If i did the math right, assuming 96 cents for ATLS and $1.60 for ATRP, the new dist for a unit holder after the ATRP spin, from both is $1.12, a 15% increase. If APL increases distributions to $3.50 by '14 and ATRP just maintains the current level, which is unlikely, the dist for ATLS goes from $1.12 to $2.76. Moderate growth for e and p and you get to >$3, a 12% yield at current unit price. And there could be some surprises with e and p, how much is 75k acres in Ohio worth, looks like the Utica fairway. CHK did a JV and got $15k per acre. HK said the Utica type curve could show 1.4 million barrels EURs per well, 40%+ liquids. Doesn't look like a lot of downside at the moment if commodity prices remain fairly stable.
This is from the latest release, looks like you can buy ATLS up to 3/13 and receive the new ARP units.
Any ATLS unitholders who sell ATLS units “regular way” on or before March 13, 2012 will also be selling their right to receive ARP common units upon distribution. Investors are encouraged to consult with their financial advisors regarding the specific implications of buying or selling ATLS common units on or before the distribution date.
The distribution of Atlas Resource Partners common units will occur on March 13, 2012, by way of a pro rata distribution to Atlas Energy unitholders. Each Atlas Energy unitholder will receive 0.1021 of a common unit of Atlas Resource Partners for each Atlas Energy common unit held by such unitholder at the close of business on February 28, 2012, the record date of the distribution. Atlas Energy will not distribute any fractional common units of Atlas Resource Partners, but instead will distribute cash in lieu of any fractional common unit of Atlas Resource Partners that you would have received after application of the above ratio.
Look at their presentation, seems the partnership business could be a good cash generator over time, probably harder now in the current gas price slump. Seems ATLS will be driven primarily by APL's growth over the next couple of years, and if e and p has some growth, could be a high growth MLP, seems $2+ is reasonable just with APL growing.
Someone posted a link to the spinoff filing on this board or APL board a while ago.
IMO no one is hedged well enough in this gas environment as forward strip is way down.
ATLS and the spinoff need to be looked at on a longer time frame. Buying gas assets at todays prices are a very good wager. Atlas is a buyer not a seller.
If ATLS was needing to or wanting to sell assets I would not want to own the spinoff.
Anyhow as some others have calculated. You could and I do own ATLS account of the APL shares and IDR's. The spinoff could tread water for 3 years and ATLS will still be pulled up in price account APL growth.
For this reason I have not been paying as close of attention to the spinoff as I might.
Seems the Utica could be valuable asset, 2900 wells, 75k acres in Ohio. Companies have paid up to $15k per acre for positions. Companies touted as having concentrated positions, enterprise value/acre, the lowest companies are in the low $20k range, ATLS value is around $7k for the spun off resources partners MLP.
ATLS sold the deep rights in Ohio to Chevron. No Utica unless they buy anew. ATLS is targeting some Clinton formation oil wells in the next partnership units. The 70,000 acres does have useful right of ways that ATLS might be able to leverage. Also the Utica wells need significant acreage to profitably drill a horizontal well and ATLS would know which key acreage Chevron would need fill in the deep rights.