Boston, MA 10/30/2013 (wallstreetpr) – Eagle Rock Energy Partners, L.P. (NASDAQ:EROC), announced a distribution of cash of 0.15 per common unit for the quarter ended September 30, 2013. The distribution of cash would also include eligible restricted common units, equivalent to 0.60 per unit. The distribution would happen on November 7, 2013. The said distribution is down by 32% compared to the 2Q, which was at 0.22 per common unit.
The company’s operating and financial performance witnessed improvement in the 3Q13. Despite the improvement in the profit, the company was not in a position to generate sufficient distributable cash flow. It is expected, that the company had been hit with several challenges over the past few quarters. Nonetheless, they were able to withstand the pressure and improve the profitability. Keeping in mind, the company’s position pertaining to the leverage ratio and liquidity position, management decided to lower down their distribution cash flow.
After going through the preliminary results, it is expected that the company is likely to report an adjusted EBITDA of 62.8 million, up 12% over the last quarter. Management expects to report distribution coverage of approximately 1.05x and anticipates that the same will increase over the forthcoming quarters.
The company expects that the decline in the distribution level, along with an anticipated in increasing growing distribution coverage over the next few quarters, will enable the company to utilize the cash from operations activity towards repayment of debt in the near term. The diversion of cash would help the company to generate higher equity value, lower down the interest output, and help the company to generate more liquidity.
Apart from the debt repayment, the company management is also looking to explore various other alternatives to improves overall leverage ratio and the company’s cash position. This can be done either by selling non-core assets, separation of its business (upstream & downstream), or equity funding, to name few in order to improve liquidity.