2009-10-26-2009-10-17-2010-05-25

Acquired minerals and royalty division with 2,800 wells on 430,000 net acres in Permian Basin, Gulf Coast, Midcontinent &LA Basin, gaining 3.6 MMBOE proved.

One of the largest private fee and royalty owners in the U.S., Black Stone Minerals Co. LP, Houston, has purchased the fee mineral and royalty interests business of Eagle Rock Energy Partners LP, Houston, (Nasdaq: EROC) for approximately $171.6 million.

Eagle Rock has retained $2.9 million of cash from net revenues received after Jan. 1, the effective date of the divestment. The partnership intends to use the proceeds to pay outstanding borrowings from its revolving credit facility.

Eagle Rock's mineral business comprises fee mineral, royalty and overriding royalty interests in more than 2,800 wells in the Permian Basin, Gulf Coast, Midcontinent and LA Basin. Proved reserves as of year-end 2008 were 3.6 million barrels of oil equivalent (77% oil), involving 430,000 net acres.

In conjunction with the sale, affiliates of Natural Gas Partners (NGP) contributed all of the outstanding incentive distribution rights to Eagle Rock and also contributed approximately 20.7 million Eagle Rock outstanding subordinated units. Eagle Rock cancelled the interests and adopted an amended, restated partnership agreement, which included a provision to eliminate the units and distribution rights.

Subsequently, Eagle Rock issued approximately 4.8 million common units ($6.01 per common unit) to an affiliate of NGP in a private placement.

A 47% controlling owner of Eagle Rock and the founding sponsor, NGP proposed a combination of transactions to enhance the MLP's liquidity in September 2009.

A simplified capital restructure was approved by a majority of Eagle Rock unaffiliated unitholders on May 21. The sale of its fee mineral and royalty interests business closed on May 24.

Madison Williams and Co. was advisor to Eagle Rock's conflicts committee and provided a fairness opinion. Andrews Kurth LLP was counsel to the conflicts committee. Vinson & Elkins LLP was counsel to the partnership with respect to the organizational restructuring, and Thompson & Knight LLP was counsel on the sale of the minerals business. Akin Gump Strauss Hauer & Feld LLP was counsel to NGP.

Eagle Rock has upstream, midstream and downstream operations with E&P assets in Alabama and Texas.