Jul 10 - Quicksilver Resources Announces $1 Billion Transaction for the Sale of 100% of Its Interests in Quicksilver Gas Services

Source Press Release
Company Quicksilver Resources IncCrestwood Midstream Partners II, LLCFirst Reserve CorporationQuicksilver Gas Services LP 
Tags Deals, Pipelines/ tankers/ distribution
Date July 22, 2010

Quicksilver Resources Inc. (NYSE: KWK) today announced that it has 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, along with the subordinated note receivable from Quicksilver Gas Services LP (NYSE: KGS), for $701 million in cash at closing plus up to $72 million in additional earn-out payments and the resulting elimination of $228 million of consolidated debt associated with  Quicksilver Gas Services LP.

The sale includes 469,944 general partner units representing 100% of the general partner membership 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 $57 million as of June 30, 2010. The transaction is not subject to financing contingencies and is expected to close in October 2010, subject to customary closing conditions.

Proceeds from this transaction will further enhance Quicksilver’s liquidity. Upon closing, Quicksilver expects to repay all outstanding borrowings under its $1 billion senior secured credit facility, of which approximately $528 million is currently outstanding, resulting in total liquidity of more than $1 billion. Net debt, defined as total debt less cash and marketable securities, is expected to drop to approximately $.83 per thousand cubic feet of proved developed natural gas reserve equivalents and net debt as a percent of total capitalization is expected to be reduced to approximately 59%, pro forma after this transaction.

“This transaction further validates Quicksilver’s integrated approach to developing its natural gas resources,” said Glenn Darden, Quicksilver president and chief executive officer. “After building the gathering and processing infrastructure for our Fort Worth Basin assets, we are now able to realize significant value that can be redeployed into our core, higher return exploration and development opportunities including the Fort Worth and Horn River basins. The sale to Crestwood enables Quicksilver to retain a reliable provider of midstream service for our ongoing Fort Worth Basin development, at an attractive cost for gathering and processing.”

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.

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