The Cohen's are money makers. You want to own what they own and they own ATLS over APL. The spin-off of E&P assets and the syndication business is brilliant. ATLS transforms itself to a GP MLP with IDR leverage to two assets with APL almost in the money. It has no financial leverage and should trade at a premium to yield 4% as a pass-thru MLP. Assuming the E&P asset trades to a yield of 5.5%, my guess is this will create value totaling about 15% of your current ATLS holdings. I don't even think ATLS trades down that much on the ex dividend date as they are giving up about $0.04 of distribution on the spin-out. this should be offset by distribution growth and guidance for 2012.
Interestingly, based on what they I heard at the lunch yesterday, in my opinion, I think they do significantly more fund raising in the E&P syndication business than the $250 MM shown in the Form 10 based on their prior history.
This is a high $30s to low $40 stock sometime in 2012
Think World Series
"Who's" on first, "What's" on second ....
As a shareholder you definitely are some where in the "Out"field along with "I can't figure it out" or is he at short? Nope that's "I don't know". Just know "Cohen" is pitching s..t and you definitely don't want to be catching. Also know he will be stealing when on base.
I can't figure it out.
It sez that Atls owns 16% GP and 12% LP of lightfoot capital. Soooo, that dosn't make them majority owners of Lightfoot. Yet the news article sez that J. Cohen is chairman of lightfoot.
Good post. I agree in principal. However, these guys have to acquire acreage from scratch at now inflated values or take castoffs from others. Gas price @$3.50/mcf(Henry Hub) does not allow for much if any profit. Until gas prices improve, mgmt fees and cost plus well site builds will probably be the main source of income from the new business. Great move if nat gas prices ever get back over $5.
ATLS plan is to drill for Nat Gas on Wall Street by acquiring conventional property from those who are anxious to raise capital to redeploy in the more exciting shale plays. They can create gas properties for under $2.00 per mcf on a financial transaction basis. You do not want nat gas prices to go up from here as it makes the acquisition costs go up.
I read the Form 10 today. They are going to start the distributions at new MLP at $0.40 per quarter. Their IDR's start to move into the money at $0.45 per quarter and they get their full 50% participation at $0.60 per quarter, exactly the same deal they have at APL. ATLS has a huge incentive to get these distributions up to $0.60 per quarter quickly.
Interestingly, if you treated the IDR's like a warrant, or stock option, and applied a Black-Scholes pricing model, you are getting the IDR exposure for about 35 cents on the dollar. There is a huge imbedded option in the ATLS stock price and therefore should trade at a premium yield to other MLPS of perhaps sub 4% - like it is right now........
They said they see enormous opportunity in other's cast offs. Indicated many E&P operators are shedding traditionally drilled conventional acreage at very attractive prices to raise capital to fund development of new shale plays. They can make many of these properties work because they can put together partnerships that make money for LP's and Atlas Resource Partners (in the form of management fees, and ongoing participation). This unique funding structure allows access to rapid large amounts of cash. As a side note, they don't think any changes in tax laws are going to have a lot of impact.
Dont forget they still have a lot of acreage in very interesting places as well including many of the best shale plays. They seemed to point to what they have done in Niobara in Colorado as example of what they might do. This was a deal where they farmed into acreage.
To paraphrase new prez of to be Atlas Resource Partners:
"well positioned to take advantage of opportunities with excellent foundation of acreage, world class team, unlevered balance sheet and partnerships to give them plenty of firepower."
Your assumption that they will drill for gas exclusively could be wrong. They may focus on oil or wet gas, as in Tennessee, where mid-stream assets will capture the full value chain. They will buy where value is recognized. As stated in the cc: conventional basins are up for sale to pursue the hot shale basins. Sounds smart to me. Buyin' Panama hats in February.
I agree. Won't get done until early part of next year(SEC).
I was wondering why L. Cooperman was there asking questions. Turns out his hedge fund owns about 3.8M shares.
Mentioned his concern of the practice of "triple dipping" of having the same board members sitting on various boards within the same conglomerate. Tongue in cheek?
Ed Cohen, CEO, did say in the cc on the EP spin-out that Atlas has never been able to accept all the investment money available from the syndication business. In other words, ATLS has never had enough product ,i.e. drill locations, for the monies available. They will leverage up on leases and crank up the syndication monies. This story continues to be under appreciated. ATLS is the largest energy syndicator in the country. What a great franchise! Somebody in the financial sector will want to own this when the improved transparency makes clear what a cash cow this business is.