Atlas had amassed a big chunk of prime acreage in the Marcellus shale and Chevron  paid up to the tune of a 37 percent deal premium that valued Atlas’ proved reserves at more than $4 per thousand cubic feet equivalent (Mcfe).

Fifteen months later, with natural gas selling for little more than $2 per thousand cubic feet, well below what it cost to get it out of the ground, Cohen struck again. His new partnership, Atlas Resource Partners (NYSE: ARP) agreed to buy acreage in Texas’ Barnett shale from Carrizo Oil and Gas (Nasdaq: CRZO), which was in a hurry to pump less gas and more crude.  The price: 69 cents per Mcfe of proved reserves, roughly one-sixth of what Cohen got from Chevron.

He’s not shy about the wheeling and dealing, promoting Atlas Resource Partners as willing to “rush in where others are fleeing” and aiming to “sell high, buy low.”

Yet ARP has not yet been properly rewarded for its bargain-hunting zeal. Instead, it finds itself on sale as infrastructure constraints limit production from some of its most promising acreage amid lingering concerns about upstream MLP accounting.

Source: Partnership presentation

The yield is up to 10.2 percent based on the distributions over the last 12 months and 11.8 percent based on the low end of Atlas’ recently trimmed 2014 forecast. Importantly, the cut seems attributable largely to midstream infrastructure constraints rather than well production rates, which according to management continue to exceed expectations.

The disconnect between the long-term potential of Atlas’ acreage and the current price of its equity has awoken the acquisitive instinct in long-time Atlas investor Leon Cooperman, whose Omega Advisors hedge fund boosted its stake in Atlas Resource Partners from 8.2 percent to 11.1 percent in November. Cohen bought 35,000 units himself in June as did Jonathan Z. Cohen, his son and board vice chairman.

Vertical drilling in the Marble Falls prospect in North Texas and horizontal wells in Oklahoma’s Mississippi Lime are helping Atlas boost its output of the more lucrative liquids, while the nearby Barnett stake, recently acquired gas acreage in New Mexico and Alabama and the promising but modest positions in the Marcellus and the Utica provide long-term exposure to higher natural gas prices.

The Cohens don’t mind taking advantage of cheap leverage, and Atlas is merely aiming for sufficient cash flow to fund its rich distributions while holding debt under 4x EBITDA. The acquisition of low-depletion-rate gas wells in New Mexico and Alabama made overall production nearly double year-over-year, and Atlas’s revenue from oil and natural gas liquids over the first nine months of 2013 was up more than fourfold from 2012, now accounting for a third of total production revenue. In addition to its well production, Atlas Resource Partners maintains a nice sideline selling private oil and gas partnerships to seekers of tax write-offs. Associated fees recently accounted for 15 percent of the partnership’s cash flow.

Source: Partnership presentation

There is no such thing as a safe 10 percent yield, and if the recent acquisitions don’t live up to their potential, the unit price could certainly head lower. But this is an executive team with a proven eye for shrewd deals, and its faith in its own equity as evidenced by insider buying by the Cohens and Cooperman should be born out in the long run. It’s also notable that the Cohens have been buying Atlas Resources Partners rather than Atlas Energy (NYSE: ATLS), the general partner with incentive distribution rights in ARP.

We’re adding ARP to the Aggressive Portfolio. Buy below $23.