ) | (11,869 | ) | (104,849 | ) | (38,886 | ) | |||||||
Net change in derivative fair value - net of income tax | (51,057 | ) | 51,221 | 60,951 | 44,508 | ||||||||||
Foreign currency translation adjustment | 4,901 | (35,550 | ) | 4,231 | (25,118 | ) | |||||||||
Other comprehensive income (loss) | (81,338 | ) | 3,802 | (39,667 | ) | (19,496 | ) | ||||||||
Comprehensive income (loss) | $ | (733,100 | ) | $ | 32,488 | $ | (1,423,894 | ) | $ | 47,019 | |||||
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 |
September 30, 2012 | December 31, 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 | |||||
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 (Note 9) | |||||||
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, and 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 (deficit) | (1,029,600 | ) | 354,627 | ||||
Total stockholders' equity | (146,702 | ) | 1,261,919 | ||||
$ | 2,490,244 | $ | 3,995,462 |
Quicksilver Resources Inc. Stockholders’ Equity | |||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Income | Retained Earnings (Deficit) | Total | ||||||||||||||||||
Balances at December 31, 2010 | $ | 1,755 | $ | 714,869 | $ | (41,487 | ) | $ | 130,187 | $ | 264,581 | $ | 1,069,905 | ||||||||||
Net income | — | — | — | — | 66,515 | 66,515 | |||||||||||||||||
Hedge derivative contract settlements reclassified into earnings from AOCI, net of income tax of $18,217 | — | — | — | (38,886 | ) | — | (38,886 | ) | |||||||||||||||
Net change in derivative fair value, net of income tax of $21,456 | — | — | — | 44,508 | — | 44,508 | |||||||||||||||||
Foreign currency translation adjustment | — | — | — | (25,118 | ) | — | (25,118 | ) | |||||||||||||||
Issuance and vesting of stock compensation | 13 | 15,462 | (4,841 | ) | — | — | 10,634 | ||||||||||||||||
Stock option exercises | 1 | 732 | — | — | — | 733 | |||||||||||||||||
Balances at September 30, 2011, restated (a) | $ | 1,769 | $ | 731,063 | $ | (46,328 | ) | $ | 110,691 | $ | 331,096 | $ | 1,128,291 | ||||||||||
Balances at December 31, 2011 | $ | 1,770 | $ | 737,015 | $ | (46,351 | ) | $ | 214,858 | $ | 354,627 | $ | 1,261,919 | ||||||||||
Net loss | — | — | — | — | (1,384,227 | ) | (1,384,227 | ) | |||||||||||||||
Hedge derivative contract settlements reclassified into earnings from AOCI, net of income tax of $53,756 | — | — | — | (104,849 | ) | — | (104,849 | ) | |||||||||||||||
Net change in derivative fair value, net of income tax of $29,704 | — | — | — | 60,951 | — | 60,951 | |||||||||||||||||
Foreign currency translation adjustment | — | — | — | 4,231 | — | 4,231 | |||||||||||||||||
Issuance and vesting of stock compensation | 17 | 18,055 | (2,810 | ) | — | — | 15,262 | ||||||||||||||||
Stock option exercises | 1 | 10 | — | — | — | 11 | |||||||||||||||||
Balances at September 30, 2012 | $ | 1,788 | $ | 755,080 | $ | (49,161 | ) | $ | 175,191 | $ | (1,029,600 | ) | $ | (146,702 | ) |
(a) | Note 1 contains additional information. |
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 sale of properties and equipment | 3,843 | 3,719 | |||||
Net cash used by 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 |
Asset Derivatives | Liability Derivatives | ||||||||||||||
September 30, 2012 | December 31, 2011 | September 30, 2012 | December 31, 2011 | ||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Level 2 inputs | $ | 209,477 | $ | 195,838 | $ | 3,001 | $ | 4,028 | |||||||
Level 3 inputs | 25,911 | 150,989 | 39,537 | — | |||||||||||
Total | $ | 235,388 | $ | 346,827 | $ | 42,538 | $ | 4,028 |
For the Three Months Ended September 30, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Balance at beginning of period | $ | 45,345 | $ | 19,115 | |||
Total gains (losses) for the period: | |||||||
Unrealized gain on commodity hedges | — | 29,737 | |||||
Loss from hedge ineffectiveness | (1,554 | ) | — | ||||
Settlements in Production Revenue | (1,315 | ) | — | ||||
Settlements in Other Revenue | (6,380 | ) | — | ||||
Changes included in Other Revenue | 152 | — | |||||
Unrealized gains (losses) reported in OCI | (49,874 | ) | 18,258 | ||||
Balance at end of period | $ | (13,626 | ) | $ | 67,110 | ||
The amount of total gains or losses for the period included in other revenue attributable to the change in unrealized gains or losses related to assets still held at the reporting date | $ | (1,402 | ) | $ | 29,737 |
For the Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Balance at beginning of period | $ | 150,989 | $ | — | |||
Total gains (losses) for the period: | |||||||
Unrealized gain (loss) on commodity hedges | (21,670 | ) | 48,852 | ||||
Realized loss on hedge restructure | (14,555 | ) | — | ||||
Gain from hedge ineffectiveness | 2,155 | — | |||||
Transfers out of Level 3 | (109,685 | ) | — | ||||
Settlements in Production Revenue | (11,990 | ) | — | ||||
Settlements in Other Revenue | (17,111 | ) | — | ||||
Changes included in Other Revenue | 2,797 | — | |||||
Unrealized gains reported in OCI | 5,444 | 18,258 | |||||
Balance at end of period | $ | (13,626 | ) | $ | 67,110 | ||
The amount of total gains or losses for the period included in other revenue attributable to the change in unrealized gains or losses related to assets still held at the reporting date | $ | (16,718 | ) | $ | 48,852 |
Production Year | Daily Production Volume | |||
Gas | NGL | |||
MMcfd | MBbld | |||
2012 | 230 | 7 | ||
2013 | 180 | — | ||
2014 | 140 | — | ||
2015 | 120 | — | ||
2016-2021 | 45 | — |
(In thousands) | |||
Remainder of 2012 | $ | 1,315 | |
2013 | 5,539 | ||
2014 | 6,012 | ||
2015 | 4,669 | ||
2016 | 569 | ||
$ | 18,104 |
Asset Derivatives | Liability Derivatives | |||||||||||||||
September 30, 2012 | December 31, 2011 | September 30, 2012 | December 31, 2011 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Derivatives designated as hedges: | ||||||||||||||||
Commodity contracts reported in: | ||||||||||||||||
Current derivative assets | $ | 126,075 | $ | 165,484 | $ | — | $ | 2,639 | ||||||||
Noncurrent derivative assets | 116,895 | 183,982 | 7,582 | — | ||||||||||||
Current derivative liabilities | — | — | — | 4,028 | ||||||||||||
Noncurrent derivative liabilities | 909 | — | 43,447 | — | ||||||||||||
Total derivatives designated as hedges | $ | 243,879 | $ | 349,466 | $ | 51,029 | $ | 6,667 | ||||||||
Derivatives not designated as hedges: | $ | — | $ | — | $ | — | $ | — | ||||||||
Total derivatives | $ | 243,879 | $ | 349,466 | $ | 51,029 | $ | 6,667 |
For the Three Months Ended September 30, | |||||||
2012 | 2011 | ||||||
Cash Flow Hedges | Cash Flow Hedges | ||||||
(In thousands) | |||||||
Derivative fair value at beginning of period | $ | 342,187 | $ | 116,349 | |||
Change in net amounts receivable and payable | 907 | (576 | ) | ||||
Settlements in production revenue | (54,133 | ) | (16,815 | ) | |||
Settlements in other revenue | (10,910 | ) | — | ||||
Settlements deferred in OCI | (6,922 | ) | — | ||||
Ineffectiveness reported in other revenue | (2,832 | ) | 880 | ||||
Unrealized gains reported in other revenue | — | 29,737 | |||||
Other changes reported in other revenue | 176 | — | |||||
Unrealized gains (losses) reported in OCI | (75,623 | ) | 76,598 | ||||
Derivative fair value at end of period | $ | 192,850 | $ | 206,173 | |||
For the Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
Cash Flow Hedges | Cash Flow Hedges | ||||||
(In thousands) | |||||||
Derivative fair value at beginning of period | $ | 342,799 | $ | 146,762 | |||
Change in net amounts receivable and payable | (6,904 | ) | (960 | ) | |||
Settlements in production revenue | (151,701 | ) | (56,143 | ) | |||
Settlements in other revenue | (28,787 | ) | — | ||||
Settlements deferred in OCI | (16,746 | ) | — | ||||
Ineffectiveness reported in other revenue | 2,067 | 1,698 | |||||
Realized losses reported in other revenue | (14,555 | ) | — | ||||
Unrealized gains (losses) reported in other revenue | (21,670 | ) | 48,852 | ||||
Other changes reported in other revenue | (2,308 | ) | — | ||||
Unrealized gain reported in OCI | 90,655 | 65,964 | |||||
Derivative fair value at end of period | $ | 192,850 | $ | 206,173 |
(In thousands) | |||
Balance at December 31, 2010 | $ | 83,341 | |
Equity loss in BBEP | (32,721 | ) | |
Distributions from BBEP | (16,344 | ) | |
BBEP Units sold | (12,551 | ) | |
Balance at September 30, 2011 | $ | 21,725 |
For the Three Months Ended June 30, | For the Nine Months Ended June 30, | ||||||
2011 | 2011 | ||||||
(In thousands) | (In thousands) | ||||||
Revenue (1) | $ | 142,368 | $ | 147,829 | |||
Operating expense | 72,929 | 226,349 | |||||
Operating income (loss) | 69,439 | (78,520 | ) | ||||
Interest and other (2) | 11,300 | 30,363 | |||||
Income tax expense (benefit) | 616 | (825 | ) | ||||
Noncontrolling interests | 68 | 137 | |||||
Net income (loss) available to BBEP unitholders | $ | 57,455 | $ | (108,195 | ) |
(1) | For the three months ended June 30, 2011, unrealized gains of $48.2 million on commodity derivatives were recognized. For the nine months ended June 30, 2011, unrealized losses of $146.7 million on commodity derivatives were recognized. |
(2) | The three months ended June 30, 2011 included unrealized losses of $2.1 million from interest rate swaps. The nine months ended June 30, 2011 included unrealized gains of $2.4 million from interest rate swaps. |
September 30, 2012 | December 31, 2011 | ||||||
(In thousands) | |||||||
Oil and gas properties | |||||||
Subject to depletion | $ | 5,681,541 | $ | 5,309,330 | |||
Unevaluated costs | 439,767 | 433,341 | |||||
Accumulated depletion | (4,275,280 | ) | (2,516,195 | ) | |||
Net oil and gas properties | 1,846,028 | 3,226,476 | |||||
Other plant and equipment | |||||||
Pipelines and processing facilities | 368,926 | 340,242 | |||||
General properties | 75,908 | 71,297 | |||||
Accumulated depreciation | (196,813 | ) | (177,496 | ) | |||
Net other property and equipment | 248,021 | 234,043 | |||||
Property, plant and equipment, net of accumulated depletion and depreciation | $ | 2,094,049 | $ | 3,460,519 |
September 30, 2012 | December 31, 2011 | ||||||
Combined Credit Agreements | $ | 490,091 | $ | 227,482 | |||
Senior notes due 2015, net of unamortized discount | 435,644 | 435,020 | |||||
Senior notes due 2016, net of unamortized discount | 579,069 | 576,977 | |||||
Senior notes due 2019, net of unamortized discount | 292,476 | 292,055 | |||||
Senior subordinated notes due 2016 | 350,000 | 350,000 | |||||
Convertible debentures, net of unamortized discount | — | 18 | |||||
Total debt | 2,147,280 | 1,881,552 | |||||
Unamortized deferred gain-terminated interest rate swaps | 18,104 | 21,897 | |||||
Current portion of long-term debt | — | (18 | ) | ||||
Long-term debt | $ | 2,165,384 | $ | 1,903,431 |
• | Reduction of the global borrowing base to $850 million from $1.075 billion |
• | Increase of the applicable margin by 0.50% for each type of loan and issued letters of credit, and setting of the commitment fee on unutilized availability to 0.50% |
• | Reduction of the minimum required interest coverage ratio from 2.5 to 1.5 for the quarter ending September 30, 2012 through the quarter ending March 31, 2014, then increasing to 2.0 for the quarter ending June 30, 2014, and reverting to 2.5 thereafter |
• | Addition of a maximum senior secured debt leverage ratio of 2.5 beginning in the quarter ending September 30, 2012 |
• | Until June 30, 2013, and so long as the total leverage ratio for the prior twelve month period is greater than or equal to 4.0: |
• | Restrict the ability to issue certain additional types of debt; |
• | Limit the aggregate amount of restricted payments to $15 million; |
• | Restrict the ability to repay existing debt securities if global borrowing base utilization equals or exceeds 25%; and |
• | Require a dollar for dollar repayment of the Combined Credit Agreements together with any repayment of existing debt securities if the global borrowing base utilization is less than 25% until the Combined Credit Agreements are paid in full, at which time existing debt securities may be repaid in any amounts; and |
• | Restrict the ability to terminate certain oil and gas hedging arrangements prior to December 31, 2014. |
Priority on Collateral and Structural Seniority (1) | ||||||||||
Highest priority | ![]() | Lowest priority | ||||||||
Equal priority | Equal Priority | |||||||||
Combined Credit Agreements | 2015 Senior Notes | 2016 Senior Notes | 2019 Senior Notes | Senior Subordinated Notes | ||||||
Principal amount (2) | $850 million | $438 million | $591 million | $298 million | $350 million | |||||
Scheduled maturity date | September 6, 2016 | August 1, 2015 | January 1, 2016 | August 15, 2019 | April 1, 2016 | |||||
Interest rate on outstanding borrowings at September 30, 2012 (3) | 3.20% | 8.25% | 11.75% | 9.125% | 7.125% | |||||
Base interest rate options (4) (5) | LIBOR, ABR, CDOR | N/A | N/A | N/A | N/A | |||||
Financial covenants (6) | - Minimum current ratio of 1.0 - Minimum EBITDA to cash interest expense ratio of 1.5 - Maximum senior secured debt leverage ratio of 2.5 | N/A | N/A | N/A | N/A | |||||
Significant restrictive covenants (6) | - Incurrence of debt - Incurrence of liens -Payment of dividends - Equity purchases - Asset sales - Affiliate transactions - Limitations on derivatives | - Incurrence of debt - Incurrence of liens -Payment of dividends - Equity purchases - Asset sales - Affiliate transactions | - Incurrence of debt - Incurrence of liens -Payment of dividends - Equity purchases - Asset sales - Affiliate transactions | - Incurrence of debt - Incurrence of liens -Payment of dividends - Equity purchases - Asset sales - Affiliate transactions | - Incurrence of debt - Incurrence of liens -Payment of dividends - Equity purchases - Asset sales - Affiliate transactions | |||||
Optional redemption (6) | Any time | August 1, 2012: 103.875 2013: 101.938 2014: par | July 1, 2013: 105.875 2014: 102.938 2015: par | August 15, 2014: 104.563 2015: 103.042 2016: 101.521 2017: par | April 1, 2012: 102.375 2013: 101.188 2014: par | |||||
Make-whole redemption (6) | N/A | N/A | Callable prior to July 1, 2013 at make‑whole call price of Treasury +50 bps | Callable prior to August 15, 2014 at make‑whole call price of Treasury +50 bps | N/A | |||||
Change of control (6) | Event of default | Put at 101% of principal plus accrued interest | Put at 101% of principal plus accrued interest | Put at 101% of principal plus accrued interest | Put at 101% of principal plus accrued interest | |||||
Estimated fair value (7) | $490.1 million | $417.2 million | $594.3 million | $283.5 million | $300.6 million |
(1) | Borrowings under the Amended and Restated U.S. Credit Facility are guaranteed by certain of Quicksilver’s domestic subsidiaries and are secured by 100% of the equity interests of each of Cowtown Pipeline Management, Inc., Cowtown Pipeline Funding, Inc., Cowtown Gas Processing L.P., Cowtown Pipeline L.P., Barnett Shale Operating LLC, Silver Stream Pipeline Company LLC, Quicksilver Production Partners Operating Ltd., QPP Parent LLC and QPP Holdings LLC (collectively, the “Domestic Pledged Equity”), 65% of the equity interests of Quicksilver Resources Canada Inc. (“QRCI”) and certain oil and gas properties and related assets of Quicksilver. Borrowings under the Amended and Restated Canadian Credit Facility are guaranteed by Quicksilver and certain of its domestic subsidiaries and are secured by the Domestic Pledged Equity, 100% of the equity interests of QRCI and any of its Canadian subsidiaries, and certain oil and gas properties and related assets of Quicksilver and QRCI. The other debt presented is based upon structural seniority and priority of payment. |
(2) | The principal amount for the Combined Credit Agreements represents the global borrowing base as of September 30, 2012. |
(3) | Represents the weighted average borrowing rate payable to lenders. |
(4) | Amounts outstanding under the Amended and Restated U.S. Credit Facility bear interest, at our election, at (i) adjusted LIBOR (as defined in the Amended and Restated U.S. Credit Facility) plus an applicable margin between 2.00% to 3.00%, (ii) ABR (as defined in the Amended and Restated U.S. Credit Facility), which is the greatest of (a) the prime rate announced by JPMorgan, (b) the federal funds rate plus 0.50% and (c) adjusted LIBOR for an interest period of one month plus 1.00%, plus, in each case under scenario (ii), an applicable margin between 1.00% to 2.00%. We also pay a per annum fee on the LC Exposure (as defined in the Amended and Restated U.S. Credit Facility) of all letters of credit issued under the Amended and Restated U.S. Credit Facility equal to the applicable margin, with respect to adjusted LIBOR loans, and a commitment fee on the unused availability under the Amended and Restated U.S. Credit Facility of 0.50%. |
(5) | Amounts outstanding under the Amended and Restated Canadian Credit Facility bear interest, at our election, at (i) the CDOR Rate (as defined in the Amended and Restated Canadian Credit Facility) plus an applicable margin between 2.00% and 3.00%, (ii) the Canadian Prime Rate (as defined in the Amended and Restated Canadian Credit Facility) plus an applicable margin between 1.00% and 2.00%, (iii) the U.S. Prime Rate (as defined in the Amended and Restated Canadian Credit Facility) plus an applicable margin between 1.00% and 2.00% and (iv) adjusted LIBOR (as defined in the Amended and Restated Canadian Credit Facility) plus an applicable margin between 2.00% to 3.00%. We pay a per annum fee on the LC Exposure (as defined in the Amended and Restated Canadian Credit Facility) of all letters of credit issued under the Amended and Restated Canadian Credit Facility equal to the applicable margin, with respect to adjusted LIBOR loans, and a commitment fee on the unused availability under the Amended and Restated Canadian Credit Facility of 0.50%. |
(6) | The information presented in this table is qualified in all respects by reference to the full text of the covenants, provisions and related definitions contained in the documents governing the various components of our debt. |
(7) | The estimated fair value is determined using market quotations based on recent trade activity for fixed rate obligations (“Level 2” inputs). We consider debt with variable interest rates to have a fair value equal to its carrying value (“Level 1” input). |
(In thousands) | |||
Beginning asset retirement obligations | $ | 85,822 | |
Additional liability incurred | 2,263 | ||
Change in estimates | 4,665 | ||
Accretion expense | 3,033 | ||
Asset retirement costs incurred | (1,422 | ) | |
Settlement of liability in excess of obligation recorded | 1,998 | ||
Currency translation adjustment | 1,666 | ||
Ending asset retirement obligations | 98,025 | ||
Less current portion | (254 | ) | |
Long-term asset retirement obligation | $ | 97,771 |
2012 | 2011 | ||
Weighted avg grant date fair value | $4.21 | $9.16 | |
Weighted avg risk-free interest rate | 1.14% | 2.38% | |
Expected life (in years) | 6.0 | 6.0 | |
Wtd avg volatility | 68.2% | 66.8% | |
Expected dividends | — | — |
Shares | Wtd Avg Exercise Price | Wtd Avg Remaining Contractual Life | Aggregate Intrinsic Value | ||||||||||
(In years) | (In thousands) | ||||||||||||
Outstanding at January 1, 2012 | 3,760,696 | $ | 12.01 | ||||||||||
Granted | 2,020,685 | 6.90 | |||||||||||
Exercised | (1,572 | ) | 6.21 | ||||||||||
Forfeited | (471,790 | ) | 8.82 | ||||||||||
Expired | (312,242 | ) | 12.31 | ||||||||||
Outstanding at September 30, 2012 | 4,995,777 | $ | 10.23 | 7.2 | $ | 3 | |||||||
Exercisable at September 30, 2012 | 2,927,909 | $ | 10.88 | 6.1 | $ | — |
Payable in shares | Payable in cash | ||||||||||||
Shares | Wtd Avg Grant Date Fair Value | Shares | Wtd Avg Grant Date Fair Value | ||||||||||
Outstanding at January 1, 2012 | 2,460,300 | $ | 12.29 | 369,846 | $ | 13.12 | |||||||
Granted | 2,998,554 | 6.41 | 653,195 | 6.19 | |||||||||
Vested | (1,487,637 | ) | 10.33 | (199,068 | ) | 11.31 | |||||||
Forfeited | (828,011 | ) | 8.97 | (135,624 | ) | 9.68 | |||||||
Outstanding at September 30, 2012 | 3,143,206 | $ | 8.49 | 688,349 | $ | 7.74 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Net income (loss) attributable to Quicksilver | $ | (651,762 | ) | $ | 28,686 | $ | (1,384,227 | ) | $ | 66,515 | |||||
Basic income allocable to participating securities (1) | — | (359 | ) | — | (801 | ) | |||||||||
Basic net income (loss) attributable to Quicksilver | $ | (651,762 | ) | $ | 28,327 | $ | (1,384,227 | ) | $ | 65,714 | |||||
Weighted average common shares – basic | 170,179 | 169,031 | 170,054 | 168,963 | |||||||||||
Effect of dilutive securities (2): | |||||||||||||||
Share-based compensation awards | — | 705 | — | 805 | |||||||||||
Weighted average common shares – diluted | 170,179 | 169,736 | 170,054 | 169,768 | |||||||||||
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 |
(1) | Restricted share awards that contain nonforfeitable rights to dividends are participating securities and, therefore, should be included in computing earnings using the two-class method. Participating securities, however, do not participate in undistributed net losses. |
(2) | For the three months ended September 30, 2012, we had the following antidilutive shares excluded from the dilution calculations: 5.0 million shares associated with our stock options and 0.3 million shares associated with our unvested restricted stock units. For the three months ended September 30, 2011, we had the following antidilutive shares excluded from the dilutive calculation: 9.8 million shares associated with our contingently convertible debt, 2.0 million shares associated with our stock options and 1.9 million shares associated with our unvested restricted stock units. For the nine months ended September 30, 2012, we had the following antidilutive shares excluded from the dilution calculation: 5.0 million shares associated with our stock options and 0.3 million shares associated with our unvested restricted stock units. For the nine months ended September 30, 2011, we had the following antidilutive shares excluded from the dilution calculation: 9.8 million shares associated with our contingently convertible debt, 2.0 million shares associated with our stock options and 1.9 million shares associated with our unvested restricted stock units. |
September 30, 2012 | |||||||||||||||||||||||||||||||||||
Quicksilver Resources Inc. | Restricted Guarantor Subsidiaries | Restricted Non- Guarantor Subsidiaries | Restricted Subsidiary Eliminations | Quicksilver and Restricted Subsidiaries | Unrestricted Non- Guarantor Subsidiaries | Fortune Creek | Consolidating Eliminations | Quicksilver Resources Inc. Consolidated | |||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||||||||||
Current assets | $ | 285,659 | $ | 90,863 | $ | 77,895 | $ | (205,745 | ) | $ | 248,672 | $ | 11,546 | $ | 5,863 | $ | (23,044 | ) | $ | 243,037 | |||||||||||||||
Property and equipment | 1,399,421 | 37,637 | 565,296 | — | 2,002,354 | — | 91,695 | — | 2,094,049 | ||||||||||||||||||||||||||
Investment in subsidiaries (equity method) | 61,433 | — | (37,523 | ) | (61,433 | ) | (37,523 | ) | (37,546 | ) | — | 75,069 | — | ||||||||||||||||||||||
Other assets | 362,158 | — | 34,620 | (243,620 | ) | 153,158 | — | — | — | 153,158 | |||||||||||||||||||||||||
Total assets | $ | 2,108,671 | $ | 128,500 | $ | 640,288 | $ | (510,798 | ) | $ | 2,366,661 | $ | (26,000 | ) | $ | 97,558 | $ | 52,025 | $ | 2,490,244 | |||||||||||||||
LIABILITIES AND EQUITY | |||||||||||||||||||||||||||||||||||
Current liabilities | $ | 218,945 | $ | 111,787 | $ | 58,300 | $ | (205,745 | ) | $ | 183,287 | $ | 11,524 | $ | 3,280 | $ | (23,044 | ) | $ | 175,047 | |||||||||||||||
Long-term liabilities | 2,036,429 | 22,003 | 515,264 | (243,620 | ) | 2,330,076 | — | 84 | 131,739 | 2,461,899 | |||||||||||||||||||||||||
Stockholders' equity | (146,703 | ) | (5,290 | ) | 66,724 | (61,433 | ) | (146,702 | ) | (37,524 | ) | 94,194 | (56,670 | ) | (146,702 | ) | |||||||||||||||||||
Total liabilities and equity | $ | 2,108,671 | $ | 128,500 | $ | 640,288 | $ | (510,798 | ) | $ | 2,366,661 | $ | (26,000 | ) | $ | 97,558 | $ | 52,025 | $ | 2,490,244 |
December 31, 2011 | |||||||||||||||||||||||||||||||||||
Quicksilver Resources Inc. | Restricted Guarantor Subsidiaries | Restricted Non- Guarantor Subsidiaries | Restricted Subsidiary Eliminations | Quicksilver and Restricted Subsidiaries | Unrestricted Non- Guarantor Subsidiaries | Fortune Creek | Consolidating Eliminations | Quicksilver Resources Inc. Consolidated | |||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||||||||||
Current assets | $ | 336,893 | $ | 87,767 | $ | 63,711 | $ | (200,727 | ) | $ | 287,644 | $ | — | $ | 27,533 | $ | (14,750 | ) | $ | 300,427 | |||||||||||||||
Property and equipment | 2,743,379 | 37,936 | 598,443 | — | 3,379,758 | — | 80,761 | — | 3,460,519 | ||||||||||||||||||||||||||
Investment in subsidiaries (equity method) | 241,680 | — | (29,449 | ) | (241,680 | ) | (29,449 | ) | (29,449 | ) | — | 58,898 | — | ||||||||||||||||||||||
Other assets | 401,279 | — | 76,857 | (243,620 | ) | 234,516 | — | — | — | 234,516 | |||||||||||||||||||||||||
Total assets | $ | 3,723,231 | $ | 125,703 | $ | 709,562 | $ | (686,027 | ) | $ | 3,872,469 | $ | (29,449 | ) | $ | 108,294 | $ | 44,148 | $ | 3,995,462 | |||||||||||||||
LIABILITIES AND EQUITY | |||||||||||||||||||||||||||||||||||
Current liabilities | $ | 348,512 | $ | 109,938 | $ | 76,450 | $ | (200,727 | ) | $ | 334,173 | $ | — | $ | 14,750 | $ | (14,750 | ) | $ | 334,173 | |||||||||||||||
Long-term liabilities | 2,112,800 | 21,903 | 385,294 | (243,620 | ) | 2,276,377 | — | 80 | 122,913 | 2,399,370 | |||||||||||||||||||||||||
Stockholders' equity | 1,261,919 | (6,138 | ) | 247,818 | (241,680 | ) | 1,261,919 | (29,449 | ) | 93,464 | (64,015 | ) | 1,261,919 | ||||||||||||||||||||||
Total liabilities and equity | $ | 3,723,231 | $ | 125,703 | $ | 709,562 | $ | (686,027 | ) | $ | 3,872,469 | $ | (29,449 | ) | $ | 108,294 | $ | 44,148 | $ | 3,995,462 |
For the Three Months Ended September 30, 2012 | |||||||||||||||||||||||||||||||||||
Quicksilver Resources Inc. | Restricted Guarantor Subsidiaries | Restricted Non- Guarantor Subsidiaries | Restricted Subsidiary Eliminations | Quicksilver and Restricted Subsidiaries | Unrestricted Non- Guarantor Subsidiaries | Fortune Creek | Consolidated Eliminations | Quicksilver Resources Inc. Consolidated | |||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||
Revenue | $ | 151,546 | $ | 1,182 | $ | 25,670 | $ | (696 | ) | $ | 177,702 | $ | — | $ | 4,422 | $ | (4,422 | ) | $ | 177,702 | |||||||||||||||
Operating expenses | 560,615 | 739 | 140,391 | (696 | ) | 701,049 | — | 3,010 | (4,422 | ) | 699,637 | ||||||||||||||||||||||||
Equity in net earnings of subsidiaries | (91,904 | ) | — | (2,268 | ) | 91,904 | (2,268 | ) | 1,443 | — | 825 | — | |||||||||||||||||||||||
Operating income (loss) | (500,973 | ) | 443 | (116,989 | ) | 91,904 | (525,615 | ) | 1,443 | 1,412 | 825 | (521,935 | ) | ||||||||||||||||||||||
Fortune Creek accretion | — | — | — | — | — | — | — | (4,978 | ) | (4,978 | ) | ||||||||||||||||||||||||
Interest expense and other | (37,965 | ) | — | (4,586 | ) | — | (42,551 | ) | 23 | 31 | — | (42,497 | ) | ||||||||||||||||||||||
Income tax (expense) benefit | (112,824 | ) | (155 | ) | 29,383 | — | (83,596 | ) | — | — | 1,244 | (82,352 | ) | ||||||||||||||||||||||
Net income (loss) | $ | (651,762 | ) | $ | 288 | $ | (92,192 | ) | $ | 91,904 | $ | (651,762 | ) | $ | 1,466 | $ | 1,443 | $ | (2,909 | ) | $ | (651,762 | ) | ||||||||||||
Other comprehensive income (loss) | (68,457 | ) | — | (12,881 | ) | 12,881 | (68,457 | ) | — | — | — | (68,457 | ) | ||||||||||||||||||||||
Equity in OCI of subsidiaries | (12,881 | ) | — | — | — | (12,881 | ) | — | — | — | (12,881 | ) | |||||||||||||||||||||||
Comprehensive income (loss) | $ | (733,100 | ) | $ | 288 | $ | (105,073 | ) | $ | 104,785 | $ | (733,100 | ) | $ | 1,466 | $ | 1,443 | $ | (2,909 | ) | $ | (733,100 | ) |
For the Three Months Ended September 30, 2011 | |||||||||||||||||||
Quicksilver Resources Inc. | Restricted Guarantor Subsidiaries | Restricted Non-Guarantor Subsidiaries | Consolidating Eliminations | Quicksilver Resources Inc. Consolidated | |||||||||||||||
(In thousands) | |||||||||||||||||||
Revenue | $ | 209,036 | $ | 1,095 | $ | 50,609 | $ | (847 | ) | $ | 259,893 | ||||||||
Operating expenses | 162,603 | 1,706 | 28,450 | (847 | ) | 191,912 | |||||||||||||
Equity in net earnings of subsidiaries | 14,728 | — | — | (14,728 | ) | — | |||||||||||||
Operating income (loss) | 61,161 | (611 | ) | 22,159 | (14,728 | ) | 67,981 | ||||||||||||
Income from earnings of BBEP | 14,370 | — | — | — | 14,370 | ||||||||||||||
Interest expense and other | (37,003 | ) | — | (248 | ) | — | (37,251 | ) | |||||||||||
Income tax (expense) benefit | (9,842 | ) | 213 | (6,785 | ) | — | (16,414 | ) | |||||||||||
Net income | $ | 28,686 | $ | (398 | ) | $ | 15,126 | $ | (14,728 | ) | $ | 28,686 | |||||||
Other comprehensive income (loss) | 33,077 | — | (29,275 | ) | 29,275 | 33,077 | |||||||||||||
Equity in OCI of subsidiaries | (29,275 | ) | — | — | — | (29,275 | ) | ||||||||||||
Comprehensive income (loss) | $ | 32,488 | $ | (398 | ) | $ | (14,149 | ) | $ | 14,547 | $ | 32,488 |
For the Nine Months Ended September 30, 2012 | |||||||||||||||||||||||||||||||||||
Quicksilver Resources Inc. | Restricted Guarantor Subsidiaries | Restricted Non- Guarantor Subsidiaries | Restricted Subsidiary Eliminations | Quicksilver and Restricted Subsidiaries | Unrestricted Non- Guarantor Subsidiaries | Fortune Creek | Consolidated Eliminations | Quicksilver Resources Inc. Consolidated | |||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||
Revenue | $ | 432,341 | $ | 3,390 | $ | 58,296 | $ | (2,294 | ) | $ | 491,733 | $ | — | $ | 10,021 | $ | (10,021 | ) | $ | 491,733 | |||||||||||||||
Operating expenses | 1,784,270 | 2,541 | 288,965 | (2,294 | ) | 2,073,482 | — | 6,093 | (10,021 | ) | 2,069,554 | ||||||||||||||||||||||||
Crestwood earn-out | 41,097 | — | — | — | 41,097 | — | — | — | 41,097 | ||||||||||||||||||||||||||
Equity in net earnings of subsidiaries | (185,797 | ) | — | (6,930 | ) | 185,797 | (6,930 | ) | 3,959 | — | 2,971 | — | |||||||||||||||||||||||
Operating income (loss) | (1,496,629 | ) | 849 | (237,599 | ) | 185,797 | (1,547,582 | ) | 3,959 | 3,928 | 2,971 | (1,536,724 | ) | ||||||||||||||||||||||
Fortune Creek accretion | — | — | — | — | — | — | — | (14,549 | ) | (14,549 | ) | ||||||||||||||||||||||||
Interest expense and other | (114,579 | ) | — | (8,060 | ) | — | (122,639 | ) | 23 | 31 | — | (122,585 | ) | ||||||||||||||||||||||
Income tax (expense) benefit | 226,981 | (297 | ) | 59,310 | — | 285,994 | — | — | 3,637 | 289,631 | |||||||||||||||||||||||||
Net income (loss) | $ | (1,384,227 | ) | $ | 552 | $ | (186,349 | ) | $ | 185,797 | $ | (1,384,227 | ) | $ | 3,982 | $ | 3,959 | $ | (7,941 | ) | $ | (1,384,227 | ) | ||||||||||||
Other comprehensive income (loss) | (44,868 | ) | — | 5,201 | (5,201 | ) | (44,868 | ) | — | — | — | (44,868 | ) | ||||||||||||||||||||||
Equity in OCI of subsidiaries | 5,201 | — | — | — | 5,201 | — | — | — | 5,201 | ||||||||||||||||||||||||||
Comprehensive income (loss) | $ | (1,423,894 | ) | $ | 552 | $ | (181,148 | ) | $ | 180,596 | $ | (1,423,894 | ) | $ | 3,982 | $ | 3,959 | $ | (7,941 | ) | $ | (1,423,894 | ) |
For the Nine Months Ended September 30, 2011 | |||||||||||||||||||
Quicksilver Resources Inc. | Restricted Guarantor Subsidiaries | Restricted Non- Guarantor Subsidiaries | Consolidating Eliminations | Quicksilver Resources Inc. Consolidated | |||||||||||||||
(In thousands) | |||||||||||||||||||
Revenue | $ | 591,394 | $ | 3,584 | $ | 128,333 | $ | (2,785 | ) | $ | 720,526 | ||||||||
Operating expenses | 442,166 | 4,512 | 130,769 | (2,785 | ) | 574,662 | |||||||||||||
Equity in net earnings of subsidiaries | (6,575 | ) | — | — | 6,575 | — | |||||||||||||
Operating income (loss) | 142,653 | (928 | ) | (2,436 | ) | 6,575 | 145,864 | ||||||||||||
Loss from earnings of BBEP | (32,721 | ) | — | — | — | (32,721 | ) | ||||||||||||
Interest expense and other | (3,182 | ) | — | (3,500 | ) | — | (6,682 | ) | |||||||||||
Income tax (expense) benefit | (40,235 | ) | 324 | (35 | ) | — | (39,946 | ) | |||||||||||
Net income | $ | 66,515 | $ | (604 | ) | $ | (5,971 | ) | $ | 6,575 | $ | 66,515 | |||||||
Other comprehensive income (loss) | 8,102 | — | (27,598 | ) | 27,598 | 8,102 | |||||||||||||
Equity in OCI of subsidiaries | (27,598 | ) | — | — | — | (27,598 | ) | ||||||||||||
Comprehensive income (loss) | $ | 47,019 | $ | (604 | ) | $ | (33,569 | ) | $ | 34,173 | $ | 47,019 |
For the Nine Months Ended September 30, 2012 | |||||||||||||||||||||||||||
Quicksilver Resources Inc. | Restricted Guarantor Subsidiaries | Restricted Non-Guarantor Subsidiaries | Quicksilver and Restricted Subsidiaries | Unrestricted Non-Guarantor Subsidiaries | Fortune Creek | Quicksilver Resources Inc. Consolidated | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||
Net cash flow provided (used) by operating activities | $ | 74,952 | $ | 655 | $ | 48,301 | $ | 123,908 | $ | — | $ | 17,468 | $ | 141,376 | |||||||||||||
Purchases of property, plant and equipment | (199,136 | ) | (655 | ) | (227,509 | ) | (427,300 | ) | — | (9,872 | ) | (437,172 | ) | ||||||||||||||
Proceeds from Crestood earn-out | 41,097 | — | — | 41,097 | — | — | 41,097 | ||||||||||||||||||||
Proceeds from sale of properties and equipment | 3,489 | — | 354 | 3,843 | — | — | 3,843 | ||||||||||||||||||||
Net cash flow used by investing activities | (154,550 | ) | (655 | ) | (227,155 | ) | (382,360 | ) | — | (9,872 | ) | (392,232 | ) | ||||||||||||||
Issuance of debt | 177,500 | — | 190,146 | 367,646 | — | — | 367,646 | ||||||||||||||||||||
Repayments of debt | (98,018 | ) | — | (13,097 | ) | (111,115 | ) | — | — | (111,115 | ) | ||||||||||||||||
Debt issuance costs | (1,998 | ) | — | (1,050 | ) | (3,048 | ) | — | — | (3,048 | ) | ||||||||||||||||
Distribution of Fortune Creek Partnership funds | — | — | — | — | — | (6,520 | ) | (6,520 | ) | ||||||||||||||||||
Proceeds from exercise of stock options | 11 | — | — | 11 | — | — | 11 | ||||||||||||||||||||
Excess tax deductions on stock compensation | 1,089 | — | — | 1,089 | — | — | 1,089 | ||||||||||||||||||||
Purchase of treasury stock | (2,810 | ) | — | — | (2,810 | ) | — | — | (2,810 | ) | |||||||||||||||||
Net cash flow provided (used) by financing activities | 75,774 | — | 175,999 | 251,773 | — | (6,520 | ) | 245,253 | |||||||||||||||||||
Effect of exchange rates on cash | — | — | 2,855 | 2,855 | — | (2,962 | ) | (107 | ) | ||||||||||||||||||
Net increase (decrease) in cash and equivalents | (3,824 | ) | — | — | (3,824 | ) | — | (1,886 | ) | (5,710 | ) | ||||||||||||||||
Cash and equivalents at beginning of period | 363 | — | — | 363 | — | 12,783 | 13,146 | ||||||||||||||||||||
Cash and equivalents at end of period | $ | (3,461 | ) | $ | — | $ | — | $ | (3,461 | ) | $ | — | $ | 10,897 | $ | 7,436 |
For the Nine Months Ended September 30, 2011 | |||||||||||||||||||
Quicksilver Resources Inc. | Restricted Guarantor Subsidiaries | Restricted Non-Guarantor Subsidiaries | Consolidating Eliminations | Quicksilver Resources Inc. Consolidated | |||||||||||||||
(In thousands) | |||||||||||||||||||
Net cash flow provided by operations | $ | 126,921 | $ | 2,224 | $ | 45,521 | $ | — | $ | 174,666 | |||||||||
Capital expenditures | (402,286 | ) | (2,224 | ) | (146,444 | ) | — | (550,954 | ) | ||||||||||
Proceeds from sale of BBEP units | 145,799 | — | — | — | 145,799 | ||||||||||||||
Proceeds from sale of properties and equipment | 2,515 | — | 1,204 | — | 3,719 | ||||||||||||||
Net cash flow used by investing activities | (253,972 | ) | (2,224 | ) | (145,240 | ) | — | (401,436 | ) | ||||||||||
Issuance of debt | 402,500 | — | 246,319 | — | 648,819 | ||||||||||||||
Repayments of debt | (313,880 | ) | — | (142,006 | ) | — | (455,886 | ) | |||||||||||
Debt issuance costs | (7,467 | ) | — | (2,809 | ) | — | (10,276 | ) | |||||||||||
Proceeds from exercise of stock options | 733 | — | — | — | 733 | ||||||||||||||
Purchase of treasury stock | (4,841 | ) | — | — | — | (4,841 | ) | ||||||||||||
Net cash flow provided (used) by financing activities | 77,045 | — | 101,504 | — | 178,549 | ||||||||||||||
Effect of exchange rates on cash | — | — | (114 | ) | — | (114 | ) | ||||||||||||
Net increase (decrease) in cash and equivalents | (50,006 | ) | — | 1,671 | — | (48,335 | ) | ||||||||||||
Cash and equivalents at beginning of period | 54,937 | — | — | — | 54,937 | ||||||||||||||
Cash and equivalents at end of period | $ | 4,931 | $ | — | $ | 1,671 | $ | — | $ | 6,602 |
Exploration & Production | Quicksilver | ||||||||||||||||||||||
U.S. | Canada | Midstream | Corporate | Elimination | Consolidated | ||||||||||||||||||
For the Three Months Ended September 30: | (In thousands) | ||||||||||||||||||||||
2012 | |||||||||||||||||||||||
Revenue | $ | 151,777 | $ | 24,962 | $ | 6,081 | $ | — | $ | (5,118 | ) | 177,702 | |||||||||||
DD&A | 27,605 | 13,740 | 1,274 | 590 | — | 43,209 | |||||||||||||||||
Impairment expense | 436,481 | 105,409 | 4,945 | — | — | 546,835 | |||||||||||||||||
Operating income (loss) | (393,280 | ) | (113,585 | ) | 2,854 | (17,924 | ) | — | (521,935 | ) | |||||||||||||
Property and equipment costs incurred | 43,722 | 21,382 | 1,824 | 837 | — | 67,765 | |||||||||||||||||
2011 | |||||||||||||||||||||||
Revenue | $ | 225,567 | $ | 34,078 | $ | 1,095 | $ | — | $ | (847 | ) | 259,893 | |||||||||||
DD&A | 43,441 | 12,300 | 1,356 | 589 | — | 57,686 | |||||||||||||||||
Operating income (loss) | 72,783 | 23,982 | (611 | ) | (28,173 | ) | — | 67,981 | |||||||||||||||
Property and equipment costs incurred | 128,531 | 35,926 | 587 | 5 | — | 165,049 | |||||||||||||||||
For the Nine Months Ended September 30: | |||||||||||||||||||||||
2012 | |||||||||||||||||||||||
Revenue | $ | 419,581 | $ | 69,105 | $ | 15,363 | $ | — | $ | (12,316 | ) | 491,733 | |||||||||||
DD&A | 108,845 | 35,182 | 3,790 | 1,773 | — | 149,590 | |||||||||||||||||
Impairment expense | 1,397,538 | 199,019 | 4,945 | — | — | 1,601,502 | |||||||||||||||||
Operating income (loss) | (1,258,519 | ) | (227,371 | ) | 5,776 | (56,610 | ) | — | (1,536,724 | ) | |||||||||||||
Property and equipment costs incurred | 160,699 | 178,783 | 13,263 | 6,284 | — | 359,029 | |||||||||||||||||
2011 | |||||||||||||||||||||||
Revenue | $ | 619,310 | $ | 100,418 | $ | 3,584 | $ | — | $ | (2,786 | ) | 720,526 | |||||||||||
DD&A | 123,776 | 35,811 | 3,535 | 1,739 | — | 164,861 | |||||||||||||||||
Impairment expense | — | 49,063 | — | — | — | 49,063 | |||||||||||||||||
Operating income (loss) | 208,644 | 1,630 | (927 | ) | (63,483 | ) | — | 145,864 | |||||||||||||||
Property and equipment costs incurred | 381,977 | 134,794 | 8,017 | 511 | — | 525,299 | |||||||||||||||||
Property, plant and equipment-net | |||||||||||||||||||||||
September 30, 2012 | $ | 1,408,964 | $ | 563,736 | $ | 112,675 | $ | 8,674 | $ | — | $ | 2,094,049 | |||||||||||
December 31, 2011 | 2,752,101 | 596,935 | 102,237 | 9,246 | — | 3,460,519 |
For the Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Interest, net of capitalized interest | $ | 141,811 | $ | 154,649 | |||
Income taxes | (1,528 | ) | 5,904 |
For the Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Working capital related to capital expenditures | $ | 37,386 | $ | 75,409 |
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | 2012 Highlights – a summary of significant activities and events affecting Quicksilver |
• | 2012 Capital Program – a summary of our planned capital expenditures during 2012 |
• | Results of Operations – an analysis of our consolidated results of operations for the three- and nine-month periods presented in our financial statements |
• | Liquidity, Capital Resources and Financial Position – an analysis of our cash flows, sources and uses of cash, contractual obligations and commercial commitments |
As of June 30, 2012 | Entered into subsequently | As of November 7, 2012 | |||||||||
Volume Mmcfd | Weighted Avg Price Per Mcf | Volume Mmcfd | Weighted Avg Price Per Mcf | Volume Mmcfd | Weighted Avg Price Per Mcf | ||||||
2012 | 230 | $5.75 - $6.00 | (5) | $6.20 | 225 | $5.74 - $6.00 | |||||
2013 | 150 | $5.40 | 50 | $4.22 | 200 | $5.10 | |||||
2014 | 110 | $5.54 | 60 | $4.23 | 170 | $5.08 | |||||
2015 | 110 | $5.54 | 40 | $4.39 | 150 | $5.23 | |||||
2016 - 2021 | 45 | $4.67 | (5) | $6.20 | 40 | $4.48 |
Natural Gas | NGL | Oil | Total | ||||||||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | ||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||
Barnett Shale | $ | 48.6 | $ | 104.9 | $ | 29.9 | $ | 55.2 | $ | 2.6 | $ | 2.4 | $ | 81.1 | $ | 162.5 | |||||||||||||||
Other U.S. | 0.2 | 0.4 | 0.1 | 0.2 | 3.3 | 2.9 | 3.6 | 3.5 | |||||||||||||||||||||||
Hedging | 37.9 | 23.2 | 8.5 | (12.9 | ) | — | — | 46.4 | 10.3 | ||||||||||||||||||||||
U.S. | 86.7 | 128.5 | 38.5 | 42.5 | 5.9 | 5.3 | 131.1 | 176.3 | |||||||||||||||||||||||
Horseshoe Canyon | 11.0 | 20.0 | — | — | — | — | 11.0 | 20.0 | |||||||||||||||||||||||
Horn River | 8.7 | 4.7 | — | — | — | — | 8.7 | 4.7 | |||||||||||||||||||||||
Hedging | 6.9 | 7.1 | — | — | — | — | 6.9 | 7.1 | |||||||||||||||||||||||
Canada | 26.6 | 31.8 | — | — | — | — | 26.6 | 31.8 | |||||||||||||||||||||||
Consolidated | $ | 113.3 | $ | 160.3 | $ | 38.5 | $ | 42.5 | $ | 5.9 | $ | 5.3 | $ | 157.7 | $ | 208.1 |
Natural Gas | NGL | Oil | Equivalent Total | ||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | ||||||||||||||||
(MMcfd) | (Bbld) | (Bbld) | (MMcfed) | ||||||||||||||||||||
Barnett Shale | 193.2 | 277.6 | 11,052 | 11,911 | 322 | 304 | 261.5 | 350.9 | |||||||||||||||
Other U.S. | 0.6 | 1.2 | 18 | 26 | 439 | 392 | 3.4 | 3.7 | |||||||||||||||
Total U.S. | 193.8 | 278.8 | 11,070 | 11,937 | 761 | 696 | 264.9 | 354.6 | |||||||||||||||
Horseshoe Canyon | 53.9 | 57.5 | 3 | 8 | — | — | 53.9 | 57.6 | |||||||||||||||
Horn River | 43.6 | 15.3 | — | — | — | — | 43.6 | 15.2 | |||||||||||||||
Total Canada | 97.5 | 72.8 | 3 | 8 | — | — | 97.5 | 72.8 | |||||||||||||||
Total | 291.3 | 351.6 | 11,073 | 11,945 | 761 | 696 | 362.4 | 427.4 |
Natural Gas | NGL | Oil | Equivalent Total | ||||||||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | ||||||||||||||||||||||||
(per Mcf) | (per Bbl) | (per Bbl) | (per Mcfe) | ||||||||||||||||||||||||||||
Barnett Shale | $ | 2.74 | $ | 4.11 | $ | 29.43 | $ | 50.38 | $ | 87.29 | $ | 85.71 | $ | 3.38 | $ | 5.04 | |||||||||||||||
Other U.S. | 2.73 | 2.80 | 36.33 | 69.68 | 81.39 | 80.14 | 11.30 | 9.88 | |||||||||||||||||||||||
Hedging | 2.12 | 0.90 | 8.31 | (11.75 | ) | — | — | 1.90 | 0.32 | ||||||||||||||||||||||
Total U.S. | 4.87 | 5.01 | 37.75 | 38.67 | 83.88 | 82.58 | 5.38 | 5.40 | |||||||||||||||||||||||
Horseshoe Canyon | $ | 2.22 | $ | 3.77 | $ | 45.92 | $ | 46.52 | $ | — | $ | — | $ | 2.22 | $ | 3.77 | |||||||||||||||
Horn River | 2.17 | 3.41 | — | — | — | — | 2.17 | 3.41 | |||||||||||||||||||||||
Hedging | 0.77 | 1.06 | — | — | — | — | 0.77 | 1.06 | |||||||||||||||||||||||
Total Canada | $ | 2.96 | $ | 4.75 | $ | 45.92 | $ | 46.52 | $ | — | $ | — | $ | 2.97 | $ | 4.75 | |||||||||||||||
Total | $ | 4.23 | $ | 4.96 | $ | 37.75 | $ | 38.68 | $ | 83.88 | $ | 82.58 | $ | 4.73 | $ | 5.29 |
Natural Gas | NGL | Oil | Total | ||||||||||||
(In thousands) | |||||||||||||||
Revenue for the 2011 quarter | $ | 160,272 | $ | 42,507 | $ | 5,285 | $ | 208,064 | |||||||
Volume variances | (22,280 | ) | (4,052 | ) | 494 | (25,838 | ) | ||||||||
Hedge revenue variances | 14,473 | 21,371 | — | 35,844 | |||||||||||
Price variances | (39,094 | ) | (21,370 | ) | 93 | (60,371 | ) | ||||||||
Revenue for the 2012 quarter | $ | 113,371 | $ | 38,456 | $ | 5,872 | $ | 157,699 |
Three Months Ended September 30, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Sales of purchased natural gas | |||||||
Purchases from Eni | $ | 20,383 | $ | 17,681 | |||
Purchases from others | 930 | 2,449 | |||||
Total | 21,313 | 20,130 | |||||
Costs of purchased natural gas sold | |||||||
Purchases from Eni | 20,383 | 17,737 | |||||
Purchases from others | 871 | 2,217 | |||||
Total | 21,254 | 19,954 | |||||
Net sales and purchases of natural gas | $ | 59 | $ | 176 |
Three Months Ended September 30, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Midstream revenue: | |||||||
Canada | $ | 477 | $ | 788 | |||
Texas | 486 | 248 | |||||
Total midstream revenue | 963 | 1,036 | |||||
Gain (loss) from hedge ineffectiveness | (2,832 | ) | 880 | ||||
Unrealized gain on commodity derivatives | — | 29,737 | |||||
Other | 559 | 46 | |||||
Total | $ | (1,310 | ) | $ | 31,699 |
Three Months Ended September 30, | |||||||||||||||
2012 | 2011 | ||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
Per Mcfe | Per Mcfe | ||||||||||||||
Barnett Shale | |||||||||||||||
Cash expense | $ | 11,464 | $ | 0.48 | $ | 16,391 | $ | 0.51 | |||||||
Equity compensation | 201 | 0.01 | 212 | — | |||||||||||
$ | 11,665 | $ | 0.49 | $ | 16,603 | $ | 0.51 | ||||||||
Other U.S. | |||||||||||||||
Cash expense | $ | 2,149 | $ | 6.94 | $ | 2,191 | $ | 6.44 | |||||||
Equity compensation | 39 | 0.13 | 82 | 0.24 | |||||||||||
$ | 2,188 | $ | 7.07 | $ | 2,273 | $ | 6.68 | ||||||||
Total U.S. | |||||||||||||||
Cash expense | $ | 13,613 | $ | 0.56 | $ | 18,582 | $ | 0.57 | |||||||
Equity compensation | 240 | 0.01 | 294 | 0.01 | |||||||||||
$ | 13,853 | $ | 0.57 | $ | 18,876 | $ | 0.58 | ||||||||
Horseshoe Canyon | |||||||||||||||
Cash expense | $ | 7,378 | $ | 1.49 | $ | 7,656 | $ | 1.45 | |||||||
Equity compensation | 85 | 0.02 | 99 | 0.06 | |||||||||||
$ | 7,463 | $ | 1.51 | $ | 7,755 | $ | 1.51 | ||||||||
Horn River | |||||||||||||||
Cash expense | $ | 799 | $ | 0.20 | $ | 1,042 | $ | 0.74 | |||||||
Equity compensation | — | — | — | — | |||||||||||
$ | 799 | $ | 0.20 | $ | 1,042 | $ | 0.74 | ||||||||
Total Canada | |||||||||||||||
Cash expense | $ | 8,177 | $ | 0.91 | $ | 8,698 | $ | 1.30 | |||||||
Equity compensation | 85 | 0.01 | 99 | 0.01 | |||||||||||
$ | 8,262 | $ | 0.92 | $ | 8,797 | $ | 1.31 | ||||||||
Total Company | |||||||||||||||
Cash expense | $ | 21,790 | $ | 0.65 | $ | 27,280 | $ | 0.69 | |||||||
Equity compensation | 325 | 0.01 | 393 | 0.01 | |||||||||||
$ | 22,115 | $ | 0.66 | $ | 27,673 | $ | 0.70 |
Three Months Ended September 30, | |||||||||||||||
2012 | 2011 | ||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
Per Mcfe | Per Mcfe | ||||||||||||||
Barnett Shale | $ | 33,894 | $ | 1.41 | $ | 46,335 | $ | 1.44 | |||||||
Other U.S. | 3 | 0.01 | 6 | 0.02 | |||||||||||
Total U.S. | 33,897 | 1.39 | 46,341 | 1.42 | |||||||||||
Horseshoe Canyon | 822 | 0.17 | 833 | 0.16 | |||||||||||
Horn River | 6,619 | 1.65 | 3,939 | 2.81 | |||||||||||
Total Canada | 7,441 | 0.83 | 4,772 | 0.71 | |||||||||||
Total | $ | 41,338 | $ | 1.24 | $ | 51,113 | $ | 1.30 |
Three Months Ended September 30, | |||||||||||||||
2012 | 2011 | ||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
Per Mcfe | Per Mcfe | ||||||||||||||
Production taxes | |||||||||||||||
Barnett Shale | $ | 961 | $ | 0.04 | $ | 2,747 | $ | 0.09 | |||||||
Other U.S. | 231 | 0.01 | 274 | 0.01 | |||||||||||
Total U.S. | 1,192 | 0.05 | 3,021 | 0.09 | |||||||||||
Horseshoe Canyon | 50 | 0.01 | 81 | 0.02 | |||||||||||
Horn River | — | — | — | — | |||||||||||
Total Canada | 50 | 0.01 | 81 | 0.01 | |||||||||||
Total production taxes | 1,242 | 0.04 | 3,102 | 0.08 | |||||||||||
Ad valorem taxes | |||||||||||||||
U.S. | $ | 4,747 | 0.19 | $ | 3,979 | 0.12 | |||||||||
Canada | 892 | 0.10 | 676 | 0.10 | |||||||||||
Total ad valorem taxes | 5,639 | 0.17 | 4,655 | 0.12 | |||||||||||
Total | $ | 6,881 | $ | 0.21 | $ | 7,757 | $ | 0.20 |
Three Months Ended September 30, | |||||||||||||||
2012 | 2011 | ||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
Per Mcfe | Per Mcfe | ||||||||||||||
Depletion | |||||||||||||||
U.S. | $ | 25,704 | $ | 1.05 | $ | 41,834 | $ | 1.28 | |||||||
Canada | 11,759 | 1.31 | 9,569 | 1.43 | |||||||||||
Total depletion | 37,463 | 1.12 | 51,403 | 1.31 | |||||||||||
Depreciation of other fixed assets | |||||||||||||||
U.S. | $ | 2,146 | $ | 0.09 | $ | 3,236 | $ | 0.10 | |||||||
Canada | 2,536 | 0.28 | 2,352 | 0.35 | |||||||||||
Total depreciation | 4,682 | 0.14 | 5,588 | 0.14 | |||||||||||
Accretion | 1,064 | 0.03 | 695 | 0.02 | |||||||||||
Total | $ | 43,209 | $ | 1.30 | $ | 57,686 | $ | 1.47 |
Three Months Ended September 30, | |||||||||||||||
2012 | 2011 | ||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
Per Mcfe | Per Mcfe | ||||||||||||||
Cash expense | $ | 8,856 | $ | 0.27 | $ | 11,086 | $ | 0.28 | |||||||
Audit and accounting fees | 845 | 0.03 | 247 | 0.01 | |||||||||||
Strategic transaction costs | 998 | 0.03 | 3,056 | 0.08 | |||||||||||
Litigation settlement | — | — | 8,500 | 0.22 | |||||||||||
Equity compensation | 6,636 | 0.20 | 4,695 | 0.11 | |||||||||||
Total | $ | 17,335 | $ | 0.53 | $ | 27,584 | $ | 0.70 |
Three Months Ended September 30, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Interest costs on debt outstanding | $ | 44,081 | $ | 43,039 | |||
Add: | |||||||
Fees paid on letters of credit outstanding | — | 115 | |||||
Premium paid on senior notes repurchased | — | 1,989 | |||||
Non-cash interest (1) | 4,592 | 5,237 | |||||
Total interest costs incurred | 48,673 | 50,380 | |||||
Less: | |||||||
Interest capitalized | (6,571 | ) | (1,987 | ) | |||
Interest expense | $ | 42,102 | $ | 48,393 |
(1) | Amortization of deferred financing costs, original issue discount net of interest swap settlement amortization. |
Three Months Ended September 30, | |||||||
2012 | 2011 | ||||||
(in thousands) | |||||||
Income tax (benefit) expense-U.S. | $ | 112,979 | $ | 9,630 | |||
Effective tax rate-U.S. | (25.3 | )% | 41.8 | % | |||
Income tax (benefit) expense-Canada | $ | (30,627 | ) | $ | 6,784 | ||
Effective tax rate-Canada | 24.9 | % | 30.8 | % | |||
Income tax (benefit) expense-total | $ | 82,352 | $ | 16,414 | |||
Effective tax rate-total | (14.5 | )% | 36.4 | % |
Natural Gas | NGL | Oil | Total | ||||||||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | ||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||
Barnett Shale | $ | 145.5 | $ | 293.1 | $ | 108.8 | $ | 161.2 | $ | 8.8 | $ | 9.2 | $ | 263.1 | $ | 463.5 | |||||||||||||||
Other U.S. | 0.5 | 0.9 | 0.3 | 0.5 | 10.6 | 8.9 | 11.4 | 10.3 | |||||||||||||||||||||||
Hedging | 122.8 | 68.6 | 15.1 | (32.7 | ) | — | — | 137.9 | 35.9 | ||||||||||||||||||||||
Total U.S. | 268.8 | 362.6 | 124.2 | 129.0 | 19.4 | 18.1 | 412.4 | 509.7 | |||||||||||||||||||||||
Horseshoe Canyon | 33.4 | 61.1 | 0.1 | 0.1 | — | — | 33.5 | 61.2 | |||||||||||||||||||||||
Horn River | 13.4 | 14.0 | — | — | — | — | 13.4 | 14.0 | |||||||||||||||||||||||
Hedging | 20.7 | 21.2 | — | — | — | — | 20.7 | 21.2 | |||||||||||||||||||||||
Total Canada | 67.5 | 96.3 | 0.1 | 0.1 | — | — | 67.6 | 96.4 | |||||||||||||||||||||||
Total | $ | 336.3 | $ | 458.9 | $ | 124.3 | $ | 129.1 | $ | 19.4 | $ | 18.1 | $ | 480.0 | $ | 606.1 |
Natural Gas | NGL | Oil | Equivalent Total | ||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | ||||||||||||||||
(MMcfd) | (Bbld) | (Bbld) | (MMcfed) | ||||||||||||||||||||
Barnett Shale | 214.2 | 260.7 | 11,293 | 12,204 | 349 | 362 | 284.1 | 336.1 | |||||||||||||||
Other U.S. | 0.7 | 1.0 | 23 | 24 | 455 | 383 | 3.6 | 3.3 | |||||||||||||||
Total U.S. | 214.9 | 261.7 | 11,316 | 12,228 | 804 | 745 | 287.7 | 339.4 | |||||||||||||||
Horseshoe Canyon | 55.0 | 58.4 | 5 | 6 | — | — | 55.0 | 58.5 | |||||||||||||||
Horn River | 23.3 | 14.5 | — | — | — | — | 23.3 | 14.5 | |||||||||||||||
Total Canada | 78.3 | 72.9 | 5 | 6 | — | — | 78.3 | 73.0 | |||||||||||||||
Total | 293.2 | 334.6 | 11,321 | 12,234 | 804 | 745 | 366.0 | 412.4 |
Natural Gas | NGL | Oil | Equivalent Total | ||||||||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | ||||||||||||||||||||||||
(per Mcf) | (per Bbl) | (per Bbl) | (per Mcfe) | ||||||||||||||||||||||||||||
Barnett Shale | $ | 2.48 | $ | 4.12 | $ | 35.15 | $ | 48.39 | $ | 92.01 | $ | 93.04 | $ | 3.38 | $ | 5.05 | |||||||||||||||
Other U.S. | 2.38 | 3.60 | 49.74 | 74.95 | 85.35 | 85.25 | 11.66 | 11.22 | |||||||||||||||||||||||
Hedging | 2.09 | 0.96 | 4.86 | (9.79 | ) | — | — | 1.75 | 0.39 | ||||||||||||||||||||||
Total U.S. | $ | 4.57 | $ | 5.08 | $ | 40.05 | $ | 38.66 | $ | 88.24 | $ | 89.05 | $ | 5.23 | $ | 5.50 | |||||||||||||||
Horseshoe Canyon | $ | 2.21 | $ | 3.83 | $ | 66.18 | $ | 62.41 | $ | — | $ | — | $ | 2.22 | $ | 3.83 | |||||||||||||||
Horn River | 2.10 | 3.54 | — | — | — | — | 2.10 | 3.54 | |||||||||||||||||||||||
Hedging | 0.96 | 1.06 | — | — | — | — | 0.96 | 1.06 | |||||||||||||||||||||||
Total Canada | $ | 3.14 | $ | 4.84 | $ | 66.18 | $ | 62.41 | $ | — | $ | — | $ | 3.15 | $ | 4.84 | |||||||||||||||
Total | $ | 4.19 | $ | 5.02 | $ | 40.06 | $ | 38.67 | $ | 88.24 | $ | 89.05 | $ | 4.79 | $ | 5.38 |
Natural Gas | NGL | Oil | Total | ||||||||||||
(In thousands) | |||||||||||||||
Revenue for the 2011 period | $ | 458,821 | $ | 129,147 | $ | 18,102 | $ | 606,070 | |||||||
Volume variances | (44,415 | ) | (11,515 | ) | 1,523 | (54,407 | ) | ||||||||
Hedge revenue variances | 53,751 | 47,751 | — | 101,502 | |||||||||||
Price variances | (131,852 | ) | (41,118 | ) | (174 | ) | (173,144 | ) | |||||||
Revenue for the 2012 period | $ | 336,305 | $ | 124,265 | $ | 19,451 | $ | 480,021 |
Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Sales of purchased natural gas | |||||||
Purchases from Eni | $ | 40,254 | $ | 47,080 | |||
Purchases from others | 2,588 | 13,036 | |||||
Total | 42,842 | 60,116 | |||||
Costs of purchased natural gas sold | |||||||
Purchases from Eni | 40,288 | 47,024 | |||||
Purchases from others | 2,240 | 12,230 | |||||
Total | 42,528 | 59,254 | |||||
Net sales and purchases of natural gas | $ | 314 | $ | 862 |
Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Midstream revenue from third parties | |||||||
Canada | $ | 1,952 | $ | 2,418 | |||
Texas | 1,096 | 799 | |||||
Total midstream revenue | 3,048 | 3,217 | |||||
Gain from hedge ineffectiveness | 2,067 | 1,698 | |||||
Loss from hedge restructure | (14,555 | ) | — | ||||
Gain (Loss) on commodity derivatives | (21,670 | ) | 48,852 | ||||
Other | (20 | ) | 573 | ||||
Total | $ | (31,130 | ) | $ | 54,340 |
Nine Months Ended September 30, | |||||||||||||||
2012 | 2011 | ||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
Per Mcfe | Per Mcfe | ||||||||||||||
Barnett Shale | |||||||||||||||
Cash expense | $ | 41,633 | $ | 0.53 | $ | 41,500 | $ | 0.45 | |||||||
Equity compensation | 842 | 0.01 | 692 | 0.01 | |||||||||||
$ | 42,475 | $ | 0.54 | $ | 42,192 | $ | 0.46 | ||||||||
Other U.S. | |||||||||||||||
Cash expense | $ | 6,448 | $ | 6.59 | $ | 4,807 | $ | 5.24 | |||||||
Equity compensation | 126 | 0.13 | 181 | 0.20 | |||||||||||
$ | 6,574 | $ | 6.72 | $ | 4,988 | $ | 5.44 | ||||||||
Total U.S. | |||||||||||||||
Cash expense | $ | 48,081 | $ | 0.61 | $ | 46,307 | $ | 0.50 | |||||||
Equity compensation | 968 | 0.01 | 873 | 0.01 | |||||||||||
$ | 49,049 | $ | 0.62 | $ | 47,180 | $ | 0.51 | ||||||||
Horseshoe Canyon | |||||||||||||||
Cash expense | $ | 21,011 | $ | 1.39 | $ | 23,642 | $ | 1.48 | |||||||
Equity compensation | 293 | 0.02 | 368 | 0.03 | |||||||||||
$ | 21,304 | $ | 1.41 | $ | 24,010 | $ | 1.51 | ||||||||
Horn River | |||||||||||||||
Cash expense | $ | 2,052 | $ | 0.32 | $ | 2,176 | $ | 0.55 | |||||||
Equity compensation | — | — | — | — | |||||||||||
$ | 2,052 | $ | 0.32 | $ | 2,176 | $ | 0.55 | ||||||||
Total Canada | |||||||||||||||
Cash expense | $ | 23,063 | $ | 1.07 | $ | 25,818 | $ | 1.30 | |||||||
Equity compensation | 293 | 0.01 | 368 | 0.01 | |||||||||||
$ | 23,356 | $ | 1.08 | $ | 26,186 | $ | 1.31 | ||||||||
Total Company | |||||||||||||||
Cash expense | $ | 71,144 | $ | 0.71 | $ | 72,125 | $ | 0.64 | |||||||
Equity compensation | 1,261 | 0.01 | 1,241 | 0.01 | |||||||||||
$ | 72,405 | $ | 0.72 | $ | 73,366 | $ | 0.65 |
Nine Months Ended September 30, | |||||||||||||||
2012 | 2011 | ||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
Per Mcfe | Per Mcfe | ||||||||||||||
Barnett Shale | $ | 108,997 | $ | 1.40 | $ | 128,724 | $ | 1.40 | |||||||
Other U.S. | 11 | 0.01 | 13 | 0.01 | |||||||||||
Total U.S. | 109,008 | 1.38 | 128,737 | 1.39 | |||||||||||
Horseshoe Canyon | 2,850 | 0.19 | 3,068 | 0.19 | |||||||||||
Horn River | 15,182 | 2.37 | 10,396 | 2.62 | |||||||||||
Total Canada | 18,032 | 0.84 | 13,464 | 0.68 | |||||||||||
Total | $ | 127,040 | $ | 1.27 | $ | 142,201 | $ | 1.26 |
Nine Months Ended September 30, | |||||||||||||||
2012 | 2011 | ||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
Per Mcfe | Per Mcfe | ||||||||||||||
Production taxes | |||||||||||||||
Barnett Shale | $ | 3,608 | $ | 0.05 | $ | 6,779 | $ | 0.07 | |||||||
Other U.S. | 639 | 0.65 | 817 | 0.89 | |||||||||||
Total U.S. | 4,247 | 0.05 | 7,596 | 0.08 | |||||||||||
Horseshoe Canyon | 102 | 0.01 | 156 | 0.01 | |||||||||||
Horn River | — | — | — | — | |||||||||||
Total Canada | 102 | 0.01 | 156 | 0.01 | |||||||||||
Total production taxes | 4,349 | 0.04 | 7,752 | 0.07 | |||||||||||
Ad valorem taxes | |||||||||||||||
U.S. | 14,191 | 0.18 | 14,069 | 0.15 | |||||||||||
Canada | 2,293 | 0.11 | 2,023 | 0.10 | |||||||||||
Total ad valorem taxes | 16,484 | 0.16 | 16,092 | 0.14 | |||||||||||
Total | $ | 20,833 | $ | 0.20 | $ | 23,844 | $ | 0.21 |
Nine Months Ended September 30, | |||||||||||||||
2012 | 2011 | ||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
Per Mcfe | Per Mcfe | ||||||||||||||
Depletion | |||||||||||||||
U.S. | $ | 103,230 | $ | 1.31 | $ | 118,858 | $ | 1.28 | |||||||
Canada | 29,389 | 1.37 | 29,325 | 1.47 | |||||||||||
Total depletion | 132,619 | 1.32 | 148,183 | 1.32 | |||||||||||
Depreciation of other fixed assets | |||||||||||||||
U.S. | $ | 6,825 | 0.09 | $ | 9,293 | 0.10 | |||||||||
Canada | 7,113 | 0.33 | 5,381 | 0.27 | |||||||||||
Total depreciation | 13,938 | 0.14 | 14,674 | 0.13 | |||||||||||
Accretion | 3,033 | 0.03 | 2,004 | 0.01 | |||||||||||
Total | $ | 149,590 | $ | 1.49 | $ | 164,861 | $ | 1.46 |
Nine Months Ended September 30, | |||||||||||||||
2012 | 2011 | ||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
Per Mcfe | Per Mcfe | ||||||||||||||
Cash expense | $ | 32,728 | $ | 0.33 | $ | 33,609 | $ | 0.30 | |||||||
Audit and accounting fees | 5,389 | 0.05 | 869 | 0.01 | |||||||||||
Strategic transaction costs | 998 | 0.01 | 4,534 | 0.04 | |||||||||||
Litigation settlement | — | — | 8,500 | 0.08 | |||||||||||
Equity compensation | 15,721 | 0.16 | 14,233 | 0.12 | |||||||||||
Total | $ | 54,836 | $ | 0.55 | $ | 61,745 | $ | 0.55 |
Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Interest costs on debt outstanding | $ | 128,592 | $ | 130,153 | |||
Add: | |||||||
Fees paid on letters of credit outstanding | 74 | 1,374 | |||||
Premium paid - senior notes repurchased | — | 2,560 | |||||
Non-cash interest (1) | 8,060 | 13,109 | |||||
Total interest costs incurred | 136,726 | 147,196 | |||||
Less: | |||||||
Interest capitalized | (14,378 | ) | (5,073 | ) | |||
Interest expense | $ | 122,348 | $ | 142,123 |
(1) | Amortization of deferred financing costs, original issue discount net of interest swap settlement amortization. |
For the Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
(in thousands) | |||||||
Income tax (benefit) expense - U.S. | $ | (226,684 | ) | $ | 39,262 | ||
Effective tax rate - U.S. | 15.9 | % | 35.0 | % | |||
Income tax (benefit) expense - Canada | $ | (62,947 | ) | $ | 684 | ||
Effective tax rate - Canada | 25.2 | % | (11.8 | )% | |||
Income tax (benefit) expense - total | $ | (289,631 | ) | $ | 39,946 | ||
Effective tax rate - total | 17.3 | % | 37.5 | % |
Production | Daily Production | |||
Year | Gas | NGL | ||
MMcfd | MBbld | |||
2012 | 230 | 7 | ||
2013 | 180 | — | ||
2014 | 140 | — | ||
2015 | 120 | — | ||
2016-2021 | 45 | — |
Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Net cash provided by operating activities | $ | 141,376 | $ | 174,666 | |||
Net cash used by investing activities | (392,232 | ) | (401,436 | ) | |||
Net cash provided by financing activities | 245,253 | 178,549 |
United States | Canada | Consolidated | |||||||||
(In thousands) | |||||||||||
For the Nine Months Ended September 30, 2012 | |||||||||||
Exploration and development | $ | 160,699 | $ | 178,783 | $ | 339,482 | |||||
Midstream | 824 | 12,439 | 13,263 | ||||||||
Administrative | 2,989 | 3,295 | 6,284 | ||||||||
Total | $ | 164,512 | $ | 194,517 | $ | 359,029 | |||||
For the Nine Months Ended September 30, 2011 | |||||||||||
Exploration and development | $ | 377,310 | $ | 84,778 | $ | 462,088 | |||||
Midstream | 8,017 | 49,331 | 57,348 | ||||||||
Administrative | 5,178 | 685 | 5,863 | ||||||||
Total | $ | 390,505 | $ | 134,794 | $ | 525,299 |
• | Reduction of the global borrowing base to $850 million from $1.075 billion |
• | Increase of the applicable margin by 0.50% for each type of loan and issued letters of credit, and setting of the commitment fee on unutilized availability to 0.50% |
• | Reduction of the minimum required interest coverage ratio from 2.5 to 1.5 for the quarter ending September 30, 2012 through the quarter ending March 31, 2014, then increasing to 2.0 for the quarter ending June 30, 2014, and reverting to 2.5 thereafter |
• | Addition of a maximum senior secured debt leverage ratio of 2.5 beginning in the quarter ending September 30, 2012 |
• | Until June 30, 2013, and so long as the total leverage ratio for the prior twelve month period is greater than or equal to 4.0: |
• | Restrict the ability to issue certain additional types of debt; |
• | Limit the aggregate amount of restricted payments to $15 million; |
• | Restrict the ability to repay existing debt securities if global borrowing base utilization equals or exceeds 25%; and |
• | Require a dollar for dollar repayment of the Combined Credit Agreements together with any repayment of existing debt securities if the global borrowing base utilization is less than 25% until the Combined Credit Agreements are paid in full, at which time existing debt securities may be repaid in any amounts; and |
• | Restrict the ability to terminate certain oil and gas hedging arrangements prior to December 31, 2014. |
• | Our accounts receivable balance decreased $27.3 million from December 31, 2011 to September 30, 2012 primarily due to the collection of $14.8 million for a non-income tax matter in Canada and a decrease of $19.6 million in production receivables due to lower realized prices before hedges at September 30, 2012 compared to December 31, 2011, partially offset by an increase of $6.1 million in an income tax receivable from the U.S. federal government from year-end. |
• | Our net property, plant and equipment balance decreased $1.37 billion from December 31, 2011 to September 30, 2012. We incurred capital cost of $359 million during 2012 and also recognized assets for retirement obligations established for new wells and facilities. Changes to U.S.-Canadian exchange rates further increased our property, plant and equipment balances $23.7 million. Offsetting the increases was $1.75 billion of DD&A and impairment expense. |
• | The valuation of our current and non-current net deferred income tax liability was $299.5 million lower from December 31, 2011 to September 30, 2012 due to a deferred income tax benefit recognized on book impairment charges recorded in 2012. Our U.S. deferred tax asset has a full valuation allowance of $283.6 million as we determined reduced likelihood of realizing deferred tax benefits primarily related to our cumulative net operating losses. |
• | The $94.5 million decrease in accounts payable was due to a reduction in accrued capital expenditures of $38.2 million from the December 31, 2011 amount and a decrease in trade payables of $56.3 million from December 31, 2011 as activity has decreased from year‑end. |
• | Long-term debt increased $262.0 million for net borrowings under the Combined Credit Agreements. |
• oil and gas reserves | • stock-based compensation | |
• full cost ceiling calculations | • income taxes | |
• derivative instruments |
ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk |
Product | Type | Production Hedged | Remaining Contract Period | Volume | Weighted Avg Price Per Mcf or Bbl | |||||
Gas | Collar | U.S. | Oct 2012 -Dec 2012 | 20 MMcfd | 6.50 - 7.15 | |||||
Gas | Collar | U.S. | Oct 2012 -Dec 2012 | 20 MMcfd | 6.50 - 7.18 | |||||
Gas | Collar | U.S. | Oct 2012 -Dec 2012 | 20 MMcfd | 6.50 - 8.01 | |||||
Gas | Swap | Canada | Oct 2012 -Dec 2012 | 5 MMcfd | 6.20 | |||||
Gas | Swap | Canada | Oct 2012 -Dec 2012 | 5 MMcfd | 6.20 | |||||
Gas | Swap | Canada | Oct 2012 -Dec 2012 | 10 MMcfd | 6.22 | |||||
Gas | Swap | Canada | Oct 2012 - Dec 2013 | 10 MMcfd | 5.00 | |||||
Gas | Swap | Canada | Oct 2012 - Dec 2015 | 10 MMcfd | 6.42 | |||||
Gas | Swap | Canada | Oct 2012 - Dec 2015 | 10 MMcfd | 6.45 | |||||
Gas | Swap | Canada | Oct 2012 -Dec 2021 | 10 MMcfd | 4.63 | |||||
Gas | Swap | Canada | Jan 2013 - Dec 2015 | 10 MMcfd | 4.04 | |||||
Gas | Swap | U.S. | Oct 2012 - Dec 2013 | 10 MMcfd | 5.00 | |||||
Gas | Swap | U.S. | Oct 2012 - Dec 2013 | 10 MMcfd | 5.00 | |||||
Gas | Swap | U.S. | Oct 2012 - Dec 2013 | 10 MMcfd | 5.00 | |||||
Gas | Swap | U.S. | Oct 2012 - Dec 2015 | 20 MMcfd | 6.00 | |||||
Gas | Swap | U.S. | Oct 2012 - Dec 2015 | 10 MMcfd | 6.00 | |||||
Gas | Swap | U.S. | Oct 2012 - Dec 2015 | 5 MMcfd | 6.23 | |||||
Gas | Swap | U.S. | Oct 2012 - Dec 2015 | 5 MMcfd | 6.20 | |||||
Gas | Swap | U.S. | Oct 2012 - Dec 2015 | 5 MMcfd | 5.68 | |||||
Gas | Swap | U.S. | Oct 2012 - Dec 2021 | 5 MMcfd | 6.20 | |||||
Gas | Swap | U.S. | Oct 2012 - Dec 2021 | 10 MMcfd | 4.54 | |||||
Gas | Swap | U.S. | Oct 2012 - Dec 2021 | 5 MMcfd | 4.38 | |||||
Gas | Swap | U.S. | Oct 2012 - Dec 2021 | 5 MMcfd | 4.35 | |||||
Gas | Swap | U.S. | Oct 2012 - Dec 2021 | 10 MMcfd | 4.37 | |||||
Gas | Swap | U.S | Jan 2013 - Dec 2014 | 10 MMcfd | 3.91 | |||||
Gas | Swap | U.S | Jan 2013 - Dec 2014 | 10 MMcfd | 3.89 | |||||
NGL | Swap | U.S. | Oct 2012-Dec 2012 | 1 MBbld | 42.81 | |||||
NGL | Swap | U.S. | Oct 2012-Dec 2012 | 1 MBbld | 43.07 | |||||
NGL | Swap | U.S. | Oct 2012-Dec 2012 | 2 MBbld | 43.94 | |||||
NGL | Swap | U.S. | Oct 2012-Dec 2012 | 1 MBbld | 47.99 | |||||
NGL | Swap | U.S. | Oct 2012-Dec 2012 | 1 MBbld | 46.55 | |||||
NGL | Swap | U.S. | Oct 2012-Dec 2012 | 1 MBbld | 46.75 |
Production Year | Volume Mmcfd | Weighted Avg Price Per Mcf | ||
2012 | 225 | $5.74 - $6.00 | ||
2013 | 200 | $5.10 | ||
2014 | 170 | $5.08 | ||
2015 | 150 | $5.23 | ||
2016 - 2021 | 40 | $4.48 |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan (2) | Maximum Number of Shares that May Yet Be Purchased Under the Plan (2) | |||||||||
July 2012 | 80,753 | $ | 5.51 | — | — | ||||||||
August 2012 | — | $ | — | — | — | ||||||||
September 2012 | 466 | $ | 3.32 | — | — | ||||||||
Total | 81,219 | $ | 5.50 | — | — |
(1) | Represents shares of common stock surrendered by employees to satisfy income tax withholding obligations arising upon the vesting of restricted stock issued under our stock plan. |
(2) | We do not have a publicly announced plan for repurchasing our common stock. |
ITEM 6. | Exhibits |
Incorporated by Reference | Filed (†) or Furnished (‡) Herewith (as indicated) | ||||||||||||
Exhibit No. | Exhibit Description | Form | SEC File No. | Exhibit | Filing Date | ||||||||
10.1 | Letter to Jeff Cook dated July 20, 2012 | † | |||||||||||
10.2 | Omnibus Amendment No. 2 to Combined Credit Agreements, dated as of August 6, 2012, among Quicksilver Resources Inc., Quicksilver Resources Canada Inc. and the agents and lenders identified therein | 10-Q | 001-14837 | 10.4 | 8/9/2012 | ||||||||
10.3 | PEA Amending Agreement, dated as of August 28, 2012, between Quicksilver Resources Canada Inc. and Nova Gas Transmission Ltd. | 8-K | 001-14837 | 10.1 | 9/10/2012 | ||||||||
10.4 | Amendment to Commitment Letter Agreement, dated as of August 28, 2012, between Quicksilver Resources Canada Inc. and Nova Gas Transmission Ltd. | 8-K | 001-14837 | 10.2 | 9/10/2012 | ||||||||
10.5* | Acquisition and Exploration Agreement, dated September 20, 2012, between Quicksilver Resources Inc. and SWEPI LP | 8-K | 001-14837 | 10.1 | 9/24/2012 | ||||||||
31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | † | |||||||||||
31.2 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | † | |||||||||||
32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | † | |||||||||||
101.INS | XBRL Instance Document | ‡ | |||||||||||
101.SCH | XBRL Taxonomy Extension Schema Linkbase Document | ‡ | |||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ‡ | |||||||||||
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | ‡ | |||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ‡ | |||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ‡ |
Dated: | November 8, 2012 | Quicksilver Resources Inc. | ||
By: | /s/ John C. Regan | |||
John C. Regan | ||||
Senior Vice President-Chief Financial Officer (Duly Authorized Officer, Principal Financial and Accounting Officer) |
Incorporated by Reference | Filed (†) or Furnished (‡) Herewith (as indicated) | ||||||||||||
Exhibit No. | Exhibit Description | Form | SEC File No. | Exhibit | Filing Date | ||||||||
10.1 | Letter to Jeff Cook dated July 20, 2012 | † | |||||||||||
10.2 | Omnibus Amendment No. 2 to Combined Credit Agreements, dated as of August 6, 2012, among Quicksilver Resources Inc., Quicksilver Resources Canada Inc. and the agents and lenders identified therein | 10-Q | 001-14837 | 10.4 | 8/9/2012 | ||||||||
10.3 | PEA Amending Agreement, dated as of August 28, 2012, between Quicksilver Resources Canada Inc. and Nova Gas Transmission Ltd. | 8-K | 001-14837 | 10.1 | 9/10/2012 | ||||||||
10.4 | Amendment to Commitment Letter Agreement, dated as of August 28, 2012, between Quicksilver Resources Canada Inc. and Nova Gas Transmission Ltd. | 8-K | 001-14837 | 10.2 | 9/10/2012 | ||||||||
10.5* | Acquisition and Exploration Agreement, dated September 20, 2012, between Quicksilver Resources Inc. and SWEPI LP | 8-K | 001-14837 | 10.1 | 9/24/2012 | ||||||||
31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | † | |||||||||||
31.2 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | † | |||||||||||
32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | † | |||||||||||
101.INS | XBRL Instance Document | ‡ | |||||||||||
101.SCH | XBRL Taxonomy Extension Schema Linkbase Document | ‡ | |||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ‡ | |||||||||||
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | ‡ | |||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ‡ | |||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ‡ |
• | Subject to your continued employment with Quicksilver through December 31, 2012: |
◦ | Base salary at your current rate through December 31, 2012; and |
◦ | Participation by you and your eligible dependents, if applicable, in Quicksilver's benefit plans, as they may be amended from time to time, through December 31, 2012; |
• | Subject to your employment through November 30, 2012 and your execution of a separation and release agreement satisfactory to Quicksilver, on November 30, 2012 you will receive a grant of Quicksilver stock having a value of $900,000 based on the closing price on the date of grant, which will be 100% vested on that date; |
• | You will receive retirement treatment for your Quicksilver options. The effect of retirement treatment is that any unvested options are now 100% vested and each outstanding option will remain exercisable for the shorter of 5 years following the date of your termination of employment and the original term of the option; and |
• | Immediate vesting of your restricted stock. |
1. | I have reviewed this quarterly report on Form 10-Q of Quicksilver Resources Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
/s/ Glenn Darden | |
Glenn Darden | |
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Quicksilver Resources Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
/s/John C. Regan | |
John C. Regan | |
Senior Vice President – Chief Financial Officer | |
(Principal Financial and Accounting Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. |
By: | /s/ John C. Regan | By: | /s/ Glenn Darden | |||
John C. Regan | Glenn Darden | |||||
Senior Vice President – Chief Financial Officer | President and Chief Executive Officer | |||||
(Principal Financial and Accounting Officer) |
Derivatives And Fair Value Measurements (Changes In Level 3 Fair Values) (Details) (Fair Value Inputs, Level 3 [Member], USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Balance at beginning of period | $ 45,345 | $ 19,115 | $ 150,989 | $ 0 |
Unrealized gain (loss) on commodity hedges | 0 | 29,737 | (21,670) | 48,852 |
Realized loss on hedge restructure | (14,555) | 0 | ||
Gain (loss) from hedge ineffectiveness | (1,554) | 0 | 2,155 | 0 |
Transfers out of Level 3 | (109,685) | 0 | ||
Changes included in Other Revenue | 152 | 0 | 2,797 | 0 |
Unrealized gains (losses) reported in OCI | (49,874) | 18,258 | 5,444 | 18,258 |
Balance at ending of period | (13,626) | 67,110 | (13,626) | 67,110 |
The amount of total gains or losses for the period included in other revenue attributable to the change in unrealized gains or losses related to assets still held at the reporting date | (1,402) | 29,737 | (16,718) | 48,852 |
Production Revenue [Member]
|
||||
Settlements | (1,315) | 0 | (11,990) | 0 |
Other Revenue [Member]
|
||||
Settlements | $ (6,380) | $ 0 | $ (17,111) | $ 0 |
Income Taxes Uncertain tax position (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended |
---|---|
Sep. 30, 2012
|
|
Income Tax Disclosure [Abstract] | |
Unrecognized Tax Benefits, Decreases Resulting from Prior Period Tax Positions | $ 9.2 |
Property, Plant And Equipment (Schedule Of Property, Plant And Equipment) (Details) (USD $)
In Thousands, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Subject to depletion | $ 5,681,541 | $ 5,309,330 |
Unevaluated costs | 439,767 | 433,341 |
Accumulated depletion | (4,275,280) | (2,516,195) |
Net oil and gas properties | 1,846,028 | 3,226,476 |
Pipelines and processing facilities | 368,926 | 340,242 |
General properties | 75,908 | 71,297 |
Accumulated depreciation | (196,813) | (177,496) |
Net other property and equipment | 248,021 | 234,043 |
Property, plant and equipment - net | $ 2,094,049 | $ 3,460,519 |
Commitments And Contingencies (Details) (NGTL [Member], CAD)
In Millions, unless otherwise specified |
Sep. 30, 2012
|
Sep. 07, 2012
|
---|---|---|
NGTL [Member]
|
||
Letters of Credit Outstanding, Amount | 29.7 | 68.3 |
Investment In BBEP (Operations Statement) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
Jun. 30, 2011
BBEP [Member]
|
Jun. 30, 2011
BBEP [Member]
|
|||||||
Business Acquisition [Line Items] | ||||||||||||
Revenue | $ 177,702 | $ 259,893 | $ 491,733 | $ 720,526 | $ 142,368 | [1] | $ 147,829 | [1] | ||||
Operating expense | 699,637 | 191,912 | 2,069,554 | 574,662 | 72,929 | 226,349 | ||||||
Operating income (loss) | (521,935) | 67,981 | (1,536,724) | 145,864 | 69,439 | (78,520) | ||||||
Interest and other | 11,300 | [2] | 30,363 | [2] | ||||||||
Income tax expense (benefit) | 82,352 | 16,414 | (289,631) | 39,946 | 616 | (825) | ||||||
Noncontrolling interests | 68 | 137 | ||||||||||
Net income (loss) available to BBEP unitholders | $ (651,762) | $ 28,686 | $ (1,384,227) | $ 66,515 | $ 57,455 | $ (108,195) | ||||||
|
Segment Information (Tables)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Income And Property And Equipment Costs Incurred |
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Derivatives And Fair Value Measurements (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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Credit Risk Derivatives, at Fair Value, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Value Of Derivative Instruments Under Input Levels |
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Changes In Level 3 Fair Values |
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Price Collars And Swaps For Anticipated Natural Gas And NGL Production |
|
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Reduction Of Interest Expense Over The Life Of The Debt Instruments |
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Estimated Fair Value Of Derivative Instruments |
|
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Carrying Value Of Derivatives |
|
Long-Term Debt (Schedule Of Long-Term Debt Instruments) (Details) (USD $)
In Thousands, unless otherwise specified |
9 Months Ended | |
---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
|
Debt Instrument [Line Items] | ||
Total debt | $ 2,147,280 | $ 1,881,552 |
Unamortized deferred gain - terminated interest rate swaps | 18,104 | 21,897 |
Current portion of long-term debt | 0 | (18) |
Long-term debt | 2,165,384 | 1,903,431 |
Combined Credit Agreements [Member]
|
||
Debt Instrument [Line Items] | ||
Combined Credit Agreements | 490,091 | 227,482 |
Senior Notes Due 2015 [Member]
|
||
Debt Instrument [Line Items] | ||
Senior notes | 435,644 | 435,020 |
Senior notes maturity period | 2015 | |
Senior Notes Due 2016 [Member]
|
||
Debt Instrument [Line Items] | ||
Senior notes | 579,069 | 576,977 |
Senior notes maturity period | 2016 | |
Senior Notes Due 2019 [Member]
|
||
Debt Instrument [Line Items] | ||
Senior notes | 292,476 | 292,055 |
Senior notes maturity period | 2019 | |
Senior Subordinated Notes [Member]
|
||
Debt Instrument [Line Items] | ||
Senior notes | 350,000 | 350,000 |
Convertible Debentures [Member]
|
||
Debt Instrument [Line Items] | ||
Convertible debentures, net of unamortized discount | $ 0 | $ 18 |
Derivatives And Fair Value Measurements (Estimated Fair Value Of Derivative Instruments) (Details) (USD $)
In Thousands, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Current derivative assets | $ 126,075 | $ 162,845 |
Noncurrent derivative assets | 109,313 | 183,982 |
Current derivative liabilities | 0 | 4,028 |
Noncurrent derivative liabilities | 42,538 | 0 |
Asset Derivatives [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Total derivative assets | 243,879 | 349,466 |
Liability Derivatives [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Total derivative liabilities | 51,029 | 6,667 |
Designated As Hedging Instrument [Member] | Asset Derivatives [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Current derivative assets | 126,075 | 165,484 |
Noncurrent derivative assets | 116,895 | 183,982 |
Current derivative liabilities | 0 | 0 |
Noncurrent derivative liabilities | 909 | 0 |
Total derivative assets | 243,879 | 349,466 |
Designated As Hedging Instrument [Member] | Liability Derivatives [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Current derivative assets | 0 | 2,639 |
Noncurrent derivative assets | 7,582 | 0 |
Current derivative liabilities | 0 | 4,028 |
Noncurrent derivative liabilities | 43,447 | 0 |
Total derivative liabilities | 51,029 | 6,667 |
Not Designated as Hedging Instrument [Member] | Asset Derivatives [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Total derivative assets | 0 | 0 |
Not Designated as Hedging Instrument [Member] | Liability Derivatives [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Total derivative liabilities | $ 0 | $ 0 |
Asset Retirement Obligations (Estimated Asset Retirement Obligation Activity) (Details) (USD $)
In Thousands, unless otherwise specified |
9 Months Ended | |
---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
|
Asset Retirement Obligation [Abstract] | ||
Beginning asset retirement obligations | $ 85,822 | |
Additional liability incurred | 2,263 | |
Change in estimates | 4,665 | |
Accretion expense | 3,033 | |
Asset retirement costs incurred | (1,422) | |
Settlement of liability in excess of obligation recorded | 1,998 | |
Currency translation adjustment | 1,666 | |
Ending asset retirement obligations | 98,025 | |
Less current portion | (254) | |
Long-term asset retirement obligation | $ 97,771 | $ 85,568 |
Supplemental Cash Flow Information (Other Significant Noncash Transactions) (Details) (USD $)
In Thousands, unless otherwise specified |
9 Months Ended | |
---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Supplemental Cash Flow Information [Abstract] | ||
Working capital related to capital expenditures | $ 37,386 | $ 75,409 |
Earnings Per Share (Reconciliation Of Components Used To Compute Basic And Diluted Net Income Per Common Share) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||||
Net income (loss) attributable to Quicksilver | $ (651,762) | $ 28,686 | $ (1,384,227) | $ 66,515 | ||||||||
Basic income allocable to participating securities | 0 | [1] | (359) | [1] | 0 | [1] | (801) | [1] | ||||
Basic net income(loss) attributable to Quicksilver | $ (651,762) | $ 28,327 | $ (1,384,227) | $ 65,714 | ||||||||
Weighted average common shares - basic | 170,179,000 | 169,031,000 | 170,054,000 | 168,963,000 | ||||||||
Share-based compensation awards | 0 | [2] | 705,000 | [2] | 0 | [2] | 805,000 | [2] | ||||
Weighted average common shares - diluted | 170,179,000 | [2] | 169,736,000 | [2] | 170,054,000 | [2] | 169,768,000 | [2] | ||||
Earnings (loss) per common share - basic | $ (3.83) | [2] | $ 0.17 | [2] | $ (8.14) | [2] | $ 0.39 | [2] | ||||
Earnings (loss) per common share - diluted | $ (3.83) | [2] | $ 0.17 | [2] | $ (8.14) | [2] | $ 0.39 | [2] | ||||
Convertible debt interest rate | 1.875% | |||||||||||
Convertible Debentures [Member]
|
||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||||
Antidilutive shares excluded from the diluted share calculation | 9,800,000 | 9,800,000 | ||||||||||
Stock Options [Member]
|
||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||||
Antidilutive shares excluded from the diluted share calculation | 5,000,000 | 2,000,000 | 5,000,000 | 2,000,000 | ||||||||
Restricted Stock Units (RSUs) [Member]
|
||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||||
Antidilutive shares excluded from the diluted share calculation | 300,000 | 1,900,000 | 300,000 | 1,900,000 | ||||||||
|
Property, Plant And Equipment (Narrative) (Details) (USD $)
|
3 Months Ended | 6 Months Ended | 9 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
Mar. 31, 2012
|
Sep. 30, 2011
|
Jun. 30, 2012
|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
U.S. Oil And Gas Properties [Member]
|
Jun. 30, 2012
U.S. Oil And Gas Properties [Member]
|
Mar. 31, 2012
U.S. Oil And Gas Properties [Member]
|
Jun. 30, 2012
U.S. Oil And Gas Properties [Member]
|
Sep. 30, 2012
U.S. Oil And Gas Properties [Member]
|
Sep. 30, 2012
Canadian Oil And Gas Properties [Member]
|
Jun. 30, 2012
Canadian Oil And Gas Properties [Member]
|
Mar. 31, 2012
Canadian Oil And Gas Properties [Member]
|
Jun. 30, 2012
Canadian Oil And Gas Properties [Member]
|
Sep. 30, 2012
Canadian Oil And Gas Properties [Member]
|
|
Property, Plant and Equipment [Line Items] | ||||||||||||||||
Impairment | $ 546,835,000 | $ 0 | $ 1,601,502,000 | $ 49,063,000 | $ 436,500,000 | $ 898,700,000 | $ 62,300,000 | $ 105,400,000 | $ 93,200,000 | $ 400,000 | ||||||
Ceiling amount using Henry Hub price | 3.73 | 3.15 | 2.83 | |||||||||||||
Percentage decrease of Henry Hub stated price | 9.50% | 23.50% | 31.30% | |||||||||||||
Ceiling amount using AECO price | 3.64 | 2.72 | 2.48 | |||||||||||||
Percentage decrease of AECO stated price | 1.00% | 25.50% | 32.10% | |||||||||||||
Ceiling amount computed using Mont Belvieu benchmark price | 35.61 | 35.49 | ||||||||||||||
Percentage decrease of Mont Belvieu stated price | 24.50% | 24.80% | ||||||||||||||
Amount of ceiling tests included in value of derivatives treated as hedges | 357,400,000 | 357,400,000 | 140,100,000 | 140,100,000 | ||||||||||||
Additional impairment expenses | 357,400,000 | 140,100,000 | ||||||||||||||
Other Asset Impairment Charges | $ 4,900,000 |
Crestwood Earn-Out
|
9 Months Ended |
---|---|
Sep. 30, 2012
|
|
Crestwood Earn Out [Abstract] | |
Crestwood Earn-Out | CRESTWOOD EARN-OUT In October 2010, we completed the sale of all of our interests in KGS to Crestwood. As part of the sale, we have the right to collect future earn-out payments through 2013. In February 2012, we collected $41 million of these earn-out payments which is presented as “Crestwood earn-out” in the condensed consolidated statement of income. We have the right to collect up to an additional $31 million in future earn-out payments in 2013, but do not anticipate receiving any additional payment and have recognized no assets related to these opportunities. Note 3 to the consolidated financial statements in our 2011 Annual Report on Form 10-K contains additional information regarding the Crestwood Transaction. |