##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 001-14837
 Quicksilver Resources Inc.
  Delaware
    
    75-2756163(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)777 West Rosedale, Fort Worth, Texas
(Address of principal executive offices)
    
    76104
(Zip Code)
 (817) 665-5000
 None
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(do not check if a smaller reporting company)
 o þ
  Title of Class
    
    Outstanding as of April 30, 2008Common Stock, $0.01 par value
    
    158,573,546




---



##### 



QUICKSILVER RESOURCES INC.
INDEX TO FORM 10-Q
For the Period Ending March 31, 2008
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Statements of Income and Comprehensive Loss
    
    
    5Condensed Consolidated Balance Sheets
    
    
    6Condensed Consolidated Statements of Cash Flows
    
    
    7Notes to Condensed Consolidated Interim Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    31PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    32Item 1A. Risk Factors
    
    
    32Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    32Item 3. Defaults Upon Senior Securities
    
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    
    32Item 5. Other Information
    
    
    32Item 6. Exhibits
    
    
    33Signatures
    
    
    34Certification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906
  2




---



##### Table of Contents



DEFINITIONS
          Inside F.E.R.C.s Gas Market Report
  
   COMMONLY USED TERMS
           3




---



##### Table of Contents



Explanatory Statement
  Forward-Looking Information
  
    
    changes in general economic conditions;
    
    fluctuations in natural gas, NGL and crude oil prices;
    
    failure or delays in achieving expected production from exploration and development
projects;
    
    uncertainties inherent in estimates of natural gas, NGL and crude oil reserves and
predicting natural gas, NGL and crude oil reservoir performance;
    
    effects of hedging natural gas, NGL and crude oil prices;
    
    competitive conditions in our industry;
    
    actions taken by third parties, including operators, processors and transporters;
    
    changes in the availability and cost of capital;
    
    delays in obtaining oilfield equipment and increases in drilling and other service costs;
    
    operating hazards, natural disasters, weather-related delays, casualty losses and other
matters beyond our control;
    
    the effects of existing and future laws and governmental regulations;
    
    the effects of existing or future litigation; and
    
    certain factors discussed in our Annual Report on Form 10-K for the year ended December 31,
2007.
  4




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements (Unaudited)
 QUICKSILVER RESOURCES INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE LOSS
 In thousands, except for per share data  Unaudited
 For the Three Months EndedMarch 31,2008
    
    
    2007RevenuesNatural gas, NGL and crude oil sales
    
    $
    158,356
    
    
    $
    113,292Other
    
    
    (853
    )
    
    
    3,288Total revenues
    
    
    157,503
    
    
    
    116,580Operating expensesOil and gas production expense
    
    
    32,530
    
    
    
    28,569Production and ad valorem taxes
    
    
    2,659
    
    
    
    4,490Other operating costs
    
    
    1,231
    
    
    
    784Depletion, depreciation and accretion
    
    
    35,059
    
    
    
    24,594General and administrative
    
    
    15,415
    
    
    
    9,698Total expenses
    
    
    86,894
    
    
    
    68,135Income from equity affiliates
    
    
    
    
    
    
    115Operating income
    
    
    70,609
    
    
    
    48,560Income from earnings of BreitBurn Energy Partners
    
    
    6,219
    
    
    
    Other income  net
    
    
    1,600
    
    
    
    601Interest expense
    
    
    (11,832
    )
    
    
    (14,952
    )Income before income taxes
    
    
    66,596
    
    
    
    34,209Income tax expense
    
    
    23,912
    
    
    
    11,295Minority interest expense, net of income tax
    
    
    508
    
    
    
    63Net income
    
    $
    42,176
    
    
    $
    22,851Other comprehensive loss  net of income taxReclassification adjustments related to settlements
of derivative contracts
    
    
    (1,940
    )
    
    
    (9,510
    )Net change in derivative fair value
    
    
    (76,297
    )
    
    
    (35,679
    )Foreign currency translation adjustment
    
    
    (8,643
    )
    
    
    1,624Comprehensive loss
    
    $
    (44,704
    )
    
    $
    (20,714
    )Earnings per common share  basic
    
    $
    0.27
    
    
    $
    0.15Earnings per common share  diluted
    
    $
    0.25
    
    
    $
    0.14Basic weighted average shares outstanding
    
    
    157,731
    
    
    
    154,389Diluted weighted average shares outstanding
    
    
    169,730
    
    
    
    167,659
  5




---



##### Table of Contents



QUICKSILVER RESOURCES INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 In thousands, except for share data  Unaudited
 March 31,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assetsCash and cash equivalents
    
    $
    1,976
    
    
    $
    28,226Accounts receivable  net of allowance for doubtful accounts
    
    
    115,957
    
    
    
    90,244Derivative assets at fair value
    
    
    22,125
    
    
    
    10,797Current deferred income tax asset
    
    
    54,180
    
    
    
    18,946Other current assets
    
    
    42,769
    
    
    
    42,188Total current assets
    
    
    237,007
    
    
    
    190,401Investment in
 BreitBurn Energy Partners
    
    
    416,731
    
    
    
    420,171Property, plant and equipment  netOil and gas properties, full cost method (including unevaluated costs of
$281,130 and $215,228, respectively)
    
    
    2,001,458
    
    
    
    1,764,400Other property and equipment
    
    
    429,306
    
    
    
    377,946Property, plant and equipment  net
    
    
    2,430,764
    
    
    
    2,142,346Derivative assets at fair value
    
    
    
    
    
    
    354Other assets
    
    
    25,439
    
    
    
    22,574$
    3,109,941
    
    
    $
    2,775,846LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    
    
    
    $
    34Accounts payable
    
    
    182,606
    
    
    
    192,855Income taxes payable
    
    
    1,457
    
    
    
    46,601Accrued liabilities
    
    
    40,406
    
    
    
    54,981Derivative liabilities at fair value
    
    
    186,301
    
    
    
    64,104Total current liabilities
    
    
    410,770
    
    
    
    358,575Long-term debt
    
    
    1,115,811
    
    
    
    813,817Asset retirement obligations
    
    
    24,989
    
    
    
    23,864Derivative liabilities at fair value
    
    
    20,474
    
    
    
    16,327Other liabilities
    
    
    10,609
    
    
    
    10,609Deferred income taxes
    
    
    392,286
    
    
    
    374,645Deferred gain on sale of partnership interests
    
    
    79,316
    
    
    
    79,316Minority interests in consolidated subsidiaries
    
    
    29,412
    
    
    
    30,338Stockholders equityPreferred stock, par value $0.01, 10,000,000 shares authorized, none outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value,
200,000,000 shares authorized; 161,244,642
and 160,633,270 shares issued, respectively
    
    
    1,612
    
    
    
    1,606Paid in capital in excess of par value
    
    
    277,112
    
    
    
    272,515Treasury stock of 2,652,981 and 2,616,726 shares, respectively
    
    
    (14,284
    )
    
    
    (12,304
    )Accumulated other comprehensive (loss) income
    
    
    (46,814
    )
    
    
    40,066Retained earnings
    
    
    808,648
    
    
    
    766,472Total stockholders equity
    
    
    1,026,274
    
    
    
    1,068,355$
    3,109,941
    
    
    $
    2,775,846
  6




---



##### Table of Contents



QUICKSILVER RESOURCES INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 In thousands  Unaudited
 For the Three Months EndedMarch 31,2008
    
    
    2007Operating activities:Net income
    
    $
    42,176
    
    
    $
    22,851Adjustments to reconcile net income to net cash provided
by operating activities:Depletion, depreciation and accretion
    
    
    35,059
    
    
    
    24,594Deferred income taxes
    
    
    23,016
    
    
    
    11,265Stock-based compensation
    
    
    4,009
    
    
    
    2,899Amortization of deferred charges
    
    
    458
    
    
    
    563Amortization of deferred loan costs
    
    
    589
    
    
    
    456Minority interest expense
    
    
    508
    
    
    
    63Non-cash loss from hedging and derivative activities
    
    
    5,735
    
    
    
    29Non-cash income from equity affiliates
    
    
    
    
    
    
    (115
    )Other
    
    
    197
    
    
    
    (264
    )Changes in assets and liabilitiesAccounts receivable
    
    
    (5,226
    )
    
    
    605Prepaid expenses and other assets
    
    
    (1,109
    )
    
    
    (3,777
    )Accounts payable
    
    
    5,027
    
    
    
    6,507Income taxes payable
    
    
    (45,144
    )
    
    
    (394
    )Accrued and other liabilities
    
    
    (22,011
    )
    
    
    7,724Net cash provided by operating activities
    
    
    43,284
    
    
    
    73,006Investing activities:Purchases of property, plant and equipment
    
    
    (331,936
    )
    
    
    (209,926
    )Advances to BreitBurn Energy Partners
    
    
    (50,150
    )
    
    
    Return of investment from BreitBurn Energy Partners and equity affiliates
    
    
    3,440
    
    
    
    202Net cash used for investing activities
    
    
    (378,646
    )
    
    
    (209,724
    )Financing
activities:Issuance of debt
    
    
    330,741
    
    
    
    143,446Repayments of debt
    
    
    (18,061
    )
    
    
    (6,868
    )Debt issuance costs
    
    
    
    
    
    
    (2,303
    )Minority interest contributions
    
    
    
    
    
    
    167Minority interest distributions
    
    
    (1,972
    )
    
    
    Proceeds from exercise of stock options
    
    
    858
    
    
    
    2,976Purchase of treasury stock
    
    
    (1,980
    )
    
    
    (494
    )Net cash provided by financing activities
    
    
    309,586
    
    
    
    136,924Effect of exchange rate changes in cash
    
    
    (474
    )
    
    
    231Net (decrease) increase in cash
    
    
    (26,250
    )
    
    
    437Cash and cash equivalents at beginning of period
    
    
    28,226
    
    
    
    5,281Cash and cash equivalents at end of period
    
    $
    1,976
    
    
    $
    5,718
  7




---



##### Table of Contents



QUICKSILVER RESOURCES INC.
 
 NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
 UNAUDITED
 1. ACCOUNTING POLICIES AND DISCLOSURES
     Stock Split
  Earnings per Common Share
   8




---



##### Table of Contents



Three Months EndedMarch 31,2008
    
    
    2007(In thousands, except pershare data)Net income
    
    $
    42,176
    
    
    $
    22,851Impact of assumed conversions  interest on 1.875%
convertible debentures, net of income taxes
    
    
    475
    
    
    
    475Income available to stockholders assuming conversion
of convertible debentures
    
    $
    42,651
    
    
    $
    23,326Weighted average common shares  basic
    
    
    157,731
    
    
    
    154,389Effect of dilutive securities:Employee stock options
    
    
    730
    
    
    
    1,767Employee stock and stock unit awards
    
    
    1,453
    
    
    
    1,687Contingently convertible debentures
    
    
    9,816
    
    
    
    9,816Weighted average common shares  diluted
    
    
    169,730
    
    
    
    167,659Earnings per common share  basic
    
    $
    0.27
    
    
    $
    0.15Earnings per common share  diluted
    
    $
    0.25
    
    
    $
    0.14
 Recently Issued Accounting Standards
 
    
    Pronouncements Implemented
 Fair Value Measurements,
     The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 9




---



##### Table of Contents



Amendment of FASB
Interpretation No. 39 Accounting for Derivative Instruments and Hedging Activities
 
    
    Pronouncements Not Yet Implemented
 Business Combinations Business Combinations
 Noncontrolling Interests in Consolidated Financial Statements  an amendment of
ARB No. 51
 Disclosures about Derivative Instruments and Hedging Activities,
 2. DERIVATIVES AND FAIR VALUE MEASUREMENTS
   Fair Value Measurements as of March 31, 2008Balance atMarch 31, 2008
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3(In thousands)Derivative assets
    
    $
    22,911
    
    
    $
    
    
    
    $
    22,911
    
    
    $
    Derivative liabilities
    
    $
    207,561
    
    
    $
    
    
    
    $
    207,561
    
    
    $
    
  10




---



##### Table of Contents



March 31,
    
    
    December 31,2008
    
    
    2007(In thousands)Derivative assets:Natural gas basis swaps
    
    $
    786
    
    
    $
    Natural gas fixed-price swaps (1)
    
    
    22,125
    
    
    
    4,666Natural gas price collars
    
    
    
    
    
    
    10,491$
    22,911
    
    
    $
    15,157Derivative liabilities:Natural gas basis swaps
    
    $
    
    
    
    $
    1,224Crude oil price collars
    
    
    7,562
    
    
    
    6,517NGL fixed-price swaps
    
    
    7,920
    
    
    
    11,294Natural gas fixed-price swaps
    
    
    53,735
    
    
    
    Natural gas price collars
    
    
    59,925
    
    
    
    1,625Fixed-price natural gas sales contracts
(2)
    
    
    78,419
    
    
    
    63,777$
    207,561
    
    
    $
    84,437
 
 (1)
    
    Includes $22.1 million and $- million for two fixed-priced swaps related to the
Michigan Sales Contract at March 31, 2008 and December 31, 2007, respectively.(2)
    
    Includes $78.1 million and $63.5 million for the Michigan Sales Contract at
March 31, 2008 and December 31, 2007, respectively.  11




---



##### Table of Contents



3. INVESTMENT IN BREITBURN ENERGY PARTNERS L.P.
    EstimatedAs of
    
    
    
    
    Two Months EndedDecember 31, 2007
    
    
    
    
    December 31, 2007(In thousands)
    
    
    
    
    (In thousands)Current assets
    
    $
    97,763
    
    
    Revenues
    
    $
    61,165Property, plant and
equipment
    
    
    1,864,487
    
    
    Operating expenses
    
    
    44,365Other assets
    
    
    24,306
    
    
    Operating income
    
    
    16,800Current liabilities
    
    
    90,684
    
    
    Interest and other
    
    
    4,403Long-term debt
    
    
    370,400
    
    
    Income tax benefit
    
    
    (669
    )Other non-current
liabilities
    
    
    100,664
    
    
    Minority interests
    
    
    31Partners equity
    
    
    1,424,808
    
    
    Net income
    
    $
    13,035Net
income available to common unitholders
    
    $
    12,567
   12




---



##### Table of Contents



4. PROPERTY, PLANT AND EQUIPMENT
  March 31,
    
    
    December 31,2008
    
    
    2007(In thousands)Oil and gas propertiesSubject to depletion
    
    $
    2,008,159
    
    
    $
    1,811,295Unevaluated costs
    
    
    281,130
    
    
    
    215,228Accumulated depletion
    
    
    (287,831
    )
    
    
    (262,123
    )Net oil and gas properties
    
    
    2,001,458
    
    
    
    1,764,400Other plant and equipmentPipelines and processing facilities
    
    
    386,129
    
    
    
    347,187General properties
    
    
    35,103
    
    
    
    32,966Construction in progress
    
    
    47,689
    
    
    
    32,682Accumulated depreciation
    
    
    (39,615
    )
    
    
    (34,889
    )Net other property and equipment
    
    
    429,306
    
    
    
    377,946Property, plant and equipment, net of
accumulated depletion and
depreciation
    
    $
    2,430,764
    
    
    $
    2,142,346
 5. LONG-TERM DEBT
  March 31,
    
    
    December 31,2008
    
    
    2007(In thousands)Senior secured credit facility
    
    $
    586,176
    
    
    $
    310,710Senior subordinated notes
    
    
    350,000
    
    
    
    350,000Convertible debentures, net of
unamortized discount
    
    
    148,135
    
    
    
    148,107KGS credit agreement
    
    
    31,500
    
    
    
    5,000Other loans
    
    
    
    
    
    
    34Total debt
    
    
    1,115,811
    
    
    
    813,851Less current maturities
    
    
    
    
    
    
    (34
    )Long-term debt
    
    $
    1,115,811
    
    
    $
    813,817
 Long-Term Debt,
 6. ASSET RETIREMENT OBLIGATIONS
   13




---



##### Table of Contents



For the Three Months EndedMarch 31,2008
    
    
    2007(In thousands)Beginning asset retirement obligations
    
    $
    24,509
    
    
    $
    25,206Additional liability incurred
    
    
    1,060
    
    
    
    1,454Accretion expense
    
    
    352
    
    
    
    361Change in estimates
    
    
    361
    
    
    
    Asset retirement costs incurred
    
    
    (143
    )
    
    
    Currency translation adjustment
    
    
    (504
    )
    
    
    115Ending asset retirement obligations
    
    
    25,635
    
    
    
    27,136Less current portion
    
    
    (646
    )
    
    
    (149
    )Long-term asset retirement obligation
    
    $
    24,989
    
    
    $
    26,987
 7. INCOME TAXES
     8. COMMITMENTS AND CONTINGENCIES
    14




---



##### Table of Contents



9. STOCK-BASED COMPENSATION
 Stockholders Equity
 Quicksilver Stock Options
   StockOptionsIssuedWtd avg grant date fair value
    
    $
    13.67Wtd avg grant date
    
    Jan 2, 2008Wtd avg risk-free interest rate
    
    
    3.41
    %Expected life (in years)
    
    
    6.0Wtd avg volatility
    
    
    40.2
    %Expected dividends
    
    
    
  Wtd Avg
    
    
    Wtd AvgExercise
    
    
    Remaining
    
    
    AggregateShares
    
    
    Price
    
    
    Contractual Life
    
    
    Intrinsic Value(In years)
    
    
    (In thousands)Outstanding at December 31, 2007
    
    
    1,021,912
    
    
    $
    6.38Granted
    
    
    373,382
    
    
    
    30.95Exercised
    
    
    186,988
    
    
    
    4.60Cancelled
    
    
    28,220
    
    
    
    26.78Outstanding at March 31, 2008
    
    
    1,180,086
    
    
    $
    13.97
    
    
    
    4.4
    
    
    $
    26,626Exercisable at March 31, 2008
    
    
    630,378
    
    
    $
    7.19
    
    
    
    2.2
    
    
    $
    18,497Vested or
expected to vest at March 31, 2008
    
    
    1,164,147
    
    
    $
    14.08
  Quicksilver Restricted Stock and Restricted Stock Units
  15




---



##### Table of Contents



Wtd AvgGrant DateShares
    
    
    Fair ValueOutstanding at December 31, 2007
    
    
    1,340,122
    
    
    $
    18.76Granted
    
    
    538,305
    
    
    
    31.39Vested
    
    
    347,230
    
    
    
    30.17Cancelled
    
    
    81,965
    
    
    
    22.12Outstanding at March 31, 2008
    
    
    1,449,232
    
    
    $
    23.24
  KGS Restricted Phantom Units
  Payable in cash
    
    
    Payable in unitsWtd Avg
    
    
    
    
    
    
    Wtd AvgGrant Date
    
    
    
    
    
    
    Grant DateUnits
    
    
    Fair Value
    
    
    Units
    
    
    Fair ValueOutstanding at December 31, 2007
    
    
    84,961
    
    
    $
    21.36
    
    
    
    9,833
    
    
    $
    21.36Vested
    
    
    
    
    
    
    
    
    
    
    (6,089
    )
    
    
    21.36Issued
    
    
    2,751
    
    
    
    23.63
    
    
    
    137,148
    
    
    
    25.25Cancelled
    
    
    (3,000
    )
    
    
    21.36
    
    
    
    
    
    
    
    Outstanding at March 31, 2008
    
    
    84,712
    
    
    $
    21.43
    
    
    
    140,892
    
    
    $
    25.15
  10. CONDENSED CONSOLIDATING FINANCIAL INFORMATION
   16




---



##### Table of Contents



Condensed Consolidating Balance Sheets
 March 31, 2008QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    
    
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCurrent assets
    
    $
    311,609
    
    
    $
    
    
    
    $
    270,544
    
    
    $
    (345,146
    )
    
    $
    237,007Property and equipment
    
    
    1,481,585
    
    
    
    10,953
    
    
    
    938,226
    
    
    
    
    
    
    
    2,430,764Investment in subsidiaries (equity method)
    
    
    790,711
    
    
    
    168,747
    
    
    
    
    
    
    
    (542,727
    )
    
    
    416,731Other assets
    
    
    75,301
    
    
    
    110,743
    
    
    
    2,329
    
    
    
    (162,934
    )
    
    
    25,439Total assets
    
    $
    2,659,206
    
    
    $
    290,443
    
    
    $
    1,211,099
    
    
    $
    (1,050,807
    )
    
    $
    3,109,941LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    503,880
    
    
    $
    113,585
    
    
    $
    138,451
    
    
    $
    (345,146
    )
    
    $
    410,770Long-term liabilities
    
    
    1,129,052
    
    
    
    
    
    
    
    598,051
    
    
    
    (162,934
    )
    
    
    1,564,169Deferred gain
    
    
    
    
    
    
    
    
    
    
    79,316
    
    
    
    
    
    
    
    79,316Minority interest
    
    
    
    
    
    
    
    
    
    
    29,412
    
    
    
    
    
    
    
    29,412Stockholders equity
    
    
    1,026,274
    
    
    
    176,858
    
    
    
    365,869
    
    
    
    (542,727
    )
    
    
    1,026,274Total liabilities and stockholders equity
    
    $
    2,659,206
    
    
    $
    290,443
    
    
    $
    1,211,099
    
    
    $
    (1,050,807
    )
    
    $
    3,109,941
 December 31, 2007QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    
    
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCurrent assets
    
    $
    213,288
    
    
    $
    596
    
    
    $
    243,086
    
    
    $
    (266,569
    )
    
    $
    190,401Property and equipment
    
    
    1,294,573
    
    
    
    1,858
    
    
    
    845,915
    
    
    
    
    
    
    
    2,142,346Investment in subsidiaries (equity method)
    
    
    819,119
    
    
    
    160,825
    
    
    
    
    
    
    
    (559,773
    )
    
    
    420,171Other assets
    
    
    72,426
    
    
    
    82,251
    
    
    
    2,171
    
    
    
    (133,920
    )
    
    
    22,928Total assets
    
    $
    2,399,406
    
    
    $
    245,530
    
    
    $
    1,091,172
    
    
    $
    (960,262
    )
    
    $
    2,775,846LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    470,690
    
    
    $
    77,529
    
    
    $
    76,925
    
    
    $
    (266,569
    )
    
    $
    358,575Long-term liabilities
    
    
    860,361
    
    
    
    
    
    
    
    512,821
    
    
    
    (133,920
    )
    
    
    1,239,262Deferred gain
    
    
    
    
    
    
    
    
    
    
    79,316
    
    
    
    
    
    
    
    79,316Minority interest
    
    
    
    
    
    
    
    
    
    
    30,338
    
    
    
    
    
    
    
    30,338Stockholders equity
    
    
    1,068,355
    
    
    
    168,001
    
    
    
    391,772
    
    
    
    (559,773
    )
    
    
    1,068,355Total liabilities and stockholders equity
    
    $
    2,399,406
    
    
    $
    245,530
    
    
    $
    1,091,172
    
    
    $
    (960,262
    )
    
    $
    2,775,846
 17




---



##### Table of Contents



Condensed Consolidating Statements of Income
 For the Three Months Ended March 31, 2008QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    
    
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    116,887
    
    
    $
    
    
    
    $
    53,261
    
    
    $
    (12,645
    )
    
    $
    157,503Operating expenses
    
    
    66,957
    
    
    
    499
    
    
    
    32,083
    
    
    
    (12,645
    )
    
    
    86,894Income from equity affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income
    
    
    49,930
    
    
    
    (499
    )
    
    
    21,178
    
    
    
    
    
    
    
    70,609Equity in net earnings of subsidiaries
    
    
    11,895
    
    
    
    2,376
    
    
    
    
    
    
    
    (14,271
    )
    
    
    Income from earnings of
BreitBurn Energy Partners
    
    
    6,219
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,219Interest expense and other
    
    
    (5,446
    )
    
    
    1,433
    
    
    
    (6,727
    )
    
    
    
    
    
    
    (10,740
    )Income tax provision
    
    
    (20,422
    )
    
    
    (327
    )
    
    
    (3,163
    )
    
    
    
    
    
    
    (23,912
    )Net income
    
    $
    42,176
    
    
    $
    2,983
    
    
    $
    11,288
    
    
    $
    (14,271
    )
    
    $
    42,176
 For the Three Months Ended March 31, 2007QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    
    
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    70,868
    
    
    $
    
    
    
    $
    50,190
    
    
    $
    (4,478
    )
    
    $
    116,580Operating expenses
    
    
    46,461
    
    
    
    459
    
    
    
    25,693
    
    
    
    (4,478
    )
    
    
    68,135Income from equity affiliates
    
    
    6
    
    
    
    
    
    
    
    109
    
    
    
    
    
    
    
    115Operating income
    
    
    24,413
    
    
    
    (459
    )
    
    
    24,606
    
    
    
    
    
    
    
    48,560Equity in net earnings of subsidiaries
    
    
    14,736
    
    
    
    1,281
    
    
    
    
    
    
    
    (16,017
    )
    
    
    Interest expense and other
    
    
    (11,120
    )
    
    
    (63
    )
    
    
    (3,231
    )
    
    
    
    
    
    
    (14,414
    )Income tax provision
    
    
    (5,178
    )
    
    
    183
    
    
    
    (6,300
    )
    
    
    
    
    
    
    (11,295
    )Net income
    
    $
    22,851
    
    
    $
    942
    
    
    $
    15,075
    
    
    $
    (16,017
    )
    
    $
    22,851
 Condensed Consolidating Statements of Cash Flows
 For the Three Months Ended March 31, 2008QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    
    
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Cash flow provided by operations
    
    $
    (45,590
    )
    
    $
    9,093
    
    
    $
    79,781
    
    
    
    
    
    
    $
    43,284Cash flow used for investing activities
    
    
    (231,747
    )
    
    
    23,270
    
    
    
    (132,502
    )
    
    
    (37,667
    )
    
    
    (378,646
    )Cash flow provided by financing activities
    
    
    252,122
    
    
    
    (32,363
    )
    
    
    52,160
    
    
    
    37,667
    
    
    
    309,586Effect of exchange rates on cash
    
    
    (58
    )
    
    
    
    
    
    
    (416
    )
    
    
    
    
    
    
    (474
    )Net increase (decrease) in cash and
equivalents
    
    
    (25,273
    )
    
    
    
    
    
    
    (977
    )
    
    
    
    
    
    
    (26,250
    )Cash and equivalents at beginning of period
    
    
    27,010
    
    
    
    
    
    
    
    1,216
    
    
    
    
    
    
    
    28,226Cash and equivalents at end of period
    
    $
    1,737
    
    
    $
    
    
    
    $
    239
    
    
    $
    
    
    
    $
    1,976
 18




---



##### Table of Contents



For the Three Months Ended March 31, 2007QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    
    
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Cash flow provided by operations
    
    $
    42,754
    
    
    $
    (231
    )
    
    $
    30,483
    
    
    
    
    
    
    $
    73,006Cash flow used for investing activities
    
    
    (166,157
    )
    
    
    (24,282
    )
    
    
    (67,639
    )
    
    
    48,354
    
    
    
    (209,724
    )Cash flow provided by financing activities
    
    
    123,755
    
    
    
    24,513
    
    
    
    37,010
    
    
    
    (48,354
    )
    
    
    136,924Effect of exchange rates on cash
    
    
    
    
    
    
    
    
    
    
    231
    
    
    
    
    
    
    
    231Net increase (decrease) in cash and
equivalents
    
    
    352
    
    
    
    
    
    
    
    85
    
    
    
    
    
    
    
    437Cash and equivalents at beginning of period
    
    
    83
    
    
    
    
    
    
    
    5,198
    
    
    
    
    
    
    
    5,281Cash and equivalents at end of period
    
    $
    435
    
    
    $
    
    
    
    $
    5,283
    
    
    $
    
    
    
    $
    5,718
 11. SUPPLEMENTAL CASH FLOW INFORMATION
  Three Months EndedMarch 31,2008
    
    2007(In thousands)Interest
    
    $
    18,295
    
    
    $
    6,443Income taxes
    
    
    47,196
    
    
    
    734
  Three Months EndedMarch 31,2008
    
    2007(In thousands)Noncash changes in working capital related to
acquisition of property, plant and equipment  net
    
    $
    14,536
    
    
    $
    (27,597
    )
 12. RELATED-PARTY TRANSACTIONS
     13. SEGMENT INFORMATION
  19




---



##### Table of Contents



Exploration & Production
    
    Processing &
    
    
    
    
    
    
    
    
    
    QuicksilverUnited States
    
    Canada
    
    Gathering
    
    Corporate
    
    Elimination
    
    Consolidated(In thousands)For the Three Months Ended March 31,2008Revenues
    
    $
    116,731
    
    
    $
    38,512
    
    
    $
    15,185
    
    
    $
    
    
    
    $
    (12,925
    )
    
    $
    157,503Depletion, depreciation and accretion
    
    
    20,089
    
    
    
    11,431
    
    
    
    3,275
    
    
    
    264
    
    
    
    
    
    
    
    35,059Operating income
    
    
    62,951
    
    
    
    16,716
    
    
    
    4,805
    
    
    
    (13,863
    )
    
    
    
    
    
    
    70,609Property and equipment costs incurred
    
    
    212,006
    
    
    
    76,443
    
    
    
    54,430
    
    
    
    361
    
    
    
    
    
    
    
    343,2402007Revenues
    
    $
    79,220
    
    
    $
    36,151
    
    
    $
    5,372
    
    
    $
    
    
    
    $
    (4,163
    )
    
    $
    116,580Depletion, depreciation and accretion
    
    
    14,308
    
    
    
    8,752
    
    
    
    1,308
    
    
    
    226
    
    
    
    
    
    
    
    24,594Operating income
    
    
    38,230
    
    
    
    18,978
    
    
    
    1,276
    
    
    
    (9,924
    )
    
    
    
    
    
    
    48,560Property and equipment costs incurred
    
    
    135,415
    
    
    
    19,559
    
    
    
    26,999
    
    
    
    605
    
    
    
    
    
    
    
    182,578Property, Plant and EquipmentMarch 31, 2008
    
    $
    1,477,659
    
    
    $
    615,916
    
    
    $
    332,772
    
    
    $
    4,417
    
    
    
    
    
    
    $
    2,430,764December 31, 2007
    
    
    1,290,728
    
    
    
    571,496
    
    
    
    275,807
    
    
    
    4,315
    
    
    
    
    
    
    
    2,142,346
 20




---



##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 RESULTS OF OPERATIONS
 Summary Financial Data
Three Months Ended March 31, 2008 Compared with the Three Months Ended March 31, 2007
 Revenues
 Oil, Gas and Related Product Sales
   Natural Gas
    
    
    NGL
    
    
    Oil and Condensate
    
    
    Equivalent Total2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(In millions)Texas
    
    $
    58.6
    
    
    $
    20.2
    
    
    $
    48.4
    
    
    $
    9.0
    
    
    $
    6.5
    
    
    $
    1.3
    
    
    $
    113.5
    
    
    $
    30.5Northeast Operations
    
    
    
    
    
    
    29.4
    
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    4.3
    
    
    
    
    
    
    
    34.6Other U.S.
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.2
    
    
    
    3.8
    
    
    
    2.0
    
    
    
    4.4
    
    
    
    2.5Hedging
    
    
    2.5
    
    
    
    11.7
    
    
    
    (3.6
    )
    
    
    
    
    
    
    (1.5
    )
    
    
    
    
    
    
    (2.6
    )
    
    
    11.7Total U.S.
    
    
    61.4
    
    
    
    61.6
    
    
    
    45.1
    
    
    
    10.1
    
    
    
    8.8
    
    
    
    7.6
    
    
    
    115.3
    
    
    
    79.3Canada
    
    
    43.5
    
    
    
    31.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43.5
    
    
    
    31.6Hedging
    
    
    (0.4
    )
    
    
    2.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    2.4Total Canada
    
    
    43.1
    
    
    
    34.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43.1
    
    
    
    34.0Total Company
    
    $
    104.5
    
    
    $
    95.6
    
    
    $
    45.1
    
    
    $
    10.1
    
    
    $
    8.8
    
    
    $
    7.6
    
    
    $
    158.4
    
    
    $
    113.3
  Natural Gas
    
    
    NGL
    
    
    Oil and Condensate
    
    
    Equivalent Total2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(MMcfd)
    
    
    (Bbld)
    
    
    (Bbld)
    
    
    (MMcfed)Texas
    
    
    80.4
    
    
    
    32.2
    
    
    
    9,989
    
    
    
    2,900
    
    
    
    777
    
    
    
    260
    
    
    
    145.0
    
    
    
    51.2Northeast Operations
    
    
    
    
    
    
    68.7
    
    
    
    
    
    
    
    388
    
    
    
    
    
    
    
    933
    
    
    
    
    
    
    
    76.7Other U.S.
    
    
    0.5
    
    
    
    0.4
    
    
    
    41
    
    
    
    28
    
    
    
    474
    
    
    
    472
    
    
    
    3.6
    
    
    
    3.3Total U.S.
    
    
    80.9
    
    
    
    101.3
    
    
    
    10,030
    
    
    
    3,316
    
    
    
    1,251
    
    
    
    1,665
    
    
    
    148.6
    
    
    
    131.2Canada
    
    
    62.5
    
    
    
    56.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62.5
    
    
    
    56.1Total Company
    
    
    143.4
    
    
    
    157.4
    
    
    
    10,030
    
    
    
    3,316
    
    
    
    1,251
    
    
    
    1,665
    
    
    
    211.1
    
    
    
    187.3
 21




---



##### Table of Contents



Natural Gas
    
    NGL
    
    Oil and Condensate
    
    Equivalent Total2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007(per Mcf)
    
    (per Bbl)
    
    (per Bbl)
    
    (per Mcfe)Texas
    
    $
    8.01
    
    
    $
    6.97
    
    
    $
    53.28
    
    
    $
    34.60
    
    
    $
    91.58
    
    
    $
    54.62
    
    
    $
    8.60
    
    
    $
    6.63Northeast Operations
    
    
    
    
    
    
    4.75
    
    
    
    
    
    
    
    26.93
    
    
    
    
    
    
    
    51.58
    
    
    
    
    
    
    
    5.03Other U.S.
    
    
    4.36
    
    
    
    7.12
    
    
    
    84.30
    
    
    
    39.01
    
    
    
    88.65
    
    
    
    47.83
    
    
    
    13.80
    
    
    
    7.83Hedging  U.S.
    
    
    0.35
    
    
    
    1.31
    
    
    
    (4.05
    )
    
    
    
    
    
    
    (13.01
    )
    
    
    
    
    
    
    (0.19
    )
    
    
    1.01Total U.S.
    
    $
    8.34
    
    
    $
    6.75
    
    
    $
    49.36
    
    
    $
    33.81
    
    
    $
    77.46
    
    
    $
    50.99
    
    
    $
    8.53
    
    
    $
    6.72Canada
    
    $
    7.64
    
    
    $
    6.25
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7.64
    
    
    $
    6.25Hedging  Canada
    
    
    (0.07
    )
    
    
    0.48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.07
    )
    
    
    0.48Canada
    
    $
    7.57
    
    
    $
    6.73
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7.57
    
    
    $
    6.73Total Company
    
    $
    8.00
    
    
    $
    6.75
    
    
    $
    49.36
    
    
    $
    33.81
    
    
    $
    77.46
    
    
    $
    50.99
    
    
    $
    8.24
    
    
    $
    6.72
  NaturalGas
    
    
    NGL
    
    
    Oil
    
    
    Total(In thousands)Revenue for the quarter ended March 31, 2007
    
    $
    95,562
    
    
    $
    10,091
    
    
    $
    7,639
    
    
    $
    113,292Volume changes
    
    
    (8,883
    )
    
    
    30,321
    
    
    
    (2,790
    )
    
    
    18,648Price changes
    
    
    17,808
    
    
    
    4,641
    
    
    
    3,967
    
    
    
    26,416Revenue for the quarter ended March 31, 2008
    
    $
    104,487
    
    
    $
    45,053
    
    
    $
    8,816
    
    
    $
    158,356
    Other Revenue
  22




---



##### Table of Contents



Operating Expenses
 Oil and Gas Production Cost
 Three Months Ended March 31,2008
    
    
    2007(In thousands, except per unit amounts)Per
    
    
    
    
    
    
    PerMcfe
    
    
    
    
    
    

McfeTexasCash expense
    
    $
    21,836
    
    
    $
    1.66
    
    
    $
    7,212
    
    
    $
    1.56Equity compensation
    
    
    314
    
    
    
    0.02
    
    
    
    117
    
    
    
    0.03$
    22,150
    
    
    $
    1.68
    
    
    $
    7,329
    
    
    $
    1.59Northeast OperationsCash expense
    
    $
    
    
    
    $
    
    
    
    $
    12,624
    
    
    $
    1.83Equity compensation
    
    
    
    
    
    
    
    
    
    
    302
    
    
    
    0.04$
    
    
    
    $
    
    
    
    $
    12,926
    
    
    $
    1.87Other U.S.Cash expense
    
    $
    888
    
    
    $
    2.41
    
    
    $
    744
    
    
    $
    2.94Equity compensation
    
    
    48
    
    
    
    0.15
    
    
    
    37
    
    
    
    0.12$
    936
    
    
    $
    2.56
    
    
    $
    781
    
    
    $
    3.06Total U.S.Cash expense
    
    $
    22,724
    
    
    $
    1.68
    
    
    $
    20,580
    
    
    $
    1.74Equity compensation
    
    
    362
    
    
    
    0.03
    
    
    
    456
    
    
    
    0.04$
    23,086
    
    
    $
    1.71
    
    
    $
    21,036
    
    
    $
    1.78CanadaCash expense
    
    $
    8,763
    
    
    $
    1.54
    
    
    $
    7,047
    
    
    $
    1.39Equity compensation
    
    
    681
    
    
    
    0.12
    
    
    
    486
    
    
    
    0.10$
    9,444
    
    
    $
    1.66
    
    
    $
    7,533
    
    
    $
    1.49Total CompanyCash expense
    
    $
    31,487
    
    
    $
    1.64
    
    
    $
    27,627
    
    
    $
    1.64Equity compensation
    
    
    1,043
    
    
    
    0.05
    
    
    
    942
    
    
    
    0.06$
    32,530
    
    
    $
    1.69
    
    
    $
    28,569
    
    
    $
    1.70
     23




---



##### Table of Contents



Production and Ad Valorem Taxes
 Three Months Ended March 31,2008
    
    
    2007(In thousands, except per unit amounts)Per
    
    
    
    
    
    
    PerMcfe
    
    
    
    
    
    

McfeProduction and ad valorem taxesU.S.
    
    $
    1,738
    
    
    $
    0.13
    
    
    $
    3,602
    
    
    $
    0.31Canada
    
    
    921
    
    
    
    0.16
    
    
    
    888
    
    
    
    0.16Total production and ad valorem taxes
    
    $
    2,659
    
    
    $
    0.14
    
    
    $
    4,490
    
    
    $
    0.27
  Other Operating Costs
  Depletion, Depreciation and Accretion
 Three Months Ended March 31,2008
    
    
    2007(In thousands, except per unit amounts)Per
    
    
    
    
    
    
    PerMcfe
    
    
    
    
    
    

McfeDepletionU.S.
    
    $
    19,062
    
    
    $
    1.41
    
    
    $
    12,638
    
    
    $
    1.07Canada
    
    
    10,505
    
    
    
    1.85
    
    
    
    7,722
    
    
    
    1.53Total depletion
    
    
    29,567
    
    
    
    1.54
    
    
    
    20,360
    
    
    
    1.21Depreciation of other fixed assets:U.S.
    
    $
    4,422
    
    
    $
    0.33
    
    
    $
    2,994
    
    
    $
    0.25Canada
    
    
    718
    
    
    
    0.13
    
    
    
    879
    
    
    
    0.17Total depreciation
    
    
    5,140
    
    
    
    0.27
    
    
    
    3,873
    
    
    
    0.23Accretion
    
    
    352
    
    
    
    0.02
    
    
    
    361
    
    
    
    0.02Total depletion, depreciation and
accretion
    
    $
    35,059
    
    
    $
    1.82
    
    
    $
    24,594
    
    
    $
    1.46
  24




---



##### Table of Contents



General and Administrative Expense
 Three Months Ended March 31,2008
    
    
    2007(In thousands, except per unit amounts)Per
    
    
    
    
    
    
    PerMcfe
    
    
    
    
    
    

McfeGeneral and administrative expenseCash expense
    
    $
    12,296
    
    
    $
    0.64
    
    
    $
    7,740
    
    
    $
    0.46Equity compensation
    
    
    3,119
    
    
    
    0.16
    
    
    
    1,958
    
    
    
    0.12Total general and administrative expense
    
    $
    15,415
    
    
    $
    0.80
    
    
    $
    9,698
    
    
    $
    0.58
  Interest Expense
  Income Tax Expense
 Three Months EndedMarch 31,2008
    
    2007Income tax (in thousands)
    
    $
    23,912
    
    
    $
    11,295Effective tax rate
    
    
    35.9
    %
    
    
    33.0
    %
  25




---



##### Table of Contents



LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
 For the Three Months EndedMarch 31,2008
    
    2007(In thousands)Net cash provided by operating activities
    
    $
    43,284
    
    
    $
    73,006Net cash used for investing activities
    
    
    (378,646
    )
    
    
    (209,724
    )Net cash provided by financing activities
    
    
    309,586
    
    
    
    136,924Effect of exchange rate changes in cash
    
    
    (474
    )
    
    
    231
     Three Months EndedMarch 31, 2008(In thousands)Exploration and development:Texas
    
    $
    202,100Other U.S.
    
    
    4,209Total U.S.
    
    
    206,309Canada
    
    
    75,946Total exploration and development
    
    
    282,255Midstream:Texas
    
    
    58,394Canada
    
    
    173Total midstream
    
    
    58,567Corporate and field office
    
    
    2,418Total plant and equipment costs incurred
    
    $
    343,240
  26




---



##### Table of Contents



March 31,
    
    
    December 31,2007
    
    
    2007(In thousands)Long-term and short-term debt:Senior secured credit facility
    
    $
    586,176
    
    
    $
    310,710Senior subordinated notes
    
    
    350,000
    
    
    
    350,000Convertible subordinated debentures
    
    
    148,135
    
    
    
    148,107KGS credit agreement
    
    
    31,500
    
    
    
    5,000Other loans
    
    
    
    
    
    
    34Total debt
    
    
    1,115,811
    
    
    
    813,851Stockholders equity
    
    
    1,026,274
    
    
    
    1,068,355Total capitalization
    
    $
    2,142,085
    
    
    $
    1,882,206
 Financial Position
  
    
    An increase of over $288.0 million in our net property, plant and equipment assets,
which includes approximately $343.2 million in capital costs incurred principally for
development, exploitation and exploration of our oil and gas properties as well as
additional natural gas processing and gathering system assets.
    
    We incurred additional long-term debt of $312.7 million, primarily as a result of our
capital expenditure program and partially offset by cash flow from operations. These
borrowings have been drawn from our senior secured credit facility and the KGS credit
facility.
    
    Our current and deferred derivative assets have increased $11.0 million, and our
current and deferred derivative liabilities have increased $122.2 million and $4.1
million, respectively. Current derivative assets of $22.1 million represent fixed-price
swaps entered into in January 2008 to offset our net earnings exposure for the remaining
contract period under the Michigan Sales Contract. Our current derivative liabilities
include $78.1 million for the estimated fair value of the Michigan Sales Contract. All
other changes in derivative assets and liabilities reflect changes in the estimated fair
value of our cash-flow hedge derivatives. The changes are the result of higher pricing
of natural gas, crude oil and NGLs compared to our derivative contracts at March 31, 2008
as market prices have generally trended upward. Additionally, our current deferred tax
asset increased $35.2 million as a result of the increase in estimated fair value of our
natural gas, crude oil and NGL financial derivatives.
 Accounting Developments
  Critical Accounting Estimates
  
    
    Oil and Gas Properties;
    
    Ceiling Test;
    
    Oil and Gas Reserves;
    
    Derivative Instruments;
    
    Asset Retirement Obligations;
    
    Stock-based Compensation;
    
    Income Taxes;
 27




---



##### Table of Contents




    
    Income from Earnings of BreitBurn Energy Partners;
    
    Revenue.
  
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
   Commodity Price Risk
    28




---



##### Table of Contents



Weighted AvgPrice Per McfProduct
    
    Type
    
    Contract Period
    
    Volume
    
    
    or Bbl
    
    
    Fair Value(In thousands)Gas
    
    Swap
    
    Apr 2008-Dec 2008
    
    25,000 Mcfd
    
    $
    8.13
    
    
    $
    (14,865
    )Gas
    
    Swap
    
    Apr 2008-Dec 2008
    
    7,500 Mcfd
    
    
    8.13
    
    
    
    (4,459
    )Gas
    
    Swap
    
    Apr 2008-Dec 2008
    
    5,000 Mcfd
    
    
    8.14
    
    
    
    (2,959
    )Gas
    
    Swap
    
    Apr 2008-Dec 2008
    
    2,500 Mcfd
    
    
    8.15
    
    
    
    (1,473
    )Gas
    
    Swap
    
    Apr 2008-Dec 2008
    
    10,000 Mcfd
    
    
    8.21
    
    
    
    (5,718
    )Gas
    
    Swap
    
    Apr 2008-Dec 2008
    
    10,000 Mcfd
    
    
    8.22
    
    
    
    (5,691
    )Gas
    
    Swap
    
    Jan 2009-Dec 2009
    
    10,000 Mcfd
    
    
    8.45
    
    
    
    (9,268
    )Gas
    
    Swap
    
    Jan 2009-Dec 2009
    
    20,000 Mcfd
    
    
    8.46
    
    
    
    (4,651
    )Gas
    
    Swap
    
    Jan 2009-Dec 2009
    
    20,000 Mcfd
    
    
    8.46
    
    
    
    (4,651
    )Gas
    
    Collar
    
    Apr 2008-Dec 2008
    
    20,000 Mcfd
    
    
    7.50-  9.15
    
    
    
    (7,906
    )Gas
    
    Collar
    
    Apr 2008-Dec 2008
    
    10,000 Mcfd
    
    
    9.00-11.70
    
    
    
    (584
    )Gas
    
    Collar
    
    Jul 2008-Dec 2008
    
    20,000 Mcfd
    
    
    8.25-  9.75
    
    
    
    (4,551
    )Gas
    
    Collar
    
    Oct 2008-Dec 2008
    
    10,000 Mcfd
    
    
    9.00-12.60
    
    
    
    (240
    )Gas
    
    Collar
    
    May 2008-Mar 2009
    
    20,000 Mcfd
    
    
    7.50-  9.35
    
    
    
    (11,293
    )Gas
    
    Collar
    
    May 2008-Mar 2009
    
    20,000 Mcfd
    
    
    8.00-10.20
    
    
    
    (7,386
    )Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    20,000 Mcfd
    
    
    7.50-  9.34
    
    
    
    (8,403
    )Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    20,000 Mcfd
    
    
    7.75-10.20
    
    
    
    (5,549
    )Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    10,000 Mcfd
    
    
    7.75-10.26
    
    
    
    (2,731
    )Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    20,000 Mcfd
    
    
    8.25-  9.60
    
    
    
    (5,717
    )Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    10,000 Mcfd
    
    
    8.25-10.45
    
    
    
    (1,855
    )Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    10,000 Mcfd
    
    
    8.25-10.45
    
    
    
    (1,855
    )Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    10,000 Mcfd
    
    
    8.25-10.45
    
    
    
    (1,855
    )Gas
    
    Basis
    
    Apr-08
    
    10,000 Mcfd
    
    
    
    
    
    
    30Gas
    
    Basis
    
    Apr-08
    
    10,000 Mcfd
    
    
    
    
    
    
    30Gas
    
    Basis
    
    Apr-08
    
    30,000 Mcfd
    
    
    
    
    
    
    90Gas
    
    Basis
    
    Apr-08
    
    30,000 Mcfd
    
    
    
    
    
    
    90Gas
    
    Basis
    
    Apr 2008-Dec 2008
    
    10,000 Mcfd
    
    
    
    
    
    
    273Gas
    
    Basis
    
    Apr 2008-Dec 2008
    
    10,000 Mcfd
    
    
    
    
    
    
    273NGL
    
    Swap
    
    Apr 2008-Dec 2008
    
    1,000 Bbld
    
    
    39.58
    
    
    
    (3,581
    )NGL
    
    Swap
    
    Apr 2008-Dec 2008
    
    2,000 Bbld
    
    
    45.94
    
    
    
    (4,339
    )Oil
    
    Collar
    
    Apr 2008-Dec 2008
    
    500 Bbld
    
    
    65.00-73.90
    
    
    
    (4,030
    )Oil
    
    Collar
    
    Apr 2008-Dec 2008
    
    500 Bbld
    
    
    65.00-77.45
    
    
    
    (3,532
    )Total
    
    
    $
    (128,356
    )
  29




---



##### Table of Contents



Weighted AvgPrice Per McfProduct
    
    Type
    
    Contract Period
    
    Volume
    
    or Bbl
    
    
    Fair Value(In thousands)Gas
    
    Sale
    
    Apr 2008-Mar 2009
    
    25,000 Mcfd
    
    $
    2.49
    
    
    $
    (78,144
    )Gas
    
    Swap
    
    Apr 2008-Mar 2009
    
    10,000 Mcfd
    
    
    8.20
    
    
    
    8,850Gas
    
    Swap
    
    Apr 2008-Mar 2009
    
    15,000 Mcfd
    
    
    8.20
    
    
    
    13,275Total
    $
    (56,019
    )
 Credit Risk
  30




---



##### Table of Contents



ITEM 4. Controls and Procedures
 Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  31




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
  
 ITEM 1A. Risk Factors
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Issuer Purchases of Equity Securities
  Total Number of
    
    
    Maximum NumberTotal Number
    
    
    
    
    
    
    Shares Purchased as
    
    
    of Shares that Mayof Shares
    
    
    Average Price
    
    
    Part of Publicly
    
    
    Yet Be PurchasedPeriod
    
    Purchased (1)
    
    
    Paid per Share
    
    
    Announced Plan (2)
    
    
    Under the Plan (2)January 2008
    
    
    31,956
    
    
    $
    57.73
    
    
    
    
    
    
    
    February 2008
    
    
    2,852
    
    
    $
    30.89
    
    
    
    
    
    
    
    March 2008
    
    
    1,447
    
    
    $
    32.60
    
    
    
    
    
    
    
    Total
    
    
    36,255
    
    
    $
    54.62
    
    
    
    
    
    
    
    
 
 (1)
    
    Represents shares of common stock surrendered by employees to satisfy our income tax
withholding obligations arising upon the vesting of restricted stock issued under our Amended
and Restated 1999 Stock Option and Retention Stock Plan or 2006 Equity Plan. Shares purchased
in January 2008 reflect the share price prior to the two-for-one stock split effected in the
form of a stock dividend. The stock dividend was paid on January 31, 2008.(2)
    
    We do not currently have in place any publicly announced, specific plans or programs
to purchase equity securities. 
 ITEM 3. Defaults Upon Senior Securities
  
 ITEM 4. Submission of Matters to a Vote of Security Holders
  
 ITEM 5. Other Information
  32




---



##### Table of Contents



ITEM 6. Exhibits:
 
 EXHIBIT INDEX
 Exhibit No.
    
    Description*31.1
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith 33




---



##### Table of Contents



SIGNATURES
   Quicksilver Resources Inc.By:
    /s/ Glenn DardenGlenn DardenPresident and Chief Executive OfficerBy:
    /s/ Philip CookPhilip CookSenior Vice President - Chief Financial Officer 34




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description*31.1
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith 35