* MoU provides for $125 mln upfront payment
* Quicksilver to operate the 50-50 joint venture
* Quicksilver Q3 adj EPS $0.03 vs est 0.05
* Q3 rev $260 mln vs est $222.4 mln
* Shares down 9 pct (Adds details on JV with KKR from conference call, updates shares)
By Swetha Gopinath
Nov 7 (Reuters) - Cash-strapped Quicksilver Resources Inc cut its production forecast and unveiled a midstream deal with KKR & Co that failed to enthuse investors looking for a plan to reduce the natural gas-focused company's debt.
Shares of Quicksilver were down 9 percent at $7.65 on Monday afternoon on the New York Stock Exchange. The stock had lost 45 percent of its value this year as of Friday.
The company, which had debt of about $2.1 billion as of September-end, has been looking to sell assets or to combine with other players since March this year to bring in funds.
Quicksilver, which will operate the 50-50 joint venture, said it will receive $125 million in upfront payment from KKR as part of a joint venture to develop a midstream business in the Horn River basin in Canada.
"Investors won't be happy till they get more clarity on what the company is doing," analyst Michael Bodino of Global Hunter Securities said, adding that the KKR deal was too small for Quicksilver's size.
The company has been actively exploring the Horn River basin in northeast British Columbia, where it has leased 130,000 net acres. About 10 percent of the company's third-quarter capital investments were in the basin's midstream activities.
In October, the company had said it will create a master limited partnership by spinning off some of its Barnett Shale assets in a bid to pay off debt.
The Fort Worth, Texas-based company expects full-year production to be 415-420 million cubic feet of natural gas equivalents per day (mmcfe/d). In December, it had forecast annual production of 425-435 mmcfe/d.
Fourth-quarter average daily production volume is expected to be 425-435 mmcfe. During the third quarter, the company produced 427 mmcfe/d. Analysts at Simmons & Co said the fourth-quarter outlook was below their estimate of 450 mmcfe/d.
"Quicksilver is guiding to much-lower-than-anticipated fourth-quarter production (10 percent below our expectations)," analysts at Raymond James wrote in a note.
Quicksilver's third-quarter adjusted profit was 3 cents per share, while revenue rose 9 percent to $260 million.
Analysts, on average, had expected earnings of 5 cents a share, on revenue of $222.4 million, according to Thomson Reuters I/B/E/S. (Reporting by Swetha Gopinath in Bangalore; Editing by Maju Samuel and Sriraj Kalluvila)