form8-ka.htm

0001060990-08-000043.txt : 20081010 0001060990-08-000043.hdr.sgml : 20081010 20081010164706 ACCESSION NUMBER: 0001060990-08-000043 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20080808 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20081010 DATE AS OF CHANGE: 20081010 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUICKSILVER RESOURCES INC CENTRAL INDEX KEY: 0001060990 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 752756163 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-14837 FILM NUMBER: 081118740 BUSINESS ADDRESS: STREET 1: 777 WEST ROSEDALE STREET CITY: FORT WORTH STATE: TX ZIP: 76104 BUSINESS PHONE: 817-665-5000 MAIL ADDRESS: STREET 1: 777 WEST ROSEDALE STREET CITY: FORT WORTH STATE: TX ZIP: 76104 8-K/A 1 form8-ka.htm QUICKSILVER RESOURCES INC. CURRENT REPORT ON FORM 8-K form8-ka.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_______________

FORM 8-K/A

Amendment No. 1

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): August 8, 2008

QUICKSILVER RESOURCES INC.

(Exact Name of Registrant as Specified in Charter)

Delaware		001-14837		75-2756163
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

777 West Rosedale Street

Fort Worth, Texas 76104

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (817) 665-5000

_______________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

On August 8, 2008, Quicksilver Resources Inc. (the “Company”) filed a Current Report on Form 8-K to report the acquisition of certain leasehold, royalty and midstream assets associated with the Barnett Shale formation in Texas (the “Alliance Operations”). In that filing, the Company indicated that it would amend the Form 8-K at a later date to include the financial information required by Item 9.01. This amendment to the August 8, 2008 Current Report on Form 8-K is being filed to provide such financial information.

Item 9.01.

Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

The unaudited combined statements of revenues and direct operating expenses of the Alliance Operations for the six months ended June 30, 2008 and 2007 and the audited combined statements of revenues and direct operating expenses of the Alliance Operations for the years ended December 31, 2007 and 2006 are filed as Exhibits 99.1 and 99.2, respectively, to this Form 8-K and are incorporated in this Item 9.01 by reference.

(b) Pro Forma Financial Information.

The unaudited pro forma condensed combined balance sheet of the Company as of June 30, 2008 and the unaudited pro forma condensed combined statements of income of the Company for the six months ended June 30, 2008 and the year ended December 31, 2007 are filed as Exhibit 99.3 to this Form 8-K and are incorporated in this Item 9.01 by reference.

(d) Exhibits.

Exhibit Number		Description
23.1		Consent of KPMG LLP.
99.1		Unaudited Combined Statements of Revenues and Direct Operating Expenses of the Alliance Operations for the six months ended June 30, 2008 and 2007.
99.2		Audited Combined Statements of Revenues and Direct Operating Expenses of the Alliance Operations for the years ended December 31, 2007 and 2006.
99.3		Unaudited Pro Forma Condensed Combined Balance Sheet of the Company as of June 30, 2008 and the Unaudited Pro Forma Condensed Combined Statements of Income of the Company for the six months ended June 30, 2008 and the year ended December 31, 2007.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	QUICKSILVER RESOURCES INC.

	By:	/s/ Philip Cook
		Philip Cook
		Senior Vice President -
		Chief Financial Officer

Date: October 10, 2008

Index to Exhibits

Exhibit Number		Description
23.1		Consent of KPMG LLP.
99.1		Unaudited Combined Statements of Revenues and Direct Operating Expenses of the Alliance Operations for the six months ended June 30, 2008 and 2007.
99.2		Audited Combined Statements of Revenues and Direct Operating Expenses of the Alliance Operations for the years ended December 31, 2007 and 2006.
99.3		Unaudited Pro Forma Condensed Combined Balance Sheet of the Company as of June 30, 2008 and the Unaudited Pro Forma Condensed Combined Statements of Income of the Company for the six months ended June 30, 2008 and the year ended December 31, 2007.

EX-23.1 2 ex23_1.htm CONSENT OF KPMG LLP ex23_1.htm

Exhibit 23.1

Independent Auditors’ Consent

We consent to the incorporation by reference in the registration statements on Form S-3 (Nos. 333-89204, 333-92196 and 333-152898) and Form S-8 (Nos. 333-134430, 333-94387, 333-91526, 333-113617 and 333-116180) of Quicksilver Resources Inc. of our report dated September 10, 2008, with respect to the combined statements of revenue and direct operating expenses of the Alliance Operations, for each of the years in the two-year period ended December 31, 2007, which report appears in the Form 8-K/A of Quicksilver Resources Inc.

/s/ KPMG LLP

Dallas, Texas

October 9, 2008

EX-99.1 3 ex99_1.htm UNAUDITED COMBINED STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES ex99_1.htm

Exhibit 99.1

KPMG

ALLIANCE OPERATIONS

Unaudited Combined Statements of Revenues and Direct Operating Expenses

Six months ended June 30, 2008 and 2007

ALLIANCE OPERATIONS
Unaudited Combined Statements of Revenues and Direct Operating Expenses
Six months ended June 30, 2008 and 2007
		2008		2007
Revenues:
Revenues from royalty interests	$		11,922,275		5,936,822
Revenues from working interests			49,736,270		23,919,768
Pipeline revenues			629,506		412,262
Total revenues			62,288,051		30,268,852

Direct operating expenses:
Lease operating expenses			5,851,452		1,901,285
Gathering and processing expenses			3,264,442		1,819,653
Production and other taxes			3,514,762		1,838,633
Total direct operating expenses			12,630,656		5,559,571
Excess of revenues over direct operating expenses	$		49,657,395		24,709,281

See accompanying notes to unaudited combined statements of revenues and direct operating expenses.

ALLIANCE OPERATIONS

Notes to Unaudited Combined Statements of Revenues and Direct Operating Expenses

Six months ended June 30, 2008 and 2007

(1)	Basis of Presentation

On July 3, 2008, Quicksilver Resources Inc. (Quicksilver) entered into Purchase and Sale Agreements (the Agreements) with various private parties including Hillwood Oil & Gas, LP, Nortex Minerals, LP, Chief Resources, LP, and Collins and Young, LP (collectively, the Sellers) to acquire producing, leasehold, royalty, and mid-stream assets, associated with the Barnett Shale formation in northern Tarrant and southern Denton counties of Texas (collectively, the Alliance Operations). The acquisition was effective April 1, 2008 (the Effective Date) and closed on August 8, 2008 for an adjusted total purchase price of approximately $1.257 billion, subject to contractual post-closing adjustments as set forth in the Agreements. The purchase price was comprised of approximately $1.0 billion in cash and 10.4 million shares of Quicksilver common stock with an agreed upon value of $256.5 million. The agreed upon fair value of the common stock issued in the transaction was based on the volume weighted average price for the 15 consecutive trading days immediately prior to August 5, 2008.

Total revenues in the accompanying unaudited combined statements of revenues and direct operating expenses consisted of total production of 7,605 MMcf from 72 average producing wells during the first six months of 2008 as compared to total production of 4,893 MMcf from 47 average producing wells during the first six months of 2007. These wells were operated by Chief Resources, LP. In addition, total revenues in the first six months of 2008 include approximately $0.6 million of revenues from working interests related to 22 wells acquired by the Sellers in November 2007, which were operated by Hillwood Oil & Gas, LP.

The Sellers did not prepare separate stand-alone historical financial statements for the Alliance Operations in accordance with accounting principles generally accepted in the United States of America. Accordingly, it is not practicable to identify all assets and liabilities, or other indirect operating costs applicable to the Alliance Operations. The unaudited combined statements of revenues and direct operating expenses are presented in lieu of the financial statements required under Rule 3-05 of Securities and Exchange Commission Regulation S-X, and are not necessarily indicative of the results of operations for the properties in future periods due to the exclusion of certain expenses. The accompanying unaudited combined statements of revenues and direct operating expenses were compiled from the historical accounting records of the Sellers who operated the properties.

Certain excluded expenses as further described in note 4 were not allocated to the Alliance Operations’ historical financial records. Any attempt to allocate these expenses would require significant and judgmental allocations which would be arbitrary and may not be indicative of the performance of the properties had they been owned by Quicksilver.

These unaudited combined statements of revenues and direct operating expenses do not represent a complete set of financial statements reflecting financial position, results of operations, shareholders’ equity, and cash flows of the Alliance Operations and may not be indicative of the combined results of operations for the Alliance Operations going forward.

(Continued)

ALLIANCE OPERATIONS

Notes to Unaudited Combined Statements of Revenues and Direct Operating Expenses

Six months ended June 30, 2008 and 2007

(2)	Significant Accounting Policies

(a)	Principles of Combination and Use of Estimates

All significant intercompany transactions and balances have been eliminated. Accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect the amounts reported in the unaudited combined statements of revenues and direct operating expenses. Actual results could be different from those estimates.

(b)	Revenue Recognition

Total revenues in the accompanying unaudited combined statements of revenues and direct operating expenses include the sale of natural gas and mid-stream related revenue. Because certain of the Sellers represent the original surface and mineral owners, the acquisition by Quicksilver includes a significant royalty interest in the Alliance Operations as well as substantially all of the working interests. The Sellers recognize revenues based on the amount of natural gas sold to purchasers when delivery to the purchaser has occurred and title has transferred. Total revenues do not include the effect of hedges on production from these properties because hedging activities of the Sellers may not be reflective of the strategy that might be used by Quicksilver.

(c)	Direct Operating Expenses

Direct operating expenses are recognized when incurred and consist of direct expenses associated with the Alliance Operations. The direct operating expenses include lease operating, gathering, processing, and production and other tax expense. Lease operating expenses include lifting costs, well repair expenses, surface repair expenses, well workover costs, and other field expenses. Gathering and processing expenses include maintenance and repair and other operating costs. Lease operating and gathering and processing expenses also include expenses directly associated with support personnel, support services, equipment, and facilities directly related to natural gas production activities. Production and other taxes consist of severance and ad valorem taxes.

(3)	Contingencies

The activities of the Alliance Operations are subject to potential claims and litigation in the normal course of operations. The Sellers’ management does not believe that any liability resulting from any pending or threatened litigation will have a materially adverse effect on the operations or financial results of the Alliance Operations. In accordance with Section 1.3 of the Agreements, the Sellers retain all rights, titles, claims, and interests associated with the Alliance Operations arising prior to the Effective Date.

(4)	Excluded Expenses

As discussed in note 1, certain costs and expenses of the Sellers have not been included in the accompanying unaudited combined statements of revenues and direct operating expenses. These costs include general and administrative expenses, interest, income taxes and other indirect expenses not allocated to the Alliance Operations. Such excluded costs are not reasonably known by management of the Sellers, and may not be indicative of future costs to be incurred by Quicksilver.

(Continued)

ALLIANCE OPERATIONS

Notes to Unaudited Combined Statements of Revenues and Direct Operating Expenses

Six months ended June 30, 2008 and 2007

Also, depreciation, depletion, and amortization have been excluded from the accompanying unaudited combined statements of revenues and direct operating expenses as such amounts would not be necessarily be indicative of the expenses that will be incurred by Quicksilver due to Quicksilver’s new cost basis in the properties.

(5)	Cash Flow Information

Capital expenditures relating to natural gas properties were $35.7 million and $28.8 million for the six months ended June 30, 2008 and 2007, respectively. Capital expenditures relating to the mid-stream assets were $4.4 million and $2.5 million for the six months ended June 30, 2008 and 2007, respectively. The mid-stream assets represent approximately 30 miles of pipeline that connects the Alliance Operations’ wells to a network of interstate pipelines. Other cash flow information is not available on a stand-alone basis for the Alliance Operations.

EX-99.2 4 ex99_2.htm AUDITED COMBINED STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES ex99_2.htm

Exhibit 99.2

KPMG

ALLIANCE OPERATIONS

Combined Statements of Revenues

and Direct Operating Expenses

December 31, 2007 and 2006

(With Independent Auditors’ Report Thereon)

Independent Auditors' Report

The Partners

Hillwood Oil & Gas, LP:

We have audited the accompanying combined statements of revenues and direct operating expenses of the Alliance Operations (the Alliance Operations), acquired on August 8, 2008 by Quicksilver Resources Inc., for each of the years in the two-year period ended December 31, 2007. These statements are the responsibility of Hillwood Oil & Gas, LP’s management. Our responsibility is to express an opinion on these statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined statements of revenues and direct operating expenses are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Alliance Operations’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the combined statements. We believe that our audits provide a reasonable basis for our opinion.

The accompanying statements were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in note 1 to the combined statements of revenues and direct operating expenses. These statements are not intended to be a complete presentation of the Alliance Operations’ revenues and expenses.

In our opinion, the combined statements of revenues and direct operating expense referred to above present fairly, in all material respects, the combined revenues and direct operating expenses of the Alliance Operations for each of the years in the two-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Dallas, Texas

September 10, 2008

ALLIANCE OPERATIONS

Combined Statements of Revenues

and Direct Operating Expenses

December 31, 2007 and 2006

		2007		2006
Revenues:
Revenues from royalty interests	$		13,791,978		8,387,473
Revenues from working interests			53,816,444		31,529,909
Pipeline revenues			1,002,423		612,964
Total revenues			68,610,845		40,530,346

Direct operating expenses:
Lease operating expenses			5,887,752		3,220,945
Gathering and processing expenses			4,446,551		2,456,883
Production and other taxes			4,292,269		1,498,372
Total direct operating expenses			14,626,572		7,176,200
Excess of revenues over direct operating expenses	$		53,984,273		33,354,146

See accompanying notes to combined statements of revenues and direct operating expenses.

ALLIANCE OPERATIONS

Notes to Combined Statements of Revenues

and Direct Operating Expenses

December 31, 2007 and 2006

(1)	Basis of Presentation

Total revenues in the accompanying combined statements of revenues and direct operating expenses consisted of total production of 11,926 MMcf from 52 average producing wells in 2007 as compared to total production of 6,902 MMcf from 29 average producing wells in 2006. These wells were operated by Chief Resources, LP. In addition, total revenues in 2007 include approximately $0.2 million of revenues from working interests related to 22 wells acquired by the Sellers in November 2007, which were operated by Hillwood Oil & Gas, LP.

The Sellers did not prepare separate stand-alone historical financial statements for the Alliance Operations in accordance with accounting principles generally accepted in the United States of America. Accordingly, it is not practicable to identify all assets and liabilities, or other indirect operating costs applicable to the Alliance Operations. The combined statements of revenues and direct operating expenses are presented in lieu of the financial statements required under Rule 3-05 of Securities and Exchange Commission Regulation S-X, and are not necessarily indicative of the results of operations for the properties in future periods due to the exclusion of certain expenses. The accompanying combined statements of revenues and direct operating expenses were compiled from the historical accounting records of the Sellers who operated the properties.

Certain excluded expenses as further described in note 5 were not allocated to the Alliance Operations’ historical financial records. Any attempt to allocate these expenses would require significant and judgmental allocations, which would be arbitrary and may not be indicative of the performance of the properties had they been owned by Quicksilver.

These combined statements of revenues and direct operating expenses do not represent a complete set of financial statements reflecting financial position, results of operations, shareholders’ equity, and cash flows of the Alliance Operations and may not be indicative of the combined results of operations for the Alliance Operations going forward.

(Continued)

ALLIANCE OPERATIONS

Notes to Combined Statements of Revenues

and Direct Operating Expenses

December 31, 2007 and 2006

(2)	Significant Accounting Policies

(a)

Principles of Combination and Use of Estimates

All significant intercompany transactions and balances have been eliminated. Accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect the amounts reported in the combined statements of revenues and direct operating expenses. Actual results could be different from those estimates.

(b)

Revenue Recognition

Total revenues in the accompanying combined statements of revenues and direct operating expenses include the sale of natural gas and mid-stream related revenue. Because certain of the Sellers represent the original surface and mineral owners, the acquisition by Quicksilver includes a significant royalty interest in the Alliance Operations as well as substantially all of the working interests. The Sellers recognize revenues based on the amount of natural gas sold to purchasers when delivery to the purchaser has occurred and title has transferred. Total revenues do not include the effect of hedges on production from these properties because hedging activities of the Sellers may not be reflective of the strategy that might be used by Quicksilver.

(c)

Direct Operating Expenses

(3)	Related-Party Transactions

In 2006, approximately 3,387 MMcf totaling $20.8 million of the natural gas production from the Alliance Operations was sold to wholly owned affiliates of the Sellers. The products sold to the Sellers’ affiliates were resold to unrelated third parties. Any margins earned by the Sellers’ affiliates are excluded from the accompanying combined statements.

(4)	Contingencies

(Continued)

ALLIANCE OPERATIONS

Notes to Combined Statements of Revenues

and Direct Operating Expenses

December 31, 2007 and 2006

(5)	Excluded Expenses (Unaudited)

As discussed in note 1, certain costs and expenses of the Sellers have not been included in the accompanying combined statements of revenues and direct operating expenses. These costs include general and administrative expenses, interest, income taxes and other indirect expenses not allocated to the Alliance Operations. Such excluded costs are not reasonably known by management of the Sellers, and may not be indicative of future costs to be incurred by Quicksilver.

Also, depreciation, depletion, and amortization have been excluded from the accompanying combined statements of revenues and direct operating expenses as such amounts would not be necessarily be indicative of those expenses that will be incurred by Quicksilver due to Quicksilver’s new cost basis in the properties.

(6)	Cash Flow Information (Unaudited)

Capital expenditures relating to natural gas properties were $60.2 million and $29.3 million for the years ended December 31, 2007 and 2006, respectively. Capital expenditures relating to mid-stream assets were $4.6 million and $5.0 million for the years ended December 31, 2007 and 2006, respectively. The mid-stream assets represent approximately 30 miles of pipeline that connects the Alliance Operations’ wells to a network of interstate pipelines. Other cash flow information is not available on a stand-alone basis for the Alliance Operations.

(7)	Supplemental Information for Natural Gas Producing Activities (Unaudited)

Supplemental natural gas reserve information related to the Alliance Operations is presented in accordance with the requirements of Statement of Financial Accounting Standards No. 69, Disclosures about Oil and Gas Producing Activities (SFAS No. 69).

Because natural gas reserves are based on many assumptions, all of which may substantially differ from actual results, reserve estimates and timing of development and production may be significantly different from the actual quantities of natural gas that are ultimately recovered and the timing of such production. In addition, results of drilling, testing, and production after the date of an estimate may justify material revisions to the estimates.

Estimated Proved Reserves

Proved natural gas reserves are estimated and prepared in accordance with SEC guidelines and are a function of: (i) the quality and quantity of available data, (ii) the interpretation of that data, (iii) the accuracy of various economic assumptions used, and (iv) the judgment of the persons preparing the estimate.

The volumes of proved natural gas reserves shown are estimates, which, by their nature, are subject to later revision. These proved natural gas reserves were estimated utilizing all available geological and reservoir data as well as production performance data.

(Continued)

ALLIANCE OPERATIONS

Notes to Combined Statements of Revenues

and Direct Operating Expenses

December 31, 2007 and 2006

The following table sets forth estimates of the proved natural gas reserves (net of royalty interest) and changes therein, for the period indicated.

	MMcf
January 1, 2006		38,469
New discoveries and extensions		24,654
Revisions of previous quantity estimates		(3,901	)
Production		(6,937	)
December 31, 2006		52,285

New discoveries and extensions		80,752
Revisions of previous quantity estimates		1,010
Purchase of minerals in place		1,001
Production		(11,926	)
December 31, 2007		123,122

Proved developed reserves as of:
December 31, 2006		50,282
December 31, 2007		113,834

Proved undeveloped reserves as of:
December 31, 2006		2,002
December 31, 2007		9,288

Estimates of future net cash flows from proved reserves were prepared by the Sellers’ engineers. The price estimates used for the development of future cash inflows were $5.23 and $4.19 per Mcf of natural gas for 2007 and 2006, respectively. Estimated future cash flows are reduced by estimated future development, production, abandonment, and dismantlement costs based on year-end cost levels, assuming continuation of existing economic conditions.

Standardized Measure of Discounted Future Net Cash Flows

The present value of future net cash flows does not purport to be an estimate of the fair market value of the Alliance Operations proved reserves. An estimate of fair value would also take into account, among other things, anticipated changes in future prices and costs, the expected recovery of reserves in excess of proved reserves and a discount factor more representative of the time value of money, and the risks inherent in producing natural gas.

(Continued)

ALLIANCE OPERATIONS

Notes to Combined Statements of Revenues

and Direct Operating Expenses

December 31, 2007 and 2006

The following table sets forth estimates of the standardized measure of discounted future net cash flows from proved reserves of natural gas for the years indicated.

		Year ended December 31
		2007			2006
Future cash inflows	$		644,066,590			218,844,550
Future production costs			(152,972,590	)		(59,054,470	)
Future development costs			(16,824,700	)		(5,556,000	)
Future net cash flows			474,269,300			154,234,080
10% discount for estimating timing of cash flows			(235,744,770	)		(71,240,860	)
Standardized measure of discounted future net cash flows relating to natural gas reserves	$		238,524,530			82,993,220

The following table sets forth the changes in standardized measure of discounted future net cash flows related to proved natural gas reserves for the years indicated.

		Year ended December 31
		2007			2006
Beginning of year	$		82,993,220			100,049,390

Sales of natural gas produced, net of production costs			(52,981,850	)		(32,741,182	)
Net changes in prices and production costs			26,296,960			(27,474,404	)
Extensions and discoveries, net of related costs			173,366,856			48,446,038
Revisions of previous quantity estimates			2,909,893			(8,353,407	)
Development costs incurred during the year			4,506,000			—
Accretion of discount			8,299,322			10,004,939
Timing and other			(6,865,871	)		(6,938,154	)
Net change			155,531,310			(17,056,170	)
End of year	$		238,524,530			82,993,220

EX-99.3 5 ex99_3.htm UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AND STATEMENTS OF INCOME ex99_3.htm

Exhibit 99.3

QUICKSILVER RESOURCES INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION AND NOTES

		Page

Pro Forma Condensed Combined Balance Sheet as of June 30, 2008		3

Pro Forma Condensed Combined Statement of Income for the Six Months Ended June 30, 2008		4

Pro Forma Condensed Combined Statement of Income for the Year Ended December 31, 2007		5

Notes to Pro Forma Condensed Combined Financial Information		6

QUICKSILVER RESOURCES INC.

PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION AND NOTES

UNAUDITED

Quicksilver Resources Inc. (“Quicksilver” or the “Company”) is an independent oil and gas company incorporated in the state of Delaware and headquartered in Fort Worth, Texas. Quicksilver engages in the development, exploitation, exploration, acquisition and production and sale of natural gas, NGLs and crude oil as well as the marketing, processing and transmission of natural gas. As of December 31, 2007, substantial portions of Quicksilver’s reserves are located in Texas, the Rocky Mountains and Alberta, Canada with U.S. offices in Fort Worth, Texas; Granbury, Texas; Cut Bank, Montana and a Canadian subsidiary, Quicksilver Resources Canada Inc. (“QRCI”) located in Calgary, Alberta.

On August 8, 2008, Quicksilver completed the acquisition of leasehold, royalty and midstream assets ( collectively “Alliance Assets”), associated with the Barnett Shale in northern Tarrant and southern Denton counties of Texas (“Alliance Asset Acquisition”), from various private parties including Chief Resources LP, Hillwood Oil & Gas L.P. and Collins and Young, L.L.C. (collectively “Sellers”) for consideration of $1 billion in cash and 10,400,468 shares of Quicksilver Resources common stock. The cash portion of the purchase price was funded with net proceeds of $674.5 million from the issuance of a $700 million face value second-lien term loan facility and $326 million drawn on Quicksilver’s senior secured credit facility. Preliminary post-close adjustments reduced Quicksilver’s senior secured credit facility borrowing by $10.0 million.

Unaudited pro forma financial information

The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not purport to be indicative of the combined results of operations that would have actually occurred had the described transaction occurred on the indicated dates or that may be achieved in the future. However, management believes that the assumptions provide a reasonable basis for presenting the significant effect of the transaction and that the pro forma adjustments give appropriate effect to those assumptions. The unaudited pro forma condensed combined financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Quicksilver’s 2007 Annual Report on Form 10-K and its June 30, 2008 Quarterly Report on Form 10-Q, the unaudited combined statements of revenues and direct operating expenses for the Alliance Operations for the six months ended June 30, 2008 and 2007 and the audited combined statements of revenues and direct operating expenses for the Alliance Operations for the years ended December 31, 2007 and 2006 (Exhibits 99.1 and 99.2 included herein).

QUICKSILVER RESOURCES INC.

PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF JUNE 30, 2008

In thousands, except for share data - Unaudited

	Historical							Pro Forma
	Quicksilver			Pro Forma				Quicksilver
	Resources Inc.			Adjustments				Resources Inc.
ASSETS
Current assets
Cash and cash equivalents	$	2,329		$	990,487		(a)	$	1,316
					(991,500	)	(b)
Accounts receivable - net of allowance for doubtful accounts		116,301			-				116,301
Current deferred income tax asset		97,980			-				97,980
Other current assets		58,012			-				58,012
Total current assets		274,622			(1,013	)			273,609
Investment in BreitBurn Energy Partners		395,787			-				395,787
Property, plant and equipment
Oil and gas properties, full cost method
Proved oil and gas properties		1,920,507			787,918		(b)		2,708,425
Unproved oil and gas properties		293,312			436,917		(b)		730,229
Other property and equipment		488,827			30,025		(b)		518,852
Property, plant and equipment - net		2,702,646			1,254,860				3,957,506
Other assets		40,232			11,513		(a)		51,745
	$	3,413,287		$	1,265,360			$	4,678,647
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	209,815		$	-			$	209,815
Income taxes payable		104			-				104
Accrued liabilities		42,289			497		(b)		42,786
Derivative liabilities at fair value		297,087			-				297,087
Total current liabilities		549,295			497				549,792

Long-term debt		1,288,824			686,000		(a)		2,290,824
					316,000		(a)
Asset retirement obligations		26,326			771		(b)		27,097
Derivative liabilities at fair value		121,893			-				121,893
Other liabilities		10,609			-				10,609
Deferred income taxes		384,298			-				384,298
Deferred gain on sale of partnership interests		79,316			-				79,316
Minority interests in consolidated subsidiaries		29,098			-				29,098
Stockholders' equity
Preferred stock, par value $0.01, 10,000,000 shares authorized, none outstanding		-			-				-
Common stock, $0.01 par value, 400,000,000 shares authorized and
161,260,383 and 171,660,851 shares issued, respectively		1,613			104		(b)		1,717
Paid in capital in excess of par value		280,730			261,988		(b)		542,718
Treasury stock of 2,661,967 shares		(14,658	)		-				(14,658	)
Accumulated other comprehensive loss		(205,101	)		-				(205,101	)
Retained earnings		861,044			-				861,044
Total stockholders' equity		923,628			262,092				1,185,720
	$	3,413,287		$	1,265,360			$	4,678,647

The accompanying notes are an integral part of these pro forma condensed combined financial statements.

QUICKSILVER RESOURCES INC.

PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2008

In thousands, except for per share data - Unaudited

	Quicksilver			Alliance						Quicksilver
	Resources Inc.			Operations		Pro Forma				Resources Inc.
	Historical			Historical		Adjustments				Pro Forma
Revenues
Natural gas, NGL and crude oil sales	$	356,503		$	61,658	$	-			$	418,161
Other		(985	)		630		-				(355	)
Total revenues		355,518			62,288		-				417,806

Operating expenses
Oil and gas production expense		66,090			9,116		-				75,206
Production and ad valorem taxes		4,867			3,515		-				8,382
Other operating costs		1,959			-		-				1,959
Depletion, depreciation and accretion		73,979			-		24,175		(c)		98,154
General and administrative		30,797			-		-		(d)		30,797
Total expenses		177,692			12,631		24,175				214,498

Operating income		177,826			49,657		(24,175	)			203,308

Equity loss from BreitBurn Energy Partners		4,050			-		-				4,050
Other income - net		(1,058	)		-		-				(1,058	)
Interest expense		26,298			-		36,070		(e)		62,368
Income before income taxes and minority interest		148,536			49,657		(60,245	)			137,948
Income tax expense		52,468			-		(3,775	)	(f)		48,693
Minority interest expense, net of income tax		1,496			-		-				1,496
Net income	$	94,572		$	49,657	$	(56,470	)		$	87,759


Earnings per common share - basic	$	0.60								$	0.52

Earnings per common share - diluted	$	0.56								$	0.49

Basic weighted average shares outstanding		157,807			-		10,400		(g)		168,207

Diluted weighted average shares outstanding		169,764			-		10,400		(g)		180,164

The accompanying notes are an integral part of these pro forma condensed combined financial statements.

QUICKSILVER RESOURCES INC.

PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2007

In thousands, except for per share data - Unaudited

				Alliance						Quicksilver
	Quicksilver			Operations		Pro Forma				Resources Inc.
	Resources Inc.			Historical		Adjustments				Pro Forma
Revenues
Natural gas, NGL and crude oil sales	$	545,089		$	67,608	$	-			$	612,697
Other		16,169			1,002		-				17,171
Total revenues		561,258			68,610		-				629,868

Operating expenses
Oil and gas production expense		136,831			10,334		-				147,165
Production and ad valorem taxes		16,142			4,292		-				20,434
Other operating costs		2,792			-		-				2,792
Depletion, depreciation and accretion		120,697			-		55,858		(h)		176,555
General and administrative		47,060			-		-		(d)		47,060
Total expenses		323,522			14,626		55,858				394,006
Income from equity affiliates		661			-		-				661
Gain on sale of oil and gas properties		628,709			-		-				628,709
Loss on natural gas sales contract		(63,525	)		-		-				(63,525	)
Operating income		803,581			53,984		(55,858	)			801,707
Other income - net		(3,887	)		-		-				(3,887	)
Interest expense		70,527			-		71,283		(i)		141,810
Income before income taxes and minority interest		736,941			53,984		(127,141	)			663,784
Income tax expense		256,508			-		(26,081	)	(j)		230,427
Minority interest expense, net of income tax		1,055			-		-				1,055
Net income	$	479,378		$	53,984	$	(101,060	)		$	432,302


Earnings per common share - basic	$	3.08								$	2.61

Earnings per common share - diluted	$	2.86								$	2.43

Basic weighted average shares outstanding		155,475			-		10,400		(k)		165,875

Diluted weighted average shares outstanding		168,029			-		10,400		(k)		178,429

The accompanying notes are an integral part of these pro forma condensed combined financial statements.

QUICKSILVER RESOURCES INC.

NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

UNAUDITED

Pro forma balance sheet

The unaudited pro forma condensed combined balance sheet as of June 30, 2008 is based on the historical unaudited condensed consolidated balance sheet of Quicksilver as of June 30, 2008. The pro forma condensed combined balance sheet gives effect to the Alliance Asset Acquisition and related transactions as if such acquisition had occurred on June 30, 2008.

(a)

Pro forma adjustment to reflect proceeds of $686.0 million from borrowings under the Company’s $700 million second lien term loan facility at 98% of face value, debt issuance costs of $11.5 million funded from those borrowings and recorded in other assets to be amortized over the life of the debt. The pro forma adjustment also reflects borrowings of $326.0 million under the Company’s senior secured credit facility and subsequent repayment of $10.0 million of borrowings under the senior secured credit facility from cash received in preliminary post-close settlement subsequent to the close date.

(b)	Reflects payment of $990.0 million and issuance of 10,400,468 shares of Quicksilver common stock to Sellers for the Alliance Assets. The acquisition of the Alliance Assets will be accounted for as a purchase with the following preliminary allocation of the purchase price:

(in thousands)

Purchase price:
Cash paid to Sellers	$	1,000,000
Cash received from post-closing settlement		(10,000	)
Cash paid for acquisition-related expenses		1,500
Total cash		991,500
Shares issued to Sellers		262,092
Total purchase price	$	1,253,592

Allocation of purchase price:
Oil and gas properties - proved	$	787,918
Oil and gas properties - unproved		436,917
Midstream assets		30,025
Liabilities assumed		(497	)
Asset retirement obligations		(771	)
	$	1,253,592

Pro forma statements of income

The unaudited pro forma combined statement of income for the six months ending June 30, 2008 is based on the unaudited condensed consolidated financial statements for Quicksilver for the six months ended June 30, 2008 and the unaudited combined statement of revenues and direct operating expenses for the Alliance Operations for the six months ended June 30, 2008. The unaudited pro forma condensed combined statement of income for the year ended December 31, 2007 is based on the audited consolidated financial statements for Quicksilver for the year ended December 31, 2007 and the audited combined statement of revenues and direct operating expenses of the Alliance Operations for the year ended December 31, 2007. The pro forma condensed combined financial information gives effect to the following events as if each had occurred on January 1, 2007.

the proceeds of $686.0 million from issuance of the $700 million second lien term loan facility and debt issuance costs of $11.5 million funded from those borrowings and recorded in other assets to be amortized over the life of the debt; borrowings of $326.0 million under Quicksilver’s senior secured credit facility and subsequent repayment of an estimated $10.0 million of borrowings under the senior secured credit facility from cash received in preliminary post-close settlement subsequent to the close date;

·	the issuance of 10,400,468 shares of Quicksilver common stock at the August 8, 2008 closing market price of $25.20 per common share; and

·	the acquisition of the Alliance Assets.

(c)

Pro forma adjustment to depletion for the six months ended June 30, 2008 giving effect to considerations including the net historical cost for existing oil and gas properties, estimated valuation of the Alliance oil and gas properties, estimated proved reserves owned after the Alliance Asset Acquisition and pro forma production during the period. Additionally, the pro forma adjustment includes depreciation on the acquired midstream assets and accretion for all Alliance Assets.

(d)	Management does not expect to incur incremental general and administrative expenses as a result of the Alliance Acquisition.

(e)

Pro forma adjustment to include interest expense associated with the $700 million second lien loan term facility, with an assumed interest rate of 7.75%, and $316 million of net borrowings under Quicksilver’s senior secured credit facility, with an assumed interest rate of 4.09% for the six months ended June 30, 2008.

(f)	Pro forma adjustment to amend the provision for income taxes with respect to the Alliance Assets and associated transactions at an effective U.S. tax rate of 35.7%.

(g)	Pro forma weighted average basic and diluted shares outstanding and earnings per share were calculated as follows:

	Quicksilver		Alliance					Quicksilver
	Resources Inc.		Operations		Pro Forma			Resources Inc.
	Historical		Historical		Adjustments			Pro Forma
	(In thousands, except per share data)
Net income	$	94,572	$	49,657	$	(56,470	)	$	87,759

Impact of assumed conversions – interest on 1.875% convertible debentures, net of income taxes		950		-		-			950
Income available to stockholders assuming conversion of convertible debentures	$	95,522	$	49,657	$	(56,470	)	$	88,709

Weighted average common shares – basic		157,807		-		10,400			168,207
Effect of dilutive securities:
Employee stock options		742				-			742
Employee stock and stock unit awards		1,399				-			1,399
Contingently convertible debentures		9,816				-			9,816
Weighted average common shares – diluted		169,764				10,400			180,164

Earnings per common share - basic	$	0.60						$	0.52

Earnings per common share - diluted	$	0.56						$	0.49

(h)

Pro forma adjustment to depletion for the year ended December 31, 2007 giving effect to considerations including the net historical cost for existing oil and gas properties, estimated valuation of the Alliance oil and gas properties, estimated proved reserves owned after the Alliance Asset Acquisition and pro forma production during the period. Additionally, the pro forma adjustment includes depreciation on the acquired midstream assets and accretion for all Alliance Assets.

(i)

Pro forma adjustment to include interest expense associated with the $700 million second lien loan term facility, with an assumed average interest rate of 7.75%, and $316 million of net borrowings under Quicksilver’s senior secured credit facility, with an average interest rate of 4.09% for the year ended December 31, 2007.

(j)	Pro forma adjustment to amend the provision for income taxes with respect to the Alliance Assets and associated transactions at an effective U.S. tax rate of 35.7%.

(k)	Pro forma weighted average basic and diluted shares outstanding and earnings per share were calculated as follows:

	Quicksilver		Alliance					Quicksilver
	Resources Inc.		Operations		Pro Forma			Resources Inc.
	Historical		Historical		Adjustments			Pro Forma
	(In thousands, except per share data)
Net income	$	479,378	$	53,984	$	(101,060	)	$	432,302
Impact of assumed conversions – interest on 1.875% convertible debentures, net of income taxes		1,901		-		-			1,901
Income available to stockholders assuming conversion of convertible debentures	$	481,279	$	53,984	$	(101,060	)	$	434,203

Weighted average common shares – basic		155,475		-		10,400			165,875
Effect of dilutive securities:
Employee stock options		1,326				-			1,326
Employee stock and stock unit awards		1,412				-			1,412
Contingently convertible debentures		9,816				-			9,816
Weighted average common shares – diluted		168,029				10,400			178,429

Earnings per common share - basic	$	3.08						$	2.61

Earnings per common share - diluted	$	2.86						$	2.43