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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934For the quarterly period ended March 31, 2010oro
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934For the transition period from to
 Commission file number: 001-33631
 Quicksilver Gas Services LP
  Delaware
    
    56-2639586(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)777 West Rosedale, Fort Worth, Texas
    
    76104(Address of principal executive offices)
    
    (Zip Code)
 817-665-8620
 None
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller Reporting company o(Do not check if a smaller reporting company)
 o þ
  Title of Class
    
    Outstanding as of April 26, 2010Common Units
    
    16,988,429




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DEFINITIONS
  Bbl Bbls
 Btu
 EBITDA
 LIBOR
 Management
 MMBtu
 MMBtud
 Mcf
 MMcf
 MMcfd
 MMcfe
 MMcfed
 NGL NGLs
 Oil
 COMMONLY USED TERMS
  Alliance Midstream Assets
 Alliance System
 Credit Facility
 Exchange Act
 FASB
 FASC Accounting Standards Codification
 GAAP
 General Partner
 HCDS
 IPO
 KGS
 LADS
 Partnership Agreement
 Quicksilver
 Quicksilver Counties
 Repurchase Obligation Waiver
 SEC
 SFAS
 2




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##### 



QUICKSILVER GAS SERVICES LP
INDEX TO FORM 10-Q
For the Period Ended March 31, 2010
  
 PART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Condensed Consolidated Statements of IncomeCondensed Consolidated Balance SheetsCondensed Consolidated Statements of Cash FlowsCondensed Consolidated Statements of Changes in Partners CapitalNotes to Condensed Consolidated Interim Financial StatementsItem 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures About Market RiskItem 4.
    
    Controls and ProceduresPART II. OTHER INFORMATIONItem 1.
    
    Legal ProceedingsItem 1A.
    
    Risk FactorsItem 2.
    
    Unregistered Sales of Equity Securities and Use of ProceedsItem 3.
    
    Defaults Upon Senior SecuritiesItem 4.
    
    (Removed and Reserved)Item 5.
    
    Other InformationItem 6.
    
    ExhibitsSignaturesCertification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906EX-31.1EX-31.2EX-32.1
  3




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FORWARD-LOOKING INFORMATION
  
    
    changes in general economic conditions;
    
    fluctuations in natural gas prices;
    
    failure or delays in Quicksilver and third parties achieving expected production from
natural gas projects;
    
    competitive conditions in our industry;
    
    actions taken or non-performance by third parties, including suppliers, contractors,
operators, processors, transporters and customers;
    
    fluctuations in the value of certain of our assets and liabilities;
    
    changes in the availability and cost of capital;
    
    operating hazards, natural disasters, weather-related delays, casualty losses and other
matters beyond our control;
    
    construction costs or capital expenditures exceeding estimated or budgeted amounts;
    
    the effects of existing and future laws and governmental regulations, including
environmental and climate change requirements;
    
    the effects of existing or future litigation; and
    
    certain factors discussed elsewhere in this Quarterly Report.
    4




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements (Unaudited)
 QUICKSILVER GAS SERVICES LP
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 In thousands, except for per unit data - Unaudited
 Three Months Ended March 31,2010
    
    2009RevenueGathering revenue - Quicksilver
    
    $
    16,389
    
    
    $
    13,528Gathering revenue
    
    
    1,115
    
    
    
    771Processing revenue - Quicksilver
    
    
    6,479
    
    
    
    8,702Processing revenue
    
    
    756
    
    
    
    738Other revenue - Quicksilver
    
    
    -
    
    
    
    225Total revenue
    
    
    24,739
    
    
    
    23,964ExpensesOperations and maintenance
    
    
    8,013
    
    
    
    5,221General and administrative
    
    
    2,441
    
    
    
    1,992Depreciation and accretion
    
    
    5,365
    
    
    
    4,524Total expenses
    
    
    15,819
    
    
    
    11,737Operating income
    
    
    8,920
    
    
    
    12,227Interest expense
    
    
    2,678
    
    
    
    2,235Income from continuing operations before income taxes
    
    
    6,242
    
    
    
    9,992Income tax provision (benefit)
    
    
    53
    
    
    
    (37
    )Net income from continuing operations
    
    
    6,189
    
    
    
    10,029Loss from discontinued operations
    
    
    -
    
    
    
    (635
    )Net income
    
    $
    6,189
    
    
    $
    9,394General partner interest in net income
    
    $
    357
    
    
    $
    272Common and subordinated unitholders interest in net income
    
    $
    5,832
    
    
    $
    9,122Basic earnings per limited partner unit:From continuing operations per common and subordinated unit
    
    $
    0.20
    
    
    $
    0.41From discontinued operations per common and subordinated unit
    
    $
    -
    
    
    $
    (0.03
    )Net earnings per common and subordinated unit
    
    $
    0.20
    
    
    $
    0.38Diluted earnings per limited partner unit:From continuing operations per common and subordinated unit
    
    $
    0.20
    
    
    $
    0.36From discontinued operations per common and subordinated unit
    
    $
    -
    
    
    $
    (0.02
    )Net earnings per common and subordinated unit
    
    $
    0.20
    
    
    $
    0.34Weighted average number of common and subordinated units
outstanding:Basic
    
    
    28,502
    
    
    
    23,827Diluted
    
    
    29,019
    
    
    
    28,550
  5




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QUICKSILVER GAS SERVICES LP
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 In thousands, except for unit data - Unaudited
 March 31,
    
    December 31,2010
    
    2009ASSETSCurrent assetsCash and cash equivalents
    
    $
    592
    
    
    $
    746Accounts receivable
    
    
    1,110
    
    
    
    1,342Accounts receivable from Quicksilver
    
    
    11,167
    
    
    
    -Prepaid expenses and other
    
    
    397
    
    
    
    180Total current assets
    
    
    13,266
    
    
    
    2,268Property, plant and equipment, net
    
    
    500,870
    
    
    
    482,497Other assets
    
    
    2,638
    
    
    
    2,859Total assets
    
    $
    516,774
    
    
    $
    487,624LIABILITIES AND PARTNERS CAPITALCurrent liabilitiesCurrent maturities of debt
    
    $
    2,750
    
    
    $
    2,475Accounts payable to Quicksilver
    
    
    -
    
    
    
    1,727Accrued additions to property, plant and equipment
    
    
    10,801
    
    
    
    8,015Accounts payable and other
    
    
    4,109
    
    
    
    2,240Total current liabilities
    
    
    17,660
    
    
    
    14,457Long-term debt
    
    
    225,800
    
    
    
    125,400Note payable to Quicksilver
    
    
    53,565
    
    
    
    53,243Asset retirement obligations
    
    
    9,169
    
    
    
    8,919Deferred income taxes
    
    
    821
    
    
    
    768Commitments and contingent liabilities (Note 10)Partners capitalCommon unitholders (16,988,429 and 16,313,451 units issued
and outstanding at March 31, 2010 and December 31, 2009, respectively)
    
    
    208,386
    
    
    
    281,239Subordinated unitholders (11,513,625 units issued and outstanding at 
March 31, 2010 and December 31, 2009)
    
    
    906
    
    
    
    3,040General partner
    
    
    467
    
    
    
    558Total partners capital
    
    
    209,759
    
    
    
    284,837$
    516,774
    
    
    $
    487,624
  6




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QUICKSILVER GAS SERVICES LP
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 In thousands - Unaudited
 Three Months Ended March 31,2010
    
    2009Operating activities:Net income
    
    $
    6,189
    
    
    $
    9,394Adjustments to reconcile net income to net cash provided by(used in) operating activities:Depreciation
    
    
    5,250
    
    
    
    5,097Accretion of asset retirement obligations
    
    
    115
    
    
    
    67Deferred income taxes
    
    
    53
    
    
    
    (37
    )Equity-based compensation
    
    
    667
    
    
    
    479Non-cash interest expense
    
    
    1,464
    
    
    
    1,247Changes in assets and liabilities:Accounts receivable
    
    
    232
    
    
    
    1,363Prepaid expenses and other
    
    
    (274
    )
    
    
    313Accounts receivable and payable with Quicksilver
    
    
    (16,367
    )
    
    
    (8,971
    )Accounts payable and other
    
    
    1,214
    
    
    
    1,277Net cash provided by (used in) operating activities
    
    
    (1,457
    )
    
    
    10,229Investing activities:Capital expenditures
    
    
    (17,163
    )
    
    
    (22,952
    )Distribution to Quicksilver
    
    
    (80,276
    )
    
    
    -Net cash used in investing activities
    
    
    (97,439
    )
    
    
    (22,952
    )Financing activities:Proceeds from revolving credit facility borrowings
    
    
    112,000
    
    
    
    22,000Repayments of credit facility
    
    
    (11,600
    )
    
    
    -Proceeds from issuance of equity
    
    
    11,088
    
    
    
    -Issuance costs of equity units paid
    
    
    (38
    )
    
    
    -Contributions by Quicksilver
    
    
    -
    
    
    
    (83
    )Distributions to unitholders
    
    
    (11,564
    )
    
    
    (9,083
    )Taxes paid for equity-based compensation vesting
    
    
    (1,144
    )
    
    
    (63
    )Net cash provided by financing activities
    
    
    98,742
    
    
    
    12,771Net cash increase (decrease)
    
    
    (154
    )
    
    
    48Cash at beginning of period
    
    
    746
    
    
    
    303Cash at end of period
    
    $
    592
    
    
    $
    351Cash paid for interest
    
    $
    1,214
    
    
    $
    1,626Cash paid for income taxes
    
    
    -
    
    
    
    -Non-cash transactions:Working capital related to capital expenditures
    
    
    16,430
    
    
    
    15,294Contribution of property, plant and equipment from Quicksilver
    
    
    -
    
    
    
    5,584Acquisition of property, plant and equipment under
repurchase obligation, net
    
    
    -
    
    
    
    (3,417
    )
  7




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QUICKSILVER GAS SERVICES LP
 
 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS CAPITAL
 In thousands - Unaudited
 Limited PartnersGeneralCommon
    
    Subordinated
    
    Partner
    
    TotalBalance at December 31, 2009
    
    $
    281,239
    
    
    $
    3,040
    
    
    $
    558
    
    
    $
    284,837Equity-based compensation expense recognized
    
    
    667
    
    
    
    -
    
    
    
    -
    
    
    
    667Distributions paid to partners
    
    
    (6,626
    )
    
    
    (4,490
    )
    
    
    (448
    )
    
    
    (11,564
    )Distribution to Quicksilver
    
    
    (80,276
    )
    
    
    -
    
    
    
    -
    
    
    
    (80,276
    )Net income
    
    
    3,476
    
    
    
    2,356
    
    
    
    357
    
    
    
    6,189Public offering of units, net of offering costs
    
    
    11,050
    
    
    
    -
    
    
    
    -
    
    
    
    11,050Taxes paid for stock-based compensation vesting
    
    
    (1,144
    )
    
    
    -
    
    
    
    -
    
    
    
    (1,144
    )Balance at March 31, 2010
    
    $
    208,386
    
    
    $
    906
    
    
    $
    467
    
    
    $
    209,759
  8




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QUICKSILVER GAS SERVICES LP
 
 NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
UNAUDITED
 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
 Organization
   OwnershipPercentageCommon unitholders:Public
    
    
    39.0
    %Quicksilver
    
    
    19.7
    %Subordinated unitholders:Quicksilver
    
    
    39.7
    %Total limited partner interest
    
    
    98.4
    %General Partner interest:Quicksilver
    
    
    1.6
    %Total
    
    
    100.0
    %
  Description of Business
  Cowtown System
  -
    
    the Cowtown Pipeline, consisting of a gathering system and gas compression
facilities.  This system gathers natural gas produced by our customers and delivers it
to the Cowtown and Corvette Plants for processing;-
    
    the Cowtown Plant, consisting of two natural gas processing units with a total
capacity of 200 MMcfd that extract NGLs from the natural gas stream and deliver
customers residue gas and extracted NGLs to unaffiliated pipelines for sale
downstream; and-
    
    the Corvette Plant, placed in service during 2009, consisting of a 125 MMcfd
natural gas processing unit that extracts NGLs from the natural gas stream and delivers
customers residue gas and extracted NGLs to unaffiliated pipelines for sale
downstream.
 9




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Lake Arlington Dry System
 Alliance System
 Three Months Ended March 31, 2009Quicksilver GasServices
    
    Alliance System
    

Combined(In thousands)Revenues
    
    $
    23,712
    
    
    $
    252
    
    
    $
    23,964Operating expenses
    
    
    (11,445
    )
    
    
    (292
    )
    
    
    (11,737
    )Operating income (loss)
    
    $
    12,267
    
    
    $
    (40
    )
    
    $
    12,227As of December 31, 2009Quicksilver GasServices
    
    Alliance System
    
    Combined(In thousands)AssetsProperty, plant and equipment, net
    
    $
    396,952
    
    
    $
    85,545
    
    
    $
    482,497Total assets
    
    $
    396,952
    
    
    $
    85,545
    
    
    $
    482,497LiabilitiesAccounts payable and other
    
    $
    4,011
    
    
    $
    4,004
    
    
    $
    8,015Asset retirement obligations
    
    
    7,654
    
    
    
    1,265
    
    
    
    8,919Partners capital
    
    
    204,561
    
    
    
    80,276
    
    
    
    284,837Total liabilities and partners capital
    
    $
    216,226
    
    
    $
    85,545
    
    
    $
    301,771
 Hill County Dry System
  10




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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis
of Presentation
 Use of Estimates 
  Discontinued Operations 
   11




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Net Income per Limited Partner Unit
 Three Months Ended March 31,2010
    
    2009(In thousands, except per unit data)Common and subordinated unitholders interest in net income from continuing operations
    
    $
    5,832
    
    
    $
    9,745Common and subordinated unitholders interest in net loss from discontinued operations
    
    
    -
    
    
    
    (623
    )Common and subordinated unitholders interest in net income
    
    $
    5,832
    
    
    $
    9,122Impact of interest on subordinated note to Quicksilver (2)
    
    
    -
    
    
    
    583Income available assuming conversion of convertible debt
    
    $
    5,832
    
    
    $
    9,705Weighted-average common and subordinated units - basic
    
    
    28,502
    
    
    
    23,827Effect of unvested phantom units
    
    
    517
    
    
    
    487Effect of subordinated note to Quicksilver (1) (2)
    
    
    -
    
    
    
    4,236Weighted-average common and subordinated units - diluted
    
    
    29,019
    
    
    
    28,550Basic earnings per unit:From continuing operations per common and subordinated unit
    
    $
    0.20
    
    
    $
    0.41From discontinued operations per common and subordinated unit
    
    $
    -
    
    
    $
    (0.03
    )Net earnings per common and subordinated unit
    
    $
    0.20
    
    
    $
    0.38Diluted earnings per unit:From continuing operations per common and subordinated unit
    
    $
    0.20
    
    
    $
    0.36From discontinued operations per common and subordinated unit
    
    $
    -
    
    
    $
    (0.02
    )Net earnings per common and subordinated unit
    
    $
    0.20
    
    
    $
    0.34Conversion price (1) (2)
    
    
    N/A
    
    
    $
    12.80
 (1)
 (2)
 Comprehensive Income
 Recently Issued Accounting Standards
  12




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3. PARTNERS CAPITAL AND DISTRIBUTIONS
   Attributable to the
    
    Per Unit
    
    Total CashPayment Date
    
    Quarter Ended
    
    Distribution (1)
    
    Distribution(In millions)Pending DistributionsMay 14, 2010 (2)
    
    March 31, 2010
    
    $
    0.390
    
    
    $
    11.6Completed DistributionsFebruary 12, 2010 (2)
    
    December 31, 2009
    
    $
    0.390
    
    
    $
    11.6November 13, 2009 (3)
    
    September 30, 2009
    
    $
    0.390
    
    
    $
    9.7August 14, 2009 (4)
    
    June 30, 2009
    
    $
    0.370
    
    
    $
    9.1May 15, 2009 (4)
    
    March 31, 2009
    
    $
    0.370
    
    
    $
    9.1
 (1)
 (2)
 (3)
 (4)
  4. DISCONTINUED OPERATIONS
  Three Months EndedMarch 31, 2009(In thousands)Revenues
    
    $
    1,002Operating expenses
    
    
    (999
    )Interest expense
    
    
    (638
    )Loss from discontinued operations
    
    $
    (635
    )
 5. PROPERTY, PLANT AND EQUIPMENT
  March 31,
    
    December 31,2010
    
    2009(In thousands)Gathering systems
    
    $
    135,941
    
    
    $
    135,128Processing plants and compression facilities
    
    
    352,764
    
    
    
    332,053Construction in progress - gathering
    
    
    19,000
    
    
    
    17,693Rights-of-way and easements
    
    
    28,486
    
    
    
    27,788Land
    
    
    4,251
    
    
    
    4,251Buildings and other
    
    
    2,826
    
    
    
    2,732543,268
    
    
    
    519,645Accumulated depreciation
    
    
    (42,398
    )
    
    
    (37,148
    )Net property, plant and equipment
    
    $
    500,870
    
    
    $
    482,497
 13




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6. DEBT
  March 31,
    
    December 31,2010
    
    2009(In thousands)Credit Facility
    
    $
    225,800
    
    
    $
    125,400Subordinated Note to Quicksilver
    
    
    56,315
    
    
    
    55,718282,115
    
    
    
    181,118Current maturities of debt
    
    
    (2,750
    )
    
    
    (2,475
    )Debt
    
    $
    279,365
    
    
    $
    178,643
  7. ASSET RETIREMENT OBLIGATIONS
  Three Months EndedMarch 31, 2010(In thousands)Beginning asset retirement obligations as reported at December 31, 2009
    
    $
    7,654Alliance Midstream Asset obligations at December 31, 2009
    
    
    1,265Adjusted asset retirement obligations
    
    $
    8,919Incremental liability incurred
    
    
    135Accretion expense
    
    
    115Ending asset retirement obligations
    
    $
    9,169
  8. EQUITY-BASED COMPENSATION
  Payable in cash
    
    Payable in unitsWeighted
    
    
    
    
    
    WeightedAverage Grant
    
    
    
    
    
    Average GrantUnits
    
    Date Fair Value
    
    Units
    
    Date Fair ValueUnvested
phantom units - January 1, 2010
    
    
    33,240
    
    
    $
    20.90
    
    
    
    485,672
    
    
    $
    12.75Vested
    
    
    -
    
    
    
    -
    
    
    
    (179,886
    )
    
    
    13.74Issued
    
    
    -
    
    
    
    -
    
    
    
    211,600
    
    
    
    21.15Cancelled
    
    
    -
    
    
    
    -
    
    
    
    (431
    )
    
    
    14.72Unvested
phantom units - March 31, 2010
    
    
    33,240
    
    
    $
    20.90
    
    
    
    516,955
    
    
    $
    15.84
  14




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9. INCOME TAXES
  
 10. COMMITMENTS AND CONTINGENT LIABILITIES
  11. RELATED-PARTY TRANSACTIONS
    15




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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 
 Overview
  Our Operations
  Operational Measurement
  Volume
 
    
    the level of successful drilling and production activity in areas where our systems are located;
    
    our ability to compete with other midstream companies for production volumes; and
    
    our pursuit of new opportunities.
 Adjusted
Gross Margin
 Operating
Expenses
 EBITDA
 16




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##### Table of Contents




    
    financial performance of our assets without regard to financing methods, capital
structure or historical cost basis;
    
    our operating performance as compared to those of other companies in the midstream
industry without regard to financing methods, capital structure or historical cost basis;
and
    
    the viability of acquisitions and capital expenditure projects and the rates of return on
investment opportunities.
 Current Quarter Highlights
 
    
    During January 2010, we completed the purchase of the Alliance Midstream Assets, located
in Tarrant and Denton counties of Texas, from Quicksilver for an initial purchase price of
$95.2 million.  The purchase price was subsequently reduced to $84.4 million due to a
purchase price adjustment based on the timing of construction costs of the system.  Gathered
volumes on the Alliance System in the three months ended March 31, 2010 averaged 111 MMcfd.
    
    In January 2010, the underwriters of our secondary offering exercised their option to
purchase an additional 549,200 common units, which resulted in additional proceeds of $11.1
million.  We used $11 million from the sale of the additional units to pay down our Credit
Facility.
 17




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RESULTS OF OPERATIONS
 Three Months Ended March 31, 2010 Compared with Three Months Ended March 31, 2009
  Three Months Ended March 31,2010
    
    2009(In thousands)Total revenues
    
    $
    24,739
    
    
    $
    23,964Operations and maintenance expense
    
    
    8,013
    
    
    
    5,221General and administrative expense
    
    
    2,441
    
    
    
    1,992Adjusted gross margin
    
    
    14,285
    
    
    
    16,751Other income
    
    
    -
    
    
    
    -EBITDA
    
    
    14,285
    
    
    
    16,751Depreciation and accretion expense
    
    
    5,365
    
    
    
    4,524Interest expense
    
    
    2,678
    
    
    
    2,235Income tax provision (benefit)
    
    
    53
    
    
    
    (37
    )Net income from continuing operations
    
    $
    6,189
    
    
    $
    10,029
  Gathering
    
    Processing2010
    
    2009
    
    2010
    
    2009(MMcf)Cowtown System
    
    
    11,430
    
    
    
    15,107
    
    
    
    11,244
    
    
    
    14,653Lake Arlington Dry System
    
    
    4,410
    
    
    
    6,278
    
    
    
    -
    
    
    
    -Alliance System
    
    
    9,957
    
    
    
    3,585
    
    
    
    -
    
    
    
    -Total
    
    
    25,797
    
    
    
    24,970
    
    
    
    11,244
    
    
    
    14,653
  Gathering
    
    Processing
    
    Other
    
    Total(In thousands)Revenue for the three months ended March 31, 2009
    
    $
    14,299
    
    
    $
    9,440
    
    
    $
    225
    
    
    $
    23,964Volume changes
    
    
    473
    
    
    
    (2,196
    )
    
    
    -
    
    
    
    (1,723
    )Price changes
    
    
    2,732
    
    
    
    (9
    )
    
    
    (225
    )
    
    
    2,498Revenue for the three months ended March 31, 2010
    
    $
    17,504
    
    
    $
    7,235
    
    
    $
    -
    
    
    $
    24,739
 Total Revenues Volumes 
 Operations and Maintenance Expense 
 18




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##### Table of Contents



General and Administrative Expense 
 Adjusted Gross Margin EBITDA 
 Depreciation and Accretion Expense 
 Interest Expense
  Three Months Ended March 31,2010
    
    2009(In thousands)Interest cost:Revolving Credit Facility
    
    $
    2,082
    
    
    $
    1,205Repurchase obligation
    
    
    -
    
    
    
    745Subordinated note to Quicksilver
    
    
    596
    
    
    
    595Total cost
    
    
    2,678
    
    
    
    2,545Less interest capitalized
    
    
    -
    
    
    
    (310
    )Interest expense
    
    $
    2,678
    
    
    $
    2,235
 19




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##### Table of Contents



Liquidity and Capital Resources
   
    
    cash generated from operations;
    
    borrowings under our Credit Facility; and
    
    future capital market transactions.
   Cash Flows
 Three Months Ended March 31,2010
    
    2009(In thousands)Net cash provided by (used in) operating activities
    
    $
    (1,457
    )
    
    $
    10,229Net cash used in investing activities
    
    
    (97,439
    )
    
    
    (22,952
    )Net cash provided by financing activities
    
    
    98,742
    
    
    
    12,771
 Cash Flows Used in Operating Activities 
 Cash Flows Used in Investing Activities 
 Cash Flows Provided by Financing Activities 
  20




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##### Table of Contents



Capital Expenditures
  
    
    expansion capital expenditures, which are made to construct additional assets, expand
and upgrade existing systems, or acquire additional assets; or
    
    maintenance capital expenditures, which are made to replace partially or fully
depreciated assets, to maintain the existing operating capacity of our assets and extend
their useful lives, or to maintain existing system volumes and related cash flows.
    Other Matters
  Debt
 Credit Facility
   
    
    incur further indebtedness;
    
    grant liens;
    
    sell assets; and
    
    engage in transactions with affiliates.
 Subordinated Note
  21




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##### Table of Contents



Contractual Obligations and Commercial Commitments
  Off-Balance Sheet Arrangements
  Recently Issued Accounting Standards
  Critical Accounting Estimates
  
    
    depreciation expense for property, plant and equipment;
    
    asset retirement obligations; and
    
    equity-based compensation.
  22




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Credit Risk
  Interest Rate Risk
  
 Item 4. Controls and Procedures
 Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  23




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. (Removed and Reserved)
  
 Item 5. Other Information
  24




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##### Table of Contents



Item 6. Exhibits:
 Exhibit No.
    
    Description10.1
    
    Gas Gathering Agreement, effective December 1, 2009, between Cowtown Pipeline Partners
L.P. (as successor in interest to Cowtown Pipeline L.P.) and Quicksilver Resources Inc.
(filed as Exhibit 10.1 to the Companys Form 8-K filed January 8, 2010 and included
herein by reference).*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 25




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##### Table of Contents



SIGNATURES
   QUICKSILVER GAS SERVICES LP
By: QUICKSILVER GAS SERVICES GP LLC, its
General PartnerBy:
    /s/ Philip CookPhilip CookSenior Vice President  Chief Financial Officer 26




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description10.1
    
    Gas Gathering Agreement, effective December 1, 2009, between Cowtown Pipeline Partners
L.P. (as successor in interest to Cowtown Pipeline L.P.) and Quicksilver Resources Inc.
(filed as Exhibit 10.1 to the Companys Form 8-K filed January 8, 2010 and included
herein by reference).*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