Quicksilver Resources Shares Got Crushed: What You Need to Know
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 (NYS: 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 (NYS: 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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At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Motley Fool newsletter services have recommended buying shares of Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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