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Quicksilver Gas Services' Third-Quarter Income Jumps 35% in 2009
Marketwire
Nov 08, 2009
FORT WORTH, TX -- (Marketwire) -- 11/09/09 -- Quicksilver Gas Services LP (NYSE: KGS) today reported net income for the third quarter of 2009 of $8.7 million, up approximately 35% from $6.4 million reported in the prior-year period. Earnings before interest, income taxes, depreciation and accretion ("EBITDA"), a non-GAAP measure, was $16.9 million for the third quarter of 2009, an increase of 29% from the 2008 third-quarter EBITDA of $13.1 million.
Third-Quarter 2009 Highlights
-- Increased average gathered volumes to approximately 234 MMcf per day;
up 10% versus the prior-year quarter
-- Increased distributable cash flow to $13.4 million; up 16% year-over-
year
-- Connected approximately three miles of gathering infrastructure
-- Connected five new wells to the gathering system
"Quicksilver Gas Services continues to grow by all measures and is increasing liquidity in order to capitalize on opportunities created by the current macro-economic environment," said Toby Darden, Quicksilver Gas Services' president and chief executive officer. "We look forward to more growth in 2010, enhanced by acquisitions. Our fee-based revenue strategy and cost-efficient operating structure continue to pay dividends for both our unitholders and for our producer-customers."
Capital Program
For the third quarter of 2009, the company incurred approximately $3.7 million of capital costs, including $2.5 million of maintenance capital. Expenditures during the quarter included the connection of approximately three miles of gathering lines and five new wells to the gathering system.
Debt and Liquidity
The company's total borrowing capacity under its senior secured revolving credit facility was increased to $320 million in October. The company currently has approximately $203 million drawn on its senior secured credit facility resulting in approximately $117 million of available capacity.
Distributions
On October 19, 2009, the company announced a cash distribution for the 2009 third quarter of $.39 per unit, a 5.4% increase from the previous quarterly rate. For the three months ended September 30, 2009, distributable cash flow, a non-GAAP financial measure, totaled $13.4 million, which provided 1.38 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 third-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 80360996, 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 80360996. 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; 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. 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per unit data - Unaudited
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Revenue
Gathering and transportation
revenue - Quicksilver $ 14,542 $ 8,674 $ 42,708 $ 22,350
Gathering and transportation
revenue 615 1,553 2,259 4,006
Gas processing revenue -
Quicksilver 8,155 7,345 25,541 21,866
Gas processing revenue 295 1,507 1,344 3,797
Other revenue - Quicksilver 691 225 1,141 675
---------- ---------- ---------- ----------
Total revenue 24,298 19,304 72,993 52,694
---------- ---------- ---------- ----------
Expenses
Operations and maintenance 5,694 4,772 17,108 15,034
General and administrative 1,733 1,473 5,463 4,712
Depreciation and accretion 5,745 3,866 16,554 10,429
---------- ---------- ---------- ----------
Total expenses 13,172 10,111 39,125 30,175
---------- ---------- ---------- ----------
Operating income 11,126 9,193 33,868 22,519
Other income - 4 1 10
Interest expense 2,238 2,703 7,924 7,542
---------- ---------- ---------- ----------
Income before income taxes 8,888 6,494 25,945 14,987
Income tax provision 235 106 446 109
---------- ---------- ---------- ----------
Net income $ 8,653 $ 6,388 $ 25,499 $ 14,878
========== ========== ========== ==========
General partner interest in
net income $ 382 $ 137 $ 886 $ 314
Common and subordinated
unitholders' interest in net
income 8,271 6,251 24,613 14,564
Earnings per common and
subordinated unit:
Basic $ 0.35 $ 0.26 $ 1.03 $ 0.61
Diluted 0.31 0.26 0.92 0.61
Weighted average number of
common and subordinated units
outstanding:
Basic 23,827 23,783 23,827 23,783
Diluted 27,981 26,829 28,319 23,924
QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except for unit data - Unaudited
September 30, December 31,
2009 2008
------------- ------------
ASSETS
Current assets
Cash and cash equivalents $ 548 $ 303
Accounts receivable 528 2,082
Accounts receivable from Quicksilver 5,066 -
Prepaid expenses and other current assets 348 594
------------- ------------
Total current assets 6,490 2,979
Property, plant and equipment, net 455,661 488,120
Other assets 1,635 1,916
------------- ------------
$ 463,786 $ 493,015
============= ============
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Current maturities of debt $ 2,200 $ 1,375
Accounts payable to Quicksilver - 10,502
Accrued additions to property, plant and
equipment 3,335 17,433
Accounts payable and other 4,706 1,930
------------- ------------
Total current liabilities 10,241 31,240
Long-term debt 206,900 174,900
Note payable to Quicksilver 52,966 52,271
Repurchase obligations to Quicksilver 67,236 123,298
Asset retirement obligations 8,639 5,234
Deferred income tax liability 815 369
Partners' capital
Common unitholders (12,313,451 and 12,269,714
units issued and outstanding at September 30,
2009 and December 31, 2008, respectively) 114,256 108,036
Subordinated unitholders (11,513,625 units
issued and outstanding at September 30,
2009 and December 31, 2008) 2,351 (2,328)
General partner 382 (5)
------------- ------------
Total partners' capital 116,989 105,703
------------- ------------
$ 463,786 $ 493,015
============= ============
QUICKSILVER GAS SERVICES LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands - Unaudited
Nine Months Ended
September 30,
--------------------------
2009 2008
------------ ------------
Operating activities:
Net income $ 25,499 $ 14,878
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation 16,259 10,297
Accretion of asset retirement
obligation 295 132
Deferred income taxes 446 52
Equity-based compensation 1,289 758
Non-cash interest expense 4,535 7,196
Changes in assets and liabilities:
Accounts receivable 1,554 (1,001)
Prepaid expenses and other assets 234 (171)
Accounts receivable and payable with
Quicksilver (2,248) 3,435
Accounts payable and other 3,405 789
------------ ------------
Net cash provided by operating activities 51,268 36,365
------------ ------------
Investing activities:
Capital expenditures (50,067) (112,200)
Assets purchased pursuant to repurchase
obligations (5,645) -
------------ ------------
Net cash used in investing activities (55,712) (112,200)
------------ ------------
Financing activities:
Proceeds from revolving credit facility
borrowings 46,500 99,300
Repayment of credit facility (14,500) -
Repayment for subordinated note payable to
Quicksilver - (825)
Distributions to unitholders (27,248) (23,423)
Other (63) -
------------ ------------
Net cash provided by financing activities 4,689 75,052
------------ ------------
Net cash increase (decrease) 245 (783)
Cash at beginning of period 303 1,125
------------ ------------
Cash at end of period $ 548 $ 342
============ ============
QUICKSILVER GAS SERVICES LP
OPERATING STATISTICS
Unaudited
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
--------------------- ---------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Volume Data:
Volumes gathered (MMcf) 21,523 19,591 65,572 51,269
Volumes processed (MMcf) 13,197 14,122 41,958 40,870
QUICKSILVER GAS SERVICES LP
RECONCILIATION OF NET INCOME TO
DISTRIBUTABLE CASH FLOW
In thousands - Unaudited
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Net income $ 8,653 $ 6,388 $ 25,499 $ 14,878
Depreciation and accretion
expense 5,745 3,866 16,554 10,429
Income tax
provision/(payments) 235 (226) 446 (223)
Non-cash interest expense,
net of capitalized interest
cost paid 1,283 1,977 4,224 6,077
Maintenance capital
expenditures (2,500) (473) (7,500) (1,418)
--------- --------- --------- ---------
Distributable cash flow $ 13,416 $ 11,532 $ 39,223 $ 29,743
========= ========= ========= =========
QUICKSILVER GAS SERVICES LP
RECONCILIATION OF NET INCOME TO
ADJUSTED GROSS MARGIN and EBITDA
Unaudited
(Amounts in thousands)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
--------------------- ---------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Total revenues $ 24,298 $ 19,304 $ 72,993 $ 52,694
Operations and maintenance
expense 5,694 4,772 17,108 15,034
General and administrative
expense 1,733 1,473 5,463 4,712
---------- ---------- ---------- ----------
Adjusted gross margin 16,871 13,059 50,422 32,948
Other income - 4 1 10
---------- ---------- ---------- ----------
EBITDA 16,871 13,063 50,423 32,958
Depreciation and accretion
expense 5,745 3,866 16,554 10,429
Interest expense 2,238 2,703 7,924 7,542
Income tax provision 235 106 446 109
---------- ---------- ---------- ----------
Net income $ 8,653 $ 6,388 $ 25,499 $ 14,878
========== ========== ========== ==========
KGS 09-12
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