Bank of America Reiterates Neutral on Atlas Resource Partners on EP Assets Acquisition

In a report published on Monday, Bank of America analyst Abhishek Sinha reiterated a Neutral rating on Atlas Resource Partners ARP and a price objective of $26.00.

In the report, Bank of America stated, "In our view, the acquisition diversifies ARP's reserves and production mix while expanding its footprint to several new areas including the Raton (CO/NM), Black Warrior (AL) and County Line (WY) regions. The deal increases ARP's reserves by ~64% while reducing PUDs to 29% of pro forma reserves from 50% previously. Notably ARP's share of PD reserves moves up from 50% to 70% with associated reductions in development and execution risks. Critically it doubles production albeit with a slightly higher gas weighting of ~84% from ~81% earlier. Note that management expects the acquired assets to have lower decline rate (~8% -10%) vs the base business (~20%) and could add over 1,600 potential drilling locations."

Atlas Resource Partners closed on Friday at $22.49.