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Atlas Pipeline Partners LP Message Board

  • bosox_pats bosox_pats Feb 6, 2014 6:03 AM Flag

    Chevron Dilemma

    Chevron has put it's Texas pipeline for sale. APL owns 20% of the pipe. The dilemma for APL is buying the 80% owned by Chevron, selling it's 20% interest with Chevron, or just holding the 20% and settling in with a new partner and operator. For Chevron, it probably gets a higher value if it can sell 100% as buyers are reluctant to take on an unknown partner. Obviously, APL will play the card of trying to buy the 80% cheaper than if went to auction. Chevron might take a cheaper price to avoid the auction selling process and cost. It would be a big deal for APL as the pipe is reportedly worth $1.0 B. I think this would come down to how much paper in the form of APL Chevron would be willing to take. Chevron taking the equity would make it easier to raise debt capital for APL.

    When Chevron announced the sale of it's pipe, APL's units traded down about $2 as the market anticipated more shares from APL and it has weighed on APL's trading performance ever since. I have no idea if APL paid $1.0 B if the deal would be accretive or how much future capital the pipe requires. One thing I do know is APL cannot afford to do non-accretive deals.

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    • APL overpaid for the Texas LPG line compared to debt issued, compared to units issued since that time. The only way it was a creative is compared to the credit line. I hope they sell it and concentrate on internal growth. Likely take a loss on sale IMO but who knows. I am glad they have the opportunity to sell it.

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