Eagle Rock Energy Partners, L.P. Reports Quarterly Results
HOUSTON--(BUSINESS WIRE)--Aug. 13, 2007--Eagle Rock Energy Partners, L.P. (Nasdaq:EROC) today reported its financial results for the second quarter ended June 30, 2007.
For the second quarter of 2007, the Partnership reported $200.0 million of revenues as compared to $114.9 million for the second quarter of 2006, mainly reflecting the two month impact of the Montierra and Laser acquisitions completed in late April and early May, respectively. The Partnership reported a net loss of $23.8 million for the second quarter, compared to a net loss of $9.0 million for the same period in 2006. Included in the net loss for the June 2007 and 2006 quarters were non-cash, unrealized risk management activities with an increase to net loss of $22.3 million and $15.8 million, respectively. In addition, the Partnership incurred higher depreciation, depletion and amortization expenses resulting from the Montierra and Laser acquisitions of $3.1 million between periods, and higher interest expense of $6.2 million as a result of draws from the Partnership's revolver facility used to finance the Tyler County Pipeline extension and Red Deer processing plant projects.
Adjusted EBITDA for the second quarter of 2007 was $22.2 million as compared to $20.9 million for the June 2006 quarter. Contributing to the lower than expected Adjusted EBITDA number in the second quarter of 2007 was an unscheduled plant turnaround during May, 2007 in the Texas Panhandle which impacted throughput volumes, NGL recoveries and increased the Partnership's short natural gas position. General and administrative expense increased by $2.3 million with respect to the second quarter of 2006, due to the additional costs of being a publicly-traded partnership, and the Montierra and Laser acquisitions. Operating costs increased by $2.3 million from the same period, also reflecting the added operation expenses from these acquisitions and the plant turnaround.
"We had a challenging second quarter mainly as a result of the unscheduled turnaround of our Arrington processing facility in the Texas Panhandle which impacted our throughput volumes, revenues and short natural gas position," said Joseph A. Mills, chairman and chief executive officer. "As a result of the turnaround during the month of May, however, our NGL recoveries and operating reliability at the Arrington facility have significantly improved and are expected to favorably impact our results going forward. Our Montierra and Laser acquisitions, the benefit of which was only realized during two months in the current quarter, performed according to plan and have continued to favorably impact our results. We completed the Red Deer processing plant in late June, adding an additional 20 MMcfd of processing capacity to our Texas Panhandle System. The plant is currently operating at capacity, validating our expected volume growth in the area."
Segment profit for the current year second quarter is $10.1 million as compared to $18.6 million for the prior year second quarter. The segment profit decrease in the current quarter resulted primarily from an unfavorable change in non-cash, unrealized risk-management activities recorded in revenues in the current period.
Mills added, "With the recent completion of the Escambia Asset Company ("EAC") and Redman acquisitions, both of which are not reflected in this quarter's numbers, we are now solidly established in the upstream segment and expanding our growth towards operated upstream properties. These acquisitions are immediately accretive to our financial results starting in August and we continue to expect an increase in distribution coverage and distribution per unit for the fourth quarter of 2007, as previously disclosed. With $331.5 million raised through private equity placements since May 2007, our balance sheet is strong, allowing us significant financial flexibility to continue to pursue our growth strategies, in the face of tightening credit markets. Our pro forma 2007 EBITDA, adjusting our recent acquisitions' expected contribution as if all transactions occurred at the beginning of the year, is expected to be $193 million based on our current asset base."
Eagle Rock will host a conference call to discuss financial results on Wednesday, August 15, 2007, at 10 a.m. CT (11 a.m. ET). Interested parties may listen live over the Internet or via telephone. To participate live over the Internet, access the company's Web site at www.eaglerockenergy.com. To participate by telephone, the call in number is 866-831-5605, confirmation code 79851645. Please call five minutes prior to the scheduled start time.
An audio replay of the conference call will also be available for seven days by dialing 888-286-8010, confirmation code 51502064. A replay and transcript will also be available by accessing the company's Web site.
Eagle Rock Energy Partners, L.P. is a growth-oriented midstream and upstream energy partnership engaged in the businesses of: (i) gathering, compressing, treating, processing, transporting and selling natural gas, (ii) fractionating and transporting natural gas liquids, and (iii) acquiring, developing, and producing oil and gas interests. Its corporate office is located in Houston, Texas.
Adjusted EBITDA is defined as net income (loss) plus income tax, interest-net, depreciation and amortization expense, other non-cash operating expenses less non realized revenues risk management loss (gain) activities and less net income from discontinued operations.
This press release may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the partnership based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the partnership, which may cause the partnership's actual results to differ materially from those implied or expressed by the forward-looking statements.
