* 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 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
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
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
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.