Quicksilver Gas Services LP (NYSE: KGS) today reported net income
of $33.2 million ($1.21 per diluted unit) for 2009, up
approximately 26% from the prior-year net income of $26.4 million
($0.96 per diluted unit). For the fourth quarter of 2009, net
income was $7.7 million ($0.28 per diluted unit) compared to $11.5
million ($0.40 per diluted unit) reported in the prior-year
quarter.
Earnings before interest, income taxes, depreciation and
accretion ("EBITDA"), a non-GAAP financial measure, for the full
year of 2009 was $63.4 million, an increase of 26% from the 2008
full-year EBITDA of $50.4 million. For the fourth quarter, EBITDA
was $15.0 million in 2009 versus $17.7 million in 2008.
2009 Highlights
-- Increased average gathered volumes to approximately 215 MMcf per day;
up 11% versus the prior year
-- Reduced unit operating expense 4% to $0.26 per gathered unit
-- Announced acquisition of the Alliance Midstream Assets
-- Connected approximately 21 miles of gathering infrastructure
-- Connected 51 new wells to the gathering system
-- Increased credit facility 36% to $320 million
"Our team did an outstanding job in 2009, increasing gathered
volumes and reducing unit operating costs, during a very
challenging year for our industry," said Toby Darden, Quicksilver
Gas Services' president and chief executive officer. "The recent
acquisition of the Alliance system coupled with increasing producer
activities in the Fort Worth Basin should provide a solid base for
significant growth at Quicksilver Gas Services."
Capital Program
The company incurred approximately $29 million of capital costs
in 2009, including approximately $10 million of maintenance
capital. Expenditures during the fourth quarter totaled $6.4
million and included the connection of approximately four miles of
gathering lines and 10 new wells to the gathering system.
Debt and Liquidity
The company's total commitments under its senior secured
revolving credit facility was increased to $320 million in October
and at December 31, 2009, the company had approximately $125.4
million drawn on this facility. Currently, the company has
approximately $222.8 million drawn on this facility.
Distributions
On January 18, 2010, the company announced a cash distribution
for the 2009 fourth quarter of $0.39 per unit. For the three months
ended December 31, 2009, distributable cash flow, a non-GAAP
financial measure, totaled $11.5 million, which provided 1.0 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 fourth-quarter and full-year of 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 44416698, 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 44416698. 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 page 7 of this news release
provide reconciliations of these non-GAAP financial measures to
their most directly comparable financial measures calculated and
presented in accordance with accounting principles generally
accepted in the United States of America ("GAAP"). Our non-GAAP
financial measures should not be considered as alternatives to GAAP
measures such as net income or operating income or any other GAAP
measure of liquidity or financial performance.
About Quicksilver Gas Services
Fort Worth, Texas-based Quicksilver Gas Services is a
growth-oriented limited partnership in the business of gathering
and processing natural gas produced from the Barnett Shale geologic
formation in the Fort Worth Basin of north Texas. The company began
operation in 2004 to provide these services to Quicksilver
Resources Inc., which owns our general partner. For more
information about Quicksilver Gas Services, visit
www.kgslp.com.
Forward-Looking Statements
The statements in this news release regarding future events,
occurrences, circumstances, activities, performance, outcomes and
results are forward-looking statements. Although these statements
reflect the current views, assumptions and expectations of
Quicksilver Gas Services LP's management, the matters addressed
herein are subject to numerous risks and uncertainties, which could
cause actual activities, performance, outcomes and results to
differ materially from those indicated. Factors that could result
in such differences or otherwise materially affect Quicksilver Gas
Services LP's financial condition, results of operations and cash
flows include: changes in general economic conditions; fluctuations
in natural gas prices; failure or delays in Quicksilver Resources
Inc. and third parties achieving expected production from natural
gas projects; competitive conditions in our industry; actions taken
or non-performance by third parties, including suppliers,
contractors, operators, processors, transporters and customers;
fluctuations in the value of certain of our assets and liabilities;
changes in the availability and cost of capital; operating hazards,
natural disasters, weather-related delays, casualty losses and
other matters beyond our control; construction costs or capital
expenditures exceeding estimated or budgeted amounts; the effects
of existing and future laws and governmental regulations, including
environmental and climate change requirements; and the effects of
existing and future litigation; as well as other factors disclosed
in Quicksilver Gas Services LP's filings with the Securities and
Exchange Commission. The forward-looking statements included in
this press release are made only as of the date of this press
release, and we undertake no obligation to update any of these
forward-looking statements to reflect subsequent events or
circumstances except to the extent required by applicable law.
QUICKSILVER GAS SERVICES LP
CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per unit data - Unaudited
Three Months Ended Year Ended
December 31, December 31,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Revenue
Gathering and transportation
revenue - Quicksilver $ 12,686 $ 12,874 $ 53,253 $ 34,468
Gathering and transportation
revenue 682 1,464 2,125 5,231
Gas processing revenue -
Quicksilver 7,064 8,261 32,605 30,127
Gas processing revenue 738 1,561 2,082 5,358
Other revenue - Quicksilver 500 225 1,641 900
-------- -------- -------- --------
Total revenue 21,670 24,385 91,706 76,084
-------- -------- -------- --------
Expenses
Operations and maintenance 4,509 4,989 20,677 19,284
General and administrative 2,146 1,695 7,609 6,407
Depreciation and accretion 4,881 3,570 19,324 12,968
-------- -------- -------- --------
Total expenses 11,536 10,254 47,610 38,659
-------- -------- -------- --------
Operating income 10,134 14,131 44,096 37,425
Other income - 1 1 11
Interest expense 2,303 2,057 8,519 8,437
-------- -------- -------- --------
Income from continuing operations
before income taxes 7,831 12,075 35,578 28,999
Income tax provision (47) 145 399 253
-------- -------- -------- --------
Net income from continuing
operations 7,878 11,930 35,179 28,746
Loss from discontinued operations (190) (392) (1,992) (2,330)
-------- -------- -------- --------
Net income $ 7,688 $ 11,538 $ 33,187 $ 26,416
======== ======== ======== ========
General partner interest in net
income $ 381 $ 338 $ 1,189 $ 652
Common and subordinated
unitholders' interest in net
income 7,307 11,200 31,998 25,764
Basic earnings per unit:
From continuing operations per
common and subordinated unit $ 0.31 $ 0.49 $ 1.41 $ 1.18
From discontinued operations
per common and subordinated
unit $ (0.01) $ (0.02) $ (0.08) $ (0.10)
Net earnings per common and
subordinated unit $ 0.30 $ 0.47 $ 1.33 $ 1.08
Diluted earnings per unit:
From continuing operations per
common and subordinated unit $ 0.29 $ 0.42 $ 1.28 $ 1.04
From discontinued operations
per common and subordinated
unit $ (0.01) $ (0.01) $ (0.07) $ (0.08)
Net earnings per common and
subordinated unit $ 0.28 $ 0.40 $ 1.21 $ 0.96
Weighted average number of common
and subordinated units outstanding:
Basic 24,740 23,783 24,057 23,783
Diluted 28,051 29,583 28,189 29,583
QUICKSILVER GAS SERVICES LP
CONSOLIDATED BALANCE SHEETS
In thousands, except for unit data - Unaudited
December 31, December 31,
2009 2008
------------- ------------
ASSETS
Current assets
Cash and cash equivalents $ 746 $ 303
Accounts receivable 1,342 1,908
Prepaid expenses and other current assets 180 594
------------- ------------
Total current assets 2,268 2,805
Property, plant and equipment, net 396,952 432,272
Assets of discontinued operations - 56,022
Other assets 2,859 1,916
------------- ------------
$ 402,079 $ 493,015
============= ============
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Current maturities of debt $ 2,475 $ 1,375
Accounts payable to Quicksilver 1,727 10,917
Accrued additions to property, plant and
equipment 4,011 13,755
Accounts payable and other 2,240 1,852
------------- ------------
Total current liabilities 10,453 27,899
Long-term debt 125,400 174,900
Note payable to Quicksilver 53,243 52,271
Repurchase obligations to Quicksilver - 66,997
Asset retirement obligations 7,654 4,574
Deferred income tax liability 768 369
Liabilities of discontinued operations - 60,302
Partners' capital
Common unitholders (16,313,451 and 12,269,714
units issued and outstanding at December 31,
2009 and December 31, 2008, respectively) 200,963 108,036
Subordinated unitholders (11,513,625 units
issued and outstanding at December 31, 2009
and 2008) 3,040 (2,328)
General partner 558 (5)
------------- ------------
Total partners' capital 204,561 105,703
------------- ------------
$ 402,079 $ 493,015
============= ============
QUICKSILVER GAS SERVICES LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands - Unaudited
Year Ended December 31,
--------------------------
2009 2008
------------ ------------
Operating activities:
Net income $ 33,187 $ 26,416
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 21,542 14,382
Accretion of asset retirement obligations 394 184
Deferred income taxes 399 196
Equity-based compensation 1,705 1,017
Non-cash interest expense 6,191 9,787
Changes in assets and liabilities:
Accounts receivable 740 (1,200)
Prepaid expenses and other assets 387 (612)
Accounts receivable and payable with
Quicksilver 3,621 4,002
Accounts payable and other (33) (1,489)
------------ ------------
Net cash provided by operating activities 68,133 52,683
------------ ------------
Investing activities:
Capital expenditures (54,818) (148,079)
------------ ------------
Net cash used in investing activities (54,818) (148,079)
------------ ------------
Financing activities:
Proceeds from revolving credit facility
borrowings 56,000 169,900
Debt issuance costs paid (1,446) (486)
Repayment of repurchase obligation to
Quicksilver (5,645) (42,085)
Repayments of credit facility (105,500) -
Repayment of subordinated note payable to
Quicksilver - (825)
Proceeds from issuance of equity units 80,760 -
Issuance costs of equity units paid (31) -
Distributions to unitholders (36,947) (31,930)
Other (63) -
------------ ------------
Net cash provided by (used in) financing
activities (12,872) 94,574
------------ ------------
Net cash increase (decrease) 443 (822)
Cash at beginning of period 303 1,125
------------ ------------
Cash at end of period $ 746 $ 303
============ ============
QUICKSILVER GAS SERVICES LP
OPERATING STATISTICS
Unaudited
Three Months Ended Year Ended
December 31, December 31,
----------------------- -----------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Volume Data:
Volumes gathered (MMcf) 18,462 21,960 78,469 70,617
Volumes processed (MMcf) 12,428 15,355 54,386 56,225
QUICKSILVER GAS SERVICES LP
RECONCILIATION OF DISTRIBUTABLE CASH FLOW
TO NET INCOME
In thousands - Unaudited
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Net income from continuing
operations $ 7,878 $ 11,930 $ 35,179 $ 28,746
Depreciation and
accretion expense 4,881 3,570 19,324 12,968
Income tax
provision/(payments) (47) 145 399 (79)
Non-cash interest
expense, net of
capitalized interest
cost paid 1,320 1,181 3,837 6,096
Maintenance capital
expenditures (2,500) (473) (10,000) (1,890)
---------- ---------- ---------- ----------
Distributable cash flow $ 11,532 $ 16,353 $ 48,739 $ 45,841
========== ========== ========== ==========
QUICKSILVER GAS SERVICES LP
RECONCILIATION OF ADJUSTED GROSS MARGIN
and EBITDA TO NET INCOME
In thousands - Unaudited
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Total revenues $ 21,670 $ 24,385 $ 91,706 $ 76,084
Operations and
maintenance expense 4,509 4,989 20,677 19,284
General and
administrative expense 2,146 1,695 7,609 6,407
---------- ---------- ---------- ----------
Adjusted gross margin 15,015 17,701 63,420 50,393
Other income - 1 1 11
---------- ---------- ---------- ----------
EBITDA 15,015 17,702 63,421 50,404
Depreciation and
accretion expense 4,881 3,570 19,324 12,968
Interest expense 2,303 2,057 8,519 8,437
Income tax provision
(benefit) (47) 145 399 253
---------- ---------- ---------- ----------
Net income from continuing
operations 7,878 11,930 35,179 28,746
Loss from discontinued
operations (190) (392) (1,992) (2,330)
---------- ---------- ---------- ----------
Net income $ 7,688 $ 11,538 $ 33,187 $ 26,416
========== ========== ========== ==========
KGS 10-03
Investor and Media Contact Rick Buterbaugh 817-665-4835
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