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): August 9, 2010

QUICKSILVER GAS SERVICES LP

(Exact Name of Registrant as Specified in Charter)

Delaware	001-33631	56-2639586
(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) 665-8620

_______________

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 2.02.      Results of Operations and Financial Condition.

On August 9, 2010, we issued a press release reporting our operating and financial results for the quarter ended June 30, 2010.  A copy of the press release is attached as Exhibit 99.1 and is incorporated herein by reference.  The information contained in this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished to the Securities and Exchange Commission and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section.

The press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission.  We presented distributable cash flow, EBITDA and adjusted gross margin for all periods presented in the press release.

As part of the press release, we provided a reconciliation of distributable cash flow to net income, which is the most comparable financial measure determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  Our management believes that distributable cash flow provides investors with information that is useful to an assessment of our operating performance and the cash flow generated by our operations.  Other companies may calculate their distributable cash flow differently than we calculate our distributable cash flow and, accordingly, our distributable cash flow may not be comparable to similar measures disclosed by other companies.

We also provided a reconciliation of EBITDA and adjusted gross margin to net income, which is the most comparable financial measure determined in accordance with accounting principles generally accepted in the United States of America.  EBITDA is used as a supplemental performance measure by our management to assess:

•   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 energy industry without regard to financing methods, capital structure or historical cost basis; and  

•   the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.

We also use EBITDA to assess our ability to incur and service debt, fund capital expenditures and make distributions.  Adjusted gross margin is used by our management and by external users of our financial statements such as investors, commercial banks, research analysts and others to evaluate the relationship between our gathering and processing revenues and our cost of operating our facilities and our general and administrative overhead.

Item 9.01.      Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description
99.1	Press release dated August 9, 2010.

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 GAS SERVICES LP
By:	Quicksilver Gas Services GP LLC, its General Partner
By:	/s/ Philip Cook
	Philip Cook
	Senior Vice President - Chief Financial Officer

Date: August 9, 2010

INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Press release dated August 9, 2010.

EX-99.1

Exhibit 99.1    

  N e w s   R e l e a s e                QUICKSILVER GAS SERVICES LP           777 West Rosedale Street   Fort Worth, TX  76104   www.kgslp.com   

Quicksilver Gas Services Second-Quarter Net Income Surges 44% in 2010

FORT WORTH, TEXAS (August 9, 2010) – Quicksilver Gas Services LP (NYSE: KGS) today reported net income for the 2010 second quarter of $10.1 million, a 44% increase from the comparable prior year’s net income of $7.0 million.  Earnings before interest, income taxes, depreciation and accretion ("EBITDA"), a non-GAAP measure, increased to $18.8 million in the 2010 quarter, up 20% from the comparable prior-year period.

The company’s total gathered volumes for the 2010 second quarter averaged 325.4 million cubic feet (MMcf) per day, an increase of 33% from the comparable prior-year period.  Continued development of the Alliance and Lake Arlington properties by Quicksilver Resources Inc. (NYSE: KWK) is expected to result in total average gathered volumes for Quicksilver Gas Services in the range of approximately 330 MMcf to 340 MMcf per day for all of 2010.  The company purchased the Alliance midstream assets from Quicksilver Resources in January and has reflected their results in the 2009 financial information by virtue of Quicksilver’s ownership position with us.

“The value of our recent acquisition of the Alliance midstream system was evident during the quarter as gathered volumes increased as anticipated,” said Toby Darden, Quicksilver Gas Services president and chief executive officer.  “More importantly, we efficiently integrated this acquisition into our gathering network which helped to reduce our costs per gathered unit by more than 25% from the first quarter of 2010.  We believe that the opportunity for continued, diversified growth will be further enhanced following completion of the sale of the general partner to Crestwood Midstream Partners later this year.”

For the second quarter of 2010, the company incurred approximately $13.5 million of capital costs, including $1.7 million of maintenance capital.  Expenditures during the quarter included the connection of approximately 2.2 miles of gathering lines and 28 new wells to the gathering system.

At June 30, 2010, the company had approximately $227 million drawn on its $320 million credit facility.

On July 22, the company announced that Quicksilver Resources, the owner of 100% of our general partner, Quicksilver Gas Services GP, had entered into a definitive agreement to sell all of its interests in Quicksilver Gas Services to Crestwood Midstream Partners II, LLC, a portfolio company of First Reserve Corporation.  At closing, which is not subject to financing contingencies and is expected to occur in October 2010, subject to customary closing conditions, Quicksilver Resources will convey all of its ownership of us to Crestwood.  The transaction has no direct impact to our historical financial statements.

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Also on July 22, 2010, the company announced that our board of directors declared a cash distribution for the 2010 second quarter of $.42 per common unit, an increase of 7.7% from the previous quarterly rate.  For the three months ended June 30, 2010, distributable cash flow, a non-GAAP financial measure, totaled $15.4 million, a 28% increase from the prior-year quarter, and resulted in a distribution coverage rate of more than 1.2 times for the 2010 second quarter.

Conference Call

Quicksilver Gas Services will host a conference call for investors and analysts at 10:00 a.m. eastern time today to discuss the second-quarter 2010 operating and financial results and its outlook for the future.  The company invites interested parties to listen to the call via the company’s website at www.kgslp.com or by calling 1-877-313-7932, using the conference ID number 44423585, approximately 10 minutes prior to the call.  A digital replay of the conference call will be available at 3:00 p.m. eastern time today and will remain available for 30 days.  The replay can be accessed at

1-800-642-1687 using the conference ID number 44423585.  The replay will also be archived for 30 days on the company’s website.

Use of Non-GAAP Financial Measures

This news release and the accompanying schedules include the non-generally accepted accounting principles ("non-GAAP") financial measures of EBITDA, adjusted gross margin and distributable cash flow.  The accompanying schedules on page 7 of this news release provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP").  Our non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income or operating income or any other GAAP measure of liquidity or financial performance.

About Quicksilver Gas Services

Fort Worth, Texas-based Quicksilver Gas Services is a growth-oriented limited partnership in the business of gathering and processing natural gas produced from the Barnett Shale geologic formation in the Fort Worth Basin of north Texas.  The company began operation in 2004 to provide these services to Quicksilver Resources Inc., which owns our general partner.  For more information about Quicksilver Gas Services, visit www.kgslp.com.

Forward-Looking Statements

The statements in this news release regarding future events, occurrences, circumstances, activities, performance, outcomes and results are forward-looking statements.  Although these statements reflect the current views, assumptions and expectations of Quicksilver Gas Services LP’s 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 Gas Services LP’s financial condition, results of operations and cash flows include:  changes in general economic conditions; fluctuations in natural gas prices; failure or delays by our customers in a chieving expected production

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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; and the effects of existing and future litigation; as well as other factors disclosed in Quicksilver Gas Services LP’s 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 applicable law.

Investor Contact

Rick Buterbaugh

817-665-4835

KGS 10-09

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QUICKSILVER GAS SERVICES LP

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

In thousands, except for per unit data - Unaudited

	Three Months Ended June 30,					Six Months Ended June 30,
	2010		2009			2010		2009
Revenue
Gathering revenue - Quicksilver	$	18,405	$	13,731		$	34,794	$	27,259
Gathering revenue		1,340		389			2,455		1,160
Processing revenue - Quicksilver		6,774		8,684			13,253		17,386
Processing revenue		675		311			1,431		1,049
Other revenue - Quicksilver		-		225			-		450
Total revenue		27,194		23,340			51,933		47,304
Expenses
Operations and maintenance		6,588		5,950			14,601		11,171
General and administrative		1,833		1,744			4,274		3,736
Depreciation and accretion		5,642		5,321			11,007		9,845
Total expenses		14,063		13,015			29,882		24,752
Operating income		13,131		10,325			22,051		22,552
Other income		-		1			-		1
Interest expense		2,945		2,243			5,623		4,478
Income from continuing operations before income taxes		10,186		8,083			16,428		18,075
Income tax provision		73		248			126		211
Net income from continuing operations		10,113		7,835			16,302		17,864
Loss from discontinued operations		-		(819	)		-		(1,454	)
Net income	$	10,113	$	7,016		$	16,302	$	16,410
General partner interest in net income	$	677	$	225		$	778	$	497
Common and subordinated unitholders’ interest in net income	$	9,436	$	6,791		$	15,524	$	15,913
Basic earnings (loss) per limited partner unit:
From continuing operations per common and subordinated unit	$	0.33	$	0.32		$	0.54	$	0.73
From discontinued operations per common and subordinated unit	$	-	$	(0.03	)	$	-	$	(0.06	)
Net earnings per common and subordinated unit	$	0.33	$	0.29		$	0.54	$	0.67
Diluted earnings (loss) per limited partner unit:
From continuing operations per common and subordinated unit	$	0.31	$	0.29		$	0.52	$	0.65
From discontinued operations per common and subordinated unit	$	-	$	(0.03	)	$	-	$	(0.05	)
Net earnings per common and subordinated unit	$	0.31	$	0.26		$	0.52	$	0.60
Weighted average number of common and subordinated units outstanding:
Basic		28,502		23,827			28,502		23,827
Diluted		31,958		28,395			31,952		28,488
Distributions per unit	$	0.42	$	0.37		$	0.81	$	0.74

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QUICKSILVER GAS SERVICES LP

CONDENSED CONSOLIDATED BALANCE SHEETS

In thousands, except for unit data - Unaudited

	June 30,		December 31,
	2010		2009
ASSETS
Current assets
Cash and cash equivalents	$	556	$	746
Accounts receivable		1,201		1,342
Accounts receivable from Quicksilver		2,038		-
Prepaid expenses and other		1,140		180
Total current assets		4,935		2,268
Property, plant and equipment, net		508,850		482,497
Other assets		2,417		2,859
Total assets	$	516,202	$	487,624
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Current maturities of debt	$	3,025	$	2,475
Accounts payable to Quicksilver		-		1,727
Accrued additions to property, plant and equipment		7,396		8,015
Accounts payable and other		5,755		2,240
Total current liabilities		16,176		14,457
Long-term debt		226,800		125,400
Note payable to Quicksilver		53,927		53,243
Asset retirement obligations		9,425		8,919
Deferred income taxes		895		768
Partners' capital
Common unitholders (16,988,429 and 16,313,451 units issued and outstanding at June 30, 2010 and December 31, 2009, respectively)		208,209		281,239
Subordinated unitholders (11,513,625 units issued and outstanding at June 30, 2010 and December 31, 2009)		331		3,040
General partner		439		558
Total partners' capital		208,979		284,837
	$	516,202	$	487,624

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QUICKSILVER GAS SERVICES LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

In thousands - Unaudited

	Six Months Ended June 30,
	2010			2009
Operating activities:
Net income	$	16,302		$	16,410
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		10,765			11,030
Accretion of asset retirement obligations		242			178
Deferred income taxes		126			211
Equity-based compensation		1,334			870
Non-cash interest expense		2,709			3,252
Changes in assets and liabilities:
Accounts receivable		141			1,499
Prepaid expenses and other		(1,011	)		32
Accounts receivable and payable with Quicksilver		(6,323	)		(2,284	)
Accounts payable and other		2,464			2,051
Net cash provided by operating activities		26,749			33,249
Investing activities:
Capital expenditures		(34,845	)		(35,780	)
Distribution to Quicksilver		(80,276	)		-
Net cash used in investing activities		(115,121	)		(35,780	)
Financing activities:
Proceeds from revolving credit facility borrowings		124,500			31,500
Repayments of credit facility		(23,100	)		(10,500	)
Proceeds from issuance of equity		11,088			-
Issuance costs of equity units paid		(34	)		-
Contributions by Quicksilver		-			37
Distributions to unitholders		(23,128	)		(18,165	)
Taxes paid for equity-based compensation vesting		(1,144	)		(63	)
Net cash provided by financing activities		88,182			2,809
Net cash increase (decrease)		(190	)		278
Cash at beginning of period		746			303
Cash at end of period	$	556		$	581

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QUICKSILVER GAS SERVICES LP

OPERATING STATISTICS

Unaudited

	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
Volume Data:
Volumes gathered (MMcf)		29,609		22,232		55,406		47,202
Volumes processed (MMcf)		11,494		14,108		22,738		28,760

QUICKSILVER GAS SERVICES LP

RECONCILIATION OF DISTRIBUTABLE CASH FLOW

TO NET INCOME

In thousands  - Unaudited

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Net income from continuing operations	$	10,113		$	7,835		$	16,302		$	17,864
Depreciation and accretion expense		5,642			5,321			11,007			9,845
Income tax provision		73			248			126			211
Non-cash interest expense, net of capitalized interest cost paid		1,245			1,124			2,709			1,734
Maintenance capital expenditures		(1,650	)		(2,500	)		(3,300	)		(5,000	)
Distributable cash flow	$	15,423		$	12,028		$	26,844		$	24,654

QUICKSILVER GAS SERVICES LP

RECONCILIATION OF ADJUSTED GROSS MARGIN 

AND EBITDA TO NET INCOME

In thousands - Unaudited

	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
Total revenues	$	27,194	$	23,340	$	51,933	$	47,304
Operations and maintenance expense		6,588		5,950		14,601		11,171
General and administrative expense		1,833		1,744		4,274		3,736
Adjusted gross margin		18,773		15,646		33,058		32,397
Other income		-		1		-		1
EBITDA		18,773		15,647		33,058		32,398
Depreciation and accretion expense		5,642		5,321		11,007		9,845
Interest expense		2,945		2,243		5,623		4,478
Income tax provision		73		248		126		211
Net income from continuing operations	$	10,113	$	7,835	$	16,302	$	17,864

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