Atlas Resource Partners Oversold With Monthly Distribution Yielding 27%
- Atlas Resource Partners derives 75% of income from Natural Gas, to support the profit margin and monthly distribution payments.
- Atlas Resource has multiple contracts on-going that hedge against the lower prices. Eventually, lower prices will catch up with their oil contracts, but gas prices are holding strong.
- Recommend buy and hold for the monthly distribution payouts and stock price appreciation.
$50 Oil Won't Be A Problem For Atlas Resource Partners
- ARP cut its expected cash distribution for 2015 from $2.40 to $2.36 per share.
- The majority of ARP's production is natural gas.
- Almost 70% of 2015 oil production has been hedged at much higher prices.
Atlas Resource Partners: What Does The Recent Transaction Mean?
- Targa Resources Partners and Targa Resources Corp have announced plans to buyout Atlas Pipeline Partners and Atlas Energy.
- Where does this leave Atlas Resource Partners?
- The following article will attempt to answer this question.
MLPs Overpaying For Assets? Atlas May Have Overpaid Versus Cabot In Recent Eagle Ford Transactions
- Atlas and Cabot bought similar assets in a similar time frame.
- Atlas paid approximately $1.5 million per undeveloped location.
- Cabot paid approximately $600,000 per undeveloped location.
Atlas Resource Partners Makes A Big Bet On The Eagle Ford
- Atlas Resource Partners buys oil assets in the Eagle Ford for $225 million.
- These assets will add 1,900 BOE/D of mostly oil production.
- ARP plans to issue Perpetual Preferred Units to help fund this transaction.
- Atlas Energy, ARP’s General Partner, will also be buying eight drilled wells and 53 undeveloped drilling locations for $115 million.
- At current prices, ARP yields 12.27%.
Atlas Resource Partners: A 12% Yield With Limited Growth
- In a recent article, Atlas Resource Partners came up as by far the cheapest upstream MLP.
- However, this low valuation may be warranted.
- At current prices, ARP yields nearly 12%.
- Distribution will be paid on July 15 of $0.1933 per unit, buy after July 3.
- 47 Mmboe deal previously announced is completed for long term production goal.
- ARP has an interest in over 12,000 producing wells.
- Oil Price increases are good for cash flow and bottom line distributions.
- Recently, 4 insiders transacted a total of 52,530 shares at an average price of $19.73.
- Overall, 53,955 shares were bought and 0 shares were sold in the last twelve months.
- Together, insiders hold 0.7% of the shares outstanding.
- ARP has purchased over $2 billion dollars' worth of oil and gas reserves since 2012.
- ARP sold $100 million in unsecured notes and $40 million in common units in May 2014.
- ARP has negative earnings per share.
- APR changed to a monthly distribution, and still pays over 10%.
Atlas Resources: An Undervalued Play On Natural Gas
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Shorting Atlas Resource Partners Vs. Buying Atlas Energy
Sat, Jan. 24, 8:25 AM
- In a low-yield world, the newly launched iBillionaire High Dividend Index - which tracks the trading moves of 25 investing-savvy billionaire investors such as Stanley Druckenmiller, James Dinan and Nelson Peltz - actually lives up to its name with a dividend yield of 5.34%.
- At 24%, the index has a high allocation of energy shares, including OXY, TRP, CNP, COP, BP, ATLS, CVI, WMB, APL, RIG and ARP.
- Also worth noting is that the index contains some high-yielding mortgage REITs, an area most investors hate right now but where billionaires seem to find value; examples are NRF, AGNC and CIM.
- No mutual fund or ETF tracks this index, but it offers a fishing pond of income investment ideas to research further.
- The top 20 holdings: TLM, CVC, GM, TIME, AEE, D, STAY, KMI, TROX, EXC, STNG, PPL, IRM, PFE, KKR, KAR, F, MIC, LO, ABBV.
Dec. 1, 2014, 5:40 PM
Nov. 10, 2014, 5:34 PM| Comment!
Oct. 11, 2014, 8:25 AM
- Energy MLPs have been subject to indiscriminate selling this week as crude oil prices plunge, and while RBC Capital analyst John Ragozzino would not step into the sector in a big way right now, he thinks investors already in the group should ride out the storm - depending on their oil price exposure.
- Many energy MLPs, especially pipelines, are less correlated to commodity prices than other energy investments, but more MLPs with cyclical oil and gas price exposure are now part of the mix, and some investors have been selling without regard for the relative quality of specific stocks, Ragozzino says.
- The analyst believes there is minimal risk to reduction in 2015 distributions; with commodity price hedging, he thinks MLPs on average will feel some pain, but can handle oil prices as low as $80/bbl.
- Ragozzino says the MLPs most highly levered to a sustained drop in crude prices are MidCon Energy Partners (NASDAQ:MCEP), LRR Energy (NYSE:LRE) and Legacy Reserves (NASDAQ:LGCY); names least exposed include Atlas Resource Partners (NYSE:ARP), Vanguard Natural Resources (NASDAQ:VNR) and EV Energy Partners (NASDAQ:EVEP).
- ETFs: AMLP, AMJ, MLPL, MLPI, MLPA, MLPN, EMLP, MLPX, MLPS, AMU, ENFR, ATMP, MLPW, IMLP
Sep. 24, 2014, 9:09 AM
- Atlas Resource Partners (NYSE:ARP) agrees to acquire oil assets in the Eagle Ford Shale in south Texas from an unnamed seller for $225M.
- The assets consist of 22 producing wells and 19 undeveloped locations containing estimated net reserves of ~12M boe.
- In connection with the acquisition, Atlas Energy's (NYSE:ATLS) E&P development subsidiary will purchase eight wells that have been drilled but not completed and 53 undeveloped drilling locations for ~$115M.
- To fund part of the deal, ARP announces a public offering of preferred units.
Aug. 7, 2014, 7:04 PM| Comment!
Jul. 15, 2014, 10:31 AM
- RBC points out in a new report that hawkish Fed commentary has tapped the brakes on MLPs to start Q3 after a strong first half of 2014, but the firm continues to view the fundamental backdrop for MLPs as highly attractive for investment.
- RBC's MLPs rated Outperform or better with the highest distributions: ARP, BBEP, ETP, LGCY, LINE, MCEP, QRE.
- ETFs: AMLP, AMJ, AMU, MLPL, MLPI, MLPG, ENFR
May. 7, 2014, 6:10 PM| 1 Comment
May. 7, 2014, 10:46 AM
- Atlas Resource Partners (ARP +0.2%) agrees to acquire a 25% share in the Chevron (CVX) operated Rangely oil field in Colorado for $420M.
- ARP expects the acquired assets to provide a stable, high margin cash flow stream with a low-decline profile
- Rangely produced ~2,900 boe in Q1, 90% of which was oil and 10% natural gas liquids; total reserves are ~47M boe.
Apr. 29, 2014, 5:21 PM
- Atlas Resource Partners (ARP) popped higher in the final hour of trading on news that 10% owner Leon Cooperman disclosed the purchase of 21,800 shares on April 25, worth ~$443K.
- Following the purchase, Cooperman directly owns ~750K shares of the company’s stock, valued at ~$15.28M.
- ARP ended regular trading +2.6% after being in the red earlier.
Apr. 21, 2014, 1:13 PM
- Atlas Energy's (ATLS -6.6%) only material source of income is distributions from Atlas Pipeline Partners (APL -2.7%) and Atlas Resource Partners (ARP -5.4%), says Hedgeye's Kevin Kaiser, but the majority of APL's and ARP's distributable cash flow is a function of aggressive non-GAAP accounting.
- "In our view, ARP and APL’s distributions are funded with capital raises – not real profits – and that can only go on for so long." The downside is considerable, concludes Kaiser, for all three MLPs, particularly ATLS.
Mar. 28, 2014, 3:49 PM
- Atlas Energy (ATLS +0.6%) is initiated with a Buy rating and $53 price target at Deutsche Bank, believing ATLS can grow its distribution at ~30%/year during the next two years driven by the leveraging effect from the high splits of the IDRs at two MLPs; APL reached the highest split in 2013 and DB anticipates it will reach the highest split in H2 2014.
- Atlas Resource Partners (ARP +0.5%) is started at Hold with a $24 target, as the firm likes the solid 10%-13% distribution growth but is cautious due to the significant exposure to natural gas drilling, meaningful leverage to commodity prices, limited drop-downs, and potential sizable equity needs.
Mar. 3, 2014, 4:29 PM
- Atlas Resource Partners (ARP) -3.8% AH after announcing a public offering of 5.5M common units.
- ARP says it plans to use the proceeds to fund its previously announced purchase of natural gas assets from GeoMet; prior to funding the acquisition, ARP may use some or all proceeds for general partnership purposes, including repayment of outstanding borrowings under its revolving credit facility.
Feb. 14, 2014, 9:53 AM
- Atlas Resource Partners (ARP +0.4%) agrees to acquire ~70B cfe of natural gas proved reserves in West Virginia and Virginia from GeoMet (GMET -10%) for $107M.
- Current net production from the properties is ~22M cfe/day from more than 400 active wells; ARP expects the acquisition to be immediately accretive to distributable cash flow.
- For GMET, the sale involves substantially all of its coalbed methane interests and other assets in the Appalachian Basin.
Dec. 10, 2013, 3:52 PM| Comment!
Nov. 21, 2013, 2:28 PM
- MLPs have recently underperformed the broader market, consistent with historical seasonal patterns of weakness in November on tax-related sales, and Baird says it would buy now (Briefing.com).
- The seasonal performance trend provides an attractive tactical entry point on the group, Baird believes, driving upgrades of Plains All American (PAA), Crestwood Midstream (CMLP), Breitburn Energy (BBEP) and Summit Midstream (SMLP) to Outperform.
- The firm also thinks Atlas Energy (ATLS), Atlas Resource (ARP), Legacy Reserves (LGCY) and Vanguard Natural (VNR) look relatively attractive and ripe for potential upgrades in the event of further weakness through Thanksgiving.
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