Quicksilver Resources seeks to monetize assets, reduce $2 billion debt

By Lisa Kerner

Charlotte, N.C., Nov. 10 – Quicksilver Resources Inc. is “moving on multiple fronts” and “not slowing down,” according to comments made by chief executive officer Glenn Darden during the company’s third-quarter earnings call on Monday.

“Our commercial banks have reaffirmed our $325 million borrowing base and given us covenant relief,” Darden said.

Quicksilver is also having success in the field, recently opening a new production area in West Texas.

Debt reduction, asset sales

“Our top priority is to reduce debt, and selling assets is an important step on our path,” said the CEO. “Our asset-marketing process is in full swing, and we have lots of players in the mix.”

Houlihan Lokey Capital, Inc. has been retained to lead a more formalized process to market Quicksilver’s assets, including the receipt of bids in the fourth quarter, according to the earnings news release.

Additionally, the company “continues to explore several avenues to address its capital structure, including the stated and springing maturities,” the release stated.

Quicksilver said it is in “frequent discussions” with certain security holders regarding “possible paths to be undertaken.”

Debt at Oct. 31 totaled $2 billion.

Quicksilver ended the quarter on Sept. 30 with total liquidity of $230 million, 97% of which was cash and cash equivalents, according to the earnings presentation.

In October, Quicksilver’s S-3 shelf was declared effective, resulting in the company’s ability to issue up to $1.75 billion of debt or equity securities, or any combination thereof, over a three-year period, said chief financial officer John Regan on the call.

Financial highlights

Quicksilver had third-quarter net income of $24 million, or $0.13 per diluted share, compared to $11 million, or $0.06 per diluted share, in the 2013 quarter.

Production revenue and realized cash derivative gain/loss for the third quarter was $105 million compared to $113 million in the prior-year period.

Capital program expenses of $29 million for the third quarter included $19 million for drilling and completion activities, $4 million for leasehold and $6 million for capitalized costs.

Fourth-quarter 2014 capital spending is expected to be in the range of $22 million to $27 million, bringing full-year capital spending to $130 million to $135 million, the news release stated.

Quicksilver is a Fort Worth-based independent oil and gas exploration and production company.

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