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Atlas Energy Group, LLC Message Board

  • zzxxyy123 zzxxyy123 Jul 17, 2012 5:17 PM Flag

    No increase in distribution

    I wonder whats up with that. ATLS stated they would distribute virtually all proceeds. Their dcf had been running about $.375/share. I would like to hear their logic on this one.

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    • No you are right propane hasnt been below a buck since '09. nice price rebound today to $.93

      But I was right about a deal being made ARP is buying someone should be good rebound. Form 5 filed for $200M

    • Not sure what your looking at, but I have a speadsheet for the postings for Mont Belvieu non tet propane for Jan 2010 - Apr 2012 and not a single month was below $1. Since most contracts are paid on this posting... I haven't kept track of Conway pricing, but it is always lower, so there might be a few months where Conway propane was below $1.

    • That last year that wholesale propane didn't drop below $1 was 2007 and it has spent between 25-50% of every year below $1 since. Given no real winter it would have been much lower save low stocks going into winter.

      I am not an expert but I do read the weekly petro stockpile report every week. I was actually taking a jab at Lisa not you I thought she was too harsh towards you.

      I understand your Dcf point and though but I didn't expect to see a dist rise till Q3 so am not overy concerened; save the last deal the assets and metrics left me confused as to why they bought it but I was wrong before about Cohen's deals before so I am holding.

      I will raise a bit of speculation about where possible DCF retained money could be going (if there is any) and that could be toward a bigger deal with EQU the JV partner of ARP who is short of cash but has great US assets.

    • Good discussion,
      Wish I was more optimistic about NGL prices. I think it is more likely in the short term, 1 or 2 years, that the price of natural gas will rebound and drag ethane up with it. This will be more important to ATLS as it benefits both APL and ARP.
      As far as distributing 100% of the distributions from APL and ARP, did the new shares issued to purchase the last property dilute current cashflow to ATLS. I believe that would be a yes. If not there would be a reason for ATLS to build a small amount of cash reserve. APL will at some point offer more shares to fund growth. ATLS will need to fund 2% of any dilution to maintain the overiding IDR's.
      jim

    • Then why did you write this:
      "Since ATLS's income comes from APL's and ARP's distribution and not NGL's that arguement does not fly"

    • I think you may have misunderstood the comment that ATLS would distribute all of its DCF. Post spin-off, its DCF consists of the distributions and IDRs that it receives from APL and ARP - the 0.25 distribution represents pretty much all of its DCF. With respect to APL and ARP, they are not distributing all of their DCF - they are maintaining prudent coverage ratios. So while ATLS is not retaining a second level of coverage, its DCF and distributions are confined by what APL and ARP elect to distribute.

      That being said, the guidance of APL and ARP for 2013 distributions (and the resultant level of distributions ATLS could pay based on these distributions) seem to be very very favorable relative to the current stock prices.

    • Last post, I swear. I do agree with your assessment of atls and had that assessment when atls was 16-18 and then sold a lot (for me) of 2013 and 2014 puts.

    • lol im the only person on this board who isnt an expert. Im more than aware of what drives the prices on all the products. While propane over $1 after T&F is nice, is has been the rule not the exception since November 2009. (since you are such an expert, you should already know this) This latest downturn certainly has it below $1. Ive worked for companies like arp for 30+ years and have negotiated numerous gas processing agreements with companies like apl. So you guys are absolutely right. I have no clue what I have invested in. lol The point I was trying to get across, obviously very poorly, was that atls stated that after arp and atls were separate companies, that atls would payout virtually 100% of its dcf. Its dcf had been running about $.375/unit (correct me if im wrong). If their dcf is still in that area, they have some explaining to do. I guess I should have waited until earnings were released and then complain if necessary. And yes all three companies are great and I love them, but that is beside the point.

    • NGL prices can go up as fast as they went down esp ethane. A new one is being built in OH and one mothballed one is being returned in TX. Major drillers are cutting back production as prices go down and land get HBP.

      IMO Propane last year @ $1.50 was not sustainable and was a spike from some major one off factors such as the late wet crop. Oh, you didn't know that? Guess you don't know what your invested in. Don't believe me? Go and look at last years Weekly Oil inventory supply #s.

      Over a buck Propane is a gift but its gone. The hot summer burning off Nat gas after a hot summer is a bigger gift. Stock is cheap based on all factors.

      This stock is worth over $45 at current NGL prices by year end,NGL prices may be off but the pipes are full and getting wider and APL is in a sweet spot like I have never seen in regards to who is drilling in their patch along with dcf increasing projects lined up and I have owned APL etc since 2002. The ATLS EQU deal was a great one too. My concern is the last ATLS Nat gas Co buy it looked a bit iffy. Hope to learn more in CC.

    • 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.

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