UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITY EXCHANGE ACT OF 1934
For the Quarter ended September 30, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE
SECURITY EXCHANGE ACT OF 1934
For the transition period from ....................
to.....................
Commission File No. 1-8523
MSR Exploration Ltd.
(Exact name of Registrant as specified in its charter)
Delaware 75-2695071
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
612 Eighth Avenue, Fort Worth, Texas 76104
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 877-3151
Securities registered pursuant to Section 12(b) of the Exchange Act:
Name of Each Exchange
Title of Each Class on Which Registered
Common Shares, United States
$0.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange
Act during the past 12 months and (2) has been subject to
such filing requirement for the past 90 days. Yes [ X ] No
[ ]
Check whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of
the Exchange Act after distribution of securities under a
plan confirmed by a Court. Yes [ ] No [ X ] because there
was no distribution of securities under the Registrant's
confirmed plan.
Common Shares outstanding at September 30, 1998: 25,777,014
Transitional Small Business Disclosure Format: Yes or
No X ]
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders of
MSR Exploration Ltd. and Subsidiaries
Fort Worth, Texas
We have reviewed the accompanying condensed consolidated
balance sheet of MSR Exploration Ltd. and subsidiaries (the
Company) as of September 30, 1998, and the related condensed
consolidated statements of operations for the three month
and nine month periods and cash flows for the nine month
period then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical procedures to
financial data and of making inquiries of persons
responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to such condensed
consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet
of the Company as of December 31, 1997, and the related
consolidated statement of operations, stockholders' equity
and cash flows for the period from inception March 7, 1997
to December 31, 1997 (not presented herein); and in our
report dated March 25, 1998, we expressed an unqualified
opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1997
is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been
derived.
DELOITTE & TOUCHE LLP
Fort Worth, Texas
November 10, 1998
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
MSR Exploration Ltd. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
September 30, December 31,
ASSETS 1998 1997
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $277 $528
Time deposits 63 59
Accounts receivable 432 507
Inventories 257 248
Prepaid expenses 4 32
Total current assets 1,033 1,374
PROPERTIES, PLANT AND EQUIPMENT - NET
("full cost") 23,842 24,234
OTHER ASSETS 339 355
$25,214 $25,963
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $48 $88
Accounts payable 1,035 652
Accrued liabilities 288 592
Total current liabilities 1,371 1,332
LONG-TERM DEBT 10,874 10,560
DEFERRED INCOME TAXES 636 1,001
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value
Authorized 50,000,000 shares,
issued and outstanding 25,777,014 258 258
Paid in capital in excess of par value 12,812 12,812
Foreign currency translation adjustment (43) (30)
Retained earnings (deficit) (694) 30
12,333 13,070
$25,214 $25,963
See Notes to Condensed Consolidated Financial Statements
3
MSR Exploration Ltd. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands, except for per share data
(UNAUDITED)
Three Months Nine Months
Ended Ended
September 30, September 30,
1998 1998
REVENUE
Oil sales $545 $1,775
Gas sales 339 1,178
Interest and other income 16 50
Total revenues 900 3,003
EXPENSES
Operating expenses 556 1,382
Production taxes 65 250
Depletion and depreciation 306 974
General and administrative 328 827
Interest 218 644
Total expenses 1,473 4,077
Loss before income taxes (573) (1,074)
Income tax benefit 180 350
Net loss ($393) ($724)
Basic and diluted loss per share ($0.02) ($0.03)
Basic weighted average number of shares
outstanding for the periods 25,777 25,777
Diluted weighted average number of shares
outstanding for the periods 25,777 25,777
See Notes to Condensed Consolidated Financial Statements
4
MSR Exploration Ltd. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
Nine Months Ended September 30, 1998
In thousands
(UNAUDITED)
OPERATING ACTIVITIES
Net loss ($724)
Charges and credits to net loss not affecting cash
Depletion and depreciation 974
Deferred income taxes (365)
Changes in assets and liabilities
Time deposits and receivables 71
Inventory, prepaid expenses and other 22
Accounts payable and accrued liabilities 79
NET CASH FROM (USED FOR) OPERATING ACTIVITIES 57
INVESTING ACTIVITIES
Acquisition of properties and equipment (582)
NET CASH FROM (USED FOR) INVESTING ACTIVITIES (582)
FINANCING ACTIVITIES
Notes payable, bank proceeds 350
Principal payments on long-term debt (76)
NET CASH FROM (USED FOR) FINANCING ACTIVITIES 274
NET INCREASE (DECREASE) IN CASH (251)
CASH AT BEGINNING OF PERIOD 528
CASH AT END OF PERIOD $277
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for interest expense $626
See Notes to Condensed Consolidated Financial Statements
5
MSR Exploration Ltd. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended September 30, 1998
(Unaudited)
Note 1. ACCOUNTING POLICIES AND DISCLOSURES
In the opinion of management of MSR Exploration, Ltd. (the
"Company"), the Company's Condensed Consolidated Financial
Statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the
financial position of the Company as of September 30, 1998,
and the results of its operations for the three and nine
months ended September 30, 1998 and its cash flows for the
nine months ended September 30, 1998.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed
or omitted. It is suggested that these consolidated
financial statements be read in conjunction with the
consolidated financial statements and notes thereto included
in the Form 10-KSB for the year ended December 31, 1997.
The results of operations for the nine month period ended
September 30, 1998 are not necessarily indicative of the
operating results to be expected for the full fiscal year.
Business Formation and Merger
MSR Exploration Ltd. ("the Company") formerly Mercury
Montana, Inc. was organized on March 7, 1997 for the purpose
of acquiring from Mercury Exploration Company (Mercury) and
thereafter exploring, developing and operating all of the
Company's oil and natural gas properties located in Montana
(the "Mercury Properties"). Upon formation of the Company,
Mercury conveyed to the Company the Mercury Properties and
associated debt in exchange for a majority of the then
outstanding Company Common Stock and warrants to purchase
additional shares of Company Common Stock. The Mercury
Properties included approximately 75 crude oil producing
wells which were subject to a prior production payment,
forward-sale agreement between Mercury and a third party
covering a period from October 1996 through December 1997.
The agreement was the obligation of Mercury; consequently
the oil revenue and associated expenses from these
properties belonged to Mercury through December 31, 1997,
and started accruing to the Company on January 1, 1998.
On March 26, 1997, MSR Exploration Ltd., ("Old MSR"), an
Alberta, Canada corporation entered into an agreement with
the Company, then known as Mercury Montana, Inc. and its
majority shareholder at that time, Mercury, both of Fort
Worth, Texas, to combine all of the Company's oil and gas
assets in Montana with all the oil and gas assets of Old MSR
by way of a merger of the Company and Old MSR. The Company
was the surviving corporation in the merger and changed its
name to MSR Exploration Ltd. after the merger was effective
on October 31, 1997. The merger was accounted for under the
purchase method of accounting.
Financial Statement Presentation
Statements of operations and cash flows for the Company from
its inception, March 7, 1997, through the date of the merger
with Old MSR, October 31, 1997, are considered immaterial
and are not presented in this report. Most of the revenue
and associated expenses from the Mercury Properties did not
begin to accrue to the Company until January 1, 1998.
Pro forma unaudited condensed consolidated statement of
operations presented elsewhere in this report, assumes the
merger of the Company and Old MSR was consummated on January
1, 1997 and included revenues and expenses from the Mercury
Properties which were subject to the production
payment/forward sales agreement. Pro forma revenues for the
three and nine months ended September 30, 1997, would have
been approximately $1,601,000 and $4,966,000, respectively;
loss before income taxes would have been approximately
$164,000 and $378,000 respectively; and the net loss would
have been approximately $108,000 and $249,000 respectively.
The pro forma results are not necessarily indicative of what
would have occurred had the merger actually taken place on
January 1, 1997.
MSR Exploration Ltd. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 2. NOTES PAYABLES AND LONG-TERM DEBT
September 30, December 31,
1998 1997
Long-term debt consists of:
Note payable to a bank
(7.5% at September 30, 1998) $10,848,000 $10,498,000
Various pre-petition claims at
interest rates ranging
From 6% to 10%, due in monthly,
quarterly and
Annual installments, including
interest 74,000 150,000
10,922,000 10,648,000
Less current maturities
48,000 88,000
$10,874,000 $10,560,000
On October 31, 1997 the Company restructured the Old MSR
revolving credit facility and entered into a new credit
agreement with a bank. Proceeds from the new facility were
used to repay the $4.0 million of debt guaranteed by the
Company and repay $6.0 million of debt owed by Old MSR. The
closing of the loan was subject to the successful completion
of the Company's merger with Old MSR. The new agreement is
for a $25 million senior secured revolving credit facility
with a current borrowing base of $12 million, which matures
in five years. The Company can designate the interest rate
on amounts outstanding at either the London Interbank
Offered Rate (LIBOR) + 1.75%, or bank prime plus 0.125%.
The collateral for this loan agreement consists of
substantially all of the existing assets of the Company and
any future reserves acquired. The loan agreement contains
certain restrictive covenants, which, among other things,
require the maintenance of a minimum current ratio, net
worth, debt service ratio and certain dividend restrictions.
For the period ended September 30, 1998, the Company is in
compliance with all of the covenants except for the interest
coverage ratio set at 2 to 1. The bank has waived the
requirements for the period ended September 30, 1998 and for
the remainder of 1998.
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
This Quarterly Report on Form 10-QSB contains forward-
looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Company's actual results could
differ materially from those set forth in the forward-
looking statements.
The following discussion and analysis should be read in
conjunction with the Company's condensed consolidated
financial statements and notes thereto for the nine month
period ended September 30, 1998 and with the Company's
audited financial statements and notes thereto for the
fiscal year ended December 31, 1997.
The Company was organized on March 7, 1997. The founders of
the Company contributed approximately 75 crude oil producing
wells in northwest Montana, constituting the Mercury
Properties in exchange for Company common stock and common
stock warrants. These properties were subject to a forward
sale of production and consequently the revenues and
expenses from the properties did not begin to accrue to the
Company until January 1, 1998.
On March 26, 1997, Old MSR, entered into an agreement with
the Company, then known as Mercury Montana, Inc., and its
majority shareholder at that time, Mercury, both of Fort
Worth, Texas, to combine all of the Company's oil and gas
assets in Montana with all the oil and gas assets of Old MSR
by way of the Merger. The Company was the surviving
corporation in the Merger and changed its name to MSR
Exploration Ltd. The merger was effective October 31, 1997.
Due to the Company's limited existence the unaudited
statement of operations for the three and nine months ended
September 30, 1998 will be compared to the unaudited pro
forma statement of operations for the three and nine months
ended September 30, 1997, which are presented separately in
this report.
Comparison of the Third Quarter Ended September 30, 1998 to
the Third Quarter Ended September 30, 1997.
Revenue. Total revenues for the three months ended
September 30, 1998 were $900,000, a 44% decrease compared to
$1,601,000 of pro forma revenues for the same period in
1997. Oil sales for the 1998 period were $545,000, a
decrease of 42% compared to third quarter 1997 pro forma
sales of $932,000. This decrease was due primarily to a 38%
decrease in average price per barrel sold by the Company.
Average crude oil prices were $10.17 per barrel during the
three months ended September 30, 1998 compared to pro forma
1997 price of $16.48. Oil sales volumes decreased 5% from
pro forma barrels of 56,600 in 1997 to 53,600 for the third
quarter of 1998. The decrease in oil sales volumes was
primarily the result of natural production declines. Gas
sales for the third quarter of 1998 were $339,000, a 48%
decline compared to $654,000 of pro forma sales during the
same quarter in 1997. The reduction in gas sales revenues
was primarily the result of lower production volumes and a
decrease in the average gas prices the Company received for
its gas. In the 1998 quarter, the Company sold its gas at
an average price of $1.78 per mcf as compared to the 1997
pro forma price of $2.34 per mcf, a 24% decrease. Gas sales
volumes for the three months ended September 30, 1998 were
190,000 mcf, a decrease of 32% compared to 1997 pro forma of
279,000 mcf. Most of the reduction in gas sales volumes can
be attributed to the Company's gas plant in northwest
Montana, by contract were shut-ins all summer and natural
production declines.
Expenses. Total expenses for the three months ended
September 30, 1998 were $1,473,000, a 17% decrease compared
to pro forma expenses of $1,765,000 for the same period in
1997. Management believes a significant portion of the
decrease in operating expenses can be attributed to
efficiencies gained as a result of the merger of the Company
and Old MSR. Comparing actual operating expenses for the
third quarter of 1998 to pro forma expenses for the same
period in 1997 indicates that 1998 operating expenses of
$556,000 decreased 16%; 1998 production taxes of $65,000
decreased 45%, primarily due to reduced sales; 1998
depletion and depreciation expense of $306,000 was down 38%,
the result of lower sales volumes and a reduced depletion
rate and general and administrative expenses of $328,000 for
1998 increased 55%. General and administrative expenses for
the 1998-quarter includes $81,000 of cost associated with
the proposed merger with Quicksilver Resources Inc. If the
merger costs had not been incurred G&A expenses would have
increased 16%. Interest expense of $218,000 for 1998
reflected a decrease of 23% due to a reduced interest rate
on the Company's long-term debt.
Net Loss. For the third quarter ended September 30, 1998,
the net loss was $393,000 ($0.02 per share) compared to pro
forma net loss of $108,000 for the 1997 period. The 1998
third quarter loss was primarily the result of the extreme
decline in crude oil and gas prices, reduced sales volumes,
and also include $81,000 of merger expenses.
Comparison of the Nine Months Ended September 30, 1998 to
Nine Months Ended September 30, 1997.
Revenues. Revenues for the first nine months of 1998 were
$3,003,000, a 40% decrease compared to pro forma revenues
for the same period in 1997, due primarily to the lower
price from oil and gas production. Oil sales for the 1998
period were $1,775,000, 44% lower than the 1997 pro forma
oil sales of $3,169,000. During the 1998 period the Company
sold its crude oil for an average price of $11.01 per barrel
compared to a 1997 average of $17.68, a decrease of 38%.
Oil sales volumes were 161,200 barrels for the first nine
months of 1998, a decrease of 10% compared to the 1997
period and was due to natural production declines and the
result of shutting-in uneconomic wells. Gas sales for the
first nine months of 1998 were $1,178,000 or $550,000 (32%)
less than 1997 pro forma sales of $1,728,000. The average
price per mcf sold was $2.03 in 1998 compared to $2.33 in
1997. Gas volumes decreased from 745,400 pro forma mcf of
sales in 1997 to 581,000 mcf in 1998 primarily due to
declines in production and lower gas plant sales.
Expenses. Total expenses for the nine months ended
September 30, 1998, were $4,077,000, a decrease of 24% over
the pro forma for 1997 of $5,344,000. As stated previously,
management believes the overall reduction in operating
expenses is the result of efficiencies gained from the
merger of the Company and Old MSR. Operating expenses of
$1,382,000 in 1998 decreased $689,000 or 33%. Production
taxes were $250,000 in 1998, a decrease of 31% due primarily
to reductions in product sales. Depletion and depreciation
expense in the 1998 period was $974,000 or 28% less than pro
forma 1997 of $1,354,000 primarily due to reduced sales
volumes and a lower depletion rate. General and
administrative expenses for the 1998 period were $827,000 an
increase of 15% compared to $721,000 in 1997. If merger
costs totaling $166,000 had not been included, G&A expenses
would have decreased 8%. Interest expense decreased 23%
primarily due to a reduction of interest rates on long-term
debt.
Net Loss. The first nine months of 1998 results of
operations shows a net loss of $724,000 ($0.03 per share)
compared to a pro forma net loss for the same period in 1997
of $249,000 ($0.01 per share). During 1998 the Company
reduced expenses 24%, which was not sufficient to overcome
the sharp decline in crude oil prices and a decrease in
production.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The following pro forma consolidated statement of operations
for the three and nine months ended September 30, 1997,
combine the historical information of the Company adjusted
to give effect to the merger as if the merger had been
consummated on January 1, 1997. The Company's oil revenues
and associated operating expenses from the Mercury
Properties included in the pro forma statements of
operations were subject to a prior production payment/
forward sales agreement between Mercury and a third party
for the period of October 1996 through December 31, 1997.
The Mercury Property oil revenues and associated expenses
were excluded from the Company's statements of operations
for the year ended December 31, 1997, however the revenues
and expenses are included in these pro forma statements of
operations to provide comparative information about the
Company for 1998 and beyond. The oil revenues and
associated expenses of the Mercury Properties began accruing
to the Company on January 1, 1998.
The pro forma statements of operations are provided for
comparative purposes only and should be read in conjunction
with the historical consolidated financial statements of the
Company included elsewhere in the report. The pro forma
information presented is not necessarily indicative of the
combined financial results as they may be in the future or
as they might have been for the periods indicated had the
merger been consummated as of January 1, 1997.
MSR Exploration Ltd. and Subsidiaries
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Nine Months
Ended Ended
September 30, September 30,
1997 1997
REVENUE
Oil sales $932 $3,169
Gas sales 654 1,728
Interest and other income 15 69
Total revenues 1,601 4,966
EXPENSES
Operating expenses 659 2,071
Production taxes 119 363
Depletion and depreciation 493 1,354
General and administrative 212 721
Interest 282 835
Total expenses 1,765 5,344
Loss before income taxes (164) (378)
Income tax benefit 56 129
Net loss ($108) ($249)
Basic and diluted loss per share $0.00 $0.01
Basic and diluted weighted average number
of shares outstanding for the periods 25,777 25,777
10
Liquidity and Capital Resources
The Company finances its operations primarily through a third
party credit facility and cash from operations. Net cash from
operations was $57,000 for the nine months ended September 30,
1998. The Company believes that its cash from operations and
funds available under its existing credit facility will be
sufficient to fund foreseeable working capital requirements of
its operations. However, the Company's capital expenditure
programs, principally the drilling of development wells, will be
dependent on crude oil pricing in the coming months.
On October 31, 1997 the Company restructured the Old MSR
revolving credit facility and entered into a new credit agreement
with a bank. Proceeds from the new facility were used to repay
the $4.0 million of debt guaranteed by the Company and repay $6.0
million of debt owed by Old MSR. The closing of the loan was
subject to the successful completion of the Company's merger with
Old MSR. The agreement is for a $25 million senior secured
revolving credit facility with a current borrowing base of $12
million, which matures in five years. The Company can designate
the interest rate on amounts outstanding at either the London
Interbank Offered Rate (LIBOR) + 1.75%, or bank prime plus
0.125%. At September 30, 1998 there was a total of $10,848,000
outstanding under the credit agreement, all of which constituted
long-term debt.
For the nine months ended September 30, 1998 the Company had
EBITDA of $544,000 compared to pro forma for the same period last
year of $1,811,000. EBITDA is calculated by adding interest,
income taxes, and depreciation, depletion and amortization to net
income. Interest includes interest expense accrued and
amortization of deferred financing costs. EBITDA is presented
here not as a measure of operating results, but rather as a
measure of the Company's operating performance and ability to
service debt. EBITDA should not be considered as an alternative
to earnings, or operating earnings, as defined by generally
accepted accounting principles, as an indicator of the Company's
financial performance, as an alternative to cash flow as a
measure of liquidity or as being comparable to other similarly
titled measures of other companies.
Year 2000 Issue
MSR has been evaluating and assessing the business risks and
exposures related to the Year 2000. This evaluation and
assessment of the extent of the risks and exposures related to
MSR's information systems, including embedded logic devices, and
related to MSR's customers, suppliers, financial institutions,
and other constituencies should be substantially completed during
1998. Since 1995, MSR and its predecessors have replaced all
major information systems with Year 2000 compliance as a
criterion, therefore, MSR does not currently expect to incur any
material amount of expense associated with the remediation of its
major information systems.
With respect to the risks and exposures related to MSR's
customers, partners, suppliers, financial institutions, and other
constituencies and the resulting potential impact on MSR's
business operations and financial condition, MSR has initiated
formal communications with its customers, suppliers, financial
institutions and other constituencies to mitigate or prevent such
risks and exposures.
Prospective Business Combination.
Effective September 8, 1998, the Company entered into an
Agreement and Plan of Merger and Reorganization to merge with
Quicksilver Resources Inc. (Quicksilver), a company affiliated
with Mercury Exploration Company and the Darden family of Fort
Worth, Texas. MSR will merge with and into Quicksilver, with
Quicksilver as the surviving corporation. As a result of the
merger, MSR stockholders will receive one share of Quicksilver
common stock for each 10 shares of MSR common stock.
Following completion of the merger, Quicksilver would own
interests in 1,200 wells (672 net), with a lease inventory of
almost 600,000 gross acres (330,000 net) located in Michigan,
Montana, Wyoming, Texas, and Canada. The company's net proved
reserves would be in excess of 285 billion cubic feet of gas
equivalent (BCFE), having a present value discounted at ten
percent (PV-10) of approximately $148 million, based on reserve
reports dated January 1, 1998. Separately, Quicksilver has
reported revenues for the nine months ended September 30, 1998 of
approximately $49.4 million, with operating cash flow of
approximately $19.8 million and net income of approximately $4.7
million.
Quicksilver is primarily owned by Mercury Exploration Company,
Trust Company of the West and an affiliate of Enron Corp.
Quicksilver expects to make application to the American Stock
Exchange to list its shares including the shares to be issued to
the MSR shareholders in the merger. Upon consummation of the
merger, the MSR shareholders would receive shares of common stock
of Quicksilver in exchange for each of their MSR shares,
representing approximately 20% of the shares of Quicksilver to be
outstanding after the merger.
The merger is subject to approval of the shareholders of MSR and
Quicksilver, certain regulatory filings and other customary
conditions. If approved, the merger is expected to be completed
in the fourth quarter of 1998.
MSR Exploration Ltd. and Subsidiaries
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings: None
ITEM 2. Changes in Securities: None
ITEM 3. Defaults Upon Senior Securities: None
ITEM 4. Submission of Matters to a Vote of Security Holders:
None
ITEM 5. Other Information: None
ITEM 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K:
On September 8, 1998, the Company filed a Form 8-K Current
Report, which announced that effective September 8, 1998,
MSR Exploration Ltd., a Delaware corporation ("MSR"), and
Quicksilver Resources Inc. (Quicksilver), a Delaware
corporation, entered into an Agreement and Plan of Merger
and Reorganization (the "Merger Agreement") pursuant to
which MSR will merge with and into Quicksilver as the
surviving corporation.
MSR EXPLORATION LTD.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: November 13, 1998
MSR Exploration Ltd.
By: /s/ Glenn M. Darden
Glenn M. Darden
President and Chief Operating Officer
By: /s/ Howard N. Boals
Howard N. Boals, Vice President of Finance
Chief Accounting Officer
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