On May 22, 2014, the units of Access Midstream Partners, L.P. (ACMP) climbed to its 52-week high of $61.12. The unit price was finally closed at $60.95, up around 1% from the previous day’s closing. The partnership’s growth projects, acquisition program and efficient cash generation capacity are expected to boost the unit price. In addition, Access Midstream’s frequent revision of quarterly cash distribution rate is also appreciable.
We view Access Midstream as an organization which has presence in many mineral-rich regions, including Barnett Shale, Eagle Ford Shale, Haynesville Shale, Marcellus Shale and several other places. Past records show that the partnership continues to expand its scale of operations. During first-quarter 2014, Access Midstream invested around $0.33 billion as capital expenditure. The partnership intends to spend $1.1 - $1.2 billion for 2014 growth capital expenditure.
On May 12, 2014, Access Midstream announced that the partnership along with its partners EV Energy Partners, LP (EVEP) and M3 Midstream LLC plans to expand infrastructure at their Utica East Ohio ("UEO") midstream service facility in eastern Ohio. Higher service demand from customers, including Chesapeake Energy Corporation (CHK) and Total SA’s (TOT) unit Total Gas & Power North America, has led to develop additional infrastructure. These initiatives will provide a secure future cash inflow to Access Midstream and its partners.
Apart from expanding existing operations, Access Midstream also follows a steady acquisition strategy. In Mar 2014, the partnership acquired certain midstream compression assets, based in Marcellus Shale and Utica Shale regions, from Chesapeake Energy’s subsidiary MidCon Compression, L.L.C.
Access Midstream’s strategies to follow the internal as well as inorganic growth initiatives will enable it to expand its scale of operations, thereby meeting increasing demand from the upstream players.
Access Midstream maintains a stable financial position. As of Mar 31, 2014, the partnership’s cash balance was $89.5 million versus $17.2 million as of Dec 31, 2013. In the first three months of 2014, Access Midstream’s operating cash flow jumped 236.7% to $269.8 million from the prior-year level. The partnership’s efficient cash generation capacity supports its steady growth initiatives.
In addition to utilizing funds for growth ventures, Access Midstream also shares profits with its unitholders though payment of cash distribution and increases the same on a regular basis. On May 15, 2014, the partnership paid quarterly cash distribution of 57.5 cents, up 3.6% from the previous pay out.
Oklahoma City, OK-based Access Midstream currently has a Zacks Rank #3 (Hold).
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