EAGLE ROCK ENERGY PARTNERS, L.P. - COMMON UNITS RE (EROC, Financial) filed Quarterly Report for the period ended 2009-09-30.
EAGLE ROCK ENERGY PARTNERS is a dynamic master limited partnership that leverages its upstream, minerals and midstream expertise to acquire and operate oil and gas properties, natural gas gathering systems, and natural gas processing plants. The company's unique expertise, combined with the tax advantages of the MLP structure, position it to effectively evaluate opportunities, execute transactions and integrate operations to provide a strong platform for future growth. Eagle Rock Energy Partners, L.p. - Common Units Re has a market cap of $266.69 million; its shares were traded at around $4.83 with and P/S ratio of 0.15. The dividend yield of Eagle Rock Energy Partners, L.p. - Common Units Re stocks is 2.07%.
Revenues and Cost of Natural Gas and Natural Gas Liquids. For the three and nine months ended September 30, 2009, revenues minus cost of natural gas and natural gas liquids for our Texas Panhandle Segment operations totaled $23.7 million and $57.1 million, respectively, compared to $43.9 million and $123.3 million, respectively, for the three and nine months ended September 30, 2008. There were two primary contributors to this decrease: (i) lower NGL and condensate pricing, as compared to pricing in 2008, and (ii) lower NGL equity production as compared to production in 2008. The lower NGL equity production was primarily due to approximately 4% lower gathered volumes in 2009 as compared to 2008 and due to operating certain plants in ethane rejection mode for much of the first two months of 2009. Ethane rejection operations occur when we elect 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 tailgates of our plants. Ethane rejection operations result in a lower volume of equity NGLs with a correspondingly smaller natural gas short position. We operate in this manner when the value of ethane is worth more in the gas stream than as a separate product.
Operating Expenses. Operating expenses, including taxes other than income, for the three and nine months ended September 30, 2009 were $8.2 million and $24.4 million, respectively, compared to $9.2 million and $25.7 million, respectively, for the three and nine months ended September 30, 2008. The $1.0 million and $1.3 million decrease in operating expenses during the three and nine months ended September 30, 2009, respectively, as compared to the same periods in 2008, was primarily due to overall cost reduction initiatives implemented by the Partnership across the segment.
Depreciation and Amortization. Depreciation and amortization expenses for the three and nine months ended September 30, 2009 were $11.6 million and $33.7 million, respectively, compared to $11.0 million and $32.6 million, respectively, for the three and nine months ended September 30, 2008. The major item impacting the $0.6 million and $1.1 million increases, respectively, was depreciation expense associated with the capital expenditures placed into service during the period.
Capital Expenditures. Capital expenditures for the three and nine months ended September 30, 2009 were $1.3 million and $5.0 million, respectively, compared to $7.2 million and $20.6 million, respectively, for the three and nine months ended September 30, 2008. We classify capital expenditures as either maintenance capital (which represents routine well connects and capitalized maintenance activities) or as growth capital (which represents organic growth projects). In the three and nine months ended September 30, 2009, growth capital represented 8% and 56% of our capital expenditures as compared to 51% and 69%, respectively, in the three and nine months ended September 30, 2008. The decrease in capital expenditures of $5.8 million and $15.6 million, respectively, was driven by reduced maintenance capital associated with fewer new well connects due to the lower drilling activity and by less growth capital due to expenditures related to our Stinnett – Cargray plant consolidation project having occurred in the three and nine months ended September 30, 2008.
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EAGLE ROCK ENERGY PARTNERS is a dynamic master limited partnership that leverages its upstream, minerals and midstream expertise to acquire and operate oil and gas properties, natural gas gathering systems, and natural gas processing plants. The company's unique expertise, combined with the tax advantages of the MLP structure, position it to effectively evaluate opportunities, execute transactions and integrate operations to provide a strong platform for future growth. Eagle Rock Energy Partners, L.p. - Common Units Re has a market cap of $266.69 million; its shares were traded at around $4.83 with and P/S ratio of 0.15. The dividend yield of Eagle Rock Energy Partners, L.p. - Common Units Re stocks is 2.07%.
Highlight of Business Operations:
Adjusted EBITDA, for the three and nine months ended September 30, 2009 and 2008, excludes amortization of commodity hedge costs (including, for the three and nine months ended September 30, 2009, costs of hedge reset transactions) of $10.6 million, $33.8 million, $2.3 million and $6.8 million, respectively. Including these amortization costs, our Adjusted EBITDA for the three and nine months ended September 30, 2009 and 2008, would have been $40.7 million, $103.3 million, $72.6 million and $177.5 million, respectively.Revenues and Cost of Natural Gas and Natural Gas Liquids. For the three and nine months ended September 30, 2009, revenues minus cost of natural gas and natural gas liquids for our Texas Panhandle Segment operations totaled $23.7 million and $57.1 million, respectively, compared to $43.9 million and $123.3 million, respectively, for the three and nine months ended September 30, 2008. There were two primary contributors to this decrease: (i) lower NGL and condensate pricing, as compared to pricing in 2008, and (ii) lower NGL equity production as compared to production in 2008. The lower NGL equity production was primarily due to approximately 4% lower gathered volumes in 2009 as compared to 2008 and due to operating certain plants in ethane rejection mode for much of the first two months of 2009. Ethane rejection operations occur when we elect 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 tailgates of our plants. Ethane rejection operations result in a lower volume of equity NGLs with a correspondingly smaller natural gas short position. We operate in this manner when the value of ethane is worth more in the gas stream than as a separate product.
Operating Expenses. Operating expenses, including taxes other than income, for the three and nine months ended September 30, 2009 were $8.2 million and $24.4 million, respectively, compared to $9.2 million and $25.7 million, respectively, for the three and nine months ended September 30, 2008. The $1.0 million and $1.3 million decrease in operating expenses during the three and nine months ended September 30, 2009, respectively, as compared to the same periods in 2008, was primarily due to overall cost reduction initiatives implemented by the Partnership across the segment.
Depreciation and Amortization. Depreciation and amortization expenses for the three and nine months ended September 30, 2009 were $11.6 million and $33.7 million, respectively, compared to $11.0 million and $32.6 million, respectively, for the three and nine months ended September 30, 2008. The major item impacting the $0.6 million and $1.1 million increases, respectively, was depreciation expense associated with the capital expenditures placed into service during the period.
Capital Expenditures. Capital expenditures for the three and nine months ended September 30, 2009 were $1.3 million and $5.0 million, respectively, compared to $7.2 million and $20.6 million, respectively, for the three and nine months ended September 30, 2008. We classify capital expenditures as either maintenance capital (which represents routine well connects and capitalized maintenance activities) or as growth capital (which represents organic growth projects). In the three and nine months ended September 30, 2009, growth capital represented 8% and 56% of our capital expenditures as compared to 51% and 69%, respectively, in the three and nine months ended September 30, 2008. The decrease in capital expenditures of $5.8 million and $15.6 million, respectively, was driven by reduced maintenance capital associated with fewer new well connects due to the lower drilling activity and by less growth capital due to expenditures related to our Stinnett – Cargray plant consolidation project having occurred in the three and nine months ended September 30, 2008.
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