Obviously the pre-announcement from APL lowering guidance for 3Q and second half of 2014 put a dent in the Atlas entities yesterday. The good news for APL is they left 2014 guidance unchanged. Furthermore, at least ARP and ATLS did not revise guidance following APL. ARP's guidance is $2.35+ for 2013 and ATLS is $1.75 - $2.00. If ATLS hits the mid-point that implies $1.10 of 2nd half distributions and ARP must deliver $1.30 to hit the $2.35.
Much of the increase in income from the many of the big wells did
not hit until mid-way through the 3rd quarter. Given oil production growth as a
percentage of mix is increasing with prices over $100 a barrel, and NG prices above
$3.50 for our marginal and unhedged production of these monster wells, ARP should
have a great 3rd quarter and the 4th quarter will be even better if they execute.
The 4th quarter should be at .80 cents with a .68 cent distribution.
This would put us at a 1.17 ratio which is healthy.
With that kind of coverage they actually have extra funds to increase drilling or reduce the
As important will be the public LP raise, and we are looking for at least $150 million.
And updates on drilling and net production rates...I'd like to see a 280 mmcf per day
exit rate equivalent for the 3rd quarter and 300 for the 4th quarter.
I think ARP had a distribution coverage of .65 in the second quarter. I would expect
to see .75 for the 3rd quarter...If so, a .65 cent distribution will be met.
Keep in mind that Dubay is running APL and he seems to be a straight shooter and I would expect he'd pre-announce bad news.
Cohen is much more likely to hold out hope.
Its very disappointing to hear that the acquisition isn't going well. Its not a huge surprise but given we hired a senior executive just to oversee it you have to wonder if that was the best hire.
I think that perhaps some "Consultant" sold someone on the idea that we needed (we meaning Atlas in general) to "geographically diversify to lessen risk" or some other BS like that. We should continue to add small bolt on acquisitions in geographies we know.
I don't need to hear ATLS or ARP or APL mentioned on CNBC or Fast Trading or whatever - I just want us to keep growing DCF in a relatively steady rate. Building organizations and expertise takes time and we seem to have lost focus this year IMO.