Summary
American Midstream has a commanding position in the midstream Gulf of Mexico, which is one of the major production centers in the United States today.
The company makes its money based on volumes, not commodity prices, so rising volumes should boost its top line.
The market has punished the stock severely ever since it cut its distribution back in July.
The company appears to have an execution problem as it looks good on paper but can never fully execute on its projections.
ArcLight is attempting to buy the company for $6.10 per unit, which indicates that it is severely undervalued at the current price. There could be an arbitrage opportunity here.
Looking for a community to discuss ideas with? Energy Profits in Dividends features a chat room of like-minded investors sharing investing ideas and strategies. Start your free trial today »
On Tuesday, December 4, troubled midstream master limited partnership American Midstream Partners (AMID) gave a presentation at the 2018 Bank of America Merrill Lynch Leveraged Finance Conference. As is the usual case in presentations like this, American Midstream devoted a significant portion of the presentation to making an investment case in itself. Unfortunately, as I discussed in a recent article, the company has been consistently failing to live up to its potential and has even been targeted by ArcLight for a takeover, which very well may be confirmation that the potential is indeed there.
As is the case with many midstream companies, American Midstream boasts substantial operations in Texas, particularly in the Permian and near the East Texas oil field. This makes sense as these are both among the richest resource basins in the United States. However, most interestingly, the partnership boasts substantial operations in the Gulf of Mexico.
