UPDATE 2-Cash-strapped Quicksilver Resources to rein in spending
* Cuts capex for the year; forecasts lower spending for 2013
* Q2 adj loss $0.13/shr vs est.0.06/shr
* Takes $992 mln charge on weak natgas prices
* Shares up as much as 7 pct
Aug 7 (Reuters) - Quicksilver Resources Inc, whose cash flow has been drained by low natural gas prices, cut its capital budget for the year and forecast lower spending for 2013 as the debt-laden company looks to conserve cash.
Quicksilver shares, which have lost nearly a third of their value so far this year, rose 7 percent on Tuesday on the New York Stock Exchange. The stock touched a five-day high of $4.59.
The company, 80 percent of whose second-quarter production was natural gas, cut its full-year capital budget by $50 million to $360 million on reduced drilling activity.
"Capital spending levels (in 2013) will be less than 2012 as we align the budget with commodity prices ... our ultimate objective will be to spend within cash inflows," Chief Financial Officer John Regan said on a conference call with analysts.
Natural gas prices have fallen to historic lows due to a glut in production from shale gas fields. Prices for the fuel fell 46 percent in the April-June quarter from last year to average $2.4 per million British thermal unit.
Quicksilver, which earlier this year unveiled plans to take its master limited partnership (MLP) public in a $250 million offering, said it was awaiting better marketing conditions.
The MLP holds proved reserves of 430.4 billion cubic feet of natural gas equivalent in the Barnett Shale in Texas.
"We remain committed to monetizing a portion of the Barnett this year in order to reduce debt," Chief Executive Glenn Darden said on the call.
Quicksilver had $2 billion in debt and $13 million in cash and equivalents as of March 31, according to Thomson Reuters data.
The company on Tuesday said it had secured covenant flexibility under a credit agreement, giving it "time to manage the balance sheet and develop emerging plays."
Quicksilver, which posted a larger-than-expected quarterly loss, took a $992 million non-cash impairment charge on oil and gas properties due to lower prices.
Encana Corp, Canada's No. 1 natural gas producer, reported a second-quarter loss last month on a $1.7 billion charge stemming from low natural gas prices.
Weak gas prices have sent a number of oil and gas companies in search of natural gas liquids (NGLs). But excess production is eroding a profit edge the companies enjoyed for the past two years. NGL prices fell about 40 percent in the first six months of the year.
Quicksilver, which owns properties in Texas, Colorado, and Wyoming in the United States and Alberta and British Columbia in Canada, expects 2012 production volume to average between 365 and 380 million cubic feet equivalent per day (mmcfe/d), down from its prior outlook of about 412 mmcfe/d.
Current quarter average daily production volume is expected to be 385-400 mmcfe/d, higher than second-quarter output of 359 mmcfe/d.
Quicksilver, which has been actively pursuing joint venture options to help fund drilling activities, said it was in advanced talks on two ventures.
Second-quarter net loss, on an adjusted basis, was 13 cents per share. By that measure, analysts had expected a loss of 6 cents per share, according to Thomson Reuters I/B/E/S.
Revenue fell 28 percent to $151 million, lower than analysts' estimates of $173.7 million.
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