SOURCE:
Quicksilver Gas Services LP
2008-08-06 05:30:00
Quicksilver Gas Services Reports Second-Quarter 2008 Results
FORT WORTH, TX–(EMWNews – August 6, 2008) – Quicksilver Gas Services LP (NYSE Arca: KGS)
today reported net income for the second quarter of 2008 of $5.6 million
($.23 per limited partner unit – diluted), an increase of more than 160% as
compared to net income of $2.1 million in the prior-year period. For the
six months ended June 30, 2008, net income totaled $8.5 million ($.35 per
limited partner unit – diluted), up more than 180% from the $3.0 million
reported in the 2007 period.
Distributable cash flow for the 2008 second quarter increased 150% to $10.5
million ($.43 per limited partner unit) from $4.2 million in the 2007
quarter. For the six months ended June 30, 2008, distributable cash flow
totaled $18.2 million ($.75 per limited partner unit) compared to $6.4
million in the 2007 period.
Second-Quarter 2008 Highlights
-- Increased quarterly cash distribution to limited partners 11% to $.35 per
unit
-- Increased average gathered volumes to 188 MMcf per day; up 159% versus
the prior-year quarter
-- Increased average processed volumes to 160 MMcf per day; up 137% versus
the prior-year quarter
-- Connected 57 new wells to the gathering system from Quicksilver Resources
Inc.
-- Connected nearly 32 miles of gathering infrastructure
“Revenues grew more than 150%, as anticipated, due to increased gathering
and processing volumes from Quicksilver Resources and third-party
producers,” said Toby Darden, Quicksilver Gas Services president and chief
executive officer. “Our continued focus on stringent cost control enabled
us to fully realize the value from the higher throughput volumes resulting
in an increase of more than 160% in net income. As a result, our
distributable cash flow increased to support an additional 11% increase in
our quarterly distribution.”
Gathered volumes increased to 17,127 million cubic feet (MMcf) in the
second quarter of 2008, up 159% from 6,613 MMcf in the prior-year quarter.
Processed volumes increased 137% to 14,593 MMcf in the second quarter of
2008 from 6,154 MMcf in the 2007 quarter. Volumes from third parties made
up 21% and 20% of the total gathered and processed volumes for the second
quarter of 2008, respectively. For the second quarter of 2008 the company
realized an average of $.516 per thousand cubic feet (Mcf) gathered and
$.627 per Mcf processed.
Capital expenditures for the second quarter of 2008 totaled $26.8 million,
including $.5 million for maintenance capital and the remainder for organic
growth projects. In addition, the company accrued $19.7 million of capital
associated with the repurchase obligation to Quicksilver Resources Inc.
Expenditures during the quarter included the connection of approximately 32
miles of gathering lines and 57 new wells to the gathering system from
Quicksilver Resources, as well as the ongoing construction of a new
processing facility that is expected to become operational during the first
quarter of 2009, increasing processing capacity 62.5% to a total of 325
MMcf per day.
For the second quarter of 2008, the unit distribution rate for limited
partners was increased 11% to $.35 by the company’s general partner. The
second-quarter distribution will be paid August 14, 2008 on all units to
holders of record as of the close of business July 31, 2008.
Conference Call
Quicksilver Gas Services will host a conference call for investors and
analysts at 10:00 a.m. eastern time today to discuss the first-quarter 2008
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 39787132, 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 by entering the conference ID number 39787132. 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 measure of
distributable cash flow. The accompanying schedules provide a
reconciliation of this non-GAAP financial measure to the most directly
comparable financial measure calculated and presented in accordance with
accounting principles generally accepted in the United States of America
(“GAAP”). Our non-GAAP financial measures should not be considered as an
alternative to GAAP measures such as net income, 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 Statement
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 by third-party
operators, processors and transporters; 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 costs or
expenditures; the effects of existing and future laws and governmental
regulations; and the effects of 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 08-07
QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per unit data - Unaudited
Three Months Six Months
Ended June 30, Ended June 30,
----------------- -----------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenues
Gathering and transportation revenue
- parent $ 7,199 $ 3,100 $ 13,676 $ 5,510
Gathering and transportation revenue 1,633 147 2,453 338
Gas processing revenue - parent 7,701 3,714 14,521 6,217
Gas processing revenue 1,447 124 2,290 391
Other revenue - parent 225 33 450 33
-------- -------- -------- --------
Total revenues 18,205 7,118 33,390 12,489
-------- -------- -------- --------
Expenses
Operations and maintenance - parent 5,312 2,228 10,262 4,945
General and administrative - parent 1,422 686 3,239 1,182
Depreciation and accretion 3,407 1,824 6,563 3,119
-------- -------- -------- --------
Total expenses 10,141 4,738 20,064 9,246
-------- -------- -------- --------
Operating income 8,064 2,380 13,326 3,243
Other income 1 23 6 35
Interest expense 2,421 211 4,839 211
-------- -------- -------- --------
Income before income taxes 5,644 2,192 8,493 3,067
Income tax provision 38 57 3 97
-------- -------- -------- --------
Net income $ 5,606 $ 2,135 $ 8,490 $ 2,970
======== ======== ======== ========
General partner interest in net
income $ 126 $ 182
Common and subordinated unitholders'
interest in net income $ 5,480 $ 8,308
Earnings per common and subordinated
unit - basic $ 0.23 $ 0.35
Earnings per common and subordinated
unit - diluted $ 0.23 $ 0.35
Weighted average number of common and
subordinated units outstanding:
Basic 23,783 23,783
Diluted 23,924 23,924
QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except for unit data - Unaudited
June 30, December 31,
2008 2007
--------- ----------
ASSETS
Current assets
Cash and cash equivalents $ 607 $ 1,125
Trade accounts receivable 2,317 882
Accounts receivable from parent - 800
Prepaid expenses and other current assets 972 690
--------- ----------
Total current assets 3,896 3,497
Property, plant and equipment, net 372,633 273,948
Other assets 1,140 965
--------- ----------
$ 377,669 $ 278,410
========= ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Current maturities of debt $ 1,100 $ 1,100
Accounts payable to parent 4,446 -
Accrued additions to property, plant and equipment 22,236 23,624
Accounts payable and other 3,586 2,700
--------- ----------
Total current liabilities 31,368 27,424
Long-term debt 55,300 5,000
Note payable to parent 51,508 50,569
Repurchase obligations to parent 131,911 82,251
Asset retirement obligations 3,187 2,793
Deferred income tax liability 118 173
Partners' Capital
Common unitholders (12,269,714 and 12,263,625 units
issued and outstanding at June 30, 2008 and
December 31,2007, respectively) 107,072 109,830
Subordinated unitholders (11,513,625 units issued
and outstanding at June 30, 2008 and December 31,
2007) (2,703) 356
General Partner (92) 14
--------- ----------
Total partners' capital 104,277 110,200
--------- ----------
$ 377,669 $ 278,410
========= ==========
QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands - Unaudited
Six Months Ended
June 30,
----------------
2008 2007
------- -------
Operating activities:
Net income $ 8,490 $ 2,970
Items included in net income not affecting cash
Depreciation 6,478 3,088
Accretion of asset retirement obligation 85 31
Deferred income taxes (55) -
Equity-based compensation 501 -
Amortization of debt issuance costs 105 -
Non-cash interest expense on repurchase
obligations to parent 2,928 211
Non-cash interest expense on note payable to
parent 1,489 -
Changes in assets and liabilities
Accounts receivable (1,435) (104)
Prepaid expenses and other assets (562) (246)
Accounts receivable from parent 5,170 -
Accounts payable and other 886 108
------- -------
Net cash provided by operating activities 24,080 6,058
------- -------
Investing activities:
Capital expenditures (59,434) (45,040)
------- -------
Net cash used in investing activities (59,434) (45,040)
------- -------
Financing activities:
Proceeds from revolving credit facility borrowings 50,300 -
Repayment of subordinated note to parent (550) -
Contributions by parent - 39,017
Contributions by other partners - 167
Distributions to unitholders (14,914) -
------- -------
Net cash provided by financing activities 34,836 39,184
------- -------
Net (decrease) increase in cash (518) 202
Cash at beginning of period 1,125 2,797
------- -------
Cash at end of period $ 607 $ 2,999
======= =======
QUICKSILVER GAS SERVICES LP
OPERATING STATISTICS
Unaudited
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
--------- --------- --------- ---------
Volume Data:
Volumes gathered (MMcf) 17,127 6,613 31,678 12,130
Volumes processed (MMcf) 14,593 6,154 26,749 10,983
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,
2008 2007 2008 2007
-------- --------- -------- ---------
Net income $ 5,606 $ 2,135 $ 8,490 $ 2,970
Depreciation and accretion
expense 3,407 1,824 6,563 3,119
Income tax provision 38 57 3 97
Non-cash interest expense 1,947 211 4,100 211
Maintenance capital expenditures (473) - (945) -
-------- --------- -------- ---------
Distributable cash flow $ 10,525 $ 4,227 $ 18,211 $ 6,397
======== ========= ======== =========
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