APL has distributed $1.21 YTD 2013. They are sticking to their full year guidance of $2.50 - $2.60 for 2013. To achieve this distribution level, they will need to make a distributions of between $1.29 - $1.39 over the next two quarters. At the mid-point, this would imply a 3Q distribution of $0.65 and a 4Q distribution of $0.69. At around $0.70, they are already achieving the annualized guidance for 2014. My guess is they will raise guidance for 2014 probably with 4Q announcement of results.
This level of distributions for APL are huge for ATLS as the IDRs are 100% in the money. ATLS still a better way to play APL IMO.
On a separate topic, on the conference call, a question was asked regarding acquiring JV partner TexStar. Management refused to answer. My guess is they are looking hard at this one as this would give them a great position in the Permian.
You are correct. The issue with acquisition of TexStar is trying to get too big to fast. Remember APL and the Cohens do not have a good track record of putting money in any pocketysw except their own. The 50/50 IDR split is a bit of a drag but only that. KMR and others have been in the 50/50 split area for years. Dubay is interesting in getting good assets. The problem is buying asets is not a good way to gain $$ in the short term. Also those assets need to be ones that are going to grow significantly in a couple of years. Not sure if the Tex assets fit that model.
I think the TexStar operations are in the Eagle Ford and would complement the Teak assets purchased in April, now known as the South Texas assets.
Gene Dubay must be a good poker player; he never gives any hint of what hand he is playing and what is on his mind as to potential acquisitions.
The management team that Mr. Dubay has built up sounds quite competent, serious and focused.
Of course, the distribution increases are gratifying.
We have come a long way in 4 years.
Once we hit .70 which will be at the beginning of 2014 the IRRI 's will hit APL and ATLS evenly for every penny above. Every penny above .70 will be difficult, because they will have to make 2 cents to keep a penny. Compound that with additional shares coming on board and we are likely to be at 70 cents or slightly greater for a while. This was the price for the acquisition of TEAK and the continued growth in the business. Even ATLS will not see the growth, because APL will struggle to get the DCF much above 80 cents per quarter. Given those facts the stocks both look cheap at these levels.
I don't know if that is going to be the case. The same things were said about NGLS and its GP TRGP. The dividend growth for TRGP is expected to be in excess of 25% in 2014 and NGLS's LP distributions expected to be up 11%. Some of these G&P acquisitions have paid off a lot bigger than management has been willing to discuss due to the usual fears and concerns about being overly optimistic and heaven forbid if mgmt. is wrong because there are already enough scumbag lawyers out there looking to sue at the drop of a hat.