Quicksilver Resources Inc. (KWK) is an independent exploration and production company based in Fort Worth, Texas. The company’s growth story remains strong and with the recent accretive Alliance acquisition, the company looks to further increase its growth prospects in the prolific Barnett Shale. The Texas Barnett Shale play now represents roughly 5.5 Tcfe of low-risk reserve potential for Quicksilver Resources.

With the 90% pullback in its stock price since mid-July, the company now trades around its 52-week low. While the company has above-average leverage ratios, we estimate that the company should be able to live within its ‘09 capital budget while still maintaining an impressive production growth rate. We are maintaining our Buy recommendation on Quicksilver Resources but decreasing our target price to $22 from $40 per share.

Concerns about the global economy and tumultuous credit markets have beaten down every sector in the stock market, Quicksilver is not different. Our new target price of $22 per share is based off of our estimated 2010 EBITDA and EPS figures of $915 MM and $1.76 per share. We have applied an EV/EBITDA and P/E multiple of 7x and 12.5x, respectively, both of which are within historical ranges and appropriate relative to the company’s peer group.

Read the full analyst report on KWK

“KWK” Free Stock Analysis: Buy? Sell? Hold?
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