EX-99.1 3 kwk8-k201603142ex991.htm UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION Exhibit
Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(DEBTOR IN POSSESSION)
The following unaudited pro forma condensed consolidated balance sheet and statements of operations are derived from the historical consolidated financial statements of Quicksilver Resources Inc. (“Quicksilver”). The pro forma condensed consolidated balance sheet as of September 30, 2015 gives effect to the deconsolidation of Quicksilver Resources Canada Inc. (“QRCI”) and its wholly owned subsidiaries and its affiliates, including Fortune Creek Gathering and Processing Partnership (collectively the “Canadian Entities”) due to commencement of restructuring proceedings of certain of the Canadian Entities under the Companies Creditors Arrangement Act (Canada) as if it had occurred on September 30, 2015. The pro forma condensed consolidated statement of operations for the year ended December 31, 2014 and the nine months ended September 30, 2015 reflects the deconsolidation of the Canadian Entities as if it had occurred on January 1, 2014. The pro forma statements of operations exclude any recognition of gain or loss related to the deconsolidation of the Canadian Entities as a non-recurring transaction. The unaudited pro forma condensed consolidated balance sheet and statements of operations have been derived from and should be read in conjunction with the related notes and Quicksilver's historical financial statements, including the related notes, included in its 2014 Annual Report on Form 10-K for the year ended December 31, 2014 and Quarterly Report on Form 10-Q/A for the quarter ended September 30, 2015.
The preparation of the unaudited pro forma consolidated financial information is based on financial statements prepared in accordance with accounting principles generally accepted in the United States of America. These principles require the use of estimates that affect the reported amounts of revenues and expenses. Actual results could differ from those estimates.
The unaudited pro forma consolidated financial information is provided for illustrative purposes only and does not purport to represent what the actual results of Quicksilver's operations would have been had the deconsolidation of the Canadian Entities occurred on the respective dates assumed, nor is it necessarily indicative of Quicksilver's future operating results. However, the pro forma adjustments reflected in the accompanying unaudited pro forma consolidated financial information reflect estimates and assumptions that Quicksilver believes to be reasonable.





QUICKSILVER RESOURCES INC. (DEBTOR IN POSSESSION)
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2015
In thousands
 
Historical
 
Pro Forma Adjustments
 
Pro Forma
 
(Restated)
 
(a)
 
 
ASSETS
Current assets
 
 
 
 
 
Cash and cash equivalents
$
175,673

 
$
(20,672
)
 
$
155,001

Accounts receivable - net of allowance for doubtful accounts
27,537

 
9,299

(b)
36,836

Other current assets
17,794

 
(7,320
)
 
10,474

Total current assets
221,004

 
(18,693
)
 
202,311

Property, plant and equipment - net
 
 
 
 
 
Oil and gas properties, full cost method
 
 
 
 
 
Evaluated oil and gas properties
320,111

 
(115,929
)
 
204,182

Unevaluated oil and gas properties
21,377

 

 
21,377

Other property and equipment
99,332

 
(41,450
)
 
57,882

Property, plant and equipment - net
440,820

 
(157,379
)
 
283,441

Other assets
6,640

 
(4,665
)
 
1,975

 
$
668,464

 
$
(180,737
)
 
$
487,727

LIABILITIES AND EQUITY
Current liabilities
 
 
 
 
 
Current portion of long-term debt
$
156,985

 
$
(78,367
)
 
$
78,618

Accounts payable
19,528

 
(1,094
)
 
18,434

Accrued liabilities
38,004

 
(4,523
)
 
33,481

Total current liabilities
214,517

 
(83,984
)
 
130,533

Partnership liability
87,935

 
(87,935
)
 

Asset retirement obligations
99,791

 
(53,554
)
 
46,237

Other liabilities
10,195

 

 
10,195

Liabilities subject to compromise
1,884,128

 

 
1,884,128

 
 
 
 
 
 
Stockholders' equity
(1,628,102
)
 
44,736

(c)
(1,583,366
)
 
$
668,464

 
$
(180,737
)
 
$
487,727

The accompanying notes are an integral part of this unaudited pro forma condensed consolidated financial information.





QUICKSILVER RESOURCES INC. (DEBTOR IN POSSESSION)
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
In thousands, except for per share data
 
 
Historical
 
Pro Forma Adjustments
 
Pro Forma
 
(Restated)
 
(a)
 
 
Revenue
 
 
 
 
 
Production
$
161,875

 
$
(38,798
)
 
$
123,077

Sales of purchased natural gas
29,921

 

 
29,921

Net derivative gains (losses)
27,863

 
(7,833
)
 
20,030

Other
7,460

 
(1,306
)
 
6,154

Total revenue
227,119

 
(47,937
)
 
179,182

Operating expense
 
 
 
 
 
Lease operating
39,763

 
(19,928
)
 
19,835

Gathering, processing and transportation
65,270

 
(9,803
)
 
55,467

Production and ad valorem taxes
8,046

 
(2,663
)
 
5,383

Costs of purchased natural gas
29,863

 

 
29,863

Depletion, depreciation and accretion
39,793

 
(17,494
)
 
22,299

Impairment
241,929

 
(91,113
)
 
150,816

General and administrative
39,312

 
(3,253
)
 
36,059

Other operating
937

 
(774
)
 
163

Total expense
464,913

 
(145,028
)
 
319,885

Operating income (loss)
(237,794
)
 
97,091

 
(140,703
)
Other income (expense) - net
(26,106
)
 
26,245

 
139

Fortune Creek accretion
(9,877
)
 
9,877

 

Interest expense
(43,537
)
 
5,401

(b)
(38,136
)
Reorganization items, net
(148,568
)
 

 
(148,568
)
Income (loss) before income taxes
(465,882
)
 
138,614

 
(327,268
)
Income tax (expense) benefit
(5,836
)
 
(657
)
 
(6,493
)
Net income (loss)
$
(471,718
)
 
$
137,957

 
$
(333,761
)
 
 
 
 
 
 
Earnings (loss) per common share - basic
$
(2.68
)
 
 
 
$
(1.90
)
Earnings (loss) per common share - diluted
$
(2.68
)
 
 
 
$
(1.90
)
Weighted average common shares outstanding - basic
176,021

 
 
 
176,021

Weighted average common shares outstanding - diluted
176,021

 
 
 
176,021

The accompanying notes are an integral part of this unaudited pro forma condensed consolidated financial information.







QUICKSILVER RESOURCES INC. (DEBTOR IN POSSESSION)
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2014
In thousands, except for per share data
 
 
Historical
 
Pro Forma Adjustments
 
Pro Forma
 
 
 
(a)
 
 
Revenue
 
 
 
 
 
Production
$
425,154

 
$
(132,767
)
 
$
292,387

Sales of purchased natural gas
70,468

 

 
70,468

Net derivative gains (losses)
65,698

 
(18,109
)
 
47,589

Other
8,108

 
(2,367
)
 
5,741

Total revenue
569,428

 
(153,243
)
 
416,185

Operating expense
 
 
 
 
 
Lease operating
76,975

 
(37,024
)
 
39,951

Gathering, processing and transportation
136,283

 
(43,295
)
 
92,988

Production and ad valorem taxes
17,344

 
(3,901
)
 
13,443

Costs of purchased natural gas
70,376

 

 
70,376

Depletion, depreciation and accretion
61,126

 
(23,902
)
 
37,224

Impairment
71,988

 
(69,403
)
 
2,585

General and administrative
47,294

 
(3,569
)
 
43,725

Other operating
2,608

 
(2,114
)
 
494

Total expense
483,994

 
(183,208
)
 
300,786

Operating income (loss)
85,434

 
29,965

 
115,399

Other income (expense) - net
(6,581
)
 
2,889

 
(3,692
)
Fortune Creek accretion
(15,067
)
 
15,067

 

Interest expense
(163,286
)
 
1,535

(b)
(161,751
)
Income (loss) before income taxes
(99,500
)
 
49,456

 
(50,044
)
Income tax (expense) benefit
(3,600
)
 
986

 
(2,614
)
Net income (loss)
$
(103,100
)
 
$
50,442

 
$
(52,658
)
 
 
 
 
 
 
Earnings (loss) per common share - basic
$
(0.59
)
 
 
 
$
(0.30
)
Earnings (loss) per common share - diluted
$
(0.59
)
 
 
 
$
(0.30
)
Weighted average common shares outstanding - basic
173,822

 
 
 
173,822

Weighted average common shares outstanding - diluted
173,822

 
 
 
173,822

The accompanying notes are an integral part of this unaudited pro forma condensed consolidated financial information.






NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (DEBTOR IN POSSESSION)
(a)
Reflects the deconsolidation of the Canadian Entities’ assets and liabilities (including intercompany balances) at their historical carrying amounts included in Quicksilver's financial statements as of September 30, 2015.
(b)
Accounts receivable has been adjusted to reflect the estimated fair value of our accounts receivable and loan receivable from QRCI. Prior to deconsolidation, both these receivables were considered intercompany balances with QRCI and were eliminated in consolidation. Subsequent to the deconsolidation, these amounts are recorded as balances with QRCI at an estimated fair value based on their carrying amounts. We have estimated a recovery rate based upon the estimated fair value of the net assets of QRCI available for distribution in relation to the secured and unsecured claims in the CCAA filing.
(c)
Retained earnings has been adjusted to reflect the impairment loss on our investment in the Canadian Entities and the pro forma adjustments including the estimated fair value of our receivables as discussed above.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 (DEBTOR IN POSSESSION)
(a)
Reflects the deconsolidation of production revenue, direct operating expenses and other income/expense from Canadian Entities.
(b)
Adjustment to increase interest expense by $6.2 million to reflect the removal of intercompany interest income.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2014 (DEBTOR IN POSSESSION)
(a)
Reflects the deconsolidation of production revenue, direct operating expenses and other income/expense from Canadian Entities.
(b)
Adjustment to increase interest expense by $8.2 million to reflect the removal of intercompany interest income.