I am trying to get a handle on the numbers and what increases at APL and ARP mean for ATLS. Assuming no secondaries, the best I can figure is that a 2 cent increase in either APL or ARP gets us about 3 cents at ATLS. We get slightly more with a raise by APL as they have more units outstanding.
The high split IDR is 60 cents for each. So basically for every cent over 60 cents that ARP or APL does, ATLS gets 3 cents, correct? Are you aware of any IDR waivers by ATLS? I thought I read there were some for APL but can't seem to locate them.
Your numbers are correct. There are a couple Wall Street earnings models that are pretty good. One thing you have to remember is ATLS holds roughly 7.5 MM preferred units of ARP that participate in the dividends one for one and convert into common units I believe in 3 years. APL does get an IDR holiday between 0.65 - 0.70 based on a deal from long ago. I believe it is a $$$ driven holiday and it kicks in at $0.65 so the high end may change with share issuance.
I think the 4Q earnings call has been delayed as they are waiting for the Engineering Reserve report for both ARP and ATLS. After doing a little more home work, I believe the reason ATLS did show an increase in distribution this quarter was due to the timing impact on the drawdown of their credit line (interest charges) to fund the asset purchase's of the preferred and E&P from the last ARP transaction.
Interesting, ARP may actually announce it's January distribution payable in March prior to the 4Q conference call...... This will give us a tell on the ATLS distribution for the March quarter given the math discussed above.
Thanks for your reply. I think it is entirely possible that ARP can grow its unit count by 50-100 percent over the next three years. Assuming that they can get the distribution over 60, we are going to see some explosive distribution growth.
It seems like a lot of the MLPs are not doing secondaries any more but rather are doing these "At the Market" issuances. I know KMP and ETP do them, among others. At the market issueance would make a lot of sense for ARP once they go to the monthly distribution.