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Eagle Rock Reports First Quarter Financial Results

Eagle Rock Reports First Quarter Financial Results

HOUSTON, May 1, 2013 (GLOBE NEWSWIRE) -- Eagle Rock Energy Partners, L.P.
("Eagle Rock" or the "Partnership") (Nasdaq:EROC) today announced its
unaudited financial results for the three months ended March 31, 2013. The
Partnership reported Adjusted EBITDA of $53.6 million for the quarter, a
decrease of approximately 19% as compared to the $66.2 million reported for
the fourth quarter of 2012. The decrease is attributable to a number of
factors, including:

  *Approximately $2.8 million related to severe winter weather in the Texas
    Panhandle which caused shut-ins and prolonged reduced flow from many of
    the producing wells in the area and also caused reduced recovery
    efficiencies at the Partnership's processing facilities. The Partnership's
    operations in the Texas Panhandle have since returned to normal
    operations.
  *Approximately $3.9 million of charges taken in the current quarter related
    to adjustments and updates to estimates used in prior quarters.
  *Approximately $3.0 million related to the downtime experienced at the
    Partnership's Flomaton facility in Southern Alabama and unexpected
    workover expense on two wells that are connected to the facility.
  *The impact of declining NGL prices during the first quarter of 2013,
    especially in the heavier end of the NGL barrel.

Eagle Rock reported Distributable Cash Flow of $22.2 million as compared to
the $29.5 million reported for the fourth quarter of 2012, with the decrease
primarily driven by the same factors impacting Adjusted EBITDA. The
Partnership also reported a Net Loss of $33.5 million, which in addition to
the factors mentioned above was driven by unrealized mark-to-market losses on
commodity hedges, which is a non-cash charge to earnings.

Other notable financial and operational activities of the Partnership during
the first quarter of 2013 included the following:

  *Announced it had entered into a new fee-based Gas Gathering, Processing
    and Purchase Agreement with Apache Corporation ("Apache") to support
    Apache's active drilling program in the Texas Panhandle.
  *Announced a quarterly distribution with respect to the first quarter of
    2013 of $0.22 per common unit, equal to the fourth quarter 2012
    distribution.
  *Completed a public offering of 10.4 million common units for total net
    proceeds of approximately $92.5 million on March 18, 2013. The Partnership
    used the proceeds to repay a portion of the outstanding borrowings under
    its revolving credit facility associated with the acquisition of BP's
    assets in the Texas Panhandle.
  *Announced the upstream component of the borrowing base under its senior
    secured credit facility was decreased from $400 million to $375 million as
    part of the Partnership's regularly scheduled semi-annual redetermination
    by its commercial lenders.
  *Completed an exchange offer of $250 million of its 8 3/8% Senior Notes due
    2019 for new notes with materially identical terms that have been
    registered under the Securities Act of 1933 and became freely tradable on
    March 1, 2013.

"We faced a challenging operating environment in the first quarter with severe
winter storms impacting our midstream volumes and efficiencies in the
Panhandle, and with NGL prices continuing near multi-year lows," said Joseph
A. Mills, Eagle Rock's Chairman and Chief Executive Officer. "Despite these
short-term challenges, the Partnership is well-positioned for future success
in both businesses. Our integration of the midstream assets acquired from BP
is progressing well, and we continue to see great interest from producers as
evidenced by our recent acreage dedication agreement with Apache. Further, we
are encouraged by our recent improved drilling results in our upstream
business and the ongoing potential we see in the SCOOP play of southwestern
Oklahoma."

Update Regarding Integration of Acquired BP Texas Panhandle Assets

The integration of the former BP assets continues on schedule. The pace of
drilling activity and well connects on the system have been consistent with
expectations. All back-office and operational functions are now integrated
within Eagle Rock. Construction of the first major interconnect between the
Partnership's legacy Panhandle assets and the former BP system will take place
in the second quarter of 2013.

Update Regarding Construction of the Wheeler Cryogenic Processing Plant

Construction of the Wheeler 60 MMcf/d cryogenic processing plant (the "Wheeler
Plant"), located in Wheeler County, and associated gathering and compression
infrastructure, is expected to be completed in the second quarter of 2013 at a
total cost of approximately $64 million, of which $47.9 million had been spent
through March 31, 2012. Upon completion of the Wheeler Plant, the Partnership
will have over 540 MMcf/d of high-efficiency processing capacity in the Texas
Panhandle to serve continued drilling activity in the Granite Wash and
surrounding geological plays.

New Fee-Based Apache Acreage Dedication

On March 6, 2013, the Partnership announced that it had entered into a new
fee-based Gas Gathering, Processing and Purchase Agreement with Apache to
support Apache's active drilling program in the Texas Panhandle.

As part of the agreement, Apache dedicated to the Partnership all existing and
future wells drilled within an area encompassing more than 106,000 gross
acres, located in Hemphill, Lipscomb, Ochiltree, Roberts, Hansford and Sherman
Counties, Texas, under market-based terms. The agreement supersedes and
expands on various existing agreements between the Partnership and Apache. The
dedicated acreage covers the Granite Wash, Hogshooter, Tonkawa, Marmaton and
Cleveland plays in the Anadarko Basin of the Texas Panhandle. The agreement
provides for fee-based compensation to the Partnership and fixed NGL
recoveries to Apache, and applies to all existing and future wells completed
by Apache on any of the acreage in the dedicated area.

First Quarter 2013 Financial and Operating Results

The Partnership's financial results are reported in the following segments:
(a) the Midstream Business -- Texas Panhandle; (b) the Midstream Business --
East Texas and Other Midstream; (c) the Midstream Business -- Marketing and
Trading; (d) the Upstream Business; and (e) the Corporate segment.

The following discussion of Eagle Rock's operating income by business segment
compares the Partnership's financial results in the first quarter of 2013 to
those of the fourth quarter of 2012. The Partnership believes comparing these
periods is more illustrative of current operating trends than comparing the
current quarter to results achieved in the first quarter of 2012. Please refer
to the financial tables at the end of this release for further detailed
information.

Midstream Business – Operating income from continuing operations, excluding
the impact of impairments, for the Midstream Business in the first quarter of
2013 decreased by approximately $3.5 million, or approximately 31%, compared
to the fourth quarter of 2012, primarily due to lower gathering, NGLs and
condensate volumes and to certain true-ups recorded in the quarter related to
prior periods.

In the Texas Panhandle, gathered volumes were down 8%, with combined equity
NGL and condensate volumes down approximately 53%, compared to the fourth
quarter of 2012. NGL and condensate equity volumes were lower due to lower
volumes and lower-than-normal NGL recovery rates as a result of the harsh
winter storms in the Texas Panhandle in early January and late February 2013.
The impact of these lower recovery rates on equity NGL volumes was even more
pronounced because the Partnership pays many producers in the Texas Panhandle
on acontractually-fixed theoretical recovery rate for NGL volumes (i.e.,
fixed recovery contracts). As such, vis-a-vis many of these producers, the
Partnership was "short" actual NGL volumes during the quarter.The Partnership
estimates that the impact of the freezing weather in the Texas Panhandle
during the quarter to Adjusted EBITDA was approximately $2.8 million. 

NGL equity volumes were also lower due to the Partnership's decision to reject
ethane during the quarter. The Partnership's election to reject ethane is an
economic decision based on its contract portfolio and the price spread between
ethane and natural gas.Despite the negative impact on ethane equity volumes,
thisdecision is made to enhance theoverall economics for the Partnership.

In addition, the first quarter 2013 results were negatively impacted by prior
period adjustments related to the BP Acquisition, which closed on October 1,
2012.As previously disclosed, following the fourth quarter 2012 earnings
conference call on February 26, 2013, the Partnership received new information
related to the system acquired from BP, which was operated by BP through the
fourth quarter in accordance with a transition services agreement. The
Partnership was informed that the cost of product sold on the system was
higher than had been originally communicated. As a result, an adjustment to
reflect the previously disclosed understatement of cost of product sold in the
fourth quarter of 2012 was made. This, combined with other true-ups recorded
in the first quarter of 2013 negatively impacted the Partnership's Adjusted
EBITDA by approximately $1.2 million.

In the Partnership's East Texas and Other Midstream segment, gathered volumes
were down 7.7%, with equity NGL and condensate volumes down approximately 35%,
compared to the fourth quarter of 2012.The decrease in gathered volumes was
in part due to natural declines in the production of existing wells and a
decrease in production from the Partnership's Tyler County gathering system in
East Texas and the North Terrebonne plant, in which the Partnership owns a
non-operated 3.07% interest, serving production from the Gulf of Mexico.The
gathering volumes associated with the Partnership's Tyler County system hit
recent highs in the fourth quarter of 2012 when one of its producer customer's
wells came online in October and has since returned to normal levels.The
volumes associated with the Partnership's North Terrebonne's plant were lower
during the quarter primarily due to a lower ownership percentage in the plant,
as compared to the fourth quarter, and lower associated third party drilling
in the Gulf of Mexico.The decrease in combined equity NGL and condensate
volumes was down primarily due to a true-up related to equity NGLs and
condensate reported in the fourth quarter of 2012.Lower gathering volumes
during the quarter also contributed to the decline.

The Marketing and Trading segment includes the financial results of the
Partnership's crude oil and condensate marketing, and natural gas marketing
and trading operations. Operating income for the Marketing and Trading
segment in the first quarter of 2013, including intercompany sales and
intersegment cost of sales, increased by approximately $0.1 million compared
to the fourth quarter of 2012.

Upstream Business - Operating income for Eagle Rock's Upstream Business in the
first quarter of 2013, excluding the impact of impairments, decreased by
approximately $0.6 million, or 5%, compared to the fourth quarter of
2012.Production volumes in the Upstream Business averaged 72.7 MMcfe/d during
the quarter, a decrease of approximately 7% from the fourth quarter of
2012.The quarter-over-quarter decreases were primarily due to lower
production during the quarter associated with unscheduled downtime at the
Partnership's Flomaton facility in Southern Alabama; a prior period
reallocation adjustment of volumes flowing through the Eustace midstream plant
located in East Texas and owned and operated by Tristream Energy; a separate
prior period adjustment related to the Partnership's non-operated drilling
program in the Mid-Continent; and a full quarter without the Partnership's
non-core Barnett Shale assets, which were sold for $15 million on December 20,
2012.

From February 7 to April 18, 2013, Eagle Rock's Flomaton facility in Escambia
County, Alabama was not operational due to minor equipment failure and
insufficient inlet volumes to operate the facility's sulfur recovery unit.
During this time, the Partnership unsuccessfully attempted to work over two
wells connected to the facility. The Flomaton facility resumed operations
after equipment repairs were made and inlet gas rates were increased by
diverting natural gas production from a nearby operated well. The Partnership
estimates the EBITDA impact during the quarter from these events was
approximately $3.0 million.

The Partnership estimates the Adjusted EBITDA impact during the quarter from
the prior period adjustments related to the Eustace plant and the lower
expected actualization of the Partnership's non-operated drilling program
mentioned above was approximately $0.8 and $1.9 million, respectively.

Corporate Segment – Operating loss for the Corporate segment, excluding the
impact of unrealized derivative gains and losses, was $9.4 million for the
first quarter of 2013 as compared to a $2.3 million loss for the fourth
quarter of 2012. The increased loss was attributable to an increase in
intercompany eliminations, a $2.9 million reduction in realized commodity
derivative gains and an approximate $1.2 million increase in General and
Administrative expenses for the first quarter.

Total revenue for the first quarter of 2013, including the impact of Eagle
Rock's realized and unrealized commodity derivative gains and losses, was
$257.7 million, down 17.5% compared with the $312.4 million reported for the
fourth quarter of 2012.The decrease in revenue was primarily due to higher
unrealized losses on commodity derivatives and lower revenue from sales of
natural gas, NGLs, crude oil, condensate and sulfur compared to the fourth
quarter of 2012.Eagle Rock recorded an unrealized loss on commodity
derivatives of $27.9 million in the first quarter 2013, as compared to an
unrealized loss on commodity derivatives of $6.9 million in the fourth quarter
2012.Unrealized gain (loss) on commodity derivatives is a non-cash,
mark-to-market amount.

Revenues associated with the sale of crude oil, natural gas, NGLs, condensate
and sulfur were down 11% relative to the fourth quarter of 2012, driven
primarily by the impact of unscheduled downtime at the Partnership's Flomaton
facility, harsh winter weather in the Texas Panhandle and the prior period
adjustments mentioned above.Adjusted EBITDA was $53.6 million for the first
quarter of 2013, down 19% from the fourth quarter of 2012, and Distributable
Cash Flow was $22.2 million for the first quarter of 2013, down 25% as
compared to the fourth quarter of 2012.The decrease in Distributable Cash
Flow was primarily attributable to lower Adjusted EBITDA and slightly higher
interest expense, partially offset by lower maintenance capital spending
during the quarter. The Partnership recorded approximately $12.7 million of
maintenance capital in the first quarter of 2013, a decrease of $5.9 million
as compared to the fourth quarter of 2012. Of the first quarter 2013
maintenance capital, $0.5 million was related to the previously-disclosed,
scheduled upgrades to Eagle Rock's Big Escambia Creek facility located in
Southern Alabama to enhance SO[2] emissions reductions.

The Partnership recorded a net loss of approximately $33.5 million for the
first quarter of 2013, versus a net loss of $55.2 million for the fourth
quarter of 2012. The reduction in net loss was driven primarily by impairment
charges in the fourth quarter of 2012, offset by higher unrealized commodity
derivative losses taken during the first quarter of 2013 and lower revenues
associated with the sale of crude oil, natural gas, NGLs, condensate and
sulfur during the first quarter of 2013.Net loss for the quarter excluding
the impact of unrealized gains and losses was approximately $7.1 million. The
Partnership did not incur any impairment charges in the first quarter of 2013.

First Quarter Distribution

On April 23, 2013, the Partnership declared a cash distribution on common
units of $0.22 per unit for the quarter ended March 31, 2013, equivalent to
$0.88 per unit on an annualized basis.This distribution is equal to the
distribution paid for the fourth quarter 2012.As declared, the distribution
will be paid on Wednesday, May 15, 2013, to unitholders of record as of the
close of business on Tuesday, May 7, 2013, including holders of restricted
common units other than those issued in late April and early May of 2013.

Capitalization and Liquidity Update

Total debt outstanding as of March 31, 2012 was $1.12 billion, consisting of
$544.8 million of senior unsecured notes (net of an unamortized debt discount
of $5.2 million) and borrowings of $577.8 million under the Partnership's
senior secured credit facility. Total debt decreased during the first quarter
of 2013 as a result of repayments from the proceeds of the Partnership's $92.5
million public offering of 10.4 million common units on March 18,
2013.Borrowings during the quarter were primarily to fund the construction of
the Wheeler Plant and the Partnership's Upstream drilling program.

The Partnership is in compliance with its financial covenants and has no
maturities under its senior secured credit facility until June
2016.Availability under the Partnership's senior secured credit facility is
subject to a borrowing base comprised of two components: the upstream
component and the midstream component.On April 17, 2013, the Partnership
announced the upstream component of the borrowing base under its senior
secured credit facility was decreased from $400 million to $375 million as
part of the Partnership's regularly scheduled semi-annual redetermination by
its commercial lenders.As of March 31, 2013, the Partnership had
approximately $215.4 million of availability under its senior secured credit
facility, based on its outstanding commitments, after taking into account
$577.8 million of outstanding borrowings and approximately $26.8 million of
outstanding letters of credit. Availability under the revolving credit
facility as of March31, 2013,considering the additional impact ofcovenant
limitations, was approximately $52 million.

The current capital budget for 2013 is approximately $208 million in total,
which includes $70 million allocated to maintenance capital expenditures and
$138 million allocated to growth capital expenditures. The current capital
budget for 2013 includes approximately $88 million allocated to the Midstream
Business and approximately $118 million allocated to the Upstream Business
(with the remainder allocated to general corporate purposes).The
Partnership's capital expenditures were approximately $56.0 million for the
three months ended March31, 2013, of which $12.7 million were related to
maintenance capital expenditures and $43.2 million were related to growth
capital expenditures.

As of March 31, 2012, the Partnership had 157.7 million common units
outstanding, including unvested restricted common units issued under its
Long-Term Incentive Plan.

Hedging Update

The Partnership entered into the following commodity hedges since its hedging
update on February 25, 2013:


Transaction Product / (Type) Quantity    Price ($/Bbl) Term
Date
3/22/13     WTI Crude        20,000      $85.20        Cal. 2016
            (Swap)           Bbls/month
3/22/13     WTI Crude        20,000      $85.00        Cal. 2016
            (Swap)           Bbls/month
3/22/13     HH Natural       250,000     $4.36         Cal. 2016
            Gas (Swap)       MMBtu/month

Details of the recent hedging transactions are included in the updated
Commodity Hedging Overview presentation Eagle Rock posted to its website on
March 28, 2013. The latest presentation can be accessed by going to
www.eaglerockenergy.com: select Investor Relations, then select Presentations.

First Quarter 2013 Conference Call Information

Eagle Rock will hold a conference call to discuss its first quarter 2013
financial and operating results on Thursday, May 2, 2013 at 2:00 p.m. Eastern
Time (1:00 p.m. Central Time).

Interested parties may listen to the earnings conference call live over the
Internet or via telephone. To listen live over the Internet, participants are
advised to log on to the Partnership's web site at www.eaglerockenergy.com and
select the "Events & Presentations" sub-tab under the "Investor Relations"
tab.To participate by telephone, the call in number is 877-293-5457,
conference ID 50061377.Participants are advised to dial into the call at
least 15 minutes prior to the call. An audio replay of the conference call
will also be available for thirty days by dialing 855-859-2056, conference ID
50061377.In addition, a replay of the audio webcast will be available by
accessing the Partnership's web site after the call is concluded.

About the Partnership

The Partnership is a growth-oriented master limited partnership engaged in two
businesses: a) midstream, which includes (i) gathering, compressing, treating,
processing and transporting natural gas; (ii) fractionating and transporting
natural gas liquids; (iii) crude oil and condensate logistics and marketing;
and (iv) natural gas marketing and trading; and b) upstream, which includes
exploiting, developing, and producing hydrocarbons in oil and natural gas
properties.

Use of Non-GAAP Financial Measures

This news release and the accompanying schedules include the non-generally
accepted accounting principles, or non-GAAP, financial measures of Adjusted
EBITDA and Distributable Cash Flow. The accompanying non-GAAP financial
measures schedules (after the financial schedules) provide reconciliations of
these non-GAAP financial measures to their most directly comparable financial
measures calculated and presented in accordance with accounting principles
generally accepted in the United States, or GAAP. Non-GAAP financial measures
should not be considered alternatives to GAAP measures such as net income
(loss), operating income (loss), cash flows from operating activities or any
other GAAP measure of liquidity or financial performance.

Eagle Rock defines Adjusted EBITDA as net income (loss) plus or (minus) income
tax provision (benefit); interest-net, including realized interest rate risk
management instruments and other expense; depreciation, depletion and
amortization expense; impairment expense; other operating expense,
non-recurring; other non-cash operating and general and administrative
expenses, including non-cash compensation related to the Partnership's
equity-based compensation program; unrealized (gains) losses on commodity and
interest rate risk management related instruments; (gains) losses on
discontinued operations and other (income) expense.

Eagle Rock uses Adjusted EBITDA as a measure of its core profitability to
assess the financial performance of its assets. Adjusted EBITDA also is used
as a supplemental financial measure by external users of Eagle Rock's
financial statements such as investors, commercial banks and research
analysts. For example, the Partnership's lenders under its revolving credit
facility use a variant of its Adjusted EBITDA in a compliance covenant
designed to measure the viability of Eagle Rock and its ability to perform
under the terms of the revolving credit facility; Eagle Rock, therefore, uses
Adjusted EBITDA to measure its compliance with its revolving credit facility.
Eagle Rock believes that investors benefit from having access to the same
financial measures that its management uses in evaluating performance.
Adjusted EBITDA is useful in determining Eagle Rock's ability to sustain or
increase distributions. By excluding unrealized derivative gains (losses), a
non-cash, mark-to-market benefit (charge) which represents the change in fair
market value of the Partnership's executed derivative instruments and is
independent of its assets' performance or cash flow generating ability, Eagle
Rock believes Adjusted EBITDA reflects more accurately the Partnership's
ability to generate cash sufficient to pay interest costs, support its level
of indebtedness, make cash distributions to its unitholders and finance its
maintenance capital expenditures. Eagle Rock further believes that Adjusted
EBITDA also portrays more accurately the underlying performance of its
operating assets by isolating the performance of its operating assets from the
impact of an unrealized, non-cash measure designed to portray the fluctuating
inherent value of a financial asset. Similarly, by excluding the impact of
non-recurring discontinued operations, Adjusted EBITDA provides users of the
Partnership's financial statements a more accurate picture of its current
assets' cash generation ability, independently from that of assets which are
no longer a part of its operations.

Eagle Rock's Adjusted EBITDA definition may not be comparable to Adjusted
EBITDA or similarly titled measures of other entities, as other entities may
not calculate Adjusted EBITDA in the same manner as Eagle Rock. Eagle Rock has
reconciled Adjusted EBITDA to the GAAP financial measure of net income (loss)
at the end of this release.

Distributable Cash Flow is defined as Adjusted EBITDA minus: (i) maintenance
capital expenditures; (ii) cash interest expense; (iii) cash income taxes; and
(iv) the addition of losses or subtraction of gains relating to other
miscellaneous non-cash amounts affecting net income (loss) for the period.
Maintenance capital expenditures represent capital expenditures made to
replace partially or fully depreciated assets; to meet regulatory
requirements; to maintain the existing operating capacity of the Partnership's
gathering, processing and treating assets or to maintain the Partnership's
natural gas, NGL, crude or sulfur production.

Distributable Cash Flow is a significant performance metric used by senior
management to compare cash flows generated by the Partnership (excluding
growth capital expenditures and prior to the establishment of any retained
cash reserves by the Board of Directors) to the cash distributions expected to
be paid to unitholders. Using this metric, management can quickly compute the
coverage ratio of estimated cash flows to planned cash distributions. This
financial measure also is important to investors as an indicator of whether
the Partnership is generating cash flow at a level that can sustain or support
an increase in quarterly distribution rates. Actual distributions are set by
the Board of Directors.

The GAAP measure most directly comparable to Distributable Cash Flow is net
income (loss). Eagle Rock's Distributable Cash Flow definition may not be
comparable to Distributable Cash Flow or similarly titled measures of other
entities, as other entities may not calculate Distributable Cash Flow (and
Adjusted EBITDA, on which it builds) in the same manner as Eagle Rock. Eagle
Rock has reconciled Distributable Cash Flow to the GAAP financial measure of
net income/(loss) at the end of this release.

This news release may include "forward-looking statements." All statements,
other than statements of historical facts, included in this press release that
address activities, events or developments that the Partnership expects,
believes or anticipates will or may occur in the future are forward-looking
statements and speak only as of the date on which such statement is made.
These statements are based on certain assumptions made by the Partnership
based on its experience and perception of historical trends, current
conditions, expected future developments and other factors it believes are
appropriate under the circumstances. Such statements are subject to a number
of assumptions, risks and uncertainties, many of which are beyond the control
of the Partnership. These include, but are not limited to, risks related to
volatility of commodity prices; market demand for crude oil, natural gas and
natural gas liquids; the effectiveness of the Partnership's hedging
activities; the Partnership's ability to retain key customers; the
Partnership's ability to continue to obtain new sources of crude oil and
natural gas supply; the availability of local, intrastate and interstate
transportation systems and other facilities to transport crude oil, natural
gas and natural gas liquids; competition in the oil and gas industry; the
Partnership's ability to obtain credit and access the capital markets; general
economic conditions; and the effects of government regulations and policies.
Should one or more of these risks or uncertainties occur, or should underlying
assumptions prove incorrect, the Partnership's actual results and plans could
differ materially from those implied or expressed by any forward-looking
statements. The Partnership assumes no obligation to update any
forward-looking statement as of any future date. For a detailed list of the
Partnership's risk factors, please consult the Partnership's Form 10-K, filed
with the Securities and Exchange Commission ("SEC") for the year ended
December 31, 2012, as well as any other public filings, including, when filed,
the Partnership's Form 10-Q for the quarter ended March 31, 2013, and press
releases.

Eagle Rock Energy Partners, L.P.
Consolidated Statement of Operations
($ in thousands)
(unaudited)
                                                               
                                         Three Months Ended      Three Months
                                                                  Ended
                                         March 31,               December 31,
                                         2013        2012        2012
REVENUE:                                                        
Natural gas, natural gas liquids, oil,    $254,200  $222,713  $284,732
condensate and sulfur sales
Gathering, compression, processing and    20,942     11,511     21,265
treating fees
Unrealized commodity derivative losses    (27,906)   (14,771)   (6,864)
Realized commodity derivative gains       9,998      6,163      12,904
Other revenue                             497        139        374
Total revenue                             257,731    225,755    312,411
                                                               
COSTS AND EXPENSES:                                             
Cost of natural gas and natural gas       179,988    130,454    193,921
liquids
Operations and maintenance                32,219     27,049     38,143
Taxes other than income                   3,866      5,150      4,914
General and administrative                18,847     16,841     17,610
Impairment                                --        45,522     54,179
Depreciation, depletion and amortization  40,237     39,294     43,002
Total costs and expenses                  275,157    264,310    351,769
OPERATINGLOSS                            (17,426)   (38,555)   (39,358)
OTHER INCOME (EXPENSE):                                         
Interest expense, net                     (17,084)   (10,241)   (16,391)
Realized interest rate derivative losses  (1,651)    (3,375)    (1,649)
Unrealized interest rate derivative gains 1,495      1,796      1,082
Other (expense) income                    (8)        (49)       6
Total other expense                       (17,248)   (11,869)   (16,952)
                                                               
LOSS BEFORE INCOME TAXES                  (34,674)   (50,424)   (56,310)
INCOME TAX BENEFIT                        (1,160)    (91)       (1,147)
NET LOSS                                  $(33,514) $(50,333) $(55,163)


Eagle Rock Energy Partners, L.P.
Consolidated Balance Sheets
($ in thousands)
(unaudited)
                                                 
                                     March 31,    December 31,
                                      2013         2012
ASSETS                                            
CURRENT ASSETS:                                   
Cash and cash equivalents             $60        $25
Accounts receivable                   144,272     138,732
Risk management assets                14,789      33,340
Prepayments and other current assets  10,122      9,867
Total current assets                  169,243     181,964
PROPERTY, PLANT AND EQUIPMENT- Net   1,988,530   1,968,206
INTANGIBLE ASSETS- Net               109,901     111,515
DEFERRED TAX ASSET                    1,655       1,656
RISK MANAGEMENT ASSETS                9,752       7,953
OTHER ASSETS                          21,530      22,922
TOTAL ASSETS                          $2,300,611 $2,294,216
                                                 
LIABILITIES AND MEMBERS' EQUITY                   
CURRENT LIABILITIES:                              
Accounts payable                      $148,689   $160,473
Accrued liabilities                   32,518      19,764
Taxes payable                         46          46
Risk management liabilities           3,438       1,231
Total current liabilities             184,691     181,514
LONG-TERM DEBT                        1,122,560   1,153,103
ASSET RETIREMENT OBLIGATIONS          41,569      44,814
DEFERRED TAX LIABILITY                41,838      43,000
RISK MANAGEMENT LIABILITIES           9,405       1,700
OTHER LONG TERM LIABILITIES           3,049       1,711
MEMBERS' EQUITY                       897,499     868,374
TOTAL LIABILITIES AND MEMBERS' EQUITY $2,300,611 $2,294,216


Eagle Rock Energy Partners, L.P.
Segment Summary
Operating Income
($ in thousands)
(unaudited)
                                                           
                               Three Months Ended            Three Months
                                                              Ended
                               March 31,                     December 31,
                               2013           2012           2012
Midstream                                                   
Revenues:                                                   
Natural gas, natural gas
liquids, oil and condensate     $220,495     $180,932     $248,153
sales
Intercompany sales - natural    (1,795)       (2,850)       (2,325)
gas
Gathering and treating services 20,942        11,511        21,265
Other                           --             --             --
Total revenue                   239,642       189,593       267,093
Cost of natural gas, natural
gas liquids, oil and condensate 180,007       130,454       194,004
(1)
Intersegment elimination - cost 11,093        13,631        11,705
of condensate
Operating costs and expenses:                               
Operations and maintenance      21,969        17,367        29,470
Impairment                      --           45,522        29,735
Depreciation, depletion and     18,931        16,682        20,760
amortization
Total operating costs and       40,900        79,571        79,965
expenses
Operating income (loss)         $7,642       $(34,063)    $(18,581)
                                                           
Upstream                                                    
Revenue                                                     
Oil and condensate sales        $12,409      $17,465      $14,332
Intersegment sales - condensate 11,190        12,489        8,778
Natural gas sales               8,200         7,318         9,631
Intersegment sales - natural    1,795         2,850         2,530
gas
Natural gas liquids sales       10,276        12,741        9,771
Sulfur sales                    2,935         4,257         2,845
Other                           497           139           374
Total revenue                   47,302        57,259        48,261
Operating costs and expenses:                               
Operations and maintenance (2)  14,116        14,832        13,709
Impairment                      --           --           24,444
Depreciation, depletion and     20,929        22,220        21,707
amortization
Total operating costs and       35,045        37,052        59,860
expenses
Operating income (loss)         $12,257      $20,207      $(11,599)
                                                           
Corporate and Other                                         
Revenues:                                                   
Unrealized commodity derivative $(27,906)    $(14,771)    $(6,864)
(losses) gains
Realized commodity derivative   9,998         6,163         12,904
gains(losses)
Intersegment elimination -      (11,305)      (12,489)      (8,983)
sales of condensate
Total revenue                   (29,213)      (21,097)      (2,943)
Costs and expenses:                                         
Intersegment elimination - cost (11,112)      (13,631)      (11,788)
of condensate
General and administrative      18,847        16,841        17,610
Intersegment elimination -      --           --           (122)
operations and maintenance
Depreciation, depletion and     377           392           535
amortization
Operating loss                  $(37,325)    $(24,699)    $(9,178)
                                                           
(1) Includes purchase of natural gas of $19 from the Upstream Segment to the
Panhandle Segment for the three months ended March 31, 2013.
(2) Includes purchase of natural gas of $122 from the Marketing and Trading
Segment to the Upstream Segment for the three months ended December 31, 2012.


Eagle Rock Energy Partners, L.P.
Midstream Segment
Operating Income
($ in thousands)
(unaudited)
                                                           
                                 Three Months Ended          Three Months
                                                              Ended
                                 March 31,                   December 31,
                                 2013          2012          2012
Texas Panhandle                                             
Revenues:                                                   
Natural gas, natural gas liquids, $106,394    $73,080     $145,065
oil and condensate sales
Intersegment sales - natural gas  49,135       25,446       33,245
and condensate
Gathering, compression,           12,521       4,950        12,233
processing and treating services
Other                             --            --            --
Total revenue                     168,050      103,476      190,543
Cost of natural gas, natural gas  132,245      71,488       143,172
liquids, oil and condensate (1)
Operating costs and expenses:                               
Operations and maintenance        17,134       12,238       23,542
Depreciation, depletion and       13,845       9,517        14,897
amortization
Total operating costs and         30,979       21,755       38,439
expenses
Operating income                  $4,826      $10,233     $8,932
                                                           
East Texas and Other Midstream                              
Revenues:                                                   
Natural gas, natural gas liquids, $27,388     $41,270     $27,114
oil and condensate sales
Intercompany sales - natural gas  8,538        9,523        12,628
Gathering, compression,           8,358        6,561        8,961
processing and treating services
Total revenue                     44,284       57,354       48,703
Cost of natural gas and natural   33,234       45,508       36,290
gas liquids and condensate
Operating costs and expenses:                             
Operations and maintenance        4,829        5,129        5,929
Impairment                        --          45,522       29,735
Depreciation, depletion and       5,002        7,135        5,737
amortization
Total operating costs and         9,831        57,786       41,401
expenses
Operating income (loss)           $1,219       $(45,940)    $(28,988)
                                                           
Marketing and Trading                                       
Revenues:                                                   
Natural gas, oil and condensate   $86,713     $66,582     $75,974
sales
Intercompany sales - natural gas  (59,468)     (37,819)     (48,198)
and condensate
Gathering, compression,           63            --            71
processing and treating services
Total revenue                     27,308       28,763       27,847
Cost of natural gas and natural   14,528       13,458       14,542
gas liquids
Intersegment cost of sales -      11,093       13,631       11,705
condensate
Operating costs and expenses:                               
Operations and maintenance        6            --          (1)
Depreciation, depletion and       84           30           126
amortization
Total operating costs and         90           30           125
expenses
Operating income                  $1,597      $1,644      $1,475
                                                           
(1) Includes purchase ofnatural gas of $19 from the Upstream Segment to the
Panhandle Segment for the three months ended March 31, 2013.


Eagle Rock Energy Partners, L.P.
Midstream Operations Information
(unaudited)
                                                               
                                              Three Months Ended Three Months
                                                                  Ended
                                              March 31,          December 31,
                                              2013      2012     2012
Gas gathering volumes - (Average Mcf/d)                         
Texas Panhandle                                342,346  159,907 372,124
East Texas and Other Midstream                 200,700  292,449 217,496
Total                                          543,046  452,356 589,620
                                                               
NGLs - (Net equity Bbls)                                        
Texas Panhandle                                64,551   287,800 415,103
East Texas and Other Midstream                 53,204   91,344  80,315
Total                                          117,755  379,144 495,418
                                                               
Condensate - (Net equity Bbls)                                  
Texas Panhandle                                275,692  213,616 302,168
East Texas and Other Midstream                 5,226    11,324  9,613
Total                                          280,918  224,940 311,781
                                                               
Natural gas position - (Average MMbtu/d)                        
Texas Panhandle                                3,379    (7,463) 16,114
East Texas and Other Midstream                 344      109     1,676
Total                                          3,723    (7,354) 17,790
                                                               
Average realized NGL price - per Bbl                            
Texas Panhandle                                $35.53    $44.08   $31.39
East Texas and Other Midstream                 $29.98    $44.60   $32.04
Weighted Average                               $34.51    $44.30   $31.51
                                                               
Average realized condensate price - per Bbl                     
Texas Panhandle                                $80.34    $92.11   $74.32
East Texas and Other Midstream                 $94.25    $103.65  $87.20
Total                                          $81.06    $93.12   $75.20
                                                               
Average realized natural gas price - per MMbtu                  
Texas Panhandle                                $3.27     $2.41    $3.23
East Texas and Other Midstream                 $3.36     $2.88    $3.37
Total                                          $3.29     $2.60    $3.26


Eagle Rock Energy Partners, L.P.
Upstream Operations Information
(unaudited)
                                                          
                                Three Months Ended          Three Months
                                                             Ended
                                March 31,                   December 31,
                                2013          2012          2012
Upstream                                                   
Production:                                                
Oil and condensate (Bbl)         279,069       323,944       283,326
Gas (Mcf)                        3,129,052     4,095,805     3,828,320
NGLs (Bbl)                       289,866       278,731       272,476
Total Mcfe                       6,542,662     7,711,855     7,163,132
                                                          
Sulfur (long ton)                26,598        28,992        22,892
                                                          
Realized prices, excluding                                 
derivatives:
Oil and condensate (per Bbl)     $84.56        $92.46        $81.57
Gas (Mcf)                        $3.19         $2.48         $3.18
NGLs (Bbl)                       $35.45        $45.10        $35.86
Sulfur (long ton)                $110.34       $145.70       $124.30
                                                          
Operating statistics:                                      
Operating costs per Mcfe (incl   $1.96         $1.77         $1.72
production taxes) (1)
Operating costs per Mcfe (excl   $1.59         $1.24         $1.22
production taxes) (1)
Operating income per Mcfe        $1.87         $2.62         ($1.62)
                                                          
Drilling program (gross wells):                            
Development wells                8             10            8
Completions                      7             10            8
Workovers                        7             5             2
Recompletions                    1             2             4
                                                          
(1) Excludes post-production costs of $1,311 and $1,148 for the three months
ended March31, 2013 and 2012, respectively, and $1,410 for the three months
ended December31, 2012.

Non-GAAP Financial Measures

The following tables present a reconciliation of the non-GAAP financial
measures of Adjusted EBITDA and Distributable Cash Flow to the GAAP financial
measure of net income for each of the periods indicated (in thousands).

Eagle Rock Energy Partners, L.P.
GAAP to Non-GAAP Reconciliations
($ in thousands)
(unaudited)
                                                               
                                         Three Months Ended      Three Months
                                                                  Ended
                                         March 31,               December 31,
                                         2013        2012        2012
Net loss to Adjusted EBITDA                                     
Net loss, as reported                     $(33,514) $(50,333) $(55,163)
Depreciation, depletion and amortization  40,237     39,294     43,002
Impairment                                --        45,522     54,179
Risk management interest related          (1,495)    (1,796)    (1,082)
instruments - unrealized
Risk management commodity related         27,906     14,771     6,864
instruments - unrealized
Non-cash mark-to-market of Upstream       --        (198)      (21)
product imbalances
Unrealized losses (gains) from other      253        (203)      (235)
derivative activity
Restricted units non-cash amortization    2,647      2,194      1,790
expense
Income benefit provision                  (1,160)    (91)       (1,147)
Interest - net including realized risk    18,743     13,664     18,040
management instruments and other expense
Other income                              --        --        (6)
Adjusted EBITDA                           $53,617   $62,824   $66,221
                                                               
Net loss to Distributable Cash Flow                             
Net loss, as reported                     $(33,514) $(50,333) $(55,163)
Depreciation, depletion and amortization  40,237     39,294     43,002
expense
Impairment                                --        45,522     54,179
Risk management interest related          (1,495)    (1,796)    (1,082)
instruments-unrealized
                                                               
Risk management commodity related
instruments and other derivative          28,159     14,568     6,629
activity- unrealized
Capital expenditures-maintenance related  (12,714)   (8,026)    (18,593)
Non-cash mark-to-market of Upstream       --        (198)      (21)
product imbalances
Restricted units non-cash amortization    2,647      2,194      1,790
expense
Income benefit provision                  (1,160)    (91)       (1,147)
Other income                              --        --        (6)
Cash income taxes                         --        (375)      (75)
Distributable Cash Flow                   $22,160   $40,759   $29,513

CONTACT: Eagle Rock Energy Partners, L.P.

         Jeff Wood, 281-408-1203
         Senior Vice President and Chief Financial Officer

         Adam Altsuler, 281-408-1350
         Vice President, Corporate Finance and
         Investor Relations, Treasurer

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