More spinoff news from the energy space. Atlas Energy (ATLS) recently completed the spinoff of its E&P MLP, Atlas Resource Partners, by distributing ~19.6% of the company or ~5.24m common units on March 13 to shareholders as of February 28th. The new company trades under the ticker ARP.
In addition to the remaining 78.4% of ARP’s common units, ATLS will also own/be ARP’s general partner (GP), which holds a 2% general partner interest and all of ARP’s incentive distribution rights. Gotta love MLP structures. The parent also has a small interest, ~11%, in midstream operator Atlas Pipeline Partners (APL). For some more information on the spinoff, here is an earlier press release on the subject.
Edward E. Cohen, Chief Executive Officer of ATLS, said earlier that, “we are extremely pleased to announce the initiation of our new company, Atlas Resource Partners, which will allow us to move forward with our strategic growth plans for our E&P business. We expect this new entity will be able to capitalize on many opportunities for expansion available to us in the current environment.” ARP has gas and oil operations in the Appalachian Basin (including the Marcellus shale), Illinois Basin and the Rocky Mountain region. The bulk of the company’s wells are in the Appalachian area. The plan is to “increase the distributions to our unitholders by continuing to grow the net production from our natural gas and oil development and production business as well as the fee-based revenues from our partnership management business”. Check out the Form 10 and a December presentation at MLP symposium for additional details on the transaction, operations (how the structure works and makes money), financial performance and executive compensation.
The company intends to pay out a quarterly distribution of $0.40 per common and class A unit, but that will depend on the company’s cash flows (see the form 10 for payout plans). According to the Form 10, the company “would not have generated sufficient available cash on a pro forma basis to have paid the minimum distribution on all of our outstanding common units and class A units for the twelve months ended September 30, 2011”. Good to know. ARP has traded up a bit since its when-issued days, but volumes are pretty low.
Disclosure: Author holds no position in any stock mentioned.
Now this becomes annoying, this whole spin off thing.
it’s the 3rd time in the past month were i was trying to dig deeper into a spin off, and it just boomed by 30+% while i’m digging…
today – ATLS and ARP are both up around 30%…
guess that’s the definition of frustration.