Eagle Rock enters gas gathering, processing, purchase agreement with Apache

Eagle Rock Energy

Eagle Rock Energy Partners LP (Nasdaq:EROC) has entered into a new fee-based gas gathering, processing and purchase agreement with Apache Corp. to support Apache's active drilling program in the Texas Panhandle.

As part of the agreement, Apache has 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 applies to all existing and future wells completed by Apache on any of the acreage in the dedicated area.

The associated Apache production will be gathered and processed at one or more of the partnership's cryogenic processing plants in the Texas Panhandle. Eagle Rock's Texas Panhandle assets consist of approximately 6,500 miles of gathering pipeline and over 480 MMcf/d of high-efficiency processing capacity, with an additional 60 MMcf/d of processing capacity expected to come on-line in the second quarter of 2013 following the completion of Eagle Rock's previously announced Wheeler Plant.

"We are very excited and pleased to be expanding our commercial relationship with Apache," said Joseph A. Mills, Eagle Rock's chairman and CEO. "Apache remains one of the most prominent and active oil and gas operators in the Texas Panhandle, and this important Agreement helps us in accomplishing two of our primary goals in our Midstream Business: strengthen our commercial position in the Texas Panhandle and increase the stability of our cash flows through more fee-based processing arrangements."

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