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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K/A
 (Amendment No. 3)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 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
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)777 West Rosedale St., Fort Worth, Texas
    
    76104(Address of principal executive offices)
    
    (Zip Code)
 817-665-5000
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, $0.01 par value per share
    
    New York Stock ExchangePreferred Share Purchase Rights,$0.01 par value per share
    
    New York Stock Exchange
   þ o
  o þ
  þ o
 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
   Class
    
    Outstanding at February 13, 2009Common Stock, $0.01 par value per share
    
    168,752,835 shares
 DOCUMENTS INCORPORATED BY REFERENCE
 Document
    
    Parts Into Which IncorporatedProxy Statement for the Registrants May 20,
    
    Part III2009 Annual Meeting of Stockholders




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Explanatory Note
 Condensed Consolidating
Financial Information Long Term Debt, Managements Discussion and Analysis of Financial Condition
and Results of Operation Controls and
Procedures Risk Factors
     
    
    SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements  an
amendment of ARB No. 51 (SFAS No. 160);
    
    FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in
Cash upon Conversion (Including Partial Cash Settlement) (FSP APB 14-1); and
    
    FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payments
Transactions Are Participating Securities (FSP EITF 03-6-1).
  
    
    Item 6. Selected Financial Data;
    
    Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations;
    
    Item 8. Financial Statements and Supplementary Data; and
    
    Item 15. Exhibits and Financial Statement Schedules.




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##### 



INDEX TO
    ANNUAL REPORT ON
    FORM 10-K/A
    For the Year Ended December 31, 2008
   
 PART IITEM 1A.


Risk FactorsPART IIITEM 6.


Selected Financial DataITEM 7.


Managements Discussion and Analysis of
    Financial Condition and Results of OperationsITEM 8.


Financial Statements and Supplementary DataITEM 9A.


Controls and ProceduresPART IVITEM 15.


Exhibits and Financial Statement SchedulesSignaturesEX-23.1EX-23.2EX-23.3EX-23.4EX-23.5EX-23.6EX-23.7EX-23.8EX-23.9EX-31.1EX-31.2EX-32.1




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As
further discussed in Note 21 (Restated) to our
consolidated financial statements in Item 8 to this Report the
Company has corrected financial information previously reported and has included information about the Company and its restricted subsidiaries, and
the following risk factors have been updated to reflect risks
associated therewith.
 ITEM 1A.
    Risk
Factors  Natural gas, NGL and crude oil prices fluctuate widely, and low prices could have a material
adverse impact on our business, financial condition, results of operations and cash flows.
   
    
    domestic and foreign demand for natural gas and crude oil;
    
    the level of domestic and foreign natural gas and crude oil supplies;
    
    the price and availability of alternative fuels;
    
    weather conditions;
    
    domestic and foreign governmental regulations;
    
    impact of trade organizations, such as OPEC;
    
    political conditions in oil and natural gas producing regions; and
    
    worldwide economic conditions.
  If natural gas, NGL or crude oil prices decrease, our exploration and development efforts are
unsuccessful or our costs increase substantially, we may be required to recognize impairment of
our oil and gas properties, which could have a material adverse effect on our financial condition,
our results of operations and our ability to borrow under and comply with our debt agreements.
  Reserve estimates depend on many assumptions that may turn out to be inaccurate and any material
inaccuracies in these reserve estimates or underlying assumptions may materially affect the
quantities and present value of our reserves.




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Our production is concentrated in a small number of geographic areas.
  Our Canadian operations present unique risks and uncertainties, different from or in addition to
those we face in our domestic operations.
  We may have difficulty financing our planned growth.
 .




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We are vulnerable to operational hazards, transportation dependencies, regulatory risks and other
uninsured risks associated with our activities.
    The failure to replace our reserves could adversely affect our production and cash flows.
  We have risk through our investment in BBEP.




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We have risk through our ownership of KGS.
  
    
    changes in general economic conditions;
    
    fluctuations in natural gas prices;
    
    failure or delays in us and third parties achieving expected production from natural gas
projects;
    
    competitive conditions in the midstream industry;
    
    actions taken on non-performance by third parties, including suppliers, contractors,
operators, processors, transporters and customers;
    
    changes in the availability and cost of capital;
    
    operating hazards, natural disasters, weather-related delays, casualty losses and other
matters beyond our control;
    
    construction costs or capital expenditures exceeding estimated or budgeted amounts;
    
    the effects of existing and future laws and governmental regulations;
    
    the effects of future litigation; and
    
    other factors discussed in KGS Annual Report on Form 10-K and as are or may be detailed
from time to time in KGS public announcements and other filings with the SEC.
 We cannot control the operations of gas processing and transportation facilities we do not own or
operate.
  The loss of key personnel could adversely affect our ability to operate.
  Competition in our industry is intense, and we are smaller and have a more limited operating
history than many of our competitors.
  Hedging our production may result in losses or limit our ability to benefit from price increases.




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
    
    our production could be materially less than expected; or
    
    the other parties to the hedging contracts could fail to perform their contractual
obligations.
  Delays in obtaining oil field equipment and increases in drilling and other service costs could
adversely affect our ability to pursue our drilling program and our results of operations.
  Our activities are regulated by complex laws and regulations, including environmental regulations
that can adversely affect the cost, manner or feasibility of doing business.
  
    
    discharge permits for drilling operations;
    
    water obtained for drilling purposes;
    
    drilling permits and bonds;
    
    reports concerning operations;
    
    spacing of wells;
    
    disposal wells;
    
    unitization and pooling of properties;
    
    environmental protection; and
    
    taxation.
    The risks associated with our debt could adversely affect our business, financial condition and
results of operations and the value of our securities.




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
    
    make it more difficult for us to satisfy our obligations with respect to our debt;
    
    require us to dedicate a substantial portion of our cash flow from operations to
payments on our debt, thereby reducing the amount of our cash flow available for working
capital, capital expenditures, acquisitions and other general corporate purposes;
    
    require us to make principal payments if the quantity and value of our proved reserves
are insufficient to support our level of borrowings;
    
    limit our flexibility in planning for, or reacting to, changes in the oil and natural
gas industry;
    
    place us at a competitive disadvantage compared to our competitors who may have lower
debt service obligations and greater financing flexibility than we do;
    
    limit our financial flexibility, including our ability to borrow additional funds;
    
    increase our interest expense on our variable rate borrowings if interest rates
increase;
    
    limit our ability to make capital expenditures to develop our properties;
    
    increase our vulnerability to exchange risk associated with Canadian dollar denominated
indebtedness;
    
    increase our vulnerability to general adverse economic and industry conditions; and
    
    result in a default or event of default under our debt agreements, which, if not cured
or waived, could adversely affect our financial condition, results of operations and cash
flows.
  
    
    reducing or delaying capital expenditures;
    
    seeking additional debt financing or equity capital;
    
    selling assets;
    
    restructuring or refinancing debt; or
    
    reorganizing our capital structure.
  Our debt agreements restrict our ability to engage in certain activities.
  
    
    incur additional debt;
    
    pay dividends on or redeem or repurchase capital stock;
    
    make certain investments;
    
    incur or permit certain liens to exist;
    
    enter into certain types of transactions with affiliates;
    
    merge, consolidate or amalgamate with another company;
    
    transfer or otherwise dispose of assets, including capital stock of subsidiaries; and
    
    redeem subordinated debt.




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Parties with whom we do business may become unable or unwilling to timely perform their
obligations to us.
  A small number of existing stockholders exercise significant control over our company, which could
limit your ability to influence the outcome of stockholder votes.
  A large number of our outstanding shares and shares to be issued upon conversion of our
outstanding convertible debentures or exercise of our outstanding options may be sold into the
market in the future, which could cause the market price of our common stock to drop
significantly, even if our business is performing well.




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Our amended and restated certificate of incorporation, restated bylaws and stockholder rights plan
contain provisions that could discourage an acquisition or change of control without our board of
directors approval.
  
    
    our board of directors is authorized to issue preferred stock without stockholder
approval;
    
    our board of directors is classified; and
    
    advance notice is required for director nominations by stockholders and actions to be
taken at annual meetings at the request of stockholders.
  We have identified material weaknesses in our internal controls that, if not properly
corrected, could result in material misstatements in our financial statements.




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As further discussed in Note 2 to our consolidated financial statements included in Item 8 of this Report, our consolidated financial statements for each period presented have been
adjusted for the retrospective application of the Adopted Pronouncements.


Item 6. Selected Financial Data




Years Ended December 31,2008(2)
    
    
    2007(3)
    
    
    2006
    
    
    2005
    
    
    2004(In thousands, except for per share data and ratios)Operating Results InformationTotal revenues
    
    $
    800,641
    
    
    $
    561,258
    
    
    $
    390,362
    
    
    $
    310,448
    
    
    $
    179,729Operating income (loss)
    
    
    (249,697
    )
    
    
    803,581
    
    
    
    174,196
    
    
    
    149,129
    
    
    
    60,693Income (loss) before income taxes
    
    
    (585,077
    )
    
    
    730,806
    
    
    
    126,248
    
    
    
    122,658
    
    
    
    44,597Net income (loss) attributable to Quicksilver
    
    
    (378,276
    )
    
    
    475,390
    
    
    
    90,006
    
    
    
    83,979
    
    
    
    30,720Diluted earnings (loss) per common share (1)
    
    $
    (2.33
    )
    
    $
    2.87
    
    
    $
    0.58
    
    
    $
    0.54
    
    
    $
    0.21Dividends paid per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash provided by operating activities
    
    $
    456,566
    
    
    $
    319,104
    
    
    $
    242,186
    
    
    $
    140,242
    
    
    $
    84,847Capital expenditures
    
    
    2,279,927
    
    
    
    1,020,684
    
    
    
    619,061
    
    
    
    331,805
    
    
    
    215,106Financial Condition InformationProperty, plant and equipment  net
    
    $
    3,797,715
    
    
    $
    2,142,346
    
    
    $
    1,679,280
    
    
    $
    1,112,002
    
    
    $
    802,610Total assets
    
    
    4,498,208
    
    
    
    2,773,751
    
    
    
    1,881,052
    
    
    
    1,241,437
    
    
    
    886,850Long-term debt
    
    
    2,586,046
    
    
    
    788,518
    
    
    
    887,917
    
    
    
    469,330
    
    
    
    357,282Long-term obligations excluding debt
    
    
    47,715
    
    
    
    34,473
    
    
    
    25,058
    
    
    
    20,891
    
    
    
    17,967Total equity
    
    
    1,211,563
    
    
    
    1,192,468
    
    
    
    602,119
    
    
    
    406,399
    
    
    
    330,515





|    |  |                                                                                                                                                                                                                                                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | Per share amounts have been adjusted to reflect a
three-for-two stock split effected in the form of a stock
dividend in June 2005 and a two-for-one stock split
effected in the form of a stock dividend in January 2008                                                                                                
|   
|(2) |  | Operating loss for 2008 includes a charge of $633.5
million for impairment associated with our U.S. oil and
gas properties. Net loss also includes $93.3 million for
pretax income attributable to the Companys proportionate
ownership of BBEP and a pretax charge of $320.4 million
for impairment of that investment
|   
|(3) |  | Operating income includes a gain of $628.7 million
recognized from the divestiture of the Companys Northeast
Operations and a charge of $63.5 million associated with
the Michigan Sales Contract (See Notes 5 and 6 to the
consolidated financial statements in Item 8 of this
Report)                                



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As further discussed in Note 2 to our consolidated financial statements included in Item 8 of this Report, our consolidated financial statements for each period presented, as well as
the financial information in the following discussion, have been adjusted for the retrospective
application of the Adopted Pronouncements. Supplemental
information has also been provided regarding the Companys
restricted subsidiaries under the caption
Quicksilver Resources Inc. and its Restricted
Subsidiaries below.
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
   
    
    Overview a general description of our business; the value drivers of our business;
measurements; and opportunities, challenges and risks.
    
    Financial Risk Management information about debt financing and financial risk
management.
    
    Results of Operations an analysis of our consolidated results of operations for the
three years presented in our financial statements.
    
    Liquidity, Capital Resources and Financial Position an analysis of our cash flows,
sources and uses of cash, contractual obligations and commercial commitments.
    
    Critical Accounting Estimates a discussion of critical accounting estimates that
represent choices between acceptable alternatives and/or require management judgments and
assumptions.
 OVERVIEW




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
    
    reserve growth;
    
    production growth; and
    
    maximizing the Companys operating cash flows.
    Years Ended December 31,2008
    
    2007
    
    2006Organic reserve growth (1)
    
    
    29
    %
    
    
    59
    %
    
    
    46
    %Production volumes (Bcfe)
    
    
    96.2
    
    
    
    77.9
    
    
    
    61.3Cash flow from operating activities (in millions)
    
    $
    456.6
    
    
    $
    319.1
    
    
    $
    242.2Diluted earnings (loss) per share(2)
    
    $
    (2.33
    )
    
    $
    2.87
    
    
    $
    0.58
 
 (1)
    
    Organic growth excludes reserves acquired or divested from
beginning and ending reserves and from production. This
ratio is calculated by subtracting adjusted beginning of
the year proved reserves from adjusted end of the year
proved reserves and dividing by adjusted beginning of the
year proved reserves. Adjusted beginning of the year
reserves are calculated by deducting sold reserves and
adjusted current year production from beginning of the
year reserves. Adjusted current year production excludes
production from purchased reserves. Adjusted end of the
year reserves are calculated by deducting purchased
reserves from end of the year reserves.(2)
    
    Operating loss for 2008 includes a pretax charge of $633.5
million for impairment associated with our U.S. oil and
gas properties. Net loss also includes $93.3 million of
pretax income attributable to the Companys proportionate
ownership of BBEP and a pretax charge of $320.4 million
for impairment of that investment. FINANCIAL RISK MANAGEMENT




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RESULTS OF OPERATIONS
 Revenue
 Natural Gas, NGL and Crude Oil
  Natural Gas
    
    
    NGL
    
    
    Oil and Condensate
    
    
    Total2008
    
    
    2007
    
    
    2006
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2008
    
    
    2007
    
    
    2006(In millions)Texas
    
    $
    371.1
    
    
    $
    121.6
    
    
    $
    63.0
    
    
    $
    198.1
    
    
    $
    106.7
    
    
    $
    22.8
    
    
    $
    30.4
    
    
    $
    9.2
    
    
    $
    5.0
    
    
    $
    599.6
    
    
    $
    237.5
    
    
    $
    90.8Northeast Operations
    
    
    
    
    
    
    100.8
    
    
    
    137.5
    
    
    
    
    
    
    
    4.5
    
    
    
    5.4
    
    
    
    
    
    
    
    18.6
    
    
    
    21.2
    
    
    
    
    
    
    
    123.9
    
    
    
    164.1Other U.S.
    
    
    0.6
    
    
    
    0.3
    
    
    
    0.8
    
    
    
    0.8
    
    
    
    0.6
    
    
    
    0.5
    
    
    
    14.8
    
    
    
    10.2
    
    
    
    9.5
    
    
    
    16.2
    
    
    
    11.1
    
    
    
    10.8Hedging
    
    
    (2.2
    )
    
    
    26.3
    
    
    
    5.4
    
    
    
    (8.6
    )
    
    
    (5.2
    )
    
    
    
    
    
    
    (7.1
    )
    
    
    (0.7
    )
    
    
    (0.5
    )
    
    
    (17.9
    )
    
    
    20.4
    
    
    
    4.9Total U.S.
    
    
    369.5
    
    
    
    249.0
    
    
    
    206.7
    
    
    
    190.3
    
    
    
    106.6
    
    
    
    28.7
    
    
    
    38.1
    
    
    
    37.3
    
    
    
    35.2
    
    
    
    597.9
    
    
    
    392.9
    
    
    
    270.6Canada
    
    
    182.7
    
    
    
    126.4
    
    
    
    106.0
    
    
    
    0.4
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183.1
    
    
    
    126.6
    
    
    
    106.3Hedging
    
    
    (0.2
    )
    
    
    25.6
    
    
    
    9.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    25.6
    
    
    
    9.7Total Canada
    
    
    182.5
    
    
    
    152.0
    
    
    
    115.7
    
    
    
    0.4
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    182.9
    
    
    
    152.2
    
    
    
    116.0Total
    
    $
    552.0
    
    
    $
    401.0
    
    
    $
    322.4
    
    
    $
    190.7
    
    
    $
    106.8
    
    
    $
    29.0
    
    
    $
    38.1
    
    
    $
    37.3
    
    
    $
    35.2
    
    
    $
    780.8
    
    
    $
    545.1
    
    
    $
    386.6
  Natural Gas
    
    
    NGL
    
    
    Oil and Condensate
    
    
    Equivalent Total2008
    
    
    2007
    
    
    2006
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2008
    
    
    2007
    
    
    2006(MMcfd)
    
    
    (Bbld)
    
    
    (Bbld)
    
    
    
    
    
    
    (MMcfed)Texas
    
    
    122.8
    
    
    
    50.1
    
    
    
    23.9
    
    
    
    11,425
    
    
    
    6,395
    
    
    
    1,579
    
    
    
    873
    
    
    
    349
    
    
    
    215
    
    
    
    196.6
    
    
    
    90.6
    
    
    
    34.7Northeast Operations
    
    
    
    
    
    
    56.1
    
    
    
    71.7
    
    
    
    
    
    
    
    331
    
    
    
    419
    
    
    
    
    
    
    
    799
    
    
    
    930
    
    
    
    
    
    
    
    62.9
    
    
    
    79.8Other U.S.
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    36
    
    
    
    29
    
    
    
    31
    
    
    
    447
    
    
    
    452
    
    
    
    463
    
    
    
    3.2
    
    
    
    3.2
    
    
    
    3.3Total U.S.
    
    
    123.1
    
    
    
    106.5
    
    
    
    95.9
    
    
    
    11,461
    
    
    
    6,755
    
    
    
    2,029
    
    
    
    1,320
    
    
    
    1,600
    
    
    
    1,608
    
    
    
    199.8
    
    
    
    156.7
    
    
    
    117.8Canada
    
    
    63.0
    
    
    
    56.8
    
    
    
    50.0
    
    
    
    3
    
    
    
    13
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63.0
    
    
    
    56.9
    
    
    
    50.0Total
    
    
    186.1
    
    
    
    163.3
    
    
    
    145.9
    
    
    
    11,464
    
    
    
    6,768
    
    
    
    2,043
    
    
    
    1,320
    
    
    
    1,600
    
    
    
    1,608
    
    
    
    262.8
    
    
    
    213.6
    
    
    
    167.8
  Natural Gas
    
    
    NGL
    
    
    Oil and Condensate
    
    
    Equivalent Total2008
    
    
    2007
    
    
    2006
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2008
    
    
    2007
    
    
    2006(per Mcf)
    
    
    (per Bbl)
    
    
    (per Bbl)
    
    
    (per Mcfe)Texas
    
    $
    8.26
    
    
    $
    6.65
    
    
    $
    7.22
    
    
    $
    47.38
    
    
    $
    45.70
    
    
    $
    39.56
    
    
    $
    95.16
    
    
    $
    72.37
    
    
    $
    63.62
    
    
    $
    8.33
    
    
    $
    7.18
    
    
    $
    7.18Northeast Operations
    
    
    
    
    
    
    4.92
    
    
    
    5.25
    
    
    
    
    
    
    
    37.36
    
    
    
    35.27
    
    
    
    
    
    
    
    63.81
    
    
    
    62.33
    
    
    
    
    
    
    
    5.40
    
    
    
    5.63Other U.S.
    
    
    7.43
    
    
    
    4.68
    
    
    
    6.85
    
    
    
    70.52
    
    
    
    52.35
    
    
    
    46.55
    
    
    
    89.41
    
    
    
    61.49
    
    
    
    56.25
    
    
    
    13.92
    
    
    
    9.63
    
    
    
    9.03Hedging  U.S.
    
    
    (0.05
    )
    
    
    0.81
    
    
    
    0.18
    
    
    
    (2.06
    )
    
    
    (2.10
    )
    
    
    
    
    
    
    (14.72
    )
    
    
    (1.19
    )
    
    
    (0.77
    )
    
    
    (0.25
    )
    
    
    0.45
    
    
    
    0.11Total U.S.
    
    $
    8.20
    
    
    $
    6.40
    
    
    $
    5.90
    
    
    $
    45.39
    
    
    $
    43.22
    
    
    $
    38.78
    
    
    $
    78.83
    
    
    $
    63.87
    
    
    $
    59.99
    
    
    $
    8.18
    
    
    $
    6.87
    
    
    $
    6.29Canada
    
    
    7.92
    
    
    
    6.10
    
    
    
    5.82
    
    
    
    325.52
    
    
    
    48.02
    
    
    
    49.03
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.94
    
    
    
    6.10
    
    
    
    5.82Hedging  Canada
    
    
    (0.01
    )
    
    
    1.23
    
    
    
    0.53
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.01
    )
    
    
    1.23
    
    
    
    0.53Total Canada
    
    $
    7.91
    
    
    $
    7.33
    
    
    $
    6.35
    
    
    $
    325.52
    
    
    $
    48.02
    
    
    $
    49.03
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7.93
    
    
    $
    7.33
    
    
    $
    6.35Total
    
    $
    8.10
    
    
    $
    6.73
    
    
    $
    6.05
    
    
    $
    45.44
    
    
    $
    43.23
    
    
    $
    38.85
    
    
    $
    78.83
    
    
    $
    63.87
    
    
    $
    59.99
    
    
    $
    8.12
    
    
    $
    6.99
    
    
    $
    6.31
  NaturalGas
    
    
    NGL
    
    
    Oil
    
    
    Total(In thousands)Revenue for 2006
    
    $
    322,357
    
    
    $
    28,978
    
    
    $
    35,205
    
    
    $
    386,540Volume changes
    
    
    42,735
    
    
    
    74,546
    
    
    
    (171
    )
    
    
    117,110Price changes
    
    
    35,897
    
    
    
    3,263
    
    
    
    2,279
    
    
    
    41,439Revenue for 2007
    
    $
    400,989
    
    
    $
    106,787
    
    
    $
    37,313
    
    
    $
    545,089Volume changes
    
    
    57,227
    
    
    
    74,591
    
    
    
    (6,463
    )
    
    
    125,355Price changes
    
    
    93,830
    
    
    
    9,288
    
    
    
    7,226
    
    
    
    110,344Revenue for 2008
    
    $
    552,046
    
    
    $
    190,666
    
    
    $
    38,076
    
    
    $
    780,788




---



##### Table of Contents



Other Revenue




---



##### Table of Contents



Operating Expenses
 Oil and Gas Production Expenses
 Years Ended December 31,2008
    
    
    2007
    
    
    2006(In thousands, except per unit amounts)Per
    
    
    
    
    
    
    Per
    
    
    
    
    
    
    PerMcfe
    
    
    
    
    
    
    Mcfe
    
    
    
    
    
    
    McfeTexasCash expense
    
    $
    92,096
    
    
    $
    1.28
    
    
    $
    53,726
    
    
    $
    1.63
    
    
    $
    24,692
    
    
    $
    1.95Equity compensation
    
    
    1,130
    
    
    
    0.02
    
    
    
    339
    
    
    
    0.01
    
    
    
    105
    
    
    
    0.01$
    93,226
    
    
    $
    1.30
    
    
    $
    54,065
    
    
    $
    1.64
    
    
    $
    24,797
    
    
    $
    1.96Northeast OperationsCash expense
    
    $
    
    
    
    $
    
    
    
    $
    48,489
    
    
    $
    2.11
    
    
    $
    44,151
    
    
    $
    1.51Equity compensation
    
    
    
    
    
    
    
    
    
    
    422
    
    
    
    0.02
    
    
    
    817
    
    
    
    0.03$
    
    
    
    $
    
    
    
    $
    48,911
    
    
    $
    2.13
    
    
    $
    44,968
    
    
    $
    1.54Other U.S.Cash expense
    
    $
    6,318
    
    
    $
    5.35
    
    
    $
    3,278
    
    
    $
    2.97
    
    
    $
    3,385
    
    
    $
    2.89Equity compensation
    
    
    190
    
    
    
    0.16
    
    
    
    193
    
    
    
    0.16
    
    
    
    101
    
    
    
    0.08$
    6,508
    
    
    $
    5.51
    
    
    $
    3,471
    
    
    $
    3.13
    
    
    $
    3,486
    
    
    $
    2.97Total U.S.Cash expense
    
    $
    98,414
    
    
    $
    1.34
    
    
    $
    105,493
    
    
    $
    1.84
    
    
    $
    72,228
    
    
    $
    1.68Equity compensation
    
    
    1,320
    
    
    
    0.02
    
    
    
    954
    
    
    
    0.02
    
    
    
    1,023
    
    
    
    0.02$
    99,734
    
    
    $
    1.36
    
    
    $
    106,447
    
    
    $
    1.86
    
    
    $
    73,251
    
    
    $
    1.70CanadaCash expense
    
    $
    33,781
    
    
    $
    1.47
    
    
    $
    28,415
    
    
    $
    1.37
    
    
    $
    20,862
    
    
    $
    1.14Equity compensation
    
    
    2,146
    
    
    
    0.09
    
    
    
    1,969
    
    
    
    0.09
    
    
    
    1,063
    
    
    
    0.06$
    35,927
    
    
    $
    1.56
    
    
    $
    30,384
    
    
    $
    1.46
    
    
    $
    21,925
    
    
    $
    1.20Total CompanyCash expense
    
    $
    132,195
    
    
    $
    1.37
    
    
    $
    133,908
    
    
    $
    1.72
    
    
    $
    93,090
    
    
    $
    1.52Equity compensation
    
    
    3,466
    
    
    
    0.04
    
    
    
    2,923
    
    
    
    0.04
    
    
    
    2,086
    
    
    
    0.03$
    135,661
    
    
    $
    1.41
    
    
    $
    136,831
    
    
    $
    1.76
    
    
    $
    95,176
    
    
    $
    1.55




---



##### Table of Contents



Production and Ad Valorem Taxes
 Years Ended December 31,2008
    
    
    2007
    
    
    2006(In thousands, except per unit amounts)Per
    
    
    
    
    
    
    Per
    
    
    
    
    
    
    PerMcfe
    
    
    
    
    
    
    Mcfe
    
    
    
    
    
    
    McfeProduction and ad valorem taxesU.S.
    
    $
    14,060
    
    
    $
    0.19
    
    
    $
    13,005
    
    
    $
    0.23
    
    
    $
    13,948
    
    
    $
    0.32Canada
    
    
    2,734
    
    
    $
    0.12
    
    
    
    3,137
    
    
    $
    0.15
    
    
    
    1,671
    
    
    $
    0.09Total production and ad valorem taxes
    
    $
    16,794
    
    
    $
    0.17
    
    
    $
    16,142
    
    
    $
    0.21
    
    
    $
    15,619
    
    
    $
    0.25
   Depletion, Depreciation and Accretion
 Years Ended December 31,2008
    
    
    2007
    
    
    2006(In thousands, except per unit amounts)Per
    
    
    
    
    
    
    Per
    
    
    
    
    
    
    PerMcfe
    
    
    
    
    
    
    Mcfe
    
    
    
    
    
    
    McfeDepletionU.S.
    
    $
    120,845
    
    
    $
    1.65
    
    
    $
    65,020
    
    
    $
    1.14
    
    
    $
    40,051
    
    
    $
    0.93Canada
    
    
    40,337
    
    
    
    1.75
    
    
    
    34,666
    
    
    
    1.67
    
    
    
    25,618
    
    
    
    1.40Total depletion
    
    
    161,182
    
    
    
    1.68
    
    
    
    99,686
    
    
    
    1.28
    
    
    
    65,669
    
    
    
    1.07Depreciation of other fixed assets:U.S.
    
    $
    21,751
    
    
    $
    0.30
    
    
    $
    15,389
    
    
    $
    0.27
    
    
    $
    8,715
    
    
    $
    0.20Canada
    
    
    3,780
    
    
    
    0.16
    
    
    
    4,115
    
    
    
    0.20
    
    
    
    3,129
    
    
    
    0.17Total depreciation
    
    
    25,531
    
    
    
    0.27
    
    
    
    19,504
    
    
    
    0.25
    
    
    
    11,844
    
    
    
    0.19Accretion
    
    
    1,483
    
    
    
    0.01
    
    
    
    1,507
    
    
    
    0.02
    
    
    
    1,287
    
    
    
    0.02Total depletion, depreciation and accretion
    
    $
    188,196
    
    
    $
    1.96
    
    
    $
    120,697
    
    
    $
    1.55
    
    
    $
    78,800
    
    
    $
    1.29




---



##### Table of Contents



Impairment of Oil and Gas Properties
  
    
    the forward strip prices on December 31, 2008, which featured future price increases and
more appropriately reflect expected future realized prices, were used in place of year-end
prices held constant;
    
    production expense was adjusted to reflect actual consolidated oil and gas production
expenses; and
    
    income tax considerations are excluded from the analysis although they are required for
the ceiling test computation.
  United States
    
    
    Canada
    
    
    Total(In thousands)Future revenues
    
    $
    13,047,702
    
    
    $
    2,012,958
    
    
    $
    15,060,660Future production costs
    
    
    (4,300,591
    )
    
    
    (550,345
    )
    
    
    (4,850,936
    )Future development costs
    
    
    (1,195,503
    )
    
    
    (112,330
    )
    
    
    (1,307,833
    )Future net pretax cash flows
    
    
    7,551,608
    
    
    
    1,350,283
    
    
    
    8,901,89110% discount
    
    
    (4,188,201
    )
    
    
    (721,623
    )
    
    
    (4,909,824
    )Managements estimate of
pretax discounted future
cash flows relating to
proved reserves
    
    $
    3,363,407
    
    
    $
    628,660
    
    
    $
    3,992,067
 General and Administrative Expense
 Years Ended December 31,2008
    
    
    2007
    
    
    2006(In thousands, except per unit amounts)Per
    
    
    
    
    
    
    Per
    
    
    
    
    
    
    PerMcfe
    
    
    
    
    
    
    Mcfe
    
    
    
    
    
    
    McfeGeneral and administrative expenseCash expense
    
    $
    49,982
    
    
    $
    0.52
    
    
    $
    38,595
    
    
    $
    0.49
    
    
    $
    21,182
    
    
    $
    0.35Litigation resolution
    
    
    9,633
    
    
    
    0.10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity compensation
    
    
    12,639
    
    
    
    0.13
    
    
    
    8,465
    
    
    
    0.11
    
    
    
    4,454
    
    
    
    0.07Total general and administrative expense
    
    $
    72,254
    
    
    $
    0.75
    
    
    $
    47,060
    
    
    $
    0.60
    
    
    $
    25,636
    
    
    $
    0.42




---



##### Table of Contents



Other Components of Operating Income
  BreitBurn-Related Income and Expenses
   Interest Expense
 Years Ended December 31,2008
    
    
    2007
    
    
    2006(in thousands)Interest costs
    
    $
    118,323
    
    
    $
    77,753
    
    
    $
    51,655Less: Interest capitalized
    
    
    (9,225
    )
    
    
    (1,091
    )
    
    
    (1,882
    )Interest expense
    
    $
    109,098
    
    
    $
    76,662
    
    
    $
    49,773




---



##### Table of Contents



Income Taxes
 Years Ended December 31,2008
    
    2007
    
    2006(in thousands)Income tax expense (benefit)
    
    $
    (211,455
    )
    
    $
    254,361
    
    
    $
    36,151Effective tax rate
    
    
    36.1
    %
    
    
    34.8
    %
    
    
    28.6
    %
   Quicksilver
Resources Inc. and its Restricted Subsidiaries
  
    
    Quicksilver Gas Services Holdings LLC;
    
    Quicksilver Gas Services GP LLC;
    
    Quicksilver Gas Services LP;
    
    Quicksilver Gas Services Operating LLC;
    
    Quicksilver Gas Services Operating GP LLC;
    
    Cowtown Pipeline Partners L.P.; and
    
    Cowtown Gas Processing Partners L.P.




---



##### Table of Contents



LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
 Cash Flow Activity
 Operating Cash Flows
 Years Ended December 31,2008
    
    
    2007
    
    
    2006(In thousands)Net cash provided by operating activities
    
    $
    456,566
    
    
    $
    319,104
    
    
    $
    242,186
   Investing Cash Flows
 Years Ended December 31,2008
    
    
    2007
    
    
    2006(In thousands)Purchases of property, plant and equipment
    
    $
    (1,286,715
    )
    
    $
    (1,020,684
    )
    
    $
    (619,061
    )Alliance Acquisition
    
    
    (993,212
    )
    
    
    
    
    
    
    Return of investment from equity affiliates
    
    
    
    
    
    
    9,635
    
    
    
    1,923Proceeds from sales of properties & equipment
    
    
    1,339
    
    
    
    741,297
    
    
    
    5,113Net cash used by investing activities
    
    $
    (2,278,588
    )
    
    $
    (269,752
    )
    
    $
    (612,025
    )




---



##### Table of Contents



Financing Cash Flows
 Years Ended December 31,2008
    
    
    2007
    
    
    2006(In thousands)Cash flow provided by financing activities:Issuance of debt
    
    $
    2,948,672
    
    
    $
    817,821
    
    
    $
    694,682Repayments of debt
    
    
    (1,096,163
    )
    
    
    (968,557
    )
    
    
    (350,754
    )Debt issuance costs
    
    
    (25,219
    )
    
    
    (5,130
    )
    
    
    (9,213
    )Noncontrolling interest contributions
    
    
    
    
    
    
    109,809
    
    
    
    7,291Noncontrolling interest distributions
    
    
    (8,644
    )
    
    
    (8,794
    )
    
    
    Proceeds from exercise of stock options
    
    
    1,244
    
    
    
    21,387
    
    
    
    19,689Excess tax benefit on exercise of stock options
    
    
    
    
    
    
    2,755
    
    
    
    Purchase of treasury stock
    
    
    (23,137
    )
    
    
    (1,567
    )
    
    
    (384
    )Net cash provided (used) by financing activities
    
    $
    1,796,753
    
    
    $
    (32,276
    )
    
    $
    361,311
   Liquidity and Borrowing Capacity




---



##### Table of Contents



Years Ended December 31,2008
    
    
    2007
    
    
    2006(In thousands)Long-term and short-term debt:Senior secured credit facility
    
    $
    827,868
    
    
    $
    310,710
    
    
    $
    421,123Senior secured second lien facility
    
    
    641,555
    
    
    
    
    
    
    
    Senior notes
    
    
    469,062
    
    
    
    
    
    
    
    Senior subordinated notes
    
    
    350,000
    
    
    
    350,000
    
    
    
    350,000Convertible subordinated debentures
    
    
    129,240
    
    
    
    122,808
    
    
    
    116,794KGS credit agreement
    
    
    174,900
    
    
    
    5,000
    
    
    
    Various loans
    
    
    
    
    
    
    34
    
    
    
    400Total debt
    
    
    2,592,625
    
    
    
    788,552
    
    
    
    888,317Total equity
    
    
    1,211,563
    
    
    
    1,192,468
    
    
    
    602,119Total capitalization
    
    $
    3,804,188
    
    
    $
    1,981,020
    
    
    $
    1,490,436
   Financial Position
  
    
    Our accounts receivable balance increased $53.1 million primarily as a result of accrual
for the refund of U.S. federal income taxes paid in 2008 for the 2007 tax year. The refund
is the result of incurring a loss for the 2008 tax year.
    
    Our current and deferred derivative assets increased $160.9 million and $115.7 million,
respectively, as our current and deferred derivative obligations decreased $54.2 million and
$16.3 million, respectively. Our current derivative obligations




---



##### Table of Contents



include the $8.1 million fair value loss for the remaining term of the Michigan Sales
Contract. Additionally, our current deferred income tax asset decreased $19.0 million and our
current deferred income tax liability increased $52.4 million as a result overall higher
valuations of our derivative valuations.
    
    Investments in equity affiliates decreased primarily due to the recognition of a $320
million impairment of our investment in BBEP during 2008.
    
    The $1.7 billion increase in our net property, plant and equipment resulted primarily
from $1.3 billion in capital expenditures for development, exploitation and exploration of
our existing oil and gas properties and expansion of our gas processing and gathering assets
in addition to the $1.3 billion of oil and gas properties and gathering assets purchased in
the Alliance Acquisition. Offsetting these increases were the $634 million impairment of our
U.S. oil and gas properties and ongoing DD&A.
    
    Long-term debt increased due to borrowings needed to fund the Alliance Acquisition and
our 2008 capital program.
 Contractual Obligations and Commercial Commitments
 Contractual Obligations.
 Payments Due by PeriodLess than
    
    
    1-3
    
    
    4-5
    
    
    More thanTotal
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 Years(In thousands)Long-term debt
    
    $
    2,632,373
    
    
    $
    6,579
    
    
    $
    1,022,505
    
    
    $
    628,289
    
    
    $
    975,000Scheduled interest obligations
    
    
    485,995
    
    
    
    71,428
    
    
    
    202,342
    
    
    
    134,130
    
    
    
    78,095Transportation contracts
    
    
    399,016
    
    
    
    8,768
    
    
    
    100,240
    
    
    
    93,121
    
    
    
    196,887Purchase obligations
    
    
    13,800
    
    
    
    13,800
    
    
    
    
    
    
    
    
    
    
    
    Natural gas supply contract
    
    
    8,063
    
    
    
    8,063
    
    
    
    
    
    
    
    
    
    
    
    Drilling rig contracts
    
    
    71,550
    
    
    
    45,620
    
    
    
    25,930
    
    
    
    
    
    
    
    Asset retirement obligations
    
    
    35,193
    
    
    
    440
    
    
    
    189
    
    
    
    126
    
    
    
    34,438Financial derivative obligations
    
    
    1,865
    
    
    
    1,865
    
    
    
    
    
    
    
    
    
    
    
    Unrecognized tax benefits
    
    
    9,255
    
    
    
    
    
    
    
    9,255
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    7,484
    
    
    
    3,612
    
    
    
    3,863
    
    
    
    9
    
    
    
    Total obligations
    
    $
    3,664,594
    
    
    $
    160,175
    
    
    $
    1,364,324
    
    
    $
    855,675
    
    
    $
    1,284,420
 
    
    Long-Term Debt.As of December 31, 2008, our outstanding indebtedness included $828
million outstanding under our Senior Secured Credit Facility, $655 million under our Senior
Secured Second Lien Facility, $475 million of Senior Notes, $350 million of Senior
Subordinated Notes, $150 million face value ($129.2 million carrying value) of convertible
debentures and $175 million outstanding under the KGS credit facility (all before discount).
Based upon our debt outstanding and interest rates in effect at December 31, 2008, we
anticipate interest payments, including our scheduled interest obligations of $71.4 million,
to be approximately $146.3 million in 2009. Although we do not expect year-over-year
increased borrowings under our Senior Secured Credit Facility during 2009, should we be
required to increase those borrowings and based on interest rates in effect at December 31,
2008, an additional $50 million in borrowings would result in additional annual interest
payments of approximately $1.7 million. If the borrowing base under our Senior Secured
Credit Facility were to be fully utilized by year-end 2009 at interest rates in effect at
December 31, 2008, we estimate that interest payments would increase by approximately $12.8
million. If interest rates on our December 31, 2008 variable debt balance of $1.7 billion
increase or decrease by one percentage point, our annual pretax income would decrease or
increase by $1.7 million.
    
    Scheduled Interest Obligations.As of December 31, 2008, we had scheduled interest
payments of $39.2 million annually on our $475 million of Senior Notes due July 1, 2015,
$24.9 million annually on our $350 million of Senior Subordinated Notes due March 31, 2016
and $2.8 million annually on our $150 million of contingently convertible debentures due
November 1, 2024.
    
    Transportation Contracts.Under contracts with various pipeline companies, we are
obligated to transport minimum daily gas volumes, as calculated on a monthly basis, or pay
for any volume deficiencies at a specified reservation fee rate. Our production committed to
the pipelines is expected to meet, or exceed, the daily volumes provided in the contracts.




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##### Table of Contents




    
    Purchase Obligations.At December 31, 2008, we were under contract to purchase goods and
services for completion of the Corvette Plant and for compressors. Total remaining cash
obligations for such items were $13.8 million, including $1.2 million of goods and services
recognized during 2008. The Corvette Plant was placed into service during the first quarter
of 2009.
    
    Natural Gas Supply Contract.During 2007, we determined we would no longer deliver a
portion of our natural gas production to supply the contractual volumes under the Michigan
Sales Contract. We recorded a loss of $63.5 million for the fair value of the remaining
contractual volumes during 2007. At December 31, 2008, we had a remaining liability of $8.1
million covering the remaining volumes under the contract that ends March 31, 2009.
    
    Drilling Rig Contracts.We lease drilling rigs from third parties for use in our
development and exploration programs. The outstanding drilling rig contracts require payment
of a specified day rate ranging from $20,000 to $23,200 for the entire lease term regardless
of our utilization of the drilling rigs.
    
    Asset Retirement Obligations.Our obligations result from the acquisition, construction
or development and the normal operation of our long-lived assets.
    
    Financial Derivative Obligations.We utilize financial derivatives to manage price risk
associated with our production revenue. The recorded assets and liabilities associated with
our derivative obligations were estimated based on published market prices of commodities
for the periods covered by the contracts. These amounts do not necessarily reflect the
payments that will be made to settle these obligations.
    
    Unrecognized Tax Benefits.We have recorded obligations that have resulted from tax
benefit claims in our tax returns that do not meet the recognition standard of more likely
than not to be sustained upon examination by tax authorities. The $9.3 million balance of
unrecognized tax benefits includes $8.9 million of amounts that, if recognized, would reduce
our effective tax rate.
    
    Operating Lease Obligations.We lease office buildings and other property under operating
leases. Our operating lease obligations include $0.6 million of future lease payments to an
affiliated entity, which is owned by members of the Darden family.
 Commercial Commitments.
 Amounts of Commitments by Expiration PeriodLess than
    
    
    1-3
    
    
    4-5
    
    
    More thanTotal
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 Years(In thousands)Purchase commitments
    
    $
    3,400
    
    
    $
    3,400
    
    
    $
    
    
    
    $
    
    
    
    $
    Surety bonds
    
    
    41,284
    
    
    
    41,284
    
    
    
    
    
    
    
    
    
    
    
    Standby letters of credit
    
    
    3,047
    
    
    
    3,047
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    47,731
    
    
    $
    47,731
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
    
    Purchase Commitments.Purchase commitments have been made to ensure delivery of material
and parts required for our drilling and completion programs and KGS infrastructure
expansions.
    
    Surety Bonds.Our surety bonds have been issued to fulfill contractual, legal or
regulatory requirements. All of our surety bonds have an annual renewal option.
    
    Standby Letters of Credit.Our letters of credit have been issued to fulfill contractual
or regulatory requirements. All of these letters of credit were issued under our Senior
Secured Credit Facility and have an annual renewal option.




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##### Table of Contents



CRITICAL ACCOUNTING ESTIMATES
   Full Cost Ceiling Calculations
 Policy Description
   Judgments and Assumptions




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##### Table of Contents



Oil and Gas Reserves
 Policy Description
  Judgments and Assumptions
  Derivative Instruments
 Policy Description




---



##### Table of Contents



Judgments and Assumptions
  Stock-based Compensation
 Policy Description
 Share-Based Payment
 Judgments and Assumptions
   Income Taxes
 Policy Description
  Judgments and Assumptions




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##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS
  RECENTLY ISSUED ACCOUNTING STANDARDS
 
    
    Pronouncements Implemented During 2008
 Adoption of SFAS No. 157 Fair Value Measurements,
    Adoption of SFAS No. 159 The Fair Value
Option for Financial Assets and Financial Liabilities  Including an amendment of FASB Statement
No. 115
 Adoption of FSP No. 39-1 Amendment of FASB Interpretation No. 39 Accounting for Derivative Instruments and Hedging Activities
 Adoption of SFAS No. 162 The Hierarchy of
Generally Accepted Accounting Principles
  
    
    Pronouncements Not Yet Implemented
 Business Combinations Business Combinations
 Disclosures about Derivative Instruments and Hedging Activities,




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 QUICKSILVER RESOURCES INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Report of Independent Registered Public Accounting FirmConsolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Years Ended
December 31, 2008, 2007 and 2006Consolidated Balance Sheets as of December 31, 2008 and 2007Consolidated Statements of Stockholders Equity for the Years ended December 31, 2008, 2007 and 2006Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006Notes to
Consolidated Financial Statements for the Years Ended
December 31, 2008, 2007 and 2006 (Restated)




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##### Table of Contents



Noncontrolling Interests in Consolidated Financial Statements  an
Amendment to ARB 51 Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) Determining Whether Instruments Granted in
Share-Based Payment Transactions are Participating Securities
 Internal ControlIntegrated Framework
 /s/ DELOITTE & TOUCHE LLP




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##### Table of Contents



QUICKSILVER RESOURCES INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
In thousands, except for per share data
 2008
    
    
    2007
    
    
    2006RevenuesNatural gas, NGL and crude oil
    
    $
    780,788
    
    
    $
    545,089
    
    
    $
    386,540Other
    
    
    19,853
    
    
    
    16,169
    
    
    
    3,822Total revenues
    
    
    800,641
    
    
    
    561,258
    
    
    
    390,362Operating expensesOil and gas production expense
    
    
    135,661
    
    
    
    136,831
    
    
    
    95,176Production and ad valorem taxes
    
    
    16,794
    
    
    
    16,142
    
    
    
    15,619Other operating costs
    
    
    3,918
    
    
    
    2,792
    
    
    
    1,461Depletion, depreciation and accretion
    
    
    188,196
    
    
    
    120,697
    
    
    
    78,800General and administrative
    
    
    72,254
    
    
    
    47,060
    
    
    
    25,636Total expenses
    
    
    416,823
    
    
    
    323,522
    
    
    
    216,692Impairment related to oil and gas properties
    
    
    (633,515
    )
    
    
    
    
    
    
    Income from equity affiliates
    
    
    
    
    
    
    661
    
    
    
    526Gain on sale of oil and gas properties
    
    
    
    
    
    
    628,709
    
    
    
    Loss on natural gas sales contract
    
    
    
    
    
    
    (63,525
    )
    
    
    Operating income (loss)
    
    
    (249,697
    )
    
    
    803,581
    
    
    
    174,196Income from earnings of BBEP
    
    
    93,298
    
    
    
    
    
    
    
    Impairment of investment in BBEP
    
    
    (320,387
    )
    
    
    
    
    
    
    Other income  net
    
    
    807
    
    
    
    3,887
    
    
    
    1,825Interest expense
    
    
    (109,098
    )
    
    
    (76,662
    )
    
    
    (49,773
    )Income (loss) before income taxes
    
    
    (585,077
    )
    
    
    730,806
    
    
    
    126,248Income tax (expense) benefit
    
    
    211,455
    
    
    
    (254,361
    )
    
    
    (36,151
    )Net income (loss)
    
    
    (373,622
    )
    
    
    476,445
    
    
    
    90,097Net income attributable to noncontrolling interests
    
    
    (4,654
    )
    
    
    (1,055
    )
    
    
    (91
    )Net income (loss) attributable to Quicksilver
    
    $
    (378,276
    )
    
    $
    475,390
    
    
    $
    90,006Other comprehensive income (loss)Reclassification adjustments related to settlements of
derivative contracts  net of income tax
    
    
    11,969
    
    
    
    (34,648
    )
    
    
    (9,707
    )Net change in derivative fair value  net of income tax
    
    
    182,472
    
    
    
    (14,794
    )
    
    
    83,410Foreign currency translation adjustment
    
    
    (49,403
    )
    
    
    29,409
    
    
    
    (1,222
    )Comprehensive income (loss)
    
    $
    (233,238
    )
    
    $
    455,357
    
    
    $
    162,487Earnings (loss) per common share  basic
    
    $
    (2.33
    )
    
    $
    3.04
    
    
    $
    0.58Earnings (loss) per common share  diluted
    
    $
    (2.33
    )
    
    $
    2.87
    
    
    $
    0.58Basic weighted average shares outstanding
    
    
    162,004
    
    
    
    156,517
    
    
    
    153,988Diluted weighted average shares outstanding
    
    
    162,004
    
    
    
    168,029
    
    
    
    166,266




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##### Table of Contents



QUICKSILVER RESOURCES INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2008 AND 2007
In thousands, except for share data
 2008
    
    
    2007ASSETSCurrent assetsCash and cash equivalents
    
    $
    2,848
    
    
    $
    28,226Accounts receivable  net of allowance for doubtful accounts
    
    
    143,315
    
    
    
    90,244Derivative assets at fair value
    
    
    171,740
    
    
    
    10,797Current deferred income tax asset
    
    
    
    
    
    
    18,946Other current assets
    
    
    75,433
    
    
    
    42,188Total current assets
    
    
    393,336
    
    
    
    190,401Investments in equity affiliates
    
    
    150,503
    
    
    
    420,171Property, plant and equipment  netOil and gas properties, full cost method (including unevaluated costs of
$543,533 and $215,228, respectively)
    
    
    3,142,608
    
    
    
    1,764,400Other property and equipment
    
    
    655,107
    
    
    
    377,946Property, plant and equipment  net
    
    
    3,797,715
    
    
    
    2,142,346Derivative assets at fair value
    
    
    116,006
    
    
    
    354Other assets
    
    
    40,648
    
    
    
    20,479$
    4,498,208
    
    
    $
    2,773,751LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    6,579
    
    
    $
    34Accounts payable
    
    
    282,636
    
    
    
    192,855Income taxes payable
    
    
    40
    
    
    
    46,601Accrued liabilities
    
    
    66,923
    
    
    
    54,981Derivative liabilities at fair value
    
    
    9,928
    
    
    
    64,104Current deferred tax liability
    
    
    52,393
    
    
    
    Total current liabilities
    
    
    418,499
    
    
    
    358,575Long-term debt
    
    
    2,586,046
    
    
    
    788,518Asset retirement obligations
    
    
    34,753
    
    
    
    23,864Derivative liabilities at fair value
    
    
    
    
    
    
    16,327Other liabilities
    
    
    12,962
    
    
    
    10,609Deferred income taxes
    
    
    234,385
    
    
    
    383,390Commitments and contingencies (Note 17)Stockholders equityPreferred stock, par value $0.01, 10,000,000 shares authorized, none outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value, 400,000,000 and 200,000,000 shares authorized,
respectively; 171,742,699 and 160,633,270 shares issued, respectively
    
    
    1,717
    
    
    
    1,606Paid in capital in excess of par value
    
    
    656,958
    
    
    
    378,622Treasury stock of 4,572,795 and 2,616,726 shares, respectively
    
    
    (35,441
    )
    
    
    (12,304
    )Accumulated other comprehensive income
    
    
    185,104
    
    
    
    40,066Retained earnings
    
    
    376,488
    
    
    
    754,764Quicksilver stockholders equity
    
    
    1,184,826
    
    
    
    1,162,754Noncontrolling interests
    
    
    26,737
    
    
    
    29,714Total equity
    
    
    1,211,563
    
    
    
    1,192,468$
    4,498,208
    
    
    $
    2,773,751




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##### Table of Contents



QUICKSILVER RESOURCES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
In thousands, except for share data
 2008
    
    
    2007
    
    
    2006Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued
    
    $
    
    
    
    $
    
    
    
    $
    Common stock, $0.01 par value, 400,000,000 and 200,000,000 shares authorizedBalance at beginning of year
    
    
    1,606
    
    
    
    1,578
    
    
    
    1,547Issuance of common stock  Alliance Acquisition
    
    
    104
    
    
    
    
    
    
    
    Issuance of common stock  restricted stock
    
    
    5
    
    
    
    6
    
    
    
    9Issuance of common stock  stock options
    
    
    2
    
    
    
    22
    
    
    
    22Balance at end of year: 171,742,699, 160,633,270 and 157,783,515 shares
issued at December 31, 2008, 2007 and 2006, respectively
    
    
    1,717
    
    
    
    1,606
    
    
    
    1,578Paid in capital in excess of par valueBalance at beginning of year
    
    
    378,622
    
    
    
    264,078
    
    
    
    237,874Stock issuance  Alliance Acquisition
    
    
    261,988
    
    
    
    
    
    
    
    Stock options exercised
    
    
    1,242
    
    
    
    21,365
    
    
    
    19,667Stock-based compensation expense recognized
    
    
    15,106
    
    
    
    11,108
    
    
    
    6,537Contributions received for subsidiary common units
    
    
    
    
    
    
    79,316
    
    
    
    Tax benefit related to stock options exercised
    
    
    
    
    
    
    2,755
    
    
    
    Balance at end of year
    
    
    656,958
    
    
    
    378,622
    
    
    
    264,078Treasury stock, at costBalance at beginning of year
    
    
    (12,304
    )
    
    
    (10,737
    )
    
    
    (10,353
    )Acquisition of treasury stock
    
    
    (23,137
    )
    
    
    (1,567
    )
    
    
    (384
    )Balance at end of year: 4,572,795, 2,616,726 and 2,579,671 shares at
December 31, 2008, 2007, and 2006, respectively
    
    
    (35,441
    )
    
    
    (12,304
    )
    
    
    (10,737
    )Accumulated other comprehensive incomeDeferred gains (losses) on hedge derivativesBalance at beginning of year
    
    
    (4,248
    )
    
    
    45,194
    
    
    
    (28,509
    )Reclassification adjustments related to settlements of derivative contracts
    
    
    11,969
    
    
    
    (34,648
    )
    
    
    (9,707
    )Net change in derivative fair value
    
    
    182,472
    
    
    
    (14,794
    )
    
    
    83,410Balance at end of year
    
    
    190,193
    
    
    
    (4,248
    )
    
    
    45,194Deferred foreign exchange adjustmentBalance at beginning of year
    
    
    44,314
    
    
    
    14,905
    
    
    
    16,127Foreign currency translation adjustment
    
    
    (49,403
    )
    
    
    29,409
    
    
    
    (1,222
    )Balance at end of year
    
    
    (5,089
    )
    
    
    44,314
    
    
    
    14,905Total accumulated other comprehensive income
    
    
    185,104
    
    
    
    40,066
    
    
    
    60,099Retained earningsBalance at beginning of year
    
    
    754,764
    
    
    
    279,719
    
    
    
    189,713Adoption of FIN 48
    
    
    
    
    
    
    (345
    )
    
    
    Net income (loss)
    
    
    (378,276
    )
    
    
    475,390
    
    
    
    90,006Balance at end of year
    
    
    376,488
    
    
    
    754,764
    
    
    
    279,719Quicksilvers stockholders equity
    
    $
    1,184,826
    
    
    $
    1,162,754
    
    
    $
    594,737Noncontrolling interestBalance at beginning of year
    
    
    29,714
    
    
    
    7,382
    
    
    
    Net income
    
    
    4,654
    
    
    
    1,055
    
    
    
    91Contributions by noncontrolling interests
    
    
    
    
    
    
    29,942
    
    
    
    7,291Stock-based compensation expense
    
    
    1,013
    
    
    
    129
    
    
    
    Distributions paid on KGS common units
    
    
    (8,644
    )
    
    
    (8,794
    )
    
    
    Balance at end of year
    
    
    26,737
    
    
    
    29,714
    
    
    
    7,382Total Equity
    
    $
    1,211,563
    
    
    $
    1,192,468
    
    
    $
    602,119




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##### Table of Contents



QUICKSILVER RESOURCES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS END DECEMBER 31, 2008, 2007 AND 2006
In thousands
 2008
    
    
    2007
    
    
    2006Operating activities:Net income (loss)
    
    $
    (373,622
    )
    
    $
    476,445
    
    
    $
    90,097Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depletion, depreciation and accretion
    
    
    188,196
    
    
    
    120,697
    
    
    
    78,800Impairment related to oil and gas properties
    
    
    633,515
    
    
    
    
    
    
    
    Deferred income tax expense (benefit)
    
    
    (166,440
    )
    
    
    207,796
    
    
    
    35,878(Gain) loss from sale of properties
    
    
    605
    
    
    
    (627,348
    )
    
    
    188Non-cash (gain) loss from hedging and derivative activities
    
    
    (1,139
    )
    
    
    62,515
    
    
    
    Stock-based compensation
    
    
    16,128
    
    
    
    11,243
    
    
    
    6,546Amortization of deferred charges
    
    
    1,014
    
    
    
    2,189
    
    
    
    226Non-cash interest expense
    
    
    12,201
    
    
    
    8,185
    
    
    
    7,782Income from equity affiliates in excess of cash distributions
    
    
    (50,762
    )
    
    
    
    
    
    
    Impairment of investment in BBEP
    
    
    320,387
    
    
    
    
    
    
    
    Provision for doubtful accounts
    
    
    
    
    
    
    (349
    )
    
    
    701Divestiture expenses
    
    
    
    
    
    
    2,015
    
    
    
    Changes in assets and liabilitiesAccounts receivable
    
    
    (53,071
    )
    
    
    (14,423
    )
    
    
    (1,100
    )Prepaid expenses and other assets
    
    
    (5,448
    )
    
    
    (4,805
    )
    
    
    (5,021
    )Accounts payable
    
    
    7,602
    
    
    
    18,939
    
    
    
    15,193Income taxes payable
    
    
    (46,561
    )
    
    
    46,012
    
    
    
    308Accrued and other liabilities
    
    
    (26,039
    )
    
    
    9,993
    
    
    
    12,588Net cash provided by operating activities
    
    
    456,566
    
    
    
    319,104
    
    
    
    242,186Investing activities:Purchases of property, plant and equipment
    
    
    (1,286,715
    )
    
    
    (1,020,684
    )
    
    
    (619,061
    )Alliance Acquisition
    
    
    (993,212
    )
    
    
    
    
    
    
    Return of investment from equity affiliates
    
    
    
    
    
    
    9,635
    
    
    
    1,923Proceeds from sales of properties and equipment
    
    
    1,339
    
    
    
    741,297
    
    
    
    5,113Net cash used in investing activities
    
    
    (2,278,588
    )
    
    
    (269,752
    )
    
    
    (612,025
    )Financing activities:Issuance of debt
    
    
    2,948,672
    
    
    
    817,821
    
    
    
    694,682Repayments of debt
    
    
    (1,096,163
    )
    
    
    (968,557
    )
    
    
    (350,754
    )Debt issuance costs
    
    
    (25,219
    )
    
    
    (5,130
    )
    
    
    (9,213
    )Noncontrolling interest contributions
    
    
    
    
    
    
    109,809
    
    
    
    7,291Noncontrolling interest distributions
    
    
    (8,644
    )
    
    
    (8,794
    )
    
    
    Proceeds from exercise of stock options
    
    
    1,244
    
    
    
    21,387
    
    
    
    19,689Excess tax benefits on exercise of stock options
    
    
    
    
    
    
    2,755
    
    
    
    Purchase of treasury stock
    
    
    (23,137
    )
    
    
    (1,567
    )
    
    
    (384
    )Net cash provided by (used in) financing activities
    
    
    1,796,753
    
    
    
    (32,276
    )
    
    
    361,311Effect of exchange rate changes in cash
    
    
    (109
    )
    
    
    5,869
    
    
    
    (509
    )Net increase (decrease) in cash
    
    
    (25,378
    )
    
    
    22,945
    
    
    
    (9,037
    )Cash and cash equivalents at beginning of period
    
    
    28,226
    
    
    
    5,281
    
    
    
    14,318Cash and cash equivalents at end of period
    
    $
    2,848
    
    
    $
    28,226
    
    
    $
    5,281




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##### Table of Contents



QUICKSILVER RESOURCES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
 1. NATURE OF OPERATIONS
   2. ADJUSTMENTS AND SIGNIFICANT ACCOUNTING POLICIES
 Adjustment for Retrospective Application of
FSP APB 14-1, SFAS No. 160 and FSP EITF 03-6-1
  FSP APB 14-1, Accounting for Convertible Debt Instruments That May be Settled in Cash upon
Conversion
  SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements




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##### Table of Contents



FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payments Transactions Are
Participating Securities
    Year Ended December 31,2008(1)
    
    2007(2)
    
    2006(3)As Revised
    
    
    
    As Revised
    
    
    
    As RevisedOriginally
    
    for New
    
    Originally
    
    for New
    
    Originally
    
    for New(Amounts in $000s, except per share data)
    
    Reported
    

GAAP
    
    Reported
    
GAAP
    
    Reported
    
GAAPInterest expense
    
    $
    102,510
    
    
    $
    109,098
    
    
    $
    70,527
    
    
    $
    76,662
    
    
    $
    44,061
    
    
    $
    49,773Income (loss) before income taxes
    
    
    (578,489
    )
    
    
    (585,077
    )
    
    
    736,941
    
    
    
    730,806
    
    
    
    131,960
    
    
    
    126,248Income tax (expense) benefit
    
    
    209,149
    
    
    
    211,455
    
    
    
    (256,508
    )
    
    
    (254,361
    )
    
    
    (38,150
    )
    
    
    (36,151
    )Minority interest expense, net of tax
    
    
    4,654
    
    
    
    
    
    
    
    1,055
    
    
    
    
    
    
    
    91
    
    
    
    Net income (loss)
    
    
    (373,994
    )
    
    
    (373,622
    )
    
    
    479,378
    
    
    
    476,445
    
    
    
    93,719
    
    
    
    90,097Net income
attributable to noncontrolling interests
    
    
    
    
    
    
    4,654
    
    
    
    
    
    
    
    1,055
    
    
    
    
    
    
    
    91Net income (loss) attributable to Quicksilver
    
    
    (373,994
    )
    
    
    (378,276
    )
    
    
    479,378
    
    
    
    475,390
    
    
    
    93,719
    
    
    
    90,006Earnings (loss) per common share  basic
    
    $
    (2.31
    )
    
    $
    (2.33
    )
    
    $
    3.08
    
    
    $
    3.04
    
    
    $
    0.61
    
    
    $
    0.58Earnings (loss) per common share  diluted
    
    $
    (2.31
    )
    
    $
    (2.33
    )
    
    $
    2.86
    
    
    $
    2.87
    
    
    $
    0.58
    
    
    $
    0.58Basic weighted average shares outstanding
    
    
    161,622
    
    
    
    162,004
    
    
    
    155,475
    
    
    
    156,517
    
    
    
    153,413
    
    
    
    153,988Diluted weighted average shares outstanding
    
    
    161,622
    
    
    
    162,004
    
    
    
    168,029
    
    
    
    168,029
    
    
    
    166,266
    
    
    
    166,266
 
 (1)
    
    Adjustments to 2008 are an increase to interest expense of
$6,588, an increase to income tax benefit of $ 2,306 and an increase
in basic and diluted weighted average shares outstanding of 382.(2)
    
    Adjustments to 2007 are an increase to interest expense of
$6,135, a decrease to income tax expense of $2,147 and an increase
in basic weighted average shares outstanding of 1,042.(3)
    
    Adjustments to 2006 are an increase to interest expense of
$5,712, a decrease to income tax expense of $1,999 and an increase
in basic weighted average shares outstanding of 575.




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##### Table of Contents



December 31, 2008(1)
    
    
    December 31, 2007(2)As Revised
    
    
    
    
    
    As RevisedOriginally
    
    
    for New
    
    
    Originally
    
    
    for New(Amounts in $000s, except per share data)
    
    Reported
    
    

GAAP
    
    
    Reported
    
    

GAAPOther assets
    
    $
    43,011
    
    
    $
    40,648
    
    
    $
    22,574
    
    
    $
    20,479Long-term debt
    
    
    2,605,025
    
    
    
    2,586,046
    
    
    
    813,817
    
    
    
    788,518Deferred income tax liability
    
    
    225,440
    
    
    
    234,385
    
    
    
    374,645
    
    
    
    383,390Deferred gain on sale of partnership interests
    
    
    79,316
    
    
    
    
    
    
    
    79,316
    
    
    
    Minority interest in consolidated subsidiaries
    
    
    29,867
    
    
    
    
    
    
    
    30,338
    
    
    
    Paid in capital in excess of par value
    
    
    550,851
    
    
    
    656,958
    
    
    
    272,515
    
    
    
    378,622Retained earnings
    
    
    392,478
    
    
    
    376,488
    
    
    
    766,472
    
    
    
    754,764Noncontrolling interests
    
    
    
    
    
    
    26,737
    
    
    
    
    
    
    
    29,714Total equity
    
    
    1,094,709
    
    
    
    1,211,563
    
    
    
    1,068,355
    
    
    
    1,192,468
 
 (1)
    
    Adjustments in 2008 include a decrease in other assets of $2,363, a decrease in
long-term debt of $18,980, an increase in paid in capital in excess of par of $26,791, a
decrease in retained earnings of $15,990 and an increase in deferred income tax liability of
$5,816, all as a result of adopting FSP APB 14-1. Adjustments to 2008
also include an increase in deferred income tax liability of $3,130, a
decrease in deferred gain on sale of partnership interests of $79,316, a decrease in
minority interest in consolidated subsidiaries  of $29,867, an increase in paid in capital in
excess of par of $79,316 and an increase in noncontrolling interests of $26,737, all as a
result of adopting SFAS No. 160.(2)
    
    Adjustments in 2007 include a decrease in other assets of $2,095, a decrease in
long-term debt of $25,299, an increase in paid in capital in excess of par of $26,791, a
decrease in retained earnings of $11,708 and an increase in deferred income tax liability of
$8,121, all as a result of adopting FSP APB 14-1. Adjustments to 2008 also include an increase in
deferred income tax liability of $624,  a
decrease to deferred gain on the sale of partnership interests of $79,316, a decrease in
minority interest in consolidated subsidiaries of $30,338, an increase in paid in capital in
excess of par of $79,316 and an increase in noncontrolling interests of $29,714, all as a
result of adopting SFAS No. 160.  Significant Accounting Policies
 Basis of Presentation




---



##### Table of Contents



Stock Split
  Use of Estimates
  Cash and Cash Equivalents
  Accounts Receivable
  Hedging and Derivatives




---



##### Table of Contents



Parts and Supplies
  Investments in Equity Affiliates
   Property, Plant, and Equipment
    Revenue Recognition




---



##### Table of Contents



Environmental Compliance and Remediation
  Income Taxes
  Stock-based Compensation
  Disclosure of Fair Value of Financial Instruments
 Fair Value Measurements
 Noncontrolling Interest in Consolidated Subsidiaries
  Foreign Currency Translation
  Earnings per Share




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##### Table of Contents



Years Ended December 31,2008
    
    
    2007
    
    
    2006(In thousands, except per share data)Net income (loss) attributable to Quicksilver
    
    $
    (378,276
    )
    
    $
    475,390
    
    
    $
    90,006Impact of
assumed conversions  interest on convertible debentures, net of income taxes(1)
    
    
    
    
    
    
    6,056
    
    
    
    5,781Income (loss) available to stockholders assuming conversion of convertible debentures
    
    $
    (378,276
    )
    
    $
    481,446
    
    
    $
    95,787Weighted average common shares  basic
    
    
    162,004
    
    
    
    156,517
    
    
    
    153,988Effect of dilutive securities:Employee stock options
    
    
    
    
    
    
    1,326
    
    
    
    2,220Employee stock awards
    
    
    
    
    
    
    370
    
    
    
    242Contingently convertible debentures
    
    
    
    
    
    
    9,816
    
    
    
    9,816Weighted average common shares  diluted(1)
    
    
    162,004
    
    
    
    168,029
    
    
    
    166,266Earnings (loss) per common share  basic
    
    $
    (2.33
    )
    
    $
    3.04
    
    
    $
    0.58Earnings (loss) per common share  diluted
    
    $
    (2.33
    )
    
    $
    2.87
    
    
    $
    0.58
 
 (1)
    
    For 2008, the effects of convertible debt, stock options
and unvested restricted stock were antidilutive and,
therefore, excluded from the diluted share calculations Recently Issued Accounting Standards
 
    
    Pronouncements Implemented During 2008
 Adoption of SFAS No. 157 Fair Value Measurements,
    Adoption of SFAS No. 159 The Fair Value
Option for Financial Assets and Financial Liabilities  Including an amendment of FASB Statement
No. 115
 Adoption of FSP No. 39-1 Amendment of FASB Interpretation No. 39 Accounting for Derivative Instruments and Hedging Activities




---



##### Table of Contents



Adoption of SFAS No. 162 The Hierarchy of
Generally Accepted Accounting Principles
  
    
    Pronouncements Not Yet Implemented
 Business Combinations Business Combinations
 Disclosures about Derivative Instruments and Hedging Activities,
  3. ALLIANCE ACQUISITION
  (In thousands)Purchase Price:Cash paid
    
    $
    1,000,000Cash received from post-closing settlement
    
    
    (8,109
    )Cash paid for acquisition-related expenses
    
    
    1,321Total cash
    
    
    993,212Issuance of 10,400,468 common shares
    
    
    262,092$
    1,255,304




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##### Table of Contents



(In thousands)Allocation of Purchase Price:Oil and gas properties  proved
    
    $
    787,918Oil and gas properties  unproved
    
    
    441,303Midstream assets
    
    
    27,350Liabilities assumed
    
    
    (496
    )Asset retirement obligations
    
    
    (771
    )$
    1,255,304
  Pro Forma Information
  For the Years EndedDecember 31,2008
    
    
    2007(In thousands, except per share data)Revenues
    
    $
    875,607
    
    
    $
    629,868Net income (loss)
    
    $
    (384,645
    )
    
    $
    428,314Earnings (loss) per common share  basic
    
    $
    (2.29
    )
    
    $
    2.57Earnings (loss) per common share  diluted
    
    $
    (2.29
    )
    
    $
    2.40
 4. QUICKSILVER GAS SERVICES LP
    KGS OwnershipQuicksilver
    
    Third Parties
    
    TotalGeneral partner interests
    
    
    1.9
    %
    
    
    
    
    
    
    1.9
    %Limited partner interests:Common interests
    
    
    23.5
    %
    
    
    27.1
    %
    
    
    50.6
    %Subordinated interests
    
    
    47.5
    %
    
    
    
    
    
    
    47.5
    %Total interests
    
    
    72.9
    %
    
    
    27.1
    %
    
    
    100.0
    %




---



##### Table of Contents



5. DIVESTITURE OF NORTHEAST OPERATIONS
       6. DERIVATIVES AND FAIR VALUE MEASUREMENTS




---



##### Table of Contents



Fair Value Measurements as of December 31, 2008Balance SheetLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Other(1)
    
    
    Total(In thousands)Derivative assets
    
    $
    
    
    
    $
    295,085
    
    
    $
    
    
    
    $
    (7,339
    )
    
    $
    287,746Derivative liabilities
    
    $
    
    
    
    $
    17,267
    
    
    $
    
    
    
    $
    (7,339
    )
    
    $
    9,928
 
 (1)
    
    Represents amounts netted under master netting arrangements    As of December 31,2008
    
    
    2007(In thousands)Derivative assets:Natural gas collars
    
    $
    260,901
    
    
    $
    10,491Natural gas fixed-price swaps
    
    
    34,184
    
    
    
    4,666$
    295,085
    
    
    $
    15,157Derivative liabilities:Natural gas basis swaps
    
    $
    4,365
    
    
    $
    1,224Natural gas fixed-price swaps(1)
    
    
    4,839
    
    
    
    Natural gas financial collars
    
    
    
    
    
    
    1,625Crude oil financial collars
    
    
    
    
    
    
    6,517NGL fixedprice swaps
    
    
    
    
    
    
    11,294Fixed-price natural gas sales contracts(1)
    
    
    8,063
    
    
    
    63,777$
    17,267
    
    
    $
    84,437
 
 (1)
    
    Includes $8.1 million and $63.5 million for the Michigan Sales Contract at
December 31, 2008 and 2007, respectively, and fixed price natural gas swaps with a liability value
of $4.8 million at December 31, 2008 that eliminated earnings exposure for the required natural gas
purchases




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##### Table of Contents



7. FINANCIAL INSTRUMENTS
 Commodity Price Risk
   Weighted Avg PriceProduct
    
    Type
    
    
    Contract Period
    
    
    Volume
    
    
    Per Mcf
    
    
    Fair Value(In thousands)Gas
    
    Swap
    
    Jan 2009-Dec 2009
    
    10,000 Mcfd
    
    $
    8.45
    
    
    $
    8,537Gas
    
    Swap
    
    Jan 2009-Dec 2009
    
    10,000 Mcfd
    
    
    8.45
    
    
    
    8,537Gas
    
    Swap
    
    Jan 2009-Dec 2009
    
    20,000 Mcfd
    
    
    8.46
    
    
    
    17,110Gas
    
    Collar
    
    Jan 2009-Mar 2009
    
    20,000 Mcfd
    
    
    7.50-  9.35
    
    
    
    3,259Gas
    
    Collar
    
    Jan 2009-Mar 2009
    
    20,000 Mcfd
    
    
    8.00-10.20
    
    
    
    4,132Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    20,000 Mcfd
    
    
    7.50-  9.34
    
    
    
    11,373Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    20,000 Mcfd
    
    
    7.75-10.20
    
    
    
    13,242Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    10,000 Mcfd
    
    
    7.75-10.26
    
    
    
    6,651Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    20,000 Mcfd
    
    
    8.25-  9.60
    
    
    
    16,083Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    10,000 Mcfd
    
    
    8.25-10.45
    
    
    
    8,290Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    10,000 Mcfd
    
    
    8.25-10.45
    
    
    
    8,290Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    10,000 Mcfd
    
    
    8.25-10.45
    
    
    
    8,290Gas
    
    Collar
    
    Jan 2009-Dec 2009
    
    10,000 Mcfd
    
    
    11.50-14.48
    
    
    
    19,520Gas
    
    Collar
    
    Apr 2009-Dec 2009
    
    10,000 Mcfd
    
    
    8.50-13.15
    
    
    
    6,796Gas
    
    Collar
    
    Apr 2009-Dec 2009
    
    30,000 Mcfd
    
    
    11.00-13.50
    
    
    
    38,970Gas
    
    Collar
    
    Jan 2010-Dec 2010
    
    20,000 Mcfd
    
    
    8.00-11.00
    
    
    
    10,423Gas
    
    Collar
    
    Jan 2010-Dec 2010
    
    20,000 Mcfd
    
    
    8.00-11.00
    
    
    
    10,423Gas
    
    Collar
    
    Jan 2010-Dec 2010
    
    20,000 Mcfd
    
    
    8.00-12.20
    
    
    
    11,077Gas
    
    Collar
    
    Jan 2010-Dec 2010
    
    20,000 Mcfd
    
    
    8.00-12.20
    
    
    
    11,077Gas
    
    Collar
    
    Jan 2010-Dec 2010
    
    10,000 Mcfd
    
    
    8.50-12.05
    
    
    
    6,778Gas
    
    Collar
    
    Jan 2010-Dec 2010
    
    20,000 Mcfd
    
    
    8.50-12.05
    
    
    
    13,555Gas
    
    Collar
    
    Jan 2010-Dec 2010
    
    10,000 Mcfd
    
    
    8.50-12.08
    
    
    
    6,795Gas
    
    Collar
    
    Jan 2010-Dec 2010
    
    40,000 Mcfd
    
    
    10.00-13.50
    
    
    
    45,877Gas
    
    Basis
    
    Jan 2009-Dec 2009
    
    20,000 Mcfd
    
    
    
    
    
    
    (1,865
    )Gas
    
    Basis
    
    Jan 2009-Dec 2009
    
    10,000 Mcfd
    
    
    
    
    
    
    (932
    )Gas
    
    Basis
    
    Jan 2009-Dec 2009
    
    15,000 Mcfd
    
    
    
    
    
    
    (798
    )Gas
    
    Basis
    
    Jan 2009-Dec 2009
    
    15,000 Mcfd
    
    
    
    
    
    
    (770
    )Total
    
    $
    290,720




---



##### Table of Contents



Weighted Avg PriceProduct
    
    Type
    
    
    Contract Period
    
    
    Volume
    
    
    Per Mcf
    
    
    Fair Value(In thousands)Gas
    
    Sale
    
    Jan 2009-Mar 2009
    
    25,000 Mcfd
    
    $
    2.49
    
    
    $
    (8,063
    )Gas
    
    Swap
    
    Jan 2009-Mar 2009
    
    10,000 Mcfd
    
    
    8.20
    
    
    
    (1,935
    )Gas
    
    Swap
    
    Jan 2009-Mar 2009
    
    15,000 Mcfd
    
    
    8.20
    
    
    
    (2,904
    )Total
    
    
    $
    (12,902
    )
  Interest Rate Risk
  Credit Risk
  Performance Risk
  Foreign Currency Risk




---



##### Table of Contents



8. ACCOUNTS RECEIVABLE
  As of December 31,2008
    
    
    2007(In thousands)Accrued production receivables
    
    $
    47,552
    
    
    $
    51,429Income tax receivable
    
    
    47,928
    
    
    
    Joint interest receivables
    
    
    29,420
    
    
    
    26,026Accrued taxes receivable
    
    
    12,877
    
    
    
    9,804Other receivables
    
    
    5,624
    
    
    
    3,089Allowance for doubtful accounts
    
    
    (86
    )
    
    
    (104
    )$
    143,315
    
    
    $
    90,244
 9. OTHER CURRENT ASSETS
  As of December 31,2008
    
    
    2007(In thousands)Spare parts and supplies
    
    $
    64,185
    
    
    $
    31,980Prepaid production taxes
    
    
    7,239
    
    
    
    Prepaid drilling rentals
    
    
    384
    
    
    
    4,457Deposits
    
    
    109
    
    
    
    2,134Other prepaid expenses
    
    
    3,516
    
    
    
    3,617$
    75,433
    
    
    $
    42,188
 10. INVESTMENT IN BREITBURN ENERGY PARTNERS L.P.




---



##### Table of Contents



As ofSeptember 30, 2008(In thousands)Current assets
    
    $
    90,284Property, plant and equipment
    
    
    1,914,432Other assets
    
    
    66,583Current liabilities
    
    
    129,084Long-term debt
    
    
    708,000Other non-current liabilities
    
    
    121,005Partners equity
    
    
    1,127,679
 For the Eleven MonthsEndedSeptember 30, 2008(In thousands)Revenues
    
    $
    420,321Operating expenses
    
    
    251,618Operating income
    
    
    168,703Interest and other
    
    
    27,795Income tax expense
    
    
    593Minority interests
    
    
    206Net income
    
    $
    140,109Net income
available to common
unitholders
    
    $
    141,660
 11. PROPERTY, PLANT AND EQUIPMENT
  As of December 31,2008
    
    
    2007(In thousands)Oil and gas propertiesSubject to depletion
    
    $
    3,621,831
    
    
    $
    1,811,295Unevaluated costs
    
    
    543,533
    
    
    
    215,228Accumulated depletion
    
    
    (1,022,756
    )
    
    
    (262,123
    )Net oil and gas properties
    
    
    3,142,608
    
    
    
    1,764,400Other plant and equipmentPipelines and processing facilities
    
    
    664,112
    
    
    
    379,869General properties
    
    
    57,941
    
    
    
    32,966Accumulated depreciation
    
    
    (66,946
    )
    
    
    (34,889
    )Net other property and equipment
    
    
    655,107
    
    
    
    377,946Property, plant and equipment, net of accumulated depletion and depreciation
    
    $
    3,797,715
    
    
    $
    2,142,346




---



##### Table of Contents



Ceiling Test Analysis
  ,
 Unevaluated Natural Gas and Crude Oil Properties Not Subject to Depletion
  December 31, 2008 Costs Incurred During
    
    
    December 31, 2007 Costs Incurred During2008
    
    
    2007
    
    
    2006
    
    
    Prior
    
    
    Total
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    Prior
    
    
    Total(In thousands)
    
    
    (In thousands)Acquisition costs
    
    $
    381,203
    
    
    $
    54,094
    
    
    $
    31,328
    
    
    $
    53,998
    
    
    $
    520,623
    
    
    $
    71,835
    
    
    $
    25,357
    
    
    $
    39,810
    
    
    $
    37,834
    
    
    $
    174,836Exploration costs
    
    
    19,632
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,632
    
    
    
    20,334
    
    
    
    20,058
    
    
    
    
    
    
    
    
    
    
    
    40,392Capitalized interest
    
    
    3,278
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,278
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    404,113
    
    
    $
    54,094
    
    
    $
    31,328
    
    
    $
    53,998
    
    
    $
    543,533
    
    
    $
    92,169
    
    
    $
    45,415
    
    
    $
    39,810
    
    
    $
    37,834
    
    
    $
    215,228
  As of December 31,2008
    
    
    2007(In thousands)Fort Worth Basin
    
    $
    440,092
    
    
    $
    107,163Canadian Horn River Basin
    
    
    80,590
    
    
    
    30,784Canadian CBM
    
    
    
    
    
    
    21,170West Texas
    
    
    
    
    
    
    50,908Other
    
    
    22,851
    
    
    
    5,203Total
    
    $
    543,533
    
    
    $
    215,228
  Other Matters




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##### Table of Contents



12. OTHER ASSETS
  As of December 31,2008
    
    
    2007(In thousands)Deferred financing costs
    
    $
    44,917
    
    
    $
    19,701Less accumulated amortization
    
    
    (8,049
    )
    
    
    (3,680
    )Net deferred financing costs
    
    
    36,868
    
    
    
    16,021Deferred compensation costs
    
    
    
    
    
    
    1,003Deposits
    
    
    3,008
    
    
    
    2,312Other
    
    
    772
    
    
    
    1,143$
    40,648
    
    
    $
    20,479
  13. ACCRUED LIABILITIES
  As of December 31,2008
    
    
    2007(In thousands)Accrued operating expenses
    
    $
    20,296
    
    
    $
    14,745Interest payable
    
    
    30,713
    
    
    
    7,402Accrued capital expenditures
    
    
    1,695
    
    
    
    11,417Accrued product purchases
    
    
    1,382
    
    
    
    9,784Revenue payable
    
    
    7,181
    
    
    
    6,692Accrued production and property taxes
    
    
    4,137
    
    
    
    3,301Prepayments from partners
    
    
    974
    
    
    
    732Environmental liabilities
    
    
    50
    
    
    
    262Other
    
    
    495
    
    
    
    646$
    66,923
    
    
    $
    54,981
 14. LONG-TERM DEBT (Restated)
   As of December 31,2008
    
    
    2007(In thousands)Senior secured credit facility
    
    $
    827,868
    
    
    $
    310,710Senior secured second lien facility, net of unamortized discount of $13,050
    
    
    641,555
    
    
    
    Senior notes due 2015, net of unamortized discount of $5,938
    
    
    469,062
    
    
    
    Senior subordinated notes due 2016
    
    
    350,000
    
    
    
    350,000Convertible debentures, net of unamortized discount of $20,760 and $27,192
    
    
    129,240
    
    
    
    122,808KGS Credit Agreement
    
    
    174,900
    
    
    
    5,000Other loans
    
    
    
    
    
    
    34Total debt
    
    
    2,592,625
    
    
    
    788,552Less current maturities
    
    
    (6,579
    )
    
    
    (34
    )Long-term debt
    
    $
    2,586,046
    
    
    $
    788,518




---



##### Table of Contents



Senior Secured
    
    
    
    
    
    
    SeniorTotal
    
    
    Senior Secured
    
    
    Second Lien
    
    
    Senior Notes
    
    
    Subordinated
    
    
    Convertible
    
    
    KGSIndebtedness
    
    
    Credit Facility
    
    
    Facility
    
    
    due in 2015
    
    
    Notes
    
    
    Debentures
    
    
    Credit Facility(In thousands)2009
    
    $
    6,579
    
    
    $
    
    
    
    $
    6,579
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2010
    
    
    6,579
    
    
    
    
    
    
    
    6,579
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2011
    
    
    6,579
    
    
    
    
    
    
    
    6,579
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2012
    
    
    1,009,347
    
    
    
    827,868
    
    
    
    6,579
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    174,9002013
    
    
    628,289
    
    
    
    
    
    
    
    628,289
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Thereafter
    
    
    975,000
    
    
    
    
    
    
    
    
    
    
    
    475,000
    
    
    
    350,000
    
    
    
    150,000
    
    
    
    $
    2,632,373
    
    
    $
    827,868
    
    
    $
    654,605
    
    
    $
    475,000
    
    
    $
    350,000
    
    
    $
    150,000
    
    
    $
    174,900
 Senior Secured Credit Facility
  Senior Secured Second Lien Facility
  Senior Notes
  Senior Subordinated Notes




---



##### Table of Contents



Convertible Debentures
   As of December 31,2008

2007(In
thousands)Carrying value of equity component

$
42,675


$
42,675Principal amount of liability component


$
150,000




$

    150,000Unamortized discount



(20,760


)



    (27,192
)Net carrying value


$
129,240




$

    122,808
 For
the years ended December 31,2008

2007

2006(In
thousands)Interest cost on contractual coupon rate


$
2,813




$

    2,813


$

    2,813Interest cost on amortization of discount(1)



6,432






    6,013




    5,622
  (1)

Interest rate on the liability component is 6.75% for each of the
three years in the period ended December 31, 2008.
 KGS Credit Agreement




---



##### Table of Contents



Summary of All Outstanding Debt
  Priority of Right to Collateralized Assets(6)
    
    Recourse only toHighest priority   (ARROW)
    
    Lowest priority
    
    KGS assetsEqual priority
    
    Equal prioritySenior Secured
    
    Senior Secured
    
    
    
    Senior
    
    Convertible
    
    KGS CreditCredit Facility
    
    Second Lien Facility
    
    Senior Notes
    
    Subordinated Notes
    
    Debentures
    
    AgreementMaturity date
    
    February 9, 2012
    
    August 8, 2013
    
    June 27, 2015
    
    March 16, 2016
    
    November 1, 2024
    
    August 10, 2012Interest rate at
December 31, 2008 (1)
    
    3.44%
    
    7.75%
    
    8.25%
    
    7.125%
    
    1.875%
    
    2.90%Base interest rate 
options (5)
    
    LIBOR, ABR or
specified
    
    LIBOR or ABR
    
    N/A
    
    N/A
    
    N/A
    
    LIBOR, ABR or
specifiedFinancial covenants 
for 2009 (3)
    
    - Minimum current ratio
of 1.0
- Minimum EBITDA to
interest expense ratio of
2.5
- Minimum reserve PV
10 plus 50% of BBEP
investment fair value to
total debt of 1.5
- Minimum reserve PV
10 plus 50% of BBEP
investment fair value to
secured debt of 2.0
    
    - Minimum current ratio
of 1.0
- Minimum EBITDA to
interest expense ratio of
2.25
- Minimum reserve PV
10 plus 50% of BBEP
investment fair value to
total debt of 1.5
- Minimum reserve PV
10 plus 50% of BBEP
investment fair value to
secured debt of 2.0
    
    N/A
    
    N/A
    
    N/A
    
    - Maximum debt to
EBITDA ratio of 4.5
- Minimum
EBITDA to interest
expense ratio of 2.5Financial covenants 
beyond 2009 (3) (4)
    
    - Minimum current ratio
of 1.0
- Minimum EBITDA to
interest expense ratio of
2.5
- Minimum reserve PV
10 plus 50% of BBEP
investment fair value to
total debt of 1.5
- Reserve PV 10 plus
50% of BBEP
investment fair value to
secured debt of 2.25
beginning December
31, 2010
    
    - Minimum current ratio
of 1.0
- Minimum EBITDA to
interest expense ratio of
2.25
- Minimum reserve PV
10 plus 50% of BBEP
investment fair value to
total debt of 1.5
- Reserve PV 10 plus
50% of BBEP
investment fair value to
secured debt of 2.25
beginning December
31, 2010
    
    N/A
    
    N/A
    
    N/A
    
    - Maximum debt to
EBITDA ratio of 4.5
- Minimum
EBITDA to interest
expense ratio of 2.5Significant 
restrictive 
covenants (3)
    
    - Incurrence of debt
- Incurrence of liens
- Payment of dividends
- Equity purchases
- Asset sales
- Affiliate transactions
- Limitations on
derivatives
    
    - Incurrence of debt
- Incurrence of liens
- Payment of dividends
- Equity purchases
- Asset sales
- Affiliate transactions
- Limitations on
derivatives
    
    - Incurrence of debt
- Incurrence of liens
- Payment of dividends
- Equity purchases
- Asset sales
- Affiliate transactions
    
    - Incurrence of debt
- Incurrence of liens
- Payment of dividends
- Equity purchases
- Asset sales
- Affiliate transactions
    
    N/A
    
    - Incurrence of debt
- Incurrence of liens
- Equity purchases
- Asset sales
- Limitations on
derivativesEstimated fair 
value (2)
    
    $827.9 million
    
    $455.0 million
    
    $349.1 million
    
    $187.2 million
    
    $93.8 million
    
    $174.9 million
 
 (1)
    
    Represents the weighted average borrowing rate payable to lenders(2)
    
    The estimated fair value is determined based on market quotations on balance sheet date
for fixed rate obligations. The Company considers debt with market-based interest rates
to have a fair value equal to its carrying value(3)
    
    The covenant information presented in this table is qualified in all respects by
reference to the full text of the covenants and related definitions contained in the
documents governing the various components of the Companys debt (4)
    
    Represents the most restrictive that each covenant becomes during its period outstanding(5)
    
    Interest rate options include a base rate plus a spread. For the Senior Secured Second
Lien Facility the LIBOR rate has a floor of 3.25% and the ABR has a floor of 4.25%(6)
    
    Priority of right to assets is not necessarily the same as priority to receive payments




---



##### Table of Contents



15. ASSET RETIREMENT OBLIGATIONS
   As of December 31,2008
    
    
    2007(In thousands)Beginning asset retirement obligations
    
    $
    24,510
    
    
    $
    25,206Additional liability incurred
    
    
    8,231
    
    
    
    5,239Change in estimates
    
    
    4,288
    
    
    
    2,385Accretion expense
    
    
    1,483
    
    
    
    1,509Sale of properties
    
    
    
    
    
    
    (11,564
    )Asset retirement costs incurred
    
    
    (359
    )
    
    
    (180
    )Loss on settlement of liability
    
    
    119
    
    
    
    4Currency translation adjustment
    
    
    (3,079
    )
    
    
    1,911Ending asset retirement obligations
    
    
    35,193
    
    
    
    24,510Less current portion
    
    
    (440
    )
    
    
    (646
    )Longterm asset retirement obligation
    
    $
    34,753
    
    
    $
    23,864
 16. INCOME TAXES




---



##### Table of Contents



As of December 31,2008
    
    
    2007(In thousands)CurrentDeferred tax assetDeferred tax benefit on derivative contract loss
    
    $
    
    
    
    $
    17,258Deferred tax benefit on cash flow hedge losses
    
    
    
    
    
    
    1,688Total current deferred tax assets
    
    $
    
    
    
    $
    18,946Deferred tax liabilitiesDeferred tax liability on cash flow hedge gains
    
    $
    52,393
    
    
    $
    NoncurrentDeferred tax assetsDeferred tax benefit on BBEP impairment
    
    $
    112,135
    
    
    $
    Deferred tax benefit on derivative contract loss
    
    
    
    
    
    
    4,973Deferred tax benefit on deferred compensation expense
    
    
    4,236
    
    
    
    1,506Deferred tax benefit on cash flow hedge losses
    
    
    
    
    
    
    617Net operating loss carry forwards
    
    
    176,957
    
    
    
    Other
    
    
    969
    
    
    
    2,336Total deferred tax assets
    
    
    294,297
    
    
    
    9,432Deferred tax liabilitiesProperty, plant and equipment
    
    
    470,925
    
    
    
    375,427Deferred tax liability on cash flow hedge gains
    
    
    40,461
    
    
    
    Deferred tax liability on convertible debenture interest
    
    
    17,296
    
    
    
    16,814Other
    
    
    
    
    
    
    581Total deferred tax liabilities
    
    
    528,682
    
    
    
    392,822Net deferred tax liabilities
    
    $
    234,385
    
    
    $
    383,390
  2008
    
    
    2007
    
    
    2006(In thousands)Current state income tax expense (benefit)
    
    $
    (4
    )
    
    $
    1,143
    
    
    $
    11Current U.S. federal income tax expense
    
    
    (45,210
    )
    
    
    45,394
    
    
    
    Current Canadian income tax expense
    
    
    199
    
    
    
    28
    
    
    
    262Total current income tax expense (benefit)
    
    
    (45,015
    )
    
    
    46,565
    
    
    
    273Deferred state income tax expense
    
    
    1,939
    
    
    
    2,538
    
    
    
    1,600Deferred U.S. federal income tax expense (benefit)
    
    
    (190,938
    )
    
    
    194,129
    
    
    
    25,502Deferred Canadian income tax expense
    
    
    22,559
    
    
    
    11,129
    
    
    
    8,776Total deferred income tax expense (benefit)
    
    
    (166,440
    )
    
    
    207,796
    
    
    
    35,878Total income tax expense (benefit)
    
    $
    (211,455
    )
    
    $
    254,361
    
    
    $
    36,151
  2008
    
    2007
    
    2006U.S. federal statutory tax rate
    
    
    35.00
    %
    
    
    35.00
    %
    
    
    35.00
    %Permanent differences
    
    
    (0.33
    %)
    
    
    0.01
    %
    
    
    0.16
    %State income taxes net of federal deduction
    
    
    (0.22
    %)
    
    
    0.33
    %
    
    
    0.83
    %FIN 48 recognition
    
    
    (0.09
    %)
    
    
    1.18
    %
    
    
    0.00
    %Foreign income taxes
    
    
    1.38
    %
    
    
    (1.71
    )%
    
    
    (6.57
    %)Other
    
    
    0.40
    %
    
    
    0.00
    %
    
    
    (0.79
    %)Effective income tax rate
    
    
    36.14
    %
    
    
    34.81
    %
    
    
    28.63
    %




---



##### Table of Contents



As of December 31,2008
    
    
    2007(In thousands)Beginning unrecognized tax benefits
    
    $
    9,997
    
    
    $
    345Gross amounts of increases in unrecognized tax benefits as a result of tax positions taken
during a prior period
    
    
    834
    
    
    
    1,396Amount of decreases in unrecognized tax benefits related to settlements with taxing authorities
    
    
    (1,301
    )
    
    
    (1,100
    )Gross amounts of increases in unrecognized tax benefits as a result of tax positions taken
during the current year
    
    
    
    
    
    
    9,356Reductions resulting from the lapse of applicable statutes of limitations
    
    
    (275
    )
    
    
    Unrecognized tax benefits
    
    $
    9,255
    
    
    $
    9,997
  17. COMMITMENTS AND CONTINGENCIES
 Contractual Obligations.
  Transportation
    
    
    Drilling Rig
    
    
    Operating
    
    
    PurchaseContracts(1)
    
    
    Contracts(2)
    
    
    Leases(3)
    
    
    Obligations(4)(In thousands)2009
    
    $
    8,768
    
    
    $
    45,620
    
    
    $
    3,612
    
    
    $
    13,8002010
    
    
    21,087
    
    
    
    19,689
    
    
    
    2,122
    
    
    
    2011
    
    
    33,406
    
    
    
    6,241
    
    
    
    1,263
    
    
    
    2012
    
    
    45,747
    
    
    
    
    
    
    
    478
    
    
    
    2013
    
    
    47,473
    
    
    
    
    
    
    
    9
    
    
    
    Thereafter
    
    
    242,535
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    399,016
    
    
    $
    71,550
    
    
    $
    7,484
    
    
    $
    13,800
 
 (1)
    
    Under contracts with various pipeline companies, the
Company is obligated to transport minimum daily gas
volumes, as calculated on a monthly basis, or pay for any
deficiencies at a specified reservation fee rate. The
production committed to the pipelines is expected to meet,
or exceed, the daily volumes required under the contracts.(2)
    
    The Company leases drilling rigs from third parties for
use in our development and exploration programs. The
outstanding drilling rig contracts require payment of a
specified day rate ranging from $20,000 to $23,200 for the
entire lease term regardless of our utilization of the
drilling rigs.




---



##### Table of Contents



(3)
    
    The Company leases office buildings and other property
under operating leases. Our operating lease obligations
include $0.6 million of future lease payments to a company
that is owned by members of the Darden family. Rent
expense for operating leases with terms exceeding one
month was $5.0 million in 2008, $5.2 million in 2007 and
$3.5 million in 2006.(4)
    
    At December 31, 2008, KGS was under contract to purchase
goods and services for completion of the Corvette Plant
and for compressors. Total remaining cash obligations for
these goods and services were $13.8 million, including
$1.2 million recognized during 2008. KGS placed the
Corvette Plant into service during the first quarter of
2009. Commitments
  Contingencies




---



##### Table of Contents



18. NONCONTROLLING INTERESTS
  19. EMPLOYEE BENEFITS
    20. STOCKHOLDERS EQUITY
 Common Stock, Preferred Stock and Treasury Stock
   Common
    
    TreasuryShares Issued
    
    Shares HeldOpening balance at January 1, 2006
    
    
    154,729,151
    
    
    
    2,571,069Stock options exercised
    
    
    2,212,190
    
    
    
    Restricted stock activity
    
    
    842,174
    
    
    
    8,602Balance at December 31, 2006
    
    
    157,783,515
    
    
    
    2,579,671Stock options exercised
    
    
    2,257,840
    
    
    
    Restricted stock activity
    
    
    591,915
    
    
    
    37,055Balance at December 31, 2007
    
    
    160,633,270
    
    
    
    2,616,726Stock issuance
    
    
    10,400,468
    
    
    
    Stock repurchase
    
    
    
    
    
    
    1,885,600Stock options exercised
    
    
    249,732
    
    
    
    Restricted stock activity
    
    
    459,229
    
    
    
    70,469Balance at December 31, 2008
    
    
    171,742,699
    
    
    
    4,572,795




---



##### Table of Contents



Stockholder Rights Plan
     Employee Stock Plans
 1999 and 2004 Plans
    2006 Equity Plan




---



##### Table of Contents



Stock Options Under All Plans
  2008
    
    2007
    
    2006Wtd avg grant date fair value
    
    $
    13.67
    
    
    
    N/A
    
    
    $
    12.50Wtd avg grant date
    
    
    Jan 2, 2008
    
    
    
    N/A
    
    
    
    Jan 3, 2006Wtd avg risk-free interest rate
    
    
    3.41
    %
    
    
    N/A
    
    
    
    4.35
    %Expected life (in years)
    
    
    6.0
    
    
    
    N/A
    
    
    
    10.0Wtd avg volatility
    
    
    40.2
    %
    
    
    N/A
    
    
    
    37.3
    %Expected dividends
    
    
    
    
    
    
    N/A
    
    
    
    
  Wtd Avg
    
    Wtd AvgExercise
    
    Remaining
    
    AggregateShares
    
    Price
    
    Contractual Life
    
    Intrinsic Value(In thousands)Outstanding at January 1, 2008
    
    
    1,021,912
    
    
    $
    7.48Granted
    
    
    373,382
    
    
    
    30.95Exercised
    
    
    (249,732
    )
    
    
    4.98Cancelled
    
    
    (42,226
    )
    
    
    28.20Outstanding at December 31, 2008
    
    
    1,103,336
    
    
    $
    14.20
    
    
    
    3.7
    
    
    $
    39Exercisable at December 31, 2008
    
    
    572,710
    
    
    $
    7.29
    
    
    
    1.6
    
    
    $
    26
   Restricted Stock Under All Plans
  Wtd AvgGrant DateShares
    
    Fair ValueOutstanding at January 1, 2008
    
    
    1,340,122
    
    
    $
    18.76Granted
    
    
    628,196
    
    
    
    30.67Vested
    
    
    (484,428
    )
    
    
    30.94Cancelled
    
    
    (147,779
    )
    
    
    22.82Outstanding at December 31, 2008
    
    
    1,336,111
    
    
    $
    24.01




---



##### Table of Contents



KGS Restricted Phantom Units
  Payable in cash
    
    Payable in unitsUnits
    

Wtd
average
grant date
fair value
    

Units
    
    Wtd
average
grant date
fair valueOutstanding at January 1, 2008
    
    
    84,961
    
    
    $
    21.36
    
    
    
    9,833
    
    
    $
    21.36Granted
    
    
    6,605
    
    
    
    24.12
    
    
    
    137,148
    
    
    
    25.25Vested
    
    
    (28,247
    )
    
    
    21.43
    
    
    
    (6,089
    )
    
    
    21.36Cancelled
    
    
    (3,000
    )
    
    
    21.36
    
    
    
    (974
    )
    
    
    25.25Outstanding at December 31, 2008
    
    
    60,319
    
    
    $
    21.63
    
    
    
    139,918
    
    
    $
    25.15
  21.
ANNUAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Restated)
  December 31, 2008Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAPASSETS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (In
    
    thousands)Current assets
    
    $
    423,487
    
    
    $
    424,862
    
    
    $
    424,862
    
    
    $
    163
    
    
    $
    163
    
    
    $
    163
    
    
    $
    426,297
    
    
    $
    104,997
    
    
    $
    104,997
    
    
    $
    (456,611
    )
    
    $
    (136,686
    )
    
    $
    (136,686
    )Property and equipment
    
    
    2,756,915
    
    
    
    2,756,915
    
    
    
    2,756,915
    
    
    
    1,774
    
    
    
    1,774
    
    
    
    1,774
    
    
    
    1,039,026
    
    
    
    1,039,026
    
    
    
    1,039,026
    
    
    
    
    
    
    
    
    
    
    
    Investment in subsidiaries (equity method)
    
    
    596,149
    
    
    
    434,390
    
    
    
    513,706
    
    
    
    170,150
    
    
    
    
    
    
    
    79,316
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (615,796
    )
    
    
    (283,887
    )
    
    
    (442,519
    )Other assets
    
    
    209,837
    
    
    
    208,462
    
    
    
    206,099
    
    
    
    123,298
    
    
    
    123,298
    
    
    
    123,298
    
    
    
    2,826
    
    
    
    2,826
    
    
    
    2,826
    
    
    
    (176,944
    )
    
    
    (175,569
    )
    
    
    (175,569
    )Total assets
    
    $
    3,986,388
    
    
    $
    3,824,629
    
    
    $
    3,901,582
    
    
    $
    295,385
    
    
    $
    125,235
    
    
    $
    204,551
    
    
    $
    1,468,149
    
    
    $
    1,146,849
    
    
    $
    1,146,849
    
    
    $
    (1,249,351
    )
    
    $
    (596,142
    )
    
    $
    (754,774
    )LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    518,836
    
    
    $
    357,077
    
    
    $
    357,077
    
    
    $
    122,677
    
    
    $
    122,677
    
    
    $
    122,677
    
    
    $
    233,597
    
    
    $
    75,431
    
    
    $
    75,431
    
    
    $
    (456,611
    )
    
    $
    (136,686
    )
    
    $
    (136,686
    )Long-term liabilities
    
    
    2,372,843
    
    
    
    2,372,843
    
    
    
    2,359,679
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    682,281
    
    
    
    680,906
    
    
    
    684,036
    
    
    
    (176,944
    )
    
    
    (175,569
    )
    
    
    (175,569
    )Deferred gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,867
    
    
    
    79,316
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,316
    
    
    
    29,867
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stockholders
equity  Quicksilver
    
    
    1,094,709
    
    
    
    1,094,709
    
    
    
    1,184,826
    
    
    
    172,708
    
    
    
    2,558
    
    
    
    81,874
    
    
    
    443,088
    
    
    
    281,329
    
    
    
    360,645
    
    
    
    (615,796
    )
    
    
    (283,887
    )
    
    
    (442,519
    )Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,737
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities
and stockholders equity
    
    $
    3,986,388
    
    
    $
    3,824,629
    
    
    $
    3,901,582
    
    
    $
    295,385
    
    
    $
    125,235
    
    
    $
    204,551
    
    
    $
    1,468,149
    
    
    $
    1,146,849
    
    
    $
    1,146,849
    
    
    $
    (1,249,351
    )
    
    $
    (596,142
    )
    
    $
    (754,774
    )
 December 31, 2007Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)ASSETSCurrent assets
    
    $
    213,288
    
    
    $
    214,388
    
    
    $
    214,388
    
    
    $
    596
    
    
    $
    596
    
    
    $
    596
    
    
    $
    243,086
    
    
    $
    59,854
    
    
    $
    59,854
    
    
    $
    (266,569
    )
    
    $
    (84,437
    )
    
    $
    (84,437
    )Property and
equipment
    
    
    1,294,573
    
    
    
    1,294,573
    
    
    
    1,294,573
    
    
    
    1,858
    
    
    
    1,858
    
    
    
    1,858
    
    
    
    845,915
    
    
    
    845,915
    
    
    
    845,915
    
    
    
    
    
    
    
    
    
    
    
    Investment in
subsidiaries
(equity method)
    
    
    819,119
    
    
    
    657,007
    
    
    
    736,323
    
    
    
    160,825
    
    
    
    1,171
    
    
    
    80,487
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (559,773
    )
    
    
    (238,007
    )
    
    
    (396,639
    )Other assets
    
    
    72,426
    
    
    
    71,326
    
    
    
    69,231
    
    
    
    82,251
    
    
    
    82,251
    
    
    
    82,251
    
    
    
    2,171
    
    
    
    2,171
    
    
    
    2,171
    
    
    
    (133,920
    )
    
    
    (132,820
    )
    
    
    (132,820
    )Total assets
    
    $
    2,399,406
    
    
    $
    2,237,294
    
    
    $
    2,314,515
    
    
    $
    245,530
    
    
    $
    85,876
    
    
    $
    165,192
    
    
    $
    1,091,172
    
    
    $
    907,940
    
    
    $
    907,940
    
    
    $
    (960,262
    )
    
    $
    (455,264
    )
    
    $
    (613,896
    )LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    470,690
    
    
    $
    308,578
    
    
    $
    308,578
    
    
    $
    77,529
    
    
    $
    77,529
    
    
    $
    77,529
    
    
    $
    76,925
    
    
    $
    56,905
    
    
    $
    56,905
    
    
    $
    (266,569
    )
    
    $
    (84,437
    )
    
    $
    (84,437
    )Long-term
liabilities
    
    
    860,361
    
    
    
    860,361
    
    
    
    843,183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    512,821
    
    
    
    511,721
    
    
    
    512,345
    
    
    
    (133,920
    )
    
    
    (132,820
    )
    
    
    (132,820
    )Deferred gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,316
    
    
    
    79,316
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,338
    
    
    
    30,338
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stockholders equity  Quicksilver
    
    
    1,068,355
    
    
    
    1,068,355
    
    
    
    1,162,754
    
    
    
    168,001
    
    
    
    8,347
    
    
    
    87,663
    
    
    
    391,772
    
    
    
    229,660
    
    
    
    308,976
    
    
    
    (559,773
    )
    
    
    (238,007
    )
    
    
    (396,639
    )Noncontrolling
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,714
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities
and stockholders
equity
    
    $
    2,399,406
    
    
    $
    2,237,294
    
    
    $
    2,314,515
    
    
    $
    245,530
    
    
    $
    85,876
    
    
    $
    165,192
    
    
    $
    1,091,172
    
    
    $
    907,940
    
    
    $
    907,940
    
    
    $
    (960,262
    )
    
    $
    (455,264
    )
    
    $
    (613,896
    )
 For the Year Ended December 31, 2008Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Revenues
    
    $
    600,906
    
    
    $
    600,906
    
    
    $
    600,906
    
    
    $
    514
    
    
    $
    514
    
    
    $
    514
    
    
    $
    261,616
    
    
    $
    265,184
    
    
    $
    265,184
    
    
    $
    (62,395
    )
    
    $
    (65,963
    )
    
    $
    (65,963
    )Operating expenses
    
    
    976,984
    
    
    
    976,984
    
    
    
    976,984
    
    
    
    11,157
    
    
    
    11,157
    
    
    
    11,157
    
    
    
    124,592
    
    
    
    128,160
    
    
    
    128,160
    
    
    
    (62,395
    )
    
    
    (65,963
    )
    
    
    (65,963
    )Equity in net earnings of
subsidiaries
    
    
    81,948
    
    
    
    74,331
    
    
    
    74,331
    
    
    
    21,762
    
    
    
    21,762
    
    
    
    21,762
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (103,710
    )
    
    
    (96,093
    )
    
    
    (96,093
    )Operating income (loss)
    
    
    (294,130
    )
    
    
    (301,747
    )
    
    
    (301,747
    )
    
    
    11,119
    
    
    
    11,119
    
    
    
    11,119
    
    
    
    137,024
    
    
    
    137,024
    
    
    
    137,024
    
    
    
    (103,710
    )
    
    
    (96,093
    )
    
    
    (96,093
    )Income from earnings of BBEP
    
    
    93,298
    
    
    
    93,298
    
    
    
    93,298
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Impairment of investment in BBEP
    
    
    (320,387
    )
    
    
    (320,387
    )
    
    
    (320,387
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense and other
    
    
    (83,069
    )
    
    
    (83,069
    )
    
    
    (89,657
    )
    
    
    6,023
    
    
    
    6,023
    
    
    
    6,023
    
    
    
    (29,311
    )
    
    
    (29,311
    )
    
    
    (24,657
    )
    
    
    
    
    
    
    
    
    
    
    Income tax (expense) benefit
    
    
    230,294
    
    
    
    237,911
    
    
    
    240,217
    
    
    
    1,617
    
    
    
    (6,000
    )
    
    
    (6,000
    )
    
    
    (22,762
    )
    
    
    (22,762
    )
    
    
    (22,762
    )
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    
    (373,994
    )
    
    
    (373,994
    )
    
    
    (378,276
    )
    
    
    18,759
    
    
    
    11,142
    
    
    
    11,142
    
    
    
    84,951
    
    
    
    84,951
    
    
    
    89,605
    
    
    
    (103,710
    )
    
    
    (96,093
    )
    
    
    (96,093
    )Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,654
    )
    
    
    
    
    
    
    
    
    
    
    Net income (loss) attributable
to Quicksilver
    
    $
    (373,994
    )
    
    $
    (373,994
    )
    
    $
    (378,276
    )
    
    $
    18,759
    
    
    $
    11,142
    
    
    $
    11,142
    
    
    $
    84,951
    
    
    $
    84,951
    
    
    $
    84,951
    
    
    $
    (103,710
    )
    
    $
    (96,093
    )
    
    $
    (96,093
    )
 For the Year Ended December 31, 2007Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Revenues
    
    $
    367,894
    
    
    $
    367,894
    
    
    $
    367,894
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    223,281
    
    
    $
    223,095
    
    
    $
    223,095
    
    
    $
    (29,917
    )
    
    $
    (29,731
    )
    
    $
    (29,731
    )Operating expenses
    
    
    241,174
    
    
    
    241,174
    
    
    
    241,174
    
    
    
    601
    
    
    
    601
    
    
    
    601
    
    
    
    111,664
    
    
    
    111,478
    
    
    
    111,478
    
    
    
    (29,917
    )
    
    
    (29,731
    )
    
    
    (29,731
    )Income from equity affiliates
    
    
    14
    
    
    
    14
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    647
    
    
    
    647
    
    
    
    647
    
    
    
    
    
    
    
    
    
    
    
    Gain on sale of properties
    
    
    628,709
    
    
    
    628,709
    
    
    
    628,709
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss on natural gas supply
contracts
    
    
    (63,525
    )
    
    
    (63,525
    )
    
    
    (63,525
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity in net earnings of
subsidiaries
    
    
    76,060
    
    
    
    73,468
    
    
    
    73,468
    
    
    
    7,407
    
    
    
    7,407
    
    
    
    7,407
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (83,467
    )
    
    
    (80,875
    )
    
    
    (80,875
    )Operating income
    
    
    767,978
    
    
    
    765,386
    
    
    
    765,386
    
    
    
    6,806
    
    
    
    6,806
    
    
    
    6,806
    
    
    
    112,264
    
    
    
    112,264
    
    
    
    112,264
    
    
    
    (83,467
    )
    
    
    (80,875
    )
    
    
    (80,875
    )Interest expense and other
    
    
    (50,077
    )
    
    
    (50,077
    )
    
    
    (56,212
    )
    
    
    2,418
    
    
    
    2,418
    
    
    
    2,609
    
    
    
    (20,036
    )
    
    
    (20,036
    )
    
    
    (19,172
    )
    
    
    
    
    
    
    
    
    
    
    Income tax expense
    
    
    (238,523
    )
    
    
    (235,931
    )
    
    
    (233,784
    )
    
    
    (636
    )
    
    
    (3,228
    )
    
    
    (3,228
    )
    
    
    (17,349
    )
    
    
    (17,349
    )
    
    
    (17,349
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    479,378
    
    
    
    479,378
    
    
    
    475,390
    
    
    
    8,588
    
    
    
    5,996
    
    
    
    6,187
    
    
    
    74,879
    
    
    
    74,879
    
    
    
    75,743
    
    
    
    (83,467
    )
    
    
    (80,875
    )
    
    
    (80,875
    )Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (191
    )
    
    
    
    
    
    
    
    
    
    
    (864
    )
    
    
    
    
    
    
    
    
    
    
    Net income attributable to Quicksilver
    
    $
    479,378
    
    
    $
    479,378
    
    
    $
    475,390
    
    
    $
    8,588
    
    
    $
    5,996
    
    
    $
    5,996
    
    
    $
    74,879
    
    
    $
    74,879
    
    
    $
    74,879
    
    
    $
    (83,467
    )
    
    $
    (80,875
    )
    
    $
    (80,875
    )
 For the Year Ended December 31, 2006Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Revenues
    
    $
    233,757
    
    
    $
    233,757
    
    
    $
    233,757
    
    
    $
    3,046
    
    
    $
    3,046
    
    
    $
    3,046
    
    
    $
    157,491
    
    
    $
    167,244
    
    
    $
    167,244
    
    
    $
    (3,932
    )
    
    $
    (13,685
    )
    
    $
    (13,685
    )Operating expenses
    
    
    148,613
    
    
    
    148,613
    
    
    
    148,613
    
    
    
    2,635
    
    
    
    2,635
    
    
    
    2,635
    
    
    
    69,376
    
    
    
    79,129
    
    
    
    79,129
    
    
    
    (3,932
    )
    
    
    (13,685
    )
    
    
    (13,685
    )Income from equity affiliates
    
    
    17
    
    
    
    17
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    509
    
    
    
    509
    
    
    
    509
    
    
    
    
    
    
    
    
    
    
    
    Equity in net earnings of
subsidiaries
    
    
    58,543
    
    
    
    57,992
    
    
    
    57,992
    
    
    
    
    
    
    
    1,574
    
    
    
    1,574
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (58,543
    )
    
    
    (59,566
    )
    
    
    (59,566
    )Operating income
    
    
    143,704
    
    
    
    143,153
    
    
    
    143,153
    
    
    
    411
    
    
    
    1,985
    
    
    
    1,985
    
    
    
    88,624
    
    
    
    88,624
    
    
    
    88,624
    
    
    
    (58,543
    )
    
    
    (59,566
    )
    
    
    (59,566
    )Interest expense and other
    
    
    (29,766
    )
    
    
    (29,766
    )
    
    
    (35,478
    )
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    (12,561
    )
    
    
    (12,561
    )
    
    
    (12,561
    )
    
    
    
    
    
    
    
    
    
    
    Income tax expense
    
    
    (20,219
    )
    
    
    (19,668
    )
    
    
    (17,669
    )
    
    
    (144
    )
    
    
    (695
    )
    
    
    (695
    )
    
    
    (17,787
    )
    
    
    (17,787
    )
    
    
    (17,787
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    93,719
    
    
    
    93,719
    
    
    
    90,006
    
    
    
    267
    
    
    
    1,290
    
    
    
    1,381
    
    
    
    58,276
    
    
    
    58,276
    
    
    
    58,276
    
    
    
    (58,543
    )
    
    
    (59,566
    )
    
    
    (59,566
    )Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (91
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
attributable to Quicksilver
    
    $
    93,719
    
    
    $
    93,719
    
    
    $
    90,006
    
    
    $
    267
    
    
    $
    1,290
    
    
    $
    1,290
    
    
    $
    58,276
    
    
    $
    58,276
    
    
    $
    58,276
    
    
    $
    (58,543
    )
    
    $
    (59,566
    )
    
    $
    (59,566
    )
 For the Year Ended December 31, 2008Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Cash flow provided
by operations
    
    $
    211,519
    
    
    $
    290,160
    
    
    $
    290,160
    
    
    $
    9,684
    
    
    $
    
    
    
    $
    
    
    
    $
    235,363
    
    
    $
    189,688
    
    
    $
    189,688
    
    
    $
    
    
    
    $
    (23,282
    )
    
    $
    (23,282
    )Cash flow provided
by (used for)
investing
activities
    
    
    (1,875,307
    )
    
    
    (1,952,156
    )
    
    
    (1,952,156
    )
    
    
    50,596
    
    
    
    
    
    
    
    
    
    
    
    (370,311
    )
    
    
    (283,518
    )
    
    
    (283,518
    )
    
    
    (83,566
    )
    
    
    (42,914
    )
    
    
    (42,914
    )Cash flow provided
by financing
activities
    
    
    1,638,387
    
    
    
    1,637,556
    
    
    
    1,637,556
    
    
    
    (60,280
    )
    
    
    
    
    
    
    
    
    
    
    135,080
    
    
    
    93,001
    
    
    
    93,001
    
    
    
    83,566
    
    
    
    66,196
    
    
    
    66,196Effect of exchange
rates on cash
    
    
    68
    
    
    
    (893
    )
    
    
    (893
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (177
    )
    
    
    784
    
    
    
    784
    
    
    
    
    
    
    
    
    
    
    
    Net decrease in cash
& equivalents
    
    
    (25,333
    )
    
    
    (25,333
    )
    
    
    (25,333
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45
    )
    
    
    (45
    )
    
    
    (45
    )
    
    
    
    
    
    
    
    
    
    
    Cash and
equivalents at
beginning of period
    
    
    27,010
    
    
    
    27,012
    
    
    
    27,012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,216
    
    
    
    1,214
    
    
    
    1,214
    
    
    
    
    
    
    
    
    
    
    
    Cash and
equivalents at end
of period
    
    $
    1,677
    
    
    $
    1,679
    
    
    $
    1,679
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,171
    
    
    $
    1,169
    
    
    $
    1,169
    
    
    $
    
    
    
    $
    
    
    
    $
    
 For the Year Ended December 31, 2007Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Cash flow provided by (used for) operations
    
    $
    146,348
    
    
    $
    190,777
    
    
    $
    190,777
    
    
    $
    (354
    )
    
    $
    (596
    )
    
    $
    (596
    )
    
    $
    173,110
    
    
    $
    131,884
    
    
    $
    131,884
    
    
    $
    
    
    
    $
    (2,961
    )
    
    $
    (2,961
    )Cash flow used for investing
activities
    
    
    (18,471
    )
    
    
    (355
    )
    
    
    (355
    )
    
    
    47,047
    
    
    
    (267
    )
    
    
    (267
    )
    
    
    (283,940
    )
    
    
    (225,433
    )
    
    
    (225,433
    )
    
    
    (14,388
    )
    
    
    (43,697
    )
    
    
    (43,697
    )Cash flow provided by (used for) financing
activities
    
    
    (101,541
    )
    
    
    (163,939
    )
    
    
    (163,939
    )
    
    
    (46,693
    )
    
    
    863
    
    
    
    863
    
    
    
    101,570
    
    
    
    84,142
    
    
    
    84,142
    
    
    
    14,388
    
    
    
    46,658
    
    
    
    46,658Effect of exchange rates on cash
    
    
    591
    
    
    
    446
    
    
    
    446
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,278
    
    
    
    5,423
    
    
    
    5,423
    
    
    
    
    
    
    
    
    
    
    
    Net increase (decrease) in cash & equivalents
    
    
    26,927
    
    
    
    26,929
    
    
    
    26,929
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,982
    )
    
    
    (3,984
    )
    
    
    (3,984
    )
    
    
    
    
    
    
    
    
    
    
    Cash and equivalents at beginning of period
    
    
    83
    
    
    
    83
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,198
    
    
    
    5,198
    
    
    
    5,198
    
    
    
    
    
    
    
    
    
    
    
    Cash and equivalents at end of period
    
    $
    27,010
    
    
    $
    27,012
    
    
    $
    27,012
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,216
    
    
    $
    1,214
    
    
    $
    1,214
    
    
    $
    
    
    
    $
    
    
    
    $
    
 For the Year Ended December 31, 2006Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Cash flow provided
by (used for)
operations
    
    $
    207,097
    
    
    $
    152,793
    
    
    $
    152,793
    
    
    $
    (45,073
    )
    
    $
    (434
    )
    
    $
    (434
    )
    
    $
    80,162
    
    
    $
    89,827
    
    
    $
    89,827
    
    
    $
    
    
    
    $
    
    
    
    $
    Cash flow used for
investing
activities
    
    
    (523,750
    )
    
    
    (469,451
    )
    
    
    (469,451
    )
    
    
    (81,534
    )
    
    
    
    
    
    
    
    
    
    
    (257,016
    )
    
    
    (210,429
    )
    
    
    (210,429
    )
    
    
    250,275
    
    
    
    67,855
    
    
    
    67,855Cash flow provided
by financing
activities
    
    
    307,746
    
    
    
    307,746
    
    
    
    307,746
    
    
    
    126,607
    
    
    
    434
    
    
    
    434
    
    
    
    177,233
    
    
    
    120,986
    
    
    
    120,986
    
    
    
    (250,275
    )
    
    
    (67,855
    )
    
    
    (67,855
    )Effect of exchange
rates on cash
    
    
    
    
    
    
    5
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (509
    )
    
    
    (514
    )
    
    
    (514
    )
    
    
    
    
    
    
    
    
    
    
    Net decrease in cash
& equivalents
    
    
    (8,907
    )
    
    
    (8,907
    )
    
    
    (8,907
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (130
    )
    
    
    (130
    )
    
    
    (130
    )
    
    
    
    
    
    
    
    
    
    
    Cash and
equivalents at
beginning of period
    
    
    8,990
    
    
    
    8,990
    
    
    
    8,990
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,328
    
    
    
    5,328
    
    
    
    5,328
    
    
    
    
    
    
    
    
    
    
    
    Cash and
equivalents at end
of period
    
    $
    83
    
    
    $
    83
    
    
    $
    83
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5,198
    
    
    $
    5,198
    
    
    $
    5,198
    
    
    $
    
    
    
    $
    
    
    
    $
    
   Guarantor Subsidiaries -
    
    Non-Guarantor SubsidiariesRestricted
    
    Restricted
    
    UnrestrictedCowtown Pipeline Funding, Inc.
    
    Quicksilver Resources Canada, Inc.
    
    Quicksilver Gas Services Holdings LLCCowtown Pipeline Management, Inc.
    
    Mercury Michigan, Inc.(1)
    
    Quicksilver Gas Services GP LLCCowtown Pipeline L.P.
    
    Terra Energy Ltd.(1)
    
    Quicksilver Gas Services LPCowtown Gas Processing L.P.
    
    GTG Pipeline Corporation(1)
    
    Quicksilver Gas Services Operating LLC (2)Terra Pipeline Company(1)
    
    Quicksilver Gas Services Operating GP LLC (2)Beaver Creek Pipeline, LLC(1)
    
    Cowtown Pipeline Partners L.P. (2)Quicksilver Resources Horn River Inc.
    
    Cowtown Gas Processing Partners L.P. (2)Cowtown Drilling Inc.
 
 (1)
    
    Prior to the sale of the Northeast Operations in November 2007, these
entities were restricted guarantor subsidiaries. After the sale, they have been reclassified
to restricted non-guarantor subsidiaries for all periods presented.(2)
    
    Each entity is a wholly owned subsidiary of and consolidated into Quicksilver Gas
Services LP.  
    
    incurring additional indebtedness;
    
    paying dividends;
    
    making investments; and
    
    making restricted payments.




---



##### Table of Contents



December 31, 2008Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCurrent assets
    
    $
    424,862
    
    
    $
    163
    
    
    $
    102,384
    
    
    $
    (123,071
    )
    
    $
    404,338
    
    
    $
    2,613
    
    
    $
    (13,615
    )
    
    $
    393,336Property and equipment
    
    
    2,756,915
    
    
    
    1,774
    
    
    
    550,906
    
    
    
    
    
    
    
    3,309,595
    
    
    
    488,120
    
    
    
    
    
    
    
    3,797,715Investment in subsidiaries (equity method)
    
    
    513,706
    
    
    
    79,316
    
    
    
    
    
    
    
    (363,203
    )
    
    
    229,819
    
    
    
    
    
    
    
    (79,316
    )
    
    
    150,503Other assets
    
    
    206,099
    
    
    
    123,298
    
    
    
    910
    
    
    
    
    
    
    
    330,307
    
    
    
    1,916
    
    
    
    (175,569
    )
    
    
    156,654Total assets
    
    $
    3,901,582
    
    
    $
    204,551
    
    
    $
    654,200
    
    
    $
    (486,274
    )
    
    $
    4,274,059
    
    
    $
    492,649
    
    
    $
    (268,500
    )
    
    $
    4,498,208LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    357,077
    
    
    $
    122,677
    
    
    $
    44,907
    
    
    $
    (123,071
    )
    
    $
    401,590
    
    
    $
    30,524
    
    
    $
    (13,615
    )
    
    $
    418,499Long-term liabilities
    
    
    2,359,679
    
    
    
    
    
    
    
    327,964
    
    
    
    
    
    
    
    2,687,643
    
    
    
    356,072
    
    
    
    (175,569
    )
    
    
    2,868,146Stockholders equity-Quicksilver
    
    
    1,184,826
    
    
    
    81,874
    
    
    
    281,329
    
    
    
    (363,203
    )
    
    
    1,184,826
    
    
    
    79,316
    
    
    
    (79,316
    )
    
    
    1,184,826Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,737
    
    
    
    
    
    
    
    26,737Total liabilities and stockholders equity
    
    $
    3,901,582
    
    
    $
    204,551
    
    
    $
    654,200
    
    
    $
    (486,274
    )
    
    $
    4,274,059
    
    
    $
    492,649
    
    
    $
    (268,500
    )
    
    $
    4,498,208
 December 31, 2007Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCurrent assets
    
    $
    214,388
    
    
    $
    596
    
    
    $
    57,952
    
    
    $
    (77,923
    )
    
    $
    195,013
    
    
    $
    1,902
    
    
    $
    (6,514
    )
    
    $
    190,401Property and equipment
    
    
    1,294,573
    
    
    
    1,858
    
    
    
    571,967
    
    
    
    
    
    
    
    1,868,398
    
    
    
    273,948
    
    
    
    
    
    
    
    2,142,346Investment in subsidiaries (equity method)
    
    
    736,323
    
    
    
    80,487
    
    
    
    
    
    
    
    (316,152
    )
    
    
    500,658
    
    
    
    
    
    
    
    (80,487
    )
    
    
    420,171Other assets
    
    
    69,231
    
    
    
    82,251
    
    
    
    1,205
    
    
    
    
    
    
    
    152,687
    
    
    
    966
    
    
    
    (132,820
    )
    
    
    20,833Total assets
    
    $
    2,314,515
    
    
    $
    165,192
    
    
    $
    631,124
    
    
    $
    (394,075
    )
    
    $
    2,716,756
    
    
    $
    276,816
    
    
    $
    (219,821
    )
    
    $
    2,773,751LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    308,578
    
    
    $
    77,529
    
    
    $
    31,075
    
    
    $
    (77,923
    )
    
    $
    339,259
    
    
    $
    25,830
    
    
    $
    (6,514
    )
    
    $
    358,575Long-term liabilities
    
    
    843,183
    
    
    
    
    
    
    
    371,560
    
    
    
    
    
    
    
    1,214,743
    
    
    
    140,785
    
    
    
    (132,820
    )
    
    
    1,222,708Stockholders equity-Quicksilver
    
    
    1,162,754
    
    
    
    87,663
    
    
    
    228,489
    
    
    
    (316,152
    )
    
    
    1,162,754
    
    
    
    80,487
    
    
    
    (80,487
    )
    
    
    1,162,754Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,714
    
    
    
    
    
    
    
    29,714Total liabilities and stockholders equity
    
    $
    2,314,515
    
    
    $
    165,192
    
    
    $
    631,124
    
    
    $
    (394,075
    )
    
    $
    2,716,756
    
    
    $
    276,816
    
    
    $
    (219,821
    )
    
    $
    2,773,751




---



##### Table of Contents



For the Year Ended December 31, 2008Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidated
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    600,906
    
    
    $
    514
    
    
    $
    187,126
    
    
    $
    (426
    )
    
    $
    788,120
    
    
    $
    78,058
    
    
    $
    (65,537
    )
    
    $
    800,641Operating expenses
    
    
    976,984
    
    
    
    11,157
    
    
    
    86,937
    
    
    
    (426
    )
    
    
    1,074,652
    
    
    
    41,223
    
    
    
    (65,537
    )
    
    
    1,050,338Equity in net earnings of
subsidiaries
    
    
    74,331
    
    
    
    21,762
    
    
    
    
    
    
    
    (74,331
    )
    
    
    21,762
    
    
    
    
    
    
    
    (21,762
    )
    
    
    Operating income (loss)
    
    
    (301,747
    )
    
    
    11,119
    
    
    
    100,189
    
    
    
    (74,331
    )
    
    
    (264,770
    )
    
    
    36,835
    
    
    
    (21,762
    )
    
    
    (249,697
    )Income from earnings of BBEP
    
    
    93,298
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,298
    
    
    
    
    
    
    
    
    
    
    
    93,298Impairment of investment in BBEP
    
    
    (320,387
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (320,387
    )
    
    
    
    
    
    
    
    
    
    
    (320,387
    )Interest expense and other
    
    
    (89,657
    )
    
    
    6,023
    
    
    
    (14,491
    )
    
    
    
    
    
    
    (98,125
    )
    
    
    (10,166
    )
    
    
    
    
    
    
    (108,291
    )Income tax (expense) benefit
    
    
    240,217
    
    
    
    (6,000
    )
    
    
    (22,509
    )
    
    
    
    
    
    
    211,708
    
    
    
    (253
    )
    
    
    
    
    
    
    211,455Net income (loss)
    
    
    (378,276
    )
    
    
    11,142
    
    
    
    63,189
    
    
    
    (74,331
    )
    
    
    (378,276
    )
    
    
    26,416
    
    
    
    (21,762
    )
    
    
    (373,622
    )Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,654
    )
    
    
    
    
    
    
    (4,654
    )Net income (loss) attributable
to Quicksilver
    
    $
    (378,276
    )
    
    $
    11,142
    
    
    $
    63,189
    
    
    $
    (74,331
    )
    
    $
    (378,276
    )
    
    $
    21,762
    
    
    $
    (21,762
    )
    
    $
    (378,276
    )
 For the Year Ended December 31, 2007Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidated
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    367,894
    
    
    $
    
    
    
    $
    187,154
    
    
    $
    (160
    )
    
    $
    554,888
    
    
    $
    35,941
    
    
    $
    (29,571
    )
    
    $
    561,258Operating expenses
    
    
    241,174
    
    
    
    601
    
    
    
    88,517
    
    
    
    (160
    )
    
    
    330,132
    
    
    
    22,961
    
    
    
    (29,571
    )
    
    
    323,522Income from equity affiliates
    
    
    14
    
    
    
    
    
    
    
    647
    
    
    
    
    
    
    
    661
    
    
    
    
    
    
    
    
    
    
    
    661Gain on sale of properties
    
    
    628,709
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    628,709
    
    
    
    
    
    
    
    
    
    
    
    628,709Loss on natural gas supply contracts
    
    
    (63,525
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63,525
    )
    
    
    
    
    
    
    
    
    
    
    (63,525
    )Equity in net earnings of
subsidiaries
    
    
    73,468
    
    
    
    7,407
    
    
    
    
    
    
    
    (73,468
    )
    
    
    7,407
    
    
    
    
    
    
    
    (7,407
    )
    
    
    Operating income
    
    
    765,386
    
    
    
    6,806
    
    
    
    99,284
    
    
    
    (73,468
    )
    
    
    798,008
    
    
    
    12,980
    
    
    
    (7,407
    )
    
    
    803,581Interest expense and other
    
    
    (56,212
    )
    
    
    2,609
    
    
    
    (14,776
    )
    
    
    
    
    
    
    (68,379
    )
    
    
    (4,396
    )
    
    
    
    
    
    
    (72,775
    )Income tax expense
    
    
    (233,784
    )
    
    
    (3,228
    )
    
    
    (17,036
    )
    
    
    
    
    
    
    (254,048
    )
    
    
    (313
    )
    
    
    
    
    
    
    (254,361
    )Net income
    
    
    475,390
    
    
    
    6,187
    
    
    
    67,472
    
    
    
    (73,468
    )
    
    
    475,581
    
    
    
    8,271
    
    
    
    (7,407
    )
    
    
    476,445Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    (191
    )
    
    
    
    
    
    
    
    
    
    
    (191
    )
    
    
    (864
    )
    
    
    
    
    
    
    (1,055
    )Net income attributable to
Quicksilver
    
    $
    475,390
    
    
    $
    5,996
    
    
    $
    67,472
    
    
    $
    (73,468
    )
    
    $
    475,390
    
    
    $
    7,407
    
    
    $
    (7,407
    )
    
    $
    475,390
 For the Year Ended December 31, 2006Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidated
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    233,757
    
    
    $
    3,046
    
    
    $
    156,372
    
    
    $
    (3,932
    )
    
    $
    389,243
    
    
    $
    10,872
    
    
    $
    (9,753
    )
    
    $
    390,362Operating expenses
    
    
    148,613
    
    
    
    2,635
    
    
    
    69,921
    
    
    
    (3,932
    )
    
    
    217,237
    
    
    
    9,208
    
    
    
    (9,753
    )
    
    
    216,692Income from equity affiliates
    
    
    17
    
    
    
    
    
    
    
    509
    
    
    
    
    
    
    
    526
    
    
    
    
    
    
    
    
    
    
    
    526Equity in net earnings of
subsidiaries
    
    
    57,992
    
    
    
    1,574
    
    
    
    
    
    
    
    (57,992
    )
    
    
    1,574
    
    
    
    
    
    
    
    (1,574
    )
    
    
    Operating income
    
    
    143,153
    
    
    
    1,985
    
    
    
    86,960
    
    
    
    (57,992
    )
    
    
    174,106
    
    
    
    1,664
    
    
    
    (1,574
    )
    
    
    174,196Interest expense and other
    
    
    (35,478
    )
    
    
    91
    
    
    
    (12,574
    )
    
    
    
    
    
    
    (47,961
    )
    
    
    13
    
    
    
    
    
    
    
    (47,948
    )Income tax expense
    
    
    (17,669
    )
    
    
    (695
    )
    
    
    (17,684
    )
    
    
    
    
    
    
    (36,048
    )
    
    
    (103
    )
    
    
    
    
    
    
    (36,151
    )Net income
    
    
    90,006
    
    
    
    1,381
    
    
    
    56,702
    
    
    
    (57,992
    )
    
    
    90,097
    
    
    
    1,574
    
    
    
    (1,574
    )
    
    
    90,097Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    (91
    )
    
    
    
    
    
    
    
    
    
    
    (91
    )
    
    
    
    
    
    
    
    
    
    
    (91
    )Net income attributable to
Quicksilver
    
    $
    90,006
    
    
    $
    1,290
    
    
    $
    56,702
    
    
    $
    (57,992
    )
    
    $
    90,006
    
    
    $
    1,574
    
    
    $
    (1,574
    )
    
    $
    90,006




---



##### Table of Contents



For the Year Ended December 31, 2008Restricted
    
    
    Restricted
    
    
    Restricted

    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Cash flow provided by operations
    
    $
    290,160
    
    
    $
    
    
    
    $
    137,005
    
    
    $
    
    
    
    $
    427,165
    
    
    $
    52,683
    
    
    $
    (23,282
    )
    
    $
    456,566Purchases of property, plant and equipment
    
    
    (1,995,791
    )
    
    
    
    
    
    
    (136,057
    )
    
    
    
    
    
    
    (2,131,848
    )
    
    
    (148,079
    )
    
    
    
    
    
    
    (2,279,927
    )Proceeds from sale of equipment to subsidiaries
    
    
    42,914
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,914
    
    
    
    
    
    
    
    (42,914
    )
    
    
    Proceeds from sales of properties and equipment
    
    
    721
    
    
    
    
    
    
    
    618
    
    
    
    
    
    
    
    1,339
    
    
    
    
    
    
    
    
    
    
    
    1,339Cash flow provided by (used for) investing activities
    
    
    (1,952,156
    )
    
    
    
    
    
    
    (135,439
    )
    
    
    
    
    
    
    (2,087,595
    )
    
    
    (148,079
    )
    
    
    (42,914
    )
    
    
    (2,278,588
    )Issuance of debt
    
    
    2,570,611
    
    
    
    
    
    
    
    208,161
    
    
    
    
    
    
    
    2,778,772
    
    
    
    169,900
    
    
    
    
    
    
    
    2,948,672Repayments of debt
    
    
    (886,429
    )
    
    
    
    
    
    
    (209,734
    )
    
    
    
    
    
    
    (1,096,163
    )
    
    
    
    
    
    
    
    
    
    
    (1,096,163
    )Debt issuance costs
    
    
    (24,733
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,733
    )
    
    
    (486
    )
    
    
    
    
    
    
    (25,219
    )Repayments to parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,914
    )
    
    
    42,914
    
    
    
    Distributions to parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,282
    )
    
    
    23,282
    
    
    
    Distributions to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,644
    )
    
    
    
    
    
    
    (8,644
    )Proceeds from exercise of stock options
    
    
    1,244
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,244
    
    
    
    
    
    
    
    
    
    
    
    1,244Purchase of treasury stock
    
    
    (23,137
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,137
    )
    
    
    
    
    
    
    
    
    
    
    (23,137
    )Cash flow provided by (used for) financing activities
    
    
    1,637,556
    
    
    
    
    
    
    
    (1,573
    )
    
    
    
    
    
    
    1,635,983
    
    
    
    94,574
    
    
    
    66,196
    
    
    
    1,796,753Effect of exchange rates on cash
    
    
    (893
    )
    
    
    
    
    
    
    784
    
    
    
    
    
    
    
    (109
    )
    
    
    
    
    
    
    
    
    
    
    (109
    )Net increase (decrease) in cash & equivalents
    
    
    (25,333
    )
    
    
    
    
    
    
    777
    
    
    
    
    
    
    
    (24,556
    )
    
    
    (822
    )
    
    
    
    
    
    
    (25,378
    )Cash and equivalents at beginning of period
    
    
    27,012
    
    
    
    
    
    
    
    89
    
    
    
    
    
    
    
    27,101
    
    
    
    1,125
    
    
    
    
    
    
    
    28,226Cash and equivalents at end of period
    
    $
    1,679
    
    
    $
    
    
    
    $
    866
    
    
    $
    
    
    
    $
    2,545
    
    
    $
    303
    
    
    $
    
    
    
    $
    2,848
 For the Year Ended December 31, 2007Restricted
    
    
    Restricted
    
    
    Restricted

    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Cash flow provided by (used for) operations
    
    $
    190,777
    
    
    $
    (596
    )
    
    $
    116,935
    
    
    $
    
    
    
    $
    307,116
    
    
    $
    14,949
    
    
    $
    (2,961
    )
    
    $
    319,104Purchases of property, plant and equipment
    
    
    (824,321
    )
    
    
    (267
    )
    
    
    (151,807
    )
    
    
    
    
    
    
    (976,395
    )
    
    
    (73,797
    )
    
    
    29,508
    
    
    
    (1,020,684
    )Investment in subsidiaries and affiliates
    
    
    (38,908
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,908
    )
    
    
    
    
    
    
    38,908
    
    
    
    Return of investment from subsidiaries and affiliates
    
    
    121,577
    
    
    
    
    
    
    
    171
    
    
    
    
    
    
    
    121,748
    
    
    
    
    
    
    
    (112,113
    )
    
    
    9,635Proceeds from sales of properties and equipment
    
    
    741,297
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    741,297
    
    
    
    
    
    
    
    
    
    
    
    741,297Cash flow provided by (used for) investing activities
    
    
    (355
    )
    
    
    (267
    )
    
    
    (151,636
    )
    
    
    
    
    
    
    (152,258
    )
    
    
    (73,797
    )
    
    
    (43,697
    )
    
    
    (269,752
    )Issuance of debt
    
    
    594,500
    
    
    
    
    
    
    
    218,321
    
    
    
    
    
    
    
    812,821
    
    
    
    5,000
    
    
    
    
    
    
    
    817,821Repayments of debt
    
    
    (777,866
    )
    
    
    
    
    
    
    (190,691
    )
    
    
    
    
    
    
    (968,557
    )
    
    
    
    
    
    
    
    
    
    
    (968,557
    )Debt issuance costs
    
    
    (3,148
    )
    
    
    
    
    
    
    (664
    )
    
    
    
    
    
    
    (3,812
    )
    
    
    (1,318
    )
    
    
    
    
    
    
    (5,130
    )Proceeds from sale of KGS units, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109,642
    
    
    
    
    
    
    
    109,642Contributions from parent
    
    
    
    
    
    
    863
    
    
    
    
    
    
    
    
    
    
    
    863
    
    
    
    67,553
    
    
    
    (68,416
    )
    
    
    Contributions from noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    167Distributions to parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (115,074
    )
    
    
    115,074
    
    
    
    Distributions to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,794
    )
    
    
    
    
    
    
    (8,794
    )Proceeds from exercise of stock options
    
    
    21,387
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,387
    
    
    
    
    
    
    
    
    
    
    
    21,387Excess tax benefits on exercise of stock operations
    
    
    2,755
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,755
    
    
    
    
    
    
    
    
    
    
    
    2,755Purchase of treasury stock
    
    
    (1,567
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,567
    )
    
    
    
    
    
    
    
    
    
    
    (1,567
    )Cash flow provided by (used for) financing activities
    
    
    (163,939
    )
    
    
    863
    
    
    
    26,966
    
    
    
    
    
    
    
    (136,110
    )
    
    
    57,176
    
    
    
    46,658
    
    
    
    (32,276
    )Effect of exchange rates on cash
    
    
    446
    
    
    
    
    
    
    
    5,423
    
    
    
    
    
    
    
    5,869
    
    
    
    
    
    
    
    
    
    
    
    5,869Net increase (decrease) in cash & equivalents
    
    
    26,929
    
    
    
    
    
    
    
    (2,312
    )
    
    
    
    
    
    
    24,617
    
    
    
    (1,672
    )
    
    
    
    
    
    
    22,945Cash and equivalents at beginning of period
    
    
    83
    
    
    
    
    
    
    
    2,401
    
    
    
    
    
    
    
    2,484
    
    
    
    2,797
    
    
    
    
    
    
    
    5,281Cash and equivalents at end of period
    
    $
    27,012
    
    
    $
    
    
    
    $
    89
    
    
    $
    
    
    
    $
    27,101
    
    
    $
    1,125
    
    
    $
    
    
    
    $
    28,226
 For the Year Ended December 31, 2006Restricted
    
    
    Restricted
    
    
    Restricted

    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Cash flow provided by (used for) operations
    
    $
    152,793
    
    
    $
    (434
    )
    
    $
    83,382
    
    
    $
    
    
    
    $
    235,741
    
    
    $
    6,445
    
    
    $
    
    
    
    $
    242,186Purchases of property, plant and equipment
    
    
    (403,074
    )
    
    
    
    
    
    
    (137,627
    )
    
    
    
    
    
    
    (540,701
    )
    
    
    (78,360
    )
    
    
    
    
    
    
    (619,061
    )Investment in subsidiaries and affiliates
    
    
    (67,855
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (67,855
    )
    
    
    
    
    
    
    67,855
    
    
    
    Return of investment from subsidiaries and affiliates
    
    
    143
    
    
    
    
    
    
    
    1,780
    
    
    
    
    
    
    
    1,923
    
    
    
    
    
    
    
    
    
    
    
    1,923Proceeds from sales of properties and equipment
    
    
    1,335
    
    
    
    
    
    
    
    3,778
    
    
    
    
    
    
    
    5,113
    
    
    
    
    
    
    
    
    
    
    
    5,113Cash flow used for investing activities
    
    
    (469,451
    )
    
    
    
    
    
    
    (132,069
    )
    
    
    
    
    
    
    (601,520
    )
    
    
    (78,360
    )
    
    
    67,855
    
    
    
    (612,025
    )Issuance of debt
    
    
    638,500
    
    
    
    
    
    
    
    56,182
    
    
    
    
    
    
    
    694,682
    
    
    
    
    
    
    
    
    
    
    
    694,682Repayments of debt
    
    
    (340,846
    )
    
    
    
    
    
    
    (9,908
    )
    
    
    
    
    
    
    (350,754
    )
    
    
    
    
    
    
    
    
    
    
    (350,754
    )Debt issuance costs
    
    
    (9,213
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,213
    )
    
    
    
    
    
    
    
    
    
    
    (9,213
    )Contributions from parent
    
    
    
    
    
    
    434
    
    
    
    
    
    
    
    
    
    
    
    434
    
    
    
    67,421
    
    
    
    (67,855
    )
    
    
    Contributions from noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,291
    
    
    
    
    
    
    
    7,291Proceeds from exercise of stock options
    
    
    19,689
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,689
    
    
    
    
    
    
    
    
    
    
    
    19,689Purchase of treasury stock
    
    
    (384
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (384
    )
    
    
    
    
    
    
    
    
    
    
    (384
    )Cash flow provided by financing activities
    
    
    307,746
    
    
    
    434
    
    
    
    46,274
    
    
    
    
    
    
    
    354,454
    
    
    
    74,712
    
    
    
    (67,855
    )
    
    
    361,311Effect of exchange rates on cash
    
    
    5
    
    
    
    
    
    
    
    (514
    )
    
    
    
    
    
    
    (509
    )
    
    
    
    
    
    
    
    
    
    
    (509
    )Net increase (decrease) in cash & equivalents
    
    
    (8,907
    )
    
    
    
    
    
    
    (2,927
    )
    
    
    
    
    
    
    (11,834
    )

    
    
    2,797
    
    
    
    
    
    
    
    (9,037
    )Cash and equivalents at beginning of period
    
    
    8,990
    
    
    
    
    
    
    
    5,328
    
    
    
    
    
    
    
    14,318
    
    
    
    
    
    
    
    
    
    
    
    14,318Cash and equivalents at end of period
    
    $
    83
    
    
    $
    
    
    
    $
    2,401
    
    
    $
    
    
    
    $
    2,484
    
    
    $
    2,797
    
    
    $
    
    
    
    $
    5,281




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##### Table of Contents



22. SUPPLEMENTAL CASH FLOW INFORMATION
  Years Ended December 31,2008
    
    2007
    
    2006(In thousands)Interest
    
    $
    83,400
    
    
    $
    69,038
    
    
    $
    37,627Income taxes
    
    
    49,433
    
    
    
    
    
    
    
    3
  Years Ended December 31,2008
    
    2007
    
    2006(In thousands)Working capital related to capital expenditures
    
    $
    230,624
    
    
    $
    159,819
    
    
    $
    118,359Issuance of common stock as consideration for the Alliance Acquisition
    
    
    262,092
    
    
    
    
    
    
    
    Noncash interest in BBEP earnings
    
    
    
    
    
    
    429,618
    
    
    
    Tax benefit recognized on employee stock option exercises
    
    
    
    
    
    
    2,755
    
    
    
    
 23. RELATED PARTY TRANSACTIONS




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##### Table of Contents



24. SEGMENT INFORMATION
  Exploration & Production
    
    Processing &
    
    
    
    
    
    
    
    
    
    QuicksilverUnited States
    
    Canada
    
    Gathering
    
    Corporate
    
    Elimination
    
    Consolidated(In thousands)2008Revenues
    
    $
    600,292
    
    
    $
    187,740
    
    
    $
    78,572
    
    
    $
    
    
    
    $
    (65,963
    )
    
    $
    800,641Depletion, depreciation and accretion
    
    
    127,010
    
    
    
    44,948
    
    
    
    15,134
    
    
    
    1,104
    
    
    
    
    
    
    
    188,196Impairment related to oil and gas properties
    
    
    624,315
    
    
    
    
    
    
    
    9,200
    
    
    
    
    
    
    
    
    
    
    
    633,515Operating income (loss)
    
    
    (321,756
    )
    
    
    104,131
    
    
    
    34,879
    
    
    
    (66,951
    )
    
    
    
    
    
    
    (249,697
    )Property, plant and equipment  net
    
    
    2,723,103
    
    
    
    550,413
    
    
    
    519,447
    
    
    
    4,752
    
    
    
    
    
    
    
    3,797,715Property and equipment costs incurred
    
    
    2,179,815
    
    
    
    138,360
    
    
    
    265,222
    
    
    
    1,638
    
    
    
    
    
    
    
    2,585,0352007Revenues
    
    $
    396,768
    
    
    $
    158,121
    
    
    $
    35,941
    
    
    $
    
    
    
    $
    (29,572
    )
    
    $
    561,258Depletion, depreciation and accretion
    
    
    72,132
    
    
    
    39,445
    
    
    
    8,146
    
    
    
    974
    
    
    
    
    
    
    
    120,697Operating income
    
    
    750,703
    
    
    
    85,155
    
    
    
    12,380
    
    
    
    (44,657
    )
    
    
    
    
    
    
    803,581Property, plant and equipment  net
    
    
    1,290,728
    
    
    
    571,496
    
    
    
    275,807
    
    
    
    4,315
    
    
    
    
    
    
    
    2,142,346Property and equipment costs incurred
    
    
    758,601
    
    
    
    115,073
    
    
    
    168,523
    
    
    
    2,017
    
    
    
    
    
    
    
    1,044,2142006Revenues
    
    $
    272,377
    
    
    $
    116,726
    
    
    $
    13,907
    
    
    $
    
    
    
    $
    (12,648
    )
    
    $
    390,362Depletion, depreciation and accretion
    
    
    45,810
    
    
    
    29,225
    
    
    
    2,998
    
    
    
    767
    
    
    
    
    
    
    
    78,800Operating income
    
    
    133,521
    
    
    
    63,906
    
    
    
    3,173
    
    
    
    (26,404
    )
    
    
    
    
    
    
    174,196Property, plant and equipment  net
    
    
    1,126,351
    
    
    
    417,199
    
    
    
    132,457
    
    
    
    3,273
    
    
    
    
    
    
    
    1,679,280Property and equipment costs incurred
    
    
    439,986
    
    
    
    118,028
    
    
    
    85,848
    
    
    
    1,865
    
    
    
    
    
    
    
    645,727
 25. SUPPLEMENTAL INFORMATION (UNAUDITED)




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##### Table of Contents








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##### Table of Contents



Natural Gas (MMcf)
    
    NGL (MBbl)
    
    Crude Oil (MBbl)United
    
    
    
    
    
    
    
    
    
    UnitedUnited States
    
    Canada
    
    Total
    
    States
    
    Canada
    
    Total
    
    States
    
    Canada
    
    TotalDecember 31, 2005
    
    
    716,043
    
    
    
    304,910
    
    
    
    1,020,953
    
    
    
    9,623
    
    
    
    
    
    
    
    9,623
    
    
    
    5,915
    
    
    
    
    
    
    
    5,915Revisions
    
    
    (80,484
    )
    
    
    (32,938
    )
    
    
    (113,422
    )
    
    
    4,593
    
    
    
    7
    
    
    
    4,600
    
    
    
    667
    
    
    
    
    
    
    
    667Extensions and discoveries
    
    
    332,811
    
    
    
    55,006
    
    
    
    387,817
    
    
    
    34,510
    
    
    
    14
    
    
    
    34,524
    
    
    
    320
    
    
    
    
    
    
    
    320Sales in place
    
    
    
    
    
    
    (405
    )
    
    
    (405
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Production
    
    
    (35,028
    )
    
    
    (18,238
    )
    
    
    (53,266
    )
    
    
    (741
    )
    
    
    (5
    )
    
    
    (746
    )
    
    
    (587
    )
    
    
    
    
    
    
    (587
    )December 31, 2006(1)
    
    
    933,342
    
    
    
    308,335
    
    
    
    1,241,677
    
    
    
    47,985
    
    
    
    16
    
    
    
    48,001
    
    
    
    6,315
    
    
    
    
    
    
    
    6,315Revisions
    
    
    (30,494
    )
    
    
    17,761
    
    
    
    (12,733
    )
    
    
    1,112
    
    
    
    (1
    )
    
    
    1,111
    
    
    
    633
    
    
    
    
    
    
    
    633Extensions and discoveries
    
    
    302,098
    
    
    
    24,463
    
    
    
    326,561
    
    
    
    46,571
    
    
    
    
    
    
    
    46,571
    
    
    
    658
    
    
    
    
    
    
    
    658Sales in place(2)
    
    
    (503,651
    )
    
    
    (1,446
    )
    
    
    (505,097
    )
    
    
    (3,147
    )
    
    
    
    
    
    
    (3,147
    )
    
    
    (3,947
    )
    
    
    
    
    
    
    (3,947
    )Production
    
    
    (38,887
    )
    
    
    (20,732
    )
    
    
    (59,619
    )
    
    
    (2,466
    )
    
    
    (5
    )
    
    
    (2,471
    )
    
    
    (584
    )
    
    
    
    
    
    
    (584
    )December 31, 2007(1)
    
    
    662,408
    
    
    
    328,381
    
    
    
    990,789
    
    
    
    90,055
    
    
    
    10
    
    
    
    90,065
    
    
    
    3,075
    
    
    
    
    
    
    
    3,075Revisions
    
    
    (171,009
    )
    
    
    4,923
    
    
    
    (166,086
    )
    
    
    (25,596
    )
    
    
    
    
    
    
    (25,596
    )
    
    
    (106
    )
    
    
    
    
    
    
    (106
    )Extensions and discoveries
    
    
    560,205
    
    
    
    22,363
    
    
    
    582,568
    
    
    
    31,662
    
    
    
    
    
    
    
    31,662
    
    
    
    428
    
    
    
    
    
    
    
    428Purchases in place
    
    
    299,952
    
    
    
    
    
    
    
    299,952
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sales in place
    
    
    
    
    
    
    (27
    )
    
    
    (27
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Production
    
    
    (45,059
    )
    
    
    (23,069
    )
    
    
    (68,128
    )
    
    
    (4,194
    )
    
    
    (2
    )
    
    
    (4,196
    )
    
    
    (483
    )
    
    
    
    
    
    
    (483
    )December 31, 2008(1)
    
    
    1,306,497
    
    
    
    332,571
    
    
    
    1,639,068
    
    
    
    91,927
    
    
    
    8
    
    
    
    91,935
    
    
    
    2,914
    
    
    
    
    
    
    
    2,914Proved developed reserves
December 31, 2006
    
    
    626,582
    
    
    
    217,759
    
    
    
    844,341
    
    
    
    18,771
    
    
    
    16
    
    
    
    18,787
    
    
    
    5,236
    
    
    
    
    
    
    
    5,236December 31, 2007
    
    
    379,917
    
    
    
    260,029
    
    
    
    639,946
    
    
    
    50,738
    
    
    
    10
    
    
    
    50,748
    
    
    
    2,763
    
    
    
    
    
    
    
    2,763December 31, 2008
    
    
    756,191
    
    
    
    278,668
    
    
    
    1,034,859
    
    
    
    56,181
    
    
    
    8
    
    
    
    56,189
    
    
    
    2,509
    
    
    
    
    
    
    
    2,509
 
 (1)
    
    Although the Company did not acquire its initial 32% limited partnership interest
in BBEP until 2007, had the Company owned 32% of BBEP at December 31, 2006, proportionate
ownership of BBEP would have included 1,341 MMcf of natural gas and 9,613 MBbl of crude oil,
all within the United States but none of which is included in the above table. At December 31,
2007, the Companys 32% ownership of BBEP represented proved oil and gas reserves of 160,880
MMcf of natural gas and 18,505 MBbl of crude oil, all within the United States but none of
which is included in the above table. At December 31, 2008, the Companys 41% ownership of
BBEP represented proved oil and gas reserves of 189,176 MMcf of natural gas and 10,509 MBbl of
crude oil, all within the United States but none of which is included in the above table.(2)
    
    Sales of reserves in place during 2007 relate principally to the BreitBurn
Transaction, which is more fully described in Note 5  United States
    
    
    Canada
    
    
    Consolidated(In thousands)2008Proved properties
    
    $
    3,068,326
    
    
    $
    553,505
    
    
    $
    3,621,831Unevaluated properties
    
    
    462,943
    
    
    
    80,590
    
    
    
    543,533Accumulated DD&A
    
    
    (902,281
    )
    
    
    (120,475
    )
    
    
    (1,022,756
    )Net capitalized costs(1)
    
    $
    2,628,988
    
    
    $
    513,620
    
    
    $
    3,142,6082007Proved properties
    
    $
    1,231,109
    
    
    $
    580,186
    
    
    $
    1,811,295Unevaluated properties
    
    
    163,274
    
    
    
    51,954
    
    
    
    215,228Accumulated DD&A
    
    
    (157,122
    )
    
    
    (105,001
    )
    
    
    (262,123
    )Net capitalized costs(1)
    
    $
    1,237,261
    
    
    $
    527,139
    
    
    $
    1,764,4002006Proved properties
    
    $
    1,163,353
    
    
    $
    397,106
    
    
    $
    1,560,459Unevaluated properties
    
    
    157,220
    
    
    
    34,445
    
    
    
    191,665Accumulated DD&A
    
    
    (250,547
    )
    
    
    (57,518
    )
    
    
    (308,065
    )Net capitalized costs(1)
    
    $
    1,070,026
    
    
    $
    374,033
    
    
    $
    1,444,059
 
 (1)
    
    Although the Company did not acquire its initial 32% limited partnership interest in
BBEP until 2007, had the Company owned 32% of BBEP at December 31, 2006, proportionate
ownership of BBEP would have included $59.3 million of capitalized oil and gas costs, all
within the United States but none of which is included in the above table. At December 31,
2007, the Companys 32% ownership of BBEP represented $593.8 million of capitalized oil and
gas costs, all within the United States but none of which is included in the above table. At
December 31, 2008, the Companys 41% ownership of BBEP represented $743.8 million of
capitalized oil and gas costs, all within the United States but none of which is included in
the above table.




---



##### Table of Contents



United States
    
    
    Canada
    
    
    Consolidated(In thousands)2008Proved acreage
    
    $
    787,172
    
    
    $
    
    
    
    $
    787,172Unproved acreage
    
    
    484,770
    
    
    
    54,048
    
    
    
    538,818Development costs
    
    
    836,032
    
    
    
    68,629
    
    
    
    904,661Exploration costs
    
    
    30,161
    
    
    
    10,280
    
    
    
    40,441Total(1)
    
    $
    2,138,135
    
    
    $
    132,957
    
    
    $
    2,271,0922007Proved acreage
    
    $
    
    
    
    $
    
    
    
    $
    Unproved acreage
    
    
    17,031
    
    
    
    31,448
    
    
    
    48,479Development costs
    
    
    648,632
    
    
    
    67,608
    
    
    
    716,240Exploration costs
    
    
    75,862
    
    
    
    11,953
    
    
    
    87,815Total(1)
    
    $
    741,525
    
    
    $
    111,009
    
    
    $
    852,5342006Proved acreage
    
    $
    
    
    
    $
    
    
    
    $
    Unproved acreage
    
    
    32,048
    
    
    
    1,574
    
    
    
    33,622Development costs
    
    
    121,104
    
    
    
    82,378
    
    
    
    203,482Exploration costs
    
    
    280,438
    
    
    
    27,197
    
    
    
    307,635Total(1)
    
    $
    433,590
    
    
    $
    111,149
    
    
    $
    544,739
 
 (1)
    
    Although the Company did not acquire its initial 32% limited partnership interest in
BBEP until 2007, had the Company owned 32% of BBEP at December 31, 2006, proportionate
ownership of BBEP would have included $12.2 million of capitalized expenditures for
exploration and development, all within the United States but none of which is included in the
above table. At December 31, 2007, the Companys 32% ownership of BBEP represented $551.0
million of costs incurred for exploration and development, all within the United States but
none of which is included in the above table. At December 31, 2008, the Companys 41%
ownership of BBEP represented $49.6 million of costs incurred for exploration and development,
all within the United States but none of which is included in the above table.  United States
    
    
    Canada
    
    
    Consolidated(In thousands)2008Natural gas, NGL and crude oil sales
    
    $
    597,889
    
    
    $
    182,899
    
    
    $
    780,788Oil & gas production expense
    
    
    113,793
    
    
    
    38,662
    
    
    
    152,455Depletion & amortization expense
    
    
    120,845
    
    
    
    40,337
    
    
    
    161,182Impairment related to oil and gas properties
    
    
    624,315
    
    
    
    
    
    
    
    624,315(261,064
    )
    
    
    103,900
    
    
    
    (157,164
    )Income tax expense (benefit)
    
    
    (91,372
    )
    
    
    30,131
    
    
    
    (61,241
    )Results from producing activities(1)
    
    $
    (169,692
    )
    
    $
    73,769
    
    
    $
    (95,923
    )2007Natural gas, NGL and crude oil sales
    
    $
    392,841
    
    
    $
    152,248
    
    
    $
    545,089Oil & gas production expense
    
    
    119,452
    
    
    
    33,521
    
    
    
    152,973Depletion & amortization expense
    
    
    65,701
    
    
    
    35,330
    
    
    
    101,031207,688
    
    
    
    83,397
    
    
    
    291,085Income tax expense
    
    
    72,691
    
    
    
    24,185
    
    
    
    96,876Results from producing activities(1)
    
    $
    134,997
    
    
    $
    59,212
    
    
    $
    194,2092006Natural gas, NGL and crude oil sales
    
    $
    270,535
    
    
    $
    116,005
    
    
    $
    386,540Oil & gas production expense
    
    
    87,199
    
    
    
    23,596
    
    
    
    110,795Depletion & amortization expense
    
    
    40,760
    
    
    
    26,094
    
    
    
    66,854142,576
    
    
    
    66,315
    
    
    
    208,891Income tax expense
    
    
    49,902
    
    
    
    19,231
    
    
    
    69,133Results from producing activities(1)
    
    $
    92,674
    
    
    $
    47,084
    
    
    $
    139,758




---



##### Table of Contents



(1)
    
    Although the Company did not acquire its initial 32% limited partnership interest in
BBEP until 2007, had the Company owned 32% of BBEP at December 31, 2006, proportionate
ownership of BBEP would have included $25.0 million of producing activity results, all within
the United States but none of which is included in the above table. For 2007, the Companys
32% ownership of BBEP represented a loss of $7.8 million for producing activity results
including realized and unrealized hedging gains and losses, all within the United States but
none of which is included in the above table. At December 31, 2008, the Companys 41%
ownership of BBEP represented income of $214.1 million for producing activity results
including realized and unrealized hedging gains and losses, all within the United States but
none of which is included in the above table.   At December 31,2008
    
    2007
    
    2006Natural gas  Henry Hub-Spot
    
    $
    5.71
    
    
    $
    6.80
    
    
    $
    5.64Natural gas  AECO
    
    
    5.44
    
    
    
    6.35
    
    
    
    5.39NGL  Mont Belvieu, Texas
    
    
    21.65
    
    
    
    57.35
    
    
    
    40.10NGL  Kalkaska, Michigan(1)
    
    
    N/A
    
    
    
    N/A
    
    
    
    37.73Crude oil  WTI Cushing
    
    
    44.60
    
    
    
    95.98
    
    
    
    60.85
 
 (1)
    
    All Michigan NGL reserves were sold in 2007 pursuant to the BreitBurn Transaction,
which is more fully described in Note 5




---



##### Table of Contents



United States
    
    
    Canada
    
    
    Total(In thousands)December 31, 2008Future revenues
    
    $
    8,783,936
    
    
    $
    1,764,268
    
    
    $
    10,548,204Future production costs
    
    
    (4,162,737
    )
    
    
    (551,395
    )
    
    
    (4,714,132
    )Future development costs
    
    
    (1,140,466
    )
    
    
    (113,800
    )
    
    
    (1,254,266
    )Future income taxes
    
    
    (504,753
    )
    
    
    (215,212
    )
    
    
    (719,965
    )Future net cash flows
    
    
    2,975,980
    
    
    
    883,861
    
    
    
    3,859,84110% discount
    
    
    (1,623,862
    )
    
    
    (441,717
    )
    
    
    (2,065,579
    )Standardized measure of discounted future
cash flows relating to proved reserves(1)
    
    $
    1,352,118
    
    
    $
    442,144
    
    
    $
    1,794,262December 31, 2007Future revenues
    
    $
    9,566,791
    
    
    $
    2,037,478
    
    
    $
    11,604,269Future production costs
    
    
    (3,286,618
    )
    
    
    (675,890
    )
    
    
    (3,962,508
    )Future development costs
    
    
    (651,802
    )
    
    
    (156,289
    )
    
    
    (808,091
    )Future income taxes
    
    
    (1,772,021
    )
    
    
    (228,883
    )
    
    
    (2,000,904
    )Future net cash flows
    
    
    3,856,350
    
    
    
    976,416
    
    
    
    4,832,76610% discount
    
    
    (2,168,150
    )
    
    
    (495,413
    )
    
    
    (2,663,563
    )Standardized measure of discounted future cash
flows relating to proved reserves(1)
    
    $
    1,688,200
    
    
    $
    481,003
    
    
    $
    2,169,203December 31, 2006Future revenues
    
    $
    7,388,886
    
    
    $
    1,629,456
    
    
    $
    9,018,342Future production costs
    
    
    (2,715,746
    )
    
    
    (550,148
    )
    
    
    (3,265,894
    )Future development costs
    
    
    (464,997
    )
    
    
    (148,850
    )
    
    
    (613,847
    )Future income taxes
    
    
    (1,268,907
    )
    
    
    (197,885
    )
    
    
    (1,466,792
    )Future net cash flows
    
    
    2,939,236
    
    
    
    732,573
    
    
    
    3,671,80910% discount
    
    
    (1,813,746
    )
    
    
    (372,238
    )
    
    
    (2,185,984
    )Standardized measure of discounted future
cash flows relating to proved reserves(1)
    
    $
    1,125,490
    
    
    $
    360,335
    
    
    $
    1,485,825
 
 (1)
    
    Although the Company did not acquire its initial 32% limited partnership interest in
BBEP until 2007, had the Company owned 32% of BBEP at December 31, 2006, proportionate
ownership of BBEP would have included $100.0 million of discounted future cash flows, all
within the United States but none of which is included in the above table. For 2007, the
Companys 32% ownership of BBEP represented $609.2 million of discounted future cash flows,
all within the United States, but none of which is included in the above table. At December
31, 2008, the Companys 41% ownership of BBEP represented $240.2 million of discounted future
cash flows related to its proved oil and gas reserves, all within the United States but none
of which is included in the above table.  Years Ended December 31,2008
    
    
    2007
    
    
    2006(In thousands)Sales of oil and gas net of production costs
    
    $
    (628,333
    )
    
    $
    (392,116
    )
    
    $
    (275,745
    )Net changes in price and production cost
    
    
    (2,368,940
    )
    
    
    1,048,432
    
    
    
    (1,236,793
    )Extensions and discoveries
    
    
    1,630,418
    
    
    
    1,045,296
    
    
    
    661,033Development costs incurred
    
    
    373,124
    
    
    
    170,686
    
    
    
    78,063Changes in estimated future development costs
    
    
    (413,097
    )
    
    
    (234,649
    )
    
    
    42,015Purchase and sale of reserves, net
    
    
    722,662
    
    
    
    (1,008,566
    )
    
    
    (1,977
    )Revision of estimates
    
    
    (618,527
    )
    
    
    (8,090
    )
    
    
    (94,080
    )Accretion of discount
    
    
    324,064
    
    
    
    196,275
    
    
    
    260,340Net change in income taxes
    
    
    509,854
    
    
    
    (293,374
    )
    
    
    302,342Timing and other differences
    
    
    93,834
    
    
    
    159,484
    
    
    
    (73,505
    )Net increase (decrease)
    
    $
    (374,941
    )
    
    $
    683,378
    
    
    $
    (338,307
    )




---



##### Table of Contents



26. SELECTED QUARTERLY DATA (UNAUDITED)
 Quarter EndedMarch 31
    
    June 30
    
    September 30
    
    December 31(In thousands, except per share data)2008(1)Operating revenues
    
    $
    157,617
    
    
    $
    197,900
    
    
    $
    236,263
    
    
    $
    208,861Operating income
    
    
    70,723
    
    
    
    107,103
    
    
    
    119,990
    
    
    
    (547,513
    )Net income (loss)
    
    
    41,642
    
    
    
    52,323
    
    
    
    (2,629
    )
    
    
    (464,958
    )Net income (loss) attributable to Quicksilver
    
    
    41,134
    
    
    
    51,335
    
    
    
    (3,754
    )
    
    
    (466,991
    )Basic net earnings (loss) per share
    
    $
    0.26
    
    
    $
    0.32
    
    
    $
    (0.02
    )
    
    $
    (2.79
    )Diluted net earnings (loss) per share
    
    
    0.25
    
    
    
    0.31
    
    
    
    (0.02
    )
    
    
    (2.79
    )2007(2)Operating revenues
    
    $
    116,580
    
    
    $
    136,398
    
    
    $
    159,199
    
    
    $
    149,081Operating income
    
    
    48,560
    
    
    
    62,078
    
    
    
    63,574
    
    
    
    629,472Net income
    
    
    21,944
    
    
    
    30,871
    
    
    
    28,170
    
    
    
    395,460Net income attributable to Quicksilver
    
    
    21,881
    
    
    
    30,743
    
    
    
    27,713
    
    
    
    395,053Basic net earnings per share
    
    $
    0.14
    
    
    $
    0.20
    
    
    $
    0.18
    
    
    $
    2.51Diluted net earnings per share
    
    
    0.14
    
    
    
    0.19
    
    
    
    0.17
    
    
    
    2.35
 
 (1)
    
    Operating loss for the fourth quarter of 2008 includes a charge of $633.5 million
for the impairment related to the Companys U.S. oil and gas properties. Net loss for the
fourth quarter of 2008 also includes $93.3 million for pretax income attributable to the
Companys proportionate ownership of BBEP and a pretax charge of $320.4 million for impairment
of the related investment, respectively.(2)
    
    Operating income and net income for the fourth quarter of 2007 includes a gain of
$628.6 million recognized from the divestiture of the Companys Northeast Operations and a
charge of $63.5 million for the remaining contract period of the Michigan Sales Contract. 27. INTERIM CONDENSED CONSOLIDATING FINANCIAL INFORMATION (UNAUDITED)
  September 30, 2008Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)ASSETSCurrent assets
    
    $
    312,186
    
    
    $
    313,286
    
    
    $
    313,286
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    336,875
    
    
    $
    86,853
    
    
    $
    86,853
    
    
    $
    (394,000
    )
    
    $
    (145,078
    )
    
    $
    (145,078
    )Property and equipment
    
    
    3,177,418
    
    
    
    3,177,418
    
    
    
    3,177,418
    
    
    
    10,977
    
    
    
    10,977
    
    
    
    10,977
    
    
    
    1,041,897
    
    
    
    1,041,897
    
    
    
    1,041,897
    
    
    
    
    
    
    
    
    
    
    
    Investment in subsidiaries (equity method)
    
    
    741,170
    
    
    
    582,708
    
    
    
    662,024
    
    
    
    166,853
    
    
    
    
    
    
    
    79,316
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (613,151
    )
    
    
    (287,836
    )
    
    
    (446,468
    )Other assets
    
    
    152,040
    
    
    
    150,940
    
    
    
    148,648
    
    
    
    151,864
    
    
    
    151,864
    
    
    
    151,864
    
    
    
    5,080
    
    
    
    5,080
    
    
    
    5,080
    
    
    
    (204,869
    )
    
    
    (203,769
    )
    
    
    (203,769
    )Total assets
    
    $
    4,382,814
    
    
    $
    4,224,352
    
    
    $
    4,301,376
    
    
    $
    329,694
    
    
    $
    162,841
    
    
    $
    242,157
    
    
    $
    1,383,852
    
    
    $
    1,133,830
    
    
    $
    1,133,830
    
    
    $
    (1,212,020
    )
    
    $
    (636,683
    )
    
    $
    (795,315
    )LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    413,613
    
    
    $
    255,151
    
    
    $
    255,151
    
    
    $
    152,390
    
    
    $
    152,390
    
    
    $
    152,390
    
    
    $
    161,161
    
    
    $
    70,701
    
    
    $
    70,701
    
    
    $
    (394,000
    )
    
    $
    (145,078
    )
    
    $
    (145,078
    )Long-term liabilities
    
    
    2,468,412
    
    
    
    2,468,412
    
    
    
    2,454,219
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    678,746
    
    
    
    677,646
    
    
    
    679,681
    
    
    
    (204,869
    )
    
    
    (203,769
    )
    
    
    (203,769
    )Deferred gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,316
    
    
    
    79,316
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,782
    
    
    
    28,782
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stockholders equity-Quicksilver
    
    
    1,500,789
    
    
    
    1,500,789
    
    
    
    1,592,006
    
    
    
    177,304
    
    
    
    10,451
    
    
    
    89,767
    
    
    
    435,847
    
    
    
    277,385
    
    
    
    356,701
    
    
    
    (613,151
    )
    
    
    (287,836
    )
    
    
    (446,468
    )Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,747
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities and stockholders equity
    
    $
    4,382,814
    
    
    $
    4,224,352
    
    
    $
    4,301,376
    
    
    $
    329,694
    
    
    $
    162,841
    
    
    $
    242,157
    
    
    $
    1,383,852
    
    
    $
    1,133,830
    
    
    $
    1,133,830
    
    
    $
    (1,212,020
    )
    
    $
    (636,683
    )
    
    $
    (795,315
    )
 June 30,
2008Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)ASSETSCurrent assets
    
    $
    416,922
    
    
    $
    418,022
    
    
    $
    418,022
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    301,450
    
    
    $
    79,661
    
    
    $
    79,661
    
    
    $
    (443,750
    )
    
    $
    (223,061
    )
    
    $
    (223,061
    )Property and equipment
    
    
    1,699,550
    
    
    
    1,699,550
    
    
    
    1,699,550
    
    
    
    10,981
    
    
    
    10,981
    
    
    
    10,981
    
    
    
    992,115
    
    
    
    992,115
    
    
    
    992,115
    
    
    
    
    
    
    
    
    
    
    
    Investment in subsidiaries (equity method)
    
    
    744,722
    
    
    
    585,309
    
    
    
    664,625
    
    
    
    167,796
    
    
    
    
    
    
    
    79,316
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (516,731
    )
    
    
    (189,522
    )
    
    
    (348,154
    )Other assets
    
    
    90,642
    
    
    
    89,542
    
    
    
    87,317
    
    
    
    131,911
    
    
    
    131,911
    
    
    
    131,911
    
    
    
    2,198
    
    
    
    2,198
    
    
    
    2,198
    
    
    
    (184,519
    )
    
    
    (183,419
    )
    
    
    (183,419
    )Total assets
    
    $
    2,951,836
    
    
    $
    2,792,423
    
    
    $
    2,869,514
    
    
    $
    310,688
    
    
    $
    142,892
    
    
    $
    222,208
    
    
    $
    1,295,763
    
    
    $
    1,073,974
    
    
    $
    1,073,974
    
    
    $
    (1,145,000
    )
    
    $
    (596,002
    )
    
    $
    (754,634
    )LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    608,806
    
    
    $
    449,393
    
    
    $
    449,393
    
    
    $
    133,800
    
    
    $
    133,800
    
    
    $
    133,800
    
    
    $
    250,439
    
    
    $
    189,163
    
    
    $
    189,163
    
    
    $
    (443,750
    )
    
    $
    (223,061
    )
    
    $
    (223,061
    )Long-term liabilities
    
    
    1,419,402
    
    
    
    1,419,402
    
    
    
    1,404,197
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    597,067
    
    
    
    595,967
    
    
    
    597,396
    
    
    
    (184,519
    )
    
    
    (183,419
    )
    
    
    (183,419
    )Deferred gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,316
    
    
    
    79,316
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,098
    
    
    
    29,098
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stockholders equity-Quicksilver
    
    
    923,628
    
    
    
    923,628
    
    
    
    1,015,924
    
    
    
    176,888
    
    
    
    9,092
    
    
    
    88,408
    
    
    
    339,843
    
    
    
    180,430
    
    
    
    259,746
    
    
    
    (516,731
    )
    
    
    (189,522
    )
    
    
    (348,154
    )Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,669
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities and stockholders equity
    
    $
    2,951,836
    
    
    $
    2,792,423
    
    
    $
    2,869,514
    
    
    $
    310,688
    
    
    $
    142,892
    
    
    $
    222,208
    
    
    $
    1,295,763
    
    
    $
    1,073,974
    
    
    $
    1,073,974
    
    
    $
    (1,145,000
    )
    
    $
    (596,002
    )
    
    $
    (754,634
    )
 March 31,
2008Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)ASSETSCurrent assets
    
    $
    311,609
    
    
    $
    312,709
    
    
    $
    312,709
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    270,544
    
    
    $
    62,152
    
    
    $
    62,152
    
    
    $
    (345,146
    )
    
    $
    (137,854
    )
    
    $
    (137,854
    )Property and equipment
    
    
    1,481,585
    
    
    
    1,481,585
    
    
    
    1,481,585
    
    
    
    10,953
    
    
    
    10,953
    
    
    
    10,953
    
    
    
    938,226
    
    
    
    938,226
    
    
    
    938,226
    
    
    
    
    
    
    
    
    
    
    
    Investment in subsidiaries (equity method)
    
    
    790,711
    
    
    
    630,357
    
    
    
    709,673
    
    
    
    168,747
    
    
    
    
    
    
    
    79,316
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (542,727
    )
    
    
    (213,626
    )
    
    
    (372,258
    )Other assets
    
    
    75,301
    
    
    
    74,201
    
    
    
    72,042
    
    
    
    110,743
    
    
    
    110,743
    
    
    
    110,743
    
    
    
    2,329
    
    
    
    2,329
    
    
    
    2,329
    
    
    
    (162,934
    )
    
    
    (161,834
    )
    
    
    (161,834
    )Total assets
    
    $
    2,659,206
    
    
    $
    2,498,852
    
    
    $
    2,576,009
    
    
    $
    290,443
    
    
    $
    121,696
    
    
    $
    201,012
    
    
    $
    1,211,099
    
    
    $
    1,002,707
    
    
    $
    1,002,707
    
    
    $
    (1,050,807
    )
    
    $
    (513,314
    )
    
    $
    (671,946
    )LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    503,880
    
    
    $
    343,526
    
    
    $
    343,526
    
    
    $
    113,585
    
    
    $
    113,585
    
    
    $
    113,585
    
    
    $
    138,451
    
    
    $
    91,513
    
    
    $
    91,513
    
    
    $
    (345,146
    )
    
    $
    (137,854
    )
    
    $
    (137,854
    )Long-term liabilities
    
    
    1,129,052
    
    
    
    1,129,052
    
    
    
    1,112,852
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    598,051
    
    
    
    596,951
    
    
    
    597,848
    
    
    
    (162,934
    )
    
    
    (161,834
    )
    
    
    (161,834
    )Deferred gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,316
    
    
    
    79,316
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,412
    
    
    
    29,412
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stockholders equity-Quicksilver
    
    
    1,026,274
    
    
    
    1,026,274
    
    
    
    1,119,631
    
    
    
    176,858
    
    
    
    8,111
    
    
    
    87,427
    
    
    
    365,869
    
    
    
    205,515
    
    
    
    284,831
    
    
    
    (542,727
    )
    
    
    (213,626
    )
    
    
    (372,258
    )Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,515
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities and stockholders equity
    
    $
    2,659,206
    
    
    $
    2,498,852
    
    
    $
    2,576,009
    
    
    $
    290,443
    
    
    $
    121,696
    
    
    $
    201,012
    
    
    $
    1,211,099
    
    
    $
    1,002,707
    
    
    $
    1,002,707
    
    
    $
    (1,050,807
    )
    
    $
    (513,314
    )
    
    $
    (671,946
    )
 September 30, 2007Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)ASSETSCurrent assets
    
    $
    4,589
    
    
    $
    5,414
    
    
    $
    5,414
    
    
    $
    596
    
    
    $
    596
    
    
    $
    596
    
    
    $
    503,821
    
    
    $
    338,438
    
    
    $
    338,438
    
    
    $
    (354,251
    )
    
    $
    (189,693
    )
    
    $
    (189,693
    )Property and equipment
    
    
    1,544,145
    
    
    
    1,544,145
    
    
    
    1,544,145
    
    
    
    1,879
    
    
    
    1,879
    
    
    
    1,879
    
    
    
    841,827
    
    
    
    841,827
    
    
    
    841,827
    
    
    
    
    
    
    
    
    
    
    
    Investment in subsidiaries
(equity method)
    
    
    622,217
    
    
    
    461,049
    
    
    
    542,662
    
    
    
    157,527
    
    
    
    
    
    
    
    81,613
    
    
    
    8,058
    
    
    
    4,543
    
    
    
    4,543
    
    
    
    (780,641
    )
    
    
    (458,431
    )
    
    
    (621,657
    )Other assets
    
    
    70,727
    
    
    
    69,902
    
    
    
    67,869
    
    
    
    64,457
    
    
    
    64,457
    
    
    
    64,457
    
    
    
    2,109
    
    
    
    2,109
    
    
    
    2,109
    
    
    
    (115,084
    )
    
    
    (114,259
    )
    
    
    (114,259
    )Total assets
    
    $
    2,241,678
    
    
    $
    2,080,510
    
    
    $
    2,160,090
    
    
    $
    224,459
    
    
    $
    66,932
    
    
    $
    148,545
    
    
    $
    1,355,815
    
    
    $
    1,186,917
    
    
    $
    1,186,917
    
    
    $
    (1,249,976
    )
    
    $
    (762,383
    )
    
    $
    (925,609
    )LIABILITIES AND
STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    366,089
    
    
    $
    204,921
    
    
    $
    204,921
    
    
    $
    60,909
    
    
    $
    60,909
    
    
    $
    60,909
    
    
    $
    160,684
    
    
    $
    157,294
    
    
    $
    157,294
    
    
    $
    (354,251
    )
    
    $
    (189,693
    )
    
    $
    (189,693
    )Long-term liabilities
    
    
    1,200,193
    
    
    
    1,200,193
    
    
    
    1,182,054
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    549,245
    
    
    
    466,807
    
    
    
    466,974
    
    
    
    (115,084
    )
    
    
    (114,259
    )
    
    
    (114,259
    )Deferred gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,613
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,795
    
    
    
    28,795
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stockholders equity-Quicksilver
    
    
    675,396
    
    
    
    675,396
    
    
    
    773,115
    
    
    
    163,550
    
    
    
    6,023
    
    
    
    87,636
    
    
    
    617,091
    
    
    
    452,408
    
    
    
    534,021
    
    
    
    (780,641
    )
    
    
    (458,431
    )
    
    
    (621,657
    )Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,628
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities and
stockholders equity
    
    $
    2,241,678
    
    
    $
    2,080,510
    
    
    $
    2,160,090
    
    
    $
    224,459
    
    
    $
    66,932
    
    
    $
    148,545
    
    
    $
    1,355,815
    
    
    $
    1,186,917
    
    
    $
    1,186,917
    
    
    $
    (1,249,976
    )
    
    $
    (762,383
    )
    
    $
    (925,609
    )
 June 30,
2007Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)ASSETSCurrent assets
    
    $
    158,611
    
    
    $
    158,611
    
    
    $
    158,611
    
    
    $
    46
    
    
    $
    46
    
    
    $
    46
    
    
    $
    355,686
    
    
    $
    355,686
    
    
    $
    355,686
    
    
    $
    (385,950
    )
    
    $
    (385,950
    )
    
    $
    (385,950
    )Property and equipment
    
    
    1,343,598
    
    
    
    1,343,598
    
    
    
    1,343,598
    
    
    
    1,900
    
    
    
    1,901
    
    
    
    1,901
    
    
    
    753,557
    
    
    
    753,556
    
    
    
    753,556
    
    
    
    
    
    
    
    
    
    
    
    Investment in subsidiaries
(equity method)
    
    
    600,553
    
    
    
    600,553
    
    
    
    600,553
    
    
    
    170,296
    
    
    
    174,371
    
    
    
    174,371
    
    
    
    8,020
    
    
    
    4,503
    
    
    
    4,503
    
    
    
    (771,536
    )
    
    
    (772,094
    )
    
    
    (772,094
    )Other assets
    
    
    21,481
    
    
    
    21,481
    
    
    
    19,508
    
    
    
    38,279
    
    
    
    38,279
    
    
    
    38,279
    
    
    
    1,353
    
    
    
    1,353
    
    
    
    1,353
    
    
    
    (38,279
    )
    
    
    (38,279
    )
    
    
    (38,279
    )Total assets
    
    $
    2,124,243
    
    
    $
    2,124,243
    
    
    $
    2,122,270
    
    
    $
    210,521
    
    
    $
    214,597
    
    
    $
    214,597
    
    
    $
    1,118,616
    
    
    $
    1,115,098
    
    
    $
    1,115,098
    
    
    $
    (1,195,765
    )
    
    $
    (1,196,323
    )
    
    $
    (1,196,323
    )LIABILITIES AND
STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    394,332
    
    
    $
    394,332
    
    
    $
    394,332
    
    
    $
    35,969
    
    
    $
    35,969
    
    
    $
    35,969
    
    
    $
    143,450
    
    
    $
    143,450
    
    
    $
    143,450
    
    
    $
    (385,950
    )
    
    $
    (385,950
    )
    
    $
    (385,950
    )Long-term liabilities
    
    
    1,100,455
    
    
    
    1,100,455
    
    
    
    1,081,369
    
    
    
    (120
    )
    
    
    (120
    )
    
    
    32
    
    
    
    370,410
    
    
    
    370,410
    
    
    
    370,410
    
    
    
    (38,279
    )
    
    
    (38,279
    )
    
    
    (38,279
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,892
    
    
    
    7,892
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stockholders equity-Quicksilver
    
    
    629,456
    
    
    
    629,456
    
    
    
    646,569
    
    
    
    166,780
    
    
    
    170,856
    
    
    
    170,856
    
    
    
    604,756
    
    
    
    601,238
    
    
    
    601,238
    
    
    
    (771,536
    )
    
    
    (772,094
    )
    
    
    (772,094
    )Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,740
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities and
stockholders equity
    
    $
    2,124,243
    
    
    $
    2,124,243
    
    
    $
    2,122,270
    
    
    $
    210,521
    
    
    $
    214,597
    
    
    $
    214,597
    
    
    $
    1,118,616
    
    
    $
    1,115,098
    
    
    $
    1,115,098
    
    
    $
    (1,195,765
    )
    
    $
    (1,196,323
    )
    
    $
    (1,196,323
    )
 March 31,
2007Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)ASSETSCurrent assets
    
    $
    134,809
    
    
    $
    134,809
    
    
    $
    134,809
    
    
    $
    2,297
    
    
    $
    2,297
    
    
    $
    2,297
    
    
    $
    319,115
    
    
    $
    319,115
    
    
    $
    319,115
    
    
    $
    (338,675
    )
    
    $
    (338,675
    )
    
    $
    (338,675
    )Property and equipment
    
    
    1,163,917
    
    
    
    1,163,917
    
    
    
    1,163,917
    
    
    
    950
    
    
    
    950
    
    
    
    950
    
    
    
    678,778
    
    
    
    678,778
    
    
    
    678,778
    
    
    
    
    
    
    
    
    
    
    
    Investment in subsidiaries
(equity method)
    
    
    537,680
    
    
    
    537,680
    
    
    
    537,680
    
    
    
    149,248
    
    
    
    150,529
    
    
    
    150,529
    
    
    
    7,955
    
    
    
    4,438
    
    
    
    4,438
    
    
    
    (687,487
    )
    
    
    (685,251
    )
    
    
    (685,251
    )Other assets
    
    
    21,598
    
    
    
    21,598
    
    
    
    19,683
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,248
    
    
    
    2,248
    
    
    
    2,248
    
    
    
    
    
    
    
    
    
    
    
    Total assets
    
    $
    1,858,004
    
    
    $
    1,858,004
    
    
    $
    1,856,089
    
    
    $
    152,495
    
    
    $
    153,776
    
    
    $
    153,776
    
    
    $
    1,008,096
    
    
    $
    1,004,579
    
    
    $
    1,004,579
    
    
    $
    (1,026,162
    )
    
    $
    (1,023,926
    )
    
    $
    (1,023,926
    )LIABILITIES AND
STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    368,360
    
    
    $
    368,360
    
    
    $
    368,360
    
    
    $
    17
    
    
    $
    17
    
    
    $
    17
    
    
    $
    139,032
    
    
    $
    139,032
    
    
    $
    139,032
    
    
    $
    (338,675
    )
    
    $
    (338,675
    )
    
    $
    (338,675
    )Long-term liabilities
    
    
    929,656
    
    
    
    929,656
    
    
    
    909,640
    
    
    
    (50
    )
    
    
    (50
    )
    
    
    1
    
    
    
    326,411
    
    
    
    326,411
    
    
    
    326,411
    
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,694
    
    
    
    7,694
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stockholders equity-Quicksilver
    
    
    559,988
    
    
    
    559,988
    
    
    
    578,089
    
    
    
    144,834
    
    
    
    146,115
    
    
    
    146,115
    
    
    
    542,653
    
    
    
    539,136
    
    
    
    539,136
    
    
    
    (687,487
    )
    
    
    (685,251
    )
    
    
    (685,251
    )Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,643
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities and
stockholders equity
    
    $
    1,858,004
    
    
    $
    1,858,004
    
    
    $
    1,856,089
    
    
    $
    152,495
    
    
    $
    153,776
    
    
    $
    153,776
    
    
    $
    1,008,096
    
    
    $
    1,004,579
    
    
    $
    1,004,579
    
    
    $
    (1,026,162
    )
    
    $
    (1,023,926
    )
    
    $
    (1,023,926
    )
 For the Three Months Ended September 30, 2008Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Revenues
    
    $
    171,634
    
    
    $
    171,639
    
    
    $
    171,639
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    81,037
    
    
    $
    80,571
    
    
    $
    80,571
    
    
    $
    (16,409
    )
    
    $
    (15,947
    )
    
    $
    (15,947
    )Operating expenses
    
    
    100,636
    
    
    
    100,488
    
    
    
    100,488
    
    
    
    376
    
    
    
    376
    
    
    
    376
    
    
    
    31,669
    
    
    
    31,356
    
    
    
    31,356
    
    
    
    (16,409
    )
    
    
    (15,947
    )
    
    
    (15,947
    )Equity in net earnings of subsidiaries
    
    
    31,846
    
    
    
    29,851
    
    
    
    29,851
    
    
    
    5,263
    
    
    
    5,263
    
    
    
    5,263
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,109
    )
    
    
    (35,114
    )
    
    
    (35,114
    )Operating income
    
    
    102,844
    
    
    
    101,002
    
    
    
    101,002
    
    
    
    4,887
    
    
    
    4,887
    
    
    
    4,887
    
    
    
    49,368
    
    
    
    49,215
    
    
    
    49,215
    
    
    
    (37,109
    )
    
    
    (35,114
    )
    
    
    (35,114
    )Income from earnings of BBEP
    
    
    (89,814
    )
    
    
    (89,814
    )
    
    
    (89,814
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense and other
    
    
    (30,287
    )
    
    
    (30,287
    )
    
    
    (31,948
    )
    
    
    1,736
    
    
    
    1,736
    
    
    
    1,736
    
    
    
    (9,014
    )
    
    
    (9,014
    )
    
    
    (7,889
    )
    
    
    
    
    
    
    
    
    
    
    Income tax (expense) benefit
    
    
    14,582
    
    
    
    16,424
    
    
    
    17,006
    
    
    
    (476
    )
    
    
    (2,318
    )
    
    
    (2,318
    )
    
    
    (9,392
    )
    
    
    (9,392
    )
    
    
    (9,392
    )
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    
    (2,675
    )
    
    
    (2,675
    )
    
    
    (3,754
    )
    
    
    6,147
    
    
    
    4,305
    
    
    
    4,305
    
    
    
    30,962
    
    
    
    30,809
    
    
    
    31,934
    
    
    
    (37,109
    )
    
    
    (35,114
    )
    
    
    (35,114
    )Net income attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,125
    )
    
    
    
    
    
    
    
    
    
    
    Net income (loss) attributable to Quicksilver
    
    $
    (2,675
    )
    
    $
    (2,675
    )
    
    $
    (3,754
    )
    
    $
    6,147
    
    
    $
    4,305
    
    
    $
    4,305
    
    
    $
    30,962
    
    
    $
    30,809
    
    
    $
    30,809
    
    
    $
    (37,109
    )
    
    $
    (35,114
    )
    
    $
    (35,114
    )
 For the Three Months Ended June 30, 2008Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Revenues
    
    $
    148,991
    
    
    $
    148,984
    
    
    $
    148,984
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    63,515
    
    
    $
    63,708
    
    
    $
    63,708
    
    
    $
    (14,491
    )
    
    $
    (14,792
    )
    
    $
    (14,792
    )Operating expenses
    
    
    72,681
    
    
    
    72,827
    
    
    
    72,827
    
    
    
    514
    
    
    
    514
    
    
    
    514
    
    
    
    32,094
    
    
    
    32,248
    
    
    
    32,248
    
    
    
    (14,491
    )
    
    
    (14,792
    )
    
    
    (14,792
    )Equity in net earnings of subsidiaries
    
    
    20,018
    
    
    
    18,555
    
    
    
    18,555
    
    
    
    4,619
    
    
    
    4,618
    
    
    
    4,618
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,637
    )
    
    
    (23,173
    )
    
    
    (23,173
    )Operating income
    
    
    96,328
    
    
    
    94,712
    
    
    
    94,712
    
    
    
    4,105
    
    
    
    4,104
    
    
    
    4,104
    
    
    
    31,421
    
    
    
    31,460
    
    
    
    31,460
    
    
    
    (24,637
    )
    
    
    (23,173
    )
    
    
    (23,173
    )Income from earnings of BBEP
    
    
    (10,269
    )
    
    
    (10,269
    )
    
    
    (10,269
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense and other
    
    
    (9,972
    )
    
    
    (9,972
    )
    
    
    (11,604
    )
    
    
    1,494
    
    
    
    1,494
    
    
    
    1,494
    
    
    
    (7,518
    )
    
    
    (7,404
    )
    
    
    (6,416
    )
    
    
    
    
    
    
    
    
    
    
    Income tax expense
    
    
    (23,691
    )
    
    
    (22,075
    )
    
    
    (21,504
    )
    
    
    (343
    )
    
    
    (1,959
    )
    
    
    (1,959
    )
    
    
    (4,522
    )
    
    
    (4,522
    )
    
    
    (4,522
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    52,396
    
    
    
    52,396
    
    
    
    51,335
    
    
    
    5,256
    
    
    
    3,639
    
    
    
    3,639
    
    
    
    19,381
    
    
    
    19,534
    
    
    
    20,522
    
    
    
    (24,637
    )
    
    
    (23,173
    )
    
    
    (23,173
    )Net income attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (988
    )
    
    
    
    
    
    
    
    
    
    
    Net income attributable to Quicksilver
    
    $
    52,396
    
    
    $
    52,396
    
    
    $
    51,335
    
    
    $
    5,256
    
    
    $
    3,639
    
    
    $
    3,639
    
    
    $
    19,381
    
    
    $
    19,534
    
    
    $
    19,534
    
    
    $
    (24,637
    )
    
    $
    (23,173
    )
    
    $
    (23,173
    )
 For the Three Months Ended March 31, 2008Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Revenues
    
    $
    116,887
    
    
    $
    116,889
    
    
    $
    116,889
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    53,261
    
    
    $
    53,653
    
    
    $
    53,653
    
    
    $
    (12,645
    )
    
    $
    (12,925
    )
    
    $
    (12,925
    )Operating expenses
    
    
    66,957
    
    
    
    66,959
    
    
    
    66,959
    
    
    
    499
    
    
    
    499
    
    
    
    499
    
    
    
    32,083
    
    
    
    32,361
    
    
    
    32,361
    
    
    
    (12,645
    )
    
    
    (12,925
    )
    
    
    (12,925
    )Equity in net earnings of subsidiaries
    
    
    11,895
    
    
    
    11,063
    
    
    
    11,063
    
    
    
    2,376
    
    
    
    2,376
    
    
    
    2,376
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,271
    )
    
    
    (13,439
    )
    
    
    (13,439
    )Operating income
    
    
    61,825
    
    
    
    60,993
    
    
    
    60,993
    
    
    
    1,877
    
    
    
    1,877
    
    
    
    1,877
    
    
    
    21,178
    
    
    
    21,292
    
    
    
    21,292
    
    
    
    (14,271
    )
    
    
    (13,439
    )
    
    
    (13,439
    )Income from earnings of BBEP
    
    
    6,219
    
    
    
    6,219
    
    
    
    6,219
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense and other
    
    
    (5,446
    )
    
    
    (5,446
    )
    
    
    (7,049
    )
    
    
    1,433
    
    
    
    1,433
    
    
    
    1,433
    
    
    
    (6,727
    )
    
    
    (6,841
    )
    
    
    (6,333
    )
    
    
    
    
    
    
    
    
    
    
    Income tax expense
    
    
    (20,422
    )
    
    
    (19,590
    )
    
    
    (19,029
    )
    
    
    (327
    )
    
    
    (1,159
    )
    
    
    (1,159
    )
    
    
    (3,163
    )
    
    
    (3,163
    )
    
    
    (3,163
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    42,176
    
    
    
    42,176
    
    
    
    41,134
    
    
    
    2,983
    
    
    
    2,151
    
    
    
    2,151
    
    
    
    11,288
    
    
    
    11,288
    
    
    
    11,796
    
    
    
    (14,271
    )
    
    
    (13,439
    )
    
    
    (13,439
    )Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (508
    )
    
    
    
    
    
    
    
    
    
    
    Net income attributable to Quicksilver
    
    $
    42,176
    
    
    $
    42,176
    
    
    $
    41,134
    
    
    $
    2,983
    
    
    $
    2,151
    
    
    $
    2,151
    
    
    $
    11,288
    
    
    $
    11,288
    
    
    $
    11,288
    
    
    $
    (14,271
    )
    
    $
    (13,439
    )
    
    $
    (13,439
    )
 For the Three Months Ended September 30, 2007Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Revenues
    
    $
    104,237
    
    
    $
    104,237
    
    
    $
    104,237
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    63,307
    
    
    $
    63,237
    
    
    $
    63,237
    
    
    $
    (8,345
    )
    
    $
    (8,275
    )
    
    $
    (8,275
    )Operating expenses
    
    
    73,375
    
    
    
    73,375
    
    
    
    73,375
    
    
    
    (784
    )
    
    
    (784
    )
    
    
    (784
    )
    
    
    31,664
    
    
    
    31,594
    
    
    
    31,594
    
    
    
    (8,345
    )
    
    
    (8,275
    )
    
    
    (8,275
    )Equity in net earnings of
subsidiaries
    
    
    18,848
    
    
    
    18,201
    
    
    
    18,201
    
    
    
    552
    
    
    
    1,848
    
    
    
    1,848
    
    
    
    289
    
    
    
    289
    
    
    
    289
    
    
    
    (19,404
    )
    
    
    (20,053
    )
    
    
    (20,053
    )Operating income
    
    
    49,710
    
    
    
    49,063
    
    
    
    49,063
    
    
    
    1,336
    
    
    
    2,632
    
    
    
    2,632
    
    
    
    31,932
    
    
    
    31,932
    
    
    
    31,932
    
    
    
    (19,404
    )
    
    
    (20,053
    )
    
    
    (20,053
    )Interest expense and other
    
    
    (15,109
    )
    
    
    (15,109
    )
    
    
    (16,657
    )
    
    
    999
    
    
    
    999
    
    
    
    999
    
    
    
    (6,652
    )
    
    
    (6,652
    )
    
    
    (6,195
    )
    
    
    
    
    
    
    
    
    
    
    Income tax expense
    
    
    (5,882
    )
    
    
    (5,235
    )
    
    
    (4,693
    )
    
    
    (624
    )
    
    
    (1,271
    )
    
    
    (1,271
    )
    
    
    (7,587
    )
    
    
    (7,587
    )
    
    
    (7,587
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    28,719
    
    
    
    28,719
    
    
    
    27,713
    
    
    
    1,711
    
    
    
    2,360
    
    
    
    2,360
    
    
    
    17,693
    
    
    
    17,693
    
    
    
    18,150
    
    
    
    (19,404
    )
    
    
    (20,053
    )
    
    
    (20,053
    )Net income attributable
to noncontrolling
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (457
    )
    
    
    
    
    
    
    
    
    
    
    Net income attributable
to Quicksilver
    
    $
    28,719
    
    
    $
    28,719
    
    
    $
    27,713
    
    
    $
    1,711
    
    
    $
    2,360
    
    
    $
    2,360
    
    
    $
    17,693
    
    
    $
    17,693
    
    
    $
    17,693
    
    
    $
    (19,404
    )
    
    $
    (20,053
    )
    
    $
    (20,053
    )
 For the Three Months Ended June 30, 2007Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Revenues
    
    $
    88,948
    
    
    $
    88,948
    
    
    $
    88,948
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    53,961
    
    
    $
    54,047
    
    
    $
    54,047
    
    
    $
    (6,408
    )
    
    $
    (6,494
    )
    
    $
    (6,494
    )Operating expenses
    
    
    54,687
    
    
    
    54,687
    
    
    
    54,687
    
    
    
    680
    
    
    
    680
    
    
    
    680
    
    
    
    25,746
    
    
    
    25,832
    
    
    
    25,832
    
    
    
    (6,408
    )
    
    
    (6,494
    )
    
    
    (6,494
    )Equity in net earnings of
subsidiaries
    
    
    19,453
    
    
    
    18,743
    
    
    
    18,743
    
    
    
    2,794
    
    
    
    2,031
    
    
    
    2,031
    
    
    
    266
    
    
    
    266
    
    
    
    266
    
    
    
    (22,231
    )
    
    
    (20,758
    )
    
    
    (20,758
    )Operating income
    
    
    53,714
    
    
    
    53,004
    
    
    
    53,004
    
    
    
    2,114
    
    
    
    1,351
    
    
    
    1,351
    
    
    
    28,481
    
    
    
    28,481
    
    
    
    28,481
    
    
    
    (22,231
    )
    
    
    (20,758
    )
    
    
    (20,758
    )Interest expense and other
    
    
    (13,706
    )
    
    
    (13,706
    )
    
    
    (15,226
    )
    
    
    84
    
    
    
    84
    
    
    
    212
    
    
    
    (3,955
    )
    
    
    (3,955
    )
    
    
    (3,955
    )
    
    
    
    
    
    
    
    
    
    
    Income tax (expense) benefit
    
    
    (8,277
    )
    
    
    (7,567
    )
    
    
    (7,035
    )
    
    
    208
    
    
    
    (502
    )
    
    
    (502
    )
    
    
    (4,701
    )
    
    
    (4,701
    )
    
    
    (4,701
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    31,731
    
    
    
    31,731
    
    
    
    30,743
    
    
    
    2,406
    
    
    
    933
    
    
    
    1,061
    
    
    
    19,825
    
    
    
    19,825
    
    
    
    19,825
    
    
    
    (22,231
    )
    
    
    (20,758
    )
    
    
    (20,758
    )Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (128
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income attributable to
Quicksilver
    
    $
    31,731
    
    
    $
    31,731
    
    
    $
    30,743
    
    
    $
    2,406
    
    
    $
    933
    
    
    $
    933
    
    
    $
    19,825
    
    
    $
    19,825
    
    
    $
    19,825
    
    
    $
    (22,231
    )
    
    $
    (20,758
    )
    
    $
    (20,758
    )
 For the Three Months Ended March 31, 2007Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Revenues
    
    $
    70,868
    
    
    $
    70,868
    
    
    $
    70,868
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    50,190
    
    
    $
    50,104
    
    
    $
    50,104
    
    
    $
    (4,478
    )
    
    $
    (4,392
    )
    
    $
    (4,392
    )Operating expenses
    
    
    46,461
    
    
    
    46,461
    
    
    
    46,461
    
    
    
    459
    
    
    
    459
    
    
    
    459
    
    
    
    25,693
    
    
    
    25,607
    
    
    
    25,607
    
    
    
    (4,478
    )
    
    
    (4,392
    )
    
    
    (4,392
    )Equity in net earnings of subsidiaries
    
    
    14,742
    
    
    
    14,480
    
    
    
    14,480
    
    
    
    1,281
    
    
    
    748
    
    
    
    748
    
    
    
    109
    
    
    
    109
    
    
    
    109
    
    
    
    (16,017
    )
    
    
    (15,222
    )
    
    
    (15,222
    )Operating income
    
    
    39,149
    
    
    
    38,887
    
    
    
    38,887
    
    
    
    822
    
    
    
    289
    
    
    
    289
    
    
    
    24,606
    
    
    
    24,606
    
    
    
    24,606
    
    
    
    (16,017
    )
    
    
    (15,222
    )
    
    
    (15,222
    )Interest expense and other
    
    
    (11,120
    )
    
    
    (11,120
    )
    
    
    (12,613
    )
    
    
    (63
    )
    
    
    (63
    )
    
    
    
    
    
    
    (3,231
    )
    
    
    (3,231
    )
    
    
    (3,231
    )
    
    
    
    
    
    
    
    
    
    
    Income tax expense
    
    
    (5,178
    )
    
    
    (4,916
    )
    
    
    (4,393
    )
    
    
    183
    
    
    
    (79
    )
    
    
    (79
    )
    
    
    (6,300
    )
    
    
    (6,300
    )
    
    
    (6,300
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    22,851
    
    
    
    22,851
    
    
    
    21,881
    
    
    
    942
    
    
    
    147
    
    
    
    210
    
    
    
    15,075
    
    
    
    15,075
    
    
    
    15,075
    
    
    
    (16,017
    )
    
    
    (15,222
    )
    
    
    (15,222
    )Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income attributable to Quicksilver
    
    $
    22,851
    
    
    $
    22,851
    
    
    $
    21,881
    
    
    $
    942
    
    
    $
    147
    
    
    $
    147
    
    
    $
    15,075
    
    
    $
    15,075
    
    
    $
    15,075
    
    
    $
    (16,017
    )
    
    $
    (15,222
    )
    
    $
    (15,222
    )
 For the Nine Months Ended September 30, 2008Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Revenues
    
    $
    437,512
    
    
    $
    437,512
    
    
    $
    437,512
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    197,813
    
    
    $
    197,932
    
    
    $
    197,932
    
    
    $
    (43,545
    )
    
    $
    (43,664
    )
    
    $
    (43,664
    )Operating expenses
    
    
    240,274
    
    
    
    240,274
    
    
    
    240,274
    
    
    
    1,389
    
    
    
    1,389
    
    
    
    1,389
    
    
    
    95,846
    
    
    
    95,965
    
    
    
    95,965
    
    
    
    (43,545
    )
    
    
    (43,664
    )
    
    
    (43,664
    )Equity in net earnings of subsidiaries
    
    
    63,759
    
    
    
    59,469
    
    
    
    59,469
    
    
    
    12,258
    
    
    
    12,258
    
    
    
    12,258
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (76,017
    )
    
    
    (71,727
    )
    
    
    (71,727
    )Operating income
    
    
    260,997
    
    
    
    256,707
    
    
    
    256,707
    
    
    
    10,869
    
    
    
    10,869
    
    
    
    10,869
    
    
    
    101,967
    
    
    
    101,967
    
    
    
    101,967
    
    
    
    (76,017
    )
    
    
    (71,727
    )
    
    
    (71,727
    )Income from earnings of BBEP
    
    
    (93,864
    )
    
    
    (93,864
    )
    
    
    (93,864
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense and other
    
    
    (45,705
    )
    
    
    (45,705
    )
    
    
    (50,601
    )
    
    
    4,663
    
    
    
    4,663
    
    
    
    4,663
    
    
    
    (23,259
    )
    
    
    (23,259
    )
    
    
    (20,638
    )
    
    
    
    
    
    
    
    
    
    
    Income tax expense
    
    
    (29,531
    )
    
    
    (25,241
    )
    
    
    (23,527
    )
    
    
    (1,146
    )
    
    
    (5,436
    )
    
    
    (5,436
    )
    
    
    (17,077
    )
    
    
    (17,077
    )
    
    
    (17,077
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    91,897
    
    
    
    91,897
    
    
    
    88,715
    
    
    
    14,386
    
    
    
    10,096
    
    
    
    10,096
    
    
    
    61,631
    
    
    
    61,631
    
    
    
    64,252
    
    
    
    (76,017
    )
    
    
    (71,727
    )
    
    
    (71,727
    )Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,621
    )
    
    
    
    
    
    
    
    
    
    
    Net income attributable to Quicksilver
    
    $
    91,897
    
    
    $
    91,897
    
    
    $
    88,715
    
    
    $
    14,386
    
    
    $
    10,096
    
    
    $
    10,096
    
    
    $
    61,631
    
    
    $
    61,631
    
    
    $
    61,631
    
    
    $
    (76,017
    )
    
    $
    (71,727
    )
    
    $
    (71,727
    )
 For the Six Months Ended June 30, 2008Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Revenues
    
    $
    265,878
    
    
    $
    265,873
    
    
    $
    265,873
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    116,776
    
    
    $
    117,361
    
    
    $
    117,361
    
    
    $
    (27,136
    )
    
    $
    (27,717
    )
    
    $
    (27,717
    )Operating expenses
    
    
    139,638
    
    
    
    139,786
    
    
    
    139,786
    
    
    
    1,013
    
    
    
    1,013
    
    
    
    1,013
    
    
    
    64,177
    
    
    
    64,609
    
    
    
    64,609
    
    
    
    (27,136
    )
    
    
    (27,717
    )
    
    
    (27,717
    )Equity in net earnings of subsidiaries
    
    
    31,913
    
    
    
    29,618
    
    
    
    29,618
    
    
    
    6,995
    
    
    
    6,994
    
    
    
    6,994
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,908
    )
    
    
    (36,612
    )
    
    
    (36,612
    )Operating income
    
    
    158,153
    
    
    
    155,705
    
    
    
    155,705
    
    
    
    5,982
    
    
    
    5,981
    
    
    
    5,981
    
    
    
    52,599
    
    
    
    52,752
    
    
    
    52,752
    
    
    
    (38,908
    )
    
    
    (36,612
    )
    
    
    (36,612
    )Income from earnings of BBEP
    
    
    (4,050
    )
    
    
    (4,050
    )
    
    
    (4,050
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense and other
    
    
    (15,418
    )
    
    
    (15,418
    )
    
    
    (18,653
    )
    
    
    2,927
    
    
    
    2,927
    
    
    
    2,927
    
    
    
    (14,245
    )
    
    
    (14,245
    )
    
    
    (12,749
    )
    
    
    
    
    
    
    
    
    
    
    Income tax expense
    
    
    (44,113
    )
    
    
    (41,665
    )
    
    
    (40,533
    )
    
    
    (670
    )
    
    
    (3,118
    )
    
    
    (3,118
    )
    
    
    (7,685
    )
    
    
    (7,685
    )
    
    
    (7,685
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    94,572
    
    
    
    94,572
    
    
    
    92,469
    
    
    
    8,239
    
    
    
    5,790
    
    
    
    5,790
    
    
    
    30,669
    
    
    
    30,822
    
    
    
    32,318
    
    
    
    (38,908
    )
    
    
    (36,612
    )
    
    
    (36,612
    )Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,496
    )
    
    
    
    
    
    
    
    
    
    
    Net income attributable to Quicksilver
    
    $
    94,572
    
    
    $
    94,572
    
    
    $
    92,469
    
    
    $
    8,239
    
    
    $
    5,790
    
    
    $
    5,790
    
    
    $
    30,669
    
    
    $
    30,822
    
    
    $
    30,822
    
    
    $
    (38,908
    )
    
    $
    (36,612
    )
    
    $
    (36,612
    )
 For the Nine Months Ended September 30, 2007Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Revenues
    
    $
    264,053
    
    
    $
    264,053
    
    
    $
    264,053
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    167,355
    
    
    $
    167,285
    
    
    $
    167,285
    
    
    $
    (19,231
    )
    
    $
    (19,161
    )
    
    $
    (19,161
    )Operating expenses
    
    
    174,523
    
    
    
    174,523
    
    
    
    174,523
    
    
    
    355
    
    
    
    355
    
    
    
    355
    
    
    
    83,103
    
    
    
    83,033
    
    
    
    83,033
    
    
    
    (19,231
    )
    
    
    (19,161
    )
    
    
    (19,161
    )Equity in net earnings of subsidiaries
    
    
    53,043
    
    
    
    51,424
    
    
    
    51,424
    
    
    
    4,627
    
    
    
    4,627
    
    
    
    4,627
    
    
    
    664
    
    
    
    664
    
    
    
    664
    
    
    
    (57,652
    )
    
    
    (56,033
    )
    
    
    (56,033
    )Operating income
    
    
    142,573
    
    
    
    140,954
    
    
    
    140,954
    
    
    
    4,272
    
    
    
    4,272
    
    
    
    4,272
    
    
    
    84,916
    
    
    
    84,916
    
    
    
    84,916
    
    
    
    (57,652
    )
    
    
    (56,033
    )
    
    
    (56,033
    )Interest expense and other
    
    
    (39,935
    )
    
    
    (39,935
    )
    
    
    (44,496
    )
    
    
    1,020
    
    
    
    1,020
    
    
    
    1,211
    
    
    
    (13,735
    )
    
    
    (13,735
    )
    
    
    (13,278
    )
    
    
    
    
    
    
    
    
    
    
    Income tax expense
    
    
    (19,337
    )
    
    
    (17,718
    )
    
    
    (16,121
    )
    
    
    (233
    )
    
    
    (1,852
    )
    
    
    (1,852
    )
    
    
    (18,588
    )
    
    
    (18,588
    )
    
    
    (18,588
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    83,301
    
    
    
    83,301
    
    
    
    80,337
    
    
    
    5,059
    
    
    
    3,440
    
    
    
    3,631
    
    
    
    52,593
    
    
    
    52,593
    
    
    
    53,050
    
    
    
    (57,652
    )
    
    
    (56,033
    )
    
    
    (56,033
    )Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (191
    )
    
    
    
    
    
    
    
    
    
    
    (457
    )
    
    
    
    
    
    
    
    
    
    
    Net income attributable to Quicksilver
    
    $
    83,301
    
    
    $
    83,301
    
    
    $
    80,337
    
    
    $
    5,059
    
    
    $
    3,440
    
    
    $
    3,440
    
    
    $
    52,593
    
    
    $
    52,593
    
    
    $
    52,593
    
    
    $
    (57,652
    )
    
    $
    (56,033
    )
    
    $
    (56,033
    )
 For the Six Months Ended June 30, 2007Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Revenues
    
    $
    159,816
    
    
    $
    159,816
    
    
    $
    159,816
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    104,151
    
    
    $
    104,151
    
    
    $
    104,151
    
    
    $
    (10,886
    )
    
    $
    (10,886
    )
    
    $
    (10,886
    )Operating expenses
    
    
    101,148
    
    
    
    101,148
    
    
    
    101,148
    
    
    
    1,139
    
    
    
    1,139
    
    
    
    1,139
    
    
    
    51,439
    
    
    
    51,439
    
    
    
    51,439
    
    
    
    (10,886
    )
    
    
    (10,886
    )
    
    
    (10,886
    )Equity in net earnings of subsidiaries
    
    
    34,195
    
    
    
    33,223
    
    
    
    33,223
    
    
    
    4,075
    
    
    
    2,779
    
    
    
    2,779
    
    
    
    375
    
    
    
    375
    
    
    
    375
    
    
    
    (38,248
    )
    
    
    (35,980
    )
    
    
    (35,980
    )Operating income
    
    
    92,863
    
    
    
    91,891
    
    
    
    91,891
    
    
    
    2,936
    
    
    
    1,640
    
    
    
    1,640
    
    
    
    53,087
    
    
    
    53,087
    
    
    
    53,087
    
    
    
    (38,248
    )
    
    
    (35,980
    )
    
    
    (35,980
    )Interest expense and other
    
    
    (24,826
    )
    
    
    (24,826
    )
    
    
    (27,839
    )
    
    
    21
    
    
    
    21
    
    
    
    212
    
    
    
    (7,186
    )
    
    
    (7,186
    )
    
    
    (7,186
    )
    
    
    
    
    
    
    
    
    
    
    Income tax expense
    
    
    (13,455
    )
    
    
    (12,483
    )
    
    
    (11,428
    )
    
    
    391
    
    
    
    (581
    )
    
    
    (581
    )
    
    
    (11,001
    )
    
    
    (11,001
    )
    
    
    (11,001
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    54,582
    
    
    
    54,582
    
    
    
    52,624
    
    
    
    3,348
    
    
    
    1,080
    
    
    
    1,271
    
    
    
    34,900
    
    
    
    34,900
    
    
    
    34,900
    
    
    
    (38,248
    )
    
    
    (35,980
    )
    
    
    (35,980
    )Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (191
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income attributable to Quicksilver
    
    $
    54,582
    
    
    $
    54,582
    
    
    $
    52,624
    
    
    $
    3,348
    
    
    $
    1,080
    
    
    $
    1,080
    
    
    $
    34,900
    
    
    $
    34,900
    
    
    $
    34,900
    
    
    $
    (38,248
    )
    
    $
    (35,980
    )
    
    $
    (35,980
    )
 For the Nine Months Ended September 30, 2008Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Cash flow provided by operations
    
    $
    53,455
    
    
    $
    138,736
    
    
    $
    138,736
    
    
    $
    9,688
    
    
    $
    2,483
    
    
    $
    2,483
    
    
    $
    210,977
    
    
    $
    149,981
    
    
    $
    149,981
    
    
    $
    
    
    
    $
    (17,080
    )
    
    $
    (17,080
    )Cash flow used for investing activities
    
    
    (1,627,306
    )
    
    
    (1,711,759
    )
    
    
    (1,711,759
    )
    
    
    72,342
    
    
    
    (2,483
    )
    
    
    (2,483
    )
    
    
    (289,446
    )
    
    
    (228,453
    )
    
    
    (228,453
    )
    
    
    (99,110
    )
    
    
    (825
    )
    
    
    (825
    )Cash flow provided by financing activities
    
    
    1,560,117
    
    
    
    1,559,289
    
    
    
    1,559,289
    
    
    
    (82,030
    )
    
    
    
    
    
    
    
    
    
    
    80,051
    
    
    
    80,054
    
    
    
    80,054
    
    
    
    99,110
    
    
    
    17,905
    
    
    
    17,905Effect of exchange rates on cash
    
    
    (155
    )
    
    
    (155
    )
    
    
    (155
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,454
    )
    
    
    (2,454
    )
    
    
    (2,454
    )
    
    
    
    
    
    
    
    
    
    
    Net decrease in cash & equivalents
    
    
    (13,889
    )
    
    
    (13,889
    )
    
    
    (13,889
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (872
    )
    
    
    (872
    )
    
    
    (872
    )
    
    
    
    
    
    
    
    
    
    
    Cash and equivalents at beginning of period
    
    
    27,010
    
    
    
    27,012
    
    
    
    27,012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,216
    
    
    
    1,214
    
    
    
    1,214
    
    
    
    
    
    
    
    
    
    
    
    Cash and equivalents at end of period
    
    $
    13,121
    
    
    $
    13,123
    
    
    $
    13,123
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    344
    
    
    $
    342
    
    
    $
    342
    
    
    $
    
    
    
    $
    
    
    
    $
    
 For the Six Months Ended June 30, 2008Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Cash flow provided by (used for) operations
    
    $
    (79,043
    )
    
    $
    (14,468
    )
    
    $
    (14,468
    )
    
    $
    9,443
    
    
    $
    2,282
    
    
    $
    2,282
    
    
    $
    206,211
    
    
    $
    159,669
    
    
    $
    159,669
    
    
    $
    
    
    
    $
    (10,872
    )
    
    $
    (10,872
    )Cash flow used for investing activities
    
    
    (404,699
    )
    
    
    (468,721
    )
    
    
    (468,721
    )
    
    
    48,163
    
    
    
    (2,282
    )
    
    
    (2,282
    )
    
    
    (204,511
    )
    
    
    (157,973
    )
    
    
    (157,973
    )
    
    
    (68,479
    )
    
    
    (550
    )
    
    
    (550
    )Cash flow
provided by (used for) financing activities
    
    
    457,023
    
    
    
    456,470
    
    
    
    456,470
    
    
    
    (57,606
    )
    
    
    
    
    
    
    
    
    
    
    (1,325
    )
    
    
    (1,321
    )
    
    
    (1,321
    )
    
    
    68,479
    
    
    
    11,422
    
    
    
    11,422Effect of exchange rates on cash
    
    
    (70
    )
    
    
    (70
    )
    
    
    (70
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    517
    
    
    
    517
    
    
    
    517
    
    
    
    
    
    
    
    
    
    
    
    Net increase (decrease) in cash & equivalents
    
    
    (26,789
    )
    
    
    (26,789
    )
    
    
    (26,789
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    892
    
    
    
    892
    
    
    
    892
    
    
    
    
    
    
    
    
    
    
    
    Cash and equivalents at beginning of period
    
    
    27,010
    
    
    
    27,012
    
    
    
    27,012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,216
    
    
    
    1,214
    
    
    
    1,214
    
    
    
    
    
    
    
    
    
    
    
    Cash and equivalents at end of period
    
    $
    221
    
    
    $
    223
    
    
    $
    223
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2,108
    
    
    $
    2,106
    
    
    $
    2,106
    
    
    $
    
    
    
    $
    
    
    
    $
    
 For the Three Months Ended March 31, 2008Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Cash flow provided by (used for) operations
    
    $
    (45,590
    )
    
    $
    (10,412
    )
    
    $
    (10,412
    )
    
    $
    9,093
    
    
    $
    1,888
    
    
    $
    1,888
    
    
    $
    79,781
    
    
    $
    57,111
    
    
    $
    57,111
    
    
    $
    
    
    
    $
    (5,303
    )
    
    $
    (5,303
    )Cash flow used for investing activities
    
    
    (231,747
    )
    
    
    (266,647
    )
    
    
    (266,647
    )
    
    
    23,270
    
    
    
    (1,888
    )
    
    
    (1,888
    )
    
    
    (132,502
    )
    
    
    (109,833
    )
    
    
    (109,833
    )
    
    
    (37,667
    )
    
    
    (278
    )
    
    
    (278
    )Cash flow provided by financing activities
    
    
    252,122
    
    
    
    251,844
    
    
    
    251,844
    
    
    
    (32,363
    )
    
    
    
    
    
    
    
    
    
    
    52,160
    
    
    
    52,161
    
    
    
    52,161
    
    
    
    37,667
    
    
    
    5,581
    
    
    
    5,581Effect of exchange rates on cash
    
    
    (58
    )
    
    
    (58
    )
    
    
    (58
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (416
    )
    
    
    (416
    )
    
    
    (416
    )
    
    
    
    
    
    
    
    
    
    
    Net decrease in cash & equivalents
    
    
    (25,273
    )
    
    
    (25,273
    )
    
    
    (25,273
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (977
    )
    
    
    (977
    )
    
    
    (977
    )
    
    
    
    
    
    
    
    
    
    
    Cash and equivalents at beginning of period
    
    
    27,010
    
    
    
    27,012
    
    
    
    27,012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,216
    
    
    
    1,214
    
    
    
    1,214
    
    
    
    
    
    
    
    
    
    
    
    Cash and equivalents at end of period
    
    $
    1,737
    
    
    $
    1,739
    
    
    $
    1,739
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    239
    
    
    $
    237
    
    
    $
    237
    
    
    $
    
    
    
    $
    
    
    
    $
    




---



##### Table of Contents



For the Nine Months Ended September 30, 2007Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Cash flow provided by operations
    
    $
    116,890
    
    
    $
    153,652
    
    
    $
    153,652
    
    
    $
    (496
    )
    
    $
    280
    
    
    $
    280
    
    
    $
    145,305
    
    
    $
    107,767
    
    
    $
    107,767
    
    
    $
    
    
    
    $
    
    
    
    $
    Cash flow used for investing activities
    
    
    (562,188
    )
    
    
    (537,828
    )
    
    
    (537,828
    )
    
    
    29,092
    
    
    
    (280
    )
    
    
    (280
    )
    
    
    (191,881
    )
    
    
    (137,213
    )
    
    
    (137,213
    )
    
    
    5,097
    
    
    
    (44,559
    )
    
    
    (44,559
    )Cash flow provided by financing activities
    
    
    446,035
    
    
    
    384,915
    
    
    
    384,915
    
    
    
    (28,596
    )
    
    
    
    
    
    
    
    
    
    
    56,978
    
    
    
    39,846
    
    
    
    39,846
    
    
    
    (5,097
    )
    
    
    44,559
    
    
    
    44,559Effect of exchange rates on cash
    
    
    588
    
    
    
    588
    
    
    
    588
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,582
    
    
    
    2,582
    
    
    
    2,582
    
    
    
    
    
    
    
    
    
    
    
    Net increase in cash & equivalents
    
    
    1,325
    
    
    
    1,327
    
    
    
    1,327
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,984
    
    
    
    12,982
    
    
    
    12,982
    
    
    
    
    
    
    
    
    
    
    
    Cash and equivalents at beginning of period
    
    
    83
    
    
    
    83
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,198
    
    
    
    5,198
    
    
    
    5,198
    
    
    
    
    
    
    
    
    
    
    
    Cash and equivalents at end of period
    
    $
    1,408
    
    
    $
    1,410
    
    
    $
    1,410
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    18,182
    
    
    $
    18,180
    
    
    $
    18,180
    
    
    $
    
    
    
    $
    
    
    
    $
    For
the Six Months Ended June 30, 2007Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Cash flow provided by operations
    
    $
    77,788
    
    
    $
    80,928
    
    
    $
    80,928
    
    
    $
    (735
    )
    
    $
    280
    
    
    $
    280
    
    
    $
    77,495
    
    
    $
    73,340
    
    
    $
    73,340
    
    
    $
    
    
    
    $
    
    
    
    $
    Cash flow used for investing activities
    
    
    (370,426
    )
    
    
    (373,564
    )
    
    
    (373,564
    )
    
    
    (45,333
    )
    
    
    (280
    )
    
    
    (280
    )
    
    
    (117,535
    )
    
    
    (107,511
    )
    
    
    (107,511
    )
    
    
    90,956
    
    
    
    39,017
    
    
    
    39,017Cash flow provided by financing activities
    
    
    292,304
    
    
    
    292,304
    
    
    
    292,304
    
    
    
    46,068
    
    
    
    
    
    
    
    
    
    
    
    36,467
    
    
    
    30,596
    
    
    
    30,596
    
    
    
    (90,956
    )
    
    
    (39,017
    )
    
    
    (39,017
    )Effect of exchange rates on cash
    
    
    390
    
    
    
    390
    
    
    
    390
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,494
    
    
    
    1,494
    
    
    
    1,494
    
    
    
    
    
    
    
    
    
    
    
    Net increase (decrease) in cash & equivalents
    
    
    56
    
    
    
    58
    
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,079
    )
    
    
    (2,081
    )
    
    
    (2,081
    )
    
    
    
    
    
    
    
    
    
    
    Cash and equivalents at beginning of period
    
    
    83
    
    
    
    83
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,198
    
    
    
    5,198
    
    
    
    5,198
    
    
    
    
    
    
    
    
    
    
    
    Cash and equivalents at end of period
    
    $
    139
    
    
    $
    141
    
    
    $
    141
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3,119
    
    
    $
    3,117
    
    
    $
    3,117
    
    
    $
    
    
    
    $
    
    
    
    $
    For the Three Months Ended March 31, 2007Quicksilver Resources Inc.
    
    
    Guarantor Subsidiaries
    
    
    Non-Guarantor Subsidiaries
    
    
    EliminationsAs Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised for
    
    
    As Previously
    
    
    As
    
    
    As Revised forReported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP
    
    
    Reported
    
    
    Restated
    
    
    New GAAP(In thousands)Cash flow provided by operations
    
    $
    42,754
    
    
    $
    40,820
    
    
    $
    40,820
    
    
    $
    (231
    )
    
    $
    276
    
    
    $
    276
    
    
    $
    30,483
    
    
    $
    31,910
    
    
    $
    31,910
    
    
    $
    
    
    
    $
    
    
    
    $
    Cash flow used for investing activities
    
    
    (166,157
    )
    
    
    (164,222
    )
    
    
    (164,222
    )
    
    
    (24,282
    )
    
    
    (276
    )
    
    
    (276
    )
    
    
    (67,639
    )
    
    
    (67,181
    )
    
    
    (67,181
    )
    
    
    48,354
    
    
    
    21,955
    
    
    
    21,955Cash flow provided by financing activities
    
    
    123,755
    
    
    
    123,756
    
    
    
    123,756
    
    
    
    24,513
    
    
    
    
    
    
    
    
    
    
    
    37,010
    
    
    
    35,123
    
    
    
    35,123
    
    
    
    (48,354
    )
    
    
    (21,955
    )
    
    
    (21,955
    )Effect of exchange rates on cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    231
    
    
    
    231
    
    
    
    231
    
    
    
    
    
    
    
    
    
    
    
    Net increase in cash & equivalents
    
    
    352
    
    
    
    354
    
    
    
    354
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85
    
    
    
    83
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    Cash and equivalents at beginning of period
    
    
    83
    
    
    
    83
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,198
    
    
    
    5,198
    
    
    
    5,198
    
    
    
    
    
    
    
    
    
    
    
    Cash and equivalents at end of period
    
    $
    435
    
    
    $
    437
    
    
    $
    437
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5,283
    
    
    $
    5,281
    
    
    $
    5,281
    
    
    $
    
    
    
    $
    
    
    
    $
    
  September 30, 2008Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCurrent assets
    
    $
    313,286
    
    
    $
    
    
    
    $
    74,908
    
    
    $
    (140,037
    )
    
    $
    248,157
    
    
    $
    11,945
    
    
    $
    (5,041
    )
    
    $
    255,061Property and equipment
    
    
    3,177,418
    
    
    
    10,977
    
    
    
    604,015
    
    
    
    
    
    
    
    3,792,410
    
    
    
    437,882
    
    
    
    
    
    
    
    4,230,292Investment in subsidiaries (equity method)
    
    
    662,024
    
    
    
    79,316
    
    
    
    
    
    
    
    (367,152
    )
    
    
    374,188
    
    
    
    
    
    
    
    (79,316
    )
    
    
    294,872Other assets
    
    
    148,648
    
    
    
    151,864
    
    
    
    3,996
    
    
    
    
    
    
    
    304,508
    
    
    
    1,084
    
    
    
    (203,769
    )
    
    
    101,823Total assets
    
    $
    4,301,376
    
    
    $
    242,157
    
    
    $
    682,919
    
    
    $
    (507,189
    )
    
    $
    4,719,263
    
    
    $
    450,911
    
    
    $
    (288,126
    )
    
    $
    4,882,048LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    255,151
    
    
    $
    152,390
    
    
    $
    37,648
    
    
    $
    (140,037
    )
    
    $
    305,152
    
    
    $
    33,053
    
    
    $
    (5,041
    )
    
    $
    333,164Long-term liabilities
    
    
    2,454,219
    
    
    
    
    
    
    
    367,886
    
    
    
    
    
    
    
    2,822,105
    
    
    
    311,795
    
    
    
    (203,769
    )
    
    
    2,930,131Stockholders equity-Quicksilver
    
    
    1,592,006
    
    
    
    89,767
    
    
    
    277,385
    
    
    
    (367,152
    )
    
    
    1,592,006
    
    
    
    79,316
    
    
    
    (79,316
    )
    
    
    1,592,006Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,747
    
    
    
    
    
    
    
    26,747Total liabilities and stockholders equity
    
    $
    4,301,376
    
    
    $
    242,157
    
    
    $
    682,919
    
    
    $
    (507,189
    )
    
    $
    4,719,263
    
    
    $
    450,911
    
    
    $
    (288,126
    )
    
    $
    4,882,048
 June 30, 2008Restricted
    
    
    Restricted
    
    
     Restricted
 
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCurrent assets
    
    $
    418,022
    
    
    $
    
    
    
    $
    72,999
    
    
    $
    (214,816
    )
    
    $
    276,205
    
    
    $
    6,662
    
    
    $
    (8,245
    )
    
    $
    274,622Property and equipment
    
    
    1,699,550
    
    
    
    10,981
    
    
    
    619,482
    
    
    
    
    
    
    
    2,330,013
    
    
    
    372,633
    
    
    
    
    
    
    
    2,702,646Investment in subsidiaries (equity method)
    
    
    664,625
    
    
    
    79,316
    
    
    
    
    
    
    
    (268,838
    )
    
    
    475,103
    
    
    
    
    
    
    
    (79,316
    )
    
    
    395,787Other assets
    
    
    87,317
    
    
    
    131,911
    
    
    
    1,058
    
    
    
    
    
    
    
    220,286
    
    
    
    1,140
    
    
    
    (183,419
    )
    
    
    38,007Total assets
    
    $
    2,869,514
    
    
    $
    222,208
    
    
    $
    693,539
    
    
    $
    (483,654
    )
    
    $
    3,301,607
    
    
    $
    380,435
    
    
    $
    (270,980
    )
    
    $
    3,411,062LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    449,393
    
    
    $
    133,800
    
    
    $
    157,737
    
    
    $
    (214,816
    )
    
    $
    526,114
    
    
    $
    31,426
    
    
    $
    (8,245
    )
    
    $
    549,295Long-term liabilities
    
    
    1,404,197
    
    
    
    
    
    
    
    355,372
    
    
    
    
    
    
    
    1,759,569
    
    
    
    242,024
    
    
    
    (183,419
    )
    
    
    1,818,174Stockholders equity-Quicksilver
    
    
    1,015,924
    
    
    
    88,408
    
    
    
    180,430
    
    
    
    (268,838
    )
    
    
    1,015,924
    
    
    
    79,316
    
    
    
    (79,316
    )
    
    
    1,015,924Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,669
    
    
    
    
    
    
    
    27,669Total liabilities and stockholders equity
    
    $
    2,869,514
    
    
    $
    222,208
    
    
    $
    693,539
    
    
    $
    (483,654
    )
    
    $
    3,301,607
    
    
    $
    380,435
    
    
    $
    (270,980
    )
    
    $
    3,411,062
 March 31, 2008Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCurrent assets
    
    $
    312,709
    
    
    $
    
    
    
    $
    58,394
    
    
    $
    (134,891
    )
    
    $
    236,212
    
    
    $
    3,758
    
    
    $
    (2,963
    )
    
    $
    237,007Property and equipment
    
    
    1,481,585
    
    
    
    10,953
    
    
    
    616,407
    
    
    
    
    
    
    
    2,108,945
    
    
    
    321,819
    
    
    
    
    
    
    
    2,430,764Investment in subsidiaries (equity method)
    
    
    709,673
    
    
    
    79,316
    
    
    
    
    
    
    
    (292,942
    )
    
    
    496,047
    
    
    
    
    
    
    
    (79,316
    )
    
    
    416,731Other assets
    
    
    72,042
    
    
    
    110,743
    
    
    
    1,131
    
    
    
    
    
    
    
    183,916
    
    
    
    1,198
    
    
    
    (161,834
    )
    
    
    23,280Total assets
    
    $
    2,576,009
    
    
    $
    201,012
    
    
    $
    675,932
    
    
    $
    (427,833
    )
    
    $
    3,025,120
    
    
    $
    326,775
    
    
    $
    (244,113
    )
    
    $
    3,107,782LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    343,526
    
    
    $
    113,585
    
    
    $
    68,899
    
    
    $
    (134,891
    )
    
    $
    391,119
    
    
    $
    22,614
    
    
    $
    (2,963
    )
    
    $
    410,770Long-term liabilities
    
    
    1,112,852
    
    
    
    
    
    
    
    401,518
    
    
    
    
    
    
    
    1,514,370
    
    
    
    196,330
    
    
    
    (161,834
    )
    
    
    1,548,866Stockholders equity-Quicksilver
    
    
    1,119,631
    
    
    
    87,427
    
    
    
    205,515
    
    
    
    (292,942
    )
    
    
    1,119,631
    
    
    
    79,316
    
    
    
    (79,316
    )
    
    
    1,119,631Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,515
    
    
    
    
    
    
    
    28,515Total liabilities and stockholders equity
    
    $
    2,576,009
    
    
    $
    201,012
    
    
    $
    675,932
    
    
    $
    (427,833
    )
    
    $
    3,025,120
    
    
    $
    326,775
    
    
    $
    (244,113
    )
    
    $
    3,107,782
 September 30, 2007Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCurrent assets
    
    $
    5,414
    
    
    $
    596
    
    
    $
    327,192
    
    
    $
    (177,745
    )
    
    $
    155,457
    
    
    $
    11,246
    
    
    $
    (11,948
    )
    
    $
    154,755Property and equipment
    
    
    1,544,145
    
    
    
    1,879
    
    
    
    614,002
    
    
    
    
    
    
    
    2,160,026
    
    
    
    227,825
    
    
    
    
    
    
    
    2,387,851Investment in subsidiaries (equity method)
    
    
    542,662
    
    
    
    81,613
    
    
    
    4,543
    
    
    
    (540,044
    )
    
    
    88,774
    
    
    
    
    
    
    
    (81,613
    )
    
    
    7,161Other assets
    
    
    67,869
    
    
    
    64,457
    
    
    
    1,150
    
    
    
    
    
    
    
    133,476
    
    
    
    959
    
    
    
    (114,259
    )
    
    
    20,176Total assets
    
    $
    2,160,090
    
    
    $
    148,545
    
    
    $
    946,887
    
    
    $
    (717,789
    )
    
    $
    2,537,733
    
    
    $
    240,030
    
    
    $
    (207,820
    )
    
    $
    2,569,943LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    204,921
    
    
    $
    60,909
    
    
    $
    143,808
    
    
    $
    (177,745
    )
    
    $
    231,893
    
    
    $
    13,486
    
    
    $
    (11,948
    )
    
    $
    233,431Long-term liabilities
    
    
    1,182,054
    
    
    
    
    
    
    
    350,671
    
    
    
    
    
    
    
    1,532,725
    
    
    
    116,303
    
    
    
    (114,259
    )
    
    
    1,534,769Stockholders equity-Quicksilver
    
    
    773,115
    
    
    
    87,636
    
    
    
    452,408
    
    
    
    (540,044
    )
    
    
    773,115
    
    
    
    81,613
    
    
    
    (81,613
    )
    
    
    773,115Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,628
    
    
    
    
    
    
    
    28,628Total liabilities and stockholders equity
    
    $
    2,160,090
    
    
    $
    148,545
    
    
    $
    946,887
    
    
    $
    (717,789
    )
    
    $
    2,537,733
    
    
    $
    240,030
    
    
    $
    (207,820
    )
    
    $
    2,569,943
 June 30, 2007Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCurrent assets
    
    $
    158,611
    
    
    $
    46
    
    
    $
    312,428
    
    
    $
    (356,263
    )
    
    $
    114,822
    
    
    $
    43,258
    
    
    $
    (29,687
    )
    
    $
    128,393Property and equipment
    
    
    1,343,598
    
    
    
    1,901
    
    
    
    560,268
    
    
    
    
    
    
    
    1,905,767
    
    
    
    193,288
    
    
    
    
    
    
    
    2,099,055Investment in subsidiaries (equity method)
    
    
    600,553
    
    
    
    174,371
    
    
    
    4,503
    
    
    
    (591,074
    )
    
    
    188,353
    
    
    
    
    
    
    
    (181,020
    )
    
    
    7,333Other assets
    
    
    19,508
    
    
    
    38,279
    
    
    
    1,353
    
    
    
    
    
    
    
    59,140
    
    
    
    
    
    
    
    (38,279
    )
    
    
    20,861Total assets
    
    $
    2,122,270
    
    
    $
    214,597
    
    
    $
    878,552
    
    
    $
    (947,337
    )
    
    $
    2,268,082
    
    
    $
    236,546
    
    
    $
    (248,986
    )
    
    $
    2,255,642LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    394,332
    
    
    $
    35,969
    
    
    $
    127,846
    
    
    $
    (356,263
    )
    
    $
    201,884
    
    
    $
    15,604
    
    
    $
    (29,687
    )
    
    $
    187,801Long-term liabilities
    
    
    1,081,369
    
    
    
    32
    
    
    
    330,488
    
    
    
    
    
    
    
    1,411,889
    
    
    
    39,922
    
    
    
    (38,279
    )
    
    
    1,413,532Stockholders equity-Quicksilver
    
    
    646,569
    
    
    
    170,856
    
    
    
    420,218
    
    
    
    (591,074
    )
    
    
    646,569
    
    
    
    181,020
    
    
    
    (181,020
    )
    
    
    646,569Noncontrolling interests
    
    
    
    
    
    
    7,740
    
    
    
    
    
    
    
    
    
    
    
    7,740
    
    
    
    
    
    
    
    
    
    
    
    7,740Total liabilities and stockholders equity
    
    $
    2,122,270
    
    
    $
    214,597
    
    
    $
    878,552
    
    
    $
    (947,337
    )
    
    $
    2,268,082
    
    
    $
    236,546
    
    
    $
    (248,986
    )
    
    $
    2,255,642
 March 31, 2007Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCurrent assets
    
    $
    134,809
    
    
    $
    2,297
    
    
    $
    308,677
    
    
    $
    (333,205
    )
    
    $
    112,578
    
    
    $
    10,438
    
    
    $
    (5,470
    )
    
    $
    117,546Property and equipment
    
    
    1,163,917
    
    
    
    950
    
    
    
    520,561
    
    
    
    
    
    
    
    1,685,428
    
    
    
    158,217
    
    
    
    
    
    
    
    1,843,645Investment in subsidiaries (equity method)
    
    
    537,680
    
    
    
    150,529
    
    
    
    4,438
    
    
    
    (527,264
    )
    
    
    165,383
    
    
    
    
    
    
    
    (157,987
    )
    
    
    7,396Other assets
    
    
    19,683
    
    
    
    
    
    
    
    1,427
    
    
    
    
    
    
    
    21,110
    
    
    
    821
    
    
    
    
    
    
    
    21,931Total assets
    
    $
    1,856,089
    
    
    $
    153,776
    
    
    $
    835,103
    
    
    $
    (860,469
    )
    
    $
    1,984,499
    
    
    $
    169,476
    
    
    $
    (163,457
    )
    
    $
    1,990,518LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    368,360
    
    
    $
    17
    
    
    $
    129,203
    
    
    $
    (333,205
    )
    
    $
    164,375
    
    
    $
    9,829
    
    
    $
    (5,470
    )
    
    $
    168,734Long-term liabilities
    
    
    909,640
    
    
    
    1
    
    
    
    324,751
    
    
    
    
    
    
    
    1,234,392
    
    
    
    1,660
    
    
    
    
    
    
    
    1,236,052Stockholders equity-Quicksilver
    
    
    578,089
    
    
    
    146,115
    
    
    
    381,149
    
    
    
    (527,264
    )
    
    
    578,089
    
    
    
    157,987
    
    
    
    (157,987
    )
    
    
    578,089Noncontrolling interests
    
    
    
    
    
    
    7,643
    
    
    
    
    
    
    
    
    
    
    
    7,643
    
    
    
    
    
    
    
    
    
    
    
    7,643Total liabilities and stockholders equity
    
    $
    1,856,089
    
    
    $
    153,776
    
    
    $
    835,103
    
    
    $
    (860,469
    )
    
    $
    1,984,499
    
    
    $
    169,476
    
    
    $
    (163,457
    )
    
    $
    1,990,518
 For the Three Months Ended September 30, 2008Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidated
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    171,639
    
    
    $
    
    
    
    $
    61,267
    
    
    $
    
    
    
    $
    232,906
    
    
    $
    19,304
    
    
    $
    (15,947
    )
    
    $
    236,263Operating expenses
    
    
    100,488
    
    
    
    376
    
    
    
    21,245
    
    
    
    
    
    
    
    122,109
    
    
    
    10,111
    
    
    
    (15,947
    )
    
    
    116,273Equity in net earnings of subsidiaries
    
    
    29,851
    
    
    
    5,263
    
    
    
    
    
    
    
    (29,851
    )
    
    
    5,263
    
    
    
    
    
    
    
    (5,263
    )
    
    
    Operating income
    
    
    101,002
    
    
    
    4,887
    
    
    
    40,022
    
    
    
    (29,851
    )
    
    
    116,060
    
    
    
    9,193
    
    
    
    (5,263
    )
    
    
    119,990Income from earnings of BBEP
    
    
    (89,814
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (89,814
    )
    
    
    
    
    
    
    
    
    
    
    (89,814
    )Interest expense and other
    
    
    (31,948
    )
    
    
    1,736
    
    
    
    (5,190
    )
    
    
    
    
    
    
    (35,402
    )
    
    
    (2,699
    )
    
    
    
    
    
    
    (38,101
    )Income tax (expense) benefit
    
    
    17,006
    
    
    
    (2,318
    )
    
    
    (9,286
    )
    
    
    
    
    
    
    5,402
    
    
    
    (106
    )
    
    
    
    
    
    
    5,296Net income (loss)
    
    
    (3,754
    )
    
    
    4,305
    
    
    
    25,546
    
    
    
    (29,851
    )
    
    
    (3,754
    )
    
    
    6,388
    
    
    
    (5,263
    )
    
    
    (2,629
    )Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,125
    )
    
    
    
    
    
    
    (1,125
    )Net income (loss) attributable to
Quicksilver
    
    $
    (3,754
    )
    
    $
    4,305
    
    
    $
    25,546
    
    
    $
    (29,851
    )
    
    $
    (3,754
    )
    
    $
    5,263
    
    
    $
    (5,263
    )
    
    $
    (3,754
    )
 For the Three Months Ended June 30, 2008Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidated
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    148,984
    
    
    $
    
    
    
    $
    45,503
    
    
    $
    
    
    
    $
    194,487
    
    
    $
    18,205
    
    
    $
    (14,792
    )
    
    $
    197,900Operating expenses
    
    
    72,827
    
    
    
    514
    
    
    
    22,107
    
    
    
    
    
    
    
    95,448
    
    
    
    10,141
    
    
    
    (14,792
    )
    
    
    90,797Equity in net earnings of subsidiaries
    
    
    18,555
    
    
    
    4,618
    
    
    
    
    
    
    
    (18,555
    )
    
    
    4,618
    
    
    
    
    
    
    
    (4,618
    )
    
    
    Operating income
    
    
    94,712
    
    
    
    4,104
    
    
    
    23,396
    
    
    
    (18,555
    )
    
    
    103,657
    
    
    
    8,064
    
    
    
    (4,618
    )
    
    
    107,103Income from earnings of BBEP
    
    
    (10,269
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,269
    )
    
    
    
    
    
    
    
    
    
    
    (10,269
    )Interest expense and other
    
    
    (11,604
    )
    
    
    1,494
    
    
    
    (3,996
    )
    
    
    
    
    
    
    (14,106
    )
    
    
    (2,420
    )
    
    
    
    
    
    
    (16,526
    )Income tax expense
    
    
    (21,504
    )
    
    
    (1,959
    )
    
    
    (4,484
    )
    
    
    
    
    
    
    (27,947
    )
    
    
    (38
    )
    
    
    
    
    
    
    (27,985
    )Net income
    
    
    51,335
    
    
    
    3,639
    
    
    
    14,916
    
    
    
    (18,555
    )
    
    
    51,335
    
    
    
    5,606
    
    
    
    (4,618
    )
    
    
    52,323Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (988
    )
    
    
    
    
    
    
    (988
    )Net income attributable to Quicksilver
    
    $
    51,335
    
    
    $
    3,639
    
    
    $
    14,916
    
    
    $
    (18,555
    )
    
    $
    51,335
    
    
    $
    4,618
    
    
    $
    (4,618
    )
    
    $
    51,335
 For the Three Months Ended March 31, 2008Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidated
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    116,889
    
    
    $
    
    
    
    $
    38,468
    
    
    $
    
    
    
    $
    155,357
    
    
    $
    15,185
    
    
    $
    (12,925
    )
    
    $
    157,617Operating expenses
    
    
    66,959
    
    
    
    499
    
    
    
    22,438
    
    
    
    
    
    
    
    89,896
    
    
    
    9,923
    
    
    
    (12,925
    )
    
    
    86,894Equity in net earnings of subsidiaries
    
    
    11,063
    
    
    
    2,376
    
    
    
    
    
    
    
    (11,063
    )
    
    
    2,376
    
    
    
    
    
    
    
    (2,376
    )
    
    
    Operating income
    
    
    60,993
    
    
    
    1,877
    
    
    
    16,030
    
    
    
    (11,063
    )
    
    
    67,837
    
    
    
    5,262
    
    
    
    (2,376
    )
    
    
    70,723Income from earnings of BBEP
    
    
    6,219
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,219
    
    
    
    
    
    
    
    
    
    
    
    6,219Interest expense and other
    
    
    (7,049
    )
    
    
    1,433
    
    
    
    (3,920
    )
    
    
    
    
    
    
    (9,536
    )
    
    
    (2,413
    )
    
    
    
    
    
    
    (11,949
    )Income tax expense
    
    
    (19,029
    )
    
    
    (1,159
    )
    
    
    (3,198
    )
    
    
    
    
    
    
    (23,386
    )
    
    
    35
    
    
    
    
    
    
    
    (23,351
    )Net income
    
    
    41,134
    
    
    
    2,151
    
    
    
    8,912
    
    
    
    (11,063
    )
    
    
    41,134
    
    
    
    2,884
    
    
    
    (2,376
    )
    
    
    41,642Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (508
    )
    
    
    
    
    
    
    (508
    )Net income attributable to Quicksilver
    
    $
    41,134
    
    
    $
    2,151
    
    
    $
    8,912
    
    
    $
    (11,063
    )
    
    $
    41,134
    
    
    $
    2,376
    
    
    $
    (2,376
    )
    
    $
    41,134
 For the Three Months Ended September 30, 2007Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidated
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    104,237
    
    
    $
    
    
    
    $
    52,955
    
    
    $
    (239
    )
    
    $
    156,953
    
    
    $
    10,282
    
    
    $
    (8,036
    )
    
    $
    159,199Operating expenses
    
    
    73,375
    
    
    
    (784
    )
    
    
    25,117
    
    
    
    (239
    )
    
    
    97,469
    
    
    
    6,477
    
    
    
    (8,036
    )
    
    
    95,910Equity in net earnings of subsidiaries
    
    
    18,201
    
    
    
    1,848
    
    
    
    289
    
    
    
    (18,205
    )
    
    
    2,133
    
    
    
    
    
    
    
    (1,848
    )
    
    
    285Operating income (loss)
    
    
    49,063
    
    
    
    2,632
    
    
    
    28,127
    
    
    
    (18,205
    )
    
    
    61,617
    
    
    
    3,805
    
    
    
    (1,848
    )
    
    
    63,574Interest expense and other
    
    
    (16,657
    )
    
    
    999
    
    
    
    (4,787
    )
    
    
    
    
    
    
    (20,445
    )
    
    
    (1,408
    )
    
    
    
    
    
    
    (21,853
    )Income tax expense
    
    
    (4,693
    )
    
    
    (1,271
    )
    
    
    (7,495
    )
    
    
    
    
    
    
    (13,459
    )
    
    
    (92
    )
    
    
    
    
    
    
    (13,551
    )Net income
    
    
    27,713
    
    
    
    2,360
    
    
    
    15,845
    
    
    
    (18,205
    )
    
    
    27,713
    
    
    
    2,305
    
    
    
    (1,848
    )
    
    
    28,170Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (457
    )
    
    
    
    
    
    
    (457
    )Net income attributable to Quicksilver
    
    $
    27,713
    
    
    $
    2,360
    
    
    $
    15,845
    
    
    $
    (18,205
    )
    
    $
    27,713
    
    
    $
    1,848
    
    
    $
    (1,848
    )
    
    $
    27,713
 For the Three Months Ended June 30, 2007Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidated
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    88,948
    
    
    $
    
    
    
    $
    46,930
    
    
    $
    (209
    )
    
    $
    135,669
    
    
    $
    7,117
    
    
    $
    (6,285
    )
    
    $
    136,501Operating expenses
    
    
    54,687
    
    
    
    680
    
    
    
    21,094
    
    
    
    (209
    )
    
    
    76,252
    
    
    
    4,738
    
    
    
    (6,285
    )
    
    
    74,705Equity in net earnings of subsidiaries
    
    
    18,743
    
    
    
    2,031
    
    
    
    266
    
    
    
    (18,727
    )
    
    
    2,313
    
    
    
    
    
    
    
    (2,031
    )
    
    
    282Operating income
    
    
    53,004
    
    
    
    1,351
    
    
    
    26,102
    
    
    
    (18,727
    )
    
    
    61,730
    
    
    
    2,379
    
    
    
    (2,031
    )
    
    
    62,078Interest expense and other
    
    
    (15,226
    )
    
    
    212
    
    
    
    (3,663
    )
    
    
    
    
    
    
    (18,677
    )
    
    
    (292
    )
    
    
    
    
    
    
    (18,969
    )Income tax expense
    
    
    (7,035
    )
    
    
    (502
    )
    
    
    (4,645
    )
    
    
    
    
    
    
    (12,182
    )
    
    
    (56
    )
    
    
    
    
    
    
    (12,238
    )Net income
    
    
    30,743
    
    
    
    1,061
    
    
    
    17,794
    
    
    
    (18,727
    )
    
    
    30,871
    
    
    
    2,031
    
    
    
    (2,031
    )
    
    
    30,871Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    (128
    )
    
    
    
    
    
    
    
    
    
    
    (128
    )
    
    
    
    
    
    
    
    
    
    
    (128
    )Net income attributable to Quicksilver
    
    $
    30,743
    
    
    $
    933
    
    
    $
    17,794
    
    
    $
    (18,727
    )
    
    $
    30,743
    
    
    $
    2,031
    
    
    $
    (2,031
    )
    
    $
    30,743
 For the Three Months Ended March 31, 2007Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidated
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    70,868
    
    
    $
    
    
    
    $
    44,732
    
    
    $
    (228
    )
    
    $
    115,372
    
    
    $
    5,372
    
    
    $
    (4,164
    )
    
    $
    116,580Operating expenses
    
    
    46,461
    
    
    
    459
    
    
    
    21,099
    
    
    
    (228
    )
    
    
    67,791
    
    
    
    4,508
    
    
    
    (4,164
    )
    
    
    68,135Equity in net earnings of subsidiaries
    
    
    14,480
    
    
    
    748
    
    
    
    109
    
    
    
    (14,474
    )
    
    
    863
    
    
    
    
    
    
    
    (748
    )
    
    
    115Operating income
    
    
    38,887
    
    
    
    289
    
    
    
    23,742
    
    
    
    (14,474
    )
    
    
    48,444
    
    
    
    864
    
    
    
    (748
    )
    
    
    48,560Interest expense and other
    
    
    (12,613
    )
    
    
    
    
    
    
    (3,156
    )
    
    
    
    
    
    
    (15,769
    )
    
    
    (75
    )
    
    
    
    
    
    
    (15,844
    )Income tax (expense) benefit
    
    
    (4,393
    )
    
    
    (79
    )
    
    
    (6,259
    )
    
    
    
    
    
    
    (10,731
    )
    
    
    (41
    )
    
    
    
    
    
    
    (10,772
    )Net income
    
    
    21,881
    
    
    
    210
    
    
    
    14,327
    
    
    
    (14,474
    )
    
    
    21,944
    
    
    
    748
    
    
    
    (748
    )
    
    
    21,944Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    (63
    )
    
    
    
    
    
    
    
    
    
    
    (63
    )
    
    
    
    
    
    
    
    
    
    
    (63
    )Net income attributable to Quicksilver
    
    $
    21,881
    
    
    $
    147
    
    
    $
    14,327
    
    
    $
    (14,474
    )
    
    $
    21,881
    
    
    $
    748
    
    
    $
    (748
    )
    
    $
    21,881
 For the Nine Months Ended September 30, 2008Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidated
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    437,512
    
    
    $
    
    
    
    $
    145,238
    
    
    $
    
    
    
    $
    582,750
    
    
    $
    52,694
    
    
    $
    (43,664
    )
    
    $
    591,780Operating expenses
    
    
    240,274
    
    
    
    1,389
    
    
    
    65,790
    
    
    
    
    
    
    
    307,453
    
    
    
    30,175
    
    
    
    (43,664
    )
    
    
    293,964Equity in net earnings of subsidiaries
    
    
    59,469
    
    
    
    12,258
    
    
    
    
    
    
    
    (59,469
    )
    
    
    12,258
    
    
    
    
    
    
    
    (12,258
    )
    
    
    Operating income
    
    
    256,707
    
    
    
    10,869
    
    
    
    79,448
    
    
    
    (59,469
    )
    
    
    287,555
    
    
    
    22,519
    
    
    
    (12,258
    )
    
    
    297,816Income from earnings of BBEP
    
    
    (93,864
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (93,864
    )
    
    
    
    
    
    
    
    
    
    
    (93,864
    )Interest expense and other
    
    
    (50,601
    )
    
    
    4,663
    
    
    
    (13,107
    )
    
    
    
    
    
    
    (59,045
    )
    
    
    (7,531
    )
    
    
    
    
    
    
    (66,576
    )Income tax expense
    
    
    (23,527
    )
    
    
    (5,436
    )
    
    
    (16,968
    )
    
    
    
    
    
    
    (45,931
    )
    
    
    (109
    )
    
    
    
    
    
    
    (46,040
    )Net income
    
    
    88,715
    
    
    
    10,096
    
    
    
    49,373
    
    
    
    (59,469
    )
    
    
    88,715
    
    
    
    14,879
    
    
    
    (12,258
    )
    
    
    91,336Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,621
    )
    
    
    
    
    
    
    (2,621
    )Net income attributable to Quicksilver
    
    $
    88,715
    
    
    $
    10,096
    
    
    $
    49,373
    
    
    $
    (59,469
    )
    
    $
    88,715
    
    
    $
    12,258
    
    
    $
    (12,258
    )
    
    $
    88,715
 For the Six Months Ended June 30, 2008Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidated
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    265,873
    
    
    $
    
    
    
    $
    83,971
    
    
    $
    
    
    
    $
    349,844
    
    
    $
    33,390
    
    
    $
    (27,717
    )
    
    $
    355,517Operating expenses
    
    
    139,786
    
    
    
    1,013
    
    
    
    44,545
    
    
    
    
    
    
    
    185,344
    
    
    
    20,064
    
    
    
    (27,717
    )
    
    
    177,691Equity in net earnings of subsidiaries
    
    
    29,618
    
    
    
    6,994
    
    
    
    
    
    
    
    (29,618
    )
    
    
    6,994
    
    
    
    
    
    
    
    (6,994
    )
    
    
    Operating income
    
    
    155,705
    
    
    
    5,981
    
    
    
    39,426
    
    
    
    (29,618
    )
    
    
    171,494
    
    
    
    13,326
    
    
    
    (6,994
    )
    
    
    177,826Income from earnings of BBEP
    
    
    (4,050
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,050
    )
    
    
    
    
    
    
    
    
    
    
    (4,050
    )Interest expense and other
    
    
    (18,653
    )
    
    
    2,927
    
    
    
    (7,916
    )
    
    
    
    
    
    
    (23,642
    )
    
    
    (4,833
    )
    
    
    
    
    
    
    (28,475
    )Income tax expense
    
    
    (40,533
    )
    
    
    (3,118
    )
    
    
    (7,682
    )
    
    
    
    
    
    
    (51,333
    )
    
    
    (3
    )
    
    
    
    
    
    
    (51,336
    )Net income
    
    
    92,469
    
    
    
    5,790
    
    
    
    23,828
    
    
    
    (29,618
    )
    
    
    92,469
    
    
    
    8,490
    
    
    
    (6,994
    )
    
    
    93,965Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,496
    )
    
    
    
    
    
    
    (1,496
    )Net income attributable to Quicksilver
    
    $
    92,469
    
    
    $
    5,790
    
    
    $
    23,828
    
    
    $
    (29,618
    )
    
    $
    92,469
    
    
    $
    6,994
    
    
    $
    (6,994
    )
    
    $
    92,469
 For the Nine Months Ended September 30, 2007Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidated
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    264,053
    
    
    $
    
    
    
    $
    144,514
    
    
    $
    (676
    )
    
    $
    407,891
    
    
    $
    22,771
    
    
    $
    (18,485
    )
    
    $
    412,177Operating expenses
    
    
    174,523
    
    
    
    355
    
    
    
    67,310
    
    
    
    (676
    )
    
    
    241,512
    
    
    
    15,723
    
    
    
    (18,485
    )
    
    
    238,750Equity in net earnings of subsidiaries
    
    
    51,424
    
    
    
    4,627
    
    
    
    664
    
    
    
    (51,406
    )
    
    
    5,309
    
    
    
    
    
    
    
    (4,627
    )
    
    
    682Operating income
    
    
    140,954
    
    
    
    4,272
    
    
    
    77,868
    
    
    
    (51,406
    )
    
    
    171,688
    
    
    
    7,048
    
    
    
    (4,627
    )
    
    
    174,109Interest expense and other
    
    
    (44,496
    )
    
    
    1,211
    
    
    
    (11,503
    )
    
    
    
    
    
    
    (54,788
    )
    
    
    (1,775
    )
    
    
    
    
    
    
    (56,563
    )Income tax expense
    
    
    (16,121
    )
    
    
    (1,852
    )
    
    
    (18,399
    )
    
    
    
    
    
    
    (36,372
    )
    
    
    (189
    )
    
    
    
    
    
    
    (36,561
    )Net income
    
    
    80,337
    
    
    
    3,631
    
    
    
    47,966
    
    
    
    (51,406
    )
    
    
    80,528
    
    
    
    5,084
    
    
    
    (4,627
    )
    
    
    80,985Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    (191
    )
    
    
    
    
    
    
    
    
    
    
    (191
    )
    
    
    (457
    )
    
    
    
    
    
    
    (648
    )Net income attributable to Quicksilver
    
    $
    80,337
    
    
    $
    3,440
    
    
    $
    47,966
    
    
    $
    (51,406
    )
    
    $
    80,337
    
    
    $
    4,627
    
    
    $
    (4,627
    )
    
    $
    80,337
 For the Six Months Ended June 30, 2007Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidated
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    159,816
    
    
    $
    
    
    
    $
    91,662
    
    
    $
    (437
    )
    
    $
    251,041
    
    
    $
    12,489
    
    
    $
    (10,449
    )
    
    $
    253,081Operating expenses
    
    
    101,148
    
    
    
    1,139
    
    
    
    42,193
    
    
    
    (437
    )
    
    
    144,043
    
    
    
    9,246
    
    
    
    (10,449
    )
    
    
    142,840Equity in net earnings of subsidiaries
    
    
    33,223
    
    
    
    2,779
    
    
    
    375
    
    
    
    (33,201
    )
    
    
    3,176
    
    
    
    
    
    
    
    (2,779
    )
    
    
    397Operating income
    
    
    91,891
    
    
    
    1,640
    
    
    
    49,844
    
    
    
    (33,201
    )
    
    
    110,174
    
    
    
    3,243
    
    
    
    (2,779
    )
    
    
    110,638Interest expense and other
    
    
    (27,839
    )
    
    
    212
    
    
    
    (6,819
    )
    
    
    
    
    
    
    (34,446
    )
    
    
    (367
    )
    
    
    
    
    
    
    (34,813
    )Income tax (expense) benefit
    
    
    (11,428
    )
    
    
    (581
    )
    
    
    (10,904
    )
    
    
    
    
    
    
    (22,913
    )
    
    
    (97
    )
    
    
    
    
    
    
    (23,010
    )Net income
    
    
    52,624
    
    
    
    1,271
    
    
    
    32,121
    
    
    
    (33,201
    )
    
    
    52,815
    
    
    
    2,779
    
    
    
    (2,779
    )
    
    
    52,815Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    (191
    )
    
    
    
    
    
    
    
    
    
    
    (191
    )
    
    
    
    
    
    
    
    
    
    
    (191
    )Net income attributable to Quicksilver
    
    $
    52,624
    
    
    $
    1,080
    
    
    $
    32,121
    
    
    $
    (33,201
    )
    
    $
    52,624
    
    
    $
    2,779
    
    
    $
    (2,779
    )
    
    $
    52,624
 For the Nine Months Ended September 30, 2008Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Cash flow provided by operations
    
    $
    138,736
    
    
    $
    2,483
    
    
    $
    113,616
    
    
    $
    
    
    
    $
    254,835
    
    
    $
    36,365
    
    
    $
    (17,080
    )
    
    $
    274,120Purchases of property, plant and equipment
    
    
    (1,744,219
    )
    
    
    (2,483
    )
    
    
    (116,871
    )
    
    
    
    
    
    
    (1,863,573
    )
    
    
    (112,200
    )
    
    
    
    
    
    
    (1,975,773
    )Return of investment from BBEP and equity affiliates
    
    
    31,435
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,435
    
    
    
    
    
    
    
    
    
    
    
    31,435Proceeds from sale of equipment to subsidiaries
    
    
    825
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    825
    
    
    
    
    
    
    
    (825
    )
    
    
    Proceeds from sales of properties and equipment
    
    
    200
    
    
    
    
    
    
    
    618
    
    
    
    
    
    
    
    818
    
    
    
    
    
    
    
    
    
    
    
    818Cash flow provided by (used for) investing activities
    
    
    (1,711,759
    )
    
    
    (2,483
    )
    
    
    (116,253
    )
    
    
    
    
    
    
    (1,830,495
    )
    
    
    (112,200
    )
    
    
    (825
    )
    
    
    (1,943,520
    )Issuance of debt
    
    
    2,169,611
    
    
    
    
    
    
    
    203,208
    
    
    
    
    
    
    
    2,372,819
    
    
    
    99,300
    
    
    
    
    
    
    
    2,472,119Repayments of debt
    
    
    (583,782
    )
    
    
    
    
    
    
    (198,206
    )
    
    
    
    
    
    
    (781,988
    )
    
    
    
    
    
    
    
    
    
    
    (781,988
    )Debt issuance costs
    
    
    (24,545
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,545
    )
    
    
    
    
    
    
    
    
    
    
    (24,545
    )Repayments to parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (825
    )
    
    
    825
    
    
    
    Distributions to parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,080
    )
    
    
    17,080
    
    
    
    Distributions to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,343
    )
    
    
    
    
    
    
    (6,343
    )Proceeds from exercise of stock options
    
    
    1,240
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,240
    
    
    
    
    
    
    
    
    
    
    
    1,240Purchase of treasury stock
    
    
    (3,235
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,235
    )
    
    
    
    
    
    
    
    
    
    
    (3,235
    )Cash flow provided by (used for) financing activities
    
    
    1,559,289
    
    
    
    
    
    
    
    5,002
    
    
    
    
    
    
    
    1,564,291
    
    
    
    75,052
    
    
    
    17,905
    
    
    
    1,657,248Effect of exchange rates on cash
    
    
    (155
    )
    
    
    
    
    
    
    (2,454
    )
    
    
    
    
    
    
    (2,609
    )
    
    
    
    
    
    
    
    
    
    
    (2,609
    )Net increase (decrease) in cash & equivalents
    
    
    (13,889
    )
    
    
    
    
    
    
    (89
    )
    
    
    
    
    
    
    (13,978
    )
    
    
    (783
    )
    
    
    
    
    
    
    (14,761
    )Cash and equivalents at beginning of period
    
    
    27,012
    
    
    
    
    
    
    
    89
    
    
    
    
    
    
    
    27,101
    
    
    
    1,125
    
    
    
    
    
    
    
    28,226Cash and equivalents at end of period
    
    $
    13,123
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    13,123
    
    
    $
    342
    
    
    $
    
    
    
    $
    13,465
 For the Six Months Ended June 30, 2008Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Cash flow provided by operations
    
    $
    (14,468
    )
    
    $
    2,282
    
    
    $
    135,589
    
    
    $
    
    
    
    $
    123,403
    
    
    $
    24,080
    
    
    $
    (10,872
    )
    
    $
    136,611Purchases of property, plant and equipment
    
    
    (489,605
    )
    
    
    (2,282
    )
    
    
    (99,137
    )
    
    
    
    
    
    
    (591,024
    )
    
    
    (59,434
    )
    
    
    
    
    
    
    (650,458
    )Return of investment from BBEP and equity affiliates
    
    
    20,334
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,334
    
    
    
    
    
    
    
    
    
    
    
    20,334Proceeds from sale of equipment to subsidiaries
    
    
    550
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    550
    
    
    
    
    
    
    
    (550
    )
    
    
    Proceeds from sales of properties and equipment
    
    
    
    
    
    
    
    
    
    
    598
    
    
    
    
    
    
    
    598
    
    
    
    
    
    
    
    
    
    
    
    598Cash flow provided by (used for) investing activities
    
    
    (468,721
    )
    
    
    (2,282
    )
    
    
    (98,539
    )
    
    
    
    
    
    
    (569,542
    )
    
    
    (59,434
    )
    
    
    (550
    )
    
    
    (629,526
    )Issuance of debt
    
    
    876,611
    
    
    
    
    
    
    
    103,377
    
    
    
    
    
    
    
    979,988
    
    
    
    50,300
    
    
    
    
    
    
    
    1,030,288Repayments of debt
    
    
    (408,032
    )
    
    
    
    
    
    
    (139,534
    )
    
    
    
    
    
    
    (547,566
    )
    
    
    
    
    
    
    
    
    
    
    (547,566
    )Debt issuance costs
    
    
    (10,837
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,837
    )
    
    
    
    
    
    
    
    
    
    
    (10,837
    )Repayments to parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (550
    )
    
    
    550
    
    
    
    Distributions to parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,872
    )
    
    
    10,872
    
    
    
    Distributions to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,042
    )
    
    
    
    
    
    
    (4,042
    )Proceeds from exercise of stock options
    
    
    1,082
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,082
    
    
    
    
    
    
    
    
    
    
    
    1,082Purchase of treasury stock
    
    
    (2,354
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,354
    )
    
    
    
    
    
    
    
    
    
    
    (2,354
    )Cash flow provided by (used for) financing activities
    
    
    456,470
    
    
    
    
    
    
    
    (36,157
    )
    
    
    
    
    
    
    420,313
    
    
    
    34,836
    
    
    
    11,422
    
    
    
    466,571Effect of exchange rates on cash
    
    
    (70
    )
    
    
    
    
    
    
    517
    
    
    
    
    
    
    
    447
    
    
    
    
    
    
    
    
    
    
    
    447Net increase (decrease) in cash & equivalents
    
    
    (26,789
    )
    
    
    
    
    
    
    1,410
    
    
    
    
    
    
    
    (25,379
    )
    
    
    (518
    )
    
    
    
    
    
    
    (25,897
    )Cash and equivalents at beginning of period
    
    
    27,012
    
    
    
    
    
    
    
    89
    
    
    
    
    
    
    
    27,101
    
    
    
    1,125
    
    
    
    
    
    
    
    28,226Cash and equivalents at end of period
    
    $
    223
    
    
    $
    
    
    
    $
    1,499
    
    
    $
    
    
    
    $
    1,722
    
    
    $
    607
    
    
    $
    
    
    
    $
    2,329
 For the Three Months Ended March 31, 2008Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Cash flow provided by operations
    
    $
    (10,412
    )
    
    $
    1,888
    
    
    $
    44,265
    
    
    $
    
    
    
    $
    35,741
    
    
    $
    12,846
    
    
    $
    (5,303
    )
    
    $
    43,284Purchases of property, plant and equipment
    
    
    (220,215
    )
    
    
    (1,888
    )
    
    
    (77,152
    )
    
    
    
    
    
    
    (299,255
    )
    
    
    (32,681
    )
    
    
    
    
    
    
    (331,936
    )Advances to BBEP
    
    
    (50,150
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50,150
    )
    
    
    
    
    
    
    
    
    
    
    (50,150
    )Return of investment from BBEP and equity affiliates
    
    
    3,440
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,440
    
    
    
    
    
    
    
    
    
    
    
    3,440Proceeds from sale of equipment to subsidiaries
    
    
    278
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    278
    
    
    
    
    
    
    
    (278
    )
    
    
    Proceeds from sales of properties and equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash flow provided by (used for) investing activities
    
    
    (266,647
    )
    
    
    (1,888
    )
    
    
    (77,152
    )
    
    
    
    
    
    
    (345,687
    )
    
    
    (32,681
    )
    
    
    (278
    )
    
    
    (378,646
    )Issuance of debt
    
    
    253,000
    
    
    
    
    
    
    
    51,241
    
    
    
    
    
    
    
    304,241
    
    
    
    26,500
    
    
    
    
    
    
    
    330,741Repayments of debt
    
    
    (34
    )
    
    
    
    
    
    
    (18,027
    )
    
    
    
    
    
    
    (18,061
    )
    
    
    
    
    
    
    
    
    
    
    (18,061
    )Repayments to parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (278
    )
    
    
    278
    
    
    
    Distributions to parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,303
    )
    
    
    5,303
    
    
    
    Distributions to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,972
    )
    
    
    
    
    
    
    (1,972
    )Proceeds from exercise of stock options
    
    
    858
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    858
    
    
    
    
    
    
    
    
    
    
    
    858Purchase of treasury stock
    
    
    (1,980
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,980
    )
    
    
    
    
    
    
    
    
    
    
    (1,980
    )Cash flow provided by (used for) financing activities
    
    
    251,844
    
    
    
    
    
    
    
    33,214
    
    
    
    
    
    
    
    285,058
    
    
    
    18,947
    
    
    
    5,581
    
    
    
    309,586Effect of exchange rates on cash
    
    
    (58
    )
    
    
    
    
    
    
    (416
    )
    
    
    
    
    
    
    (474
    )
    
    
    
    
    
    
    
    
    
    
    (474
    )Net increase (decrease) in cash & equivalents
    
    
    (25,273
    )
    
    
    
    
    
    
    (89
    )
    
    
    
    
    
    
    (25,362
    )
    
    
    (888
    )
    
    
    
    
    
    
    (26,250
    )Cash and equivalents at beginning of period
    
    
    27,012
    
    
    
    
    
    
    
    89
    
    
    
    
    
    
    
    27,101
    
    
    
    1,125
    
    
    
    
    
    
    
    28,226Cash and equivalents at end of period
    
    $
    1,739
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,739
    
    
    $
    237
    
    
    $
    
    
    
    $
    1,976
 For the Nine Months Ended September 30, 2007Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Cash flow provided by (used for) operations
    
    $
    153,652
    
    
    $
    280
    
    
    $
    93,846
    
    
    $
    
    
    
    $
    247,778
    
    
    $
    13,921
    
    
    $
    
    
    
    $
    261,699Purchases of property, plant and equipment
    
    
    (612,074
    )
    
    
    (280
    )
    
    
    (82,178
    )
    
    
    
    
    
    
    (694,532
    )
    
    
    (55,184
    )
    
    
    29,508
    
    
    
    (720,208
    )Investment in subsidiaries and affiliates
    
    
    (38,045
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,045
    )
    
    
    
    
    
    
    38,045
    
    
    
    Return of investment from subsidiaries and affiliates
    
    
    112,125
    
    
    
    
    
    
    
    149
    
    
    
    
    
    
    
    112,274
    
    
    
    
    
    
    
    (112,112
    )
    
    
    162Proceeds from sales of properties and equipment
    
    
    166
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    166
    
    
    
    
    
    
    
    
    
    
    
    166Cash flow provided by (used for) investing activities
    
    
    (537,828
    )
    
    
    (280
    )
    
    
    (82,029
    )
    
    
    
    
    
    
    (620,137
    )
    
    
    (55,184
    )
    
    
    (44,559
    )
    
    
    (719,880
    )Issuance of debt
    
    
    497,500
    
    
    
    
    
    
    
    42,530
    
    
    
    
    
    
    
    540,030
    
    
    
    
    
    
    
    
    
    
    
    540,030Repayments of debt
    
    
    (123,773
    )
    
    
    
    
    
    
    (58,584
    )
    
    
    
    
    
    
    (182,357
    )
    
    
    
    
    
    
    
    
    
    
    (182,357
    )Debt issuance costs
    
    
    (2,857
    )
    
    
    
    
    
    
    (664
    )
    
    
    
    
    
    
    (3,521
    )
    
    
    (992
    )
    
    
    
    
    
    
    (4,513
    )Proceeds from sale of KGS units, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109,642
    
    
    
    
    
    
    
    109,642Contributions from parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67,553
    
    
    
    (67,553
    )
    
    
    Contributions from noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    167Distributions to parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (112,112
    )
    
    
    112,112
    
    
    
    Distributions to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,694
    )
    
    
    
    
    
    
    (7,694
    )Proceeds from exercise of stock options
    
    
    15,570
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,570
    
    
    
    
    
    
    
    
    
    
    
    15,570Purchase of treasury stock
    
    
    (1,525
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,525
    )
    
    
    
    
    
    
    
    
    
    
    (1,525
    )Cash flow provided by (used for) financing activities
    
    
    384,915
    
    
    
    
    
    
    
    (16,718
    )
    
    
    
    
    
    
    368,197
    
    
    
    56,564
    
    
    
    44,559
    
    
    
    469,320Effect of exchange rates on cash
    
    
    588
    
    
    
    
    
    
    
    2,582
    
    
    
    
    
    
    
    3,170
    
    
    
    
    
    
    
    
    
    
    
    3,170Net increase (decrease) in cash & equivalents
    
    
    1,327
    
    
    
    
    
    
    
    (2,319
    )
    
    
    
    
    
    
    (992
    )
    
    
    15,301
    
    
    
    
    
    
    
    14,309Cash and equivalents at beginning of period
    
    
    83
    
    
    
    
    
    
    
    2,401
    
    
    
    
    
    
    
    2,484
    
    
    
    2,797
    
    
    
    
    
    
    
    5,281Cash and equivalents at end of period
    
    $
    1,410
    
    
    $
    
    
    
    $
    82
    
    
    $
    
    
    
    $
    1,492
    
    
    $
    18,098
    
    
    $
    
    
    
    $
    19,590
 For the Six Months Ended June 30, 2007Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Cash flow provided by (used for) operations
    
    $
    80,928
    
    
    $
    280
    
    
    $
    67,282
    
    
    $
    
    
    
    $
    148,490
    
    
    $
    6,058
    
    
    $
    
    
    
    $
    154,548Purchases of property, plant and equipment
    
    
    (334,712
    )
    
    
    (280
    )
    
    
    (62,635
    )
    
    
    
    
    
    
    (397,627
    )
    
    
    (45,040
    )
    
    
    
    
    
    
    (442,667
    )Investment in subsidiaries and affiliates
    
    
    (39,017
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39,017
    )
    
    
    
    
    
    
    39,017
    
    
    
    Return of investment from subsidiaries and affiliates
    
    
    3
    
    
    
    
    
    
    
    164
    
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    
    
    
    
    167Proceeds from sales of properties and equipment
    
    
    162
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    162
    
    
    
    
    
    
    
    
    
    
    
    162Cash flow provided by (used for) investing activities
    
    
    (373,564
    )
    
    
    (280
    )
    
    
    (62,471
    )
    
    
    
    
    
    
    (436,315
    )
    
    
    (45,040
    )
    
    
    39,017
    
    
    
    (442,338
    )Issuance of debt
    
    
    283,000
    
    
    
    
    
    
    
    29,157
    
    
    
    
    
    
    
    312,157
    
    
    
    
    
    
    
    
    
    
    
    312,157Repayments of debt
    
    
    (180
    )
    
    
    
    
    
    
    (37,081
    )
    
    
    
    
    
    
    (37,261
    )
    
    
    
    
    
    
    
    
    
    
    (37,261
    )Debt issuance costs
    
    
    (1,882
    )
    
    
    
    
    
    
    (664
    )
    
    
    
    
    
    
    (2,546
    )
    
    
    
    
    
    
    
    
    
    
    (2,546
    )Contributions from parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,017
    
    
    
    (39,017
    )
    
    
    Contributions from noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    167Proceeds from exercise of stock options
    
    
    12,187
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,187
    
    
    
    
    
    
    
    
    
    
    
    12,187Purchase of treasury stock
    
    
    (821
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (821
    )
    
    
    
    
    
    
    
    
    
    
    (821
    )Cash flow provided by (used for) financing activities
    
    
    292,304
    
    
    
    
    
    
    
    (8,588
    )
    
    
    
    
    
    
    283,716
    
    
    
    39,184
    
    
    
    (39,017
    )
    
    
    283,883Effect of exchange rates on cash
    
    
    390
    
    
    
    
    
    
    
    1,494
    
    
    
    
    
    
    
    1,884
    
    
    
    
    
    
    
    
    
    
    
    1,884Net increase (decrease) in cash & equivalents
    
    
    58
    
    
    
    
    
    
    
    (2,283
    )
    
    
    
    
    
    
    (2,225
    )
    
    
    202
    
    
    
    
    
    
    
    (2,023
    )Cash and equivalents at beginning of period
    
    
    83
    
    
    
    
    
    
    
    2,401
    
    
    
    
    
    
    
    2,484
    
    
    
    2,797
    
    
    
    
    
    
    
    5,281Cash and equivalents at end of period
    
    $
    141
    
    
    $
    
    
    
    $
    118
    
    
    $
    
    
    
    $
    259
    
    
    $
    2,999
    
    
    $
    
    
    
    $
    3,258
 For the Three Months Ended March 31, 2007Restricted
    
    
    Restricted
    
    
    Restricted
    
    
    Quicksilver
    
    
    Unrestricted
    
    
    
    
    
    
    QuicksilverQuicksilver
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Subsidiary
    
    
    and Restricted
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Resources Inc.Resources Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Cash flow provided by (used for) operations
    
    $
    40,820
    
    
    $
    276
    
    
    $
    30,151
    
    
    $
    
    
    
    $
    71,247
    
    
    $
    1,759
    
    
    $
    
    
    
    $
    73,006Purchases of property, plant and equipment
    
    
    (142,252
    )
    
    
    (276
    )
    
    
    (43,696
    )
    
    
    
    
    
    
    (186,224
    )
    
    
    (23,702
    )
    
    
    
    
    
    
    (209,926
    )Investment in subsidiaries and affiliates
    
    
    (21,955
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,955
    )
    
    
    
    
    
    
    21,955
    
    
    
    Return of investment from subsidiaries and affiliates
    
    
    (15
    )
    
    
    
    
    
    
    217
    
    
    
    
    
    
    
    202
    
    
    
    
    
    
    
    
    
    
    
    202Cash flow provided by (used for) investing activities
    
    
    (164,222
    )
    
    
    (276
    )
    
    
    (43,479
    )
    
    
    
    
    
    
    (207,977
    )
    
    
    (23,702
    )
    
    
    21,955
    
    
    
    (209,724
    )Issuance of debt
    
    
    123,000
    
    
    
    
    
    
    
    20,446
    
    
    
    
    
    
    
    143,446
    
    
    
    
    
    
    
    
    
    
    
    143,446Repayments of debt
    
    
    (87
    )
    
    
    
    
    
    
    (6,781
    )
    
    
    
    
    
    
    (6,868
    )
    
    
    
    
    
    
    
    
    
    
    (6,868
    )Debt issuance costs
    
    
    (1,639
    )
    
    
    
    
    
    
    (664
    )
    
    
    
    
    
    
    (2,303
    )
    
    
    
    
    
    
    
    
    
    
    (2,303
    )Contributions from parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,955
    
    
    
    (21,955
    )
    
    
    Contributions from noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    167Proceeds from exercise of stock options
    
    
    2,976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,976
    
    
    
    
    
    
    
    
    
    
    
    2,976Purchase of treasury stock
    
    
    (494
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (494
    )
    
    
    
    
    
    
    
    
    
    
    (494
    )Cash flow provided by (used for) financing activities
    
    
    123,756
    
    
    
    
    
    
    
    13,001
    
    
    
    
    
    
    
    136,757
    
    
    
    22,122
    
    
    
    (21,955
    )
    
    
    136,924Effect of exchange rates on cash
    
    
    
    
    
    
    
    
    
    
    231
    
    
    
    
    
    
    
    231
    
    
    
    
    
    
    
    
    
    
    
    231Net increase (decrease) in cash & equivalents
    
    
    354
    
    
    
    
    
    
    
    (96
    )
    
    
    
    
    
    
    258
    
    
    
    179
    
    
    
    
    
    
    
    437Cash and equivalents at beginning of period
    
    
    83
    
    
    
    
    
    
    
    2,401
    
    
    
    
    
    
    
    2,484
    
    
    
    2,797
    
    
    
    
    
    
    
    5,281Cash and equivalents at end of period
    
    $
    437
    
    
    $
    
    
    
    $
    2,305
    
    
    $
    
    
    
    $
    2,742
    
    
    $
    2,976
    
    
    $
    
    
    
    $
    5,718




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##### Table of Contents



ITEM 9A. Controls and Procedures
 Disclosure Controls and Procedures
    Managements Report on Internal Control Over Financial Reporting
  Internal Control 
Integrated Framework
 
    
    preparation and review of combined financial information within our condensed consolidating
financial information. The condensed consolidating information previously reported
contained errors that resulted from inadequate review of the
combined financial information.  These errors did not affect the amounts
previously reported in our consolidated financial statements.
 
    
    monitoring the Companys financial reporting
requirements. The review associated with the completeness of the
required information failed to highlight omitted information related
to the Company and its restricted subsidiaries.
 Changes in Internal Control Over Financial Reporting




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##### Table of Contents



Internal
Control  Integrated Framework
     Internal Control  Integrated Framework
 Noncontrolling Interests in Consolidated Financial
Statements  an Amendment to ARB 51 Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement) Determining Whether Instruments
Granted in Share-Based Payment Transactions are Participating Securities




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##### Table of Contents



ITEM 15. Exhibits and Financial Statement Schedules
 Financial Statement Schedules
  i.)
    
    Audited financial statements and related footnotes of Quicksilver Resources Canada
Inc. (QRCI) for the years ended December 31, 2008, 2007 and 2006.
(1)ii.)
    
    Consolidated audited financial
statements and related footnotes of Cowtown Pipeline Funding, Inc.
 for the years ended December 31, 2008, 2007 and 2006. (1)iii.)
    
    Consolidated audited financial statements and related footnotes of Quicksilver Gas Services
Holdings LLC for the years ended December 31, 2008, 2007 and 2006.
(1)iv.)
    
    Consolidated audited financial statements and related footnotes of Quicksilvers
equity method investment in BreitBurn Energy Partners L.P. (BBEP). (2)
 
 (1)
    
    The audited financial statements of QRCI, Cowtown Pipeline Funding, Inc.
and Quicksilver Gas Services Holdings LLC are being filed in
accordance with SEC Rule 3-16 of Regulation S-X.(2)
    
    The audited financial statements and related footnotes of Quicksilvers equity
method investment in BreitBurn Energy Partners L.P. are being filed in accordance with SEC Rule
3-09 of Regulation S-X.




---



##### 



QUICKSILVER RESOURCES CANADA INC.
CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ending December 31, 2008, 2007 and 2006
 Independent Auditors ReportConsolidated Balance Sheets as of December 31, 2008 and 2007Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2008,
2007 and 2006Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2008, 2007 and 2006Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006Notes to Consolidated Financial Statements for the Years Ended December 31, 2008, 2007 and 2006




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##### Table of Contents



/s/ DELOITTE & TOUCHE LLP




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##### Table of Contents



QUICKSILVER RESOURCES CANADA INC.
 
 CONSOLIDATED BALANCE SHEETS
 As of December 31, 2008 and 2007
 In thousands
 2008
    
    
    2007ASSETSCurrent assetsCash and cash equivalents
    
    $
    866
    
    
    $
    89Accounts receivable  net of allowance for doubtful accounts
    
    
    29,169
    
    
    
    38,648Advances to Quicksilver
    
    
    30
    
    
    
    118Derivative assets at fair value
    
    
    59,245
    
    
    
    419Other current assets
    
    
    13,063
    
    
    
    18,739Total current assets
    
    
    102,373
    
    
    
    58,013Investment
in equity affiliate at cost
    
    
    68,604
    
    
    
    Property, plant and equipmentOil and gas properties, full cost method (including
unevaluated costs of $9,832 and $21,170, respectively)
    
    
    437,563
    
    
    
    533,401Other property and equipment
    
    
    42,585
    
    
    
    38,566Property, plant and equipment  net
    
    
    480,148
    
    
    
    571,967Other assets
    
    
    910
    
    
    
    1,205$
    652,035
    
    
    $
    631,185LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    19,587
    
    
    $
    9,396Accrued liabilities
    
    
    7,612
    
    
    
    21,679Derivative liabilities at fair value
    
    
    1,865
    
    
    
    Deferred income taxes
    
    
    15,843
    
    
    
    62Total current liabilities
    
    
    44,907
    
    
    
    31,137Long-term debt
    
    
    252,868
    
    
    
    310,710Asset retirement obligations
    
    
    17,608
    
    
    
    14,278Deferred income taxes
    
    
    56,948
    
    
    
    46,572Stockholders equityCommon stock
    
    
    1,817
    
    
    
    1,817Paid in capital in excess of par value
    
    
    28,118
    
    
    
    28,118Accumulated other comprehensive income
    
    
    33,809
    
    
    
    43,870Retained earnings
    
    
    215,960
    
    
    
    154,683Total stockholders equity
    
    
    279,704
    
    
    
    228,488$
    652,035
    
    
    $
    631,185




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##### Table of Contents



QUICKSILVER RESOURCES CANADA INC.
  CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Years Ended December 31, 2008, 2007 and 2006
In thousands
 2008
    
    
    2007
    
    
    2006RevenueNatural gas, NGL and crude oil
    
    $
    181,994
    
    
    $
    154,372
    
    
    $
    117,831Other
    
    
    4,840
    
    
    
    6,174
    
    
    
    721Total revenue
    
    
    186,834
    
    
    
    160,546
    
    
    
    118,552Operating expensesOil and gas production expense
    
    
    38,153
    
    
    
    35,931
    
    
    
    26,237Depletion, depreciation and accretion
    
    
    44,821
    
    
    
    39,287
    
    
    
    29,012General and administrative
    
    
    3,673
    
    
    
    2,499
    
    
    
    1,790Total expenses
    
    
    86,647
    
    
    
    77,717
    
    
    
    57,039Operating income
    
    
    100,187
    
    
    
    82,829
    
    
    
    61,513Other income (expense)  net
    
    
    (2,994
    )
    
    
    (427
    )
    
    
    108Interest expense
    
    
    (13,978
    )
    
    
    (14,773
    )
    
    
    (12,593
    )Income before income taxes
    
    
    83,215
    
    
    
    67,629
    
    
    
    49,028Income tax expense
    
    
    (21,938
    )
    
    
    (11,129
    )
    
    
    (8,777
    )Net income
    
    $
    61,277
    
    
    $
    56,500
    
    
    $
    40,251Other comprehensive incomeReclassification adjustments related to
settlements of derivative contracts  net of income tax
    
    
    160
    
    
    
    (18,043
    )
    
    
    (6,030
    )Net change in derivative fair value  net of income tax
    
    
    38,478
    
    
    
    5,012
    
    
    
    33,747Foreign currency translation adjustment
    
    
    (48,699
    )
    
    
    29,018
    
    
    
    (1,236
    )Comprehensive income
    
    $
    51,216
    
    
    $
    72,487
    
    
    $
    66,732




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##### Table of Contents



QUICKSILVER RESOURCES CANADA INC.
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
For the Years Ended December 31, 2008, 2007 and 2006
In thousands
 AccumulatedAdditional
    
    
    OtherCommon
    
    
    Paid-in
    
    
    Comprehensive
    
    
    RetainedStock
    
    
    Capital
    
    
    Income
    
    
    Earnings
    
    
    TotalBalances at December 31, 2005
    
    $
    1,817
    
    
    $
    28,118
    
    
    $
    1,402
    
    
    $
    57,932
    
    
    $
    89,269Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,251
    
    
    
    40,251Hedge derivative contract settlements
reclassified into earnings from accumulated
other comprehensive income, net of
income tax of $3,636
    
    
    
    
    
    
    
    
    
    
    (6,030
    )
    
    
    
    
    
    
    (6,030
    )Net change in derivative fair value,
net of income tax benefit of $17,884
    
    
    
    
    
    
    
    
    
    
    33,747
    
    
    
    
    
    
    
    33,747Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    (1,236
    )
    
    
    
    
    
    
    (1,236
    )Balances at December 31, 2006
    
    $
    1,817
    
    
    $
    28,118
    
    
    $
    27,883
    
    
    $
    98,183
    
    
    $
    156,001Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,500
    
    
    
    56,500Hedge derivative contract settlements
reclassified into earnings from accumulated
other comprehensive income, net of
income tax of $7,550
    
    
    
    
    
    
    
    
    
    
    (18,043
    )
    
    
    
    
    
    
    (18,043
    )Net change in derivative fair value,
net of income tax benefit of $2,229
    
    
    
    
    
    
    
    
    
    
    5,012
    
    
    
    
    
    
    
    5,012Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    29,018
    
    
    
    
    
    
    
    29,018Balances at December 31, 2007
    
    $
    1,817
    
    
    $
    28,118
    
    
    $
    43,870
    
    
    $
    154,683
    
    
    $
    228,488Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,277
    
    
    
    61,277Hedge derivative contract settlements
reclassified into earnings from accumulated
other comprehensive income, net of
income tax benefit of $65
    
    
    
    
    
    
    
    
    
    
    160
    
    
    
    
    
    
    
    160Net change in derivative fair value,
net of income tax of $15,715
    
    
    
    
    
    
    
    
    
    
    38,478
    
    
    
    
    
    
    
    38,478Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    (48,699
    )
    
    
    
    
    
    
    (48,699
    )Balances at December 31, 2008
    
    $
    1,817
    
    
    $
    28,118
    
    
    $
    33,809
    
    
    $
    215,960
    
    
    $
    279,704




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##### Table of Contents



QUICKSILVER
RESOURCES CANADA INC.
  CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2008, 2007 and 2006In thousands
 2008
    
    
    2007
    
    
    2006Operating activities:Net income
    
    $
    61,277
    
    
    $
    56,500
    
    
    $
    40,251Adjustments to reconcile net income
to net cash provided by operating activities:Depletion, depreciation and accretion
    
    
    44,821
    
    
    
    39,287
    
    
    
    29,012Deferred income tax expense
    
    
    21,938
    
    
    
    11,129
    
    
    
    8,777Non-cash loss from hedging and derivative activities
    
    
    (2,544
    )
    
    
    (193
    )
    
    
    Loss from
the sale of equipment
    
    
    
    
    
    
    
    
    
    
    936Non-cash interest expense
    
    
    295
    
    
    
    297
    
    
    
    316Changes in assets and liabilitiesAccounts receivable
    
    
    9,479
    
    
    
    9,763
    
    
    
    2,503Advances
to/from Quicksilver
    
    
    88
    
    
    
    (446
    )
    
    
    (8,326
    )Other assets
    
    
    2,324
    
    
    
    (3,318
    )
    
    
    487Accounts payable
    
    
    1,977
    
    
    
    (78
    )
    
    
    (2,928
    )Accrued liabilities
    
    
    (2,650
    )
    
    
    (447
    )
    
    
    3,567Net cash provided by operating activities
    
    
    137,005
    
    
    
    112,494
    
    
    
    74,595Investing activities:Purchases of property, plant and equipment
    
    
    (136,057
    )
    
    
    (147,195
    )
    
    
    (131,470
    )Proceeds from sales of property, plant and equipment
    
    
    618
    
    
    
    
    
    
    
    3,778Net cash used for investing activities
    
    
    (135,439
    )
    
    
    (147,195
    )
    
    
    (127,692
    )Financing activities:Issuance of debt
    
    
    208,161
    
    
    
    218,321
    
    
    
    56,182Repayment of debt
    
    
    (209,734
    )
    
    
    (190,691
    )
    
    
    (9,908
    )Debt issuance costs
    
    
    
    
    
    
    (664
    )
    
    
    Net cash (used for) provided by financing activities
    
    
    (1,573
    )
    
    
    26,966
    
    
    
    46,274Effect of exchange rate changes in cash
    
    
    784
    
    
    
    5,423
    
    
    
    (514
    )Net increase (decrease) in cash
    
    
    777
    
    
    
    (2,312
    )
    
    
    (7,337
    )Cash and cash equivalents at beginning of period
    
    
    89
    
    
    
    2,401
    
    
    
    9,738Cash and cash equivalents at end of period
    
    $
    866
    
    
    $
    89
    
    
    $
    2,401




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##### Table of Contents



QUICKSILVER RESOURCES CANADA INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2008, 2007 and 2006
 1. SIGNIFICANT ACCOUNTING POLICIES
 Nature of Business and Basis of Presentation
  Basis of Presentation
   Use of Estimates
  Cash and Cash Equivalents
  Accounts Receivable
  Hedging and Derivatives




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##### Table of Contents



Parts and Supplies
  Investments
in Equity Affiliates
  Property, Plant, and Equipment
    Revenue Recognition
  Environmental Compliance and Remediation
  Income Taxes
  Stock-based Compensation




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##### Table of Contents



Disclosure of Fair Value of Financial Instruments
 Fair Value Measurements
 Foreign Currency Translation
  Recently Issued Accounting Standards
 
    
    Pronouncements Implemented During 2008
 Adoption of SFAS No. 157  Fair Value Measurements,
    Adoption of SFAS No. 159 The Fair Value
Option for Financial Assets and Financial Liabilities  Including an amendment of FASB Statement
No. 115
 Adoption of
FSP FIN 39-1 Amendment of FASB Interpretation No. (FIN) 39 Accounting for Derivative Instruments and Hedging Activities




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##### Table of Contents



Adoption of SFAS No. 162 The Hierarchy of
Generally Accepted Accounting Principles
 
    
    Pronouncements Not Yet Implemented
 Business Combinations Business Combinations
 Disclosures about Derivative Instruments and Hedging Activities,




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##### Table of Contents



2. ACCOUNTS RECEIVABLE
  As of December 31,2008
    
    
    2007(In thousands)Accrued production receivables
    
    $
    13,435
    
    
    $
    19,728Joint interest receivables
    
    
    15,386
    
    
    
    16,150Other receivables
    
    
    348
    
    
    
    2,770$
    29,169
    
    
    $
    38,648
 3. DERIVATIVES AND FAIR VALUE MEASUREMENTS
  Fair Value Measurements as of December 31, 2008Balance SheetLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Other(1)
    
    
    Total(in thousands)Derivative assets
    
    $
    
    
    
    $
    61,746
    
    
    $
    
    
    
    $
    (2,501
    )
    
    $
    59,245Derivative liabilities
    
    $
    
    
    
    $
    4,366
    
    
    $
    
    
    
    $
    (2,501
    )
    
    $
    1,865
 
 (1)
    
    Represents amounts netted under master netting
arrangements   Asset Derivatives
    
    
    
    Liability DerivativesDecember 31,
    
    
    
    December 31,2008
    
    
    2007
    
    
    
    2008
    
    
    2007(in thousands)
    
    
    
    (in thousands)Derivatives designated as hedging
instruments under SFAS 133Commodity contracts reported in:Current derivative assets
    
    $
    61,746
    
    
    $
    1,643
    
    
    
    $
    2,501
    
    
    $
    1,224Current derivative liabilities
    
    
    
    
    
    
    
    
    
    
    
    1,865
    
    
    
    Total derivatives designated as
hedging instruments under SFAS 133
    
    $
    61,746
    
    
    $
    1,643
    
    
    
    $
    4,366
    
    
    $
    1,224




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##### Table of Contents



Weighted Avg Price PerProduct

    
    Type
    
    Contract Period
    
    Volume
    
    
    MMBtu (1)
    
    
    Fair Value(MMBtud)
    
    
    
    
    
    (In thousands)Gas
       
    
    Swap
    
    Jan 2009-Dec 2009
    
    
    10,000
    
    
    $
    8.45
    
    
    $
    8,536Gas

    
    Swap
    
    Jan 2009-Dec 2009
    
    
    20,000
    
    
    
    8.46
    
    
    
    17,110Gas

    
    Collar
    
    Jan 2009-Dec 2009
    
    
    10,000
    
    
    
    8.25-10.45
    
    
    
    8,290Gas

    
    Collar
    
    Jan 2009-Dec 2009
    
    
    10,000
    
    
    
    8.25-10.45
    
    
    
    8,290Gas

    
    Collar
    
    Jan 2009-Dec 2009
    
    
    10,000
    
    
    
    11.50-14.48
    
    
    
    19,520Gas

    
    Basis
    
    Jan 2009-Dec 2009
    
    
    20,000
    
    
    
    (2
    )
    
    
    (1,865
    )Gas

    
    Basis
    
    Jan 2009-Dec 2009
    
    
    20,000
    
    
    
    (2
    )
    
    
    (932
    )Gas

    
    Basis
    
    Jan 2009-Dec 2009
    
    
    15,000
    
    
    
    (2
    )
    
    
    (799
    )Gas

    
    Basis
    
    Jan 2009-Dec 2009
    
    
    15,000
    
    
    
    (2
    )
    
    
    (770
    )Total
    
    $
    57,380
 
 (1)
    
    MMBtu means million British Thermal Units, a measure of heating value(2)
    
    Basis swaps for 60,000 MMBtu per day hedge the AECO (a natural
gas reference price for gas delivered onto NOVA Gas Transmission Ltd. System in Alberta, Canada) basis adjustment at a weighted
average deduction of $0.84 per MMBtu from the New York Mercantile Exchange price for 2009. 4. OTHER CURRENT ASSETS
  As of December 31,2008
    
    
    2007(In thousands)Spare parts and supplies
    
    $
    11,399
    
    
    $
    14,751Prepaid expenses
    
    
    1,664
    
    
    
    3,988$
    13,063
    
    
    $
    18,739
 5. INVESTMENT IN EQUITY AFFILIATE




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##### Table of Contents



6. PROPERTY, PLANT AND EQUIPMENT
  December 31,
    
    
    December 31,2008
    
    
    2007(In thousands)Oil and gas propertiesSubject to depletion
    
    $
    547,249
    
    
    $
    616,192Unevaluated costs
    
    
    9,832
    
    
    
    21,170Accumulated depletion
    
    
    (119,518
    )
    
    
    (103,961
    )Net oil and gas properties
    
    
    437,563
    
    
    
    533,401Other plant and equipmentPipelines and processing facilities
    
    
    51,005
    
    
    
    45,213General properties
    
    
    3,722
    
    
    
    4,240Accumulated depreciation
    
    
    (12,142
    )
    
    
    (10,887
    )Net other property and equipment
    
    
    42,585
    
    
    
    38,566Property, plant and equipment, net of
accumulated depletion and depreciation
    
    $
    480,148
    
    
    $
    571,967
 Unevaluated Natural Gas and Crude Oil Properties Excluded From Depletion
  December 31, 2008
    
    
    December 31, 2007Costs Incurred During
    
    
    Costs Incurred During2008
    
    
    Prior
    
    
    Total
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    Prior
    
    
    Total(In thousands)
    
    
    (In thousands)Acquisition costs
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    626
    
    
    $
    720
    
    
    $
    575
    
    
    $
    7,085
    
    
    $
    9,006Exploration costs
    
    
    9,218
    
    
    
    
    
    
    
    9,218
    
    
    
    12,164
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,164Capitalized interest
    
    
    614
    
    
    
    
    
    
    
    614
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    9,832
    
    
    $
    
    
    
    $
    9,832
    
    
    $
    12,790
    
    
    $
    720
    
    
    $
    575
    
    
    $
    7,085
    
    
    $
    21,170
  Capitalized Costs




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##### Table of Contents



7. ACCRUED LIABILITIES
  As of December 31,2008
    
    
    2007(In thousands)Accrued operating expenses
    
    $
    3,881
    
    
    $
    5,985Accrued capital expenditures
    
    
    
    
    
    
    11,417Revenue payable
    
    
    2,887
    
    
    
    3,545Prepayments from partners
    
    
    844
    
    
    
    732$
    7,612
    
    
    $
    21,679
 8. LONG-TERM DEBT




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##### Table of Contents



9. ASSET RETIREMENT OBLIGATIONS
   December 31,
    
    
    December 31,2008
    
    
    2007(In thousands)Beginning asset retirement obligations
    
    $
    14,278
    
    
    $
    10,117Incremental liability incurred
    
    
    1,651
    
    
    
    1,586Accretion expense
    
    
    830
    
    
    
    664Change in estimates
    
    
    3,928
    
    
    
    Currency translation adjustment
    
    
    (3,079
    )
    
    
    1,911Ending asset retirement obligations
    
    $
    17,608
    
    
    $
    14,278
 10. INCOME TAXES
  As of December 31,2008
    
    
    2007(In thousands)CurrentDeferred tax liability on cash flow hedge gains
    
    $
    15,843
    
    
    $
    62Non-currentDeferred tax assetsNet operating loss carry forwards
    
    $
    1,644
    
    
    $
    2,033Total deferred tax assets
    
    
    1,644
    
    
    
    2,033Deferred tax liabilitiesProperty, plant and equipment
    
    
    57,858
    
    
    
    48,498Other
    
    
    734
    
    
    
    107Total deferred tax liabilities
    
    
    58,592
    
    
    
    48,605Net deferred tax liabilities
    
    $
    56,948
    
    
    $
    46,572




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##### Table of Contents



2008
    
    
    2007
    
    
    2006(In thousands)Current income tax expense
    
    $
    
    
    
    $
    
    
    
    $
    Deferred income tax expense
    
    
    21,938
    
    
    
    11,129
    
    
    
    8,777Total income tax expense
    
    $
    21,938
    
    
    $
    11,129
    
    
    $
    8,777
  2008
    
    
    2007
    
    
    2006Income taxes at statutory rate
    
    
    29.00
    %
    
    
    32.12
    %
    
    
    34.12
    %Enacted future federal rate reductions
    
    
    (3.96
    %)
    
    
    (7.08
    %)
    
    
    (5.12
    %)Enacted
future rate reductions effects for prior years
    
    
    
    
    
    
    (9.35
    %)
    
    
    (6.62
    %)Permanent differences
    
    
    1.44
    %
    
    
    0.77
    %
    
    
    (4.48
    %)Other
    
    
    (0.12
    %)
    
    
    
    
    
    
    Effective income tax rate
    
    
    26.36
    %
    
    
    16.46
    %
    
    
    17.90
    %
 11. RELATED PARTY TRANSACTIONS
  12. EMPLOYEE BENEFITS
  13. COMMITMENTS AND CONTINGENCIES
  in thousands2009
    
    $
    1,2462010
    
    
    3692011
    
    
    41Thereafter
    
    
    $
    1,656




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##### Table of Contents



14. STOCKHOLDERS EQUITY
 Shares
    
    
    BookIssued
    
    
    Value(In thousands)Unlimited number of Class A common voting shares
    
    
    
    
    
    $
    Unlimited number of Class B common voting shares
    
    
    2,495,646
    
    
    
    1,785Unlimited number of Class C common non-voting, exchangeable shares
    
    
    394,482
    
    
    
    32Balance at December 31, 2008 and 2007
    
    
    2,890,128
    
    
    $
    1,817
   15. SUPPLEMENTAL CASH FLOW INFORMATION
  Years Ended December 31,2008
    
    2007
    
    2006(In thousands)Interest
    
    $
    14,374
    
    
    $
    15,547
    
    
    $
    13,004Income taxes
    
    
    
    
    
    
    
    
    
    
    
  Years Ended December 31,2008
    
    2007
    
    2006(In thousands)Working capital related to acquisition
of property, plant and equipment
    
    
    16,450
    
    
    $
    19,653
    
    
    $
    39,189Preferred interests in 1373159 Alberta Ltd.
    
    
    82,542
    
    
    
    
    
    
    
    
 16. SUBSEQUENT EVENT




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##### Table of Contents



COWTOWN PIPELINE FUNDING, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Independent Auditors ReportConsolidated Statements of Income for the Years Ended December 31, 2008, 2007 and 2006Consolidated Balance Sheets as of December 31, 2008 and 2007Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006Consolidated Statements of Changes in Stockholders Equity for the Years ended December 31, 2008, 2007
and 2006Notes to Consolidated Financial Statements for the Years Ended December 31, 2008, 2007
and 2006




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##### Table of Contents



Noncontrolling Interests in Consolidated Financial Statements  an Amendment to ARB
51
 /s/ DELOITTE & TOUCHE LLP




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##### Table of Contents



COWTOWN PIPELINE FUNDING, INC.
  CONSOLIDATED STATEMENTS OF INCOMEIn thousands
 Year Ended December 31,2008
    
    
    2007
    
    
    2006RevenuesGathering and transportation revenue  Quicksilver
    
    $
    36,061
    
    
    $
    15,089
    
    
    $
    6,460Gathering and transportation revenue
    
    
    6,118
    
    
    
    1,773
    
    
    
    53Gas processing revenue  Quicksilver
    
    
    30,127
    
    
    
    16,564
    
    
    
    7,342Gas processing revenue
    
    
    5,366
    
    
    
    1,990
    
    
    
    63Other revenue  Quicksilver
    
    
    900
    
    
    
    525
    
    
    
    Total revenues
    
    
    78,572
    
    
    
    35,941
    
    
    
    13,918ExpensesOperations and maintenance  Quicksilver
    
    
    21,638
    
    
    
    12,037
    
    
    
    7,567General and administrative  Quicksilver
    
    
    6,407
    
    
    
    3,379
    
    
    
    1,278Depreciation and accretion
    
    
    15,134
    
    
    
    8,146
    
    
    
    2,999Total expenses
    
    
    43,179
    
    
    
    23,562
    
    
    
    11,844Impairment Expense
    
    
    9,200
    
    
    
    
    
    
    
    Operating income
    
    
    26,193
    
    
    
    12,379
    
    
    
    2,074Other income
    
    
    11
    
    
    
    236
    
    
    
    12Interest expense
    
    
    4,154
    
    
    
    2,022
    
    
    
    Income before income taxes
    
    
    22,050
    
    
    
    10,593
    
    
    
    2,086Income tax provision
    
    
    7,861
    
    
    
    3,591
    
    
    
    730Net income
    
    
    14,189
    
    
    
    7,002
    
    
    
    1,356Net income
attributable to noncontrolling interests
    
    
    (4,716
    )
    
    
    (1,092
    )
    
    
    (99
    )Net income
attributable to Cowtown Pipeline Funding, Inc.
    
    $
    9,473
    
    
    $
    5,910
    
    
    $
    1,257




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##### Table of Contents



COWTOWN PIPELINE FUNDING, INC.
  CONSOLIDATED BALANCE SHEETS
In thousands
 December 31,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assetsCash and cash equivalents
    
    $
    303
    
    
    $
    1,125Accounts receivable
    
    
    2,245
    
    
    
    882Accounts receivable from Quicksilver
    
    
    
    
    
    
    3,494Prepaid expenses and other current assets
    
    
    594
    
    
    
    690Total current assets
    
    
    3,142
    
    
    
    6,191Properties, plant and equipment, net
    
    
    489,893
    
    
    
    284,885Deferred tax asset
    
    
    
    
    
    
    5,979Other assets
    
    
    1,916
    
    
    
    965$
    494,951
    
    
    $
    298,020LIABILITIES AND EQUITYCurrent liabilitiesCurrent maturities of debt
    
    $
    1,375
    
    
    $
    1,100Accounts payable to Quicksilver
    
    
    12,173
    
    
    
    9,079Accrued additions to property, plant and equipment
    
    
    17,433
    
    
    
    23,624Accounts payable and other
    
    
    1,930
    
    
    
    2,425Current tax payable
    
    
    10,844
    
    
    
    10,844Total current liabilities
    
    
    43,755
    
    
    
    47,072Long-term debt
    
    
    174,900
    
    
    
    5,000Note payable to Quicksilver
    
    
    52,271
    
    
    
    50,569Asset retirement obligations
    
    
    5,234
    
    
    
    2,793Deferred income tax liability
    
    
    1,882
    
    
    
    Commitments and contingent liabilities (Note 7)Common stock
    
    
    1
    
    
    
    1Additional paid in capital
    
    
    171,150
    
    
    
    153,561Retained earnings
    
    
    17,656
    
    
    
    8,183Cowtown
Pipeline Funding Inc. equity
    
    
    188,807
    
    
    
    161,745Noncontrolling interests
    
    
    28,102
    
    
    
    30,841Total equity
    
    
    216,909
    
    
    
    192,586$
    494,951
    
    
    $
    298,020




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##### Table of Contents



COWTOWN PIPELINE FUNDING, INC.
  CONSOLIDATED STATEMENTS OF CASH FLOWSIn thousands
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Operating activities:Net income
    
    $
    14,189
    
    
    $
    7,002
    
    
    $
    1,356Items included in net income not affecting cash:Depreciation
    
    
    14,950
    
    
    
    8,063
    
    
    
    2,978Impairment of midstream assets
    
    
    9,200
    
    
    
    
    
    
    
    Accretion of asset retirement obligation
    
    
    184
    
    
    
    83
    
    
    
    21Deferred income taxes
    
    
    7,861
    
    
    
    3,591
    
    
    
    730Equity-based compensation
    
    
    1,017
    
    
    
    130
    
    
    
    Amortization of debt issuance costs
    
    
    243
    
    
    
    88
    
    
    
    Non-cash interest expense
    
    
    2,802
    
    
    
    1,669
    
    
    
    Changes in assets and liabilities:Accounts receivable
    
    
    (1,363
    )
    
    
    (815
    )
    
    
    (66
    )Prepaid expenses and other assets
    
    
    (612
    )
    
    
    (543
    )
    
    
    (146
    )Accounts receivable from Quicksilver
    
    
    4,707
    
    
    
    (6,046
    )
    
    
    Accounts payable and other
    
    
    (495
    )
    
    
    1,131
    
    
    
    1,138Net cash provided by operating activities
    
    
    52,683
    
    
    
    14,353
    
    
    
    6,011Investing activities:Capital expenditures
    
    
    (148,079
    )
    
    
    (74,064
    )
    
    
    (77,539
    )Other
    
    
    
    
    
    
    
    
    
    
    (821
    )Net cash used in investing activities
    
    
    (148,079
    )
    
    
    (74,064
    )
    
    
    (78,360
    )Financing activities:Proceeds from revolving credit facility borrowings
    
    
    169,900
    
    
    
    5,000
    
    
    
    Debt issuance costs
    
    
    (486
    )
    
    
    (1,041
    )
    
    
    Repayment of subordinated note payable to Quicksilver
    
    
    (829
    )
    
    
    
    
    
    
    Net proceeds from issuance of equity units
    
    
    
    
    
    
    112,298
    
    
    
    Issuance costs of equity units paid
    
    
    
    
    
    
    (2,933
    )
    
    
    Distribution to Quicksilver
    
    
    (65,367
    )
    
    
    (115,074
    )
    
    
    Contributions by Quicksilver
    
    
    
    
    
    
    68,416
    
    
    
    67,855Contributions by
noncontrolling interests
    
    
    
    
    
    
    167
    
    
    
    7,291Distributions to
noncontrolling interests
    
    
    (8,644
    )
    
    
    (8,794
    )
    
    
    Net cash provided by financing activities
    
    
    94,574
    
    
    
    58,039
    
    
    
    75,146Net increase (decrease) in cash
    
    
    (822
    )
    
    
    (1,672
    )
    
    
    2,797Cash at beginning of period
    
    
    1,125
    
    
    
    2,797
    
    
    
    Cash at end of period
    
    $
    303
    
    
    $
    1,125
    
    
    $
    2,797Cash paid for interest
    
    $
    2,341
    
    
    
    
    
    
    
    Cash paid for income taxes
    
    $
    332
    
    
    
    
    
    
    
    Non-cash transactions:Working capital related to capital expenditures
    
    $
    31,920
    
    
    $
    30,809
    
    
    $
    6,608Debt issuance costs
    
    
    
    
    
    
    (12
    )
    
    
    Cost in connection with the initial public offering
    
    
    
    
    
    
    (275
    )
    
    
    Issuance of subordinated note payable to Quicksilver
    
    
    
    
    
    
    50,000
    
    
    
    




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##### Table of Contents



COWTOWN PIPELINE FUNDING, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
In thousands
 Cowtown Pipeline Funding Inc. EquityRetained
    
    
    Additional Paid
    
    
    NoncontrollingCommon Stock
    
    
    Earnings
    
    
    In Capital
    
    

Interests
    
    
    Total EquityBalance at January 1, 2006
    
    $
    1
    
    
    $
    1,016
    
    
    $
    48,595
    
    
    $
    496
    
    
    $
    50,108Contributions
    
    
    
    
    
    
    
    
    
    
    71,685
    
    
    
    7,970
    
    
    
    79,655Cash distributions to Quicksilver
    
    
    
    
    
    
    
    
    
    
    (4,508
    )
    
    
    
    
    
    
    (4,508
    )Net income
    
    
    
    
    
    
    1,257
    
    
    
    
    
    
    
    99
    
    
    
    1,356Balance at December 31, 2006
    
    
    1
    
    
    
    2,273
    
    
    
    115,772
    
    
    
    8,565
    
    
    
    126,611Contributions
    
    
    
    
    
    
    
    
    
    
    200,473
    
    
    
    29,848
    
    
    
    230,321Reclass Quicksilvers equity balance to receivable from
Quicksilver
    
    
    
    
    
    
    
    
    
    
    1,971
    
    
    
    
    
    
    
    1,971Distribution of subordinated note payable to Quicksilver
    
    
    
    
    
    
    
    
    
    
    (50,000
    )
    
    
    
    
    
    
    (50,000
    )Cash distributions to Quicksilver
    
    
    
    
    
    
    
    
    
    
    (114,655
    )
    
    
    
    
    
    
    (114,655
    )Cash
distributions to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,794
    )
    
    
    (8,794
    )Equity-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130
    
    
    
    130Net income
    
    
    
    
    
    
    5,910
    
    
    
    
    
    
    
    1,092
    
    
    
    7,002Balance at December 31, 2007
    
    
    1
    
    
    
    8,183
    
    
    
    153,561
    
    
    
    30,841
    
    
    
    192,586Contributions
    
    
    
    
    
    
    
    
    
    
    82,956
    
    
    
    172
    
    
    
    83,128Cash distributions to Quicksilver
    
    
    
    
    
    
    
    
    
    
    (65,367
    )
    
    
    
    
    
    
    (65,367
    )Cash
distributions to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,644
    )
    
    
    (8,644
    )Equity-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,017
    
    
    
    1,017Net income
    
    
    
    
    
    
    9,473
    
    
    
    
    
    
    
    4,716
    
    
    
    14,189Balance at December 31, 2008
    
    $
    1
    
    
    $
    17,656
    
    
    $
    171,150
    
    
    $
    28,102
    
    
    $
    216,909




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##### Table of Contents



COWTOWN PIPELINE FUNDING, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
 Description of Business
    
    
    The Cowtown System, which includes:
 
    
    the Cowtown Pipeline, which consists of a pipeline gathering system and gas
compression facilities in the southern portion of the Fort Worth Basin and gathers
natural gas produced by KGS customers and delivers it for processing;
    
    the Cowtown Plant, in Hood County, Texas, which consists of two natural gas
processing units that extract NGLs from the natural gas stream and deliver customers
residue gas to unaffiliated pipelines for transport and sale downstream; and
    
    the Corvette Plant in Hood County, Texas, which was placed in service during
the first quarter 2009, and consists of a natural gas processing unit that extracts
NGLs from the natural gas stream and delivers KGS customers residue gas to
unaffiliated pipelines for transport and sale downstream.
 
    
    The Lake Arlington Dry System, located in Tarrant County, Texas, which consists of a
gathering system and a gas compression facility, which KGS purchased from Quicksilver in
the fourth quarter of 2008. This system is connected to affiliated pipelines for transport
and sale downstream.
    
    The West Texas System, which consists of a 12 mile gathering system and a dehydration
facility with capacity up to 6MMcfd.
 2. ADJUSTMENTS AND SIGNIFICANT ACCOUNTING POLICIES
 Adjustment for Retrospective Application of SFAS No. 160
  SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements
   Statement of Income information for the years ended December 31,2008
    
    2007
    
    2006Originally
    
    As
    
    Originally
    
    As
    
    Originally
    
    As(amounts in 000s)
    
    Reported
    
    Adjusted
    
    Reported
    
    Adjusted
    
    Reported
    
    AdjustedIncome before income taxes
    
    $
    22,050
    
    
    $
    22,050
    
    
    $
    10,593
    
    
    $
    10,593
    
    
    $
    2,086
    
    
    $
    2,086Income tax provision
    
    
    7,861
    
    
    
    7,861
    
    
    
    3,591
    
    
    
    3,591
    
    
    
    730
    
    
    
    730Minority interest
    
    
    4,716
    
    
    
    
    
    
    
    1,092
    
    
    
    
    
    
    
    99
    
    
    
    Net income
    
    
    9,473
    
    
    
    14,189
    
    
    
    5,910
    
    
    
    7,002
    
    
    
    1,257
    
    
    
    1,356Net income attributable to noncontrolling interests
    
    
    
    
    
    
    (4,716
    )
    
    
    
    
    
    
    (1,092
    )
    
    
    
    
    
    
    (99
    )Net income attributable to Cowtown Pipeline Funding, Inc.
    
    
    
    
    
    
    9,473
    
    
    
    
    
    
    
    5,910
    
    
    
    
    
    
    
    1,257
 Balance Sheet information as of December 31,2008
    
    2007Originally
    
    As
    
    Originally
    
    AsReported
    
    Adjusted
    
    Reported
    
    AdjustedMinority interest liability
    
    $
    31,287
    
    
    $
    
    
    
    $
    31,487
    
    
    $
    Total liabilities
    
    
    386,763
    
    
    
    278,042
    
    
    
    216,237
    
    
    
    105,434Cowtown Pipeline Funding, Inc. equity
    
    
    109,491
    
    
    
    188,807
    
    
    
    82,429
    
    
    
    161,745Noncontrolling interests
    
    
    
    
    
    
    28,102
    
    
    
    
    
    
    
    30,841Total equity
    
    
    109,491
    
    
    
    216,909
    
    
    
    82,429
    
    
    
    192,586
 Significant Accounting Policies
 Basis of Presentation
 Use of Estimates 
 Cash and Cash Equivalents




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##### Table of Contents



Accounts receivable
 Property, Plant and Equipment
  Asset Retirement Obligations 
 Impairment of Long-Lived Assets
 Other Assets
 Environmental Liabilities
 Revenue Recognition
 
    
    persuasive evidence of an exchange arrangement exists;
    
    services have been rendered;
    
    the price for its services is fixed or determinable; and
    
    collectability is reasonably assured.
 Income Taxes
 Segment Information
 Fair Value of Financial Instruments 
 Equity Based Compensation 




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##### Table of Contents



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
 The Hierarchy of Generally Accepted Accounting
Principles
 
    
    Pronouncements Not Yet Implemented
 Business Combinations Business Combinations
 Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)




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##### Table of Contents



3. PROPERTY, PLANT AND EQUIPMENT
  December 31,Depreciable Life
    
    
    2008
    
    
    2007(in thousands)Gathering and transportation systems
    
    20 years
    
    $
    187,832
    
    
    $
    114,618Processing plants
    
    20-25 years
    
    
    160,404
    
    
    
    120,477Construction in progress  plant
    
    
    
    
    
    
    106,563
    
    
    
    12,636Construction in progress  pipeline
    
    
    
    
    
    
    27,994
    
    
    
    20,046Rights-of-way and easements
    
    20 years
    
    
    39,834
    
    
    
    26,905Land
    
    
    
    
    
    
    1,239
    
    
    
    952Buildings and other
    
    20-40 years
    
    
    1,836
    
    
    
    910525,702
    
    
    
    296,544Accumulated Depreciation
    
    
    
    
    
    
    (35,809
    )
    
    
    (11,659
    )Net property, plant and equipment
    
    
    
    
    
    $
    489,893
    
    
    $
    284,885
  4. ACCOUNTS PAYABLE AND OTHER
  December 31,2008
    
    
    2007(in thousands)Accrued operating expenses
    
    $
    957
    
    
    $
    882Accrued property taxes
    
    
    
    
    
    
    895Equity compensation payable
    
    
    116
    
    
    
    275Interest payable
    
    
    734
    
    
    
    147Other
    
    
    123
    
    
    
    226$
    1,930
    
    
    $
    2,425
 5. LONG-TERM DEBT
  Payments Due by PeriodLong-Term Debt
    
    Total
    
    
    2009
    
    
    2010-2012
    
    
    2013-2014
    
    
    Thereafter(in millions)Credit Agreement
    
    $
    174.9
    
    
    $
    
    
    
    $
    174.9
    
    
    $
    
    
    
    $
    Subordinated Note to Quicksilver
    
    
    53.6
    
    
    
    1.4
    
    
    
    3.3
    
    
    
    48.9
    
    
    
    Total long-term debt
    
    $
    228.5
    
    
    $
    1.4
    
    
    $
    178.2
    
    
    $
    48.9
    
    
    $
    
 Credit Agreement




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##### Table of Contents



Quarters Ended
    
    Maximum Debt to EBITDA
    
    Minimum EBITDA to InterestDecember 31, 2008 and thereafter
    
    4.50 to 1
    
    2.50 to 1
  Subordinated Note
   
    
    an event of default under the revolving credit agreement;
    
    the existence of a pending judicial proceeding with respect to any event of default under
the revolving credit agreement; or
    
    our ratio of total indebtedness (which includes the $50.0 million Subordinated Note) to
EBITDA as of the end of the fiscal quarter immediately preceding the date of such payment
was equal to or greater than 3.5 or would be greater than 3.5 after consideration of such
payment.




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##### Table of Contents



6. ASSET RETIREMENT OBLIGATIONS
  Year Ended December 31,2008
    
    
    2007(in thousands)Beginning asset retirement obligations
    
    $
    2,793
    
    
    $
    503Additional liability incurred
    
    
    2,257
    
    
    
    2,207Accretion expense
    
    
    184
    
    
    
    83Ending asset retirement obligations
    
    $
    5,234
    
    
    $
    2,793
  7. COMMITMENTS AND CONTINGENT LIABILITIES
 Litigation
 Casualties or Other Risks
   Regulatory Compliance
 Environmental Compliance




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##### Table of Contents



Commitments
  Payments Due by PeriodContractual Obligations
    
    Total
    
    
    2009
    
    
    2010-2012
    
    
    2013-2014
    
    
    Thereafter(in millions)Construction commitments
    
    $
    13.8
    
    
    $
    13.8
    
    
    $
    
    
    
    $
    
    
    
    $
    Total contractual obligations
    
    $
    13.8
    
    
    $
    13.8
    
    
    $
    
    
    
    $
    
    
    
    $
    
 8. INCOME TAXES
  As of December 31,2008
    
    
    2007(In thousands)Non-currentDeferred tax assetsDeferred tax benefit (liability) on partnership income
    
    $
    
    
    
    $
    5,979Total deferred tax assets
    
    $
    
    
    
    $
    5,979Deferred tax liabilitiesDeferred tax
liabilities on partnership income
    
    $
    1,882
    
    
    $
    Total deferred tax liabilities
    
    $
    1,882
    
    
    $
    
 The components of income tax expense for 2008, 2007 and 2006 are as follows:
 2008
    
    
    2007
    
    
    2006(In thousands)Current state income tax expense
    
    $
    
    
    
    $
    371
    
    
    $
    Current U.S. federal income tax expense
    
    
    
    
    
    
    10,273
    
    
    
    Total current income tax expense
    
    
    
    
    
    
    10,644
    
    
    
    Deferred state income tax expense (benefit)
    
    
    221
    
    
    
    (265
    )
    
    
    Deferred U.S. federal income tax expense (benefit)
    
    
    7,640
    
    
    
    (6,788
    )
    
    
    730Total deferred income tax expense (benefit)
    
    
    7,861
    
    
    
    (7,053
    )
    
    
    730Total income tax expense
    
    $
    7,861
    
    
    $
    3,591
    
    
    $
    730
 The following table reconciles the statutory federal income tax rate to the effective tax rate for 2008, 2007 and 2006:
 2008
    
    
    2007
    
    
    2006U.S. federal statutory tax rate
    
    
    35.00
    %
    
    
    35.00
    %
    
    
    35.00
    %State income taxes net of federal deduction
    
    
    0.65
    %
    
    
    (1.10
    )%
    
    
    0.00
    %Effective income tax rate
    
    
    35.65
    %
    
    
    33.90
    %
    
    
    35.00
    %




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##### Table of Contents



9. EQUITY PLAN
  Payable in cash
    
    Payable in unitsWeighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    AverageGrant Date
    
    
    
    
    
    Grant DateUnits
    
    Fair Value
    
    Units
    
    Fair ValueUnvested phantom units  January 1, 2008
    
    
    84,961
    
    
    $
    21.36
    
    
    
    9,833
    
    
    $
    21.36Vested
    
    
    (28,247
    )
    
    
    21.43
    
    
    
    (6,089
    )
    
    
    21.36Issued
    
    
    6,605
    
    
    
    24.12
    
    
    
    137,148
    
    
    
    25.25Cancelled
    
    
    (3,000
    )
    
    
    21.36
    
    
    
    (974
    )
    
    
    25.25Unvested phantom units  December 31, 2008
    
    
    60,319
    
    
    $
    21.63
    
    
    
    139,918
    
    
    $
    25.15
  10. NONCONTROLLING INTERESTS
   11. TRANSACTIONS WITH RELATED PARTIES
  Omnibus Agreement
 
    
    restrictions on Quicksilvers ability to engage in midstream business activities in
Quicksilver Counties;
    
    Obligation to reimburse Quicksilver for all general and administrative expenses incurred
by them on behalf of KGS; and
    
    Quicksilvers obligation to provide cross-indemnification for certain liabilities.
 Secondment Agreement




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##### Table of Contents



Gas Gathering and Processing Agreement
     Contribution, Conveyance and Assumption Agreement
 
    
    the transfer of all of the interests of certain entities to KGS and its subsidiaries;
    
    the issuance of the incentive distribution rights to the general partner and the
continuation of its 2% general partner interest in KGS;
    
    KGS issuance of 5,696,752 common units, 11,513,625 subordinated units and the right to
receive $162.1 million, to Holdings in exchange for the contributed interests; and
    
    KGS issuance of 816,873 common units and the right to receive $7.7 million to private
investors in exchange for their contributed interests.
 Centralized cash management
 Services to affiliates
 Allocation of costs




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##### Table of Contents



QUICKSILVER GAS SERVICES HOLDINGS LLC
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Independent Auditors ReportConsolidated Statements of Income for the Years Ended December 31, 2008, 2007 and 2006Consolidated Balance Sheets as of December 31, 2008 and 2007Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006Consolidated Statements of Changes in Members Capital for the Years ended December 31, 2008,
2007 and 2006Notes to Consolidated Financial Statements for the Years Ended December 31, 2008, 2007 and 2006




---



##### Table of Contents



Noncontrolling Interests in Consolidated
Financial Statements  an Amendment to ARB
51
 /s/ DELOITTE & TOUCHE LLP




---



##### Table of Contents



QUICKSILVER GAS SERVICES HOLDINGS LLC
  CONSOLIDATED STATEMENTS OF INCOME
In thousands
 Year Ended December 31,2008
    
    
    2007
    
    
    2006RevenuesGathering and transportation revenue  Quicksilver
    
    $
    36,061
    
    
    $
    15,089
    
    
    $
    6,460Gathering and transportation revenue
    
    
    5,612
    
    
    
    1,773
    
    
    
    53Gas processing revenue  Quicksilver
    
    
    30,127
    
    
    
    16,564
    
    
    
    7,342Gas processing revenue
    
    
    5,358
    
    
    
    1,990
    
    
    
    63Other revenue  Quicksilver
    
    
    900
    
    
    
    525
    
    
    
    Total revenues
    
    
    78,058
    
    
    
    35,941
    
    
    
    13,918ExpensesOperations and maintenance  Quicksilver
    
    
    20,250
    
    
    
    11,512
    
    
    
    7,475General and administrative  Quicksilver
    
    
    6,407
    
    
    
    3,379
    
    
    
    937Depreciation and accretion
    
    
    14,566
    
    
    
    8,070
    
    
    
    2,963Total expenses
    
    
    41,223
    
    
    
    22,961
    
    
    
    11,375Operating income
    
    
    36,835
    
    
    
    12,980
    
    
    
    2,543Other income
    
    
    11
    
    
    
    236
    
    
    
    13Interest expense
    
    
    10,177
    
    
    
    4,647
    
    
    
    Income before income taxes
    
    
    26,669
    
    
    
    8,569
    
    
    
    2,556Income tax provision
    
    
    253
    
    
    
    313
    
    
    
    135Net income
    
    
    26,416
    
    
    
    8,256
    
    
    
    2,421Net income
attributable to noncontrolling interests
    
    
    (7,160
    )
    
    
    (1,304
    )
    
    
    (140
    )Net income attributable to Quicksilver Gas Services Holdings LLC
    
    $
    19,256
    
    
    $
    6,952
    
    
    $
    2,281




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##### Table of Contents



QUICKSILVER GAS SERVICES HOLDINGS LLC
  CONSOLIDATED BALANCE SHEETSIn thousands
 December 31,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assetsCash and cash equivalents
    
    $
    303
    
    
    $
    1,125Accounts receivable
    
    
    2,082
    
    
    
    882Accounts receivable from Quicksilver
    
    
    
    
    
    
    800Prepaid expenses and other current assets
    
    
    594
    
    
    
    690Total current assets
    
    
    2,979
    
    
    
    3,497Properties, plant and equipment, net
    
    
    488,120
    
    
    
    273,948Other assets
    
    
    1,916
    
    
    
    965$
    493,015
    
    
    $
    278,410LIABILITIES AND MEMBERS CAPITALCurrent liabilitiesCurrent maturities of debt
    
    $
    1,375
    
    
    $
    1,100Accounts payable to Quicksilver
    
    
    10,502
    
    
    
    Accrued additions to property, plant and equipment
    
    
    17,433
    
    
    
    23,624Accounts payable and other
    
    
    1,930
    
    
    
    2,700Total current liabilities
    
    
    31,240
    
    
    
    27,424Long-term debt
    
    
    174,900
    
    
    
    5,000Note payable to Quicksilver
    
    
    52,271
    
    
    
    50,569Repurchase obligations to Quicksilver
    
    
    123,298
    
    
    
    82,251Asset retirement obligations
    
    
    5,234
    
    
    
    2,793Deferred income tax liability
    
    
    369
    
    
    
    173Commitments and contingent liabilities (Note 7)Net members capital (deficit)
    
    
    75,836
    
    
    
    79,862Noncontrolling interests
    
    
    29,867
    
    
    
    30,338Total equity
    
    
    105,703
    
    
    
    110,200$
    493,015
    
    
    $
    278,410




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##### Table of Contents



QUICKSILVER GAS SERVICES HOLDINGS LLC
  CONSOLIDATED STATEMENTS OF CASH FLOWSIn thousands
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Operating activities:Net income
    
    $
    26,416
    
    
    $
    8,256
    
    
    $
    2,421Items included in net income not affecting cash:Depreciation
    
    
    14,382
    
    
    
    7,987
    
    
    
    2,942Accretion of asset retirement obligation
    
    
    184
    
    
    
    83
    
    
    
    21Deferred income taxes
    
    
    196
    
    
    
    38
    
    
    
    135Equity-based compensation
    
    
    1,017
    
    
    
    130
    
    
    
    Amortization of debt issuance costs
    
    
    243
    
    
    
    88
    
    
    
    Non-cash interest expense
    
    
    8,825
    
    
    
    4,294
    
    
    
    Changes in assets and liabilities:Accounts receivable
    
    
    (1,200
    )
    
    
    (815
    )
    
    
    (66
    )Prepaid expenses and other assets
    
    
    (612
    )
    
    
    (543
    )
    
    
    (146
    )Accounts receivable from Quicksilver
    
    
    4,002
    
    
    
    (5,975
    )
    
    
    Accounts payable and other
    
    
    (770
    )
    
    
    1,406
    
    
    
    1,138Net cash provided by operating activities
    
    
    52,683
    
    
    
    14,949
    
    
    
    6,445Investing activities:Capital expenditures
    
    
    (148,079
    )
    
    
    (73,797
    )
    
    
    (77,539
    )Other
    
    
    
    
    
    
    
    
    
    
    (821
    )Net cash used in investing activities
    
    
    (148,079
    )
    
    
    (73,797
    )
    
    
    (78,360
    )Financing activities:Proceeds from sale of assets to Quicksilver
    
    
    
    
    
    
    29,508
    
    
    
    Proceeds from revolving credit facility borrowings
    
    
    169,900
    
    
    
    5,000
    
    
    
    Debt issuance costs
    
    
    (486
    )
    
    
    (1,041
    )
    
    
    Repayment of repurchase obligation to Quicksilver
    
    
    (42,085
    )
    
    
    
    
    
    
    Repayment of subordinated note payable to Quicksilver
    
    
    (829
    )
    
    
    
    
    
    
    Net proceeds from sale of KGS units
    
    
    
    
    
    
    112,298
    
    
    
    Costs paid for sale of KGS units
    
    
    
    
    
    
    (2,933
    )
    
    
    Distributions to Quicksilver
    
    
    (23,282
    )
    
    
    (115,074
    )
    
    
    Contributions by Quicksilver
    
    
    
    
    
    
    38,045
    
    
    
    67,421Contributions by noncontrolling  interests
    
    
    
    
    
    
    167
    
    
    
    7,291Distributions to noncontrolling  interests
    
    
    (8,644
    )
    
    
    (8,794
    )
    
    
    Net cash provided by financing activities
    
    
    94,574
    
    
    
    57,176
    
    
    
    74,712Net increase (decrease) in cash
    
    
    (822
    )
    
    
    (1,672
    )
    
    
    2,797Cash at beginning of period
    
    
    1,125
    
    
    
    2,797
    
    
    
    Cash at end of period
    
    $
    303
    
    
    $
    1,125
    
    
    $
    2,797Cash paid for interest
    
    $
    2,341
    
    
    
    
    
    
    
    Cash paid for income taxes
    
    $
    332
    
    
    
    
    
    
    
    Non-cash transactions:Working capital related to capital expenditures
    
    $
    31,920
    
    
    $
    30,809
    
    
    $
    6,608Debt issuance costs
    
    
    
    
    
    
    (12
    )
    
    
    Cost in connection with the initial public offering
    
    
    
    
    
    
    (275
    )
    
    
    Issuance of subordinated note payable to Quicksilver
    
    
    
    
    
    
    50,000
    
    
    
    Acquisition of property, plant and equipment under
repurchase
obligation
    
    $
    (77,108
    )
    
    $
    (50,118
    )
    
    $
    




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##### Table of Contents



QUICKSILVER GAS SERVICES HOLDINGS LLC
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS CAPITAL
In thousands
 Net Members
    
    
    NoncontrollingCapital
    
    

Interests
    
    
    TotalBalance at January 1, 2006
    
    $
    48,949
    
    
    $
    
    
    
    $
    48,949Contributions
    
    
    71,930
    
    
    
    7,291
    
    
    
    79,221Cash distributions to Quicksilver
    
    
    (4,508
    )
    
    
    
    
    
    
    (4,508
    )Net income
    
    
    2,281
    
    
    
    140
    
    
    
    2,421Balance at December 31, 2006
    
    
    118,652
    
    
    
    7,431
    
    
    
    126,083Contributions
    
    
    117,361
    
    
    
    30,397
    
    
    
    147,758Distribution of subordinated note payable to
Quicksilver
    
    
    (50,000
    )
    
    
    
    
    
    
    (50,000
    )Reclass Quicksilvers equity balance to
receivable from Quicksilver
    
    
    1,971
    
    
    
    
    
    
    
    1,971Cash distributions to Quicksilver
    
    
    (115,074
    )
    
    
    
    
    
    
    (115,074
    )Cash distributions to noncontrolling interests
    
    
    
    
    
    
    (8,794
    )
    
    
    (8,794
    )Equity-based compensation expense
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    6,952
    
    
    
    1,304
    
    
    
    8,256Balance at December 31, 2007
    
    
    79,862
    
    
    
    30,338
    
    
    
    110,200Cash distributions to Quicksilver
    
    
    (23,282
    )
    
    
    
    
    
    
    (23,282
    )Cash distributions to noncontrolling interests
    
    
    
    
    
    
    (8,648
    )
    
    
    (8,648
    )Equity-based compensation expense
    
    
    
    
    
    
    1,017
    
    
    
    1,017Net income
    
    
    19,256
    
    
    
    7,160
    
    
    
    26,416Balance at December 31, 2008
    
    $
    75,836
    
    
    $
    29,867
    
    
    $
    105,703




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##### Table of Contents



QUICKSILVER GAS SERVICES HOLDINGS LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
 Organization
  Description of Business
  
    
    The Cowtown System, which includes:
 
    
    the Cowtown Pipeline, which consists of a pipeline gathering system and gas
compression facilities in the southern portion of the Fort Worth Basin and gathers
natural gas produced by KGS customers and delivers it for processing;
    
    the Cowtown Plant, in Hood County, Texas, which consists of two natural gas
processing units that extract NGLs from the natural gas stream and deliver customers
residue gas to unaffiliated pipelines for transport and sale downstream; and
    
    the Corvette Plant in Hood County, Texas, which was placed in service during
the first quarter 2009, and consists of a natural gas processing unit that extracts
NGLs from the natural gas stream and delivers KGS customers residue gas to
unaffiliated pipelines for transport and sale downstream.
 
    
    The Lake Arlington Dry System, located in Tarrant County, Texas, which consists of a
gathering system and a gas compression facility, which KGS purchased from Quicksilver in
the fourth quarter of 2008. This system is connected to affiliated pipelines for transport
and sale downstream.
  2. ADJUSTMENTS AND SIGNIFICANT ACCOUNTING POLICIES
 Adjustment for Retrospective Application of SFAS No. 160
  SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements
   Statement of Income information for the years ended December 31,2008
    
    2007
    
    2006Originally
    
    As
    
    Originally
    
    As
    
    Originally
    
    As(amounts in 000s)
    
    Reported
    
    Adjusted
    
    Reported
    
    Adjusted
    
    Reported
    
    AdjustedIncome before income taxes
    
    $
    26,669
    
    
    $
    26,669
    
    
    $
    8,569
    
    
    $
    8,569
    
    
    $
    2,556
    
    
    $
    2,556Income tax provision
    
    
    253
    
    
    
    253
    
    
    
    313
    
    
    
    313
    
    
    
    135
    
    
    
    135Minority interest
    
    
    7,160
    
    
    
    
    
    
    
    1,304
    
    
    
    
    
    
    
    140
    
    
    
    Net income
    
    
    19,256
    
    
    
    26,416
    
    
    
    6,952
    
    
    
    8,256
    
    
    
    2,281
    
    
    
    2,421Net income attributable to noncontrolling interests
    
    
    
    
    
    
    (7,160
    )
    
    
    
    
    
    
    (1,304
    )
    
    
    
    
    
    
    (140
    )Net income attributable to Quicksilver Gas
Services Holdings LLC
    
    
    
    
    
    
    19,256
    
    
    
    
    
    
    
    6,952
    
    
    
    
    
    
    
    2,281
 Balance Sheet information as of December 31,2008
    
    2007Originally
    
    As
    
    Originally
    
    AsReported
    
    Adjusted
    
    Reported
    
    AdjustedMinority interest liability
    
    $
    29,867
    
    
    $
    
    
    
    $
    30,338
    
    
    $
    Total liabilities
    
    
    496,495
    
    
    
    387,312
    
    
    
    277,864
    
    
    
    168,210Net members capital (deficit)
    
    
    (3,480
    )
    
    
    75,836
    
    
    
    546
    
    
    
    79,862Noncontrolling interests
    
    
    
    
    
    
    29,867
    
    
    
    
    
    
    
    30,338Total equity
    
    
    (3,480
    )
    
    
    105,703
    
    
    
    546
    
    
    
    110,200
 Significant Accounting Policies
 Basis of Presentation
 Use of Estimates 
 Cash and Cash Equivalents
 Accounts receivable




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##### Table of Contents



Property, Plant and Equipment
  Asset Retirement Obligations 
 Repurchase Obligations to Quicksilver 
 
    
    a portion of the gathering lines in the Cowtown Pipeline;
    
    the Lake Arlington Dry System; and
    
    the Hill County Dry System.
  Cowtown Pipeline repurchase
 Lake Arlington Dry System repurchase
 Hill County Dry System repurchase
  Estimate of
    
    
    ConstructionConstruction
    
    
    Costs Recognized
    
    
    RepurchaseCosts as of
    
    
    through
    
    
    obligation atJune 5, 2007
    
    
    December 31,
    
    
    December 31,
    
    
    DecemberSales Price
    
    
    2008(1)
    
    
    2008
    
    
    31, 2008
    
    
    KGS RepurchaseCowtown Pipeline
    
    $
    22.9
    
    
    $
    62.6
    
    
    $
    67.0
    
    
    $
    67.0
    
    
    Optional at CostLake Arlington Dry
System
    
    
    3.6
    
    
    
    
    (2)
    
    
    42.1
    
    
    
    
    
    
    Repurchased at FV in 2008Hill County Dry
System
    
    
    3.0
    
    
    
    78.0
    
    
    
    56.3
    
    
    
    56.3
    
    
    Obligatory at FV$
    29.5
    
    
    $
    140.6
    
    
    $
    165.4
    
    
    $
    123.3




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##### Table of Contents



(1)
    
    Estimates may change based on changes in producers drilling progress,
material and labor costs, easement costs and other factors(2)
    
    Excludes any estimated costs after completion of purchase  Impairment of Long-Lived Assets
 Other Assets
 Environmental Liabilities
 Revenue Recognition
 
    
    persuasive evidence of an exchange arrangement exists;
    
    services have been rendered;
    
    the price for its services is fixed or determinable; and
    
    collectability is reasonably assured.
 Income Taxes
 Segment Information
 Fair Value of Financial Instruments 
 Equity Based Compensation 
 Recently Issued Accounting Standards
 
    
    Pronouncements Implemented




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##### Table of Contents



Fair Value Measurements
 The Fair Value Option for Financial Assets
and Financial Liabilities  Including an amendment of FASB Statement No. 115
 The Hierarchy of Generally Accepted Accounting
Principles
 
    
    Pronouncements Not Yet Implemented
 Business Combinations Business Combinations
 Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)




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##### Table of Contents



3. PROPERTY, PLANT AND EQUIPMENT
  December 31,Depreciable Life
    
    
    2008
    
    
    2007(in thousands)Gathering and transportation systems
    
    20 years
    
    $
    179,594
    
    
    $
    106,478Processing plants
    
    20-25 years
    
    
    157,353
    
    
    
    117,571Construction in progress  plant
    
    
    
    
    
    
    106,563
    
    
    
    12,636Construction in progress  pipeline
    
    
    
    
    
    
    27,994
    
    
    
    20,046Rights-of-way and easements
    
    20 years
    
    
    39,473
    
    
    
    26,905Land
    
    
    
    
    
    
    1,239
    
    
    
    952Buildings and other
    
    20-40 years
    
    
    1,836
    
    
    
    910514,052
    
    
    
    285,498Accumulated Depreciation
    
    
    
    
    
    
    (25,932
    )
    
    
    (11,550
    )Net property, plant and equipment
    
    
    
    
    
    $
    488,120
    
    
    $
    273,948
  4. ACCOUNTS PAYABLE AND OTHER
  December 31,2008
    
    
    2007(in thousands)Accrued operating expenses
    
    $
    957
    
    
    $
    882Accrued property taxes
    
    
    
    
    
    
    895State income taxes
    
    
    
    
    
    
    276Equity compensation payable
    
    
    116
    
    
    
    275Interest payable
    
    
    734
    
    
    
    147Other
    
    
    123
    
    
    
    225$
    1,930
    
    
    $
    2,700
 5. LONG-TERM DEBT
  Payments Due by PeriodLong-Term Debt
    
    Total
    
    
    2009
    
    
    2010-2012
    
    
    2013-2014
    
    
    Thereafter(in millions)Credit Agreement
    
    $
    174.9
    
    
    $
    
    
    
    $
    174.9
    
    
    $
    
    
    
    $
    Subordinated Note to Quicksilver
    
    
    53.6
    
    
    
    1.4
    
    
    
    3.3
    
    
    
    48.9
    
    
    
    Total long-term debt
    
    $
    228.5
    
    
    $
    1.4
    
    
    $
    178.2
    
    
    $
    48.9
    
    
    $
    
 Credit Agreement




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##### Table of Contents



Quarters Ended
    
    Maximum Debt to EBITDA
    
    Minimum EBITDA to InterestDecember 31, 2008 and thereafter
    
    4.50 to 1
    
    2.50 to 1
  Subordinated Note
   
    
    an event of default under the revolving credit agreement;
    
    the existence of a pending judicial proceeding with respect to any event of default under
the revolving credit agreement; or
    
    our ratio of total indebtedness (which includes the $50.0 million Subordinated Note) to
EBITDA as of the end of the fiscal quarter immediately preceding the date of such payment
was equal to or greater than 3.5 or would be greater than 3.5 after consideration of such
payment.
  6. ASSET RETIREMENT OBLIGATIONS




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##### Table of Contents



Year Ended December 31,2008
    
    
    2007(in thousands)Beginning asset retirement obligations
    
    $
    2,793
    
    
    $
    503Additional liability incurred
    
    
    2,257
    
    
    
    2,207Accretion expense
    
    
    184
    
    
    
    83Ending asset retirement obligations
    
    $
    5,234
    
    
    $
    2,793
  7. COMMITMENTS AND CONTINGENT LIABILITIES
 Litigation
 Casualties or Other Risks
   Regulatory Compliance
 Environmental Compliance
 Commitments




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##### Table of Contents



Payments Due by PeriodContractual Obligations
    
    Total
    
    
    2009
    
    
    2010-2012
    
    
    2013-2014
    
    
    Thereafter(in millions)Construction commitments
    
    $
    13.8
    
    
    $
    13.8
    
    
    $
    
    
    
    $
    
    
    
    $
    Total contractual obligations
    
    $
    13.8
    
    
    $
    13.8
    
    
    $
    
    
    
    $
    
    
    
    $
    
 8. INCOME TAXES
    9. EQUITY PLAN
  Payable in cash
    
    Payable in unitsWeighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    AverageGrant Date
    
    
    
    
    
    Grant DateUnits
    
    Fair Value
    
    Units
    
    Fair ValueUnvested phantom units  January 1, 2008
    
    
    84,961
    
    
    $
    21.36
    
    
    
    9,833
    
    
    $
    21.36Vested
    
    
    (28,247
    )
    
    
    21.43
    
    
    
    (6,089
    )
    
    
    21.36Issued
    
    
    6,605
    
    
    
    24.12
    
    
    
    137,148
    
    
    
    25.25Cancelled
    
    
    (3,000
    )
    
    
    21.36
    
    
    
    (974
    )
    
    
    25.25Unvested phantom units  December 31, 2008
    
    
    60,319
    
    
    $
    21.63
    
    
    
    139,918
    
    
    $
    25.15
  10. NONCONTROLLING
INTERESTS




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##### Table of Contents



11. TRANSACTIONS WITH RELATED PARTIES
  Omnibus Agreement
 
    
    restrictions on Quicksilvers ability to engage in midstream business activities in
Quicksilver Counties;
    
    Quicksilvers construction of the Lake Arlington Dry System and the Hill County Dry
System and the obligations to repurchase those assets from Quicksilver at their fair market
value;
    
    Obligation to reimburse Quicksilver for all general and administrative expenses incurred
by them on behalf of KGS; and
    
    Quicksilvers obligation to provide cross-indemnification for certain liabilities.
 Secondment Agreement
 Gas Gathering and Processing Agreement




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##### Table of Contents



Contribution, Conveyance and Assumption Agreement
 
    
    the transfer of all of the interests of certain entities to KGS and its subsidiaries;
    
    the issuance of the incentive distribution rights to the general partner and the
continuation of its 2% general partner interest in KGS;
    
    KGS issuance of 5,696,752 common units, 11,513,625 subordinated units and the right to
receive $162.1 million, to Holdings in exchange for the contributed interests; and
    
    KGS issuance of 816,873 common units and the right to receive $7.7 million to private
investors in exchange for their contributed interests.
 Centralized cash management
 Services to affiliates
 Allocation of costs




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##### Table of Contents



Report of Independent Registered Public Accounting Firm




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##### Table of Contents



BreitBurn Energy Partners L.P. and Subsidiaries
Consolidated Statement of Operations 
For the Year Ended
December 31, 2008
 Thousands of dollars, except per unit amountsRevenues and other income items:Oil, natural gas and natural gas liquid sales
    
    $
    467,381Gains on commodity derivative instruments,
net (note 14)
    
    
    332,102Other revenue, net (note 10)
    
    
    2,920Total revenues and other income items
    
    
    802,403Operating costs and expenses:Operating costs
    
    
    149,681Depletion, depreciation and amortization (note 5)
    
    
    179,933General and administrative expenses
    
    
    43,435Total operating costs and expenses
    
    
    373,049Operating income
    
    
    429,354Interest and other financing costs, net
    
    
    29,147Loss on interest rate swaps (note 14)
    
    
    20,035Other income, net
    
    
    (191
    )Income before taxes and minority interest
    
    
    380,363Income tax expense (note 6)
    
    
    1,939Minority
interest (note 19)
    
    
    188Net income
    
    
    378,236General Partners interest in net income (loss)
    
    
    (2,019
    )Limited Partners interest in net income
    
    $
    380,255Basic net income per unit (note 2)
    
    $
    6.42Diluted net income per unit (note 2)
    
    $
    6.28
 The accompanying notes are an integral part of these consolidated financial statements.




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##### Table of Contents



BreitBurn Energy Partners L.P. and Subsidiaries
Consolidated Balance SheetAs of December 31, 2008
 Thousands of dollars, except unit amountsASSETSCurrent assets:Cash
    
    $
    2,546Accounts receivable, net (note 2)
    
    
    47,221Derivative instruments (note 14)
    
    
    76,224Related party receivables (note 7)
    
    
    5,084Inventory (note 8)
    
    
    1,250Prepaid expenses
    
    
    5,300Intangibles (note 9)
    
    
    2,771Other current assets
    
    
    170Total current assets
    
    
    140,566Equity investments (note 10)
    
    
    9,452Property, plant and equipmentOil and gas properties (note 4)
    
    
    2,057,531Non-oil and gas assets (note 4)
    
    
    7,8062,065,337Accumulated depletion and depreciation (note 5)
    
    
    (224,996
    )Net property, plant and equipment
    
    
    1,840,341Other long-term assetsIntangibles (note 9)
    
    
    495Derivative instruments (note 14)
    
    
    219,003Other long-term assets
    
    
    6,977Total assets
    
    $
    2,216,834LIABILITIES AND PARTNERS EQUITYCurrent liabilities:Accounts payable
    
    $
    28,302Book overdraft
    
    
    9,871Derivative instruments (note 14)
    
    
    10,192Revenue distributions payable
    
    
    16,162Derivative settlements payable
    
    
    50Salaries and wages payable
    
    
    6,249Accrued liabilities
    
    
    9,164Total current liabilities
    
    
    79,990Long-term debt (note 11)
    
    
    736,000Deferred income taxes (note 6)
    
    
    4,282Asset retirement obligation (note 12)
    
    
    30,086Derivative instruments (note 14)
    
    
    10,058Other long-term liabilities
    
    
    2,987Total liabilities
    
    
    863,403Minority interest (note 19)
    
    
    539Partners equity (note 13)Limited partners interest (a)
    
    
    1,352,892Total liabilities and partners equity
    
    $
    2,216,834(a) Limited partner units outstanding
    
    
    52,635,634
 The accompanying notes are an integral part of these consolidated financial statements.




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##### Table of Contents



BreitBurn Energy Partners L.P. and Subsidiaries
Consolidated Statement of Cash Flows 
For the Year Ended December 31, 2008
 Thousands of dollarsCash flows from operating activitiesNet income
    
    $
    378,236Adjustments to reconcile net income to cash flow
from operating activities:Depletion, depreciation and amortization
    
    
    179,933Unit-based compensation expense
    
    
    6,907Unrealized gain on derivative instruments
    
    
    (370,734
    )Distributions greater than income from
equity affiliates
    
    
    1,198Deferred income tax
    
    
    1,207Minority interest
    
    
    188Amortization of intangibles
    
    
    3,131Other
    
    
    2,643Changes in net assets and liabilities:Accounts receivable and other assets
    
    
    258Inventory
    
    
    4,454Net change in related party receivables and payables
    
    
    32,688Accounts payable and other liabilities
    
    
    (13,413
    )Net cash provided by operating activities
    
    
    226,696Cash flows from investing activitiesCapital expenditures
    
    
    (131,082
    )Property acquisitions
    
    
    (9,957
    )Net cash used by investing activities
    
    
    (141,039
    )Cash flows from financing activitiesPurchase of common units
    
    
    (336,216
    )Distributions (1)
    
    
    (121,349
    )Proceeds from the issuance of long-term debt
    
    
    803,002Repayments of long-term debt
    
    
    (437,402
    )Book overdraft
    
    
    7,951Long-term debt issuance costs
    
    
    (5,026
    )Net cash used by financing activities
    
    
    (89,040
    )Decrease in cash
    
    
    (3,383
    )Cash beginning of period
    
    
    5,929Cash end of period
    
    $
    2,546
 
 (1)
    
    Includes distributions on equivalent units of $2.3 million The accompanying notes are an integral part of these consolidated financial statements.




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##### Table of Contents



BreitBurn Energy Partners L.P. and Subsidiaries
Consolidated Statement of Partners Equity For the Year
Ended December 31, 2008
 Limited
    
    
    GeneralThousands of dollars
    
    Partners
    
    
    Partner
    
    
    TotalBalance,
January 1, 2008
    
    $
    1,423,418
    
    
    $
    1,390
    
    
    $
    1,424,808Redemption of common
units from predecessors (a)
    
    
    (336,216
    )
    
    
    
    
    
    
    (336,216
    )Distributions
    
    
    (118,580
    )
    
    
    (427
    )
    
    
    (119,007
    )Distributions paid on unissued units under incentive plans
    
    
    (2,335
    )
    
    
    (7
    )
    
    
    (2,342
    )Unit-based compensation
    
    
    7,383
    
    
    
    
    
    
    
    7,383Net income
(loss) (b)
    
    
    380,255
    
    
    
    (2,019
    )
    
    
    378,236Contribution of general partner interest to the partnership
    
    
    (1,063
    )
    
    
    1,063
    
    
    
    Other
    
    
    30
    
    
    
    
    
    
    
    30Balance, December 31, 2008
    
    $
    1,352,892
    
    
    $
    
    
    
    $
    1,352,892
 
 (a)
    
    Reflects the purchase of 14.405 million Common Units from subsidiaries of Provident.(b)
    
    General partner interests were purchased as of June 17, 2008. The accompanying notes are an integral part of these consolidated financial statements.




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##### Table of Contents



Notes to Consolidated Financial Statements
 Note 1. Organization and Operations
 BreitBurn Energy Partners L.P.




---



##### Table of Contents



2. Summary of Significant Accounting Policies
 Principles of consolidation
  Use of estimates
  Accounting for Business Combinations
 Basis of Presentation
  Business segment information
 Disclosures about
Segments of an Enterprise and Related Information
 Revenue recognition




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##### Table of Contents



Cash and cash equivalents
  Accounts Receivable
  Inventory
  Investments in Equity Affiliates
  Property, plant and equipment
 Oil and gas properties
   Non-oil and gas assets
  Oil and natural gas reserve quantities
  Asset retirement obligations
 Accounting for Asset Retirement Obligations




---



##### Table of Contents



Impairment of assets
   Debt issuance costs
  Equity-based compensation
  Share Based Payments
  Fair market value of financial instruments
  Accounting for business combinations
 Accounting for Business Combinations




---



##### Table of Contents



Concentration of credit risk
  Derivatives
 Accounting for Derivative Instruments and Hedging Activities
 Fair Value Measurements
 Income taxes
  Accounting for
Income Taxes.
 FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109




---



##### Table of Contents



Net Income per unit
  Year EndedDecember 31,2008Weighted average
number of Common
Units used to
calculate basic and
diluted net income
or loss per unit:Basic
    
    
    59,238,588Dilutive
    
    
    1,322,107Diluted
    
    
    60,560,695
  Environmental expenditures
  3. Accounting Pronouncements
 SFAS No. 157, Fair Value Measurements. Effective Date of FASB Statement No. 157,
 SFAS No. 159 The Fair Value Option for Financial Assets and Financial Liabilities 
including an amendment of FAS 115 (SFAS No. 159).
 SFAS No. 141(revised 2007) Business Combinations (SFAS No. 141R).




---



##### Table of Contents



SFAS
No. 160  Noncontrolling Interests in Consolidated Financial Statements  an amendment
of ARB No. 51 (SFAS No. 160).
 SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities  an amendment
of FASB Statement No. 133 (SFAS No. 161).
 FSP 142-3, Determination of the Useful Life of Intangible Assets (FSP 142-3). Goodwill and Other Intangible Assets. Business Combination
 SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS No. 162).
 FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions
Are Participating Securities (FSP EITF 03-6-1).




---



##### Table of Contents



4. Acquisitions
  Thousands of dollarsRelated party receivables  current, net
    
    $
    10,662Other current assets
    
    
    21Oil and gas properties
    
    
    8,451Non-oil and gas assets
    
    
    4,343Related party receivables  non-current
    
    
    6,704Current liabilities
    
    
    (13,510
    )Long-term liabilities
    
    
    (6,704
    )$
    9,967
  5. Impairments and Price Related Depletion and Depreciation Adjustments




---



##### Table of Contents



6. Income Taxes
   Year EndedDecember 31,Thousands of dollars
    
    2008Income  before taxes and minority interest
    
    $
    380,363Partnership income not subject to tax
    
    
    376,459Income subject to tax
    
    
    3,904Federal income tax rate
    
    
    34Income tax at statutory rate
    
    
    1,327Other
    
    
    Income tax expense
    
    $
    1,327
  December 31,Thousands of dollars
    
    2008Deferred tax assets:Net operating loss carryforwards
    
    $
    767Asset retirement obligation
    
    
    337Unrealized hedge loss
    
    
    Other
    
    
    103Deferred tax liabilities:Depreciation, depletion and intangible drilling costs
    
    
    (3,404
    )Other
    
    
    (2,085
    )Net deferred tax liability
    
    $
    (4,282
    )




---



##### Table of Contents



New Accounting Pronouncement
 FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109
  7. Related Party Transactions




---



##### Table of Contents



8. Inventory
    9. Intangibles
   10. Equity Investments




---



##### Table of Contents



11. Long-Term Debt




---



##### Table of Contents



Year EndedDecember 31,Thousands of dollars
    
    2008Credit facility
    
    $
    25,487Commitment fees
    
    
    1,047Amortization of discount and deferred issuance costs
    
    
    2,613Total
    
    $
    29,147Cash paid for interest on Credit facility
(including realized losses on interest rate swaps)
    
    $
    29,767
 12. Asset Retirement Obligation
  Year Ended December 31,Thousands of dollars
    
    2008Carrying amount, beginning of period
    
    $
    27,819Liabilities settled in the current period
    
    
    (1,054
    )Revisions (1)
    
    
    1,363Acquisitions
    
    
    Accretion expense
    
    
    1,958Carrying amount, end of period
    
    $
    30,086
 
 (1)
    
    Increased cost estimates and revisions to reserve life. 13. Partners Equity




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##### Table of Contents



Cash Distributions
          2007 Private Placements




---



##### Table of Contents



14. Financial Instruments
 Fair Value of Financial Instruments
  Commodity Activities




---



##### Table of Contents



Year
    
    Year
    
    Year
    
    Year2009
    
    2010
    
    2011
    
    2012Gas Positions:Fixed Price Swaps:Hedged Volume (MMBtu/d)
    
    
    45,802
    
    
    
    43,869
    
    
    
    25,955
    
    
    
    19,129Average Price ($/MMBtu)
    
    $
    8.14
    
    
    $
    8.20
    
    
    $
    9.21
    
    
    $
    10.12Collars:Hedged Volume (MMBtu/d)
    
    
    1,740
    
    
    
    3,405
    
    
    
    16,016
    
    
    
    19,129Average Floor Price ($/MMBtu)
    
    $
    9.00
    
    
    $
    9.00
    
    
    $
    9.00
    
    
    $
    9.00Average Ceiling Price ($/MMBtu)
    
    $
    16.36
    
    
    $
    12.79
    
    
    $
    11.28
    
    
    $
    11.89Total:Hedged Volume (MMMBtu/d)
    
    
    47,542
    
    
    
    47,275
    
    
    
    41,971
    
    
    
    38,257Average Price ($/MMBtu)
    
    $
    8.17
    
    
    $
    8.26
    
    
    $
    9.13
    
    
    $
    9.56Oil Positions:Fixed Price Swaps:Hedged Volume (Bbls/d)
    
    
    1,838
    
    
    
    2,308
    
    
    
    2,116
    
    
    
    1,939Average Price ($/Bbl)
    
    $
    75.51
    
    
    $
    83.12
    
    
    $
    88.26
    
    
    $
    90.00Participating Swaps: (a)Hedged Volume (Bbls/d)
    
    
    2,847
    
    
    
    1,993
    
    
    
    1,439
    
    
    
    Average Price ($/Bbl)
    
    $
    62.86
    
    
    $
    64.40
    
    
    $
    61.29
    
    
    $
    Average Part. %
    
    
    60.9
    %
    
    
    55.5
    %
    
    
    53.2
    %
    
    
    Collars:Hedged Volume (Bbls/d)
    
    
    594
    
    
    
    1,279
    
    
    
    2,048
    
    
    
    3,077Average Floor Price ($/Bbl)
    
    $
    92.31
    
    
    $
    102.84
    
    
    $
    103.43
    
    
    $
    110.00Average Ceiling Price ($/Bbl)
    
    $
    122.92
    
    
    $
    136.16
    
    
    $
    152.61
    
    
    $
    145.39Floors:Hedged Volume (Bbls/d)
    
    
    500
    
    
    
    500
    
    
    
    
    
    
    
    Average Floor Price ($/Bbl)
    
    $
    100.00
    
    
    $
    100.00
    
    
    $
    
    
    
    $
    Total:Hedged Volume (Bbls/d)
    
    
    5,778
    
    
    
    6,080
    
    
    
    5,603
    
    
    
    5,016Average Price ($/Bbl)
    
    $
    73.12
    
    
    $
    82.52
    
    
    $
    86.88
    
    
    $
    102.27
 
 (a)
    
    A participating swap combines a swap and a call option with the same strike price. Interest Rate Activities
  Notional amounts in thousands of dollars
    
    Notional Amount
    
    Fixed RatePeriod CoveredJanuary 1, 2009 to January 8, 2009
    
    $
    50,000
    
    
    
    3.6200
    %January 1, 2009 to January 20, 2009
    
    
    200,000
    
    
    
    3.6825
    %January 1, 2009 to July 8, 2009
    
    
    50,000
    
    
    
    3.0450
    %January 1, 2009 to January 8, 2010
    
    
    100,000
    
    
    
    3.3873
    %January 20, 2009 to July 20, 2009
    
    
    250,000
    
    
    
    3.6825
    %July 20, 2009 to December 20, 2010
    
    
    300,000
    
    
    
    3.6825
    %December 20, 2010 to October 20, 2011
    
    
    200,000
    
    
    
    2.9900
    %




---



##### Table of Contents



Oil
    
    
    Natural GasCommodity
    
    
    Commodity
    
    
    Interest Rate
    
    
    Total FinancialThousands of dollars
    
    Derivatives
    
    
    Derivatives
    
    
    Derivatives
    
    
    InstrumentsBalance, December 31, 2008Short-term assets
    
    $
    44,086
    
    
    $
    32,138
    
    
    $
    
    
    
    $
    76,224Long-term assets
    
    
    145,061
    
    
    
    73,942
    
    
    
    
    
    
    
    219,003Total assets
    
    
    189,147
    
    
    
    106,080
    
    
    
    
    
    
    
    295,227Short-term liabilities
    
    
    (1,115
    )
    
    
    
    
    
    
    (9,077
    )
    
    
    (10,192
    )Long-term liabilities
    
    
    (1,820
    )
    
    
    
    
    
    
    (8,238
    )
    
    
    (10,058
    )Total liabilities
    
    
    (2,935
    )
    
    
    
    
    
    
    (17,315
    )
    
    
    (20,250
    )Net assets (liabilities)
    
    $
    186,212
    
    
    $
    106,080
    
    
    $
    (17,315
    )
    
    $
    274,977




---



##### Table of Contents



As of December 31, 2008Thousands of dollars
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssets (Liabilities):Commodity Derivatives (swaps, put and call options)
    
    $
    
    
    
    $
    139,074
    
    
    $
    153,218
    
    
    $
    292,292Other Derivatives (interest rate swaps)
    
    
    
    
    
    
    (17,315
    )
    
    
    
    
    
    
    (17,315
    )Total
    
    $
    
    
    
    $
    121,759
    
    
    $
    153,218
    
    
    $
    274,977




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##### Table of Contents



Year EndedThousands of dollars
    
    December 31, 2008Assets (Liabilities):Beginning balance
    
    $
    44,236Realized and unrealized gains, net
    
    
    106,154Purchases and issuances
    
    
    7,452Settlements
    
    
    (4,624
    )Balance at December 31, 2008
    
    $
    153,218
   15. Unit and Other Valuation-Based Compensation Plans




---



##### Table of Contents



Unit Based Compensation
 Share-Based Payments




---



##### Table of Contents



Founders Plan
      December
31, 2008Number of
    
    
    WeightedAppreciation
    
    
    AverageRights Units
    
    
    Exercise PriceOutstanding, beginning of period
    
    
    214,107
    
    
    $
    18.50Exercised
    
    
    (91,463
    )
    
    
    18.50Outstanding, end of period
    
    
    122,644
    
    
    $
    18.50Exercisable, end of period
    
    
    
    
    
    $
    
 BreitBurn Management LTIP and the Partnership LTIP




---



##### Table of Contents



WeightedNumber of
    
    
    AverageUnits
    
    
    Grant PriceOutstanding, beginning of period
    
    
    267,702
    
    
    $
    10.77Granted
    
    
    
    
    
    
    Exercised
    
    
    (267,351
    )
    
    
    10.77Cancelled
    
    
    (351
    )
    
    
    10.73Outstanding, end of period
    
    
    
    
    
    $
    10.77Exercisable, end of period
    
    
    
    
    
    $
    




---



##### Table of Contents



PTUs and RTUsDecember
31, 2008WeightedNumber of
    
    
    AverageUnits
    
    
    Grant PriceOutstanding, beginning of period
    
    
    108,717
    
    
    $
    23.64Granted
    
    
    
    
    
    
    Exercised
    
    
    (20,645
    )
    
    
    20.39Cancelled
    
    
    (1,080
    )
    
    
    24.10Outstanding, end of period
    
    
    86,992
    
    
    $
    24.10Exercisable, end of period
    
    
    
    
    
    $
    
 Unit Appreciation Right Plan
     BreitBurn Management CompanyPVE indexed unitsDecember
31, 2008Number of
    
    
    WeightedAppreciation
    
    
    AverageRights
    
    
    Exercise PriceOutstanding,
beginning of period
    
    
    154,323
    
    
    $
    9.16Exercised
    
    
    (69,994
    )
    
    
    9.18Cancelled
    
    
    
    
    
    
    Outstanding, end of
period
    
    
    84,329
    
    
    $
    9.96Exercisable, end of
period
    
    
    84,329
    
    
    $
    9.96
 Director Performance Units




---



##### Table of Contents



December
31, 2008Number of
    
    
    WeightedPerformance
    
    
    AverageUnits
    
    
    Grant PriceOutstanding, beginning of period
    
    
    37,473
    
    
    $
    21.11Granted
    
    
    20,146
    
    
    
    27.35Exercised
    
    
    (22,190
    )
    
    
    23.05Outstanding, end of period
    
    
    35,429
    
    
    $
    23.44Exercisable, end of period
    
    
    
    
    
    $
    
 Restricted Phantom Units and Convertible Phantom Units
  Restricted Phantom Units (RPUs).
 Convertible Phantom Units (CPUs).




---



##### Table of Contents




    
    if such termination occurs on or before December 31, 2008, a percentage equal to 40 percent;
    
    if such termination occurs on or before December 31, 2009, a percentage equal to 60 percent;
    
    if such termination occurs on or before December 31, 2010, a percentage equal to 80 percent; and
    
    if such termination occurs on or after January 1, 2011, a percentage equal to 100 percent.
   Number of
    
    
    WeightedRPU
    
    
    AverageUnits
    
    
    Grant PriceOutstanding, beginning of period (a)
    
    
    372,945
    
    
    $
    30.98Granted
    
    
    245,290
    
    
    
    20.44Cancelled
    
    
    (10,972
    )
    
    
    20.83Outstanding, end of period
    
    
    607,263
    
    
    $
    26.91Exercisable, end of period
    
    
    
    
    
    $
    
 16. Commitments and Contingencies
 Lease Rental Obligations
  Payments Due by YearThousands of dollars
    
    2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    after 2013
    
    TotalOperating leases
    
    $
    2,232
    
    
    $
    2,126
    
    
    $
    1,989
    
    
    $
    1,656
    
    
    $
    1,272
    
    
    $
    2,143
    
    
    $
    11,418
  Surety Bonds and Letters of Credit




---



##### Table of Contents



Other




---



##### Table of Contents



17. Retirement Plan
  18. Significant Customers
  19. Minority Interest
  20. Subsequent Events
    21. Oil and Natural Gas Activities (Unaudited)
 Costs incurred
  Thousands of dollarsProperty acquisition costsProved
    
    $
    Unproved
    
    
    Development costs
    
    
    129,503Asset retirement costs
    
    
    1,363Pipelines and processing
facilities
    
    
    Total
    
    $
    130,866




---



##### Table of Contents



Capitalized costs
  Thousands of dollarsProved properties and related producing assets
    
    $
    1,734,932Pipelines and processing facilities
    
    
    112,726Unproved properties
    
    
    209,873Accumulated depreciation, depletion and amortization
    
    
    (223,575
    )$
    1,833,956
  Results of operations for oil and gas producing activities
  Thousands of dollarsOil, natural gas and NGL sales
    
    $
    467,381Realized loss on derivative instruments
    
    
    (55,946
    )Unrealized gain  on derivative
instruments
    
    
    388,048Operating costs
    
    
    (149,681
    )Depreciation, depletion, and amortization
    
    
    (178,657
    )Pre-tax Income
    
    
    471,145Income tax expense
    
    
    1,939Results of producing operations
    
    $
    469,206
 Supplemental reserve information




---



##### Table of Contents



Oil
    
    GasIn Thousands
    
    (MBbl)
    
    (MMcf)Proved ReservesBeginning balance
    
    
    58,095
    
    
    
    505,069Revision of
previous estimates (a)
    
    
    (29,106
    )
    
    
    (16,251
    )Production
    
    
    (3,079
    )
    
    
    (22,384
    )Ending balance
    
    
    25,910
    
    
    
    466,434Proved Developed ReservesBeginning balance
    
    
    52,103
    
    
    
    457,444Ending balance
    
    
    23,346
    
    
    
    433,780
 
 (a)
    
    Additions due to infill drilling are classified in Revisions and were approximately 741 MBbl
for oil and 35,834 MMcf for natural gas in 2008. Standardized measure of discounted future net cash flows
  Thousands of dollarsFuture cash inflows
    
    
    3,523,524Future development costs
    
    
    (212,951
    )Future production expense
    
    
    (1,843,986
    )Future net cash flows
    
    
    1,466,587Discounted at 10% per year
    
    
    (874,327
    )Standardized measure of discounted future net cash flows
    
    $
    592,260




---



##### Table of Contents



1.
    
    An estimate was made of the quantity of proved reserves and the future
periods in which they are expected to be produced based on year-end
economic conditions.2.
    
    In accordance with SEC guidelines, the reserve engineers estimates of
future net revenues from our estimated proved properties and the
present value thereof are made using oil and gas sales prices in
effect as of the dates of such estimates and are held constant
throughout the life of the properties, except where such guidelines
permit alternate treatment, including the use of fixed and
determinable contractual price escalations. We have entered into
various arrangements to fix or limit the prices relating to a portion
of our oil and gas production. Arrangements in effect at December 31,
2008 are discussed in Note 14. Such risk management arrangements are
not reflected in the reserve reports. Representative market prices at
the as-of date for the reserve reports as of December 31, 2008
were $44.60 ($20.12 for Wyoming), per barrel of oil, and $5.71,
per MMBTU of gas.3.
    
    The future gross revenue streams were reduced by estimated future
operating costs (including production and ad valorem taxes) and future
development and abandonment costs, all of which were based on current
costs. Future net cash flows assume no future income tax expense as
we are essentially a non-taxable entity except for two tax paying
corporations whose future income tax liabilities on a discounted basis
are insignificant.
  Thousands of dollarsBeginning balance
    
    $
    1,912,467Sales, net of production expense
    
    
    (317,700
    )Net change in sales and transfer prices, net of production
expense
    
    
    (1,306,752
    )Previously estimated development costs incurred during year
    
    
    57,694Changes in estimated future development costs
    
    
    (98,064
    )Extensions, discoveries and improved recovery, net of costs
    
    
    Purchase of reserves in place
    
    
    Revision of quantity estimates and timing of estimated
production
    
    
    153,368Accretion of discount
    
    
    191,247Ending balance
    
    $
    592,260
 22. Quarterly Financial Data (Unaudited)
 Year Ended December 31, 2008First
    
    
    Second
    
    
    Third
    
    
    FourthThousands of dollars
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterOil, natural gas and natural gas liquid sales
    
    $
    115,849
    
    
    $
    139,962
    
    
    $
    130,249
    
    
    $
    81,321Gains (losses) on derivative instruments
    
    
    (83,387
    )
    
    
    (353,282
    )
    
    
    407,441
    
    
    
    361,330Other revenue, net
    
    
    875
    
    
    
    643
    
    
    
    806
    
    
    
    596Total revenue
    
    $
    33,337
    
    
    $
    (212,677
    )
    
    $
    538,496
    
    
    $
    443,247Operating income (loss) (1)
    
    
    (34,455
    )
    
    
    (282,267
    )
    
    
    468,625
    
    
    
    277,451Net income (loss) (1)
    
    
    (41,140
    )
    
    
    (286,240
    )
    
    
    454,454
    
    
    
    251,162




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##### Table of Contents



Year Ended December 31, 2008First
    
    
    Second
    
    
    Third
    
    
    FourthThousands of dollars
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterLimited Partners interest in loss (1)
    
    
    (40,867
    )
    
    
    (284,494
    )
    
    
    454,454
    
    
    
    251,162Basic net loss per limited partner unit (2)
    
    
    (0.61
    )
    
    
    (4.39
    )
    
    
    8.63
    
    
    
    4.77Diluted net loss per limited partner unit (2)
    
    
    (0.61
    )
    
    
    (4.39
    )
    
    
    8.41
    
    
    
    4.65Basic units outstanding
    
    
    67,020,641
    
    
    
    64,807,563
    
    
    
    52,635,634
    
    
    
    52,635,634Diluted units outstanding
    
    
    67,020,641
    
    
    
    64,807,563
    
    
    
    54,062,291
    
    
    
    54,019,830
 
 (1)
    
    Fourth quarter 2008 includes $86.4 million for total impairments and price related adjustments
and depreciation expense.(2)
    
    Due to changes in the number of weighted average common units outstanding that may occur each
quarter, the earnings per unit amounts for certain quarters may not be additive.




---



##### Table of Contents



Exhibits  Exhibit No.

Sequential Description**2
.1

Contribution Agreement, dated September 11, 2007, between
    Quicksilver Resources Inc. and BreitBurn Operating L.P. (filed
    as Exhibit 10.2 to the Companys Form 8-K filed November 7,
    2007 and included herein by reference.)**2
.2

Purchase and Sale Agreement, dated as of July 3, 2008, among
    Nortex Minerals, L.P., Petrus Investment, L.P., Petrus
    Development, L.P., and Perot Investment Partners, Ltd., as
    Sellers, and Quicksilver Resources Inc., as Purchaser (filed as
    Exhibit 10.1 to the Companys Form 8-K filed July 7, 2008
    and included herein by reference).**2
.3

Purchase and Sale Agreement, dated as of July 3, 2008, among
    Hillwood Oil & Gas, L.P., Burtex Minerals, L.P., Chief
    Resources, LP, Hillwood Alliance Operating Company, L.P., Chief
    Resources Alliance Pipeline LLC, Chief Oil & Gas LLC, Berry
    Barnett, L.P., Collins and Young, L.L.C. and Mark Rollins, as
    Sellers, and Quicksilver Resources Inc., as Purchaser (filed as
    Exhibit 10.2 to the Companys Form 8-K filed July 7, 2008
    and included herein by reference).3
.1

Amended and Restated Certificate of Incorporation of Quicksilver
    Resources Inc. filed with the Secretary of State of the State of
    Delaware on May 21, 2008 (filed as Exhibit 4.1 to the
    Companys Form S-3, File No. 333-151847, filed June 23,
    2008 and included herein by reference).3
.2

Amended and Restated Certificate of Designation of Series A
    Junior Participating Preferred Stock of Quicksilver Resources
    Inc. (filed as Exhibit 3.3 to the Companys Form 10-Q filed
    May 6, 2006 and included herein by reference).3
.3

Amended and Restated Bylaws of Quicksilver Resources Inc. (filed
    as Exhibit 3.1 to the Companys Form 8-K filed November 16,
    2007 and included herein by reference).4
.1

Indenture Agreement for 1.875% Convertible Subordinated
    Debentures Due 2024, dated as of November 1, 2004, between
    Quicksilver Resources Inc., as Issuer, and The Bank of New York,
    as Trustee (as successor in interest to JPMorgan Chase Bank,
    National Association) (filed as Exhibit 4.1 to the
    Companys Form 8-K filed November 1, 2004 and included
    herein by reference).4
.2

Indenture, dated as of December 22, 2005, between Quicksilver
    Resources Inc. and The Bank of New York, as Trustee (as
    successor in interest to JPMorgan Chase Bank, National
    Association) (filed as Exhibit 4.7 to the Companys Form
    S-3, File No. 333-130597, filed December 22, 2005 and included
    herein by reference).4
.3

First Supplemental Indenture, dated as of March 16, 2006, among
    Quicksilver Resources Inc., the subsidiary guarantors named
    therein and The Bank of New York, as Trustee (as successor in
    interest to JPMorgan Chase Bank, National Association) (filed as
    Exhibit 4.1 to the Companys Form 8-K filed March 21, 2006
    and included herein by reference).4
.4

Third Supplemental Indenture, dated as of September 26, 2006,
    among Quicksilver Resources Inc., the subsidiary guarantors
    named therein and The Bank of New York, as Trustee (as successor
    in interest to JPMorgan Chase Bank, National Association) (filed
    as Exhibit 4.1 to the Companys Form 10-Q filed November 7,
    2006 and included herein by reference).4
.5

Fifth Supplemental Indenture, dated as of June 27, 2008, among
    Quicksilver Resources Inc., the subsidiary guarantors named
    therein and The Bank of New York Trust Company, N.A., as trustee
    (filed as Exhibit 4.1 to the Companys Form 8-K filed June 30, 2008 and included herein by reference).4
.6

Sixth Supplemental Indenture, dated as of July 10, 2008, among
    Quicksilver Resources Inc., the subsidiary guarantors named
    therein and The Bank of New York Mellon Trust Company, N.A., as
    trustee (filed as Exhibit 4.1 to the Companys Form 8-K
    filed July 10, 2008 and included herein by reference).




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##### Table of Contents



Exhibit No.

Sequential Description4
.7

Amended and Restated Rights Agreement, dated as of December 20,
    2005, between Quicksilver Resources Inc. and Mellon Investor
    Services LLC, as Rights Agent (filed as Exhibit 4.1 to the
    Companys Form 8-A/A (Amendment No. 1) filed December 21,
    2005 and included herein by reference).10
.1

Master Gas Purchase and Sale Agreement, dated March 1, 1999,
    between Quicksilver Resources Inc. and Reliant Energy Services,
    Inc. (filed as Exhibit 10.10 to the Companys Form S-1,
    File No. 333-89229, filed November 1, 2004 and included
    herein by reference).10
.2

Wells Agreement dated as of December 15, 1970, between Union Oil
    Company of California and Montana Power Company (filed as
    Exhibit 10.5 to the Companys Predecessor, MSR Exploration
    Ltd.s Form S-4/A, File No. 333-29769, filed August 21,
    1997 and included herein by reference).]+ 10
.3

Quicksilver Resources Inc. Amended and Restated 1999 Stock
    Option and Retention Stock Plan (filed as Exhibit 10.6 to the
    Companys Form 8-K filed November 24, 2008 and included
    herein by reference).+ 10
.4

Form of Incentive Stock Option Agreement pursuant to the
    Quicksilver Resources Inc. Amended and Restated 1999 Stock
    Option and Retention Stock Plan (filed as Exhibit 10.2 to the
    Companys Form 8-K filed January 28, 2005 and included
    herein by reference).+ 10
.5

Form of Non-Qualified Stock Option Agreement pursuant to the
    Quicksilver Resources Inc. Amended and Restated 1999 Stock
    Option and Retention Stock Plan (filed as Exhibit 10.3 to the
    Companys Form 8-K filed January 28, 2005 and included
    herein by reference).+ 10
.6

Form of Retention Share Agreement pursuant to the Quicksilver
    Resources Inc. Amended and Restated 1999 Stock Option and
    Retention Stock Plan (filed as Exhibit 10.3 to the
    Companys Form 8-K filed April 19, 2005 and included herein
    by reference).+ 10
.7

Form of Restricted Stock Unit Agreement pursuant to the
    Quicksilver Resources Inc. Amended and Restated 1999 Stock
    Option and Retention Stock Plan (filed as Exhibit 10.4 to the
    Companys Form 8-K filed April 19, 2005 and included herein
    by reference).+ 10
.8

Quicksilver Resources Inc. Amended and Restated 2004
    Non-Employee Director Equity Plan (filed as Exhibit 10.4 to the
    Companys Form 8-K filed May 25, 2007 and included herein
    by reference).+ 10
.9

Form of Non-Qualified Stock Option Agreement pursuant to the
    Quicksilver Resources Inc. Amended and Restated 2004
    Non-Employee Director Equity Plan (filed as Exhibit 10.4 to the
    Companys Form 8-K filed January 28, 2005 and included
    herein by reference).+ 10
.10

Form of Restricted Share Agreement pursuant to the Quicksilver
    Resources Inc. Amended and Restated 2004 Non-Employee Director
    Equity Plan (filed as Exhibit 10.2 to the Companys Form
    8-K filed May 18, 2005 and included herein by reference).+ 10
.11

Quicksilver Resources Inc. Second Amended and Restated 2006
    Equity Plan (filed as Exhibit 10.1 to the Companys Form
    8-K filed November 24, 2008 and included herein by reference).+ 10
.12

Form of Restricted Share Agreement pursuant to the Quicksilver
    Resources Inc. Second Amended and Restated 2006 Equity Plan
    (filed as Exhibit 10.2 to the Companys Form 8-K filed May
    25, 2006 and included herein by reference).+ 10
.13

Form of Restricted Stock Unit Agreement pursuant to the
    Quicksilver Resources Inc. Second Amended and Restated 2006
    Equity Plan (filed as Exhibit 10.2 to the Companys Form
    8-K filed November 24, 2008 and included herein by reference).+ 10
.14

Form of Quicksilver Resources Canada Inc. Restricted Stock Unit
    Agreement (Cash Settlement) pursuant to the Quicksilver
    Resources Inc. Second Amended and Restated 2006 Equity Plan
    (filed as Exhibit 10.3 to the Companys Form 8-K filed
    November 24, 2008 and included herein by reference).+ 10
.15

Form of Quicksilver Resources Canada Inc. Restricted Stock Unit
    Agreement (Stock Settlement) pursuant to the Quicksilver
    Resources Inc. Second Amended and Restated 2006 Equity Plan
    (filed as Exhibit 10.4 to the Companys Form 8-K filed
    November 24, 2008 and included herein by reference).






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##### Table of Contents



Exhibit No.

Sequential Description+ 10
.16

Form of Incentive Stock Option Agreement pursuant to the
    Quicksilver Resources Inc. Second Amended and Restated 2006
    Equity Plan (filed as Exhibit 10.5 to the Companys Form
    8-K filed May 25, 2006 and included herein by reference).+ 10
.17

Form of Nonqualified Stock Option Agreement pursuant to the
    Quicksilver Resources Inc. Second Amended and Restated 2006
    Equity Plan (filed as Exhibit 10.6 to the Companys Form
    8-K filed May 25, 2006 and included herein by reference).+ 10
.18

Form of Non-Employee Director Nonqualified Stock Option
    Agreement pursuant to the Quicksilver Resources Inc. Second
    Amended and Restated 2006 Equity Plan (One-Year Vesting) (filed
    as Exhibit 10.8 to the Companys Form 8-K filed May 25,
    2006 and included herein by reference).+ 10
.19

Form of Non-Employee Director Nonqualified Stock Option
    Agreement pursuant to the Quicksilver Resources Inc. Second
    Amended and Restated 2006 Equity Plan (Three-Year Vesting)
    (filed as Exhibit 10.5 to the Companys Form 8-K filed
    November 24, 2008 and included herein by reference).+ 10
.20

Form of Non-Employee Director Restricted Share Agreement
    pursuant to the Quicksilver Resources Inc. Second Amended and
    Restated 2006 Equity Plan (One-Year Vesting) (filed as Exhibit
    10.7 to the Companys Form 8-K filed May 25, 2006 and
    included herein by reference).+ 10
.21

Form of Non-Employee Director Restricted Share Agreement
    pursuant to the Quicksilver Resources Inc. Second Amended and
    Restated 2006 Equity Plan (Three-Year Vesting) (filed as Exhibit
    10.2 to the Companys Form 8-K filed May 25, 2007 and
    included herein by reference).+ 10
.22

Description of Non-Employee Director Compensation for
    Quicksilver Resources Inc. (filed as Exhibit 10.11 to the
    Companys Form 8-K filed November 24, 2008 and included
    herein by reference).+ 10
.23

Quicksilver Resources Inc. 2007 Executive Bonus Plan (filed as
    Exhibit 10.1 to the Companys Form 8-K filed April 16, 2007
    and included herein by reference).+ 10
.24

Description of 2007 Cash Bonus (filed as Exhibit 10.3 to the
    Companys Form 10-Q filed May 9, 2007 and included herein
    by reference).+ 10
.25

Quicksilver Resources Inc. 2008 Executive Bonus Plan (filed as
    Exhibit 10.1 to the Companys Form 8-K filed December 14,
    2007 and included herein by reference).+ 10
.26

Quicksilver Resources Inc. 2009 Executive Bonus Plan (filed as
    Exhibit 10.10 to the Companys Form 8-K filed November 24,
    2008 and included herein by reference).+ 10
.27

Quicksilver Resources Inc. Amended and Restated Change in
    Control Retention Incentive Plan (filed as Exhibit 10.9 to the
    Companys Form 8-K filed November 24, 2008 and included
    herein by reference).+ 10
.28

Quicksilver Resources Inc. Second Amended and Restated Key
    Employee Change in Control Retention Incentive Plan (filed as
    Exhibit 10.8 to the Companys Form 8-K filed November 24,
    2008 and included herein by reference).+ 10
.29

Quicksilver Resources Inc. Amended and Restated Executive Change
    in Control Retention Incentive Plan (filed as Exhibit 10.7 to
    the Companys Form 8-K filed November 24, 2008 and included
    herein by reference).+ 10
.30

Form of Director and Officer Indemnification Agreement (filed as
    Exhibit 10.1 to the Companys Form 8-K filed August 26,
    2005 and included herein by reference).10
.31

Amended and Restated Credit Agreement, dated as of February 9,
    2007, among Quicksilver Resources Inc. and the lenders
    identified therein (filed as Exhibit 10.1 to the Companys
    Form 8-K
    filed February 12, 2007 and included herein by reference).10
.32

Amended and Restated Credit Agreement, dated as of February 9,
    2007, among Quicksilver Resources Canada Inc. and the lenders
    and/or agents identified therein (filed as Exhibit 10.2 to the
    Companys Form 8-K filed February 12, 2007 and included
    herein by reference).






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##### Table of Contents



Exhibit No.

Sequential Description10
.33

Fourth Amendment to Combined Credit Agreements, dated as of June
    20, 2008, among Quicksilver Resources Inc., Quicksilver
    Resources Canada Inc. and the agents and combined lenders
    identified therein (filed as Exhibit 10.1 to the Companys
    Form 8-K filed June 25, 2008 and included herein by reference).10
.34

Fifth Amendment to Combined Credit Agreements, dated as of
    August 4, 2008, among Quicksilver Resources Inc., Quicksilver
    Resources Canada Inc. and the agents and combined lenders
    identified therein (filed as Exhibit 10.1 to the Companys
    Form 8-K filed August 5, 2008 and included herein by reference).10
.35

Credit Agreement, dated as of August 8, 2008, among Quicksilver
    Resources Inc., the lenders party thereto and Credit Suisse,
    Cayman Islands Branch, as administrative agent (filed as
    Exhibit 10.1 to the Companys Form 8-K filed August 8,
    2008 and included herein by reference).10
.36

Registration Rights Agreement, dated as of November 1, 2007,
    between Quicksilver Resources Inc. and BreitBurn Energy L.P.
    (filed as Exhibit 10.1 to the Companys Form 8-K filed
    November 7, 2007 and included herein by reference).+10
.37

2007 Equity Plan (filed as Exhibit 99.1 to Quicksilver Gas
    Services LPs Form S-8,
    File No. 333-145326,
    filed August 10, 2007 and included herein by reference).+10
.38

Form of Phantom Unit Award Agreement for Non-Directors (Cash)
    (filed as Exhibit 10.10 to Quicksilver Gas Services LPs
    Form S-1/A, File No. 333-140599, filed July 17, 2007 and
    included herein by reference).+10
.39

Form of Phantom Unit Award Agreement for Non-Directors (Units)
    (filed as Exhibit 10.11 to Quicksilver Gas Services LPs
    Form S-1/A, File No. 333-140599, filed July 25, 2007 and
    included herein by reference).+10
.40

Quicksilver Gas Services LP Annual Bonus Plan (filed as Exhibit
    10.1 to Quicksilver Gas Services LPs Form 8-K, File No.
    001-33631, filed December 13, 2007 and included herein by
    reference).+10
.41

Form of Indemnification Agreement by and between Quicksilver Gas
    Services GP LLC and its officers and directors (filed as Exhibit
    10.7 to Quicksilver Gas Services LPs Form S-1/A,
    File No. 333-140599, filed July 17, 2007 and included
    herein by reference).*** 21
.1

List of subsidiaries of Quicksilver Resources Inc.* 23
.1

Consent of Deloitte & Touche LLP.* 23
.2

Consent of Schlumberger Data and Consulting Services.* 23
.3

Consent of LaRoche Petroleum Consultants, Ltd.* 23
.4

Consent of Schlumberger Data and Consulting Services.* 23
.5

Consent of Netherland, Sewell & Associates, Inc.* 23
.6

Consent of PricewaterhouseCoopers LLP* 23
.7

Consent of Deloitte & Touche LLP.* 23
.8

Consent of Deloitte & Touche LLP.* 23
.9

Consent of Deloitte & Touche LLP.*** 24
.1

Power of Attorney.* 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.**
    
    Excludes schedules and exhibits we agree to furnish
    supplementally to the SEC upon request.***
    
    Filed with the Companys original Annual Report on Form 10-K filed on March 3, 2009.+
    
    Identifies management contracts and compensatory plans or
    arrangements.






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##### Table of Contents



SIGNATURES      By: /s/  Philip
CookDated:     June 16, 2009

Philip Cook
   Senior Vice President  Chief
Financial Officer




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##### Table of Contents



Exhibit Index
  Exhibit No.

Sequential Description**2
.1

Contribution Agreement, dated September 11, 2007, between
    Quicksilver Resources Inc. and BreitBurn Operating L.P. (filed
    as Exhibit 10.2 to the Companys Form 8-K filed November 7,
    2007 and included herein by reference.)**2
.2

Purchase and Sale Agreement, dated as of July 3, 2008, among
    Nortex Minerals, L.P., Petrus Investment, L.P., Petrus
    Development, L.P., and Perot Investment Partners, Ltd., as
    Sellers, and Quicksilver Resources Inc., as Purchaser (filed as
    Exhibit 10.1 to the Companys Form 8-K filed July 7, 2008
    and included herein by reference).**2
.3

Purchase and Sale Agreement, dated as of July 3, 2008, among
    Hillwood Oil & Gas, L.P., Burtex Minerals, L.P., Chief
    Resources, LP, Hillwood Alliance Operating Company, L.P., Chief
    Resources Alliance Pipeline LLC, Chief Oil & Gas LLC, Berry
    Barnett, L.P., Collins and Young, L.L.C. and Mark Rollins, as
    Sellers, and Quicksilver Resources Inc., as Purchaser (filed as
    Exhibit 10.2 to the Companys Form 8-K filed July 7, 2008
    and included herein by reference).3
.1

Amended and Restated Certificate of Incorporation of Quicksilver
    Resources Inc. filed with the Secretary of State of the State of
    Delaware on May 21, 2008 (filed as Exhibit 4.1 to the
    Companys Form S-3, File No. 333-151847, filed June 23,
    2008 and included herein by reference).3
.2

Amended and Restated Certificate of Designation of Series A
    Junior Participating Preferred Stock of Quicksilver Resources
    Inc. (filed as Exhibit 3.3 to the Companys Form 10-Q filed
    May 6, 2006 and included herein by reference).3
.3

Amended and Restated Bylaws of Quicksilver Resources Inc. (filed
    as Exhibit 3.1 to the Companys Form 8-K filed November 16,
    2007 and included herein by reference).4
.1

Indenture Agreement for 1.875% Convertible Subordinated
    Debentures Due 2024, dated as of November 1, 2004, between
    Quicksilver Resources Inc., as Issuer, and The Bank of New York,
    as Trustee (as successor in interest to JPMorgan Chase Bank,
    National Association) (filed as Exhibit 4.1 to the
    Companys Form 8-K filed November 1, 2004 and included
    herein by reference).4
.2

Indenture, dated as of December 22, 2005, between Quicksilver
    Resources Inc. and The Bank of New York, as Trustee (as
    successor in interest to JPMorgan Chase Bank, National
    Association) (filed as Exhibit 4.7 to the Companys Form
    S-3, File No. 333-130597, filed December 22, 2005 and included
    herein by reference).4
.3

First Supplemental Indenture, dated as of March 16, 2006, among
    Quicksilver Resources Inc., the subsidiary guarantors named
    therein and The Bank of New York, as Trustee (as successor in
    interest to JPMorgan Chase Bank, National Association) (filed as
    Exhibit 4.1 to the Companys Form 8-K filed March 21, 2006
    and included herein by reference).4
.4

Third Supplemental Indenture, dated as of September 26, 2006,
    among Quicksilver Resources Inc., the subsidiary guarantors
    named therein and The Bank of New York, as Trustee (as successor
    in interest to JPMorgan Chase Bank, National Association) (filed
    as Exhibit 4.1 to the Companys Form 10-Q filed November 7,
    2006 and included herein by reference).4
.5

Fifth Supplemental Indenture, dated as of June 27, 2008, among
    Quicksilver Resources Inc., the subsidiary guarantors named
    therein and The Bank of New York Trust Company, N.A., as trustee
    (filed as Exhibit 4.1 to the Companys Form 8-K filed June
    530, 2008 and included herein by reference).4
.6

Sixth Supplemental Indenture, dated as of July 10, 2008, among
    Quicksilver Resources Inc., the subsidiary guarantors named
    therein and The Bank of New York Mellon Trust Company, N.A., as
    trustee (filed as Exhibit 4.1 to the Companys Form 8-K
    filed July 10, 2008 and included herein by reference).4
.7

Amended and Restated Rights Agreement, dated as of December 20,
    2005, between Quicksilver Resources Inc. and Mellon Investor
    Services LLC, as Rights Agent (filed as Exhibit 4.1 to the
    Companys Form 8-A/A (Amendment No. 1) filed December 21,
    2005 and included herein by reference).




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##### Table of Contents



Exhibit No.

Sequential Description10
.1

Master Gas Purchase and Sale Agreement, dated March 1, 1999,
    between Quicksilver Resources Inc. and Reliant Energy Services,
    Inc. (filed as Exhibit 10.10 to the Companys Form S-1,
    File No. 333-89229, filed November 1, 2004 and included
    herein by reference).10
.2

Wells Agreement dated as of December 15, 1970, between Union Oil
    Company of California and Montana Power Company (filed as
    Exhibit 10.5 to the Companys Predecessor, MSR Exploration
    Ltd.s Form S-4/A, File No. 333-29769, filed August 21,
    1997 and included herein by reference).]+ 10
.3

Quicksilver Resources Inc. Amended and Restated 1999 Stock
    Option and Retention Stock Plan (filed as Exhibit 10.6 to the
    Companys Form 8-K filed November 24, 2008 and included
    herein by reference).+ 10
.4

Form of Incentive Stock Option Agreement pursuant to the
    Quicksilver Resources Inc. Amended and Restated 1999 Stock
    Option and Retention Stock Plan (filed as Exhibit 10.2 to the
    Companys Form 8-K filed January 28, 2005 and included
    herein by reference).+ 10
.5

Form of Non-Qualified Stock Option Agreement pursuant to the
    Quicksilver Resources Inc. Amended and Restated 1999 Stock
    Option and Retention Stock Plan (filed as Exhibit 10.3 to the
    Companys Form 8-K filed January 28, 2005 and included
    herein by reference).+ 10
.6

Form of Retention Share Agreement pursuant to the Quicksilver
    Resources Inc. Amended and Restated 1999 Stock Option and
    Retention Stock Plan (filed as Exhibit 10.3 to the
    Companys Form 8-K filed April 19, 2005 and included herein
    by reference).+ 10
.7

Form of Restricted Stock Unit Agreement pursuant to the
    Quicksilver Resources Inc. Amended and Restated 1999 Stock
    Option and Retention Stock Plan (filed as Exhibit 10.4 to the
    Companys Form 8-K filed April 19, 2005 and included herein
    by reference).+ 10
.8

Quicksilver Resources Inc. Amended and Restated 2004
    Non-Employee Director Equity Plan (filed as Exhibit 10.4 to the
    Companys Form 8-K filed May 25, 2007 and included herein
    by reference).+ 10
.9

Form of Non-Qualified Stock Option Agreement pursuant to the
    Quicksilver Resources Inc. Amended and Restated 2004
    Non-Employee Director Equity Plan (filed as Exhibit 10.4 to the
    Companys Form 8-K filed January 28, 2005 and included
    herein by reference).+ 10
.10

Form of Restricted Share Agreement pursuant to the Quicksilver
    Resources Inc. Amended and Restated 2004 Non-Employee Director
    Equity Plan (filed as Exhibit 10.2 to the Companys Form
    8-K filed May 18, 2005 and included herein by reference).+ 10
.11

Quicksilver Resources Inc. Second Amended and Restated 2006
    Equity Plan (filed as Exhibit 10.1 to the Companys Form
    8-K filed November 24, 2008 and included herein by reference).+ 10
.12

Form of Restricted Share Agreement pursuant to the Quicksilver
    Resources Inc. Second Amended and Restated 2006 Equity Plan
    (filed as Exhibit 10.2 to the Companys Form 8-K filed May
    25, 2006 and included herein by reference).+ 10
.13

Form of Restricted Stock Unit Agreement pursuant to the
    Quicksilver Resources Inc. Second Amended and Restated 2006
    Equity Plan (filed as Exhibit 10.2 to the Companys Form
    8-K filed November 24, 2008 and included herein by reference).+ 10
.14

Form of Quicksilver Resources Canada Inc. Restricted Stock Unit
    Agreement (Cash Settlement) pursuant to the Quicksilver
    Resources Inc. Second Amended and Restated 2006 Equity Plan
    (filed as Exhibit 10.3 to the Companys Form 8-K filed
    November 24, 2008 and included herein by reference).+ 10
.15

Form of Quicksilver Resources Canada Inc. Restricted Stock Unit
    Agreement (Stock Settlement) pursuant to the Quicksilver
    Resources Inc. Second Amended and Restated 2006 Equity Plan
    (filed as Exhibit 10.4 to the Companys Form 8-K filed
    November 24, 2008 and included herein by reference).+ 10
.16

Form of Incentive Stock Option Agreement pursuant to the
    Quicksilver Resources Inc. Second Amended and Restated 2006
    Equity Plan (filed as Exhibit 10.5 to the Companys Form
    8-K filed May 25, 2006 and included herein by reference).




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##### Table of Contents



Exhibit No.

Sequential Description+ 10
.17

Form of Nonqualified Stock Option Agreement pursuant to the
    Quicksilver Resources Inc. Second Amended and Restated 2006
    Equity Plan (filed as Exhibit 10.6 to the Companys Form
    8-K filed May 25, 2006 and included herein by reference).+ 10
.18

Form of Non-Employee Director Nonqualified Stock Option
    Agreement pursuant to the Quicksilver Resources Inc. Second
    Amended and Restated 2006 Equity Plan (One-Year Vesting) (filed
    as Exhibit 10.8 to the Companys Form 8-K filed May 25,
    2006 and included herein by reference).+ 10
.19

Form of Non-Employee Director Nonqualified Stock Option
    Agreement pursuant to the Quicksilver Resources Inc. Second
    Amended and Restated 2006 Equity Plan (Three-Year Vesting)
    (filed as Exhibit 10.5 to the Companys Form 8-K filed
    November 24, 2008 and included herein by reference).+ 10
.20

Form of Non-Employee Director Restricted Share Agreement
    pursuant to the Quicksilver Resources Inc. Second Amended and
    Restated 2006 Equity Plan (One-Year Vesting) (filed as Exhibit
    10.7 to the Companys Form 8-K filed May 25, 2006 and
    included herein by reference).+ 10
.21

Form of Non-Employee Director Restricted Share Agreement
    pursuant to the Quicksilver Resources Inc. Second Amended and
    Restated 2006 Equity Plan (Three-Year Vesting) (filed as Exhibit
    10.2 to the Companys Form 8-K filed May 25, 2007 and
    included herein by reference).+ 10
.22

Description of Non-Employee Director Compensation for
    Quicksilver Resources Inc. (filed as Exhibit 10.11 to the
    Companys Form 8-K filed November 24, 2008 and included
    herein by reference).+ 10
.23

Quicksilver Resources Inc. 2007 Executive Bonus Plan (filed as
    Exhibit 10.1 to the Companys Form 8-K filed April 16, 2007
    and included herein by reference).+ 10
.24

Description of 2007 Cash Bonus (filed as Exhibit 10.3 to the
    Companys Form 10-Q filed May 9, 2007 and included herein
    by reference).+ 10
.25

Quicksilver Resources Inc. 2008 Executive Bonus Plan (filed as
    Exhibit 10.1 to the Companys Form 8-K filed December 14,
    2007 and included herein by reference).+ 10
.26

Quicksilver Resources Inc. 2009 Executive Bonus Plan (filed as
    Exhibit 10.10 to the Companys Form 8-K filed November 24,
    2008 and included herein by reference).+ 10
.27

Quicksilver Resources Inc. Amended and Restated Change in
    Control Retention Incentive Plan (filed as Exhibit 10.9 to the
    Companys Form 8-K filed November 24, 2008 and included
    herein by reference).+ 10
.28

Quicksilver Resources Inc. Second Amended and Restated Key
    Employee Change in Control Retention Incentive Plan (filed as
    Exhibit 10.8 to the Companys Form 8-K filed November 24,
    2008 and included herein by reference).+ 10
.29

Quicksilver Resources Inc. Amended and Restated Executive Change
    in Control Retention Incentive Plan (filed as Exhibit 10.7 to
    the Companys Form 8-K filed November 24, 2008 and included
    herein by reference).+ 10
.30

Form of Director and Officer Indemnification Agreement (filed as
    Exhibit 10.1 to the Companys Form 8-K filed August 26,
    2005 and included herein by reference).10
.31

Amended and Restated Credit Agreement, dated as of February 9,
    2007, among Quicksilver Resources Inc. and the lenders
    identified therein (filed as Exhibit 10.1 to the Companys
    Form 8-K
    filed February 12, 2007 and included herein by reference).10
.32

Amended and Restated Credit Agreement, dated as of February 9,
    2007, among Quicksilver Resources Canada Inc. and the lenders
    and/or agents identified therein (filed as Exhibit 10.2 to the
    Companys Form 8-K filed February 12, 2007 and included
    herein by reference).10
.33

Fourth Amendment to Combined Credit Agreements, dated as of June
    20, 2008, among Quicksilver Resources Inc., Quicksilver
    Resources Canada Inc. and the agents and combined lenders
    identified therein (filed as Exhibit 10.1 to the Companys
    Form 8-K filed June 25, 2008 and included herein by reference).




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##### Table of Contents



Exhibit No.

Sequential Description10
.34

Fifth Amendment to Combined Credit Agreements, dated as of
    August 4, 2008, among Quicksilver Resources Inc., Quicksilver
    Resources Canada Inc. and the agents and combined lenders
    identified therein (filed as Exhibit 10.1 to the Companys
    Form 8-K filed August 5, 2008 and included herein by reference).10
.35

Credit Agreement, dated as of August 8, 2008, among Quicksilver
    Resources Inc., the lenders party thereto and Credit Suisse,
    Cayman Islands Branch, as administrative agent (filed as
    Exhibit 10.1 to the Companys Form 8-K filed August 8,
    2008 and included herein by reference).10
.36

Registration Rights Agreement, dated as of November 1, 2007,
    between Quicksilver Resources Inc. and BreitBurn Energy L.P.
    (filed as Exhibit 10.1 to the Companys Form 8-K filed
    November 7, 2007 and included herein by reference).+10
.37

2007 Equity Plan (filed as Exhibit 99.1 to Quicksilver Gas
    Services LPs Form S-8,
    File No. 333-145326,
    filed August 10, 2007 and included herein by reference).+10
.38

Form of Phantom Unit Award Agreement for Non-Directors (Cash)
    (filed as Exhibit 10.10 to Quicksilver Gas Services LPs
    Form S-1/A, File No. 333-140599, filed July 17, 2007 and
    included herein by reference).+10
.39

Form of Phantom Unit Award Agreement for Non-Directors (Units)
    (filed as Exhibit 10.11 to Quicksilver Gas Services LPs
    Form S-1/A, File No. 333-140599, filed July 25, 2007 and
    included herein by reference).+10
.40

Quicksilver Gas Services LP Annual Bonus Plan (filed as Exhibit
    10.1 to Quicksilver Gas Services LPs Form 8-K, File No.
    001-33631, filed December 13, 2007 and included herein by
    reference).+10
.41

Form of Indemnification Agreement by and between Quicksilver Gas
    Services GP LLC and its officers and directors (filed as Exhibit
    10.7 to Quicksilver Gas Services LPs Form S-1/A,
    File No. 333-140599, filed July 17, 2007 and included
    herein by reference).*** 21
.1

List of subsidiaries of Quicksilver Resources Inc.* 23
.1

Consent of Deloitte & Touche LLP.* 23
.2

Consent of Schlumberger Data and Consulting Services.* 23
.3

Consent of LaRoche Petroleum Consultants, Ltd.* 23
.4

Consent of Schlumberger Data and Consulting Services.* 23
.5

Consent of Netherland, Sewell & Associates, Inc.* 23
.6

Consent of PricewaterhouseCoopers LLP.* 23
.7

Consent of Deloitte & Touche LLP.* 23
.8

Consent of Deloitte & Touche LLP.* 23
.9

Consent of Deloitte & Touche LLP.*** 24
.1

Power of Attorney.* 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.**
    
    Excludes schedules and exhibits we agree to furnish
    supplementally to the SEC upon request.***
    
    Filed with the Companys original Annual Report on Form 10-K filed on March 3, 2009.+
    
    Identifies management contracts and compensatory plans or
    arrangements.