UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K/A
 (Amendment No. 2)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 001-14837
 QUICKSILVER RESOURCES INC.
  Delaware
    
    75-2756163(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)777 West Rosedale St., Fort Worth, Texas
    
    76104(Address of principal executive offices)
    
    (Zip Code)
 817-665-5000
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, $0.01 par value per share
    
    New York Stock ExchangePreferred Share Purchase Rights,$0.01 par value per share
    
    New York Stock Exchange
   þ o
  o þ
  þ o
 o
  Large
accelerated filer þ
    
    Accelerated filer
o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ
   Class
    
    Outstanding at February 13, 2009Common Stock, $0.01 par value per share
    
    168,752,835 shares
 DOCUMENTS INCORPORATED BY REFERENCE
 Document
    
    Parts Into Which IncorporatedProxy Statement for the Registrants May 20,
    
    Part III2009 Annual Meeting of Stockholders




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Explanatory Note
  
    
    Quicksilver Resources Canada Inc. (QRCI);
    
    Cowtown Pipeline Funding, Inc.; and
    
    Quicksilver Gas Services Holdings LLC.
   (i)




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##### 



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




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##### 



QUICKSILVER RESOURCES CANADA INC.
CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ending December 31, 2008, 2007 and 2006
 PageIndependent Auditors Report
    
    
    2Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    
    3Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2008,
2007 and 2006
    
    
    4Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2008, 2007 and 2006
    
    
    5Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006
    
    
    6Notes to Consolidated Financial Statements for the Years Ended December 31, 2008, 2007 and 2006
    
    
    7
  1




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/s/ DELOITTE & TOUCHE LLP
 
 2




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##### 



QUICKSILVER RESOURCES CANADA INC.
 
 CONSOLIDATED BALANCE SHEETS
 As of December 31, 2008 and 2007
 In thousands
 2008
    
    
    2007ASSETSCurrent assetsCash and cash equivalents
    
    $
    866
    
    
    $
    89Accounts receivable  net of allowance for doubtful accounts
    
    
    29,169
    
    
    
    38,648Advances to Quicksilver
    
    
    30
    
    
    
    118Derivative assets at fair value
    
    
    59,245
    
    
    
    419Other current assets
    
    
    13,063
    
    
    
    18,739Total current assets
    
    
    102,373
    
    
    
    58,013Investment
in equity affiliate at cost
    
    
    68,604
    
    
    
    Property, plant and equipmentOil and gas properties, full cost method (including
unevaluated costs of $9,832 and $21,170, respectively)
    
    
    437,563
    
    
    
    533,401Other property and equipment
    
    
    42,585
    
    
    
    38,566Property, plant and equipment  net
    
    
    480,148
    
    
    
    571,967Other assets
    
    
    910
    
    
    
    1,205$
    652,035
    
    
    $
    631,185LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    19,587
    
    
    $
    9,396Accrued liabilities
    
    
    7,612
    
    
    
    21,679Derivative liabilities at fair value
    
    
    1,865
    
    
    
    Deferred income taxes
    
    
    15,843
    
    
    
    62Total current liabilities
    
    
    44,907
    
    
    
    31,137Long-term debt
    
    
    252,868
    
    
    
    310,710Asset retirement obligations
    
    
    17,608
    
    
    
    14,278Deferred income taxes
    
    
    56,948
    
    
    
    46,572Stockholders equityCommon stock
    
    
    1,817
    
    
    
    1,817Paid in capital in excess of par value
    
    
    28,118
    
    
    
    28,118Accumulated other comprehensive income
    
    
    33,809
    
    
    
    43,870Retained earnings
    
    
    215,960
    
    
    
    154,683Total stockholders equity
    
    
    279,704
    
    
    
    228,488$
    652,035
    
    
    $
    631,185
  3




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##### 



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




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##### 



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




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##### 



QUICKSILVER
RESOURCES CANADA INC.
  CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2008, 2007 and 2006In thousands
 2008
    
    
    2007
    
    
    2006Operating activities:Net income
    
    $
    61,277
    
    
    $
    56,500
    
    
    $
    40,251Adjustments to reconcile net income
to net cash provided by operating activities:Depletion, depreciation and accretion
    
    
    44,821
    
    
    
    39,287
    
    
    
    29,012Deferred income tax expense
    
    
    21,938
    
    
    
    11,129
    
    
    
    8,777Non-cash loss from hedging and derivative activities
    
    
    (2,544
    )
    
    
    (193
    )
    
    
    Loss from
the sale of equipment
    
    
    
    
    
    
    
    
    
    
    936Non-cash interest expense
    
    
    295
    
    
    
    297
    
    
    
    316Changes in assets and liabilitiesAccounts receivable
    
    
    9,479
    
    
    
    9,763
    
    
    
    2,503Advances
to/from Quicksilver
    
    
    88
    
    
    
    (446
    )
    
    
    (8,326
    )Other assets
    
    
    2,324
    
    
    
    (3,318
    )
    
    
    487Accounts payable
    
    
    1,977
    
    
    
    (78
    )
    
    
    (2,928
    )Accrued liabilities
    
    
    (2,650
    )
    
    
    (447
    )
    
    
    3,567Net cash provided by operating activities
    
    
    137,005
    
    
    
    112,494
    
    
    
    74,595Investing activities:Purchases of property, plant and equipment
    
    
    (136,057
    )
    
    
    (147,195
    )
    
    
    (131,470
    )Proceeds from sales of property, plant and equipment
    
    
    618
    
    
    
    
    
    
    
    3,778Net cash used for investing activities
    
    
    (135,439
    )
    
    
    (147,195
    )
    
    
    (127,692
    )Financing activities:Issuance of debt
    
    
    208,161
    
    
    
    218,321
    
    
    
    56,182Repayment of debt
    
    
    (209,734
    )
    
    
    (190,691
    )
    
    
    (9,908
    )Debt issuance costs
    
    
    
    
    
    
    (664
    )
    
    
    Net cash (used for) provided by financing activities
    
    
    (1,573
    )
    
    
    26,966
    
    
    
    46,274Effect of exchange rate changes in cash
    
    
    784
    
    
    
    5,423
    
    
    
    (514
    )Net increase (decrease) in cash
    
    
    777
    
    
    
    (2,312
    )
    
    
    (7,337
    )Cash and cash equivalents at beginning of period
    
    
    89
    
    
    
    2,401
    
    
    
    9,738Cash and cash equivalents at end of period
    
    $
    866
    
    
    $
    89
    
    
    $
    2,401
  6




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##### 



QUICKSILVER RESOURCES CANADA INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2008, 2007 and 2006
 1. SIGNIFICANT ACCOUNTING POLICIES
 Nature of Business and Basis of Presentation
  Basis of Presentation
   Use of Estimates
  Cash and Cash Equivalents
  Accounts Receivable
  Hedging and Derivatives
  7




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Parts and Supplies
  Investments
in Equity Affiliates
  Property, Plant, and Equipment
    Revenue Recognition
  Environmental Compliance and Remediation
  Income Taxes
  Stock-based Compensation
  8




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Disclosure of Fair Value of Financial Instruments
 Fair Value Measurements
 Foreign Currency Translation
  Recently Issued Accounting Standards
 
    
    Pronouncements Implemented During 2008
 Adoption of SFAS No. 157  Fair Value Measurements,
    Adoption of SFAS No. 159 The Fair Value
Option for Financial Assets and Financial Liabilities  Including an amendment of FASB Statement
No. 115
 Adoption of
FSP FIN 39-1 Amendment of FASB Interpretation No. (FIN) 39 Accounting for Derivative Instruments and Hedging Activities
 9




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Adoption of SFAS No. 162 The Hierarchy of
Generally Accepted Accounting Principles
 
    
    Pronouncements Not Yet Implemented
 Business Combinations Business Combinations
 Disclosures about Derivative Instruments and Hedging Activities,
 10




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2. ACCOUNTS RECEIVABLE
  As of December 31,2008
    
    
    2007(In thousands)Accrued production receivables
    
    $
    13,435
    
    
    $
    19,728Joint interest receivables
    
    
    15,386
    
    
    
    16,150Other receivables
    
    
    348
    
    
    
    2,770$
    29,169
    
    
    $
    38,648
 3. DERIVATIVES AND FAIR VALUE MEASUREMENTS
  Fair Value Measurements as of December 31, 2008Balance SheetLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Other(1)
    
    
    Total(in thousands)Derivative assets
    
    $
    
    
    
    $
    61,746
    
    
    $
    
    
    
    $
    (2,501
    )
    
    $
    59,245Derivative liabilities
    
    $
    
    
    
    $
    4,366
    
    
    $
    
    
    
    $
    (2,501
    )
    
    $
    1,865
 
 (1)
    
    Represents amounts netted under master netting
arrangements   Asset Derivatives
    
    
    
    Liability DerivativesDecember 31,
    
    
    
    December 31,2008
    
    
    2007
    
    
    
    2008
    
    
    2007(in thousands)
    
    
    
    (in thousands)Derivatives designated as hedging
instruments under SFAS 133Commodity contracts reported in:Current derivative assets
    
    $
    61,746
    
    
    $
    1,643
    
    
    
    $
    2,501
    
    
    $
    1,224Current derivative liabilities
    
    
    
    
    
    
    
    
    
    
    
    1,865
    
    
    
    Total derivatives designated as
hedging instruments under SFAS 133
    
    $
    61,746
    
    
    $
    1,643
    
    
    
    $
    4,366
    
    
    $
    1,224
 11




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Weighted Avg Price PerProduct

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

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

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

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

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

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

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

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

    
    Basis
    
    Jan 2009-Dec 2009
    
    
    15,000
    
    
    
    (2
    )
    
    
    (770
    )Total
    
    $
    57,380
 
 (1)
    
    MMBtu means million British Thermal Units, a measure of heating value(2)
    
    Basis swaps for 60,000 MMBtu per day hedge the AECO (a natural
gas reference price for gas delivered onto NOVA Gas Transmission Ltd. System in Alberta, Canada) basis adjustment at a weighted
average deduction of $0.84 per MMBtu from the New York Mercantile Exchange price for 2009. 4. OTHER CURRENT ASSETS
  As of December 31,2008
    
    
    2007(In thousands)Spare parts and supplies
    
    $
    11,399
    
    
    $
    14,751Prepaid expenses
    
    
    1,664
    
    
    
    3,988$
    13,063
    
    
    $
    18,739
 5. INVESTMENT IN EQUITY AFFILIATE
  12




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##### 



6. PROPERTY, PLANT AND EQUIPMENT
  December 31,
    
    
    December 31,2008
    
    
    2007(In thousands)Oil and gas propertiesSubject to depletion
    
    $
    547,249
    
    
    $
    616,192Unevaluated costs
    
    
    9,832
    
    
    
    21,170Accumulated depletion
    
    
    (119,518
    )
    
    
    (103,961
    )Net oil and gas properties
    
    
    437,563
    
    
    
    533,401Other plant and equipmentPipelines and processing facilities
    
    
    51,005
    
    
    
    45,213General properties
    
    
    3,722
    
    
    
    4,240Accumulated depreciation
    
    
    (12,142
    )
    
    
    (10,887
    )Net other property and equipment
    
    
    42,585
    
    
    
    38,566Property, plant and equipment, net of
accumulated depletion and depreciation
    
    $
    480,148
    
    
    $
    571,967
 Unevaluated Natural Gas and Crude Oil Properties Excluded From Depletion
  December 31, 2008
    
    
    December 31, 2007Costs Incurred During
    
    
    Costs Incurred During2008
    
    
    Prior
    
    
    Total
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    Prior
    
    
    Total(In thousands)
    
    
    (In thousands)Acquisition costs
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    626
    
    
    $
    720
    
    
    $
    575
    
    
    $
    7,085
    
    
    $
    9,006Exploration costs
    
    
    9,218
    
    
    
    
    
    
    
    9,218
    
    
    
    12,164
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,164Capitalized interest
    
    
    614
    
    
    
    
    
    
    
    614
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    9,832
    
    
    $
    
    
    
    $
    9,832
    
    
    $
    12,790
    
    
    $
    720
    
    
    $
    575
    
    
    $
    7,085
    
    
    $
    21,170
  Capitalized Costs
  13




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##### 



7. ACCRUED LIABILITIES
  As of December 31,2008
    
    
    2007(In thousands)Accrued operating expenses
    
    $
    3,881
    
    
    $
    5,985Accrued capital expenditures
    
    
    
    
    
    
    11,417Revenue payable
    
    
    2,887
    
    
    
    3,545Prepayments from partners
    
    
    844
    
    
    
    732$
    7,612
    
    
    $
    21,679
 8. LONG-TERM DEBT
   14




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##### 



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




---



##### 



2008
    
    
    2007
    
    
    2006(In thousands)Current income tax expense
    
    $
    
    
    
    $
    
    
    
    $
    Deferred income tax expense
    
    
    21,938
    
    
    
    11,129
    
    
    
    8,777Total income tax expense
    
    $
    21,938
    
    
    $
    11,129
    
    
    $
    8,777
  2008
    
    
    2007
    
    
    2006Income taxes at statutory rate
    
    
    29.00
    %
    
    
    32.12
    %
    
    
    34.12
    %Enacted future federal rate reductions
    
    
    (3.96
    %)
    
    
    (7.08
    %)
    
    
    (5.12
    %)Enacted
future rate reductions effects for prior years
    
    
    
    
    
    
    (9.35
    %)
    
    
    (6.62
    %)Permanent differences
    
    
    1.44
    %
    
    
    0.77
    %
    
    
    (4.48
    %)Other
    
    
    (0.12
    %)
    
    
    
    
    
    
    Effective income tax rate
    
    
    26.36
    %
    
    
    16.46
    %
    
    
    17.90
    %
 11. RELATED PARTY TRANSACTIONS
  12. EMPLOYEE BENEFITS
  13. COMMITMENTS AND CONTINGENCIES
  in thousands2009
    
    $
    1,2462010
    
    
    3692011
    
    
    41Thereafter
    
    
    $
    1,656
    16




---



##### 



14. STOCKHOLDERS EQUITY
 Shares
    
    
    BookIssued
    
    
    Value(In thousands)Unlimited number of Class A common voting shares
    
    
    
    
    
    $
    Unlimited number of Class B common voting shares
    
    
    2,495,646
    
    
    
    1,785Unlimited number of Class C common non-voting, exchangeable shares
    
    
    394,482
    
    
    
    32Balance at December 31, 2008 and 2007
    
    
    2,890,128
    
    
    $
    1,817
   15. SUPPLEMENTAL CASH FLOW INFORMATION
  Years Ended December 31,2008
    
    2007
    
    2006(In thousands)Interest
    
    $
    14,374
    
    
    $
    15,547
    
    
    $
    13,004Income taxes
    
    
    
    
    
    
    
    
    
    
    
  Years Ended December 31,2008
    
    2007
    
    2006(In thousands)Working capital related to acquisition
of property, plant and equipment
    
    
    16,450
    
    
    $
    19,653
    
    
    $
    39,189Preferred interests in 1373159 Alberta Ltd.
    
    
    82,542
    
    
    
    
    
    
    
    
 16. SUBSEQUENT EVENT
  17




---



##### 



COWTOWN PIPELINE FUNDING, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageIndependent Auditors Report
    
    
    19Consolidated Statements of Income for the Years Ended December 31, 2008, 2007 and 2006
    
    
    20Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    
    21Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006
    
    
    22Consolidated Statements of Changes in Stockholders Equity for the Years ended December 31, 2008, 2007
and 2006
    
    
    23Notes to Consolidated Financial Statements for the Years Ended December 31, 2008, 2007
and 2006
    
    
    24
 18




---



##### 



/s/ DELOITTE & TOUCHE LLP
 
 19




---



##### 



COWTOWN PIPELINE FUNDING, INC.
  CONSOLIDATED STATEMENTS OF INCOMEIn thousands
 Year Ended December 31,2008
    
    
    2007
    
    
    2006RevenuesGathering and transportation revenue  Quicksilver
    
    $
    36,061
    
    
    $
    15,089
    
    
    $
    6,460Gathering and transportation revenue
    
    
    6,118
    
    
    
    1,773
    
    
    
    53Gas processing revenue  Quicksilver
    
    
    30,127
    
    
    
    16,564
    
    
    
    7,342Gas processing revenue
    
    
    5,366
    
    
    
    1,990
    
    
    
    63Other revenue  Quicksilver
    
    
    900
    
    
    
    525
    
    
    
    Total revenues
    
    
    78,572
    
    
    
    35,941
    
    
    
    13,918ExpensesOperations and maintenance  Quicksilver
    
    
    21,638
    
    
    
    12,037
    
    
    
    7,567General and administrative  Quicksilver
    
    
    6,407
    
    
    
    3,379
    
    
    
    1,278Depreciation and accretion
    
    
    15,134
    
    
    
    8,146
    
    
    
    2,999Total expenses
    
    
    43,179
    
    
    
    23,562
    
    
    
    11,844Impairment Expense
    
    
    9,200
    
    
    
    
    
    
    
    Operating income
    
    
    26,193
    
    
    
    12,379
    
    
    
    2,074Other income
    
    
    11
    
    
    
    236
    
    
    
    12Interest expense
    
    
    4,154
    
    
    
    2,022
    
    
    
    Income before income taxes
    
    
    22,050
    
    
    
    10,593
    
    
    
    2,086Income tax provision
    
    
    7,861
    
    
    
    3,591
    
    
    
    730Minority interest
    
    
    4,716
    
    
    
    1,092
    
    
    
    99Net income
    
    $
    9,473
    
    
    $
    5,910
    
    
    $
    1,257
  20




---



##### 



COWTOWN PIPELINE FUNDING, INC.
  CONSOLIDATED BALANCE SHEETS
In thousands
 December 31,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assetsCash and cash equivalents
    
    $
    303
    
    
    $
    1,125Accounts receivable
    
    
    2,245
    
    
    
    882Accounts receivable from Quicksilver
    
    
    
    
    
    
    3,494Prepaid expenses and other current assets
    
    
    594
    
    
    
    690Total current assets
    
    
    3,142
    
    
    
    6,191Properties, plant and equipment, net
    
    
    489,893
    
    
    
    284,885Deferred tax asset
    
    
    1,303
    
    
    
    6,625Other assets
    
    
    1,916
    
    
    
    965$
    496,254
    
    
    $
    298,666LIABILITIES AND EQUITYCurrent liabilitiesCurrent maturities of debt
    
    $
    1,375
    
    
    $
    1,100Accounts payable to Quicksilver
    
    
    12,173
    
    
    
    9,079Accrued additions to property, plant and equipment
    
    
    17,433
    
    
    
    23,624Accounts payable and other
    
    
    1,930
    
    
    
    2,425Current tax payable
    
    
    10,844
    
    
    
    10,844Total current liabilities
    
    
    43,755
    
    
    
    47,072Long-term debt
    
    
    174,900
    
    
    
    5,000Note payable to Quicksilver
    
    
    52,271
    
    
    
    50,569Asset retirement obligations
    
    
    5,234
    
    
    
    2,793Deferred gain on sale of subsidiary equity
    
    
    79,316
    
    
    
    79,316Minority interest
    
    
    31,287
    
    
    
    31,487Commitments and contingent liabilities (Note 7)Common stock
    
    
    1
    
    
    
    1Additional paid in capital
    
    
    91,834
    
    
    
    74,245Retained earnings
    
    
    17,656
    
    
    
    8,183Total equity
    
    
    109,491
    
    
    
    82,429$
    496,254
    
    
    $
    298,666
  21




---



##### 



COWTOWN PIPELINE FUNDING, INC.
  CONSOLIDATED STATEMENTS OF CASH FLOWSIn thousands
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Operating activities:Net income
    
    $
    9,473
    
    
    $
    5,910
    
    
    $
    1,257Items included in net income not affecting cash:Depreciation
    
    
    14,950
    
    
    
    8,063
    
    
    
    2,978Impairment of midstream assets
    
    
    9,200
    
    
    
    
    
    
    
    Accretion of asset retirement obligation
    
    
    184
    
    
    
    83
    
    
    
    21Deferred income taxes
    
    
    7,861
    
    
    
    3,591
    
    
    
    730Equity-based compensation
    
    
    1,017
    
    
    
    130
    
    
    
    Amortization of debt issuance costs
    
    
    243
    
    
    
    88
    
    
    
    Non-cash interest expense
    
    
    2,802
    
    
    
    1,669
    
    
    
    Minority interest expense
    
    
    4,716
    
    
    
    1,092
    
    
    
    99Changes in assets and liabilities:Accounts receivable
    
    
    (1,363
    )
    
    
    (815
    )
    
    
    (66
    )Prepaid expenses and other assets
    
    
    (612
    )
    
    
    (543
    )
    
    
    (146
    )Accounts receivable from Quicksilver
    
    
    4,707
    
    
    
    (6,046
    )
    
    
    Accounts payable and other
    
    
    (495
    )
    
    
    1,131
    
    
    
    1,138Net cash provided by operating activities
    
    
    52,683
    
    
    
    14,353
    
    
    
    6,011Investing activities:Capital expenditures
    
    
    (148,079
    )
    
    
    (74,064
    )
    
    
    (77,539
    )Other
    
    
    
    
    
    
    
    
    
    
    (821
    )Net cash used in investing activities
    
    
    (148,079
    )
    
    
    (74,064
    )
    
    
    (78,360
    )Financing activities:Proceeds from revolving credit facility borrowings
    
    
    169,900
    
    
    
    5,000
    
    
    
    Debt issuance costs
    
    
    (486
    )
    
    
    (1,041
    )
    
    
    Repayment of subordinated note payable to Quicksilver
    
    
    (829
    )
    
    
    
    
    
    
    Net proceeds from issuance of equity units
    
    
    
    
    
    
    112,298
    
    
    
    Issuance costs of equity units paid
    
    
    
    
    
    
    (2,933
    )
    
    
    Distribution to Quicksilver
    
    
    (65,367
    )
    
    
    (115,074
    )
    
    
    Contributions by Quicksilver
    
    
    
    
    
    
    68,416
    
    
    
    67,855Contributions by minority interests
    
    
    
    
    
    
    167
    
    
    
    7,291Distributions to minority interests
    
    
    (8,644
    )
    
    
    (8,794
    )
    
    
    Net cash provided by financing activities
    
    
    94,574
    
    
    
    58,039
    
    
    
    75,146Net increase (decrease) in cash
    
    
    (822
    )
    
    
    (1,672
    )
    
    
    2,797Cash at beginning of period
    
    
    1,125
    
    
    
    2,797
    
    
    
    Cash at end of period
    
    $
    303
    
    
    $
    1,125
    
    
    $
    2,797Cash paid for interest
    
    $
    2,341
    
    
    
    
    
    
    
    Cash paid for income taxes
    
    $
    332
    
    
    
    
    
    
    
    Non-cash transactions:Working capital related to capital expenditures
    
    $
    31,920
    
    
    $
    30,809
    
    
    $
    6,608Debt issuance costs
    
    
    
    
    
    
    (12
    )
    
    
    Cost in connection with the initial public offering
    
    
    
    
    
    
    (275
    )
    
    
    Issuance of subordinated note payable to Quicksilver
    
    
    
    
    
    
    50,000
    
    
    
    
  22




---



##### 



COWTOWN PIPELINE FUNDING, INC.
  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITYIn thousands
 AdditionalCommon
    
    
    Retained
    
    
    Paid InStock
    
    
    Earnings
    
    
    Capital
    
    
    Total EquityBalance at January 1, 2006
    
    $
    1
    
    
    $
    1,016
    
    
    $
    48,595
    
    
    $
    49,612Contributions
    
    
    
    
    
    
    
    
    
    
    71,685
    
    
    
    71,685Cash distributions to Quicksilver
    
    
    
    
    
    
    
    
    
    
    (4,508
    )
    
    
    (4,508
    )Net income
    
    
    
    
    
    
    1,257
    
    
    
    
    
    
    
    1,257Balance at December 31, 2006
    
    
    1
    
    
    
    2,273
    
    
    
    115,772
    
    
    
    118,046Contributions
    
    
    
    
    
    
    
    
    
    
    121,157
    
    
    
    121,157Reclass Quicksilvers equity balance to receivable from
Quicksilver
    
    
    
    
    
    
    
    
    
    
    1,971
    
    
    
    1,971Distribution of subordinated note payable to Quicksilver
    
    
    
    
    
    
    
    
    
    
    (50,000
    )
    
    
    (50,000
    )Cash distributions to Quicksilver
    
    
    
    
    
    
    
    
    
    
    (114,655
    )
    
    
    (114,655
    )Net income
    
    
    
    
    
    
    5,910
    
    
    
    
    
    
    
    5,910Balance at December 31, 2007
    
    
    1
    
    
    
    8,183
    
    
    
    74,245
    
    
    
    82,429Contributions
    
    
    
    
    
    
    
    
    
    
    82,956
    
    
    
    82,956Cash distributions to Quicksilver
    
    
    
    
    
    
    
    
    
    
    (65,367
    )
    
    
    (65,367
    )Net income
    
    
    
    
    
    
    9,473
    
    
    
    
    
    
    
    9,473Balance at December 31, 2008
    
    $
    1
    
    
    $
    17,656
    
    
    $
    91,834
    
    
    $
    109,491
  23




---



##### 



COWTOWN PIPELINE FUNDING, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
 Description of Business
    
    
    The Cowtown System, which includes:
 
    
    the Cowtown Pipeline, which consists of a pipeline gathering system and gas
compression facilities in the southern portion of the Fort Worth Basin and gathers
natural gas produced by KGS customers and delivers it for processing;
    
    the Cowtown Plant, in Hood County, Texas, which consists of two natural gas
processing units that extract NGLs from the natural gas stream and deliver customers
residue gas to unaffiliated pipelines for transport and sale downstream; and
    
    the Corvette Plant in Hood County, Texas, which was placed in service during
the first quarter 2009, and consists of a natural gas processing unit that extracts
NGLs from the natural gas stream and delivers KGS customers residue gas to
unaffiliated pipelines for transport and sale downstream.
 
    
    The Lake Arlington Dry System, located in Tarrant County, Texas, which consists of a
gathering system and a gas compression facility, which KGS purchased from Quicksilver in
the fourth quarter of 2008. This system is connected to affiliated pipelines for transport
and sale downstream.
    
    The West Texas System, which consists of a 12 mile gathering system and a dehydration
facility with capacity up to 6MMcfd.
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
 Use of Estimates 
 Cash and Cash Equivalents
 24




---



##### 



Accounts receivable
 Property, Plant and Equipment
  Asset Retirement Obligations 
 Impairment of Long-Lived Assets
 Other Assets
 Environmental Liabilities
 Revenue Recognition
 
    
    persuasive evidence of an exchange arrangement exists;
    
    services have been rendered;
    
    the price for its services is fixed or determinable; and
    
    collectability is reasonably assured.
 Income Taxes
 Segment Information
 Fair Value of Financial Instruments 
 Equity Based Compensation 
 25




---



##### 



Recently Issued Accounting Standards
 
    
    Pronouncements Implemented
 Fair Value Measurements
 The Fair Value Option for Financial Assets
and Financial Liabilities  Including an amendment of FASB Statement No. 115
 The Hierarchy of Generally Accepted Accounting
Principles
 
    
    Pronouncements Not Yet Implemented
 Business Combinations Business Combinations
 Noncontrolling Interests in Consolidated Financial Statements  an amendment of
ARB No. 51
 Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)
 26




---



##### 



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




---



##### 



Quarters Ended
    
    Maximum Debt to EBITDA
    
    Minimum EBITDA to InterestDecember 31, 2008 and thereafter
    
    4.50 to 1
    
    2.50 to 1
  Subordinated Note
   
    
    an event of default under the revolving credit agreement;
    
    the existence of a pending judicial proceeding with respect to any event of default under
the revolving credit agreement; or
    
    our ratio of total indebtedness (which includes the $50.0 million Subordinated Note) to
EBITDA as of the end of the fiscal quarter immediately preceding the date of such payment
was equal to or greater than 3.5 or would be greater than 3.5 after consideration of such
payment.
  28




---



##### 



6. ASSET RETIREMENT OBLIGATIONS
  Year Ended December 31,2008
    
    
    2007(in thousands)Beginning asset retirement obligations
    
    $
    2,793
    
    
    $
    503Additional liability incurred
    
    
    2,257
    
    
    
    2,207Accretion expense
    
    
    184
    
    
    
    83Ending asset retirement obligations
    
    $
    5,234
    
    
    $
    2,793
  7. COMMITMENTS AND CONTINGENT LIABILITIES
 Litigation
 Casualties or Other Risks
   Regulatory Compliance
 Environmental Compliance
 29




---



##### 



Commitments
  Payments Due by PeriodContractual Obligations
    
    Total
    
    
    2009
    
    
    2010-2012
    
    
    2013-2014
    
    
    Thereafter(in millions)Construction commitments
    
    $
    13.8
    
    
    $
    13.8
    
    
    $
    
    
    
    $
    
    
    
    $
    Total contractual obligations
    
    $
    13.8
    
    
    $
    13.8
    
    
    $
    
    
    
    $
    
    
    
    $
    
 8. INCOME TAXES
  As of December 31,2008
    
    
    2007(In thousands)Non-currentDeferred tax assetsDeferred tax benefit on minority interest
    
    $
    3,185
    
    
    $
    646Deferred tax benefit (liability) on partnership income
    
    
    (1,882
    )
    
    
    5,979Total deferred tax assets
    
    $
    1,303
    
    
    $
    6,625
 The components of income tax expense for 2008, 2007 and 2006 are as follows:
 2008
    
    
    2007
    
    
    2006(In thousands)Current state income tax expense
    
    $
    
    
    
    $
    371
    
    
    $
    Current U.S. federal income tax expense
    
    
    
    
    
    
    10,273
    
    
    
    Total current income tax expense
    
    
    
    
    
    
    10,644
    
    
    
    Deferred state income tax expense (benefit)
    
    
    221
    
    
    
    (265
    )
    
    
    Deferred U.S. federal income tax expense (benefit)
    
    
    7,640
    
    
    
    (6,788
    )
    
    
    730Total deferred income tax expense (benefit)
    
    
    7,861
    
    
    
    (7,053
    )
    
    
    730Total income tax expense
    
    $
    7,861
    
    
    $
    3,591
    
    
    $
    730
 The following table reconciles the statutory federal income tax rate to the effective tax rate for 2008, 2007 and 2006:
 2008
    
    
    2007
    
    
    2006U.S. federal statutory tax rate
    
    
    35.00
    %
    
    
    35.00
    %
    
    
    35.00
    %State income taxes net of federal deduction
    
    
    0.65
    %
    
    
    (1.10
    )%
    
    
    0.00
    %Effective income tax rate
    
    
    35.65
    %
    
    
    33.90
    %
    
    
    35.00
    %
 30




---



##### 



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




---



##### 



Gas Gathering and Processing Agreement
     Contribution, Conveyance and Assumption Agreement
 
    
    the transfer of all of the interests of certain entities to KGS and its subsidiaries;
    
    the issuance of the incentive distribution rights to the general partner and the
continuation of its 2% general partner interest in KGS;
    
    KGS issuance of 5,696,752 common units, 11,513,625 subordinated units and the right to
receive $162.1 million, to Holdings in exchange for the contributed interests; and
    
    KGS issuance of 816,873 common units and the right to receive $7.7 million to private
investors in exchange for their contributed interests.
 Centralized cash management
 Services to affiliates
 Allocation of costs
 32




---



##### 



QUICKSILVER GAS SERVICES HOLDINGS LLC
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageIndependent Auditors Report
    
    34Consolidated Statements of Income for the Years Ended December 31, 2008, 2007 and 2006
    
    35Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    36Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006
    
    37Consolidated Statements of Changes in Members Capital for the Years ended December 31, 2008,
2007 and 2006
    
    38Notes to Consolidated Financial Statements for the Years Ended December 31, 2008, 2007 and 2006
    
    39
 33




---



##### 



/s/ DELOITTE & TOUCHE LLP
 
 34




---



##### 



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




---



##### 



QUICKSILVER GAS SERVICES HOLDINGS LLC
  CONSOLIDATED BALANCE SHEETSIn thousands
 December 31,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assetsCash and cash equivalents
    
    $
    303
    
    
    $
    1,125Accounts receivable
    
    
    2,082
    
    
    
    882Accounts receivable from Quicksilver
    
    
    
    
    
    
    800Prepaid expenses and other current assets
    
    
    594
    
    
    
    690Total current assets
    
    
    2,979
    
    
    
    3,497Properties, plant and equipment, net
    
    
    488,120
    
    
    
    273,948Other assets
    
    
    1,916
    
    
    
    965$
    493,015
    
    
    $
    278,410LIABILITIES AND MEMBERS CAPITALCurrent liabilitiesCurrent maturities of debt
    
    $
    1,375
    
    
    $
    1,100Accounts payable to Quicksilver
    
    
    10,502
    
    
    
    Accrued additions to property, plant and equipment
    
    
    17,433
    
    
    
    23,624Accounts payable and other
    
    
    1,930
    
    
    
    2,700Total current liabilities
    
    
    31,240
    
    
    
    27,424Long-term debt
    
    
    174,900
    
    
    
    5,000Note payable to Quicksilver
    
    
    52,271
    
    
    
    50,569Repurchase obligations to Quicksilver
    
    
    123,298
    
    
    
    82,251Asset retirement obligations
    
    
    5,234
    
    
    
    2,793Deferred income tax liability
    
    
    369
    
    
    
    173Deferred gain on sale of subsidiary equity
    
    
    79,316
    
    
    
    79,316Commitments and contingent liabilities (Note 7)Minority interest
    
    
    29,867
    
    
    
    30,338Net members capital (deficit)
    
    
    (3,480
    )
    
    
    546$
    493,015
    
    
    $
    278,410
  36




---



##### 



QUICKSILVER GAS SERVICES HOLDINGS LLC
  CONSOLIDATED STATEMENTS OF CASH FLOWSIn thousands
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Operating activities:Net income
    
    $
    19,256
    
    
    $
    6,952
    
    
    $
    2,281Items included in net income not affecting cash:Depreciation
    
    
    14,382
    
    
    
    7,987
    
    
    
    2,942Accretion of asset retirement obligation
    
    
    184
    
    
    
    83
    
    
    
    21Deferred income taxes
    
    
    196
    
    
    
    38
    
    
    
    135Equity-based compensation
    
    
    1,017
    
    
    
    130
    
    
    
    Amortization of debt issuance costs
    
    
    243
    
    
    
    88
    
    
    
    Non-cash interest expense
    
    
    8,825
    
    
    
    4,294
    
    
    
    Minority interest expense
    
    
    7,160
    
    
    
    1,304
    
    
    
    140Changes in assets and liabilities:Accounts receivable
    
    
    (1,200
    )
    
    
    (815
    )
    
    
    (66
    )Prepaid expenses and other assets
    
    
    (612
    )
    
    
    (543
    )
    
    
    (146
    )Accounts receivable from Quicksilver
    
    
    4,002
    
    
    
    (5,975
    )
    
    
    Accounts payable and other
    
    
    (770
    )
    
    
    1,406
    
    
    
    1,138Net cash provided by operating activities
    
    
    52,683
    
    
    
    14,949
    
    
    
    6,445Investing activities:Capital expenditures
    
    
    (148,079
    )
    
    
    (73,797
    )
    
    
    (77,539
    )Other
    
    
    
    
    
    
    
    
    
    
    (821
    )Net cash used in investing activities
    
    
    (148,079
    )
    
    
    (73,797
    )
    
    
    (78,360
    )Financing activities:Proceeds from sale of assets to Quicksilver
    
    
    
    
    
    
    29,508
    
    
    
    Proceeds from revolving credit facility borrowings
    
    
    169,900
    
    
    
    5,000
    
    
    
    Debt issuance costs
    
    
    (486
    )
    
    
    (1,041
    )
    
    
    Repayment of repurchase obligation to Quicksilver
    
    
    (42,085
    )
    
    
    
    
    
    
    Repayment of subordinated note payable to Quicksilver
    
    
    (829
    )
    
    
    
    
    
    
    Net proceeds from sale of KGS units
    
    
    
    
    
    
    112,298
    
    
    
    Costs paid for sale of KGS units
    
    
    
    
    
    
    (2,933
    )
    
    
    Distributions to Quicksilver
    
    
    (23,282
    )
    
    
    (115,074
    )
    
    
    Contributions by Quicksilver
    
    
    
    
    
    
    38,045
    
    
    
    67,421Contributions by minority interests
    
    
    
    
    
    
    167
    
    
    
    7,291Distributions to minority interests
    
    
    (8,644
    )
    
    
    (8,794
    )
    
    
    Net cash provided by financing activities
    
    
    94,574
    
    
    
    57,176
    
    
    
    74,712Net increase (decrease) in cash
    
    
    (822
    )
    
    
    (1,672
    )
    
    
    2,797Cash at beginning of period
    
    
    1,125
    
    
    
    2,797
    
    
    
    Cash at end of period
    
    $
    303
    
    
    $
    1,125
    
    
    $
    2,797Cash paid for interest
    
    $
    2,341
    
    
    
    
    
    
    
    Cash paid for income taxes
    
    $
    332
    
    
    
    
    
    
    
    Non-cash transactions:Working capital related to capital expenditures
    
    $
    31,920
    
    
    $
    30,809
    
    
    $
    6,608Debt issuance costs
    
    
    
    
    
    
    (12
    )
    
    
    Cost in connection with the initial public offering
    
    
    
    
    
    
    (275
    )
    
    
    Issuance of subordinated note payable to Quicksilver
    
    
    
    
    
    
    50,000
    
    
    
    Acquisition of property, plant and equipment under
repurchase
obligation
    
    $
    (77,108
    )
    
    $
    (50,118
    )
    
    $
    
  37




---



##### 



QUICKSILVER GAS SERVICES HOLDINGS LLC
  CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS CAPITALIn thousands
 Net Members CapitalBalance at January 1, 2006
    
    $
    48,949Contributions
    
    
    71,930Cash distributions to Quicksilver
    
    
    (4,508
    )Net income
    
    
    2,281Balance at December 31, 2006
    
    
    118,652Contributions
    
    
    38,045Distribution of subordinated note payable to Quicksilver
    
    
    (50,000
    )Reclass Quicksilvers equity balance to receivable from
Quicksilver
    
    
    1,971Cash distributions to Quicksilver
    
    
    (115,074
    )Net income
    
    
    6,952Balance at December 31, 2007
    
    
    546Cash distributions to Quicksilver
    
    
    (23,282
    )Net income
    
    
    19,256Balance at December 31, 2008
    
    $
    (3,480
    )
  38




---



##### 



QUICKSILVER GAS SERVICES HOLDINGS LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
 Organization
  Description of Business
  
    
    The Cowtown System, which includes:
 
    
    the Cowtown Pipeline, which consists of a pipeline gathering system and gas
compression facilities in the southern portion of the Fort Worth Basin and gathers
natural gas produced by KGS customers and delivers it for processing;
    
    the Cowtown Plant, in Hood County, Texas, which consists of two natural gas
processing units that extract NGLs from the natural gas stream and deliver customers
residue gas to unaffiliated pipelines for transport and sale downstream; and
    
    the Corvette Plant in Hood County, Texas, which was placed in service during
the first quarter 2009, and consists of a natural gas processing unit that extracts
NGLs from the natural gas stream and delivers KGS customers residue gas to
unaffiliated pipelines for transport and sale downstream.
 
    
    The Lake Arlington Dry System, located in Tarrant County, Texas, which consists of a
gathering system and a gas compression facility, which KGS purchased from Quicksilver in
the fourth quarter of 2008. This system is connected to affiliated pipelines for transport
and sale downstream.
  2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
 Use of Estimates 
 Cash and Cash Equivalents
 Accounts receivable
 39




---



##### 



Property, Plant and Equipment
  Asset Retirement Obligations 
 Repurchase Obligations to Quicksilver 
 
    
    a portion of the gathering lines in the Cowtown Pipeline;
    
    the Lake Arlington Dry System; and
    
    the Hill County Dry System.
  Cowtown Pipeline repurchase
 Lake Arlington Dry System repurchase
 Hill County Dry System repurchase
  Estimate of
    
    
    ConstructionConstruction
    
    
    Costs Recognized
    
    
    RepurchaseCosts as of
    
    
    through
    
    
    obligation atJune 5, 2007
    
    
    December 31,
    
    
    December 31,
    
    
    DecemberSales Price
    
    
    2008(1)
    
    
    2008
    
    
    31, 2008
    
    
    KGS RepurchaseCowtown Pipeline
    
    $
    22.9
    
    
    $
    62.6
    
    
    $
    67.0
    
    
    $
    67.0
    
    
    Optional at CostLake Arlington Dry
System
    
    
    3.6
    
    
    
    
    (2)
    
    
    42.1
    
    
    
    
    
    
    Repurchased at FV in 2008Hill County Dry
System
    
    
    3.0
    
    
    
    78.0
    
    
    
    56.3
    
    
    
    56.3
    
    
    Obligatory at FV$
    29.5
    
    
    $
    140.6
    
    
    $
    165.4
    
    
    $
    123.3
 40




---



##### 



(1)
    
    Estimates may change based on changes in producers drilling progress,
material and labor costs, easement costs and other factors(2)
    
    Excludes any estimated costs after completion of purchase  Impairment of Long-Lived Assets
 Other Assets
 Environmental Liabilities
 Revenue Recognition
 
    
    persuasive evidence of an exchange arrangement exists;
    
    services have been rendered;
    
    the price for its services is fixed or determinable; and
    
    collectability is reasonably assured.
 Income Taxes
 Segment Information
 Fair Value of Financial Instruments 
 Equity Based Compensation 
 Recently Issued Accounting Standards
 
    
    Pronouncements Implemented
 41




---



##### 



Fair Value Measurements
 The Fair Value Option for Financial Assets
and Financial Liabilities  Including an amendment of FASB Statement No. 115
 The Hierarchy of Generally Accepted Accounting
Principles
 
    
    Pronouncements Not Yet Implemented
 Business Combinations Business Combinations
 Noncontrolling Interests in Consolidated Financial Statements  an amendment of
ARB No. 51
 Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)
 42




---



##### 



3. PROPERTY, PLANT AND EQUIPMENT
  December 31,Depreciable Life
    
    
    2008
    
    
    2007(in thousands)Gathering and transportation systems
    
    20 years
    
    $
    179,594
    
    
    $
    106,478Processing plants
    
    20-25 years
    
    
    157,353
    
    
    
    117,571Construction in progress  plant
    
    
    
    
    
    
    106,563
    
    
    
    12,636Construction in progress  pipeline
    
    
    
    
    
    
    27,994
    
    
    
    20,046Rights-of-way and easements
    
    20 years
    
    
    39,473
    
    
    
    26,905Land
    
    
    
    
    
    
    1,239
    
    
    
    952Buildings and other
    
    20-40 years
    
    
    1,836
    
    
    
    910514,052
    
    
    
    285,498Accumulated Depreciation
    
    
    
    
    
    
    (25,932
    )
    
    
    (11,550
    )Net property, plant and equipment
    
    
    
    
    
    $
    488,120
    
    
    $
    273,948
  4. ACCOUNTS PAYABLE AND OTHER
  December 31,2008
    
    
    2007(in thousands)Accrued operating expenses
    
    $
    957
    
    
    $
    882Accrued property taxes
    
    
    
    
    
    
    895State income taxes
    
    
    
    
    
    
    276Equity compensation payable
    
    
    116
    
    
    
    275Interest payable
    
    
    734
    
    
    
    147Other
    
    
    123
    
    
    
    225$
    1,930
    
    
    $
    2,700
 5. LONG-TERM DEBT
  Payments Due by PeriodLong-Term Debt
    
    Total
    
    
    2009
    
    
    2010-2012
    
    
    2013-2014
    
    
    Thereafter(in millions)Credit Agreement
    
    $
    174.9
    
    
    $
    
    
    
    $
    174.9
    
    
    $
    
    
    
    $
    Subordinated Note to Quicksilver
    
    
    53.6
    
    
    
    1.4
    
    
    
    3.3
    
    
    
    48.9
    
    
    
    Total long-term debt
    
    $
    228.5
    
    
    $
    1.4
    
    
    $
    178.2
    
    
    $
    48.9
    
    
    $
    
 Credit Agreement
  43




---



##### 



Quarters Ended
    
    Maximum Debt to EBITDA
    
    Minimum EBITDA to InterestDecember 31, 2008 and thereafter
    
    4.50 to 1
    
    2.50 to 1
  Subordinated Note
   
    
    an event of default under the revolving credit agreement;
    
    the existence of a pending judicial proceeding with respect to any event of default under
the revolving credit agreement; or
    
    our ratio of total indebtedness (which includes the $50.0 million Subordinated Note) to
EBITDA as of the end of the fiscal quarter immediately preceding the date of such payment
was equal to or greater than 3.5 or would be greater than 3.5 after consideration of such
payment.
  6. ASSET RETIREMENT OBLIGATIONS
  44




---



##### 



Year Ended December 31,2008
    
    
    2007(in thousands)Beginning asset retirement obligations
    
    $
    2,793
    
    
    $
    503Additional liability incurred
    
    
    2,257
    
    
    
    2,207Accretion expense
    
    
    184
    
    
    
    83Ending asset retirement obligations
    
    $
    5,234
    
    
    $
    2,793
  7. COMMITMENTS AND CONTINGENT LIABILITIES
 Litigation
 Casualties or Other Risks
   Regulatory Compliance
 Environmental Compliance
 Commitments
 45




---



##### 



Payments Due by PeriodContractual Obligations
    
    Total
    
    
    2009
    
    
    2010-2012
    
    
    2013-2014
    
    
    Thereafter(in millions)Construction commitments
    
    $
    13.8
    
    
    $
    13.8
    
    
    $
    
    
    
    $
    
    
    
    $
    Total contractual obligations
    
    $
    13.8
    
    
    $
    13.8
    
    
    $
    
    
    
    $
    
    
    
    $
    
 8. INCOME TAXES
    9. EQUITY PLAN
  Payable in cash
    
    Payable in unitsWeighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    AverageGrant Date
    
    
    
    
    
    Grant DateUnits
    
    Fair Value
    
    Units
    
    Fair ValueUnvested phantom units  January 1, 2008
    
    
    84,961
    
    
    $
    21.36
    
    
    
    9,833
    
    
    $
    21.36Vested
    
    
    (28,247
    )
    
    
    21.43
    
    
    
    (6,089
    )
    
    
    21.36Issued
    
    
    6,605
    
    
    
    24.12
    
    
    
    137,148
    
    
    
    25.25Cancelled
    
    
    (3,000
    )
    
    
    21.36
    
    
    
    (974
    )
    
    
    25.25Unvested phantom units  December 31, 2008
    
    
    60,319
    
    
    $
    21.63
    
    
    
    139,918
    
    
    $
    25.15
  10. MINORITY INTEREST AND DEFERRED GAIN ON SALE
 Minority Interest
 Deferred Gain on sale of subsidiary equity
 46




---



##### 



11. TRANSACTIONS WITH RELATED PARTIES
  Omnibus Agreement
 
    
    restrictions on Quicksilvers ability to engage in midstream business activities in
Quicksilver Counties;
    
    Quicksilvers construction of the Lake Arlington Dry System and the Hill County Dry
System and the obligations to repurchase those assets from Quicksilver at their fair market
value;
    
    Obligation to reimburse Quicksilver for all general and administrative expenses incurred
by them on behalf of KGS; and
    
    Quicksilvers obligation to provide cross-indemnification for certain liabilities.
 Secondment Agreement
 Gas Gathering and Processing Agreement
     47




---



##### 



Contribution, Conveyance and Assumption Agreement
 
    
    the transfer of all of the interests of certain entities to KGS and its subsidiaries;
    
    the issuance of the incentive distribution rights to the general partner and the
continuation of its 2% general partner interest in KGS;
    
    KGS issuance of 5,696,752 common units, 11,513,625 subordinated units and the right to
receive $162.1 million, to Holdings in exchange for the contributed interests; and
    
    KGS issuance of 816,873 common units and the right to receive $7.7 million to private
investors in exchange for their contributed interests.
 Centralized cash management
 Services to affiliates
 Allocation of costs
 48




---



##### 



Report of Independent Registered Public Accounting Firm
 
   
 49




---



##### 



BreitBurn Energy Partners L.P. and Subsidiaries
Consolidated Statement of Operations 
For the Year Ended
December 31, 2008
 Thousands of dollars, except per unit amountsRevenues and other income items:Oil, natural gas and natural gas liquid sales
    
    $
    467,381Gains on commodity derivative instruments,
net (note 14)
    
    
    332,102Other revenue, net (note 10)
    
    
    2,920Total revenues and other income items
    
    
    802,403Operating costs and expenses:Operating costs
    
    
    149,681Depletion, depreciation and amortization (note 5)
    
    
    179,933General and administrative expenses
    
    
    43,435Total operating costs and expenses
    
    
    373,049Operating income
    
    
    429,354Interest and other financing costs, net
    
    
    29,147Loss on interest rate swaps (note 14)
    
    
    20,035Other income, net
    
    
    (191
    )Income before taxes and minority interest
    
    
    380,363Income tax expense (note 6)
    
    
    1,939Minority
interest (note 19)
    
    
    188Net income
    
    
    378,236General Partners interest in net income (loss)
    
    
    (2,019
    )Limited Partners interest in net income
    
    $
    380,255Basic net income per unit (note 2)
    
    $
    6.42Diluted net income per unit (note 2)
    
    $
    6.28
 The accompanying notes are an integral part of these consolidated financial statements.
 50




---



##### 



BreitBurn Energy Partners L.P. and Subsidiaries
Consolidated Balance SheetAs of December 31, 2008
 Thousands of dollars, except unit amountsASSETSCurrent assets:Cash
    
    $
    2,546Accounts receivable, net (note 2)
    
    
    47,221Derivative instruments (note 14)
    
    
    76,224Related party receivables (note 7)
    
    
    5,084Inventory (note 8)
    
    
    1,250Prepaid expenses
    
    
    5,300Intangibles (note 9)
    
    
    2,771Other current assets
    
    
    170Total current assets
    
    
    140,566Equity investments (note 10)
    
    
    9,452Property, plant and equipmentOil and gas properties (note 4)
    
    
    2,057,531Non-oil and gas assets (note 4)
    
    
    7,8062,065,337Accumulated depletion and depreciation (note 5)
    
    
    (224,996
    )Net property, plant and equipment
    
    
    1,840,341Other long-term assetsIntangibles (note 9)
    
    
    495Derivative instruments (note 14)
    
    
    219,003Other long-term assets
    
    
    6,977Total assets
    
    $
    2,216,834LIABILITIES AND PARTNERS EQUITYCurrent liabilities:Accounts payable
    
    $
    28,302Book overdraft
    
    
    9,871Derivative instruments (note 14)
    
    
    10,192Revenue distributions payable
    
    
    16,162Derivative settlements payable
    
    
    50Salaries and wages payable
    
    
    6,249Accrued liabilities
    
    
    9,164Total current liabilities
    
    
    79,990Long-term debt (note 11)
    
    
    736,000Deferred income taxes (note 6)
    
    
    4,282Asset retirement obligation (note 12)
    
    
    30,086Derivative instruments (note 14)
    
    
    10,058Other long-term liabilities
    
    
    2,987Total liabilities
    
    
    863,403Minority interest (note 19)
    
    
    539Partners equity (note 13)Limited partners interest (a)
    
    
    1,352,892Total liabilities and partners equity
    
    $
    2,216,834(a) Limited partner units outstanding
    
    
    52,635,634
 The accompanying notes are an integral part of these consolidated financial statements.
 51




---



##### 



BreitBurn Energy Partners L.P. and Subsidiaries
Consolidated Statement of Cash Flows 
For the Year Ended December 31, 2008
 Thousands of dollarsCash flows from operating activitiesNet income
    
    $
    378,236Adjustments to reconcile net income to cash flow
from operating activities:Depletion, depreciation and amortization
    
    
    179,933Unit-based compensation expense
    
    
    6,907Unrealized gain on derivative instruments
    
    
    (370,734
    )Distributions greater than income from
equity affiliates
    
    
    1,198Deferred income tax
    
    
    1,207Minority interest
    
    
    188Amortization of intangibles
    
    
    3,131Other
    
    
    2,643Changes in net assets and liabilities:Accounts receivable and other assets
    
    
    258Inventory
    
    
    4,454Net change in related party receivables and payables
    
    
    32,688Accounts payable and other liabilities
    
    
    (13,413
    )Net cash provided by operating activities
    
    
    226,696Cash flows from investing activitiesCapital expenditures
    
    
    (131,082
    )Property acquisitions
    
    
    (9,957
    )Net cash used by investing activities
    
    
    (141,039
    )Cash flows from financing activitiesPurchase of common units
    
    
    (336,216
    )Distributions (1)
    
    
    (121,349
    )Proceeds from the issuance of long-term debt
    
    
    803,002Repayments of long-term debt
    
    
    (437,402
    )Book overdraft
    
    
    7,951Long-term debt issuance costs
    
    
    (5,026
    )Net cash used by financing activities
    
    
    (89,040
    )Decrease in cash
    
    
    (3,383
    )Cash beginning of period
    
    
    5,929Cash end of period
    
    $
    2,546
 
 (1)
    
    Includes distributions on equivalent units of $2.3 million The accompanying notes are an integral part of these consolidated financial statements.
 52




---



##### 



BreitBurn Energy Partners L.P. and Subsidiaries
Consolidated Statement of Partners Equity For the Year
Ended December 31, 2008
 Limited
    
    
    GeneralThousands of dollars
    
    Partners
    
    
    Partner
    
    
    TotalBalance,
January 1, 2008
    
    $
    1,423,418
    
    
    $
    1,390
    
    
    $
    1,424,808Redemption of common
units from predecessors (a)
    
    
    (336,216
    )
    
    
    
    
    
    
    (336,216
    )Distributions
    
    
    (118,580
    )
    
    
    (427
    )
    
    
    (119,007
    )Distributions paid on unissued units under incentive plans
    
    
    (2,335
    )
    
    
    (7
    )
    
    
    (2,342
    )Unit-based compensation
    
    
    7,383
    
    
    
    
    
    
    
    7,383Net income
(loss) (b)
    
    
    380,255
    
    
    
    (2,019
    )
    
    
    378,236Contribution of general partner interest to the partnership
    
    
    (1,063
    )
    
    
    1,063
    
    
    
    Other
    
    
    30
    
    
    
    
    
    
    
    30Balance, December 31, 2008
    
    $
    1,352,892
    
    
    $
    
    
    
    $
    1,352,892
 
 (a)
    
    Reflects the purchase of 14.405 million Common Units from subsidiaries of Provident.(b)
    
    General partner interests were purchased as of June 17, 2008. The accompanying notes are an integral part of these consolidated financial statements.
 53




---



##### 



Notes to Consolidated Financial Statements
 Note 1. Organization and Operations
 BreitBurn Energy Partners L.P.
         54




---



##### 



2. Summary of Significant Accounting Policies
 Principles of consolidation
  Use of estimates
  Accounting for Business Combinations
 Basis of Presentation
  Business segment information
 Disclosures about
Segments of an Enterprise and Related Information
 Revenue recognition
  55




---



##### 



Cash and cash equivalents
  Accounts Receivable
  Inventory
  Investments in Equity Affiliates
  Property, plant and equipment
 Oil and gas properties
   Non-oil and gas assets
  Oil and natural gas reserve quantities
  Asset retirement obligations
 Accounting for Asset Retirement Obligations
 56




---



##### 



Impairment of assets
   Debt issuance costs
  Equity-based compensation
  Share Based Payments
  Fair market value of financial instruments
  Accounting for business combinations
 Accounting for Business Combinations
 57




---



##### 



Concentration of credit risk
  Derivatives
 Accounting for Derivative Instruments and Hedging Activities
 Fair Value Measurements
 Income taxes
  Accounting for
Income Taxes.
 FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109
  58




---



##### 



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




---



##### 



SFAS
No. 160  Noncontrolling Interests in Consolidated Financial Statements  an amendment
of ARB No. 51 (SFAS No. 160).
 SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities  an amendment
of FASB Statement No. 133 (SFAS No. 161).
 FSP 142-3, Determination of the Useful Life of Intangible Assets (FSP 142-3). Goodwill and Other Intangible Assets. Business Combination
 SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS No. 162).
 FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions
Are Participating Securities (FSP EITF 03-6-1).
  60




---



##### 



4. Acquisitions
  Thousands of dollarsRelated party receivables  current, net
    
    $
    10,662Other current assets
    
    
    21Oil and gas properties
    
    
    8,451Non-oil and gas assets
    
    
    4,343Related party receivables  non-current
    
    
    6,704Current liabilities
    
    
    (13,510
    )Long-term liabilities
    
    
    (6,704
    )$
    9,967
  5. Impairments and Price Related Depletion and Depreciation Adjustments
      61




---



##### 



6. Income Taxes
   Year EndedDecember 31,Thousands of dollars
    
    2008Income  before taxes and minority interest
    
    $
    380,363Partnership income not subject to tax
    
    
    376,459Income subject to tax
    
    
    3,904Federal income tax rate
    
    
    34Income tax at statutory rate
    
    
    1,327Other
    
    
    Income tax expense
    
    $
    1,327
  December 31,Thousands of dollars
    
    2008Deferred tax assets:Net operating loss carryforwards
    
    $
    767Asset retirement obligation
    
    
    337Unrealized hedge loss
    
    
    Other
    
    
    103Deferred tax liabilities:Depreciation, depletion and intangible drilling costs
    
    
    (3,404
    )Other
    
    
    (2,085
    )Net deferred tax liability
    
    $
    (4,282
    )
   62




---



##### 



New Accounting Pronouncement
 FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109
  7. Related Party Transactions
       63




---



##### 



8. Inventory
    9. Intangibles
   10. Equity Investments
   64




---



##### 



11. Long-Term Debt
         65




---



##### 



Year EndedDecember 31,Thousands of dollars
    
    2008Credit facility
    
    $
    25,487Commitment fees
    
    
    1,047Amortization of discount and deferred issuance costs
    
    
    2,613Total
    
    $
    29,147Cash paid for interest on Credit facility
(including realized losses on interest rate swaps)
    
    $
    29,767
 12. Asset Retirement Obligation
  Year Ended December 31,Thousands of dollars
    
    2008Carrying amount, beginning of period
    
    $
    27,819Liabilities settled in the current period
    
    
    (1,054
    )Revisions (1)
    
    
    1,363Acquisitions
    
    
    Accretion expense
    
    
    1,958Carrying amount, end of period
    
    $
    30,086
 
 (1)
    
    Increased cost estimates and revisions to reserve life. 13. Partners Equity
    66




---



##### 



Cash Distributions
          2007 Private Placements
  67




---



##### 



14. Financial Instruments
 Fair Value of Financial Instruments
  Commodity Activities
   68




---



##### 



Year
    
    Year
    
    Year
    
    Year2009
    
    2010
    
    2011
    
    2012Gas Positions:Fixed Price Swaps:Hedged Volume (MMBtu/d)
    
    
    45,802
    
    
    
    43,869
    
    
    
    25,955
    
    
    
    19,129Average Price ($/MMBtu)
    
    $
    8.14
    
    
    $
    8.20
    
    
    $
    9.21
    
    
    $
    10.12Collars:Hedged Volume (MMBtu/d)
    
    
    1,740
    
    
    
    3,405
    
    
    
    16,016
    
    
    
    19,129Average Floor Price ($/MMBtu)
    
    $
    9.00
    
    
    $
    9.00
    
    
    $
    9.00
    
    
    $
    9.00Average Ceiling Price ($/MMBtu)
    
    $
    16.36
    
    
    $
    12.79
    
    
    $
    11.28
    
    
    $
    11.89Total:Hedged Volume (MMMBtu/d)
    
    
    47,542
    
    
    
    47,275
    
    
    
    41,971
    
    
    
    38,257Average Price ($/MMBtu)
    
    $
    8.17
    
    
    $
    8.26
    
    
    $
    9.13
    
    
    $
    9.56Oil Positions:Fixed Price Swaps:Hedged Volume (Bbls/d)
    
    
    1,838
    
    
    
    2,308
    
    
    
    2,116
    
    
    
    1,939Average Price ($/Bbl)
    
    $
    75.51
    
    
    $
    83.12
    
    
    $
    88.26
    
    
    $
    90.00Participating Swaps: (a)Hedged Volume (Bbls/d)
    
    
    2,847
    
    
    
    1,993
    
    
    
    1,439
    
    
    
    Average Price ($/Bbl)
    
    $
    62.86
    
    
    $
    64.40
    
    
    $
    61.29
    
    
    $
    Average Part. %
    
    
    60.9
    %
    
    
    55.5
    %
    
    
    53.2
    %
    
    
    Collars:Hedged Volume (Bbls/d)
    
    
    594
    
    
    
    1,279
    
    
    
    2,048
    
    
    
    3,077Average Floor Price ($/Bbl)
    
    $
    92.31
    
    
    $
    102.84
    
    
    $
    103.43
    
    
    $
    110.00Average Ceiling Price ($/Bbl)
    
    $
    122.92
    
    
    $
    136.16
    
    
    $
    152.61
    
    
    $
    145.39Floors:Hedged Volume (Bbls/d)
    
    
    500
    
    
    
    500
    
    
    
    
    
    
    
    Average Floor Price ($/Bbl)
    
    $
    100.00
    
    
    $
    100.00
    
    
    $
    
    
    
    $
    Total:Hedged Volume (Bbls/d)
    
    
    5,778
    
    
    
    6,080
    
    
    
    5,603
    
    
    
    5,016Average Price ($/Bbl)
    
    $
    73.12
    
    
    $
    82.52
    
    
    $
    86.88
    
    
    $
    102.27
 
 (a)
    
    A participating swap combines a swap and a call option with the same strike price. Interest Rate Activities
  Notional amounts in thousands of dollars
    
    Notional Amount
    
    Fixed RatePeriod CoveredJanuary 1, 2009 to January 8, 2009
    
    $
    50,000
    
    
    
    3.6200
    %January 1, 2009 to January 20, 2009
    
    
    200,000
    
    
    
    3.6825
    %January 1, 2009 to July 8, 2009
    
    
    50,000
    
    
    
    3.0450
    %January 1, 2009 to January 8, 2010
    
    
    100,000
    
    
    
    3.3873
    %January 20, 2009 to July 20, 2009
    
    
    250,000
    
    
    
    3.6825
    %July 20, 2009 to December 20, 2010
    
    
    300,000
    
    
    
    3.6825
    %December 20, 2010 to October 20, 2011
    
    
    200,000
    
    
    
    2.9900
    %
 69




---



##### 



Oil
    
    
    Natural GasCommodity
    
    
    Commodity
    
    
    Interest Rate
    
    
    Total FinancialThousands of dollars
    
    Derivatives
    
    
    Derivatives
    
    
    Derivatives
    
    
    InstrumentsBalance, December 31, 2008Short-term assets
    
    $
    44,086
    
    
    $
    32,138
    
    
    $
    
    
    
    $
    76,224Long-term assets
    
    
    145,061
    
    
    
    73,942
    
    
    
    
    
    
    
    219,003Total assets
    
    
    189,147
    
    
    
    106,080
    
    
    
    
    
    
    
    295,227Short-term liabilities
    
    
    (1,115
    )
    
    
    
    
    
    
    (9,077
    )
    
    
    (10,192
    )Long-term liabilities
    
    
    (1,820
    )
    
    
    
    
    
    
    (8,238
    )
    
    
    (10,058
    )Total liabilities
    
    
    (2,935
    )
    
    
    
    
    
    
    (17,315
    )
    
    
    (20,250
    )Net assets (liabilities)
    
    $
    186,212
    
    
    $
    106,080
    
    
    $
    (17,315
    )
    
    $
    274,977
        70




---



##### 



As of December 31, 2008Thousands of dollars
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssets (Liabilities):Commodity Derivatives (swaps, put and call options)
    
    $
    
    
    
    $
    139,074
    
    
    $
    153,218
    
    
    $
    292,292Other Derivatives (interest rate swaps)
    
    
    
    
    
    
    (17,315
    )
    
    
    
    
    
    
    (17,315
    )Total
    
    $
    
    
    
    $
    121,759
    
    
    $
    153,218
    
    
    $
    274,977
 71




---



##### 



Year EndedThousands of dollars
    
    December 31, 2008Assets (Liabilities):Beginning balance
    
    $
    44,236Realized and unrealized gains, net
    
    
    106,154Purchases and issuances
    
    
    7,452Settlements
    
    
    (4,624
    )Balance at December 31, 2008
    
    $
    153,218
   15. Unit and Other Valuation-Based Compensation Plans
     72




---



##### 



Unit Based Compensation
 Share-Based Payments
  73




---



##### 



Founders Plan
      December
31, 2008Number of
    
    
    WeightedAppreciation
    
    
    AverageRights Units
    
    
    Exercise PriceOutstanding, beginning of period
    
    
    214,107
    
    
    $
    18.50Exercised
    
    
    (91,463
    )
    
    
    18.50Outstanding, end of period
    
    
    122,644
    
    
    $
    18.50Exercisable, end of period
    
    
    
    
    
    $
    
 BreitBurn Management LTIP and the Partnership LTIP
  74




---



##### 



WeightedNumber of
    
    
    AverageUnits
    
    
    Grant PriceOutstanding, beginning of period
    
    
    267,702
    
    
    $
    10.77Granted
    
    
    
    
    
    
    Exercised
    
    
    (267,351
    )
    
    
    10.77Cancelled
    
    
    (351
    )
    
    
    10.73Outstanding, end of period
    
    
    
    
    
    $
    10.77Exercisable, end of period
    
    
    
    
    
    $
    
  75




---



##### 



PTUs and RTUsDecember
31, 2008WeightedNumber of
    
    
    AverageUnits
    
    
    Grant PriceOutstanding, beginning of period
    
    
    108,717
    
    
    $
    23.64Granted
    
    
    
    
    
    
    Exercised
    
    
    (20,645
    )
    
    
    20.39Cancelled
    
    
    (1,080
    )
    
    
    24.10Outstanding, end of period
    
    
    86,992
    
    
    $
    24.10Exercisable, end of period
    
    
    
    
    
    $
    
 Unit Appreciation Right Plan
     BreitBurn Management CompanyPVE indexed unitsDecember
31, 2008Number of
    
    
    WeightedAppreciation
    
    
    AverageRights
    
    
    Exercise PriceOutstanding,
beginning of period
    
    
    154,323
    
    
    $
    9.16Exercised
    
    
    (69,994
    )
    
    
    9.18Cancelled
    
    
    
    
    
    
    Outstanding, end of
period
    
    
    84,329
    
    
    $
    9.96Exercisable, end of
period
    
    
    84,329
    
    
    $
    9.96
 Director Performance Units
  76




---



##### 



December
31, 2008Number of
    
    
    WeightedPerformance
    
    
    AverageUnits
    
    
    Grant PriceOutstanding, beginning of period
    
    
    37,473
    
    
    $
    21.11Granted
    
    
    20,146
    
    
    
    27.35Exercised
    
    
    (22,190
    )
    
    
    23.05Outstanding, end of period
    
    
    35,429
    
    
    $
    23.44Exercisable, end of period
    
    
    
    
    
    $
    
 Restricted Phantom Units and Convertible Phantom Units
  Restricted Phantom Units (RPUs).
 Convertible Phantom Units (CPUs).
  77




---



##### 




    
    if such termination occurs on or before December 31, 2008, a percentage equal to 40 percent;
    
    if such termination occurs on or before December 31, 2009, a percentage equal to 60 percent;
    
    if such termination occurs on or before December 31, 2010, a percentage equal to 80 percent; and
    
    if such termination occurs on or after January 1, 2011, a percentage equal to 100 percent.
   Number of
    
    
    WeightedRPU
    
    
    AverageUnits
    
    
    Grant PriceOutstanding, beginning of period (a)
    
    
    372,945
    
    
    $
    30.98Granted
    
    
    245,290
    
    
    
    20.44Cancelled
    
    
    (10,972
    )
    
    
    20.83Outstanding, end of period
    
    
    607,263
    
    
    $
    26.91Exercisable, end of period
    
    
    
    
    
    $
    
 16. Commitments and Contingencies
 Lease Rental Obligations
  Payments Due by YearThousands of dollars
    
    2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    after 2013
    
    TotalOperating leases
    
    $
    2,232
    
    
    $
    2,126
    
    
    $
    1,989
    
    
    $
    1,656
    
    
    $
    1,272
    
    
    $
    2,143
    
    
    $
    11,418
  Surety Bonds and Letters of Credit
  78




---



##### 



Other
    79




---



##### 



17. Retirement Plan
  18. Significant Customers
  19. Minority Interest
  20. Subsequent Events
    21. Oil and Natural Gas Activities (Unaudited)
 Costs incurred
  Thousands of dollarsProperty acquisition costsProved
    
    $
    Unproved
    
    
    Development costs
    
    
    129,503Asset retirement costs
    
    
    1,363Pipelines and processing
facilities
    
    
    Total
    
    $
    130,866
 80




---



##### 



Capitalized costs
  Thousands of dollarsProved properties and related producing assets
    
    $
    1,734,932Pipelines and processing facilities
    
    
    112,726Unproved properties
    
    
    209,873Accumulated depreciation, depletion and amortization
    
    
    (223,575
    )$
    1,833,956
  Results of operations for oil and gas producing activities
  Thousands of dollarsOil, natural gas and NGL sales
    
    $
    467,381Realized loss on derivative instruments
    
    
    (55,946
    )Unrealized gain  on derivative
instruments
    
    
    388,048Operating costs
    
    
    (149,681
    )Depreciation, depletion, and amortization
    
    
    (178,657
    )Pre-tax Income
    
    
    471,145Income tax expense
    
    
    1,939Results of producing operations
    
    $
    469,206
 Supplemental reserve information
   81




---



##### 



Oil
    
    GasIn Thousands
    
    (MBbl)
    
    (MMcf)Proved ReservesBeginning balance
    
    
    58,095
    
    
    
    505,069Revision of
previous estimates (a)
    
    
    (29,106
    )
    
    
    (16,251
    )Production
    
    
    (3,079
    )
    
    
    (22,384
    )Ending balance
    
    
    25,910
    
    
    
    466,434Proved Developed ReservesBeginning balance
    
    
    52,103
    
    
    
    457,444Ending balance
    
    
    23,346
    
    
    
    433,780
 
 (a)
    
    Additions due to infill drilling are classified in Revisions and were approximately 741 MBbl
for oil and 35,834 MMcf for natural gas in 2008. Standardized measure of discounted future net cash flows
  Thousands of dollarsFuture cash inflows
    
    
    3,523,524Future development costs
    
    
    (212,951
    )Future production expense
    
    
    (1,843,986
    )Future net cash flows
    
    
    1,466,587Discounted at 10% per year
    
    
    (874,327
    )Standardized measure of discounted future net cash flows
    
    $
    592,260
 82




---



##### 



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




---



##### 



Year Ended December 31, 2008First
    
    
    Second
    
    
    Third
    
    
    FourthThousands of dollars
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterLimited Partners interest in loss (1)
    
    
    (40,867
    )
    
    
    (284,494
    )
    
    
    454,454
    
    
    
    251,162Basic net loss per limited partner unit (2)
    
    
    (0.61
    )
    
    
    (4.39
    )
    
    
    8.63
    
    
    
    4.77Diluted net loss per limited partner unit (2)
    
    
    (0.61
    )
    
    
    (4.39
    )
    
    
    8.41
    
    
    
    4.65Basic units outstanding
    
    
    67,020,641
    
    
    
    64,807,563
    
    
    
    52,635,634
    
    
    
    52,635,634Diluted units outstanding
    
    
    67,020,641
    
    
    
    64,807,563
    
    
    
    54,062,291
    
    
    
    54,019,830
 
 (1)
    
    Fourth quarter 2008 includes $86.4 million for total impairments and price related adjustments
and depreciation expense.(2)
    
    Due to changes in the number of weighted average common units outstanding that may occur each
quarter, the earnings per unit amounts for certain quarters may not be additive.  84




---



##### 



Exhibits  Exhibit No.

Sequential Description**2
.1

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

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

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

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

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

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

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

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

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

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

Fifth Supplemental Indenture, dated as of June 27, 2008, among
    Quicksilver Resources Inc., the subsidiary guarantors named
    therein and The Bank of New York Trust Company, N.A., as trustee
    (filed as Exhibit 4.1 to the Companys Form 8-K filed June
    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). 85




---



##### 



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).


86



---



##### 



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).


87



---



##### 



Exhibit No.

Sequential Description10
.33

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

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

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

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

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

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

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

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

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

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

Consent of Deloitte & Touche LLP.*** 23
.2

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

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

Consent of Schlumberger Data and Consulting Services* 23
.5

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

Consent of PricewaterhouseCoopers LLP* 23
.7

Consent of Deloitte & Touche LLP.* 23
.8

Consent of Deloitte & Touche LLP.* 23
.9

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

Power of Attorney* 31
.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.* 31
.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.* 32
.1

Certification Pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002.     *
    
    Filed herewith.**
    
    Excludes schedules and exhibits we agree to furnish
    supplementally to the SEC upon request.***
    
    Filed with the Companys original Annual Report on Form 10-K filed on March 3, 2009.+
    
    Identifies management contracts and compensatory plans or
    arrangements.


88



---



##### 



SIGNATURES
  Quicksilver Resources Inc.By:
    
    /s/ Philip CookPhilip CookDated: May 29, 2009
    
    
    
    Senior Vice President  Chief Financial Officer
 89




---



##### 



Exhibit Index
  Exhibit No.

Sequential Description**2
.1

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

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

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

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

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

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

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

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

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

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

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

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

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




---



##### 



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).




---



##### 



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).




---



##### 



Exhibit No.

Sequential Description10
.34

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

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

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

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

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

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

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

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

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

Consent of Deloitte & Touche LLP.*** 23
.2

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

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

Consent of Schlumberger Data and Consulting Services* 23
.5

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

Consent of PricewaterhouseCoopers LLP* 23
.7

Consent of Deloitte & Touche LLP.* 23
.8

Consent of Deloitte & Touche LLP.* 23
.9

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

Power of Attorney* 31
.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.* 31
.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.* 32
.1

Certification Pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002.     *
    
    Filed herewith.**
    
    Excludes schedules and exhibits we agree to furnish
    supplementally to the SEC upon request.***
    
    Filed with the Companys original Annual Report on Form 10-K filed on March 3, 2009.+
    
    Identifies management contracts and compensatory plans or
    arrangements.