Exhibit 99.1
| | |
March 12, 2008 | | CONTACTS: |
| | Elizabeth Wilkinson – Investor Relations Phone: 281-408-1329 |
Eagle Rock Reports 2007 Fourth Quarter and Year End Results; Fourth Quarter Adjusted EBITDA of $52.0 million up 15.1% from $45.2 million in the Third Quarter
HOUSTON—Eagle Rock Energy Partners, L.P. (“Eagle Rock” or the “Partnership”) (NasdaqGS: EROC) today announced its financial results for the three months and year ended December 31, 2007.
Highlights:
The Partnership highlighted the following achievements for the fourth quarter of 2007 as compared to the third quarter of 2007:
| | • | | Increased Adjusted EBITDA by 15.1%, to $52.0 million from $45.2 million |
| | • | | Increased Distributable Cash Flow by 7.6% to $34.0 million from $31.6 million |
| | • | | Increased quarterly distribution rate to $0.3925 per unit from $0.3675 while maintaining a 119% coverage |
The following are significant achievements for the year ended December 31, 2007, as compared to December 31, 2006:
| | • | | Increased Adjusted EBITDA by 64.3%, to $133.4 million from $81.2 million |
| | • | | Increased Distributable Cash Flow by 99.5% to $76.4 million from $38.3 million |
| | • | | Increased cash distributions by 8.3% to an annualized amount of $1.57 per unit from $1.45 per unit |
| | • | | Expanded midstream asset base and added two new lines of business: the Upstream and Minerals Segments |
| | • | | Increased average daily throughput in the Midstream Segment by 57.2% to 349 MMcf/d from 222 MMcf/d in 2006 |
“We are very pleased to report improved financial results for the fourth quarter of 2007. Strong operating performance in all our segments, a favorable commodity price environment, and the full impact of our recent acquisitions, combined to generate significant increases in fourth quarter Adjusted EBITDA and Distributable Cash Flow,”
said Joseph A. Mills, chairman and chief executive officer. He added: “For Eagle Rock, 2007 was a year of transformation, profound growth, and record results. We expanded the Partnership’s footprint by adding a new region to our midstream business, diversified across the energy value chain by entering the upstream and minerals businesses, and added key members to our management team. By seizing these opportunities, we strengthened our balance sheet, grew our cash flows, and broadened our universe of growth opportunities in ways that will benefit us for years to come. I am proud of our tremendous operational and financial accomplishments. Eagle Rock’s impressive mix of assets, properties and personnel positions us extremely well for making 2008 a year of continued growth.”
Fourth Quarter and Full Year Financial Results
The Partnership is in the process of completing its audit of financial statements as well as its initial audit of internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002. Management is responsible for assessing its internal controls over financial reporting and providing a report of its assessment in the Partnership’s annual report. During this process, management determined, based on thepotential for misstatement as opposed to anactual misstatement, that the Partnership’s internal controls have material weaknesses related to: a) financial reporting and, b) midstream cost of natural gas sold. The Partnership has taken remedial action to ensure that the financial information presented herein reflects, in all material respects, the financial condition of the Partnership. Management believes that these material weaknesses will not result in a restatement of any prior periods and that the information presented herein is materially correct in all respects.
Eagle Rock analyzes and manages its operations under six distinct segments: three Midstream segments we identify as the Texas Panhandle, East Texas / Louisiana and South Texas Segments, and the Upstream, Minerals and Corporate Segments. The Corporate Segment includes our risk management (derivatives) and other corporate activities. Other expense, Interest expense – net, and Income tax provision (related to Texas Margin Tax) are discussed separately. Please refer to financial tables at the end of this release for further detailed information.
Fourth Quarter Financial Results
Adjusted EBITDA for the fourth quarter of 2007 was $52.0 million compared with $19.0 million for the fourth quarter of 2006, an increase of 173.3%. We define Adjusted EBITDA as net income (loss) plus income tax provision, interest-net (including both realized and unrealized interest rate risk management activities), depreciation, depletion and amortization expense, impairment expense, other operating expense, other non-cash operating and general and administrative expenses (including non-cash
compensation related to our equity-based compensation program) less unrealized risk management instrument gain (loss) activities and other income/(expense).
Distributable Cash Flow for the fourth quarter of 2007 (prior to any cash reserves established by Eagle Rock’s Board) totaled $34.0 million compared to $5.8 million for the fourth quarter of 2006, an increase of 486.2%. Distributable Cash Flow is defined as Adjusted EBITDA minus: (i) maintenance capital expenditures; (ii) cash interest expense; and (iii) the addition of losses or subtraction of gains relating to other miscellaneous non-cash amounts affecting net income for the period. Fourth quarter 2007 Distributable Cash Flow represents 119% coverage of the fourth quarter 2007 distribution of $0.3925 per unit based on total units outstanding on February 11, 2008, the distribution record date.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures that are defined and reconciled to the most directly comparable GAAP measures at the end of this news release.
Revenue (including the negative impact of both our realized and unrealized derivative losses) for the fourth quarter of 2007 increased 91.2% to $221.1 million compared with $115.7 million for the fourth quarter of 2006.
From the inception of our hedging program in 2005, we have used mark-to-market accounting for our commodity hedges and interest rate swaps. We record monthly realized gains and losses on commodity hedge instruments to Revenues based on cash settlement information. The settlement amounts vary due to the volatility in the commodity market prices throughout each month. We also record non-cash, unrealized gains and losses monthly to Revenues based upon the future mark-to-market value of our derivatives through their expiration dates. Option premium costs we have incurred are amortized through the unrealized risk management instruments line item, which is included in our Revenues.
As a result of our commodity hedging activities and the favorable physical commodity pricing environment, revenues include a total realized loss of $7.4 million on risk management activity that was settled during the fourth quarter of 2007, and an unrealized, non-cash mark-to-market loss of $97.9 million for the same period, as compared to a realized gain of $2.2 million on risk management activity that was settled for the fourth quarter of 2006 and an unrealized, non-cash, mark-to-market loss of $5.0 million for the same period.
Neither the unrealized, non-cash, mark-to-market loss of $5.0 million for the fourth quarter of 2006 nor the unrealized, non-cash mark-to-market loss of $97.9 million for the fourth quarter of 2007 had an impact on cash activities for the 2006 period and 2007
period, respectively, and as such are excluded from our calculation of Adjusted EBITDA and Distributable Cash Flow.
Operations and maintenance costs and taxes other than income increased to $20.7 million for the fourth quarter of 2007, from $10.3 million for the fourth quarter of 2006. This increase was mostly due to the addition of the upstream operations and the addition of the Laser Midstream assets during 2007.
General and administrative expenses increased by $8.4 million from $2.8 million for the fourth quarter of 2006 to $11.2 million for the fourth quarter of 2007. This growth in general and administrative expenses was mostly driven by increased head-count in our corporate office as a result of our expansion into the minerals and upstream businesses related to the Montierra, Redman and EAC acquisitions, and to recruiting efforts in accounting, back-office, engineering, land and operations-related corporate personnel associated with being a larger energy related public partnership. As a result, corporate-office payroll expenses increased by $3.7 million between periods. Also as a result of being a public partnership, our public partnership expenses related to audit, tax, Sarbanes-Oxley compliance and others contributed $1.2 million to expenses during the fourth quarter of 2007. Expenses related to outside professional services, including the costs of registration of common units related to our private placements of equity and funding of acquisitions with our common units, impacted our general and administrative expenses expense by $1.8 million during the quarter. We recorded other miscellaneous expenses of $4.0 million.
Other operating expense includes liquidated damages of $0.9 million related to registration rights granted to our March 2006 pre-IPO investors and our May 2007 private equity investors, as the effective registration of these investors’ common units was not achieved within the timeframe specified.
Interest Expense – net, which includes both realized and unrealized gains/losses from our interest rate swaps, increased to $21.8 million for the fourth quarter of 2007, as compared to $5.7 million for the fourth quarter of 2006. This increase is partly a result of an increase in our debt outstanding from $405.7 million at the end of 2006, to $567.1 million at the end of 2007. This increase in funded debt resulted from financing several organic projects and acquisitions during the year, including the Tyler County Pipeline Extension, Red Deer processing plant project and a portion of the Redman and EAC acquisitions. In addition, an increased base interest rate and a higher interest rate margin also increased our interest expense. We entered into a new Senior Revolving Credit Facility on December 13, 2007, which carries a lower interest rate margin than our previous credit facility. However, this only impacted our interest expense for a two-week period during the fourth quarter of 2007.
Interest Expense—net, also includes interest swap realized gain of $1.4 million during the fourth quarter of 2007. We also recorded an unrealized mark-to-market loss of $12.2 million related to our interest rate risk management position reflected in Interest Expense—net. The unrealized loss relates to our future period interest rate swaps and from changes during the year in the underlying interest rate associated with the derivatives. The unrealized mark-to-market loss did not have any impact on cash activities for the 2007 period and is also excluded by definition from our calculation of Distributable Cash Flow and Adjusted EBITDA.
Other expenses include the non-cash write-off of $6.2 million in unamortized debt issuance costs related to our previous credit facility. The non-cash write-off of unamortized debt issuance costs related to our previous credit facility is added back in the calculation of both Adjusted EBITDA and Distributable Cash Flow, while the non-recurring liquidated damages are added back to Adjusted EBITDA but excluded from the calculation of Distributable Cash Flow.
Income tax benefit recorded during the fourth quarter of 2007 of approximately $0.6 million reflects an adjustment to a change in estimate for Texas Margin Tax.
Weighted average common units outstanding totaled approximately 50.7 million for the fourth quarter of 2007 and approximately 16.7 million for the same period in 2006. Mainly due to the impact of non-cash, unrealized, mark-to-market losses related to Eagle Rock’s commodity and interest rate hedging activities of $110.1 million during the fourth quarter, net loss increased to $111.5 million for the fourth quarter.
Net loss for the fourth quarter of 2007 includes unrealized, mark-to-market losses related to both our commodity and interest rate derivatives of $110.1 million, the non-recurring, non-cash write-off of $6.2 million in unamortized debt issuance costs related to our previous credit facility, $0.9 million in non-recurring liquidated damages accrued to certain of our private equity investors and a $5.7 million non-cash asset impairment charge.
Full Year Financial Results
Revenue for 2007 (including the negative impact of both our realized and unrealized derivative losses) increased by 62.9% to $779.2 million compared with $478.4 million for the prior year. Revenue for the full year 2007 includes $3.1 million of net realized cash settlements paid with respect to expired commodity derivatives, $8.2 million of non-cash amortization expense related to the option component of Eagle Rock’s commodity derivatives, and $120.2 million of unrealized losses related to non-cash, mark-to-market charges for Eagle Rock’s commodity derivatives. Revenues for the full year 2006 included $2.3 million of cash settlements received on expired commodity
derivatives, $19.2 million of amortization expense related to the option component of Eagle Rock’s commodity derivatives and $7.1 million of unrealized losses related to non-cash, mark-to-market charges for Eagle Rock’s commodity derivatives.
Adjusted EBITDA for the year ended December 31, 2007, was $133.4 million compared with $81.2 million for the year ended December 31, 2006, an increase of 64.3%. Distributable Cash Flow for the year ended 2007 was $76.4 million compared to $38.3 million for 2006, an increase of 99.4%. Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures that are defined and reconciled to the most directly comparable GAAP measures at the end of this news release.
Weighted average common units outstanding totaled approximately 37.0 million for the year ended December 31, 2007, and approximately 12.1 million for the same period in 2006. Net loss increased to $145.6 million for the year ended December 31, 2007, compared to net loss of $23.3 million for the year ended December 31, 2006.
Net loss of $145.6 million includes unrealized, mark-to-market losses related to both our commodity and interest rate derivatives totaling $144.2 million; the non-recurring, non-cash write-off of $6.2 million in unamortized debt issuance costs related to our previous credit facility; $1.1 million in non-recurring liquidated damages to our private equity investors; and a $5.7 million non-cash asset impairment charge.
Unit Distributions
On February 6, 2008, Eagle Rock announced a fourth quarter 2007 cash distribution of $0.3925 per unit, or $1.57 per unit on an annualized basis, for all of its outstanding common, subordinated and general partner units. This distribution was paid on February 14, 2008, to unitholders of record at the close of business on February 11, 2008.
Conference Call
Eagle Rock will hold a conference call to discuss its fourth quarter and year-end 2007 financial results and recent developments on Wednesday, March 12 at 10 a.m. Eastern Time ( 9 a.m. Central Time).
Interested parties may listen live over the internet or via telephone. To listen live over the internet, log on to the Partnership’s web site atwww.eaglerockenergy.com. To participate by telephone, the call in number is 888-713-4211,confirmation code 19845816. Investors are advised to dial into the call at least 15 minutes prior to the call to register. Participants may pre-register for the call by using the following link to pre-register and view important information about this conference call. Pre-registering is not mandatory but is recommended as it will provide you immediate entry to the call and will
facilitate the timely start of the call. Pre-registration only takes a few minutes and you may pre-register at any time, including up to and after the call start. To pre-register, please clickhttps://www.theconferencingservice.com/prereg/key.process?key=P9QCNVW7V. (Due to its length, this URL may need to be copied/pasted into your internet browser’s address field. Remove extra space if one exists.) An audio replay of the conference call will also be available for seven days by dialing 888-286-8010, confirmation code 92215059. In addition, a replay of the audio webcast will be available shortly after the call on Eagle Rock’s website.
Use of Non-GAAP Financial Measures
This news release and the accompanying schedules include the non-generally accepted accounting principles, or non-GAAP, financial measures of Adjusted EBITDA and Distributable Cash Flow. The accompanying schedules provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States, or GAAP. Non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income, operating income, cash flows from operating activities or any other GAAP measure of liquidity or financial performance. Eagle Rock uses non-GAAP financial measures as measures of its core profitability or to assess the financial performance of its assets. Eagle Rock believes that investors benefit from having access to the same financial measures that its management uses in evaluating performance.
Eagle Rock defines Adjusted EBITDA as net income (loss) plus income tax provision, interest-net (including both realized and unrealized interest rates risk management activities), depreciation, depletion and amortization expense, impairment expense, other operating expense, other non-cash operating and general and administrative expenses (including non-cash compensation related to our equity-based compensation program) less non-realized revenues risk management instrument gain (loss) activities and other income/(expense). Adjusted EBITDA is used as a supplemental financial measure by external users of Eagle Rock’s financial statements such as investors, commercial banks and research analysts. Adjusted EBITDA is useful in determining our ability to sustain or increase distributions. By excluding unrealized derivative gains (losses), a non-cash mark-to-market charge which represents the change in fair market value of our executed derivative instruments and is independent of our assets’ performance or cash flow generating ability, we believe Adjusted EBITDA reflects more accurately our ability to generate cash sufficient to pay interest costs, support our level of indebtedness, make cash distributions to our unitholders and general partner and finance our maintenance capital expenditures. We further believe that Adjusted EBITDA also describes more accurately the underlying performance of our operating assets by isolating the performance of our operating assets from the impact of an unrealized, non-cash measure designed to describe the fluctuating inherent value of a financial asset.
Similarly, by excluding the impact of non-recurring discontinued operations, Adjusted EBITDA provides users of our financial statements a more accurate picture of our current assets’ cash generation ability, independently from that of assets which are no longer a part of our operations. Eagle Rock’s Adjusted EBITDA definition may not be comparable to Adjusted EBITDA or similarly titled measures of other entities, as other entities may not calculate Adjusted EBITDA in the same manner as Eagle Rock does. Eagle Rock has reconciled Adjusted EBITDA to net income.
Distributable Cash Flow is defined as Adjusted EBITDA minus: (i) maintenance capital expenditures; (ii) cash interest expense; and (iii) the addition of losses or subtraction of gains relating to other miscellaneous non-cash amounts affecting net income for the period. Maintenance capital expenditures represent: a) in our midstream business, capital expenditures employed to replace partially or fully depreciated assets to maintain the existing operating capacity of the Partnership’s assets and to extend their useful lives, or other capital expenditures that are incurred in maintaining existing system volumes and related cash flows, including well connect expenditures; and b) in our upstream business, capital expenditures employed to replace partially or fully production volumes in order to maintain existing volumes and related cash flows. Distributable Cash Flow is a significant performance metric used by senior management to compare basic cash flows generated by the Partnership (prior to the establishment of any retained cash reserves by its Board of Directors) to the cash distributions expected to be paid to unitholders. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. Distributable Cash Flow is also an important non-GAAP financial measure for unitholders since it serves as an indicator of the Partnership’s success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not the Partnership is generating cash flow at a level that can sustain or support an increase in quarterly distribution rates. Distributable Cash Flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships and limited liability companies because the value of a unit of such an entity generally is related to the amount of cash distributions the entity can pay to its unitholders. The GAAP measure most directly comparable to Distributable Cash Flow is net income.
Eagle Rock Energy Partners, L.P. is a growth-oriented partnership engaged in three businesses: a) midstream, which includes (i) gathering, compressing, treating, processing, transporting and selling natural gas, and (ii) fractionating and transporting natural gas liquids; b) upstream, which includes acquiring, exploiting, developing, and producing crude oil and natural gas interests; and c) minerals, which includes acquiring and managing fee minerals and royalty interests. Its corporate office is located in Houston, Texas.
This press release may include “forward-looking statements” as defined by the Securities and Exchange Commission. 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.
Eagle Rock Energy Partners, L.P.
Consolidated Statements of Operations
(unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Twelve Months Ended
December 31, | | | Three Months
Ended | |
| ($ in thousands) | | 2007 | | | 2006 | | | 2007 | | | 2006 | | | Sept. 30, 2007 | |
REVENUE: | | | | | | | | | | | | | | | | | | | | |
Natural gas, natural gas liquids, condensate and oil sales | | $ | 313,304 | | | $ | 113,910 | | | $ | 868,101 | | | $ | 486,911 | | | $ | 253,056 | |
Gathering, compression and processing fees | | | 8,146 | | | | 4,367 | | | | 27,417 | | | | 14,862 | | | | 7,723 | |
Minerals and royalty income | | | 5,803 | | | | — | | | | 15,004 | | | | — | | | | 6,009 | |
Gain/(loss) on risk management instruments | | | (105,244 | ) | | | (2,795 | ) | | | (131,453 | ) | | | (24,004 | ) | | | 8,688 | |
Other income | | | (877 | ) | | | 185 | | | | 130 | | | | 621 | | | | 1,388 | |
| | | | | | | | | | | | | | | | | | | | |
Total Revenue | | | 221,132 | | | | 115,667 | | | | 779,199 | | | | 478,390 | | | | 276,864 | |
COSTS AND EXPENSES: | | | | | | | | | | | | | | | | | | | | |
Cost of natural gas and natural gas liquids | | | 235,044 | | | | 88,699 | | | | 686,882 | | | | 377,580 | | | | 196,839 | |
Operations and maintenance | | | 16,785 | | | | 9,013 | | | | 52,802 | | | | 32,905 | | | | 16,883 | |
Taxes other than income | | | 3,957 | | | | 1,256 | | | | 8,319 | | | | 2,301 | | | | 2,746 | |
General and administrative | | | 11,223 | | | | 2,797 | | | | 27,810 | | | | 10,860 | | | | 7,196 | |
Other operating | | | 916 | | | | 6,000 | | | | 2,847 | | | | 6,000 | | | | 220 | |
Impairment | | | 5,749 | | | | — | | | | 5,749 | | | | — | | | | — | |
Depreciation, depletion and amortization | | | 29,674 | | | | 11,761 | | | | 80,559 | | | | 43,220 | | | | 25,105 | |
| | | | | | | | | | | | | | | | | | | | |
Total Costs and Expenses | | | 303,348 | | | | 119,526 | | | | 864,968 | | | | 472,866 | | | | 248,989 | |
OPERATING INCOME (LOSS): | | | (82,216 | ) | | | (3,859 | ) | | | (85,769 | ) | | | 5,524 | | | | 27,875 | |
Other Income (Expense): | | | | | | | | | | | | | | | | | | | | |
Interest income | | | 630 | | | | 256 | | | | 1,160 | | | | 996 | | | | 231 | |
Other income | | | (183 | ) | | | — | | | | 696 | | | | — | | | | 767 | |
Interest expense, net | | | (22,395 | ) | | | (5,992 | ) | | | (53,304 | ) | | | (26,985 | ) | | | (19,152 | ) |
Other expense | | | (7,971 | ) | | | (1,619 | ) | | | (8,226 | ) | | | (1,619 | ) | | | 2 | |
| | | | | | | | | | | | | | | | | | | | |
Total other (expense) income | | | (29,919 | ) | | | (7,355 | ) | | | (59,674 | ) | | | (27,608 | ) | | | (18,152 | ) |
INCOME (LOSS) BEFORE INCOME TAXES | | | (112,135 | ) | | | (11,214 | ) | | | (145,443 | ) | | | (22,084 | ) | | | 9,723 | |
Income tax provision | | | (603 | ) | | | 486 | | | | 169 | | | | 1,230 | | | | 352 | |
| | | | | | | | | | | | | | | | | | | | |
NET INCOME (LOSS) | | $ | (111,532 | ) | | $ | (11,700 | ) | | $ | (145,612 | ) | | $ | (23,314 | ) | | $ | 9,371 | |
| | | | | | | | | | | | | | | | | | | | |
Eagle Rock Energy Partners, L.P.
Operating Income
(unaudited)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31 | | Twelve Months Ending
December 31 | | Three
Months
Ended
Sept. 2007 |
| ($ in thousands) | | 2007 | | | 2006 | | 2007 | | | 2006 | |
Panhandle | | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | | |
Sales of natural gas, NGLs, oil and condensate | | $ | 151,476 | | | $ | 95,742 | | $ | 479,120 | | | $ | 415,331 | | $ | 126,980 |
Gathering and treating services | | | 2,255 | | | | 2,091 | | | 8,910 | | | | 7,382 | | | 2,267 |
Other | | | (1,028 | ) | | | 120 | | | — | | | | 339 | | | 1,028 |
| | | | | | | | | | | | | | | | | |
Total revenues | | | 152,703 | | | | 97,953 | | | 488,030 | | | | 423,052 | | | 130,275 |
Cost of natural gas and natural gas liquids | | | 113,629 | | | | 73,302 | | | 372,205 | | | | 317,626 | | | 96,871 |
Operating costs and expenses: | | | | | | | | | | | | | | | | | |
Operations and maintenance | | | 6,333 | | | | 7,575 | | | 30,635 | | | | 28,318 | | | 9,190 |
Taxes other than income | | | 467 | | | | 967 | | | 1,859 | | | | 1,758 | | | 465 |
Depreciation, depletion and amortization | | | 10,977 | | | | 9,088 | | | 42,308 | | | | 36,270 | | | 11,334 |
| | | | | | | | | | | | | | | | | |
Total operating costs and expenses | | | 17,777 | | | | 17,630 | | | 74,802 | | | | 66,346 | | | 20,989 |
| | | | | | | | | | | | | | | | | |
Operating income | | $ | 21,297 | | | $ | 7,021 | | $ | 41,023 | | | $ | 39,080 | | $ | 12,415 |
| | | | | | | | | | | | | | | | | |
East Texas/Louisiana | | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | | |
Sales of natural gas, NGLs, oil and condensate | | $ | 58,252 | | | $ | 18,168 | | $ | 153,660 | | | $ | 71,580 | | $ | 44,215 |
Gathering and treating services | | | 3,341 | | | | 2,276 | | | 13,547 | | | | 7,480 | | | 3,939 |
Other | | | — | | | | 65 | | | (21 | ) | | | 282 | | | 360 |
| | | | | | | | | | | | | | | | | |
Total revenues | | | 61,593 | | | | 20,509 | | | 167,186 | | | | 79,342 | | | 48,514 |
Cost of natural gas and natural gas liquids | | | 50,859 | | | | 15,397 | | | 133,350 | | | | 59,954 | | | 38,397 |
Operating costs and expenses: | | | | | | | | | | | | | | | | | |
Operations and maintenance | | | 2,695 | | | | 1,438 | | | 9,773 | | | | 4,587 | | | 3,311 |
Taxes other than income | | | 358 | | | | 289 | | | 1,156 | | | | 543 | | | 309 |
Depreciation, depletion and amortization | | | 4,439 | | | | 1,638 | | | 10,781 | | | | 5,915 | | | 2,606 |
| | | | | | | | | | | | | | | | | |
Total operating costs and expenses | | | 7,492 | | | | 3,365 | | | 21,710 | | | | 11,045 | | | 6,226 |
| | | | | | | | | | | | | | | | | |
Operating income | | $ | 3,242 | | | $ | 1,747 | | $ | 12,126 | | | $ | 8,343 | | $ | 3,891 |
| | | | | | �� | | | | | | | | | | | |
South Texas | | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | | |
Sales of natural gas, NGLs, oil and condensate | | $ | 71,958 | | | $ | — | | | 184,634 | | | $ | — | | $ | 62,792 |
Gathering and treating services | | | 1,602 | | | | — | | | 4,012 | | | | — | | | 1,517 |
Other | | | 1 | | | | — | | | 1 | | | | — | | | — |
| | | | | | | | | | | | | | | | | |
Total revenues | | | 73,561 | | | | — | | | 188,647 | | | | — | | | 64,309 |
Cost of natural gas and natural gas liquids | | | 70,556 | | | | — | | | 181,327 | | | | — | | | 61,571 |
Operating costs and expenses: | | | | | | | | | | | | | | | | | |
Operations and maintenance | | | 299 | | | | — | | | 911 | | | | — | | | 357 |
Taxes other than income | | | 120 | | | | — | | | 147 | | | | — | | | 12 |
Depreciation, depletion and amortization | | | 1,028 | | | | — | | | 2,453 | | | | — | | | 910 |
| | | | | | | | | | | | | | | | | |
Total operating costs and expenses | | | 1,447 | | | | — | | | 3,511 | | | | — | | | 1,279 |
| | | | | | | | | | | | | | | | | |
Operating income | | $ | 1,558 | | | $ | — | | $ | 3,809 | | | $ | — | | $ | 1,459 |
| | | | | | | | | | | | | | | | | |
Eagle Rock Energy Partners, L.P.
Operating Income
(unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ending
December 31 | | | Twelve Months Ending
December 31 | | | Three Months
Ended
September 2007 | |
| ($ in thousands) | | 2007 | | | 2006 | | | 2007 | | | 2006 | | |
Midstream | | | | | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | | | | | |
Sales of natural gas, NGLs, oil and condensate | | $ | 281,686 | | | $ | 113,910 | | | $ | 817,414 | | | $ | 486,911 | | | $ | 233,987 | |
Gathering and treating services | | | 7,198 | | | | 4,367 | | | | 26,469 | | | | 14,862 | | | | 7,723 | |
Other | | | (1,027 | ) | | | 185 | | | | (20 | ) | | | 621 | | | | 1,388 | |
| | | | | | | | | | | | | | | | | | | | |
Total revenues | | | 287,857 | | | | 118,462 | | | | 843,863 | | | | 502,394 | | | | 243,098 | |
Cost of natural gas and natural gas liquids | | | 235,044 | | | | 88,699 | | | | 686,882 | | | | 377,580 | | | | 196,839 | |
Operating costs and expenses: | | | | | | | | | | | | | | | | | | | | |
Operations and maintenance | | | 9,327 | | | | 9,013 | | | | 41,319 | | | | 32,905 | | | | 12,858 | |
Taxes other than income | | | 945 | | | | 1,256 | | | | 3,162 | | | | 2,301 | | | | 786 | |
Depletion, depreciation and amortization | | | 16,444 | | | | 10,726 | | | | 55,542 | | | | 42,185 | | | | 14,850 | |
| | | | | | | | | | | | | | | | | | | | |
Total operating costs and expenses | | | 26,716 | | | | 20,995 | | | | 100,023 | | | | 77,391 | | | | 28,494 | |
| | | | | | | | | | | | | | | | | | | | |
Operating income | | $ | 26,097 | | | $ | 8,768 | | | $ | 56,958 | | | $ | 47,423 | | | $ | 17,765 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Upstream | | | | | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | | | | | |
Oil and condensate | | $ | 15,286 | | | $ | — | | | $ | 24,874 | | | $ | — | | | $ | 9,588 | |
Natural gas | | | 6,835 | | | | — | | | | 11,210 | | | | — | | | | 4,375 | |
NGLs | | | 9,497 | | | | — | | | | 14,603 | | | | — | | | | 5,106 | |
Income fees and other | | | 948 | | | | | | | | 948 | | | | | | | | — | |
Other | | | 150 | | | | | | | | 150 | | | | | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total revenues | | | 32,716 | | | | — | | | | 51,785 | | | | — | | | | 19,069 | |
| | | | | | | | | | | | | | | | | | | | |
Operating costs and expenses: | | | | | | | | | | | | | | | | | | | | |
Operations and maintenance | | | 7,458 | | | | — | | | | 11,483 | | | | — | | | | 4,025 | |
Taxes other than income | | | 2,589 | | | | — | | | | 4,386 | | | | — | | | | 1,797 | |
Depreciation, depletion and amortization | | | 9,339 | | | | — | | | | 16,235 | | | | — | | | | 6,896 | |
| | | | | | | | | | | | | | | | | | | | |
Total operating costs and expenses | | | 19,386 | | | | — | | | | 32,104 | | | | — | | | | 12,718 | |
| | | | | | | | | | | | | | | | | | | | |
Operating income | | $ | 13,330 | | | $ | — | | | $ | 19,681 | | | $ | — | | | $ | 6,351 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Minerals | | | | | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | | | | | |
Oil and condensate | | $ | 2,916 | | | $ | — | | | $ | 7,529 | | | $ | — | | | $ | 3,080 | |
Natural gas | | | 2,153 | | | | — | | | | 5,493 | | | | — | | | | 1,850 | |
NGLs | | | 68 | | | | — | | | | 693 | | | | — | | | | 527 | |
Lease bonus, rentals and other | | | 666 | | | | — | | | | 1,289 | | | | — | | | | 552 | |
| | | | | | | | | | | | | | | | | | | | |
Total revenues | | | 5,803 | | | | — | | | | 15,004 | | | | — | | | | 6,009 | |
| | | | | | | | | | | | | | | | | | | | |
Operating costs and expenses: | | | | | | | | | | | | | | | | | | | | |
Operations and maintenance | | | — | | | | — | | | | — | | | | — | | | | — | |
Taxes other than income | | | 423 | | | | — | | | | 771 | | | | — | | | | 163 | |
Depreciation, depletion, amortization and impairment | | | 8,886 | | | | — | | | | 13,777 | | | | — | | | | 3,359 | |
| | | | | | | | | | | | | | | | | | | | |
Total operating costs and expenses | | | 9,309 | | | | — | | | | 14,548 | | | | — | | | | 3,522 | |
| | | | | | | | | | | | | | | | | | | | |
Operating income | | $ | (3,506 | ) | | $ | — | | | $ | 456 | | | $ | — | | | $ | 2,487 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Corporate | | | | | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | | | | | |
Realized commodity derivatives | | $ | (7,385 | ) | | $ | 2,180 | | | $ | (3,061 | ) | | $ | 2,302 | | | $ | (177 | ) |
Unrealized commodity derivatives | | | (97,859 | ) | | | (4,975 | ) | | | (128,392 | ) | | | (26,306 | ) | | | 8,865 | |
| | | | | | | | | | | | | | | | | | | | |
Total revenues | | | (105,244 | ) | | | (2,795 | ) | | | (131,453 | ) | | | (24,004 | ) | | | 8,688 | |
General and administrative | | | 11,223 | | | | 2,797 | | | | 27,810 | | | | 10,860 | | | | 7,196 | |
Depreciation, depletion and amortization | | | 754 | | | | 1,035 | | | | 754 | | | | 1,035 | | | | — | |
Other expense | | | 916 | | | | 6,000 | | | | 2,847 | | | | 6,000 | | | | 220 | |
| | | | | | | | | | | | | | | | | | | | |
Operating income | | $ | (118,137 | ) | | $ | (12,627 | ) | | $ | (162,864 | ) | | $ | (41,899 | ) | | $ | 1,272 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | | | | | |
Sales of natural gas, NGLs, oil and condensate | | $ | 314,402 | | | $ | 113,910 | | | $ | 868,101 | | | $ | 486,911 | | | $ | 253,056 | |
Gathering and treating services | | | 7,198 | | | | 4,367 | | | | 27,417 | | | | 14,862 | | | | 7,723 | |
Minerals and royalty income | | | 5,803 | | | | — | | | | 15,004 | | | | — | | | | 6,009 | |
Commodity derivatives | | | (105,244 | ) | | | (2,795 | ) | | | (131,453 | ) | | | (24,004 | ) | | | 8,688 | |
Other | | | (1,027 | ) | | | 185 | | | | 130 | | | | 621 | | | | 1,388 | |
| | | | | | | | | | | | | | | | | | | | |
Total revenues | | | 221,132 | | | | 115,667 | | | | 779,199 | | | | 478,390 | | | | 276,864 | |
| | | | | | | | | | | | | | | | | | | | |
Cost of natural gas and natural gas liquids | | | 235,044 | | | | 88,699 | | | | 686,882 | | | | 377,580 | | | | 196,839 | |
| | | | | |
Costs and expenses: | | | | | | | | | | | | | | | | | | | | |
Operating | | | 16,785 | | | | 9,013 | | | | 52,802 | | | | 32,905 | | | | 16,883 | |
Taxes other than income | | | 3,957 | | | | 1,256 | | | | 8,319 | | | | 2,301 | | | | 2,746 | |
General and administrative | | | 11,223 | | | | 2,797 | | | | 27,810 | | | | 10,860 | | | | 7,196 | |
Other expense | | | 916 | | | | 6,000 | | | | 2,847 | | | | 6,000 | | | | 220 | |
Depreciation, depletion, amortization and impairment | | | 35,423 | | | | 11,761 | | | | 86,308 | | | | 43,220 | | | | 25,105 | |
| | | | | | | | | | | | | | | | | | | | |
Total Costs and Expenses | | | 68,304 | | | | 30,827 | | | | 178,086 | | | | 95,286 | | | | 52,150 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Total operating income (loss) | | | (82,216 | ) | | | (3,859 | ) | | | (85,769 | ) | | | 5,524 | | | | 27,875 | |
| | | | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | |
Interest income | | | 630 | | | | 256 | | | | 1,160 | | | | 996 | | | | 231 | |
Other income | | | (183 | ) | | | — | | | | 696 | | | | — | | | | 767 | |
Interest expense | | | (10,167 | ) | | | (6,127 | ) | | | (37,521 | ) | | | (29,759 | ) | | | (10,723 | ) |
Unrealized interest rate derivatives | | | (12,228 | ) | | | 135 | | | | (15,783 | ) | | | 2,774 | | | | (8,429 | ) |
Other income (expense) | | | (7,971 | ) | | | (1,619 | ) | | | (8,226 | ) | | | (1,619 | ) | | | 2 | |
| | | | | | | | | | | | | | | | | | | | |
Total other income (expense) | | | (29,919 | ) | | | (7,355 | ) | | | (59,674 | ) | | | (27,608 | ) | | | (18,152 | ) |
| | | | | | | | | | | | | | | | | | | | |
Income (loss) before taxes | | | (112,135 | ) | | | (11,214 | ) | | | (145,443 | ) | | | (22,084 | ) | | | 9,723 | |
| | | | | |
Income tax provision | | | (603 | ) | | | 486 | | | | 169 | | | | 1,230 | | | | 352 | |
| | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | (111,532 | ) | | $ | (11,700 | ) | | $ | (145,612 | ) | | $ | (23,314 | ) | | $ | 9,371 | |
| | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 51,971 | | | $ | 19,019 | | | $ | 133,378 | | | $ | 81,192 | | | $ | 45,155 | |
Eagle Rock Energy Partners, L.P.
Midstream Operations Information
(unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ending
December 31 | | | Twelve Months Ending
December 31 | | | Three Months
Ending
September
2007 | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | | |
Gas gathering volumes
(Average Mcf/d) | | | | | | | | | | | | | | | | | | | | |
Texas Panhandle | | | 163,411 | | | | 147,927 | | | | 151,260 | | | | 146,402 | | | | 164,544 | |
East Texas/Louisiana | | | 157,450 | | | | 83,811 | | | | 134,007 | | | | 75,170 | | | | 155,540 | |
South Texas | | | 92,345 | | | | N/A | | | | 63,435 | | | | N/A | | | | 99,266 | (a) |
| | | | | | | | | | | | | | | | | | | | |
Total | | | 413,206 | | | | 231,738 | | | | 348,702 | | | | 221,572 | | | | 419,350 | |
| | | | | | | | | | | | | | | | | | | | |
NGLs and condensate
(Equity gallons) | | | | | | | | | | | | | | | | | | | | |
Texas Panhandle | | | 23,694,310 | | | | 24,734,938 | | | | 88,973,113 | | | | 97,776,126 | | | | 23,644,648 | |
East Texas/Louisiana | | | 5,746,483 | | | | 3,468,931 | | | | 18,320,082 | | | | 13,461,870 | | | | 4,742,723 | |
South Texas | | | 246,668 | | | | N/A | | | | 463,490 | | | | N/A | | | | 162,876 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | | 29,687,461 | | | | 28,203,869 | | | | 107,756,685 | | | | 111,237,996 | | | | 28,550,247 | |
| | | | | | | | | | | | | | | | | | | | |
Natural gas short position
(Average MMBtu/d) | | | | | | | | | | | | | | | | | | | | |
Texas Panhandle | | | (6,570 | ) | | | (7,130 | ) | | | (7,184 | ) | | | (7,536 | ) | | | (6,330 | ) |
East Texas/Louisiana | | | (382 | ) | | | 2,067 | | | | 1,077 | | | | 1,436 | | | | 1,116 | |
South Texas | | | 500 | | | | N/A | | | | 250 | | | | N/A | | | | 500 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | | (6,452 | ) | | | (5,063 | ) | | | (5,857 | ) | | | (6,100 | ) | | | (4,714 | ) |
| | | | | | | | | | | | | | | | | | | | |
Average realized price—NGL | | | | | | | | | | | | | | | | | | | | |
Texas Panhandle | | $ | 1.47 | | | $ | 0.79 | | | $ | 1.22 | | | $ | 0.98 | | | $ | 1.27 | |
East Texas/Louisiana | | $ | 1.32 | | | $ | 0.64 | | | $ | 1.07 | | | $ | 0.81 | | | $ | 1.06 | |
South Texas | | $ | 1.43 | | | | N/A | | | $ | 1.32 | | | | N/A | | | $ | 1.51 | |
Weighted average | | $ | 1.42 | | | $ | 0.75 | | | $ | 1.15 | | | $ | 0.94 | | | $ | 1.21 | |
| | | | | |
Average realized price—condensate | | | | | | | | | | | | | | | | | | | | |
Texas Panhandle | | $ | 80.31 | | | $ | 51.39 | | | $ | 63.51 | | | $ | 58.02 | | | $ | 63.41 | |
East Texas/Louisiana | | $ | 94.14 | | | $ | 54.07 | | | $ | 73.33 | | | $ | 56.02 | | | $ | 75.48 | |
South Texas | | $ | 86.34 | | | | N/A | | | $ | 78.89 | | | | N/A | | | $ | 71.76 | |
Weighted average | | $ | 81.21 | | | $ | 51.51 | | | $ | 64.31 | | | $ | 57.96 | | | $ | 64.34 | |
| | | | | |
Average realized price—natural gas | | | | | | | | | | | | | | | | | | | | |
Texas Panhandle | | $ | 6.06 | | | $ | 6.29 | | | $ | 6.08 | | | $ | 6.16 | | | $ | 5.45 | |
East Texas/Louisiana | | $ | 6.62 | | | $ | 6.13 | | | $ | 6.54 | | | $ | 6.08 | | | $ | 5.86 | |
South Texas | | $ | 6.46 | | | | N/A | | | $ | 6.38 | | | | N/A | | | $ | 5.99 | |
Weighted average | | $ | 6.31 | | | $ | 6.29 | | | $ | 6.25 | | | $ | 6.08 | | | $ | 5.71 | |
| (a) | Includes a MMBtu conversion adjustment (8,122) Mcf/d |
Eagle Rock Energy Partners, L.P.
Upstream Operations Information
(unaudited)
| | | | | | | | | | | | | | |
| | | Three Months
Ending
December 31 | | Twelve Months
Ending
December 31 | | Three
Months
Ended
September
2007 |
| | | 2007 | | | 2006 | | 2007 | | 2006 | |
Upstream | | | | | | | | | | | | | | |
Production: | | | | | | | | | | | | | | |
Oil and condensate (Bbl) | | | 195,229 | | | N/A | | | 336,028 | | N/A | | | 140,799 |
Gas (Mcf) | | | 917,981 | | | N/A | | | 1,584,279 | | N/A | | | 666,298 |
NGLs (Bbl) | | | 123,833 | | | N/A | | | 212,061 | | N/A | | | 88,228 |
Total Mcfe | | | 2,832,357 | | | N/A | | | 4,872,817 | | N/A | | | 2,040,460 |
| | | | | |
Realized prices, excluding derivatives: | | | | | | | | | | | | | | |
Oil and condensate (Bbl) | | $ | 78.30 | | | N/A | | $ | 74.02 | | N/A | | $ | 68.10 |
Gas (Mcf) | | $ | 7.45 | | | N/A | | $ | 7.08 | | N/A | | $ | 6.57 |
| | | | | |
Operating statistics: | | | | | | | | | | | | | | |
OPEX per Mcfe (incl prod taxes) | | $ | 3.55 | | | N/A | | $ | 3.26 | | N/A | | $ | 3.82 |
OPEX per Mcfe (excl prod taxes) | | $ | 2.63 | | | N/A | | $ | 2.36 | | N/A | | $ | 2.64 |
Operating Income per Mcfe | | $ | 4.71 | | | N/A | | $ | 4.04 | | N/A | | $ | 4.17 |
| | | | | |
Drilling program (gross wells): | | | | | | | | | | | | | | |
Development wells | | | 2 | | | N/A | | | 2 | | N/A | | | — |
Completions | | | 2 | | | N/A | | | 2 | | N/A | | | 3 |
Workovers | | | 2 | | | N/A | | | 4 | | N/A | | | 2 |
Recompletions | | | 1 | | | N/A | | | 1 | | N/A | | | — |
| | | | | |
Minerals | | | | | | | | | | | | | | |
Production: | | | | | | | | | | | | | | |
Oil and condensate (Bbl) | | | 34,367 | | | N/A | | | 106,275 | | N/A | | | 47,498 |
Gas (Mcf) | | | 323,576 | | | N/A | | | 872,176 | | N/A | | | 376,389 |
NGLs (Gal) | | | (31,993 | ) | | N/A | | | 624,223 | | N/A | | | 534,622 |
Total Mcfe | | | 525,208 | | | N/A | | | 1,599,001 | | N/A | | | 737,752 |
| | | | | |
Realized prices, excluding derivatives: | | | | | | | | | | | | | | |
Oil and condensate (Bbl) | | $ | 84.88 | | | N/A | | $ | 70.85 | | N/A | | $ | 64.84 |
Gas (Mcf) | | $ | 6.65 | | | N/A | | $ | 6.30 | | N/A | | $ | 4.92 |
Non-GAAP Financial Measures
The following tables present a reconciliation of the non-GAAP financial measures of (i) Adjusted EBITDA to the GAAP financial measures of net income and cash flows from operating activities and (ii) Distributable Cash Flow to the GAAP financial measure of net income for each of the periods indicated (in thousands).
Eagle Rock Energy Partners, L.P.
GAAP to Non-GAAP Reconciliations
(unaudited)
Net income (loss) to adjusted EBITDA
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31 | | | Twelve Months Ending
December 31 | | | Three Months
Ended
September 2007 | |
| ($ in thousands) | | 2007 | | | 2006 | | | 2007 | | | 2006 | | |
Net income (loss) as reported | | $ | (111,532 | ) | | $ | (11,700 | ) | | $ | (145,612 | ) | | $ | (23,314 | ) | | $ | 9,371 | |
| | | | | |
Depreciation, depletion and amortization expense | | | 29,674 | | | | 11,761 | | | | 80,559 | | | | 43,220 | | | | 25,105 | |
Impairment | | | 5,749 | | | | — | | | | 5,749 | | | | — | | | | | |
Risk management interest related instruments-unrealized | | | 12,228 | | | | (135 | ) | | | 15,783 | | | | (2,774 | ) | | | 8,429 | |
Risk management instruments-unrealized | | | 97,859 | | | | 4,975 | | | | 128,392 | | | | 26,306 | | | | (8,865 | ) |
Other operating expense | | | 916 | | | | 6,000 | | | | 2,847 | | | | 6,000 | | | | 220 | |
Restricted units non-cash amortization expense | | | 784 | | | | 142 | | | | 2,395 | | | | 142 | | | | 820 | |
Income tax provision | | | (603 | ) | | | 486 | | | | 169 | | | | 1,230 | | | | 352 | |
Interest—net including realized risk management instruments | | | 17,508 | | | | 7,490 | | | | 44,587 | | | | 30,382 | | | | 10,490 | |
Non-recurring operating items | | | (795 | ) | | | — | | | | (795 | ) | | | — | | | | — | |
Other (income)/expense | | | 183 | | | | — | | | | (696 | ) | | | — | | | | (767 | ) |
| | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 51,971 | | | $ | 19,019 | | | $ | 133,378 | | | $ | 81,192 | | | $ | 45,155 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net income (loss) to distributable cash flow | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net income (loss) as reported | | $ | (111,532 | ) | | $ | (11,700 | ) | | $ | (145,612 | ) | | $ | (23,314 | ) | | $ | 9,371 | |
| | | | | |
Depreciation, depletion and amortization expense | | | 29,674 | | | | 11,761 | | | | 80,559 | | | | 43,220 | | | | 25,105 | |
Impairment | | | 5,749 | | | | — | | | | 5,749 | | | | — | | | | — | |
Risk management interest related instruments-unrealized | | | 12,228 | | | | (135 | ) | | | 15,783 | | | | (2,774 | ) | | | 8,429 | |
Risk management instruments-unrealized | | | 97,859 | | | | 4,975 | | | | 128,392 | | | | 26,306 | | | | (8,865 | ) |
Write-off of debt issuance costs | | | 6,215 | | | | — | | | | 6,215 | | | | — | | | | — | |
Termination fee (paid with IPO proceeds) | | | — | | | | 6,000 | | | | — | | | | 6,000 | | | | | |
Capital expenditures-maintenance | | | (6,406 | ) | | | (5,200 | ) | | | (15,627 | ) | | | (11,300 | ) | | | (2,492 | ) |
Restricted units non-cash amortization expense | | | 784 | | | | 142 | | | | 2,395 | | | | 142 | | | | 820 | |
Non-recurring operating items | | | (795 | ) | | | — | | | | (795 | ) | | | — | | | | — | |
Other (income)/expense | | | 183 | | | | — | | | | (696 | ) | | | — | | | | (767 | ) |
| | | | | | | | | | | | | | | | | | | | |
Distributable cash flow | | $ | 33,959 | | | $ | 5,843 | | | $ | 76,363 | | | $ | 38,280 | | | $ | 31,601 | |
| | | | | | | | | | | | | | | | | | | | |
Oil and Natural Gas Reserves
Estimates of proved reserves at December 31, 2007, were prepared by Cawley, Gillespie & Associates, Inc. (“Cawley Gillespie”), the Partnership’s independent consulting petroleum engineers. All proved reserves are located in the United States of America.
The following table illustrates the Partnership’s estimated net proved reserves, including changes, and proved developed reserves for the periods indicated, as estimated by Cawley Gillespie. Natural gas liquids are included in oil reserves. Oil and natural gas liquids are based on the December 31, 2007 West Texas Intermediate posted price of $96.00 per barrel and are adjusted by lease for quality, transportation fees, and regional price differentials. Gas prices are based on a December 31, 2007 Henry Hub spot market price of $7.46 per MMBtu and are adjusted by lease for energy content, transportation fees, and regional price differentials. All prices are held constant in accordance with SEC guidelines.
| | | | | | | |
| | | Proved Reserves |
| | | Oil (MBbls) | | Gas (MMcf) | | | Natural Gas
Liquids (MBbls) |
Proved reserves, January 1, 2007 | | — | | — | | | — |
Extensions and discoveries | | — | | — | | | — |
Purchase of minerals in place | | 9,816 | | 48,336 | | | 5,727 |
Production | | 442 | | 2,456 | | | 227 |
Sale of minerals in place | | — | | — | | | — |
Revision of previous estimates | | 707 | | (1,237 | ) | | 242 |
Proved reserves, December 31, 2007 | | 10,081 | | 44,643 | | | 5,743 |
| | | | | | |
| | | Proved Developed Reserves |
| | | Oil (MBbls) | | Gas (MMcf) | | Natural Gas
Liquids (MBbls) |
December 31, 2007 | | 9,634 | | 38,868 | | 5,437 |
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