Condensed Consolidating Financial Information | CONDENSED CONSOLIDATING FINANCIAL INFORMATION Note 17 to the consolidated financial statements in our 2014 Annual Report on Form 10-K contains a more complete description of our guarantor, non-guarantor, restricted and unrestricted subsidiaries under the indentures for our Second Lien Notes, Senior Notes and Senior Subordinated Notes. The following tables present financial information about Quicksilver and our restricted subsidiaries for the three- and six-month periods covered by the condensed consolidated financial statements. Under the indentures for our Second Lien Notes, Senior Notes and Senior Subordinated Notes, Fortune Creek is not considered to be a subsidiary and therefore it is presented separately from the other subsidiaries for these purposes. The activity and balances included in the Quicksilver Resources Inc. and the Restricted Guarantor Subsidiaries columns represent the U.S. Debtors’ financial information. Cowtown Drilling Inc., a U.S. Debtor, is included in the Restricted Non-Guarantor Subsidiaries column, however, no activity occurred and no balances exist for the periods presented below. Additionally, Makarios Resources International Holdings LLC, Makarios Resources International Inc., Quicksilver Production Partners GP LLC and Quicksilver Production Partners LP, all of which are U.S. Debtors, are included in the Unrestricted Non-Guarantor Subsidiaries column, however, no activity occurred and no balances exist for the periods presented below. Condensed Consolidating Balance Sheets June 30, 2015 Debtors Non-Debtors Quicksilver Resources Inc. Restricted Guarantor Subsidiaries Restricted Non- Guarantor Subsidiaries Unrestricted Non- Guarantor Subsidiaries Fortune Creek Consolidated Eliminations Quicksilver Resources Inc. Consolidated (in thousands) ASSETS Current assets $ 219,762 $ 1,243 $ 33,351 $ 49 $ 2,179 $ — $ 256,584 Property and equipment 423,221 13,815 174,240 — 11,400 — 622,676 Investment in subsidiaries (equity method) (443,883 ) — (87,033 ) (85,496 ) — 616,412 — Other assets 415,703 — 4,984 — — (413,282 ) 7,405 Total assets $ 614,803 $ 15,058 $ 125,542 $ (85,447 ) $ 13,579 $ 203,130 $ 886,665 LIABILITIES AND EQUITY Current liabilities $ 135,825 $ 260 $ 501,241 $ 30 $ 118 $ (413,282 ) $ 224,192 Long-term liabilities 45,620 10,195 55,082 — 1,421 90,519 202,837 Liabilities subject to compromise 1,899,156 — — — — — 1,899,156 Stockholders' equity (1,465,798 ) 4,603 (430,781 ) (85,477 ) 12,040 525,893 (1,439,520 ) Total liabilities and equity $ 614,803 $ 15,058 $ 125,542 $ (85,447 ) $ 13,579 $ 203,130 $ 886,665 December 31, 2014 Debtors Non-Debtors Quicksilver Resources Inc. Restricted Guarantor Subsidiaries Restricted Non- Guarantor Subsidiaries Unrestricted Non- Guarantor Subsidiaries Fortune Creek Consolidated Eliminations Quicksilver Resources Inc. Consolidated (in thousands) ASSETS Current assets $ 774,287 $ 13,909 $ 68,513 $ 82 $ 1,742 $ (435,256 ) $ 423,277 Property and equipment 420,744 14,357 280,830 — 12,849 — 728,780 Investment in subsidiaries (equity method) (293,312 ) — (82,360 ) (82,379 ) — 458,051 — Other assets 43,533 — 18,712 — — — 62,245 Total assets $ 945,252 $ 28,266 $ 285,695 $ (82,297 ) $ 14,591 $ 22,795 $ 1,214,302 LIABILITIES AND EQUITY Current liabilities $ 2,038,575 $ 13,837 $ 520,296 $ 63 $ 3,522 $ (435,256 ) $ 2,141,037 Long-term liabilities 44,548 15,131 58,009 — 1,492 91,956 211,136 Stockholders' equity (1,137,871 ) (702 ) (292,610 ) (82,360 ) 9,577 366,095 (1,137,871 ) Total liabilities and equity $ 945,252 $ 28,266 $ 285,695 $ (82,297 ) $ 14,591 $ 22,795 $ 1,214,302 Condensed Consolidating Statements of Income For the Three Months Ended June 30, 2015 Debtors Non-Debtors Quicksilver Resources Inc. Restricted Guarantor Subsidiaries Restricted Non- Guarantor Subsidiaries Unrestricted Non- Guarantor Subsidiaries Fortune Creek Consolidated Eliminations Quicksilver Resources Inc. Consolidated (in thousands) Revenue $ 51,590 $ 754 $ 11,462 $ — $ 2,969 $ (3,400 ) $ 63,375 Operating expenses 52,844 551 95,656 — 520 (3,400 ) 146,171 Equity in net earnings of subsidiaries (88,809 ) — (920 ) 2,450 — 87,279 — Operating income (loss) (90,063 ) 203 (85,114 ) 2,450 2,449 87,279 (82,796 ) Fortune Creek accretion — — — — — (3,370 ) (3,370 ) Interest expense and other 481 — (3,947 ) — 1 — (3,465 ) Reorganization items, net (80,040 ) — — — — — (80,040 ) Income tax (expense) benefit (2,197 ) — 49 — — — (2,148 ) Net income (loss) $ (171,819 ) $ 203 $ (89,012 ) $ 2,450 $ 2,450 $ 83,909 $ (171,819 ) Other comprehensive loss (3,101 ) — (2,068 ) — — — (5,169 ) Equity in OCI of subsidiaries (2,068 ) — — — — 2,068 — Comprehensive income (loss) $ (176,988 ) $ 203 $ (91,080 ) $ 2,450 $ 2,450 $ 85,977 $ (176,988 ) For the Three Months Ended June 30, 2014 Debtors Non-Debtors Quicksilver Resources Inc. Restricted Guarantor Subsidiaries Restricted Non- Guarantor Subsidiaries Unrestricted Non- Guarantor Subsidiaries Fortune Creek Consolidated Eliminations Quicksilver Resources Inc. Consolidated (in thousands) Revenue $ 85,898 $ 411 $ 31,723 $ — $ 4,136 $ (4,136 ) $ 118,032 Operating expenses 77,637 356 28,578 — 2,061 (4,136 ) 104,496 Equity in net earnings of subsidiaries (268 ) — (1,526 ) 2,076 — (282 ) — Operating income (loss) 7,993 55 1,619 2,076 2,075 (282 ) 13,536 Fortune Creek accretion — — — — — (3,602 ) (3,602 ) Interest expense and other (41,691 ) — (970 ) — 1 — (42,660 ) Income tax (expense) benefit (2,397 ) (19 ) (953 ) — — — (3,369 ) Net income (loss) $ (36,095 ) $ 36 $ (304 ) $ 2,076 $ 2,076 $ (3,884 ) $ (36,095 ) Other comprehensive income (loss) 110 — (217 ) — — — (107 ) Equity in OCI of subsidiaries (217 ) — — — — 217 — Comprehensive income (loss) $ (36,202 ) $ 36 $ (521 ) $ 2,076 $ 2,076 $ (3,667 ) $ (36,202 ) For the Six Months Ended June 30, 2015 Debtors Non-Debtors Quicksilver Resources Inc. Restricted Guarantor Subsidiaries Restricted Non- Guarantor Subsidiaries Unrestricted Non- Guarantor Subsidiaries Fortune Creek Consolidated Eliminations Quicksilver Resources Inc. Consolidated (in thousands) Revenue $ 126,063 $ 6,461 $ 36,422 $ — $ 5,857 $ (6,671 ) $ 168,132 Operating expenses 121,810 1,156 121,336 — 1,248 (6,671 ) 238,879 Equity in net earnings of subsidiaries (114,525 ) — (1,987 ) 4,611 — 111,901 — Operating income (loss) (110,272 ) 5,305 (86,901 ) 4,611 4,609 111,901 (70,747 ) Fortune Creek accretion — — — — — (6,598 ) (6,598 ) Interest expense and other (32,386 ) — (33,408 ) — 2 — (65,792 ) Reorganization items, net (140,685 ) — — — — — (140,685 ) Income tax (expense) benefit (4,163 ) — 479 — — — (3,684 ) Net income (loss) $ (287,506 ) $ 5,305 $ (119,830 ) $ 4,611 $ 4,611 $ 105,303 $ (287,506 ) Other comprehensive loss (14,216 ) — (3,674 ) — — — (17,890 ) Equity in OCI of subsidiaries (3,674 ) — — — — 3,674 — Comprehensive income (loss) $ (305,396 ) $ 5,305 $ (123,504 ) $ 4,611 $ 4,611 $ 108,977 $ (305,396 ) For the Six Months Ended June 30, 2014 Debtors Non-Debtors Quicksilver Resources Inc. Restricted Guarantor Subsidiaries Restricted Non- Guarantor Subsidiaries Unrestricted Non- Guarantor Subsidiaries Fortune Creek Consolidated Eliminations Quicksilver Resources Inc. Consolidated (in thousands) Revenue $ 148,808 $ 785 $ 60,225 $ — $ 9,078 $ (9,078 ) $ 209,818 Operating expenses 153,038 647 58,843 — 3,886 (9,078 ) 207,336 Equity in net earnings of subsidiaries (5,957 ) — (2,808 ) 5,195 — 3,570 — Operating income (loss) (10,187 ) 138 (1,426 ) 5,195 5,192 3,570 2,482 Fortune Creek accretion — — — — — (8,003 ) (8,003 ) Interest expense and other (79,702 ) — (3,688 ) — 3 — (83,387 ) Income tax (expense) benefit (5,039 ) (48 ) (933 ) — — — (6,020 ) Net income (loss) $ (94,928 ) $ 90 $ (6,047 ) $ 5,195 $ 5,195 $ (4,433 ) $ (94,928 ) Other comprehensive loss (8,688 ) — (3,524 ) — — — (12,212 ) Equity in OCI of subsidiaries (3,524 ) — — — — 3,524 — Comprehensive income (loss) $ (107,140 ) $ 90 $ (9,571 ) $ 5,195 $ 5,195 $ (909 ) $ (107,140 ) Condensed Consolidating Statements of Cash Flows For the Six Months Ended June 30, 2015 Debtors Non-Debtors Quicksilver Resources Inc. Restricted Guarantor Subsidiaries Restricted Non-Guarantor Subsidiaries Unrestricted Non-Guarantor Subsidiaries Fortune Creek Consolidated Eliminations Quicksilver Resources Inc. Consolidated (in thousands) Net cash flow provided by (used in) operating activities $ 96,015 $ (333 ) $ 18,264 $ (1 ) $ (1,080 ) $ — $ 112,865 Purchases of property, plant and equipment (17,175 ) — (2,493 ) — — — (19,668 ) Investment in subsidiary (4,753 ) — — — — 4,753 — Proceeds from sale of properties and equipment 1,504 — 1,378 — — — 2,882 Net cash flow provided by (used in) investing activities (20,424 ) — (1,115 ) — — 4,753 (16,786 ) Issuance of debt 2,100 — 26,235 — — — 28,335 Repayments of debt (111,126 ) — (41,576 ) — — — (152,702 ) Debt issuance costs paid (80 ) — — — — — (80 ) Intercompany note — — — — — — — Intercompany financing — 333 4,420 — — (4,753 ) — Distribution of Fortune Creek Partnership funds — — — — (1,426 ) — (1,426 ) Purchase of treasury stock (115 ) — — — — — (115 ) Net cash flow provided by (used in) financing activities (109,221 ) 333 (10,921 ) — (1,426 ) (4,753 ) (125,988 ) Effect of exchange rates on cash — — 5,680 — 909 — 6,589 Net increase (decrease) in cash and equivalents (33,630 ) — 11,908 (1 ) (1,597 ) — (23,320 ) Cash and equivalents at beginning of period 211,656 — 10,182 20 1,671 — 223,529 Cash and equivalents at end of period $ 178,026 $ — $ 22,090 $ 19 $ 74 $ — $ 200,209 For the Six Months Ended June 30, 2014 Debtors Non-Debtors Quicksilver Resources Inc. Restricted Guarantor Subsidiaries Restricted Non-Guarantor Subsidiaries Unrestricted Non-Guarantor Subsidiaries Fortune Creek Consolidated Eliminations Quicksilver Resources Inc. Consolidated (in thousands) Net cash flow provided by (used in) operating activities $ (25,494 ) $ (469 ) $ 17,652 $ — $ 7,548 $ — $ (763 ) Purchases of property, plant and equipment (70,590 ) — (17,381 ) — (21 ) — (87,992 ) Investment in subsidiary (56,781 ) — (26,395 ) (26,395 ) — 109,571 — Proceeds from Southwestern Transaction 93,456 — — — — — 93,456 Proceeds from sale of properties and equipment 1,420 — 390 — — — 1,810 Purchases of marketable securities (55,890 ) — — — — — (55,890 ) Maturities and sales of marketable securities 212,057 — — — — — 212,057 Net cash flow provided by (used in) investing activities 123,672 — (43,386 ) (26,395 ) (21 ) 109,571 163,441 Repayments of debt (138,651 ) — (55,038 ) — — — (193,689 ) Debt issuance costs paid (225 ) — — — — — (225 ) Intercompany note (22,559 ) — 22,559 — — — — Intercompany financing — 469 56,312 — — (56,781 ) — Contribution received — — — 26,395 26,395 (52,790 ) — Distribution of Fortune Creek Partnership funds — — — — (33,770 ) — (33,770 ) Purchase of treasury stock (2,383 ) — — — — — (2,383 ) Net cash flow provided by (used in) financing activities (163,818 ) 469 23,833 26,395 (7,375 ) (109,571 ) (230,067 ) Effect of exchange rates on cash — — 315 — 255 — 570 Net increase (decrease) in cash and equivalents (65,640 ) — (1,586 ) — 407 — (66,819 ) Cash and equivalents at beginning of period 83,893 — 4,135 22 1,053 — 89,103 Cash and equivalents at end of period $ 18,253 $ — $ 2,549 $ 22 $ 1,460 $ — $ 22,284 |