Apache Corporation (APA), Eagle Rock Energy Partners, L.P. (EROC), BP plc (ADR) (BP): Commodity Prices Drive This Company’s Success

More midstream operators are pushing for fixed-fee contracts to provide better stability. Another example of this is Atlas Pipeline Partners, L.P. (NYSE:APL), which currently has just 36% fixed-fee contracts. However, it recently acquired a business which had 80% of its contracts as fixed fee, which pushes the pro forma business to 42% fixed. By the end of next year, Atlas Pipeline Partners, L.P. (NYSE:APL) expects to have 50% fixed-fee contracts, which will make its distribution more secure. Because income security is important to investors, it’s good to see Eagle Rock move in this same direction of having more of its revenue tied to fixed-fee contracts, even if it still does have a long way to go.

Final Foolish thoughts
While Eagle Rock Energy Partners, L.P. (NASDAQ:EROC)’s operations are centered on areas with growth potential, way too much of its revenue is tied to volatile commodities. That can cause issues both with its debt and its distributable cash flow, meaning its high distribution might not be on solid ground.

The article Commodity Prices Drive This Company’s Success originally appeared on Fool.com and is written by Matt DiLallo.

Fool contributor Matt DiLallo owns shares of Enterprise Products Partners L.P. (NYSE:EPD). The Motley Fool recommends Enterprise Products Partners L.P. The Motley Fool owns shares of Apache.

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