It should be noted that the 12 Marcellus wells are part of the investment program and not 100 % Atlas Energy owned wells. That would place the ownership at 20 %. Assuming 2,500 MCF per well on average this would net out to 6,000 MCF/ day to Atlas. It would be nice to see gas production creep up to 60,000 MCF/day and the WV Marcellus wells will help as well. I have requested a prospectus from Atlas to estimate potential returns from the various gas plays. It seems like they could drill a lot of wells with $200 to $ 300 million in syndication money. Just trying to estimate the impact on DCF.
Never got a prospectus but did speak to a rep. Atlas sells the partnership deals thru a tight network of reps. The attraction for the investor is the tax write-off. Deals tend to cash flow at about 10 per cent annually. Most of the sales occur toward the end of the year as taxpayers attempt to lower tax liability. A smaller syndication usually closes around mid year. This is a gem of a business for Atlas with a well-established sales network. Very low key. But it has and does bring in $300 million a year [last 5 year average] of investment capital. Not including upfront fees and management fees, I calculate an additional 12 to 15 cents per year cumulative additional DCF on these syndications in the $ 300M range. [Math: $300M @ 10 % with 20% partially carried interest = $ 6M/ 50M units] I will be watching net gas production increase from Q1 on the Q2 earnings release. Q1 was 37,000 MCF. When this moves up to 60 MCF with gas @ $6/mcf [maybe next 2 years]it will have a significant impact on DCF. The presentation on the Atlas Resources website details gross margins on the syndications. These are significant. When AHD and APL were crashing in 2008/09 ATLS held up quite nicely. I am just trying to understand this new business model that the merger of AHD/ ATLS has created. So far I am very happy with what I see. Wells Fargo agrees and of course just increased the senior borrowing facility for ATLS. Would love to see the WF write up from May if anyone can find a copy of it. GLTA BigEaRljr