I would like to discuss the appropriateness of rolling ARP into ATLS.
They are both MLP's, It would be an easy vote to win because ATLS owns
a large share of APR and I think they will easily get over 50% of the vote.
It would align what seems to be the potential for self dealing and reduce costs
for management duplication, etc.
Not happening. The structure is appropriate for value a creation to ATLS and high current income to ARP. I may be proved wrong but do not think there is anything afoot involving ARP giving assets to ATLS so that ATLS can have more GP rights. Just illogical and lawyers would have a pay day.
ARP can monetize assets to institutions in the same way that they market to individuals but in acreage instead of wells. ARP would get a fee or percentage for managing the assets and the institutions could get some assets that would match up to some of the long term liabilities. There is a synergy between the intrinsic value of oil and gas assets vs long term liabilities in a vey low return environment. It is just a matter of how it can be structured and the goal for ARP would be to bring forward net present value on some of the smaller assets (bundled) while managing institution money to pay for development similar to a JV agreement. The difference would be the MLP pass through to to a likely pass through entity ( pension or endowment) that would be at an advantage compared to doing a deal with a C Corp.
I have no idea what the end deal will be but current returns on long dated assets vs liabilities does leave a lot of room for a low cost pass through operator.
I think it is going to be a simple drop down of excess ARP acreage into new MLP that the company has no plans to drill any time soon. Initially, ARP owns 100% of the LP interest and then gets diluted down as new MLP issues equity to drill this acreage. The GP interest in the new MLP probably will have little value given the speculative nature of the acreage. ATLS could pay ARP consideration to gain control of the GP of new MLP. The consideration payment, approved by ARP's independent directors will protect Cohen's from self-dealing. After the transaction, all GP's consolidated with ATLS and ATLS controls a solid pipeline in APL, a solid E&P asset in ARP and a call option on gas prices and speculative acreage in new E&P MLP. All speculation on my part but a possibility. We all know they are up to something, we just don't know exactly what it is........