What we really need is ANOTHER public "Atlas" entity to further confuse the market.
Oh, and by the way, amazing how Cohen was just singing the praises of APL, now APL is getting hit by ethane rejection.
I think the term "value trap" may be appropriate.
So, now is crunch time.
Distribution should be raised to $.65/unit, or $2.60 annually. This should help put a bottom in the unit price.
3Q should FINALLY allow us to see Marcellus and Mississippi Lime and Marble Falls results. Maybe we will also see 2013 fund raise.
Rising gas prices might also help realized prices on our unhedged production.
I think we start trending upwards towards $23. If we get $.65/unit and company keeps guidance of 4Q to $.68/unit, then we likely trend upwards towards $24 or $25.
I would think we need to see an equity yield of a little under 10% to allow accretive deals.
Starting to get interesting at these prices.
Agree that at $10-$12 this is a nice income producer. Won't be a big gainer but should produce solid distributions for years to come, with perhaps some fluctuation from commodity prices and cap ex.
The deal appears to be a much better deal for PVR than RGP. RGP is buying future growth but paying full price for it. More than anything, it helps give RGP more scale. Pushes them into a top 15 MLP. That seems laughable but one must consider the monsters above them like EPD, KMP, PAA, WPZ, OKS and even parent ETP.
I think this is really Energy Transfer simply using whatever currency it can use to grow. Long term RGP will be rolled into ETP.
As a holder of RGP units, I can't get terribly excited about the deal as it means RGP distribution growth is likely pushed out again.
Oh well, I keep collecting nice distributions and perhaps we will get pedestrian growth.
LRE is not Lime Rock. Affiliated, but not the same entity.
Yes, this shows how bad PVR was struggling. Overall, this is probably a great deal for PVR holders, whom get to be part of a much larger MLP with a better credit rating and more stability. Eventually this will get folded into ETP but until then RGP ought to achieve modest distribution growth.
RGP gains more scale (now a top 15 MLP in terms of enterprise value)
I own ETE, so I like to see the Energy Transfer family of companies growing. It might not be accretive now, but it will eventually mean more cash to ETE.
RGP manages to get a nice toehold in the Marcellus, which coupled with SXL's Mariner projects allows for more deal making.
Yes, the Legacy management team is very good. They own about 22% of the company. They even stated in essence that they don't care about near term growth, they care about long term value. They want Legacy to be providing solid distributions 10 years from now. They appear to be committed to the long term and make very disciplined acquisitions. In my opinion, these guys aren't going to be the fastest growers, but if commodity prices collapse, these guys will likely fair a lot better than others.
Agreed. Cohen is the problem.
He can't leave well enough alone. He's a chronic creator, he gets a concept and creates something, but loses the initiative to follow through and maintain it. One can look at the history of his Resource family of companies. RAS, RSO, REXI, AFN (I think that is the one his son nosedived)
The man needs to retire.
Also agree that the pompous "we are smarter than everyone else" needs to be put in check. Cohen drove APL into the ground by not hedging, then at the absolute worst time possible, he went fully monty and hedged right before NGLs turned around. He quietly stepped aside and let adult supervision (Dubay) take over and clean things up.
I know...maybe he can run for public office. Our country needs another windbag full of hot air. He can do less damage in govt than here at ATLS/ARP/APL.
Yes, I cannot effectively state how disappointed I was that Cohen blew such a great opportunity to tell the ARP story. Instead, he waxed poetic about past events. He barely spoke to the many promising plays, the drilling partnership raise, which he almost made sound like was drying up and dead. Didn't bother to touch on pending distribution growth. How can Cohen speak for a full 20+ minutes and not mention any of the highlights? Why does Cohen continue to waste airspace talking about ATN days? Why does he waste our time talking about APL? Talk about ARP. It really isn't touch Ed. Stop telling us about how you rush into places where others are fleeing. Tell us that oil production has eclipsed 2000 bbl/d. Tell us that the Marble Falls is doing so well that 2014 they plan to drill another 50 wells. Tell us that at $100/bbl oil, that the wells are paying out in 12 months. Tell us that details Ed. We don't need anecdotes.
Linn's natural gas hedges of $4.48/mcf are significantly lower than the current $5.31/mcf realization. In case sand doesn't have his calculator handy, that is a full $.83/mcf that "evaporates". Another hole in DCF that Linn has to plug by making more acquisitions.
The only tidbit of info that Cohen ever gave was that this was an alternate drilling program for investors. It didn't have the tax advantages that the current private drilling programs have.
In my mind, I am thinking this is simply a vehicle for institutional investors to put capital to work into E&P. Similar to perhaps Enervest or Quantom etc.
Really though, I just don't like seeing ARP divest acreage. ARP will end up losing its good acreage to this new MLP. It just won't make any sense, why would a new MLP want ARP's non valuable acreage? If you cannot obtain a decent IRR on it, why take it? No, this will be a chance for Cohen to stick his hands in the cookie jar and take some quality acreage out of ARP at ATLS' expense. Watch and see.
Exactly - Cohen has no self control. He also lacks the ability to give bad news. Those are 2 major character flaws in the man. I follow nearly all of the MLPs (well, about 45 of them) and have for about 12 years. I listen to almost all of the conference calls etc. Cohen is by far one of the worst in terms of admitting he screwed up and conveying bad news. The classic example was when he drove APL into the ground by playing cutesy with the hedges, stepped aside and let Eugene Dubay take over the operation (someone that actually has midstream experience). Cohen didn't even appear on the conference call when Dubay stepped in because Cohen can't take the heat from angry unit holders. It may seem trivial, but it revealed a lot about the mans character. He simply cannot leave well enough alone, cannot give an accurate picture of the state of the business. He spoke for 20 minutes at the most recent conference call and said NOTHING about the Marble Falls, Utica, Mississippi Lime production rates. Not a word. But we have to hear him babble on ad nausem about how he sold Marcellus to Chevron at the top and was standing around in his underwear? Is the man going senile?
I'm actually quite surprised he hasn't tried to take the private drilling programs out of ARP and put them in to ATLS, though my gut tells me that is exactly what he is planning to do.
July '12 - 54,000 mcfe/d / July '13 52,000 mcfe/d
January '12 - 58,000 mcfe/d / January '13 52,000 mcfe/d
So within a short time period we can show both flat production and significant decline. I look at decline over 2-3 year spans otherwise your resolution is skewed.
Point is, decline is somewhere in the 6% decline rate, which is normal for long lived mature production.
If NGL prices rise, the Hugoton may see some more aggressive drilling which might help volumes a bit.
You are right, I was going off of memory. It looks like $24 million remaining over 40 million units, which comes out to $.60/unit.
I do however believe decline is more in the 5% range, perhaps as high as 6-7% . It varies from month to month and also should be looked at on a rolling average
It is the fact that Cohen will be cherry picking assets out of ARP to benefit the GP which ATLS will likely own.
It stinks. But that is who Cohen is and whom he has always been. It is why Atlas gets very little respect or coverage from most of the brokerage firms.
The remaining charge is closer to $.80/unit by my calcs.
Agreed though, as I mentioned, I track decline. True decline is much easier to see now that very little drilling is being done.
I disagree that a negative ruling is fully priced in. Even though we have dropped tremendously, the news will drive it lower, even if it is a mere blip for a few days.
I'll be looking to buy hand over fist once the judgement is known and assuming a good price can be had.
I still think we test the mid to low $6's, if not for HGT's fundamentals, then the shutdown, rising interest rates etc.
It's a nice call on gas prices that should allow you to collect a very nice risk adjusted return while you wait.
I am not rushing in and buying a full position if it drops below $7. I'll nibble. The arbitration concerns me. I think if the outcome is negative (allowing XTO to recoup) then HGT will drop, perhaps as low as $6. Even though we all know that it is about a 10 month time frame for them to recoup.
I'll be happy to pick up some HGT below $7, knowing I would not collect any material distributions for 10 months.
Of course, things are lining up nicely, with the pending arbitration ruling and a generally weak market (govt shut down, fear of rising interest rates making yield vehicles less desireable etc).
I am very optimistic that I will be able to buy HGT below $7 and perhaps as low as $6/unit.
At $6, I will be very content to accept additional arbitration risk. HGT appears to be a nice risk-reward opportunity.
If the acreage is held by production, it should be kept.
The commodity business is volatile and who can say that gas won't pop towards $4.50 or $5.00 and oil drop to $65 in a year or two. Then ARP would be looking at all of their gas positions and doing a major high grading effort, heck, they might even be looking at those coal bed methane properties if gas goes to $6..
The idea of pulling assets out of ARP to form another drilling partnership effort, especially one we don't fully understand yet, seems ridiculous.
But as I said, Cohen isn't happy unless he is spending lots of fees to the attorney's and trying to move money from one pocket to another and calling it value creation.
Yes, I too am interested in seeing how this unfolds. I hate to see the self dealing, but Cohen has a long storied history of self dealing.
On the other hand, I might actually give ARP a chance to monetize some acreage, but again, why not just hold onto it and eat through it over the next few years. I hate the way he always has to make everything so complicated. Complicated results in misunderstanding by retail investors and low multiples. Then you get stuck holding a value trap.
Cohen always manages to screw things up right when they are about lined out. ARP has a lot of tail winds, nice hedges, nice portfolio (minus the CBM), and the partnership business has been very nice for years, even in down years. I hate to see it cannibalized.
In the interim, this is a nice yielder to go along with the long term cash cow in ATLS.
Doesn't it seem about time for them to screw up the APL side again? Maybe another Alaskan acquisition..
What did people think the decline rates were last year? It is pretty easy to see what the decline rates are, one can merely plot the monthly volumes over 3 or 4 years and get a very good feel for what the production decline is and what it is likely to be going forward especially now that very little drilling is going on.
I have a spreadsheet with monthly production volumes going back to '03. I can give you a very accurate projection of production 1 yr from now, 2 yrs from now etc. Only a surge in gas prices and subsequent drilling on trust acreage would alter this projection significantly.
Then one must take a guess on gas pricing, the settlements and can come up with a ballpark NAV.
I for one, want to own HGT under $7/unit.