Eagle Rock Completes Initial Steps in Reducing Debt

Eagle Rock has completed the initial steps in a series of transactions intended to reduce the Partnership's outstanding debt, improve its liquidity position and simplify its capital structure.

On May 24, 2010, Eagle Rock completed the sale of its fee mineral and royalty interests business to an affiliate of Black Stone Minerals Company, L.P. ("Black Stone Minerals") for approximately $171.6 million in cash after purchase price adjustments made to reflect an effective date for the sale of January 1, 2010, pursuant to the terms of the Purchase and Sale Agreement dated December 21, 2009 between wholly-owned subsidiaries of the Partnership and Black Stone Minerals. Eagle Rock retained approximately $2.9 million of cash from net revenues received after the effective date from the fee mineral and royalty interests business. Further upward or downward adjustments to the purchase price may occur post-closing to reflect customary true-ups. Eagle Rock intends to use the net proceeds from the transaction primarily to pay down outstanding borrowings under the Partnership's revolving credit facility.

Also on May 24, 2010, affiliates of Natural Gas Partners contributed to Eagle Rock all of the outstanding incentive distribution rights and the 20,691,495 outstanding subordinated units in Eagle Rock. Upon the contribution, Eagle Rock canceled those interests and adopted an amended and restated partnership agreement, which provides for the elimination of the subordinated units and incentive distribution rights, as well as the elimination of the related concepts of a minimum quarterly distribution, arrearages on the common units and a subordination period.

In connection with the completion of these transactions, Eagle Rock issued 4,825,211 common units to an affiliate of Natural Gas Partners in a private placement, priced at approximately $6.01 per common unit.

The simplification of Eagle Rock's capital structure was approved by a majority of Eagle Rock's unaffiliated unitholders on May 21, 2010.


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