Exhibit 10.20
Execution Version
JOINT OPERATING AGREEMENT
     This JOINT OPERATING AGREEMENT (this “Agreement”) dated October 1, 2010,
but effective as of July 1, 2010, between Quicksilver Resources Inc., a Delaware
corporation (“KWK”), Quicksilver Gas Services LP, a Delaware limited partnership
(“KGS LP”), and Quicksilver Gas Services GP LLC, a Delaware limited liability
company and the general partner of KGS LP (“KGS GP” and, together with KGS LP,
“KGS”). KWK and KGS may sometimes be referred to individually as a “Party” and
collectively as the “Parties.”
     WHEREAS, pursuant to that certain Purchase Agreement (the “Purchase
Agreement”) dated as of July 22, 2010, among First Reserve Crestwood Holdings
LLC, a Delaware limited liability company (“Buyer”), KWK and certain
subsidiaries of KWK (the “Selling Subsidiaries”), Buyer agreed to purchase the
Holdings LLC Interests (as defined in the Purchase Agreement) from the Selling
Subsidiaries and the KGS Note (as defined in the Purchase Agreement) from KWK,
and KWK agreed to sell the KGS Note, and to cause the Selling Subsidiaries to
sell the Holdings LLC Interests, to Buyer. Capitalized terms not otherwise
defined herein shall have the meaning ascribed to such terms in the Purchase
Agreement; and
     WHEREAS, in connection with the Closing under the Purchase Agreement, the
Parties desire to enter into this Agreement to provide the terms and conditions
pursuant to which the construction, operation, management and maintenance of
certain interests and assets owned by each of KWK and KGS in certain contract
areas will be jointly conducted.
     NOW, THEREFORE, in consideration of the mutual covenants and agreements
made herein, the Parties, intending to be legally bound, hereby agree as
follows:
ARTICLE 1
Definitions
     Section 1.01. Definitions. As used herein, the following terms have the
following meanings:
     “Alliance Gas Gathering Agreement” means the Gas Gathering Agreement dated
as of December 1, 2009 between Cowtown Pipeline Partners L.P., as the assignee
of Cowtown Pipeline L.P., and KWK (as amended or amended and restated from time
to time).

 

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     “Alliance Gas Pipelines and Related Facilities” means the Pipelines and
Related Facilities associated with the Alliance Area Gathering System located in
Tarrant and Denton Counties, Texas.
     “Approved Projects” means Pipelines and Related Facilities projects agreed
upon by the Parties.
     “Capex Budget” means the annual budget for capital expenditures relating to
Approved Projects.
     “Contract Area” means, collectively, the Contract Areas covered by all of
the Gas Agreements.
     “Contract Labor” means any third party contractor utilized to perform
operating, maintenance or repair activities on Quicksilver-owned Pipelines and
Related Facilities.
     “Cowtown Gas Processing Agreement” means the Sixth Amended and Restated Gas
Gathering and Processing Agreement dated as of September 1, 2008, between KWK,
Cowtown Pipeline Partners L.P. and Cowtown Gas Processing Partners L.P. (as
amended or amended and restated from time to time).
     “FTE” or “Full Time Equivalent” means any hourly or salaried KGS employee.
     “Fully burdened rate” means the rate at which KGS employees’ labor will be
billed to Quicksilver. It includes base salary, 410k contribution, equity-based
compensation, employee benefits, health insurance, unemployment taxes, FICA,
overtime, deferred compensation, long term care insurance, accrued bonus,
company vehicle insurance, vehicle lease expense, vehicle repair and maintenance
expense.
     “Gas Agreement” means each of the Alliance Gas Gathering Agreement, Lake
Arlington Gas Gathering Agreement and Cowtown Gas Processing Agreement.
     “Lake Arlington Gas Gathering Agreement” means the Amended and Restated Gas
Gathering Agreement dated as of September 1, 2008, between Cowtown Pipeline
Partners L.P., as the assignee of Cowtown Pipeline L.P., and KWK (as amended or
amended and restated from time to time).
     “Lake Arlington Pipelines and Related Facilities” means the Pipelines and
Related Facilities associated with the Lake Arlington Gathering System located
in Tarrant County, Texas.
     “Pipelines and Related Facilities” shall mean all natural gas, natural gas
liquids, water, gas lift and other pipelines including all meters, separators,
dehydrators, treating or processing plants, compressors, cathodic protection,

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rectifiers, drip stations, pig launchers and receivers required to be
constructed, installed, operated and maintained by KGS or KWK pursuant to their
individual or joint obligations under the Gas Agreement(s).
     “RRC” means the Railroad Commission of Texas.
     “Support Services” means those KGS functional groups that will periodically
perform work on behalf and for the sole benefit of KWK-owned assets. These
services include Health, Safety and Environmental (HSE), Purchasing and Supply
Chain Management, Instrumentation and Electrical Technicians and Management.
     (a) Each of the following terms is defined in the Section set forth
opposite such term:

          Term   Section
AFE
  2.04(a)
Agreement
  Preamble
Buyer
  Recitals
Damages
  7.02(a)
Indemnified Party
  7.02(a)
Indemnifying Party
  7.02(a)
KGS
  Preamble
KSP GP
  Preamble
KGS LP
  Preamble
KGS Pipeline
  2.02(a)
KWK
  Preamble
KWK Pipeline
  2.02(a)
Parties
  Preamble
Pipeline Contractor
  2.03(a)
Pipelines
  2.02(a)
Purchase Agreement
  Recitals
ROW Acquisition
  2.02(a)
RTUs
  3.01(b)
Selling Subsidiaries
  Recitals
Third-Party Gas Agreement
  3.01

     Section 1.02. Other Definitional and Interpretative Provisions. The words
“hereof”, “herein” and “hereunder” and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. References to Articles, Sections, Exhibits and Schedules are to
Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise
specified. All Exhibits and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise
defined

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therein, shall have the meaning as defined in this Agreement. Any singular term
in this Agreement shall be deemed to include the plural, and any plural term the
singular. Whenever the words “include”, “includes” or “including” are used in
this Agreement, they shall be deemed to be followed by the words “without
limitation”, whether or not they are in fact followed by those words or words of
like import. “Writing”, “written” and comparable terms refer to printing, typing
and other means of reproducing words (including electronic media) in a visible
form. References to any agreement or contract are to that agreement or contract
as amended, modified or supplemented from time to time in accordance with the
terms hereof and thereof. References to any Person include the successors and
permitted assigns of that Person. References from or through any date mean,
unless otherwise specified, from and including or through and including,
respectively. References to “law”, “laws” or to a particular statute or law
shall be deemed to include any such law or statute as amended from time to time,
any rules and regulations promulgated thereunder and any and all Applicable Law.
ARTICLE 2
Future Pipelines and Related Facilities Build-out and Development
     Section 2.01. General. In an effort to optimize the resources of the
Parties, to ensure timely completion of the Approved Projects and to provide for
the most efficient ongoing operation, management and maintenance of existing and
future Pipelines and Related Facilities required under each of the Gas
Agreements, KWK and KGS agree to cooperate and jointly develop the Pipelines and
Related Facilities in the manner set forth in this Article 2. The Parties shall
jointly cooperate each year and from time to time as required to prepare,
discuss and approve the Capex Budget with respect to the KGS Pipeline; provided
that the initial Capex Budget with respect to the KGS Pipeline shall be the
capital expenditure budget set forth in Section 5.01(b) of the Seller Disclosure
Schedules. KWK shall submit to KGS each year the Capex Budget with respect to
the KWK Pipelines. The Capex Budget shall identify in sufficient detail all
projects and estimated costs for the ensuing year with respect to the Pipelines
and Related Facilities covered by the relevant Capex Budget.
     Section 2.02. ROW Acquisition. KWK shall direct and manage the land brokers
and personnel necessary for procuring the permits, approvals and Right-of-Way
(the “ROW Acquisition”) necessary for the construction and operation of the KGS
gas gathering utility pipeline (including related appurtenances and facilities)
(the “KGS Pipeline”) and the KWK gas lift and water lines (including related
appurtenances and facilities) (the “KWK Pipelines” and, together with the KGS
Pipeline, the “Pipelines”), as applicable, as contemplated by the Capex Budget.
To the extent the estimated cost of the ROW Acquisition for the KGS Pipeline
materially exceeds the estimated cost of such ROW Acquisition pursuant to the
applicable Capex Budget, KWK shall notify KGS of such event, as soon as
reasonably feasible, providing an estimate of such revised costs; provided,
however, that KWK shall have authority to settle all ROW Acquisition issues,

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including costs and terms, subject to the approval of KGS (which approval shall
not be unreasonably withheld or delayed).
     (a) The ROW Acquisition shall include applying for, and submitting
information necessary to obtain, such permits, approvals and licenses required
to construct and operate the Pipelines (including any construction permits as
may be required by the RRC) as well as the acquisition of easements and any
other Right-of-Way from the appropriate landowners in the name of KGS and KWK,
as applicable, for the KGS Pipeline and the KWK Pipelines respectively.
     (b) Notwithstanding anything to the contrary herein, the Parties agree that
if and to the extent KWK does not perform any of its obligations pursuant to
this Section 2.02 with respect to the KGS Pipeline to the reasonable
satisfaction of KGS, then, upon at least five (5) Business Days prior written
notice, KGS shall have the right to perform (at KGS’s cost) such obligations
with respect to the KGS Pipeline instead of KWK, it being understood that such
right to substitute itself in the performance of KWK’s obligations shall be
KGS’s sole remedy for any non-performance by KWK of its obligations pursuant to
this Section 2.02 with respect to the KGS Pipeline, and KGS shall not have any
other claim (for breach of contract or otherwise), whether in law or in equity,
for any such non-performance.
     Section 2.03. Construction of Pipelines. KGS shall direct and manage all
pipeline construction contractors and sub-contractors and all other Persons
providing construction related services (each, a “Pipeline Contractor”) as are
required for the construction and installation of the Pipelines in the same
easement land area under each Party’s respective and separate Right-of-Way. The
Pipelines shall be installed by such Pipeline Contractors (or, if KGS constructs
or installs such Pipeline itself, KGS) in such a manner (including with all such
cathodic protection) as is consistent with accepted industry standards. The
Parties shall mutually agree upon the number of days for the estimated
completion of the Pipelines or any segment thereof. For the avoidance of doubt,
KGS will contract with such Pipeline Contractors for the construction and
installation of both Parties’ Pipelines and Related Facilities in accordance
with the Capex Budget. To the extent the estimated cost of the construction or
installation of the KWK Pipelines materially exceeds the estimated cost of the
construction or installation of such Pipelines pursuant to the applicable Capex
Budget, KGS shall notify KWK of such event, as soon as feasible, providing an
estimate of such revised costs; provided, however, that KGS shall have authority
to settle all issues relating to the construction and installation of the
Pipelines, including costs and terms, subject to the approval of KWK (which
approval shall not be unreasonably withheld or delayed).
     (a) KGS shall notify KWK at least five (5) Business Days prior to the
commencement of the construction of any segment of the Pipelines by any Pipeline
Contractor. KGS and KWK shall hold regularly scheduled weekly meetings to
discuss and report on the status of, and any progress with respect to,

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(i) applications for required permits, approvals and licenses, (ii) the
construction and installation of the Pipelines as well as related equipment laid
or installed, as applicable, and (iii) testing, inspection and flowing of gas.
KWK’s designated personnel shall have, for the purposes of inspecting and
reviewing, reasonable access to any of the activities conducted hereunder and
any documentation relating thereto.
     (b) Notwithstanding anything to the contrary herein, the Parties agree that
if and to the extent KGS does not perform any of its obligations pursuant to
this Section 2.03 with respect to the KWK Pipeline to the reasonable
satisfaction of KWK, then, upon at least five (5) Business Days prior written
notice, KWK shall have the right to perform (at KWK’s cost) such obligations
with respect to the KWK Pipeline instead of KGS, it being understood that such
right to substitute itself in the performance of KGS’s obligations shall be
KWK’s sole remedy for any non-performance by KGS of its obligations pursuant to
this Section 2.03 with respect to the KWK Pipeline, and KWK shall not have any
other claim (for breach of contract or otherwise), whether in law or in equity,
for any such non-performance.
     Section 2.04. Costs. For all Approved Projects, KWK shall prepare and
submit to KGS authorizations for expenditure (“AFEs”) for the estimated
acquisition costs and capital expenditure for the ROW Acquisition to the extent
attributable to the KGS Pipeline. KGS shall pay to KWK, by wire transfer in
immediately available funds within five (5) Business Days of receipt of the
relevant AFE, the acquisition costs and capital expenditure incurred by KWK that
are attributable to the KGS Pipeline.
     (a) For all Approved Projects, KGS shall prepare and submit to KWK AFEs for
the estimated acquisition costs and capital expenditure for the construction and
installation of the KWK Pipelines. KWK shall pay to KGS, by wire transfer in
immediately available funds within five (5) Business Days of receipt of the
relevant AFE, the acquisition costs and capital expenditure incurred by KGS that
are attributable to the KWK Pipelines. Notwithstanding anything to the contrary
in this Agreement, to the extent KGS does not hire a third-party Pipeline
Constructor for the construction or installation of the KWK Pipeline but
constructs or installs such Pipeline itself or requests an Affiliate of KGS to
construct or install such Pipeline, the Capital Budget and AFE with respect to
such Pipeline shall only reflect the actual costs incurred, or estimated to be
incurred, by KGS or such Affiliate in connection with the construction or
installation of such Pipeline, and KWK shall not be required to pay to KGS any
amounts in excess of such actual costs with respect to the construction or
installation of such Pipeline (irrespective of whether such payment is made
pursuant to this Section 2.04(b) or pursuant to Section 2.04(c)).
     (b) (i) To the extent the actual acquisition costs or capital expenditure
for any acquisition activity or construction or installation activity, as the
case may be, differs from the estimated acquisition costs or capital expenditure
for such

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activity pursuant to the relevant AFE, the Parties shall true each other up for
any such difference within 30 days after completion of the acquisition activity
or construction or installation activity, as the case may be, in question.
(ii) Each Party shall have the right, upon reasonable notice, and at all
reasonable times during usual business hours, to audit, examine, inspect and
make copies of the books and records of the other Party relating to AFEs
submitted by the other Party and/or the corresponding acquisition activities or
construction and installation activities, as the case may be; provided that such
right may only be exercised with respect to any books and records relating to
any AFE or the corresponding acquisition activities or construction or
installation activities, as the case may be, during the two-year period
immediately following the completion of the relevant activities. Such right may
be exercised through any agent or employee of the Party conducting such audit,
examination or inspection; provided such agent or employee has been reasonably
approved by the other Party. The Party conducting such audit, examination or
inspection shall bear all costs and expenses incurred in connection therewith.
If any Party determines during the two-year period immediately following the
completion of any acquisition activities or construction or installation
activities, as the case may be (irrespective of whether such determination is
made as a result of any audit, examination or inspection pursuant to this clause
(ii) or otherwise), that the actual acquisition costs or capital expenditure for
any acquisition activity or construction or installation activity, as the case
may be, differs from the estimated acquisition costs or capital expenditure for
such activity pursuant to the relevant AFE, then (x) the Party making such
determination shall promptly notify the other Party thereof and (y) the Parties
shall true each other up for any such difference within 30 days after the Party
making such determination notifies the other Party thereof.
     (c) To the extent the Parties cannot agree, within the relevant 30-day
period pursuant to Section 2.04(c), on the difference between the actual
acquisition costs or capital expenditure for any acquisition activity or
construction or installation activity, as the case may be, and the estimated
acquisition costs or capital expenditure for such activity pursuant to the
relevant AFE, the Parties shall settle such dispute in accordance with the
dispute resolution mechanism pursuant to the applicable Gas Agreement, which
dispute resolution mechanism shall apply mutatis mutandis (provided that the
provisions of Sections 7.06 through 7.08 hereof shall apply to any lawsuit of
the Parties arising out of or relating to any such dispute).
     Section 2.05. Sharing of Documentation. Promptly upon receipt thereof by
KWK, all surveys, as-builts, permits, approvals, licenses, agreements relating
to any Right-of-Way and other documentation relating to the ROW Acquisition
shall be made available by KWK to KGS to the extent such documentation relates
to the KGS Pipeline.
     (a) Promptly upon receipt thereof by KGS, all surveys, as-builts, permits,
approvals, licenses, agreements relating to any Right-of-Way and other
documentation relating to the construction or installation of the Pipelines
shall be

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made available by KGS to KWK to the extent such documentation relates to the KWK
Pipelines.
     Section 2.06. Compliance with Procedures. Each Party shall comply, and
shall ensure that its agents and contractors comply, with the other Party’s
posted safety procedures when entering or performing any work in such other
Party’s premises.
     Section 2.07 Limitation on Liability. EXCEPT TO THE EXTENT SET FORTH IN
THIS AGREEMENT, NEITHER PARTY MAKES, AND EXPRESSLY DISCLAIMS, ANY
REPRESENTATIONS OR WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PERFORMANCE OF THE SERVICES PROVIDED BY SUCH PARTY HEREIN,
INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED
AND DISCLAIMED.
ARTICLE 3
SCADA Data; IT; Emergency Phone Numbers; Insurance
     Section 3.01. Collection, Management and Sharing of SCADA Data and
Infrastructure. KWK will collect, control and manage the SCADA data with respect
to the Pipelines and shall have open access to all infrastructure, including
communication towers, that supports the collection, control and management of
the SCADA data (it being understood that ownership to any SCADA meter or other
SCADA infrastructure shall remain unaffected by the foregoing). KGS shall
reimburse KWK for fifty percent (50%) of any costs and expenses incurred by KWK
or its Affiliates in connection with the operation and maintenance of the SCADA
system and infrastructure, provided that with respect to labor charges such
fifty percent (50%) allocation shall be applied to the following rates : (i) one
hundred percent (100%) of the fully burdened rate of one (1) SCADA
administrator; (ii) twenty percent (20%) of the fully burdened rate of one
(1) SCADA manager; (iii) twenty percent (20%) of the fully burdened rate of one
(1) network administrator, and (iv) forty percent (40%) of the fully burdened
rate of one (1) telecom administrator. KWK shall make available to KGS the SCADA
data relating to each Gas Agreement, as well as SCADA data relating to each
currently existing gas gathering agreement and gas processing agreement between
KGS and a third party (a “Third-Party Gas Agreement”), at no additional cost to
KGS, until such Gas Agreement or Third-Party Gas Agreement”), as applicable,
terminates or is terminated in accordance with its terms. The Parties will
negotiate in good faith as to the allocation of costs for future additional
third-party meters.
     (a) KGS shall perform the installation and maintenance of the SCADA meters
with respect to the Pipelines, and KWK shall perform the installation and

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maintenance of the Remote Telemetry Units (“RTUs”) with respect to the Pipelines
(it being understood that ownership to any SCADA meter or other SCADA
infrastructure shall remain unaffected by the foregoing). Notwithstanding the
foregoing, KWK shall direct, specify and coordinate the materials and
configuration standards required to support the maintenance and operation of the
SCADA network system.
     (b) Each Party may request that new SCADA meters or RTUs be installed at
the requesting Party’s cost. In such case, the Parties shall agree on who shall
have ownership to any such new SCADA meter or RTU; provided that if the Parties
cannot agree on who shall have such ownership, the Party requesting such
installation and paying for the new SCADA meter or RTU, as the case be, shall
have ownership to such new SCADA meter or RTU, but shall provide access to such
meter or RTU on commercially agreeable terms to the other Party. Each new SCADA
meter and RTU shall be connected to the SCADA system.
     Section 3.02. Maintenance of Insurance. Each Party agrees to purchase and
maintain customary insurance coverage (consistent with accepted industry
standards) for the Pipelines and Related Facilities owned by such Party.
     Section 3.03. IT; Software; Licenses; Communications. The software,
licenses and communications network set forth on Schedule I, attached hereto,
shall be accessed and used by both Parties subject to the terms hereof. KWK will
not be liable, and KGS shall be responsible and liable for any costs and any
additional terms or obligations, which may include approvals for transfer or the
purchase of licenses, software, or equipment, that may be required by a vendor
or licensor arising out of the access and use of the items scheduled on
Schedule I.
     Section 3.04. Emergency Phone Numbers. The Parties agree that KWK shall
retain all emergency phone numbers in effect on the date hereof, regardless of
whether such numbers were previously held in the name of KWK, KGS or any of
their respective Affiliates.
ARTICLE 4
Alliance Area Pipelines and Related Facilities
     Section 4.01. General. In an effort to operate the aforementioned pipeline
system in the most efficient and cost-effective manner, KWK agrees to allow KGS
to operate these assets on their behalf. KGS will operate and manage the assets
and KWK shall compensate KGS, all as further described in this Article 4 and in
Schedule II attached hereto.
     Section 4.02. Labor.
     (a) Fifty percent (50%) of the fully burdened rate of one (1) pipeline
operator will be included in the monthly operating charge.

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     (b) Thirty six percent (36%) of the fully burdened rate of one (1) pipeline
administrator will be included in the monthly operating charge. This figure is
calculated based on historical One-Call data for the Contract Area.
     (c) Twelve and one half percent (12.5%) of the fully burdened rate of one
(1) pipeline supervisor will be included in the monthly operating charge. This
figure is calculated based on fifty percent (50%) of this individual’s time
being equally spent on the four (4) operating areas within the Contract Area.
     (d) Twenty five percent (25%) of the fully burdened rate of one
(1) mechanic will be included in the monthly operating charge. This figure
includes all Support Services as defined in Section 1.01. The intent of this
calculation is to simplify accounting of each individual’s time within the
Support Services category. This simplification allows for the timely execution
and completion of the services.
     (e) Measurement technicians, Gas Analysts and Measurement Supervision, will
be charged in accordance with the provisions of Section 6.02.
     (f) Any Contract Labor performed on the pipelines or related facilities
will be sourced by KGS, coded in accordance with the KWK well coding system and
billed directly to KWK.
     Section 4.03. Materials.
     (a) All material goods necessary to the safe and efficient operation of the
pipelines and related facilities will be sourced by KGS employees, received
onsite, coded in accordance with KWK’s well coding system and direct billed to
KWK by the suppliers.
     (b) Pipeline chemicals, maintenance activities, safety and environmental
charges will be billed to KWK at fifty percent (50%) of the total invoiced
amount when such activity occurs in rights of way containing lines owned by both
parties.
     (c) Pipeline pipe, valves and fittings will be sourced by KGS employees,
received onsite, coded in accordance with KWK’s well coding system and direct
billed to KWK by the suppliers.
     (d) Utility charges for cathodic protection at the Cozart Meter Site will
be paid one hundred percent (100%) directly by KWK. Utility charges incurred at
the other two (2) meter locations will be paid directly by KGS.
ARTICLE 5
Lake Arlington Area Pipelines and Related Facilities
     Section 5.01. General. In an effort to operate the aforementioned pipeline
system in the most efficient and cost-effective manner, KWK agrees to allow

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KGS to operate these assets on their behalf. KGS will operate and manage the
assets and KWK shall compensate KGS, all as further described in this Article 5
and in Schedule II attached hereto.
     Section 5.02. Labor.
     (a) Fifty percent (50%) of the fully burdened rate of one (1) pipeline
operator will be included in the monthly operating charge.
     (b) Three percent (3%) of the fully burdened rate of one (1) pipeline
administrator will be included in the monthly operating charge. This figure is
calculated based on historical One-Call data for the Contract Area.
     (c) Twelve and one half percent (12.5%) of the fully burdened rate of one
(1) pipeline supervisor will be included in the monthly operating charge. This
figure is calculated based on fifty percent (50%) of this individual’s time
being equally spent on the four (4) operating areas within the Contract Area.
     (d) Twenty five percent (25%) of the fully burdened rate of one
(1) mechanic will be included in the monthly operating charge. This figure
includes all Support Services as defined in Section 1.01. The intent of this
calculation is to simplify accounting of each individual’s time within the
Support Services category.
     (e) Measurement technicians, Gas Analysts and Measurement Supervision will
be charged in accordance with the provisions of Section 6.02.
     (f) Any Contract Labor performed on the pipelines or related facilities
will be sourced by KGS, coded in accordance with KWK’s well coding system and
billed directly to KWK.
     Section 5.03. Materials.
     (a) All material goods necessary to the safe and efficient operation of the
pipelines and related facilities will be sourced by KGS employees, received
onsite, coded in accordance with KWK’s well coding system and direct billed to
KWK by the suppliers.
     (b) Pipeline chemicals, maintenance activities, safety and environmental
charges will be billed to KWK at fifty percent (50%) of the total invoiced
amount when such activity occurs in rights of way containing lines owned by both
parties.
     (c) Pipeline pipe, valves and fittings will be sourced by KGS employees,
received onsite, coded as per KWK’s well coding system and direct billed to KWK
by the suppliers.

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ARTICLE 6
Measurement
     Section 6.01. General. In an effort to maintain the accuracy of all
measurement points and reporting within the Contract Area, KWK agrees to allow
KGS to perform these measurement activities. KGS will operate and maintain the
measurement assets and KWK shall compensate KGS, all as further described in
this Article 6 and in Schedule II attached hereto.
     Section 6.02. Labor.
     (a) Sixty one percent (61%) of all measurement technicians employed on
October 1, 2010 will be billed at their fully burdened rate on a monthly basis.
This figure is calculated based on the physical meter count between KGS and KWK
in the Contract Area.
     (b) Sixty one percent (61%) of all measurement supervisors employed on
October 1, 2010 will be billed at their fully burdened rate on a monthly basis.
This figure is calculated based on the historical allocation of company labor
associated with the physical meter count between KGS and KWK in the Contract
Area.
     (c) Sixty one percent (61%) of the fully burdened rate of one (1) gas
analyst will be billed on a monthly basis. This figure is calculated based on
the historical allocation of company labor associated with the physical meter
count between KGS and KWK in the Contract Area.
     (d) Any Contract Labor utilized in conjunction with measurement activities,
including but not limited to gas sampling and analysis, will be direct billed to
KWK at sixty one (61%) of the total amount invoiced.
     Section 6.03. Materials. All material goods necessary to the safe and
efficient operation of KWK’s measurement system will be sourced by KGS
employees, received onsite, coded in accordance with KWK’s well coding system
and direct billed to KWK.
     Section 6.04. Quarterly Adjustments. In an effort to maintain an equitable
split of the charges associated with Measurement, both parties agree to meet
quarterly in order to verify and readjust, if necessary, the allocation of
charges outlined in Article 6.
ARTICLE 7
Miscellaneous
     Section 7.01. Performance Standard; Further Assurances. Each Party shall
perform its obligations under this Agreement in accordance with accepted
industry standards.

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     (a) Subject to the terms and conditions of this Agreement, the Parties will
use their commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary or desirable under
Applicable Law to carry out the provisions of this Agreement. Each Party agrees
to execute and deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be necessary or desirable in
order to carry out expeditiously the provisions of this Agreement.
     Section 7.02. Indemnification; Claims. Each Party (the “Indemnifying
Party”) shall indemnify and hold harmless the other Party and its Affiliates,
shareholders, directors, officers, employees, agents, successors and permitted
assigns (each, an “Indemnified Party”) from and against all damage, loss,
liability and expense (including reasonable expenses of investigation and
reasonable attorneys’ fees and expenses in connection with any action, suit or
proceeding (whether involving a third party claim or a claim solely between the
Parties) but excluding any incidental, indirect or consequential damages,
losses, liabilities or expenses, and lost profits except to the extent any
incidental, indirect or consequential damage, loss, liability or expense, or
lost profit is claimed by a third party) (“Damages”) incurred or suffered by
such Indemnified Party that arises out of or relates to (i) any Pipeline owned
by the Indemnifying Party or the Indemnifying Party’s operation thereof or
(ii) any act or omission that constitutes gross negligence or willful misconduct
by the Indemnifying Party in connection with the performance of its obligations
under this Agreement (other than the obligations pursuant to Section 2.02 or
Section 2.03, as the case may be, the remedies for breaches of which are
governed by Section 2.02(c) and Section 2.03(c), respectively). Notwithstanding
the foregoing, no Party shall have any indemnification obligation pursuant to
this Section 7.02(a) for any claim by the other Party to the extent such claim
results from or arises out of the gross negligence or willful misconduct of the
other Party.
     (a) The provisions of Sections 12.03 and 12.04 of the Purchase Agreement
regarding third-party claim procedures and direct claim procedures shall apply
mutatis mutandis to any claim for indemnification pursuant to Section 7.02(a)
hereof.
     (b) The provisions of this Section 7.02 shall survive the termination of
any Gas Agreement or any provision of this Agreement.
     Section 7.03. Notices. All notices, requests and other communications to
any Party hereunder shall be in writing (including facsimile transmission) and
shall be given,
     if to KGS, to:
Quicksilver Gas Services GP LLC
717 Texas Avenue, Suite 3150
Houston, Texas 77002

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Attention: Robert G. Phillips
Facsimile No.: 832-519-2250
     if to KWK, to:
Quicksilver Resources Inc.
806 Cherry Street
Suite 3700, Unit 19
Fort Worth, TX 76102
Facsimile No.: 817-665-5021
or such other address or facsimile number as such Party may hereafter specify in
writing for the purpose by notice to the other Parties. All such notices,
requests and other communications shall be deemed duly given when delivered
personally (including by courier or overnight courier with confirmation), via
facsimile (with confirmation) or delivered by an overnight courier (with
confirmation), if, in any such case, confirmation is obtained prior to 5 p.m. in
the place of receipt and such day is a Business Day. Otherwise, any such notice,
request or communication shall be deemed not to have been received until the
next succeeding Business Day.
     Section 7.04. Amendments and Waivers. Any provision of this Agreement may
be amended or waived if, but only if, such amendment or waiver is in writing and
is signed, in the case of an amendment, by each Party, or in the case of a
waiver, by the Party against whom the waiver is to be effective.
     (a) No failure or delay by any Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. Except as otherwise provided
herein, the rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
     Section 7.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns; provided that no Party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other Party; provided, however, that
notwithstanding the foregoing, each Party may assign all or any portion of this
Agreement to any subsidiary or Affiliate of such Party provided that no such
assignment by such Party shall in any way affect such Party’s obligations or
liabilities under this Agreement.
     Section 7.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Texas, without regard to
the conflicts of law rules thereof.

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     Section 7.07. Jurisdiction. The Parties agree and consent that any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be subject to the exclusive jurisdiction of any
federal or state court located in Tarrant County, Texas (and, in each case, of
the appropriate appellate courts therefrom), and irrevocably waive, to the
fullest extent permitted by law, any objection that they may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any Party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing, each
Party agrees that service of process on such Party as provided in Section 7.03
shall be deemed effective service of process on such Party.
     Section 7.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
     Section 7.09. Counterparts; Effectiveness; Third Party Beneficiaries. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each Party shall
have received a counterpart hereof signed by the other Parties. Until and unless
each Party has received a counterpart hereof signed by the other Parties, this
Agreement shall have no effect and no Party shall have any right or obligation
hereunder (whether by virtue of any other oral or written agreement or other
communication). No provision of this Agreement is intended to confer any rights,
benefits, remedies, obligations, or liabilities hereunder upon any Person other
than the Parties and their respective successors and permitted assigns.
     Section 7.10. Entire Agreement. This Agreement constitutes the entire
agreement between the Parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the Parties with respect to the subject matter of this
Agreement.
     Section 7.11. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
Governmental Authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party. Upon such a determination, the Parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the Parties as
closely as possible in an

15

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acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
[Remainder of page intentionally left blank; next page is signature page]

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     IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed by their respective authorized officers as of the date first written
above.

            QUICKSILVER RESOURCES INC.
      By:   /s/ Glenn Darden         Name:   Glenn Darden         Title:  
President and Chief Executive Officer                QUICKSILVER GAS SERVICES LP
      By:   Quicksilver Gas Services GP LLC,
its general partner    

            By:    /s/ Robert G. Phillips       Name:    Robert G. Phillips    
  Title:    President       QUICKSILVER GAS SERVICES GP LLC
      By:    /s/ Robert G. Phillips       Name:    Robert G. Phillips      
Title:    President    

[Signature page to Joint Operating Agreement]

 

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Schedule I
IT, Software, License, Communication
(Attached)

 

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KGS IT Provided by Quicksilver Resources Inc. as part of the Joint Operating
Agreement

                  Product/ Vendor/       End State Business Function   Supplier
  Description   Group
SCADA
  Cygnet   Well RTU Data Collection of production
data and statistics. Collects custody
transfer qualified data for revenue
settlement & provides remote well site
monitoring, control & ESD   JOA
 
           
RTU configuration software
  Bristol configuration
software   3rd party software   JOA
 
           
Field Wireless
  Freewave Cellular   Meter RTU communications provided by
Freewave radios & in some instances
  JOA
 
      via cellular modems in support of
SCADA system    
 
           
Radio configuration
  Freewave utility   3rd party software   JOA
 
           
Generation of volume
allocations and revenue

  Quorum Business
Solutions   KWK retaining ownership of license as
of close, KGS will be responsible for any
  JOA
interfaces (TIPS)
      incremental license expense.    
 
           
RTU configuration software
  PCCU   For Totalflow RTUs   JOA

 

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Schedule II
Operating Costs

                      LAKE         ALLIANCE   ARLINGTON   COMMENTS
 
           
LABOR
           
Mechanic
  0 FTE   0 FTE    
 
           
Pipeline Operator
  50.0% x 1 FTE   50.0% x 1 FTE   1 P/L Operator is evenly split
between Lake Arlington & Alliance
 
           
Pipeline Administration
  36.0% x 1 FTE   3.0% x 1 FTE   50% total of 1 FTE Pipeline
Administrator split based on historic
One Call activity levels
 
           
 
         
Pipeline Supervision
  12.5% x 1 FTE   12.5% x 1 FTE   50% total of 1 FTE Pipeline
Supervisor; evenly split across the
Contract Area
 
           
Plant Superintendent
  0 FTE   0 FTE   25% total of 1 FTE Plant
Superintendent to cover AH
 
           
Support Services
  25% x 1 FTE   25% x 1 FTE   Includes HSE, Purchasing, I&E
Technicians and I&E Management;
billed at 1 FTE Mechanic rate
 
           
Measurement Technician
  (see
measurement
sec)   (see measurement
sec)   (see measurement sec)
 
           
Gas Analyst
  (see
measurement
sec)   (see measurement
sec)   (see measurement sec)
 
           
Measurement Supervision
  (see
measurement
sec)   (see measurement
sec)   (see measurement sec)
 
           
Contract Labor
  direct billed to KWK   direct billed to KWK   direct billed to KWK
 
           
MATERIALS
           
 
           
Plant Inlet Separation
  N/A   N/A   N/A
 
           
Plant Gas Compression
  N/A   N/A   N/A
 
           
Plant Repair & Overhaul
  N/A   N/A   N/A
 
           
Plant Glycol Dehy
  N/A   N/A   N/A
 
           
Plant Communications
  N/A   N/A   N/A
 
           
Plant Pipe, Valves & Fittings
  N/A   N/A   N/A
 
           
Plant Buildings &
  N/A   N/A   N/A

 

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                      LAKE         ALLIANCE   ARLINGTON   COMMENTS
 
           
LABOR
           
 
           
Grounds
           
 
           
Plant Utility System
  N/A   N/A   N/A
 
           
Plant Safety & Environmental
  N/A   N/A   N/A
 
           
Pipeline Chemicals
  50.0% actual expenses   50.0% actual expenses   50.0% actual expenses
 
           
Pipeline Pipe, Valves & Fittings
  as needed   as needed   as needed
 
           
Pipeline Maintenance Activities
  50.0% actual expenses   50.0% actual expenses   50.0% actual expenses
 
           
Pipeline Safety & Environmental
  50.0% actual expenses   50.0% actual expenses   50.0% actual expenses