DESCRIPTION: Atlas Energy, Inc. is one of the largest independent natural gas producers in the Appalachia and Michigan Basins and a leading producer in the Marcellus Shale in Pennsylvania. Atlas Energy, Inc. is also the country's largest sponsor and manager of tax-advantaged energy investment partnerships. Atlas Energy, Inc. also owns 1.1 million common units in Atlas Pipeline Partners, L.P. (NYSE:APL) and a 64% interest in Atlas Pipeline Holdings, L.P. (NYSE:AHD), a limited partnership which owns the general partner interest of APL. Atlas Pipeline Partners, L.P. is active in the gathering and processing segments of the midstream natural gas industry. In the Mid-Continent region in Oklahoma and Texas, APL owns and operates eight active gas processing plants and a treating facility, as well as approximately 10,300 miles of active intrastate gas gathering pipeline. In Appalachia, APL is a 49% joint venture partner with The Williams Companies in Laurel Mountain Midstream, LLC.
The information provided below is based on the most recent information we have received from analysts, newsletters and other contributors to Streetwise Reports' The Gold Report or The Energy Report. We encourage you to visit the company's web site and call the company for more specifics on this company before you decide to invest.
"New Marcellus IP rates. ATLS last reported that 16 dry gas wells had an average 24-hour rate of 4.2 MMcfe/d and 7 wet gas wells have had an average 24-hour rate of 5.3 MMcfe/d. The highest rate to date was [the] wet gas well in Washington County, which IP'd at 10.3 MMcfe/d."
The Energy Report Interview with Amir Arif (07/08/10)
"Atlas is our favorite idea in the Marcellus because they recently did one of these joint-venture deals with Reliance Industries Ltd., an Indian company, for $1.7 billion. It was a high marker in terms of what people were receiving in dollars per acre. We know they're sitting on some sweet acreage. We now know they have good funding available, meaning no equity dilution needed to get the growth going. And its also a company where we see a huge discount between the stock price and what we think the underlying value of the company is. That's why that's our favorite."
View Entire Article: Amir Arif: Bet on Low-Cost, High-Volume Shale Plays
Amir Arif, Stifel Nicolaus
(05/28/10)
"We are adding ATLS to the Stifel Nicolaus Select List as a compelling investment opportunity in the E&P sector. With the stock trading below the price when the JV was announced on April 9, 2010, we believe that the recent market correction provides an opportunity to own a name that should double in the coming two years as it begins to develop its Marcellus asset. The development, which will be disproportionately funded by its JV partner, should help close the gap between the current stock price and our 1-year NAV of $56 and our 3-year NAV of $85. We maintain our Buy rating and our $53 target price, which essentially reflects fair value to our risked NAV."
Scott Hanold, RBC Capital Markets
(05/10/10)
"Recurring EPS/CFPS of $0.17/$0.64 beat our $0.09/$0.48 and the consensus of $0.16/$0.62. Production of 100 MMcfe/d was 5% below our 105 MMcfe/d estimate and down 3% sequentially. Cash operating costs of $1.35/Mcfe were much better than our $1.89/Mcfe expectation.
Our 2010 production forecast of 39.4 Bcfe is 10% below our prior estimate. ATLS issued new guidance of 3941 Bcfe, down from its prior expectation of 4550 Bcfe.
The lower production outlook reflects capacity constraints and is not indicative of well performance. While ATLS's midstream access in SW Pennsylvania provides some advantages, it does not make the company immune to constraints in the Marcellus basin. We expect most if not all Marcellus players to have growing pains, which we have seen already, as infrastructure plays catch up to growth. The company and its partners have ~70 projects in the works to improve its capacity. However, we would like to see more visibility on key milestones and other details.
Short-term growing pains provide attractive entry point. At the current stock price, ATLS shares reflect just $3,000 per Marcellus acre (402k net acres), a sharp discount to its recent record JV price and a discount to its Marcellus peers. Importantly, ATLS' wells are performing ahead of our expectation of 3.75 Bcfe EURs. Most wells in the area look more like 45 Bcfe."
Michael Scialla, Thomas Weisel Partners
(02/16/10)
"Anadarko Petroleum (NYSE: APC) announced today that is has entered into an agreement with Mitsui E&P USA (NASDAQ: MITSY), whereby MITSY will participate with APC as a 32.5% partner in APC's Marcellus assets in north-central Pennsylvania, for approximately $1.4 billion.
. . .Ignoring MITSY's option to purchase additional acreage and a share of existing wells, the transaction values APC's Marcellus acreage at $14,000 per net acre. APC's acreage is in northern and central PA while Atlas' core Marcellus holdings are in the southwestern portion of the state, so the transaction is not directly applicable. Given that much more of the southwestern portion of the play has been 'de-risked' than the north-central PA area, however, Atlas's core acreage should be viewed comparably, if not at a higher value, in our opinion.
Assuming a market price of $14,000/acre for Atlas' 266,000 net-acre core Marcellus position, we believe the current share price implies investors are paying nothing for the rest of the company's assets, including its proved reserves. Based on a $6 Henry Hub price, we value these other assets at $18 per share. A joint venture for Atlas' core Marcellus lands priced at $9,000 per acre or greater would be accretive to the implied market price, accelerate development of the company's properties and deleverage the balance sheet.
We reiterate our Overweight rating and price target of $40."
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