Quicksilver Resources Inc. Downgraded After $1.10 Billion Loss

Quicksilver Resources Inc. Downgraded After $1.10 Billion Loss

The stock of Quicksilver Resources Inc (NYSE: KWK) has been downgraded to neutral, as the result of lower than expected earnings per share. The company posted earnings per share of $0.01, which was $0.02 lower than analysts’ expectations. Although revenues were around $10 million higher in the fourth quarter of 2012 than what had been anticipated, this news was not met with the same excitement as the focus shifted to earnings. An accounting change by the company in the fourth quarter of 2012 resulted in a charge of $1.1 billion, which was part of a total 2012 loss of around $2.5 billion. The company’s stock closed around $2 per share, up nearly 15 percent from its previous level, despite the ratings downgrade. The close for Quicksilver Resources Inc is less than half of the company’s 52 week high of around $6 per share. This Fort Worth, Texas based oil and gas company has a market capitalization of around $367 million.

With a market capitalization of around $274 million, Petroquest Energy Inc (NYSE: PQ), an independent oil and gas company, is deemed a buy by a majority of analysts for the current period. The financial outlook for PQ appears tied to its exploration and development activities in Oklahoma, Texas, Arkansas, Wyoming and the Gulf of Mexico. The company’s stock is trading at around $4 per share. The Lafayette, Louisiana based company has assets of around $435 million, due in part of net equipment valuation of nearly $400 million, against total liabilities of around $300 million.

Goodrich Petroleum Corporation (NYSE: GDP) of Houston, Texas, with a market capitalization of around $540 million, is trading at a higher level than Quicksilver Resources Inc. and Petroquest Energy Inc. Closing at around $15 per share, this oil and natural gas company operates properties in Louisiana and Texas. The fortunes of Goodrich Petroleum Corporation are similar to that of Petroquest Energy Inc., as shown on its most recent balance sheet. The company holds around $770 million in total assets against around $700 million in total liabilities. Much of the company’s value is held in its equipment, with a net value (after depreciation expense) of $700 million. The holdings of both Goodrich Petroleum Corporation and Petroquest Energy Inc. appear to be more extensive than those of Quicksilver Resources Inc. and place both companies in a better financial light.

The resulting accounting charge taken by Quicksilver in 2012 should be absorbed throughout the year as the company seeks to rebound from this and move forward financially.