Eagle Rock Reports First Quarter Financial Results

HOUSTON, May 1, 2013 (GLOBE NEWSWIRE) -- Eagle Rock Energy Partners, L.P. ("Eagle Rock" or the "Partnership") (Nasdaq:EROC) today announced its unaudited financial results for the three months ended March 31, 2013. The Partnership reported Adjusted EBITDA of $53.6 million for the quarter, a decrease of approximately 19% as compared to the $66.2 million reported for the fourth quarter of 2012. The decrease is attributable to a number of factors, including:
  • Approximately $2.8 million related to severe winter weather in the Texas Panhandle which caused shut-ins and prolonged reduced flow from many of the producing wells in the area and also caused reduced recovery efficiencies at the Partnership's processing facilities. The Partnership's operations in the Texas Panhandle have since returned to normal operations.
  • Approximately $3.9 million of charges taken in the current quarter related to adjustments and updates to estimates used in prior quarters.
  • Approximately $3.0 million related to the downtime experienced at the Partnership's Flomaton facility in Southern Alabama and unexpected workover expense on two wells that are connected to the facility.
  • The impact of declining NGL prices during the first quarter of 2013, especially in the heavier end of the NGL barrel.

Eagle Rock reported Distributable Cash Flow of $22.2 million as compared to the $29.5 million reported for the fourth quarter of 2012, with the decrease primarily driven by the same factors impacting Adjusted EBITDA. The Partnership also reported a Net Loss of $33.5 million, which in addition to the factors mentioned above was driven by unrealized mark-to-market losses on commodity hedges, which is a non-cash charge to earnings.

Other notable financial and operational activities of the Partnership during the first quarter of 2013 included the following:
  • Announced it had entered into a new fee-based Gas Gathering, Processing and Purchase Agreement with Apache Corporation ("Apache") to support Apache's active drilling program in the Texas Panhandle.
  • Announced a quarterly distribution with respect to the first quarter of 2013 of $0.22 per common unit, equal to the fourth quarter 2012 distribution.
  • Completed a public offering of 10.4 million common units for total net proceeds of approximately $92.5 million on March 18, 2013. The Partnership used the proceeds to repay a portion of the outstanding borrowings under its revolving credit facility associated with the acquisition of BP's assets in the Texas Panhandle.
  • Announced the upstream component of the borrowing base under its senior secured credit facility was decreased from $400 million to $375 million as part of the Partnership's regularly scheduled semi-annual redetermination by its commercial lenders.
  • Completed an exchange offer of $250 million of its 8 3/8% Senior Notes due 2019 for new notes with materially identical terms that have been registered under the Securities Act of 1933 and became freely tradable on March 1, 2013.

"We faced a challenging operating environment in the first quarter with severe winter storms impacting our midstream volumes and efficiencies in the Panhandle, and with NGL prices continuing near multi-year lows," said Joseph A. Mills, Eagle Rock's Chairman and Chief Executive Officer. "Despite these short-term challenges, the Partnership is well-positioned for future success in both businesses. Our integration of the midstream assets acquired from BP is progressing well, and we continue to see great interest from producers as evidenced by our recent acreage dedication agreement with Apache. Further, we are encouraged by our recent improved drilling results in our upstream business and the ongoing potential we see in the SCOOP play of southwestern Oklahoma."

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