Eagle Rock Energy Partners, L.P. (EROC) is seeing growth by focusing on large yearly acquisitions, such as last year’s acquisition of BP‘s (BP) midstream assets, and is also devoting $200 million of capital this year to organic growth projects, says Joseph A. Mills, CEO of Eagle Rock Energy Partners, L.P.
“You may have seen, back in the fourth quarter of last year, we closed on a very important acquisition where we bought all of BP’s midstream assets from the Texas Panhandle — very important acquisition, about $230 million acquisition,” Mills said. “Since 2006, when we went public, we have done about $1.4 billion to $1.5 billion of acquisitions. We do, typically, one very large acquisition per year, anywhere between $200 million to $500 million either in the upstream or the midstream business.”
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Eagle Rock Energy is also focused on growing organically, as organic growth projects provide better returns to unitholders in terms of the rate of return on invested capital, Mills says.
“Last year, 2012, we had a record year in terms of capital spend related to our organic growth projects; it was right at about $300 million. This year we pulled back a little bit, so on our menu today we have about $200 million of capital devoted to our organic growth projects. That’s a function of several large projects we completed in 2012, and based on the opportunities we see in front of us, we’ve reduced our total annual spend rate, but we are optimistic there will be some additional projects, so we’d like to see that continue to grow in terms of our organic growth spending,” Mills said.
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