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 nine-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. The U.S. Debtors had a net receivable balance of $4.8 million at September 30, 2015, and a net payable balance of $1.6 million at December 31, 2014, to non-debtors. The receivable balance at September 30, 2015 was primarily due to the non-debtors not making interest payments of approximately $0.7 million per month beginning with the interest payment due in March 2015 on a $413.3 million intercompany loan, which principal amount has been unchanged since December 31, 2014. Condensed Consolidating Balance Sheets September 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 $ 190,165 $ 1,981 $ 24,287 $ 17 $ 4,554 $ — $ 221,004 Property and equipment 331,656 13,545 146,960 — 10,419 — 502,580 Investment in subsidiaries (equity method) (467,867 ) — (87,936 ) (86,499 ) — 642,302 — Other assets 415,257 — 4,665 — — (413,282 ) 6,640 Total assets $ 469,211 $ 15,526 $ 87,976 $ (86,482 ) $ 14,973 $ 229,020 $ 730,224 LIABILITIES AND EQUITY Current liabilities $ 130,132 $ 401 $ 497,142 $ — $ 124 $ (413,282 ) $ 214,517 Long-term liabilities 46,237 10,195 52,207 — 1,347 87,935 197,921 Liabilities subject to compromise 1,884,128 — — — — — 1,884,128 Stockholders' equity (1,591,286 ) 4,930 (461,373 ) (86,482 ) 13,502 554,367 (1,566,342 ) Total liabilities and equity $ 469,211 $ 15,526 $ 87,976 $ (86,482 ) $ 14,973 $ 229,020 $ 730,224 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 September 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 $ 46,964 $ 941 $ 11,515 $ — $ 2,974 $ (3,407 ) $ 58,987 Operating expenses 135,793 613 30,576 — 699 (3,407 ) 164,274 Equity in net earnings of subsidiaries (23,981 ) — (1,004 ) 2,275 — 22,710 — Operating income (loss) (112,810 ) 328 (20,065 ) 2,275 2,275 22,710 (105,287 ) Fortune Creek accretion — — — — — (3,279 ) (3,279 ) Interest expense and other 571 — (4,422 ) — — — (3,851 ) Reorganization items, net (7,883 ) — — — — — (7,883 ) Income tax (expense) benefit (2,330 ) — 178 — — — (2,152 ) Net income (loss) $ (122,452 ) $ 328 $ (24,309 ) $ 2,275 $ 2,275 $ 19,431 $ (122,452 ) Other comprehensive loss (4,228 ) — (1,431 ) — — — (5,659 ) Equity in OCI of subsidiaries (1,431 ) — — — — 1,431 — Comprehensive income (loss) $ (128,111 ) $ 328 $ (25,740 ) $ 2,275 $ 2,275 $ 20,862 $ (128,111 ) For the Three Months Ended September 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 $ 120,513 $ 427 $ 42,558 $ — $ 4,271 $ (4,271 ) $ 163,498 Operating expenses 72,868 341 27,648 — 2,128 (4,271 ) 98,714 Equity in net earnings of subsidiaries 8,821 — (1,458 ) 2,144 — (9,507 ) — Operating income (loss) 56,466 86 13,452 2,144 2,143 (9,507 ) 64,784 Fortune Creek accretion — — — — — (3,602 ) (3,602 ) Interest expense and other (37,613 ) 86 (4,838 ) — 1 — (42,364 ) Income tax (expense) benefit 4,826 (30 ) 65 — — 78 4,939 Net income (loss) $ 23,679 $ 142 $ 8,679 $ 2,144 $ 2,144 $ (13,031 ) $ 23,757 Other comprehensive loss (11,564 ) — (3,325 ) — — — (14,889 ) Equity in OCI of subsidiaries (3,325 ) — — — — 3,325 — Comprehensive income (loss) $ 8,790 $ 142 $ 5,354 $ 2,144 $ 2,144 $ (9,706 ) $ 8,868 For the Nine Months Ended September 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 $ 173,027 $ 7,402 $ 47,937 $ — $ 8,831 $ (10,078 ) $ 227,119 Operating expenses 257,603 1,769 151,912 — 1,947 (10,078 ) 403,153 Equity in net earnings of subsidiaries (138,506 ) — (2,991 ) 6,886 — 134,611 — Operating income (loss) (223,082 ) 5,633 (106,966 ) 6,886 6,884 134,611 (176,034 ) Fortune Creek accretion — — — — — (9,877 ) (9,877 ) Interest expense and other (31,815 ) — (37,830 ) — 2 — (69,643 ) Reorganization items, net (148,568 ) — — — — — (148,568 ) Income tax (expense) benefit (6,493 ) — 657 — — — (5,836 ) Net income (loss) $ (409,958 ) $ 5,633 $ (144,139 ) $ 6,886 $ 6,886 $ 124,734 $ (409,958 ) Other comprehensive loss (18,444 ) — (5,105 ) — — — (23,549 ) Equity in OCI of subsidiaries (5,105 ) — — — — 5,105 — Comprehensive income (loss) $ (433,507 ) $ 5,633 $ (149,244 ) $ 6,886 $ 6,886 $ 129,839 $ (433,507 ) For the Nine Months Ended September 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 $ 269,321 $ 1,212 $ 102,783 $ — $ 13,349 $ (13,349 ) $ 373,316 Operating expenses 225,906 988 86,491 — 6,014 (13,349 ) 306,050 Equity in net earnings of subsidiaries 2,864 — (4,266 ) 7,339 — (5,937 ) — Operating income (loss) 46,279 224 12,026 7,339 7,335 (5,937 ) 67,266 Fortune Creek accretion — — — — — (11,605 ) (11,605 ) Interest expense and other (117,315 ) 86 (8,526 ) — 4 — (125,751 ) Income tax (expense) benefit (213 ) (78 ) (868 ) — — 78 (1,081 ) Net income (loss) $ (71,249 ) $ 232 $ 2,632 $ 7,339 $ 7,339 $ (17,464 ) $ (71,171 ) Other comprehensive loss (20,252 ) — (6,849 ) — — — (27,101 ) Equity in OCI of subsidiaries (6,849 ) — — — — 6,849 — Comprehensive income (loss) $ (98,350 ) $ 232 $ (4,217 ) $ 7,339 $ 7,339 $ (10,615 ) $ (98,272 ) Condensed Consolidating Statements of Cash Flows For the Nine Months Ended September 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 $ 97,516 $ (444 ) $ 16,568 $ (3 ) $ (1,768 ) $ — $ 111,869 Purchases of property, plant and equipment (21,576 ) — (3,431 ) — — — (25,007 ) Investment in subsidiary (6,920 ) — — — — 6,920 — Proceeds from sale of properties and equipment 1,504 — 1,474 — — — 2,978 Net cash flow provided by (used in) investing activities (26,992 ) — (1,957 ) — — 6,920 (22,029 ) Issuance of debt 2,100 — 26,235 — — — 28,335 Repayments of debt (129,084 ) — (41,576 ) — — — (170,660 ) Debt issuance costs paid (80 ) — — — — — (80 ) Intercompany financing — 444 6,476 — — (6,920 ) — 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 (127,179 ) 444 (8,865 ) — (1,426 ) (6,920 ) (143,946 ) Effect of exchange rates on cash — — 4,614 — 1,636 — 6,250 Net increase (decrease) in cash and equivalents (56,655 ) — 10,360 (3 ) (1,558 ) — (47,856 ) Cash and equivalents at beginning of period 211,656 — 10,182 20 1,671 — 223,529 Cash and equivalents at end of period $ 155,001 $ — $ 20,542 $ 17 $ 113 $ — $ 175,673 For the Nine Months Ended September 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 $ (39,474 ) $ (688 ) $ 28,843 $ — $ 6,336 $ — $ (4,983 ) Purchases of property, plant and equipment (88,119 ) (57 ) (23,247 ) — (21 ) — (111,444 ) Investment in subsidiary (1,246 ) — (26,395 ) (26,395 ) — 54,036 — Proceeds from Southwestern Transaction 95,587 — — — — — 95,587 Proceeds from sale of properties and equipment 1,445 — 497 — — — 1,942 Purchases of marketable securities (55,890 ) — — — — — (55,890 ) Maturities and sales of marketable securities 222,025 — — — — — 222,025 Net cash flow provided by (used in) investing activities 173,802 (57 ) (49,145 ) (26,395 ) (21 ) 54,036 152,220 Issuance of debt 174,000 — 69,184 — — — 243,184 Repayments of debt (138,651 ) — (55,038 ) — — — (193,689 ) Debt issuance costs paid (225 ) — — — — — (225 ) Intercompany note (22,558 ) — 22,558 — — — — Intercompany financing — 745 501 — — (1,246 ) — Contribution received — — — 26,395 26,395 (52,790 ) — Distribution of Fortune Creek Partnership funds — — — — (37,113 ) — (37,113 ) Purchase of treasury stock (2,388 ) — — — — — (2,388 ) Net cash flow provided by (used in) financing activities 10,178 745 37,205 26,395 (10,718 ) (54,036 ) 9,769 Effect of exchange rates on cash — — (2,718 ) — 4,934 — 2,216 Net increase (decrease) in cash and equivalents 144,506 — 14,185 — 531 — 159,222 Cash and equivalents at beginning of period 83,893 — 4,135 22 1,053 — 89,103 Cash and equivalents at end of period $ 228,399 $ — $ 18,320 $ 22 $ 1,584 $ — $ 248,325 |