<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 17, 1999
QUICKSILVER RESOURCES INC.
(Exact name of registrant as specified in its charter)
Delaware 001-14837 75-2756163
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1619 Pennsylvania Avenue, Fort Worth, Texas 76104
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 877-3151
Not Applicable
(Former name or former address, if changed since last report)
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REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Quicksilver Resources Inc.
Fort Worth, Texas
We have audited the accompanying statement of revenues and direct
operating expenses of the Unocal Corporation's Spirit Energy 76 unit
interests, as described in Note 1, for the year ended December 31, 1998. This
financial statement is the responsibility of management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying statement of revenues and direct operating expenses
reflects the revenues and direct operating expenses attributable to the
Unocal Corporation's Spirit Energy 76 unit interests, as described in Note 2,
and is not intended to be a complete presentation of the revenues and
expenses of the Unocal Corporation's Spirit Energy 76 unit interests.
In our opinion, the financial statement referred to above presents
fairly, in all material respects, the revenues and direct operating expenses
of the Unocal Corporation's Spirit Energy 76 unit interests, as described in
Note 1, for the year ended December 31, 1998, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Fort Worth, Texas
July 22, 1999
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SPIRIT ENERGY 76 UNIT INTERESTS
STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1998
(In Thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998
----
<S> <C>
REVENUES - Oil, gas and related product sales $9,718
DIRECT OPERATING EXPENSES - Lease
operating expenses 2,670
-----
EXCESS OF REVENUES OVER DIRECT
OPERATING EXPENSES $7,048
======
</TABLE>
See notes to statement of revenues and direct operating expenses
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SPIRIT ENERGY 76 UNIT INTERESTS
NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES FOR THE YEAR
ENDED DECEMBER 31, 1998
1. THE PROPERTIES
The accompanying statement represents the revenues and direct operating
expenses attributable to the net interest in Unocal Corporation's Spirit
Energy 76 unit interests in producing wells and certain non-producing
leases primarily in the Garfield and Beaver Creek Fields sold to
Quicksilver Resources Inc. ("Quicksilver"). The purchase price was $30
million, consisting of $27 million in cash and 404,381 unregistered
shares of Quicksilver's common stock. The stock component of the
purchase price was placed in escrow and will be distributed to Unocal
over a three-year period, subject to downward adjustment for certain
costs, expenses, and liabilities incurred during this period.
Quicksilver financed the cash portion of the purchase price with $27
million of borrowings under a bank credit facility, which permits
Quicksilver to obtain revolving credit loans and to issue letters of
credit from time to time in an aggregate amount not to exceed the lesser
of a borrowing base limitation or $200 million. The properties are
located in the state of Michigan. The acquisition closed in May 1999.
These acquired properties and their related operations are included in
Quicksilver's consolidated financial statements from the date of closing.
2. BASIS OF PRESENTATION
The historical financial statements reflecting financial position,
results of operations and cash flows required by generally accepted
accounting principles, are not presented as such information is neither
readily available on an individual property basis nor meaningful for the
properties acquired because the entire acquisition cost is being
assigned to oil and gas properties. Accordingly, the statement of
revenues and direct operating expenses is presented in lieu of the
financial statements required under Rule 3-05 of Securities and Exchange
Commission Regulation S-X.
The accompanying statement of revenues and direct operating expenses
represents Unocal Corporation's net ownership interest in the properties
acquired by Quicksilver and is presented on the full cost accrual basis
of accounting. Depreciation, depletion and amortization; allocated
general and administrative expenses; interest expense and income; and
income taxes have been excluded because the property interest acquired
represents only a portion of a business and the expenses incurred are
not necessarily indicative of the expenses to be incurred by Quicksilver.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of certain revenues for the
reported period. Estimates and assumptions are also required in the
disclosure of contingent assets and liabilities as of the date of the
financial statements. Actual results may differ from such estimates.
3. CONTINGENT LIABILITIES
Given the nature of the properties acquired and as stipulated in the
purchase agreement, Quicksilver is subject to loss contingencies, if
any, pursuant to existing or expected environmental laws, regulations
and leases covering the acquired properties.
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4. OIL AND NATURAL GAS RESERVES INFORMATION (UNAUDITED)
Unaudited reserve information related to the properties being acquired
is presented in the table below and is derived from the January 1, 1999,
oil and natural gas reserve report prepared by Quicksilver's independent
petroleum engineers and calculated as of January 1, 1998 by adding
production for 1998 to the January 1, 1999 amount.
<TABLE>
<CAPTION>
Oil Gas
(MBl) (MMcf)
----- ------
<S> <C> <C>
Estimated Quantities of Proved Reserves:
January 1, 1998 2,938 50,003
Production (239) (3,441)
----- ------
December 31, 1998 2,699 46,562
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Proved Developed Reserves:
As of December 31, 1998 621 12,937
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</TABLE>
Standardized Measure of Discounted Future Net Cash Flows and Changes
Therein Related to Oil and Natural Gas Reserves--The standardized
measure of discounted future net cash flows ("Standardized Measure")
relating to oil and natural gas reserves being acquired is calculated in
accordance with Statement of Financial Accounting Standards No. 69,
"Disclosures About Oil And Gas Producing Activities." The Standardized
Measure has been prepared assuming year-end selling prices adjusted for
future fixed and determinable contractual price changes, year-end
development and production costs, and a 10% annual discount rate. The
reserves and the related Standardized Measure at December 31, 1998,
derived from the oil and natural gas reserve report prepared by
Quicksilver's independent petroleum engineers, were adjusted for
production during 1998, and in addition, the Standardized Measure was
adjusted for price changes to derive reserves and the Standardized
Measure as of December 31, 1998. The Standardized Measure is not a fair
market value of the mineral interests purchased, and the Standardized
Measure presented for the proved oil and natural gas reserves does not
purport to present the fair market value of the oil and natural gas
properties. An estimate of such value should consider, among other
factors, anticipated future prices of oil and natural gas, the
probability of recoveries of existing proved reserves, the value of
probable reserves and acreage prospects, and, perhaps, different
discount rates. It should be noted that estimates of reserve quantities
are inherently imprecise and subject to substantial revision.
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<TABLE>
<CAPTION>
December 31, 1998
-----------------
(Amounts in thousands)
<S> <C>
Future cash inflows $ 149,842
Future production and development costs (65,499)
Future income tax expense (19,497)
---------
Future net cash flows undiscounted 64,846
10% annual discount for estimated
timing of cash flows (26,550)
---------
Standardized measure of discounted future
net cash flows $ 38,296
=========
</TABLE>
The following are principal sources of changes in the standardized
measure of discounted future net cash flows:
<TABLE>
<CAPTION>
Year Ended December 31, 1998
----------------------------
(Amounts in thousands)
<S> <C>
Standardized measure of discounted future
net cash flows at beginning of period $ 39,028
Changes resulting from:
Net change in prices (1,986)
Sales of oil and natural gas produced,
net of production costs (7,048)
Accretion of discount 3,903
Net change in income taxes 4,399
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Standardized measure of discounted future net
cash flows at end of period $ 38,296
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</TABLE>
* * * * * *
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This Current Report on Form 8-K/A is an amendment to the Current Report
on Form 8-K filed on May 28, 1999, pursuant to Item 7(a).
ITEM 7. FINANCIAL STATEMENTS.
(a) Financial Statement of Assets Acquired.
Report of Independent Auditors
Statement of revenues and direct operating expenses for the year
ended December 31, 1998
Notes to statement of revenues and direct operating expenses
for the year ended December 31, 1998
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
QUICKSILVER RESOURCES INC.
By: /s/ Glenn M. Darden
-----------------------------------------
Glenn M. Darden
President and Chief Operating Officer
Date: July 22, 1999
