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Atlas Resource Partners, L.P. Message Board

  • rrb1981 rrb1981 Aug 10, 2013 12:10 PM Flag

    Conference Call

    Listened to the CC a second time. I always pick up little nuggets on the second pass.

    So, while they did not discuss much regarding the Marble Falls in terms of IP rates etc. it is now very evident that they are having a tremendous amount of success in that arena.

    Oil volumes at 1600 bbl/d with more wells in the works. They confirmed paybacks in the 12-18 months time frame. So, they go into a very efficient capital recycle exercise. With payouts that quick, they should have no issues showing steady and meaningful volume growth on the oil front. The Marble Falls wells have to be the best IRR in ARP's portfolio and I hope we see continued aggressive drilling here with payouts so strong.

    Also, FINALLY someone asked about the distribution. Now sounds like $2.35 is going to be exceeded. I am going to continue to guess that we see something like $.61 and $.69 as opposed to the $.65 and $.65 I had predicted.

    That would be an approximate 13% increase in Q3 and 13% in Q4.

    Even with a 2013 exit rate of $.65/Q, that puts us at a $2.60 run rate...if they ramp up to say $.69/unit we'd be looking at a run rate of $2.76...or a yield on today's price of 13%

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    • True but to note reason why BofA is neutral is tied to ngas prices so i think until they recover close to 4 which they should we may have to wait for upgrades on sell side.....drilling is beginning to get delayed as per XTEX admissions tied to ngas to thats our risk.....nonetheless i agree 13%yld will result in units to appreciate from here

      • 1 Reply to breakem1
      • I would like to highlight one of the reasons I am bullish on ARP:

        Note the "average" hedge price for natural gas for ARP over the next couple of years:
        2013 (remaining) $3.96, 2014 $4.15, 2015 $4.21, 2016 $4.32, 2017 $4.54

        So, we have a nice escalating hedge price going out several years.

        Compare that to some of the other big E&P MLPs that may have gas hedged at higher prices, yet they have a cliff facing them over the next few years as high dollar hedges roll off the books. ARP is in the opposite position. They bought gas assets near the bottom. The much needed drop in NGL prices may finally start to reduce gas supplies, which until recently did not appear to be dropping despite low gas prices. Much of this could be attributed to the high prices for liquids. Now with NGL prices hurting, producers may switch to drilling for oil until such time as gas prices recover. This may finally produce the "pop" needed in gas prices. I wouldn't hold my breath for anything above $5/mcf, but I would not be surprised to see $5/mcf. ARP can make good money on its Barnett play at $5/mcf, especially if drilled through the investment partnerships.

    • Thanks for the good info....ARP looks very solid.

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