May 8, 2013
May 1, 2013
Natural gas services including gathering, compressing, treating, processing, and marketing.
Home » Inside Eagle Rock → Acquisitions
Inside Eagle Rock
We employ an exceptional staff of professionals who follow a thorough and disciplined approach in their technical evaluation and due diligence of acquisition opportunities. Our executives are highly experienced in oil and gas operations, property transactions and corporate management.
At Eagle Rock Energy Partners, we seek to create a portfolio of properties that provides a stable future revenue stream to our investors — and also presents future growth opportunities that do not require excessive capital investment. To accomplish this, we look for acquisition opportunities with the following characteristics:
- Regional scale - Attractive midstream assets have sufficient size to allow us to compete effectively in attracting new customers to our system.
- Active drilling areas - We seek opportunities in areas that are experiencing active exploration and development activities. We are particularly attracted to regions that have extensive infill drilling activities, such as East Texas and Oklahoma.
- Potential for expansion - The presence of the two previous characteristics creates the potential for future organic growth projects. We seek opportunities to attract customers to our systems by growing our regional market share or by participating in a growing market.
- Low decline rates - In order to create a set of assets that will deliver stable, growing distributions, we feel it is important to acquire midstream assets in gas basins whose geological and reservoir characteristics support production that has low natural decline rates.
- Synergy with upstream assets - When feasible, we seek opportunities that are in areas in which we currently operate upstream assets, have a non-operating ownership, or desire to expand our upstream business in the future.
- Low decline rates - In order to provide a platform for stable and growing distributions, we seek assets that have low production decline rates. We tend to avoid production in water drive reservoirs that may suddenly and unexpectedly "water out."
- Relatively high level of developed reserves - We seek a balance of future development potential and current production rate. The current production rate is important to ensure that the acquisition will immediately provide cash flow so that distributions can be increased, but the undeveloped potential is necessary to ensure that production declines can be offset by additional drilling and recompletions.
- Relatively low risk development - We avoid opportunities that involve significant exploration activities. Our company is structured to deliver stable distributions to our investors; we do not believe that objective is compatible with a high level of risky exploration activity.
- Oil/gas balance - We diversify our hydrocarbon mix in order to avoid exposure to excessive price swings in one commodity. Although we use financial hedges to protect the cash flows of our existing production, a significant drop in the price of a commodity could result in a significant reduction in the profitability of drilling activities that are focused on that commodity.
- Wellbore and geographic diversification - We attempt to avoid situations in which a single event could result in a significant impact to our cash flows. These kinds of events include hurricanes, regional commodity price disruptions and well-bore failures.
- Operations - We prefer to operate working interests. This allows us greater flexibility with respect to future capital investments and allows us to manage the risk associated with them.