Quicksilver, KKR Form British Columbia Midstream JV

Acquired 50% WI in newly-formed midstream partnership covering AMI of 30MM acres targeting Horn River, Liard & Cordova basins in BC, NW Territories.

Quicksilver Resources Inc., Fort Worth, Texas, (NYSE: KWK) and New York-based global investment firm Kohlberg Kravis Roberts & Co. LP have formed a midstream partnership focused on construction and operation of gas midstream services to support producer customers in British Columbia and the Northwest Territories of Canada.

KKR paid $125 million to Quicksilver in exchange for a 50% interest in the partnership. Quicksilver contributed its existing 20-mile, 20-inch gathering line and compression facilities and 10-year contracts for gas deliveries into those facilities to create the partnership.

The agreement establishes an area of mutual interest for the midstream business covering approximately 30 million potential acres in the Horn River, Liard and Cordova basins, which would include third-party transportation and processing infrastructure and agreements.

KKR will carry Quicksilver on its portion of future development costs on the initial treating facility in exchange for preferential distributions to KKR. Quicksilver will be the operator of the partnership.

The companies will jointly build and operate natural gas gathering, transportation and processing infrastructure to maximize the value of the production stream from Quicksilver's development in the Horn River Basin

KKR's investment in the joint venture was sourced from KKR Financial and other KKR Asset Management pools of capital

Quicksilver chairman Toby Darden says, “With its well-established and versatile energy business, KKR is an ideal partner in creating a low-cost and reliable solution for processing and transporting natural gas produced from the Horn River Basin for Quicksilver and other producers. It will facilitate the sale of natural gas to multiple markets in North America and ultimately to export markets in Asia.”