Just because a company is selling off its assets doesn’t mean disaster is afoot. Sometimes it’s just a move to free-up capital for growth projects. That’s the case with Atlas Pipeline Partners, LP (NYSE: APL, Stock Forum)…
The Pennsylvania gas company recently announced that it’s selling its Elk City, Oklahoma facility for $682 million.
That kind of news usually sends investors running for the exits. But instead, Atlas shares blasted higher.
You see, the company isn’t selling off its Elk City operations in order to tap “emergency” funds. Instead, it’s freeing up this huge chunk of cash so it can concentrate on the largest natural gas deposit in the United States…
Biggest natural gas discovery in the U.S… ever
In 2002, geologists knew all about the Marcellus Formation. It’s an enormous shale deposit that contains 500 trillion cubic feet of natural gas – enough energy to power the U.S. for 200 years.
It wasn’t a big story back then because it was impossible to harvest profitable amounts of gas through normal vertical drilling methods.
But that was then. Now we can drill horizontally. This grants us access to a wealth of natural gas – and it’s exactly what Atlas Pipeline has been doing.
Atlas grabs a share of Marcellus Shale
Laurel Mountain Midstream, LLC, one of Atlas Pipeline’s joint ventures, controls over 1,800 miles of natural gas gathering lines in the Marcellus shale formation.
The area, which connects 6,900 gas wells across Pennsylvania and northern West Virginia, produces more than 100 million cubic feet of gas, worth $1 million… each and every day.
And right now, the company is building a new pipeline system that will produce five times that amount when finished. Over 500 million cubic feet of natural gas, each day. That’s $1.68 billion annually. Facilities in Africa, the Middle East and Alaska aren’t even close to producing that amount in a day.
What’s more, Daryl Grieger, regional vice-president and general manager of Laurel Mountain Midstream, says the plants will be in place for 50 years – during which time, Atlas Pipeline will be in prime position as one of the biggest natural gas providers.
It’s the single largest natural gas discovery in United States history. And Atlas’ aggressive stake in the formation will greatly increase the company’s value in the coming months and years ahead.
Disclosure: The author does not hold positions in any of the stocks mentioned
