Quicksilver Gas Services LP (NYSE: KGS) today reported net income
for the second quarter of 2009 of $7.4 million, up 32% from $5.6
million reported in the prior-year period. Earnings before
interest, income taxes, depreciation and accretion ("EBITDA"), a
non-GAAP measure, was $16.2 million for the second quarter of 2009,
an increase of 42% from the 2008 second quarter EBITDA of $11.5
million.
Second-Quarter 2009 Highlights
-- Increased average gathered volumes to approximately 223 MMcf per day;
up 18% versus the prior-year quarter
-- Increased distributable cash flow to $12.6 million; up 20% year-over-
year
-- Connected approximately 12 miles of gathering infrastructure
-- Connected 21 new wells to the gathering system
"Strong year-over-year growth in revenues, net income and
distributable cash flow, during a very challenging period for our
industry, is a testament to the quality of our assets and operating
structure," said Toby Darden, Quicksilver Gas Services president
and chief executive officer. "Producers' reduced activity levels in
the Fort Worth Basin have lowered our near-term growth estimates
and we are responding prudently by minimizing capital spending and
maximizing financial flexibility. We believe that this approach
will serve us well as we continue to pursue accretive growth
opportunities."
Capital Program
For the second quarter of 2009, the company incurred
approximately $12.5 million of capital costs, including $2.5
million of maintenance capital. Expenditures during the quarter
included the connection of approximately 12 miles of gathering
lines and 21 new wells to the gathering system.
Debt and Liquidity
Based on results through June 30, 2009, the company's total
borrowing capacity under its senior secured revolving credit
facility is $235 million and the company had drawn $195.9 million,
resulting in $39.1 million of available capacity.
Distributions
On July 20, 2009, the company announced a cash distribution for
the 2009 second quarter of $.37 per unit. For the three months
ended June 30, 2009, distributable cash flow, a non-GAAP financial
measure, totaled $12.6 million, which provided 1.39 times the
amount required to cover the total distributions to both the
limited and general partners for the period.
Conference Call
Quicksilver Gas Services will host a conference call for
investors and analysts at 10:00 a.m. eastern time today to discuss
the second-quarter 2009 operating and financial results and its
outlook for the future. The company invites interested parties to
listen to the call via the company's website at www.kgslp.com or by
calling 1-877-313-7932, using the conference ID number 80360462,
approximately 10 minutes prior to the call. A digital replay of the
conference call will be available at 3:00 p.m. eastern time today
and will remain available for 30 days. The replay can be accessed
at 1-800-642-1687 using the conference ID number 80360462. The
replay will also be archived for 30 days on the company's
website.
Use of Non-GAAP Financial Measures
This press release and the accompanying schedules include the
non-generally accepted accounting principles ("non-GAAP") financial
measures of EBITDA, adjusted gross margin and distributable cash
flow. The accompanying schedules on pages 7-8 of this news release
provide reconciliations of these non-GAAP financial measures to
their most directly comparable financial measures calculated and
presented in accordance with accounting principles generally
accepted in the United States of America ("GAAP"). Our non-GAAP
financial measures should not be considered as alternatives to GAAP
measures such as net income or operating income or any other GAAP
measure of liquidity or financial performance.
About Quicksilver Gas Services
Fort Worth, Texas-based Quicksilver Gas Services is a
growth-oriented limited partnership in the business of gathering
and processing natural gas produced from the Barnett Shale geologic
formation in the Fort Worth Basin of north Texas. The company began
operation in 2004 to provide these services to Quicksilver
Resources Inc., which owns our general partner. For more
information about Quicksilver Gas Services, visit
www.kgslp.com.
Forward-Looking Statements
The statements in this news release regarding future events,
occurrences, circumstances, activities, performance, outcomes and
results are forward-looking statements. Although these statements
reflect the current views, assumptions and expectations of
Quicksilver Gas Services LP's management, the matters addressed
herein are subject to numerous risks and uncertainties, which could
cause actual activities, performance, outcomes and results to
differ materially from those indicated. Factors that could result
in such differences or otherwise materially affect Quicksilver Gas
Services LP's financial condition, results of operations and cash
flows include: changes in general economic conditions; fluctuations
in natural gas prices; failure or delays in Quicksilver Resources
Inc. and third parties achieving expected production from natural
gas projects; competitive conditions in our industry; actions taken
or non-performance by third parties, including suppliers,
contractors, operators, processors, transporters and customers;
fluctuations in the value of certain of our assets and liabilities;
changes in the availability and cost of capital; operating hazards,
natural disasters, weather-related delays, casualty losses and
other matters beyond our control; construction costs or capital
expenditures exceeding estimated or budgeted amounts; the effects
of existing and future laws and governmental regulations; and the
effects of current and future litigation; as well as other factors
disclosed in Quicksilver Gas Services LP's filings with the
Securities and Exchange Commission. Except as required by law, we
do not intend to update or revise any forward-looking statements,
whether as a result of new information, future events, or
otherwise.
KGS 09-08
QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per unit data - Unaudited
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2009 2008 2009 2008
------------- ------------- ------------ ------------
Revenue
Gathering and
transportation
revenue -
Quicksilver $ 14,092 $ 7,199 $ 28,166 $ 13,676
Gathering and
transportation
revenue 669 1,633 1,644 2,453
Gas processing
revenue -
Quicksilver 8,684 7,701 17,386 14,521
Gas processing
revenue 311 1,447 1,049 2,290
Other revenue -
Quicksilver 225 225 450 450
------------- ------------- ------------ ------------
Total revenue 23,981 18,205 48,695 33,390
------------- ------------- ------------ ------------
Expenses
Operations and
maintenance 6,003 5,312 11,414 10,262
General and
administrative 1,738 1,422 3,730 3,239
Depreciation and
accretion 5,768 3,407 10,809 6,563
------------- ------------- ------------ ------------
Total expenses 13,509 10,141 25,953 20,064
------------- ------------- ------------ ------------
Operating income 10,472 8,064 22,742 13,326
Other income 1 1 1 6
Interest expense 2,813 2,421 5,686 4,839
------------- ------------- ------------ ------------
Income before income
taxes 7,660 5,644 17,057 8,493
Income tax provision 248 38 211 3
------------- ------------- ------------ ------------
Net income $ 7,412 $ 5,606 $ 16,846 $ 8,490
============= ============= ============ ============
General partner
interest in net
income $ 233 $ 126 $ 504 $ 182
Common and
subordinated
unitholders'
interest in net
income 7,179 5,480 16,342 8,308
Earnings per common
and subordinated
unit:
Basic $ 0.30 $ 0.23 $ 0.69 $ 0.35
Diluted 0.27 0.23 0.61 0.35
Weighted average
number of common
and subordinated
units outstanding:
Basic 23,827 23,783 23,827 23,783
Diluted 28,395 23,924 28,489 23,924
QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except for unit data - Unaudited
June 30, December 31,
2009 2008
--------- ------------
ASSETS
Current assets
Cash and cash equivalents $ 581 $ 303
Accounts receivable 583 2,082
Accounts receivable from Quicksilver 1,317 -
Prepaid expenses and other current assets 577 594
--------- ------------
Total current assets 3,058 2,979
Property, plant and equipment, net 507,462 488,120
Other assets 1,731 1,916
--------- ------------
$ 512,251 $ 493,015
========= ============
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Current maturities of debt $ 1,925 $ 1,375
Accounts payable to Quicksilver - 10,502
Accrued additions to property, plant and
equipment 10,105 17,433
Accounts payable and other 3,392 1,930
--------- ------------
Total current liabilities 15,422 31,240
Long-term debt 195,900 174,900
Note payable to Quicksilver 52,817 52,271
Repurchase obligations to Quicksilver 133,443 123,298
Asset retirement obligations 8,898 5,234
Deferred income tax liability 580 369
Partners' capital
Common unitholders (12,313,451 and 12,269,714
units issued and outstanding at June 30, 2009
and December 31, 2008, respectively) 108,176 108,036
Subordinated unitholders (11,513,625 units issued
and outstanding at June 30, 2009 and December
31, 2008) (2,951) (2,328)
General partner (34) (5)
--------- ------------
Total partners' capital 105,191 105,703
--------- ------------
$ 512,251 $ 493,015
========= ============
QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands - Unaudited
Six Months Ended June 30,
--------------------------
2009 2008
------------ ------------
Operating activities:
Net income $ 16,846 $ 8,490
Adjustments to reconcile net income to
net cash provided by
operating activities:
Depreciation 10,631 6,478
Accretion of asset retirement
obligation 178 85
Deferred income taxes 211 (55)
Equity-based compensation 870 501
Non-cash interest expense 3,252 4,607
Changes in assets and liabilities:
Accounts receivable 1,499 (1,435)
Prepaid expenses and other assets 32 (562)
Accounts receivable and payable with
Quicksilver (2,284) 5,170
Accounts payable and other 2,051 801
------------ ------------
Net cash provided by operating activities 33,286 24,080
------------ ------------
Investing activities:
Capital expenditures (35,780) (59,434)
------------ ------------
Net cash used in investing activities (35,780) (59,434)
------------ ------------
Financing activities:
Proceeds from revolving credit facility
borrowings 31,500 50,300
Repayment of credit facility (10,500) -
Repayment for subordinated note payable to
Quicksilver - (550)
Distributions to unitholders (18,165) (14,914)
Other (63) -
------------ ------------
Net cash provided by financing activities 2,772 34,836
------------ ------------
Net cash increase (decrease) 278 (518)
Cash at beginning of period 303 1,125
------------ ------------
Cash at end of period $ 581 $ 607
============ ============
QUICKSILVER GAS SERVICES LP
OPERATING STATISTICS
Unaudited
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Volume Data:
Volumes gathered (MMcf) 20,263 17,127 44,049 31,678
Volumes processed (MMcf) 14,108 14,593 28,760 26,749
QUICKSILVER GAS SERVICES LP
RECONCILIATION OF NET INCOME TO
DISTRIBUTABLE CASH FLOW
In thousands - Unaudited
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Net income $ 7,412 $ 5,606 $ 16,846 $ 8,490
Depreciation and accretion
expense 5,768 3,407 10,809 6,563
Income tax provision 248 38 211 3
Non-cash interest expense, net of
capitalized interest cost paid 1,693 1,947 2,941 4,100
Maintenance capital expenditures (2,500) (473) (5,000) (945)
-------- -------- -------- --------
Distributable cash flow $ 12,621 $ 10,525 $ 25,807 $ 18,211
======== ======== ======== ========
QUICKSILVER GAS SERVICES LP
RECONCILIATION OF NET INCOME TO
ADJUSTED GROSS MARGIN and EBITDA
Unaudited
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2009 2008 2009 2008
-------- -------- -------- --------
(In thousands)
Total revenues $ 23,981 $ 18,205 $ 48,695 $ 33,390
Operations and maintenance expense 6,003 5,312 11,414 10,262
General and administrative expense 1,738 1,422 3,730 3,239
-------- -------- -------- --------
Adjusted gross margin 16,240 11,471 33,551 19,889
Other income 1 1 1 6
-------- -------- -------- --------
EBITDA 16,241 11,472 33,552 19,895
Depreciation and accretion expense 5,768 3,407 10,809 6,563
Interest expense 2,813 2,421 5,686 4,839
Income tax provision 248 38 211 3
-------- -------- -------- --------
Net income $ 7,412 $ 5,606 $ 16,846 $ 8,490
======== ======== ======== ========
Investor and Media Contact Rick Buterbaugh 817-665-4835
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