Quicksilver Gas Services LP (NYSE:KGS) announced today that Crestwood Holdings Partners LLC (“Crestwood”) has closed on the purchase of all of Quicksilver Resources Inc.’s (NYSE:KWK) (“Quicksilver Resources”) ownership interests in Quicksilver Gas Services GP LLC (“Quicksilver GP”) and Quicksilver Gas Services LP (“Quicksilver Gas Services”). Quicksilver Gas Services owns and operates three natural gas gathering pipeline systems with related natural gas processing, treating and compression assets located in the Barnett Shale play of the Fort Worth basin in north Texas.
The transaction, announced on July 22, 2010, includes Crestwood’s purchase of a 100% interest in Quicksilver GP, 5,696,752 common units and 11,513,625 subordinated units in Quicksilver Gas Services and a note payable by Quicksilver Gas Services which had a balance of approximately $58 million at closing. Quicksilver Resources received from Crestwood $701 million cash and has the right to receive additional cash payments from Crestwood in 2012 and 2013 of up to $72 million in the aggregate. The additional payments will be determined by an earn-out formula which is based upon Quicksilver Gas Services’ actual gathering volumes during 2011 and 2012. Quicksilver Resources is the largest natural gas producer on the Quicksilver Gas Services pipeline systems.
“Crestwood is pleased to complete our first midstream acquisition,” said Robert G. Phillips, Crestwood’s President and Chief Executive Officer. “The Quicksilver transaction represents a great starting point for our disciplined growth strategy. The assets, employees and producer customers we are acquiring in the Barnett Shale form a solid platform for future deals in other shale plays, and the new credit facility should provide the financial capacity to support those growth objectives. I am particularly pleased that four members of the previous board of directors have agreed to join us going forward. They share our vision of building a successful midstream business around a diversified portfolio of high quality assets and a commitment to best in class customer service,” Phillips added.