8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_______________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 1, 2010

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.)

801 Cherry Street

Suite 3700, Unit 19

Fort Worth, Texas 76102

(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))

Item 2.01.      Completion of Acquisition or Disposition of Assets

On October 1, 2010, Quicksilver Resources Inc. (“Quicksilver”) announced that pursuant to the terms of the Purchase Agreement (the “Purchase Agreement”) among Quicksilver, its wholly owned subsidiaries Cowtown Gas Processing L.P. and Cowtown Pipeline L.P. (the “Selling Subsidiaries”) and Crestwood Holdings LLC, formerly known as First Reserve Crestwood Holdings LLC (“Buyer”), dated July 22, 2010, as amended, Quicksilver, through the Selling Subsidiaries, sold to Buyer (i) all of its interests in Quicksilver Gas Services LP (“KGS”), including 100% of its interest in KGS’ general partner and all of its common units, subordinated units, general partner units and incentive distribution rights and (ii) the Subordinated Promissory Note, dated August 10, 2007, issued by KGS to Qu icksilver.  In exchange, Quicksilver received $701 million in cash and may receive up to $72 million in future earn-out payments.

The foregoing summary of the Purchase Agreement, and the transactions contemplated thereby, does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement, which is attached as Exhibit 2.1 to Quicksilver’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 23, 2010 and incorporated herein by reference.

Item 8.01.      Other Events

On October 1, 2010, Quicksilver issued a press release announcing that it had completed the transactions contemplated by the Purchase Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference into this Item 8.01.

Item 9.01.      Financial Statements and Exhibits

(b) Pro Forma Financial Information

The unaudited pro forma financial information for the years ended December 31, 2009, 2008 and 2007 and the six months ended June 30, 2010 and as of June 30, 2010 is attached as exhibit 99.2.  The unaudited pro forma financial information for the years ended December 31, 2009, 2008 and 2007 and for the six months ended June 30, 2010 has been prepared as if the disposition had occurred on January 1, 2007.  The unaudited pro forma financial information as of June 30, 2010 has been prepared as if the disposition had occurred on June 30, 2010.  This information is not necessarily indicative of the results that actually would have resulted if the disposition had occurred on these dates or that may be attained in the future.

(d) Exhibits:

Exhibit Number	Description
99.1	Press Release issued by Quicksilver Resources Inc. announcing closing of the Crestwood Transaction
99.2	Unaudited Pro Forma Condensed Combined Financial Information

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 7, 2010

INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Press Release issued by Quicksilver Resources Inc. announcing closing of the Crestwood Transaction
99.2	Unaudited Pro Forma Condensed Combined Financial Information

EX-99.1

Exhibit 99.1    

 

  N e w s   R e l e a s e                QUICKSILVER RESOURCES INC.           801 Cherry Street   Fort Worth, TX  76102   www.qrinc.com 

Quicksilver Resources Completes Sale of 100% of its Interests in Quicksilver Gas Services

FORT WORTH, TEXAS (October 1, 2010) – Quicksilver Resources Inc. (NYSE: KWK)has closed the previously announced sale of all of its interests in Quicksilver Gas Services to Crestwood Holdings LLC.  Quicksilver received $701 million in cash at closing and expects to receive up to an additional $72 million in earn-out payments in 2012 and 2013.

The sale included 469,944 general partner units representing 100% of the general partner interests, 5,696,752 common units, 11,513,625 subordinated units and the note receivable from Quicksilver Gas Services LP, which had a balance of approximately $58 million at closing.  Proceeds from the sale are being used to fully repay the company’s $1 billion senior secured credit facility, which had an outstanding balance of approximately $529 million on September 30, 2010.

UBS Financial Services acted as financial advisor to Quicksilver and Davis Polk & Wardwell LLP acted as legal counsel to Quicksilver in connection with the transaction.

About Quicksilver Resources

Fort Worth, Texas-based Quicksilver Resources is a natural gas and crude oil exploration and production company engaged in the development and acquisition of long-lived, unconventional natural gas reserves, including coalbed methane, shale gas, and tight sands gas in North America.  The company has U.S. offices in Fort Worth, Texas; Glen Rose, Texas and Cut Bank, Montana.  Quicksilver’s Canadian subsidiary, Quicksilver Resources Canada Inc., is headquartered in Calgary, Alberta.  For more information about Quicksilver Resources, visit www.qrinc.com.

Forward-Looking Statements

The statements in this news release regarding future events, occurrences, circumstances, activities, performance, outcomes and results are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Although these statements reflect the current views, assumptions and expectations of Quicksilver Resources’ management, the matters addressed herein are subject to numerous risks and uncertainties, which could cause actual activities, performance, outcomes and results to differ materially from those indicated.  Factors that could result in such differences or otherwise materially affect Quicksilver Resources’ financial condition, results of operations and cash flows include:  changes in general economic conditions; fluctuations in natural gas, natural gas liquids and crude oil prices; failure or delays in achieving expected production from exploration and development projects; uncertainties inherent in estimates of natural gas, natural gas liquids and crude oil reserves and predicting natural gas, natural gas liquids and crude oil reservoir performance; effects of hedging natural gas, natural gas liquids and crude oil prices; fluctuations in the value of certain of our assets and liabilities; competitive conditions in our industry; actions taken or non-performance by third parties, including suppliers, contractors, operators, processors, transporters, customers and counterparties; changes in the availability and cost of capital; delays in obtaining oilfield equipment and

- more -

  NEWS RELEASE Page 2 of 2

increases in drilling and other service costs; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; the effects of existing and future laws and governmental regulations, including environmental and climate change requirements; and the effects of existing or future litigation; as well as, other factors disclosed in Quicksilver Resources’ filings with the Securities and Exchange Commission.  The forward-looking statements included in this news release are made only as of the date of this news release, and we undertake no obligation to update any of these forward-looking statements to reflect subsequent events or circumstances except to the extent required by appl icable law.

Investor Contact:

Rick Buterbaugh

(817) 665-4835

KWK 10-14

-end-

EX-99.2

Exhibit 99.2

QUICKSILVER RESOURCES INC.

INTRODUCTION TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On October 1, 2010 we disposed of our interests in Quicksilver Gas Services LP ("KGS") to Crestwood Holdings LLC, formerly known as First Reserve Crestwood Holdings LLC, including of 100% of the general partner units, with incentive distribution rights, all of our common and subordinated units in KGS and the subordinated note due from KGS.  In exchange, we received $701 million in cash at closing and expect to receive up to $72 million in future earn-out payments.  The transaction, which we call the “Crestwood Transaction,” resulted in the elimination of approximately $227 million of consolidated debt associated with KGS from our balance sheet as of June 30, 2010.  The proceeds are expected to be used to repay outstanding borrowin gs on our Senior Secured Credit Facility and to pay federal income taxes associated with the disposition.

The following unaudited pro forma condensed consolidated financial statements and explanatory notes present how our financial statements may have appeared had the Crestwood Transaction occurred on June 30, 2010 (with respect to the balance sheet information) or on January 1, 2007 (with respect to the statements of operations information).

The unaudited pro forma condensed consolidated financial statements have been derived and should be read together with our historical consolidated financial statements and related notes included in our 2009 Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010.

The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and do not purport to represent what our results of operations or financial position would actually have been had the Crestwood Transaction occurred on the dates noted above, or to project our results of operations or financial position for any future periods.  The pro forma adjustments are based on available information and certain assumptions that we believe are reasonable.  The pro forma adjustments are directly attributable to the Crestwood Transaction and are expected to have a continuing impact on our results of operations.  We believe we have made all adjustments necessary to fairly present the unaudited pro forma financial information.

QUICKSILVER RESOURCES INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF JUNE 30, 2010

	As Historically			Crestwood Transaction
	Presented			Adjustments				Pro Forma
	(In thousands, except for share data)
ASSETS
Current assets
Cash and cash equivalents	$	3,308		$	200,708		(a)	$	204,016
Accounts receivable - net of allowance for doubtful accounts		42,595			(2,417	)	(b)		40,178
Derivative assets at fair value		138,871			-				138,871
Other current assets		63,137			(1,138	)	(b)		61,999
Total current assets		247,911			197,153				445,064
Investment in BBEP		92,956			-				92,956
Property, plant and equipment
Oil and gas properties, full cost method (including unevaluated costs of $375,100 and $458,037, respectively)		2,613,688			-				2,613,688
Other property and equipment		769,214			(510,500	)	(b)		258,714
Property, plant and equipment - net		3,382,902			(510,500	)			2,872,402
Derivative assets at fair value		67,763			-				67,763
Deferred income taxes		73,083			(6,208	)	(b)		66,875
Other assets		42,084			(2,417	)	(b)		39,667
	$	3,906,699		$	(321,972	)		$	3,584,727
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	122,400		$	(7,681	)	(b)	$	114,719
Accrued liabilities		156,639			(4,649	)	(b)		151,990
Income taxes payable		-			138,000		(c)		138,000
Deferred income taxes		54,888			-				54,888
Total current liabilities		333,927			125,670				459,597
Long-term debt		2,586,923			(720,034	)	(d)		1,866,889
Asset retirement obligations		61,634			(9,425	)	(b)		52,209
Other liabilities		30,396			-				30,396
Deferred income taxes		49,037			(895	)	(b)		48,142
Commitments and contingencies
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; 175,496,888 and 174,469,836 shares issued, respectively		1,755			-				1,755
Paid in capital in excess of par value		748,405			-				748,405
Treasury stock of 5,025,337 and 4,704,448 shares, respectively		(41,167	)		-				(41,167	)
Accumulated other comprehensive income		158,916			-				158,916
Retained (deficit) earnings		(85,994	)		345,579		(e)		259,585
Quicksilver stockholders' equity		781,915			345,579				1,127,494
Noncontrolling interests		62,867			(62,867	)	(f)		-
Total equity		844,782			282,712				1,127,494
	$	3,906,699		$	(321,972	)		$	3,584,727

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

QUICKSILVER RESOURCES INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2010

	As Historically			Crestwood Transaction
	Presented			Adjustments				Pro Forma
	(In thousands, except per share amounts)
Revenue
Natural gas, NGL and crude oil	$	413,250		$	-			$	413,250
Sales of purchased natural gas		33,045			(3,457	)	(g)		29,588
Other		4,433			(4,100	)	(g)		333
Total revenue		450,728			(7,557	)			443,171
Operating expense
Oil and gas production expense		74,191			34,338		(g)		108,529
Production and ad valorem taxes		17,372			(2,565	)	(g)		14,807
Costs of purchased natural gas		37,063			(55	)	(g)		37,008
Other operating expense		2,224			(1,943	)	(g)		281
Depletion, depreciation and accretion		97,426			(11,049	)	(h)		86,377
General and administrative expense		37,740			(1,745	)	(g)		35,995
Total expense		266,016			16,981				282,997
Operating income		184,712			(24,538	)			160,174
Income from earnings of BBEP - net		7,179			-				7,179
Other income - net		53,393			-				53,393
Interest expense		(90,639	)		9,362		(i)		(81,277	)
Income from continuing operations before income taxes		154,645			(15,176	)			139,469
Income tax - continuing operations		(53,301	)		5,463		(j)		(47,838	)
Income from continuing operations		101,344			(9,713	)			91,631
Income from continuing operations attributable to noncontrolling interests		(6,353	)		6,353		(k)		-
Income from continuing operations attributable to Quicksilver	$	94,991		$	(3,360	)		$	91,631
Earnings per common share from continuing operations attributable to Quicksilver  - basic	$	0.56						$	0.54
Earnings per common share from continuing operations attributable to Quicksilver - diluted	$	0.54						$	0.51
Basic weighted average shares outstanding		170,225							170,225
Diluted weighted average shares outstanding		180,855							180,855

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

QUICKSILVER RESOURCES INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2009

	As Historically			Crestwood Transaction
	Presented			Adjustments				Pro Forma
	(In thousands, except per share amounts)
Revenue
Natural gas, NGL and crude oil	$	796,698		$	-			$	796,698
Sales of purchased natural gas		23,654			(352	)	(g)		23,302
Other		12,383			(7,881	)	(g)		4,502
Total revenue		832,735			(8,233	)			824,502
Operating expense
Oil and gas production expense		127,715			71,221		(g)		198,936
Production and ad valorem taxes		23,881			(3,596	)	(g)		20,285
Costs of purchased natural gas		30,158			(103	)	(g)		30,055
Other operating expense		6,684			(3,910	)	(g)		2,774
Depletion, depreciation and accretion		201,387			(20,913	)	(h)		180,474
General and administrative expense		77,243			(3,229	)	(g)		74,014
Total expense		467,068			39,470				506,538
Impairment related to oil and gas properties		(979,540	)		-				(979,540	)
Operating loss		(613,873	)		(47,703	)			(661,576	)
Income from earnings of BBEP		75,444			-				75,444
Impairment of investment in BBEP		(102,084	)		-				(102,084	)
Other expense - net		(1,242	)		-				(1,242	)
Interest expense		(195,101	)		24,760		(i)		(170,341	)
Loss from continuing operations before income taxes		(836,856	)		(22,943	)			(859,799	)
Income tax - continuing operations		291,617			8,260		(j)		299,877
Loss from continuing operations		(545,239	)		(14,683	)			(559,922	)
Income from continuing operations attributable to noncontrolling interests		(12,234	)		12,234		(k)		-
Loss from continuing operations attributable to Quicksilver	$	(557,473	)	$	(2,449	)		$	(559,922	)
Earnings per common share from continuing operations attributable to Quicksilver  - basic	$	(3.30	)					$	(3.31	)
Earnings per common share from continuing operations attributable to Quicksilver - diluted	$	(3.30	)					$	(3.31	)
Basic weighted average shares outstanding		169,004							169,004
Diluted weighted average shares outstanding		169,004							169,004

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

QUICKSILVER RESOURCES INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2008

	As Historically			Crestwood Transaction
	Presented			Adjustments				Pro Forma
	(In thousands, except per share amounts)
Revenue
Natural gas, NGL and crude oil	$	780,788		$	-			$	780,788
Other		19,853			(12,140	)	(g)		7,713
Total revenue		800,641			(12,140	)			788,501
Operating expense
Oil and gas production expense		134,302			46,088		(g)		180,390
Production and ad valorem taxes		18,734			(1,779	)	(g)		16,955
Other operating expense		3,337			224		(g)		3,561
Depletion, depreciation and accretion		188,196			(13,051	)	(h)		175,145
General and administrative expense		72,254			(2,984	)	(g)		69,270
Total expense		416,823			28,498				445,321
Impairment related to oil and gas properties		(633,515	)		-				(633,515	)
Operating loss		(249,697	)		(40,638	)			(290,335	)
Income from earnings of BBEP		93,298			-				93,298
Impairment of investment in BBEP		(320,387	)		-				(320,387	)
Other income - net		807			(11	)	(g)		796
Interest expense		(109,098	)		30,173		(i)		(78,925	)
Loss from continuing operations before income taxes		(585,077	)		(10,476	)			(595,553	)
Income tax - continuing operations		211,455			3,771		(j)		215,226
Loss from continuing operations		(373,622	)		(6,705	)			(380,327	)
Income from continuing operations attributable to noncontrolling interests		(4,654	)		4,654		(k)		-
Loss from continuing operations attributable to Quicksilver	$	(378,276	)	$	(2,051	)		$	(380,327	)
Earnings per common share from continuing operations attributable to Quicksilver  - basic	$	(2.33	)					$	(2.35	)
Earnings per common share from continuing operations attributable to Quicksilver - diluted	$	(2.33	)					$	(2.35	)
Basic weighted average shares outstanding		162,004							162,004
Diluted weighted average shares outstanding		162,004							162,004

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

QUICKSILVER RESOURCES INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2007

	As Historically			Crestwood Transaction
	Presented			Adjustments				Pro Forma
	(In thousands, except per share amounts)
Revenue
Natural gas, NGL and crude oil	$	545,089		$	-			$	545,089
Other		16,169			(6,280	)	(g)		9,889
Total revenue		561,258			(6,280	)			554,978
Operating expense
Oil and gas production expense		136,103			19,877		(g)		155,980
Production and ad valorem taxes		17,048			-		(g)		17,048
Other operating expense		2,614			(1,895	)	(g)		719
Depletion, depreciation and accretion		120,697			(7,778	)	(h)		112,919
General and administrative expense		47,060			(1,317	)	(g)		45,743
Total expense		323,522			8,887				332,409
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			(15,167	)			788,414
Other income - net		3,887			(236	)	(g)		3,651
Interest expense		(76,662	)		38,454		(i)		(38,208	)
Income from continuing operations before income taxes		730,806			23,051				753,857
Income tax - continuing operations		(254,361	)		(8,299	)	(j)		(262,660	)
Income from continuing operations		476,445			14,752				491,197
Income from continuing operations attributable to noncontrolling interests		(1,055	)		1,055		(k)		-
Income from continuing operations attributable to Quicksilver	$	475,390		$	15,807			$	491,197
Earnings per common share from continuing operations attributable to Quicksilver  - basic	$	3.04						$	3.14
Earnings per common share from continuing operations attributable to Quicksilver - diluted	$	2.87						$	2.96
Basic weighted average shares outstanding		156,517							156,517
Diluted weighted average shares outstanding		168,029							168,029

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

QUICKSILVER RESOURCES INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2010 AND FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 and 2007

Note 1 Basis of Presentation

The accompanying unaudited pro forma condensed consolidated financial statements and explanatory notes present how our financial statements may have appeared had the sale of our interests in KGS to Crestwood Holdings LLC (the “Crestwood Transaction”), occurred on June 30, 2010 (with respect to the balance sheet information) or on January 1, 2007 (with respect to statements of operations).  The Crestwood Transaction is explained in more detail in the introductory paragraph to the accompanying unaudited pro forma financials.

Following are descriptions of certain columns included in the accompanying unaudited pro forma condensed consolidated financial statements:

As Historically Presented – Represents our historical condensed consolidated balance sheet as of June 30, 2010 and our historical condensed consolidated statements of operations for the six months ended June 30, 2010 and the years ended December 31, 2009, 2008 and 2007.

Crestwood Transaction Adjustments – Represents the adjustments to our historical condensed consolidated financial statements necessary to arrive at our pro forma financial position as of June 30, 2010, as if the Crestwood Transaction occurred on June 30, 2010, and the pro forma results of our operations for the six months ended June 30, 2010 and the years ended December 31, 2009, 2008 and 2007, as if the disposition occurred as of January 1, 2007.

Note 2 Pro Forma Adjustments

Condensed Consolidated Balance Sheet

(a) To record excess cash of $200.7 million remaining after using a portion of the Crestwood Transaction proceeds, net of $6.5 million of transaction costs, to repay our indebtedness under our Senior Secured Credit Facility.

(b) Represents the deconsolidation of assets and liabilities directly attributable to KGS, except for its debt described in (d) below.

(c) To record the income taxes arising from the Crestwood Transaction, of which we believe $130.0 million is due to the Internal Revenue Service in December 2010 and $8.0 million is due to the State of Texas in May 2011.

(d) To reflect repayment of all amounts due under our Senior Secured Credit Facility ($493.2 million) and the deconsolidation of KGS’ Credit Agreement ($226.8 million).

(e) To record the estimated gain from the Crestwood Transaction of $540.0 million before taxes ($345.6 million after taxes and after tax impact of transaction costs).

(f) To record the elimination of noncontrolling interest attributable to KGS as a result of the Crestwood Transaction.

Condensed Consolidated Statements of Operations

(g) To eliminate the revenues and operating expenses directly attributable to KGS.

(h) To eliminate depreciation associated with assets disposed in the Crestwood Transaction.

(i) To adjust interest expense to give effect to the absence of outstanding borrowings under our Senior Secured Credit Facility and borrowings outstanding under the KGS credit agreement.

(j) To record income tax expense for the effects of the pro forma adjustments at statutory rates.

(k) To record the elimination of net income attributable to noncontrolling interests as a result of the Crestwood Transaction.