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EAGLE ROCK ENERGY PARTNERS, L.P. - COMMON UNITS RE Reports Operating Results (10-Q)

November 05, 2010 | About:
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10qk

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EAGLE ROCK ENERGY PARTNERS, L.P. - COMMON UNITS RE (EROC) filed Quarterly Report for the period ended 2010-09-30.

Eagle Rock Energy Partners, L.p. - Common Units Re has a market cap of $616.6 million; its shares were traded at around $7.42 with a P/E ratio of 20.5 and P/S ratio of 0.9. The dividend yield of Eagle Rock Energy Partners, L.p. - Common Units Re stocks is 1.4%.EROC is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Adjusted EBITDA, for the three and nine months ended September 30, 2010 and 2009, excludes amortization of commodity hedge costs (including costs of hedge reset transactions) of $0.4 million, $3.5 million, $10.6 million and $33.9 million, respectively. Including these amortization costs, our Adjusted EBITDA for the three and nine months ended September 30, 2010 and 2009 would have been $32.8 million, $93.5 million, $36.9 million and $93.5 million, respectively.

Depreciation and Amortization. Depreciation and amortization expenses for the three and nine months ended September 30, 2010 were $11.7 million and $34.9 million, respectively, compared to $11.6 million and $33.7 million, respectively, for the three and nine months ended September 30, 2009. The major item impacting the $0.1 million and $1.3 million increases was depreciation expense associated with the capital expenditures placed into service during the period.

Revenues and Cost of Natural Gas and Natural Gas Liquids. For the three and nine months ended September 30, 2010, revenues minus cost of natural gas and NGLs for our East Texas/Louisiana Segment totaled $12.3 million and $42.7 million, respectively, compared to $14.0 million and $35.0 million, respectively, for the three and nine months ended September 30, 2009. During the three and nine months ended September 30, 2010 and 2009, we recorded revenues associated with deficiency payments of $2.2 million, $10.4 million, $0.8 million and $1.1 million, respectively, from certain of our producers due to lower than anticipated volumes. These amounts are included within gathering and treating services revenue. Excluding these deficiency payments, revenues minus cost of natural gas and NGLs for the three and nine months ended September 30, 2010 and 2009 would have been $10.0 million, $32.4 million, $13.1 million, and $33.9 million, respectively. The decrease for the three months ended September 30, 2010 compared to the three months ended September 30, 2009, excluding the impact of the deficiency payments, is primarily due to a decrease in gathering and NGL equity volumes and lower NGL prices, partially offset by higher condensate volumes and higher oil and condensate and natural gas prices. The increase for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009, excluding the impact of the deficiency payments, is primarily due to higher commodity prices and higher NGL equity gallons due to recovery of additional ethane gallons. During the first two months of 2009, we elected to not recover the ethane component in the natural gas stream in our plants and instead choose to leave the ethane component in the residue gas stream sold at the tailgate of our plants. We operate in this manner when the value of ethane is worth more in the gas stream than as a separate component.

Operating Expenses. Operating expenses for the three and nine months ended September 30, 2010 were $4.5 million and $12.9 million, respectively, compared to $4.7 million and $13.9 million, respectively, for the three and nine months ended September 30, 2009. The major items impacting the $0.2 million and $1.0 million decreases in operating expense for the three and nine months ended September 30, 2010, compared to the same period in 2009, was due to overall cost reduction initiatives implemented across the segment in operating expenses.

Depreciation and Amortization. Depreciation and amortization expenses for the three and nine months ended September 30, 2010 were $4.6 million and $13.2 million, respectively, compared to $4.5 million and $13.5 million, respectively, for the three and nine months ended September 30, 2009. The major item impacting the $0.2 million increase for the three months ended September 30, 2010, as compared to the the same period in 2009, was depreciation expense associated with the capital expenditures placed into service during the period. The increase for the three months ended September 30, 2010 was offset by the $0.3 million decrease due to the impairment taken in the fourth quarter of 2009 resulting in decreased depreciable bases.

Discontinued Operations. On April 1, 2009, we sold our producer services line of business, and we have classified the revenues minus the cost of natural gas and NGLs as discontinued operations. During the three and nine months ended September 30, 2010, this business generated revenues of less than $0.1 million and $0.1 million, respectively, and no cost of natural gas and NGLs. During the three and nine months ended September 30, 2009, this business generated revenues of less than $0.1 million and $19.2 million, respectively, and cost of natural gas and NGLs of zero and $19.0 million, respectively. For the three and nine months ended September 30, 2010, less than $0.1 million and $0.1 million, respectively, of revenues minus the cost of natural gas and NGLs have been reported as discontinued operations, as compared to revenues minus the cost of natural gas and NGLs of less than $0.1 million and $0.3 million, respectively, for the three and nine months ended September 30, 2009.

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