Atlas Pipeline Partners, L.P. (APL)’s Big Buy

For example, earlier this year the company announced a percent of proceeds contract with SandRidge Energy Inc. (NYSE:SD) in the Mississippi Lime formation. The deal was a winner for both companies, as SandRidge Energy Inc. (NYSE:SD) was looking to capture natural gas liquids volumes to enhance the economics its core Mississippi Lime acreage. It enabled the company to get a greater share of the processing value while paying lower fees. Meanwhile, Atlas was able to extend its contract with SandRidge Energy Inc. (NYSE:SD) while also receiving more acreage dedicated to expanding its fee-based gathering assets.

All of this growth has Atlas Pipeline Partners, L.P. (NYSE:APL) expecting 2014 EBITDA of $450 million-$500 million with annual distributions of between $2.75 and $2.85 per unit. That would indicate solid growth from the current EBITDA rate $340 million and annualized distribution rate of $2.32 per unit. That growth assumes that the company won’t make any new acquisitions or pursue further organic growth opportunities at its legacy operations, meaning that there is the potential for additional upside.

Overall, Atlas’ big Eagle Ford buy is a very positive development for the company. It adds geographic diversity, increases its fee-based revenue, and is loaded with organic growth opportunities. There’s a lot to like with this deal and Atlas investors should be very pleased with this new addition.

The article Atlas Pipeline Partners’ Big Eagle Ford Buy originally appeared on and is written by Matt DiLallo.

Motley Fool contributor Matt DiLallo owns shares of Enterprise Products Partners L.P. The Motley Fool recommends Enterprise Products Partners L.P.

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