Top 10 Energy Companies To Invest In 2014

Food demand is set to soar in the coming years, and farmers will have to squeeze a lot more out of their current acreage to meet it. That’s a big plus for agriculture stocks—especially those with a history of innovation.

One factor spurring crop demand is the increased use of biofuels. There are two main types: ethanol and biodiesel. Ethanol can be made from sugar-rich crops, such as sugarcane and corn, while biodiesel comes from oilseeds, such as soybeans and rapeseed.

According to the International Energy Agency, world biofuel production will hit 2.36 million barrels a day in 2018, up from 1.86 million in 2012. Right now, about 40% of the U.S. corn crop is converted into ethanol, up from almost zero a decade ago.

Emerging Markets Set the Table for Agriculture Stocks

Biofuel consumption is one reason to be bullish on agriculture stocks, but the key drivers of food demand remain growing populations and changing diets, mostly in the developing world.

Hot Oil Stocks To Buy Right Now: Snam SpA (SRG)

Snam SpA is an Italy-based company engaged in the management of natural gas services. The Company is diversified into four operating segments. The Transportation segment covers transportation-related gas services, including capacity management and transportation of the gas at the entry points of the gas network to the redelivery points. It owns transportation infrastructures of gas pipelines. The Regasification segment is focused on extraction activities of natural gas, its liquefaction for transport by ship and subsequent regasification. The Storage segment covers deposits, gas treatment plants, compression plants and the operational dispatching system. The Distribution segment engages gas distribution through local transportation networks from delivery points at the metering and reduction stations to the gas distribution network redelivery points at the end customers. Additionally, Snam SpA as the parent company, focuses on planning, management, coordination and control of the group. Advisors' Opinion:

• [By Victor Selva]

  The Specialty Restaurant Group (SRG), which includes Bahama Breeze and The Capital Grille, has grown over the last couple of quarters. Eddie V's Restaurants and Yard House might be meaningful long-term drivers, as we think most of the growth in the next years will come from the acquisition of those restaurants.

• [By Tom Stoukas]

  Snam SpA (SRG) dropped the most in almost a year as Eni SpA sold an 11.7 percent stake in the owner of Italy�� biggest natural-gas network. Wm Morrison Supermarkets Plc tumbled the most in more than 14 months. Experian Plc jumped to a record after the world�� largest credit-checking company raised its dividend and announced a share buyback.

Top 10 Energy Companies To Invest In 2014: Turcas Petrol AS (TRCAS)

Turcas Petrol AS (Turcas) is a Turkey-based integrated energy holding company that operates in the fields of fuel distribution, oil refining, power generation & trading, and import & wholesale of natural gas. The joint venture company, Shell & Turcas Petrol AS (STAS), carries out the Company�� fuel distribution activities through a network of gas stations, delivering services across Turkey. Its Oil refining and petroleum production is undertaken by SOCAR & Turcas Energy (STEAS). The Company operates its power generation, trading and distribution activities through Turcas Energy Holding. The import, export and wholesale of natural gas are handled by Turcas Gas Trading. Advisors' Opinion:

• [By Lyubov Pronina]

  Akbank sank 4.2 percent in Istanbul, falling for a sixth straight day, the longest streak in almost two months. Turcas Petrol AS (TRCAS) lost 1.6 percent after the Turkish energy company said Finance Ministry officials started an inspection at its venture with Royal Dutch Shell Plc.

Top 10 Energy Companies To Invest In 2014: Enterprise Products Partners LP (EPD)

Enterprise Products Partners L.P. (Enterprise), incorporated on April 9, 1998, owns and operates natural gas liquids (NGLs) related businesses of Enterprise Products Company (EPCO). The Company is a North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products and certain petrochemicals. Its midstream energy asset network links producers of natural gas, NGLs and crude oil from supply basins in the United States, Canada and the Gulf of Mexico with domestic consumers and international markets. Its midstream energy operations include natural gas gathering, treating, processing, transportation and storage; NGL transportation, fractionation, storage, and import and export terminals; crude oil gathering and transportation, storage and terminals; offshore production platforms; petrochemical and refined products transportation and services; and a marine transportation business that operates on the United States inland and Intracoastal Waterway systems and in the Gulf of Mexico. Its assets include approximately 50,000 miles of onshore and offshore pipelines; 200 million barrels of storage capacity for NGLs, petrochemicals, refined products and crude oil; and 14 billion cubic feet of natural gas storage capacity. In addition, its asset portfolio includes 24 natural gas processing plants, 21 NGL and propylene fractionators, six offshore hub platforms located in the Gulf of Mexico, a butane isomerization complex, NGL import and export terminals, and octane isobutylene production facilities. The Company operates in five business segments: NGL Pipelines & Services; Onshore Natural Gas Pipelines & Services; Onshore Crude Oil Pipelines & Services; Offshore Pipelines & Services, and Petrochemical & Refined Products Services.

NGL Pipelines & Services

The Company�� NGL Pipelines & Services business segment includes its natural gas processing plants and related NGL marketing activities; approximately 16,700 miles of NGL pipel! ines; NGL and related product storage facilities; and 14 NGL fractionators. This segment also includes its import and export terminal operations. At the core of its natural gas processing business are 24 processing plants located across Colorado, Louisiana, Mississippi, New Mexico, Texas and Wyoming. Natural gas produced at the wellhead (especially in association with crude oil) contains varying amounts of NGLs. Once the mixed component NGLs are extracted by a natural gas processing plant, they are transported to a centralized fractionation facility for separation into purity NGL products. Once processed, this natural gas is available for sale through its natural gas marketing activities. Its NGL marketing activities generate revenues from the sale and delivery of NGLs it takes title to through its natural gas processing activities and open market and contract purchases from third parties. Its NGL marketing activities utilize a fleet of approximately 670 railcars, the majority of which are leased from third parties.

The Company�� NGL pipelines transport mixed NGLs and other hydrocarbons from natural gas processing facilities, refineries and import terminals to fractionation plants and storage facilities; distribute and collect NGL products to and from fractionation plants, storage and terminal facilities, petrochemical plants, export facilities and refineries, and deliver propane to customers along the Dixie Pipeline and certain sections of the Mid-America Pipeline System. Revenues from its NGL pipeline transportation agreements are based upon a fixed fee per gallon of liquids transported multiplied by the volume delivered. Certain of its NGL pipelines offer firm capacity reservation services. It collects storage revenues under its NGL and related product storage contracts based on the number of days a customer has volumes in storage multiplied by a storage fee. In addition, it charges customers throughput fees based on volumes delivered into and subsequently withdrawn from storage. Its ! principal! NGL pipelines include Mid-America Pipeline System, South Texas NGL Pipeline System, Seminole Pipeline, Dixie Pipeline, Chaparral NGL System, Louisiana Pipeline System, Skelly-Belvieu Pipeline, Promix NGL Gathering System, Houston Ship Channel pipeline, Rio Grande Pipeline, Panola Pipeline and Lou-Tex NGL Pipeline. It operates its NGL pipelines with the exception of the Tri-States pipeline.

The Company�� NGL operations include import and export facilities located on the Houston Ship Channel in southeast Texas. It owns an import and export facility located on land it leases from Oiltanking Houston LP. Its import facility can offload NGLs from tanker vessels at rates up to 14,000 barrels per hour depending on the product. During the year ended December 31, 2012, its average combined NGL import and export volumes were 132 thousand barrels per day. In addition to its Houston Ship Channel import/export terminal, it owns a barge dock also located on the Houston Ship Channel, which can load or offload two barges of NGLs or other products simultaneously at rates up to 5,000 barrels per hour.

The Company owns or have interests in 14 NGL fractionators located in Texas and Louisiana. NGL fractionators separate mixed NGL streams into purity NGL products. The primary sources of mixed NGLs fractionated in the United States are domestic natural gas processing plants, crude oil refineries and imports of butane and propane mixtures. Mixed NGLs sourced from domestic natural gas processing plants and crude oil refineries are transported by NGL pipelines and by railcar and truck to NGL fractionation facilities.

The Company�� NGL fractionation facilities process mixed NGL streams for third party customers and support its NGL marketing activities. It earns revenues from NGL fractionation under fee-based arrangements, including a level of demand-based fees. At its Norco facility in Louisiana, it performs fractionation services for certain customers under percent-of-liquids co! ntracts. ! Its fee-based fractionation customers retain title to the NGLs, which it processes for them. Its NGL fractionators include Mont Belvieu fractionator, Shoup and Armstrong fractionator, Hobbs NGL fractionator, Norco NGL fractionator, Promix NGL fractionators and BRF fractionators.

Onshore Natural Gas Pipelines & Services

The Company�� Onshore Natural Gas Pipelines & Services business segment includes approximately 19,900 miles of onshore natural gas pipeline systems, which provide for the gathering and transportation of natural gas in Colorado, Louisiana, New Mexico, Texas and Wyoming. It leases salt dome natural gas storage facilities located in Texas and Louisiana and own a salt dome storage cavern in Texas, which are integral to its pipeline operations. This segment also includes its related natural gas marketing activities.

The Company�� onshore natural gas pipeline systems and storage facilities provide for the gathering and transportation of natural gas from producing regions, such as the San Juan, Barnett Shale, Permian, Piceance, Greater Green River, Haynesville Shale and Eagle Ford Shale supply basins in the western United States. In addition, these systems receive natural gas production from the Gulf of Mexico through coastal pipeline interconnects with offshore pipelines. Its onshore natural gas pipelines receive natural gas from producers, other pipelines or shippers at the wellhead or through system interconnects and redeliver the natural gas to processing facilities, local gas distribution companies, industrial or municipal customers, storage facilities or to other onshore pipelines.

Its onshore natural gas pipelines generates revenues from transportation agreements under which shippers are billed a fee per unit of volume transported multiplied by the volume gathered or delivered. Its onshore natural gas pipelines offer firm capacity reservation services whereby the shipper pays a contractually stated fee based on the level of through! put capac! ity reserved in its pipelines whether or not the shipper actually utilizes such capacity. Under its natural gas storage contracts, there are typically two components of revenues monthly demand payments, which are associated with a customer�� storage capacity reservation and paid regardless of actual usage, and storage fees per unit of volume stored at its facilities. The Company�� natural gas marketing activities generate revenues from the sale and delivery of natural gas obtained from third party well-head purchases, regional natural gas processing plants and the open market.

Onshore Crude Oil Pipelines & Services

The Company�� Onshore Crude Oil Pipelines & Services business segment includes approximately 5,100 miles of onshore crude oil pipelines, crude oil storage terminals located in Oklahoma and Texas, and its crude oil marketing activities. Its onshore crude oil pipeline systems gather and transport crude oil in New Mexico, Oklahoma and Texas to refineries, centralized storage terminals and connecting pipelines. Revenue from crude oil transportation is based upon a fixed fee per barrel transported multiplied by the volume delivered.

The Company owns crude oil terminal facilities in Cushing, Oklahoma and Midland, Texas, which are used to store crude oil volumes for it and its customers. Under its crude oil terminaling agreements, it charges customers for crude oil storage based on the number of days a customer has volumes in storage multiplied by a contractual storage fee. With respect to storage capacity reservation agreements, it collects a fee for reserving storage capacity for customers at its terminals. In addition, it charges its customers throughput (or pumpover) fees based on volumes withdrawn from its terminals. It provides fee-based trade documentation services whereby it documents the transfer of title for crude oil volumes transacted between buyers and sellers at its terminals. The Company�� crude oil marketing activities generate revenues! from the! sale and delivery of crude oil obtained from producers or on the open market.

Offshore Pipelines & Services

The Company�� Offshore Pipelines & Services business segment serves active drilling and development regions, including deepwater production fields, in the northern Gulf of Mexico offshore Texas, Louisiana, Mississippi and Alabama. This segment includes approximately 2,300 miles of offshore natural gas and crude oil pipelines and six offshore hub platforms. Its offshore Gulf of Mexico pipelines provide for the gathering and transportation of natural gas or crude oil. Revenue from its offshore pipelines is derived from fee-based agreements whereby the customer is charged a fee per unit of volume gathered or transported multiplied by the volume delivered. Poseidon Oil Pipeline Company, L.L.C. (Poseidon), in which it has a 36% equity method investment, purchases crude oil from producers and shippers at a receipt point (at a fixed or index-based price less a location differential) and then sells quantities of crude oil at onshore Louisiana locations (at the same fixed or index-based price, as applicable).

The Company�� offshore platforms are components of its pipeline operations. Platforms are used to interconnect the offshore pipeline network; provide means to perform pipeline maintenance; locate compression, separation and production handling equipment and similar assets, and conduct drilling operations during the initial development phase of an oil and natural gas property. Revenues from offshore platform services consist of demand fees and commodity charges. Revenue from commodity charges is based on a fixed-fee per unit of volume delivered to the platform multiplied by the total volume of each product delivered.

Petrochemical & Refined Products Services

The Company�� Petrochemical & Refined Products Services business segment consists of propylene fractionation plants, pipelines and related marketing activities; a butane isom! erization! facility and related pipeline system; octane enhancement and isobutylene production facilities; refined products pipelines, including its Products Pipeline System, and related marketing activities, and marine transportation and other services.

The Company�� propylene fractionation and related activities consist of seven propylene fractionation plants (six located in Mont Belvieu, Texas and a seventh in Baton Rouge, Louisiana), propylene pipeline systems aggregating approximately 680 miles in length and related petrochemical marketing activities. This business includes an export facility and associated above-ground polymer grade propylene storage spheres located in Seabrook, Texas. Results of operations for its polymer grade propylene plants are dependent upon toll processing arrangements and petrochemical marketing activities. The toll processing arrangements include a base-processing fee per gallon (or other unit of measurement). Its petrochemical marketing activities include the purchase and fractionation of refinery grade propylene obtained in the open market and generate revenues from the sale and delivery of products obtained through propylene fractionation. The revenues from its propylene pipelines are based upon a transportation fee per unit of volume multiplied by the volume delivered to the customer. As part of its petrochemical marketing activities, it has refinery grade propylene purchase and polymer grade propylene sales agreements. Its butane isomerization business includes three butamer reactor units and eight associated deisobutanizer units located in Mont Belvieu, Texas, which comprise the commercial isomerization facility in the United States.

The Company�� commercial isomerization units convert normal butane into mixed butane, which is fractionated into isobutane, isobutane and residual normal butane. The uses of isobutane are for the production of propylene oxide, isooctane, isobutylene and alkylate for motor gasoline. These processing arrangements inclu! de a base! -processing fee per gallon (or other unit of measurement). Its isomerization business also generates revenues from the sale of natural gasoline created as a by-product of the isomerization process. The Company owns and operates an octane enhancement production facility located in Mont Belvieu, Texas, which produces isooctane, isobutylene and methyl tertiary butyl ether (MTBE). The products produced by this facility are used in reformulated motor gasoline blends. The isobutane feedstocks consumed in the production of these products are supplied by its isomerization units. The Company owns a facility located on the Houston Ship Channel, which produces high purity isobutylene (HPIB). The feedstock for this plant is produced by its octane enhancement facility located at its Mont Belvieu complex. HPIB is used in the production of alkylated phenols used as antioxidants, lube oil additives, butyl rubber and resins.

Refined products pipelines and related activities consist of its Products Pipeline System, equity method investment in Centennial Pipeline LLC (Centennial) and refined products marketing activities. The Products Pipeline System transports refined products, and petrochemicals, such as ethylene and propylene and NGLs, such as propane and normal butane. These refined products are produced by refineries and include gasoline, diesel fuel, aviation fuel, kerosene, distillates and heating oil. Refined products also include blend stocks, such as raffinate and naphtha. Blend stocks are used to produce gasoline or as a feedstock for certain petrochemicals. The Centennial Pipeline intersects its Products Pipeline System near Creal Springs, Illinois, and loops the Products Pipeline System between Beaumont, Texas and south Illinois. In addition, it has refined products terminals located at Aberdeen, Mississippi and Boligee, Alabama adjacent to the Tombigbee River and on the Houston Ship Channel in Pasadena, Texas. Its related marketing activities generate revenues from the sale and delivery of refin! ed produc! ts obtained from third parties on the open market.

The Company�� marine transportation business consists of tow boats and tank barges, which are used to transport refined products, crude oil, asphalt, condensate, heavy fuel oil, liquefied petroleum gas and other petroleum products along inland and intracoastal the United States waterways. Its marine transportation assets service refinery and storage terminal customers along the Mississippi River, the intracoastal waterway between Texas and Florida and the Tennessee-Tombigbee Waterway system. It owns a shipyard and repair facility located in Houma, Louisiana and marine fleeting facilities in Bourg, Louisiana and Channelview, Texas. Other services consist of the distribution of lubrication oils and specialty chemicals and the bulk transportation of fuels by truck, in Oklahoma, Texas, New Mexico, Kansas and the Rocky Mountain region of the United States.

Advisors' Opinion:

• [By Aimee Duffy]

  Master limited partnerships are not like other stocks, and the metrics we use to compare an MLP to its peers differ from the metrics we use to compare regular companies. For example, instead of the traditional P/E ratio, we emphasize MLP-specific metrics like distribution coverage ratio and today's focus: price to distributable cash flow (P/DCF). I'll use Enterprise Products Partners (NYSE: EPD  ) , Kinder Morgan Energy Partners (NYSE: KMP  ) , and Buckeye Partners (NYSE: BPL  ) to illustrate the concept.

Top 10 Energy Companies To Invest In 2014: Sandridge Mississippian Trust II (SDR)

SandRidge Mississippian Trust II is a statutory trust formed to own overriding royalty interests to be conveyed to the trust by SandRidge Energy, Inc. (SandRidge) in 67 producing horizontal wells, including 13 wells, which are awaiting completion (the Producing Wells), in the Mississippian formation in northern Oklahoma and southern Kansas, and overriding royalty interests in 206 horizontal development wells (The Development Wells) to be drilled in the Mississippian formation (the Development Wells) on properties within an Area of Mutual Interest (the AMI). SandRidge is an independent oil and natural gas company engaged in the development and production activities related to the exploitation of its holdings in West Texas and the Mid-Continent area of Oklahoma and Kansas. The AMI, which is limited to the Mississippian formation, consists of approximately 81,200 gross acres (53,000 net acres) held by SandRidge. The Bank of New York Mellon Trust Company, N.A. is trustee (the Trustee), and The Corporation Trust Company is a Delaware Trustee (the Delaware Trustee).

The Mississippian formation is encountered at depths between approximately 4,000 feet and 7,000 feet and lies between the Pennsylvanian-aged Morrow formation and the Devonian-aged Woodford Shale formation. Effective as of January 1, 2012, the royalty interests was conveyed from SandRidge's interest in the Producing Wells and the Development Wells. The royalty interest in the Producing Wells (the PDP Royalty Interest) entitles the trust to receive 80% of the proceeds from the sale of production of oil and natural gas attributable to SandRidge's net revenue interest in the Producing Wells. The royalty interest in the Development Wells (the Development Royalty Interest) entitles the trust to receive 70% of the proceeds from the sale of oil and natural gas production attributable to SandRidge's net revenue interest in the Development Wells.

As of December 31, 2011, the total proved reserves estimated to be attributable to t! he trust were 26.1 million barrels of oil equivalent. This amount includes 10.2 million barrels of oil equivalent attributable to the PDP Royalty Interest and 15.9 million barrels of oil equivalent attributable to the Development Royalty Interest. The proved reserves consist of 46.8% oil and 53.2% natural gas. In addition, as of December 31, 2011, there were 9.8 million barrels of oil equivalent of probable reserves estimated to be attributable to the trust, all of which were attributable to the Development Royalty Interest. The probable reserves consist of 46.9% oil and 53.1% natural gas.

SandRidge will retain 20% of the proceeds from the sale of oil and natural gas attributable to its net revenue interest in the Producing Wells, as well as 30% of the proceeds from the sale of future production attributable to its net revenue interest in the Development Wells. SandRidge initially will own 48.2% of the trust units. SandRidge operates 79% of the Producing Wells. The completed Producing Wells and 121 other Mississippian wells outside of the AMI that have been completed by SandRidge have an average perforated length of approximately 4,200 feet. SandRidge Exploration and Production, LLC (SandRidge E&P), a wholly owned subsidiary of SandRidge, will grant to the trust a lien on its interests in the AMI.

The Underlying Properties are located in Noble, Kay, Alfalfa, Grant and Woods counties in northern Oklahoma and Harper, Comanche, Sumner and Barber counties in southern Kansas in the Mississippian formation, which is an expansive carbonate hydrocarbon system located on the Anadarko Shelf. The Mississippian formation can reach 1,000 feet in gross thickness and the targeted porosity zone is between 50 and 100 feet in thickness. As of December 31, 2011, there were approximately 43 horizontal rigs drilling in the formation, with 19 of those rigs drilling for SandRidge. As of December 31, 2011, SandRidge had approximately 1.5 million net acres leased in the Mississippian formation in north! ern Oklah! oma and Kansas.

Advisors' Opinion:

• [By Matt DiLallo]

  SandRidge Mississippian Trust I (NYSE: SDT  ) and Trust II (NYSE: SDR  )
  These trusts were created by SandRidge Energy (NYSE: SD  ) , with the first Mississippian Trust formed in 2010 and the second formed one year later. Both trusts own royalty interests in oil and gas properties targeting the Mississippian formation and have future upside as SandRidge drills wells as part of the areas of mutual interest.

• [By Jonathan Morgan]

  Schroders Plc (SDR) gained 1.3 percent to 2,183 pence after Exane raised its recommendation on Europe�� biggest independent money manager to outperform, which is similar to a buy rating, from neutral. The brokerage said that the fund manager will benefit from its brand and its distribution network among retail and institutional clients.

Top 10 Energy Companies To Invest In 2014: Liberty Coal Energy Corp (LBTG)

Liberty Coal Energy Corp, incorporated on August 31, 2007, is an exploration-stage company. The Company is a precious metal mineral exploration, development and production company. The primary business focus of the Company is to acquire, explore and develop coal properties in North America. On February 1, 2012, the Company entered into a letter of intent for the acquisition of private mineral leasehold rights to certain coal mining property in Owsley County, Kentucky with AMS Development LLC. and Colt Resources, Inc.

The Owsley property covers approximately 1,000 acres and has 3,600,000 tons of coal recoverable by surface and high wall (auger) methods. As of September 31, 2011, the Company had not earned any revenues.

Advisors' Opinion:

• [By Peter Graham]

  On Friday, small cap mining stocks Maverick Minerals Corp (OTCMKTS: MVRM) and Liberty Coal Energy Corp (OTCMKTS: LBTG) plus oil stock Gray Fox Petroleum Corp (OTCBB: GFOX) sank 30.9%, 16.67% and 11.2%, respectively. However, only one of these stocks appears to have been the subject of some kind of paid promotion in the form of an investment in some shares. So will these three small cap mining or oil stocks keep coming up empty for investors this week? Here is a closer look:

Top 10 Energy Companies To Invest In 2014: Bri-Chem Corp (BRY)

Bri-Chem Corp. is a North American distributor, blender, and manufacturer of drilling fluids and steel pipe for the oil and gas industry in North America. The Company operates in three segments: Fluids, Steel Distribution and Steel Manufacturing. Its Fluids segment includes the sale of fluids and chemical additives to the resource and industrial markets. The Steel Distribution segment includes the sale of tubular steel products to the resource, industrial and construction industries. The Steel Manufacturing segment produces seamless steel pipe through a thermal expansion process for sale to steel pipe distributors in North America. On May 31, 2011, it acquired all membership interest in Bri-Chem Supply Corp, LLC (BSU) and Stryker Transportation Ltd. (Stryker). In September 2013, Bri-Chem Corp acquired the cement blending business assets of Sun Coast Materials Co. and certain additional transportation assets from its affiliate Acme Trucking, Inc. Advisors' Opinion:

• [By Matt DiLallo]

  I'm convinced that he's right to be bullish on LINN. I've been an investor in the company practically since it went public in 2006. The recent negativity on the company will eventually blow over, as it always does after these "bear raids" end. The biggest form of uncertainty is that these negative attacks have pulled in the SEC to investigate. That's putting the complex merger involving LINN, its affiliate LinnCo (NASDAQ: LNCO  ) and Berry Petroleum (NYSE: BRY  ) on shaky ground.

Top 10 Energy Companies To Invest In 2014: Eagle Rock Energy Partners LP (EROC)

Eagle Rock Energy Partners, L.P. (Eagle Rock) is a limited partnership engaged in the business of gathering, compressing, treating, processing and transporting natural gas; fractionating and transporting natural gas liquids (NGLs); crude oil logistics and marketing; natural gas marketing and trading, known as Midstream Business, and developing and producing interests in oil and natural gas properties, known as Upstream Business. On May 3, 2011, the Company acquired CC Energy II, L.L.C and outstanding membership interests of Crow Creek Energy. On May 20, 2011, it sold the Wildhorse Gathering System in its East Texas and Other Midstream Segment.

Midstream Business

The Company�� Midstream Business is located in four natural gas producing regions: the Texas Panhandle; East Texas/Louisiana; South Texas, and the Gulf of Mexico. As of December 31, 2011, these working interest properties included 591 gross operated productive wells and 1,197 gross non-operated wells with net production to the Company of approximately 87.7 million cubic feet of natural gas per day and proved reserves of approximately 234.0 Bcf of natural gas, 11.5 million barrels of crude oil or other liquid hydrocarbons of crude oil, and 11.3 million barrels of crude oil or other liquid hydrocarbons of natural gas liquids, of which 76% are proved developed. As of December 31, 2011, its Midstream Business consisted of Panhandle Segment and East Texas and Other Midstream Segment.

The Company�� Texas Panhandle Segment covers 10 counties in Texas and two counties in Oklahoma. Through the systems within this segment, the Company offers midstream wellhead-to-market services, including gathering, compressing, treating, processing and selling of natural gas, and fractionating and selling of NGLs. As of December 31, 2011, approximately 213 producers and 2,072 wells and central delivery points were connected to the systems in its Texas Panhandle Segment. The Texas Panhandle Segment averaged gathered volumes fo! r 2011 of approximately 155.1 million cubic feet of natural gas per day. As of December 2011, Chesapeake Energy and BP America Production represented 14% and 11%, respectively, of the total volumes of its Texas Panhandle Segment. The Texas Panhandle Segment consists of approximately 3,963 miles of natural gas gathering pipelines, ranging from two inches to 24 inches in diameter; seven natural gas processing plants with an aggregate capacity of 210 million cubic feet of natural gas per day; a propane fractionation facility with capacity of 1.0 million cubic feet of natural gas per day, and two condensate collection and stabilization facilities.

Eagle Rock�� systems in the East Panhandle (northern Wheeler, Hemphill and Roberts Counties, Texas) gather and process natural gas produced in the Morrow and Granite Wash reservoirs of the Anadarko basin. In the Panhandle Segment, natural gas is contracted at the wellhead primarily under percent-of proceeds (which includes percent-of-liquids) fixed recovery, percent-of-index and fee-based arrangements that range from one to five years in term. During the year endede December 31, 2011, it produced over 2,600 equity barrels per day of condensate in the Texas Panhandle Segment. During 2011, it stabilizes approximately 2,000 barrels per day combined at its Superdrip and Cargray Stabilizers.

The Company�� East Texas and Other Midstream Segment operates within the natural gas producing regions, such as East Texas/Louisiana, South Texas and the Gulf of Mexico. Through its Texas/Louisiana region, it offers producers natural gas gathering, treating, processing and transportation and NGL transportation across 21 counties in East Texas and seven parishes in West Louisiana. Its operations in the South Texas region primarily gather natural gas and recover NGLs and condensate from natural gas produced in the Frio, Vicksburg, Miocene, Canyon Sands and Wilcox formations in South Texas. Its operations in the Gulf of Mexico region are non-operated owne! rship int! erests in pipelines and onshore plants which are all located in southern Louisiana. The Gulf of Mexico region also provides producer services by arranging for the processing of producers��natural gas into third-party processing plants, known as Mezzanine Processing Services.

As of December 31, 2011, approximately 705 wells and central delivery points were connected to its systems in the East Texas and Other Midstream Segment. As of December 31, 2011, the East Texas and Other Midstream Segment provides gathering and/or marketing services to approximately 140 producers. During 2011, the East Texas and Other Midstream Segment averaged gathered volumes of approximately 319.9 million cubic feet of natural gas per day. As of December 31, 2011, Stone Energy Corporation and Anadarko Petroleum Company represented 18% and 9%, respectively, of the total volumes of its East Texas and Other Midstream Segment. Residue gas pipelines include Houston Pipeline Company, Natural Gas Pipeline Company, Tennessee Gas Pipeline, Crosstex Energy L.P. and Southern Natural Pipeline.

Upstream Business

The Company�� Upstream Business located in four regions within the United States, such as Southern Alabama, which includes the associated gathering, processing and treating assets; Mid-Continent, which includes areas in Oklahoma, Arkansas, Texas Panhandle and North Texas; Permian, which includes areas in West Texas, and East/South Texas/Mississippi assets. As of December 31, 2011, these working interest properties included 591 gross operated productive wells and 1,197 gross non-operated wells with net production of approximately 87.7 million cubic feet of natural gas per day and proved reserves of approximately 234.0 Bcf of natural gas, 11.5 million barrels of crude oil or other liquid hydrocarbons of crude oil, and 11.3 million barrels of crude oil or other liquid hydrocarbons of natural gas liquids, of which 76% are proved developed.

The Southern Alabama region includes the! Big Esca! mbia Creek, Flomaton and Fanny Church fields located in Escambia County, Alabama. These fields produce from either the Smackover or Norphlet formations at depths ranging from approximately 15,000 to 16,000 feet. The Big Escambia Creek field encompasses approximately 11,568 gross and 7,334 net Eagle Rock operated acres. It operates 18 productive wells with an average ownership of 60% working interest and 51% net revenue interest in the Big Escambia Creek field. The Fanny Church field is located two miles east of Big Escambia Creek. Its ownership includes approximately 1,284 gross and 999 net operated acres that include three productive operated wells with an average ownership of 86% working interest and 66% net revenue interest. The Flomaton field is adjacent to and partially underlies the Big Escambia Creek field. The field encompasses approximately 1,280 gross and 1,256 net Eagle Rock operated acres and produces from the Norphlet formation at depths from approximately 15,000 to 16,000 feet. It operates three productive wells with an approximate average 91% working interest and 78% net revenue interest. The Smackover and Norphlet reservoirs are sour, gas condensate reservoirs which produce gas and fluids containing a high percentage of hydrogen sulfide and carbon dioxide.

The Mid-Continent region consists of operated and non-operated properties across the Golden Trend Field, Cana Shale play, Verden Field, and other western Oklahoma fields located in the Anadarko Basin in Oklahoma, the Mansfield Field and other various fields in the Arkoma Basin in Arkansas and Oklahoma, various fields in the Texas Panhandle, and the Barnett Shale in north Texas. Productive depths range from approximately 2,500 feet in the Arkoma fields of western Arkansas to greater than 18,000 feet in the Springer formation in certain western Oklahoma fields. Its producing field is the Golden Trend field that extends across Grady, McClain and Garvin counties in Oklahoma. It has 14,621 net acres in the Cana Shale play exte! nding acr! oss Canadian, Blaine and Dewey counties, Oklahoma. The Cana Shale produces from horizontal wells drilled to vertical depths of 11,000 - 13,000 feet and extended with horizontal lateral lengths of approximately 5,000 feet. In the total Mid-Continent region, it operate 316 productive wells and own a working interest in an additional 1,054 non-operated productive wells. The average working interest in these productive operated and non-operated wells is 83% and 9%, respectively. The net production averaged approximately 53.2 million cubic feet of natural gas per day during 2011, of which approximately 77% was produced from wells it operated.

The Permian region contains numerous fields, including Block 27, Estes Block 34, H.S.A., Heiner, Monahans N., Payton, Running W., Ward S, and Ward-Estes N. located mainly in Ward, Pecos, and Crane Counties, Texas. These fields are located in the Central Basin Platform which extends from central Lea County in New Mexico to central Pecos County in Texas and encompasses hundreds of individual fields with multiple productive intervals from the Yates-Seven Rivers-Queen through the Ellenburger formations. The Ward County fields contains two major properties, the Louis Richter and the American National Life Ins. Co. leases, and encompasses approximately 10,285 gross and 10,215 net Eagle Rock acres. It operate multiple fields consisting of stacked multi-pay horizons that produce from depths of 2,300 feet (Yates) to 9,100 feet (Pennsylvanian). The Southern Unit is located in the Running W Waddell field and produces predominantly oil at depths from approximately 5,750 to 5,900 feet. It operates approximately 5,875 net acres in this area.

The East/South Texas/Mississippi region includes the Aker, Birch, Edgewood, Eustace, Fruitvale, Ginger and Wesson fields in East Texas, the Jourdanton field in South Texas, and the Chicora W, High Road, and Stafford Springs fields in Mississippi. The East Texas fields produce primarily from the Smackover Trend at depth! s from 12! ,000 to 12,700 feet and encompass approximately 18,991 gross and 15,872 net Eagle Rock acres. It operates 32 productive wells, which produce gas that contains between approximately 30% to 69% of impurities (hydrogen sulfide, nitrogen, and carbon dioxide). The Edgewood field also contains two productive gas wells in the Cotton Valley at depths of 11,500 to 11,600 feet which produce sweet natural gas. The East Texas production, with the exception of a single well, is delivered to the third party owned Eustace Plant for separation of condensate, removal of impurities, and extraction of natural gas liquids and sulfur for a combination of fees and percentage of proceeds.

In South Texas, it operates wells in the Jourdanton field in Atascosa County, Texas. It operates nine productive wells with 100% working interest and 88% net revenue interest. Its production from the field is primarily from the Edwards carbonates (7,300 to 7,400 feet). On December 31, 2011, the Company had under operation 290 gross (261 net) productive oil wells and 301 gross (251 net) productive natural gas wells. On December 31, 2011, Eagle Rock owned non-operated working interests in an additional 148 gross (18 net) productive oil wells and 1049 gross (72 net) productive natural gas wells.

The Company competes with DCP Midstream, LLC and Enbridge Energy Partners, L.P., Crosstex Energy, L.P., Energy Transfer Partners, LP and Enterprise Products Partners, L.P.

Advisors' Opinion:

• [By Robert Rapier]

  And just as a yield depressed by a big runup in the unit price can signal trouble ahead, so can a higher yield implying higher risk. We dropped Eagle Rock Energy Partners (NASDAQ: EROC) from The Energy Strategist and MLP Profits portfolios last year shortly before declines turned it into a double-digit yielder, and haven�� regretted those decisions for a second.