Jim, thank you for your thoughtful posts. Intangible drilling costs are a non-cash deduction. If this deduction is eliminated, cash flow and distributions would not be affected. However, the tax shield on these distributions would be less and the taxable portion of the distribution would be higher. Overall, this would probably cause the multiples folks are willing to pay for drilling assets to be lower as the purchase price subsidy from the US Treasury would lessen.
I agree with your comments concerning Utica. My only concern is Chesapeake has done a great job of creating hype around this play and therefore the prices may be higher than otherwise.
The arbitrage between oil and gas on a BTU equivalent basis is huge. Gas should be trading closer to $12 on this basis. These types of arbitrage will not last forever. Coal to gas in Electricity sector, shut-ins, more heating oil to gas, chemical industry expansions, namely in the fertilizer sector, and natural disasters should close this arbitrage.
This time next year I believe APL will be sporting well over a $3 annualized dividend with a visible path to $4. ATLS will be riding this on a leveraged basis and at a 1.0X payout. ATLS is a very attractive takeover candidate given it's a leveraged play on both APL and the E&P spin-off. More importantly, through ATLS, for less $$$, you get control of both assets through GP.