ARP did not increase it's distribution from $0.12 to $0.40. The $0.12 distribution reflected the pro rata share of a $0.40 distribution relative to when it was spun off from ATLS. Thus, given the amount of time ARP was spun-out, $0.12 exactly equalled $0.40.
Furthermore, the $0.40 distribution at ARP, factoring in the spin-out effectively is a higher distribution at ATLS. For example, I own 200,000 shares of ATLS. If ATLS had retained 100% of ARP, my distribution at $0.25 would be $50,000. Combining my $0.25 ATLS distribution with my $0.40 ARP distribution, my total cash received is just over $58,000. Receiving $58,000 is like receiving a $0.29 distribution from ATLS pre spin-off. Net-net, I came out ahead, plus I have roughly $570,000 of ARP capital from the spin-off. Overall, management created value from these moves. Lastly, by creating a currency for ARP, they arbitraged the low gas price and created further value by acquiring ARP assets and they upped ARP distribution guidance north of $0.90 for second half of 2012.
Interestingly, NGL pricing has been bottoming to firming recently. The forward gas strip looks like $3.25 -3.50 next year and over $4.00 in 2014. What is going on between propane and ethane is a little troubling but a rounding error in the scheme of things. I hope ARP does another big deal. Right now it is cheaper to drill for gas on Wall Street than Texas by buying gas assets for around $1.00 and hedging into the forward market in the 3's creating a nice spread. The window may be closing however. A nice inventory of property creates an incredible fee opportunity for ARP on the syndicated side - truly a toll road approach to E&P - brilliant, just brilliant.
2-3 years out we will be richly rewarded. ATLS is a $80 - 100 unit value a few years out. Plus, you will receive a lot of distributions where most is treated as a return of capital. I can't think of a better way to stick it to the IRS and Obama in this bankrupt country we call the USA.