Quicksilver questions why BreitBurn suspended quarterly distributions

By Lisa Kerner

Charlotte, N.C., May 1 - Quicksilver Resources Inc. said it was "deeply disappointed" by BreitBurn Energy Partners LP's decision to suspend quarterly distributions to unitholders.

Quicksilver owns approximately 40.45% of the outstanding common units representing limited partner interests of BreitBurn Energy Partners, which owns 100% of its general partner, BreitBurn GP, LLC.

The unitholder's comments were made in a Thursday letter to BreitBurn GP's board included in a schedule 13D/A filed with the Securities and Exchange Commission.

Quicksilver said BreitBurn's decision strengthens its conviction "that management and the board of directors have an agenda that is in direct opposition to the interests of the partnership's non-management limited partners, who own more than 98% of the common units."

BreitBurn must pay down the partnership's debt, avoid any future acquisitions and reduce general and administrative expenses in order to restore quarterly distributions, according to Quicksilver.

Quicksilver lawsuit

As previously reported, BreitBurn GP will hold the annual meeting of the limited partners of BreitBurn on Nov. 30, 2009 for the purpose of electing directors unless a Tarrant County, Texas, court awards injunctive or declaratory relief as requested by Quicksilver, a Fort Worth independent energy company.

On March 19, Quicksilver filed an amended petition against the BreitBurn defendants requesting that Quicksilver be allowed to vote all its common units in future elections for directors of BreitBurn GP and/or allowing the limited partners of BreitBurn GP to vote on whether the partnership agreement amendment should be adopted.

Quicksilver's claims for damages will be tried on Jan. 25, 2010 or later. The trial on Quicksilver's claims for permanent injunctive relief and declaratory relief will be set for Sept. 21, a prior SEC filing said.

In December, BreitBurn GP approved the adoption of a unit purchase rights plan. The rights become exercisable if a person or group acquires beneficial ownership of 20% or more of the common units of BreitBurn or begins a tender offer that could result in ownership of 20% or more of BreitBurn common units.

Los Angeles-based BreitBurn is an independent oil and gas limited partnership.

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