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Acquired all interests in Quicksilver Gas Services held by Quicksilver Resources, which has midstream MLP assets in N TX Barnett shale.

Crestwood Midstream Partners II LLC, an affiliate of Mesa, Ariz.-based Crestwood Holdings LLC, has acquired all of the interests in Quicksilver Gas Services LP (NYSE: KGS) held by parent company Quicksilver Resources Inc., Fort Worth, (NYSE: KWK) for $701 million in cash.

The deal included 469,944 general partner units representing 100% of the general partner interests, 5.7 million units, 11.5 million subordinated units and the note receivable from Quicksilver Gas Services, which had a balance of approximately $58 million at closing. Crestwood could pay up to an additional $72 million in earn-out payments to Quicksilver Resources in 2012 and 2013.

Quicksilver Gas Services is a midstream MLP that provices gathering, processing, and treating services for the gas and natural gas liquids industry primarily on the Barnett shale formation of the Fort Worth Basin in North Texas. It owns the Cowtown System, Lake Arlington Dry System, Hill County Dry System and Alliance midstream assets in Tarrant and Denton counties.

Quicksilver Resources used the proceeds to pay its $1-billion senior secured credit facility, which had an outstanding balance of approximately $529 million on Sept. 30.

Quicksilver Gas Services president and chief executive Toby Darden says, "We believe that the sale of the general partner to Crestwood will facilitate greater and more diversified growth for the partnership and its unitholders. It will retain the dedication of nearly all volumes from Quicksilver Resources' Fort Worth Basin development and be better structured to expand outside of this basin."

Crestwood president and CEO Bob Phillips says, "We salute Quicksilver Resources for the tremendous job they have done in building a high-quality set of midstream assets in the Barnett shale area and we look forward to partnering with them in the future as their midstream service provider."

UBS Financial Services was financial advisor to Quicksilver Resources. Davis Polk & Wardwell LLP was legal counsel to Quicksilver Resources.