By Tanya Rutledge
Special to the Houston Chronicle
Catapulted by a May 2011 acquisition that was the largest in its history, Eagle Rock Energy Partners logged major growth in earnings per share last year along with a strong return to shareholders.
The master limited partnership, which has midstream and upstream oil and natural gas assets, took the No. 2 spot on the Chronicle 100 list of top public companies. It was not on the list last year.
Among its midstream holdings: gathering pipelines and processing plants. Its upstream assets include oil and natural gas wells that it owns, operates or has working interests in.
Joe Mills, chairman and CEO of Eagle Rock, credits the company’s 310 percent earnings-per-share growth and 41 percent shareholder return largely to the $563 million acquisition of Tulsa, Okla.-based Crow Creek Energy, which had upstream assets centered in the central U.S., including Oklahoma, Arkansas and North Texas.
The deal represented a 190 percent increase in Eagle Rock’s oil and natural gas reserves and more than doubled its upstream production.
“It was a very large transaction that really helped move the needle on our revenue and earnings per share growth,” Mills said. “It was really a defining moment for us.”
Eagle Rock, which was founded in 2005 and had 2011 revenue of more than $1 billion, has a successful record of making deals, but they tend to be in the $100 million to $300 million range.
The Crow Creek assets include natural gas liquids, or NGLs, which are priced in relation to crude oil.
“As crude prices rose, NGL prices rose with them, so that really helped our bottom line even as natural gas prices fell,” Mills said.
The Crow Creek deal tipped the scale on Eagle Rock’s assets to 60 percent upstream and 40 percent midstream. Because the company likes to keep a 50-50 balance – an unusual structure for an MLP – Eagle Rock will eye buying more midstream assets this year, Mills said.
Still, the Crow Creek deal will let Eagle Rock – which has 480 employees, 198 in Houston – focus a little more on organic growth until the right acquisition comes along.
“We are under no pressure to go make another big acquisition, but we do like to keep a nice balance between midstream and upstream assets, so you may see a midstream acquisition sooner than later,” Mills said.
Rutledge is a freelance reporter.