Undervalued MLP - Eagle Rock - Is Now the Time to Buy?

Here's a summary of Eagle Rock Energy Partners LP, a Master Limited Partnership:

"Eagle Rock Energy Partners LP engages in the business of gathering, compressing, treating, processing, transporting, marketing and trading natural gas. The company operates its business under three segments: Upstream Business, Midstream Business and Corporate and Other. The Upstream Business segment engages in crude oil, condensate, natural gas, natural gas liquids and sulfur production from operated and non-operated wells. The Midstream Business segment consists three divisions: Texas Panhandle, which engages in gathering, compressing, treating, processing and transporting natural gas; fractionating, transporting and marketing natural gas liquids; East Texas and Other Midstream division gathering, compressing, processing and treating natural gas and marketing of natural gas, natural gas liquids and condensate in South Texas, East Texas, Louisiana, Gulf of Mexico and inland waters of Texas; Marketing and Trading division engages in crude oil and condensate logistics and marketing in the Texas Panhandle; and natural gas marketing and trading. The Corporate and Other Segment engages in risk management, intersegment eliminations and other corporate activities such as general and administrative expenses. Eagle Rock Energy Partners was founded in May 2006 and is headquartered in Houston, TX."

Recently, the Company (EROC) completed a sale of some of it's operations (it's midstream business) and was able to pay down outstanding debt.  Before the transaction closed, the Company temporarily suspended its distributions, at which time it fell out of favor with most investors since that's the main reason you want to hold one of these stocks.

The Company has indicated it intends to resume the distribution in November and an announcement is expected soon (in connection with reporting earnings for the third quarter ended September 30, which should be due out in the next couple of weeks).  Analyst estimates vary on what the dividend will be when it resumes and what it could grow to in 2015, although some estimates indicate the yield based on the current price could be as high as 20%.  The Company has transformed itself into primarily an upstream MLP with the transaction described previously.  With over half of it's business in natural gas and the other half split evenly between oil and natural gas products, the Company is well positioned for the coming winter season and a rebound in oil prices.

Now might be the time to buy some shares of this beaten-down stock before the distributions resume.  Not only is the potential yield attractive, there could be potential for capital appreciation as well.

Here are the current analyst recommendations:

Analysts Recommendations

 current1 Month Ago3 Months AgoBUY111OVERWEIGHT000HOLD555UNDERWEIGHT000SELL000MEANHOLDHOLDHOLD

Here are insider transactions, which include a lot of purchases indicating management's faith in the business:

Transaction Summary

Total insider purchases and sales reported to the SEC

TimeframeTransactionsSharesLast 3 months9 Purchases1 Sales135,20355,000Last 6 months20 Purchases8 Sales766,213148,783Last 12 months21 Purchases13 Sales766,827219,787

Disclosure:  I own shares in EROC.

Related articles

• What is the True Meaning of "Diversified Investment Portfolio?"

• How To Build A Financial Fortress

• Zacks Upgrades Eagle Rock Energy Partners, L.P. to "Neutral" (EROC)

• 2 Energy MLPs Set for Earnings Beat amid Low Oil & Gas Prices - Analyst Blog