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Gold/Mining/Energy : APL: Atlas Pipeline Partners
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To: Jim P. who wrote (27)10/15/2013 4:33:48 PM
From: Jim P.   of 31
 
APL guiding lower with coverage expected at 1 times. This is a large miss and is evidence that APL over paid for South Texas and that the 20% of margin dependent of condensate recoveries is likely not materializing.
Volumes in South Texas Eagleford area less than expected and I do not know if APL is getting dryer gas account that is what is available or....producers are getting better at stripping out condensate at the well head, moving gas to processors that get a lower cut of condensate or just poor timing on well hook ups. This may be likely as producers move to more and more pad drilling.
Lower volumes in Eagleford purchased for a large amount of equity and debt are masking the growth in other areas.
Short term "sigh" year to 3 years negative compared to sticking within the basins APL has a wrap on and not wanting exposure so much in the Eagleford.
Negative for ATLS also as this will push ATLS growth out a year or so from where it would have been.
Holders may still get bailed out by NGL prices or natural gas prices but the growth in condensate volume in the U.S. makes it more likely there will be over supply and lower relative pricing to crude.
I think next 6 months APL will have trouble breaking $40 unless people get even more excited about PXD's permian growth.
jim
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