Exhibit 99.1
Eagle Rock Energy Partners, L.P.
Reports Third Quarter 2006 Financial Results
HOUSTON--(BUSINESS WIRE)--Nov. 15, 2006--Eagle Rock Energy
Partners, L.P. (Nasdaq:EROC) today reported its financial results for
the third quarter ended September 30, 2006.
The Partnership reported net income of $12.9 million for the
current quarter as compared to a $0.2 million loss for the September
30, 2005 quarter and a $8.9 million loss for the June 30, 2006
quarter. Included in net income for the September 2006 and June 2006
quarters were unrealized risk management activities with a $7.9
million net gain and a $10.8 million net loss, respectively.
"We are pleased with our third quarter results, the drilling
activity around our assets, the activity level we have experienced
with our well connect program, initial benefits of our organic growth
programs and the further integration of our recently completed
acquisitions," said Alex A. Bucher, Chairman, Chief Executive Officer
and President of Eagle Rock Energy. "We continue to move ahead with
progress on our organic growth programs as well as other strategic
growth initiatives we are exploring."
During the quarter, the Partnership was able to amend and restate
its credit agreement with commitments of $500 million and the ability
to expand the facility up to an additional $100 million by meeting
certain financial conditions. As of September 30, 2006, the
Partnership had outstanding debt of approximately $397 million with a
cash balance of $16.9 million.
Segment profit for the current year quarter is $50.9 million as
compared to $18.6 million a quarter earlier and $1.1 million for the
September 2005 quarter. The increase from the June 2006 quarter
comprised of favorable change in unrealized risk management activities
recorded in revenues of $29.4 million. The remaining favorable
variance of $2.9 million is due to an overall net favorable commodity
price environment for the September quarter, higher volume throughput
and the full quarter effect of the MGS acquisition.
"Looking ahead, we are very active in our organic and strategic
growth programs with emphasis on growing our distributable cash flow
and financial results," stated Bucher. "We have several initiatives
that will impact our performance and cash distribution over the next
several quarters. The Tyler Country pipeline extension and Red Deer
processing plant start up are targeted organic growth programs with
very positive contributions starting in early 2007. We continue to
find opportunities in our cost structure and are active on the
acquisition front. We feel we have a very strong level of stable cash
flow from the mixture of our gas gathering and processing activities
and contracts, downside protection from our risk management program, a
healthy balance sheet and borrowing capacity within our credit
agreement to facilitate future growth programs."
Adjusted EBITDA for the current quarter was $24.2 million as
compared to $63,000 for the September 2005 quarter and $21 million for
the June 2006 quarter.
The increase in Adjusted EBITDA from June reflects the impact from
favorable commodity pricing environment during the September quarter,
continued contribution from the Tyler County pipeline, well connect
activities and the full quarter impact of the MGS acquisition.
On November 10 and 14, the Partnership respectively declared and
paid a distribution of $14.3 million to both common and subordinated
unitholders of record as of September 30, 2006. The distribution was
from September 30, 2006 quarter cash flow.
The Partnership completed its initial public offering on October
24, 2006, issuing 12,500,000 common units to the public, representing
approximately a 30% limited partner interest.
"I want to thank the employees of Eagle Rock for their hard work
and contribution over the past year, they are the key reason for our
success. Our safety and environmental record continues to be excellent
while handling the new challenges that come with growth," expressed
Bucher.
Eagle Rock Energy Partners, L.P. is a growth-oriented midstream
energy partnership engaged in the business of gathering, compressing,
treating, processing, transporting and selling natural gas and
fractionating and transporting natural gas liquids in Texas and
Louisiana. Its corporate office is located in Houston, Texas.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy these units nor shall there be any
sale of these securities in any state or jurisdiction in which such an
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities of such jurisdiction. The offering
may only be made by means of a prospectus.
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 PIPELINE, L.P.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2006 2005
------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................ $ 16,851,173 $ 19,371,706
Accounts receivable...................... 40,874,929 43,557,479
Risk management assets................... 14,463,273 21,829,647
Prepayments and other current assets..... 285,342 1,277,364
------------- -------------
Total current assets.................... 72,474,717 86,036,196
PROPERTY, PLANT AND EQUIPMENT -- Net...... 534,367,165 441,587,868
INTANGIBLE ASSETS -- Net.................. 135,722,016 115,000,292
RISK MANAGEMENT ASSETS.................... 15,519,197 44,023,139
OTHER ASSETS.............................. 10,725,344 14,011,567
------------- -------------
TOTAL..................................... $768,808,439 $700,659,062
============= =============
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Accounts payable......................... $ 32,811,115 $ 43,401,308
Distributions payable-affiliate.......... -- 5,000,000
Accrued liabilities...................... 9,073,206 2,324,812
Risk management liabilities.............. -- 2,259,819
Current maturities of long-term debt..... 750,000 3,866,038
------------- -------------
Total current liabilities............... 42,634,321 56,851,977
LONG-TERM DEBT............................ 396,231,073 404,600,000
ASSET RETIREMENT OBLIGATIONS.............. 1,072,869 678,802
DEFERRED TAX LIABILITY.................... 743,552 --
RISK MANAGEMENT LIABILITIES............... 15,514,260 30,432,547
COMMITMENTS AND CONTINGENCIES MEMBERS'
EQUITY (DEFICIT):
Common Unit Holders...................... 117,642,558 208,013,148
Subordinated Unitholders................. 195,118,338 --
General Partner.......................... (148,532) 82,588
------------- -------------
Total members' equity................... 312,612,364 208,095,736
------------- -------------
TOTAL..................................... $768,808,439 $700,659,062
============= =============
EAGLE ROCK PIPELINE, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------
REVENUE:
Natural gas liquids
sales............. $ 69,784,452 $4,125,679 $181,623,308 $11,907,421
Natural gas sales.. 47,564,174 1,481,010 146,750,210 3,148,916
Condensate......... 15,559,026 6,295 44,627,830 176,691
Gathering,
compression, and
processing fees... 4,549,002 556,299 10,495,159 1,025,563
(Loss) gain on risk
management
instruments....... 14,031,071 -- (21,209,255) --
Other.............. 108,657 (204,681) 435,569 --
-------------------------------------------------
Total revenue..... 151,596,382 5,964,602 362,722,821 16,258,591
COSTS AND EXPENSES:
Cost of natural gas
and natural gas
liquids........... 100,723,002 4,896,323 288,880,970 13,741,636
Operations and
maintenance....... 9,093,820 530,401 23,891,615 869,953
General and
administrative.... 3,097,328 475,136 9,108,076 1,401,254
Depreciation and
amortization...... 11,243,890 258,380 31,458,507 778,123
-------------------------------------------------
Total costs and
expenses......... 124,158,040 6,160,240 353,339,168 16,790,966
OPERATING (LOSS)
INCOME 27,438,342 (195,638) 9,383,653 (532,375)
OTHER INCOME
(EXPENSE):
Interest and other
income............ 216,974 15,049 739,971 63,375
Interest and other
expense........... (14,547,286) -- (20,993,513) --
-------------------------------------------------
Total other
(expense) income. (14,330,312) 15,049 (20,253,542) 63,375
INCOME (LOSS) BEFORE
INCOME TAXES....... 13,108,030 (180,589) (10,869,889) (469,000)
INCOME TAX PROVISION 236,319 -- 744,174 --
-------------------------------------------------
NET INCOME (LOSS)... $ 12,871,711 $ (180,589)$(11,614,063)$ (469,000)
=================================================
Eagle Rock Pipeline, L.P.
Results of Operations
Nine Months Ended
($ in thousands) Three Months Ended September 30
------------------------------- ------------------
Sept
Sept 2006 June 2006 2005 2006 2005
----------- ----------- ------- --------- --------
Sales of natural
gas, NGLs and
condensate $132,907 $123,250 $5,958 $373,001 $15,233
Gathering and
treating services 4,549 4,192 6 $10,495 $1,026
Risk management
instrument -
realized
transactions (449) (240) 0 122 0
Risk management
instrument -
unrealized 14,480 (14,931) 0 (21,331) 0
Other
revenues 109 147 0 436 0
----------- ----------- ------- --------- --------
Total operating
revenues 151,596 112,418 5,964 362,723 16,259
----------- ----------- ------- --------- --------
Purchase of natural
gas and NGLs 100,723 93,806 4,896 288,881 13,742
----------- ----------- ------- --------- --------
Segment Profit 50,873 18,612 1,068 73,842 2,517
----------- ----------- ------- --------- --------
Operation and
maintenance expense 9,094 9,014 530 23,892 870
General and
administrative
expense 3,097 3,550 475 9,108 1,401
Depreciation and
amortization
expense 11,244 11,001 258 31,459 778
Interest - net
including realized
risk management
instrument 7,730 7,534 (15) 22,892 (63)
Unrealized risk
management interest
related instrument 6,600 (4,106) 0 (2,639) 0
Income tax provision 236 508 0 744 0
----------- ----------- ------- --------- --------
Net Income $12,872 ($8,889) ($180) ($11,614) ($469)
=========== =========== ======= ========= ========
----------- ----------- ------- --------- --------
Adjusted EBITDA $24,202 $20,979 $63 $62,173 $246
----------- ----------- ------- --------- --------
2006 quarter ending
September June
----------- -----------
Operational
Information
Gathering volumes-
mmcf/d-average 236,164 229,435
NGL total equity
gallons for the
quarter 18,822,228 18,493,321
Condensate total
equity barrels for
the quarter 226,644 232,699
Natural gas short
position-mmcf/d-
average (4,026) (6,222)
Key Index prices- Sept. 30 Jun. 30
average for
quarter
----------- -----------
Oil $70.62 $70.67
NGL-
average
pricing
- gal. $1.10 $1.00
Natural
Gas $6.58 $6.79
For 2006, as of
Key Balance Sheet
items Sept. 30 Jun. 30
----------- -----------
($ in Cash and
thousands) cash
equiv-
alent $16,851 $7,103
Net
working
capital $29,841 $16,778
Total
Debt $396,981 $398,220
Total
Members
Equity $312,612 $301,447
Eagle Rock Pipeline,L.P.
GAAP to Non GAAP Reconciliations
Segment Profit reconciliation to Net Income (Loss)
We define Segment profit as operating revenues minus the cost of
natural gas and natural gas liquids and other cost of sales.
Operating revenues include both realized and unrealized risk
management activities.
The following table reconciles Segment Profit to
Net Income (loss):
Nine Months Ended
Three Months Ended September 30
------------------------------- ------------------
Sept
Sept 2006 June 2006 2005 2006 2005
----------- ----------- ------- --------- --------
Segment Profit $50,873 $18,612 $1,068 $73,842 $2,517
Less
Operation and
maintenance expense 9,094 9,014 530 23,892 870
General and
administrative
expense 3,097 3,550 475 9,108 1,401
Depreciation and
amortization
expense 11,244 11,001 258 31,459 778
Interest - net
including realized
risk management
instrument 7,730 7,534 (15) 22,892 (63)
Unrealized risk
management interest
related instrument 6,600 (4,106) 0 (2,639) 0
Income tax
provision 236 508 0 744 0
----------- ----------- ------- --------- --------
Net income (loss)
as reported $12,872 ($8,889) ($180) ($11,614) ($469)
Adjusted EBITDA Reconciliation to Net Income (Loss)
We define Adjusted EBITDA as net income (loss) plus income tax,
interest-net, unrealized interest risk management activities,
depreciation and amortization expense less non realized revenues risk
management loss (gain) activities.
Nine Months Ended
Three Months Ended September 30
------------------------------- ------------------
Sept.
Sept. 2006 June 2006 2005 2006 2005
----------- ----------- ------- --------- --------
Adjusted EBITDA $24,202 $20,979 $63 $62,173 $246
Less
Income tax provision 236 508 0 744 0
Interest - net
including realized
risk management
instrument 7,730 7,534 (15) 22,892 (63)
Unrealized risk
management interest
related instrument 6,600 (4,106) 0 (2,639) 0
Depreciation and
amortization
expense 11,244 11,001 258 31,459 778
Plus
Risk management
instrument -
unrealized 14,480 (14,931) 0 (21,331) 0
----------- ----------- ------- --------- --------
Net income (loss)
as reported $12,872 ($8,889) ($180) ($11,614) ($469)
CONTACT: Eagle Rock Energy Partners, L.P.
Alfredo Garcia, Investor Relations, 832-327-8003
or
Richard FitzGerald, Investor Relations, 832-327-2058