investor's guide to enormous oil & gas dividends

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

• $1.5 billion market cap

• 9.0% yield• Coverage ratio last

quarter: 1.3x• Distribution paid

quarterly

Ticker: LGCY

Photo credit: Flickr/Edward Stojakovic

Asset Map

Source: Legacy Investor Presentation

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

QR Energy LP

• $1.2 billion• 11% yield• Distribution

coverage ratio last quarter: 1.1x

• Distribution paid monthly

Ticker: QRE

Photo credit: Flickr/Ray Bodden

Asset Map

Source: QR Energy Investor Presentation

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

Atlas Resource Partners, L.P.

• $1.3 billion market cap

• 10.3% yield• Distribution coverage

ratio last quarter: 1.1x• Distributions paid

monthly

Ticker: ARP

Photo credit: Flickr/Nicholas A. Tonelli

Asset Map

Source: Atlas Resource Investor Presentation

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

Eagle Rock Energy Partners, L.P.

• $880.9 million market cap

• 10.9% yield• Distribution coverage

ratio last quarter: 1.05x

• Distribution paid quarterly

Ticker: EROC

Photo credit: Flickr/Kool Cats Photography

Asset Map

Source: Eagle Rock Investor Presentation

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

Memorial Production Partners LP

• $1.34 billion market cap

• 10% yield• Distribution coverage

ratio last quarter: 0.67x

• Distribution paid quarterly

Ticker: MEMP

Photo credit: Flickr/Loco Steve

Asset Map

Source: Memorial Investor Presentation

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

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 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

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