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Transport Your Money Into This Natural Gas Industry
by Investment U Research
Wednesday, December 23, 2009
Most commodity investors know by now that natural gas prices took a major hit over the past two years.
And with production stalled around the world, very few people expect it to rise much more than the $2 per MMbtu it managed to climb this year.
But the natural gas industry still holds pockets of wealth, if you just know how to access them.
Since prices rose back to $5 per Mmbtu in late September after slumping since January, companies have recommitted to drilling projects and ramping up production.
For Atlas Pipeline Partners (NYSE: APL), which services the Midwest and Appalachian regions, that means revenue will soon follow.
By gathering, processing and transporting the commodity instead of selling it directly, Atlas brings in revenue based on fees and not on the price of the natural gas itself… putting the company solidly in the green just as long as production continues.
And considering how Atlas plays a vital role in extracting shale gas, it should do well for some time to come.
Clients Worth Bragging About
In all, Atlas owns 9,100 miles of pipeline connected to about 6,000 wells. And every year, it adds over 800 new wells in the Appalachian area, it’s main source of revenue.
Though it has eight natural gas processing plants and one treatment facility in the southwest, it focuses on the Appalachian Basin, which holds the most mature oil and gas production in the U.S. and makes for easy transportation to the energy-guzzling mid-Atlantic and northeastern states.
It has an enviable job there too, putting its pipelines to work for Atlas Energy Resources, LLC, the largest independent energy producer in the eastern U.S.
Atlas Energy has a steady business itself, with a solid operation and a sizable venture in Marcellus Shale, widely considered to be the natural gas resource of the future.
Atlas Pipeline also has a 49% joint venture with Williams Companies (NYSE: WMB), one of the largest natural gas producers in the country.
That business – Laurel Mountain Midstream, LLC – manages more than 1,800 miles of natural gas gathering pipelines and 7,400 wells, largely in the Marcellus Shale of southwest Pennsylvania.
Shares Set for a Boom
Aside from price recovery and the resulting growth in production, Atlas Pipeline has one more bonus to offer, this time in the form of dividends.
Since 2000, the company has added an average increase of 7 cents to its dividend payouts every year.
Furthermore, the price to revenue ratio is at a low of 0.28 and the price to book ratio is at 0.58, while the five-year annual dividend growth rate sits at 9.75% and the five-year annual revenue growth rate stands at 145%.
Anyway you look at it, and despite the slow rebound for natural gas prices, this stock is set to grow next year and well into the longer term.
Good investing,
Sheena Martin
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One Response to “Transport Your Money Into This Natural Gas Industry”
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January 19th, 2010 at 4:11 pm
Check out http://realm-energy.com to learn more about emerging shale plays in europe and elsewhere.
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