February 1, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Quicksilver Resources (NYSE: KWK ) started February on the wrong foot, falling as much as 17% in early trading, after the company announced cuts to its capital spending.
So what: With natural gas prices as low as they are, management has decided to cut capital spending in 2012 to $370 million, from $696 million in 2011, of which $108 million will be focused on liquid rich land in the Fort Worth Basin. The goal is to keep natural gas production flat for 2012.
Now what: This shouldn't come as a large shock since bigger players, like Chesapeake Energy (NYSE: CHK ) , have already cut back on production. Unless prices recover in 2012 (something I highly doubt), Quicksilver won't have a reason -- or the funds -- to increase production. Considering the company's nearly $2 billion debt load, and lower than expected production in 2012, I can't imagine this being a reason to buy today.
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