Quicksilver Resources Reports Second-Quarter 2009 Results

• Press Release
• Source: Quicksilver Resources Inc.
• On 7:00 am EDT, Monday August 10, 2009

FORT WORTH, TX--(Marketwire - 08/10/09) - Quicksilver Resources Inc. (NYSE:KWK - News) today reported operating and financial results for the 2009 second quarter.

Second-Quarter 2009 Highlights

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--  Produced volumes of approximately 331 MMcfe per day; up 40% year-over-
    year
--  Reduced oil and gas production expense to $1.05 per Mcfe; down 32%
    year-over-year
--  Increased Fort Worth Basin daily production volumes 54% year-over-year
--  Increased Canadian daily production volumes 5% year-over-year
--  Drilled 29 horizontal wells in the Fort Worth Basin
--  Closed joint venture transaction with Eni on Alliance properties
--  Reduced total debt by $196 million during the quarter
    

"Quicksilver's second-quarter operating results were as expected and met our stated goals to maintain production volumes, reduce unit costs, and reduce total debt," said Glenn Darden, Quicksilver president and chief executive officer. "We have increased Quicksilver's financial flexibility and continue to benefit from our natural gas hedging position which will underpin the company's cash flow through 2010."

Financial Results

Second-quarter 2009 adjusted net income, a non-GAAP measure, was $41.2 million ($.24 per diluted share) compared to adjusted net income of $65.9 million ($.40 per diluted share) in the 2008 period. Adjusted net income excludes the following items:

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--  a noncash impairment charge of $70.6 million ($53.1 million after tax)
    in the 2009 quarter related to the company's Canadian oil and gas
    properties;
--  a noncash charge of $27.1 million ($17.6 million after tax) in the
    2009 quarter for debt expense related to the company's early repayment of
    its senior secured second-lien notes;
--  net income of $16.0 million ($10.4 million after tax) in the 2009
    quarter associated with the company's ownership in BreitBurn Energy
    Partners that included a gain related to the early settlement of hedges, a
    charge for the unrealized mark-to-market loss on oil and gas derivative
    positions and a charge on interest rate swaps;
--  a charge of $5.0 million ($3.3 million after tax) in the 2009 quarter
    related to the company's settlement of litigation; and
--  a charge of $22.1 million ($14.4 million after tax) in the 2008
    quarter related to the unrealized mark-to-market loss of derivative
    positions held by BreitBurn Energy Partners, associated with the company's
    ownership in BreitBurn Energy Partners.
    

Including the items noted above, Quicksilver reported a net loss of $21.8 million (a loss of $.13 per diluted share) in the 2009 second quarter as compared to net income of $51.3 million ($.31 per diluted share) in the prior-year period.

Production

For the second quarter of 2009, average daily production was approximately 331 million cubic feet of natural gas equivalent (MMcfe) per day compared to approximately 236 MMcfe per day for the same period in 2008, an increase of approximately 40%. Total production for the second quarter of 2009 was approximately 30.1 billion cubic feet of natural gas equivalent (Bcfe) compared to approximately 21.5 Bcfe for the second quarter of 2008. The 2009 production volumes were comprised of approximately 71% natural gas, approximately 27% natural gas liquids (NGLs) and approximately 2% crude oil and condensate. Increased activities at the company's Lake Arlington and Alliance projects in the northern portion of its Fort Worth Basin acreage resulted in increased production of dry gas as a percent of total production in the 2009 quarter as compared to the 2008 quarter.

Revenues and Costs

Sales of natural gas, NGLs and crude oil totaled $199.3 million in the second quarter of 2009 and were essentially unchanged from the prior-year quarter. Sales from increased production volumes from the company's Fort Worth Basin in Texas and Horseshoe Canyon area in Alberta, Canada were nearly completely offset by lower average realized prices for all commodities, which resulted in an approximate 28% decrease in the average realized price per thousand cubic feet of natural gas equivalent (Mcfe).

Total production expense was $31.7 million for the 2009 second quarter, down $1.3 million from the prior-year quarter even though total production increased more than 40%. Unit production expense, including production, gathering and processing and transportation expense, decreased to $1.05 per Mcfe during the second quarter of 2009, a 32% reduction from $1.54 per Mcfe reported in the prior-year period. Quicksilver's ongoing efforts to reduce and control costs enabled the company to remain as one of the lowest-cost operators in North America.

Income from Earnings of Unconsolidated Affiliate

Quicksilver reported $19.0 million of pre-tax earnings attributable to the company's approximate 41% interest in BreitBurn Energy Partners L.P.'s (BBEP) first-quarter 2009 results, including $18.5 million of income from the early settlement of derivative positions, a $1.7 million loss on the unrealized mark-to-market of commodity derivative positions and a $.9 million loss on interest rate derivatives. On April 17, 2009, BBEP announced that it was suspending its distributions and, therefore, Quicksilver did not receive any cash distributions from this partnership during the quarter.

Interest Expense and Debt

Interest expense in the 2009 second quarter increased to $68.1 million, due to higher outstanding debt balances, primarily associated with the acquisition of the Alliance properties in August 2008, and the early retirement of the company's senior secured second-lien facility. In June 2009, the company issued $600 million face amount of senior notes due 2016 and fully repaid its senior secured second-lien facility. We recognized $27.1 million of additional interest expense for the remaining unamortized original issue discount and deferred financing costs upon early retirement of the senior secured second-lien facility.

Operational Update

Quicksilver continued to focus on the exploitation and development of the 175,000 net acres in its core fairway within the Barnett Shale formation of the Fort Worth Basin. During the second quarter of 2009, the company drilled 29 (22.9 net) wells and connected 27 (25.2 net) wells to sales. The company currently has five rigs working in the basin, including four rigs dedicated to the Lake Arlington and Alliance areas in Tarrant and Denton counties.

In Canada, drilling, completion and pipeline activities were suspended for most of the quarter due to the seasonal break-up period. The company drilled just one well during the second quarter of 2009 in the Horseshoe Canyon area and expects to drill nine (seven net) wells for the remainder of this year. The company now anticipates participating in a total of 145 (42.2 net) wells in this area for the full year of 2009.

During the second quarter of 2009, the company incurred costs of approximately $136 million, including approximately $103 million for drilling and completion activities and $31 million for midstream activities and approximately $2 million for other corporate items. The company expects to incur an additional $216 million of capitalized costs during the second half of 2009.

Third-Quarter 2009 Outlook

Third-quarter 2009 production volumes are expected to average in the range of 310 MMcfe to 320 MMcfe per day. Average unit expenses, on a Mcfe basis, are expected as follows:

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-- Production                              $.55 -  $.60
-- Gathering and processing                 .15 -   .18
-- Transportation                           .35 -   .40
-- Production taxes                         .15 -   .20
-- General and administrative               .62 -   .67
-- Depletion, depreciation & accretion     1.65 -  1.70

Conference Call

The company will host a conference call to discuss second-quarter 2009 operating and financial results and its outlook for the future at 11:00 a.m. eastern time today.

Quicksilver invites interested parties to participate in the call via the company's website at http://www.qrinc.com or by calling 1-877-313-7932, using the conference ID number 80367823, prior to 10:55 a.m. eastern time. A digital replay of the conference call will be available at 3:00 p.m. eastern time today, and will remain available for 30 days. The replay can be accessed at 1-800-642-1687 and enter the conference ID number 80367823. The replay will also be archived for 30 days on the company's website.

Use of Non-GAAP Financial Measure

This press release and the accompanying schedule include the non-generally accepted accounting principles ("non-GAAP") financial measure of adjusted net income. The accompanying schedule provides reconciliations of this non-GAAP financial measure to its most directly comparable financial measure calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Our non-GAAP financial measure should not be considered as an alternative to GAAP measures such as net income or operating income or any other GAAP measure of liquidity or financial performance.

About Quicksilver Resources

Fort Worth, Texas-based Quicksilver Resources is a natural gas and crude oil exploration and production company engaged in the development and acquisition of long-lived, unconventional natural gas reserves, including coalbed methane, shale gas, and tight sands gas in North America. The company has U.S. offices in Fort Worth, Texas; Glen Rose, Texas and Cut Bank, Montana. Quicksilver's Canadian subsidiary, Quicksilver Resources Canada Inc., is headquartered in Calgary, Alberta. For more information about Quicksilver Resources, visit www.qrinc.com.

Forward-Looking Statements

The statements in this press release regarding future events, occurrences, circumstances, activities, performance, outcomes and results are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although these statements reflect the current views, assumptions and expectations of Quicksilver Resources' management, the matters addressed herein are subject to numerous risks and uncertainties, which could cause actual activities, performance, outcomes and results to differ materially from those indicated. Factors that could result in such differences or otherwise materially affect Quicksilver Resources' financial condition, results of operations and cash flows include: changes in general economic conditions; fluctuations in natural gas, natural gas liquids and crude oil prices; failure or delays in achieving expected production from exploration and development projects; uncertainties inherent in estimates of natural gas, natural gas liquids and crude oil reserves and predicting natural gas, natural gas liquids and crude oil reservoir performance; effects of hedging natural gas, natural gas liquids and crude oil prices; fluctuations in the value of certain of our assets and liabilities; competitive conditions in our industry; actions taken or non-performance by third parties, including suppliers, contractors, operators, processors ,transporters, customers and counterparties; changes in the availability and cost of capital; delays in obtaining oilfield equipment and increases in drilling and other service costs; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; the effects of existing and future laws and governmental regulations; and the effects of existing or future litigation; as well as, other factors disclosed in Quicksilver Resources' filings with the Securities and Exchange Commission. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

KWK 09-12

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                        QUICKSILVER RESOURCES INC.
            CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
            In thousands, except for per share data - Unaudited


                    For the Three Months Ended   For the Six Months Ended
                             June 30,                    June 30,
                    --------------------------  --------------------------
                        2009          2008          2009          2008
                    ------------  ------------  ------------  ------------
Revenue
  Natural gas, NGL
   and crude oil    $    199,315  $    198,147  $    382,869  $    356,503
  Sales of
   purchased
   natural gas             5,217             -         5,217             -
  Other                    1,509          (246)        3,887          (985)
                    ------------  ------------  ------------  ------------
    Total revenue        206,041       197,901       391,973       355,518
                    ------------  ------------  ------------  ------------

Operating expenses
  Oil and gas
   production
   expense                31,703        33,019        63,874        65,375
  Production and ad
   valorem taxes           7,441         3,081        11,807         5,740
  Costs of
   purchased
   natural gas             8,582             -         8,582             -
  Other operating
   costs                   1,744           396         3,271         1,801
  Depletion,
   depreciation and
   accretion              50,966        38,920       110,662        73,979
  General and
   administrative         24,389        15,382        41,770        30,797
                    ------------  ------------  ------------  ------------
    Total expenses       124,825        90,798       239,966       177,692

Impairment related
 to oil and gas
 properties              (70,643)            -      (967,126)            -
                    ------------  ------------  ------------  ------------
Operating income
 (loss)                   10,573       107,103      (815,119)      177,826
Income (loss) from
 earnings of BBEP,
 net                      19,016       (10,269)       19,016        (4,050)
Other income
 (expense), net             (855)         (428)          (94)        1,058
Interest expense         (68,081)      (16,098)     (108,282)      (29,533)
                    ------------  ------------  ------------  ------------
Income (loss)
 before income
 taxes                   (39,347)       80,308      (904,479)      145,301
Income tax
 (expense) benefit        18,897       (27,985)      316,720       (51,336)
                    ------------  ------------  ------------  ------------
Net income (loss)        (20,450)       52,323      (587,759)       93,965
Net income
 attributable to
 noncontrolling
 interests                (1,312)         (988)       (2,982)       (1,496)
                    ------------  ------------  ------------  ------------
Net income (loss)
 attributable to
 Quicksilver        $    (21,762) $     51,335  $   (590,741) $     92,469
                    ============  ============  ============  ============

Earnings (loss) per
 common share -
 basic              $      (0.13) $       0.32  $      (3.50) $       0.58
Earnings (loss) per
 common share -
 diluted            $      (0.13) $       0.31  $      (3.50) $       0.57
Basic weighted
 average shares
 outstanding             169,009       158,290       168,894       158,209
Diluted weighted
 average shares
 outstanding             169,009       169,185       168,894       169,094





                        QUICKSILVER RESOURCES INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                In thousands, except share data - Unaudited


                                                  June 30,    December 31,
                                                    2009          2008
                                                ------------  ------------
                     ASSETS
Current assets
  Cash and cash equivalents                     $        657  $      2,848
  Accounts receivable, net of allowance for
   doubtful accounts                                  53,450       143,315
  Derivative assets at fair value                    202,332       171,740
  Other current assets                                70,516        75,433
                                                ------------  ------------
    Total current assets                             326,955       393,336
Investment in BreitBurn Energy Partners              158,418       150,503
Property, plant and equipment
  Oil and gas properties, full cost method
   (including unevaluated costs of $512,568 and
   $543,533, respectively)                         2,150,528     3,142,608
  Other property and equipment                       697,264       655,107
                                                ------------  ------------
Property, plant and equipment, net                 2,847,792     3,797,715
Derivative assets at fair value                       55,729       116,006
Deferred income taxes                                138,759             -
Other assets                                          41,525        40,648
                                                ------------  ------------
                                                $  3,569,178  $  4,498,208
                                                ============  ============

      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Current portion of long-term debt             $          -  $      6,579
  Accounts payable                                   138,016       282,636
  Income taxes payable                                 7,767            40
  Accrued liabilities                                 96,043        66,923
  Derivative liabilities at fair value                   276         9,928
  Deferred inocme taxes                               76,639        52,393
    Total current liabilities                        318,741       418,499
Long-term debt                                     2,497,693     2,586,046
Asset retirement obligations                          41,476        34,753
Derivative liabilities at fair value                     503             -
Other liabilities                                     31,768        12,962
Deferred income taxes                                 27,314       234,385
Stockholders' equity
  Preferred stock, par value $0.01, 10,000,000
   shares authorized, none outstanding                     -             -
  Common stock, $0.01 par value, 400,000,000
   shares authorized; 173,895,897 and
   171,742,699 shares issued, respectively             1,739         1,717
  Paid in capital in excess of par value             667,427       656,958
  Treasury stock of 4,674,212 and 4,572,795
   shares, respectively                              (36,068)      (35,441)
  Accumulated other comprehensive income             207,203       185,104
  Retained earnings (deficit)                       (214,253)      376,488
                                                ------------  ------------
    Quicksilver stockholders' equity                 626,048     1,184,826
Noncontrolling interests                              25,635        26,737
                                                ------------  ------------
  Total equity                                       651,683     1,211,563
                                                ------------  ------------
                                                $  3,569,178  $  4,498,208
                                                ============  ============





                        QUICKSILVER RESOURCES INC.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                         In thousands - Unaudited


                                                  For the Six Months Ended
                                                          June 30,
                                                  ------------------------
                                                      2009         2008
                                                  -----------  -----------
Operating activities:
   Net income (loss)                              $  (587,759) $    93,965
   Adjustments to reconcile net income (loss) to
    net cash provided by operating activities:
      Depletion, depreciation and accretion           110,662       73,979
      Impairment related to oil and gas
       properties                                     967,126            -
      Deferred income tax expense (benefit)          (331,321)      50,243
      Stock-based compensation                         11,223        7,641
      Non-cash loss from hedging and derivative
       activities                                       5,544       11,069
      Non-cash interest expense                        35,848        4,532
      (Income) loss from BBEP in excess of cash
       distributions, net of impairment                (7,915)       4,050
      Other                                               420        1,067
   Changes in assets and liabilities:
      Accounts receivable                              89,580      (26,057)
      Derivative assets at fair value                  54,896            -
      Other assets                                     (4,266)      (9,213)
      Accounts payable                                (25,864)      (8,566)
      Income taxes payable                              7,726      (46,497)
      Accrued and other liabilities                   (15,622)     (19,602)
                                                  -----------  -----------
Net cash provided by operating activities             310,278      136,611
                                                  -----------  -----------

Investing activities:
   Purchases of property, plant and equipment        (441,184)    (650,458)
   Proceeds from sales of property, plant and
    equipment                                         233,488          598
   Return of investment from BBEP                           -       20,334
                                                  -----------  -----------
Net cash used for investing activities               (207,696)    (629,526)
                                                  -----------  -----------

Financing activities:
   Issuance of debt                                 1,020,750    1,030,288
   Repayment of debt                               (1,144,031)    (547,566)
   Debt issuance costs                                (22,802)     (10,837)
   Eni Gas Purchase Commitment assumed                 46,628            -
   Noncontrolling interest distributions               (4,896)      (4,042)
   Proceeds from exercise of stock options                 80        1,082
   Purchase of treasury stock                            (627)      (2,354)
                                                  -----------  -----------
Net cash provided by (used for) financing
 activities                                          (104,898)     466,571
                                                  -----------  -----------

Effect of exchange rate changes in cash                   125          447
                                                  -----------  -----------

Net decrease in cash                                   (2,191)     (25,897)

Cash and cash equivalents at beginning of period        2,848       28,226
                                                  -----------  -----------

Cash and cash equivalents at end of period        $       657  $     2,329
                                                  ===========  ===========





                        QUICKSILVER RESOURCES INC.
 Production, on a thousand cubic feet of natural gas equivalent (Mcfe) per
                       day basis, by operating area


                    Three Months Ended June 30,  Six Months Ended June 30,
                    --------------------------- ---------------------------
                      2009      2008    Change    2009      2008    Change
                    --------- --------- ------  --------- --------- ------

Texas                 262,695   170,187     54%   263,005   157,605     67%
Other U.S.              2,960     3,118     -5%     3,131     3,358     -7%
                    --------- ---------         --------- ---------
                      265,655   173,305     53%   266,136   160,963     65%

Canada                 65,593    62,498      5%    65,262    62,513      4%
                    --------- ---------         --------- ---------

  Total               331,248   235,803     40%   331,398   223,476     48%
                    ========= =========         ========= =========





                        QUICKSILVER RESOURCES INC.
                   Unaudited Selected Operating Results


                                    Three Months Ended   Six Months Ended
                                         June 30,            June 30,
                                    ------------------- -------------------
                                      2009      2008      2009      2008
                                    --------- --------- --------- ---------
Average Daily Production:
Natural Gas (Mcfd)                    234,795   158,540   238,603   151,002
NGL (Bbld)                             14,837    11,484    14,100    10,757
Oil (Bbld)                              1,238     1,393     1,366     1,322
  Total (Mcfed)                       331,248   235,803   331,398   223,476

Average Realized Prices:
Natural Gas (per Mcf)               $    7.52 $    9.02 $    7.28 $    8.53
NGL (per Bbl)                       $   24.22 $   54.45 $   22.77 $   52.07
Oil (per Bbl)                       $   52.48 $   88.25 $   42.65 $   83.15
  Total (Mcfe)                      $    6.61 $    9.23 $    6.38 $    8.77

Expense per Mcfe:
Oil and gas production expense:
  Cash expense                      $    1.02 $    1.51 $    1.03 $    1.57
  Stock-based compensation               0.03      0.03      0.03      0.04
                                    --------- --------- --------- ---------
Total oil and gas production
 expense:                           $    1.05 $    1.54 $    1.06 $    1.61
Production and ad valorem taxes     $    0.25 $    0.14 $    0.20 $    0.14
Depletion, depreciation and
 accretion                          $    1.69 $    1.81 $    1.84 $    1.82
General and administrative expense:
  Other cash expense                $    0.49 $    0.57 $    0.47 $    0.60
  Litigation settlement                  0.17         -      0.08         -
  Stock-based compensation               0.15      0.15      0.15      0.16
                                    --------- --------- --------- ---------
Total general and administrative
 expense                            $    0.81 $    0.72 $    0.70 $    0.76





                        QUICKSILVER RESOURCES INC.
        RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME
              In thousands, except per share data - Unaudited

                             For the Three Months     For the Six Months
                                Ended June 30,          Ended June 30,
                            ----------------------  ----------------------
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------

Net income (loss)           $  (21,762) $   51,535  $ (590,741) $   92,469
                            ----------  ----------  ----------  ----------

Adjustments
  Impairment of E&P
   Properties                   70,643           -     967,126           -
  Impairment of investment
   in BBEP                           -           -     102,084           -
  Equity portion of BBEP
   impairment of E&P
   properties                        -           -      35,044           -
  Equity portion of early
   settlement of hedges
   from BBEP                   (18,508)          -     (18,508)          -
  Equity portion of
   interest rate derivative
   loss from BBEP                  852           -       6,977           -
  Equity portion of
   commodity derivative
   loss (income) from BBEP       1,650      22,133    (138,823)     22,840
  Debt termination-related
   expenses (interest
   expense)                     27,122           -      27,122           -
  Legal settlement (G&A)         5,000           -       5,000           -
                            ----------  ----------  ----------  ----------
  Total adjustments before
   income tax expense           86,759      22,133     986,022      22,840
  Income tax expense           (23,750)     (7,747)   (327,421)     (7,994)
                            ----------  ----------  ----------  ----------
Adjustments for items after
 taxes                          63,009      14,386     658,601      14,846
                            ----------  ----------  ----------  ----------

Adjusted net income         $   41,247  $   65,921  $   67,860  $  107,315
                            ==========  ==========  ==========  ==========

Adjusted net income per
 common share - Diluted     $     0.24  $     0.40  $     0.40  $     0.65

Diluted weighed average
 common shares outstanding     180,136     169,185     179,648     169,094

 
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