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Inergy, L.P. Message Board

bosox_pats 15 posts  |  Last Activity: Jul 17, 2014 8:30 PM Member since: Nov 22, 2010
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  • Reply to

    Cooperman - Delivering Alpha

    by bosox_pats Jul 16, 2014 5:55 PM
    bosox_pats bosox_pats Jul 17, 2014 8:30 PM Flag

    Bigearl,

    You and I are cut out of the same ATLS cloth.

    Best,

  • Reply to

    Cooperman - Delivering Alpha

    by bosox_pats Jul 16, 2014 5:55 PM
    bosox_pats bosox_pats Jul 17, 2014 6:10 PM Flag

    I love the Cooperman quip! Good to see your still in the name BigEarl - haven't seen you in awhile.

  • Leon Cooperman provided his top 12 picks for next 12 months. Atlas was a prominent pick and he stated the stock has 50% upside from here. I think he is on the low side but my view is probably longer than his view. Looking forward to the 2Q distribution announcement for ATLS and hoping for a bump in the June monthly distribution for ARP. Looking for ATLS to increase to $0.48 - $0.50 from $0.46 sequentially.

  • Acquisition closed on the 30th, backdated to April 1st for cash flow coverage of new shares issued. Pro forma for the bad weather, 1Q coverage of the distribution was only 1.0X, actual was 0.92X. I think they had a really good production 2Q. As I add all this up, my guess is the company is building coverage of the distribution this quarter to something between 1.10 - 1.20X, bringing first half coverage to around 1.0 - 1.05X. This will set us up for actual distribution increases in 2H. They may even give us a little bump in the monthly for June. Good coverage combined with bumps to annualized rate of $2.50 gets us a sub 10% yield - upside to $26 - 28 by year-end. ATLS the GP is still a better total return play longer term.

  • Reply to

    London investor conference

    by chegerar Jun 11, 2014 8:43 AM
    bosox_pats bosox_pats Jun 13, 2014 5:54 AM Flag

    I listened to Ed's presentation. He brought up his roots in Pennsylvania throughout presentation but he also slipped and mentioned he lives in NYC. We now know the company is really directed out of NYC. Regarding ATLS distribution guidance of $1.95 - $2.35 (I think top of range was stealth lowered), he said employees will be penalized if not at least $2.00 and incentivized to beat top of range. This implies meaningful increases from here - to hit $2.25 for the year, average quarterly distribution would need to be $0.60. This is not going to happen in 2Q, we will be lucky to get $0.50.

    Having said all this, I think ARP is having a big 2Q production quarter. It will be interesting to see if the next monthly declaration reflects this strength or if they use extra cash flow to strengthen distribution coverage instead. Either way a positive. I think we are in the bottoming process after admittedly 9 months of sub-par performance at each MLP.

    Comments regarding the $500 MM raise for AGP were interesting. It will be interesting how much of any value created in the private MLP will actually flow into ATLS valuation. It sounds like Ed is anxious to do some deals in the Marcellus.

  • Reply to

    NAPTP MLP conference

    by bosox_pats May 21, 2014 6:32 PM
    bosox_pats bosox_pats May 23, 2014 7:47 AM Flag

    David,

    That is annual. Yesterday, I noticed one street analyst had estimated it to be $0.11 accretive. In my scenario, I have $0.06 going to coverage and $0.02 going to distribution.

  • Reply to

    NAPTP MLP conference

    by bosox_pats May 21, 2014 6:32 PM
    bosox_pats bosox_pats May 22, 2014 5:29 AM Flag

    Listen to the webcast. I know they are always bullish, although Cohen was not there. My interpretation was bullish. Ramping production in 2Q of organic projects. The acquisition was accretive to distributable cash flow. My back of the envelope calculation given the property produces about 4,000 BOE/day, purchase price and financed 60% equity and 40% debt is about 8 cents per unit.

  • bosox_pats by bosox_pats May 21, 2014 6:32 PM Flag

    ARP presented at 3 30 PM today. Listen to the replay. This is the most bullish presentation I've heard from ARP in quite some time. They repeated several times that production is ramping from organic sources in the 2Q. They finally made some reference to what accretive means relative to the latest Colorado acquisition.
    Accretive means strengthening coverage of the distribution. They are geared to raising coverage to 1.1X but also making progress on increasing the distribution. My guess is the monthly goes from 0.1933 to 0.20, or $2.40 annualized. Guidance is $2.40 - $2.60 for the year so an increase is in the cards.

    APL is also turning the corner. This is all very bullish for ATLS. ATLS is a steal down here around $39.

  • bosox_pats by bosox_pats May 9, 2014 7:02 AM Flag

    An analyst from Tourbillon that just took a 5% stake in ATLS (through options I believe) asked some interesting questions. He pointed out that if the West Texas Permian operations were a separate company, it would be worth more than all of APL currently. Cohen responded by noting he is fully aware of the sharp valuation disparity. One wonders if the deal making cohen's will try to monetize this disparity by spinning off this asset in a separate LP........?

  • bosox_pats by bosox_pats May 9, 2014 7:00 AM Flag

    An analyst from Tourbillon that just took a 5% stake in ATLS (through options I believe) asked some interesting questions. He pointed out that if the West Texas Permian operations were a separate company, it would be worth more than all of APL currently. Cohen responded by noting he is fully aware of the sharp valuation disparity. One wonders if the deal making cohen's will try to monetize this disparity by spinning off this asset in a separate LP........?

  • Both will close this quarter. Interestingly, Geomet is back dated to Jan 1st and Colorado to April 1st. We should get an uplift as a result in DCF from there contributions. Should be an interesting 9 AM conference call. Best way to play this is through ATLS.......

  • Reply to

    isthedivintrouble

    by bobbyjopro May 7, 2014 6:49 PM
    bosox_pats bosox_pats May 7, 2014 7:29 PM Flag

    Not at all - it's going higher.

  • Reply to

    Last 3Q's behind ATLS

    by bosox_pats May 3, 2014 3:11 PM
    bosox_pats bosox_pats May 7, 2014 5:20 AM Flag

    David,

    All the projections I have seen from Morgan Stanley, Wells Fargo, Goldman, etc. show APL's distributions continuing to rise slowly including the conversion of the converts. Given how the IDR's work, even though APL will have slow distribution growth, ATLS totally benefits from the higher share count at APL as the IDR payments are geared to the distribution per unit. So a $0.62 distribution on 70 MM units rising to $0.65 on 95 MM units results in a huge bump in cash flow to ATLS.

    Write-off's don't scare me as they are a non-cash charge. A write-off does impact the amount of depreciation and the tax consequence of the distributions but it will have minimal impact. I doubt there will be a write-off as management seemed pretty confident that Silver Oak 1 will be full shortly and Silver Oak 2 will be over half full by year-end. Silver Oak 2 will be full by year-end 2015. When they bought TEAK, they assumed the units would generate $80 MM each of EBITDA, or $160 MM total, for a multiple of under 7X. Given the competition in S. Texas, EBITDA looks to be $120 MM total, or a multiple of slightly over 8X. This wouldn't spawn a write-down. They just sold their 20% stake in the Chevron NGL pipe for about 14X and they will book a gain of $50 MM in 2Q. As long as assets are trading north of 8X, no write-down will be booked.

    You should listen to the 1Q APL conference call. Proceeds from the converts were actually used to expand capacity. This new capacity is system-wide so one can expect at least a 20% bump in cash flow from these assets easily covering the dilution from the higher share count.

    The same math applies at ARP. ATLS totally benefits from a modestly growing distribution and a growing share count as well. One day I will wake up and both ARP and APL will have 200 MM units outstanding through acquisitions and expansions........and ATLS will still have about 50 MM units outstanding. This math causes ATLS distributions to increase rapidly.

  • bosox_pats by bosox_pats May 3, 2014 3:11 PM Flag

    The operational issues with APL are now largely behind us. We probably overpaid for TEAK but it is now a sunk cost. TEAK needs to be viewed from the lens of timing. We own to brand new units that by the end of 2015 will throwing off $120 MM of EBITDA combined. In West Texas we are humming along with Pioneer and the SCOOP is an unexpected but pleasant surprise.

    On the ARP side, the company has been operating very nicely. I suspect we will get some upside in the 2Q to our distributions. Now the Marcellus non-compete is behind us, I suspect we are probably hunting for opportunities. NG gas prices seem fairly firm here in the spring and a hot summer could really put a bid underneath the commodity given the sharp drawdown in storage during the cold winter. At some point the markets start anticipating exports starting in 2016 but probably not until next year.

    I'm looking for distributions from ATLS of about $2.25 in 2014, down from my original hope of $2.75 - $3.00. We will likely be annualizing something north of $2.50 in 4Q. I still see these units trading north of $100 in the next 3-5 years.

  • Reply to

    On the rebound

    by tmcpvale Apr 28, 2014 10:47 AM
    bosox_pats bosox_pats Apr 29, 2014 6:14 AM Flag

    No, these bonds are not being refinanced. The 9.25s were issued under rule 144a, a form of private placement. The 144a bonds are being exchanged for registered securities. It happens all the time.

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