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Atlas Energy, L.P. Reports Operating And Financial Results For The Fourth Quarter And Full Year 2012

Stocks in this article: APL ARP ATLS

Atlas Pipeline Senior Notes Offerings

On February 11, 2013, APL issued $650 million of 5.875% Senior Notes due 2023 in a private placement transaction issued at par. APL received net proceeds of approximately $638.2 million after underwriting commissions and other transaction costs, and utilized the proceeds to redeem any or all of its outstanding 8.75% Senior Notes due 2018 in a related tender offer, as well as repay a portion of its outstanding indebtedness under its existing credit facility.

In September 2012, APL issued $325.0 million of 6.625% Senior Notes due 2020 in a private placement transaction. Subsequently, in December 2012, APL completed a follow-on private offering of $175 million of 6.625% Senior Notes due 2020 at 103% of their principal amount, plus accrued interest from September 28, 2012, representing a yield to worst of 6.003%. APL received net proceeds of approximately $176.3 million after underwriting commissions and other transaction costs, and utilized the proceeds from the December offering to fund a portion of its acquisition of Cardinal.

The senior notes are subject to a registration rights agreement entered in connection with the transaction, which requires APL, among other things, to file a registration statement with the SEC and exchange the privately placed notes for registered notes by certain dates.

Atlas Resource Fourth Quarter 2012 Highlights

  • ARP’s average net daily production for the fourth quarter 2012 was 110.1 Mmcfed, an increase of approximately 13.8 Mmcfed, or 14%, compared with the third quarter 2012. The increase was primarily due to a full quarter’s volume from the acquisition of the remaining 50% interest in Equal Energy, Ltd.’s approximately 8,500 net undeveloped acres in the core of the Mississippi Lime play in northwestern Oklahoma in September 2012, and a full quarter’s volume from the acquisition of Titan Operating, LLC (“Titan”) in the Barnett Shale in July 2012.

ATLS owns 100% of the general partner Class A units and the incentive distribution rights, and a 43% common limited partner interest in ARP. ATLS’ financial results are presented on a consolidated basis with those of ARP. Non-controlling interests in ARP are reflected as income (expense) in ATLS’ consolidated statements of operations and as a component of partners’ capital on its consolidated balance sheets. A consolidating statement of operations and balance sheet have also been provided in the financial tables to this release for the comparable periods presented. Please refer to the ARP fourth quarter and full year 2012 earnings release for additional details on its financial results.

Atlas Pipeline Fourth Quarter 2012 Highlights

  • During the fourth quarter 2012, APL operated near or at nameplate capacity on all of its gathering and processing systems in the Mid Continent. APL processed an average of approximately 1,001.9 Mmcfd of natural gas in the fourth quarter 2012 amongst its WestOK, WestTX, Velma and the newly-acquired Arkoma systems, 67% higher than the prior year comparable quarter’s volumes. APL again attained record high volumes with over 80,100 bbl per day of natural gas liquids generated from APL’s four processing systems, which primarily reside in Oklahoma and Texas.

ATLS owns a 2.0% general partner interest, all of the incentive distribution rights, and a 8.7% common limited partner interest in APL. ATLS’ financial results are presented on a consolidated basis with those of APL. Non-controlling interests in APL are reflected as income (expense) in ATLS’ consolidated statements of operations and as a component of partners’ capital on its consolidated balance sheets. A consolidating statement of operations and balance sheet have also been provided in the financial tables to this release for the comparable periods presented. Please refer to the APL fourth quarter and full year 2012 earnings release for additional details on its financial results.

Corporate Expenses

  • Cash general and administrative expense, excluding amounts attributable to APL and ARP, was $1.5 million for the fourth quarter 2012, relatively consistent with the third quarter 2012. Please refer to the consolidating combined statements of operations provided in the financial tables of this release.

Interested parties are invited to access the live webcast of an investor call with management regarding Atlas Energy, L.P.’s fourth quarter 2012 results on Friday, February 22, 2013 at 9:00 am ET by going to the Investor Relations section of Atlas Energy’s website at www.atlasenergy.com. For those unavailable to listen to the live broadcast, the replay of the webcast will be available following the live call on the Atlas Energy website and telephonically beginning at 11:00 a.m. ET on February 22, 2013 by dialing 888-286-8010, passcode: 12321370.

Atlas Energy, L.P. (NYSE: ATLS) is a master limited partnership which owns all of the general partner Class A units and incentive distribution rights and an approximate 43% limited partner interest in its upstream oil & gas subsidiary, Atlas Resource Partners, L.P. Additionally, Atlas Energy owns and operates the general partner of its midstream oil & gas subsidiary, Atlas Pipeline Partners, L.P., through all of the general partner interest, all the incentive distribution rights and an approximate 9% limited partner interest. For more information, please visit our website at www.atlasenergy.com, or contact Investor Relations at InvestorRelations@atlasenergy.com.

Atlas Resource Partners, L.P. (NYSE: ARP) is an exploration & production master limited partnership which owns an interest in over 10,200 producing natural gas and oil wells, primarily in Appalachia and the Barnett Shale in Texas. ARP is also the largest sponsor of natural gas and oil investment partnerships in the U.S. For more information, please visit our website at www.atlasresourcepartners.com, or contact Investor Relations at InvestorRelations@atlasenergy.com.

Atlas Pipeline Partners, L.P. (NYSE: APL) is active in the gathering and processing segments of the midstream natural gas industry. In Oklahoma, southern Kansas, northern and western Texas, and Tennessee, APL owns and operates 12 active gas processing plants, 18 gas treating facilities, as well as approximately 10,100 miles of active intrastate gas gathering pipeline. APL also has a 20% interest in West Texas LPG Pipeline Limited Partnership, which is operated by Chevron Corporation. For more information, visit the Partnership's website at www.atlaspipeline.com or contact IR@atlaspipeline.com.

Cautionary Note Regarding Forward-Looking Statements

This document contains forward-looking statements that involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. ATLS cautions readers that any forward-looking information is not a guarantee of future performance. Such forward-looking statements include, but are not limited to, statements about future financial and operating results, resource potential, ATLS’ plans, objectives, expectations and intentions and other statements that are not historical facts. Risks, assumptions and uncertainties that could cause actual results to materially differ from the forward-looking statements include, but are not limited to, those associated with general economic and business conditions; changes in commodity prices; changes in the costs and results of drilling operations; uncertainties about estimates of reserves and resource potential; inability to obtain capital needed for operations; ATLS’ level of indebtedness; changes in government environmental policies and other environmental risks; the availability of drilling equipment and the timing of production; tax consequences of business transactions; and other risks, assumptions and uncertainties detailed from time to time in ATLS’, ARP’s and APL’s reports filed with the U.S. Securities and Exchange Commission, including quarterly reports on Form 10-Q, current reports on Form 8-K and annual reports on Form 10-K. Forward-looking statements speak only as of the date hereof, and ATLS assumes no obligation to update such statements, except as may be required by applicable law.

   

ATLAS ENERGY, L.P.

CONSOLIDATED COMBINED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except per unit data)
 
Three Months Ended Years Ended
December 31, December 31,
Revenues: 2012   2011 2012   2011
Gas and oil production $ 31,578 $ 15,325 $ 92,901 $ 66,979
Well construction and completion 39,219 70,947 131,496 135,283
Gathering and processing 360,386 346,102 1,219,815 1,329,418
Administration and oversight 3,224 2,668 11,810 7,741
Well services 4,697 4,752 20,041 19,803
Gain (loss) on mark-to-market derivatives (2) (4,965 ) (29,405 ) 31,940 (20,453 )
Other, net   4,865     5,146     13,440     31,803  
Total revenues   439,004     415,535     1,521,443     1,570,574  
 
Costs and expenses:
Gas and oil production 10,377 5,147 26,624 17,100
Well construction and completion 34,197 60,876 114,079 115,630
Gathering and processing 298,630 291,227 1,009,100 1,123,051
Well services 2,204 2,661 9,280 8,738
General and administrative (1) 56,931 23,538 165,777 80,584
Chevron transaction expense 7,670
Depreciation, depletion and amortization 43,048 27,855 142,611 109,373
Asset impairment   9,507     6,995     9,507     6,995  
Total costs and expenses   454,894     418,299     1,484,648     1,461,471  
 
Operating income (loss) (15,890 ) (2,764 ) 36,795 109,103
 
Gain (loss) on asset sales and disposal 39 570 (6,980 ) 256,292
Interest expense (1) (15,890 ) (7,434 ) (46,520 ) (38,394 )
Loss on early extinguishment of debt               (19,574 )
 
Income (loss) from continuing operations before tax (31,741 ) (9,628 ) (16,705 ) 307,427
Income tax expense   (176 )       (176 )    
Income (loss) from continuing operations (31,917 ) (9,628 ) (16,881 ) 307,427
 
Loss from discontinued operations               (81 )
Net income (loss) (31,917 ) (9,628 ) (16,881 ) 307,346
 

(Income) loss attributable to non-controlling interests

 

17,042

   

5,454

   

(35,532

)

 

(257,643

)

Net income (loss) after non-controlling interests (14,875 ) (4,174 ) (52,413 ) 49,703
Income not attributable to common limited partners (results of operations of the Transferred Business as of and prior to February 17, 2011, the date of acquisition) (1)  

 

 

       

 

 

    (4,711 )
Net income (loss) attributable to common limited partners $ (14,875 )

$

(4,174

)

$ (52,413 )

$

44,992

 
 
Net income (loss) attributable to common limited partners per unit – basic:
Income (loss) from continuing operations attributable to common limited partners $ (0.29 ) $ (0.08 ) $ (1.02 ) $ 0.91
Loss from discontinued operations attributable to common limited partners                
Net income (loss) attributable to common limited partners $ (0.29 ) $ (0.08 ) $ (1.02 ) $ 0.91  
 
Net income (loss) attributable to common limited partners per unit – diluted:
Income (loss) from continuing operations attributable to common limited partners $ (0.29 ) $ (0.08 ) $ (1.02 ) $ 0.88
Loss from discontinued operations attributable to common limited partners                
Net income (loss) attributable to common limited partners

$

(0.29

)

$

(0.08

)

$

(1.02

)

$

0.88

 
 
Weighted average common limited partner units outstanding:
Basic   51,359     51,271     51,327     48,235  
Diluted   51,359     51,271     51,327     49,676  
 
Net income (loss) attributable to common limited partners:
Income (loss) from continuing operations $ (14,875 ) $ (4,174 ) $ (52,413 ) $ 45,002
Loss from discontinued operations               (10 )
Net income (loss) attributable to common limited partners $ (14,875 )

$

(4,174

)

$ (52,413 )

$

44,992

 
 

(1)

 

In accordance with prevailing accounting literature, ATLS has adjusted its historical financial statements to present them combined with the historical financial results of the exploration and production business acquired from Chevron (the “Transferred Business”) for all periods prior to its acquisition date of February 17, 2011. However, since the results of operations of the Transferred Business prior to its acquisition date are not attributable to the common limited partners of ATLS, these amounts have been deducted to obtain net income (loss) attributable to common limited partners for the respective period. Also, the historical results of the Transferred Business prior to the acquisition date do not reflect general and administrative expenses and interest expense as ATLS was unable to identify and allocate such amounts to the Transferred Business for the respective periods.

 

(2)

Consists principally of hydrocarbon derivative gains / (losses) that relate to the operating activities of ATLS’s consolidated subsidiary, APL. The underlying hydrocarbon derivatives do not represent present or potential future obligations of ATLS.

 
 

ATLAS ENERGY, L.P.

CONSOLIDATED BALANCE SHEETS

(unaudited; in thousands)

 

December 31,

ASSETS

2012

 

2011

Current assets:

Cash and cash equivalents $ 36,780 $ 77,376
Accounts receivable 196,249 136,853
Current portion of derivative asset 35,351 15,447
Subscriptions receivable 55,357 34,455
Prepaid expenses and other   45,255   24,779
Total current assets 368,992 288,910
 

Property, plant and equipment, net

3,502,609 2,093,283

Intangible assets, net

200,680 104,777

Investment in joint venture

86,002 86,879

Goodwill, net

351,069 31,784

Long-term derivative asset

16,840 30,941

Other assets, net

  71,002   48,197
$ 4,597,194 $ 2,684,771
 

LIABILITIES AND PARTNERS’ CAPITAL

 

Current liabilities:

Current portion of long-term debt $ 10,835 $ 2,085
Accounts payable 119,028 93,554
Liabilities associated with drilling contracts 67,293 71,719
Accrued producer liabilities 109,725 88,096
Current portion of derivative payable to Drilling Partnerships 11,293 20,900
Accrued interest 11,556 1,629
Accrued well drilling and completion costs 47,637 17,585
Accrued liabilities   103,291   61,653
Total current liabilities 480,658 357,221
 

Long-term debt, less current portion

1,529,508 522,055

Long-term derivative liability

888

Long-term derivative payable to Drilling Partnerships

2,429 15,272

Deferred income taxes, net

30,258

Asset retirement obligations and other

73,605 46,142
 

Commitments and contingencies

 

Partners’ Capital:

Common limited partners’ interests 456,171 554,999
Accumulated other comprehensive income   9,699   29,376
465,870 584,375
Non-controlling interests   2,013,978   1,159,706
Total partners’ capital   2,479,848   1,744,081
$ 4,597,194 $ 2,684,771
 
   
ATLAS ENERGY, L.P.
Financial and Operating Highlights
 
Three Months Ended Years Ended
December 31, December 31,
2012   2011 2012  

2011 (1)

 
Net income (loss) attributable to common limited partners per unit - basic $ (0.29 ) $ (0.08 ) $ (1.02 ) $ 0.91
 
Distributable cash flow per unit (2)(3) $ 0.30 $ 0.37 $ 1.08 $ 1.36
 
Cash distributions paid per unit (4) $ 0.30 $ 0.24 $ 1.07 $ 0.81
 
ATLAS RESOURCE:
Production volume: (5)(6)
Natural gas (Mcfd) 95,845 30,560 69,408 31,403
Oil (Bpd) 447 339 330 307
Natural gas liquids (Bpd)   1,935     432     974     444  
Total (Mcfed)   110,137     35,182     77,232     35,912  
 
Average sales prices: (6)
Natural gas (per Mcf) (7) $ 3.04 $ 4.20 $ 3.29 $ 4.98
Oil (per Bbl) (8) $ 90.76 $ 87.19 $ 94.02 $ 89.70
Natural gas liquids (per gallon) $ 0.73 $ 1.14 $ 0.76 $ 1.15
 
Production costs: (6)(9)
Lease operating expenses per Mcfe $ 0.88 $ 1.20 $ 0.82 $ 1.09
Production taxes per Mcfe   0.14     0.08     0.12     0.10  
Total production costs per Mcfe $ 1.01 $ 1.28 $ 0.94 $ 1.19
 
ATLAS PIPELINE:
Production volume: (6)
Gathered gas volume(Mcfd) 1,100,266 649,644 1,026,996 599,828
Processed gas volume (Mcfd) 1,001,883 601,188 922,715 548,932
Residue gas volume (Mcfd) 846,794 486,312 837,961 445,094
Processed NGL volume (Bpd) 80,120 58,597 76,807 54,120
Condensate volume (Bpd) 3,044 2,325 3,415 2,821
 
Average sales prices: (6)
Natural gas (per Mcf) $ 3.18 $ 3.40 $ 2.62 $ 3.86
Condensate (per Bbl) $ 80.75 $ 89.75 $ 87.88 $ 90.65
Natural gas liquids (per gallon) $ 0.90 $ 1.17 $ 0.90 $ 1.20
 

(1)

  In accordance with prevailing accounting literature, ATLS has adjusted its historical financial statements to present them combined with the historical financial results of the Transferred Business for all periods prior to its acquisition date of February 17, 2011. However, since the results of operations of the Transferred Business prior to its acquisition date are not attributable to the common limited partners of ATLS, these amounts have been deducted to obtain net income (loss) attributable to common limited partners for the respective period. Also, the historical results of the Transferred Business prior to the acquisition date do not reflect general and administrative expenses and interest expense as ATLS was unable to identify and allocate such amounts to the Transferred Business for the respective periods.
 

(2)

A reconciliation from net income to distributable cash flow is provided in the financial tables of this release.
 
(3) Calculation consists of distributable cash flow divided by the weighted average common limited partner units outstanding of 51,359,000 and 51,271,000 for the three months ended December 31, 2012 and 2011, respectively, and 51,327,000 for the year ended December 31, 2012. For the year ended December 31, 2011, the weighted average common limited partner units outstanding of 51,250,000 utilized for the calculation is the weighted average common limited partner units outstanding for the period subsequent to February 17, 2011, the date of acquisition for the Transferred Business, which includes the 23.4 million common limited partner units issued as partial consideration for the acquisition.
 

(4)

Represents the cash distributions declared per limited partner unit for the respective period and paid by ATLS within 50 days after the end of each quarter, based upon the distributable cash flow generated during the respective quarter. The year ended December 31, 2011 includes a cash distribution payment of $0.11 per limited partner unit for the 1 st quarter 2011, which reflected a prorated cash distribution for the period from February 17, 2011, the date of acquisition for the Transferred Business, to March 31, 2011.
 
(5) Production quantities consist of the sum of (i) ARP’s proportionate share of production from wells in which it has a direct interest, based on ARP’s proportionate net revenue interest in such wells, and (ii) ARP’s proportionate share of production from wells owned by the investment partnerships in which ARP has an interest, based on its equity interest in each such partnership and based on each partnership’s proportionate net revenue interest in these wells.
 
(6) “Mcf” and “Mcfd” represent thousand cubic feet and thousand cubic feet per day; “Mcfe” and “Mcfed” represent thousand cubic feet equivalents and thousand cubic feet equivalents per day, and “Bbl” and “Bpd” represent barrels and barrels per day. Barrels are converted to Mcfe using the ratio of six Mcf’s to one barrel.
 
(7)

 

ARP’s average sales price for natural gas before the effects of financial hedging was $2.98 per Mcf and $3.68 per Mcf for the three months ended December 31, 2012 and 2011, respectively, and $2.60 per Mcf and $4.53 per Mcf for the years ended December 31, 2012 and 2011, respectively. These amounts exclude the impact of subordination of production revenues to investor partners within the investor partnerships. Including the effects of subordination, average natural gas sales prices were $2.54 per Mcf ($2.48 per Mcf before the effects of financial hedging) and $3.81 per Mcf ($3.29 per Mcf before the effects of financial hedging) for the three months ended December 31, 2012 and 2011, respectively, and $2.76 per Mcf ($2.08 per Mcf before the effects of financial hedging) and $4.28 per Mcf ($3.83 per Mcf before the effects of financial hedging) for the years ended December 31, 2012 and 2011, respectively.
 
(8) ARP’s average sales price for oil before the effects of financial hedging was $87.55 per barrel and $86.76 per barrel for the three months ended December 31, 2012 and 2011, respectively, and $91.32 per barrel and $89.07 per barrel for the years ended December 31, 2012 and 2011, respectively.
 
(9) Production costs include labor to operate the wells and related equipment, repairs and maintenance, materials and supplies, property taxes, severance taxes, insurance and production overhead. These amounts exclude the effects of ARP’s proportionate share of lease operating expenses associated with subordination of production revenue to investor partners within ARP’s investor partnerships. Including the effects of these costs, lease operating expenses per Mcfe were $0.71 per Mcfe ($0.95 per Mcfe for total production costs) and $0.98 per Mcfe ($1.06 per Mcfe for total production costs) for the three months ended December 31, 2012 and 2011, respectively, and $0.58 per Mcfe ($0.70 per Mcfe for total production costs) and $0.77 per Mcfe ($0.87 per Mcfe for total production costs) for the years ended December 31, 2012 and 2011, respectively.
 
   

ATLAS ENERGY, L.P.

Financial Information

(unaudited; in thousands except per unit amounts)
 
Three Months Ended Years Ended
December 31, December 31,
Adjusted EBITDA and Distributable Cash Flow Summary: 2012   2011 2012  

2011 (1)

 
Atlas Resource Cash Distributions Earned (2) :
Limited Partner Units $ 10,062 $ $ 29,975 $
Class A Units (2%) 469 1,146
Incentive Distribution Rights   149         149      
Total Atlas Resource Cash Distributions Earned (2)   10,680         31,270      
per limited partner unit $ 0.48 $ $ 1.43 $
 
Atlas Pipeline Cash Distributions Earned (2) :
Limited Partner Units 3,337 3,165 13,061 11,286
General Partner 2% Interest 815 633 2,776 2,099
Incentive Distribution Rights   2,302     1,397     7,187     3,173  
Total Atlas Pipeline Cash Distributions Earned (2)   6,454     5,195     23,024     16,558  
per limited partner unit $ 0.58 $ 0.55 $ 2.27 $ 1.96
 
Total Cash Distributions Earned 17,134 5,195 54,294 16,558
 

E&P Operations Adjusted EBITDA prior to spinoff on March 5, 2012 (3)

9,565

9,111

49,182

Cash general and administrative expenses (4) (1,531 ) 5,461 (7,441 ) (1,615 )
Other, net   1     1,237     984     16,224  
Adjusted EBITDA (5) 15,604 21,458 56,948 80,349
Cash interest expense (6) (82 ) (202 ) (335 ) (726 )
Maintenance capital expenditures (3)       (2,300 )   (1,231 )   (9,833 )
Distributable Cash Flow (5) $ 15,522   $ 18,956   $ 55,382   $ 69,790  
 
Distributions Paid (7) $ 15,410 $ 12,310 $ 54,937 $ 41,526
per limited partner unit $ 0.30 $ 0.24 $ 1.07 $ 0.81
Distribution coverage ratio 1.0x 1.5x 1.0x 1.7x
 
Reconciliation of non-GAAP measures to net income (loss) (5) :
Distributable cash flow $ 15,522 $ 18,956 $ 55,382 $ 69,790
Distributable cash flow of Transferred Business as of and prior to February 17, 2011 (the date of acquisition) (1)

8,261

E&P Operations EBITDA prior to spinoff on March 5, 2012 (3) (9,565 ) (9,111 ) (49,182 )
E&P Operations EBITDA of Transferred Business as of and prior to February 17, 2011 (1)

(8,510 )
Atlas Resource net loss attributable to ATLS common limited partners

(11,274

)

(4,741

)

(34,718

)

19,899

Atlas Resource cash distributions earned by ATLS (2) (10,680 ) (31,270 )
Atlas Pipeline net income attributable to ATLS common limited partners

2,501

198

15,343

37,753

Atlas Pipeline cash distributions earned by ATLS (2) (6,454 ) (5,195 ) (23,024 ) (16,558 )
Depreciation and amortization (1,069 ) (1,069 )
Non-recurring spinoff and acquisition costs (8,370 ) (2,087 )
Amortization of deferred finance costs (51 ) (154 ) (230 ) (5,510 )
Non-cash stock compensation expense (4,611 ) (4,201 ) (18,237 ) (13,132 )
Maintenance capital expenditures (3) 2,300 1,231 9,833
Other non-cash adjustments 172 (703 ) 591 215
Income attributable to non-controlling interests   (17,042 )   (5,454 )   35,532     257,643  
Net income (loss) $ (31,917 ) $ (9,628 ) $ (16,881 ) $ 307,346  
 

(1)

  In accordance with prevailing accounting literature, ATLS has adjusted its historical financial statements to present them combined with the historical financial results of the Transferred Business for all periods prior to its acquisition date of February 17, 2011. However, since the results of operations of the Transferred Business prior to its acquisition date are not attributable to the common limited partners of ATLS, these amounts have been deducted to obtain net income (loss) attributable to common limited partners for the respective period. Also, the historical results of the Transferred Business prior to the acquisition date do not reflect general and administrative expenses and interest expense as ATLS was unable to identify and allocate such amounts to the Transferred Business for the respective periods.
(2) Represents the cash distribution paid by ARP and APL within 45 days after the end of each quarter, based upon the distributable cash flow generated during the respective quarter.
(3) Represents the E&P Operations Adjusted EBITDA generated and maintenance capital expenditures incurred by ATLS on a stand-alone basis prior to the transfer of its E&P assets to ARP on March 5, 2012.
(4) Excludes non-cash stock-compensation expense, non-recurring spinoff costs and non-recurring acquisition costs incurred, including amounts in connection with the acquisition of the Transferred Business.
(5) Adjusted EBITDA and distributable cash flow are non-GAAP (generally accepted accounting principles) financial measures under the rules of the Securities and Exchange Commission. Management of ATLS believes that adjusted EBITDA and distributable cash flow provide additional information for evaluating ATLS’s performance, among other things. These measures are widely used by commercial banks, investment bankers, rating agencies and investors in evaluating performance relative to peers and pre-set performance standards. Adjusted EBITDA is also a financial measurement that, with certain negotiated adjustments, is utilized within ATLS’s financial covenants under its credit facility. Adjusted EBITDA and distributable cash flow are not measures of financial performance under GAAP and, accordingly, should not be considered as a substitute for net income, operating income, or cash flows from operating activities in accordance with GAAP.

(6)

Excludes non-cash amortization of deferred financing costs.

(7)

Represents the cash distribution paid within 50 days after the end of each quarter, based upon the distributable cash flow generated during the respective quarter.
 
 
ATLAS ENERGY, L.P.
CAPITALIZATION INFORMATION

(unaudited; in thousands)

 
December 31, 2012
Atlas   Atlas   Atlas  
Energy Resource Pipeline Consolidated
Total debt $ 9,000 $ 351,425 $ 1,179,918 $ 1,540,343
Less: Cash   (10,194 )   (23,188 )   (3,398 )   (36,780 )
Total net debt /(cash) (1,194 ) 328,237 1,176,520 1,503,563
 
Partners’ capital   465,870     862,006     1,606,408    

2,479,848 (1)

 
Total capitalization $ 464,676   $ 1,190,243   $ 2,782,928   $ 3,983,411  
 
Ratio of net debt to capitalization 0.00x
     

(1) Net of eliminated amounts .

December 31, 2011
Atlas Atlas Atlas
Energy Resource Pipeline Consolidated
Total debt $ $ $ 524,140 $ 524,140
Less: Cash   (22,500 )   (54,708 )   (168 )   (77,376 )
Total net debt /(cash) (22,500 ) (54,708 ) 523,972 446,764
 
Partners’ capital   584,375     457,175     1,236,228    

1,744,081 (2)

 
Total capitalization $ 561,875   $ 402,467   $ 1,760,200   $ 2,190,845  
 
Ratio of net debt to capitalization 0.00x
     

(2) Net of eliminated amounts .

 
         

ATLAS ENERGY, L.P.

CONSOLIDATING STATEMENTS OF OPERATIONS

(unaudited; in thousands)

 

Three Months Ended December 31, 2012

 
Atlas Atlas Atlas
Energy Resource Pipeline Eliminations Consolidated
Revenues:
Gas and oil production $ $ 31,578 $ $ $ 31,578
Well construction and completion 39,219 39,219
Gathering and processing 5,956 354,508 (78 ) 360,386
Administration and oversight 3,224 3,224
Well services 4,697 4,697
Loss on mark-to-market derivatives (4,965 ) (4,965 )
Other, net   173     66     4,626         4,865  
Total revenues   173     84,740     354,169     (78 )   439,004  
 
Costs and expenses:
Gas and oil production 10,377 10,377
Well construction and completion 34,197 34,197
Gathering and processing 6,306 292,402 (78 ) 298,630
Well services 2,204 2,204
General and administrative 6,142 20,696 30,093 56,931

Depreciation, depletion and amortization

18,734

24,314

43,048

Asset impairment

 

   

9,507

   

   

   

9,507

 
Total costs and expenses   6,142     102,021     346,809     (78 )   454,894  
 
Operating income (loss) (5,969 ) (17,281 ) 7,360 (15,890 )
 
Gain on asset sales and disposal 39 39
Interest expense   (133 )   (1,666 )   (14,091 )       (15,890 )
 
Loss from continuing operations before tax (6,102 ) (18,908 ) (6,731 ) (31,741 )
Income tax expense           (176 )       (176 )
Loss from continuing operations (6,102 ) (18,908 ) (6,907 ) (31,917 )
Discontinued operations                    
Net loss (6,102 ) (18,908 ) (6,907 ) (31,917 )
(Income)/loss attributable to non-controlling interests  

   

   

(1,902

)

 

18,944

   

17,042

 
Net income/(loss) attributable to common limited partners

$

(6,102

)

$

(18,908

)

$

(8,809

)

$

18,944

 

$

(14,875

)

 
         
ATLAS ENERGY, L.P.
CONSOLIDATING STATEMENTS OF OPERATIONS

(unaudited; in thousands)

 

Three Months Ended December 31, 2011

 
Atlas Atlas Atlas
Energy Resource Pipeline Eliminations Consolidated
Revenues:
Gas and oil production $ $ 15,325 $ $ $ 15,325
Well construction and completion 70,947 70,947
Gathering and processing 3,698 342,483 (79 ) 346,102
Administration and oversight 2,668 2,668
Well services 4,752 4,752
Loss on mark-to-market derivatives (29,405 ) (29,405 )
Other, net   531     85     4,530         5,146  
Total revenues   531     97,475     317,608     (79 )   415,535  
 
Costs and expenses:
Gas and oil production 5,147 5,147
Well construction and completion 60,876 60,876
Gathering and processing 4,465 286,841 (79 ) 291,227
Well services 2,661 2,661
General and administrative (1,260 ) 15,261 9,537 23,538
Depreciation, depletion and amortization

1,069

6,850

19,936

27,855

Asset impairment       6,995             6,995  
Total costs and expenses   (191 )   102,255     316,314     (79 )  

418,299

 
 
Operating income (loss) 722 (4,780 ) 1,294 (2,764 )
 
Gain on asset sales and disposal 3 39 528 570
Interest expense (356 ) (7,078 ) (7,434 )
Loss on early extinguishment of debt                    
 
Income (loss) from continuing operations 369 (4,741 ) (5,256 ) (9,628 )
Discontinued operations                    
Net income (loss) 369 (4,741 ) (5,256 ) (9,628 )
(Income)/loss attributable to non-controlling interests  

   

   

(1,708

)

 

7,162

   

5,454

 
Net income/(loss) attributable to common limited partners

$

369

 

$

(4,741

)

$

(6,964

)

$

7,162

 

$

(4,174

)

 
 

ATLAS ENERGY, L.P.

CONSOLIDATING STATEMENTS OF OPERATIONS

(unaudited; in thousands)

 

Year Ended December 31, 2012

 
  Atlas   Atlas   Atlas    
Energy Resource Pipeline Eliminations Consolidated
Revenues:
Gas and oil production $ $ 92,901 $ $ $ 92,901
Well construction and completion 131,496 131,496
Gathering and processing 16,267 1,203,983 (435 ) 1,219,815
Administration and oversight 11,810 11,810
Well services 20,041 20,041
Gain on mark-to-market derivatives 31,940 31,940
Other, net   1,575     (4,886 )   16,751         13,440  
Total revenues   1,575     267,629     1,252,674     (435 )   1,521,443  
 
Costs and expenses:
Gas and oil production 26,624 26,624
Well construction and completion 114,079 114,079
Gathering and processing 19,491 990,044 (435 ) 1,009,100
Well services 9,280 9,280
General and administrative 34,048 69,123 62,606 165,777
Chevron transaction expense 7,670 7,670

Depreciation, depletion and amortization

52,582

90,029

142,611

Asset impairment       9,507             9,507  
Total costs and expenses   34,048     308,356     1,142,679     (435 )   1,484,648  
 
Operating income (loss) (32,473 ) (40,727 ) 109,995 36,795
 
Loss on asset sales and disposal (6,980 ) (6,980 )
Interest expense   (565 )   (4,195 )   (41,760 )       (46,520 )
 

Income (loss) from continuing operations before tax

(33,038

)

(51,902

)

68,235

 

(16,705

)

Income tax expense           (176 )       (176 )
Net income (loss) (33,038 ) (51,902 ) 68,059 (16,881 )

Income attributable to non-controlling interests

 

   

   

(6,010

)

 

(29,522

)

 

(35,532

)

Net income (loss) attributable to common limited partners

$

(33,038

)

$

(51,902

)

$

62,049

 

$

(29,522

)

$

(52,413

)

 
 

ATLAS ENERGY, L.P.

CONSOLIDATING COMBINED STATEMENTS OF OPERATIONS

(unaudited; in thousands)

 

Year Ended December 31, 2011

 
  Atlas   Atlas   Atlas     Consolidated

Energy

Resource (1)

Pipeline

Eliminations

Combined (1)

Revenues:
Gas and oil production $ $ 66,979 $ $ $ 66,979
Well construction and completion 135,283 135,283
Gathering and processing 17,746 1,312,007 (335 ) 1,329,418
Administration and oversight 7,741 7,741
Well services 19,803 19,803
Loss on mark-to-market derivatives (20,453 ) (20,453 )
Other, net   16,602     (30 )   15,231         31,803  
Total revenues   16,602     247,522     1,306,785     (335 )   1,570,574  
 
Costs and expenses:
Gas and oil production 17,100 17,100
Well construction and completion 115,630 115,630
Gathering and processing 20,842 1,102,544 (335 ) 1,123,051
Well services 8,738 8,738
General and administrative 16,694 27,536 36,354 80,584

Depreciation, depletion and amortization

1,069

30,869

77,435

109,373

Asset impairment       6,995             6,995  
Total costs and expenses   17,763     227,710     1,216,333     (335 )   1,461,471  
 
Operating income (loss) (1,161 ) 19,812 90,452 109,103
 
Gain on asset sales and disposal 3 87 256,202 256,292
Interest expense (6,791 ) (31,603 ) (38,394 )
Loss on early extinguishment of debt           (19,574 )       (19,574 )
 
Income (loss) from continuing operations (7,949 ) 19,899 295,477 307,427
Discontinued operations           (81 )       (81 )
Net income (loss) (7,949 ) 19,899 295,396 307,346

Income attributable to non-controlling interests

 

   

   

(6,200

)

 

(251,443

)

 

(257,643

)

Net income (loss) after non-controlling interests

(7,949

)

19,899

289,196

(251,443

)

49,703

Income not attributable to common limited partners (results of operations of the Transferred Business as of and prior to February 17, 2011, the date of acquisition (1))

 

   

(4,711

)

 

   

   

(4,711

)

Net income (loss) attributable to common limited partners

$

(7,949

)

$

15,188

 

$

289,196

 

$

(251,443

)

$

44,992

 
 
 

(1)

In accordance with prevailing accounting literature, ATLS has adjusted its historical financial statements to present them combined with the historical financial results of the Transferred Business for all periods prior to its acquisition date of February 17, 2011. However, since the results of operations of the Transferred Business prior to its acquisition date are not attributable to the common limited partners of ATLS, these amounts have been deducted to obtain net income (loss) attributable to common limited partners for the respective period. Also, the historical results of the Transferred Business prior to the acquisition date do not reflect general and administrative expenses and interest expense as ATLS was unable to identify and allocate such amounts to the Transferred Business for the respective periods.
 
 
ATLAS ENERGY, L.P.
CONDENSED CONSOLIDATING BALANCE SHEETS

(unaudited; in thousands)

 

December 31, 2012

 

         
Atlas Atlas Atlas
ASSETS Energy Resource Pipeline Eliminations Consolidated
Current assets:
Cash and cash equivalents $ 10,194 $ 23,188 $ 3,398 $ $ 36,780

Accounts receivable

5 38,718 157,526 196,249

Receivable from (advances from) affiliates

11,353

(5,853

)

(5,500

)

Current portion of derivative asset 12,274 23,077 35,351
Subscriptions receivable 55,357 55,357
Prepaid expenses and other   118   9,063     36,074         45,255
Total current assets 21,670 132,747 214,575 368,992
 
Property, plant and equipment, net 1,302,228 2,200,381 3,502,609
Goodwill and intangible assets, net 33,104 518,645 551,749
Long-term derivative asset 8,898 7,942 16,840
Investment in joint venture 86,002 86,002
Investment in subsidiaries 454,436 (454,436 )
Other assets, net   22,287   16,122     32,593         71,002
$ 498,393 $ 1,493,099   $ 3,060,138   $ (454,436 ) $ 4,597,194
 
LIABILITIES AND PARTNERS’ CAPITAL
 
Current liabilities:
Current portion of long-term debt $ $ $ 10,835 $ $ 10,835
Accounts payable 171 59,549 59,308 119,028

Liabilities associated with drilling contracts

67,293

67,293

Accrued producer liabilities 109,725 109,725

Current portion of derivative payable to Drilling Partnerships

11,293

11,293

Accrued interest 4 1,153 10,399 11,556

Accrued well drilling and completion costs

47,637

47,637

Accrued liabilities   21,304   24,235     57,752         103,291
Total current liabilities 21,479 211,160 248,019 480,658
 
Long-term debt, less current portion 9,000 351,425 1,169,083 1,529,508
Long-term derivative liability 888 888
Long-term derivative payable to Drilling Partnerships

2,429

2,429

Deferred income taxes, net 30,258 30,258
Asset retirement obligations and other 2,044 65,191 6,370 73,605
 
Partners’ Capital:
Common limited partners’ interests 456,171 840,437 1,539,177 (2,379,614 ) 456,171

Accumulated other comprehensive income

 

9,699

 

21,569

   

   

(21,569

)

 

9,699

465,870 862,006 1,539,177 (2,401,183 ) 465,870
Non-controlling interests         67,231     1,946,747     2,013,978
Total partners’ capital   465,870   862,006     1,606,408     (454,436 )   2,479,848
$ 498,393 $ 1,493,099   $ 3,060,138   $ (454,436 ) $ 4,597,194
 
 
ATLAS ENERGY, L.P.
CONDENSED CONSOLIDATING BALANCE SHEETS

(unaudited; in thousands)

 
 

December 31, 2011

 

         
Atlas Atlas Atlas
ASSETS Energy Resource Pipeline Eliminations Consolidated
Current assets:
Cash and cash equivalents $ 22,500 $ 54,708 $ 168 $ $ 77,376
Accounts receivable 869 20,572 115,412 136,853

Receivable from (advances from) affiliates

3,928

(1,253

)

(2,675

)

Current portion of derivative asset 13,802 1,645 15,447
Subscriptions receivable 34,455 34,455
Prepaid expenses and other   1,462   7,676     15,641         24,779
Total current assets 28,759 129,960 130,191 288,910
 
Property, plant and equipment, net 4,571 520,883 1,567,829 2,093,283
Goodwill and intangible assets, net 33,285 103,276 136,561
Long-term derivative asset 16,127 14,814 30,941
Investment in joint venture 86,879 86,879
Investment in subsidiaries 533,697 (533,697 )
Other assets, net   22,190   858     25,149         48,197
$ 589,217 $ 701,113   $ 1,928,138   $ (533,697 ) $ 2,684,771
 
LIABILITIES AND PARTNERS’ CAPITAL
 
Current liabilities:
Current portion of long-term debt $ $ $ 2,085 $ $ 2,085
Accounts payable 2,179 36,731 54,644 93,554

Liabilities associated with drilling contracts

71,719

71,719

Accrued producer liabilities 88,096 88,096

Current portion of derivative payable to Drilling Partnerships

20,900

20,900

Accrued interest 5 1,624 1,629

Accrued well drilling and completion costs

17,585

17,585

Accrued liabilities   2,418   35,952     23,283         61,653
Total current liabilities 4,602 182,887 169,732 357,221

 

Long-term debt, less current portion 522,055 522,055
Long-term derivative payable to Drilling Partnerships

15,272

15,272

Asset retirement obligations and other 240 45,779 123 46,142
 
Partners’ Capital:
Common limited partners’ interests 554,999 427,246 1,269,019 (1,696,265 ) 554,999
Accumulated other comprehensive income (loss)  

29,376

 

29,929

   

(4,390

)

 

(25,539

)

 

29,376

584,375 457,175 1,264,629 (1,721,804 ) 584,375
Non-controlling interests         (28,401 )   1,188,107     1,159,706
Total partners’ capital   584,375   457,175     1,236,228     (533,697 )   1,744,081
$ 589,217 $ 701,113   $ 1,928,138   $ (533,697 ) $ 2,684,771
 
 
ATLAS ENERGY, L.P.
Ownership Interests Summary
   

 

 

Atlas Energy Ownership Interests as of December 31, 2012 :

 

 

Amount

Overall

Ownership

Interest

Percentage

 
ATLAS RESOURCE:
General partner interest 100 % 2.0 %
Common units 20,962,485 43.0 %
Incentive distribution rights 100 % N/A  
Total Atlas Energy ownership interests in Atlas Resource 45.0 %
 
ATLAS PIPELINE:
General partner interest 100 % 2.0 %
Common units 5,754,253 8.7 %
Incentive distribution rights 100 % N/A  
Total Atlas Energy ownership interests in Atlas Pipeline 10.7 %
 
LIGHTFOOT CAPITAL PARTNERS, GP LLC:
Approximate general partner ownership interest 15.9 %
Approximate limited partner ownership interest 12.1 %
 




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