##### Table of Contents





UNITED STATES
    SECURITIES AND EXCHANGE COMMISSION
    WASHINGTON, D.C. 20549
 FORM 10-K
  x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   
  001-14837
  QUICKSILVER RESOURCES
    INC.
   Delaware(State or other jurisdiction of
    incorporation or organization)

75-2756163(I.R.S. Employer
    Identification No.)777 West Rosedale St., Fort Worth, Texas(Address of principal executive offices)

76104(Zip Code)   817-665-5000
     Title of each class

Name of each exchange on which
    registeredCommon Stock, $0.01 par value per share
    Preferred Share Purchase Rights,
    $0.01 par value per share


New York Stock Exchange
    New York Stock Exchange     Indicate by
    check mark if the registrant is a well-known seasoned issuer, as
    defined in Rule 405 of the Securities Act.
    Yes [
    X
    ]     No [  ]  Indicate by
    check mark if the registrant is not required to file reports
    pursuant to Section 13 or Section 15(d) of the
    Exchange Act.
    Yes [  ]     No [ X
    ]    Regulation S-K Form 10-K Form 10-K.
  Rule 12b-2
  Large
    accelerated filer [ X ]
    Accelerated
    filer [  ]
    Non-accelerated
    filer [  ]
    Smaller
    reporting company [  ]   Indicate by
    check mark whether the registrant is a shell company (as defined
    in
    Rule 12b-2
    of the Exchange Act).
    Yes [  ]     No [ X
    ]      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, 2009 Annual Meeting of Stockholders


Part III




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##### 





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


Business


5ITEM 1A.


Risk Factors


19ITEM 1B.


Unresolved Staff Comments


26ITEM 2.


Properties


26ITEM 3.


Legal Proceedings


26ITEM 4.


Submission of Matters to a Vote of Security
    Holders


26PART IIITEM 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


26ITEM 6.


Selected Financial Data


29ITEM 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


30ITEM 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


48ITEM 8.


Financial Statements and Supplementary Data


49ITEM 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


95ITEM 9A.


Controls and Procedures


95ITEM 9B.


Other Information


97PART IIIITEM 10.


Directors, Executive Officers and Corporate
    Governance


97ITEM 11.


Executive Compensation


97ITEM 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


97ITEM 13.


Certain Relationships and Related Transactions
    and Director Independence


97ITEM 14.


Principal Accountant Fees and Services


97PART IVITEM 15.


Exhibits and Financial Statement Schedules


98Signatures


102Exhibit-21.1Exhibit-23.1Exhibit-23.2Exhibit-23.3EX-99.1Exhibit-31.1Exhibit-31.2Exhibit-32.1     2




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DEFINITIONS
    AECO
  Bbl Bbls
  Bbld
  Bcf
  Bcfd
  Bcfe
  Btu
  Canada
  CBM
  DD&A
  Domestic
  LIBOR
  MBbl MBbls
  MBbld
  MMBbls
  MMBtu
  MMBtud
  Mcf
  Mcfe
  MMcf
  MMcfd
  MMcfe
  MMcfed
  NGL NGLs
  NYMEX
  Oil
  Tcf
  Tcfe
  COMMONLY
    USED TERMS
    Alliance Acquisition
  BBEP
  BreitBurn Transaction
  FASB
 3




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##### Table of Contents



GAAP
  IPO
  KGS
  Mercury
  Michigan Sales Contract
  Northeast Operations
  PCAOB
  SEC
  SFAS
  Forward-Looking
    Information
    
    changes in general economic conditions;
    fluctuations in natural gas, NGL and crude oil prices;
    failure or delays in achieving expected production from
    exploration and development projects;
    uncertainties inherent in estimates of natural gas, NGL and
    crude oil reserves and predicting natural gas, NGL and crude oil
    reservoir performance;
    effects of hedging natural gas, NGL and crude oil prices;
    fluctuations in the value of certain of our assets and
    liabilities;
    competitive conditions in our industry;
    actions taken or non-performance by third parties, including
    suppliers, contractors, operators, processors, customers and
    counterparties;
    changes in the availability and cost of capital;
    delays in obtaining oilfield equipment and increases in drilling
    and other service costs;
    operating hazards, natural disasters, weather-related delays,
    casualty losses and other matters beyond our control;
    the effects of existing and future laws and governmental
    regulations;
    the effects of existing or future litigation; and
    certain factors discussed elsewhere in this annual report.  Forms 10-K, 10-Q 8-K.
   4




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##### Table of Contents



PART I  ITEM 1.
    Business  GENERAL
      FORMATION
    AND DEVELOPMENT OF BUSINESS
    STRATEGIC
    ACQUISITION
    BUSINESS
    STRATEGY
    Focus on core areas of repeatable, low-risk
    development:
  Pursue disciplined organic growth opportunities:
 5




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Enhance profitability through control and marketing of our
    equity natural gas and crude oil:
  Maintain flexible financial profile:
  BUSINESS
    STRENGTHS
  High-quality asset base with long reserve life:
  Multi-year inventory of development and exploitation drilling
    projects: 10-year
  Proven record of organic growth in reserves and
    production:
 6




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##### Table of Contents



Midstream strength:
  Experienced management and technical team:
  FINANCIAL
    INFORMATION ABOUT SEGMENT AND GEOGRAPHICAL AREAS
    PROPERTIES
    OIL AND
    NATURAL GAS OPERATIONS
    Texas
     7




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##### Table of Contents



high-Btu high-Btu
          Rocky
    Mountain Region
    Canada
        Other
    Properties
   8




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##### Table of Contents



2009
    Capital Program
   9




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##### Table of Contents



OIL AND
    NATURAL GAS RESERVES
          Total Proved Reserves


Proved Developed ReservesFor the Years Ended December 31,


For the Years Ended December 31,2008


2007


2006


2008


2007


2006Natural gas (MMcf)United States


1,306,497



662,409



933,342



756,191



379,917



626,582Canada


332,571



328,381



308,335



278,668



260,029



217,759Total


1,639,068



990,790



1,241,677



1,034,859



639,946



844,341NGL (MBbl)United States


91,927



90,055



47,985



56,181



50,738



18,771Canada


8



10



16



8



10



16Total


91,935



90,065



48,001



56,189



50,748



18,787Crude oil (MBbl)United States


2,914



3,074



6,315



2,509



2,763



5,236Canada


-



-



-



-



-



-Total


2,914



3,074



6,315



2,509



2,763



5,236Total (MMcfe)


2,208,162



1,549,624



1,567,573



1,387,047



961,012



988,477   10




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##### Table of Contents



Years Ended December 31,2008


2007


2006Representative prices:Natural gas  Henry Hub
    Spot(1)

$
5.71


$
6.80


$
5.64Natural gas 
    AECO(1)


5.44



6.35



5.39NGL  Mont Belvieu, Texas


21.65



57.35



40.10NGL  Kalkaska,
    Michigan(2)


N/A



N/A



37.73Crude oil  WTI
    Cushing(1)


44.60



95.98



60.85Standardized measure of discounted future net cash
    flows(3),

    after income tax (in millions)

$
1,794.3


$
2,169.2


$
1,485.8   (1)

    
    The natural gas and crude oil prices as of each respective year
    end were based, respectively, on NYMEX Henry Hub and AECO prices
    per MMBtu and NYMEX prices per Bbl, adjusted to reflect local
    differentials(2)

    
    All Michigan NGL reserves were sold in 2007 pursuant to the
    BreitBurn Transaction, which is more fully described in
    Note 5 to the consolidated financial statements(3)

    
    Determined based on year end unescalated prices and costs in
    accordance with the guidelines of the SEC, discounted at 10% per
    annum  VOLUMES,
    SALES PRICES AND OIL AND GAS PRODUCTION EXPENSE
   11




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##### Table of Contents



DRILLING
    ACTIVITY
    Years Ended December 31,2008


2007


2006Gross


Net


Gross


Net


Gross


NetDevelopment:United StatesProductive


292.0



255.7



258.0



226.2



41.0



32.8Non-productive


1.0



1.0



-



-



-



-CanadaProductive


372.0



155.9



351.0



179.1



162.0



86.6Non-productive


1.0



1.0



-



-



-



-Total


666.0



413.6



609.0



405.3



203.0



119.4Exploratory:United StatesProductive


5.0



4.1



32.0



19.2



160.0



126.4Non-productive


2.0



2.0



4.0



3.2



8.0



8.0CanadaProductive


-



-



5.0



5.0



238.0



128.6Non-productive


-



-



-



-



-



-Total


7.0



6.1



41.0



27.4



406.0



263.0Total:Productive


669.0



415.7



646.0



429.5



601.0



374.4Non-productive


4.0



4.0



4.0



3.2



8.0



8.0Total


673.0



419.7



650.0



432.7



609.0



382.4  12




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ACQUISITION,
    EXPLORATION AND DEVELOPMENT CAPITAL EXPENDITURES
    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

$
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

$
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

$
433,590


$
111,149


$
544,739   PRODUCTIVE
    OIL AND GAS WELLS
    As of December 31, 2008Natural Gas


Crude OilGross


Net


Gross


NetUnited States


664.0



587.5



222.0



218.4Canada


2,635.0



1,237.7



3.0



0.1Total


3,299.0



1,825.2



225.0



218.5  13




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##### Table of Contents



OIL AND
    GAS ACREAGE
    As of December 31, 2008Developed Acreage


Undeveloped AcreageGross


Net


Gross


NetTexas


76,333



66,887



683,637



599,727Other


91,759



82,235



256,433



205,474United States


168,092



149,122



940,070



805,201Canada


400,564



248,136



288,497



229,325Total


568,656



397,258



1,228,567



1,034,526     2009 Expirations


2010 Expirations


2011 ExpirationsNet





Net Acres with





Net Acres with





Net Acres withUndeveloped





Options





Options





OptionsAcres


Net Acres


to Extend


Net Acres


to Extend


Net Acres


to ExtendTexas


599,727



88,752



22,549



400,552



21,842



62,778



1,095Other U.S.


205,474



19,721



6,457



30,860



128



26,838



5,611Canada


229,325



24,470



570



23,230



-



63,529



-Totals


1,034,526



132,943



29,576



454,642



21,970



153,145



6,706     MARKETING
    COMPETITION
   14




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GOVERNMENTAL
    REGULATION
    ENVIRONMENTAL
    MATTERS
    
    require the acquisition of a permit before drilling commences;
    restrict the types, quantities and concentrations of various
    substances that can be released into the environment in
    connection with drilling, production, processing and pipeline
    gathering activities;
    limit or prohibit drilling activities on certain lands lying
    within wilderness, wetlands, frontier and other protected areas;
    require remedial action to prevent pollution from former
    operations such as plugging abandoned wells; and
    impose substantial liabilities for pollution resulting from
    operations.  clean-up
     15




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clean-up
              AVAILABILITY
    OF REPORTS AND CORPORATE GOVERNANCE DOCUMENTS
  Form 10-K, Form 10-Q, Form 8-K
 16




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EMPLOYEES
    EXECUTIVE
    OFFICERS OF THE REGISTRANT
    Name

Age

Position(s)Thomas F. Darden


55


Director, Chairman of the BoardGlenn Darden


53


Director, President and Chief Executive OfficerAnne Darden Self


51


Director, Vice President - Human ResourcesJeff Cook


52


Executive Vice President - OperationsPhilip W. Cook


47


Senior Vice President - Chief Financial OfficerJohn C. Cirone


59


Senior Vice President, General Counsel and SecretaryJohn C. Regan


39


Vice President, Controller and Chief Accounting OfficerRobert N. Wagner


45


Vice President - Reservoir Engineering     THOMAS F. DARDEN
  GLENN DARDEN
  ANNE DARDEN SELF
  JEFF COOK
  PHILIP W. COOK
 17




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JOHN C. CIRONE
  JOHN C. REGAN
  ROBERT N. WAGNER
 18




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ITEM 1A.
    Risk
    Factors    Natural
    gas and crude oil prices fluctuate widely, and low prices could
    have a material adverse impact on our business.
      
    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 or crude oil prices decrease, our exploration and
    development efforts are unsuccessful or our costs increase
    substantially, we may be required to recognize impairment
    expenses on our oil and gas properties.
    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.
   19




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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.
   20




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We may
    have difficulty financing our planned growth.
    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.
     21




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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.
   22




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##### Table of Contents



Hedging
    our production may result in losses or limit our ability to
    benefit from price increases.
    
    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.       23




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The
    risks associated with our debt could adversely affect our
    business, financial condition and results of operations, and
    such risk could increase if we incur more debt.
      
    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 default in the event of a failure to comply with
    covenants contained in our debt agreements, which, if not cured
    or waived, could adversely affect our financial condition or
    results of operations.    
    reducing or delaying capital expenditures;
    seeking additional debt financing or equity capital;
    selling assets; or
    restructuring or refinancing debt.    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; 24




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
    transfer or otherwise dispose of assets, including capital stock
    of subsidiaries; and
    redeem subordinated debt.      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.
     25




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##### Table of Contents



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.    ITEM 1B.
    Unresolved
    Staff Comments    ITEM 2.
    Properties    ITEM 3.
    Legal
    Proceedings    ITEM 4.
    Submission
    of Matters to a Vote of Security Holders   PART II.  ITEM 5.
    Market
    For Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchase of Equity Securities  Market
    Information
   26




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HIGH


LOW2008Fourth Quarter

$
20.74


$
3.74Third Quarter


40.70



17.13Second Quarter


44.98



34.96First Quarter


38.72



24.282007(1)Fourth Quarter

$
30.58


$
23.44Third Quarter


24.28



18.85Second Quarter


24.77



19.74First Quarter


20.42



16.48    (1)

    
    Per share amounts previously reported have been adjusted to
    reflect a
    two-for-one
    stock split effected in the form of a stock dividend in January
    2008      Performance
    Graph
    Comparison
    of Cumulative Five Year Total Return
  
 27




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Issuer
    Purchases of Equity Securities
    Total Number of


Maximum Number ofTotal Number of





Shares Purchased as


Shares that May YetShares


Average Price


Part of Publicly


Be Purchased UnderPeriod

Purchased


Paid per Share


Announced
    Plan(3)


the
    Plan(3)October
    2008(1)


1,885,600


$
10.55



-



-November 2008


-


$
-



-



-December
    2008(2)


573


$
4.44



-



-Total


1,886,173


$
10.55



-



-    (1)

    
    Represents shares of common stock purchased from Quicksilver
    Energy L.P., an entity owned by members of the Darden family(2)

    
    Represents shares of common stock surrendered by employees to
    satisfy the income tax withholding obligations arising upon the
    vesting of restricted stock issued under our stock plans(3)

    
    We do not have a publicly announced plan for repurchasing our
    common stock 28




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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 and minority interest


(578,489
)


736,941



131,960



127,974



45,446Net income (loss)


(373,994
)


479,378



93,719



87,434



31,272Diluted earnings (loss) per common
    share(1)

$
(2.31
)

$
2.86


$
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


4,500,571



2,775,846



1,882,912



1,243,094



888,334Long-term debt


2,605,025



813,817



919,517



506,039



399,134Long-term obligations excluding debt


47,715



34,473



25,058



20,891



17,967Stockholders equity


1,094,709



1,068,355



575,666



383,615



304,276    (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 and net income for 2007 include 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 4 and 5 to the consolidated financial statements
    in Item 8 of this annual report) 29




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##### Table of Contents



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
          
    reserve growth;
    production growth; and
    maximizing the Companys operating cash flows.   30




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##### Table of Contents



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)

$
(2.31
)

$
2.86


$
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
   31




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##### Table of Contents



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
)


0.67



0.15



(14.72
)


(1.19
)


(0.77
)


(2.06
)


(2.10
)






(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    32




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##### Table of Contents



high-BTU
      high-BTU
    Other
    Revenue
     33




---



##### 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







PerTexas






Mcfe







Mcfe







McfeCash 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        34




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##### Table of Contents



Production
    and Ad Valorem Taxes
  Years Ended December 31,2008


2007


2006(In thousands, except per unit amounts)Per







Per







PerProduction and ad valorem taxes






Mcfe







Mcfe







McfeU.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      35




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##### Table of Contents



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       Impairment
    of Oil and Gas Properties
   36




---



##### Table of Contents




    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







PerGeneral and administrative expense






Mcfe







Mcfe







McfeCash 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      37




---



##### Table of Contents



Other
    Components of Operating Income
    BreitBurn-Related
    Income and Expenses
    other-than-temporary
  Interest
    Expense
  Years Ended December 31,2008


2007


2006(in thousands)Interest costs

$
111,735


$
71,618


$
45,943Less: Interest capitalized


(9,225
)


(1,091
)


(1,882
)Interest expense

$
102,510


$
70,527


$
44,061      38




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##### Table of Contents



Income
    Taxes
  Years Ended December 31,2008


2007


2006(in thousands)Income tax expense (benefit)

$
(209,149)


$
256,508


$
38,150Effective tax rate


35.9%



34.9%



28.9%       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      39




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##### Table of Contents



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
)            40




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##### 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
)Minority interest contributions


-



109,809



7,291Minority 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
     41




---



##### 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


148,219



148,107



147,994KGS credit agreement


174,900



5,000



-Various loans


-



34



400Total debt


2,611,604



813,851



919,517Stockholders equity


1,094,709



1,068,355



575,666Total capitalization

$
3,706,313


$
1,882,206


$
1,495,183       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. 42




---



##### Table of Contents




    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 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 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, 43




---



##### Table of Contents



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.
    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


$
-


$
-


$
-  44




---



##### Table of Contents




    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.  CRITICAL
    ACCOUNTING ESTIMATES
      Full Cost
    Ceiling Calculations
  Policy
    Description
  country-by-country unit-of-production
   45




---



##### Table of Contents



Judgments
    and Assumptions
          Oil and
    Gas Reserves
  Policy
    Description
   46




---



##### Table of Contents



Judgments
    and Assumptions
    Derivative
    Instruments
  Policy
    Description
      Judgments
    and Assumptions
    Stock-based
    Compensation
  Policy
    Description
  Share-Based Payment
  Judgments
    and Assumptions
   47




---



##### Table of Contents



Income
    Taxes
  Policy
    Description
    Judgments
    and Assumptions
    OFF-BALANCE
    SHEET ARRANGEMENTS
  Regulation S-K.
  RECENTLY
    ISSUED ACCOUNTING STANDARDS
    ITEM 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk   48




---



##### 



ITEM 8.
    Financial
    Statements and Supplementary Data  QUICKSILVER
    RESOURCES INC.
    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
   
 PageReport of Independent Registered Public
    Accounting Firm


49Consolidated Statements of Income (Loss) and
    Comprehensive Income (Loss) for the Years Ended
    December 31, 2008, 2007 and 2006


50Consolidated Balance Sheets as of
    December 31, 2008 and 2007


51Consolidated Statements of Stockholders
    Equity for the Years ended December 31, 2008, 2007 and
    2006


52Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2008, 2007 and 2006


53Notes to Consolidated Financial Statements for
    the Years Ended December 31, 2008, 2007 and 2006


54   49




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM            Internal ControlIntegrated Framework
      50




---



##### 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


(102,510
)


(70,527
)


(44,061
)Income (loss) before income taxes and minority interest


(578,489
)


736,941



131,960Income tax (expense) benefit


209,149



(256,508
)


(38,150
)Minority interest expense, net of income tax


(4,654
)


(1,055
)


(91
)Net income (loss)

$
(373,994
)

$
479,378


$
93,719Other 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)

$
(228,956
)

$
459,345


$
166,200Earnings (loss) per common share - basic

($
2.31
)

$
3.08


$
0.61Earnings (loss) per common share - diluted

($
2.31
)

$
2.86


$
0.58Basic weighted average shares outstanding


161,622



155,475



153,413Diluted weighted average shares outstanding


161,622



168,029



166,266    51




---



##### 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


43,011



22,574$
4,500,571


$
2,775,846LIABILITIES 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


2,605,025



813,817Asset retirement obligations


34,753



23,864Derivative liabilities at fair value


-



16,327Other liabilities


12,962



10,609Deferred income taxes


225,440



374,645Commitments and contingencies (Note 17)Deferred gain on sale of partnership interests


79,316



79,316Minority interests in consolidated subsidiaries


29,867



30,338Stockholders 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


550,851



272,515Treasury stock of 4,572,795 and 2,616,726 shares,
    respectively


(35,441
)


(12,304
)Accumulated other comprehensive income


185,104



40,066Retained earnings


392,478



766,472Total stockholders equity


1,094,709



1,068,355$
4,500,571


$
2,775,846    52




---



##### 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


272,515



237,287



211,083Stock issuance  Alliance Acquisition


261,988



-



-Stock options exercised


1,242



21,365



19,667Stock-based compensation expense recognized


15,106



11,108



6,537Tax benefit related to stock options exercised


-



2,755



-Balance at end of year


550,851



272,515



237,287Treasury 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


766,472



287,439



193,720Adoption of FIN 48


-



(345
)


-Net income (loss)


(373,994
)


479,378



93,719Balance at end of year


392,478



766,472



287,439Total stockholders equity

$
1,094,709


$
1,068,355


$
575,666    53




---



##### 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)

$
(373,994
)

$
479,378


$
93,719Adjustments 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)


(164,134
)


209,943



37,877(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


2,527



2,189



226Amortization of deferred loan costs


4,100



2,050



2,070Minority interest expense


4,654



1,055



91Income 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
)Minority interest contributions


-



109,809



7,291Minority 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    54




---



##### 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.
    SIGNIFICANT
    ACCOUNTING POLICIES  Basis of
    Presentation
    Stock
    Split
    Use of
    Estimates
   55




---



##### Table of Contents



Cash and
    Cash Equivalents
    Accounts
    Receivable
  and/or 30-60 days.
  Hedging
    and Derivatives
        Parts and
    Supplies
  first-in,
  Investments
    in Equity Affiliates
   56




---



##### Table of Contents



Property,
    Plant, and Equipment
  country-by-country
      Revenue
    Recognition
    Environmental
    Compliance and Remediation
    Income
    Taxes
   57




---



##### Table of Contents



Stock-based
    Compensation
    Disclosure
    of Fair Value of Financial Instruments
  Fair Value Measurements
  Minority
    Interest in Consolidated Subsidiaries
    Foreign
    Currency Translation
    Earnings
    per Share
   58




---



##### Table of Contents



Years Ended December 31,2008


2007


2006(In thousands, except per share data)Net income (loss)

$
(373,994
)

$
479,378


$
93,719Impact of assumed conversions  interest on
    1.875% convertible debentures, net of income
    taxes(1)


-



1,901



1,901Income (loss) available to stockholders assuming conversion of
    convertible debentures

$
(373,994
)

$
481,279


$
95,620Weighted average common shares  basic


161,622



155,475



153,413Effect of dilutive securities:Employee stock options


-



1,326



2,220Employee stock awards


-



1,412



817Contingently convertible debentures


-



9,816



9,816Weighted average common
    shares  diluted(1)


161,622



168,029



166,266Earnings (loss) per common share  basic

$
(2.31
)

$
3.08


$
0.61Earnings (loss) per common share  diluted

$
(2.31
)

$
2.86


$
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, 157-2 (FSP 157-2) FAS 157-3
     59




---



##### Table of Contents



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 No. 39-1, Amendment of FASB Interpretation No. 39 Accounting for Derivative Instruments
    and Hedging Activities No. 39-1
  Adoption of SFAS No. 162 The
    Hierarchy of Generally Accepted Accounting Principles
    Pronouncements
    Not Yet Implemented
  Business
    Combinations Business Combinations
  Noncontrolling Interests in
    Consolidated Financial Statements  an amendment
    of ARB No. 51
  Disclosures about
    Derivative Instruments and Hedging Activities,
 60




---



##### Table of Contents



14-1, Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement 14-1), 14-1 14-1 14-1
  12-month first-day-of-the-month Form 10-K
  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  61




---



##### 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)

$
(377,460
)

$
432,302Earnings (loss) per common share - basic

($
2.19
)

$
2.61Earnings (loss) per common share - diluted

($
2.19
)

$
2.43   4.
    QUICKSILVER
    GAS SERVICES LP     62




---



##### Table of Contents



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
%       5.
    DIVESTITURE
    OF NORTHEAST OPERATIONS         63




---



##### Table of Contents



6.
    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

$
-


$
295,085


$
-


$
(7,339
)

$
287,746Derivative liabilities

$
-


$
17,267


$
-


$
(7,339
)

$
9,928   (1)
       64




---



##### Table of Contents



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)
    7.
    FINANCIAL
    INSTRUMENTS  Commodity
    Price Risk
   65




---



##### Table of Contents



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     66




---



##### 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
    Canadian-U.S. exchange
 67




---



##### 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.     68




---



##### Table of Contents



For the Eleven MonthsAs of




EndedSeptember 30, 2008




September 30,
    2008(In thousands)




(In thousands)Current assets

$
90,284


Revenues

$
420,321Property, plant and equipment


1,914,432


Operating expenses


251,618Other assets


66,583


Operating income


168,703Current liabilities


129,084


Interest and other


27,795Long-term debt


708,000


Income tax expense


593Other non-current liabilities


121,005


Minority interests


206Partners equity


1,127,679


Net income

$
140,109Net income available to common unitholders

$
141,660   Form 10-K. Form 10-K
  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   Ceiling
    Test Analysis
   69




---



##### Table of Contents



,
  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
   70




---



##### Table of Contents



12.
    OTHER
    ASSETS    As of December 31,2008


2007(In thousands)Deferred financing costs

$
46,375


$
21,159Less accumulated amortization


(7,144
)


(3,044
)Net deferred financing costs


39,231



18,115Deferred compensation costs


-



1,003Deposits


3,008



2,312Other


772



1,144$
43,011


$
22,574     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  71




---



##### Table of Contents



14.
    LONG-TERM
    DEBT    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 $1,781
    and $1,893


148,219



148,107KGS Credit Agreement


174,900



5,000Other loans


-



34Total debt


2,611,604



813,851Less current maturities


(6,579
)


(34
)Long-term debt

$
2,605,025


$
813,817     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
   72




---



##### Table of Contents



Senior
    Secured Second Lien Facility
    Senior
    Notes
    Senior
    Subordinated Notes
    Convertible
    Debentures
    KGS
    Credit Agreement
   73




---



##### Table of Contents



Summary
    of All Outstanding Debt
    
   (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 4.5% and the ABR has a
    floor of 3.5%(6)
    
    Priority of right to assets is not
    necessarily the same as priority to receive payments 74




---



##### 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     75




---



##### 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



1,506Minority interest


3,130



624Deferred tax benefit on cash flow hedge losses


-



617Net operating loss carry forwards


176,957



-Other


969



2,336Total deferred tax assets


297,427



10,056Deferred 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


11,481



8,693Other


-



581Total deferred tax liabilities


522,867



384,701Net deferred tax liabilities

$
225,440


$
374,645     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)


(188,632
)


196,276



27,501Deferred Canadian income tax expense


22,559



11,129



8,776Total deferred income tax expense (benefit)


(164,134
)


209,943



37,877Total income tax expense (benefit)

$
(209,149
)

$
256,508


$
38,150  76




---



##### Table of Contents



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
%


0.80
%FIN 48 recognition


(0.09
%)


1.17
%


0.00
%Foreign income taxes


1.38
%


(1.69
)%


(6.29
%)Other


0.13
%


0.04
%


(0.74
%)Effective income tax rate


35.87
%


34.86
%


28.93
%         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    77




---



##### Table of Contents



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.(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
  10-year
 78




---



##### Table of Contents



and/or
  18.
    MINORITY
    INTEREST  Impact of
    KGS IPO
    Impact of
    SFAS 160
   79




---



##### Table of Contents



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   Stockholder
    Rights Plan
   80




---



##### Table of Contents



Employee
    Stock Plans
  1999 and
    2004 Plans
        2006
    Equity Plan
   81




---



##### 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    82




---



##### Table of Contents



KGS
    Restricted Phantom Units
    Payable in cash


Payable in unitsShares


Date Fair


Shares


Date FairOutstanding 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.
    CONDENSED
    CONSOLIDATING FINANCIAL INFORMATION      Condensed
    Consolidating Balance Sheets
  December 31, 2008QuicksilverQuicksilver


Guarantor


Non-Guarantor





Resources Inc.Resources Inc.


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)ASSETSCurrent assets

$
423,487


$
163


$
426,297


$
(456,611
)

$
393,336Property and equipment


2,756,915



1,774



1,039,026



-



3,797,715Investment in subsidiaries (equity method)


596,149



170,150



-



(615,796
)


150,503Other assets


209,837



123,298



2,826



(176,944
)


159,017Total assets

$
3,986,388


$
295,385


$
1,468,149


$
(1,249,351
)

$
4,500,571 83




---



##### Table of Contents



December 31, 2008QuicksilverQuicksilver


Guarantor


Non-Guarantor





Resources Inc.Resources Inc.


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities

$
518,836


$
122,677


$
233,597


$
(456,611
)

$
418,499Long-term liabilities


2,372,843



-



682,281



(176,944
)


2,878,180Deferred gain


-



-



29,867



-



29,867Minority interest


-



-



79,316



-



79,316Stockholders equity


1,094,709



172,708



443,088



(615,796
)


1,094,709Total liabilities and stockholders equity

$
3,986,388


$
295,385


$
1,468,149


$
(1,249,351
)

$
4,500,571December 31, 2007QuicksilverQuicksilver


Guarantor


Non-Guarantor





Resources Inc.Resources Inc.


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)ASSETSCurrent assets

$
213,288


$
596


$
243,086


$
(266,569
)

$
190,401Property and equipment


1,294,573



1,858



845,915



-



2,142,346Investment in subsidiaries (equity method)


819,119



160,825



-



(559,773
)


420,171Other assets


72,426



82,251



2,171



(133,920
)


22,928Total assets

$
2,399,406


$
245,530


$
1,091,172


$
(960,262
)

$
2,775,846LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities

$
470,690


$
77,529


$
76,925


$
(266,569
)

$
358,575Long-term liabilities


860,361



-



512,821



(133,920
)


1,239,262Deferred gain


-



-



79,316



-



79,316Minority interest


-



-



30,338



-



30,338Stockholders equity


1,068,355



168,001



391,772



(559,773
)


1,068,355Total liabilities and stockholders equity

$
2,399,406


$
245,530


$
1,091,172


$
(960,262
)

$
2,775,846   Condensed
    Consolidating Statements of Income
  December 31, 2008QuicksilverQuicksilver


Guarantor


Non-Guarantor





Resources Inc.Resources Inc.


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)Revenues

$
600,906


$
514


$
261,616


$
(62,395
)

$
800,641Operating expenses


976,984



11,157



124,592



(62,395
)


1,050,338Equity in net earnings of subsidiaries


81,948



21,762



-



(103,710
)


-Operating income (loss)


(294,130
)


11,119



137,024



(103,710
)


(249,697
)Income from earnings of BBEP


93,298



-



-



-



93,298Impairment of investment in BBEP


(320,387
)


-



-



-



(320,387
)Interest expense and other


(83,069
)


6,023



(29,311
)


-



(106,357
)Income tax (expense) benefit


230,294



1,617



(22,762
)


-



209,149Net income

$
(373,994
)

$
18,759


$
84,951


$
(103,710
)

$
(373,994
)   84




---



##### Table of Contents



December 31, 2007QuicksilverQuicksilver


Guarantor


Non-Guarantor





Resources Inc.Resources Inc.


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)Revenues

$
367,894


$
-


$
223,281


$
(29,917
)

$
561,258Operating expenses


241,174



601



111,664



(29,917
)


323,522Income from equity affiliates


14



-



647



-



661Gain on sale of properties


628,709



-



-



-



628,709Loss on natural gas supply contracts


(63,525
)


-



-



-



(63,525
)Equity in net earnings of subsidiaries


76,060



7,407



-



(83,467
)


-Operating income


767,978



6,806



112,264



(83,467
)


803,581Interest expense and other


(50,077
)


2,418



(20,036
)


-



(67,695
)Income tax expense


(238,523
)


(636
)


(17,349
)


-



(256,508
)Net income

$
479,378


$
8,588


$
74,879


$
(83,467
)

$
479,378   December 31, 2006QuicksilverQuicksilver


Guarantor


Non-Guarantor





Resources Inc.Resources Inc.


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)Revenues

$
233,757


$
3,046


$
157,491


$
(3,932
)

$
390,362Operating expenses


148,613



2,635



69,376



(3,932
)


216,692Income from equity affiliates


17



-



509



-



526Equity in net earnings of subsidiaries


58,543



-



-



(58,543
)


-Operating income


143,704



411



88,624



(58,543
)


174,196Interest expense and other


(29,766
)


-



(12,561
)


-



(42,327
)Income tax expense


(20,219
)


(144
)


(17,787
)


-



(38,150
)Net income

$
93,719


$
267


$
58,276


$
(58,543
)

$
93,719   Condensed
    Consolidating Statements of Cash Flows
  December 31, 2008QuicksilverQuicksilver


Guarantor


Non-Guarantor





Resources Inc.Resources Inc.


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)Cash flow provided by operations

$
211,519


$
9,684


$
235,363


$
-


$
456,566Cash flow used for investing activities


(1,875,307
)


50,596



(370,311
)


(83,566
)


(2,278,588
)Cash flow provided by financing activities


1,638,387



(60,280
)


135,080



83,566



1,796,753Effect of exchange rates on cash


68



-



(177
)


-



(109
)Net increase (decrease) in cash & equivalents


(25,333
)


-



(45
)


-



(25,378
)Cash and equivalents at beginning of period


27,010



-



1,216



-



28,226Cash and equivalents at end of period

$
1,677


$
-


$
1,171


$
-


$
2,848 85




---



##### Table of Contents



December 31, 2007QuicksilverQuicksilver


Guarantor


Non-Guarantor





Resources Inc.Resources Inc.


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)Cash flow provided by operations

$
146,348


$
(354
)

$
173,110


$
-


$
319,104Cash flow used for investing activities


(18,471
)


47,047



(283,940
)


(14,388
)


(269,752
)Cash flow provided by financing activities


(101,541
)


(46,693
)


101,570



14,388



(32,276
)Effect of exchange rates on cash


591



-



5,278



-



5,869Net increase (decrease) in cash & equivalents


26,927



-



(3,982
)


-



22,945Cash and equivalents at beginning of period


83



-



5,198



-



5,281Cash and equivalents at end of period

$
27,010


$
-


$
1,216


$
-


$
28,226December 31, 2006QuicksilverQuicksilver


Guarantor


Non-Guarantor





Resources Inc.Resources Inc.


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)Cash flow provided by operations

$
207,097


$
(45,073
)

$
80,162


$
-


$
242,186Cash flow used for investing activities


(523,750
)


(81,534
)


(257,016
)


250,275



(612,025
)Cash flow provided by financing activities


307,746



126,607



177,233



(250,275
)


361,311Effect of exchange rates on cash


-



-



(509
)


-



(509
)Net increase (decrease) in cash & equivalents


(8,907
)


-



(130
)


-



(9,037
)Cash and equivalents at beginning of period


8,990



-



5,328



-



14,318Cash and equivalents at end of period

$
83


$
-


$
5,198


$
-


$
5,281   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



-  86




---



##### Table of Contents



23.
    RELATED
    PARTY TRANSACTIONS                  24.
    SEGMENT
    INFORMATION    87




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##### Table of Contents



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)       88




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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 reservesDecember 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 89




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##### Table of Contents



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. 90




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##### 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. 91




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##### Table of Contents



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   (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.     92




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##### Table of Contents



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      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 93




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##### Table of Contents



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
)   26.
    SELECTED
    QUARTERLY DATA (UNAUDITED)  Quarter EndedMarch 31


June 30


September 30


December 31(In thousands, except per share data)2008(1)Operating revenues

$
157,503


$
198,015


$
236,262


$
208,861Operating income


70,609



107,217



119,990



(547,513
)Net income (loss)


42,176



52,396



(2,675
)


(465,891
)Basic net earnings (loss) per share

$
0.27


$
0.33


$
(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



61,975



63,574



629,472Net income


22,851



31,731



28,719



396,077Basic net earnings per share

$
0.15


$
0.20


$
0.18


$
2.53Diluted 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. 94




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##### Table of Contents



ITEM 9.
    Changes
    in and Disagreements with Accountants or Accounting and
    Financial Disclosure    ITEM 9A.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
    Form 10-K,
    Managements
    Report on Internal Control Over Financial Reporting
  Rules 13a-15(f)
  Internal Control  Integrated
    Framework
    Changes
    in Internal Control Over Financial Reporting
   95




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal Control 
    Integrated Framework
        Internal Control  Integrated Framework
    /s/ DELOITTE & TOUCHE LLP
    96




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##### Table of Contents



ITEM 9B.
    Other
    Information   PART III  ITEM 10.
    Directors,
    Executive Officers and Corporate Governance        ITEM 11.
    Executive
    Compensation    ITEM 12.
    Security
    Ownership of Management and Certain Beneficial Owners and
    Management and Related Stockholder Matters    ITEM 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence      ITEM 14.
    Principal
    Accountant Fees and Services   97




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##### Table of Contents



PART IV  ITEM 15.
    Exhibits
    and Financial Statement Schedules    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). 98




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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). 99




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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). 100




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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.* 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.+
    
    Identifies management contracts and compensatory plans or
    arrangements. 101




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##### Table of Contents



SIGNATURES    
  By: /s/  Glenn
    DardenDated:     March 2, 2009

Glenn Darden
    President and Chief Executive Officer     Signature

Title

Date*Thomas
    F. Darden

Chairman of the Board; Director

March 2, 2009/s/  Glenn
    DardenGlenn
    Darden

President and Chief Executive Officer (Principal Executive
    Officer);  Director

March 2, 2009*Philip
    Cook

Senior Vice President  Chief Financial Officer (Principal
    Financial Officer)

March 2, 2009*John
    C. Regan

Vice President, Controller and
    Chief Accounting Officer 
    (Principal Accounting Officer)

March 2, 2009*Anne
    Darden Self

Director

March 2, 2009*W.
    Byron Dunn

Director

March 2, 2009*Steven
    M. Morris

Director

March 2, 2009*W.
    Yandell Rogers, III

Director

March 2, 2009*Mark
    J. Warner

Director

March 2, 2009   *
    The undersigned, by singing his name hereto, does sign and
    execute this Annual Report on Form 10-K pursuant to the Powers
    of Attorney executed by the above-named officers and directors
    and filed herewith.  By: /s/  Glenn
    DardenGlenn DardenAttorney-in-Fact  102




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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
    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).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). 103




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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). 104




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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). 105




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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.* 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.+
    
    Identifies management contracts and compensatory plans or
    arrangements 106