ATLS should have increased 4Q distribution to $0.49 from $0.46 given $0.02 increase at ARP. Given share difference (59.5MM at ARP and 51.4 MM at ATLS) and IDR kicker at ATLS, this how is should have translated to $0.03 to ATLS. I speculate they spent the $0.03 on start-up expenses of Atlas Growth Partners, a private MLP that will form the 3rd IDR stream for ATLS. Therefore, if this spend is one-time in nature, we can bank $0.03 for 1Q. Furthermore, should APL increase by a couple pennies and ARP increase by a couple pennies, this could translate into another $0.06 - $0.08 for ATLS. (We will get a faster read through on ARP with them going monthly distribution). Overall, when you add this all up, we could be looking at a $0.10 increase in distribution for ATLS in 1Q. Although largely hedged, the small unhedged portion of production should be benefitting from higher commodity prices which should further support the thesis.
The news flow should also be pretty good. We have conference calls, some news on syndicate capital raise at ARP and hopefully some color on Atlas Growth Partners. Long and Strong! Good to be owning rising distribution plays in a sloppy market with a falling 10-year treasury. Oh yeah, I forgot ARCX that went public in 4Q. ATLS has a 20% interest in Lightfoot that took ARCX public. Although small, it looks like ARCX will throw off $1 MM annually to ATLS which is another $0.02 to the good guys!!
APL isn't really going to increase distributions this year (yes I know they are basically promising a penny a quarter increase). ARP has potential for increases but we'll have to see how they have done operationally this quarter to get a feel for whether or not that will take place. I would expect that as they roll forwards with NG futures contracts we'll see some increase in DCF as stockpiles are about 50% of where they were a year ago.
We really need some Ethane demand. I read that there is a new planned export facility being built but that won't come online until 2016 at the earliest - even then it would only absorb about 50% of the overproduction that exists today.
Thanks for your great work on this. I think you and I are the only two Big ATLS bulls in the world. Noticed that ATLS has not announced the date for its results and conference call yet. Signals they are up to something. Should grow the distribution 40 percent in 2014. Nobody is projecting growth that fast and yet it yields 4 percent. I would expect that after they do the ARP earnings announcement, we get a secondary there. Then it is off to the races for ATLS.
I have been long ATLS since it was in the teens. 20,000 units plus 30,000 arp and significant apl and others. Hope the hedgeye gives me opportunity with their bs report tomorrow to add more. I have owned MLPs since the early 90s when there were only a handful like Lakehead Pipeline which is long since absorbed. They have made me wealthy, so hang in there folks.
Yes, I'm a big bull. By end of this year, ATLS should be annualizing $2.80 in distributions, or $0.70 per quarter. At a 4% yield, this gets you to a $70 unit price. By the second half of 2015, we will be annualizing $3.50+ which would get you a $88 unit price at 4%. Hard to find those types of names in a market that has been picked over. Plus, one gets the downside protection of the yield.
I do believe they are up to something. My guess is APL is trying to figure out how to buy the other 80% of the Chevron pipe they don't own and make it accretive. We know they are forming a 3rd MLP at Atlas Growth Partners which will give us a new IDR stream down the road. Plus, we will have a liquidity event when they take it public. ARP has filed a very broad shelf registration so I'm sure you are right that they are up to something on the acquisition front.
I believe they are awaiting their engineering report on the state of ARP's reserves. My guess is their reserve position has improved meaningfully given the uplift in NG prices recently making more drilling locations economic. Once they have this in hand, they will announce 4Q results. In addition, ARP will announce results of their syndicate fund raising which I believe will come in better than $150 MM.