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Quicksilver Resources, AŞ Message Board

  • buyacramer buyacramer Feb 12, 2013 11:26 AM Flag

    KWK still worth close to half a billion?

    How is KWK's equity value still valued at half a billion? Not to mention the
    massive billions in debt they owe. The company continues to burn
    through cash and there little hope for Nat gas rebound as there is more Nat gas in this country to power the US for the next century or more.

    Would like to hear people' s thoughts on why KWK is worth investing in
    and at such a high valuation. my quick thoughts:

    - overwhelmingly high supply of Nat gas out there which will
    undoubtedly keep Nat gas prices low for years to come. if prices for
    some reason rise(maybe due to snowstorm) idle wells will be put into
    service asap.

    - kwk burning through cash with no end in sight. this is a company
    with very high bankruptcy risk

    - raising cash via equity offering to stay afloat is almost impossible
    given poor industry prospects. investors who bought in earlier equity
    raises have seen mgmt destroy all the value.

    With such poor industry prospects and a very high likelihood KWK won't
    survive probably within 5 yrs, why should anyone buy into KWK at a
    $500 million valuation? did I mention the billions in debt they owe? If nat gas remains at these levels, which it likely will, how will KWK stay alive? For years the only people making big money is managment and their million dollar salaries. Why do investors continue to support managment destroying shareholder value and still continue to tout what a great investment KWK is?

    Sentiment: Strong Sell

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    • Boy that's harsh, but most likey close to the truth. I'm buying long looking for a bounce. You wrote this very well and I'm thinking your a pretty sharp guy, so why don't you just short the #$%$ out of it and roll in the $$$, and let us not to sharp add to your pile of cash. Because it's all a gamble! Also a lot of people like to trash this stock, why waste your time just short it!!

      Sentiment: Strong Buy

      • 2 Replies to rheadson
      • If you are looking to bet on a rebound in nat gas, why not just buy the commodity? Buy UNG or UGAZ (3x leverage). At least you arent risking all your capital if nat gas stays low. With KWK, if nat gas stays low, the equity will be worthless. Mgmt's multimillion salaries along with an inefficiently run company and stagnant nat gas prices will cripple KWK.

        At least with the commodity, if it doesnt go anywhere or trends slightly down, you only have a small loss. You could seriously loose everything one day when KWK announces they dont have enough funds to operate due to low nat gas prices and will be filing for chapter 11 bankruptcy protection.

        Read most analyst reports that cover KWK and most are either a hold at best with most giving KWK a sell rating citing high liquidity risk. Why would you choose KWK over buying the commodity to play nat gas turnaround?

      • Well said rheadson. He should short & reap the rewards. I strongly believe that there will be a bounce. The land owned by KWK alone is worth a couple billion dollars.

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