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An Investor’s Guide to
Oil & Gas MLPs (Part II)

Photo credit: Flickr/haymarketrebel
Part II Will Look at Five Growing MLPs

• Represent ~25% of
segment’s value
• Less geographic diversity
• Higher yields
Legacy Reserves LP
Ticker: LGCY
• $1.5 billion
market cap
• 9.0% yield
• Coverage ratio
last quarter: 1.3x
• Distribution ...
Asset Map

Source: Legacy Investor Presentation
The Information that Matters
•
•
•
•
•

Total Proved Reserves: 88.4 million BOE
Liquids production: 69%
Reserve to product...
QR Energy LP
Ticker: QRE
• $1.2 billion
• 11% yield
• Distribution
coverage ratio last
quarter: 1.1x
• Distribution paid
m...
Asset Map

Source: QR Energy Investor Presentation
The Information that Matters
•
•
•
•
•

Total Proved Reserves: 99.1 million BOE
Liquids production: 68%
Reserve life index...
Atlas Resource Partners, L.P.
Ticker: ARP
• $1.3 billion market
cap
• 10.3% yield
• Distribution
coverage ratio last
quart...
Asset Map

Source: Atlas Resource Investor Presentation
The Information that Matters
•
•
•
•
•

Total Proved Reserves: 1.4 Tcfe
Liquids production: 10%
Reserve life index: ~13 ye...
Eagle Rock Energy Partners, L.P.
Ticker: EROC
• $880.9 million
market cap
• 10.9% yield
• Distribution
coverage ratio last...
Asset Map

Source: Eagle Rock Investor Presentation
The Information that Matters
•
•
•
•
•

Total Proved Reserves: 350 Billion Cfe
Liquids production: 44%
Reserve life index:...
Memorial Production Partners LP
Ticker: MEMP

Photo credit: Flickr/Loco Steve

• $1.34 billion market
cap
• 10% yield
• Di...
Asset Map

Source: Memorial Investor Presentation
The Information that Matters
•
•
•
•

Total Proved Reserves: 1,063 Billion Cfe
Liquids production: 31%
Reserve life index:...
Now Let’s See How Each Compares

•
•
•
•

Scale
Reserves
Production
Hedging
Enterprise Value
Total Proved Reserves

Sources: Company presentations, SEC filings and author’s calculations
Where is the Cash Flowing From?

Sources: Company presentations, SEC filings and author’s calculations
How Secure is the Cash Flow?

Sources: Company presentations, SEC filings and author’s calculations
How Secure is the Cash Flow?

Sources: Company presentations, SEC filings and author’s calculations
Key Takeaways
• Legacy Reserves – Solid balance sheet, oil rich
production though not as well hedged
• QR Energy – Oil ric...
Our Special Free Report on
nine rock-solid dividend
stocks
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Investor's Guide to Enormous Oil & Gas Dividends

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Oil and gas MLPs offer investors enormous cash distributions. Some of the smaller MLPs like Legacy Reserves (NASDAQ: LGCY), QR Energy (NYSE: QRE), Atlas Resource Partners (NYSE: ARP), Eagle Rock Energy Partners (NASDAQ: EROC), and Memorial Production Partners (NASDAQ: MEMP) offer yields of more than 10%. The problem is that not all of these enormous yields are equal as each company is pursing a slightly different strategy.

Atlas Resource Partners, for example is focused on buying up cheap natural-gas reserves in hopes of earning investors solid cash flow now and outsized future income as the value of those reserves increase. Meanwhile, both Legacy Reserves and QR Energy are focused on higher margin oil production. Finally, we have Eagle Rock Energy Partners and Memorial Production Partners, which have a more balanced production profile.

These, however, are just some of the differences between these high-yielding oil and gas companies. To take an even deeper look, I've created the slide show below to help investors decide which of these enormous distributions belong in their portfolios.

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  • Photo credit:http://www.flickr.com/photos/26557483@N08/5957330806/in/photolist-a5qSU7-aCx7Yz-bDQ9S8-dJZ524-c441K3-9NYrVg-cjcRKj-7Ecczy-8fTdBh-8fTeR7-eJL7Yj-8vdjNk-bqgSnt-bqgSTv-bqgSzn-9t5uoY-dhc1Rq-aEjxBS-bdD3NP-dhc5qC-aEjst5-ak2jnj-8fyenD-7GDLNv-iVPo6G-bdXfKT-bdXi1n-bdXjjV-bdXkJr-bdXhCX-bdXiEz-bdXiYc-bdXgKp-bdXg3e-bdXipe-bdXhp2-9GZVnn-bdXknv-bdXjLg-bdXk3t-e1cRDJ-9b86vA-gPYtge
  • Photo credit: http://www.flickr.com/photos/akasped/3837663953/in/photolist-6R82MT-7p1NJQ-8Qt9W3-8Eww7E-eyS46o-b3yY7r-hK4ht2-dJdmvr-hR1fXE-dNRfoq-dKiQ8A-9tutzp-8bSwEM-dy7Q6b-8Pepz6-a47QeL-bnaidD-8omnqG-8omnqL-8omnrd-8omnr3-dnRAMX/
  • Sources: http://files.shareholder.com/downloads/AMDA-HU2C0/2931700866x0x709049/8d3d2b4c-2162-46da-a1c6-339542975327/MEMP%20-%20RBC%20MLP%20Conf%20Investor%20Presentation%20-%20FINAL%2011%2022%2013.pdf
  • Sources: http://files.shareholder.com/downloads/LGCY/2935501301x0x717793/551df073-f73c-4e0f-803c-ecd3901c6458/Legacy%20Reserves%20January%20Investor%20Presentation%20vF.pdf
  • Photo credit: http://www.flickr.com/photos/rcbodden/5142987254/in/photolist-6R82MT-7p1NJQ-8Qt9W3-8Eww7E-eyS46o-b3yY7r-hK4ht2-dJdmvr-hR1fXE-dNRfoq-dKiQ8A-9tutzp-8bSwEM-dy7Q6b-8Pepz6-a47QeL-bnaidD-8omnqG-8omnqL-8omnrd-8omnr3-dnRAMX/
  • Sources: http://phx.corporate-ir.net/External.File?t=1&item=VHlwZT0yfFBhcmVudElEPTUwNzAwMTZ8Q2hpbGRJRD01Mjc3MDI=
  • Sources: http://qrenergylp.com/downloads/FactSheet3Q13.pdf and http://phx.corporate-ir.net/External.File?t=1&item=VHlwZT0yfFBhcmVudElEPTUwNzAwMTZ8Q2hpbGRJRD01Mjc3MDI=
  • http://www.flickr.com/photos/14922165@N00/7770508920/in/photolist-cQDTzJ-bmzShM-9t2XpR-8UcDK2-8UcK3k-8UfPSG-c3aHzj-c3aSp3-aCJR1T
  • Sources: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NTIwMjc4fENoaWxkSUQ9MjA0ODQzfFR5cGU9MQ==&t=1
  • Sources: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NTIwMjc4fENoaWxkSUQ9MjA0ODQzfFR5cGU9MQ==&t=1
  • http://www.flickr.com/photos/40775084@N05/6823166174/in/photolist-boWvA7-dVnWU3-dVnX4W-fykwqJ-du2TzF-euYAvp-8eh6Q9-8Ct1ds-bBRoLT-9dEpvB-972PT5-8edQtM-e5WpBf-8eh7ds-9Awwe5-7TEq4w-e9kejC-c226eY-aGgGpx-7TBdEZ-efWGAX-9JMDs5-cB3iY1-fSjjDi-9gdHeG-bBSkZe-bhiw3F-f4DrHG-8hJHx7-c226c3-8J584Q-8J58o5-8J227R-8J22Eg-8J58v7-8J22vB-dKvjeZ-dJiMBS-a47QeL-8FdUW9-bzVTkR-ek44Zd-boXkuq-edmo3M-apjDcM-7XtxMD-7Xtyi4-7XtxX8-7Xty8M-7XtysR-fSsjcH
  • Sources: http://files.shareholder.com/downloads/EROC/2935570689x0x718189/8988ca98-304e-4ae5-ab4d-0d4c22374957/1-13-14_UBS_Deer_Valley_Prez_FINAL_v5.pdf
  • Sources: http://files.shareholder.com/downloads/EROC/2935570689x0x718189/8988ca98-304e-4ae5-ab4d-0d4c22374957/1-13-14_UBS_Deer_Valley_Prez_FINAL_v5.pdf
  • http://www.flickr.com/photos/36989019@N08/6132949462/in/photolist-akWYcY-akWYqC-ctVqbj-c441uQ-9ixBrw-9ixBfh-9iuuzk-bqgSci-bqgS7k-bqgRr2-bqgRLH-eE6e8G-7Pffjp-ieXYKT-8s4LXw-8n1txi-9iuujX-9ixB7d-a37VcG-9rbSSh-bcDmat-akU9Tv-9rbSVN-9rbT15-d8NDVb-a6QfU5-ahSbNn-9N99Kd-9pKxoV-96AZf6-8WEeiJ-dTThph-a5qSU7-aCx7Yz-bDQ9S8-dJZ524-9NYrVg-7Ecczy-8fTdBh-8fTeR7-eJL7Yj-bqgSnt-bqgSTv-bqgSzn-bdD3NP-8fyenD-iVPo6G-bdXhCX-bdXgKp-bdXipe-9GZVnn
  • Sources: http://files.shareholder.com/downloads/AMDA-HU2C0/2931700866x0x709049/8d3d2b4c-2162-46da-a1c6-339542975327/MEMP%20-%20RBC%20MLP%20Conf%20Investor%20Presentation%20-%20FINAL%2011%2022%2013.pdf
  • Sources: http://files.shareholder.com/downloads/AMDA-HU2C0/2931700866x0x709049/8d3d2b4c-2162-46da-a1c6-339542975327/MEMP%20-%20RBC%20MLP%20Conf%20Investor%20Presentation%20-%20FINAL%2011%2022%2013.pdf
  • Sources: http://files.shareholder.com/downloads/AMDA-HU2C0/2931700866x0x709049/8d3d2b4c-2162-46da-a1c6-339542975327/MEMP%20-%20RBC%20MLP%20Conf%20Investor%20Presentation%20-%20FINAL%2011%2022%2013.pdf
  • Transcript of "Investor's Guide to Enormous Oil & Gas Dividends "

    1. 1. An Investor’s Guide to Oil & Gas MLPs (Part II) Photo credit: Flickr/haymarketrebel
    2. 2. Part II Will Look at Five Growing MLPs • Represent ~25% of segment’s value • Less geographic diversity • Higher yields
    3. 3. Legacy Reserves LP Ticker: LGCY • $1.5 billion market cap • 9.0% yield • Coverage ratio last quarter: 1.3x • Distribution paid quarterly Photo credit: Flickr/Edward Stojakovic
    4. 4. Asset Map Source: Legacy Investor Presentation
    5. 5. The Information that Matters • • • • • Total Proved Reserves: 88.4 million BOE Liquids production: 69% Reserve to production index: ~12 years General Partner: None Areas to watch: Permian Basin development
    6. 6. QR Energy LP Ticker: QRE • $1.2 billion • 11% yield • Distribution coverage ratio last quarter: 1.1x • Distribution paid monthly Photo credit: Flickr/Ray Bodden
    7. 7. Asset Map Source: QR Energy Investor Presentation
    8. 8. The Information that Matters • • • • • Total Proved Reserves: 99.1 million BOE Liquids production: 68% Reserve life index: ~16 years General Partner: None Areas to watch: Permian Basin development and balance sheet
    9. 9. Atlas Resource Partners, L.P. Ticker: ARP • $1.3 billion market cap • 10.3% yield • Distribution coverage ratio last quarter: 1.1x • Distributions paid monthly Photo credit: Flickr/Nicholas A. Tonelli
    10. 10. Asset Map Source: Atlas Resource Investor Presentation
    11. 11. The Information that Matters • • • • • Total Proved Reserves: 1.4 Tcfe Liquids production: 10% Reserve life index: ~13 years General Partner: Atlas Energy Areas to watch: Direct investment program, natural gas prices and shale focused drilling
    12. 12. Eagle Rock Energy Partners, L.P. Ticker: EROC • $880.9 million market cap • 10.9% yield • Distribution coverage ratio last quarter: 1.05x • Distribution paid quarterly Photo credit: Flickr/Kool Cats Photography
    13. 13. Asset Map Source: Eagle Rock Investor Presentation
    14. 14. The Information that Matters • • • • • Total Proved Reserves: 350 Billion Cfe Liquids production: 44% Reserve life index: ~13 years General Partner: None Areas to watch: Divestment of midstream operations and SCOOP growth
    15. 15. Memorial Production Partners LP Ticker: MEMP Photo credit: Flickr/Loco Steve • $1.34 billion market cap • 10% yield • Distribution coverage ratio last quarter: 0.67x • Distribution paid quarterly
    16. 16. Asset Map Source: Memorial Investor Presentation
    17. 17. The Information that Matters • • • • Total Proved Reserves: 1,063 Billion Cfe Liquids production: 31% Reserve life index: ~18 years General Partner: Memorial Resource Development and Natural Gas Partners • Areas to watch: Acquisitions outside of Texas and distribution coverage ratio
    18. 18. Now Let’s See How Each Compares • • • • Scale Reserves Production Hedging
    19. 19. Enterprise Value
    20. 20. Total Proved Reserves Sources: Company presentations, SEC filings and author’s calculations
    21. 21. Where is the Cash Flowing From? Sources: Company presentations, SEC filings and author’s calculations
    22. 22. How Secure is the Cash Flow? Sources: Company presentations, SEC filings and author’s calculations
    23. 23. How Secure is the Cash Flow? Sources: Company presentations, SEC filings and author’s calculations
    24. 24. Key Takeaways • Legacy Reserves – Solid balance sheet, oil rich production though not as well hedged • QR Energy – Oil rich production with downside risk to falling oil prices • Atlas Energy – Natural gas rich cash flows locked in for near term, with long-term upside • Eagle Rock Energy – Balanced production and solid hedges and lots of upside to the SCOOP • Memorial – Balanced production with locked in cash flows
    25. 25. Our Special Free Report on nine rock-solid dividend stocks
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