Mr. Cohen said emphatically, in the last call, that there would be total distributions in 2013 of at least $2.35.
So, we should see .65 next quarter and perhaps .70 the final quarter. Let's see if they do what
they promise...I like the way they payout just below DCF and are ramping up on several fronts.
That they have gotten larger, to an approx $2 billion market cap give them efficiency to reduces costs per share and small enough, where a $200 million strategic bolt-on or a larger than expected LP sales trajectory, say $250 million, or a ramp up of liquid production in the Barnett, really moves DCF.
We will be between .75 by Q4 of 2014, if we get good partnership sales and generally good news on
Marble Falls, the Utica, and PA with reasonable integration on recent large purchase.
They have done what they said and yet the market has not responded well.
What is worth noting, the private drilling program "risk" becomes less after each acquisition as it plays a smaller overall role in the total DCF.
While I don't like seeing it diluted, I would like to see them get to a point where the cash flow generated by the private drilling programs is used strictly as growth capital. If they have a good raise, they drill more, if they have a poor raise, they drill less. Essentially, it would be running with a larger than normal coverage ratio. I feel like the E&P MLPs ought to be doing this anyway due to the commodity risk.
I would think that there is still a lot of bias against natural gas. Both ARP and BBEP were called "best bets" in a Baird note and I am following that note I am up 10.4$ on BBEP and flat on ARP. They both have huge recent acquisitions that will be very accretive to revenue and hopefully to earnings. However while the price of crude is on a tear, natural gas prices go lower.
I do not think that the analysts' are giving credit to the
retail LP's potential. I understand that we receive an appoximate 35%
carried interest in these wells plus fees. The fees cover all
of ARP's G & A...and will be growing...the cash flow from these
deals is free cash without associated debt, therefore, growth in
this area increases DCF markedly. If that is correct, an increasing
LP sales to the $250 million level gives ARP about $100 million of wells
and if they do 25% IRR, the marble falls wells have liquids will do better, closer to
40% IRR, then the cash flow is reinvestment through bolt-ons could be further accretive.