Eagle Rock Energy Partners L.P. Q1 2010 Earnings Call Transcript

May. 7.10 | About: Eagle Rock (EROC)

Eagle Rock Energy Partners L.P. (NASDAQ:EROC)

Q1 2010 Earnings Call

May 6, 2010 2:00 pm ET


Joe Mills - Chairman of the Board & Chief Executive Officer

Jeff Wood - Chief Financial Officer

Adam Altsuler - Senior Financial Analyst



Good day ladies and gentlemen, and welcome to the first quarter 2010, Eagle Rock Energy Partners, L.P. earnings conference call. My name is Erick. I will be your audio coordinator today. At this time all participants are in a listen-only mode, and we will facilitate a question-and-answer session at the end of the presentation. (Operator Instructions)

I would now like to turn the presentation over to Adam Altsuler, Senior Financial Analyst; please proceed.

Adam Altsuler

Thank you Eric, and thank you to our unit holders, analyst and other interested parties for joining us today on Eagle Rock Energy’s first quarter 2010 earnings call. Before we get started commenting on our first quarter results, there are few legal items that we would like to cover.

First I want to point out, the remarks and answers to questions by partnership representative on today’s call may refer to or contain forward-looking statements. Such remarks or answers are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, and such statements speak only as of today’s date or different as of the date specified.

The partnership assumes no responsibility to update any forward-looking statements as of any future date. The partnership has included in its SEC filings cautionary language identifying important factors but not necessarily all factors that could cause actual results to be materially different from those set forth in any forward looking statements. A more complete discussion of these risks is included in the partnership’s SEC filings, including in our 2009 Annual Report on Form 10-K. Our SEC filings are publically available on the SEC’s Edgar system.

Last, we also updated our commodity hedging presentation. You may access both the first quarter 2010 earnings press release, and the updated hedging presentation on our website at www.eaglerockengery.com under the Investor Relations tab.

As most of you are aware, our conference committee and board of directors have reviewed and approved a series of transactions among Eagle Rock Natural Gas Partners and Blackstone Minerals Company, to simplify our capital structure and improve our liquidity. We refer to these transactions as the recapitalization transactions, and will be bringing certain aspects of both to all of our unit holders on May 14, 2010. We will not consummate the recapitalization transaction without the requisite approval of our unaffiliated unit holders.

In connection with the proposed transactions we have filed, the definitive proxy statement, and other documents with the SEC. Investors and security holders are advised to read the definitive proxy statement, because it contains important information about Eagle Rock and the recapitalization transactions.

Copies of our SEC filings and the definitive proxy maybe obtained on our website at www.englerockenergy.com, on the SEC’s website at www.sec.gov, or by contacting our Investor Relations department. Engle Rock and our Directors, Executive Officers and other members of our management and employees may be deemed participants in the solicitation of proxies from our unit holders, in connection with the recapitalization transactions.

Information regarding the special interest of those who maybe deemed to be participants in the proposed transaction is included in the definitive proxy statement. Information regarding our Directors and Executive Officers is also included in our 2009 10-K, and will be included in the subsequent beneficial ownership filing to the SEC.

Joe and Jeff will discuss the recapitalization transactions in their prepared remarks, but the discussion will be strictly limited to information contained in our SEC filings. We will be limited in our ability to address questions regarding certain aspects of the recapitalization transactions on this call.

I will now turn the call over to Joe Mills, our Chairman and CEO, for a review of the first quarter 2010 results.

Joe Mills

Thank you, Adam. Good afternoon ladies and gentlemen. I appreciate you joining us for a discussion of our first quarter 2010 results. First off I need to apologize about my voice. I have lost my voice in the past 24 hours, so please bear with me as I walk us through our first quarter results.

We issued our earnings release after the markets closed last night, and we reported adjusted EBITDA of $36.8 million for the quarter, down by 28% as compared to the fourth quarter of 2009, and 10% as compared to the first quarter of 2009. The reduction in the adjusted EBITDA is primarily due to a material decrease in our realized commodity hedge portfolio as compared to our hedge portfolio in all of 2009.

The average strike price on Eagle Rock’s crud and NGL hedges in the first quarter of 2010 fell by 15% to $75.48 per barrel, as compared to the $101.6 per barrel in the fourth quarter of 2009. As a result, cash flow from our realized commodity derivative settlement fell by $15.6 million, to a realized loss of $2.7 million for the first quarter, as compared to a realized gain of $12.9 million in the fourth quarter of 2009.

Our first quarter financial results are like the challenges and the opportunities that we face. We continue to benefit from our diversified business model. Excluding the effects of impairments, our midstream operating income fell by approximately 4%, but our upstream and minerals operating income increased by 53% and 12% respectively.

During the first quarter, we initiated in our upstream business a robust growing program in the Permian Basin, with one well drilled and completed, two wells completing, and one rig running as of March 31. In the midstream business we continue to be excited about the areas in which we operate, and we are looking forward to expanding our current foot print in the Texas Panhandle through the deployment of our new Phoenix plant, and in East Texas through our recently announced East Texas’s main line expansion project.

Despite these positive developments, throughput volumes in our Michigan business continue to be negatively impacted by the low natural gas price environment, empathizing the importance of our announced recapitalization and related transactions proposal to improve our liquidity. As we have discussed on our previous calls, we continue to remain aggressively hedged in 2010. We are 91% hedged in our overall crud; condensate and NGL expected volumes, at a weighted average price of $62.35 per barrel.

As per the natural gas and ethane, we are 76% hedged at an average weighted price of $6.69 per MCF. Similar to our first quarter results though, our 2010 adjusted EBITDA will continue to be impacted throughout this year with our lower price commodity hedge portfolio as compared to 2009. Jeff will discuss in more detail our hedge portfolio and it’s impact on 2010 and 2011 in a few minutes.

During the quarter we were paid an additional $17 million of outstanding borrowings, bringing the total debt we paid since April 30 of last year through March 31 of this year to $100 million. Our current total debt outstanding stands at $737 million.

Adjusted EBITDA was $36.8 million, and distributable cash flow was $21.9 million for the quarter. The partnership’s first quarter distribution of $0.025 per common and general party unit, as the record date at the close of business on May 7, will be paid next Friday May 14.

In an effort to significantly improve the partnership’s liquidity position, plus accelerate our debt reduction strategy so as to enable us to begin to grow our assets again, and be in a position to increase for distribution meaningfully, we announced on December 21 of last year the partnership, through certain of its affiliates had entered into definitive agreements with affiliates of natural gas partners and Blackstone Minerals Company, to improve our liquidity and simplify our capital structure.

The definitive agreement include a securities purchase and global transaction agreement which was entered into between Eagle Rock and NGP and a separate purchase and sale agreement entered into between Eagle Rock and Blackstone for the sale of Eagle Rock’s minerals business. The global transaction agreement was amended on January 12 of this year to afford Eagle Rock greater flexibility in the payment of the contemplated transaction fee to NGP, either in cash or in partnership common units.

We announced last week that our conference committee has made the determination to pay the $29 million fee to NGP in common units, valued at $6.001 per unit, which was based on 10% discount to the volume adjusted trailing 10 days average of the trading price of Eagle Rock’s common units as of April 24, 2010. Resulting in a total of approximately 4.8 million units to be paid NGP, subject of course to a successful unit holder vote on May 14, and upon the successful completion of the mineral business sale to Blackstone Minerals.

If our unit holders approve the recapitalization transactions, we expect to raise approximately $230 million in the near term from the mineral sale and other liquidity focused transactions, and these proceeds will be used to pay out debts on our senior credit facility and improve our liquidity position.

We continue to believe there are excellent organic growth projects in our existing areas of interest, and this recapitalization will enable the partnership to begin to stabilize, and measurably grow with assets, and ultimately with cash flow, so that we can be in a position in the near term to increase our quarterly distribution to you our unit holders.

We mailed the definitive proxies to our unit holders beginning April 9 of this year. The unit holder vote is scheduled for next Friday, May 14, at our corporate offices located at 1415 Louisiana Street, Suit 2700 Huston Texas. We urge you to vote your proxy as soon as possible. I’ll have more to say on this here in a few more moments.

Now turning to some details about each of our operating business results during in the quarter. First our midstream business; throughput volumes averaged 518 million cubic feet equivalent per day as compared to 547 million cubic feet a day in the fourth quarter last year, a reduction of 5%, as well as lower equity volumes of NGL and condensate of 13%.

NGL and condensate prices were higher during the quarter, which partially mitigated the impact to the lower volumes and equity barrels. The reduction in gathered volumes and equity barrels continues to be a function of slower drilling activity in our areas of interest, but also specifically the impact of several severe extended winter storms in the Panhandle and East Taxes, which impacted the producer volumes with freeze ups and delays in drilling activity.

We are beginning to see encouraging drilling activity in the Panhandle and East Texas, thanks to improved successful drilling result in horizontal Granite Wash play, and improving results in the Haynesville and Middle Bossier play of Nacogdoches County, Texas.

Drilling activity is slowly recovering in the expanded Austin Chalk Play of East Texas, where we continue to see two rigs running today. The reduction in drilling activity across horizontal Chalk Play was the most significant driver in the reduced gathered and processed volumes in our East Texas segment during 2009.

We are optimistic given the recent improvement in NGL prices, but our producer customers are reevaluating their economics in this play. Several new wells have been staked for drilling in mid to late 2010 on the Louisiana side of the play. This will be the first time we’ve seen locations on the Louisiana side.

Moving to the Haynesville shale play in North Louisiana, we continue to connect additional Haynesville well into our Belle Bower gathering system in Desoto Parish, Louisiana. This is a limited gathering system, but we are currently gathering approximately 32 million cubic feet a day, and looking to expand our system in the near future to gather an incremental 30 million cubic feet a day. This system had only 6 million cubic feet a day on it as recently as last fall.

Moving to East Texas; on April 21 we announced our plans of begin construction on the expansion of our East Texas main line gas gathering system, to provide multi market capability for producers in the growing Haynesville and the Middle Bossier shale plays, specifically in Nacogdoches and St. Augustine counties.

The expansion includes construction of a 9 mile 20 inch diameter pipeline and associated treating facilities in Nacogdoches County, with the initial pipeline capacity of 200 million cubic feet a day. In the expansion of existing East Texas main line pipeline interconnects into NGPL, TETCO and Gulf South interstate pipes, as well as HPL’s intrastate pipeline.

The project with an estimated cost of about $12 million, will expand Eagle Rock’s interconnect delivery capabilities through our East Texas pipeline by about 300 million cubic feet a day, and will allow it’s high end of our existing BGS gathering system.

We have purchased the required 20 inch pipe, we’ve acquired substantially all of the necessary write away, and we expect the project to be completed and operational by the early third quarter of 2010. Final approval to initiate the construction is dependent upon many variables, including our ability to secure producer commitments to the project.

Based on continued drilling activity and success in the area, we are also evaluating subsequent expansions which could result in a total of over 50 miles of primarily 20 inch diameter pipeline extending east to west into Nacogdoches, Angelino, San Augustine and Sabine County, East Texas, at a total estimated cost of approximately $50 million.

Turning now to the Texas Panhandle, we remain encouraged by the continuous successful drilling results of several large independent and super independent in the horizontal Granite Wash play of Robert, Hemphill and Wheeler County, East Texas. Just this week there have been some very impressive announcements by several of the large producers of initial potential rates in the 25 million to 45 million cubic feet a day range.

Eagle Rock is a major gatherer and processor of natural gas in this area and has been a core of our company and operation since our inception. Today we see five rigs running on acres dedicated to our gas gathering systems, all targeting the horizontal Granite Wash.

Back in February we did announce the replacement of our aging Arrington plant located in Hemphill County, Texas, with a high efficiency cryo plant in order to accommodate volume growth from the Granite Wash play. Deployment of this cryo plant, which we have named the Phoenix plant, is phase two of our panhandle consolidation and processing capacity expansion project, which we originally announced in February of 2008.

We are currently deploying the Phoenix plant to the Arrington facility location and construction is underway. The relocation of the plant is expected to be completed by September 30 of this year, at an incremental cost of approximately $18 million. With the installation of the Phoenix plant, we will initially accommodate 50 million cubic feet a day of throughput capacity using exiting compression located at the current Arrington facility.

The new Phoenix plant will be capable though of handling 80 million cubic feet a day, with additional field and inlet compression, which we can readily add. With the state of the art Phoenix cryo facility in place, we will be able to deliver improved recoveries to our customers, and additional equity barrels for our partnership. We do not anticipate any downtime or reduced throughput volumes across our East Panhandle systems during the completion of the project.

Turning to operating expenses now, our midstream business experienced a slight 3% increase in operating costs as compared to the fourth quarter. All this increase driven by increased chemical and lubricant costs, as well as higher overtime due to the extended winter season. We remain focused on maintaining our cost structure, but we are seeing pressure from suppliers on operating costs, and we are budgeting to remain flat overall in 2010, as compared to 2009.

On the capital front, for all of 2009 we spent a total of $15 million in organic growth capital in the midstream business. For 2010 we are expecting to spend approximately $30 million in growth capital, and this is all focused on organic growth. This total includes the $18 million we we’ll spend on the new Phoenix plant, and approximately $12 million on the East Texas mainline expansion. We are though looking at additional organic growth opportunities in several of our areas as we speak.

Turning now to our upstream business; operating income in the first quarter of 2010, excluding the impact of impairments, increased by $1.7 million or by 53%, as compared to the fourth quarter of last year. The increase was attributable to approximately 3% higher production volumes, and higher realized natural gas, NGL and sulfur prices.

We recorded sulfur revenues associated with our South Alabama and East Texas production of approximately $1.1 million, and realized sulfur prices were $43.87 per long ton for the three months ended March 31. The increase in volumes during the quarter was primarily due to our drilling results and our Permian basin asset, as well as bringing back online two wells in our Big Escambia Creek field, that we have been working over at the end of the fourth quarter and beginning of the first quarter.

During the first quarter we averaged 31.7 million cubic feet equivalent per day. I’m pleased to say that today we are currently averaging 35.4 million cubic feet equivalent per day. We continue to have positive results with an ongoing workable program, especially in our East Texas area.

Turning to our South Alabama assets, we just completed a 12-day turn around at our BEC facility, where we performed routine maintenance work, as well as installing backup compression for the residue gas, to resolve the gas compression issues that we endured in 2009. The plan is back up and running, and we believe this turn around will significantly improve the run times at BEC for the remainder of this year and beyond, as this plant has never had backup compression.

During all of 2009 we incurred sulfur disposal cost in excess of sulfur revenues related to our sulfur production. During 2009, sulfur disposal cost totaled $2.250. Sulfur prices at the Tampa, Florida hub, which was zero dollar per long ton in the first quarter of 2009, increased an average now for the first quarter 2010 at $90 per long ton. We are encouraged now to see sulfur prices settle at $145 per long ton at the Tampa hub in this current quarter.

We continue to produce on an average 8,500 long tons per month of sulfur, and at these prices, we should generate approximately $1 million of EBITDA per month from the sale of our net sulfur production. Based on our latest view of worldwide sulfur consumption, we are optimistic we will generate positive operating cash flow from our sulfur production for the next three to six months of 2010.

Net operating costs in the upstream business were up significantly as compared in the fourth quarter. Approximately 1.6 million of this increase was attributable to the work over expense associated with the SBC 1110 well and the CCA 1-5 well, both of them located in our Big Escambia Creek field. These large expense work-overs are now completed, and we are running back at our normal OpEx levels for the second quarter.

We believe we are still on pace to end 2010 with an operating cost structure of $10.74 per BOE. Like the Midstream business though, we are focused on maintaining our lower overall cost structure in this natural gas price environment, however we are seeing some price increases on commodity based products and by our vendors.

Today we are maintaining an active drilling program in our upstream business for 2010. To date we have drilled and completed three wells, we currently have one rig running, and we have plans to drill at least three additional new wells in our Permian and East Texas areas, and based on results, we could drill as many as three additional wells for a total of 10 wells in 2010.

We continue to focus on our inventory of low risk work-overs and their completions, and combined with our drilling plans, we anticipate we will grow our net production by 10% on a year-over-year basis in 2010.

Last but not the least, our Minerals business; segment operating income in the first quarter of 2010 increased by about $400,000, almost 12% compared to the fourth quarter of last year. The increase was due to higher realized crude oil and NGL prices, as well as 23% higher production volumes as compared to our fourth quarter. The higher production volumes are directly attributable to our fee mineral position in the Haynesville Shale play in North Louisiana, where we continue to see meaningful drilling permits and activity.

As expected, we are finally seeing some of the production and royalty income from wells that were drilled in this play early to mid last year, and we expect to see this trend continue to 2010. Assuming a successful vote on the recapitalization transactions, we will exit the mineral business later this year.

I will now turn the call over to Jeff, to review in more detail our financial metrics.

Jeff Wood

Okay, thanks Joe. We reported adjusted EBITDA of $36.8 million for the first quarter, which as Joe mentioned was down by 28% from what we reported last quarter. This $14.6 million decrease in EBITDA can primarily be attributed to the impact of our realized commodity hedges, which fell by $15.6 million.

We’ve been highlighting this dip in our hedge portfolio during 2010 for some time now, and this is the right way to think about it. The realized prices on our hedges dropped from over $100 a barrel in the fourth quarter, to approximately $75 per barrels in this quarter. The negative impact from our hedges will continue throughout the rest of the year, absent any adjustment, and assuming the current price environment as it swaps and flows for the reminder of the year on our crude hedges of approximately $62 a barrel.

Should the current forward commodity curves and NGL correlation fall for the year, we expect our hedge portfolio to continue to negatively impact our adjusted EBITDA to the extent of $5 million to $10 million per quarter. After this year our hedge portfolio improved again, climbing to $75 a barrel in 2011 and $77 a barrel in 2012. As discussed in our most recent hedge presentation which is available on our website, we recently entered into crude oil hedges for 2013, covering about 45% of our expected equity volumes, at a swap price of $90 a barrel.

Turning back to the current quarter, our operating margin in the midstream business, before the impact of hedges and impairments decreased by approximately $500,000 versus the fourth quarter. Included in our first quarter result was a $1.6 million payment from a producer under our volume commitment arrangement. This benefit was largely offset by the impact of the severe weather in the Texas Panhandle, which decreased our midstream-operating margin by approximately $1 million.

The decline in our reported equity NGL and condensate volumes for the quarter might suggest a larger drop in operating margin, so let me address that issue. While we were impacted by the cold weather in January, we were also impacted by the same in December. We reported on one-month lag, and therefore use estimates for the last month in any reporting period. Our volume estimates for December, turned out to be high, in part due to the severe weather during the month. We adjust for or actualize those estimates in the following quarter.

The higher than usual estimates and actualization for December resulted in big quarter-over-quarter results in volumes, as they cost fourth quarter production numbers to be higher than the actual amount, and first quarter production numbers to be lower than the actual amount. The actualization and fewer days in the first quarter, explained much of the midstream volume decline, especially in the Panhandle.

As Joe mentioned, drilling in the East Texas, Austin Chalk is recovering, but only slowly given current gas prices. Operating income in the upstream business was up in the first quarter due to higher production, and a significant recovery in sulfur prices.

Joe spoke about the turnaround of our BEC plant in Southern Alabama, which began in late April. That turnaround lasted a total of 12 days and was done on budget. We incurred approximately $1.2 million of maintenance capital, and $200,000 of operating expense in the first quarter related to the turn around; plus the work was done in the second quarter, and we expect to recognize roughly $2 million in additional maintenance capital expense, and $1.3 million of operating expense in the second quarter related to the turnaround.

In addition to the cost, the impact of production from the BEC turnaround for the second quarter was approximately 48 million cubic feet of residue gas, 14,000 barrels of oil, 8.7000 barrels of liquid, and about 2000 long tons of sulfur. In total we expect a revenue impact of this in the second quarter to be approximately $1.7 million.

Adjusted EBITDA for the quarter included a $11.3 million of G&A expense, excluding the impact of non-cash expense related to our long term incentive program, compared to $9.6 million of such expenses in the fourth quarter. We expect G&A expenses to trend lower upon completion of the recapitalization transaction, for which we continue to incur legal and advisory fees. Currently we are capitalizing a portion of these costs in accordance with GAAP.

Turning now to our liquidity position; we paid down an additional $17 million of borrowings under our credit facility in the first quarter, reaching our targeted goal of $100 million of debt repayment within 12 months following the distribution cut. As we have mentioned previously, we do not expect to continue at this rate of debt repayment in 2010, given a substantial follow up in our commodity hedge prices, and the increased level of gross capital spending.

We ended the quarter with our total leverage ratio, which is our outstanding debt allocated to the midstream and mineral segments, divided by the adjusted by the EBITDA attributable to those segments, standing at just over 4.5 times, and availability in the facility of approximately $61 million. Both of those are roughly consistent with where we were at year-end.

As we have discussed numerous times on these calls, our maximum allowable leverage ratio under the credit facility is five times. We expect to push closer to that or violate that covenant in the coming quarters, as in our ability to reduce debt or enhance our EBITDA, including the impact of our commodity hedges. That is one of the many reasons we are asking our unit holders to carefully consider the recapitalization proposal currently up for vote.

Continuing with the credit facility, we announced in mid-April that our borrowing base had been set at $130 million, as part of our semiannual borrowing base redetermination process. The amount of our borrowing base represents the credit we are given by our lenders with respect to our upstream properties.

As we regularly discuss on these calls, our credit facility is supported by the upstream business via the borrowing days, and by the midstream and minerals businesses via traditional cash flow based covenants; any reduction in the borrowing base further burdens the midstream and mineral businesses, which must have increased allocation of debt to the covenant. Prior to this latest redetermination the borrowing base was $135 million. The small decrease was primarily due to the rolling off of our more valuable upstream commodity hedges at the end of last year.

Before turning the call back to Joe, I want to say how much we both have appreciated all the feedback we have received from investors over the past several weeks, as we have been on the road and on calls with many of you around the recapitalization transaction. Assuming the unit holder vote on May 14 is a successful, we view it as a can to a re-IPO of Eagle Rock, and look forward to operating your company with a more simplified structure and with greater liquidity. Joe will eco this point, but we sincerely want your participation in the process.

All unit holders of record as of close of business on March 29, should have received their proxy statement and voting cards by now, as well as one or two reminder mailings. I want to remind you that in most circumstances your broker cannot vote on your behalf on the proposals, and further, that every non-vote is considered a no vote.

We appreciate those of you who have already taken the time to vote and strongly encourage those of you who haven’t to do so. You can vote online, over the phone or by mail, as detailed on your proxy vote card. Please give us a call if you’d like to discuss the transaction in advance of casting your vote.

Now with that, I will turn the call back over to Joe for some additional comment before we open it to questions.

Joe Mills

Thank you Jeff. Subject to the approval of the recapitalization transaction by majority of our non-affiliated unit holders, and continued improved oil and NGL commodity prices, we are viewing with more optimism our prospects and goals of improving our liquidity through 2010, and focusing the company’s longer term on its growth opportunities.

As Jeff mentioned, we have reduced our total debt by $100 million since last April, and with a successful approval of the recapitalization transactions, we hope to raise up to $230 million in the near term, to further reduce our debt levels and improve the liquidity of the partnership. We are encouraged by rise of crude oil and NGL prices, but continue to believe natural gas prices will remain in the $4 to $6 range for the next two years depending on the US economic recovery.

We have seen the EMP companies remain focused on drilling in the near term. Gas suppliers remain robust, and unless demand continues to recovery, we will continue to see lower natural gas prices. We believe producers will focus their drilling programs and high return projects like the Granite Wash play, or the Chalk Play in East Texas for the high condensate natural gas liquid component of these reservoirs.

The liquid significantly improved during the economics for the producers, and in turn this will benefit our partnership, cash flows and growth opportunities at high margin areas. We hope to see midyear some stabilization of throughput volumes in our own midstream business, and natural gas prices must stabilize and improve in order to spur additional drilling activity by our producer customers.

In order for prices to improve longer term though, we’ll need to see continued improvement in demand, which is ultimately tide to the available healthy growth in the US economy. While there have been signs the economy is stabilizing and is starting go grow, it is also clear that the sustained recovery is fragile. Continued concerns about default risk in Greece and other countries in Europe will only cause more volatility in the commodity markets in the near term.

We remained focused on continuing our cost structure to be profitable in this environment, while aggressively securing new commitments to our gathering and processing facilities, and building new process facilities such as Phoenix plant, and growth pipelines in key areas such as the East Texas, Haynesville and Middle Bossier shale plays.

Finally though as Jeff said, we cannot stress enough, how important it is for all of our unit holders to participate in the upcoming vote on the recapitalization transactions. The definitive proxy was mailed to you with your voting instructions beginning around April 9, and you should have received those documents by now. If you have not received your proxy cards, please contact our proxy solicitor, which is Moro & Company at 1800-607-0088 for the material. Moro is also able to take your vote over the phone if you so choose.

The recapitalization is an extremely important event in Eagle Rock’s history, and is equally important to us, that our unit holders taken an active role in deciding Eagle Rock’s future. It is critical that each of you take some time to study the materials, so that you may cast your vote as appropriate; and as Jeff said, if there’s any questions you have about it, please do not hesitate to reach out Jeff or myself, and we will try and address your questions or concerns.

So with that, I will now open up the floor for questions.

Question-and-Answer Session


(Operator Instructions) It appears we have no audio questions in queue at this time.

Joe Mills

Okay, thank you Erick. Well I guess this is the first for us not to have any questions, and I hope that says that we explained everything accurately for you, but I want to thank everybody on the call for participating, but more importantly for continuing your support and interest in Eagle Rock, and so we look forward to the vote which is next Friday, and clearly we will provide feedback once the vote occurs.

So again, I want to thank everybody for your time today, and we’ll talk to you very soon.


Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect and have a good day.

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