Albert Alfonso
Dividend investing, dividend growth investing, master limited partnerships, oil & gas

Eagle Rock Energy Partners: A Hybrid Upstream And Midstream MLP With An Unsustainable Yield

Eagle Rock Energy Partners (NASDAQ:EROC) is a hybrid MLP, with its assets about evenly split between midstream services and E&P upstream operations. Even with its midstream exposure, Eagle Rock's cash flow is still highly sensitive to commodity prices. During Q1 2013, Eagle Rock's distributable cash flow, or DCF, fell well short of its distributions paid. At current prices, Eagle Rock's distribution yield is amongst the highest in the MLP sector at over 10%.

(click to enlarge)

Collapse in DCF

During Q1 2013, Eagle Rock saw its adjusted EBITDA drop 19% from Q4 2012 levels. This was due to a series of factors, including a severe winter in the Texas Panhandle, unplanned downtime in Alabama, lower NGL prices,...

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