June 2, 2010 (FinancialWire) — Eagle Rock Energy Partners, L.P. (NASDAQ: EROC) has completed the initial steps in a series of transactions intended to reduce its 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. for approximately $171.6 million in cash. Upward or downward adjustments to the purchase price may occur post-closing to reflect customary true-ups.

Eagle Rock said it intends to use most of the net proceeds to pay down outstanding borrowings under its 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 cancelled 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.

Eagle Rock Energy Partners is engaged in gathering, compressing, treating, processing and transporting natural gas; fractionating and transporting natural gas liquids; and marketing natural gas, condensate and NGLs; and acquiring, exploiting, developing, and producing hydrocarbons in oil and natural gas properties.

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