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Atlas Resource Partners, L.P. Message Board

  • conob1 conob1 Nov 19, 2012 5:50 PM Flag

    ARP to aquire 35mmboe Barnettt Shale

    Atlas Resource Partners, L.P. to Acquire Approximately 35 MMboe of Proved Reserves in the Barnett Shale and Marble Falls for $255 Million From DTE Energy

    •ARP to acquire approximately 35 MMboe of proved reserves and significant resource potential in the Fort Worth basin of Texas; estimated proved reserves are 24% oil, 33% natural gas liquids, 43% natural gas
    •ARP’s estimated pro forma net proved reserves increase to approximately 900 Bcfe
    •2012 year to date average production from the acquired assets is approximately 3,800 Boe/d
    •The transaction represents ARP’s fourth acquisition since ARP’s creation in March 2012, for a total of approximately $700 million
    •ARP increases its 2013 distribution guidance to a range of $2.35 to $2.50 per limited partner common unit as a result of the acquisition

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    • Seeking Alpha shows them as the only ones to have a high growth (20%!!) going forward the next 3 years...

      Sentiment: Strong Buy

    • Exactly, Jim. ARP is stocking up on drill locations for the partnership drilling programs. Remember in the cc Ed Cohen said that ATLS is in the process now of raising $250 million, its largest ever money raise. That does not include amounts raised earlier in the year. Cohen basically told the analyst that the $250mm amount shown for the year in terms of partnership money was for "accounting purposes," i.e. use it as a benchmark but don' t be surprised if we raise more.
      This deal right now cash flows $100mm/ year based on current production of 4000 boepd and the additional acreage and drill pads and infrastructure are being purchased at low prices, very low prices. I seem to recall that ATLS would wind up with 30% of the well working interest, some of it carried and not the 15% you mention. This working interest would be in addition to the fees and mark-ups that are added on as the wells are transferred to the partnerships. A presentation from about 2 years ago spells this out. I have not looked at it in a while so I could be off. With taxes going up for high earners the write-off benefits will be even more attractive. These deals return about 10% a year for the partnership investors.
      Right now I think the ATLS price is being reined in because there is one or more bigger deals in the works that will push the price above 50 and then to 75 plus by the end of next year based on a 4th quarter 2013 distribution of 60 cents.
      Ed Cohen is looking for deals of historic proportions in terms of price, asset quality, etc. He did state in a recent cc the ultimate deal would be a "trifecta" ( I think he used that word) where the cash flow would improve, borrowing lines would be increased and the balance sheet improved.
      I too have had trouble with posts disappearing on the new and improved Yahoo boards so I am copying and pasting this entry before posting.
      BigEaRljr

      Sentiment: Hold

    • Exactly, Jim. ARP is stocking up on drill locations for the partnership drilling programs. Remember in the cc Ed Cohen said that ATLS is in the process now of raising $250 million, its largest ever money
      raise. That does not include amounts raised earlier in the year. Cohen basically told the analyst that the $250mm amount shown for the year in terms of partnership money was for "accounting purposes," i.e. use it as a benchmark but don' t be surprised if we raise more.
      This deal right now cash flows $100mm/ year based on current production of 4000 boepd and the additional acreage and drill pads and infrastructure are being purchased at low prices, very low prices. I seem to recall that ATLS would wind up with 30% of the well working interest, some of it carried and not the 15% you mention. This working interest would be in addition to the fees and mark-ups that are added on as the wells are transferred to the partnerships. A presentation from about 2 years ago spells this out. I have not looked at it in a while so I could be off. With taxes going up for high earners the write-off benefits will be even more attractive. These deals return about 10% a year for the partnership investors.
      Right now I think the ATLS price is being reined in because there is one or more bigger deals in the works that will push the price above 50 and then to 75 plus by the end of next year based on a 4th quarter 2013 distribution of 60 cents.
      Ed Cohen is looking for deals of historic proportions in terms of price, asset quality, etc. He did state in a recent cc the ultimate deal would be a "trifecta" ( I think he used that word) where the cash flow would improve, borrowing lines would be increased and the balance sheet improved.
      I too have had trouble with posts disappearing on the new and improved Yahoo boards so I am copying and pasting this entry before posting.
      BigEaRljr

      Sentiment: Buy

    • Also during the fourth quarter, I wanted to note that we recognized a 7 million non-cash impairment of our Niobrara natural gas properties. This impairment reflects a decline in forward natural gas prices and certain service issues which restricted production and, as such, our reserve amounts. We are in the process of rectifying these service issues, which should improve the performance of these wells and reserve amounts in future periods.

    • It just look ok.... IMO of course. Not much of a bump in distribution. It means we are hoping for a rise in NGL and NG pricing in the years ahead.

      I expect there has to be a larger deal coming before year end.

      • 3 Replies to davidbdc2001
      • 700 drilling locations using $800,000 per well with payback in 6 to 16 months per DTE presentation (June) is a gold mine for partnership program. ARP will sell the locations to the partnership and keep 15%. Drilling location sales to partnership program will bring down the cost of aquisition.

      • "Not much of a bump in the distribution???" Am I misreading something? Last quarter they paid 43 cents or an annual rate of $1.72 and the guidance is $2.35 to $2.50. That looks like an increase of almost 40%. I wish all of my MLPs had that distribution growth.

      • Agree fully. The 2nd and 3rd Barnett deals did not move the needle very much. They are however modestly accretive and no doubt if/when gas prices finally recover to the $4.50-$5.00 range..ARP will be well poised to profit.

        I like the focus on the Barnett and hope they continue to consolidate a very large position there. I wonder if Cohen is wispering in the Darden's ears...telling them to kill their plans to IPO their own MLP and instread just divest their Barnett holdings to ARP.

        There are still several very large holdings in the Barnett including CHK, DVN, EOG, KWK as well as numerous smaller players. Plenty of takeaway capacity and low geological risk.

        If they can continue to buy low risk properties at modest prices it will end up giving them a huge tailwind when/if pricing recovers

 
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